factors affecting dividend payment policy 69 factors affecting dividend payment policy seto sulaksono adi wibowo 61* and agung bana 1,2 politeknik negeri batam, batam, indonesia abstract dividend payments are a routine activity that is usually done by the company once a year. before dividend payments are made many factors are considered before the company pays the dividends. this study aims to determine what factors affect the payment of dividends. the sample used in this study is all non-financial sector companies that pay dividends for 3 consecutive years 2016 to 2018. this study uses the eviews test tool and uses multiple regression tests. the results of this study indicate that profitability, life cycle and company size have positive effects while liquidity, cash flow, growth opportunities and leverage have no effect on dividend payout policies. keywords cash flow, company size, dividend payout, dividend per share, growth opportunities, life cycle, profitability. 1. introduction companies in carrying out their operations would want to generate maximum profits. so when a company makes a profit the shareholders will also feel the impact in the form of a part of net income which is commonly called a dividend. dividend payments are very important for companies, because with dividend payments the company is considered good by the shareholders. dividend payments will also improve the company's image and provide a positive response to the capital market. dividend payments are determined by the gms (general meeting of shareholders). this gms will determine whether dividends are distributed in the form of dividends or retained as retained earnings for future working capital. there are several factors that affect dividend payments such as corporate tax, liquidity, profitability, company size, cash flow and other regulations. fundamental factors have an important role in dividend payment policies. many literatures have explained the relationship between fundamental factors and dividend payout policies. research on dividend payments has been conducted abroad by (arko, abor, adjasi, & amidu, 2014) the results show that tangibility, company size and profitability have a positive effect on dividend payments. also supported by (yusof & ismail, 2016) the results of his research mentioned profitability, company size and investment have a positive effect. khan & shamim (2017) the results of his research profitability has a positive effect while cash flow has a negative effect on dividend payments. inversely proportional to (brahmiah, srinivasan, & sangeetha, 2018) which states profitability, liquidity and company size have a negative effect on dividend payments. jabbouri (2016) mentions company size and liquidity have a positive effect while cash flow and growth have a negative effect. domestic research has been conducted by lopulusi (2013) with the results of the analysis that profitability, liquidity, growth, debt and free cash flow have a negative effect, while company size has a significant negative effect on dividend payments. in line with research (saputra, 2016) which states that liquidity, profitability and cash flow have a negative effect on dividend payments. research by (apriliani & natalylova, 2017) shows company size, profitability, cash flow and collateral assets have a positive effect on dividend payments. also supported by (hudiwijono, aisjah, & ratnawati, 2018) which results in leverage, liquidity, free cash flow, company size, company growth, business risk and profitability have a positive effect on dividend payment * corresponding author. email address: seto@polibatam.ac.id afebi management and business review (ambr) vol.05 no.01 june 2020 70 policies while the company size factor is the most dominant factor affecting dividend payment policies. 2. literature study signal theory signal theory discovered by spence (1973) states that the information released by the company is very important for investment decisions by external parties. the information can be in the form of past, present or future conditions of a company's life. this information can be used as an analysis tool by investors for investment decisions. life cycle theory life cycle theory (mueller, 1972) suggests that dividends follow a good corporate life cycle pattern and the dividends distributed reflect a management analysis of the importance of market conditions including aspects relating to shareholders, agency costs, information inequality, securities issuance costs and costs of securities transaction. firm size the size of the company is the total amount of wealth owned by a company, the greater the total amount of company wealth the greater the size of the company (novyanny & turangan, 2018). firm size describes the size of a company that can be expressed by indicators of total assets or total net sales (hery, 2017). the size of the company is divided into 3 categories, namely small companies (small firm), medium companies (medium firm) and large companies (large firm) (yulia, 2013). companies will more easily obtain funding because the size of the company is considered capable of influencing the value of the company and the company's ability to bear the risks that arise. this is because large companies are better able to deal with economic competition because they have better corporate control.kajian literatur previous research overseas research by (arko, abor, adjasi, & amidu, 2014). the results of his research namely profitability, investment, taxation and leverage have a positive effect on dividend payments. using panel data analysis in his research showed that company size, current profit, liquidity had a positive effect while free cash flow, leverage, growth and state of economy had a negative effect (jabbouri, 2016). yusof & ismail (2016) conducted research in malaysia. the results of the study there are 5 factors that affect dividend payments, namely income, debt, company size, shareholders and investment. revenue, company size and investment have a positive effect while debt and shareholders have a negative effect. research by (khan & shamim, 2017) to examine the factors that influence dividend payout policies with samples breaking down companies in various sectors and using ols panel data analysis. the results show earnings per share has a positive impact on dividend policy in the drinks, travel, telecommunications, car and electricity sectors while the forestry and paper sectors have a negative impact. free cash flow only has a positive effect on dividends in the telecommunications sector while other sectors have a negative effect. leverage has a positive effect on dividend payments in the forestry, tobacco, travel and telecommunications sectors while the household goods, gas oil and pharmaceutical sectors have a negative effect. brahmiah, srinivasan, & sangeetha (2018) states that liquidity, profitability, company size and inflation have a negative influence on dividend payout policies. singla & samanta (2018) in their research used panel data analysis and samples of construction companies in india from 2011-2016. the results show that profitability, life cycle and company size have a positive effect while cash flow has a negative effect on dividend payments. factors affecting dividend payment policy 71 research on dividend policy was conducted domestically by lopulusi (2013) in his research using a sample of manufacturing companies in 2007-2011. the results of growth, liquidity, cash flow and debt have a negative effect while the size of the company has a significant negative effect. wicaksono & nasir (2014) used the spss analysis tool to examine the effect of liquidity, company growth, profitability, leverage and size on dividend payments. the results of his research are profitability has a positive effect and company growth has a negative effect. company size, leverage and liquidity have no effect. saputra (2016) examined the factors that influence dividend payment policies and use a sample of manufacturing companies in indonesia. the result is liquidity, free cash flow, company size, debt and profitability have no significant effect on dividend payment policies. apriliani & natalylova (2017) used manufacturing companies in indonesia as a sample. the results of the study are company size, profitability, collateral assets and cash flow have an influence on dividend payments while others have no effect. hudiwijono, aisjah & ratnawati (2018) used a sample of construction companies in indonesia. this study examines the influence of fundamental factors on dividend payment policies. the result is liquidity, free cash flow, leverage, firm growth, company size, profitability and business risk have a positive effect on dividend payment policies. firm size is the most dominant factor affecting dividend payment policy. 3. research method quantitative method is the method used in this study. this approach has the aim to prove the existence of a causal relationship between the independent variable and the dependent variable. the independent variables contained in this study are profitability, liquidity, cash flow, growth opportunities, life cycle, leverage and company size. the dependent variable in this study is dividend payment. quantitative approach method is important because it will test the hypothesis. secondary data is a type of data used that is taking data from the indonesia stock exchange (idx) or the indonesia stock exchange (idx). quantitative research methods are planned, structured and clear research. figure 1 reasearch model profitability dividen paid liquidity cash flow growth opportunities life cycle leverage firm size afebi management and business review (ambr) vol.05 no.01 june 2020 72 4. result and discussion table 1 shows the descriptive statistics as follows, table 1 descriptive statistics variabel mean maximum minimum std. dev dps 28.3623 222.0000 1.0000 33.5427 prof 0.0719 0.2300 0.0012 0.0437 liq 2.2331 7.3000 0.3200 1.3590 cf 0.0702 0.3087 -0.2126 0.0848 gro 1.8045 6.3558 0.2238 1.2424 lc 0.5917 0.9920 0.1241 0.2370 lev 0.4234 0.8403 0.0700 0.1811 size 28.9899 32.9598 24.9475 1.4678 sampel (n) 210 210 210 210 source : data processed this test is used to determine the right regression model to be used at the hypothesis testing stage. at this stage two tests will be conducted for each hypothesis, namely the chow test and the hausman test. the results of the panel data regression test output are as follows: table 2 chow test source: data processed the magnitude of the chi-square cross-section probability is 0.0000. chi-square cross-section probability value <0.05, the chow test results indicate that the fixed effect model is more appropriate to use than the common effect. table 3 hausman test source : data processed the magnitude of the random cross-section probability is 0.1492. the value of the random cross-section probability> 0.05, the results of the hausman test indicate that the random effect model is more appropriate to use than the fixed effect, then it is necessary to do a lagrange multiplier test table 4 lagrange multiplier test source: data processed the magnitude of the breusch-pagan probability is 0.0000. the probability value is <0.05, then the lagrange multiplier results show that the random effect model is more appropriate to be used to model the regression equation in hypothesis testing. based on tables 2, 3 and 4 it can be concluded that the right model in this study is the random effect. effect test statistic d.f prob. cross-section f 7.2072 (69.133) 0.0000 effect test statistic d.f prob. cross-section random 10.7660 7 0.1492 test summary prob. lagrange multiplier breusch-pagan 0.0000 factors affecting dividend payment policy 73 table 5 multikolinearity test source: data processed based on table 5 it can be seen that the correlation coefficient between variables has values below 0.8. this indicates that the data in this study did not occur multicollinearity (ghozali, 2016) so it can be concluded that the variable does not contain multicollinearity with other independent variables and is suitable for use in conducting regression tests. table 6 heteroscedasticity test source: data processed based on table 6 it can be seen that the value of * r-squared is 8.4120 while the probability value is 0.1322> 0.05 so it can be concluded that the data do not experience heteroscedasticity problems. table 7 multiple linear regresion test dividend per share variable expectation coefficient sig. c -108.624 0.0004 prof (h1) + 75.0808 0.0085 liq (h2) + -1.7532 0.0531 cf (h3) + -16.3627 0.0805 gro (h4) -0.0245 0.4906 lc (h5) + 13.0672 0.0243 lev (h6) -4.1096 0.3339 size (h7) + 4.0163 0.0003 r-squared 0.1421 adjusted rsquared 0.1123 prob(fstatistic) 0.0000 n 210 hasil uji model random source : data processed prof liq cf gro lc lev size 1.00 0.34 0.49 0.58 0.48 -0.38 0.12 0.34 1.00 0.08 0.22 0.32 -0.56 -0.19 0.49 0.08 1.00 0.41 0.29 -0.27 0.02 0.58 0.22 0.41 1.00 0.33 -0.10 0.24 0.48 0.32 0.29 0.33 1.00 -0.29 0.06 -0.38 -0.56 -0.27 -0.10 -0.29 1.00 0.34 0.12 -0.19 0.02 0.24 0.06 0.34 1.00 f-statistic 1.6182 prob. f(20.291) 0.1319 obs*r-squared 11.150 prob.chi-square(20) 0.1322 scaled explained ss 56.380 prob.chi square(20) 0.0000 f-statistic 1.6182 prob. f(20.291) 0.1319 obs*r-squared 11.150 prob.chi-square(20) 0.1322 scaled explained ss 56.380 prob.chi square(20) 0.0000 afebi management and business review (ambr) vol.05 no.01 june 2020 74 the first hypothesis states that profitability has a positive effect on dividend payments. the hypothesis is supported if the significance value is less than 0.05. based on table 7 the first hypothesis profitability variable produces a significance value of 0.0004. significance value <0.05 and positive constant values mean that profitability has a positive effect on dividend payments. the second hypothesis states that liquidity has a positive effect on dividend payments. the hypothesis is supported if the significance value is small than 0.05. based on table 7 of the two hypotheses the liquidity variable produces a significance value of 0.0531. significance value> 0.05 means that liquidity has no effect on dividend payments. the third hypothesis states that cash flow has a positive effect on dividend payments. the hypothesis is supported if the significance value is small than 0.05. the third hypothesis of the cash flow variable produces a significance value of 0.0805. significance value> 0.05 means that cash flow has no effect on dividend payments. the fourth hypothesis states that growth opportunities negatively affect dividend payments. the hypothesis is supported if the significance value is small than 0.05. the fourth hypothesis of growth opportunities variables produces a significance value of 0.4906. significance value> 0.05 means that growth opportunities do not affect dividend payments. hypothesis 5 states that life cycle has a positive effect on dividend payments. the hypothesis is supported if the significance value is less than 0.05. based on table 7, the fifth hypothesis of the life cycle variable produces a significance value of 0.0243. significance value <0.05 and positive constant values mean that the life cycle has a positive effect on dividend payments the sixth hypothesis states that leverage has a negative effect on dividend payments. the sixth hypothesis of the leverage variable produces a significance value of 0.3339. significance value> 0.05 means that leverage has no effect on dividend payments the seventh hypothesis states that firm size has a positive effect on dividend payments. the seventh hypothesis of the firm size variable produces a significance value of 0,0003. significance value <0.05 and positive constant values mean that company size has a positive effect on payments 5. conclusions based on the results of research and discussion of the factors that influence dividend payments, it can be concluded that profitability has a positive effect on dividend payments. this explains that the higher the profitability or the company's ability to generate profits, the higher the chance of dividends will be paid by the company. liquidity has no effect on dividend payments, this explains that a company with a good level of liquidity does not affect dividend payments. cash flow has no effect on dividend payments, this is because companies prefer to invest more cash than paying dividends to shareholders. growth opportunities has no effect on dividend payments because growing companies tend to use larger retained earnings to fund their operations so they prefer to hold profits rather than pay dividends. life cycle has a positive effect on dividend payments, this shows that companies that have a good life cycle will pay dividends. leverage has no effect on dividend payments, this explains that a company's leverage level has no effect on dividend payments. the size of the company has a positive effect on dividend payments, this factors affecting dividend payment policy 75 shows that the larger the size of the company, the greater the company will pay its dividends. this study has several limitations. first, in terms of the sample used. the sample used in the study is only companies that pay dividends 3 years in a row, hoping for further research can use samples with a longer year. second, the independent variables used are only seven variables while many other factors can influence dividend payments. suggestions for future research might add to the psychological factors of shareholders in determining dividend payments. references al-najjr, b., & kilincarslan, e. (2016). effect ownership structure on dividen policy: evidence from turkey. the international journal of business in society, vol. 16 , 135-161. al-najmi, j., & hussain, h. a. (2011). corporate dividens decision : evidence form saudi arabia. the journal of risk finance vol 12 no 1, 41-56. apriliani, a., & natalylova, k. (2017). faktor-faktor yang mempengaruhi kebijakan dividen pada perusahaan manufaktur di bei. jurnal bisnis dan akuntansi vol 19 no 1a, 49-57. arko, a. c., abor, j., adjasi , c. k., & amidu, m. (2014). what influence dividend decision of firms in sub-saharan african? journal of accounting in emerging vol 4 no 1, 57-78. brahmiah, b., srinivasan, p., & sangeetha, r. (2018). determinants of corporate dividend policy in india : a dynamic panel data analysis. academy of accounting and financial studies journal. ghozali, i. (2016). aplikasi analisis multivariete dengan program ibm spss 23. semarang: badan penerbit universitas diponegoro. hery. (2017). kajian riset akuntansi. jakarta, jakarta, indonesia: grasindo. hudiwijono, r. e., aisjah, s., & ratnawati, k. (2018). influence of fundamental factors on dividend payout policy: study on construction companies listed on indonesian stock exchange. jabbouri, i. (2016). determinants of corporate dividend policy in emerging markets: evidence from mena stock markets. research in international business and finance 37, 283298. khan, m. n., & shamim, m. (2017). a sectoral analysis of dividend payment behavior: evidence from karachi stock exchange. journals.sagepub.com. lopulusi, i. (2013). analisis faktor-faktor yang mempengaruhi kebijakan dividen . jurnal ilmiah mahasiswa universitas surabaya vol 2. mueller, d. (1972). a life cycle theory of firm. the journal of industrial economics vol 20, 199-219. novyanny, m. c., & turangan, j. a. (2018). pengaruh likuiditas, ukuran perusahaan, umur perusahaan & pertumbuhan perusahaan terhadap profitabilitas pada afebi management and business review (ambr) vol.05 no.01 june 2020 76 perusahaan jasa sektor perdagangan, jasa & investasi yang terdaftar pada bei. jurnal manajerial dan kewirausahaan. saputra, d. e. (2016). analisis faktor-faktor yang mempengaruhi kebijakan dividen sektor industri barang dan konsumsi yang terdaftar di bei periode 2012-2014. singla, h. k., & samanta, p. k. (2018). determinants of dividend payout for construction companies. journal of financial management of property and construction. spence, m. (1973). job market signaling. the quarterly journal economics, vol 87, issue: 3, 355-374. wicaksono, s., & nasir , m. (2014). faktor-faktor yang mempengaruhi kebijakan dividen pada perusahaan manufaktur bei. diponegoro journal of accounting vol 3 no 4, 1-13. yulia, m. (2013). pengaruh ukuran perusahaan, profitabilitas, financial leverage, dan nilai saham terhadap perataan laba (income smoothing) pada perusahaan manufaktur, keuangan, dan pertambangan, yang terdaftar di bei. ejournal. yusof, y., & ismail, s. (2016). determination of dividend policy of public listed companies in malaysia. review of international bussines and strategy 26 , 8899. the influence of human resources, facilities and infrastructure to hemodialization patient satisfaction in bhayangkara hospital tk. 1 raden said soekanto jakarta 126 the influence of human resources, facilities and infrastructure to hemodialization patient satisfaction in bhayangkara hospital tk. 1 raden said soekanto jakarta kesty rama danty 121* 1 universitas satyagama, jakarta, indonesia abstract hemodialysis is one type of therapy for kidney failure patients that many suffer from in indonesia. identification of problems in this study consisted of a lack of nurses and non-medical staff working in the hemodialysis room, lack of facilities and infrastructure in hemodialysis rooms such as toilets for visitors, narrow hemodialysis space so that beds between patients were close together, consultation room for patients with doctors, the location of hemodialysis rooms is less strategic than major roads, and there is no isolation room specifically for hepatitis b patients. phenomena that often occur in some hospitals, especially related to the ability of human resources in caring for patients who already have hemodialysis training certificates as a benchmark for the ability of ideal and actual human resources. another problem is that the application of technology that has not been optimal has an effect on patient satisfaction, an environment that is not yet conducive which has an effect on patient satisfaction and the provision of incentives to hd room staff is inadequate which influences service and impacts patient this research is needed to study and analyze how much influence human resources and facilities and infrastructure have on the satisfaction of hemodialysis patients at tk i raden said soekanto bhayangkara hospital, jakarta. the design of the research is using descriptive analysis and regression analysis. to meet the research objectives set, the research design used a survey method with a quantitative approach using questionnaires to collect data. the construction of a questionnaire or list of questions is based on perception. the results showed a positive and significant relationship between human resources and hemodialysis patient satisfaction at bhayangkara tk.i hospital, soekanto hospital, east jakarta. correlation of test results in the form of strong positive results. human resources have a contribution of 42.6% to patient satisfaction. the results also showed a positive and significant relationship between facilities and infrastructure on hemodialysis patient satisfaction at bhayangkara tk.i hospital, soekanto hospital, east jakarta. correlation of test results in the form of strong positive results. facilities and infrastructure contributed 43.7% to patient satisfaction. the results showed a positive and significant relationship between human resources and infrastructure simultaneously to hemodialysis patient satisfaction at bhayangkara tk.i hospital, soekanto hospital, east jakarta. human resources and infrastructure simultaneously contribute 56.9% to patient satisfaction. keywords: facilities and infrastructure, descriptive analysis, human resources, satisfaction of hemodynamic patients 1. introduction hemodialysis is one type of therapy for kidney failure patients that many suffer from in indonesia. hemodialysis is used to replace some kidney function. hemodialysis patients need special care because they have to spend quite a lot of time in the hospital, which is 2 to 3 dialysis sessions per week, with each dialysis session * corresponding author. email address: raditatech@yahoo.com afebi management and business review (ambr) vol.04 no.01, june 2019 127 taking 4 to 5 hours. because of each year the incidence of chronic kidney failure requiring renal replacement therapy in the form of dialysis is increasing, it is necessary to increase the number of dialysis services in health care facilities at bhayangkara hospital tk.i soekanto hospital. identification of problems in this study consisted of a lack of nurses and nonmedical staff working in the hemodialysis room, lack of facilities and infrastructure in hemodialysis rooms such as toilets for visitors, narrow hemodialysis space so that beds between patients were close together, consultation room for patients with doctors, the location of hemodialysis rooms is less strategic than major roads, and there is no isolation room specifically for hepatitis b patients. phenomena that often occur in some hospitals, especially related to the ability of human resources in caring for patients who already have hemodialysis training certificates as a benchmark for the ability of ideal and actual human resources. another problem is that the application of technology that has not been optimal has an effect on patient satisfaction, an environment that is not yet conducive which has an effect on patient satisfaction and the provision of incentives to hd room staff is inadequate which influences service and impacts patient the current condition and situation of human resources at sukanto hospital are suspected to be in a problem, namely the lack of nurses and non-medical personnel working in the hemodialysis room of bhayangkara hospital tk.i soekanto hospital and relating to the ability of human resources in caring for patients who already have hemodialysis training certificate as a benchmark of ideal and actual human resource capabilities. human resources needed in hemodialysis services consist of internal medicine specialists (hypertensive kidney consulants), internal medicine specialists, other health professionals (general practitioners and hemodialysis nurses), technicians who understand the hemodialysis machine, pharmacists who understand dialysate fluid and other equipment needed for hemodialysis, as well as other human resources as needed. on the other hand, the lack of facilities and infrastructure in the hemodialysis room such as toilets for visitors, the narrow space of the hemodiálisis so that the beds between patients are close together, the patient consultation room with the doctor, the location of the hemodialysis room is less strategic far from the main road, and there is no special isolation room for patients hepatitis b. patient satisfaction depends on the ability of human resources in handling patients and the completeness of facilities and infrastructure in hospitals that are related to patients. 2. methodology survey research is a valuable tool for use in scientific research which aims to develop new theoretical models. within this approach we can distinguish two main categories of surveys: 1. explorative, also known as descriptive: these surveys are meant to study the current state of a phenomenon, in a chosen population. it is the first step in a scientific investigation. this category also includes all the data collected to describe the results of a certain phenomenon. 2. .explicative, also known as relational: these surveys are meant to test a certain hypothesis and the relationships among the variables which are the object of the investigation. hypotheses may just prove the existence of a specific relationship, or also infer the existence of a positive or a negative influence. survey research is therefore an important empirical tool which can be used when studying. here is a short synthesis of the main steps of this approach setting of the theoretical background, selection of the research methodology, definition of the data the influence of human resources, facilities and infrastructure to hemodialization patient satisfaction in bhayangkara hospital tk. 1 raden said soekanto jakarta 128 collection approach, data collection, selection of tools for the analysis, analysis of the collected data. 3. research model the data analysis model of this study uses simple and multiple linear regression as shown in figure 1. figure 1 research model written numeric’s data as follows: x1 = human resources (independent variable) x2 = facilities and infrastructure (independent variable) y = patient satisfaction at bhayangkara tk.i hospital, soekanto hospital (dependent variable) ρx1y = the structural parameters of the effect of x1 to y ρpx2y = the structural parameters of the effect of x2 to y ρx1yx2y = the structural parameters influence x1 and x2 together to y  = epsilon (other factors outside of research) 4. discussion 4.1. data description a description of the results of the study was carried out so that a clear description of the statements of the respondents could be obtained from the variables included in this study, namely the influence of human resources and facilities and infrastructure on the patient satisfaction of hemodialysis a. age level the age level of hemodialysis patients at soekanto hospital, east jakarta was mostly 36-40 years old (28%), and (19%) aged 31-35 years. only 9% are aged between 20-25 years, according to the following graph. x1 x2 y afebi management and business review (ambr) vol.04 no.01, june 2019 129 figure 2 percentage graph of patient age level (respondents) b. gender hemodialysis patients were male (34% (63%), the remaining 20 were female employees (37%), according to the following pie chart. figure 3 percentage gender graph of respondents c. level education most respondents (68%) have a bachelor's degree (s1), diploma three (d3) level occupies the second highest number (21%) and lastly 5 people (11%) with a public high school education. figure 4 graph of respondent education level 4.2 hypothesis test a. the effect of human resources to patient satisfaction correlation value (r) determination of human resources (x1) with patient satisfaction (y) of 0.661 is classified as a strong positive correlation. the hr coefficient indicates a contribution of 0.426 or 42.6% to patient satisfaction. from these data it is proven that there is a strong positive relationship between hr variables on customer satisfaction. with tcount greater than ttable and p.sig <0.05 shows the significance of the influence of the hr independent variable on the dependent variable the influence of human resources, facilities and infrastructure to hemodialization patient satisfaction in bhayangkara hospital tk. 1 raden said soekanto jakarta 130 patient satisfaction. based on the above test it can be proven that there is a positive and significant effect between hr on patient satisfaction. b. the effect of facilities and infrastructure to patient satisfaction correlation value (r) determination of facilities and infrastructure (x2) with patient satisfaction (y) of 0.669 is classified as a strong positive correlation. the coefficient of facilities and infrastructure and infrastructure shows a contribution of 0.437 or 43.7% to patient satisfaction. from these data it is proved that there is a strong positive relationship between the variable facilities and infrastructure on customer satisfaction. with a tcount greater than ttable and p.sig <0.05 indicates the significance of the influence of the independent variable facilities and infrastructure on the dependent variable patient satisfaction. based on the above test it can be proven that there is a positive and significant effect between facilities and infrastructure on patient satisfaction. c. the effect of human resources, facilities and infrastructure together to patient satisfaction correlation value (r) determination of hr (x1) and facilities and infrastructure (x2) simultaneously with patient satisfaction (y) of 0.765 are classified as strong positive correlation. the hr coefficient and means and infrastructure simultaneously showed a contribution of 0.569 or 56.9% to patient satisfaction. from these data it is proven that there is a strong positive relationship between the variables hr and facilities and infrastructure simultaneously on customer satisfaction. with a tcount greater than ttable and p.sig <0.05 shows the significance of the effect of the independent variable hr and facilities and infrastructure simultaneously on the dependent variable patient satisfaction. based on the above test it can be proven that there is a positive and significant effect between hr and facilities and infrastructure simultaneously on patient satisfaction. 5. conclusion 1. there is a positive and significant relationship between human resources and hemodialysis patient satisfaction at bhayangkara hospital tk.i soekanto hospital, east jakarta. correlation of the test results in the form of strong positive results. human resources contributed 42.6% to patient satisfaction. 2. there is a positive and significant relationship between facilities and infrastructure on hemodialysis patient satisfaction at bhayangkara hospital tk.i soekanto hospital, east jakarta. correlation of the test results in the form of strong positive results. facilities and infrastructure contributed 43.7% to patient satisfaction. 3. there is a positive and significant relationship between human resources and facilities and infrastructure simultaneously to the satisfaction of hemodialysis patients at bhayangkara hospital, tk.i, soekanto hospital, east jakarta. correlation of the test results in the form of strong positive results. human resources and infrastructure simultaneously contribute 56.9% to patient satisfaction references aditama, t. y. 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(2014). dasar-dasar manejemen. jakarta: pt.bumi aksara. prepaid electricity marketing communication strategy at pt. pln (persero) temanggung customer service unit 47 prepaid electricity marketing communication strategy at pt. pln (persero) temanggung customer service unit muhammad hasan absori 1*4and deni ramdani 2 1, 2 universitas tidar, magelang, indonesia abstract pt. pln (persero) is a provider of electrical energy services in indonesia. technological developments encourage the innovation of prepaid electricity programs in providing effective and efficient services to consumers. so marketing communication is one of the strategies used to introduce prepaid electricity products to the public. marketing communication is communication that is used to improve marketing strategies in expanding the target market segmentation. pt. pln (persero) temanggung customer service unit uses socialization techniques in delivering prepaid electricity programs to the temanggung community. the purpose of this study was to determine the form of marketing communication channels used by pt. pln (persero) temanggung customer service unit to provide prepaid electricity program information to consumers in order to increase prepaid electricity usage in temanggung. this study uses a qualitative description method. research data obtained by interview and observation conducted at pt. pln (persero) temanggung customer service unit. in this study conducted with triagulation techniques. the research results of pt. pln (persero) temanggung customer service unit uses marketing communication channels in promoting prepaid electricity programs. the message delivered contains the difference between prepaid and postpaid electricity, benefits, token costs or electricity energy vouchers and how to purchase tokens on the prepaid electricity program. keywords: marketing communication strategy, prepaid electricity 1. introduction the rapid development of increasingly sophisticated technology. encourage the use of technology by humans every day that is useful for survival and comfort of life. technological sophistication also helps provide goods and services needed by humans. this increases the influence of human activities in the use of technology so that actions and activities run effectively and efficiently every day. the development of technology is also used by the government in increasing the effectiveness of services to the community. good with the optimal distribution of information and energy services to the community. pt. pln (persero), which is one of the state-owned enterprises (bumn) that serves and provides electricity services in indonesia. in serving and providing electrical energy services needed by the public pt. pln (persero) has several service units located in various regions in indonesia. which is useful to provide convenience and optimization of electricity services on time to customers. in practice there are two types of electrical systems, namely postpaid electricity and prepaid electricity. postpaid electricity is an electricity service by paying the electricity load every 20th of every month. prepaid electricity is an electricity service that spends money or costs in advance to buy tokens in order to enjoy pln electricity services. prepaid electricity was created to handle customer complaints regarding surging electricity usage, incorrect meter readings, arrival of meter officers who were * corresponding author. email address: muhammadhasanabsori@gmail.com afebi management and business review (ambr) vol.05 no.01 june 2020 48 considered annoying (wahyuningtiyas, 2013). also to reduce losses received by the company due to late payment by postpaid electricity customers. it is expected that using prepaid electricity can overcome these complaints, so customers can optimize electricity by setting their own monthly purchase and electricity schedule and not having to be afraid of paying late every month. this increase is also expected so that pt. pln (persero) continues to improve service and electricity quality to customers so that customer loyalty in using services is maintained. so some strategies are needed to achieve this. strategy is the overall conditional decision about the action to be taken to achieve the goal (doembana, rahman & farhan, 2017). a unified, broad and integrated plan that connects the advantages of the company's strategy that is useful in achieving company goals through proper implementation by the company (cahyono, 2016). marketing is one of the keys to improving approaches to help companies make sales strategies to the public. marketing strategy is very important for the company, by taking an approach that is used to help the company in achieving its goals which contain decisions about target markets, product placement, marketing mix, and the level of marketing mix required (triyanto, 2015). so marketing strategies are very important for a company's success in making marketing decisions that are useful for achieving company goals. the proper use of strategy is able to make the company survive in competition and increase the acquisition of the company to achieve goals. good communication between the company and the customer is also needed to maintain the relationship between the two. which is also useful for maintaining good relations between companies and customers expanding market segments. marketing communication is a form of communication in strengthening marketing strategies in obtaining broader segmentation. this study can also be said as an effort to strengthen customer loyalty to the company's products and services (kusniadji, 2016). trying to convey to the public, especially consumers targeted through a product that supports the company's marketing strategy (nurdiana, 2010). the existence of communication makes a good relationship by the company to customers who need their products or services. building a communication requires a communication strategy in product marketing (nurficahyanti, 2015). in formulating a communication strategy it also requires clear objectives and careful calculations of the conditions and situations of the community. the researchers wanted to know about the communication strategy used by pt. pln (persero) temanggung customer service unit in order to increase the number of electricity customers in the temanggung area. based on a research interview with the customer service and administration supervisor (ppa), there are several marketing communication strategies used to increase the use of prepaid electricity by consumers. implement several marketing communication strategies to market prepaid electricity in the form of personal and non-personal marketing communication strategies to consumers. thus it is expected that customers of pt. pln (persero) can understand and enjoy the ease of use of prepaid electricity in their daily needs. the purpose of this study was to determine the prepaid electricity marketing communication strategy used by pt. pln (persero) temanggung customer service unit to its customers, in order to increase the use of prepaid electricity at temanggung customer service unit. 2. literature study marketing strategy strategy is the overall conditional decision about action to achieve an appropriate action to achieve a goal (cahyono, 2016). according to wibowo, arifin and sunarti (2015) strategy is also a process of determining plans by top leaders who focus on prepaid electricity marketing communication strategy at pt. pln (persero) temanggung customer service unit 49 long-term goals. marketing strategy is the impact of the company's expectations of the impact of marketing activities on product demand in certain markets. marketing communication marketing communication is a continuous two-way exchange of information between buyers and sellers in a market so that the marketing process runs effectively and efficiently (kusniadji, 2016). communication that convinces people by providing stimuli with the aim of changing the behavior of others. according to farahdiba (2020) the purpose of marketing communication is to obtain three stages of change aimed at consumers, the three stages include: the stage of knowledge change, the stage of attitude change, and the stage of behavior change. according to tulasi (2012) marketing communication means the process and concept of integrated products or services to be conveyed to consumers through a channel on an ongoing basis to aim at selling products or services to consumers. 1. public relations 2. marketing around each village 3. information from your mouth 4. advertising 5. sales promotion 6. online marketing 3. research methods this study uses a qualitative description method. this study tries to produce descriptive data in the form of written words from the data that has been obtained. the study was conducted at pt. pln (persero) temanggung customer service unit. this selection uses a purposive sampling technique to obtain maximum results. the data used are perimer and secondary data. perimer data is obtained directly by conducting interviews and observations obtained through library studies that can support research. according to wilantara & eriyanti (2019) to obtain high-quality data, in this study a data validation check was used using a triagulation technique. in the triagulation technique of source obtained is done by member checking until data saturation is achieved. the process of data analysis begins with data collection, data reduction, data presentation, and finally conclusion drawing. 4. results and discussion pt. prepaid electricity program pln (persero) the prepaid electricity program is a prepaid electricity service that allows customers to control their electricity usage as needed (markoni, 2015). according to hermawan & tuti (2011) the official launch of the prepaid electricity program was in 2009 and has been socialized since 2008. the use of prepaid electricity such as telephone reload, customers must first buy tokens or electricity pulses to enjoy electricity services. purchases can be made through atms at a number of banks or through the online electricity bill counter. electric tokens usually consist of 20 digit numbers that are input into a special kwh meter or prepaid meter (mpb). in the mpb there are a number of features that can be read by customers related to electricity usage such as information on the number of kwh meters both from the new input, already in use, being used and the amount of remaining electrical energy. the benefits of using prepaid electricity (http://web.pln.co.id/pelanggan/listrikpintar/keuntungan-listrik-pintar) include: 1. ease of customers in controlling electricity usage http://web.pln.co.id/pelanggan/listrik-pintar/keuntungan-listrik-pintar http://web.pln.co.id/pelanggan/listrik-pintar/keuntungan-listrik-pintar afebi management and business review (ambr) vol.05 no.01 june 2020 50 customers can monitor themselves through a prepaid electronic meter which shows the number of kwh usage remaining which can help regulate daily electricity usage. 2. electricity consumption can be adjusted to the budget the flexibility of purchasing tokens can be adjusted by customers with vouchers ranging from rp. 20,000 to rp. 1,000,000, so that it is more controlled in the budget. 3. there will be no additional costs no charge fees due to late payment of electricity made every month. 4. privacy is more maintained there is no recording by the meter recording officer, because prepaid electricity automatically records the customer's electricity usage. 5. extensive token or electricity purchase network purchases of tokens or electricity pulses can be obtained through atms, online electricity payment counters, and shopping applications that support the purchase of tokens or electricity pulses. 6. suitable for customers who have a rental house or rented room (boarding house) as rented house owners and rented rooms do not need to worry anymore about electricity bills that are not paid by residents because prepaid electricity usage is already the responsibility of the tenant. marketing communication at pt. pln (persero) temanggung customer service unit pt. pln (persero) temanggung customer service unit in carrying out communication strategies using socialization techniques to the public. the use of appropriate marketing communication strategies can prevent companies from losing losses due to ineffective and inefficient promotional activities (kusniadji, 2016). the transition from the use of postpaid electricity to prepaid is desired in order to reduce losses suffered by temanggung customer service unit because there are some customers who are late paying electricity every month. this makes the loss of electricity income obtained by temanggung customer service unit. the use of prepaid electricity is also able to optimize the use of electricity by consumers because electricity usage can be set according to the needs of each month. marketing communication strategies to convey messages, especially consumers of the existence of a product. in establishing and implementing marketing communication strategies on prepaid electricity is the authority of the marketing department. but it is also assisted by the customer service unit in temanggung regency. the message delivered by the communicator in socializing prepaid electricity is about the difference between prepaid and postpaid electricity, benefits, to the cost of tokens or electricity energy vouchers, and how to purchase tokens. the communication channel used to pass socialization to consumers through personal and non-personal communication channels. the personal communication channel is directly personal to the customer which is carried out every day by the area manager, unit manager and supervisor. marketing communication channels of pt. pln (persero) temanggung customer service unit from the results of research conducted known marketing communication channel strategies implemented by pt. pln (persero) temanggung customer service unit as a way of delivering information to socialize the prepaid electricity program to the community in temanggung regency. from the results of research that has been done (muzajjad, 2012), the communication strategy channel used is personal and nonpersonal communication strategies. channels of personal communication strategies carried out to customers by managers and supervisors every day. and non-personal communication channels are carried out using mass media to help disseminate prepaid electricity information to consumers through radio, newspapers and the internet. prepaid electricity marketing communication strategy at pt. pln (persero) temanggung customer service unit 51 marketing communication channel conducted by pt. pln (persero) temanggung customer service unit in socializing prepaid electricity. 1. public relations building relationships with elements of the community one of them by working with elements of local government, village government, community organizations and community event sponsors. also by connecting free electricity that is used for public lighting. with this, it is expected to maintain the relationship that has been built between pt. pln (persero) temanggung customer service unit with the community. 2. mobile marketing for every village marketing is carried out to villages that are part of pt. pln (persero) temanggung which aims to facilitate providing services and information to consumers directly. the communication was carried out by conducting a socialization seminar at the village office conducted by representatives of the employees of pt. pln (persero) temanggung customer service unit. also by recording the village head, in the village which is a work area to facilitate conveying and exchanging the latest information about pln electricity services to the village and vice versa. 3. information from mouth to mouth dissemination of communication from each customer about prepaid electricity making it easier for the socialization process to consumers who already know about prepaid electricity service information. word of mouth information is effective for prepaid electricity distribution felt by pt. pln (persero) temanggung customer service unit. because with this it facilitates communication channels received by the public about prepaid electricity programs. 4. advertising the advertising process carried out by pt. pln (persero) temanggung customer service unit became very effective. by providing advertising that is in line with the characteristics of the targeted consumers by using the influence of the mass media. the advertising program used by temanggung customer service unit uses print and electronic media. the use of print media used as advertising media is to use brochures given to consumers and use newspapers to achieve the intended target consumers. electronic media which is usually used by temanggung customer service unit uses internet media such as websites and uses social media to facilitate the dissemination of information to consumers. also conducting talkshow on local radio ofa radio in temanggung regency every month to be used as a medium for disseminating information to consumers. with the increasing use of information media in the network of delivering information to consumers, it is more effective to know more about prepaid electricity programs conducted by pt. pln (persero) temanggung customer service unit. 5. sales promotion the use of promotional media of pt. pln (persero) temanggung customer service unit utilizes facilities that are able to support the intended consumer segments. the use of media as a promotion used is by installing prepaid electricity at a low price. this is intended so that consumers are interested in switching to using prepaid electricity programs for daily activities in the use of electrical energy. promotional programs provided by pt. pln (persero) temanggung customer service unit with year-end discounts on prepaid electricity installations. the promotion is able to increase prepaid electricity programs by consumers. this program can be seen directly on the website of pt. pln (persero) by consumers. thus consumers can enjoy promotional programs provided by pt. pln (persero). 6. online marketing the use of marketing media in conducting marketing communication by pt. pln (persero) temanggung customer service unit. by providing convenience through online media so that customers do not need to directly register themselves to the office. customers can access directly through the website:www.pln.co.id, via sms banking, via sms t-cas, and call center 123 or 0293-491123 for pt. pln (persero) http://www.pln.co.id/ afebi management and business review (ambr) vol.05 no.01 june 2020 52 temanggung customer service unit. this makes it easier for customers to submit electricity installation registrations, so that the time spent by customers is more effective because of the ease of service provided. the implementation of marketing communication strategy policy that has been applied is useful for the effectiveness of achieving the objectives of the prepaid electricity program by pt. pln (persero) temanggung customer service unit. with the ease of information on smart electricity to the public in the use of electricity as well as saving electricity usage (wilantara & eriyati, 2019). the use of several communication channels must be able to be accepted by the public. because the policy that will be accepted is also intended and the public interest itself. which is able to increase prepaid electricity program customers. the information provided to the public contains the convenience of service, benefits, and privacy of the customer because they are not visited by officers every month. measuring the success of the monthly targets achieved by pt. pln (persero) temanggung customer service unit is a benchmark of how the public absorbs information that has been given in marketing communications. the decision to use and switch to using prepaid electricity is the effect of achieving the effectiveness of marketing communication strategies. marketing communication is able to create reciprocal activities that will be received by consumers and affect the company. consumer confidence about the use of products offered by the company is the right choice for consumers. so that marketing communications activities are personal and non-personal in order to influence and persuade the use of prepaid electricity services to consumers can be done to achieve the goals to be achieved by the company. 5. conclusion based on the results of research that has been done, it can be concluded that the marketing communication strategy to increase the use of prepaid electricity by pt. pln (persero) temanggung customer service unit. the marketing communication strategy uses a form of communication in strengthening marketing strategies to increase the number of prepaid electricity users. because marketing communication conveys messages, especially consumers about the existence of a product. the use of prepaid electricity has advantages that can be felt by consumers such as: (1) ease of customers in controlling electricity usage, (2) electricity usage can be adjusted to the budget, (3) will not incur additional costs, (4) privacy is more maintained, ( 5) extensive token or electricity purchase network pt. pln (persero) temanggung customer service unit uses socialization techniques to the public to deliver prepaid electricity program information to the temanggung community. information that contains content about the ease of service, benefits and safeguarding customer privacy. the forms of marketing communication channels used are (1) public relations, (2) mobile marketing, (3) mouth-to-mouth information, (4) advertising, (5) sales promotion, and (6) online marketing. using several communication channels makes the dissemination of prepaid electricity programs acceptable to the public, so that the effective delivery of information can be optimally interwoven. and able to increase the growth of prepaid electricity program customers to be received. references doembana, i., rahman, a., & farhan, m. (2017). buku ajar manajemen dan strategi komunikasi pemasaran. zahir publishing: yogyakarta. cahyono, p. (2016). implementasi strategi pemasaran dengan menggunakan metode swot dalam upaya meningkatkan penjualan produk jasa asuransi prepaid electricity marketing communication strategy at pt. pln (persero) temanggung customer service unit 53 kecelakaan dan kematian pada pt. prudential cabang lamongan. jurnal pendidikan ilmu manajemen, 1(2), 129-138. farahdiba, d. (2020). konsep dan strategi komunikasi pemasaran: perubahan perilaku konsumen menuju era disrupsi. jurnal ilmiah komunikasi makna,8(1), 22-38. hermawan, i., & tuti, r. w. d. (2011). kualitas pelayanan pasang baru listrik prabayar di pt. pln (persero) cikande. kajian,, 22(2), 1-17. kusniadji, s. (2016). strategi komunikasi pemasaran dalam kegiatan pemasaran produk consumer goods (studi kasus pada pt expand berlian mulia di semarang). jurnal komunikasi, 8(1), 83-98. markoni. 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[skripsi]. malang: universitas islam negeri maulana malik ibrahim. pt. pln (persero). keuntungan listrik pintar. http://web.pln.co.id/pelanggan/listrikpintar/keuntungan-listrik-pintar . retrieved may 3, 2020. http://web.pln.co.id/pelanggan/listrik-pintar/keuntungan-listrik-pintar http://web.pln.co.id/pelanggan/listrik-pintar/keuntungan-listrik-pintar effect of financial performance and good corporate governance of bond ratings (a case study companies listed in indonesia stock exchange period 2013-2017) 50 effect of financial performance and good corporate governance of bond ratings (a case study companies listed in indonesia stock exchange period 2013-2017) dina esensia 51*, ahmad fauzan fathoni2, and haryetti3 1, 2, 3 universitas riau, pekanbaru, indonesia abstract one type of investments that are considered safe and profitable is a bond. however, this investment has a risk of the company in the form of debt default risk will also affect investor decisions. therefore, investors need to know the potential risks to be faced with analyzing the viability of the company that became a place for investment by bond rating. in addition, investors need to see whether companies apply corporate governance (gcg) or not because by implementing good corporate governance (gcg) in the company reflects that the company is able to manage efficiently the company's financial performance, including managing the assets and returns. this study aims to examine how the influence of the financial performance and good corporate governance on bond ratings. the population in this study is a company that was listed on the indonesia stock exchange in 2013-2017 as many as 555 companies with a total sample of 57 companies,sampling technique used is purposive sampling method methods of analysis used in this study is the logistic regression analysis and the results showed that financial performance variables significant negative effect on obigasi ranked. while good corporate governance variables were significant positive effect on bond ratings. keywords: bond rating, gcg, return on assets. 1. introduction amid global competition at the moment, many companies require funding in developing a business so the company must publish the value of the securities as a contributing factor. according ginting (2012), sources of funding can be obtained from the company (internal financing) and outside financing (external financing). internal funding sources obtained from the use of retained earnings that undistributed profits to dividends. while external funding of the loan obtained by the company to outside parties to sell shares to issue bonds in the capital market. the reason why many companies issued bonds are as one form of corporate funding to finance investment. investments in bonds is one of the most attractive investment by the investor. this is because the bonds have a fixed income earned from interest to be received on a periodic basis and principal at maturity. for issuers, the bond is a safe securities because of the cost of emissions is cheaper than stocks. besides the bond issuance also to avoid bad ratings investor than if the company issuing new shares husnan (2007). pefindo assessment of the factors that determine the high bond ratings is the company's financial condition and business risk profile. return on assets (roa) is a profitability ratio that measures a company's ability to generate earnings from assets that were used.roa can assist management and investors to see how well a company is able to manage its investment assets into profit or profit (profit). in addition to the rating agency, the performance of a company must also be assessed to see if the company is unable to repay its obligations. to assess the performance of the company from the inside, it takes a control instrument better known as gcg or (gcg). implementation in the implementation of good corporate governance or corporate governance can give * corresponding author. email address: dinaesensia@gmail.com afebi management and business review (ambr) vol.05 no.02 deember 2020 51 confidence in the return of the return on investment, especially for investors and creditors.with the implementation of good corporate governance that improve the performance of the company as a whole, then this will also have an impact on the financial condition of the company's balance sheet will be better and leads to a positive direction. of the few differences of research results and phenomena, it can be concluded that not all the phenomena that occur in accordance with the existing scientific logic. therefore, researchers interested in studying and learn again about this matter further. in this study, researchers added a free variable that can distinguish this study with previous research. therefore, researchers raised a study entitled "effect of financial performance and good corporate governance against bond ratings ". based on the data that has been analyzed is found that the return on assets have no significant negative effect on bond ratings and good corporate governance have a significant positive effect on bond ratings. furthermore, the explanation in this article will be divided into three parts, the first is a literature review that will explain any theory used in this study and previous research that referenced researcher. the second part is the results and discussion will explain the results of research and discussion of results have been found. then, the third part is the conclusion that a more concise outline of the research study. 2. literature review signaling theory signal theory suggests how should a company give a signal to users of financial statements. these signals in the form of information about what has been done by the management to realize the wishes of the owner. signals can be either promotional or other information which states that the company is better than any other company. information for the provision of the published rating of the bonds expected to be a signal the company's financial condition and illustrates the possibilities that occurred in relation to debts owed. according prog et al (2008: 214) signaling theory suggests how should companies give a signal to the users of financial statements. information for the provision of the published rating of the bonds expected to be a signal the company's financial condition and illustrates the possibilities that occurred in relation to debts owed. one type of information released by the company that can be a signal to parties outside the company, especially for investors is the annual report. theory agency (agency theory) agency theory explaining that the individual who runs an entity has the motivation caused by self-interest, giving rise to a conflict of interest between the principal (owner) and agent (manager). this theory was first proposed by jensen and meckling (1976), which explains that the separation of ownership with control of an entity or company. such separation has a contractual relationship between the parties with the other party, which the owners do contract tied to the manager (agent) to perform operations of the entity for the benefit of owners with their specific delegation of authority so that managers can make informed decisions. one reason for the good corporate governance is when the shareholders or stakeholders have an interest to get the maximum profit, while the manager of the company also wants to get the wages and bonuses as much as possible to the manager of the company. the existence of two participants were led to issues about the mechanism should be established to harmonize the interests of the bebeda them both. effect of financial performance against bond ratings profitability is a ratio showing how the company's ability to generate profits. investments in bonds directly was not affected by the profitability of the company, for any amount of profit that can be produced by the company, bondholders still receive effect of financial performance and good corporate governance of bond ratings (a case study companies listed in indonesia stock exchange period 2013-2017) 52 the interest rate that has been determined. but analysts remain interested in the profitability of the company as this is the only best indicator of the financial health of the company almilia, et al. (2007). according to research conducted by margreta & nurmayanti (2009) found that the predictive variables affect the profitability of bond ratings which means that the profitability can provide a signal to investors regarding the rating of the bonds in a company. profitability can be used as a complement to the analysis of risk, due to the ability of companies generate profits reflects the ability of companies obtain cash inflows. high profitability companies will gain a good cash inflows, thus reflecting a smaller risk that a better bond ratings. based on the analysis and findings above, the research hypothesis is formulated as follows: h1: suspected return on asset affect the bond ratings effect of good corporate governance on bond ratings husnan (2003) in the northern (2016) states that one of the forms of funding that can be done by a company to finance its investment is by issuing bonds. bonds not only used as a means of expansion can also be used as a means to strengthen the capital for the company. bond rating is an indicator of the possibility of interest payments and debt on time in accordance with an agreed arrangement. research asbaugh et al. (2004) in the northern (2016) showed that companies with strong corporate governance appears to have a higher credit ratings than companies with weak corporate governance. the credit rating will affect the perception of the creditors and potential creditors on the credibility and the company's ability to meet its financial obligations as a whole .. mariana (2016), in her study "effects of good corporate governance mechanism against ranked bond listed on the indonesia stock exchange period 20082010". research shows that the proportion of independent board significant effect on bond ratings. this study did not prove that institutional ownership, insider ownership, audit committee and board size significantly affect the bond ratings. dewi, et al. (2016), in her study "effects of good corporate governance, profitability, liquidity and solvency against bond rating. the study found that good corporate governance which is proxied by corporate governance perception index positive effect on bond ratings. based on the analysis and findings above, the research hypothesis is formulated as follows: h2: suspected good corporate governnace affect the bond ratings. 3. research methods data used for this research is secondary data is data obtained indirectly. secondary data in this study a report data that has been provided or published. source of research data obtained memalui annual financial statements and the entire company sample that has been audited and publicized through the website of indonesia stock exchange is www.idx.co.id. the population used in this study are all manufacturing companies listed on the stock exchange 2013-3017 period, which amounts to 144 companies. the sampling technique in this penlitian is purposive sampling population that has to meet certain criteria required by researchers. the criteria chosen by the researchers are: 1. companies listed in indonesia stock exchange in the period 2013-2017. 2. companies that issue bonds and listed in indonesia stock exchange in 2013-2017. 3. companies that publishes financial statements and annual reports are complete and successively during the period 2013-2017. of the 555 companies listed on the stock exchange, which meet the criteria of the sample in this study amounted to 57 companies. afebi management and business review (ambr) vol.05 no.02 deember 2020 53 indicators operational definitions and variables in this study determined three variables to be studied the financial performance, good corporate governance, and the bond rating. financial performance defined as the achievement of financial management, to achieve the goal of the company is generating profits and enhance shareholder value. the financial performance in this study measured using profitability ratios or in proxy by roa. good corporate governance (gcg) implementation of gcg can increase the value of the company, due to the implementation of good corporate governance can reduce the risk that may be undertaken by the council with decisions that benefit themselves, and general corporate governance can increase the level of investor confidence. newell and wilson (2002) in this study, a proxy used to assess corporate governance are scores of corporate governance perception index (cgpi) of iicg. bond ratings bond ratings are opinions about the feasibility of the obligor on certain debt securities. of bond ratings are expected to provide clues and input for potential investors about the quality of the bond investment interest to them. in announcing the bond rating is issued pefindo can be done every month. in this study, using the rating of the bonds issued by pt. pefindo at the end of the year ie on 31 december. data analysis method the data in this study using logistic as dependent variables reflect choices among alternatives (investment grade) ratings are investment grade that have default risk is low and (non-investment grade) ratings are not worth the investment that has a bond default risk (risk of default) tall one. this model was chosen because it wanted to quantify the relationship between probability variables with a few other variables. 4. results and discussion descriptive statistics provide a picture or a description of the data visible than the minimum, maximum, average (mean), standard deviation of each variable used in this study. table 1 descriptive statistics variables n minimum maximum mean std. deviation roa 285 -24.48 20.49 3.7500 4.14060 gcg 285 37.81 93.80 69.6314 8.32220 valid n (listwise) 285 source: data processed (2019) feasibility model (goodness of fit test) basis for a decision is to compare the value of probability with a significance level (0.05). if the probability value> 0.05, h0 is accepted, otherwise if the probability value <0.05 h0 is rejected. table 2 hosmer and lemeshow test step chi-square df sig. 1 8643 8 .373 source: data processed (2019) effect of financial performance and good corporate governance of bond ratings (a case study companies listed in indonesia stock exchange period 2013-2017) 54 table 2 shows that the probability value of 0.373 is greater than the significance level (0.05) h0 is accepted. this may imply that the model accepted and unfit for further analysis, because there is no real difference between the predicted classification and classification were observed.or it can be said that the model is able to predict the value of his observations. thus, the regression model viable for use in subsequent analyzes. test the coefficient of determination (r2) based on table 3 known values of determination coefficient of 0.126 this means is that the percentage of influence vaiabel roa and good corporate governance to the bond rating is 12.6%. while the rest of 87.4% diperngaruhi by other variables not included in this model. but keep in mind that the value is only a form of approach because of logistic regression coefficient of determination can not be calculated like the regression. source: data processed (2019) classification matrix based on the classification matrix table above, shows that the predictive power of the regression model to predict the likelihood of investment grade companies amounted to 98.4%. this means that by using regression models were used turned out to be as many as 240 companies (98.4%) were predicted to investment grade. meanwhile, the predictive power of the model non-investment grade companies was 2.6% which means that the regression model is used there are two companies (2.6%) were predicted to non-investment grade. the explanation is based on the overall percentage of 87%, which means the accuracy of the model of this study was 84.9%. overall test model (overal model fit test) the existence of deterioration in value between -2 log likelihood beginning with a value of -2 log likelihood in the next step shows that the hypothesized model fits the data. decrease log likelihood models showed a regression model that better santoso (2017). table 3 model summary step -2 log likelihood cox & snell r square nagelkerke r square 1 213.821a .071 .126 table 4 table classification observed predicted bond rating percentage correct non investment grade investment grade step 1 bond rating non investment grade 2 39 4.9 investment grade 4 240 98.4 overall percentage 84.9 source: data processed (2019) afebi management and business review (ambr) vol.05 no.02 deember 2020 55 table 5 iteration history a, b, c iteration -2 log likelihood coefficients constant step 0 1 239 710 1,425 2 234 841 1,745 3 234 788 1,783 4 234 788 1,784 source: data processed (2019) table 6 iteration history a, b, c iteration -2 log likelihood coefficients constant roa gcg step 1 1 224.379 -1.458 -, 032 , 043 2 214.236 -2.735 -, 054 , 069 3 213.823 -3.041 -, 062 , 075 4 213.821 -3.056 -, 062 , 075 5 213.821 -3.056 -, 062 , 075 source: data processed (2019) table 7 log likelihood block number beginning block number end decrease / increase 234.788 213.821 reduction source: data processed (2019) based on the initial value table 5 -2 log likelihood of234.788 and -2 log likelihood final value in table 6 is equal to 213.821. the decline between -2 log likelihood initial value and final value of -2 log likelihood indicate that the regression model, the better. simultaneous test (test f) table 8 omnibus tests of model coefficients chi-square df sig. step 1 step 20.966 2 , 000 block 20.966 2 , 000 model 20.966 2 , 000 source: data processed (2019) based on table 8 diketahui chi square value of 20.966 with a significance of 0.000. because the significance value (0.000) <0.05. means that the roa and gcg jointly significant effect on bond ratings, partial test (test t) in santoso (2017) regression coefficient test was conducted to test how far all independent variables included in the model have an influence on the dependent variable. regression coefficient test value can be seen from table variables in the equation, to see the value in the column signfikansi.decisions concerning acceptance or rejection of h0 can be done in the following way santoso, (2017): effect of financial performance and good corporate governance of bond ratings (a case study companies listed in indonesia stock exchange period 2013-2017) 56 h0: β1 = 0 then the regression coefficient is not significant h1: β1 ≠ 0 then a significant regression coefficient then the value of profitability in table variables in the equation compared with the significance level of 0.05. if the probability value> 0.05, h0 is accepted and if the probability value <0.05 h0 is rejected. at 5:10 table presented value variable in the equation. table 9 variables in the equation b se wald df sig. exp (b) step 1a roa -, 062 , 042 2,198 1 , 138 , 940 gcg , 075 .019 15.391 1 , 000 1,078 constant -3.056 1,333 5.251 1 , 022 , 047 source: data processed (2019) 1. based on table 4 found that the variable return on assets (roa) with a regression coefficient -, 062 has a probability value of 0.138> 0.05. what this means is that the roa no significant effect on bond ratings. 2. 5:10 according to the table found that the variable good corporate governance (gcg). the regression coefficient, 075 has a probability value of 0.000 <0.05. what this means is that gcg significant effect on bond ratings. financial performance probability influence on bond ratings under the table 9 it is in indication that companies that have a high ranking or better, then the probability of the company itself to get a better rating also increased. companies are well worth the investment to the level of investment kelayak is worthy of investment (investment grade) were given a score of 1 to the ratings categories, namely: idaaa, aa, ida and idbbb. and not worth the investment (non invesmnet grade) were given a score of 0 and ranked category idbb, idb, ccc, sd, d. when a company is able to manage its assets efficiently, the company produces high roa, so that the probability of a company's worth the investment to investment grade bond ratings. the indication is for the investor needs to pay attention to the company that has a good rating so that the company is worth to invest. the results showed that the return on assets significant negative effect on the probability of bond ratings. roa in this case shows the company's ability to generate profits. with high ability to generate profits, then the company can improve its ranking and can convince investors to buy bonds issued by the company. adams et al. (2000) mengemukanan that the high level of profitability will show strong financial condition of companies that financially affect bond ratings, but the results of this study indicate that profitability negatively affect bond ratings, which means roa high does not guarantee a bond to get a high rating from agency the rating of the bonds. although the company earned high profits, but profits that companies use to pay short-term obligations and long term, and a decrease in the level of profitability is likely due to higher cash outflows in each of these companies, and not significant means to lower or decrease the value of roa an enterprise does not give effect to the bond rating. so the profitability variable alone can not be used to assess the bond rating, but there are other factors that can be used for bond ratings. this is not in line with signaling theory which says that the signal will be delivered by the manager to the market that the company has good prospects in the future in order for the company's shares rose and investors' hopes capturing these signals because the management is committed to increasing the value of the company so as to increase bond rating company.profitability measures the company's ability to afebi management and business review (ambr) vol.05 no.02 deember 2020 57 generate profits based on a specific asset level. the higher profit generated more profit is expected the company's ability to meet its obligations, the better away from default risk. high levels of profitability which can indicate the ability of the company's going concern and demonstrates the company's ability to meet its obligations. the higher the bond rating provides a signal that the probability of the risk of failure in fulfilling obligations lower. this is in line with research satoto (2011) who studied the ability of financial ratio as a tool for predicting bond ratings, which indicates that roa no significant effect on bond ratings. effect of good corporate governance of the probability of bond ratings based on the research results indicate that good corporate governance is a significant positive effect on the probability of bond ratings. it can be concluded that good corporate governance directly affect the bond ratings. this means that if a company has good corporate governance it will affect the bond ratings announcement, which the bond rating would indicate classification good value, otherwise if governance kekola a bad company then the company will announce a low rating. currently the business actors such as investors, lenders, and stakeholders increasingly realize the importance of good corporate governnace implementation within the company due to increased competition and globalization conditions. it dikarenkan good corporate governance is one of the important factors in assessing the performance of a sufficiently firm. good corporate governance of the company the better the performance of a company. in addition, the implementation of gcg implementation within a company is a big opportunity for the company to achieve a variety of benefits, including confidence in the company.as in the theory of agency good corporate governance appears as an attempt to control the behavior of management to act in the interests of each as well as a control tool to allow terciptnya system of profit sharing and wealth balance. this is consistent with agency theory emphasizes the importance of delegation of authority from the principal to the agent, where the agent has an obligation to manage the company in accordance with the interests of the principal. by implementing good corporate governance circuitry refers to the principle and guidelines become one of the ways that can be used to minimize the occurrence of discrepancies between the principal and the agent within a company or organization. therefore required implementation of good governance at the company. the better the implementation of good corporate governance of a company, the better the bond rating announcement on each company. this is in line with research dewi & yasa (2016) which shows that corporate governance index positive effect on bond ratings. 5. conclusion return on asset have no significant negative effect on the rating and good corporate bonds have significant positive effect on bond ratings. suggested for further research, is expected to retest the other factors more diverse and add the variables that can affect the bond ratings. it is intended that the conclusions that have wider coverage anyway. for a company of this research can be used as a material consideration to evaluate, improve and enhance the company's financial performance in the future this research datang.bagi potential investors can be expected as a material consideration and be a warning signal before investing. references adams, m., burton, b., & hardwick, p. (2000). the determinants of credit ratings in the united kingdom insurance industry. journal of accounting and economics, 19. effect of financial performance and good corporate governance of bond ratings (a case study companies listed in indonesia stock exchange period 2013-2017) 58 almilia, l. s., & devi, v. (2007). factors that pempengaruhi prediction bond ratings in manufacturing companies listed on the jakarta stock exchange. amrullah, k. (2007). the ability financial ratio as a tool for predicting bond ratings manufacturing company. [thesis]. semarang: unnes. daniri, m. a. (2005). good corporate governance: concepts and practice in the context of indonesia. jakarta: indonesian ray. dewi, k. k., & yasa, w. g. (2016). effect of good corporate governance, profitability, liquidity and solvency against bond rating the indonesian stock exchange. journal of economics, business and entrepreneurship, 6(1), 5970. fcgi (forum for corporate governance in indonesia). nd role of the board of commissioners and the audit committee in implementing corporate govenance (gcg). series of corporate governance (corporate governance) volume ii. ghozali, i. (2016). applications multivariate analysis with spss. semarang: diponegoro publisher agency. ginting, s. (2012). influence analysis of cash flow growth and profitability return of shares in the company lq 45 in indonesian stock exchange. journal of economic wira mikroskil, 2(1). hartono, j. (2008). portfolio theory and investment analysis (5 th edition). yogyakarta: bpfe husnan, s. (2007). financial management theory and application (long-term decision). yogyakarta: bpfe. jensen, m. c., & meckling, w. h. (1976). theory of the firm: managerial behavior, agency costs and ownership structure. journal of financial economics, 3, 305560. magreta., & nurmayanti, p. (2009). factors affecting prediction seen from bond ratings in accounting factors and non-accounting. business and accounting journal, 11(3), 143-154. mariana. (2016). effect of good corporate governance mechanism against ranked bond listed on the indonesia stock exchange period 2008-2010. newell, r., & wilson, g. (2002). a premium for good governance. the mckinsey quartely, 3, 20-23. rahardja., & sari, m. p. (2008). comparative analysis tool (discriminant and logistic regression) on bond ratings. santoso, s. (2017). multivariate statistics with spss. jakarta: pt. elex media komputindo. satoto, s. h. (2011). analysis of factors affecting bond rating. karisma, 5(2), 104115. weston, j. f., & brigham, e. (1994). fundamentals of financial management. bandung: erland www.idx.com retrieved on september 17, 2018. www.pefindo.com retrieved on september 15, 2018. http://www.idx.com/ http://www.pefindo.com/ investigation of capital market efficiency in indonesia 103 investigation of capital market efficiency in indonesia gita masria hutapea 1*10, ahmad fauzan fathoni 2, and yulia efni 3 1,2,3 universitas riau, pekanbaru, indonesia abstract in the midst of a national economic growth downturn that affected the capital market as a subsystem of the economy, now indonesia capital market industry began to look at the development of the application of the principles of sharia as an alternative investment instruments in capital markets activities in indonesia. the growth of the islamic capital market in indonesia is quite encouraging, but the islamic capital market exposure is still minimal. lack of public understanding about the islamic capital market into doubt for investors to invest in the capital market. with the background of the problem, this research aims to investigate the level of efficiency increase of capital markets in indonesia to see the influence of the capital market and the asymmetry of information on abnormal return. the population in this study are all listed company listed on the stock exchange 2014-2018 period as many as 626 companies with a total sample of 238 companies were selected based on criteria predetermined. the analytical method used in this research is multiple linear regression and the results showed that the type of capital markets significant negative effect on abnormal returns and the information asymmetry significant positive effect on abnormal returns. the continued development of the islamic capital market information asymmetry and abnormal returns are also lower so the efficiency of the capital market has also increased. the analytical method used in this research is multiple linear regression and the results showed that the type of capital markets significant negative effect on abnormal returns and the information asymmetry significant positive effect on abnormal returns. the continued development of the islamic capital market information asymmetry and abnormal returns are also lower so the efficiency of the capital market has also increased. the analytical method used in this research is multiple linear regression and the results showed that the type of capital markets significant negative effect on abnormal returns and the information asymmetry significant positive effect on abnormal returns. the continued development of the islamic capital market information asymmetry and abnormal returns are also lower so the efficiency of the capital market has also increased. keywords: abnormal return, principles of islamic shariah, the information asymmetry, the type of capital markets 1. introduction the existence of capital market in indonesia is one of the most important factors in helping to build a strong national economy and global competitiveness with the availability of facilities and the indonesian capital market instruments that can compete with the capital market instruments other countries. in connection with that, amid the deterioration of national economic growth rate, which also affected the capital market sector as a subsystem of national economy of indonesia, now the indonesian capital market industry began to look at the development of the application of the principles of islamic shari'a as an alternative investment instruments in capital market activities in indonesia. * corresponding author. email address: hutapeagita16@gmail.com afebi management and business review (ambr) vol.04 no.02, december 2019 104 research conducted by ngo & wijayanti (2003) concluded that that invest in islamic stocks more profitable than investing in shares of non-islamic. ocean et al (2016) concluded that the islamic stock index in the indonesia stock exchange is an efficient capital market in the form of a strong half. research conducted by khajar (2012) found that the indonesian islamic capital market is efficient at least in the form of weak. study conducted by nasution (2015) showed that the islamic capital market has been in a semi-strong efficient. research on the conventional capital market conducted by mar'ati (2012) concluded that that the indonesian capital market efficiency theory for semi-strong form (semi-strong form) has been efficient. dwipayana & wiksuana (2017) concluded that the indonesia stock exchange, represented by compass 100 index is expressed in a semi-strong efficient in information (informationnaly efficient market). research on the comparative efficiency of islamic capital markets and capital markets conventionally performed by ali et al. (2018) using mf-dfa analysis concludes that the islamic capital market is more efficient than the conventional capital market. research mensi et al (2016) on the efficiency of the islamic capital market after the gfc using mf-dfa analysis shows that the islamic capital market more efficient in the long run than in the short term. despite the growth of the islamic capital market is quite encouraging, but the islamic capital market exposure is still minimal. lack of public understanding about the islamic capital market into doubt for investors to invest in the capital market. this is because the practice of activity in the capital market that contain the element of speculation. therefore, requires knowledge of the islamic capital market, both of concepts and principles, as well as trade mechanisms. with the background of the problem, this study aimed to investigate the level of efficiency increase of capital markets in indonesia to see the influence of the capital market and the asymmetry of information on abnormal return based on the data that has been analyzed, the type of capital markets significant negative effect on abnormal returns and the information asymmetry significant positive effect on abnormal returns. this suggests that the development of the islamic capital market information asymmetry and the lower abnormal returns so that the efficiency of the capital market has also increased. furthermore, the explanation in this article will be divided into three parts, the first is a literature review that will explain any theory used in this study and previous research that referenced researcher. the second part is the results and discussion will explain the results of research and discussion of results have been found. then, the third part is the conclusion that a more concise outline of the research study. 2. literature study/hypothesis development information asymmetry theory this theory says that the parties associated with the company do not have the same information about the prospects and risks of the company. certain parties have more information than others. this theory consists of theories: 1. myers and majluf according to this theory there is information asymmetry between managers and outsiders. the manager has more complete information about the condition of the company than outsiders. 2. signaling signaling develops a model in which the capital structure (the use of debt) is a signal delivered by managers to the market. if the manager has confidence that the company's prospects are good, and therefore wants the shares to increase, he wants to communicate this to investors. managers can use more debt as a more credible signal. investigation of capital market efficiency in indonesia 105 islamic capital market concept the principles of islamic capital market instruments differ from conventional capital markets. shares traded on the islamic capital market must come from issuers that meet the islamic criteria the sharia capital market must be free from unethical and moral transactions, such as insider trading and short selling. therefore, the islamic capital market must throw away any transactions that contain elements of speculation. this is what distinguishes it from conventional capital markets which is one way to get its benefits by using speculation. (sholahuddin, 2006). effect of capital market types on abnormal returns the concept of an efficient market places more emphasis on aspects of information where the price of traded securities has reflected all available information (tandelilin, 2010). based on this concept, efficient markets are always associated with the availability of information which means there is no asymmetric information among stakeholders. according to the asymmetry theory, there is an imbalance of information between stakeholders relating to the prospects and risks of companies where certain parties have better information than outside parties (hanafi, 2014). more information that is owned by the manager can trigger to take actions in accordance with the wishes and interests to maximize the utility for himself. conceptually, the islamic capital market is designed to reduce asymmetric information. this is supported by sutedi's research (2011) which states that the existence of islamic capital market rules aims to minimize and even eliminate speculation in stock trading, where in conventional capital markets speculation is a very difficult situation to separate. in accordance with the concept, the islamic capital market should be more efficient compared to conventional capital markets. the efficiency referred to here means that no investor can get an abnormal return in stock trading. based on the description above, the research hypothesis can be formulated as follows. h1: suspected type of capital market affects abnormal returns. effect of information asymmetry on abnormal return an efficient capital market is needed to eliminate speculative actions because all information is the basis of investors in making investment decisions. the impact of an efficient market is that no investor can control the market. with the efficiency of the capital market, it means that no one can get an abnormal return. in addition, if the market is efficient, there is no asymmetric information. information asymmetry is a condition where there is an imbalance of information between management and shareholders (irfan, 2002). according jogiyanto (2013) information asymmetry is private information that is only owned by investors who have information (informed investors). information asymmetry indicates that there is a group of investors who have more information about an event that allows investors to get abnormal returns. the higher the information asymmetry, the higher the likelihood that investors will get an abnormal return which results in an inefficient market. h2: alleged information asymmetry affects abnormal returns. 3. research methods the population in this study are all listed company listed on the stock exchange 2014-2018 period as many as 626 companies. the sampling technique that has been chosen is purposive sampling method with a total sample of 238. the analysis method used in this research is multiple linear regression afebi management and business review (ambr) vol.04 no.02, december 2019 106 data used in this research is secondary data. secondary data sources in this study was obtained from the indonesia stock exchange through the sitewww.idx.co.id, www.investing.comand www.yahoofinance.com, operational definition and measurement of variablesabnormal return according husnan (2009) abnormal return is the difference between the actual profit rate to the level of the expected profit. according jogiyanto (2013) return is not normal (abnormal return) is the difference between actual returns that occurred with the return expectations. the formula to calculate the abnormal return by jogiyanto (2013), namely: rtni, t = ri, t e [ri, t] (1) type capital markets type capital market is divided into two, namely the islamic capital market and conventional capital markets.general differences between conventional capital market with the islamic capital market can be seen in the instruments and mechanisms of the transaction, while the islamic stock index value difference with conventional stock index value lies in the issuer's shares of criteria that must meet the fundamental principles of sharia. in this study, the islamic capital market rated 1 and the conventional capital market by value 0. asymmetry of information asymmetry of information is a condition where there is an imbalance between the management information acquisition as a provider of information to the shareholders and stakeholders as the user information (irfan, 2002). asymmetry information can be measured by using the bid ask spread. bid ask spread can be measured by the following formula: spreadi, t = (𝑎𝑠𝑘𝑖,𝑡 − 𝑏𝑖𝑑𝑖,𝑡 {(𝑎𝑠𝑘𝑖,𝑡+ 𝑏𝑖𝑑𝑖𝑡 )/2} x100 (2) 4. results descriptive statistics analysis a description of the variables of this study are presented in table descriptive statistics which show the minimum, maximum, mean, and standard deviation can be seen in this betikut table. table 1 descriptive statistics test results issi vs jci descriptive statistics n minimum maximum mean std. deviation type capital markets 276 891 0 1 .96 .195 information asymmetry 276 891 .000 39 316 3.4160 9 3.269144 abnormal return 276 891 -3131 3,843 -.05229 .965581 source: data processed (2019) source: data processed (2019) table 2 test results descriptive statistics jii vs lq45 descriptive statistics n minimum maximum mean std. deviation type capital market 42 596 0 1 .38 .484 information asymmetry 42 596 .132 27 435 2.72883 1.665304 abnormal return 42 596 -9270 15 364 .00748 2.915783 http://www.idx.co.id/ http://www.investing.com/ http://www.yahoofinance.com/ investigation of capital market efficiency in indonesia 107 classical assumption test results normality test the test results normality of the data in this study can be seen in table 3 and 4 below. table 3 normality test results issi vs jci table 4 normality test results jii vs lq45 based on the tables 3 and 4 above shows the value asimp. sig. using data issi jci vs 0.063> 0.05. furthermore, using the data jii lq45 vs 0.072> 0.05. these results indicate that the regression model to meet the normal assumptions. test multicollinearity the test results multicollinearity in this study are presented in table 5 and 6 below. table 5 test results multicollinearity issi vs jci coefficients model collinearity statistics tolerance vif 1 (constant) type capital markets .992 1,008 information asymmetry .992 1,008 a. dependent variable: abnormal_return source: data processed (2019) one-sample kolmogorov-smirnov test residual unstandardized n 276 891 normal parametersa, b mean .0000000 std. deviation .76003491 most extreme differences absolute .406 positive .040 negative -.046 kolmogorov-smirnov z .046 asymp. sig. (2-tailed) .063c a. test distribution is normal. b. calculated from data. source: data processed (2019) one-sample kolmogorov-smirnov test residual unstandardized n 42 596 normal parametersa, b mean .0000000 std. deviation 2.18187630 most extreme differences absolute .105 positive .086 negative -.105 kolmogorov-smirnov z .105 asymp. sig. (2-tailed) .072c a. test distribution is normal. b. calculated from data. source: data processed (2019) afebi management and business review (ambr) vol.04 no.02, december 2019 108 table 6 test results multicollinearity issi vs jci coefficients model collinearity statistics tolerance vif 1 (constant) type capital markets .999 1,001 information asymmetry .999 1,001 a. dependent variable: abnormal_return source: data processed (2019) based on the results in table 5 and 6 above can be seen that the four variables independem have tolerance values> 0.10 and vif <10, so that it can be concluded that the regression model is free of multicollinearity. test heteroskidastity heteroskidastity testing results in this study are presented in table 7 and 8 below. table 7 test results heteroskedasticity issi vs jci coefficients model t sig. 1 (constant) type capital markets .231 .641 information asymmetry .759 .789 a. dependent variable: res_2 source: data processed (2019) according to the table 7 can be seen that the sig. for variable types of capital market amounted to 0,641> 0,05 and the information asymmetry 0.789> 0.05, so it can not happen heteroskedastisity concluded in this study. table 8 test results heterocedastisity jii vs lq45 coefficients model t sig. 1 (constant) type capital markets -.324 .774 information asymmetry .652 .889 a. dependent variable: res_2 source: data processed (2019) based on table 8 above it can be seen that the sig. for variable types of capital market amounted to 0.774> 0.05 and the information asymmetry 0.889> 0.05, so it can not happen heteroskedastisity concluded in this study. autocorrelation test autocorrelation test results of this research can be seen in table 9 and 10 below: investigation of capital market efficiency in indonesia 109 table 9 test results autocorrelation issi vs jci model summary model r r square adjusted r square std. error of the estimate durbin-watson 1 .617a .380 .380 .760038 .366 a. predictors: (constant), asimetri_informasi, jenis_pasar_modal b. dependent variable: abnormal_return source: data processed (2019) according to the table 9 the value of durbin watson (dw) produced a regression model that is equal to 0.366 while for the table dw with sampael n = 276 891 and a variable indevendennya (k) = 2 values obtained dl = 0.181 and du = 0.223. thus du <dw <4-du = 0.223 <0.366 <3.777, it can be concluded in this study there is no positive or negative autocorrelation. table 10 test results autocorrelation jii vs lq45 model summary model r r square adjusted r square std. error of the estimate durbin-watson 1 .663a .440 .440 2.181928 0404 a. predictors: (constant), asimetri_informasi, jenis_pasar_modal b. dependent variable: abnormal_return source: data processed (2019) according to the table above can be seen 10 durbin watson value of 0.404. as for the value dw table with sampael n = 42 596 and variable indevendennya (k) = 2 values obtained dl = 0.336 and du = 0.378. thus du <dw <4-du = 0.378 <0.404 <3.596, it can be concluded in this study there is no positive or negative autocorrelation. test the coefficient of determination (r2 test) test results the coefficient of determination can be seen in table 11 below. table 11 test results the coefficient of determination (r2) issi vs jci source: data processed (2019) based on the test results of the coefficient of determination issi vs jci in the table above, the value of r square in the regression model obtained at 0.380. this shows that the influence of the independent variables and the type of capital market information asymmetry to the dependent variable abnormal return can be explained by this equation at 38% while 62% are influenced by other factors not included in this regression model. furthermore, the value of r square using vs jii lq45 index data can be seen in table 12 below: model summary model r r square adjusted r square std. error of the estimate durbin-watson 1 .617a .380 .380 .760038 .366 a. predictors: (constant), asimetri_informasi, jenis_pasar_modal b. dependent variable: abnormal_return afebi management and business review (ambr) vol.04 no.02, december 2019 110 table 12 test results the coefficient of determination (r2) vs jii lq45 model summary model r r square adjusted r square std. error of the estimate durbin-watson 1 .663a .440 .440 2.181928 .404 a. predictors: (constant), asimetri_informasi, jenis_pasar_modal b. dependent variable: abnormal_return source: data processed, (2019) based on the test results of the coefficient of determination jii vs lq45 in the table above, the value of r square in the regression model obtained at 0.440. this shows that the influence of the independent variables and the type of capital market information asymmetry to the dependent variable abnormal return can be explained by this equation by 44%, while 56% are influenced by other factors not included in this regression model. simultaneous effect test (f test) table 13 test f results issi vs jci anovaa source: data processed (2019) table 14 test f results jii vs lq45 anovaa source: data processed (2019) from the above table f test both jci and jii issi vs vs lq45 known that the variable types of capital market and asymmetry inforrmasi have a significance value of 0.000. with a degree of confidence of 95% or 5% significance level, it can be seen that the value of the significance of 0000 is less than the alpha value of 0:05. thus it is known that the independent variables jointly significant effect on the dependent variable. partial test (t test) table 15 test results t issi vs jci source: data processed (2019) model f sig. 1 regression 85008.125 .000b residual total model f sig. 1 regression 16736.308 .000b residual total coefficients model t sig. 1 (constant) -55 449 .000 type capital markets -38 203 .000 information asymmetry 412 328 .000 a. dependent variable: abnormal return investigation of capital market efficiency in indonesia 111 table 16 test results t jii vs lq45 source: data processed (2019) 5. discussion effect of capital markets type to abnormal return well known significance values using issi data jci and jii vs vs lq45 $ 0.00. 0.000 significance value <0.05 then h1 is accepted, so that it can be concluded that the type of capital markets significant negative effect on abnormal returns. the statistical results of research using data issi vs cspi index shows that the type of capital markets significant negative effect on abnormal returns. the negative sign means that the development of the islamic capital market abnormal return will be lower. in accordance with theislamic capital market concept which states that the islamic capital market is made to reduce the asymmetry of information which the shares traded should come from companies engaged in sectors that meet the criteria of sharia and free from elements of usury, as well as stock transactions carried out by avoiding speculation practices. true islamic capital market must be free of transactions that are unethical and immoral, such as insider trading and short selling. therefore, the islamic capital market should throw away any transaction that contains elements of speculation. this is what distinguishes it from conventional capital market which is one way to get the benefits by using speculation. although it acknowledged, in certain cases such as insider trading and market manipulation by making false statements prohibited in conventional capital markets (sholahuddin, 2006). the results are consistent with research conducted by khajar (2012) also said that the indonesian sharia capital market is efficient in the weak form. furthermore ocean et al (2016) concluded that the islamic stock index in the indonesia stock exchange is an efficient capital market in the form of a strong half. results of research conducted outside indonesia also supports that such research ali et al (2018) and mensi et al (2016) which states that the islamic capital market more efficient compared with the capital markets conventional. further visits are specifically using the index data with the best performance are jii vs lq45 also so that that kind of capital markets negatively affect the abnormal return. this suggests that the development of the islamic capital market abnormal return will be lower. this is supported by research sutedi (2011) which stated that with the rules of the islamic capital market aims to minimize or eliminate speculation in stock trading, where the conventional capital market speculation is very difficult to separate state. with these rules then the investor the opportunity to earn abnormal returns are also lower. if conventional and sharia capital markets are applied together in indonesia and other countries, it can increase capital market growth due to various choices that can be chosen by investors. if investors do not want their funds mixed with ribawi funds, coefficients model t sig. 1 (constant) -143 821 .000 type capital markets -5158 .000 information asymmetry 182 955 .000 a. dependent variable: abnormal return afebi management and business review (ambr) vol.04 no.02, december 2019 112 investors can invest their capital in the islamic capital market and conversely investors who do not want to invest in the islamic capital market can invest in conventional capital markets. different if in a country only applies one of the types of capital markets (conventional or sharia), then there is no choice for investors, thereby reducing the interest of investors to invest in the capital market. this will have an impact on the decline in capital market growth in indonesia and other countries. effect of information asymmetry on abnormal return well known significance values using issi data jci and jii vs vs lq45 $ 0.00. 0.000 significance value <0.05 then h1 is accepted, so that it can be concluded that the information asymmetry significant negative effect on abnormal returns. the statistical results of research using data issi vs jci showed that the asymmetry of information is positive and significant effect on the abnormal return. the positive sign means that the higher the information asymmetry abnormal returns will also be higher, conversely the lower the information asymmetry abnormal returns will also be lower. asymmetry theory says that the parties associated with the company does not have the same information about the company's prospects and risks. certain parties have better information than the other party. managers usually have better information than with outsiders (investors) because it can be said the case of information asymmetry between managers and investors. more information is owned by the manager may trigger to perform actions in accordance with the wishes and interests of maximizing utility for himself. as for the owners of capital in this case the investor would be difficult to effectively control the actions taken by management because it has little information exists. managers as a manager of the company more aware of internal information and the company's prospects in the future compared to the owners (shareholders). therefore, as a manager, the manager is obliged to give a signal about the state of the company to the owner. a given signal can be done through the disclosure of accounting information such as financial reports. this study was supported by research wardani et al (2016) which states that the information asymmetry significant positive effect on stock returns. further research yassin et al (2015) stated that the information asymmetry significant positive effect on stock returns. other studies are clinch and lombardi (2011) states that the higher the information asymmetry abnormal returns are also higher. the same results were obtained from the data more specific indices that use stock index with the best performance are jii vs lq45 which states that the information asymmetry significant positive effect on abnormal return, which means that the higher the information asymmetry abnormal returns will also be higher. interestingly, with the growing development of the islamic capital market information asymmetry will also be reduced due to the islamic capital market is not allowed to practice speculation. with these rules then the asymmetry of information is also getting lower and cause the abnormal return is lower as well. the lower abnormal returns, the market is also more efficient. 6. conclusion type capital markets significant negative effect on abnormal returns and information asymmetry significant positive effect on abnormal returns. investigation of capital market efficiency in indonesia 113 references ali, et al. (2018). stock market efficiency: a comparative analysis of islamic and conventional stock markets. www. elsevier.com/locate/physa. 0378 4371 clinch., & lombardi. (2011). information and the cost of capital: the easley-o'hara (2004), model with endogenous information acquisition. australian journal of management, 36(1), 5-14. dwipayana, i. g., & wiksuana, i. g. (2017). market efficiency testing on the exchange indonesian effect. eud management e-journal, 6(4). hanafi, m. (2014). financial management (1st edition). yogyakarta: bpfe husnan, s. (2009). basics securities analysis and portfolio theory (4th edition). yogyakarta: upp stim ykpn irfan, a. (2002). financial reporting and information asymmetry in relationships the agency. economic track, 19. jogiyanto, h. (2013). portfolio theory and investment analysis. yogyakarta: bpfe. kasmir. (2004). banks and other financial institutions. jakarta: sinar grafika. khajar, i. (2012). indonesian islamic capital market efficiency before and after global financial crisis of 2008. journal of finance and banking, 16(1) mar'ati, f. s. (2012). analysis of the indonesian capital market efficiency. journal of applied management sciences and accounting, 3(2) mensi, et al. (2016). global financial crisis and weak form efficiency of islamic sectoral stock markets: an mf-dfa analysis. https://doi.org/10.016/j.physa. 12034 nasution, y. s. (2015). efficient market hypothesis (fama theory according to the capital market and islamic view). journal of economic perpekstif darussalam, 1(1) ngo, a., & wijayanti, i. (2003). fundamental factor analysis and systematic risk of property stock prices on the jse. journals accounting & finance, 5. ocean, et al. (2016). capital market efficiency analysis sharia stock index in indonesia stock exchange. journal katalogis, 4(6) sholahuddin. (2006). the economic and financial institutions of islam. surakarta: muhammadiyah university press. sutedi, a. (2011). syariah capital market financial investment facility based on sharia principles. jakarta: sinar grafika. tandelilin, e. (2010). portfolio and investment theory and application (1st edition). yogyakarta: canisius wardani, et al. (2016). effect of information asymmetry of finance, ipo, discretionary accrual to the stock return rate in company go public (empirical study on manufacturing companies listed on the stock exchange period 2011-2015). journal of the faculty of economics. afebi management and business review (ambr) vol.04 no.02, december 2019 114 yassin, et al. (2015). the relationship between information asymmetry and stockreturn in the presence of accounting conservatism. international journal of business and management, 10(5) trust and habit as key success on digital consuming behavior in indonesia mediated by behavior intention 16 trust and habit as key success on digital consuming behavior in indonesia mediated by behavior intention daduk mansur2¹ ⃰ , ernie sule², dwi kartini3, and yevis marty oesman4 1,2,3,4 universitas padjadjaran, indonesia abstract personal perception as a fundamental factor on consumer buying behaviour especially on online shopping, triggered by internet access all over the world. in indonesia personality aspect becomes a key factor regarding new technology adoption. big internet user not yet automatically increased the use of e-commerce. indonesia has big potential market for e-commerce. unfortunately, the e-commerce user in indonesia is still 12% from total internet user in indonesia. it is very important to find factors i.e. trust (t) and habit (h), which affects the use behaviour of e-commerce. this study aims to find out the perfect model that fits the use behaviour of e-commerce in indonesia. in this study,we conduct literature review and primary data survey. statistical result is analysed using war partial least square (pls) with 547 respondents from 4 e-commerce providers user. we found that t (trust) and h (habit) have positive influence on behaviour intention (bi), bi positive influence on use behaviour (ub) e-commerce. based on the results, we build a fit model and validate the data regarding e-commerce user behaviour. the fit model is expected to guide provider to find the key success factor in e-commerce business in indonesia and are expected to become an innovation and important factors as an academic contribution. based on these results we recommend operator to build good perception regarding habit (h) and trust (t). keywords: habit; trust, behavior intention, use behavior 1. introduction indonesia has potential market for e-commerce business with a huge potential revenue. indonesia takes rank 2 (two) in internet users in asia and ranked sixth from all over the world (123 million) (emarketer, 2015). unfortunately, the potential revenue is still loss because the number of e-commerce user only takes about 12% from the total internet user (at kearney, 2015). this shows a strong indication that acceptance and use of e-commerce are still problems. effect from this condition makes a potential in lost revenue for business e-commerce in indonesia up to us$ 30 billion (a.t. kearney, 2015). e-commerce data shows recording significant from year-on-year growth of 6070 per cent since 2014, the indonesian e-commerce market is still relatively small (us$8 billion) compared to regional pace-setter, china, sales of us$692 billion. in 2016, indonesia’s e-commerce sales as a percentage of total annual retail sales amounted to 1.6 per cent, compared to 13 per cent in china. these percentages suggest there is still a room for growth in the indonesian e-commerce market, which is likely to be led by the ongoing transformation through the industry via high levels of investment and industry consolidation (austrade, 2018). several current limitations regarding existing infrastructure and other issues related to the economical and sociocultural conditions become a barrier for e-commerce business growth (lawrence & tar, 2010). other problem also appears such as the lack of awareness on the great potential of e-commerce, which is one important barrier in its adoption (agwu et al., * corresponding author. email address: daduk1600@unpad.ac.id afebi management and business review (ambr) vol.03 no.02, december 2018 17 2015). even e-commerce has a potential business revenue on huge number in developing country, but the fact is still on low level status (makame, et al., 2014). many factors also become barrier for the low usage of e-commerce and until today the condition is still not clear which factors could influence the use of e-commerce (ndyali, 2013). e-commerce is a very important aspect for economic growth, in developing countries. unfortunately, the adoption of e-commerce and the related researches are still limited (okadapau, 2016). literature study shows the main factor as the key success factors for growth of business e-commerce are related with acceptance and the use and from this perspective, some existing researches show it depends on the technology adoption process (indrawati & mansur, 2016). previous research only focused on sme as a unit analysis rather than individual user like research by looi (2005), kartiwi (2006), macgregor & kartiwi (2010), maryeni et. al, (2012), rahayu & day (2015). e-commerce business potentially has a huge revenue in real money that is come from the personal buyer. according from this condition, it is very important to know what factors that influence on personal/consumer user of e-commerce. e-commerce is changing the face of retailing, travelling and reaching more consumers each year. nowadays consumer to consumer (c2c) on e-commerce is most often conducted in an electronic auction environment (leonard et al., 2013). this condition gives strong indication for us to use personality user as unit analysis in this research. our research has a purpose to find out the fit model that has the capability to predict estimation for adoption of e-commerce consumer behaviour. the model is capable to estimate a few factors that influence the personal digital buying behaviour in the use of e-commerce. the previous research use sme as a unit analysis. from practitioner aspect, the fit model gives significant impact to help the operator of e-commerce to improve their performance and eliminate the gap in both theoretical and empirical on e-commerce business in indonesia. 2. literature review regarding e-commerce adoption is based on theory behaviour which is rooted in the field of social psychology. acceptance of e-commerce as a buying tool is related with consumer buying behaviour. understanding customer behaviour in the opinion of khaniwale (2015) is a study of how an individual makes the decision to allocate the available resources to consume a product. there are four factors that can affect consumer behaviour, which are culture, social, personality and psychology. survey result regarding perception of e-commerce user in indonesia shows that trust (t) (56%) and habit (h) (22%) provide influence on decision making to accept and use e-commerce (dbs asian insight, 2013). trust (t), give a definition as the degree of believe regarding to integrity and skill provider (bartikowski, 2015) and also chin. et.al (2009) shows that trust (t) on the use of internet will give an influence to the use of e-commerce. habit (h) is a degree of individual behavior to conduct activity routine (farzin and dahlan, 2016). preliminary survey that is conducted with 214 respondent which are users of ecommerce show that 41% of them have a lack trust of security and 45% show that respondent have an online habit. trust and habit as key success on digital consuming behavior in indonesia mediated by behavior intention 18 figure 1 preliminary survey diagram source: survey result (2017) literature study shows that personal perception i.e. masa’deh et al., (2016) shows that h give influence on behavior intention (bi), and jham (2016) shows that t (trust) influence on bi and bi influence on use behavior (ub). 3. model and hypothesis development technology adoption in this research refers to the unified theory and use of technology (utaut) as the strongest theory on technology adoption (samaradiwakara and gunawardena, 2014) where the independent variables influence to behavior intention (bi) and bi influenced on use behavior (ub). we know that ecommerce contains an online transaction, by literature review we found new several variables that meet with the use behavior of e-commerce user in indonesia. there are some variables that is suitable and are connected with the factors which affects the ecommerce consumption in indonesia. indonesian e-commerce association already conducts a research. from the survey there are 14.6% that has problem with transaction process and on the other side 38.4% have an untrusted issue to buy some product through e-commerce (idea, 2016). according to the literature review above, those several factors that influence to bi for the use of e-commerce, are: 1. habit (h) refers to tendency of routine activity (al azam et al., 2016), other research by nair, et. al., (2015) gives definition as a conducted activity automatically. 2. trust (t) refers to believe regarding competence, integrity and benevolence (masa’deh et al., 2016). other research also gives definition as a believer of related reliability, efficiency, security, comfort, dependence and confidence (jham, 2016). 3. behavior intention (bi) refers to the intentional use (farzin & dahlan, 2016). this variable also has definition as an intentional individual that acts to accept and use of a system (indrawati & mansur, 2016). 4. use behavior (ub) refers to individual believe usage system (al azam et al., 2016). this variable also refers to the frequency of an activity while using the system (indrawati & mansur, 2016). according the literature review, this research builds a hypothesis which is listed below: afebi management and business review (ambr) vol.03 no.02, december 2018 19 1. h1: positive habit (h) has a significant effect on behavior intention (bi) in the use of e-commerce 2. h2: positive trust (t) has a significant effect on behavior intention (bi) in the use of e-commerce. 3. h3: positive behavior intention (bi) has a significant effect on use behavior (ub) in e-commerce. 4. h4: positive habit (h) has a significant effect on use behavior (ub) in ecommerce. 5. h5: positive trust (t) has a significant effect on use behavior (ub) in ecommerce. the model that is used on this research shown in figure 2. figure 2 factors influence to acceptance and use of e-commerce behaviour source: research e-commerce behaviour adoption in indonesia 4. research methodology this research is developed and validated through the fit model for validation factors that influence to acceptance and the use of e-commerce. by literature review and in-depth interview with the experts as a methodology to develop the model. the model validated and checked by analysis data that gathered from survey. item that is being surveyed is built by develop construct that refers to previous research which is found from reputation journal. in this research to build robust questioner, pilot survey had conduct and get 30 respondents with composition of 17 male and 13 female 13 person. age distributed below 20 years old 10 person, between 20 until 30 years old 10 person and above 30 years old 10 person. after calculated using spss 17.0 the result finds 3 items (h1, bi7, ub8) which is the score of corrected item-total correlation below 0.3 and cronbach's alpha if item deleted for all items above 0,7. based on this condition, there is a need to ground a few items for spss second processing. after taking process again in spss 17.0, the result finds that that the score of corrected item-total correlation is above 0.3 and cronbach's alpha if item is deleted for all items above 0,7. the final result is the proposed model that is ready to be used for validation for the e-commerce consumer behaviour. data primer gathered from the survey has a purpose to get primary data with total respondent 547-person (m = 392, f = 155) with age data (age <20 yo = 25, 20<age<30 yo = 190, 30<age<40 yo = 208, 40<age<50 yo = 98, age>50 yo = 26). data is being analysed using smart partial least square (pls) 2.0 for the calculation on statistic parameter. starting with importing the data survey and continue by building a latent variable and then make direct line for connection between variables in the model. the running result from smart pls analysis that influence become significant if t statistic > 1.96, based on this theory, results of the hypothesis test showed in table 1. trust and habit as key success on digital consuming behavior in indonesia mediated by behavior intention 20 table 1 result of calculation data survey using smart pls 2.0 t statistics (|o/sterr|) result habit -> behaviour intention 7.147381 > 1,96 h1 received trust -> behaviour intention 3.768538 > 1,96 h2 received behaviour intention -> use behaviour 4.937761 > 1,96 h3 received habit -> use behaviour 5.644498 > 1,96 h4 received trust -> use behaviour 2.754131 > 1,96 h5 received source: research trust and habit as key success on digital consuming behavior in indonesia mediated by behavior intention 5. results and discussions this research finds factors on personal perception that influenced to e-commerce acceptance and use behaviour. according to that condition, the result of statistical that was calculated found that h and t are positively significant to influence on behavior intention (bi) and bi is positively significant to influence on use behavior (ub). the result also found new important factors compared with some previous research as novelty on consumer behaviour in e-commerce usage for shopping online. those factors are trust and habit which significantly influence directly to e-commerce use behaviour. the findings on this research strengthen and completing the previous research like macgregor and kartiwi (2010), that finds perception become barriers to ecommerce adoption in a developed country like indonesia. rahayu and day (2015), find the determinant factors of e-commerce adoption in indonesia. those all researches focus on sme as unit analysis. based on result of research, the model of key success factor is as shown in figure 3. figure 3 trust and habit as the key important factors for acceptance and use ecommerce in indonesia source: research trust and habit as key success on digital consuming behavior in indonesia mediated by behavior intention the data for figure 3 which shows the value of use behavior (ub) from behavior intention (bi) is shown in apendix c (runing data by smart pls calculate result pls algoritm). afebi management and business review (ambr) vol.03 no.02, december 2018 21 6. conclusion and recommendation this paper has searched and studied a fit model of acceptance and the use ecommerce in indonesia. we consider that h (habit) and t (trust) are supported by a survey, and the statistical data is calculated based on the pls (partial least square) method. this research can estimate the acceptance and use of e-commerce, so that providers and operators can have tools to conduct evaluations. based on the research findings, we found several factors that can influence the user adoption of e-commerce which are habit (h) and trust (t). these factors became the main focus of improvement in accordance with the culture and e-commerce user behaviour. the most important academic contribution from this research is finding new variables and proposition that trust (t) and habit (h) provide positive influence on the e-commerce use behaviour. hypothesis test showed that this model fits to prediction and estimation related to the factors that influence to e-commerce use behaviour on online shopping. this model can also help the operators to identify the significant influence variables for the e-commerce services. from the results of this study, the use behaviour (ub) value (shown in figure 3) is equal to 0.632 or 63.2% which indicates this value is still insubstantial, where only 63.2% of the factors described are related to use behaviour (ub), so there are still several factors that need further researched, for example relating to trust factors and changes in user habits that continue to experience dynamism. references alekam. 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(2012). the influence of trust, advertising, family on intention and actual purchase of local brand in yemen. american journal of economics, special issue: 64-68. branding strategy of west java: fashion products of the creative industry 33 7 branding strategy of west java: fashion products of the creative industry popy rufaidah 1* 1 padjadjaran university, bandung, indonesia abstract in past research, branding strategy application in the creative industry has been left largely unexplored. this study aims to investigate the types of branding strategy elements perceived as the distinctiveness of west java in fashion products of the creative industry. this study is a cross-sectional study using survey method, which is designed to describe the frequency of customer perceptions of branding strategy elements such as products design, marketing communication tools and physical environment. the data used in this study is primary and secondary data. the primary data is obtained from the results of observations, interviews and survey using questionnaires. the respondents of the study are the customers of fashion products in the creative industry who have been living in west java at lest for two years. the study concludes that there are some critial points in building west java brand through several branding strategy elements that need more attention such as (i) the performance of blogs and websites as marketing promotional tools used by companies in the creative industry is perceived low (37%); (ii) most of the fashion products marketed by companies in the creative industry are perceived similar and not unique (57%); (iii) the logo of the fashion products sold in the market by creative industry players is perceived not attractive (37%) and; the places where the fashion products are sold are perceived not clean (46%). keywords: branding strategy, fashion products, creative industry 1. introduction the development of creative industries in west java, which consists of twenty-seven cities and districts, is very interesting to be studied. west java provincial government has been an initiator of the creative industry in indonesia by giving birth to an organization called the committee of west java creative economic development in 2011. this organization has a role to develop the quantity and quality of creative economy. research related to the creative industry is growing, such as in the fields of art and culture, verbal and visual communication, information technology and information systems, policy, management science, and other fields of science. referring to the presidential instruction of the republic of indonesia number 6 of 2009, the creative industry consists of: advertising (creation and production of advertisement); architecture (township, gardening, etc.); art and antiques market; craft; design (interior, exterior, graphics); fashion; movies, * corresponding author. email address: popy.rufaidah@unpad.ac.id mailto:popy.rufaidah@unpad.ac.id afebi management and business review (ambr) vol.02 no.02, december 2017 34 video and photography; interactive games; music; performing arts; publishing and printing; computer services and software; radio and television; and research and development. it is interesting to note that the products produced by the creative industry have not had a good identity performance as their brand distinctiveness. in particular, one of the creative industry clusters of interest to be studied is the fashion cluster (clothing). companies that can maintain a position in the competition are those known for their use of branding strategy (porter 1988). as competition in the market is increasingly tight, more and more companies apply branding strategy as one way to improve the performance of product penetration to their target market, differentiate their product offerings, and strengthen the brand image of the product (singh 2014). companies must discover how to create successful brands in their target markets while assessing their brand effectiveness and branding strategies. successful brands in the marketplace are able to create alliances for mutual benefit for the company (aaker, 1996). strebinger (2014) found that branding strategies for products are determined by industry (23 percent of variance), the overall strategy of the company (28 percent), and the remaining variance being product-level decisions deviating from both. service and consumer durables companies lean more towards corporate branding than consumer nondurables. research in the field of branding strategy has been done extensively such as by strebinger (2014) who referred his study to murphy (1987), olins (1989), laforet and saunders (1994), kapferer (1997), aaker and joachimsthaler (2000), urde (2003) and keller (2003). moreover, research that focuses on measuring consumer perceptions of fashion products produced by creative industries made from textiles is still very rare. results of study of creative economy initiation team (taskforce) of west java province 2011, along with the local government planning agency of west java, wherein the author is involved as the team leader, show that the creative industries of west java have a major weakness, that is the brands of the products have not been registered (81%). it is interesting, nevertheless, how the consumer perceptions of the use of brands on fashion products made from textiles in west java has never been studied before. so this research aims to investigate how the consumers of fashion products in the creative industry in west java perceive the branding strategy applied by small medium enterprises (smes). 2. literature review brand is a company’s long-term investment, which if managed with the maximum, will certainly provide benefits for the company. to be able to maintain a brand in the long term, it is important for a company to apply appropriate branding strategy to its products. one-way to build a brand strategy is by applying brand elements (brand identity), which are "those trademarkable devices that serve to identify and differentiate the brand" (keller, 2008: 140). brand element or brand identity is any means or mark that serves to differentiate and identify the brand. the literature review of branding strategy can be traced back to the literatures on brands, brand identity, visual identity, products and promotions. branding strategy of west java: fashion products of the creative industry 35 extensive literature review on branding strategy can be traced on the study of strebinger (2014) where he mentioned that branding strategy is often used synonymously with the terms "brand architecture" (aaker and joachimsthaler, 2000:8; douglas et al., 2001; kapferer, 2012:309) or "brand structure" (laforet and saunders, 1994/2007). branding strategy is an activity undertaken by a company to differentiate one product offering from other products in the same product category. in addition, branding strategies are used sometimes in different product categories where competitors offerings in the same product category. bhat & reddy (1998) emphasized the importance of brand globalness and product category, whether functional or prestige, as determinants of new brand and or in the development of brand extension. for the development of a brand, it should be noted that local brands can meet customer satisfaction in functional and practical form, while prestige products meet the consumer's need for self-expression. a study by bharadwaj et al. (2010) on indian consumers shows that indian consumers have a higher preference for global brands than local brands from india and judge local brands lower in terms of brand image. their research shows that when new products have substantial attribute changes, then functional local brands are preferred with brand new names. this becomes the basis of this study, i.e. to examine whether the indicators of brand formation for fashion products of smes in the creative industry form the product brand. this study uses visual identity concept which has been published by rufaidah, razzaque & walpole (2003: 2423), which states that the design of products/services (e.g. corporate name, logo type, typography and color), corporate communication tools (e.g. slogan and visual communication) and physical environment of the organization (e.g. spatial design) are parts of visual identity that can enhance the corporate identity of the firm. referring to similar published literature of melewar & saunders (1998), van den bosch, elving & de jong (2006) say that corporate visual identity consists of the following components: "corporate name, logo, color palette, font type, and a corporate slogan, tagline and/or descriptor and these may be applied on, for instance, stationery, printed matter (such as brochures and leaflets), advertisements, websites, vehicles, buildings, interiors, and corporate clothing. sometimes architecture can be an important element in an organization's visual identity." for the purposes of this study, the concept of branding strategy used in this study is adopted from the concept of company's visual identity combined with other concepts of branding strategy developed by several experts. this study defines branding strategy as a number of ways to form brand distinctiveness through product/service design (such as organization name, logo type, grammar, color, and other visual elements), a number of communication tools (such as print media, electronic media and social media) and physical environment (such as the environmental design in which the business is conducted). based on the aforementioned definition, there are three components that shape the dimension of a brand, namely, the design of products/services, marketing communication tools, the physical environment of the organization. to support the afebi management and business review (ambr) vol.02 no.02, december 2017 36 study of literature in this research, the concept from kotler & keller (2012) has been used. however, modifications are made to the definition of each branding component. "products are everything that can be offered to the market to satisfy wants or needs" (kotler & keller 2012: g7). in this research, the component of branding strategy examined from product aspect is the product/service design offered by the smes in the creative industry for fashion products made from textiles. so product/service design in this research is defined as a number of product design elements that are unique or different from other competing products such as brand names, logos, letters, colors, styles, and other elements (rufaidah et al., 2003: 2423). marketing communication (kotler & keller 2012: g5) are the means by which firms attempt to inform, persuade, and remind consumers directly or indirectly about the products and brands they sell. marketing communication tools are the tools by which companies use to inform, persuade, and remind consumers directly or indirectly about the products and brands they offer (such as print, electronic, and social media). the types of media being studied are print media (newspapers and magazines); broadcast media (radio, television); network media (telephone, cable, satellite, wireless); electronic media (audio recording, video recording, videodisc, cd-rom, internet pages); and display media (billboards, signs, posters). most non-personal messages go through paid media. rufaidah et al. (2003: 2423) proposed that the physical environment of organization is one of corporate visual identity factors which influences consumer perceptions. considering that this research uses visual identity element as one of the pressing strategy components, the physical environment of organization becomes one of the branding strategy components. an example of a company's physical form is spatial design which is the design of space between interior and exterior environments in both public and private areas (companies/organizations). spatial design elements include spatial layout, room condition, environmental condition and other elements. therefore, physical environment of organization used in this research is defined as a number of elements of spatial design in the form of physical environment, spatial layout, room condition, environmental condition and other physical elements of a company. as compared to previous research, this study is unique in that it is the first study explaining branding strategy based on consumer perceptions of fashion products produced by smes in west java and the first study of branding strategy dimensions and their significant within sme industry. consumer perceptions of the branding strategy applied by the smes in fashion creative industry in west java has not been examined in any great detail. the second contribution of the paper lies in a replication of conceptualization and measurement of branding strategy which here is conceived of as the ensemble of three dimensions, namely, product design, marketing communication tools and physical environment. the object of the study is unique in its capability to provide support for the findings. 3. research methodology the research applied a single cross-sectional method. in single crosssectional design, one sample of respondents is drawn from the target population and branding strategy of west java: fashion products of the creative industry 37 information is obtained from this sample only once (malhotra 2010: 108). the method of analysis is descriptive. the study starts from primary and secondary data collection to identify and determine the branding strategy used by smes, especially those selling fashion products. the population in this study is the consumers of fashion creative industry products produced by smes in west java. based on the calculations using slovin’s formula, the number of respondents required for this study is about ninety-seven respondents. however, the study has collected 129 respondents. the stages in this research activity started from primary and secondary data collection to identify fashion products in the creative industry produced by smes in west java and product user responses to branding strategy used by smes of fashion products. prior to conducting survey activities to the target respondents, the existing conditions in the field has been directly observed, i.e. the business and consumers of fashion products in the creative industry. the cities and regencies that are qualified for the survey are those that have been considered to have fashion creative industry. the cities include bandung city, cimahi city and cirebon city, while the regencies include bandung regency, west bandung regency, garut regency and subang regency. representations of 3 out of 9 cities and 4 out of 18 regencies are considered to be quite representative. but in implementation, not all respondents were willing to fill it out the questionnaires, so the most responses are obtained from bandung city, cirebon city, garut regency and subang regency. the main observation units in this research are smes in the creative industry, relevant organizations in west java provincial government (such as department of industry and trade, especially promotion and cooperation sector). the population of the study is all consumers of creative industry products in west java. this research focused on consumers of creative industry products that have lived in west java for at least two years. in addition, the study also interviewed smes who produce fashion products that are part of the creative industry cluster. sampling method used in this research is simple random sampling. this study focused on measuring the perceptions of consumers of creative industry products in west java, especially fashion products produced by smes. the 1-to-5 likert scale was used to show the degree of agreement (1 for strongly disagree to 5 for strongly agree). the operationalization of variables uses three dimensions to measure branding strategy, namely: product design. product design is one of the strongest dimensions of branding strategy applied by most smes in west java. the indicators of product design in this research are as follows: product brand uniqueness, uniqueness of product that makes it easy to remember, product design reflects product quality, product features compared to products from other regions, brand name reflects product exclusiveness, brand name uniqueness, product quality reflects brand name, billboard graphic design, the attractiveness of brochure graphic design, up-to-date product design to product exclusiveness, affordability, the attractiveness of logo, the familiarity of logo, unique logo reflects the quality of fashion products, the uniqueness of letters on the label, the uniqueness of the label, the uniqueness of afebi management and business review (ambr) vol.02 no.02, december 2017 38 different letters, more interesting color variations, the diversity of colors as product's characteristic and the diversity of colors as the added value of the product. marketing communication tools. marketing communication tools are applied by smes that produce fashion products in the creative industry in west java. the marketing communication tools are attractive branding strategy adopted by most smes in west java. the indicators of marketing communication tools are as follows: newspapers as media of promotion, magazines and tabloids as media of promotion, blogs and websites as media of promotion, internet media as media of promotion, facebook as medium of promotion, twitter as medium of promotion, radio as medium of promotion and tv as medium of promotion. physical environment of the place of sale of fashion products. the place for selling fashion products (outlet) is part of the physical environment dimension. it is also applied by the smes that produce fashion products in the creative industry in west java. the indicators are as follows: the strategic location of the outlet, the quality of facilities reflects the quality of service, the ease of access to public transportation to reach the outlet, ease of consumer service based on the spatial design of the outlet, cleanliness of the outlet, environmental care around the outlet, maintenance of public facilities, availability of parking area. aaker et al. (2011: 259) state that likert scale is a scale indicating a statement of agreement or disagreement with the diversity of statements relating to attitudes or objects. therefore, 20 items were used to measure product design, 8 items to measure marketing communication tools and 9 items to measure the physical environment of organization. some items were negative items (i.e. number 8 and number 12). negative items were used to avoid mistakes made by respondents when filling out the questionnaires. the instrument consists of two components, which are the respondent profile (location of residence, age, education, and income) and items to measure the branding strategy dimensions. 4. results the results of the study discussed in this section explain the consumers’ ratings of fashion products in the creative industry based on the indicators described in the previous section. the next section shows the percentage of consumer perceptions of fashion products based on the indicators studied. the majority of the evaluation results show an encouraging rate, but there are some indicators of which results are lower than fifty percent. these indicators are discussed in the conclusion section. descriptive statistics the profile of the respondents of the study are as follows: from the total of 129 respondents who were all west javanese people spread in 27 regencies and cities, 55% were male and 45% were female; 32% were between 20-25 years old, 6% were between 26-30 years old, 12% were between 31-35 years old, 16% were between 36-40 years, 19% were between 41-45 years old and 15 % were over 45 years old; 39% were unmarried, 60% were married and 1% was widowed; 52% had master degree, 32% had bachelor degree, 11% had high school degree, 1% had diploma degree, 4% had doctoral degree and none had elementary or junior high branding strategy of west java: fashion products of the creative industry 39 education; 40% were students, 22% were private employees, 4% were entrepreneurs, 17% were civil servants/military and 17% had other jobs. product design. product design is one of the strongest dimensions of branding strategy applied by most smes in west java. the results for indicators of product design are as follows: product brand uniqueness (72.9%), product uniqueness (65.9%), product design reflects product quality (61.2%), product features compared to products from other regions (55.0%), brand name reflects product exclusiveness (55.0%), brand name uniqueness (48.1%), product quality reflects brand name (50.4%), billboard design graphic design (56.6%), the attractiveness of brochure graphic design (71.3%), up-to-date product design to product exclusiveness (82.9%), affordability (89.9% ), the attractiveness of logo (62.8%), the familiarity of logo (48.8%), unique logo reflects the quality of fashion products (47.3%), the uniqueness of letters on the label (51.2%), the uniqueness of the label (39.5%), the uniqueness of different letters (44.2%), more interesting color variations (55.8%), the diversity of colors as product’s characteristic (55.0%) and the diversity of colors as the added value of the product (62,8,9%). marketing communication tools. marketing communication tools are applied by smes that produce fashion products in the creative industry in west java. the results for indicators of marketing communication tools are as follows: newspapers as media of promotion (58,1%), magazines and tabloids as media of promotion (68,2%), blogs and websites as media of promotion (79,8%), internet media as media of promotion (74,4%), facebook as medium of promotion (82,9%), twitter as medium of promotion (74,4%), radio as medium of promotion (54,3%) and tv as medium of promotion (33.3%). physical environment of the place of sale of fashion products. the place for selling of fashion products (outlet) is part of the physical environment dimension. the results for indicators of physical environment are as follows: the strategic location of the outlet (88.4%), the quality of facilities reflects the quality of service (79.1%), the ease of access to public transportation to reach the outlet (88.4%), the ease of consumer service based on spatial design of the outlet (73,4%), cleanliness of the outlet (69,0%), environmental care around the outlet (58,9%), maintenance of public facilities (48.1%), availability of parking area (51.2%). 5. discussion based on the results of the study on product design, it can be concluded that fashion product design in west java is one of the indicators that shapes the uniqueness of creative economy in west java. the indicators forming the design of fashion products as a characteristic of west java are as follows: fashion products in west java have distinctive brands compared with fashion products from other provinces; fashion products in west java have unique characteristics that are easy to remember compared with fashion products from other provinces; the design of fashion products in west java reflects a better quality than the design of fashion products from other provinces. the brand names used in fashion products in west java reflect the uniqueness and quality of fashion products and more unique than those of other products. afebi management and business review (ambr) vol.02 no.02, december 2017 40 the graphic design of fashion products advertisement through billboards and brochures in west java is interesting. the uniqueness of design of fashion products in west java is always up to date. fashion products in west java are easy to find by consumers. however, the findings found that the use of the logo on fashion products in west java did not attract the attention of consumers. the logos of fashion products in west java are easy to recognize compared with those of fashion products from other regions. the uniqueness of logos of fashion products in west java reflects the quality of fashion products. unique fonts used on labels of fashion products in west java add more attractiveness to the products. the letters used on labels of fashion products in west java show the uniqueness of west java. the letters used are unique and different from those used for fashion products from other regions. fashion products in west java offers more interesting color variations. the color diversity of fashion products in west java reflects the added value of the products. based on the results of the study on marketing communication tools, it can be concluded that marketing communication tools used by smes to promote the fashion products in west java are one of the indicators that shapes the uniqueness of creative economy in west java. the indicators forming the marketing communication tools are as follows: the smes of fashion products in west java use media such as newspapers, magazines and tabloids, blogs and websites to promote their products. social media such as facebook and twitter are also used for promotion of fashion products in west java because they are very popular among consumers. social media like twitter also is one of the media that is also used to market fashion products in west java region. in addition, fashion products in west java are also promoted through broadcast media such as radio and tv. based on the results of the study on physical environment, it can be concluded that physical environment as place for selling the fashion products by smes in west java is one of the indicators that shapes the uniqueness of creative economy in west java. the indicators forming the physical environment as place for selling the fashion products are as follows: the location of the outlets of fashion products in west java are strategic and easy to reach by consumers; the good facilities of the outlet reflects the quality of service. public transportation is available anytime as the access to reach the outlet; the spatial design of the outlet facilitates consumers during service; the atmosphere of the outlet is convenient for consumers who are shopping; the cleanliness of the outlet is well preserved; the environment around the outlet is well preserved; and public facilities in the neighborhood of the outlet are well maintained. 6. conclusion the results of the study show that consumer perceptions of some indicators are below 50%, mostly in visual branding indicators, such as the brand name uniqueness (48,1%), the familiarity of logo (48,8%), unique logo reflects the quality of fashion products (47,3%), the uniqueness of the label (39,5%) and the uniqueness of different letters (44,2%). these results show that the role of brand names, logos, and typography designs has a very important part in the minds of consumers of creative products, especially in the fashion industry. the smes need to collaborate branding strategy of west java: fashion products of the creative industry 41 with graphic designers to leverage the role of visual graphic design so as to create unique brand names, logos and letters of fashion products in the minds of consumers and distinct brands compared to with those of similar competitors in the industry. in relation to marketing communication tools, 33.3% of respondents stated that fashion products in west java has been widely known from tv advertisement. so there is a potential to improve the performance of tv advertisement in marketing fashion products. although advertising on tv is one of the most expensive forms of promotion, it is worth noting that smes in this industry use mutually beneficial partnerships with various industries and tv media managers to promote fashion creative industry products. furthermore, only 48.1% of respondents stated that public facilities in the neighborhood of the outlet are well maintained. this needs to be a serious concern of smes with a response that the cleanliness of the sales place of fashion products in west java show the cleanliness is well maintained. in other words, hygiene programs to keep the product’s sales spot needs to be a priority and enhanced. so, cleanliness of the sales place or the outlet could become the identity physical environment. references aaker, d., kumar, v., & leone, r. (2011). marketing research, 10th ed. wiley. aaker, d.a., & keller, k.l. (1990) consumer evaluations of brand extensions. journal of marketing, 54 (1): 27-41. bhat, s., & reddy, s. k. (1998). symbolic and functional positioning of brands. journal of consumer marketing, 15(1), 32-43. bharadwaj, v., kumar, a., & kim, y.k. (2010) brand analyses of us global and local brands in india: the case of levi's. journal of global marketing, 23 (1), 80-94 instruksi presiden republik indonesia nomor 6 tahun 2009 [instruction of the president of the republic of indonesia number 6 year 2009] keller, k. l. (2008). strategic brand management, third edition. pearson education limited. kotler, p., & keller, k. (2012). marketing management, fourteenth edition. pearson education limited. laporan penelitian, tim inisiasi (taskforce) ekonomi kreatif propinsi jawa barat 2011, bappeda pemerintah provinsi jawa barat [research report, team initiation (taskforce) creative economy west java province 2011, bappeda west java provincial government] malhotra, n. k. (2010). marketing research : an applied orientation, sixth edition. pearson. afebi management and business review (ambr) vol.02 no.02, december 2017 42 rufaidah, p. (2012). ekonomi kreatif: peluang & kebijakan. tabloid inspirasi, 25 juni 2012 [rufaidah, popy. 2012. creative economy: opportunities & policies. inspiration tabloid, june 25, 2012] strebinger, a. (2014). rethinking brand architecture: a study on industry, companyand product-level drivers of branding strategy, european journal of marketing, vol. 48, issue 9/10, pp. 1804-1782 singh, b. (2014). measuring effectiveness of branding strategy using second order factor analysis. international journal of trade & global business perspectives, 3(2), 929-936 analysis of factors affecting brand loyalty: a case study of janji jiwa coffee 72 analysis of factors affecting brand loyalty: a case study of janji jiwa coffee danu triwinarko widodo 1and hapsari setyowardhani 2* 1,2 universitas indonesia, depok, indonesia abstract as the indonesia world records museum (muri)’s 2019 winner of the category of fastest growing coffee shop in 2019, janji jiwa strives to maintain and increase its number of customers. this study replicates kim and lee's (2016) research on how coffee shops in south korea increase their brand loyalty. it employs the purposive sampling method with 206 respondents and analysis is conducted using structural equation modeling (sem). the findings of the study reveal that customer brand identification has a positive effect on brand involvement, but no positive effect on brand-decision involvement. both self-congruity and service value have a positive effect on brand involvement and brand-decision involvement. in addition, brand involvement and brand-decision involvement have a positive effect on brand satisfaction and brand loyalty. finally, brand satisfaction has a positive effect on brand loyalty. managerial implications and recommendations related to these findings will be discussed further in order to guide future research. keywords: brand loyalty, brand satisfaction, coffee shop, customer-brand identification, involvement, self congruity, service value 1. introduction indonesia is one of the countries with the highest coffee consumption in the world. ico noted that in the 2016/2017 period this reached 4.6 million packs (per 60 kg), making it 6th in the ranking of countries with the highest coffee consumption, after russia. the largest coffee consumption in the world is among countries that are members of the european union, with a consumption of more than 42.6 million packages. considering their spread in indonesia, this study focuses on coffee shops, especially in the jakarta metropolitan area (jabodetabek). moreover, coffee shops are one type of business that requires relatively little capital and are easy to run, without having to have complicated coffee processing skills. moreover, the coffee shop business that can reach all levels of society, from middle-low to middle-upper class, which makes them relatively attractive to indonesians. this study replicates the research conducted by kim & lee (2017) entitled "promoting customers’ involvement with service brands: evidence from coffee shop customers". in their study, they found that coffee shop managers must understand their business well amidst the massive growth of such shops in south korea due to the fact that they are very easy to start up and are very popular. however, one of the main problems in managing a coffee shop is the high failure rate because of the intense competition (kim & lee, 2017). therefore, one of the reasons why many coffee shops do not survive in the long term is due to industry standardization, which makes it difficult for them to differentiate between customer and company relationships between coffee shops (cha et al ., 2015, choi et al., 2017). * corresponding author. email address: hapsari.setyowardhani@ui.gmail.com afebi management and business review (ambr) vol.04 no.02, december 2019 73 2. theoretical review in general, involvement shows the degree of perceived relevance and importance associated with an object, which makes it valuable to an individual. customer involvement can take the form of an individual state (motivation/interest) (huang et al., 2010); a process (eternal ) (huang et al., 2010; kinard and capella, 2010); and/or serve as a moderator between relationships (san martin et al., 2011). the concept of engagement has been applied to the context of advertising (lee et al., 2015), purchasing decisions (bojanic & warnick, 2012), and/or the service industry (kinard & capella, 2010). based on laaksonen's (1994) research, this study investigates three different approaches to examining the factors that influence customer engagement with service brands. laaksonen proposes three categories of engagement: a. cognitive-based involvement approaches; for example, psychological ties between the individual and the stimulus object; b. the individual-state involvement approach, which is the inherent potential of a situation to attract the attention of individuals on their behavior in that situation; and c. the response-based involvement approach, that is, the point of view related to information processing. based on mittal and lee (1989), there are two different types of brand involvement, namely: a. brand involvement or product involvement, related to the brand itself, with a focus on whether the brand meets the consumer's consumption objectives. brand or product involvement can also be defined as the interest of consumers in a product class, which comes from their perception that the product class meets their values and goals in consuming certain brand products; and b. brand-decision involvement or purchase involvement, which describes the customer's purchasing decision on a brand in this study. brand-decision or purchase involvement can also be defined as making a selection when choosing a brand. a low level of brand-decision involvement implies weak brand selection, whereas a high level implies a very strong choice of brand. brand satisfaction refers to the overall satisfaction of customers with a brand, based on all interactions with service providers (olsen, 2007). when customers are satisfied with a brand, they are more likely to have higher brand loyalty (li & petrick, 2008). brand loyalty is defined as a condition in which consumers have a positive assessment of a brand, have a commitment to it, and have a tendency to repurchase products from the brand in the future (mowen, 1995). therefore, brand loyalty is highly influenced by the level of consumer satisfaction or dissatisfaction with certain brands. 3. research method this research adopts a conclusive descriptive approach, utilizing both primary and secondary data. the primary data were collected through survey questionnaires distributed to customers of the janji jiwa coffee shop who had visited and consumed coffee there three times or more. 206 out of the 211 questionnaires were valid. meanwhile, the secondary data were gathered from journals, books, and online news articles related to the variables used in this study. analysis of factors affecting brand loyalty: a case study of janji jiwa coffee 74 the study replicates that conducted by kim & lee (2017), entitled “promoting customers’ involvement with service brands: evidence from coffee shop customers" based on the following research model. figure 1 research model source : son-ho and seonjeong (2016) for this study, the researchers made modifications to the research object. the previous research by kim and lee (2017) focused on more than eight leading coffee shops in south korea, including starbucks, caffebene, coffee bean, angel-in. -us, hollys, ediya coffee, tom n toms, and several other independent coffee shops. this study, however, only examines the janji jiwa coffee shop. however, the research model, research variables and question items employed are similar to those used by kim and lee (2017). a pre-test was conducted by distributing research questionnaires to 30 respondents as a sample to ascertain whether the research instrument could be applied in further research. for this reason, it was necessary to first calculate the validity and reliability of each indicator. the main test in this study employed structural equation modeling (sem). to determine how well the observed variables represent each construct, measurement model and structural model analysis were performed. the study includes nine hypotheses: h1. customer-brand identification has a positive effect on (a) brand involvement and (b) brand-decision involvement; h2. self-congruity has a positive effect on (a) brand involvement and (b) branddecision involvement; h3. service value has a positive effect on (a) brand involvement and (b) brand-decision involvement; h4. brand involvement has a positive effect on brand-decision involvement; h5. brand involvement has a positive effect on brand satisfaction; h6. brand-decision involvement has a positive effect on brand satisfaction; h7. brand involvement has a positive effect on brand loyalty; h8. brand-decision involvement has a positive effect on brand loyalty; and h9. brand satisfaction has a positive effect on brand loyalty. 4. results the minimum, maximum, total (total value), average, and average total answers of each variable item responded to by the 206 participating respondents were observed. afebi management and business review (ambr) vol.04 no.02, december 2019 75 table 1 descriptive variable analysis indicator n minimum maximum sum mean total mean customer-brand identification cbi1 206 1 5 795 3,85 3,72 cbi2 206 1 5 788 3,82 cbi3 206 1 5 751 3,65 cbi4 206 1 5 731 3,55 self-congruity sc1 206 1 5 513 2,49 2,43 sc2 206 1 5 495 2,40 sc3 206 1 5 504 2,45 sc4 206 1 5 494 2,39 service value sv1 206 1 5 822 3,99 3,98 sv2 206 1 5 804 3,90 sv3 206 1 5 879 4,27 sv4 206 1 5 802 3,89 sv5 206 1 5 789 3,83 brand involvement bi1 206 1 5 496 2,41 2,40 bi2 206 1 5 469 2,28 bi3 206 1 5 507 2,46 bi4 206 1 5 501 2,43 bi5 206 1 5 499 2,42 brand-decision involvement bdi1 206 1 5 693 3,36 3,43 bdi2 206 1 5 693 3,36 bdi3 206 1 5 708 3,44 bdi4 206 1 5 733 3,56 brand satisfaction bs1 206 1 5 788 3,82 3,75 bs2 206 1 5 762 3,70 bs3 206 1 5 777 3,77 bs4 206 1 5 763 3,70 bs5 206 1 5 768 3,73 brand loyalty bl1 206 1 5 782 3,80 3,66 bl2 206 1 5 735 3,57 bl3 206 1 5 754 3,66 bl4 206 1 5 743 3,61 source : lisrel output analysis furthermore, a causal relationship analysis was conducted to observe the influence of the variables on each other. to do this, the t-value and the equation coefficient, or (r²), were examined. tabel 2 t-values of the structural model hypotheses hypotheses statement t-value conclusion h1a customer-brand identification has a positive effect on brand involvement 4,02 significant h1b customer-brand identification has a positive effect on brand-decision involvement -0,56 not significant h2a self-congruity has a positive effect on brand involvement 3,79 significant analysis of factors affecting brand loyalty: a case study of janji jiwa coffee 76 source : lisrel output analysis from the lisrel output processed, it was found that eleven of the twelve hypotheses on the relationship between the variables had t-values of ≥ 1.645, namely h1a = 4.02, h2a = 3.79, h2b = 2.28, h3a = 3.39, h3b = 6.04, h4 = 3.12, h5 = 2.06, h6 = 7.81, h7 = 1.92, h8 = 2.39 and h9 = 7.18, which indicates that there is a significant relationship between the variables in the related hypothesis. besides, one of the twelve research hypotheses does not meet the requirements for significant influence, with a t-value that does not meet the requirements of ≥ 1.645 or ≤ -1.645, namely h1b = -0.33, which indicates that the relationship between the related variables in the hypothesis is not significant. 5. discussion the individual state of customer involvement can represent an individual's behavior (laaksonen, 1994). self-congruity describes the approach to individual circumstances. customers tend to infer their self-image and/or self-identity through their consumption experiences. for example, self-congruity explains that customers are more likely to buy a product brand when the brand matches their image. ladik, et.al.(2015) describes how assets can represent themselves, express individual personal achievements, and show social status. customers' views about themselves can be related to the services they use, such as the coffee shops they visit (kim & jang, 2014). this implies that customers recognize their self-concept through the consumption of coffee brands due to the symbolic nature of the coffee industry. a response-based approach can explain how customers process and evaluate external information during the service provision process. customer-perceived value represents a response-based approach. the exchange process is dynamic in the service industry due to the evolving interactions between service providers and customers (sierra & mcquitty, 2005). perceived value refers to a customer's overall assessment of a product or brand based on its benefits and costs (zeithaml, 1988), while service value describes the various service components that shape customer value perceptions by the trade-off between what customers receive and what they provide. kim and jang (2014) suggest that coffee shop customers tend to fulfil their values (materialism), social values, and functional values through consumption. they identify trends in symbolic consumption related to individual and social values that ultimately influence customer coffee shop loyalty. therefore, it is estimated that when customers perceive value during their consumption processes, such as competitive pricing or high quality, they are more likely to be involved with brands and brand decisions. h2b self-congruity has a positive effect on branddecision involvement 2,28 significant h3a service value has a positive effect on brand involvement 3,39 significant h3b service value has a positive effect on branddecision involvement 6,04 significant h4 brand involvement has a positive effect on branddecision involvement 3,12 significant h5 brand involvement has a positive effect on brand satisfaction 2,06 significant h6 brand-decision involvement has a positive effect on brand satisfaction 7,81 significant h7 brand involvement has a positive effect on brand loyalty 1,92 significant h8 brand-decision involvement has a positive effect on brand loyalty 2,39 significant h9 brand satisfaction has a positive effect on brand loyalty 7,18 significant afebi management and business review (ambr) vol.04 no.02, december 2019 77 6. recommendations it is acknowledged that the research contains some limitations. therefore, the following recommendations are suggested for researchers conducting further studies to improve these: a. develop and modify the model by adding either independent or moderating variables that are relevant to the research context. b. conduct research in different industrial contexts to confirm the application of this model to these. c. the research object in this study is only the janji jiwa coffee shop; in the future research could be carried out on several other leading coffee shops in jabodetabek and indonesia. d. the selection of respondents should represent more types of consumers to better describe the entire age group, occupation, and income. e. screen the questionnaire respondents by asking whether they consume janji jiwa products by buying them or obtaining them free. this is because such a difference could produce bias when completing the survey due to the question of whether or not the respondents had made sacrifices. references bojanic, d., &warnick, r. 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(1988). consumer perceptions of price, quality and value: a means-end model and synthesis of evidence. journal of marketing, 52. 2-22. 10.1177/002224298805200302. https://doi.org/10.1016/0167-4870(89)90030-5 https://doi.org/10.1016/0167-4870(89)90030-5 https://www.researchgate.net/deref/http%3a%2f%2fdx.doi.org%2f10.1002%2fmar.20384 the multidimensional constructs of organizational justice and organizational commitment: empirical evidence from public and private organizations in indonesia 59 9 the multidimensional constructs of organizational justice and organizational commitment: empirical evidence from public and private organizations in indonesia fahrudin js pareke 1* 1 university of bengkulu, bengkulu, indonesia abstract the multidimensional construct of organizational justice and organizational commitment has attracted longstanding attention and debate among managers, researchers and academicians. to achieve significant progress, studies in this area should be directed to investigate the two sides simultaneously, construct validity and substantive validity. so that the progress achieved can be balanced between the conceptualization and definition of the construct itself as well as the relationship and its effect on other constructs. therefore, current study intents to test the validity dan reliability of four-factors of organizational justice (ffoj) construct, and to test its effect on organizational commitment dimensions. the research respondents were 264 private employees and civil servants who studying in 3 graduate programs at university of bengkulu, choosen using stratified random sampling. two-hundred-and-fifty-seven respondents participated in the study. data analysis used factor analysis, reliability test, and hierarchical regression analysis (hra). the conclusions of this study provide strong support for the ffoj conceptualization. of the 20 items questionnaire included in factor analysis, 19 items loaded in 4 dimensions, which is distributive justice (4 items), procedural justice (6 items), interactional justice (4 items), and informational justice (5 items). the reliability of all dimension are good, with cronbach 'alpha (α) score greater than 0.7. almost all dimensions of ffoj affect the dimensions of organizational commitment, except the interactional justice that has no effect on the affective commitment. further investigation is highly recommended so that organizational justice measurement becomes more workable in explaining the phenomena of justice in the daily life of the organization. the empirical evidence also further emphasized the important role of organizational justice in order to foster, enhance, and maintain organizational commitment. attempts to acquire employees with high organizational commitment will face serious obstacles when the employees still perceive there is no fairness in their organization. keywords: afective commitment, continuance commitment, distributive justice, interactional justice, informational justice; procedural justice, normative commitment * corresponding author. email address: pareke@unib.ac.id mailto:pareke@unib.ac.id afebi management and business review (ambr) vol.02 no.02, december 2017 60 1. introduction the aspects of justice is very important in the dayly life of the organization, given the consequences that can occur if employees perceive the existence of injustice. for example, if an organization or its representatives perceived to be unfair, members of the organization will have low organizational commitment and ocb (skitka and bravo, 2005). skitka and bravo (2005) also found that injustice will encourage crime in the workplace and the desire to protest. it is not surprisingly, the issues relating to justice become the most attractive issue for everyone in the organization (sert, et al., 2014). organizational justice, therefore, is an issue that needs serious attention (azizi and zulkiflee, 2016). as greenberg (2001) stated, everyone believes that to be fair depends on generally agreed opinions on appropriate ways to distribute results and ways of treating others. this general agreement is the origin of expectations on which to estimate fair treatment. behaviors that meet these expectations are interpreted as fair action, while those that violate expectations are considered unfair. initial debate on organizational justice emphasised on the aspect of distributive justice, but lately the perspective of procedural justice is increasingly being studied (folger and konovsky, 1989). according to chan (2000) distributive justice can be defined as a perception of fairness about results or resources allocation. the procedural justice aspect deals with the procedures by which the organization distributes organizational results and resources to its members. folger and cropanzano (chan, 2000) define procedural justice as equity issues relating to the methods, mechanisms, and processes used to determine outcomes. in recent studies, the concept of organizational justice has undergone a very rapid development, by promoted of a new dimension of organizational justice, interactional justice. interactional justice relates to the interaction between organization members with its refresentatives. the informational justice proposed by colquitt (2001) as a fourth dimension, relating to the access and transparency of information within organizations. the colquitt’s (2001) ffoj conceptualization has been used and tested extensively in various settings and countries (dfaz-gracia et al., 2014; kovacevic at al., 2013; shibaoka et al., 2010). this research stream basically tried to investigate the construct validity aspect, conceptualization and definition of construct of organizational justice. these research stream is important, as it seeks to minimized obstacles to the development of the body knowledge and literature in this field over the long term. in particular, to eliminate difficulties in understanding the patterns contained in the empirical literature in this field (podsakoff et al., 2000). other research streams focused more on the substantive validity, to explain the pattern of relationships between organizational justice and other constructs, such as job satisfaction, ocb, and organizational commitment. organizational commitment is one form of employee work attitude that affected by organizational justice. greenberg and baron (2000: 170) defined attitudes as the clusters of feelings, beliefs and tendencies of relatively stable behavior (eg tendency toward certain objects). one's attitude in working life in organizational behavior literature is called work-related attitudes, which included job satisfaction (attitude toward work) and organizational commitment (attitude toward the organization). organizational commitment in general is employee's involvement and identification with a particular organization (clugston, 2000). the multidimensional constructs of organizational justice and organizational commitment: empirical evidence from public and private organizations in indonesia 61 the explanation and verification of the effect of organizational justice on organizational commitment is done through theories, as well as empirical studies. conceptually, some theories have been proposed to explain the phenomena of the relationship among perception of justice, attitudes and behavior. among them are social exchange theory (set), leader-member exchange (lmx), and equity theory (et). set is an economical model of human behavior; an employee's desire to maximize rewards and minimize losses that support the interaction between them and the organization or those who represent it. this model has a premise on beliefs about the social context of the organization, including relationships based on mutual trust and interaction, carrying non-specific obligations (wat and shaffer, 2005). these obligations can take the form of a work attitude such as organizational commitment. employees portray this behavior to maintain a mutually beneficial relationship with the organization. as time passes, a pattern of reciprocal relations evolves, resulting in a perception of a balance in an exchange relationship. when the responsible party is identified, according to the set, individuals develop a desire to provide feedback, leading to the creation of shared obligations in a relationship (murphy et al., 2003). lmx theory argues that leaders do not build a same relationships with their subordinates. for some of their subordinates, leaders formed a better quality of exchange characterized by trust, affection, and respect. while with some other subordinates the leader formed a lower quality of exchange, that includes only the interactions required by the definition of a person's role (murphy et al., 2003). lower quality exchange is characterized by the use of formal organizational authority. while higher quality relationships involve the exchange of resources beyond those listed in formal employment contracts. therefore, employees are more likely to demonstrate organizational commitment if they work in a fair organization and have a high quality relationship with their supervisors (wat and shaffer, 2005). conceptual explanations of the relationship between employees’ perceptions and attitudes also found in equity theory, which promotes that individuals are motivated to maintain fairness of relationships between them, and avoid unfair or unnatural relationships (greenberg and baron 2000 ). according to equity theory, employees will feel very satisfied when the ratio between their benefits received with contributed is proportional to the ratio of their peers. if employees perceive they are treated fairly by their supervisors, they will tend to reward them by showing a positive attitude toward their work, work performance, and commitment. efforts for providing the empirical evident of the literatures of organizational justice on commitment have been made through empirical researches (such as srivastava, 2015, rafei-dehkordi, 2013; jawad et al., 2012; davis & rothstein, 2006; hassan, 2002; aquino, 1997; pareke, 2004; pareke, 2003). however, previous studies have not generally proven the effect of each dimension of organizational justice on each dimension of organizational commitment as a whole. rafei-dehkordi (2013) and jawad et al. (2012) for example, examines only three dimensions of organizational justice (distributive, procedural, and interactional) on organizational commitment without specifying its dimensions. pareke (2005) concluded that distributive justice affects affective and normative commitment, and procedural justice affects continuance and normative commitment. afebi management and business review (ambr) vol.02 no.02, december 2017 62 2. methods respondents the total respondents was 264 people, who were the private employees and civil servants currently studying in 3 graduate programs at faculty of economics and business, university of bengkulu, indonesia. samples were chosen using stratified random sampling method, where the population will be grouped based on the study program, then from each group will be taken some random samples. of the 264 selected respondents, only 257 respondents participated in the study. the demographic composition of respondents was 61.1% male; 65,3% were between 26 to 40 years old; 59,9% had a tenure under 11 years; and 77.8% worked at government institutions. measures organizational justice measured by adopting colquitt (2001)’s conceptualization, consisting of four dimensions, distributive justice, procedural justice, interactional justice, and informational justice. using 20 item statements measured by semantic differential scale, score 1 = never up to 5 = always (sekaran, 2000: 198-199). organizational commitment measured by alen & meyer (1990), consisted of affective, continuance, and normative commitment. each dimension consists of 6 items, using a 5-point likert scale, 1 = strongly disagree to 5 = strongly agree. analyses data analysis was done in 3 stages, first to re-verify the dimensions of organizational justice using factor analysis. principal component analysis was applied to transform all items into a set of group variables that are not correlated with each other (sekaran, 2000: 409). the factor rotation method used was the varimax rational approach, where maximum simplification is possible if there are only 1 and 0 in a column. the varimax method maximized the amount of variance by loading required from the factor matrix. with the varimax approach, it will tend to show some high loading (ie close to -1 or +1) and some loading close to 0 in each column of the matrix (hair et al (1998: 109-110) .varimax tends to provide a separation of factors more clearly. in addition, further data analysis to test the level of reliability, by summing the cronbach 'alpha (α) score. furthermore, the hierarchical regression analysis (hra) applied to examine the effect of ffoj dimensions on each dimension of organizational commitment. using the 2 steps approach at 3 models of regression (depends on the number of dependent variables). in the first step, the control variables (gender, age, tenure, job level, organization type) as independent variables were reggressed on dependent variable. in the second stage, the ffoj dimensions (distributive, procedural, interactional, and informational) were included as independent variables, after inputting the control variables first. to evaluate the regression model, the parameter used was the f value, with the model criterion to be considered good if the probability value (ρ value) ≤ 0.05. to conclude whether the dependent variable had an effect on the independent variable, the parameter used was the value of beta value (β), with the criterion of the dependent variable having an effect on the independent variable if the probability value (ρ value) ≤ 0.05. the multidimensional constructs of organizational justice and organizational commitment: empirical evidence from public and private organizations in indonesia 63 result of factor analysis of organizational justice factor analysis to the 20 ffoj items with varimax rotation method, resulting 5 factors/components. as table 1 shows, the first factor was able to explain 30.95% of the data variance. the second factor explained 11.43% of the data variance. the third factor explained 8.33% of the data variance. and the fourth factor was able to explain 6.77% data variance. table 1 also shows the total variance explained by four factors of ffoj, reaching 57, 48%. table 1 persentase of total variance explained total variance explained component initial eigenvalues total % of variance cumulative % 1. 6.190 30.948 30.948 2. 2.286 11.430 42.378 3. 1.665 8.326 50.705 4. 1.354 6.769 57.474 extraction method: principal component analysis. table 2 shows the factor loading of each item ffoj that have score above 0,4. the first factor, referring to the colquitt (2001) conceptualization, is procedural justice. initially, this dimension had 7 statement items, however, in this study reduced to 6 items. one item, which is "i have been able to appeal the outcomes arrived at by those procedures" formed another factor (factor 5), so it does not fit into this factor. factor 2, referring to the informational justice dimension, has 5 statements. factor 2 dan 4, referring to the interactional dan distributive justice dimension, has 4 statements. while the fifth factor has only 1 item. afebi management and business review (ambr) vol.02 no.02, december 2017 64 table 2 rotated component matrix no. items component 1 2 3 4 5 1. my outcome reflect the effort i have put in to my work .741 2. my outcome appropriate for work i have completed .670 3. my outcome reflect what i have contributed to the organization .768 4. my outcome justified, given my performance .718 5. i have been able to express my views and feelings during those procedures .595 6. i had influence over the outcome arrived at by those procedures .672 7. those procedures have been applied consistently .754 8. those procedures have been free from bias .754 9. those procedures have been based on accurate information .623 10. i have been able to appeal the outcomes arrived at by those procedures .748 11. those procedures upheld ethical and moral standards .457 12. he/she has treated me in polite manner .721 13. he/she has treated me with dignity .818 14. he/she has treated me with respect .721 15. he/she has refrained from improper remarks or comments .708 16. he/she has been candid in his/her communications with me .688 17. he/she has explained the procedures throughly .635 18. his/her explanations regarding the procedures reasonable .706 19. he/she communicated details in timely manner .701 20. he/she has seemed to tailor his/her comunications to individual specific needs .549 reliability test of organizational justice and commitment dimensions table 3 shows the results of reliability testing using cronbach's coefficien alpha (α). the goal was to know the level of consistency of the interitem, reflecting the consistency of respondents in response to all question items. respondents may not be consistent in answering items of questions due to differences in perceptions, or because of their lack of understanding of the items. reliability testing was performed for each dimension. although some researchers recommend a level of reliability of not less than 0.8, yet a degree of reliability above 0.7 is still acceptable (ko et al., 1997). according to sekaran (2000), the α coefficient value of less than 0.6 means the reliability is bad, range 0.7 is acceptable, and more than 0.8 is good. all ffoj dimensions and organizational commitment were above 0.7, indicating that all dimensions considered reliable. the multidimensional constructs of organizational justice and organizational commitment: empirical evidence from public and private organizations in indonesia 65 table 3 results of reliability tes no. dimensions total item cronbach’s alpha 1. distributive justice 4 .712 2. procedural justice 6 .808 3. interactional justice 4 .816 4. informational justice 5 .827 5. affective commitment 6 .757 6. continuance commitment 6 .761 7. normative commitment 6 .779 descriptive statistics table 4 presents the mean, standard deviation, and zero-order correlation. the means for all research variables are above the median. these data indicate that the respondents reported a high level of organizational justice and organizational commitment. the correlation between each control variable (sex, age, level of position, type of organization) is good, with correlation coefficients ranging from 0.107 to 0.483. similarly, the level of correlation between each dependent variable and independent is very good, ranging from 0.265 to .786. while the correlation between each control variable with independent and dependent variable is low, ranging from 0.008 to .104. this correlation level indicates the expected direction. tabel 4 means, standard deviation, and zero-order correlations variables means s.d. 1 2 3 4 5 6 7 8 9 10 11 1. gender .61 .488 2. age 35.35 7.808 .182** 3. tenure 10.05 7.131 .175** .937** 4. job level 1.22 .416 -.112 -.227** -.183** 5. organization type 1.56 .617 .182** .483** .453** .107 6. distributive justice 13.0311 2.86939 -.039 -.103 -.105 .020 .089 7. procedural justice 20.4864 4.21873 .056 .087 .095 -.037 .090 .244** 8. interactional justice 14.3852 3.33592 .061 -.076 -.091 .048 .047 .073 .448** 9. informational justice 17.8504 3.84064 .104 .022 -.012 .009 .008 .133* .496** .596** 10. affective commitment 20.7821 3.85570 .069 .053 .047 -.038 .019 .224** .403** .373** .474** 11. continuance commitment 20.9844 3.96850 .043 -.023 -.036 .045 -.020 .234** .472** .468** .598** .654** 12. normative commitment 21.0817 4.05108 .044 .036 .025 -.015 .043 .265** .512** .499** .631** .786** .784** *ρ≤ 0.05, **ρ ≤ 0.001 afebi management and business review (ambr) vol.02 no.02, december 2017 66 the effect of organizational justice on organizational commitment table 5 presents the values of β, the values of f, r2 and δr2. this value is obtained by performing two steps of hra in each dimension of organizational commitment as dependent variables. in the first step, control variables were regressed on affective commitment as a dependent variable. this analysis conducted to determine the effect of control variables on the dependent variable. by entering control variables, the researcher can ensure that the changes that occur in affective commitment variables are no longer caused by control variables. in this first step, evidence was found that sex, age, tenure, job level, type of organization have no significant effect on affective commitment. with a value of r2 is 0.007 indicating that control variables can only explain 0.07% of the data variance contained in affective commitment. in the second step, each dimensions of organizational justice (distributive, procedural, interational, and information) was included as dependent variables on affective commitment. in this second step, information justice positively affected affective commitment at the level of significance ρ ≤ .001. distributive and procedural justice positively affects affective commitment at the level of significance ρ ≤ .005. while interactional justice only shows an effect on affective commitment at the level of significance ρ ≤ .01. the value of f is 11.249, was significant at the level of ρ ≤, 001, which proven that the tested regression model was good and could be used further. the value of r2 increases to 0.291, which means that all independent variables (control variables and organizational justice dimensions) accounted for 29.1% of the data variance contained in affective commitment. there was an increased ability to explain the data variance in affective commitment of 28.4% by dependent variable (δr2 = .284). the same procedure was also applied to the continuance commitment dimension. in the first step, the control variables as independent variables were reggressed on the continuance commitment as a dependent variable. in this first step, result obtained that control variables had no significant effect on continuance commitment. with an r2 value of .008 suggests that control variables could only explained .08% of the data variance in continuance commitment. in the second step, the dimensions of organizational justice (distributive, procedural, intercational, and informational) were included as the dependent variables on continuance commitment after incorporating the control variables. not much different from the hra results with affective commitment as the dependent variable, in this second step, informational justice positively affected affective commitment at the level of significance ρ ≤ .001. distributive, procedural, and interactional justice positively affected continuance commitment at significance level ρ ≤ .005. f value of 20,583 was significant at the level of ρ ≤ .001, which proves that the regression model tested is good and can be used further. the value of r2 increased to .429, which means that all independent variables (control variables and organizational justice dimensions) were able to explain 42.9% of the data variationce in continuous commitment. there was an increased ability to explain data variance on continuance commitment by dependent variables of 42.1% (δr2 = .421). furthermore, the same procedure is also applied to the normative commitment dimension. the control variables as independent variables were reggressed on normative commitment as dependent variable, and obtained evidence that control variables had no significant effect on normative commitment. the multidimensional constructs of organizational justice and organizational commitment: empirical evidence from public and private organizations in indonesia 67 with r2 value of only .004 showed that control variables could only explained .04% of data variationce in normative commitment. as in previous hras, in the second step, the dimensions of organizational justice (distributive, procedural, intercational, and informational) were included as the dependent variables on continuous commitment after incorporated control variables. hra results find that distributive, procedural and informational justice affect the normative commitment at the level of significance ρ ≤ .001. while interactional justice positively affected the normative commitment at the level of significance ρ ≤ .005. f value of 25.913 significant at the level of ρ ≤ .001, which proved that the tested regression model is good. r2 value also better than the results of 2 previous hras of .486, which means that all independent variables (control variables and organizational justice dimensions) were able to explain 48.6% of the data variance in normative commitment. there was an increased ability to explain the existing data variance on normative commitment by dependent variables of 48.2% (δr2 = .482). table 5 result of hierarchcal regression analysis dependent independent affective commitment continuance commitment normative commitment step 1 step 2 step 1 step 2 step 1 step 2 β ρ β ρ β ρ β ρ β ρ β ρ gender .061 .347 .021 .711 .057 .375 .003 .954 .035 .589 -.022 .638 age .064 .735 .002 .990 .126 .503 .033 .823 .072 .701 -.024 .862 tenure -.022 .903 .078 .618 -.138 .449 -.009 .948 -.065 .720 .074 .580 job level -.019 .773 -.021 .720 .058 .387 .053 .308 -.010 .878 -.016 .749 org. type -.011 .883 -.055 .404 -.036 .635 -.076 .197 .032 .672 -.015 .788 distributive .151 .008 .133 .010 .157 .001 procedural .157 .018 .184 .002 .189 .001 interactional .120 .087 .135 .032 .155 .009 informational .304 .000 .408 .000 .428 .000 f .358 11.249*** .400 20.583*** .201 25.913*** r2 .007 .291 .008 .429 .004 0.486 ∆r2 .284 .421 0.482 ***ρ ≤ 0.001 3. discussion and conclusion the conceptualization and measurement of ffoj developed by colquitt (2001) considered as one of the most complete questinnairre to measure organizational justice constructs, and has been tested in various settings (including dfaz-gracia et al., 2014; kovacevic at al., 2013; shibaoka et al., 2010). this research took part in the stream research that supported colquitt's (2001) research, by taking the settings of both public and private employees in the province of bengkulu, indonesia. the result of factor analysis on 20 items of questions of organizational justice perception variable supports the conceptualization of colquitt (2001), with 19 items of measurement formed 4 dimensions of organizational justice (procedural 6 items, informational 5 items, interactional and afebi management and business review (ambr) vol.02 no.02, december 2017 68 distributive each 4 question items). all 4 factors are able to explain 57.47% variance data of organizational justice. the item "i have been able to appeal the outcomes arrived at by those procedures" as one of the dimensions of procedural justice, failed to gain empirical support through this study. possible explanations are related to the generally perceived “appeals process”, which is considered as a separate process and requires considerable time, effort, and cost. for public institutions, the denial of an organization's decision may involve the state administrative court. the appeal process as well as other judicial processes will involve instruments such as judges, witnesses, trial of courts schedules, etc. so that it can be perceived as a separate process from the other decision-making processes within the organization. that is, the appeal process may be an indicator of justice within the organization in general, but it is not relevant to measure fair or unfair specific procedures in the organization. the research contexts in various private and public organizations are the main differentiators of this study. the previous studies generally used only one sector, for example service employees (dfaz-grasia, et al., 2014), financial organizations (bin ismail and bin daud , 2016), manufacturing companies (shibaoka et al., 2010, and colquitt, 2001), government hospitals (srivastava, 2015). thus, it can beconcluded that the measures developed by colquitt (2001) can generally be used in a variety of contexts, especially in indonesia. the indonesian version is also a complement to existing measures, such as the english version (colquitt, 2001), the spanish version (dfaz-gracia et al., 2014), and the japanese version (shibaoka et al., 2010). the results of this study support the conclusions of previous studies (including srivastava, 2015, hassan, 2002; chen et al., 2015; rafei-dehkordi, 2013) about the positive effect of organizational justice on organizational commitment. however, previous tests tend to treat the construct of justice and commitment as a whole, without specifying the effect of each dimension. a more detailed study was conducted by srivastava (2015) by examining the effect of each of the dimensions of organizational justice, but did not specify the components of organizational commitment separately. this study proved, that if tested separately each dimension of justice and commitment, positive effect also persisted. among the dimensions of organizational justice, the strongest effect was shown by the dimension of informational justice, while the weakest effect was shown by the interactional justice. from the perspective of organizational commitment, the effect of organizational justice dimensions was most strongly seen in the dimensions of normative commitment. at the significance level ρ ≤ .005, interactional justice has no effect on affective commitment. the explanation of the empirical conclusions refers to the substance of the dimension of affective commitment itself. affective commitment is characterized by a high degree of affection towards the organization. according to allen & meyer (1990), affective commitment refers to the extent to which a person has an emotional attachment, identifies and feels involved in an organization. a person with a high level of affective commitment remains within an organization because he wants it (meyer et al., 1998). therefore, the patterns of interaction that occur within the organization may be determinants of whether bound, 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(2005). equity and relationship quality influences on organizational citizenship behaviors: the mediating role of trust in the supervisor and empowerment. personnel review, 34 (4): 406-422. http://www.tigger.uic.edu/ services quality and images: satisfaction and loyalty of students face to face tutorial services 48 services quality and images: satisfaction and loyalty of students face to face tutorial services yusuf 51* 1 universitas terbuka, tanjung pinang, indonesia abstract purpose of the study is to describe service quality, image, satisfaction and loyalty, and its direct and indirect influence. using descriptive quantitative method with the descriptive and explanatory survey. the sample is 205 students. the type of primary data used and data analysis techniques using analysis tests path. the results showed that all the average variables were high and the image variable had the highest average. directly, service quality to satisfaction, image to satisfaction, and satisfaction with loyalty have a significant effect, satisfaction with loyalty and image of loyalty has no significant effect. simultaneously, service quality and image of satisfaction and service quality, image, satisfaction with loyalty have a significant effect. indirectly, satisfaction can mediate service quality towards loyalty and satisfaction capable of mediating the image of loyalty. in its implications, any increase or decrease in satisfaction indirectly will influence the loyalty of regional office of open university at pangkalpinang tutorial students. keywords: face-to-face tutorial, image, student satisfaction, service quality, student loyalty 1. introduction at present, education is a growing industry in asia, where many offer a variety of higher education programs and skills courses. supported again with relative prices and very good quality. currently leading universities from the uk and australia set up branch campuses in asia, while other universities from the united states, canada, australia, france, germany, and new zealand also offer the same programs with degrees in the field of study. (bakar, talib, & hashim, 2014). one area in the service literature that is of much concern is the conceptualization of service quality. in education, service quality is usually referred to as non-academic aspects of the consumer experience in an institution. (khoo, ha, & mcgregor, 2017) in the hospitality industry, service quality is also a point of differentiation among competitors and plays a very important role in increasing efficiency and effectiveness, and increasing the profitability of institutions. (ali, hussain, & ryu, 2017). service quality is recognized as an important problem for businesses in improving the performance of service-based organizations, such as hotels, education, transportation, and restaurants which must also be managed effectively. (kensbock, patiar, & jennings, 2017). a good company must consistently respond to customer complaints. service quality is always updated and is considered to have a significant influence on the service sector that has high contact. however, the idea of service quality is often associated with the concept of a service company image and has become important in online banking services. (saleh, quazi, & keating, 2016). the image will rise when consumers get high service and will decrease when consumers get low service. brand reputation is defined as a perception of the quality associated with the brand. (nguyen & leblanc, 2001). the concept of service quality is a very complex discussion because the quality of service has a very different character when compared to the quality of the product, this is because services have properties that are not real. (tjiptono, 2014). in the restaurant industry, customers not only evaluate food quality but also the quality of service they * corresponding author. email address: yusuf_se@ecampus.ut.ac.id afebi management and business review (ambr) vol.04 no.01, june 2019 49 encounter during a dining experience. perception quality of service is the main core determinant of customer satisfaction and behavior. (omar, ariffin, & ahmad, 2016). in the service of higher education, students not only feel a moment but as long as students take education. (yusuf, 2016). however, the extent to which the perception of service quality, perceived value, satisfaction and loyalty are connected in the literature. (wantara, 2016). student satisfaction is very important in the evaluation of distance learning because it is related to the quality of online learning and the process of student performance. interaction is an important indicator of determining student satisfaction. (harsasi & sutawijaya, 2018). the performance of open university services is now different. in the past, the image inherent as an institution was difficult for students to quickly complete their education. this is due to many limitations. students consider the distance learning system to be very difficult, especially as academic support facilities are not complete as they are today. (susanto, 2014). since 2008, service quality has continued to be improved, equipped and improved. starting from the implementation of a quality assurance system, iso 9001:2008 standard service disintegrated service patterns, friendliness of staff, development of independent learning facilities, technology facilities, increased accreditation, and others. (purwaningdiyah, 2010). ut has been awarded international quality certificates by icde since 2005 and the international organization for standardization iso 9001 since 2006. besides, all study programs at ut have also been accredited by the national accreditation board for indonesian higher education. (darojat, 2018). regional office of open university at pangkalpinang institution wants to study scientifically, whether the services that have been carried out affect the image of the institution. regional office of open university at pangkalpinang wants to periodically measure the effectiveness of all system improvements, among others on service management systems, satisfaction and loyalty carried out on the image of the open university as an institution of higher education services open to all. research this is by capturing perceptions of various groups of students who take part in the face-to-face tutorial service. 2. literature study ghozali (2010), entitled analysis of the quality of education services and their effects on student loyalty in private universities in the city of semarang. the study was conducted at private universities in the city of semarang to determine the relationship between the variable image, quality of education services, student satisfaction, and loyalty of private tertiary institutions in the city of semarang. the study used a cross-sectional research method with a sample of 100 respondents. the conclusion is that service quality variables affect student satisfaction variables and image variables can also affect student satisfaction at private universities in the city of semarang. prasetyaningrum (2009), with the title analysis of the effect of learning and service quality on student satisfaction and student loyalty (case study on ungaran undergraduate students). this study uses a survey method with the sampling method in this study is purposive sampling. the population of the study was ungaran undaris students which began in the 2004/2005 academic year to 2008/2009 with a sample of 150 students. the conclusion is that student loyalty can be increased by improving the quality of learning that will increase student satisfaction. student loyalty can also be improved by increasing the quality of services that will increase student satisfaction. research conducted by sugihartono (2009), entitled the analysis of the influence of image, service quality and satisfaction on customer loyalty (case study at pt. pupuk kalimantan timur, grobogan regency sales representative). the study was conducted on 102 companies in central java who are consumers of pt. pupuk kalimantan timur, in grobogan regency, central java, is targeting the company's services quality and images: satisfaction and loyalty of students face to face tutorial services 50 sales representatives. this study aims to analyze the effect of imagery on loyalty, analyze the effect of service quality on loyalty and analyze the effect of consumer satisfaction on the loyalty of urea fertilizer users produced by pt. east kalimantan fertilizer, in grobogan regency. the conclusion is that customer loyalty is positively influenced by image, service quality and company reputation. the better the image, service quality and company reputation, customer loyalty will also increase. stephen, et al, (2007), in his study entitled the effect of brand image on overall satisfaction and loyalty in the context of color selection of cosmetic products. the study used data collection techniques using a questionnaire. the instruments are arranged on a likert scale. the purpose of this study was to examine the effect of the benefits of brand image on satisfaction and loyalty in the context of color selection of cosmetic products. five benefits of a brand image consisting of functional, social, symbolic, experience and appearance enhancements. the study was conducted on 97 women who showed functional improvement and appearance significantly affected loyalty. four benefits of brand image, namely functional, social, experience, and appearance improvement are positively related to overall satisfaction. the results also show that overall satisfaction affects customer loyalty. the results show that marketers must focus on the benefits of brand image in their efforts to achieve customer loyalty. 3. research methodology data and sample research the nature of this research is descriptive and verification, so the research method used is descriptive survey method and method explanatory survey. quantitative data with data collection are related to the dependent or bound variable (satisfaction and loyalty of the regional office of open university at pangkalpinang students) and independent/ independent variables (service quality and image). the data source comes from primary data and secondary data. the study population was all students who took the face-to-face tutorial who were studying higher education at the ut pangkalpinang regional office during the registration period of 2017.2 which amounted to 3.675 students spread to the s1 basic and non-basic education study programs. to avoid questionnaire data with incomplete (broken) responses so that the number of samples needed to be increased is 35 samples. the total sample size of 235 respondents was taken using a simple sample determination by malhotra (2005), which is multiplying the number of items observed with five (5) variables. the number of questionnaires examined was 40 x 5 so that a total sample of 235 was chosen to anticipate if a damaged questionnaire was obtained. the questionnaire used in this study was prepared using a likert scale. according to kinnear (husein 1999) "the likert scale is related to one's attitude towards something". each question in the questionnaire has five (5) alternative answers. 5 strongly agree, 4 agree, 3 doubtful, 2 disagree, 1 strongly disagree. research concept this research was conducted based on previous research by ghozali (2010), stephen, maznah, nabsiah & ismail (2007), bloemer, ruyter & peeters (1998), prasetyaningrum(2009), hossain and shirley (2009), hui & shun (2006), sugihartono (2009), the purpose of this study was to investigate service quality variables, image, satisfaction and loyalty. the hypothesis is proposed as follows. h1: service quality positively affects student satisfaction. h2: image positively affects student satisfaction. h3: service quality positively influences student loyalty. h4: images positively influence student loyalty. h5: student satisfaction positively influences student loyalty. h6: service and image quality positively influences student loyalty. h7: service quality, image, and student satisfaction simultaneously influence student loyalty. https://www.researchgate.net/profile/mohammed_hossain30 https://www.researchgate.net/scientific-contributions/2014248078_shirley_leo afebi management and business review (ambr) vol.04 no.01, june 2019 51 h8: student satisfaction through service quality positively influences student loyalty. h9: student satisfaction through institutional image positively influences student loyalty. the research model can be seen in figure 1 below. figure 1 research model variables and measurements based on the literature review, the researcher performed a variety of sub-variables on service quality variables by dividing them into five dimension groups namely tangibles, empathy, reliability, responsiveness, assurance. variable image, variable satisfaction student, and variable loyalty student. the variable operationalization list can be seen in table 1 below. table 1 operational list of variables variables sub variables indicators evaluation code quality services tangible 1. tutorial locations and strategic offices. 2. the extent of tutorial parking area & regional office facilities. 3. complete tutorial facilities and regional office. 4. modernization of learning equipment. 5. information facilities. bl1 bl2 bl3 bl4 bl5 empathy 1. ability to handle complaints 2. patience helps complaints 3. clarity of information provided. 4. understanding of receiving ut instructions. 5. ease of communication. em1 em2 em3 em4 em5 reliability 1. speed in handling problems. 2. ability to handle problems. 3. the discipline of tutors and regional office officers. 4. tutor routines control problems. 5. ease of student administration procedures. te1 te2 te3 te4 te5 responsive ness 1. readinesstutors and officers to be contacted. 2. the attention of tutors and regional officers. 3. ease of students to discuss with face-to-face tutorial tutors and regional officers. 4. the accuracy of face-to-face tutorial tutors and regional office officers in handling student problems. 5. concern for face-to-face tutorial tutors and regional dt1 dt2 dt3 dt4 dt5 services quality and images: satisfaction and loyalty of students face to face tutorial services 52 officers to students. assurance 1. accuracy of data and information. 2. student trust in face-to-face tutorial tutors and regional office officers. 3. the seriousness of face-to-face tutorial tutors and regional office officers in handling student problems. 4. security while at the tutorial location. 5. regional office reputation. ja1 ja2 ja3 ja4 ja5 image 1. a good impression of the regional office. 2. belief in the regional office has a good image. 3. regional office fulfilled the promise. 4. regional office reputation is good. ci1 ci2 ci3 ci4 satisfaction 1. the speed of solving student problems while at the regional office. 2. the hospitality of teaching staff and regional office officers. 3. tuition fees at the regional office. 4. ease of handling problem handling. 5. completeness of regional office tutors and staff during problem handling. 6. accuracy handles students. 7. ease of getting information. 8. regular data or archives about students. kp1 kp2 kp3 kp4 kp5 kp6 kp7 kp8 loyalty 1. no transfer of students to other universities. 2. the regional office recommendations are good for others. 3. positive word of mouth. lo1 lo2 lo3 data analysis model in this study, qualitative data analysis is in-depth to describe the results of research through non-numerical or non-statistical approaches by using validity tests by measuring validity by seeing the value of the item to total correlation as valid if it is worth ≥ 0,30 (sekaran, 2011; sugiyono, 2004). the choice of ± 0,30-factor loadings is also more related to practical significance because the load factor above 0,30 is considered significant at p = 0,05 (heir, et al., (abdullah 2005). reliability testing can be done by measuring the value internal known consistency of the value of cronbach alpha (α). cronbach alpha (α) value that is implied for an instrument is reliable ≥ 0,60 (sekaran, 2011). quantitative analysis is done using path analysis. this analysis is used to determine the extent of the direct and indirect influence of service quality (x1), image (x2) on student satisfaction (y1) and its implications for student loyalty (y2). the analysis is carried out through [1] testing the relationship between sub-variables, [2] path analysis equation structure 1 y1=ρy1x1x1+ρy1x2x2+ρy2y1+ρy1€1€1, which determines the influence of research variables as a whole obtained from the sum of all exogenous variables endogenous variables. [3] path structure ii equation y2= ρy2x1x1+ρy2x2x2+ρy2y1+ρy2€2€2, which determines the influence of research variables as a whole obtained by the value of the path coefficient of the sum of all exogenous variables towards endogenous variables. [4] path analysis diagram, and [5] calculation of influence on structure i and structure ii. statistical techniques used to test hypotheses using f test (simultaneous testing) and t-test are used to test the constants of each independent variable individually and the multiple determination coefficient (r2) to measure the contribution of the independent variables studied to the dependent variable. afebi management and business review (ambr) vol.04 no.01, june 2019 53 4. results the results of the analysis show that the overall variables in this study have high mean values, namely in the categories 3,41-4,20. and the image variable has the highest average value of 3.89. and in general, the factors of service quality, image, student satisfaction and loyalty of regional office of open university at pangkalpinang students are highly valued. validity tests are used to measure the validity or validity of a questionnaire. the minimum requirement to be considered as a valid instrument is the index value of its validity (value pearson correlation) has rcount > rtable which is 0,137. the results of the validity test in this study all have a rcount value that is greater than rtable so that the whole item of the research instrument is said to be valid. the variable reliability test results can be seen in table 2 below. table 2 test results from the reliability variable chronchbach alpha description service quality (x1) tangible 0,688 reliable emphaty 0,744 reliable reability 0,784 reliable responsiveness 0,722 reliable assurance 0,770 reliable image (x2) 0,789 reliable satisfaction (y1) 0,807 reliable loyalty (y2) 0,606 reliable based on table 2. where the reliability test results show that all variables have coefficient chronchbach alpha a large enough which is above 0,60 so that it can be said that all measuring concepts of each variable from the questionnaire are reliable which means that the questionnaire used in this study is a questionnaire reliable. hypothesis testing is done to see the effect of variable independent on the dependent variable. the f test shows whether all the independent variables included in the model have a significant influence on the dependent variable (ghozali, 2005). to determine the f test by looking at the significance level of 5% (α = 0,05). if the value of sig < value α = 0,05 then ha is accepted. if the value of sig> value α = 0,05 then ha is rejected. the result of the f test structure 1 can be seen in table 3 below. table 3 f test results structure 1 anovaa model sum of squares df mean square f sig. 1 regression 2050,227 2 1025,11 3 94,824 .000b residual 2183,754 202 10,811 total 4233,980 204 a. dependent variable: total satisfaction b. predictors: (constant), total image, total service quality table 3. the results of the f test can be seen the significance value of 0,000 is much smaller than 0,05. then the regression model can be used to predict student satisfaction variables or in other words, exogenous variables of service quality and image together (simultaneous) have a significant effect on student satisfaction. services quality and images: satisfaction and loyalty of students face to face tutorial services 54 the result of f test results structure 2 can be seen in table 4 below. table 4 f test results structure 2 anovaa model sum of squares df mean square f sig. 1 regression 508,652 3 169,551 129,409 .000b residual 263,348 201 1,310 total 772,000 204 a. dependent variable: total loyalty b. predictors: (constant), total satisfaction, total service quality, total image table 4. the results of the f test can be seen the significance value of 0,000 is much smaller than 0.05. then the regression model can be used to predict student loyalty variables or in other words, exogenous variables of service quality, student image, and satisfaction together (simultaneous) have a significant effect on student loyalty. the t-test is used to determine the relationship between the independent variable on the dependent variable. criteria for acceptance of hypotheses are as follows: [1] zero hypothesis (h0) is accepted if the value of sig > value α and vice versa if the value of sig < value α then null hypothesis is rejected, [2] alternative hypothesis (ha) is accepted if the value is sig<value α and vice versa if the value of sig>value α, the alternative hypothesis (ha) is rejected. the results of t-test results structure 1 can be seen in table 5 below. table 5 t-test results structure 1 coefficientsa model unstandardized coefficients standardizedc coefficients t sig. b std.erro r beta 1 (constant) 5.065 1.902 2.663 .008 total services quality .638 .128 .324 4.975 .000 total image .780 .115 .444 6.812 .000 a. dependent variable: total satisfaction from the results of processing data in table 5. obtained [1] effect of service quality on student satisfaction, that is on the variable quality of service significance value 0,000 < 0,05. so the hypothesis that reads there is significant influence between the quality of service on student satisfaction is accepted (ha accepted and ho rejected). this means that part there is a significant effect between service quality and student satisfaction. [2] effect of an image on student satisfaction, that is, on image variables, a significance value of 0,000 < 0,05. so the hypothesis that reads there is significant influence between the image of student satisfaction is accepted (ha accepted and ho rejected). this means that part there is significant influence between image and satisfaction. the results of t-test results structure 2 can be seen in table 6 below. afebi management and business review (ambr) vol.04 no.01, june 2019 55 table 6 t-test results structure 2 coefficientsa model unstandardized coefficients standardizedc oefficients t sig. b std. error beta 1 (constant) .894 .674 1.327 .186 total services quality .010 .047 .012 .206 .837 total image .023 .044 .031 .525 .600 total satisfaction .352 .024 .824 14.373 .000 a. dependent variable: total loyalty from the results of processing data in table 6. obtained [1] effect of service quality on student loyalty, namely the variable quality of service significance value 0,837 > 0,05. so the hypothesis that reads there is a significant effect between the quality of service on student loyalty is rejected (ha is rejected and ho is accepted). this means that part there is no significant effect between service quality and student loyalty. [2] effect of an image on student loyalty, namely on the image variable of significance value 0,600 > 0,05. so that the hypothesis that reads there is significant influence between the image of student loyalty is rejected (ha rejected and ho accepted). this means that part there is no significant influence between image and loyalty. effect of student satisfaction on student loyalty. in the variable student satisfaction the significance value is 0,000 < 0,05. so the hypothesis that reads there is a significant effect between student satisfaction on student loyalty is accepted (ha accepted and ho rejected). this means that part there is a significant effect between student satisfaction and student loyalty. 5. discussion influence of service quality on student satisfaction hypothesis testing shows that directly the quality of service influences and significantly affects student satisfaction face-to-face tutorial of regional office of open university at pangkalpinang (0,000 < 0,05). can be explained, the better the quality of services provided, the more satisfaction will be felt by students. influence of institutional image on student satisfaction hypothesis testing shows that directly the institutional image has a significant effect on the satisfaction of students in face-to-face tutorials of regional office of open university at pangkalpinang (0,000 < 0,05). this shows that by attaching a good image of the institution that is embedded in the minds of students, the satisfaction felt by students will be even higher. influence of service quality on student loyalty hypothesis testing shows that service quality has a positive but not significant effect on face-to-face student loyalty of regional office of open university at pangkalpinang (0,837 > 0,05). service quality that is fulfilled properly can affect student loyalty but is not significant because there are other factors that affect loyalty more than service quality. if the company is able to provide the quality of service expected by students, it will lead to student loyalty behavior, but it is necessary to pay attention to other factors. influence of image of institution on student loyalty hypothesis testing shows that institutional image has a positive but not significant effect on face-to-face student loyalty in upbjj-ut pangkalpinang (0,600 > 0,05). that is, the positive image of the institution in the minds of students face to face tutorials of services quality and images: satisfaction and loyalty of students face to face tutorial services 56 regional office of open university at pangkalpinang is able to maintain student loyalty but is not significant because there are other factors that affect loyalty more than the image of the institution. it can be concluded that the more embedded the image of a positive institution in the mind, the higher the loyalty of students but it is necessary to pay attention to other factors. influence of student satisfaction on student loyalty hypothesis testing shows that directly student satisfaction has a positive and significant effect on face-to-face student loyalty tutorial of regional office of open university at pangkalpinang (0,000 < 0,05). the more satisfaction felt by students, the higher the sense of loyalty generated by students. influence of service quality and institutional image on student satisfaction hypothesis testing shows that jointly a positive and significant effect on face-toface tutorial student satisfaction of regional office of open university at pangkalpinang (0,000 < 0,05). so it can be concluded that the increasing service and image of the institution owned by of regional office of open university at pangkalpinang and able to be felt by students will further increase the sense of satisfaction generated by students. influence of service quality, institutional image and satisfaction on student loyalty tests on service quality, institutional image and student satisfaction together on student loyalty shows that together service quality, institutional image and student satisfaction have a positive and significant effect on student loyalty of regional office of open university at pangkalpinang (0,000 < 0.05 ) so it can be concluded that the better the quality of service, the image of the institution and the satisfaction felt by students, will increase the sense of loyalty generated by students. influence of service quality on student loyalty through student satisfaction the value of the direct effect is smaller than the indirect effect (0,000144 < 0.2669976). it can be concluded, satisfaction is able to mediate the relationship of service quality and student loyalty. the influence of service quality through satisfaction is greater than the direct effect on loyalty. these results indicate that service quality has an indirect effect on loyalty through satisfaction or it can be concluded that satisfaction can be a variable that mediates service quality on loyalty. influence of institutional image on student loyalty through student satisfaction the value of the direct effect is smaller than the indirect effect (0,000961 < 0.365856). it can be concluded, satisfaction is able to mediate the relationship between the image of the institution and student loyalty. the effect of mediating student satisfaction is greater than the direct effect of the institution's image on loyalty. these results indicate that the image of an institution has an indirect effect on loyalty through satisfaction or it is concluded that satisfaction can be a variable that mediates between the image of an institution against loyalty. 6. conclusion this study was conducted to capture students' perceptions of service quality and image on student satisfaction to increase student loyalty face-to-face tutorial services that took part in a tutorial service regional office of open university at pangkalpinang. the study was conducted on 235 students. questionnaires that can be processed are 205 using the likert scale. based on the data and discussion, the results obtained that the overall variables in this study have a high average value that is in the categories 3,41-4,20. and the image variable has the highest average value of 3,89. and in general, the factors of service quality, image, student satisfaction and loyalty of regional office of open university at pangkalpinang students are highly valued. 1 correlation structure is obtained (r) 0,696 and the coefficient of determination (r2 ) 48,4%, the rest (e) 51,6% influenced by other factors not examined. while the correlation test 2 structure is obtained (r) 0,812 and the coefficient of determination (r2) of 65,9%, the rest (e) 34,1% influenced by other factors not examined. afebi management and business review (ambr) vol.04 no.01, june 2019 57 the results obtained directly that the service quality and image of each have a significant effect on student satisfaction, service quality, and each image has no significant effect on student loyalty, and student satisfaction has a significant effect on student loyalty. indirectly the results that service quality and image mediated by student satisfaction each have no significant effect on student loyalty. simultaneously the results obtained that service quality and image have a positive and significant influence on student satisfaction. as well as the quality of service, student image and satisfaction have a positive and significant influence on student loyalty. every increase or decrease in student satisfaction will indirectly influence student loyalty and every time there is an increase or decrease in service quality, student image and satisfaction together will have a significant effect on student loyalty to regional office of open university face-to-face tutorial service in pangkalpinang. institutions further enhance service quality variables and institutional image so that regional office of open university at pangkalpinang satisfaction and loyalty is even better. references ali, 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(2006). service marketing. mcgraw-hill companies: united states. the role of collaboration value chain design at reward-based crowdfunding platforms and music industry in indonesia 1 the role of collaboration value chain design at reward-based crowdfunding platforms and music industry in indonesia octadila laily anggraeni 1*and elvia r. shauki 2 1,2 universitas indonesia, depok, indonesia abstract industry 4.0 has brought many changes, in the financial sector there is financial technology. one form of financial technology is crowdfunding. creative industries are quite high sectors that use crowdfunding as a funding model. this research includes collaboration between crowdfunding and the music industry. in the process of collaboration between the crowdfunding and the music industry, the parties need to conduct a value chain analysis and find out their competitive advantages to maximize fundraising. the consequence of collaboration between the crowdfunding and the music industry is the presence of new business models accompanied by changes in the value chain. this study aims to determine value chain design collaboration between reward-based crowdfunding and the music industry. this research is based on the value network theory, using a qualitative approach with multi-cases study design. this research was conducted by gathering information through interviews with crowdfunding and the music industry. the results show that collaboration leads to changes in value chain design. crowdfunding has changed the pattern of production in the music industry with its involvement in funding, sales, and distribution. other forms of crowdfunding and other creative industries require further investigation. this study aims to help practitioners understand how reward-based crowdfunding is changing the music industry. keywords: music industry, reward-based crowdfunding, value chain 1. introduction the 4.0 industrial revolution has brought many conveniences in everyday life. almost all activities are carried out with the help of the internet network (ernst & young, 2018; kagermann, h., lukas, w., & wahlster, 2011; marr, 2016). ernst & young said that industrial revolution 4.0 was disruptive or destructive. in the era of industrial revolution 4.0, almost everything was forced to change from offline to online. inter-human interaction has been replaced with the internet. all daily activities ranging from transportation, finance to shopping for daily necessities can be done quickly and easily with the internet. in the financial sector, financial technology companies are growing rapidly. as of february 1, 2019, there are 99 financial technology platforms registered with ojk (otoritas jasa keuangan, 2019). the forms of financial technology companies are also diverse but broadly speaking, bank indonesia categorizes financial technology into four major groups based on its activities, namely payment systems, market aggregators, investment and risk management, and loans, financing and capital provision. (bank indonesia, 2017). the first form is a payment gateaway that helps people make payments online. the second form is market support or market aggregator. the way the market aggregator works is to help users compare information on financial products and choose the one that suits their needs. next is investment and risk management that helps in arranging financial planning digitally. the fourth form is loans, financing and provision of capital or commonly known as peer-to-peer lending and crowdfunding. peer-to-peer lending has access to channel investor funds in the form of loans to microentrepreneurs (msmes) who find it difficult to apply for loans to banks. while crowdfunding serves to raise funds from the public for investment or social purposes. * corresponding author. email address: octadilaily@yahoo.co.id afebi management and business review (ambr) vol.04 no.01, june 2019 2 (paschen, 2017) divides crowdfunding into three groups: donations, loans, and capital. the crowdfunding typology described by paschen is illustrated in table 1 below: table 1. crowdfunding typology donation loan equity pure donation reward-based forgivable loan presales traditi-onal investorled entrepreneurled without rewards with rewards rewards not receiving rewards recognitions, tokens, or other rewards interest, only if the project gets income or profits finish product of project fixed interest rate securities, income, or profit share share of capital, securities, income, or profit source: (paschen, 2017) (badan ekonomi kreatif, 2016, 2017) mentions that crowdfunding can be one of the credible funding models for creative industries. the creative industry is a fairly high sector utilizing crowdfunding funding models. the report submitted by kickstarter shows that music, film and games projects are projects that have been successfully funded with the most dollars. the total funds collected for the three projects are equivalent to 45% of the total projects registered on the kickstarter (kickstarter, 2019). in indonesia, crowdfunding platforms that focus on handling creative industries, especially the art of music, is kolase.com. the scope of this research is only on crowdfunding platform collaboration and the music industry. rapid technological developments have triggered changing customer tastes and uncertain competition. on the other hand, there is a niche market because customers seek customization and taste to satisfy their individual preferences (russ, kuilboer, & ashrafi, 2014). in such challenging environments, companies must have a competitive advantage to survive. competitive advantage cannot be understood by looking at the company as a whole (porter, 1995). porter introduces value chains as a tool that helps companies better recognize their competitive advantage and facilitate strategy determination. in the process of collaboration between crowdfunding platforms and the music industry, the culprit needs to do value chain analysis and find out its competitive advantages to maximize collection of funding. (nucciarelli et al., 2017) explained the consequences of the collaboration was the existence of a new business model accompanied by changes in the value chain that had an impact on the relationship between developers and other industry stakeholders. the collaboration value chain between crowdfunding platforms and the music industry is different from their respective value chains. this research was conducted to find out the value chain design collaboration between crowdfunding platforms and the music industry. collaborative value chain design can then be used by musicians to maximize the value creation process in the results. previous research conducted by (hadida & paris, 2014) on managerial changes in the music industry shows that the digital music industry has strengthened their value chains better than the traditional music industry. the cognitive framework of the value chain can influence investor interpretation of the digital music industry. (hadida & paris, 2014) research has not included collaborative elements between technology and the music industry. the role of collaboration value chain design at reward-based crowdfunding platforms and music industry in indonesia 3 (gamble, brennan, & mcadam, 2017; pastonesi, 2013) conducted an exploratory study on how reward-based crowdfunding affected the development of the music industry. crowdfunding also contributes to marketing and brings musicians closer to their listeners. crowdfunding finally succeeded in becoming a solution for musicians to obtain funding sources for production activities and provide greater control than when musicians worked with record companies. both studies have not included the value chain element. research conducted by (nucciarelli et al., 2017) has combined elements from previous research to find out the effect of reward-based crowdfunding on the process of creating value in the digital game industry. this study replicates (nucciarelli et al., 2017) research with different objects, locations and times of research. this research is based on value network theory, using a qualitative approach with the design of multi cases studies. the design of multi-case studies studies helps in observing the similarities and differences of each case studied (stake, 2006). this research helps to observe the value chain transformation that is created from the collaboration of reward-based crowdfunding platform with music industry. this research is expected to help practitioners understand the collaboration value chain between the value chain platform and the music industry so they can find out their competitive advantages. the research is organized as follows: part 1 discusses background and research problems, section 2 contains a literature review of crowdfunding and the theory underlying the research, section 3 discusses the design and research methods in detail, section 4 contains the results of music industry analysis and value chain transformation created by the collaboration of the music industry with reward-based crowdfunding, and section 5 contains conclusions and suggestions for future research. 2. literature review value network theory is introduced by (stabell & fjeldstad, 1998). stabell and fjelstad explained that the value creation process allows exchanges in networks with scales and compositions that are in accordance with the needs of members. value networks emphasize that values are created when interactions are facilitated by value networks. the value chain was first introduced by porter in 1995. (porter, 1995) defines value chain as a series of processes carried out by companies to identify key activities and supporting activities related to value creation. value chain is an ideal framework to examine how the value proposition works, the cost structure and the business model of the company. value proposition is the reason for customers to choose a product. the process of creating this value can be maximized through value chain analysis (thompson, strickland iii, gamble, & peteraf, 2017). the higher the value proposition of a product, the higher the customer's willingness to get the product. in the value chain, company activities are divided into two groups, namely the main activities and supporting activities. the following is a description of the relationship between the main activities and supporting activities in the value chain: afebi management and business review (ambr) vol.04 no.01, june 2019 4 figure 1 value chain source: (thompson et al., 2017) basically the value chain is formed by the activities mentioned above, but the activities involved will vary according to the peculiarities of each business model. through the value chain, companies can conduct an analysis of the company's cost structure, the value creation process, and conduct evaluations so that the company can act effectively in accordance with its competitive advantage. (hadida & paris, 2014) research shows that there has been a change in the value chain design in the music industry when it changes from traditional to digital. the cognitive framework of the value chain can influence investor interpretation of the digital music industry. (hadida & paris, 2014) research has not included collaborative elements between technology and the music industry. this study aims to fill the research gap. (bank indonesia, 2017) defines financial technology as the use of technology in the financial system to provide services, products or new business models. the phenomenon of financial technology is relatively new in indonesia and bank indonesia only regulates this industry in 2017. in the regulations issued by bank indonesia, the financial technology industry is divided into four groups: payment gateaway, market support, investment and risk management, and crowdfunding and peer-to-peer lending. the financial technology industry is growing rapidly and as of january 2019 there have been 192 financial technology companies consisting of 161 start-up companies, 22 financial institutions and 9 associate partners (fintech indonesia, 2019). one form of financial technology is crowdfunding. (kirby & worner, 2014) in his report explains that crowdfunding is a sum of funds collected by large groups of individuals or groups to fund business or personal projects through web-based platforms. (kirby & worner, 2014) then explained that there are four crowdfunding categories, namely donations, reward-based, loans and capital. it was different with (paschen, 2017) which divides crowdfunding into three major groups, namely those that are donations, loans, and capital. paschen also categorizes crowdfunding based on the rewards earned. the crowdfunding typology delivered by (paschen, 2017) is explained in table 1. (paschen, 2017) divides crowdfunding types of donations into two groups, which are pure donations and reward-based. when doing reward-based crowdfunding organizations or groups that need funds will offer a return to the owner of the funds in the form of goods or services from the project or work carried out. reward-based crowdfunding is very popularly used in the creative industry and usually the rewards given to the owner of the fund are in the form of work produced. one of the rewardbased crowdfunding platforms in indonesia is kolase.com. until february 2019, kolase.com has successfully funded 54 projects and collected rp1.1 billion. (kolase.com, 2019) research conducted by (gamble et al., 2017; pastonesi, 2013) shows that crowdfunding is able to bring musicians closer to their listeners. crowdfunding is also able to be a solution for musicians to obtain funding sources for production activities primary support product r&d, technology, and system development human resource management general administration su ply ch op er ati di str ib sa les & se rvi ce pr ofi t the role of collaboration value chain design at reward-based crowdfunding platforms and music industry in indonesia 5 and provide greater control than when musicians collaborate with record companies. both studies have not included the element of value chain analysis. subsequent research conducted by (nucciarelli et al., 2017) in the gaming industry has integrated value chain logic and collaboration between crowdfunding platforms and the gaming industry. nucciarelli et al. (2017) found that crowdfunding is not only for raising funds but also bringing together capital, technology and market knowledge channels. the findings also explain the effects of crowdfunding on the gaming industry. this research was carried out on collaboration between reward-based crowdfunding platforms and the music industry in indonesia. filling in the gap of research conducted by gamble et al. (2017) and pastonesi (2013), this study integrates the collaboration with the value chain logic so that an overview of collaboration value chain design can be obtained. this research was formulated through the following research framework: figure 2 research framework this study aims to produce a value chain design collaboration between rewardbased crowdfunding platforms and the music industry to help understand the structure of the new value chain formed from the collaboration. this research is based on value network theory, in this study the music industry and all parties involved in crowdfunding platforms are positioned as members of the value network. this research was conducted with a multi cases studies strategy to find the similarities and differences in each funding case on crowdfunding platforms to find out the collaboration effects that were generated. value network theory (stabell & fjeldstad, 1998) revolusi industri 4.0 (ernst & young, 2018), (kagermann, lukas, & wahlster, 2011) and (marr, 2016) collaboration with crowdfunding platforms with the music industry has not been identified in detail on the value chain side (gamble, brennan, & mcadam, 2017) and (pastonesi, 2013) value chain music industry value chain financial technology multi-case studies observe the similarities and differences of each case studied and value chain transformations that are created from the collaboration of the music industry with rewardbased crowdfunding platforms (stake, 2006) value chain design collaboration between reward-based crowdfunding platforms and the music industry afebi management and business review (ambr) vol.04 no.01, june 2019 6 3. research methodology this research was conducted to find out the new value chain design created from the collaboration process of reward-based crowdfunding platforms with the music industry in indonesia. in this chapter we discuss the strategy, and the research approach used, data collection and analysis methods, and the unit of analysis used in this study. (yin, 2003) defines case studies as research methods that explain how a phenomenon occurs. whereas (stake, 2006) defines a case study as a research method used to determine the unique characteristics of each case. stake also explained that in case studies it was necessary to extract information and in-depth analysis of a case. based on the understanding of the case study, this study uses a case study research strategy because it aims to gain a deep understanding of the phenomenon of crowdfunding platform collaboration with the music industry. (stake, 2006) explains that there are two types of case studies, namely single case studies and multi cases studies. the difference is in multi cases studies, the number of cases observed is more than one with the same procedure and analyzed together. this study analyzes the interaction of several music collaboration projects with rewardbased crowdfunding platforms in value creation so that the strategies used are multi cases studies. this study uses a qualitative approach. yvonna and egon guba (1985) in (stake, 2006) show that qualitative research is based on the view that social phenomena, social dilemmas and the nature of cases are situational. a case study with a qualitative approach was developed to study the real case experience that actually happened. this study uses qualitative data, namely data in the form of words such as notes on the results of interviews, transcripts, and open statements on the internet. qualitative data analysis is intended to make valid conclusions from the amount of data collected (sekaran, u., & bougie, 2016). in this study, the data used were only qualitative data obtained from interviews with reward-based crowdfunding platforms and music industry collaborators with crowdfunding platforms. the data used in this study are primary data. primary data is data collected by researchers directly for specific research purposes (sekaran, u., & bougie, 2016). primary data was obtained from speakers on reward-based crowdfunding platforms and music industry collaborators with crowdfunding platforms. there are four main methods to obtain primary data, namely interviews, observations, questionnaires and experiments (sekaran, u., & bougie, 2016). this study uses research instruments in the form of semi-structured interviews and content analysis. semi-structured interviews are used to gain an in-depth understanding of the phenomena that occur with a guide to the list of questions that have been prepared previously aimed at answering research problems. the semi-structured interview model makes the interview more flexible so that the information explored becomes deeper. semi-structured interview questions were designed to gather data about the overall crowdfunding process from production input, marketing, to distribution to customers, both from crowdfunding platforms and musician platforms as campaigners. the interview results are then grouped according to the associated value chain stages so that it is known that the collaborative value chain design is formed. in addition to interviews, another research instrument that is also used is content analysis. kolbe & burnett in (sekaran, u., & bougie, 2016) defines content analysis as observational research methods used to evaluate systematically the content of all forms of communication are recorded. the results of the interviews collected in this study was analyzed using content analysis. the data analysis method used in this study is content analysis. content analysis can be used to analyze newspapers, websites, advertisements, interview records, and the like. content analysis allows this research to analyze text information and systematically identify its properties, such as the existence of certain words, concepts, characters, themes, or sentences (sekaran, u., & bougie, 2016). the role of collaboration value chain design at reward-based crowdfunding platforms and music industry in indonesia 7 data from the interviews was obtained, it was then analyzed by grouping them according to the type and context of the information obtained. first of all, two large groups were created, namely the results of interviews from the crowdfunding platform based on rewards and the results of interviews from each selected music project. furthermore, the results of selected music project interviews were grouped again according to the nature and type of project. in this study five music album-making projects were selected. the unit of analysis in this study is multi unit analysis. the object of the research in question is a reward-based crowdfunding platform and music projects that collaborate with crowdfunding platforms. the intended reward-based crowdfunding platform is kolase.com, an online joint venture formed by pt kirai adiwarna nusantara (kawan). kolase.com is currently the only reward-based crowdfunding platform that specifically handles music collaboration projects. kolase.com bridges musicians with their fans and also the owners of funds who want to channel their funds to support music projects made by musicians. forms of music projects that can be made can be various, ranging from making albums, tours, to music concerts. since its launch on february 1, 2018, kolase.com has succeeded in realizing 54 collaborations and collecting rp1.1 billion in rupiah at the end of february 2019. 54 collaboration projects consist of various types of collaboration categories. kolase.com also has 20,267 members joined (kolase.com, 2019). every customer who donates to an art project on kolase.com must be registered as a member. the other unit of analysis is music projects resulting from collaboration between kolase.com and musicians. the type of music project chosen is the making of an album because it is more complex and represents the condition of the music industry as a whole, from production to music to customers. since its launch, there have been 11 album-making projects and five of them have been completed. this research selects five album collaboration collaborative projects that have been completed to be analyzed further on collaboration value chain images formed from the reward-based crowdfunding platform (kolase.com) and the music projects. in the discussion, musicians were referred to as campaigners or those who make campaigns on crowdfunding platforms. 4. results this section discusses the analysis of research results including the general description of research respondents, and the process of obtaining data. the discussion was then conducted in accordance with the research objectives, namely value chain design on crowdfunding platforms, value chain design in the music industry, and collaborative value chain design generated in the crowdfunding process. interviews in this study were conducted on crowdfunding platform kolase.com and campaigners on album-making projects. as of march 1, 2019, there were five albummaking projects that were successfully funded and all were targeted by respondents. in conducting the research, interviews were only successfully carried out on crowdfunding platform management and three of the five targeted campaigners due to limited access and time of research. the response rate that was collected for the campaigners was 60%. all access to interviews with campaigners is obtained from crowdfunding platforms kolase.com. based on the information gathered during the interview with the crowdfunding platform, information was obtained that basically kolase.com is only a platform whose task is to raise funds from customers to realize the work of campaigned musicians. the workings of crowdfunding platforms are basically the same as other internet-based platforms such as social media, where campaigners can directly create their projects on the kolase.com webpage. but in practice, campaigners still need assistance to compile any information that needs to be published on the kolase.com page to appeal to prospective customers. furthermore, in the production process, the entire creative afebi management and business review (ambr) vol.04 no.01, june 2019 8 process is fully handed over to musicians but in the process of making merchandise some musicians request advice on the form of merchandise and funding packages that are in accordance with the profile of customers who follow crowdfunding. kolase.com helps campaigners promote their work through social media, press releases, and making promotional material in the form of photos and videos. for the distribution process, kolase.com has collaborated with freight forwarders that are integrated with the platform. this makes it easier for campaigners to distribute their work to customers and minimize the risk of shipping errors. after the campaign was completed, kolase.com sent out customers database who joined crowdfunding to the campaigner. this database contains information such as gender, age and area of origin of the customer. kolase.com also provides a polling feature that can be utilized by campaigns to conduct research before making a senior project. information that can be polled such as the location of the concert, guest stars of art events, choice of album covers, or the price of merchandise to be made. this feature helps the campaign to conduct research on the market to be targeted. based on the information collected during interviews with music industry players, information about the value chain description in the music industry is obtained in the following table 2. table 2 results of interviews with campaigners. value chain eirine dekat elephantkind funding 100% funding from crowdfunding album production costs: own costs the physical production cost of the album from crowdfunding on kolase.com album production costs: own costs the physical production cost of the album from crowdfunding on kolase.com development & production the entire creative process of the album & merchandise is done by itself the entire creative process of the album and merchandise is done by itself the entire creative process of the album and merchandise is done by itself sales & marketing kolase.com provides promotional material in the form of photos and videos. kolase.com provides promotional material in the form of photos, videos and press releases. kolase.com sends blast emails related to album projects to all its members. kolase.com provides promotional material in the form of photos, videos and press releases. kolase.com sends blast emails related to album projects to all its members. distribution the distribution process is carried out by the band itself the distribution process is carried out by jne which is integrated with kolase.com the distribution process is carried out by jne which is integrated with kolase.com market dvds and merchandise tailored to customer profiles. after crowdfunding is complete, kolase.com hands over the customer database. dvds and merchandise produced are limited only to customers who follow crowdfunding. after crowdfunding is complete, kolase.com submits a customer database that can be used to plan the next work. dvds produced are limited to customers who follow crowdfunding. merchandise is made costumized for each customer. after crowdfunding is complete, kolase.com submits a customer database that can be used to plan the next work. based on the information gathered during the interview with the campaigner, it shows that crowdfunding is not limited to fundraising but also influences other the role of collaboration value chain design at reward-based crowdfunding platforms and music industry in indonesia 9 components of the value chain and changes the campaigner's working pattern in producing works. at least there are five components of the value chain in the main activities that change. first, in terms of campaigner funding, new funding sources are obtained from customers who follow crowdfunding. this was confirmed in the eirine case where all costs for production were obtained from crowdfunding. second is the polling feature on crowdfunding platforms that campaigners can use to research prospective customers' tastes before making a work. this feature is known by the campaigner but has not been utilized because each campaigner has a mature concept. third, in terms of sales and marketing, crowdfunding platforms help campaigners in preparing promotional materials for prospective customers. the market reach that can be achieved by campaigners is broader with the promotion assistance from crowdfunding platforms through press releases to its members via e-mail and promotions through social media and electronic media. fourth, from a crowdfunding platform distribution side, it really helps campaigners to send their work to customers because the system on crowdfunding platforms has been integrated with the logistics company system. the facility is felt by the dekat and elephantkind, while at eirine crowdfunding, the system has not been integrated. the fifth is from the market side. after the project is done, the crowdfunding platform sent out a project report to the campaigner. the report is the database of the customers participating in the project made. information submitted includes customer gender, age, region, and social media. 5. discussion collaborative value chain design in reward-based crowdfunding platform and music industry in indonesia this study aims to produce collaborative value chain designs between crowdfunding platforms and the music industry during crowdfunding. the framework design proposed in this study is illustrated in figure 3 below: traditional collaboration with crowdfunding platform figure 3 collaborative value chain design this research uses the value chain logic to analyze value creation in the collaborative process between crowdfunding platforms and the music industry. the results of the study show that crowdfunding has brought changes to the music industry. the process of creating value has undergone many changes. in the main activity illustrated in figure 3, it is known that all components of the value chain have collaborated in creating value between crowdfunding platforms and the music industry. at the funding stage, campaigners obtain new funding sources from crowdfunding. potential user fundings platform crowdfunding development & production sales & marketing distribution end user media sosial press release integrated with crowdfunding platform afebi management and business review (ambr) vol.04 no.01, june 2019 10 later in the product development stage, campaigners can take advantage of the research facilities provided by crowdfunding platforms. at the stage of selling and distributing products to campaigner customers, it is quite helpful to have integration between crowdfunding platforms and logistics companies. campaigners also obtain customer databases at the end of the project period. the collaboration value chain design above helps campaigners to analyze competitive power and value creation from the collaboration process that is formed. in terms of value network theory, value creation is formed from the interaction of campaigners and customers through crowdfunding projects. interaction that occurs is that customers pay their funds to campaigners through crowdfunding platforms, and campaigners send products to customers based on data processed by crowdfunding platforms. all parties involved in the crowdfunding process show interdependence in the value creation process. 6. conclusion this section summarizes the results of the research described in the previous section, explain the limitations of the study, and provide suggestions for subsequent research. this research aims to find out value chain design as a result of collaboration between crowdfunding platforms and the music industry in indonesia. research found that the collaboration process occurs in almost all the main activities in the value chain. crowdfunding indirectly has changed the pattern of production in the music industry in indonesia with its involvement in funding, product development, sales, distribution, until the product reaches the customer's hands. the role of crowdfunding platforms as a means of interaction between campaigners and their customers in value creation is a form of value network application theory. time constraint has limited the author to gather more responses, though response rate is equal to 60%, this can be improved by extending the period of study. in addition, this study only analyzes album-making projects, while there are other forms of projects that can be found in the music industry. the proposal for further research is to increase the number of respondents to the study and the types of projects analyzed in order to obtain a broader and more varied picture of collaboration between crowdfunding platforms and the music industry in indonesia. in addition, research can be carried out regarding the effects of crowdfunding on entrepreneurial decisions in the creative industry. the research allows researchers to understand the effects of social capital on crowdfunding project design. references badan ekonomi kreatif. 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(2003). application of case study research second edition. interpretive interactionism (2nd edition). california: sage publication. identification and comparison study of marketing students ethical sensitivity 42 identification and comparison study of marketing students ethical sensitivity tony wijaya1*4, agung utama2, nurhadi3, and andreas m kuncoro4 1,2,3,4 universitas negeri yogyakarta, yogyakarta abstract the research aimed to identify and compare the ethical sensitivity level of marketing student. this research is descriptive-comparative using primary data. sources of data in the study is a student of marketing management. the study used a saturated sample of all students who are still active (3 batches). data collection techniques are surveys using questionnaires. data analysis techniques in this study using descriptive statistics and analysis of variance. based on the result of the research, it can be concluded that there is a significant difference in students' ethical sensitivity in 2nd, 4th and 6th semesters significantly. 6th-semester students have better ethical sensitivity than 4th and 2nd semester. 4th-semester students have better ethical sensitivity than 2ndsemester. keywords: ethical sensitivity, marketing students, semester 1. introduction businesses in indonesia will face increasingly severe challenges in the future, so there is a need for work professionalism. the professionalism of a profession is manifested in ethical attitudes and actions. ethical attitudes and actions are crucial to the position of businesspeople in society. the problem of business ethics is increasing not only in indonesia but also in other countries including in developed countries. this is demonstrated by surveys conducted by sales & marketing management in a number of marketing managers who commit ethical violations (roman & munuera, 2005). attention to ethical issues is inseparable from the growing world of business as a result of development. increasing business activity both at home and abroad has created new challenges, namely the demands of ethical practices, which are also the demands of business life in many countries around the world (bertens, 2000). global economic transparency demands ethical business practices. therefore, ethics is needed in business, because unethical business practices can reduce productivity and curb efficiency (kartasasmita, 1997). marketing is allegedly the most unethical business function and many marketing practices have been criticized (laezniak, 1999). another impact of unethical marketing behavior is the risk the company loses its customers (roman and munuera, 2005). economic progress encourages the emergence of new business actors that lead to business competition. all these businesses seek to gain the most profit. sometimes in order to achieve that goal, all efforts and actions are carried out even if the businessperson must take actions that ignore the moral dimensions and business ethics themselves, including ethics in product * corresponding author. email address: tony@uny.ac.id mailto:tony@uny.ac.id afebi management and business review (ambr) vol.03 no.01, june 2018 43 marketing. to anticipate this, it is necessary to identify ethical factors. ethics is a fundamental concept for business. awareness of the importance of this is precisely the case when various counter-ethical cases occur, both in certain professions and in general business. business education plays a fundamental role in positioning ethical behavior (ermasofa et al., 2017). ethics is a fundamental concept for the field of cultivation. ethical paradigms provide principles and assumptions which handily overlay the multitude of variables a business person needs to consider when processing decisions and encountering dilemmas, regardless of their level of intensity (lovett & woolard, 2016). marketers' ethical behavior and actions will have an impact on consumers and the environment. the problems of marketing ethics are part of marketing research topics such as those conducted by roman and munuera (2005), abratt & penman (2002), schwepker (2003), yoo & donthu (2002), singhapakdi (2004), and singhapakdi et al (2000a ; 2000b). ethical issues should not occur if every marketer has the knowledge, understanding, and applying ethics adequately in the execution of his work. as an implementation of the increasingly widespread expectation of ethical issues among practitioners and academics of ethical education, the presence of subjects with moral and ethical teachings is very relevant to be conveyed to learners. regardless of how it exists, ethical education has been recognized as having an important role in business development. the american assembly of collegiate school of business (aacsb) as one of the accrediting agencies in america also posits the importance of ethics in the business program curriculum (shannon & berl, 1997). the 1986 american accounting association's (aaa) through the bedford committee has emphasized the need to include studies on ethical issues in education. it also reveals that the national commission on fraudulent financial reporting through the treadway commission (1987) recommends to further expand the scope of ethics in education. therefore, it is important for higher education to respond by incorporating or integrating ethics into the curriculum or needing to extend its scope within the existing curriculum. radtke (2000) states that ethical education is based on a premise that moral development can be enhanced through the educational process. this is corroborated by various ethical researches such as the identification of ethical educational goals; ethical issues and the need to access ethical teaching outcomes. the study of ethics has been widely practiced both overseas and domestically (ameen et al., 1996; radtke, 2000; rustiana, 2003). subjects who become respondents vary from professional group to group of students. the results of these researchers varied, with the finding that there were differences in ethics among the various groups and the opposite findings. rustiana (2003) found differences in ethical sensitivity in male and female students. mahfoedz (1999) found no ethical differences between junior and senior students differed from those of stevens et al. (1993) who found a difference in ethical orientation between junior and senior students. yoo & donthu (2002) found a learning relationship with ethical behavior in marketing. in indonesia, the existence of courses containing ethics content is inseparable from the mission of higher education as a higher education subsystem, which is not only responsible for teaching business science (science transformation) to the students but also responsible to educate students to have personality intact as human beings. education makes people become more identification and comparison study of marketing students ethical sensitivity 44 ethically sensitive and are able to argue in ethical matter even though knowledgeable persons are not always ethical (suwardi et al., 2014). the world of higher education has a great influence on student ethics behavior. the world of good education will encourage students to be business candidates who have a professional attitude and are based on moral and ethical standards. as a producer of energy or business to business and business, universities have a very strategic role to deliver and prepare the students to be professional candidates who have good ethical values. ethics has an important role for marketing students as prospective marketing executives or marketing practitioners in the future and needs to be equipped with an ethical outline in the marketing profession (yoo & donthu, 2002). ratdke (2000) points out the importance of detecting students' ethical behavior as early as to prevent unethical behavior through the scope or content of the ethics curriculum in the course. studies yield interesting results regarding certain factors that influence the ethicality of business students and may impact the effectiveness of business ethics instruction (wang & calvano, 2015). one attempt to detect ethical behavior is to identify through student sensitivity. ethical inclusiveness is the description or proxy of the student's ethical actions after graduation. sensitivity is a feature of action that detects the possibility of graduates in ethical behavior. if the student has behaved unethically then the possibility after graduation will have a tendency to behave unethically as well. this research seeks to determine the ethical sensitivity of marketing students as a consideration of the importance of ethical content in the marketing curriculum either explicitly or implicitly. the results of research show that the learning outcomes are profound and directly relevant to undergraduate curricular (ahmed et al., 2017). the problem formulation is spelled out specifically as follows; how does the comparison of ethical sensitivity rate to the marketing student based on the semester level? 2. literature study dellaportas et al., (2011) describe ethical sensitivity as "... the way an individual signifies the ethical situation and consequences of one's actions against others". according to dellaportas et al., (2011), students' ethical sensitivity is one of the essential requirements for realizing ethical issues and raising future awareness to understand the possible impact of unethical problems on others. business research is focused on making decisions and behaving ethically. however, an important factor in ethical judgment and behavior is the consciousness of individuals that they are moral agents. the ability to recognize ethical or moral values in a decision is what is called ethical sensitivity. decisions or actions related to moral matters must have consequences for others and should involve choice or willingness to choose from the decision maker. this definition has a broad sense because decisions often have consequences for others and the willingness to choose is almost always a gift, even though those choices are often at great risk. in some cases, many decisions are judged as moral decisions simply because they have moral content, but they are not. ethical sensitivity is the ability of students to realize ethical or moral values in an ethical decision (ameen et al., 1996; rustiana, 2003). the ethical sensitivity in this study is related to the academic activities of the students afebi management and business review (ambr) vol.03 no.01, june 2018 45 during the process of studying the lectures and reflected in the academic acts that have an impact on ethical behavior after becoming a businessperson. ratdke (2000) argues that ethical sensitivity is a description or proxy of the students' ethical actions after graduation. sensitivity is a feature of action that detects the possibility of graduates in ethical behavior. if as a prospective business actor, the student has behaved unethically then the possibility after graduation will behave unethically. this needs to be detected early on as a starting point to prevent unethical behavior through the scope or content of the ethics curriculum in the course, so as a potential business actor capable of competing and acting professionally. ethical decisions are complicated to judge primarily because the existing rules are not perfect as a means of ethical decisions. often what happens is a legal but not always ethical decision. this biased state often leads to ethical problems. ethical sensitivity of the students in the form of ethical considerations (rustiana, 2003) while doing tasks, exams and assessments such as looking at other student exam answers, preparing notes for copying, borrowing reports or other papers for diplagiat, asking others to write or make papers, from others but without mentioning the source of the reference in the presentation of the report, before the exam asks questions on the class or parallel colleagues, asks answers to friends, exchanges test answers, writes case analysis reports or papers for other students, lies to lecturers to postpone exams reporting lecturer appraisal errors that benefit the student, copying other people's paper at home, not participating in group work on duty but can of equal value, visiting learning from other people's records without their permission, visiting lecturers after the exam in the hope of getting more value well, doing the exam for mahasi other students, get a copy of the exam before taking the exam, do the test before the time when the lecturer's instructions forbid it, give exam answers to other students during the exam, pay someone else to do the task or paper, arrange a seat in order to cheat, and bribe or threaten other students or lecturers to increase the value of the course. research hypothesis ha: there is a significant difference in the degree of ethical sensitivity to students in the field of marketing campus wates based on the level of the semester 3. research methodology types of research the type of this research is descriptive-quantitative. the orientation of this research is positivistic and in the process of collecting data is a survey. operational definition and variable measurement variable in this research is interdependency that is ethical sensitivity. the operational definition relating to the meaning of all the variables used in this fieldwork is described and described as follows: in this study, ethical sensitivity is the ability of students to realize ethical or moral values in an ethical decision (ameen et al., 1996; rustiana, 2003). ethical sensitivity is measured (ratdke, 2000) with student attitudes in terms of performing assignments, exams and judgments in the form of viewing other student exam answers, borrowing reports or other people's papers for example, asking others to write or make papers, writing ideas from others without mentioning the source of reference in the presentation of the report, writing a identification and comparison study of marketing students ethical sensitivity 46 case analysis report or paper for other students, their reasons for the lecturer to postpone the assignment, preparing the note to be copied, before the exam to ask questions on the class or colleagues palalel, request answers to friends, exchanged test answers , copying other peoples' assignments, not participating in group work on assignments, using paper on the internet, paying other people doing paperwork, looking at other people's records without their permission, doing exams for other students, arranging seats to cheat, get a copy of the exam before taking the exam, do so al the time-honored exam when the lecturer's instructions forbid it, giving the exam answers to the other students during the exam, not reporting the lecturer's misstatement in favor of the student, facing the lecturer after the exam in hopes of obtaining better grades, requesting value waivers, giving gifts with the aim of getting good grades. the instruments in this study were adapted from previous studies. the data rate of research variables collected in the form of score data range (interval) or use interval scale that is range 1-5. types and data sources this study used primary data collected using a questionnaire on ethical sensitivity. measurement of ethical sensitivity using a questionnaire adapted from ratdke (2000). test instruments the instrument test in this research consisted of validity and reliability test. validity test in this research use corrected aitem total correlation value. an item is said to be valid if it has a significance value> 0.05 or greater r-table. reliability testing using cronbach alpha to indicate the extent to which a tool can be trusted to measure an object, the coefficient alpha is approaching 1 means the question items in the coefficient more reliable. a variable is considered reliable if the alpha coefficient is greater than 0.7 (now, 1992). the result of validity test shows corrected total correlation value of 0.349-0.906 with a significance level <0,05 which means that all item is valid. an alpha coefficient of 0.954> 0.7 which means that ethical sensitivity variables are categorized reliable. population and sample the research population used as sample source is the marketing student of uny. the sampling technique using non-probability technique with purposive sampling method, and chosen is a student of marketing management in universitas negeri yogyakarta semester 2nd, 4th and 6th data analysis technique the type of this research approach is descriptive. data were analyzed using descriptive statistic and anova. 4. result descriptive analysis descriptive analysis is used in analyzing students' ethical sensitivity. based on the descriptive analysis, it can be seen the average data of ethical sensitivity of students in each group (semester) as follows: afebi management and business review (ambr) vol.03 no.01, june 2018 47 table 1. means based on semester ethical sensitivity tukey hsd semester n subset for alpha = 0.05 1 2 3 sem 2 68 2.0412 sem 4 54 2.9287 sem 6 46 3.5967 sig. 1.000 1.000 1.000 means for groups in homogeneous subsets are displayed. a. uses harmonic mean sample size = 54.582. b. the group sizes are unequal. the harmonic mean of the group sizes is used. type i error levels are not guaranteed. the mean value of student's ethical sensitivity of semester 2nd was 2.0412 (n = 68) lower than the 4th-semester student of 2.9287 (n = 54) and the 6thsemester student was 3.5967 (n = 46). this comparison shows the highest average in 6th-semester. comparison of each group (semester) is analyzed based on the post hoc tests of anova as follows: table 2. post hoc tests based on semester based on the value of post hoc tests from anova, it is known that the mean difference of ethical sensitivity of students in 6th-semester and 4thsemester is 0.66804 with 0,000 significance which means there is significant difference of ethical sensitivity of students in 6th and 4th-semester, and the 6thsemester student's ethical sensitivity is better than 4th-semester. the mean difference in the ethical sensitivity of students in 4th-semester and 2nd-semester is 0.88753 with a significance of 0,000 which means there is a significant difference in the ethical sensitivity of students in 4th and 2nd-semester, and the 4th-semester student's ethical sensitivity is better than 2nd-semester. mean difference sensitivity ethical student 6th-semester and 2nd-semester of 1.5556 with a significance of 0,000 which means there is a significant difference in the ethical sensitivity of students of 6th-semester and 2nd -semester, and the 6thsemester student's ethical sensitivity is better than 2nd-semester. overall there is a difference of student ethical sensitivity of 2nd, 4th and 6th-semester multiple comparisons dependent variable: ethical sensitivity tukey hsd (i) semester (j) semester mean difference (i-j) std. error sig. 95% confidence interval lower bound upper bound sem 6 sem 4 .66804* .03205 .000 .5922 .7438 sem 2 1.55556* .03049 .000 1.4834 1.6277 sem 4 sem 6 -.66804* .03205 .000 -.7438 -.5922 sem 2 .88753* .02911 .000 .8187 .9564 sem 2 sem 6 -1.55556* .03049 .000 -1.6277 -1.4834 sem 4 -.88753* .02911 .000 -.9564 -.8187 *. the mean difference is significant at the 0.05 level. f = 1349.665 sig.=0.000 identification and comparison study of marketing students ethical sensitivity 48 significantly which shows an f-count value of 1349.665 with a significance of 0.000. 5. discussion the findings of this study are consistent with the results of yulianty and fitriany (2005) that found that the final semester students tended to be ethical compared to the students of the first semester. this reinforces the notion that ethical content in the curriculum contributes to students' ethical behavior. the content of the ethics curriculum in the learning process in marketing encourages students to consider the ethical orientation in making decisions. evaluation and belief that ethical actions tend to have better and longer-term impacts (long term relationship). shannon & berl (1997) also identified that business students who follow ethical courses have a tendency to act more ethically related to ethical issues in marketing. yoo & donthu (2002) also found there was a significant relationship between formal and informal education with the tendency of students to behave ethically. theoretically, the explanation of purchasing behavior refers to a general concept of behavior that can be explained through an approach involving the cognitive and environmental aspects which are then referred to as cognitive social theory (santrock, 2005). the cognitive social view proposed by bandura (2001) explains that behavior as a response to a stimulus is largely determined by the state of the stimulus and the individual and the role of the environment. this formulation is no different from lewin's formulation that behavior is the relationship between the environment and organism. the relationship is not yet clear so bandura is clarified with interactional relations. an interactional relationship in question is the relationship behavior with the environment and personal aspects. this formulation addresses the limitations of cognitive views that use stimulus-organism-response formulation (s-o-r). the response stimulus relationship does not take place automatically but the individual plays a decisive role, especially an ethically oriented action. a response is a function of stimulus and organism with the formulation of interaction between behavior, personal (cognitive) and environmental aspects. learning ethics through stimulus will generate attitudes and interests to behave ethically. individuals behave in making decisions in solving their problems (needs and wants). individuals are involved in the learning process to solve the problem. cognition learning emphasizes the thought process involving ethical knowledge. the cognitive social approach is more appropriate to explain the behavior of individuals who have high involvement in decision making. individuals use knowledge in selecting and selecting decisions based on information they have. in addition, knowledge about the benefits and impacts of behavior is required. 6. conclusions based on the above discussion it can be concluded that thoroughly there is a difference of student ethical sensitivity 2nd, 4th and 6th-semesters significantly. 6th-semester students have better ethical sensitivity than 4th and 2nd-semester. 4th-semester students have better ethical sensitivity than 2ndsemester. based on the findings and conclusions in this study can be given some suggestions of the importance of ethical content required in the scope of the field of marketing. consideration of ethical contents in the course of marketing afebi management and business review (ambr) vol.03 no.01, june 2018 49 is expected to encourage students to have good ethical sensitivity so that in marketing practices are able to behave ethically. there are several factors that are not researched like gender, experience, and age (carbo et al., 2016). future research can intend to investigate whether potential differences in such perceptions depend on 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(2005).persepsi mahasiswa akuntansi terhadap etika penyusunan laporan keuangan. simposium nasional akuntansi viii. 1516 september 2005. effect of service quality and perceived value satisfaction and loyalty religious tourists visit island madura, indonesia 55 4effect of service quality and perceived value satisfaction and loyalty religious tourists visit island madura, indonesia pribanus wantara1* 1 trunojoyo university, madura, indonesia abstract this paper wants to examine the relationship of service quality, perceived value, satisfaction and loyalty with religious tourists who visit the island of madura in 2015. the structural equation modeling results support the hypothesis that service quality affects directly the satisfaction and loyalty, and satisfaction directly affects loyalty, but the results do not support the hypothesis that the perceived value directly affects the satisfaction and perceived value directly affects loyalty. quality of service only has direct and indirect influence on loyalty through satisfaction. so the stage of tourism development in madura, quality of service is very important in building loyalty and satisfaction tourists. keywords: loyalty, madura island, perceived value, satisfaction, service quality 1. introduction in the period of the last decade in some countries there is a new paradigm, that the religious journey packaged in religious tourism. religious tourism is done by visiting the holy places and ancient buildings such as mosques, churches, temples, tombs of saints or religious figures, and other sacred places. people come to the holy site not only for worship, pilgrimage, or meditation, but they can learn about the history and archeology also traveling. so that the activity of worship, pilgrimage, learning about the history and archeology in the holy sites, as well as travel can be classified as religious tourism (center for research and promotion of tourism in 2006, najib, 2008). with this condition, it can be one of the tourism industry can be expected to be the main source of income of the region or country. after the longest bridge was completed and inaugurated by the president in 2009, interest in religious tourism visit to the island of madura higher. this is supported by a sense of obedience madurese to seek religious leaders or scholars making the island area of approximately 5,168 km2 known as area of santri (muslim students) and even some people mentioned that madura as a portico medina, as evidenced by the number of schools as well as religious leaders or scholars who emerged from the island with a population of nearly 6 million. although religious leaders are now gone, but obedience to the scholars madurese very large. they are often regarded as a tomb of kiai (scholars) that is believed to be the most appropriate place in addition to praying for the souls of scholars and also to pray to god with a specific purpose. the number of tourists who visit the tombs of kiai (scholars) make such a religious tourist destination in madura. here * corresponding author. email address: pribanus@gmail.com effect of service quality and perceived value satisfaction and loyalty religious tourists visit island madura, indonesia 56 are four potential of religious tourism on the island of madura, which became the main destination for tourists visiting the island of madura: first, tomb syeikhona cholil bangkalan, tomb syeikhona cholil, in the area martajasah-bangkalan is one of the important places in madura island visited by many pilgrims who come from various regions both inside and outside the region, in addition to the tomb of ebuh tears which is also located in the town of bangkalan. the tomb complex of this great scholar is always visited by pilgrims and tourists, day or night. in this complex there are also magnificent mosques award winner number two of the most beautiful mosques in east java. secondly, the tomb of ratu ebu-sampang, religious tourism object located in the village polagan, sampang district and reach 2 km from the city center to the south. tomb of ratu ebu is a tourist attraction in the form of the tomb of the great scholars who led the kingdom in ancient times which is the tomb of the king of sampang "r. praseno" who died in 1624. third, batu ampar-pamekasan, grave batu ampar, is the tomb of influential cleric in pamekasan and the equivalent of wali songo. the cemetery is located in the village of batu ampar, district guluk-guluk, which is about 15 km from the city center. as tourism location that visited by people who want to pray and make pilgrimages in the tomb islamic spreader leader in pamekasan. fourth, tomb asta tinggi in sumenep, asta tinggi is the kings tomb of sumenep which was built around the 1750, arrive at your location will be made stunned by a magnificent gate and high artistic value. this place is so sacred, even the children of kings in sumenep still have pilgrimage to this place before entry / stay / visit kraton sumenep. thus, visitors are required to take their shoes off at the front gate of each tomb (also maintain modesty clothing and behavior). every day the tombs never empty of visitors, especially on days of islam, sometimes must be willing jostling to get into the cemetery. however, everything will be paid for treating the architecture which resembles a portuguese building. there is a growing belief in the community, anyone who is able to finishing al-quran in this place will surely make fluent reading the qur'an. the next, to attract tourists, the necessary facilities and infrastructure to visit religious tourist sites, such as access roads, places of worship adequate, parking lots, rest areas, locations merchandise sales, service personnel were friendly and so on. for long-term development with intense competition, many companies do not only focus on attracting new customers, but also to secure and increase customer loyalty. the new work on the determinants of loyalty has emphasized the importance of perceived quality, perceived value and customer satisfaction (cronin et al, 2000, kashyap and bojanic, 2000, petrick 2004 duman and mattila 2005 meng et al, 2011). however, the extent to which the perception of service quality, perceived value, satisfaction and loyalty are connected to one another is uncertain in the literature. this research is expected to contribute to the literature investigating the relationship between perceived quality, perceived value, customer satisfaction and loyalty religious tourists who visit religious places on the island of madura. effect of service quality and perceived value satisfaction and loyalty religious tourists visit island madura, indonesia 57 2. literature study/hypothesis development service quality parasuraman et al. (1985, 1988) developed the servqual instrument, which consists of 22 attributes are incorporated in the five dimensions (ie, reliability, assurance, tangibles, empathy and responsiveness). they define the quality of service as a difference or gap between customer expectations and perceived performance and proposes to use the value gap to measure the quality of service. although servqual increasingly widespread use in various industries and countries, some experts such as brady et al. (2002), cronin and taylor (1992, 1994) states that the quality of service is more accurate when judged by the quality perception than the value of "gap". another criticism against the servqual instrument consists of 22 attributes considered inappropriate, or say that they can not be adopted to measure the quality of service in all service industries (cronin and taylor, 1992). meanwhile, according to ladhari (2009), there are 30 specific measures on quality of service industry that has developed between 1990 and 2007 in different industries and countries. perceived value zeithaml (1988) defines perceived value as "an overall assessment of the usefulness of consumer products based on the perception of what was acceptable and what is excluded". the perceived value can be analyzed with the size of the item that is in terms of "value for money" (sweeney et al 1996). however, many researchers recommend that perceived value is measured using a multidimensional scale (sweeney and soutar 2001; chen, 2008, lee et al 2007). sweeney and soutar (2001) even developed a model of perceived value, named perval. meng et al (2011) considers the non-monetary aspects can also be used to evaluate the perceived value in the shipping industry. monroe (in kristanto, 2005) reveals that in order to assess whether the performance of the products of a brand can create value, based on the four components of perceived value that is costs, exchange rates, aesthetics, and function relatively. the concept of the value proposed by monroe described as follows: (1) cost (cost), is the total money spent or paid by consumers to acquire and consume a service. (2) the value of the exchange (exchange value), is the value received by the consumer in touch with the ease obtained consumers to consume a service; (3) aesthetics is the value which consumers feel happy and comfortable with the services acquired. (4) the relative function is how a service is used, as well as its ability to reduce costs or generate certain advantages for consumers. with the achievement of an optimum level of customer satisfaction that encourages loyalty in the minds of customers who are satisfied earlier. customer satisfaction according to oliver (1997, 2010), customer satisfaction is defined as an assessment that the products or services provided have fun meet consumption levels associated. also there are two levels of the individual consumer satisfaction: satisfaction transaction-specific and cumulative satisfaction. transaction-specific satisfaction or the satisfaction of meeting compliance identified as a response to a transaction or meetings, while the cumulative satisfaction is based on the effect of service quality and perceived value satisfaction and loyalty religious tourists visit island madura, indonesia 58 assessment of events much the same experience and not just a one time experience. for both cases (satisfaction and contentment meetings cumulative), the satisfaction of both defined as an overall assessment of satisfaction or decomposed into satisfaction with the performance or quality attribute (cronin and taylor 1992). "overall" "cumulative" satisfaction is commonly used by researchers such as mittal et al. 1999 and spreng et al. 1996. loyalty according to oliver (1997; 2010), loyalty is defined as "a commitment that are held to buy back the products or services that are favored consistently in the future, leading to repeat sales on the same brand, despite situational influences and marketing efforts that have the potential to cause the switch behavior ". there are two approaches to customer loyalty: the behavior and attitude. loyalty behavior refers to actual customer behavior to repeat purchase products or services and recommend the loyalty attitude while referring customer's intention to repurchase and willingness to recommend. loyalty attitude is more commonly used in many research studies (loureiro and kastenholz 2011) and is relatively easy to measure. the relationship between service quality, perceived value, satisfaction, and loyalty there are several previous studies that explore the relationship quality satisfaction and loyalty. it is generally believed to industrial and service marketing that (1) a good quality service will generate customer satisfaction, (2) good quality services will attract customers that can lead to customer loyalty, and (3) high level of satisfaction will tend to create loyalty customer. however, it has also been submitted that satisfaction may not be sufficient to generate loyalty, despite the loyal customers almost generally satisfied (cronin and taylor 1992; cronin et al., 2000, petrick, 2004). furthermore, many researchers claim that the perceived value is the determinant of customer satisfaction (patterson and spreng, 1997, petrick and backman, 2002) and loyalty (petrick, 2004; eggert and ulaga, 2002). based on the literature review above, this study establishes the hypothesis as follows: h1: service quality is a significant effect, positive, and direct to customer satisfaction. h2: service quality is a significant effect, positive and direct to loyalty. h3: the perceived value significant influence, positively and directly on customer satisfaction. h4: the value perceived value significant influence, positively and directly to loyalty. h5: customer satisfaction have significant influence, positively and directly to loyalty. 3. research methodology data collection and measurement the measurement instrument for the empirical study was developed in three phases. first, some of the relevant items for the questionnaire were taken from the literature. for the measurement of service quality, adopted items from the serveffect of service quality and perceived value satisfaction and loyalty religious tourists visit island madura, indonesia 59 perf scale (cronin and taylor, 1992) were used. items for measurement of perceived value were adopted from cronin et al. (2000) and gallarza and saura (2006). for measurement of customer satisfaction, items from oliver's (1993) scale were used. additionally, to representatively capture the customer loyalty, we used items adopted from nguyen and leblanc (2001). second, in-depth interviews with 40 tourists of different genders, ages, education levels, and from different cities were conducted in order to generate an additional of information. in the final study, the items for service quality, perceived value, and customer loyalty were measured on a five-point likert scale (one ="strongly dis agree" to five="strongly agree"). seventeen items were used for measurement of service quality, the scale for perceived value consists of four items, while the scale for loyalty of four items. satisfaction was also measured on a five-point scale, ranging from "very dissatisfied" to "very satisfied." data for the main research was collected from 200 tourists in december 2015, by means of a personal interview. for each of the three destinations, the quota sample framework followed there presentative tourist structure by the cities of origin. due to control over the respondent selection, we believe that relevant units were in cluded. research data the data used in this study were collected through a questionnaire survey on pilgrims who came to madura island taken by accidental as a sample to fill out a questionnaire. of the total questionnaires of 200 pieces, the final number of valid questionnaires was 154 after eliminating 46 of 200 questionnaires were returned due to either incomplete information or questions not answered. after the steps suggested in cooper and emory, 154 samples were then tested using cronbach test to ensure the reliability of the sample to represent the population in this study (cooper and emory, 1995; cronbach, 1951). characteristics of respondents who support this study are described as follows: based on the characteristics of the sex of the respondents consisted of: 92 male respondents and 62 female respondents; based on the characteristics of the age of the respondents: 94 respondents aged under 40 years; 60 respondents aged above 41 years. 4. results an internal consistency test was conducted in regard to the whole data of participants for each variable in the study’s questionnaire. reliability test an internal consistency test was conducted in regard to the whole data of participants for each variable in the study’s questionnaire. table 1 internal consistency of study's questionnaire variabel no. of items cronbach alpha service quality (sq) 21 .873 perceived value (pv) 4 .763 satisfaction (s) 3 .706 loyalty (l) 3 .751 effect of service quality and perceived value satisfaction and loyalty religious tourists visit island madura, indonesia 60 the results indicated that a cronbach’s alpha coefficient was α = .873 for service quality, α = .763 for perceived value, α = .706 for tourist satisfaction, and α = .751 for tourist loyalty as shown in table 1. the reliability of multi-item scales was assessed by cronbach's alpha coefficient. for all four scales used to operationalize the constructs investigated, cronbach's alpha coefficient value was higher than 0.70. according to churchill (in zineldin and jonsson, 2000) a value of cronbach's alpha coefficient of 0.70 or higher is considered acceptable and indicates that the measurement scale tested is reliable. therefore, the measurement scales used in this study are reliable. measurement of structural equation modeling (sem) overall after measurement models for each factor or construct using confirmatory factor analysis (cfa), which produces the information that each of the factors / indicators that support the research model each have been received with a value of loading factor that is significant or reliable, then analyzed the relationship causality in a structural equation model or sem (structural equation modeling) overall. the model is said to be good when development hypothetical model theoretically supported by empirical data. detailed sem analysis results are shown in figure 1. figure 1 research model path coefficients the result of the model presented in figure 1 further evaluated using the goodness of fit indices and the results are shown in table 2. table 2 fit indices of the research model statistic value χ 2 (df) 94.564 probability value for χ 2 statistic (p) .224 χ 2/df 1.113 root mean square error of approximation (rmsea) .118 goodness of fit index (gfi) .941 adjusted goodness of fit index (agfi) .917 value v1e-10 v2e-11 v3e-12 sq sq2e-2 sq3e-3 sq4e-4 sat lo y s2 e-7 s1 e-6 s3 e-8 l1 e-14 l2 e-15 l3 e-16 ,80 z2 z3 goodness of fit chi-square = 94,564 df = 85 cmin/df = 1,113 probability = ,224 gfi = ,941 agfi = ,917 rmsea = ,024 rmr = ,026 tli = ,986 cfi = ,989 nfi = ,901 z1 sq5e-5 ,60 ,69 ,49 ,60 sq1e-1 ,49 ,72 ,85 ,73 ,82 ,64 ,37 ,73 ,57 ,09 ,69 ,66 ,37 ,01 v4e-13 ,63 effect of service quality and perceived value satisfaction and loyalty religious tourists visit island madura, indonesia 61 statistic value normed fit index (nfi) .901 comparative fit index (cfi) .989 tucker-lewis index (tli) .986 evaluation of the proposed model indicates that an evaluation of the overall construct criteria of good result because there are no critical violations, considering the measurement has met all the terms it was concluded that the model can be received or said to have been in accordance with the data in order to test the suitability of the model further. 5. conclusion the results showed that the quality of service supported by indicators of reliability, assurance, tangibles, empathy and responsiveness proven to provide a significant positive effect on the level of 5% of customer satisfaction and loyalty tourists come to the island of madura. this illustrates that if the dimensions of service quality on a religious tourism on the island of madura can be maintained even can be improved then this condition will provide support to increase customer satisfaction and loyalty for tourists religion to visit the locations of the religious on the island of madura, thus increasing income and income of the people on the island of madura. the perceived value that is supported by the four components of perceived value that is costs, exchange rates, aesthetics, and function relatively. proven to provide a significant positive effect on the level of 5% of the marketing capabilities. this means that, if the higher ability of an area to show the value of a good tourist location, it can increase customer satisfaction and loyalty religious tourists come to the island of madura. furthermore, through sem analysis showed that the quality of the services affect satisfaction and loyalty. however, it was found that the perceived value does not have a direct and significant effect on satisfaction and loyalty. so to increase loyalty for the tourists visiting the island of madura is to improve the quality of service is more important than increasing the perceived value and satisfaction. there are several limitations to this study. generalization of this study is limited because of three reasons. first, the data collected from 154 tourists in two group trips in one month. larger sample sizes it is possible to understand the determinants of loyalty to the religious tourists visiting the island of madura. second, this study used only a single item to measure satisfaction and perceived value to reduce the burden on respondents and time for the interview. for further research, some items are preferred so that the validity and reliability they can be assessed through cfa. also they can improve the interpretation and prediction of perceived value, satisfaction and loyalty. third, the analysis is based on a collection of survey data collected in december 2015 further research is needed to test whether the relationship between service quality, perceived value, customer satisfaction and customer loyalty with the conditions of changing times. 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(2000). an examination of the main factors affecting trust/commitment in supplier-dealer relationships: an empirical study of swedish wood industry. the tqm magazine, 12(4), 245-265. customer complaint response strategy in service failure: study of online shopper in indonesia 13 customer complaint response strategy in service failure: study of online shopper in indonesia yeshika alversia2¹ ⃰ and rizky wijayanti 2 1,2 universitas indonesia, depok, indonesia abstract the shifting pattern of shopping habit into a digital nowadays perceived by the business players as the trigger of the growth in e-commerce and e-marketplace. indonesia is currently one of the largest markets in southeast asia for online shopping. on the other hand, it is inevitable that there are still many obstacles and problems that defer the optimized growth of e-marketplace in indonesia. there are customer concerns about issues that may arise when they do online shopping. service failures that often arise eventually encourage customers to complain. failure in service that lead to the emergence of various complaints from customers is an inevitable thing. each company must prepare an optimal strategy to manage those complaints. the objective of this research is to find out whether there is a difference effect of service failure explanation in the form of excuse, justification, reference and apology on customer satisfaction and repurchase, in the high level of problem condition compared to the low level of problem condition, for the case of online shopper e-marketplace in indonesia. furthermore, this research is conducted with the purpose to build the best strategy of giving response using service failure explanation (i.e. excuse, justification, reference and apology). researchers use a scenario-based experiment as the method and then all the data were analysed using t-test and anova. total 325 respondents of online shoppers in indonesia were collected, and the results revealed that apology and justification are the best choices for responding customers’ complaints. keywords: customer complaint, e-commerce, online shopper, response strategy, service failure explanation 1. introduction the high level of internet users has contributed greatly to the changing ways of shopping for indonesians today. there is shifting in style of shopping among indonesians, from offline to online. in 2014, based on the nielsen global survey of ecommerce, concluded that 61% of indonesian use mobile phones for online shopping. in addition, indonesia, together with the philippines, thailand and vietnam, is in the top position in global for the country with high amount of consumers who do online shopping from mobile phones. this phenomenon eventually led to the emergence of a variety of e-marketplaces in indonesia ranging from bukalapak, elevania, jd.id, tokopedia, shopee, blanja, blibli, and others, that finally opened up opportunities for many businesses to open their stores with an online system. e-marketplace and e-commerce provide opportunities for electronic channel transactions, which are generally known as internet-based platforms. there are several types of e-marketplaces that move in different scopes, such as resources, foods, pharmacueticals, or those that support various types of transactions such as b2b, customer-to-customer, and business-to-customer (standing & standing, 2015). it is inevitable that there are still many obstacles and problems that cause the growth of indonesia's e-marketplace cannot be maximized. from the consumer side, there are still many concerns and problems when people shop online. key concerns include transaction fraud, online payment security, and product quality that is not in line with * corresponding author. email address: yeshika@ui.ac.id afebi management and business review (ambr) vol.04 no.01, june 2019 14 image promotion. this can trigger dissatisfaction or service failure by the emarketplace (service failure) which ultimately encourages consumers or the public to make complaints or complaints. previous study states that it is estimated that 15% -25% of consumers experience dissatisfaction from their shopping activities, even though the cause of complaint occur in various types of product categories (andreasen, 1988). koushiki (2013) argues that several studies that have been done before prove that if companies make explanation they are able to overcome service failure problems. furthermore, suveera (2014) in tarofder et al., (2016), explains that there are still few number of studies that prove service failure explanation is able to provide significant influence on customer satisfaction and repurchase intention. to help prevent the emergence of negative effects from complaints that arise, companies must be able to create a good customer service system. the existence of this current research is expected to have a positive impact from the response that will be given by company or e-marketplace to the customer after they feel the service failure and then get an explanation, whether excuse, justification, reference and apology. therefore, the objectives of this study are as follow: to find out whether there is a difference effect of service failure explanation in the form of excuse, justification, reference and apology on customer satisfaction and repurchase in the high level of problem condition compared to the low level of problem condition for the case of online shopper e-marketplace in indonesia. 2. literature review and hypotheses development 2.1. service failure and level of failure service failure is defined as the perception received by the customer, when one or more of the aspects of service provided in a transaction activity process is not in accordance with their expectations (lovelock & wirtz, 2011). further, lovelock and wirtz (2011) explained that in addressing the failure, there are several actions that might be carried out by the customer, including: (1) take a public action; the customer may take action by making a complaint to the company directly, or the authorities, such as to a third party or police, organizations, or other legal assistance. (2) private action; the customer takes personal actions, meaning that it does not report to a third party, but personally the customer will blacklist the company or service provider that gives bad service to them. (3) take no action; mostly happened, that is, the customer does not even complain despite getting unsatisfactory service. from previous research, it is proven that only 5% -10% of the total unhappy customer (customers who get less satisfactory service) whose finally give their complain. level of failure is the extent to which customer satisfaction in a service recovery depends on the severity of the problem and recoverability that can be given (lovelock & wirtz, 2011). the level of problems when a failure occurs can be explained into two groups of problem levels; heavy or high level of problem and light or low level of problem. at the level of severe problems it is actually very difficult to do recovery which can completely satisfy the customer, for example, it is very difficult to recover from customers who are injured due to service equipment errors. there is a concept that explains "let the punishment fit the crime" means that the customer will expect low when there is an error or failure that is small (minor) and vice versa. customers will expect recovery and even significant compensation when a major error occurs or major failure in terms of time, effort, causing high irritation, or anxiety because of service failures (lovelock & wirtz, 2011). 2.2. service recovery service recovery is a systematic effort carried out by a company or service provider when a service failure has occurred in an attempt to resolve the problem and keep the customer from using the same company (lovelock & wirtz, 2011). there are two general types of service recovery, namely compensatory and non-compensatory service recovery. customer complaint response strategy in service failure: study of online shopper in indonesia 15 compensation is one of the recovery strategies that proven has effective impact to improve the perspective of consumers when a service failure occurs (bitner et al., 1990; smith et al., 1999; smith and bolton, 1998 in baker & mayer, 2014). in addition, compensation is the second most strategy that is used as one of the recovery initiatives in restaurants (hoffman et al., 1995). rust & chung, (2006) and tax et al., (1998) explain that it is important for service providers to better understand non-compensatory recovery methods. one form of non-compensatory recovey is to provide adequate information to consumers on the consideration of failure that has occurred by giving the explanation (baker & meyer, 2014). 2.3. service failure explanation bies (1987) on tarofder et al., (2016) states that there are four parts of explanation classification as a form to handle service failure, this classification are as follow: (1) excuse: one of the ways used by a company to explain the problem due to external problems. in this case the company tends to try to avoid responsibility for the problems that faced by their customers. (2) justification; one of the methods used by the company in dealing with customer complaints, almost same with excuse, both methods show that the problem arises because of the company's external factors. however, justification shows that the company accepts the responsibility and will improve it. in this case the service problem or failure must be justified. (3) reference; one method of managing problems from customers, by way of companies comparing situations experienced by one customer with another customer who has experienced worse service problems. it turns out that this way can reduce negative perception because of the service failure. (4) apology; embodiment of regret from the company for service failures that occur. the company acknowledges that the problems that arise are the responsibility of the company and offer an apology indeed it is felt necessary in every case that arises. 2.4. customer satisfaction satisfaction is defined as a positive attitude based on the experience of using a service or product (tarofder et al., 2016). generally, customers have a prediction of the service they will feel before consuming a product or services. predictions that arise as a result of the search process for product / service information (search and choice process) before finally deciding to use it (lovelock & wirtz, 2011). according to kristen et al., (2014) on tarofder et al., (2016) differences in the types of service failures that exist and ensuring service recovery can affect customer satisfaction and future intentions. 2.5. repurchase intention many studies have proven that when failures occur in company services, customers will tend to spread negative word of mouth (nwom) and do not want to repurchase similar products (mikael, 2013; beth et.al., 2010 on tarofder et.al ., 2016). the effort given by the company to carry out recovery on the problems that occur is able to provide a positive influence on repurchase intention (goodwin & rose, 1992; kelley et.al., 1994 on tarofder et al., 2016). when a problem or complaint is wellhandled by the company and give satisfaction there will appear a greater chance that the customer will remain loyal and use the same product or service. complaint handling should be seen by the company as a profit center rather than cost center. if customers who feel dissatisfied fail to be handled, then the company will lose more than just the value of transactions in the future (lovelock & wirtz, 2011). based on the above explanation, the hypotheses of this study are as follow: -the effect of excuse on customer satisfaction and repurchase intention h1a : when company using excuse as the response, there is a significant difference in customer satisfaction between conditions of high level of problem and low level of problem. h1b : when company using excuse as the response, there is a significant difference in purchase intention between conditions of high level of problem and low level of problem. afebi management and business review (ambr) vol.04 no.01, june 2019 16 -the effect of justification on customer satisfaction and repurchase intention. h2a : when company using justification as the response, there is a significant difference in customer satisfaction between conditions of high level of problem and low level of problem. h2b : when company using justification as the response, there is a significant difference in repurchase intention between conditions of high level of problem and low level of problem. -the effect of reference on customer satisfaction and repurchase intention. h3a : when company using reference as the response, there is a significant difference in customer satisfaction between conditions of high level of problem and low level of problem. h3b : when company using reference as the response, there is a significant difference in repurchase intention between conditions of high level of problem and low level of problem. -the effect of apology on customer satisfaction and repurchase intention. h4a : when company using apology as the response, there is a significant difference in customer satisfaction between conditions of high level of problem and low level of problem. h4b : when company using apology as the response, there is a significant difference in repurchase intention between conditions of high level of problem and low level of problem. 3. research methodology 3.1. research design this research is conducted using experimental design with factorial design. factorial used to see the differences if there is interaction between two cells. therefore this research is in the form of 4 (type of service failure explanation) x 2 (level of problem) as illustrated in the following table: table 1 experimental factorial design 4x2 service failure explanation level of problem low high excuse cell a cell b justification cell c cell d reference cell e cell f apology cell g cell h source: data processed by researchers (2018) this experiment was carried out by giving eight different stimulus to the respondents, therefore it has eight cells, specifically: cell a: respondents who receive stimulus in the form of conditions when shopping in e-marketplace facing low level of problem category then make a complaint and get an excuse-response. cell b: respondents who receive stimulus in the form of conditions when shopping in e-marketplace facing high level of problem category then make a complaint and get an excuse-response. cell c: respondents who receive stimulus in the form of conditions when shopping in e-marketplace facing low level of problem category then make a complaint and get a justification-response. customer complaint response strategy in service failure: study of online shopper in indonesia 17 cell d: respondents who receive stimulus in the form of conditions when shopping in e-marketplace facing high level of problem category then make a complaint and get a justification-response. cell e: respondents who receive stimulus in the form of conditions when shopping in e-marketplace facing low level of problem category then make a complaint and get a reference-response. cell f: respondents who receive a stimulus in the form of conditions when shopping in e-marketplace facing high level of problem category then make a complaint and get a reference-response. cell g: respondents who receive stimulus in the form of conditions when shopping in e-marketplace facing low level of problem category then make a complaint and get an apology-response. cell h: respondents who receive stimulus in the form of conditions when shopping in e-marketplace facing high level of problem category then make a complaint and get an apology-response. 3.2. data collection method in primary data collection, researchers created a scenario-based experiment in the form of a self-administered questionnaire distributed online through email and social media. for the experimental design, the minimum sample size required is 30 people per cell (malhotra, 2010), therefore, the researchers aim to collect a minimum of 240 respondents for total eight cells. the questionnaire used the google form feature for respondents who met the criteria, then fill it independently. in addition, the questions given are structured questionnaires where the choice of answers to the questions given has been determined by the researchers. in this study, the sampling technique used nonprobability sampling through convience sampling, i.e. the sample will be taken based on certain considerations that are considered in accordance with the research objectives and the desired characteristics of the sample. researchers spread the link of online questionnaire through email and friends’ list on social media. this method is used by looking at the ease and readiness of the sample to be chosen as research respondents. manipulation check was also performed in this study. for experimental research, there are requirements that must be met so that the data obtained can be processed. manipulation check is emphasized to find out whether the stimulus in the form of online shopping scenarios is understood by the respondents. there are eight different scenarios, regarding the two level of problem (i.e. high level and low level of problem) and four types of the responses presented to those complaints in the form of excuse, justification, reference or apology. in this case, only the data from respondents whose answer are corresponded to the manipulation check questions used to be processed in the study. population of this study are people who have done online shopping in one of the e-marketplaces in indonesia, whether they have or have never complained online, and have a domicile in the java island with the age range of the millennial generation, 18 38 years old. in this study the total number of respondents obtained who met the criteria and passed the manipulation check was 325 people. the total respondents were divided into 8 different groups who filled out 8 questionnaires with a stimulus in the form of different scenarios that had been distributed online. afebi management and business review (ambr) vol.04 no.01, june 2019 18 table 2 distribution of respondents for each type of questionnaire no questionnaires number of respondents 1 excuse on high level of problem condition 39 2 excuse on low level of problem condition 40 3 justification on high level of problem condition 38 4 justification on low level of problem condition 42 5 reference on high level of problem condition 49 6 reference on low level of problem condition 39 7 apology on high level of problem condition 42 8 apology on low level of problem condition 36 source: data processed by researchers (2018) 4. results the next stage of processing research data is to test hypotheses. hypothesis testing was carried out using independent t-test to see the mean differences between two different and unrelated sample groups. in testing with this method, there are some indicators used to determine the results of data processing. in the lavene's test for equality of variance section, if the significance value is <0.05, to determine the significance of the test independent t-test uses a column in the equal variance not assumed. whereas if the significance of lavene's test for equality of variance is> 0.05, the determination of the independent t-test test results uses a column on equal variance assumed (malhotra, 2010). further, hypothesis testing is done to see the difference in the effect of the service failure explanation response in the form of excuse, justification, reference, and apology in conditions of high level of problem and low level of problem on customer satisfaction and repurchase intention. 4.1. the effect of excuse, justification, reference and apology on customer satisfaction table 3 below shows the summary of the results related to the impact on customer satisfaction. based on the results, the independent t-test test for customer satisfaction given excuse response shows that the value of the t-value is -2.401 with a significance value of 0.019 (p-value <0.05). with these results, it can be interpreted that customer satisfaction value generated by giving responses in the form of excuse has a significant difference, between conditions of high level of problem with low level of problem (mexhl = 2.442 < mexll =3.075, p value <0.05, 2-tailed). so, from this test it can be concluded that hypothesis 1a is accepted. the independent t-test test for customer satisfaction given justification response shows that the t-value obtained is -3.526 and the significance is 0.001 (p-value <0.05). the test results prove that there is a significant difference in the value of customer satisfaction when giving a justification response between conditions of high level of problem and low level of problem (mjusthl = 4.086 < mjustll = 4.88, p-value <0.05, sig 2tailed) thus, it can be concluded that hypothesis 2a is accepted. customer complaint response strategy in service failure: study of online shopper in indonesia 19 table 3 mean difference between groups on customer satisfaction variable hypothesis group mean group mean mean difference t-value sig. (2tailed) result h1a excuse-high level of problem 2.442 excuse-low level of problem 3.075 0.633 -2.401 0.019 accepted h2a justificationhigh level of problem 4.086 justificationlow level of problem 4.881 0.795 -3.526 0.001 accepted h3a referencehigh level of problem 2.316 reference low level of problem 4.051 1.735 -5.630 0.000 accepted h4a apology-high level of problem 3.988 apology-low level of problem 4.597 0.609 -3.261 0.002 accepted source: data processed by researchers (2018) furthermore, for the reference response on customer satisfaction, it is known that the t-value obtained is -5.630 with a significance value of 0.000 (p-value <0.05). then from the test results, it can be explained that there is a significant difference between the response in the form of a reference to the condition of high level of problem with a response in the form of a high level of problem for customer satisfaction variables, (mrefhl = 2.490 < mrefll = 3.532, pvalue <0.05, sig 2-tailed). that way, it was concluded that hypothesis 3a is accepted. finally, the independent t-test test for customer satisfaction given apology response shows that the results of the t-value were -3.261 and the significance value was 0.002 (p-value 0.05). these results indicate that there is a significant difference in customer satisfaction between the response in the form of apology at high level of problem condition with a response in the form of apology at low level of problem (maphl = 3.988 < mapll = 4.597, p-value <0.05, sig 2-tailed). then it can be concluded that hypothesis 4a is accepted. 4.2. the effect of excuse, justification, reference and apology on repurchase intention table 4 below shows the summary of the results related to the impact on repurchase intention. similarly, repurchase intention was tested by independent t-test. based on the results, the independent t-test for repurchase intention given excuse response shows the t-value of the two groups was -2.693 and for the significance value obtained was 0.009 (p-value <0.05). these results indicate that the value of the repurchase intention obtained in the form of an excuse response has a significant difference between the conditions of high level of problem and low level of problem (mexhl = 2.596 < mexll = 3.300, p-value <0.05, 2-tailed ). therefore, with these results it can be concluded that the hypothesis 1b is accepted. the next test was the independent t-test for repurchase intention given justification response, shows that the t-value obtained for both groups is -2.445 and the significance value is 0.017. based on these results it can be explained that there are significant differences in the two sample groups that have a justification response in conditions of high level of problem and group with a justification response at a low level of problem condition (mjusthl = 3.474 < mjustll = 4.048, p-value <0, 05, sig 2-tailed). then it can be said that the hypothesis 2b is accepted. furthermore, for the reference response on repurchase intention variables, the results of the t-value of -3.852 and a significance value of 0.000 (p-value 0.05). from these results it can be explained that there are significant differences in the form of a reference response to the condition of high level of problem by giving a reference response in the condition of high level of problem to respurchase intention (mrefhl = 3.411 <mrefll = 4.049, p-value 0.05 , sig 2-tailed). thus it can be concluded that hypothesis 3b is accepted. afebi management and business review (ambr) vol.04 no.01, june 2019 20 table 4 mean difference between groups on repurchase intention variable hypothesis group mean group mean mean difference tvalue sig. (2tailed) result h1b excuse-high level of problem 2.596 excuse-low level of problem 3.300 0.731 -2.693 0.009 accepted h2b justificationhigh level of problem 3.474 justification -low level of problem 4.048 0.574 -2.445 0.017 accepted h3b referencehigh level of problem 2.490 reference low level of problem 3.532 1.042 -3.852 0.000 accepted h4b apologyhigh level of problem 3.411 apologylow level of problem 4.049 0.638 -2.627 0.010 accepted source: data processed by researchers (2018) finally, the independent t-test for repurchase intention given apology response shows that the value of the t-value obtained was -2.67 with a significance value of 0.010 (p-value <0.05). based on the results of the test it can be said that there is a significant difference between the response in the form of apology at high level of problem with the response in the form of apology at low level of problem to repurchase intention variable (maphl = 3.411 < mapll = 4.049, p-value < 0.05, sig 2-tailed). then it can be concluded that hypothesis 4b is accepted. 5. discussion in influencing both customer satisfaction as well as repurchase intention, the justification response is still the best choice proven justification has the highest average value for both problem conditions, high level of problem and low level of problem. wang et al., (2014) on tarofder et al., (2016) explained that from the studies conducted, the response was in the form of justification in which there was a sense of responsibility for the problems or failures that occurred, more well received by the customer and giving a more positive impact on customer satisfaction and the level of repurchase intention. after justification, apology occupies the second position with an average value under justification. both, justification and apology, have a fairly high average in conditions of high level of problem and low level of problem. the use of apology can also reduce bad influences such as negative word of mouth appearing due to service failure (nguyen and mccoll-kennedy 2003, in tarofder et al., 2016). on reference and excuse, the average value produced is lower than justification and apology. influence on customer satisfaction and repurchase intention for reference is also still greater at a low level of problem condition compared to high level of problem. this is because at a mild level of problem conditions, customers will feel more relieved when they get an explanation that there are still other customers who have problems or complaints that are heavier and worse. the same is true with excuse, when a problem or service failure appears but the e-marketplace does not have the intention to be responsible and does not acknowledge the error that the customer satisfaction value will decrease. according to conlon and murray (1996) on tarofder et. al., (2016), using excuse can increase customers' negative perception of a company or e-marketplace and not providing a form of responsibility will also produce a bad response from the customer. 6. conclusion and implications overall, from results analysis of the research that has been done, the following conclusions are drawn: customer complaint response strategy in service failure: study of online shopper in indonesia 21 1. giving response or explanation in the form of excuse, justification, reference and apology gives a different influence on customer satisfaction and repurchase intention both on the condition of a high level of problem or on a low level of problem. 2. based on the results, the different influences of each explanation given, justification and apology do not have a significant difference in the effect on customer satisfaction and repurchase intention, both responses will have an equally positive or high mean value, or in other words, will give a high level satisfaction and repurchase intention from customer. likewise with reference and excuse, in general they give results that are not significantly different between customer satisfaction and repurchase intention, both responses will equally give a low level satisfaction and repurchase intention. 3. in the condition of both low level and high level of problems, the service failure explanation in the form of justification has the greatest impact compared to other responses such as excuse, reference and apology. this shows that customers will be more satisfied and increase their repurchase intention, when the business provider or e-marketplace is able to provide a detailed explanation of the reasons why the problem can occur and the form of responsibility for the problems that arise. so that the justification response provides positive outcomes for customer satisfaction and repurchase intention. meanwhile, excuse get the lowest average value results in both problem level conditions compared to apology and reference. the implications for the company, in this case e-marketplace in indonesia such as tokopedia, blibli.com or lazada, are suggested as follow: 1. the form of service failure explanation provided by e-marketplace, whether excuse, justification, reference and apology can give a different influence on customer response, especially customer satisfaction and willingness to keep using the same e-marketplace in the future. for managers of the e-markeplace industry, at least use apology as the form of response and apology must be conveyed to the customer when complaining. roschk and susanne kaiser (2013) explained that the use of apologies that are well conveyed to customers will have a good influence on the failure process that occurs (eg, social losses that arise due to spending that will be used for payment, or failed to be delivered). on the outcome of the failure that occurred (loss suffered by the customer because the item purchased was damaged). therefore an apology needs to be reviewed in terms of providing an explanation of the complaint. apology can reduce customers anxiety due to failures that occur and is proven that e-marketplace wants to address the problems (boshoff and leong, 2003 in tarofder et al., 2016). furthermore, e-marketplace also can use an apology and justification in providing complete response to the customer who complains, both to positively influence customer satisfaction and buy back the customer's purchase intention. especially with the e-marketplace justification that can show the responsibility there is a failure, therefore customers will give their trust and keep using the same e-marketplace. 2. avoid using excuse in responding when complaints arise which can damage the image of e-marketplace in front of customers by explaining that e-marketplace is not responsible. previous studies have explained that angry customers will evaluate the excuse response as an unpleasant response (tax et, al., 1998 on tarofder et al., 2016). e-marketplace must be able to show empathy and show an effort to fix the problems that arise. 3. the e-marketplace can make a clear sop (standard operating procedure) for the seller as a partner of the e-marketplace and also for their customer service staff. based on the this research, 41% of the total respondents, they admitted having complained to the e-marketplace and 62.7% of the respondents who made the complaint, submitted their complaints through the customer service in the emarketplace that was not directly complain to the seller. therefore the management afebi management and business review (ambr) vol.04 no.01, june 2019 22 interacts well and needs to make a strict sop in terms of treating customers and providing compilation responses that appear. this standard also needs to be given to sellers who are the partner of e-marketplace that allows for consistency of services to handle service failures. 4. providing fast service failure response and in accordance with the conditions faced by the customer can be an alternative before the e-marketplace provides another form of service recovery in the form of material (e.g. money compensation) for severe failure conditions, which sometimes takes long time to be processed. by providing high-quality explanations that are fast and satisfying when a complaint arises, it will reduce the disappointment of the customer and keep the customer making purchases in the same e-marketplace. 5. make prevention efforts, by providing additional services to customers that make it easier when conditions arise that require customers to complain. there are still very few e-marketplaces that provide additional complain services. zalora, lazada, and blibli are the examples, blibli.com is one of the e-marketplaces that has a standard in handling complaints in the form of returning goods if the goods are known to be defect / not suitable or cannot be used (damaged). blibli.com automatically provides a form that they put into the box along with the shopping items ordered by the customer. this form is standardized and contains complete information making it easier for customers if 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[online]. available at: http://aisel.aisnet.org/icis2012/proceedings/researchinprogress/22/ [accessed 30 juni. 2018). analysis of the effects of quality work of life factors on employee motivation regional office of universitas terbuka at pangkalpinang, indonesia 69 analysis of the effects of quality work of life factors on employee motivation regional office of universitas terbuka at pangkalpinang, indonesia yusuf 61*, adrian sutawijaya2 1,2 universitas terbuka pangkalpinang, pangkalpinang, indonesia abstract the purpose of this research is to know the description of quality of work life and employee motivation in upbjj-ut pangkalpinang, and its influence is partially and simultaneously so that it can get information to increase motivation which will improve the quality of organizational performance. the research method used is descriptive quantitative approach with cross sectional design. the sample in this study amounted to 30 samples. the type of data used is the primary data. data analysis technique using multiple linear regression test. the results showed that (1) the overall variables had a high average value that is in the category of 3.41-4.20 and the variable of pride to the institution had the highest average value of 4.21%. thus the majority of respondents feel proud of the institution while working at upbjjut pangkalpinang. in general, there are seven variables that have positive and significant influence and four variables that have positive but not significant influence. variables that have positive and significant impacts are available facilities, workplace safety, employee engagement, communication, security, a sense of pride in institutions and work restructuring. while the variables that have positive but not significant are balanced compensation, career development, problem solving and work environment (3) simultaneously the quality of work life variable has a positive and significant influence on work motivation. this means that any increase or decrease in quality of work life together will give a significant influence on employee motivation in upbjj-ut pangkalpinang. keywords: employee motivation, quality of work life, work motivation 1. introduction human resources is the main asset of the organization and has a strategic role within the organization as a thinker, planner and control of organizational activities. to achieve organizational goals, one of the things that managers need to do is to provide motivation that can arouse passion and morale, improve morale and satisfaction, increase work productivity, maintain loyalty and stability of employees and improve discipline and reduce employee absenteeism (hasibuan, 2007). according to cascio (2003), companies should create an atmosphere of work where employees feel their involvement in the company, their participation in decision making, a sense of security for the work environment, good communication between employees and with superiors, a growing career and a sense of pride in work . working atmosphere like this will lead to quality * corresponding author. email address: yusuf_se@ecampus.ut.ac.id afebi management and business review (ambr) vol.03 no.01, june 2018 70 of work life (qwl) is good. good quality of work life can generate work motivation and worker performance in an effort to achieve company goals better. implementation of quality of work life will affect employee work motivation and can improve work productivity of employees. however, when a company is unable to implement a good quality of work life, it will find it difficult to generate employee morale and maintain employee loyalty to the company. therefore it is necessary to discuss the components of quality of work life on employee motivation in upbjj-ut pangkalpinang. thus, the results obtained become information for increased motivation that will ultimately improve the quality of organizational performance. therefore, the researcher wanted the research on "analysis of the effect of quality of work life factors on employee motivation at upbjj-ut pangkalpinang". 2. literature study saputri (2015), entitled relation of quality of work life component with non-medical motivation in public hospital of rebo market area in 2015 states that most non medical employees have high work motivation. all qwl components, available facilities, workplace safety, employee engagement, balanced compensation, communications, career development, problem solving, job security, institutional pride, work restructuring and work environment are well assessed by employees non medical at rsud pasar rebo. samtica (2011), entitled relation of quality of work life with work motivation of nurse executor at rs haji jakarta in 2011 stated that the motivation of nurse nur haji hospital jakarta in 2011 stated high enough. there is a significant relationship between the components of quality work of life which consist of available workplace safety facilities, employee involvement, balanced compensation, career development communication, problem solving, job security and a sense of pride in institution with motivation to work nurse of rs haji jakarta in 2011. dewi (2006), in his research study entitled analysis of the effect of quality of work life on employee achievement motivation (case study head office pt pos indonesia (persero) obtained the result that the motivation of achievement of employees at pt pos indonesia (persero) tend to good and generally quality the work life of pt pos indonesia (persero) employees tends to be good.the result of partial influence test shows that only improvement factor of work environment able to explain dependent variable of achievement motivation if other independent variable is controlled. 3. research methodology types and data sources the data used in this research is quantitative data with cross sectional design. quantitative data with data collection related to dependent or dependent variable (employee motivation upbjj-ut pangkalpinang) and independent variable (quality of work life) observed at the same time. the data source comes from primary data and secondary data. primary data is obtained directly through observation activities on the activities undertaken by employees during the work time and the results of interview activities. population and sample research the research population is head of upbjj-ut pangkalpinang, academic and student administration unit at administration unit (tu) and registration analysis of the effects of quality work of life factors on employee motivation regional office of universitas terbuka at pangkalpinang, indonesia 71 and exam unit (ru) and learning and service learning unit (bblba) upbjj-ut pangkalpinang with 30 respondents . the sample in this study is all members of the population in the three units. the use of 30 respondents is because the population is so small that based on the table to determine the size based on the specific population developed by krejcie and morgan (1970) the population is below n = 25, then the number of population (n) = number of sample (s). (sekaran, 2011). the sampling method of each unit is done by sampling saturation or sample determination by taking all the population amount (sugiyono, 2004). framework for operational thinking based on the description of the quality of work life component proposed by nawawi (2001) and cascio (2003), the researcher used eleven (11) quality of work life components consisting of nine (9) quality of work life components according to cascio , available facilities, workplace safety, employee engagement, balanced compensation, communication, career development, problem solving, job security, and institutional pride. while two (2) components of quality of work life according to nawawi, namely the restructuring of work and work environment. where eleven (11) components of quality of work life is independent variable, while the dependent variable is work motivation. the research concept framework used by researchers can be seen in figure 1 below: figure 1 concept research framework 4. results descriptive statistics analysis scale categories according sugiono (2013) above analysis results note that the overall variables in this study has a high average value that is in the category of 3.41-4.20. and variable pride to the institution has a very high average value of 4.21%. thus the majority of respondents feel proud of the institution while afebi management and business review (ambr) vol.03 no.01, june 2018 72 working at upbjj-ut pangkalpinang. and in general the quality of work life and work motivation factors in upbjj-ut pangkalpinang are considered high. figure 2 average value of descriptive test result test validity and reliability validity test is used to measure the validity or validity of a questionnaire. the minimum requirement to be considered a valid instrument item is the value of its validity index (pearson correlation value) has r hitung > r tabel ie 0.374. the results of validity test in this study all have a value of rhitung larger than rtabel so that the whole of the instrument instrument is said to be valid. table 1 reliability test results based on table 1. where the reliability test results indicate that all variables have a large enough chronchbach alpha coefficient that is above 0.60 so it can be said all the measuring concepts of each variable of the questionnaire is reliable which means that the questionnaire used in this study is a questionnaire that is reliable. classic assumption test normality test normal plot chart view presented above can be concluded that histogram graph gives normal distribution pattern. while on a normal graph the plot looks spots spread around the diagonal line, as well as its spread following the direction of the diagonal line. these two graphs show that the regression model is worth using because it satisfies the assumption of normality. analysis of the effects of quality work of life factors on employee motivation regional office of universitas terbuka at pangkalpinang, indonesia 73 figure 3 normality test results heteroscedasticity test scatterplot graphic results presented above show the spreading points randomly and spread over and below the number 0 on the y-axis, and does not have a clear pattern or form a pattern. so it can be concluded that there is no problem of heteroskedastisitas on regression model. figure 4 heteroscedasticity test results test multicolonierity the results of multicollinearity test, the result of calculation of tolerance value shows that tolerance value> 0.10 which means no correlation between independent variable more than 95%, calculation of vif value, from independent variable tested no vif value more than 10, it can be concluded that there is no multicolinearity between independent variables in the regression model. afebi management and business review (ambr) vol.03 no.01, june 2018 74 table 2 multicollonearity test results multiple regression analysis based on table 3. the data in the table above where the regression analysis results obtained the following equation: table 3 multiple regression test results the above equation shows that if the independent variables are assumed to be fixed or zero, then the dependent variable of work motivation will go up by the constant value at the equation above that is 0,016, it shows that there is an improvement on the employee's motivation of upbjj-ut pangkalpinang either from the facility available, workplace safety, employee engagement, balanced compensation, communication, career development, problem solving, security, institutional pride, work restructuring and the work environment owned by upbjj-ut pangkalpinang. figure 5 linear equations similarly, if there is an increase of 1% in the independent variable then the dependent variable of work motivation will have an increase of the coefficient value of each independent variable. analysis of the effects of quality work of life factors on employee motivation regional office of universitas terbuka at pangkalpinang, indonesia 75 partial regression coefficient test (t test) partially there are 7 (seven) variables that have positive and significant influence and 4 (four) variables that have positive but not significant influence. variables that have positive and significant impacts are available facilities, workplace safety, employee engagement, communication, security, a sense of pride in institutions and work restructuring. while the variables that have positive but not significant influence are balanced compensation, career development, problem solving and work environment. table 4 test results t variables that have positive and significant impacts such as available facilities, workplace safety, employee engagement, communication, sense of security, institutional pride and work restructuring have a positive beta value, thitung value greater than ttable is 2.101 and significant value less than 0,05. while the variables that have positive and insignificant effects such as balanced compensation, career development, problem solving and work environment have a positive beta value, but the value of t hitung is smaller than t table is 2.101 and significant value is greater than 0.05. simultaneous regression coefficient test (f test) based on data from table 5. f calculation results, it can be seen that fcount is 18.211 and ftable with df1 = k-1 and df2 = n k, where n is the number of samples and k is the number of independent and dependent variables. thus the ftable value is 2.374 and the significance level is 0.05. means f count > f table is 18.211 > 2.374 and the value p = 0,000 < 0.05. hence ho is rejected and h12 accepted which means the available facility variables, workplace safety, employee involvement, balanced compensation, communication, career development, problem solving, security, institutional pride, work restructuring and work environment have a positive and significant influence simultaneous to work motivation. afebi management and business review (ambr) vol.03 no.01, june 2018 76 table 5 test results f this means that the quality of work life variables simultaneously influence positively and significantly to work motivation of upbjj-ut pangkalpinang employees. this is because the overall quality of work life variables have a high average value, especially on the variable pride of the institution. this means that any increase or decrease in quality of work life together will give a significant influence on employee motivation in upbjj-ut pangkalpinang. multiple determination coefficient the coefficient of determination (r2) shows the number of adjusted r square of 0.867 or 86.7% which means variation of work motivation variables can be explained by available facility variables, work environment safety, employee involvement, balanced compensation, communication, career development , problem solving, security, institutional pride, work restructuring and work environment of 86.7%, the remaining 13.3% is explained by other variables outside of the research variables. table 6 coefficient test results determination 5. discussion influence of facilities available to work motivation. available facility variables are variables that partially affect the work motivation because the available facility variables according to the calculation results obtained t hitung of 2.829 larger than t tabel 2.101 and with significance of 0.011 is smaller than the level of significance of 0.05. this means that partially available facilities variables positively and significantly influence employee work motivation upbjj-ut pangkalpinang. influence of occupational safety on work motivation work environment safety variable is a variable that partially affect the work motivation due to work environment safety variables according to the calculation results obtained thitung of 3.193 greater than ttabel 2.101 and with significance of 0.005 smaller than the significance level of 0.05. this means that the working environment safety variable partially positively and significantly affect the employee motivation of upbjj-ut pangkalpinang. influence employee involvement on work motivation analysis of the effects of quality work of life factors on employee motivation regional office of universitas terbuka at pangkalpinang, indonesia 77 employee involvement variable is a variable that partially influence to work motivation due to employee involvement variable according to calculation result obtained thitung equal to 2,197 bigger than ttabel 2,101 and with significance equal to 0,041 smaller than level of significance equal to 0,05. this means that employee involvement variable partially positively and significantly influence to employee motivation upbjj-ut pangkalpinang. influence of balanced compensation on work motivation a balanced compensation variable is a variable that partially affect the work motivation due to balanced compensation variable according to the calculation results obtained thitung of 1.158 smaller than ttabel 2.101 and with significance of 0.262 greater than the significance level of 0.05. this means that partially balanced compensation variables have a positive and insignificant effect on employee motivation of upbjj-ut pangkalpinang. this is because the respondents stated that some statement items on the balanced compensation variable are still low, especially regarding upbjj-ut pangkalpinang has given a reasonable incentive in accordance with the work i have done. influence of communication on work motivation communication variable is a variable that partially affect the work motivation due to communication variables according to calculation results obtained thitung of 2.383 greater than ttabel 2.101 and with significance of 0.028 smaller than the significance level of 0.05. this means that the partial communication variables positively and significantly affect the employee motivation upbjj-ut pangkalpinang. this is because respondents stated that some statement items on the communication variable is high enough, especially about the leader always convey information quickly. influence career development on work motivation the variable of career development is a variable that partially affect the work motivation due to career development variables according to the calculation results obtained thitung of 0.250 smaller than ttabel 2.101 and with significance of 0.805 greater than the significance level of 0.05. this means that career development variables partially have a positive and insignificant effect on work motivation of upbjj-ut pangkalpinang employees. influence problem solving on work motivation the problem solving variable is the variable that partially affect the work motivation because the problem solving variable according to the calculation results obtained thitung of 0.092 smaller than ttabel 2.101 and with significance of 0.928 greater than the significance level of 0.05. this means that the problem solving variable partially positively and insignificantly affect the employee motivation of upbjj-ut pangkalpinang. influence of job security to work motivation safety variable is a variable that has a partial effect on work motivation due to security variable according to the calculation result obtained by thitung 2,559 is bigger than ttabel 2,101 and with significance equal to 0,020 smaller than level of significance equal to 0,05. this means that the partial security variable has a positive and significant effect on the employee's motivation of upbjj-ut pangkalpinang. influence of proud of the institution on work motivation variable of pride to institution is a variable that partially influence to work motivation due to variable pride of institution according to calculation result obtained thitung equal to 2,588 bigger than ttabel 2,101 and with significance afebi management and business review (ambr) vol.03 no.01, june 2018 78 equal to 0,019 smaller than significance level equal to 0,05. this means the variable pride of the institution partially positively and significantly influence the employee motivation upbjj-ut pangkalpinang. influence of job restructuring on work motivation job restructuring variable is a variable that partially affect the work motivation due to work restructuring variables according to the calculation results obtained thitung of 5.889 larger than ttabel 2.101 and with significance of 0.000 smaller than the level of significance of 0.05. this means that the partial restructuring variables positively and significantly affect the employee motivation of upbjj-ut pangkalpinang. influence work environment to work motivation work environment variable is a variable that partially affect the work motivation due to work development variables according to the calculation results obtained thitung of 0.250 smaller than t tabel 2.101 and with significance of 0.805 greater than the significance level of 0.05. this means that career development variables partially have a positive and insignificant effect on work motivation of upbjj-ut pangkalpinang employees. influence of quality of work life on work motivation variables incorporated in the quality of work life is a variable that affects simultaneously to work motivation due to the variable quality of work according to the calculation results obtained thitung of 18.211 larger than ttabel 2.374 and with significance of 0.000 smaller than the level of significance of 0.05. this means that the quality of work life variables simultaneously influence positively and significantly to work motivation of upbjj-ut pangkalpinang employees. 6. conclusion based on the data and discussion of the research under the title "analysis of the effect of quality work of life factors on employee motivation upbjjut pangkalpinang", it can be concluded that: (1) the overall variable has a high average value namely in the categories of 3.41-4.20 and variable pride of the institution has the highest average value of 4.21%. thus the majority of respondents feel proud of 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(2003). human resource and personnel management. fifth edition. new york: mcgraw-hill, inc. http://lib.ui.ac.id/file?file=digital/20297144-s-sinta%20%20samtica.pdf http://lib.ui.ac.id/file?file=digital/20297144-s-sinta%20%20samtica.pdf performance is influenced by job insecurity and occupational safety health 35 performance is influenced by job insecurity and occupational safety health dirga lestari31*1 and siti maria2 1,2 mulawarman university, samarinda abstract the purpose of this study was to investigate the influence between job insecurity and occupational safety and health (osh). it was expected that job insecurity was positively related to job performance and to occupational safety and health (osh). some firefighter and rescue department in east kutai regency sampled in this study and the result of the proposed hypothesis is acceptable. job insecurity was in fact positively correlated with job performance and positively with occupational safety and health (osh). however, results of this research indicate to improve the performance required not only the safety and personal health of employees physically but also the work security from the psychological side of within the workers themselves. this applies not only to firefighters but also to other sector workers. limitations of the study are the use of a sample of only one hundred and twenty-six firefighter and a need for more in-depth interviews to more firefighter and rescue department in east kutai regency. keywords: job insecurity, occupational safety and health, performance 1. introduction good human resource management will provide significant progress for the organization. one of the factors that need to be considered to achieve the desired target is to pay attention to job insecurity and the existence of occupational safety and health programs for employees to improve their performance. with the program, every employee will get health and safety guarantee both physically, socially, and psychologically so that every employee feel safe and protected in work. anxiety problems perceived by employees, safety and work-related illness can not be viewed as a minor problem because it can cause many harm to both employees and organizations. concrete losses can include medical expenses, a desire to quit, a decrease in production that will result in a decline in performance that can even result in lifelong disability or death for employees. the intensity of the emergence of job insecurity is increasingly felt by employees when they feel that at any time there is a possibility that they will move positions, move their work to other areas, or even out of the agency where they work. because in doing his job, every employee as a humans certainly crave comfort and safety in work. security in this context does not mean only safe from workplace accidents, but far from it, a sense of security from the threat of job loss. this sense of security can be a tremendous stimulator in maintaining a long-term employee attitude. job insecurity has a psychological impact on employees in the form of decreasing job satisfaction that will be fatal to the overall performance of the organization. occupational safety and health (osh) which neglected also resulted in a decrease in performance and may result in all forms of activities or operations * corresponding author. email address: dirga.lestari.as@feb.unmul.ac.id mailto:dirga.lestari.as@feb.unmul.ac.id afebi management and business review (ambr) vol.03 no.01, june 2018 36 of the company will be disrupted. with increasing cases of work accidents and the resulting losses and increased potential hazards in the production process, effective and efficient management of occupational health and safety (osh) in all organizational elements is required. to anticipate these threats then government r.i. has succeeded in formulating and enacting laws which provide legal protection as stated in law number 1 of 1970 and number 23 of 1992 which guarantees and regulates occupational safety and health (osh). but the implementation of that laws still has not been applied maximally so that the risk of work accident hazard due to human error is still happens often. along with the high population, density and land use can be a potential for fire. various problems caused by population density such as dense settlements, buildings, and public facilities may pose a risk of fire. the fire hazard is one of the most unpredictable and unpredictable disasters when it comes, but the fire hazards can be reduced by giving full awareness of the goods that could result in a faulty source of fire and electronic goods. strategy is very useful compared to the act of extinguishing when the fire is out of control. fire is one of the disasters that can be classified as both natural and non-natural disasters based on the cause of the fire, causing loss of life, environmental damage, and property loss. therefore the role of government and citizens is very important to prevent and cope with fires. one of the institutions to tackle the fire that formed by local government in east kutai is fire and rescue department. this department has the main duty to implement some regional authorities in the field of fire prevention and handling which includes prevention, guidance, counseling, and operational control. when viewed from the substance of the role of the importance of the fire and rescue department in terms of tackling fires, it is necessary to provide excellent service quality to provide fire management services that are increasingly prevalent in the end of this decade. whereas based on the law no 24 article 6 of 2007 the government and local governments become responsible for the implementation of disaster management. meanwhile, in east kutai regency still reap many cases related to public criticism of the services provided by that department. this is reinforced by public complaints about fire service proving that the fire and rescue department in east kutai still not stable in maintaining the achievement of its performance, so needed a system that regulate and oversee the course of human resource activity owned bye fire and rescue department in east kutai. in other words the role and function of management is needed for the creation of the organization's goals. from the observation in the field there is an indication of the decline in employee performance that will have implications on the process of achieving the objectives of the department, so it needs to be studied how job insecurity and occupational safety and health (osh) variables affect employee performance. 2. literature study/hypotheses development scientific interest in job insecurity has started since thirty years ago with the publication of famous articles, “job insecurity: toward conceptual clarity”, by greenhalgh and rosenblatt (1984). job insecurity is a condition of powerlessness to maintain the desired sustainability in a threatening work situation. job insecurity leads to psychological impact in employees. among the psychological aspects that arise include the decrease in job satisfaction, performance is influenced by job insecurity and occupational safety health 37 decreased creativity, feelings of gloom and guilt, anxiety and even anger (band dan tustin, 1999). job insecurity can be likened to feeling threatened to unemployment (mohr,2000). job insecurity also contains references about undesirable properties in a job (sverke & hellgren, 2002). job insecurity implies a discrepancy between what is 'desired' by the employee (security about the future of their current job) and what they 'get' (the perception that the job is now insecure). rosenblatt, talmud, and ruvio (1999) found that job insecurity was associated with performance degradation. so as cheng dan chan (2008) found a significant relationship between job insecurity and performance. however, other studies have shown that employees see the risk of termination of employment may increase their efforts to be more valuable to the organization and consequently not fired (sverke and hellgren, 2001). occupational safety and health (osh) is one of the integrated maintenance programs in order to reduce accidents. mathis and jackson (2003:245) states that safety refer to the protection of a person's physical wellbeing against work-related injuries. while health refers to the general condition of physical, mental and emotional stability in general. while occupational safety and health (osh) according to mondy and noe (2005:360) is the protection of employees from injuries caused by work-related accidents. safety risks are aspects of the work environment that can cause fire, electric shock, cuts, bruises, sprains, broken bones, loss of limbs, hearing and vision. occupational health is freedom from physical violence. health risks are the factors of work itself such as working beyond a specified time period, an environment that can create emotion, stress or physical impairment. the importance of maintaining the safety and health of members of the organization has been widely recognized among managers because healthy and fit employees, in the physical sense and in the mental sense of psychologists, will be able to show excellent performance, high motivation and low absenteeism (siagian, 2008:263). with the occupational safety and health (osh) program, very closely related to the performance of employees because if within the company creates a comfortable working atmosphere, safe and peaceful, then employees will feel appreciated and cared for. therefore, the safety and health program will be able to improve the performance of these employees. performance is the achievement or result of one's effort to achieve certain goals. performance refers to employee performance measured by the standards or criteria set by the company (mathis and jackson, 2003:78). furthermore wibowo (2014:7) suggests performance is the result of work that has a strong relationship with the organization's strategic goals, customer satisfaction, and contribute to the economy. while rivai (2005:309) states performance is a real behavior that is displayed every person as a work performance generated by employees in accordance with its role in the company. it can be concluded that performance is the activity of employees in doing the work and the results achieved from the work or about what to do and how to do it. occupational safety and health (osh) and performance issues always get management attention because it is closely related to the productivity of the company. occupational safety and health (ohs) and performance standards programs affect how many employees contribute to the company. afebi management and business review (ambr) vol.03 no.01, june 2018 38 based on the description of background and literature review is then the hypothesis proposed in this study are as follows: h1: job insecurity has a positive and significant influence on firefighter performance in east kutai. h2: occupational safety and health (osh) has a positive and significant influence on firefighter performance in east kutai. 3. research methodology the population used in this research is firefighters who are directly involved in field in fire and rescue department of east kutai regency which amounted to 183 people. the sampling method in this research is done by random sampling technique so that every employee in the population has the same probability to be a member of the sample. of the population of 183 employees determined the number of samples of 126 people. data collection methods in this study using primary data. that is done by using questionnaires delivered directly to respondents in the form of closed questions. the research variables are first operationalized so that the measurement can be done. measurement data conducted in this study is likert scale with the following sizes: 1 = strongly disagree. 2 = disagree, 3 = quite agree, 4 = agree, 5 = strongly agree. furthermore, to answer the research hypothesis, the data were analyzed by using multiple linear regression analysis method with the help of spss program version 21.00. 4. results the result of analysis of the influence of job insecurity and occupational safety and health (osh) to performance can be presented from the results of multiple regression analysis as in the following table. table coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constan t) ,903 1,907 ,473 ,637 job insecurit y ,302 ,089 ,239 3,415 ,001 osh ,563 ,071 ,558 7,961 ,000 r : 0,643a f : 43,357 r square : 0,413 sig : 0,000b adj. r square : 0,404 a. dependent variable: performance b. predictors : (constant), job insecurity, osh source : output research’s results, 2017 performance is influenced by job insecurity and occupational safety health 39 the result of the analysis shows the coefficient of determination r square equal to 0,413 and correlation (r) equal to 0,643. the amount of contribution of job insecurity and occupational safety and health (osh) variable to the performance of fire and rescue officers in east kutai can be seen from adjusted r square value of 0.404. this means that 40,4% performance variables will be affected by independent variables, namely job insecurity and occupational safety and health (osh). while the remaining 59,6% performance variables will be influenced by other variables that are not discussed in this study. meanwhile, to know the level of significance of independent variables to dependent variables simultaneously then tested by using the f test (fisher test). test f is done by comparing fcount with ftable. obtained fcount value of 43,357 then the value compared with ftabel with a significant level of 0.05, obtained f table value of = 3.07 so that f count = 43,357 bigger than f table = 3.07 (fcount> ftabel). taking into account of these values, the hypothesis that there is a significant influence between job insecurity and occupational safety and health (osh) variables on performance variables firefighters and rescue in east kutai is acceptable. to determine the effect of independent variables partially on the performance of firefighters and rescue in east kutai is using t test, that is by comparing the value of tcount to ttable at a significant level of 0.05 or at 95% confidence. from the data in the table it appears that job insecurity has a significant influence on the performance of firefighters and rescue workers in east kutai, it is shown by the value of t test results where the value of tcount (3.415) > t table (1.960) and significant value 0.001 < 0.05. from the regression equation is known if job insecurity variable has positive value of regression coefficient equal to 0,302. this means that this indicates that job insecurity has a positive effect in improving the performance of firefighters and rescue workers in east kutai. while the occupational safety and health (osh) variables also appear to have a significant influence on the performance of firefighters and rescue workers in east kutai, where the t value (7.961) > t table (1.960) and the significant value 0.000 < 0.05. from the regression equation is known if the variable occupational safety and health (osh) has a positive regression coefficient value of 0.563. this means that occupational safety and health has a positive influence in improving the performance of firefighters and rescue workers in east kutai. thus both independent variables have a significant influence on the performance of firefighters and rescue workers in east kutai. of these two variables, the occupational safety and health (osh) variable has the strongest influence on the performance of firefighters and rescue workers in east kutai compared to job insecurity. 5. discussion based on research that has been done, shows that officers feel the discomfort in the work that makes the officers feel worried, causing feelings of insecurity and excessive worries. job insecurity is a condition of powerlessness to maintain the desired sustainability in a threatening work situation (greenhalgh and rosenblatt, 2010). unsafe feelings will have an impact on job attitudes of employees, even the desire for ever greater turnover. the result of research showing the influence of job insecurity on the performance of firefighters and rescue in east kutai is supported by previous research afebi management and business review (ambr) vol.03 no.01, june 2018 40 conducted by chirumbolo (2005) and eo lucky (2013) who found job insecurity have significant influence on performance. job insecurity raises the impact of psychological aspects, such as decreased job satisfaction, decreased creativity, worries, feelings of depression and even cause the desire or intention of employees to stop working from work voluntarily according to his own choice. based on the analysis using multiple regression, the second hypothesis that there is influence between occupational safety and health on the performance of firefighters and rescue in east kutai has been proven and the hypothesis is acceptable. the impact is significant, so that the implementation of occupational safety and health provided by the fire and rescue agency in east kutai to its officers will be able to improve the performance of the officers themselves in the completion of their work. the results of this study are also reinforced by the opinion of mangkunegara (2007:162), "in addition to aims to avoid work accidents in the company's production process, occupational safety and health programs also to improve enthusiasm, work harmonious and employee participation", with increased enthusiasm, and employee participation will affect employee performance. it is expected that the department can ensure that firefighter keeps their current jobs for the long term as well as providing osh, as job insecurity and occupational safety and health (osh) variables have a positive and significant impact on performance, firefighter gets better. given the independent variables in the study this is a very important thing in affecting firefighter performance expected results of this study can used as a reference for researchers further to develop this study with consideration other variables such as workload, compatibility with co-workers and work environment which is another variable outside the already entered variable in this research. 6. conclusion this research showing job insecurity have significant influence on the performance of firefighters and rescue in east kutai. job insecurity instead tend to be directly damaging for the organization. job insecurity can cause unsafe feelings and will have an impact on job attitudes of employees, such as decreased job satisfaction, decreased creativity, worries, feelings of depression and even cause the desire or intention of employees to stop working from work voluntarily. this research also showing that there is influence between occupational safety and health on the performance of firefighters and rescue in east kutai. the occupational safety and health provided by the fire and rescue agency in east kutai to its officers will be able to improve the performance of the officers themselves in the completion of their work. it is expected that the company can maintain and improve services to occupational health and safety programs, because employee health and safety variables have the most dominant influence on employee performance. thus the performance of employees will be better. references band, d.c., & tustin, c. m. (1995). strategic downsizing. management decision, 33/8:36-41 performance is influenced by job insecurity and occupational safety health 41 cheng, g., & chan, d. (2008). who suffers more from job insecurity? a meta analytic review. applied psychology: an international review, 57 (2), 272–303. chirumbolo, a., & areni, a. (2005). the influence of job insecurity on job performance and absenteeism: the moderating effect of work attitudes. journal of industrial psychology, 31, 65-71. lucky, e.o., minai, m.s., & rahman, h. a. (2013). impact of job security on the organizational performance in a multiethnic environment. research journal of business management, 7 (1): 64-70. greenhalgh, l., & rosenblatt, z. (1984). job insecurity: toward conceptual clarity. academy of management review, 3, 438-448. greenhalgh, l., & rosenblatt z. (2010). evolution of research on job insecurity. international studies of management. & organization, 40, 619. mangkunegara, a. (2007). manajemen sumber daya manusia perusahaan. cetakan ketujuh. bandung : remaja rosdakarya. mathis, r. l., & jackson, j. j. (2003). human resorce management. tenth edition. ohio: thomson corporation. mohr, g. b. (2000). the changing significance of different stressors after the announcement of bankruptcy: a longitudinal investigation with special emphasis on job insecurity. journal of organizational behavior, 21, 337359. mondy, r. w., & noe, r. m. (2005). human resource management. ninth edition. usa: prentice hall. rivai, v. (2005). manajemen sumber daya manusia. jakarta: raja grafindo persada. rosenblatt, z., talmud, i., & ruvio, a. (1999). a gender-based framework of the experience of job insecurity and its effects on work attitudes. european journal of work and organizational psychology, 8(2), 197217. siagian, s. p. (2008). manajemen sumber daya manusia. jakarta: bumi aksara. sverke, m., & hellgren, j. (2001). exit, voice, and loyalty reactions to job insecurity in sweden: do unionized and non-unionized members differ? british journal of industrial relations, 39, 167–182. sverke, m., & hellgren, j. (2002). the nature of job insecurity: understanding employment uncertainty on the brink of a new millennium. applied psychology. an international review, 51, 23-42. wibowo. (2014). manajemen kinerja. edisi keempat. jakarta: rajawali pers. firm size as a moderation factor: testing the relationship of capital structure with dividend policy 41 firm size as a moderation factor: testing the relationship of capital structure with dividend policy akhmadi1*4, bambang mahmudi2, moh muksin3, indra suhendra4, and rina f5 1, 2, 3, 4, 5 universitas sultan ageng tirtayasa, serang, indonesia abstract this study examines size as a variable that can strengthen and weaken the relationship between debt policy and dividend policy. presearch using a sample of 26 companies of 65 population basic industrial and chemical manufacturing companies listed on the indonesia stock exchange in 2011-2015, which is determined by purposive technique. the variables observed include debt policy as an independent variable, dividend policy as the dependent variable, and firm size as a moderating variable. the analysis tool uses regression moderating analysis (mra). the results prove that the debt to asset ratio (dar) has a negative and insignificant effect on the dividend payout ratio (dpr), firm size negatively moderates and there is a significant relationship between capital structure and dividend policy. keywords: dar, dpr, firm size, roe. 1. introduction the capital market is an alternative long-term investment option, where one of the products that often gets the attention of investors is stocks because of the investor's expectation of stock returns, in the form of capital gains and dividends. regarding dividends, this return is usually expected by investors who are oriented towards longterm returns, whose mechanism is decided at the general meeting of shareholders (gms). according to suad husnan and enny pudjiastuti (2002: 333), dividend policy is a policy that concerns the use of profit which is the right of shareholders, basically the profit can be divided as dividends or retained to be reinvested. meanwhile, according to brigham & houston (2001), the optimal dividend policy is a dividend policy that can create a balance between current dividends and future growth that can maximize the company's stock price. regarding dividend policy, there are several relevant theories including the bird in the hand theory, which explains that investors who prefer dividends have the view that dividends have less risk and a more certain rate of return compared to capital gains. while inagency theoryit is explained that investors generally want a relatively stable dividend distribution (steady stream) and increase in the future, because dividend stability can increase investor confidence in the company and support the company's performance prospects (profitability), thereby reducing investor uncertainty in investing funds in the company (philippatos and sihler, 1991) in ambarwati (2012). many factors influence the dividend ratio. according to hanafi (2004), factors that can influence dividend policy are investment, profitability, liquidity, access to markets, income stability, and restrictions. while levy and sarnat (1990) in van horn (1986), the factors that influence dividend decisions include profitability, liquidity position, debt capacity, capital structure, prohibition on debt covenants, level of company expansion, level of company profit, firm stability, ability to enter. capital market, controlling group actors, the position of shareholder as taxpayer, tax on profits that were done wrongly, and the inflation rate. based on this explanation, it is clear that dividend policy is influenced by many factors, but several previous empirical researchers have presented dividend policy * corresponding author. email address: akhmadi@untirta.ac.id afebi management and business review (ambr) vol.05 no.02 deember 2020 42 related to capital structure. research by dewi et al (2012), proves that capital structure has a negative effect on dividend policy. meanwhile siswantini (2014) and sulistyowati et al (2013) prove that capital structure has a positive effect on dividend policy. a very different result was stated by gita and rohmawati (2010, which proved that the capital structure did not have a significant effect on dividend policy). based on the explanation above, it is clear that there is still a gap in the relationship between capital structure and dividend policy. thus the relationship cannot be said to be an established relationship, but it still creates ambiguity (confusion). the gap that occurs is believed to be due to the presence of other variables that influence this relationship. based on the search for several references related to several previous studies leadingfirm size as a variable that can affect the relationship between capital structure and dividend policy.research by musiega et.al (2013), proves that size is able to mediate the relationship between the leverage variable and dividend policy. consider existing research gaps, the researchers are interested in conducting research which is different from the previous research, namely by adding the firm size as a moderating variable. based on the research problems that have been stated, the objectives of this study are: is there an effect of capital structure on dividend policy? is there an effect of profitability on dividend policy? is the effect of capital structure and profitability on dividend policy moderated by firm size? 2. literature study signalling theory signaling theory, bhatacharya (1972) inirham fahmi (2013),emphasizes the importance of the information issued by the company on investment decisions outside the company. signalling theoryin suharli (2006), management will pay dividends to signal the company's success in posting profits. furthermore, weston and copeland, 1997 in nursandari (2013), the level of company profit is a basic element of dividend policy so that financial ratio analysis affects dividend policy. agency theory jensen and meckling (1976) in najmudin (2011), describes the relationship between separation of ownership and company control. describing the conflict between the principal and the agent, which states that agency costs are the sum of a) expenses for monitoring by the owner (principal), b) expenses for binding by the agent, and c) other costs related to company control . the existence of this separation will create a conflict of interest between shareholders and managers. packing order theory inner order pecking theory najmudin (2011), starting from the premise that companies use internal funding when available, and choose to issue debt over equity when external funds are needed. issuance of new shares is a last resort.maidah (2016), explained that if the use of internal funds is insufficient, then the second alternative is to use debt. this stigma means that the larger the size of the company indicates that the company has a higher number of assets and tends to use larger external funds. along with the increasing growth of the company. dividend policy dividend is a part of profit which is the right of shareholders regarding their ownership in a company. halim (2015: 7), dividend is the distribution of profits given by the company that issued the shares for the profits generated by the company. generally, dividends are an attraction for shareholders with a long-term orientation. there are different types of dividends, according tomusthikawati (2010) in nursandari (2013), namely cash dividend, property dividend, script dividend, liquidating dividend, http://ekonomi.kabo.biz/2011/07/teori-sinyal.html firm size as a moderation factor: testing the relationship of capital structure with dividend policy 43 and stock dividend. dividend policy maccording to sudana (2011: 164), relates to determining the percentage of net profit after tax that is distributed as dividends to shareholders. whilemulyawan (2015)dividend policy is a decision to share the profit earned by the company to shareholders as dividends or to hold it in the form of retained earnings to be used as investment financing in the future. capital structure wild, 2005 in mulyawan (2015), capital structure is a combination of long-term debt and securities used by a company to finance its operational activities. irham fahmi (2016), capital structure is a description of the form of the company's financial proportion, namely between the capital owned by long-term liabilities and equity (shareholder's equity) which is a source of financing for a company. raharjaputra (2011: 296) the capital structure is the proportion between long-term debt and equity in order to finance its investment (operating assets). capital structure is measured using a capital structure ratio known as the leverage ratio (nuswandari, 2013). according to kasmir (2012: 151), the leverage ratio is a ratio used to measure the extent to which the company's assets are financed with debt. firm size the size of the company is the size of the company seen from the size of its equity, firm value, or the result of the total asset value of a company riyanto, 2011 in agustiniet al, 2015). sudarsi, 2002 in prasetia et al (2014), company size is the natural log of total assets. meanwhile, huang (2002) in damayanti (2013) states that company size is a reflection of the size of the company as measured by the natural logarithm of sales. hypothesis development effect of capital structure on dividend policy jensen et al (1992) supported by megginson (1997) and chen and steinler (1999) in dewi (2008), explained that debt policy negatively affects dividend policy. companies with high levels of debt will try to reduce agency cost of debt by reducing their debt. debt reduction can be done by financing investments with internal sources of funds so that shareholders will give up their dividends to finance their investments. the same thing was statedkalay (1982) in suhadak and darmawan, (2011), that companies that use high leverage will cause the company to reduce or not increase its dividend payments (suhadak and darmawan, 2011: 170). jensen et. al (1992) indewi (2008), debt policy has a negative effect on dividend policy because the use of debt that is too high will cause a decrease in dividends where most of the profits will be allocated as reserves for debt settlement. agency theory in dewi and sedana (2012), suggests a negative relationship between capital structure and dividend policy where debt is a way to reduce agency conflicts. companies that have debt, then the company will be forced to remove the available cash from the company to pay interest on debt and pay off debt before distributing the dividend policy. the relationship between model structure and dividend policy is empirically explained dewi (2011), which provesthat the capital structure has a significant negative effect on dividend policy. these results are supported by several subsequent researchers, namely sumiadji (2011), dewi and sedana (2012), vo and nguyen (2014), mandala (2014), and pramana et al (2015), who in essence explain that to reduce agency problems. then part of the company's funds must be willing to pay installments and interest on debt, so there is a tendency to reduce its priority to increase the dividend ratio. based on the explanation above, then the research hypothesis 1 (h1) can be formulated, namely: h1 : the higher the capital structure, the smaller the dividend ratio afebi management and business review (ambr) vol.05 no.02 deember 2020 44 the effect of capital structure on dividend policy moderated by firm size. sjahrial (2008) explains that companies with a larger size have greater confidence in obtaining sources of funds, so that it will be easier to obtain credit from outside parties. empirically, the relationship between firm size and capital structure is explained by sunarya (2013), which proves that firm size strengthens the relationship between capital structure and dividend policy. there is a tendency to use larger loan amounts compared to smaller companies. research results that are also relevant to the research of sunarya (2013), presented by elsa (2012), joshua and komang (2013), tariq (2015), maidah (2016), karadeniz et al (2011), tatik and budiyanto (2015), rehman (2016), and trinh and phuong (2016), who prove that company size determines the company's capital structure. agency theoryvogt (1994) in dewi (2008), identifies that the size or size of the company plays a role in explaining the dividend payout ratio in the company. empirically khoiro et al (2013), which proves that company size has a significant and positive influence on dividend policy. the positive significant effect explains that companies with a higher size tend to have an increase in dividend policy. pecking order theory,smith and warner, 1979 in hadianto (2007), large companies can easily finance their investment through the capital market because of the small information asymmetry that occurs. investors can get more information from large companies when compared to small companies. so, obtaining funds through the capital market makes the proportion of debt smaller in the capital structure. titman and wessel 1988 in hadianto (2007), that the issuance of equity to small companies costs more than large companies. in other words, the larger the company size, the cheaper the cost of issuing equity. hadianto (2007) empirically proves that company size has a significant negative effect on capital structure. this result is consistent with the pecking order hypothesis that for large companies, consideration of the cost of issuing equity in the capital market is quite cheap (titman and wessels, 1988) and the low level of information asymmetry that occurs (smith and warner, 1979). if this is realized, the proportion of equity ownership is greater than debt. the empirical research of hapsari (2010), yusron et al (2016), wahome et al (2015), and ramachandran & veeramuthu (2010),bhawa and made (2015),youssef and el-ghonamie (2015), osarentin and chijuka (2011), prove that a larger company size presents the cost of issuing equity in the capital market which is quite cheap so that using equity is more possible than debt. signaling theory, damayanti (2015) states that large companies with high growth rates need more funds for investment activities, so that the funds obtained from retained earnings are not paid out as dividends. zang, 2014 in amalia, (2016), the negative correlation between dividend yield and size shows that small companies are more able to pay dividends. empiricallynurhayati (2013), proves that firm size has a significant negative effect on the dividend payout ratio. the larger the size of a company, the smaller the dividend ratio.lanawati and amilin (2015) who prove that firm size has a negative sign, which means that an increase in firm size will result in a decrease in the dividend payout ratio. other consistent results are by winatha (2001), damayanti and achyani (2006) and sulistyaningsih (2012), which conclude that the size of firm variable has a negative effect on the dividend payout ratio. based on these explanations, research hypothesis 3 (h3) can be formulated, namely: h2 : firm size moderates the relationship between capital structure and dividend policy. 3. research methodology the sample in this study were 26 companies from 65 populations of manufacturing companies in the basic industry and chemical sector which were listed on the indonesia stock exchange in 2011-2015, which were determined by purposive technique. there are 130 observational data. the observed variable is the capital firm size as a moderation factor: testing the relationship of capital structure with dividend policy 45 structure of the independent variable, measured by the debt to total asset ratio (dar), which is the ratio between total liability and total assets, irham fahmi (2016). dividend policy, as a dependent variable as measured by the dividend payout ratio (dpr), is the ratio between dividend per shre and earnings per share, harmono (2011). the moderating variable is firm size as measured by ln total assets, riyanto (2011). the analysis tool uses moderating regression analysis (mra). 4. results descriptive statistics the results of descriptive statistical analysis were processed using the spss 2 statistical program2 for each variable in 2011-2015 is presented in the following table: source: processed data in general, of the 3 variables analyzed, namely dar, dpr, and fz, seen from the comparison of the mean and standard deviation, almost all of them show that the mean value is greater than the standard deviation, except for dpr with a mean value of 35.84 which is lower than the standard deviation. is at 46.98. meanwhile, seen from the comparison between the maximum value and the mean value, almost all of them show a maximum value that is greater than the mean value. classic assumption test normality test uses kolmogorov smirnov, by transforming it into a natural logarithm (ln) as a form of treatment for data that is not normally distributed, the kolmogorov-smirnov test results in table 4.3 show the asymp value. sig has a value of 0.183> 0.05. this shows that the resulting regression model is normally distributed. multicollinearity test using tolerance and vif parameters shows that all independent variables do not have a very strong direct relationship (correlation). the multicollinearity test results can be seen from the tolerance value and the variance inflation factor (vif). where the tolerance value is> 0.10 and vif <10, so it can be said that there are no symptoms of multicollinearity in the resulting regression model (table 2). table 2 classcic assumption test test parameter result normality kolmogorov smirnov sig = 0.183 multicoleniarity tollerance and vif tollerance vif lndar = 0.943 lnfz = 0.612 1,060 1,020 heteroscedasticity glejser siglndar = 0.902 siglnfz = 0.612 autocorrelation durbin-waston dw = 1.759 linearity lagrange multiflier c2count = 130x 0.157 = 20.41 source: processed data table 1 statistics descriptive n minimum maximum mean std. deviation dar 130 , 08 , 92 , 4479 , 21028 dpr 130 , 53 452.13 35,8358 46,98514 fz 130 10.52 18.45 14,9260 1.66295 valid n (listwise) 130 afebi management and business review (ambr) vol.05 no.02 deember 2020 46 heteroscedasticity test using the glejser parameter, the results of the spss output in table 4.5 clearly showin the regression model, there is no variance inequality of the residues from one observation to another. this can be seen from the significance probability which is above the 5% confidence level, so that there are no symptoms of heteroscedasticity in the resulting regression model. the autocorrelation test using the durbin-waston parameter above shows that the durbin watson statistical test value is 1.759. meanwhile, the lower limit (dl) is 1.6623, and the upper limit (du) is 1.7589. thus the results obtained (1.7589 <1.759 <2.2411) were in the dl to du area (du <d <4-du) or were in the area not rejected, so there was no autocorrelation symptom in the resulting regression model.linearity test, the results of the spss output in table 4.7 show the value of 20.41 <154.302 or c2 count <c2 table, it can be concluded that the resulting regression model is linear. then the regression model can be used in this study (table 2). hypothesis test the effect of the debt to assets ratio on the dividend payout ratio the results of the hypothesis test (table 4.8) produce the t value = -0.702 with a significance probability of 0.484 indicates a value greater than the value at the level the predetermined significance is 0.05 so that ho is accepted or ha is rejected. these results indicate that the debt to asset ratio (dar) has a negative and insignificant effect on the dividend payout ratio (table 3). table 3 partial test results model don't count sig constant 19,408 0,000 lndar -0,792 0.484 source: processed data the effect of the debt to asset ratio on the dividend payout ratio, which is moderated by the firm size the moderate variable which is the interaction between dar * firm size, the t value is -4,271 with a probability value = 0,000 which is smaller than the specified significance level of 0.05, h3 ho is rejected. these results indicate that firm size negatively and significantly moderates the relationship between capital structure and dividend policy. table 4 moderation test results model don't count sig lnfz -3,970 0,000 lndar 4,161 0,000 lndar * lnfz -4,271 0,000 source: processed data 5. discussion the results of these studies did not match the expectations of the researchers. results are not relevant to agency theory theory, jensen et. al (1992) in dewi (2008), that most of the profits will be allocated as reserves to pay off debts, the use of too high a debt will cause a decrease in dividends. hasil also contradicts dewi (2011), sumiadji (2011), vo and nguyen (2014), and ramachandran and veeramuthu (2010) which proves that the divident payout ratio has a negative effect on the capital structure (table 3). the results of the research match the expectations of the researchers. the results are also relevant to the pecking order theory, smith and warner, 1979 in hadianto firm size as a moderation factor: testing the relationship of capital structure with dividend policy 47 (2007), that because of the small information asymmetry that occurs, large companies can easily finance their investments through the capital market. the proportion of debt becomes smaller in its capital structure as funds increase through the stock capital market. the results of the study are in accordance with hadianto (2007), hapsari (2010), yusron et al (2016), wahome et al (2015), and ramachandran & veeramuthu (2010),bhawa and made (2015),youssef and el-ghonamie (2015), osarentin and chijuka (2011), who prove that a larger company size uses equity is higher than debt (table 4). the results of the study are also relevant to the signaling theory in damayanti (2015), that the funds obtained from retained earnings are not paid out as dividends but more funding for investment activities in large companies with high growth rates. the results also correspond tonurhayati (2013), lanawati and amilin (2015), (2001), damayanti and achyani (2006) and sulistyaningsih (2012), which prove that the size of firm has a negative effect on the dividend payout ratio (table 4). 6. conclusion increasing the debt ratio will not automatically increase the dividend ratio because of the low tax savings that are generated. tax savings are an incentive for increasing the dividend ratio, because of the potential to increase company profits, which is a considered component in calculating the dividend ratio. the implication of this result is that despite the increase in interest expense and debt repayments, an increase in the debt ratio will not always have an impact on reducing the company's cash ability to pay dividends. debt may increase, but due to low tax savings, an increase in the debt ratio does not provide a strong incentive to increase the dividend ratio. the company's capital and operational expenditures are increasing as the size of the company increases, but it tends to use sources of funding from internal company funds, thereby reducing the debt ratio. the larger the size of the company, the higher the need for funding. meanwhile, the source of funding needs comes from retained earnings so that more available cash is used to increase investment and company operations. this policy will reduce the dividend ratio. the implication of these results is that companies tend to choose sources of funding from the capital market (stocks) rather than from debt. the larger the size of the company, the reason is that costs are more efficient and the level of information asymmetry is low because debt is considered to increase the risk of financial distress. the results also imply that there is a tendency that the greater the size of the company, the greater the need for funds for investment and for operations. the cheapest and least risky source of funding to fulfill it is an internal source of funds, namely retained earnings. however, there are consequences that will reduce the dividend ratio. limited research uses one proxy for each observed variable in this study, so there is no information if other proxies are used. future research should use more than one proxy for each research variable.the results of the research cannot be generalized for all sectors listed on the indonesia stock exchange, because they have just reviewed them in sub basic industry and chemical sector. subsequent research expands the coverage of its population in all sectors listed on the indonesia stock exchange. references ambarwati, s. d. a. 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(2014). does ownership structure matter for dividend yield? evidence from the hongkong stock exchange. business and economic research, 4(2). issn 2162-486. the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency 52 the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency yanti dwi indarti51* 1 universitas singaperbangsa karawang, karawang, indonesia abstract the performance level of the personnel and training board of karawang regency in 2016 is less than 100%. this is thought to be influenced by various factors such as competence, compensation and work motivation. because of interest in the problem, this study has a purpose to find out, analyze and explain about the influence of competence and compensation for work motivation and its impact on employee performance at the personnel staffing and training of karawang regency. to analyze the problem, we had 58 respondents answer through the nonprobability sampling technique with the saturated sampling method. the data collection technique used the survey method with a questionnaire tool. data analysis was done by validity test, reliability test, descriptive analysis and verified analysis with a multiple linear regression. data processing used the spss version 17.00 software application the results of the research conducted at the personnel and training board karawang regency shows that 1) employee competence has a very good criteria, compensation has a good criterion, motivation work and employee performance has a very high criteria; 2) competence with compensation has a positive and significant correlation at a low correlation level with a correlation coefficient of 0.329; 3) competence has a positive and significant effect of 11% to work motivation with a path coefficient of 0,255 and compensation has a positive and significant effect of 33.8% to work motivation with a path coefficient of 0.541; 4) competence and compensation effect simultaneously positive and significant equal to 44,8% to work motivation; 5) competence has a positive and significant effect of 14.7% to employee performance with a path coefficient of 0.298 and compensation has a positive and significant effect of 41% to employee performance with a path coefficient of 0.593; 6) competence and compensation effect simultaneously positive and significant equal to 55,7% to employee performance; 7) work motivation has a positive and significant effect of 66.4% on employee performance with a path coefficient of 0.815; 8) competence through work motivation has a positive and significant effect of 29.8% to employee performance and compensation through work motivation has a positive and significant effect of 59.3% to employee performance; 9) competence and compensation through work motivation influence simultaneously positive and significant equal to 89,1% to employee performance. the influence of other variables are not examined outside the competence and compensation through the job motivation to employee performance of 10,9%, so there needs to be further research on other variables to obtain comprehensive information in order to improve the performance of employees in the personnel board and training board karawang regency. keywords: competence, compensation, employee performance, work motivation. * corresponding author. email address: yantidwibangrier@gmail.com mailto:yantidwibangrier@gmail.com afebi management and business review (ambr) vol.03 no.01, june 2018 53 1. introduction performance is a result that every organization desires to reach. for reaching a good performance, an organization needs employees that have high work potential for anticipating environmental opportunities and challenges which are more competitive for reaching the organization’s goals, so human resource management needs to be directed to be the thinker and determinant of the organization’s way sustainably. “performance is an implementation from plans arranged by the organization, performance implementation is implemented by human resources which have the ability, competence, motivation, and interest” (wibowo, 2009;4). competence influences employee performance, if an employee has a high competence such as knowledge, skill, ability, and attitude that is corresponding with the carried position he or she will be motivated to work efficiently, effectively, and productively. “competence is the behavior dimension which is behind competent performance. often named behavior competence because it is meant for explaining how people behave when they perform their roles well” (armstrong and baron, 1998:298 in wibowo, 2009:326). motivation is a factor in competence which is able to change. by providing motivation, appreciation to employee performance is able to have a positive influence to employee motivation. if directors are able to encourage personal motivations of an employee, then synchronize with the organization’s needs, they will often find an assignment increase in a number of competence which influence performance. “…motivation represents psychological processes, which causes the emergence, direction, and occurrence of the persistence of volunteer activities which are directed in the direction of certain goals” (mitchell, 1982:81 in j.winardi, 2011:1). other than competence, financial compensation is one of the aspects which influence employee performance. in fulfilling employee work satisfaction, providing financial compensation to employees need to be paid attention. providing proper compensation equally for employees will create a pleasant work environment and able to cause a high work motivation for employees. “in providing and deciding for remuneration compensation levels for employees, there are matters to be considered. the consideration of providing this remuneration compensation has to be based on a logical reason, so it will be able to create satisfaction for employees.” (nasution,1994:160 in kadarisman,2014:23). based on the phenomenon in the personnel and training board karawang regency that the cause of the performance achievement level which is not yet optimal is caused by, among others, the availability of employees which is not equal to the number of employees in the whole karawang regency government which need to be served, the low employee competence and not yet corresponding with the placement in their positions, there are still employees which have not yet mastered technology, compensation which is not yet corresponding from the amount and the proportion between position gaps, and employee work motivation which is not yet optimal. so the writer desires to research “the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency”. the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency 54 2. theoretical base and hypothesis development competence “competence is a behavior dimension behind the competent performance. often named behavior competence because it is meant for explaining how people behave when they perform their roles well” (armstrong and baron, 1998:298 cited by wibowo, 2010:326). “competence is a basic characteristic of individual behavior which is related with the effective mold criteria and or excellent performance in work or situations” (lyle spencer and signe spencer, 1993:9 in sudarmanto, 2015:46). “competence clusters and dimensions are divided through dimensions that prioritize achievement and action, aid, and serve other people, the ability to influence and create impact, managerial ability, cognition ability, personal effectiveness ability” (lyle spencer and signe spencer, 1993:9 in sudarmanto, 2015: 70-71). compensation “appreciation (reward) has the meaning of appreciations/rewards which organizations give to their members, which are financial material, nonfinancial material, or psychological or non-material. forms of appreciation are in the forms of: basic salary/basic wage, variable salary, incentives, achievement service money (bonus), opportunities of career/promotion, holiday, pension” sudarmanto, 2015:192). “compensation is what an employee/worker obtains as a reward of the work provided” (kadarisman, 2014:1).”compensation is able to be measured through dimensions which are results and goals which are expected from appreciation, individual criteria and measure which is given appreciation, characteristic or form of appreciation, equality level of the appreciation system and appreciation time range” (sudarmanto, 2015:200-201 and kardisman, 2014:23-24). work motivation “motivation refers to the strength from the inside and the outside of a person which awakens sustains the commitment for an action” (david boddy, 2008:486). motivation is a psychological process which awakens and directs behavior in reaching goals or goal-directed behavior” (robert kreitner and angelo kinicki, 2003 in wibowo, 2010:378). “according to the motivation theory related with performance, that motivation is able to be obtained through needs, job design, satisfaction, equity, expectation, and goal setting” (kreitner and angelo kinicki, 2003:2010 in wibowo, 2010:391-399). performance “performance is about implementing work and the results reached from that work, about what is done and how it is done. performance is the work result which has a strong relation with strategic goals and the organization, consumer satisfaction, and provide contribution to the economy” (armstrong and baron, 1998:150 in wibowo, 2017:70). “referring to the definition as a result which states that performance is a produced record of results of certain work functions or activities for a certain time period” (bernardin, 2001:143 in sudarmanto, 2015:8). “performance or the dimensions to measure performance are quality, quantity, timeliness, cost-effectiveness, need for supervision and interpersonal impact” (bernardin, 2001 in sudarmanto 2015:12). afebi management and business review (ambr) vol.03 no.01, june 2018 55 framework competence dimension (spencer, 1993 in sudarmanto, 2015:70-71) which are (1) achievement and action oriented with a passionate indicator for achievement and for reaching work targets, attention to work quality and detail, proactive and initiative, searching information; (2) assisting and serving other persons with the empathy indicator, customer oriented; (3) ability to influence and create impact with the indicator of a wide impact and influence, organizational awareness, building job relations; (4) managerial ability with the indicator to develop other persons, ability to direct/provide orders, group cooperation, leading groups; (5) cognition ability with the indicators of analytical thinking, conceptual thinking, technical/professional/managerial skills; (6) personal effectiveness ability with indicators of self-control, confidence, flexibility, organizational commitment. compensation dimension (sudarmanto, 2015:200-201 and kadarisman, 2014:23-24) which are (1) results and goals expected from appreciation are equalized with the indicator of corresponding levels of appreciation with the employee expectations and needs, appreciation level motivation to employee spirit or passion of the job, appreciation system motivation level to employee desire to still work in the organization environment, appreciation system benefit level to work satisfaction; (2) criteria and measure of individuals which are given appreciation with the indicators of level of appreciation corresponding with performance, level of appreciation corresponding with responsibility, level of appreciation corresponding with rank and position, level of appreciation corresponding with job load, level of appreciation corresponding with education, level of appreciation corresponding with job length; (3) characteristic or form of appreciation with indicators of appreciation variation, appreciation number/amount; (4) appreciation system equity level with the indicators of how far the appreciation level fulfills the feeling of equity to employees, how far the appreciation level fulfills the feeling of equity from the organization ability point of view; (5) appreciation time range with the indicator of how long the appreciation is provided compared with activities in work. motivation dimension (kreitner and angelo kinicki, 2003:2010 in wibowo, 2010:391-399) which are (1) needs with the indicators of the need for achievement, the need for affiliation, the need for power; (2) job design with the indicators of scientific management, job enlargement, job rotation, job enrichment; (3) satisfaction with the indicators of need fulfillment, discrepancies, value attainment, equity, genetic component; (4) equity with the indicators of equity in social exchange, equity in providing and accepting relations; (5) expectation with the indicators of expectancy (certain effort levels will be followed by certain performance levels), instrumentally (certain results are dependent on specific performance levels), valence (positive or negative values which persons place in results; (6) goal setting with the indicators of goals direct attention (goals focus on one matter which is relevant and important), goals regulate effort (effort levels are implemented proportionally with goal difficulty) goals increase persistence (persistence in effort for the time period extension), goals accelerate strategies and action plans (goals encourage developing strategies and action plans). the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency 56 performance dimension (bernardin, 2001 in sudarmanto, 2015:12) which are (1) quality with process indicators or results nearing perfect/fulfills quality standards, ease of procedure/steps of service, service requirements corresponding with the service type; (2) quantity with the indicator of number or quantity of job results corresponding with the target; (3) timeliness with the indicator of punctuality in finishing activities or producing products, timeliness accuracy in every change of the good/service until at the consumer, certainty of service schedule, low level of absence or tardiness of service personnel; (4) cost-effectiveness with the indicators of waste reduction in using organizational resources (persons, money, material, technology), using organizational resources which are corresponding with the service type and of good quality, fairness of service costs, certainty of service costs; (5) need for supervision with the indicators of service personnel clarity, service personnel discipline, service personnel responsibility, service personnel honesty; (6) interpersonal impact with the indicators of cooperation with other persons (with employees and leaders) in work, the ability to influence coworker behavior, the ability to influence consumer behavior. figure 1 research paradigm source: processed based on source for research needs research hypothesis the hypotheses in this research are: 1) there is a correlation between competence and compensation; 2) there is an influence of competence and compensation partially to work motivation; 3) there is an influence of competence and compensation simultaneously to work motivation; 4) there is an influence of competence and compensation partially to employee performance; 5) there is an influence of competence and compensation simultaneously to employee performance; 6) there is an influence of work motivation to employee performance; 7) there is an influence of competence and compensation partially through work motivation to employee performance; 8) there is an influence of competence and compensation simultaneously through work motivation to employee performance. competence compensation motivation performance afebi management and business review (ambr) vol.03 no.01, june 2018 57 3. research method the research object is the personnel and training board of karawang regency. the method used is the explanatory survey method, which is analyzing the influence that occurs between the competition variable (x1), compensation variable (x2) and work motivation (y) with employee performance (z). the population in this research are the employees of the personnel and training board of karawang regency with the sample determination technique by saturated sampling so all employees which total at 58 persons are created as respondents. data gathering is implemented by distributing questionnaires which consists of 4 variables, which are the competence variable, compensation variable, work motivation variable, and performance variable with questions of each variable as many as 21 question items. the scale used is the likert scale with answer ranges of 1 to 5 (1= strongly disagree, 2= disagree 3= less agree; 4= agree 5= strongly agree). the data analysis method which will be used is this research consists of the classic assumption test and hypothesis test with a path analysis. the data analysis technique uses the aid of spss 17.0 software. classic assumption test data validity test the validity of a data is related with the precision degree between field data with data reported by the researcher. for obtaining valid data in the quantitative method an instrument validity test is needed. instrument validity illustrates instrument levels which are able to measure what is measured (suharsimi arikunto, 2003:219). the spss test technique is often used for validity tests by using the bivariate pearson (pearson product moment) and corrected item-total correlation. the r count value is matched with the r table product moment in the 5% significance level. if the r count is larger than the 5% r table, the item is valid. from the variable validity tests of the competence variable (x1), compensation variable (x2), motivation variable (y), and performance variable (z) it is obtained that 21 question items are wholly valid, because r count is larger than r table. data reliability test reliability is related with the consistence degree and data stability or findings. a data is said to be reliable if investigated by different researchers, the data is the same, likewise if implemented in a different time, the same data is obtained, of course it is related with the same sample. by using spss, the reliability test notes the reliability statistics table. data is reliable if the cronbach alpha result is >0.60. meaning answer consistence >60%. from the reliability test results of the competence variable (x1), compensation variable (x2), motivation variable (y), and performance variable (z) it is obtained that the four variables are wholly reliable because the cronbach alpha value is larger than 0.060. data normality test the normality test is a test of the normality of the distribution of competence data (x1), compensation data (x2), work motivation data (y), and the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency 58 employee performance (z). this matter is implemented by using the kolmogorov-smirnov test using spss. with the criteria if the significance number (sig) <0.05 data is not normally distributed, and a significance number (sig) of >0.05 data is normally distributed. the normality test result is seen in the asympt.sig. (2-tailed) shows the significance level is larger than α=0.05 which is 0.716>0.05 which means that data is distributed normally. for the z kolmogorov-smirnov value. the unstandardized residual z variable value = 0.697. if that z value is compared with 1.97 (for the significance level of 0.05), so 0.697<1.97, so data is stated to be normally distributed. data transformation data transformation is the implemented effort with the purpose of changing the real data measurement into another form so data is able to fulfill assumptions which underlies statistical analysis, so data is ready to be analyzed. considering the analysis used is the path analysis, it is required that the measurement scale used is at least the interval scale. because data obtained from the research instrument is ordinal data, so it is able to be analyzed for the relation, the data has to be improved (transformed) from ordinal to interval by using the method of successive interval (msi). analysis design and hypothesis test descriptive analysis the scale range with samples as many as 58 employees with using an equation as the following: 𝑅𝑆 = 𝑛(𝑚 − 1) 𝑚 = 58(5 − 1) 5 = 46,4 where : rs n m : : : scale range total samples total alternative answers (score) lowest scale = lowest score value x total samples = 1 x 58 = 58 highest scale = highest score value x total samples = 58 x 5 = 290 table 1 scale range source: processed based on source for research needs score scale scale range criteria 1 58 – 104.4 not very good 2 104.5 – 150.8 not good 3 150.9 – 197.2 poor 4 197,3 – 243.6 good 5 243.7 – 290 very good afebi management and business review (ambr) vol.03 no.01, june 2018 59 not very good not good poor good very good 58 104.4 150.8 197.2 243.6 290 figure 2 bar scale source: processed based on source for research needs verified analysis correlation analysis table 2 r correlation interpretation coefficient interval correlation 0.00 – 0.199 very low 0.20 – 0.399 low 0.40 – 0.599 average 0.60 – 0.799 strong 0.80 – 1.000 very strong source: sugiyono (2014:184) for knowing the correlation significance, the significance is able to be observed, if the sig value <0.05 there is a significant correlation (h1 accepted), if the sig value >0.05 there is no significant correlation (h0 accepted). path analysis the path analysis is an analysis that the researcher uses for knowing the presence or absence of influence between the competence (x1) and compensation (x2) variables to work motivation (y) and the impact to employee performance (z). ρyx1 ρzx1 ρyx1x2 ρzx1x2 ρzy ρzx1x2 ρyx2 ρzx2 x1 x2 y z ε1y rx1x 2 ε1z the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency 60 figure 3 path analysis source: processed based on source for research needs equation : y = ρyx1 x1 + ρyx2 x2 + ρε1y z= ρyx1 x1 + ρyx2 x2 + ρzy y + ρε1z where : x1 x2 y z ρyx1 ρyx2 ρyx1x2 ρzy ρzx1 ρzx2 ρzx1x2 ρzyx1 ρzyx2 ρzyx1x2 ε1 : : : : : : : : : : : : : : : competence compensation motivation performance influencing path coefficient x1 to y influencing path coefficient x2 to y influencing path coefficient x1 and x2 to y influencing path coefficient y to z influencing path coefficient x1 to z influencing path coefficient x2 to z influencing path coefficient x1 and x2 to z influencing path coefficient x1 through y to z influencing path coefficient x2 through y to z influencing path coefficient x1 and x2 through y to z path coefficient of other variables (error) determination coefficient analysis the r2 (r square) determination coefficient is used for predicting the size of the independent variable contribution influence which are competence (x1) and compensation (x2) to the intervening variable which is motivation (y) and the size of the intervening variable influence to the dependent variable which is performance (z) with the requirement that the f test requirement in the regression analysis has a significant value. if the f test result is not significant, the determination coefficient (r square) is not able to be used to predict influence contributions between those variables. the r2 determination coefficient value is between 0 (zero) and 1 (one). if the r2 is minus in value (-) it is able to be said that there is no independent variable influence to dependent variables. the smaller the r2 determination coefficient, the weaker the influence of the independent variable to the dependent variable. contrarily, if the r2 value is closer to 1 the influence will be stronger. hypothesis test 1) f test for testing the significance of independent variable influence to dependent variables simultaneously. if the value of f count < f table the influencing independent variable is not significant to the dependent variable simultaneously. for testing the significance of the independent variable influence to dependent variables partially. if the value of t count < t table the influencing independent variable is not significant to the dependent variable partially. afebi management and business review (ambr) vol.03 no.01, june 2018 61 4. results and discussion correlation analysis and path analysis result the path analysis result as a whole with the influence of competence and compensation to motivation and its impact to performance is able to be seen in the following illustration: ε1y =0.551 ε1z =0.078 0.090 0.329 0.255 0.541 0.815 with the equation as the following: z=0.255x1 + 0.541x2 + 0.815y + 0.078 where: z : performance y : motivation x1 : competence x2 : compensation ε1z : path coefficient of other variables as large as 0.078 descriptive discussion competence variable descriptive discussion from the descriptive analysis an average total score of the competence variable as large as 257 is obtained located in the scale range with the very good criteria, which means respondents already consider that employee competence is largely corresponding with the primary task and function of each position. from the frequency tabulation that the respondent statement to the competence variable with the largest percentage in the strongly agree criteria which is in the dimension of achievement oriented and action in the spirit for achievement indicator and to reach the job target, and attention to work quality and precision. while the largest percentage in the less agree criteria are in the dimensions of cognitive ability in the technical/professional/managerial expertise indicators and personal effectiveness ability in the self-control dimension. compensation variable descriptive discussion from the descriptive analysis an average total score of the compensation variable as large as 239 is obtained located in the scale range with the good criteria, which means respondents already consider that the compensation provided by the personnel and training board of karawang regency is already corresponding with employee expectations and corresponding with the personnel and training board of karawang regency. x1 x2 y z the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency 62 from the frequency tabulation that the respondent statement to the compensation variable with the largest percentage in the strongly agree criteria which is in the dimension of results and goals which is expected from appreciation in the appreciation suitability indicator with employee expectations and needs, the equality level of the appreciation system with the indicator of how far the appreciation level fulfills the equality feeling from the organizational viewpoint, and the appreciation time range dimension in the indicator. how long is the appreciation given compared with work activities. while the largest percentage in the less agree criteria is in the individual criteria and measurement dimension which provided appreciation in the appreciation suitability level with job length. motivation variable descriptive discussion from the descriptive analysis an average total score of the motivation variable as large as 269 is obtained located in the scale range with the very high criteria, which means that respondents already consider that every employee has a very high work spirit in the frame of improving employee individual performance and the personnel and training board of karawang regency. from the frequency tabulation that the respondent statement to the motivation variable with the largest percentage in the strongly agree criteria is in the number 52 statement observed from the satisfaction dimension in the value attainment indicator. while the largest percentage in the less agree criteria is in the satisfaction dimension in the need fulfillment indicator. performance variable descriptive discussion from the descriptive analysis an average total score of the performance variable as large as 265 is obtained located in the scale range with the very high criteria, which means that respondents already consider that employee work results are already corresponding with the determined target by the personnel and training board of karawang regency. from the frequency tabulation that the respondent statement to the performance variable with the largest percentage in the strongly agree criteria is in the need for supervision dimension in the indicators of service officer responsibility and service officer politeness. while the largest percentage in the less agree criteria is in the need for supervision dimension in the service officer discipline indicator. afebi management and business review (ambr) vol.03 no.01, june 2018 63 verified discussion the verified analysis can be seen in the following table: table 3 verified analysis results analysis amoun t sig n. meanin g t/f count meanin g conclusion correlation x1-x2 3,29 0,0 12 <0,05 2,760 >2,021 positive and significant at low levels influence of x1 to y 11% 0,0 19 <0,05 2,411 >2,021 positive and significant influence of x2 to y 33,8% 0,0 00 <0,05 5,110 >2,021 positive and significant influence of x1 and x2 to y 44.8% 0,0 00 <0.05 22.436 >3.16 positive and significant influence of x1 to z 14.7% 0,0 03 <0.05 3.132 >2.021 positive and significant influence of x2 to z 41% 0,0 00 <0.05 6.236 >2.021 positive and significant influence of x1 and x2 to z 55.7% 0,0 00 <0.05 34.500 >3.16 positive and significant influence of y to z 66.4% 0,0 00 <0.05 15.941 >2.021 positive and significant influence of x1 through y to z 29.8% 0,0 38 <0.05 >2.122 2.021 positive and significant influence of x2 through y to z 59.3% 0,0 03 <0.05 >3.110 2.021 positive and significant 89.1% 0,0 00 <0.05 >213.5 48 2.78 positive and significant source: processed based on source for research needs therefore the influence of competence (x1) and compensation (x2) to performance (z) through motivation (y) is as large as 89.1% larger than the influence of competence (x1) and compensation (x2) to performance (z) as large as 55.7%. so motivation (y) has a strong and significant influence for mediating competence (x1) and compensation (x2) to performance (z). conclusion and suggestions conclusion 1. employee competence has a very good criteria, meaning that employee competence is already corresponding with the primary tasks and functions of each position. yet there are still indicators which are poor that are technical/professional/managerial expertise and self-control. 2. compensation has a good criteria, which means that the compensation provided by the personnel and training board of karawang regency is already corresponding with employee expectations and corresponding with the ability of the personnel and training board of karawang regency. yet there is still an indicator which is poor which the appreciation suitability level with job length is. the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency 64 3. work motivation has a very high criteria, meaning every employee has a high work spirit in the frame of improving employee individual performance and the personnel and training board of karawang regency performance. yet there is still a low indicator which is the need fulfillment. 4. employee performance has a very high criteria, meaning employee work results are already corresponding with what is determined by the personnel and training board of karawang regency. yet there is still a low indicator which is service officer discipline. 5. competence with compensation has a positive and significant correlation in the low correlation level, this shows that if employee competence increases, the compensation provided also increases, also the contrary. but the relation level is low, which means there are still other factors outside competence and compensation which have stronger correlations than those two factors. 6. the influence of competence to work motivation is as large as 11%. competence has a positive influence to work motivation meaning that the competence variable significantly influences work motivation, therefore the higher the employee competence, the employee work motivation will also be higher. the influence of compensation to work motivation is as large as 33%. compensation has a positive influence to work motivation meaning that the compensation variable significantly influences work motivation, therefore the higher the good compensation provided, the employee work motivation will also be higher. 7. the influence of competence and compensation simultaneously to work motivation is as large as 44.8%. competence and compensation have positive influences to work motivation meaning the competence and compensation variables significantly influence work motivation, therefore the higher the competence and compensation, the employee work motivation will also be higher. but there are still other factors outside of competence and compensation which are not investigated which influence work motivation as large as 55.2%. 8. the influence of competence to employee performance is as large as 14.7%. competence has a positive influence to employee performance meaning that the competence variable significantly influences employee performance, therefore the higher the employee competence, the employee performance will also be higher. the influence of compensation to employee performance is as large as 41%. compensation has a positive influence to employee performance meaning that the compensation variable significantly influences employee performance, therefore the higher the good compensation provided, the employee performance will also be higher. 9. the influence of competence and compensation simultaneously to employee performance is as large as 55.7%. competence and compensation have positive influences to employee performance meaning the competence and compensation variables significantly influence employee performance, therefore the higher the competence and compensation, the employee performance will also be higher. but there are still other factors outside of competence and compensation which are not investigated which influence employee performance as large as 44.3%. afebi management and business review (ambr) vol.03 no.01, june 2018 65 10. the influence of work motivation to employee performance is as large as 66.4%. work motivation has a positive influence to employee performance meaning that the work motivation variable significantly influences employee performance, therefore the higher the employee work motivation, the employee performance will also be higher. 11. the influence of competence through work motivation to employee performance is as large as 29.8%. competence through work motivation has a positive influence to employee performance meaning that the competence through work motivation variable significantly influences employee performance, therefore the higher the competence through work motivation, the employee performance will also be higher. the influence of compensation through work motivation to employee performance is as large as 59.3%. compensation through work motivation has a positive influence to employee performance meaning that the compensation through work motivation variable significantly influences employee performance, therefore the higher the compensation through work motivation, the employee performance will also be higher. 12. the influence of competence and compensation simultaneously through motivation to employee performance is as large as 89.1%. competence and compensation through motivation have positive influences to employee performance meaning the competence and compensation through motivation variables significantly influence employee performance, therefore the higher the competence and compensation through motivation, the employee performance will also be higher. but there are still other factors outside of competence and compensation through motivation which are not investigated which influence employee performance as large as 10.9%. suggestions 1. good employee competence needs to be maintained, moreover needs to be improved and optimized back to be able to improve performance and in the frame of reaching good governance. the low indicators of technical/professional/managerial expertise and self-control needs to be improved by ways of: a. developing employee technical, professional, managerial competence by implementing training need analysis which consist of organizationbased need analysis, job competence-based need analysis, and individual competence-based need analysis. b. develop individual self-control by developing a performance system management which is objective and able to avoid like and dislike situations, and create an optimal career management system. 2. a good compensation needs to be maintained, moreover needs to be improved. the low indicator of the appreciation suitability level with work length needs to be improved by arranging the job grading and salary structure which covers non-analytical methods in arranging the remuneration scale and position evaluation, analytical methods and points rating in arranging the remuneration scale and position evaluation, salary grading based on measured compensable factors, a remuneration scale based on the 3p (pay for person, position, and performance) principle. the effect of competence and compensation to motivation of employees and its impact on employee performance in the personnel and training board of karawang regency 66 3. a good compensation needs to be maintained, moreover needs to be improved. the low indicator of the need fulfillment has to be improved by arranging talent management and strategy, measuring competence with an assessment center, measuring performance appraisal based on kpi, measuring a competence based hr management system. 4. the already high employee performance needs to be maintained, moreover needs to be improved more. the low indicator of service officer discipline needs to be improved by implementing hr and od (organizational development) auditing to be able to produce an optimal auditing process, and provide a positive impact for performance improvement of the human resources department service and organization development. 5. competence with compensation has a positive and significant correlation with a low level of correlation. for improving the correlation between competence and compensation in the frame of improving performance, the compensation provided should be competence based, able to be implemented by arranging a competence-based hr management system, arranging a kpi based performance appraisal in the frame of arranging a reward and punishment based policy. 6. from the influence test result, it is obtained an indirect influence of competence and compensation to employee performance through work motivation as high as 89.1% larger than the direct influence of competence and compensation to employee performance through motivation as large as 55.7% so work motivation becomes a variable that mediates between competence and compensation to employee performance. for improving employee performance, it should be applied all key functions in the human resource management science beginning with the recruitment function, training and development, career management, performance assessment up to the remuneration strategy function to be able to improve employee work motivation which in the end will impact employee performance improvement. 7. the influence of other variables that are not investigated outside of competence and compensation through work motivation is as large as 10.9%. it is expected to be from other variables such as the leadership variable, organization culture, work environment, organization commitment, work stress, and others, so further research of the other variables needs to be implemented for obtaining information that is comprehensive in the 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indonesia abstract the quality of public service performance has a broad impact in various parts live, especially to achieve public welfare. therefore the efforts to improve public services must be conducted continuously by dinas penanaman modal pelayanan terpadu satu pintu dan tenaga kerja (dpmptsp naker) of pangkalpinang. the efforts to improve the quality of services must be conducted jointly, integrated, programmed, directed, and consistent by paying attention to the needs and expectations of the public, so that the services provided to the community can be given appropriately, quickly, cheaply, openly, simply and easily implemented. the purpose of the community satisfaction index survey preparation is to find out the performance of dinaspenanaman modal pelayanan terpadu satu pintu dan tenaga kerja of pangkalpinang which will be used as a basis for making and establishing policies in order to improve the quality of public services. the survey of community satisfaction index (ikm) is made refers to the provisions of peraturan menteri pendayagunaan aparatur negara dan reformasi birokrasi republik indonesia number 14 year2017 concerning guidelines for preparing the community satisfaction survey of public service providers units of at least 9 skm elements. the respondents of the survey were the people who were applying for licensing at dpmptsp naker of pangkalpinang amounted to 224 people. the community satisfaction index survey is collaborating with university of bangka belitung through the institute for research and community service (lppm), which is formulated through a cooperation agreement with the service provider of dinas penanaman modal pelayanan terpadu satu pintu dan tenaga kerja of pangkalpinang. based on the results of the ikm survey with 9 elements, obtained the value of the service element which has the lowest value is the element of requirement (u1) with a value of 3.193 and the element that has the highest value is the cost / tariff (u4) of 3.767. the community satisfaction survey in the dinaspenanaman modal pelayanan terpadu satu pintu dan tenaga kerja of pangkalpinang with a weighted nrr of 3.374 was converted into the public satisfaction index at a service unit of 84.36, which was categorized into b or good. keywords: community satisfaction index, public satisfaction, public service 1. introduction the demand for a good governance paradigm requires the fulfillment of the principles of accountability, transparency, responsiveness, and participation in every activity which held by the central government and regional governments. the public services which organized by the government in various service sectors those are related to the fulfillment of civil community rights and basic needs of the community. the community really wants an optimal service, but in some conditions, there are still complaints from the community such as the complicated procedures, lack of transparency, lack of information, lack of consistency, limited facilities, inadequate facilities and infrastructure, uncomfortable atmosphere, so does not guarantee the time of completion. the community as service users always expect the optimal service, so that government officials are required to always improve their performance. the level * corresponding author. email address: deviyono92@gmail.com afebi management and business review (ambr) vol.03 no.02, december 2018 47 of public service quality performance has a broad impact (impact) in various parts of life, especially to achieve the level of community welfare. therefore the efforts to improve public services must be conducted continuously. the efforts to improve the quality of services must be conducted jointly, integrated, programmed, directed, and consistent by paying attention to the needs and expectations of the public, so that the services provided to the community can be given appropriately, quickly, cheaply, openly, simply and easily implemented. one of the instruments which are used in evaluating these performances is by conducting surveys and studies about community satisfaction index (ikm). having a background that has been explained, the measurement of the community satisfaction index (ikm) is very necessary to measure, know and analyze how government provide the services to the community as service users according to their needs and expectations and can determine future steps or policies to be implemented. the purpose of the preparation of the community satisfaction index survey is to find out the performance of dinas penanaman modal pelayanan terpadu satu pintu dan tenaga kerja of pangkalpinang which will be used as a basis for making and establishing policies in order to improve the quality of public services. 2. literature study/hypotheses development 2.1. public service 2.1.1. the definition of public services general understanding of public services in the decree of the minister of administrative reform number 63 of 2003 is all service activities carried out by public service providers as an effort to fulfill the needs of recipients of services and the implementation of the requirements of the legislation. public services according to sinambela (2011) are fulfilling the desires and needs of the community by state administrators. the state is established by the public (of society) of course with the aim of increasing the welfare of the community. in essence the state, in this case, the government (bureaucrats) must be able to meet the needs of the community. needs, in this case, are not individual needs, but various needs that are actually expected by the community, for example, the need for health, education, and others. whereas according to moenir (2010) public services are activities carried out by a person or group of people on the basis of material factors through certain systems, procedures, and methods in the context of efforts to meet the interests of others in accordance with their rights. every government agency that includes the ministry of work unit / organizational unit, department, non-departmental government institution, secretariat of the highest and highest state institutions, and other government agencies, both central and regional, bumn and bumd that have to serve the public in accordance with the principles and principles in public services in accordance with the provisions of applicable legislation in order to meet the needs of the community in order to improve the welfare and satisfaction of the community. 2.1.2. the principles and standards of public service minister of administrative reform in decree number 63 of 2003 has regulated the principles, principles, and standards of public services that must be carried out in the delivery of public services by government agencies. the principles, principles, and standards of public services are made to be a guideline in the implementation of public services by government agencies and also serve as indicators in evaluating and evaluating performance for public service providers. with the guidance made in this decree, it is expected that the community can get services that are appropriate to their needs and the process is satisfying and does not complicate the community. the public service principle includes: a. transparency; open, easy and accessible to all parties who need and are provided adequately and easily understood. analysis of public satisfaction in dpmptsp naker of pangkalpinang city 48 b. accountability; can be accounted for in accordance with the provisions of the legislation. c. conditional; in accordance with the conditions and ability of the giver and recipient of the service by sticking to the principles of efficiency and effectiveness. d. participatory; encourage community participation in the implementation of public services by paying attention to the aspirations, needs, and expectations of the community. e. security of rights; not discriminatory in the sense of not distinguishing ethnicity, religion, race, class, gender, and economic status. f. the balance of rights and obligations; providers and recipients of public services must fulfill the rights and obligations of each party. the implementation of public services stipulated in the decree of the minister of administrative reform number 63 of 2003 follows the principles: a. simplicity; public service procedures are not convoluted, easy to understand and easy to implement. b. clarity; technical requirements and public service administration; work units or officials who are authorized and responsible in providing services and resolving complaints or problems and disputes in the implementation of public services; details of public service fees and payment procedures. c. the certainty of time; implementation of public services can be completed within a predetermined period of time. d. accuracy; public service products are received correctly, accurately and legally. e. security; public service processes and products provide a sense of security and legal certainty. f. responsible; the leaders of public service providers or appointed officials are responsible for the implementation of services and resolution of complaints or problems in the implementation of public services. g. complete facilities and infrastructure; availability of adequate work facilities and infrastructure and other supports including the provision of telecommunications and information technology facilities. h. ease of access; places and locations as well as adequate service facilities, easily accessible to the public, and can utilize telecommunications and information technology. i. discipline, courtesy, and friendliness; service providers must be disciplined, polite and polite, friendly, and provide services sincerely. j. convenience; the service environment must be orderly, organized, provided a waiting room that is a comfortable, clean, neat, beautiful and healthy environment and equipped with service support facilities such as parking, toilets, places of worship, and others. public service standards according to kep. menpan no. 63 th 2003 includes: a. service procedures; standardized service procedures for providers and recipients of services including procurement. b. settlement time; settlement time determined from the time of filing the application to the completion of the service including complaints. c. service fees; the service fee or tariff includes the details that are deposited in the service delivery process. d. service products; the results of services to be received are in accordance with the stipulated conditions. e. facilities and infrastructure; providers of adequate service facilities and infrastructure by public service providers. f. competence of service providers; the competency of the service provider must be determined precisely based on the knowledge, expertise, skills, attitudes, and behaviors needed. afebi management and business review (ambr) vol.03 no.02, december 2018 49 2.2. public satisfaction satisfaction is a gap between the expected value and the performance obtained. if the performance is below the expected value, the community will feel disappointment. but on the contrary, if the performance value obtained exceeds the expected value, the community will feel satisfaction. satisfaction of the community according to the decree of the minister of administrative reform number kep / 25 / m.pan / 2004 concerning the general guidelines for the compilation of the community satisfaction index defines community satisfaction as the result of public opinion and assessment of the service performance of the public service apparatus. this means that community satisfaction can be measured from the extent to which people feel there is no gap between the conditions needed and the actual conditions that are occurring when the service is carried out. the main factor that determines community satisfaction according to lupiyoadi (2013: 155), is the perception of service quality. achievement of community satisfaction if further review through the quality of service can be improved with several approaches as follows: a. minimize the gaps between management and the community. b. public organizations should be able to build a shared commitment to creating a vision in the improvement of the service process. c. provides an opportunity for the public to lodge complaints by forming a system of suggestions and criticisms. d. developing services to achieve community satisfaction and expectations. in determining the level of public satisfaction, there are five factors that must be considered by service organizations namely (lupioyadi, 2006): a. quality of products/services, the public will be satisfied if their evaluation results show that the products/services they use are of high quality. b. quality of service, the public will feel satisfied if they get good or appropriate service. c. emotional, the public will feel proud and get confidence that other people will be amazed at it when using products/services with certain brands that tend to have a higher level of satisfaction. d. prices, products that have the same quality but have lower prices will give a higher value. e. costs, the public does not need to incur additional costs do not need to waste time getting the desired goods or services. 2.3. community satisfaction index according to minister of administrative reform and bureaucratic reform of the republic of indonesia number 14 of 2017 concerning guidelines for preparing the public satisfaction survey for public service providers, the community satisfaction survey is a comprehensive measurement of community satisfaction with the quality of services provided by public service providers. while the community satisfaction index is the result of measurements from the activities of the community satisfaction survey in the form of numbers. numbers are set on a scale of 1 (one) up to 4 (four). the measurement of the community satisfaction index aims to measure the level of community satisfaction as a service user and improve the quality of public service delivery. the expected goals of this ikm measurement are: a. encouraging community participation as service users in assessing the performance of service providers. b. encouraging service providers to improve the quality of public services. c. encouraging service providers to be more innovative in organizing public services d. measuring trends in the level of community satisfaction with public services skm elements in this regulation include: a. requirements; requirements are conditions that must be met in the management of a type of service, both technical and administrative requirements. analysis of public satisfaction in dpmptsp naker of pangkalpinang city 50 b. systems, mechanisms, and procedures; procedures are procedures for services that are standardized for the givers and recipients of services, including complaints. c. time of settlement; settlement time is the period of time needed to complete the entire service process of each type of service. d. fees / rates *); fees / tariffs are fees charged to service recipients in managing and/or obtaining services from the organizer, the amount of which is determined based on the agreement between the organizer and the community. e. product specifications type of service; product specifications of the type of service are the results of services provided and received in accordance with the conditions set. this service product is the result of each type of service specification. f. implementing competencies **); implementing competence is the ability that must be possessed by the executor including knowledge, expertise, skills, and experience. g. implementing behavior **); implementing behavior is the attitude of officers in providing services. h. handling complaints, suggestions, and feedback; complaint handling, suggestions, and input are procedures for implementing complaints handling and follow-up. i. facilities and infrastructure; means are anything that can be used as a tool in achieving goals and objectives. infrastructure is everything that is the main support for the implementation of a process (business, development, project). means used for moving objects (computers, machines) and infrastructure for immovable objects (buildings) note: *) element 4, can be replaced with another form of a question if in a regulation the cost is not borne by the recipient of the service (consumer). example: making a ktp, the cost of the law is declared free. **) element 6 and element 7, can be replaced with another form of a question if the type of service to be surveyed is website based. 3. research methodology to conduct the surveys periodically using a qualitative method approach with measurements using a likert scale. likert scale is a psychometric scale that is commonly used in questionnaires and is the scale most widely used in research in the form of surveys other than that this method is also used to measure attitudes, opinions, and perceptions of a respondent or group of respondents toward a type of public service. on the likert scale, the respondents were asked to determine their level of agreement with a statement by choosing one of the available options. 3.1. survey period the periodic survey is a survey which conducted by public service providers toward the public services which are given to the community. this survey is a survey of service in licensing at dinaspenanamanmodalpelayananterpadusatupintu dan tenaga kerja of pangkalpinang for the period of 2018. this survey is comprehensive and the results of survey analysis are used to evaluate community satisfaction toward the licensing services provided. in addition, the survey results are used for policy material on public services and see the trends of public services that have been given to the community and the performance of public service providers. 3.2. survey implementation the survey implementers were conducted by an experienced independent institution, namely the university of bangka belitung through the institute for research and community service (lppm), which was formulated through a cooperation agreement with the service provider unit of dinas penanaman modal pelayanan terpadu satu pintu dan tenaga kerja of pangkalpinang. afebi management and business review (ambr) vol.03 no.02, december 2018 51 3.3. survey stages the implementation of the community satisfaction survey (skm) toward the implementation of public services can be conducted through the stages of planning, preparation, implementation, processing and presenting the survey results, which include the following steps: 1) compiling survey instruments; 2) determine the amount and sampling technique; 3) determine the respondent; 4) conducting surveys; 5) processing survey results; 6) presenting and reporting results. the stages of implementing the community satisfaction survey toward the implementation of public services are based on the methods and techniques that can be accounted for. 3.4. survey technique the research with survey methods can be conducted by 1) questionnaire with face-to-face interviews; 2) questionnaires through self-filling, including those sent by mail; 3) focus group discussions; 4) unstructured interviews through in-depth interviews. 3.5. time and place of survey the community satisfaction index survey dinas penanaman modal pelayanan terpadu satu pintu dan tenaga kerja (dpmptsp & naker) of pangkalpinang is held for 6 (six) months, from january to june 2018, with the respondents in the area of pangkalpinang. 3.6. population the population in this survey is the community who have obtained the services of making a trading business license (siup) from dpmptsp & naker during the first semester of 2018 with the amount of license amounted to 533 licenses, those are: table 1 number of types of permit license size in 2018 no month types of license size total small medium large 1 january 50 20 0 70 2 february 62 18 4 84 3 march 71 28 3 102 4 april 55 25 1 81 5 may 77 26 4 107 6 june 68 20 1 89 total 383 137 13 533 source : dpmptsp&naker of pangkalpinang, 2018 3.7. sampling the sampling technique can be adjusted to the type of service, the purpose of the survey and the data that would like to obtain. the respondents are randomly selected according to the coverage area of each service unit. whereas for sample size and population can use sample tables from krejcie and morgan. by using the formula where the total population is 533 respondents so that the sample results are 224 respondents. the sample is divided into 3 types of characteristics with an unproportional, those are small, medium and large so that the sampling technique is a disproportional stratified random sampling. respondents of this study consisted of age 31-40 years as many as 46 people, aged 20-30 years as many as 38 people and aged 41-45 years as many as 15 people. 3.8. data analysis the data analysis of each community satisfaction survey method, as done, is conducted through measurement using likert scale, where each survey question for each element is given a value then calculated using the "weighted average value" of each service element. processing of survey data is carried out in two ways, namely processing data in a computer and processing data manually. analysis of public satisfaction in dpmptsp naker of pangkalpinang city 52 4. results the community satisfaction index survey was conducted with the aim to find out how the performance of dinaspenanamanmodalpelayananterpadusatu pintudantenagakerjaof pangkalpinang towards service recipient communities, and then the results will be used as a basis for making and establishing policies in order to improve the quality of public services. the results of survey calculations are obtained from the respondents' answers to the questions on the questionnaire that has been distributed. the question is about the satisfaction of licensing conducted by the community when managing licenses, which consists of: 1. requirements element, that is requirements that must be fulfilled in the management of a type of service, both technical and administrative requirements. 2. procedure element, that is the standardized service procedure for the giver and recipient of the service, including complaints. 2. service time element, that is the period of time which needed to complete the entire service process of each type of service. 3. cost / tariff element, that is the fees charged to service recipients in managing and/or obtaining services from the provider, the amount of which is determined by agreement between the provider and the community. 4. the results of services which is given and received in accordance with the stipulated provisions. service products, that the results of each type of service specification. 5. implementer competency element, that is the abilities that must be possessed by the executor include knowledge, expertise, skills, and experience. 6. implementer behavior element, that the attitude of officers in giving services 7. elements of handling, complaints, suggestions, and input, that is procedures for handling complaints and following up. 8. facilities and infrastructure element. the facility element is everything that is used as a tool in achieving the aims and objectives, while the infrastructure element is everything that is the main support for the implementation of a process (business, development, project). means are used for moving objects (computers, machines) and infrastructure for immovable objects (buildings). satisfaction of licensing services at dpmptsp naker of pangkalpinang is calculated using the community satisfaction index, community satisfaction surveys can be seen in table 2. table 2 results of the community satisfaction survey no service elements nrrb eleme nt weighted nrr /element weighted nrr ikm ikm service unit service quality 1. requirements 3,193 0,354 3,374 84,36 b(good) 2. system, mecanism and procedures 3,202 0,355 3. time service 3,211 0,356 4. cost/tarriff 3,767 0,418 5. spesific product of service type 3,269 0,363 6. implementer competency 3,233 0,359 7. impelementer behaviour 3,300 0,366 8. handling complaints, suggestion or input 3,596 0,399 9. facility and infrastructure 3,628 0,403 source:data processed (2018) afebi management and business review (ambr) vol.03 no.02, december 2018 53 based on the results of the community satisfaction survey in dpmptsp naker of pangkalpinang has a service unit community satisfaction index of 84.36 percent, which is included in the category of service b or good with a weighted average value (nrr) of community satisfaction index is 3.374. the following are the nrr values of service elements and rank of each service element: 1. cost/tariff (u4) amounted to 3,767. results of respondents' answers in 2017 the percentage of respondents who answered the criteria for good and very good are 77.75 percent and there is 2.95 percent provide answers with criteria that are not good. in 2017 an element of cost/tariff ranked 8th with an average rating of 3.12, while in 2018 the average value of 3.76 means that there is an increase in respondents' satisfaction with service in the element of cost/tariff is 0.63 and is ranked 1 out of all elements of service evaluation. this condition illustrates that costs which is imposed on service recipients in managing and/or obtaining service from the organizer, the amount of which is determined by agreement between organizers and the community does not burden the community and them willing to pay with the amount specified. 2. facility and infrastructure (u9) amounted to 3,628. when compared between 2017 and 2018 the results of the assessment indicate that in 2017 respondents gave an assessment of satisfaction with the criteria for good and very good for the facilities and infrastructure were 94.28 percent and 2018 amounted to 96.88 percent, meaning that there was an increase in facilities and infrastructure such as computers, pleasant waiting rooms, and adequate parking spaces so that people are satisfied with the elements of the facilities and infrastructure when they take care of licensing. 3. handling complaints, suggestion and input(u8)amounted to 3,596. 4. elements of handling, complaints, suggestions and feedback, namely procedures implementation of complaint handling and follow-up. in general the answer respondents in the service satisfaction survey results on the element of handling, complaints, suggestions, and inputs with good and very good criteria of 98.21 in 2017 and 96.52 for 2018, meaning a decrease of 1.69 percent, but in the second year no respondent gave the answer with criteria is not good. this means that every handling, complaints, suggestions and input, and procedures for implementing complaints handling and does not continue to provide a solution to what is complained by community or the respondent. for the future, it will be better if the complaint not only manually or personally but can be done through media technology, such as e-mail, website or complaint telephone number. 4. implementer behavior(u7)amounted to 3,300. both in 2017 and 2018 no respondent gave an assessment to the element of service behavior with criteria not good, there was 94.47 percent and 99.55 percent give an assessment of very good and good criteria, meaning that there was an increase of 5.08 percent for 2018. results the increase indicates that the attitude of the officer in giving service is very good and acceptable to the community when they are take care of licensing. 5. specific product of service type (u5) amounted to 3,269. respondents gave an assessment with very good and good criteria in 2017 there were 97.86 percent and no respondents gave criteria for answers are not good so the results of the assessment place elements service satisfaction for service-specific products is ranked 7th with an average value of 3.18. when compared with 2018, there are increasing service satisfaction from the community for these elements is equal to 0.081. this means that the community has received a good type of service given in accordance with the stipulated provisions of each type specification service. 6. implementer competency (u6) amounted to 3,233. the survey results of the respondents in those two years were known to none respondents who gave answers with criteria that were not good. generally it is known that the respondent gave as many goods and very good answers 99.11 percent in 2017 analysis of public satisfaction in dpmptsp naker of pangkalpinang city 54 and 98.93 percent in 2018. this situation reflects that element of implementing competency, namely the ability that must be owned by the executor including knowledge, expertise, skills and experience is good but care or development needs to be done especially the skills and expertise in the field of communication and information, especially for new implementing staff (employees). 7. time service (u3) amounted to 3,211. in 2017 the average value of the service time is 3.12, whereas in 2108 it increased to 3.21, there was an increase of 0.82 and in both years there were no respondents who gave the answer with criteria is not good. this result shows that the office dinas penanaman modal pelayanan terpadu satu pintudan tenagakerja of pangkalpinang, has been able to shorten the time current service compared to the previous year, this condition is an impact that the community or respondents who are taking care of licensing have complete understanding of the required requirements quickly so that make it easier for officers to provide services and ultimately speed up service time. 8. system, mechanism, and procedure(u2) amounted to 3,202. judging in 2017, this service element is ranked 5th with the average value is 3.24, when compared to 2018 there is a decline amounting to 0.04. a total of 96.78 respondents answered questions on the questionnaire which was distributed with good and very good criteria, but in 2017 there are 0.8 which give bad answers, and this does not happen in the year 2018. this shows that the offices dinas penanaman modal pelayanan terpadu satu pintudan tenagakerja of pangkalpinang in 2018 has simplified elemental services systems, mechanisms, and procedures that include service procedures standardized for providers and recipients of services, including complaints so better than the previous year. to make it easier for the community in understanding systems, mechanisms and procedures in the following years, details of this element should be displayed in the form of more images communicative and there are officers who provide information about these elements when the community is conducting licensing arrangements. 9. requirement (u1) amounted to 3,193. refer to the answers obtained from respondents in 2018 with the most results on good criteria, then this means that the respondent those who manage to license for 2018 feel the requirements licensing arrangements are not difficult and can be easily completed. if compared to the results of the 2017 survey, a percentage increase occurred the number of respondents who gave good and very good criteria in the year 2018 by 0.9 percent. increased service satisfaction on the element of requirements which includes conditions that must be met in the management of a type of service, both technical and administrative requirements have been made efforts increasing information provision to the people who will do it management of these permits by attaching the types of prerequisites service on bulletin boards or information boards at the office. 5. discussion 5.1 correlation between service satisfaction and requirement elements (u1) with system, mechanisms and procedures elements(u2) to find out how much the correlation between requirements elements (u1) with system, mechanisms and procedures elements (u2), using chi-square analysis, the following results are obtained. afebi management and business review (ambr) vol.03 no.02, december 2018 55 table 3 table of chi-square analysis chi-squaretests value df asymptotic rsquare significance (2-sided) pearson chi-square 221,988a 4 ,000 0,75 likelihood ratio 188,123 4 ,000 linear-by-linear 167,305 1 ,000 association n ofvalid cases 224 a. 5 cells (55,6%)have expected count less than 5. the minimum expected count is ,03. source: data processed (2018) based on the test results it is known that the significance level of the two elements is 0,000 means 0.00 <0.05, and the r2 value is 0.75, which means that there is a correlation between the preconditions and systems, mechanisms and procedures amounted to 75 percent. this shows that if the requirements set for administration of license applications are easily completed, so the system, mechanism, and procedures which will be conducted will also be easier. 5.2 correlation between time service element(u3)with implementer competency(u6) to find out how much the correlation between service time element (u3) and implementer competencies (u6) using chi-square analysis, the following results were obtained: table 4 results of chi-square analysis chi-squaretests value df asymptotic significance (2-sided) rsquare pearson chi242,132a 4 ,000 0,783 square likelihood ratio 229,641 4 ,000 linear-by-linear 174,516 1 ,000 association n ofvalid cases 224 a. 4 cells (44,4%)have expected count less than 5.the minimumexpected countis ,10. source: data processed (2018) based on the test results it is known that the significance level of the two elements is 0,000 means 0.00 <0.05, and the r2 value is 0.783 which means that there is a relationship between service time (u3) and implementer competency (u6) amounted to 78.3 percent. this shows that if the service time is fast or good, it means that the competency of the implementer has been running well and has alertness, speed, and accuracy in serving licenses. analysis of public satisfaction in dpmptsp naker of pangkalpinang city 56 5.3 correlationbetween spesific product of service types (u5) and implementer behaviour(u7) to find out how much the correlation between specific product of service types (u5) and implementer behavior (u7) using chisquare analysis obtained the following results: table 5 result of chi-squareanalysis u3 and u6 source: data processed (2018) based on the test results it is known that the significance level of the two elements is 0,000 means 0.00 <0.05, and the value of r2 is 0.865 which means that there is a correlation between the specific product of service type (u5) and implementing behavior (u7), amounted to 86.5. the conclusions are concluded that the higher the specific product of service type, the better behavior of the implementer. 6. conclusion based on the results of a survey which has conducted at dinas penanaman modal pelayanan terpadu satu pintu dantenaga kerjaof pangkalpinang in the first semester of 2018, it can be concluded as follows: 1. service element which has the lowest value is requirement element (u1) amounted to 3,193 and the highest value is cost / tariff element (u4) amounted to 3,767. 2. the community satisfaction survey at dinas penanaman modal pelayanan terpadu satu pintudan tenagakerja of pangkalpinang has a weighted nrr amounted to 3.374 converted in the community satisfaction index of the service unit amounted to 84.36, which is categorized as b or good 2. bivariant tests are conducted using r square and chi-square. the results of r square service satisfaction between requirements element (u1) with system, mechanism and procedure element (u2) amounted to 75 percent, service time element (u3) with implementer competencies element (u6) amounted to 78.3 percent, and specific product or service type (u5) and implementer behavior (u7) amounted to 86.5 percent, with a significant level of chi-square test amounted to 0.00 or 0.00 <0.05. references agustina, s. 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hakim1*, lindawati kartika2, and zuraina dato’ mansor3 1,2 bogor agricultural university, bogor, indonesia 3 university of putra malaysia, serdang, malaysia abstract indonesian cooks is a kind of job that has a great potential to be developed, considering the high enthusiasm for indonesian dishes in malaysia and the popularity of indonesian food in the world. this research aims to analyze the condition of compensation system currently applied to indonesian migrant workers at cooks job cluster in kuala lumpur, as well as to identify the compensable factors, and to analyze the ideal compensation system. data used in this research are primary data (questionnaire) and secondary data (literature study). this research used descriptive analysis, salary mapping analysis, point system method, and linear regression test in order to process the data. result of the research shows (1) the evaluation result of indonesian migrant cooks’ salary distribution has not been ideal entirely; (2) compensable factors that used are knowledge and skill, organizational capabilities, self reliance, self presentation, responsibility of supervising, responses to critics, and the influence of work result; (3) the ideal compensation system for indonesian migrant cooks in kl is non classification system based on hay plan method, which the required funding is more efficient with amount rm 4,036.99 or about rp.12,918,368.00. keywords: compensation system, indonesian migrant workers 1. introduction asean economic community (aec) is an economic integration agenda from asean member states that aims to reduce economic barriers among southeast asian states. began in early 2016, aec ensures the free flow of investment, capital, skill workers, goods and services in 10 asean member states. according to a research by international labor organization (ilo) in 2015, aec will increase the demand of professional workers as much as 41% or approximately 38 million workers, the demand of middle level workers 24% or 14 million workers, and for low level workers, 24% or 12 million workers. the increased demand for workers is an opportunity for asean member states to solve the domestic unemployment problem in some states. accounted as the world's fourth largest population, indonesia is also accounted as one of the world's largest exporter of labours amongst the asean members. according to act no.39 year 2004, indonesian migrant worker is every indonesian citizen who are eligible to work abroad under the status of employment * corresponding author. email address: afrisca.azhak@gmail.com mailto:afrisca.azhak@gmail.com afebi management and business review (ambr) vol.02 no.02, december 2017 18 for a certain period of time with a wage. indonesian migrant workers are often referred as foreign exchange heroes since their remittances from working abroad, is second in line after the income from oil and gas sector for contributing about 10% of the value of the indonesia’s state budget (bank of indonesia, 2013). however, the high remittances of these migrants cannot be compared to the situation and conditions that they have to undergo, such as assault, unpaid wages, and so on (bnp2tki, 2015). in responding to this, the government of indonesia has attempted to improve the protection of indonesian migrant workers by reducing the number of informal migrant workers annually. it is supported by moratorium regulations, which functions to temporarily reduce the influx of workers abroad as well as to reduce the number of indonesian workers in informal sectors in several countries. according to bnp2tki (the national institution of indonesian migrant placement and protection) indonesian informal migrant workers refer to those who are working abroad for individual employer with the absence of a binding law that leads to a subjective working relations and vulnerability towards complication. a large number of indonesian informal workers caused by the low level of education in indonesia. this is shown in figure 1. figure 1 human resources quality in indonesia and other countries (source: ministry of trade of the republic of indonesia, 2016) based on figure 1, human resources in indonesia are still dominated by education at a base level of 70.40%. comparing to other southeast asia countries such as malaysia, indonesia is still slightly behind from dominating the growing industries, and still developing on the light medium level industry. indonesia and malaysia are two member states of asean with common roots, history, and geographical proximity. in terms of indonesian migrant workers, malaysia serves as one of their primary destination from 2011 to 2015. this is shown in figure 2. analysis of compensation system based on job value of indonesian cooks in kuala lumpur 19 figure 2 placement of indonesian workers in foreign countries in 2011-2015 (source: bnp2tki, 2015) among the other destination countries both in southeast asia and in the world, malaysia is occupying the first position as a destination country with the largest number of migrant workers. in 2008, malaysia was also the main destination for migrant workers in southeast asia (kaur, 2008). the ease of getting a job, higher salary, various work opportunities, and geographical proximity attract many indonesian workers both in formal or informal sector to seek an opportunity in malaysia. it supported by the study of mansor (2014) who discovered that employee willingness to accept international assignment can be affected by their assumptions about cultural similarity between their home country and the host country. kaur (2008) found that the reason of indonesian workers migrating to malaysia is because of the similar language, culture, and religion. martin (2003) also revealed the factors which encourage people to migrate are the economic and non economic reasons both in terms of the attractiveness of labor demand, labor supply encouragement, and information transformation network. as previously mentioned, sending indonesian workers to work abroad have indeed contributed to the state’s budget, but not only that, they also reduce the number of unemployment, increase foreign exchange, as well as the development of rural areas of their origin (republika.co.id, 2015 and tribunnews.com, 2013). however sending workers abroad also inflicted a lot of problems such as assault, sexual harassment and even murder as they are often despised due to their job as domestic workers (voaindonesia.com, 2015). in malaysia, indonesian migrant workers are mostly working on the 3d sector known as dirty, dangerous and difficult such as construction, plantation and restaurant services sector, as most malaysians detest to work in this 3d sector (bbc.com, 2016). in 2015, ministry of manpower of the republic of indonesia issued a regulation (ministry of manpower’s regulation no.1 /2015) regarding the change of the classification of 7 informal working fields to formal work for migrant workers, one of them is as a cook. indonesian cook is one of the jobs with highest development potential. this is supported by the popularity of indonesian culinary that offers combination of peculiar spices and taste. some indonesian dishes have been praised as the most delicious food in the world, such as rendang and nasigoreng (fried rice) that placed first and second as the world's most delicious food according to world's 50 best food in 2011. satay, another indonesian original dish, also successfully placed in the 14th position of world's best food according to cnn in 2011. world's enthusiasm for indonesian food is very significant, including in kuala lumpur. in this recent times, ayam penyet, a dish originating from java, has greatly been demanded. ayam penyet dishes even have become a franchise business with many 0 100000 200000 2011 2012 2013 2014 2015 malaysia singapore brunei d afebi management and business review (ambr) vol.02 no.02, december 2017 20 different brands such as ayam penyet ap which has 26 outlet branches in malaysia and ayam penyet ria which has 9 outlet branches in malaysia, and many more ayam penyet brands in malaysia (antaranews.com, 2011 and finance.detik.com, 2014). this indicates that indonesian cook is a potential job to be developed in malaysia especially in kuala lumpur. 2. literature study human resource is the most valuable asset which has the greatest potential in determining the performance and achievement of an organization. some studies related to the analysis of the compensation system are done considering the importance of compensation for human resources in companies and in order to achieve success in a company itself. at the previous research, hatman (20016) found that the compensation system in cv. indopress cemerlang still needs improvement. 50% levels of the job are not in ideal condition. compensable factors in cv. indopress cemerlang are experience, responsibility to supervise, consequences of errors, problem solving, working condition and level of independence. another research which conducted by yusliana (2012) also found that there were 16 indicators which used to determine the amount of incentives for education personnel who are civil servants in the bogor agricultural university. assessment of work quality has the greatest weight than other indicators. in 2013, safdar also found that the compensable factors which used at the job evaluation for humanitarian actors in health sector of pakistan were experience, education, working zones, and job status. the proposed salary of doctors in various specialization was varying from minimum to maximum salary. data at safdar’s research had poor coordination with scoring system. staff with highest score was having least salary and those having least score were receiving maximum salary. safdar’s research also suggests a new salary structure. based on some previous studies, such the studies which had been carried out by hatman, yusliana, safdar, it is obtained that the compensation system in several companies is not yet ideal. it implies that the internal equity has not been reached on some of those conditions. the previous studies also found the factors which underlying the nominal payroll in specific type of job that had been studied. based on previous researches by hatman, yusliana, safdar, and sun, and the presence of ministry of manpower's regulation no.1/2015 which stated that cooks is one of the jobs which will be enhanced from informal to the formal sector or later indonesian cooks will work with employers who incorporated in legal entities, author is interested to do a research regarding compensation system analysis based on job value of indonesian migrant for cooks job cluster in kuala lumpur, malaysia. this study focuses on the assessment system of compensation received by tki cook at home industry level who work in kuala lumpur, malaysia. 3. research methodology sampling method sampling method in this research is non probability sampling with purposive sampling techniques and convenience sampling. the sample numbers in this study were 14 experts, and 30 samples of indonesian cooks. the sample used analysis of compensation system based on job value of indonesian cooks in kuala lumpur 21 as resource persons in this study include: (1) one representative from expert assessor of indonesian chef association; (2) one representative from owner of the restaurant in indonesia (3) one human resources management expert (the expert lecturer of human resource management, university of indonesia); (4) 11 shop owners that employ indonesian cooks of home industry level in kuala lumpur, malaysia; (5) 30 indonesian migrant workers who works as cooks in home industry level, kuala lumpur, malaysia. statistical descriptive analysis according sugiono (2010) descriptive statistics are statistics which used to analyze data by describing the data that has been collected without intention to create a generally applicable conclusion. salary mapping analysis salary mapping analysis is used to determine the percentage of the range spread and mid to mid in every level of existing positions. the good conditions of salary structure is the condition where the presentation of mid to mid is smaller than the percentage of range spread in a position level. point system method through the point method, appraisers allocate the numeric values towards the job specific factors, and the numbers of these values provide a quantitative assessment of the relative job value (mondy 2008). point system method steps that were taken this study include: 1. choose the work group 2. identify the compensable factors 3. determine the level and define every compensation factors 4. determine the weight of factors weighting techniques used in this study is the eckenrode weighting method. 5. determine the factor point value 6. validate the point system 7. calculate the job point of workers 8. determine the price of works 9. calculate the pay ranges 10. calculate the pay grades 11. adjustments points system will indicate the actual salary conditions: a. under paid, indicating that actual salaries are lower than the bottom margin salary b. in paid, indicating that actual salaries are in the right position, which is located between the bottom and the upper margin salary c. over paid, indicating that actual salaries are higher than the upper margin salary 12. ideal compensation system making at the under paid a salary, actual salaries should be increased to the bottom margin salary. in paid salary does not need to be changed or adjusted because it is in the right conditions. the over paid salary could not be changed, because every salary could not be downgraded. collect data the research was conducted in kuala lumpur, malaysia in january 2016 april 2016. data used in this research were primary and secondary data. the questionnaire in this study is divided into two types. the first type of questionnaire afebi management and business review (ambr) vol.02 no.02, december 2017 22 was aimed to determine the rating of compensable factors, this was distributed to the experts. the second type of questionnaire was distributed to indonesian workers on cooks job cluster at home industry level in kuala lumpur in order to know the aspects of workers’ compensation received. in this research, secondary data are taken from ministry of labor of the republic of indonesia and the bnp2tki, the indonesian embassy in malaysia, books, internet, theses and the relevant journals. 4. results the main object of this research is the indonesian migrant workers who work as a cook at home industry level or equivalent with smes or shops in kuala lumpur, malaysia. the indonesian cooks who become samples in this research work for the shops at chow kit, kampung baru and kampung bandan area of kuala lumpur, malaysia. the compensation system condition of indonesian migrant workers at cooks job cluster in home industry level, kuala lumpur according to survey which conducted by researcher, indonesian cooks in kl at home industry level have an average basic salary of rm 1,642. overall, the indonesian cooks receive a fixed allowance for meal, and holiday allowance, but not all indonesian migrant workers who work as cook receive bonus, as it is dependent on the policy of shop owner. this could be seen in table 1. table 1 the condition of compensation component which received by indonesian cooks at home industry level in kuala lumpur 2016 position total person basic salary the average of basic salary % of total receiver (person) rm rp rm rp direct financial compensation indirect financial compensation s a la r y w a g e c o m m is si o n b o n u s m e a l h o li d a y a ll o w a n c e h e a lt h cooks 21 1,200 3,000 3,840,000.00 9,600,000.00 1,731 5,539,000.00 100 38.1 0 38.1 100 100 57.1 senior cooks assistant 7 1,100 2,100 3,520,000,00 6,720,000.00 1,414 4,524,800.00 100 14.29 0 14.2 100 100 71.4 junior cooks assistant 2 1,500 4,800,000.00 1,500 4,800,000.00 100 0 0 50 100 100 100 total 30 source: data processed (2016) table 1 explains that indonesian cooks at home industry level in kl have a basic salary that is already above the workers minimum wage in malaysia which is rm 900 based on the agreement between the government of malaysia and indonesia (finance.detik.com, 2015), but not all of indonesian cooks receive the complete remuneration package. from 21 positions of cooks position and seven senior cooks assistant, there are eight cooks and one senior cooks assistant analysis of compensation system based on job value of indonesian cooks in kuala lumpur 23 where their workplace applies wage system through the implementation of overtime and bonuses when the shop get many visitors. from the total sample of indonesian cooks, there are 19 cooks who received health reimbursements from the shop owner when they get ill. the salary mapping of indonesian cooks in kuala lumpur, 2016 the condition of compensation system which currently implemented on indonesian migrant workers at cooks job cluster for home industry level in kuala lumpur is able to be observed from the salary mapping based on job position. table 2 salary mapping result job position total person total salary (rm) actual (rm) actual explanation min average max mid to mid spread cooks 21 44,003 1,35 8 2,095.38 3,375 21.36 % 148.53 % ideal, but the range spread is very large senior cooks assistant 7 12,086 1,40 8 1,726.57 2,408 6.57 % 71.02 % ideal, but the mid to mid percentage is less appropriate because it is negative junior cooks assistant 2 3,696 1,80 8 1,848.00 1,888 4.42% ideal source: data processed (2016) table 2 explains that the spread value on the actual compensation condition for cooks position is ideal, for it is greater than mid to mid value (148.53% > 21.36%). mid to mid which is smaller than the spread indicates that the salary increase that occurred on the job level is not too extreme. but the spread value that still less suitable due to the spread value in these conditions is very large which is more than 100% and dispersed at every position level, where the spread value at cooks position is more than 100%. it describes the respondents’ salary distribution are considerable enough for every job level in cooks job cluster, therefore it is less than ideal and should be fixed. moreover, the mid to mid value for senior cooks assistant is also less suitable as its value is negative, where mid to mid value should be positive. the negative value is caused due to the average salary value of the lower positions is greater than the average salary value of the senior cooks assistant (1,848.00 > 1,726.57), and it should be revised. afebi management and business review (ambr) vol.02 no.02, december 2017 24 5. discussion job value calculation of indonesian cooks in kuala lumpur 2016 in this study, compensable factors are formulated based on the hay plan method, cooks’ appraisal on form chef resources official website www.chefsresources.com, and indonesian government regulation on kep.217/men/vii/2009 on skkni social services sector and individual services sector enterprises food. compensable factors are sorted from the most important to least important factor by experts through questionnaires. the results of compensable factors rating is then used to calculate the weight of job value using eckenrode methods. table 3 the result of point system factor weight level 1 2 3 4 5 knowledge and skill 27.78 27.78 90.29 152.79 215.30 277.80 self presentation 14.24 14.24 56.96 99.68 142.40 organizational capabilities 16.32 16.32 53.04 89.76 126.48 163.20 responses to critics 9.72 9.72 38.88 68.04 97.20 self reliance 15.28 15.28 61.12 106.96 152.80 responsibility of supervising 13.89 13.89 55.56 97.23 138.90 the influence of work result 2.78 2.78 15.29 27.80 source: data processed (2016) table 3 shows that knowledge and skills factor is a main aspect which is used in hiring indonesian cooks. furthermore, the weight of each level at every compensable factor was used to analyze the job value of every indonesian cooks that will be examined by processing the questionnaire results. points system for job position on indonesian cooks in kuala lumpur 2016 to determine the value of the job point on every worker who works as cooks at each position, the researcher analyze the job value of every aspect through questionnaires that has been given to indonesian cooks. job value aspects are analyzed and rated in accordance with the result of the points system at every level of compensable factors which is obtained in the preceding stage. analysis of compensation system based on job value of indonesian cooks in kuala lumpur 25 table 4 job point of indonesian cooks at home industry level in kuala lumpur 2016 no name location of work position job point no name location of work position job point 1 r1 kb1 c 792.26 16 r7 ck2 c 433.64 2 r2 kb1 c 792.26 17 r26 ck1 c 371.14 3 r17 ck4 c 772.48 18 r27 kb4 c 371.14 4 r16 ck4 c 670.37 19 r24 kb3 c 337.79 5 r3 kb2 c 649.54 20 r12 ck3 c 337.79 6 r9 kb4 c 603.7 21 r11 ck3 c 308.63 7 r4 kb3 c 587.03 22 r23 kb2 sca 430.51 8 r5 ck1 c 582.86 23 r14 kb5 sca 387.79 9 r19 ck4 c 563.08 24 r15 kb5 sca 384.67 10 r18 ck4 c 562.03 25 r13 ck3 sca 341.95 11 r6 ck2 c 548.24 26 r28 kb6 sca 306.29 12 r8 kb4 c 541.19 27 r25 kb3 sca 299.23 13 r21 ck4 c 510.98 28 r22 kb1 sca 279.44 14 r10 kbd1 c 489.62 29 r30 kbd1 jca 230.21 15 r20 ck4 c 448.48 30 r29 ck1 jca 224.21 notes. r= respondent; kb= kampung baru; ck= chow kit; kbd= kampung bandan; c= cooks; sca= senior cooks assistant; jca= junior cooks assistant source: data processed (2016) table 4 shows that the cooks has the highest value of job point. this is due to the skills, abilities, and high capacity of cooks that also possess a significant value to the results of the job point analysis of the cooks. table 6 also depicted that the position of junior cooks assistant has the lowest value the job point. it is due to the skills, abilities, and capacity which are low in this position create the value of the job point analysis of jca position become low. the job value effect toward actual salaries of indonesian cooks in kuala lumpur 2016 through the regression analysis after obtaining the job point value of every cooks worker, the next step is finding the linear equations by using the job point as the variable x and actual salaries (all-in) as the variable y. afebi management and business review (ambr) vol.02 no.02, december 2017 26 table 5 regression analysis between job point and actual salaries coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 1108.368 226.921 4.884 .000 job point 1.874 .455 .614 4.116 .000 a. dependent variable: actual salaries source: data processed (2016) table 5 shows that the regression equation to see the effect of job value on actual salaries of indonesian cooks is y = 1108.368 + 1.874059x. this equation shows that if the job point of indonesian cooks increase for 1(one) unit, the actual salaries will rise to rm 1.874059. the regression y = 1108.368 + 1.874059x shows that the actual salaries which is showed as y variable is depends on job point as the x variable. if the job point is lower, the actual salaries will show the lower value too. if the job point has an increasing value, the actual salary should be rise up. then, the regression equation is used to calculate a midpoint salary of each position to determine the value of the bottom margin and the upper margin salary of each position. non classification of compensation system midpoint salary in this study was obtained by the formula y = 1108.368 + 1.874059x. pay ranges of indonesian cooks is 3% which derived from the average of salary increase received by workers. interval bottom margin of salary and the upper margin salary of indonesian cooks is 6%, where the bottom margin of salary is 97% of the midpoint salary, and the upper margin salary is 103% of the midpoint salary. to this extend, the salary received by indonesian cooks can be categorised into three condition; in paid or appropriate, over paid and under paid. the detail results of indonesian cooks compensation condition by non classification calculation could be seen table 6. table 6 analysis of non classification salary structure position total person up ip op cooks 21 10 3 8 senior cooks assistant 7 5 0 2 junior cooks assistant 2 0 0 2 total 30 15 3 12 notes. up=under paid; ip=in paid; op=over paid source: data processed (2016) the under paid salary should be pulled up into the bottom margin salaries as it is the minimum salary that must be paid aligned with the job value of indonesian cooks. on the other hand, the over paid salary shall remain as it is analysis of compensation system based on job value of indonesian cooks in kuala lumpur 27 essentially the employee’s salary and cannot be downgraded, but it could be resolved by extending the work of the migrant workers in order to balance out the over paid salary. in the previous research, pandey (2012) found that people and their motivation is dependent upon how well they are being paid. trevor (2006) also found that pay dispersion had stronger negative effects on satisfaction and commitment for those who had lower salaries. therefore the adjustment salary which calculated based on job evaluation was needed to enhance the external and internal consistency. adjustment of ideal salary is conducted in order to diminish the imbalance of salaries ranging from the bottom margin of salary and the upper margin of salary or in paid. adjustments are made to raise the upper margin of salary range by 41% that is obtained by multiplying midpoint salary by 144%. under the non classification system of compensation, the total actual salaries that are issued monthly for indonesian cooks amounte to rm 59.785 for the total of 11 shops which employ indonesian cooks (the total of 30 indonesian cooks). through the ideal compensation for non classification system, total salaries which necessary to be issued in a month amounted to rm 63,821.99 for the total of 11 shops for also the total of 30 indonesian cooks which are being the sample respondent in this research, where the number of difference between the ideal salary and the current salary which not appropriate is amounted to rm 4,036.99 for seven shops that employ indonesian cooks which the salary is identified in under paid condition. the classification of compensation system in providing a comprehensive research, the compensation system is also calculated with the classification system to compare the results between the non classification and classification calculations in order to show the most efficient alternative in solving the loopholes of the existing compensation system. pay ranges used in figure 7 is 6%, where the bottom margin of salary is 97% of the midpoint salary, and the upper margin of salary is 103% of the midpoint salary. it is obtained from the average increase salary for indonesian cooks, that is 3%. the result of the classification of compensation system is shown in table 7. table 7 the result of classification compensation system group total up ip op iii 6 4 0 2 ii 11 4 5 2 i 13 4 0 9 total 30 12 5 13 notes. up=under paid; ip=in paid; op=over paid source: data processed (2016) table 7 expalins there are 12 indonesian cooks whose salary are in under paid condition, 5 indonesian cooks that are in paid condition, and 13 indonesian cooks with the overpaid conditions of actual salary. this step is followed by salary adjustment of indonesian cooks which indicated in under paid condition. adjustments are made by tugging the under paid salaries to be in paid into the afebi management and business review (ambr) vol.02 no.02, december 2017 28 bottom margin salaries and raise the upper margin of salary for 47%. upper margin of salary is 150% of the midpoint salary. after being adjusted, all salaries are in the condition of in paid or appropriate in the range between the bottom margin of salary and the upper margin of salary. total salary issued on the actual conditions in which many indonesian cooks salaries are in unsuitable conditions is amounted to rm 59.785 for the total of 11 shops which employ indonesian cooks. in order to achieve the ideal system of classification, the total compensation that needs to be issued must amount to rm 64,733.07 monthly per the total of 11 shops that employ 30 indonesian cooks. the gap between ideal salary and the current salary is inappropriate as it amounts only rm 4,948.07 for eight shops that employ indonesian cooks in which the salary have been indicated in the under paid condition. 6. conclusion managerial implications based on the analysis of this study, indonesian cooks’ salary are already above the minimum salary policy of indonesian workers in malaysia, but have not reached the average salary standard based on the salary survey that was conducted with a calculation of the compensation system on the existing of indonesian cooks in kl. indonesian cooks salaries which are on under paid condition should be increased, therefore the job value will appropriate through the salary amount and achieve the equity. the difference details of actual salary received by indonesian cooks, the ideal of non classification salary, and the ideal of classification salary could be seen in table 8. table 8 the difference of actual salary received by indonesian cooks in 2016, ideal salary based on non classification system and the ideal salary based on classification system actual salary amounts of indonesian cooks in february,2016 (rm) the ideal salary through non classification system (rm) the ideal salary through classification system (rm) total salary 59,785 63,821.99 64,733.07 difference in price *4,036.99 4,948.07 notes. * the most efficient of ideal compensation system source: data processed (2016) the difference of the actual salary received by indonesian cooks in february 2016 with the the ideal salary through non classification system has the lowest gap when its being compared through the gap of the ideal salary of classifications which amounts to rm 4,036.99 or about rp.12,918,368.00. it concludes that the more efficient ideal compensation system to be applied in revamping of the existing compensation system for indonesian cooks is compensation based on non classification system, because it has the smallest amount of difference, therefore it most likely to be achieved. this is also analysis of compensation system based on job value of indonesian cooks in kuala lumpur 29 strengthened by the fact that a shop at home industry level have a slight different capacity, therefore the compensation system with the classification analysis would be difficult to be applied for the aggregates or clusters calculation as done in this study. in order to enhance the competitiveness and productivity, the shop owner may use the results of compensation based on salary surveys that have been done throughout this study, where the shop owners who employ indonesian cooks which are identified in under paid condition are expected to increase the salaries of cooks with a total of rm 4,036.99 for 7(seven) shops per month where the details is shown in table 9. table 9 the details of total funding for adjustment based on ideal compensation system of non classification for indonesian cook in kl, 2016 source: data processed (2016) table 9 shows the shops of kb2, kb3, kb4, kb5, ck1, ck2, and ck4 have indonesian cooks which the salaries are under paid, so it is advisable to increase the salaries of indonesian cooks with the funding amount in table 11. additionally, based on the calculation of non classification compensation system of job value on the sample of indonesian cooks in kl by salary survey that have been conducted by researcher, the ideal average of bottom margin salary and the upper margin salary (all in/includes meal and allowances) and the ideal basic salary of indonesian cooks at home industry level in kl could be seen in table 10. shop total operational cost for employee adjustment (rm/month) kb2 914.60 kb3 706.69 ck1 376.37 ck2 719.13 kb4 553.52 kb5 662.32 ck4 104.36 total 4036.99 explanation: kb2= kampung baru 2 (second shop which is located in kampung baru as the sample in this research that employ indonesian cooks); kb3= kampung baru 3; kb4=kampung baru 4; ck1= chow kit 1; ck2= chow kit 2; ck4= chow kit 4 afebi management and business review (ambr) vol.02 no.02, december 2017 30 table 10 the ideal salary (all in) and the basic salary for indonesian cooks in kl 2016 position ideal salary (all in) ideal basic salary average of bottom salary margin average of upper salary margin rm rp rm rp rm rp cooks 2,051.06 6,563,392.00 3,044.87 9,743,584 .00 1,743.06 5,577,792.00 senior cooks assistant 1,706.14 5,459,648.00 2,532.82 8,105,024.00 1,398.14 4,474,048.00 junior cooks assistant 1,488.15 4,762,080.00 2,209.21 7,069,472.00 1,180.15 3,776,480.00 source: data processed (2016) the determination of cooks’ classification could be adjusted to the rules of core competencies in skkni for social services sector and individual services sector enterprises food. the average salary at bottom margin and upper margin and also the ideal basic salary then expected to become an input and consideration for ministry of manpower of the republic of indonesia and indonesian embassy in kuala lumpur to be informed for the ideal payroll system in accordance with the salary survey conducted for indonesian migrant workers in kuala lumpur especially on cooks job cluster at home industry level which propose to enhance the external and internal equity and improve the productivity and welfare of indonesian cooks at home industry level in kl. conclusions based on the analysis, the conclusions of this study are: 1. the salary increase for each job position of indonesian migrant workers at cooks job cluster for home industry level in kl is not too extreme, but the indonesian cooks’ salary distribution are considerable enough for every job level in cooks job cluster and the existence of salary levels in several positions which are not hierarchical cause the compensation condition of indonesian migrant workers at cooks job cluster in kl has not been ideal entirely. 2. the compensable factors or the order of factors which became the basis determination of salary on indonesian migrant workers at cooks job cluster for home industry level in kl are knowledge and skill, organizational capabilities, self reliance, self presentation, responsibility of supervising, responses to critics, and the influence of work result. 3. the ideal compensation system for indonesian migrant cooks in kl is non classification system based on hay plan method, in which the required funding is more efficient with the amount of rm 4,036.99 or about rp.12,918,368.00 for 7(seven) shops that employ indonesian cooks which are identified in under paid condition. recommendations 1. the result of the analysis shows that the ideal compensation system based on non classification could be implemented by stakeholders as policies both in short and long term to increase the welfare and productivity of indonesian migrant workers at cooks job cluster for home industry level in kl. indonesian migrant cooks whose salary are identified in under paid conditions analysis of compensation system based on job value of indonesian cooks in kuala lumpur 31 should receive a salary increase in order to achieve the bottom or minimum margin salary. wherein, the indonesian cooks with overpaid salary conditions could be rectified by expanding the job, in order to create internal equity at work. 2. the results of compensation system analysis based on job value with non classification calculations could become an input and consideration for ministry of manpower of the republic of indonesia and indonesian embassy in kuala lumpur to be informed regarding the ideal payroll system in accordance with the salary survey conducted for indonesian migrant workers in kuala lumpur especially on cooks job cluster at home industry level. 3. the following research are encourage to analyze the compensation system based on job value of indonesian migrant worker in other informal job, such as driver, caregiver, babysitter, gardener, child care and housekeeper to analyze the salary that should be applied according to the job value of migrant workers abroad. references de pora a. 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[thesis]. bogor: institut pertanian bogor. influence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east 65 5influence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east niantoro sutrisno1*, h. puji isyanto2, rachmat hasbullah3 1,2,3 singaperbangsa university, karawang, indonesia abstract the purpose of this study is to identify, analyze and assess influences of teacher’s competency, motivation and job satisfaction on teacher’s performance at state junior high school 1 east cikarangbekasi regency. this research is intended to giving advice for the teacher’s competence, motivation and job satisfaction in order teacher’s performance improve. this research was using descriptive and verification method. descriptive research is used to describe characteristics of a population or phenomenon being studied. verification is the research conducted with the aim to prove the truth of a theory on a particular time and place. the results of this research are as follows: 1. range scale of teacher’scompetence isquite good, it need to be improved. 2. range scale of teacher’s motivation is quite high, it need to increased. 3. range scale of teacher’s job satisfaction is quite satisfied, it need to increased. 4. range scale of teacher’s performance is quite good, it need for improved. 5. there is a relationship between teacher’s competence and motivation. 6. there is a relationship between teacher’s competence and job satisfaction. 7. there is a relationship between motivation and job satisfaction. 8. there are both partially and simultaneously influence teacher’s competence, motivation and job satisfaction on teacher’s performance. keywords: job satisfaction, motivation, teacher’s competency, teacher’s performance 1. introduction one of the suppressions in the 1945 constitution of indonesia is to enrich the life of the nation. technically the national education system act no. 20 year 2003 article 3 states that national education has a function for developing and shaping the character and civilization of a nation that is dignified in order to enrich the life of the nation, whose purpose is to develop the potential of students to become humans that are faithful and righteous to the one almighty god, noble, healthy, scholarly, intelligent, creative, independent and become citizens that are democratic and responsible. supardi (2013:7) states that the success of a nation’s education is very determined by teachers. * corresponding author. email address: torrosoet@gmail.com https://en.wikipedia.org/wiki/statistical_population mailto:torrosoet@gmail.com influence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east 66 teacher performance is the competence of a teacher in implementing learning and responsible for students under their guiandce by increasing the learning achievements of the students. it is stated by supardi (2013:55) that teacher performance is able to be seen clearly in learning. andrew ragatz et. al. in the publication of the ministry of education and world bank publication no 53732-id (2010:2) states that low performance in the world of education is one of them caused by the low performance of teaching labor. it is not surprising that with the low performance of teaching labor or teachers there is an impact to the results of students such as what is stated in the report of jalal et. al. (2009:5) publication no.48578 that is arranged by the ministry of education and the world bank shows that education results in indonesia for the 8th grade or in the junior high school level is placed in a low ranking below international average, compared with other countries in the learning subjects of mathematics and science. the performance that is not optimal is able to be caused by several factors among others are ability, motivation and, job satisfaction where the mentioned three factors become parts from this research. competence becomes an important element for curriculum implementation in the class. a good curriculum without the support of teacher competence will not have a positive impact to performance such as summarized in the research results of rohimah (2013) that competence has an impact to performance. teachers that have job motivation will show optimal performance such as summarized from the research results of devi (2009). a characteristic of a teacher that is motivated is a teacher that is disciplined at job. discipline at job is marked by job attenandce in accorandce with what is determined. hadiyatmo (2012) in his research states that job satisfaction will impact performance. a good performance will be reached if teachers feel satisfaction in job such as stated by wibisono (2011: 138) that employee satisfaction is an important matter and directly proportional with their contribution to the corporation. 2. literature study teacher competence teacher competence is defined according the ministry regulation above chapter ii article 3 clause (1) which is stated that: “competences meant in article 2 is a set of knowledge, skill, and behavior that has to be possessed, internalized, mastered, and actualized by teachers in implementing professional tasks”. as for the competence that teachers have to possess according to the same act in chapter ii article 3 clause (2) it is stated that teacher competences meant in clause (1) consists of pedagogic ability, personality ability, social ability, and professional competence that are obtained through profession education. teacher competence dimensions as explained in the paragraph before that teacher competence consists of pedagogic competence, personality competence, social competence, and professional competence. teacher competence dimensions according to influence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east 67 government regulation of the republic of indonesia number 74 year 2008 about teachers chapter i article 1, consists of: 1. pedagogic competence dimension 2. personality competence 3. social competence 4. professional competence motivation bangun (2012:312) defines motivation as the following: “motivation comes from the word motive, which means push. therefore motivation means a condition that pushes or becomes a cause a person does an act/activity that happens consciously”. ivansevich, konopaske and matteson (2005; 143), states that there is no person that doubts the primary role of motivation in shaping behavior, and specifically in influencing job performance in organizations. furthermore ivansevich, konopaske, and matteson (2005: 148) one of the important approaches in motivation is the theory that is stated by mclelland. motivation dimensions according to nasution (2000:205), mcclelland has proposed a motivation theory that closely relates with the learning concept. he is confident that most needs come from culture. three of the needs that are studied are the need for achievement, need for affiliation, and need for power. job satisfaction with job satisfaction an employee is able to feel if his/her job is pleasing or not pleasing to be done. dermawan wibisono (2011 ; 138) states that employee satisfaction becomes one of the important factors and is directly proportional with their contribution to the corporation. that will increase the efficiency and effectiveness of the corporation that implicates to the corporation’s performance increase robbins (2001; 139) defines job satisfaction as the following: “referring to the general attitude of an individual to his/her job. somebody with a high job satisfaction level shows a positive attitude to that job; somebody that is not satisfied with his/her job shows a negative attitude to his/her job. if people speak about employee attitude, more often they mean job satisfaction”. job satisfaction dimensions for knowing that employees feel satisfied, the dimensions have to be known. robbins (2001; 149) explains factors that determine job satisfaction as the following: 1. jobs that are mentally challenging 2. rewards that are worth it 3. supportive job condition 4. supportive co-workers 5. conformity between personality-job teacher performance in an operational level, teachers are a determinant of education success through their performance in the institutional, instructional, and experiential levels influence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east 68 teachers are human resources that are able to leverage other factors so excellent learning is created and become a primary factor that determines education. according to husdarta in supardi (2013:54) teacher performance in learning becomes the most important part in supporting the creation of the education process effectively especially in developing a disciplinary attitude and quality as a result of the learning of students. teacher performance is the ability of a teacher in implementing the learning task and responsible for students under their guiandce by increasing the learning achievements of the students. because of that, teacher performance is able to be defined as a condition that shows the ability of a teacher in implementing their tasks and illustrates the presence of an act that teachers show in or as long as implementing the learning activity. teacher performance dimensions teacher performance dimensions impliedly is in the acts of the republic of indonesia number 14 year 2005 about teachers and lecturers chapter iv article 20 clause (a) namely in implementing professional tasks teachers are obliged to plan learning, implement the excellent learning process and judge and evaluate learning results. meanwhile supardi (2013:23) defines teacher performance is the ability and success of teachers in implementing learning tasks that are shown by the following dimensions: 1. the ability to arrange a learning plan. 2. the ability to implement learning. 3. the ability to implement interpersonal relations. 4. the ability to implement judgment of learning results. 5. the ability to implement enrichment programs. 6. the ability to implement remedial programs. 3. research results and discussion based on data processing results that the competence as a whole is present in a well enough average with a score of 132. the motivation variable recapitulation is in a high enough range with a score of 131. the job satisfaction variable is in a satisfactory enough range with a score of 125. the teacher performance recapitulation variable is in a well enough range with a score of 127. correlation analysis and influence of competence, motivation and job satisfaction to teacher performance in public junior high school 1 east cikarang bekasi regency a. pearson product moment correlation analysis for knowing the results of correlation analysis between competence, motivation, and job satisfaction variables to teacher performance in public junior high school 1 east cikarang bekasi regency, it is able to be seen in table 1 below: influence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east 69 table 1 correlation of competence (x1), motivation (x2) and job satisfaction (x3) correlations competence motivation job satisfaction performance competence pearson correlation 1 .443** .384* .548** sig. (2-tailed) .005 .016 .000 n 39 39 39 39 motivation pearson correlation .443** 1 .431** .581** sig. (2-tailed) .005 .006 .000 n 39 39 39 39 job satisfaction pearson correlation .384* .431** 1 .568** sig. (2-tailed) .016 .006 .000 n 39 39 39 39 performance pearson correlation .548** .581** .568** 1 sig. (2-tailed) .000 .000 .000 n 39 39 39 39 **. correlation is significant at the 0.01 level (2-tailed). *. correlation is significant at the 0.05 level (2-tailed). based on the table above correlation values: x1 correlation to x2 as large as 0.443; x2 correlation to x3 as large as 0.431; x1 correlation to x3 as large as 0.384. which means the above numbers show that there is a positive relation between the competence (x1), motivation (x2), and job satisfaction (x3) to teacher performance in public junior high school 1 east cikarang bekasi regency. b. analysis of competence, motivation, and job satisfaction influences to teacher performance in public junior high school 1 east cikarang bekasi regency the recapitulation is able to be seen in table 2 below: table 2 simultaneous influence of competence (x1), motivation (x2) and job satisfaction (x3) to performance (y) variable route analysis direct influence influence through % x1 x2 x3 competence (x1) 0.284 0.080 0.039 0.035 15% motivation (x2) 0.316 0.099 0.039 0.043 18% job satisfaction (x3) 0.323 0.104 0.035 0.043 18% x1, x2, x3 52% source: processed data, 2016 influence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east 70 while in more detail the amount of influence is able to be seen in table 4.7 in the next hypothesis test. hypothesis test based on t count test results an x1 value as large as 2.120 is obtained, x2 as large as 2.303 and x3 as large as 2.422 as written in table 3 below: table 3 influence of partial competence (x1), motivation (x2) and job satisfaction (x3) to performance (y) based on the table above the r square value shows the determination coefficient value which is = 0.52 or 52% which means the teacher performance variable is influenced by competence, motivation and job satisfaction variables, while the other 48% (100% 52% = 48% ) is influenced by other factors that are not studied in this research. coefficientsa model unstandardized coefficients standardized coefficients t sig. correlations b std. error beta zeroorder partial part 1 (constant) -2.846 15.587 -.183 .856 competence .338 .159 .284 2.120 .041 .548 .337 .248 motivation .420 .182 .316 2.303 .027 .581 .363 .269 job satisfaction .203 .084 .323 2.422 .021 .568 .379 .283 a. dependent variable: performance the research hypothesis test with a two tailed test for correlation coefficients in the real standard of 5% , compares t count and t table, obtained as the following: x1 as large as 2.120 > 2.03 h0 rejected, means that there is an influence of competence to performance. x2 as large as 2.303 > 2.03 h0 rejected, means that there is an influence of motivation to performance x3 as large as 2.422 > 2.03 h0 rejected, means that there is an influence of job satisfaction to performance determination coefficient the determination coefficient value to the relation between competence, motivation and job satisfaction to teacher performance in public junior high school 1 east cikarang bekasi regency is able to be seen in the table below: table 4 determination coefficient (r2) x1, x2 and x3 to y model summaryb model r r square adjusted r square std. error of the estimate 1 .723a .523 .482 7.517 a. predictors: (constant), kepuasan kerja, kompetensi, motivasi b. dependent variable: kinerja influence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east 71 significant correlation test significant correlation values are able to be seen in the table below. table 5 analysis results of simulant influence of competence (x1), motivation (x2) and job satisfaction (x3) to teacher performance (y) anovab model sum of squares df mean square f sig. 1 regression 2168.605 3 722.868 12.792 .000a residual 1977.754 35 56.507 total 4146.359 38 a. predictors: (constant), kepuasan kerja, kompetensi, motivasi b. dependent variable: kinerja in the anova test or f test, an f count is obtained which is 12.792 with a significance level of 0.000. because the probability value (0.000) is less than 0.05, competence (x 1), motivation (x2) and job satisfaction (x3) to performance (y). 4. summary and suggestions the summary of this research is as the following: 1. teacher competence has a positive and significant influence to teacher performance, so teacher performance is able to increase in line with their competence increase. therefore the research hypothesis that states that there is an influence of competence to performance, is able to be accepted. 2. motivation has a positive and significant influence to teacher performance, so teachers are able to increase their performance in the presence of motivation increase. therefore the research hypothesis that states that there is an influence of motivation to performance, is able to be accepted. 3. job satisfaction has a positive and significant influence to positive teacher performance, so teachers are able to increase their performance in the presence of job satisfaction increase. therefore the research hypothesis that states that there is an influence of job satisfaction to performance, is able to be accepted. 4. competence, motivation and job satisfaction simultaneously have a positive and significant influence to performance. therefore, teacher performance is able to increase in the presence of the simultaneous increase of competence, motivation and job satisfaction. suggestions that the writer are able to propose are as the following: 1. teachers have to increase their competence more by participating in several kinds of training such as curriculum training or teacher learning subject conference so the competence that they have is able to develop. 2. an education supervision needs to be implemented more routinely at schools, in the implementation of the supervision process a motivation presentation also has to be implemented. 3. job satisfaction needs to be increased through job distributions that are challenging in the form of task increases. a wage increase to noninfluence of teacher competence, motivation and job satisfaction on teacher’s performance smp negeri 1 cikarang bekasi regency east 72 government employee teachers and facilitate government employee teachers that have not yet obtained certificates. other than that, job conditions need to be improved and the relations between teachers and non-teachers have to be improved through routinely planned non formal meetings. 4. work results that are well enough are not yet optimal, so it has to be increased through sustainable professional development . references armstrong, m. 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(2011). manajemen sumber daya manusia: teori, aplikasi dan isu penelitian. bandung: alfabeta. website quality and purchase intention: the role of participation, e-wom, and trust 1 website quality and purchase intention: the role of participation, e-wom, and trust suresh kumar 1*, jessica cindy stacia2, yuyus suriana3, diana sari4, and meydia hasan5 1universitas presiden, bekasi, indonesia 2the ritz-carlton-bali, nusa dua, indonesia 3, 4, 5 universitas padjajaran, bandung, indonesia abstract the purpose of this study is to find out the relationship between website quality, participation, electronic word of mouth, and trust to purchase intention in the hospitality industry, particularly in the hotel industry. as far as the authors' knowledge, the study about booking intention directly from hotel website based on website quality, participation, e-wom, and trust, has never been conducted before. besides, most authors conducted booking intention based on online travel agent application leaving alone the hotel website. thus, the loyalty of customers moves to online travel agencies instead of the hotel itself. the quantitative method was applied in this research. there were 68 item statements distributed to 380 respondents and 357 valid responses were received from respondents who stayed at any hotels for the past 6 months and booked a room directly from the hotel website. data were checked for normality, model fit, construct validity, and reliability. this study reveals that website quality influences participation and trust, while participation influences e-wom on the online website, leading to customer’s trust which finally leads to customer’s purchase intention. managerial implications are added in brief along with the future directions based on the limitations of the study in the last section of this study. keywords: online booking intention, website quality, participation, e-wom, trust. 1. introduction it is without a doubt that the world's sexiest industry is now travel and tourism. as reported by world travel tourism (unwto) that in 2018 there were 1.4 billion international tourist arrivals, an increase of 5% from 1.322 billion in 2017, with earnings of usd 1.7 trillion (world tourism organization, 2019), and it is expected to increase to 1.8 billion in 2030. it is also reported that the travel and tourism industry plays a significant role in world gdp (10.4% of global gdp in 2017) and decreasing job unemployment rate since travel and tourism contributes 313 million jobs, or 9.9% of total employment or 1 every 10 jobs worldwide in 2017 (sofronov, 2018). indonesia got several positive influences by the growth itself. world travel & tourism council (wttc) has placed indonesia as the 9th fastest growing foreign tourist visitors in the world, the third in asia and the first in south east asia with a growth rate of 22% compared to the world which was only 6% in average (rahayu, 2018). moreover, indonesia also gains a lot from the tremendous growth of travel and tourism. as reported by arif yahya, tourism minister of indonesia (2014-2019), the total tourists visited indonesia were 16 million in 2018 with total spending of about usd 17.6 billion which was on par with crude palm oil as the generating income from export to indonesia’s gdp (rahayu, 2018). furthermore, the tourism competitive index of indonesia has also increased from 70 in 2013 becomes 42 in 2017 (rahayu, 2018) moreover, she reported that indonesia won 66 awards from various institutions and was also appointed as the best ministry of tourism in asia-pacific. anticipating the increasing number of tourists both domestic and international, the number of star hotels in indonesia has increased to 2,350 hotels with almost 290 thousand rooms compare to 16,000 non-star hotels with almost 285,000 rooms in 2017 according to hariyadi b. sukamdani, director of indonesia hotels and restaurants association (kusumaningrum, 2017). unfortunately, he added that those numbers are too many (600,000 rooms) compare to thailand (300,000 rooms) with 29 million visitors and malaysia (320,000 rooms) with 25 million visitors that resulted in a low occupancy rate (65%) (yanita, 2018). moreover, he stated that the competitors are * corresponding author. email address: sureshkumar@president.ac.id afebi management and business review (ambr) vol.05 no.02 december 2020 2 also from the unregistered hotel, for example, airbnb, airy, etc. if these conditions continue, more hotels will close down which lead to a rise in the unemployment rate, and in the end, it will impact lower visitors and contribution towards indonesia gdp. as a consequence, hotels are in need to have more customers to stay in competition and understanding customers’ purchase intention is essential to lure customers to the hotel. with the increased number of the online social network, social shopping websites have increased as well (yang, li, kim, & kim, 2015). for instance, in the hospitality industry, tripadvisor, booking.com, agoda, traveloka, trivago, pegi-pegi.com, and many more social shopping websites have supplied information regarding the hotels needed by customers. hence, retailers need to investigate customer behavior on social shopping websites to fully utilize the marketing effort to increase their purchase intention. it is also stated by baeshen, al-karaghouli, and ghoneim (2017) that online booking hotel is important for today’s business society since customers are moving towards online. besides, ali (2016) argues that hotel industries can use website quality to reduce the gap between customers and them, instead of relying too much on travel agencies or online travel. he also believes that a better website quality increases purchase intentions. furthermore, bilro, loureiro, and ali (2018) state that customers always look for a social online website for reviews on hotels, restaurants, and even attractions that suit their needs before purchasing and at the same time would also post a comment based on their experiences perceiving the services. however, it is still rare to find a study regarding the relationship between website quality and customer behavior, especially electronic word of mouth (bilro et al., 2018). nowadays, social media, an online specialized instrument that enables clients to take part in a discussion with different consumers and companies, has become very popular among customers of different age, sex, culture, etc. to exchange their view and even perception about almost everything (kim, martinez, mcclure, & kim, 2016). hence, companies must assemble a long term haul with customers through promotions via social media. furthermore, it is not only social media but also blogs, feedback thread, chatting communities, and online instant messenger services are used by customers as communication tools to find details on products or services which is called the electronic word of mouth (matute, polo-redondo, & utrillas, 2016; yoo, kim, & sanders, 2015). e-wom is a comment posted by experienced customers towards products or services that they got (abubakar, ilkan, meshall al-tal, & eluwole, 2017). in addition, yoo et al. (2015) argue that what makes it more interesting for customers is that with e-wom, not only text can be used to review or complain or give compliments but also a video at any time, anywhere, and any day. moreover, ladhari and michaud (2015) state that e-wom reaches world-wide audiences since the rapid development of the internet, whereas traditional word of mouth is only limited to family members, and internal circle. moreover, abubakar et al. (2017) found that e-wom is the predictor for trust and revisit intention in hospitality industry. trust has been studied in many studies mainly in e-commerce living alone on social media (shi & chow, 2015). the difference is that customers can directly judge a company based on their direct online shopping experience, whereas in social media customers tend to gather more information on the products or services before they buy them. furthermore, shi and chow (2015) state that with customers searching for information, trust becomes very valuable for customers to rely on trusted resources and make it the foundation to share the information they share. bulut and karabulut (2018) argue that trust is an important key factor to enhance the buying behavior of customers in online shopping because it reduces the risk of feeling from customers. ladhari and michaud (2015) also claim that trust is the most important key attributes to increase online sales. shi and chow (2015) state that trust can be gained not only from company trust but also through the social network. however, the research on transferred trust has gained little attention among researchers (shi & chow, 2015). thus, this study aims at finding out the relationship among website quality, participation, e-wom, trust, and purchase intention in hotel industries based on customers’ perspectives who are familiar with online social shopping and hotel websites. though purchase intention in hotel booking via social shopping or websites has been studied by few researchers based on the website quality and participation (yang et al., 2015), e-wom and trust (abubakar et al., 2017; bulut & karabulut, 2018), however the integrated study of purchase intention based on website quality, participation, e-wom, and trust, to the authors’ knowledge, has never been studied before. thus, this study is organized in several sections, such as a review of the literature regarding website quality, participation, e-wom, and trust and their relationship toward purchase intention and the website quality and purchase intention: the role of participation, e-wom, and trust 3 findings. finally, discussions on theoretical and managerial implications are presented as the concluding remark. 2. literature study and hypotheses development 2.1 website quality ali (2016) defines website quality as customers’ overall evaluation of the website’s features to how close it meets customers’ expectations and its outstanding. he measures hotel website quality as a multi-dimensional construct consists of usability, functionality, and security and privacy. functionality refers to what extent the website provides information regarding products and services offered. usability refers to what extent the website is efficient and fun for the products and services being offered. as for security and privacy refers to what extent the website reduces the unreliability of buying online. yang et al. (2015) define website quality as how the customers perceived the quality as a whole of a website. they also measure website quality as a multi-dimensional construct with six sub-dimensions, such as visual aesthetics, navigation, user-friendliness, privacy/security, entertainment, and community driveness. visual aesthetics refer to the appearance of the website in terms of the visual design of a social shopping website, dealing with balance, emotional appeal, aesthetics, and uniformity of the overall graphical look and feel, consisting of colors, photographs, shapes, and fonts. navigation refers to how smooth customers can switch from one page to others and bring the experience as if customers were in a mortar and brick store. user-friendliness refers to how simple the website can be operated by customers. privacy and security refer to what extent the website can protect customers’ identity, secure transactions, and website safety guarantee. entertainment refers to the enjoyment and fun customers are having while browsing the website through the tools provided by audio, video, graphics, icons, social networking links, etc. community driveness refers to an online community where customers can link to their old friends, find new friends, and connect with other community members. bilro et al. (2018) measure website quality with three sub-dimensions, namely: information/content, interactive features, and visual design. information/content refers to how customers perceived the information provided by the website is useful, updated, and reliable. interactive features refer to tools provided by the website to inquire, search, plan on the visit. visual design refers to the design of the page, aesthetic aspects, font style, format style, animation, user-friendly, sound effect, etc. nevertheless, this study will measure website quality based on yang et al. (2015) and bilro et al. (2018). 2.2 participation and e-wom yang et al. (2015) define participation as the interactivity between customers and websites and other online customers through the sharing of knowledge, emotional support, and distributing ideas. they further state that loyalty as the result of e-satisfaction can be influenced by participation. in addition, agag and el-masry (2016) state that customers’ participation will ensure a long-term relationship among community members. as for yoo et al. (2015), reciprocity is the interactivity of customers directly with companies instead of only among them. this definition shows the similarity with the participation definition by yang et al. (2015). further, yoo et al. (2015) argue that companies can respond better to their customer’s needs by having more interaction and companies should not eliminate the negative comments to preserve e-wom systems in allowing customers’ participation. electronic word of mouth (e-wom) is defined as a medium to exchange information about one’s view, perception, and feeling about almost everything which is passed from one customer to the others (kim et al, 2016). furthermore, they argue that customers tend to be influenced by others’ views, hence it becomes the most powerful promotional tool for companies. abubakar et al. (2017) define wom as communication between one customer the others to share their feelings about a particular product or service. they state that e-wom is another form of wom which happens on the internet or social media. abubakar et al. (2017) argue that e-wom is more powerful when the one who posts it is the one who has consumed the product or service and it even leads to loyalty. in addition, bhandari and rogers (2017) also argue that customers use e-wom to reduce risk in making any bad purchase decision since the messages give them a better understanding regarding afebi management and business review (ambr) vol.05 no.02 december 2020 4 products or services before they buy. e-wom is also defined as spreading customers’ experiences, either good or bad ones, to other customers regarding products, services, brands, or companies via social media (abubakar et al., 2017; matute et al., 2016; yoo et al., 2015). though traditional word of mouth is similar to e-wom, there are four main differences or advantages (matute et al., 2016). first, reviews made online stay longer on the net and accessible for many users. second, information is disseminated at super speed and read by many customers. third, the web makes it feasible for customers to see information, for example, the number of words or the way the message is written. last but not least, since nobody knows or acknowledges the senders or receivers, hence the information is constantly in doubt. based on several findings, e-wom has proven to influence customer behavior and improve company performances (abubakar et al., 2017; yoo et al., 2015). moreover, abubakar (2016) confirms that e-wom is without incentives and mostly unknown compare to wom, hence customers trust more to the comments posted on e-wom. 2.3 trust according to abubakar et al. (2017), trust from the destination image perspective is the willingness of customers to rely on the place, where they go, would perform what it promises. moreover, they argue that customers will find more details on the place they go through experiences such as friends, family members, relatives. this wom practice is to avoid unnecessary disappointment and risk and increase customers’ comfort from the destination. according to shi and chow (2015), trust in the e-commerce context is the willingness to believe the buyers by the customers since the transaction only happens through a network, not physical contact. bhandari and rogers (2017) argue that one of the acts of trust by customers toward companies is the company shows that they care about what customers’ problems are. further, they add that credibility is also another measurement of trust that customers label it by matching the information supplied by the company to what is being displayed by wom. in the hotel context, ladhari and michaud (2015) argue that reliability, competence, and integrity are the key dimensions of trust. if a customer can rely on the hotel best on what they perceive and what the hotel promises, means that the hotel is reliable. if the hotel can perform well what it says (knowledge, skills, and ability) then the hotel is a competent one, whereas integrity is the passion or care of the hotel towards their customers. as for the medical tourism context, abubakar (2016) measures trust based on reputation, credibility, and competence. reputation is defined as the ability to provide medical services consistently and improvement is made from time to time. credibility refers to services delivered are in-line with the promises given and take good care of customers who are in need, whereas competence is the ability to fulfill customers’ satisfaction. another interesting point of view comes from shi and chow (2015). so far trust is measured for company trust based on three dimensions: integrity (promises are kept), competence (companies’ ability to fulfill customers’ needs), and benevolence (passion for customers). whereas company trust can also be transferred from comments posted on a social commerce network. hence, this study will include two other dimensions: information-based and identification based to measure trust apart of the three other dimensions (integrity, competence, and network) mostly used. information-based trust is the trust of customers based on information provided through e-wom either by experienced customers or the company itself. identification-based trust is the trust of customers in other customers. 2.4 purchase intention abubakar and ilkan (2016) define purchase intention in destination context as the decision to visit a destination place after calculating cost and benefit and considering e-wom about the place as well. according to emir, halim, hedre, abdullah, azmi, and kamal (2016) in the hotel context, purchase intention is the possibility of customers use a hotel website to book in the future. the purchase decision is also defined as the possibility of buying a product or service because of the needs after thorough analysis and intention to recommend it (lkhaasuren & nam, 2018). lkhaasuren and nam (2018) also acknowledge the importance of the purchase decision as to the predictor of the buying process. hence, this study will measure the purchase intention base on customers’ willingness or plans in the future to book a room from a hotel website. website quality and purchase intention: the role of participation, e-wom, and trust 5 2.5 relationship between website quality, participation, and trust ali (2016) found that hotel website quality drives the purchase intention of customers through perceived flow and satisfaction. in addition, yang et al (2015) disclosed that hotel website quality impacts purchase intention through participation and e-wom, and yoo et al. (2015) considered participation (reciprocity) as a sub-dimension of e-wom. however, martinez and kim (2012) revealed that in fashion private sale sites that website quality attitude directly draws purchase intention. gregg and walczak (2010) claimed that having a good website quality can increase the trust of a website in an online auction. as in the e-commerce industry, website quality also contributes to the development of trust (nilashi, jannach, ibrahim, esfahani, & ahmadi, 2016). for the apparel shopping intention, jones and kim (2010) unfolded that website quality and trust as the predictors of the shopping intention. finally, wang, law, guillet, hung, and fong (2015) expressed that purchase intention trust in online booking intentions happens when customers trust the website quality of the company. hence, this study proposes: h1: website quality influences participation h2: website quality influences trust h3: participation influences e-wom 2.6 relationship between e-wom, trust, and purchase intention abubakar et al (2017) found that e-wom strongly affects intention for a med-tourist visit to turkey directly and indirectly through destination trust. the higher the e-wom the higher also the intention of the tourist to visit turkey for medical treatment or med-tourist directly and indirectly through destination trust. bhandari and rodgers (2018) revealed that positive and negative e-woms draw purchase intention while trust mediated the positive one regarding a brand. similar to bhandari and rodgers (2018) findings, bulut and karabulut (2018) study on online repurchase intention also showed that e-wom is a strong predictor for online repurchase intention directly and indirectly through e-trust. in the hotel booking industry as well, ladhari and michaud (2015) disclosed that e-wom strongly increases purchase intention directly and indirectly with trust as the mediator. hence, this study proposes: h4: e-wom influences trust h5: e-wom influences purchase intention h6: trust influences purchase intention hence, this study proposes a theoretical framework as depicted in figure 1. figure 1 theoretical framework 3. research methodology a survey method of quantitative research was applied to this study. the questionnaire as a tool in survey method was used with a 7-point likert scale as a measurement for respondents’ perception since it is better to get respondents' agreement compare to a 5-point likert scale (wang et al., 2015). the questionnaire was designed into three sections, namely screening questions, respondents’ profile, and construct measurements. following the purposive sampling technique, the screening questions were used to get the targeted respondents for the study by asking whether they had booked the hotel online through the hotel website and stayed in the booked hotel for the past 6 months. respondents targeted afebi management and business review (ambr) vol.05 no.02 december 2020 6 were those customers of hotels at greater jakarta, the capital city of indonesia, since jakarta has 46,899 rooms in 2018 and the highest booked hotel in indonesia. the construct measurements of predictor and criterion variables for this study were taken from various sources. for website quality dimensions, such as visual aesthetics (5 items), navigation (3 items), user-friendliness (5 items), privacy/security (3 items), entertainment (4 items), community driveness (3 items), interactive features (5 items) and information contents (4 items), were built through past studies (ali, 2016; bilro et al., 2018; nilashi et al., 2016; o’cass & carlson, 2012; wang et al., 2015; yang et al., 2015). participation measurements (5 items) adopted from yang et al. (2015) and yoo et al. (2015), e-wom measurements (6 items) were adjusted from abubakar et al., (2017); bulut and karabulut (2018); and kumar (2017). as for trust, five sub-dimensions are involved, consist of ability (4 items), benevolence (5 items), integrity (7 items), information-based trust (four items), and identification-based (3 items) taken from abubakar et al. (2017); bulut and karabulut (2018); ladhari and michaud (2015); shi and chow (2015); and wang et al. (2015). purchase intention measurements (4 items) were adjusted from wang et al.’s online booking intention and matute et al. (2016). before the questionnaire was distributed, points of view from indonesian academicians and practitioners were consulted to suit the indonesian context. to increase the readability, 10 graduate students from business school were chosen to give some feedback before finalizing the questionnaire (malhotra, nunan, & birks, 2017). the reviewed questionnaire was then sent to 600 targeted respondents through different kinds of channels such as instagram, whatsapp, and line. data were collected from instagram (200 respondents), whatsapp (55 respondents), and line (125 respondents) between may to august 2019 with a total of 380 respondents responded. 14 respondents did not fill in the questionnaire. also, 9 responses were deleted because the data were not complete. total valid responses gathered were 357 respondents. 4. results 4.1 demographics of respondents this study gathered 357 eligible respondents (table 1) with most of the respondents were female (66.9%) followed by the male (33.1%). respondents were indonesians who booked hotel rooms from hotel websites for the past 6 months. relating to occupation types, most respondents were from employees (92.7%). concerning the education, respondents were dominated by bachelor degree level (55.9%), and senior high school (39.3%). the descriptive statistics also reveal that the most prominent age level was from age of 17 to 26 years old (85.2%). table 1 respondents’ profile measure item percentage gender female 66.9% male 33.1% occupation employee 92.7% entrepreneur 5.3% others 2% age 17-27 years old 85.2% 28-38 years old 10.1% above 38 years old 3.6% monthly income idr.4.000.000-idr.6.500.000 61% above idr. 9.000.000 16.2% idr. 6.500.000 – idr. 9.000.000 11.5% chose not to answer 11.2% education completed college university 55.9% completed senior high school 39.3% completed post-graduate degree 4.2% website quality and purchase intention: the role of participation, e-wom, and trust 7 4.2 normality normality assessment for data collection was conducted before further analysis. for assessing each variable, a skewness-kurtosis method was used with the criteria in the range of +1 and -1 (hair, black, babin, & anderson, 2018; hair, hult, ringle, & sarstedt, 2017). based on amos 22.0, the statistical results showed the skewness and kurtosis were in the range of +1 and -1 (table 2), hence the data were considered normal. 4.3 structural model analysis 4.3.1 measurement model a. model fit since, the first trial was not a good fit (table 3), because the results showed only 1 out of 7 were in good fit (rmsea=0.064) while the other could not get the minimum number of a good fit. hence two statements (wqg1 and ewom5) were deleted since the standardized regression weight was below 0.7 to improve the model. besides, another 4 statements (wqi1, wqe4, wqc2, wqa4) were deleted for their intolerable high modification indices. finally, the results showed 5 criteria (cmin=2.126, ifi=0.912, tli=0.907, cfi=0.912, rmsea=0.058) were in good fit (table 3) and chi-square was also significant (χ2 = 2988.925, df=1627, p= .000). hence, the data were eligible to be used for further analysis. table 2 assessment of normality constructs items skewness kurtosis electronic word of mouth ewom4 -1.104 1.851 ewom3 -.931 1.178 ewom2 -1.023 1.599 ewom1 -.860 1.168 purchase intention pi4 -.839 .408 pi3 -.798 .550 pi2 -.826 .671 pi1 -.852 .638 identity te3 -.673 .770 te2 -.768 1.052 te1 -.620 .292 info td4 -.341 -.478 td3 -.880 1.410 td2 -.495 -.062 td1 -.624 .178 integrity tc7 -.445 -.299 tc6 -.761 1.089 tc5 -.690 .377 tc4 -.645 .530 tc3 -.617 .453 tc2 -.579 .396 tc1 -.622 .142 benevolence tb5 -.516 .120 tb4 -.532 .006 tb3 -.622 .555 tb2 -.522 .185 tb1 -.766 1.335 ability ta4 -.409 -.190 ta3 -.667 .635 ta2 -.459 .026 ta1 -.408 -.161 participation wqi5 -.785 .059 wqi4 -.733 -.358 wqi3 -.867 .742 wqi2 -.954 1.110 information contents wqh4 -.578 .181 wqh3 -.755 .952 wqh2 -.521 .045 wqh1 -.640 .402 interactive features wqg5 -.606 .217 wqg4 -.737 .402 wqg3 -.764 .633 wqg2 -.785 .656 community driveness wqf2 -.706 .922 wqf1 -.699 .867 entertainment wqe3 -.807 .599 wqe2 -.834 .544 wqe1 -.772 .421 privacy/ security wqd2 -.357 -.795 wqd1 -.259 -.842 userfriendliness wqc1 -.541 -.336 wqc3 -.497 -.165 wqc4 -.442 -.362 wqc5 -.486 -.183 navigation wqb1 -.478 -.566 wqb2 -.297 -.535 wqb3 -.419 -.384 visual aesthetics wqa1 -.262 -.412 wqa2 -.310 -.434 wqa3 -.298 -.534 wqa5 -.354 -.375 afebi management and business review (ambr) vol.05 no.02 december 2020 table 3 goodness of fit model fit cut of value before after decision structural fit chi-square degrees of freedom p 4961.064 2024 .000 2988.925 1627 .000 3926.286 1728 .000 cmin <5 2.451 2.186 good fit 2.272 gfi >0.9 .690 .729 mediocre .713 agfi >0.9 .651 .703 mediocre .686 ifi >0.9 .887 .912 good fit .906 tli >0.9 .876 .907 good fit .900 cfi >0.9 .886 .912 good fit .905 rmsea <0.08 .064 .058 good fit .06 b. construct reliability and validity all constructs were tested for their level of reliability and construct validity (table 4). for reliability test, it was tested through composite reliability (cr) and it was found out that all the constructs (website quality = 0.95, trust = 0.98, purchase intention = 0.91, e-wom = 0.93, participation = 0.88) have cr above the cut-off value of 0.7 as suggested by hair et al. (2014) with trust shows the highest reliability (cr = 0.98) and participation shows the lowest reliability (cr = 0.88). convergent validity was also tested through average variance explained (ave) to make sure the items being measured are truly measuring the construct being measured. the findings show that all constructs (website quality = 0.95, trust = 0.98, purchase intention = 0.91, e-wom = 0.93, participation = 0.88) have ave above 0.5 as suggested by hair et al. (2018) with trust has the highest ave (0.89) and participation has the lowest ave (0.66). table 4 reliability and validity results factor loading cr ave website quality wvisual 0.86 0.95 0.72 wnavi 0.89 wfriend 0.89 wsecurity 0.87 wettment 0.85 wcdrivers 0.79 winttive 0.73 wcontent 0.89 trust tability 0.92 0.98 0.89 tbenevolence 0.96 tintegrity 0.97 tinfo 0.93 tindentity 0.94 purchase intention pi1 0.81 0.91 0.72 pi2 0.78 pi3 0.95 pi4 0.85 e_wom ewom1 0.85 0.93 0.78 ewom2 0.88 ewom3 0.9 ewom4 0.91 participation wqi2 0.87 0.88 0.66 wqi3 0.84 wqi4 0.72 wqi5 0.8 website quality and purchase intention: the role of participation, e-wom, and trust 9 discriminant validity was also tested to measure the construct validity by correlating the square root of ave of each construct against the other constructs (hair et al, 2018). it was found that all constructs have a square root of ave higher than their inter-correlation against the other constructs (table 5). table 5 discriminant validity c. structural fit for structural model fit (table 3), the results show sufficient good fit (χ2 = 3926.286, df=1278, p= .0001; cmin=2.272, ifi=0.906, tli=0.900, cfi=0.905, rmsea=0.06). hence, the data are eligible to be used for hypothesis testing (hair et al., 2018). as for the hypothesis testing, all relationships proposed in this study were found to be significant (table 6). in more details, trust (γ =.396, p < .000) and e-wom (γ =.396, p < .000) have proven to be the driver of purchase intention in booking the hotel through hotel websites with a similar level of influences from both variables. trust itself has been proven to be influenced by e-wom (γ =.246, p < .000), and website quality (γ =.679, p < .000) were the strongest influenced is from website quality. other than trust, website quality has proven to significantly influence participation (γ =.758, p < .000), and participation is also shown its influence on e-wom (γ =.579, p < .000). table 6 hypothesis testing according to abubakar (2016), squared multiple correlations are used to assess the relationship between independent variables that could be measured by the independent variables. this study shows a strong model of hotel booking intention from hotel websites (48.4% of variance) through website quality, participation, trust, and w-wom as the predictors in the hotel industry (table 7). table 7 squared multiple correlations 5. discussion the impact of website quality on participation has been studied before by yang et al (2015) where it is concluded that customers are more proactive to participate in the website that has entertaining social shopping websites. the result is in line with this research which confirms that website quality of hotel websites may affect customer’s participation in posting online feedbacks and contributing to social we bsq trust participation e_wom purchase we bsq 0.85 trust 0.82 0.95 participation 0.66 0.65 0.81 e_wom 0.75 0.69 0.46 0.88 purchase 0.61 0.65 0.32 0.67 0.85 standardized se cr p participati <--w_e_b_s_i_t_e_q_l 0.758 0.084 12.335 0.001 e_wom <--participation 0.579 0.054 8.251 0.001 t_r_u_ <--e_wom 0.246 0.047 4.75 0.001 t_r_u_ <--w_e_b_s_i_t_e_q_l 0.679 0.06 10.693 0.001 purchase <--e_wom 0.396 0.066 6.095 0.001 purchase <--t_r_u_s_t 0.396 0.071 6.243 0.001 hypothesis testing model r-square participation 0.574 e_wom 0.336 t_r_u_s_t 0.668 purchase 0.484 afebi management and business review (ambr) vol.05 no.02 december 2020 10 interactions in the websites. these findings are supported by yang et al. (2015) that website quality influences purchase intention through participation as the mediator. moreover, this study also confirms that the quality of the websites also may affect customer’s trust towards the hotel websites. this has a similar result with nilashi et al (2016) past study in the ecommerce industry saying that website quality contributes to the development of trust. furthermore, a previous study from octavia and tamerlane (2017) also mentioned that in agoda.com, the higher quality of the website, the customer’s trust also increases. the findings are also supported by the study from gregg and walczak (2010) which state that a website should have good quality within it to increase customer’s trust in the website itself. also, it is proven that the customer’s participation in social interactions on websites influences ewom (yang et al., 2015). customers with a high level of participation might as well write an online review about the hotel (abubakar et al., 2017). the findings of this research supported by a past study from kim et al (2016) saying that e-wom is used as a medium to exchange information and perception amongst customers. meanwhile, this research confirms that positive e-wom has also proven influences trust. comparing these findings with previous research from abubakar et al (2017) saying that e-wom strongly affected intention for a med-tourist visit to turkey directly and indirectly through destination trust. referring to a past study by bhandari and rodgers (2018); ladhari and michaud (2015) who stated that trust becomes the mediator between positive e-wom and purchase intention. as expected, trust influences customer’s purchase intention and in this case, hotel booking intention. when trust has already developed, the customer will tend to book their hotel on online booking websites (bhandari & rodgers, 2018). this finding is supported by nilashi et al (2016) in the e-commerce industry that found website quality contributes to the development of trust and also jones and kim (2010) previous study in the apparel industry. 6. conclusion the results show that all hypotheses are accepted. which confirmed that website quality influences participation (h1) and trust (h2). while participation influences ewom (h3), e-wom influences trust (h4), e-wom influences purchase intention (h5), and finally trust influences purchase intention (h6). the model also shows a good model with squared multiple correlations for participation was 57.4 %, e-wom was 33.6%, trust was 66.8% and purchase intention was 48.4%. in this study, website quality consists of eight sub-dimensions, they are visual aesthetics, navigability, user-friendliness, privacy/security, entertainment, community driveness, interactive features, and information/content. this study expanding the theory of website quality based on six subdimensions from yang et al (2015) and two sub-dimensions from bilro (2018). this study found that the quality of a website might affect customer’s participation. thus, creating an online booking website that contained complete and reliable information about the hotel, interactive features such as providing maps route to the hotel, information about local destinations, and nearby attractions is essential. not to forget about the visual design which has to be interactive to attract customers to visit the website itself. all of the sub-dimensions affect the level of the customer’s participation in online interactions. besides participation, this study also found that website quality influences purchase intention through trust as a partial mediator. this study adopted some sub-dimensions from wang et al (2015) which are ability, benevolence, integrity. hence, to make it more complete this study adopted two more sub-dimensions from shi and chow (2015) which are information-based and identification-based. it is proven that gaining customer’s trust is essential to increase the sellings of the hotel. thus, providing the customer with a good quality website that is reliable, helpful, and honest is necessary. furthermore, when customer actively participates in an online discussion on the website, they will tend to write an online review about their experiences in using the website's services. this study suggests that hotel management keeps every online review that appears on online booking websites because it influences the sellings of the hotel. if there are any negative online reviews, it is necessary to follow-up with the customers about the problems and gives recovery action to maintain a good relationship. on the other hand, positive e-wom will increase customer’s trust towards the hotel booking website. this study suggests that hotels should pay attention to creating memorable and unforgettable website quality and purchase intention: the role of participation, e-wom, and trust 11 experiences for the customer because they can write a positive and negative review which can be read by everyone including prospective customers that can lead to their booking intention. working hand in hand with social media to attract prospective customers by creating informative and attractive websites, while keep working to provide good services and memorable experiences during the guest’s stay so they will give a positive online review which can be used as references to the other customers. through this study, it can be concluded that customers will be looking for online reviews first to gain their trust towards the hotel and finally ending up with a decision whether they want to book a room in that hotel or not. in data gathering for respondents, this study was only focused on respondents based on the greater jakarta area, the capital city of indonesia. thus, it can be improved by expanding to other areas or regions to gain more insights from diverse perspectives. according to yoshino, morgan, and nasution (2017), indonesia has 34 provinces which means each region has its own culture and preferences which can be explored more by future studies. this study suggests to include culture as one of the new variables to broaden the study since mosunmola, adegbuyi, kehinde, agboola, and olokundun (2019) has found that that culture shapes online shopping intention and also suggests a future study to evaluate the effect of other two cultural dimensions which are power distance and long term orientation. although this study has combined variables that have never been studied in an integrated way before, the possibility to explore some gaps exist for future researchers. for example, to increase hotel purchase intention through an online website, digital marketing can be added as recommended by wibisurya (2018) who concluded that location-based advertising (lba) as part of digital marketing can create positive’s customers' attitude towards purchase intention. furthermore, social media marketing is also essential in the hospitality industry. according to parvez, moyeenudin, arun, anandan, and janahan (2018), social media has the role to increase the connectivity among customers to share their experiences or opinion about the hotel. many luxury hotels also use online networks such as instagram, twitter, and facebook to enhance business capabilities to increase brand awareness which will lead to purchase intention. search engine optimization (seo) can also be considered as one of the factors that might affect purchase intention through hotel websites. the higher the rank of the website in the search engine, the higher the possibility users will visit the website (parvez et al., 2018). references abubakar, a. m., ilkan, m., meshall al-tal, r., & eluwole, k. k. 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(2017). the government decentralization program in indonesia. central and local government relations in asia, (601), 276–305. https://doi.org/10.4337/9781786436870.00017 can traditional retailers use conventional strategy to fight against modern retailers attacks? 1 can traditional retailers use conventional strategy to fight against modern retailers attacks? rachmadi agus triono 1*, zuliani dalimunthe2, helman arif 3 1,2,3 universitas indonesia, depok, indonesia abstract despite rapid growth in online type, the majority indonesian retail market is offline shopping because of households disperse across thousand cities and islands. however, the threat comes from corporatized modern retailers. typically, attacks from modern retailers in the form of franchised minimarkets endangered the existence of traditional retailers which generally are small sized and independently owned by individual or household. this research investigates how traditional retailers can deliver a strategic response to the presence of modern retailers, and to examine whether there are differences in performance among business entities that use different strategic responses. we also investigate if there are differences, which strategic response would give the best result in performance. questionnaires were distributed to 109 respondents using convenience sampling. an anova was done at respective types of retailers' buyers. there is no significant evidence that the strategic response developed by traditional retailers differed from one another. furthermore, we found that the performance of traditional retailers are below modern retailers, except for those that belong to a higher tier of performance. higher tier traditional retailers are the best strategic group in traditional retailers and their performance statistically could equate to the performance of modern retail. keywords: indonesian retail market, small-scale retailer strategy, strategic group, strategic response 1. introduction at kerney global retail development index (gdri) 2016 placed indonesia in 5th rank of top 30 developing countries for retail investment worldwide, a country has 256 million population and retail market worth usd 324 billion. retail – and trading sector in general is an essential sector of the indonesian economy. the central bureau of statistics (bps) year 2018 report that trading sector contributes 13,1% of indonesian gdp in 2017 and absorb 18,57% of labor force. nowadays, retail sector worldwide facing the challenge from rapid rising in online shopping. however, the impact on offline shopping in indonesia still unclear. despite its significant growth, indonesian retail market still dominated by offline shopping. indonesian households are well dispersed over vast distances even islands. consumer bases for the retail market outside main cities remain fragmented, especially in second and third-tier cities (euromonitor report, 2018). it brings opportunity for offline retailers to continue their business in indonesia and maintain their consumers. unfortunately, the huge of indonesian retail market brings another challenge for traditional retailers. indonesia retail entrepreneur associations * corresponding author. email address: rachmadi78@gmail.com mailto:rachmadi78@gmail.com afebi management and business review (ambr) vol.03 no.01, june 2018 2 (aprindo) divide the retail market into a modern retailer and traditional retailer. the growth of modern retail has increased significantly over time but mainly from franchised minimarkets having brand developed by big corporations. they directly attack traditional retailers generally small and informally-managed. from 2002 until now, attack from franchised minimarkets on traditional retail increased significantly. franchised minimarkets are continuing to grow from major cities to second or third layer cities even to villages throughout indonesia. modern retailers in indonesia commonly organized and owned by big corporations. meanwhile, traditional retailers generally small and independently owned by individual or households with limited capital (praharsi et al., 2014). ac nielsen in retail audit (2010) provide evidences how declining in traditional retail markets as the result of franchised minimarket attacks. from macroeconomic perspectives, declining share of traditional retailer market compares to modern retailers affect to the lower purchasing power of households relied on this sector. increasing growth in modern retailers and declining in traditional retailers bring negative consequences on national objectives to reduce income gap and even to alleviate poverty also. indonesian traditional retailers need strategic competitiveness to continue in the market. at least they need to respond strategically on the continuing attack from modern retailers. this study aims to evaluate how indonesian traditional retailers strategically respond to modern retailer attacks. the results of this study should offer solutions for traditional retailers in how to deal with these attacks. indirectly, by doing this research, we also want to recommend government how to increase labor force purchasing power working in the traditional retail sector. we tested four hypotheses in this research. firstly, minimarkets as franchise business entities have three prime advantages -size, system, and skills compared to traditional retail. thus, its performance should be higher than the traditional retail market. secondly, different traditional retail groups will develop different strategic responses, and they will develop similar strategic responses within the traditional retailer group. thirdly, strategic competitive response in various strategic groups associated with the strategic group's performance. and lastly, the strategic competitive response in the best group could result in comparable performance to minimarkets. this paper consists of six parts. after introduction part, literature study provides in the second part, consist of the concept of retailers, strategy and competitive responses, business performance and hypothesis development. the third part consists of data and methods used in this study. the fourth part provide results of the study while the fifth discuss the results along with similar research conducted in other country. the last part consists of conclusion and implications as well as limitation of the study. 2. literature study and hypotheses development 2.1. retail definition according to berman and evans (2001) retail is business activities that sell goods and services to end customers that buy the products for their personal use. they explain further: can traditional retailers use conventional strategy to fight against modern retailers attacks? 3 selling are made in a small amount, just enough to be used for personal consumptions in a specified time. types of buying are impulse buying, as an opposite of rational buying where the customer buy without deeper rational considerations. when buying, customers consider business location, product handling effectivity, store opening hours, and price level. meanwhile, levy and weitz (2012) define retailing with emphasize more on activities that create value added to goods and services sold both for personal or family use. furthermore, sujana (2005) classified retail according to its ownership, merchandise category and the breadth of the outlet. according to ownership, he classified retail to single store retailer, company-owned retailer, and franchise store which built based upon a cooperative contract between brand owner as a franchisor and outlet owner as the franchisee. sujana (2005) then classified retailers by outlet's breadth as small store (less than 100 m2), minimarket (100m2 – 1.000 m2), supermarket (1.000 m2 – 5.000 m2) and hypermarket (more than 5.000 m2). praharsi et at (2014) divided indonesian retailer into two board category, namely organized retailer and small-independent retailers. organized retailer defined as large-scale chain stores that are corporatized while smallindependent retailers are a single store, sole-proprietorships and own by individual or family. in their study, organized retailers typically refer to indomaret and alfamart widely known in indonesia due to their rapid expansion nationwide in short period of time and directly threatening the existence of small-independent of traditional retailers. in this study, we define traditional retails as those retail owned by an individual (single store retailers) with outlet area less than 100 m2. meanwhile, minimarkets are defined as franchised outlet of nationwide brands with space between 100 m2 – 1.000 m2. both retail stores with brand indomart and alfamaret are included in this definition. 2.2. strategy and competitive response porter (1985) defined strategy as the effort to place a company position as a unique entity and increase its value through effective decisions. while kluyver and pearce (2005) described strategy as an effort to position a company to gain competitive advantage through the choice of industry entered, product decisions, and allocating resources. furthermore, rumelt (2011) define a strategy based on a structure as a "kernel", which has three elements: (1) diagnosis on the situation faced; (2) guiding policy to meet challenges; and (3) coherent activities to apply the guiding policy. the concept of strategy broadly used by settled businessmen with large businesses, but the concept is applicable to retail business also. levy and weltz (2012) stated that retailers had used the idea of strategy as a plan that focused on resources to achieve their goals and the creation of relative competitive advantage as compared to the competitors. typically, strategic plan in retail business conducts through target market identification, and deliver goods and services fit to target markets or consumers. the creation of competitive advantage of a retailer performed through several generic strategies – according to porter (1985) consist of sales services and product differentiations, price leadership, and the combination of low cost and differentiations (ramakrishnan, 2010). afebi management and business review (ambr) vol.03 no.01, june 2018 4 competitive response, on the other hand, is a counteraction toward competitors to gain market position, and those actions describe interactions among companies within an industry. grimm et al. (2006) stated that competitive response is a source of competitive advantage and, hence, the ability to gain a better profit. thus, traditional retailers need strategies representing competitive responses to modern retailer actions. an appropriate competitive response would increase the competitive position of a traditional retailer. in the context of group action to fight against their competitors, there is a theory of strategic groups. the theory predicts that existence of a specific group in business entities occur due to convergent behaviour of such entity in respond to its environment (halaj & zochowski, 2009). a business entity employed a specific combination of strategic response identified itself as a member of a strategic group. gamble and thompson (2011) define a strategic group as a group of companies in an industry having similar competitive approach and competitive position. the similarity can be in the form of same product variety, selling price, distribution channels, or similarity in services. at a certain level, it proved that specific strategic responses are effective through confirmation of business performance. furrer et al. (2008) showed that the chosen strategy determines the performance of a business entity. hence, one can say that to make a business entity as a place to go shopping, the entity should choose a combination of strategy or strategic response to its opponents. 2.3. business performance the concept of business performance has pros and cons in business research. this issue isn't so much about how to measure, but rather what is to be measured (matthews, 2011). the measures of objective performance include accounting performance and market performance. however, researchers in strategic management have a difficult time obtaining objective measures of performance (dess & robinson, 1984). thus, there are so many researchers employed business performance measurement through what is called subjective self-reporting (beal, 2000). the use of subjective performance measurements will not reduce the quality of the research, however. wall et al. (2004) reported a high degree of reliability and validity from subjective business performance in their research. finally, the relationship between generic strategy used and performance has been reported by acquaah and ardekani (2008) and amoako and acquaah (2008). 2.4. hypothesis development this research aims to examine whether performance of traditional retailers grouped in strategic groups is equal or worse compared to minimarket retailers. minimarket has ten determinants supposed to be superior than traditional retailers. hansen and wernerfelt (1989) stated three factors making the performance of a business entity differentiate. they are size, system and skill. other determinants are economies of scale and experiences (douglas & donald, 1969), influence of technology (morgenstein and harriet, 1992); location and property (guy, clifford, 1994); retail market strategy (michael and barton, 2004); as well as employee satisfaction orientation, merchandises, product lines, and square feet of store space (robbins, stephen p, 2005; tang and lim, 2004). for all those ten determinants, minimarket retailers have competitive advantage than traditional retailers. thus, first hypothesis could be stated as follows: can traditional retailers use conventional strategy to fight against modern retailers attacks? 5 hypothesis 1: "minimarket retailer’s performance should be higher than traditional retailers". about strategic groups developing different strategic response, porter (1979) said that: "an industry can be viewed as composed of clusters or groups of firms where each group consists of firms following similar strategies regarding key decision variables……i define such groups as strategic groups." a similar strategy here is defined as a combination of strategy adopted by traditional retailers to fight against modern minimarkets' attack in their respective regions. different minimarket strategies in their respective area will result in different strategic responses developed by traditional retailers in their region to face their respective minimarket retailers. it means that in a specific region, all traditional retailers facing the same minimarket attack will develop similar strategic responses while in different minimarket locations, the respective traditional retailers will develop different strategic responses. had all the traditional retailers in one region are considered as one strategic group, and in others that face others minimarket are regarded as separate strategic groups, then it would be expected that in one strategic group the traditional retailers will develop similar strategic responses that differ with developed by other strategic groups. thus, the second hypothesis could be stated as: hypothesis 2: "different traditional retail groups will develop different strategic responses, and similar strategic responses will be developed within a traditional retailer group". to the extent of traditional retail group performance concern due to the strategic response developed, should be proven with its ability to achieve more either to its opponent-minimarketor to its others strategic groups fellow. as has been said, furrer, et al. (2008) proved that business entity's performance is determined by its strategic choice either resources or generic strategic choice. the stand-alone relationship between performance and resources choices have been proven by delios and beamish (2001,2017), kraatz and zajac (2001), vorhies and morgan (2003) and kor and mahoney ( 2005). on the other hand, a relationship between generic strategy and performance, as stated before, has been proven by acquaah dan ardekani (2008), as well as amoako and acquaah (2008). hence, the third and fourth hypothesis can be stated as follows: hypothesis 3: "strategic competitive response in respective strategic groups associated with the strategic group's performance." afebi management and business review (ambr) vol.03 no.01, june 2018 6 hypothesis 4: “strategic competitive response in the best group is comparable to performance of minimarket retailers.” 3. research methodology 3.1. data this research use customer's perceptions to measure variables used in the research toward traditional retailers and minimarkets, namely their respective strategic response and performance. the data gathered in depok, indonesia using the convenience sampling method, while the determination on the number of respondents was calculated using the statistical method developed by cochran (1963). in this research, we determine a quota of 100 respondents. when applied, it is composed of 109 respondents quoted proportionally in four depok regions: beji, cinere, sukmajaya and kukusan, which represent both rural areas (beji and kukusan) and urban areas (cinere and sukmajaya). 3.2. variables operationalization in this research, conventional retail strategy is defined as a series of action taken by retailers to make their stores become more preferred place to go shopping. such actions including various sales services, availability of highquality goods, purchases in small quantities, diversity of products sold, customer relationships, convenience purchases, credit facility, discounts, and lower prices. `this research used the cluster elements (xi) suggested by porter (1985), which is a translation of the five strategic response dimensions consist of product orientation (x1), selling price (x2), sales services (x3), cost focus (x4), and technological orientation (x5). the selling price indicators, according to ramakrishnan (2010), are selling price below the competitors' and selling products at a lower price. megicks (2001) contributed one indicator: give discounts in response to the modern minimarket strategy. the elements of cluster xi by which clusters formed are strategic responses of traditional retailers and minimarkets, respectively. another dimension of strategic response is sales services, namely all services given, convenience, gifts, and easy to purchase. megicks (2001) said that employee training to increase courtesy while serving their customers is an indicator of sales service directed toward opponents' strategies. ramakhrisnan (2010) added three indicators: convenience when purchasing, home delivery service, and giving special attention to the needs of customers. the cost focus strategy while maintaining product quality was stated by mcgee and rubach in ramakrishnan (2010), and specifies two elements: give a discount on the total amount of purchase and give gifts through overhead efficiency. the technological orientation element was suggested by ramakrishnan (2010). he suggested two indicators: the use of computers for sales and administration, and payment using credit cards. finally, the performance of a business entity is measured using subjective performance indicators composed of customers' subjective assessments toward the outlet. those latent variables dimension, are further operationalized into several indicators, and each is assigned using five scales likert ratings (1=strongly disagree. 2=disagree. 3=neither disagree nor agree. 4=agree. 5=strongly agree) can traditional retailers use conventional strategy to fight against modern retailers attacks? 7 to express respondents' subjective assessment on each indicator. the use of these subjective assessments by no means reduce the quality of research findings since it has been found that there is a closed correlation between subjective performance and objective performance measurements (voss and voss, 2000). another researcher, megicks (2001), suggested the whole store success indicator. 4. results we examine the research instrument validity before testing hypothesis through factor analysis. validity defined as whether a measurement able to measure what it intends to measure (suter, 2006). the element of each strategy or strategic response together with aspects of performance were processed using factor analysis with varimax rotations. several operational variables in each strategic dimension do not valid and hence deleted from each corresponding operational variable. however, all operational variables are valid to use as definitions for each latent variable, as shown by their high factor loading's values. after these not valid operational variables omitted, latent variables namely product orientation, selling price, services, cost focus and quality, technology orientation and performance have six, five, ten, eight, five and five operational variables respectively. the result shown in table 1 together with each respective factor loadings. table 1 principal component factor analysis with varimax rotation of retail strategic response strategic dimension factor loadings product price services cost technology performance product1 0.645 product2 0.681 product3 0.772 product5 0.652 product6 0.667 product15 0.607 price1 0.740 price2 0.553 price3 0.802 price4 0.828 price5 0.703 service13 0.633 service14 0.688 service22 0.616 service24 0.745 service25 0.798 service26 0.748 service27 0.778 service32 0.569 service33 0.597 service40 0.623 cost1 0.812 cost2 0.897 cost3 0.822 afebi management and business review (ambr) vol.03 no.01, june 2018 8 strategic dimension factor loadings product price services cost technology performance cost4 0.861 cost5 0.857 cost6 0.714 cost7 0.860 cost8 0.798 techno1 0.898 techno2 0.943 techno3 0.660 techno4 0.943 techno5 0.894 perform2 0.666 perform3 0.829 perform4 0.662 perform5 0.874 perform6 0.803 latent variable 1 (product orientation) measured by selling durable goods (product1), selling goods in good condition (product2), excellent packaging (product3), products sold are fresh (product5), and having good looking (product15). latent variable 2 (selling price) measured by lower price (price1), some products are cheaper (price2), the price is low (price3), cheaper than other stores (price4) and the prices are negotiable (price5). latent variable 3 (services) emphasizes on self-services (serrvice13), pleasant store layout (service14), goods are always available (service22), store keepers answer question quickly (service 24), store keepers answer question in good manners (service 25), store keepers answer question perfectly (service26), store keepers answer any question (service27), goods can be delivered to consumer’s house (service 32), products can be delivered even for some specific amount (service33), and customer able making order to the store (service40). variable 4 (cost focus and quality) refer to responses emphasizing in discount provided by the store (cost1), discounts provide even for specified amount of purchase (cost2), discount provided for some certain product (cost3), the store provide gift for some purchases (cost4), gifts deliver directly (cost5), gifts are still deliver even indirectly (cost6), gifts delivered even for purchase in some specific amount only (cost7) and the customer received a gift for purchasing specific product only (cost8). the last strategic response variable is technological orientations consist of using computer for transaction processing (techno1), using computer for merchandise and inventory processing (techno2), the payment for purchasing easily accomplish (techno3), credit cards are acceptable (techno4), and debit cards are acceptable (tehno5). meanwhile, store performance variables consist of popularity of the store (performance2), the store always full of visitors (performance3), the store size increasing overtime (performance4), buyers increase from time to time (performance5) and the merchandises offered increase from time to time (performance6). next, to test the construct reliability, we measure the cronbach alpha index (cronbach, 1951) as shown in table 2 below. the index measures internal can traditional retailers use conventional strategy to fight against modern retailers attacks? 9 consistency of the research instrument used, that is how a set of items closely related as a group. the alpha index is viewed as the expected correlation among operational variables measuring the same construct. tabel 2 construct reliability measurement of modern retail and traditional retail variable indicators  modern  traditional product orientation 6 0.649 0.836 selling price 5 0.843 0.819 sales services 10 0.843 0.890 cost focus & quality 8 0.939 0.935 techno orientation 5 0.855 0.922 business performance 5 0.714 0.812 as seen in table 2 above, all cronbach alpha’s indexes are above 0.6, proving that the internal reliability of instruments used are strong. it means that all respondents have similar perceptions on the meaning of variables used. thus, instruments used in the study is not bias. furthermore, the testing hypothesis using anova and cluster analysis of the four hypotheses are shown in table 3. table 3 testing null hypothesis no research hypothesis statistical hypothesis significant conclusion 1 minimarket retailer perform better than traditional retail ho:=     0.012 reject ho 2 traditional retailers develop various strategic competitive response in line with minimarket faced such that they form strategic groups 2.1. product 2.2. price 2.3. services 2.4. cost focus 2.5. technology cluster i formed ho:= = = = = i =4 0.000 0.000 0.000 0.000 0.000 4 strategic groups are formed differ in product differ in price differ in services differ in cost differ in techno 3 strategic competitive response within strategic groups are associated with their respective performance ho: =+  = + for  =    0.189 do not reject ho 4 the best strategic group’s performance as superior as minimarket performance ho: =     0.985 do not reject ho from table 3 above, we generate four conclusions. firstly, performance between minimarkets and traditional retailers is different. the performance of minimarkets outperforms the traditional retail markets. secondly, the traditional retailers developed strategic competitive responses in line with minimarkets, such that they formed strategic groups. the strategic dimensions used are significantly different between the four groups formed. thirdly, there are no afebi management and business review (ambr) vol.03 no.01, june 2018 10 performance differences among the strategic groups concerning the strategic response, meaning that the strategic response does not associate with performance. fourth, there is no best strategic groups with its respective associated strategic response that differs in performance with the minimarket, which means that there are no superior strategic responses that lead to an excellent performance. 5. discussion from the first fact we conclude that minimarket had already disturbed traditional retailers' market performance. it means that two entities the traditional retailer and the minimarkets have the same market and are not separated by location, effort, or other separation dimensions. they are perfect competitors in the marketplace. then, logical result of the first null hypothesis test prove that competitive responses are essential for traditional retailers to do. it is also proven by the fact that from the four clusters formed (table 4), the strategic response used by each cluster consist of a combination of technological response, hard/soft services, and services oriented toward products. four clusters formed here is slightly different to what ramakrishnan (2010) did in his study in india. his study results in 5 clusters strategic group. four of which just the same to what this study got, together with the fifth strategic group named traditional. a deeper analysis directed toward strategic competitive response used by the four strategic groups of traditional retail show that strategic group 1, the competitive, uses all dimension of strategic responses in an equally balanced manner. with relatively high investment in technology, it results in better performance than those of misdirected and middle of the road cluster strategic groups. strategic group 2, the misdirected, is just like strategic group 1 except that their service and cost focus & quality dimensions are lower. it also does not invest much in technology. while it trying to address a broad target through product variety and pricing strategy, it performance result is the lowest among the other strategic groups formed. table 4 final cluster of strategic group formed strategic response cluster1 competitive n=30 cluster2 misdirecte d n=19 cluster3 mid of the road n=32 cluster4 full service n=28 product 3.7 3.5 3.3 4.4 price 3.6 3.4 3.3 3.9 services 3.6 2.8 3.1 4.0 cost & quality 3.5 1.6 2.8 3.8 technology 2.8 2.4 2.4 4.2 performance 4.5 4.2 4.3 4.7 strategic group 3 uses all the dimensions of strategic responses in equally balanced manner just as group 1, but they use smaller amounts as compared to other clusters, which resulted in a mediocre result. while strategic group 4 uses all strategic responses in highest amount than other groups, in attempt to reach both niche customers and those of price can traditional retailers use conventional strategy to fight against modern retailers attacks? 11 sensitive segments. with these strategies this strategic group yield in the best performance indicator among the groups formed. although the data does not suggest a significant mean difference of the performance dimension of four strategic groups formed, it is apparent that strategic group 4 outperformed the other strategic groups. contrasting to what ramakrishnan (2010) revealed from traditional retail in india to what comparable traditional retail in indonesia discuss in this research, one can see that in all comparable clusters, traditional retail in india used the element of technology higher than its allied retail in indonesia (table 5). this difference could be caused by the fact that india has more advance in technological development as compared to indonesia. a popular thesis is that indonesia lags five years behind and that we’ll see it follow a similar technological development trajectory (freischlad, nadine: 2016). india’s traditional retail also have higher score of cost focus and quality as compared to its peer in indonesia. the root of this difference could be attributable to indonesia’s retailer culture that demand high profitability at the cost of the buyer in the form of lower product quality. for instance, the viral habit of indonesian food sellers to use synthetic dyes and artificial sweeteners in their merchandises sold (priambodo, ra, 2016) on the other hand, traditional retail in indonesia tend to use service elements better as their strategic response than its associates traditional retail in india. they also use elements product and pricing better in four clusters strategic group formed. no wonder, indonesia is an archipelagos known for its hospitality. table 5 comparison of strategic responses used by traditional retail in indonesia and india strategic response competitive misdirect mid of the road full service products 3.71 3.51 3.30 4.36 4.00 4.00 3.00 4.00 pricing 3.63 3.39 3.30 3.92 3.30 2.90 3.20 4.30 services 3.63 2.76 3.10 4.02 2.79 2.15 3.15 3.98 cost focus & quality 3.46 1.64 2.80 3.76 4.00 2.00 3.00 4.00 technology 2.81 2.39 2.40 4.20 3.00 3.20 3.46 4.24 source: comparison between table 4 and ramakhrisnan (2010) *bold figures are result in india although the test of null hypothesis of hypothesis 1 result in the null hypothesis rejection, means that minimarket has superior performance than traditional retails. looking deeper into performance indicators differences between the traditional market and the modern retail market as shown in table 6, one can see that some of the traditional retailer's performance indicators can equate the minimarket indicators. for instance, indicator 4 (space increment of the retail entity) and performance indicator 6 (increment of merchandise sold by the retail body) are not significantly different between the two entities. it is afebi management and business review (ambr) vol.03 no.01, june 2018 12 true that this fact can be interpreted that both, the traditional retail and minimarket are never increase their space store and the variety of merchandise sold, but the interpretation that they grow in similar rate can speculatively, also be considered. meanwhile, indicator 2 (the retail entity is widely known), indicator 3 (the store is always crowded), and indicator 5 (buyers increase from time to time) show that modern minimarkets are outperforming the traditional retail market. apparently, these 3 performance indicators that responsible for the higher performance score value of minimarket as compared to traditional retailers. table 6 performance difference between traditional and modern retail indicator f significant conclution performance2 10.055 0.002 differ performance3 7.569 0.006 differ performance4 0.610 0.805 do not differ performance5 11.056 0.001 differ performance6 1.960 0.163 do not differ the use of integrated strategic response, indicate superior result as competitive advantage builder in traditional retailer. this is consistent with the finding of ramakrishnan (2010), although the result of the study is statistically not significant. however, the research result could point out to those who plunged into the retail business to implement such strategy as the strategic response to their minimarket opponents. focus differentiation strategy as operationalized through the exercise of product variability should be mixed with cost & quality to get excellent result unless it throws out into misdirected and middle of the road strategic cluster with poor performance result 6. conclusion this research’s objective is to find whether traditional retailers develop different strategic responses depending on minimarkets faced, and then to discover which strategic responses achieve the best performance against attacks from the franchise minimarkets. we found that the data do not support all the research hypotheses. they also do not reject all the null hypotheses. the analysis proves that although the traditional retailers created four types of strategic response within four cluster strategic groups, the differences among the responses are hard to identify since all the responses were composed of similar elements of strategic response combinations, though they all differed in dimension. from the analysis, we also identified that the performance of traditional retailers does not differ significantly among the three strategic groups. however, it can still be seen that there is one strategic response that best led to superior performance when facing attacks from modern minimarkets, i.e., using all the strategic dimensions as a strategic response. the implication of such findings is that modern retail markets are going head-to-head with traditional retailers in the market. their customers could not be partially or fully separated. they steal customers back and forth from each other. that is why both traditional retailers and modern retailers do not grow independently without comparable performance growth. dealing with such can traditional retailers use conventional strategy to fight against modern retailers attacks? 13 situations, therefore, would require the development of strategic responses by traditional retailers to their opponent – which is the modern retail entities, by exploiting the strategic response dimension that best fits to combat their modern supermarket opponent. this study has two limitations. first, the study was done only in one medium city in indonesia, both rural and urban area. even the generalizability of the study does not limited by rural-urban considerations, it is bounded by the sampling distribution agenda. in the future, such study in indonesia should cover more cities as research area. another limitation is in the selection of respondents. it seem to me that interviewers select respondents too freely, ignoring the size of traditional store that is chosen. thus, even a very small store might be selected when interviewing their buyers as respondents. however, that kind of store tend to neglect the important of strategic response, so that the respondents –their buyersperceive as such. references ac nielsen. 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(2014). smallindependent retailers vs organized retailers: an empirical study in indonesia economics of service industries. journal of retailing and consumer services, 21, 108-117. does human resource management practices moderate the relationship between nepotism and attitude? 31 does human resource management practices moderate the relationship between nepotism and attitude? mahdani ibrahim31*, maulana alimin 2, and banta karollah 3 1 universitas syiah kuala, banda aceh, indonesia 2 general hospital dr. zainoel abididin, banda aceh, indonesia 3 sabang college of economics, banda aceh, indonesia abstract this study aims to examine the moderating effect of human resource management practice (hrmp) variables on the relationship between nepotism variables and attitude variables (job satisfaction, organisational citizenship behaviour (ocb) and organisational commitment).a research sample of 300 workers in the three largest hospitals in aceh (dr. zainoel abidin general hospital, meuraxa general hospital and harapan bunda hospital). primary data were obtained by distributing questionnaires to participants in the three hospitals with 100 questionnaires each.data were analysed using simple regression and moderated regression analysis.the results of our analysis found that hrmps have a moderating effect on the relationship between nepotism and job satisfaction and nepotism and organisational commitment.the moderating effect of hrmps was not found in the relationship between nepotism and ocb. keywords: hrmps, job satisfaction, ocb, organisational commitment, nepotism. 1. introduction nepotism has developed throughout the world for generations. although some researchers believe that nepotism has declined with the development of giant companies, some believe that nepotism is still alive and thriving (sarpong & maclean, 2015).nepotism, the human tendency to provide protection or provide assistance to family, friends and relatives, who have no achievements that qualify, has been described in contemporary social life as opposed to natural justice, social justice and counterproductive to successful organisation (billet, 2009; stewart, 2003). nepotism is often prevalent in businesses run by families who are also the owners of the company (lubatkin et al., 2015). in indonesia, the practice of nepotism does not only occur in family companies but also in public organisations, both profitoriented and non-profit oriented, and the practice of nepotism has worsened economic conditions due to low competitiveness (malik, 2018). in hospitals, we often observe the practice of nepotism in the recruitment procedure of medical personnel and non-medical employees and even in acquiring a good position in the organisational structure. the practice of nepotism can also be considered a part of a resource package that shows that business families can negotiate with their relatives (lubatkin et al., 2015).a review ofmany areas of responsibility for personnel managerssurprisingly showsthat some researchers have raised great concern about nepotism, but our literature search shows that very little empirical research has been carried out in this field. a number of highlights have also focused on the negative aspects of nepotism (elbaz, haddoud, & shehawy, 2018). nepotism and cronyism can be seen as forms of corruption because they involve abuse of power (hudson & claasen, 2017). nepotism is an unprofessional phenomenon that benefits only family members or close friends (arasli, bavik,& ekiz, 2006).however, jaskiewicz and luchak (2013)had another * corresponding author. email address: mahdani@unsyiah.ac.id afebi management and business review (ambr) vol.05 no.02 december 2020 32 view,that is, nepotism can take several forms and exist at various levels within a company, for the purpose of a conceptual framework that is better to use a dichotomous conceptualisation of the construct that defines nepotism as recruitment family managers in the top management team of a family company, and such reasons are in line with perspectives (hambrick & mason, 1984). we strongly support perspectives (jaskiewicz & luchak, 2013; hambrick & mason, 1984), and we work hard to re-examine nepotism because we believe that human resource management practices (hrmps) can strengthen nepotism relationships, especially towards job satisfaction, organisational citizenship behaviour (ocb) and organisational commitment. 2. literature review and hypotheses development 2.1. nepotism and job satisfaction when an organisation chooses a family or close friend to occupy a certain position in the organisation, such conditions are known as ‘nepotism’, even though the people who are placed in that position do not have adequate abilities.in this study, nepotism is defined as utilising the influence of family or relatives to achieve organisational goals. nepotism means choosing family members or close friends based on relationships, not based on ability,which is considered a bad practice in the organisation.nickson (2013) argued that poor labourpractices remain prevalent in the tourism and hospitality sector. elbaz, haddoudand shehawy (2018) found that the practice of nepotism has a direct negative effect on several competencies (selfcompetence, team competences and change competence). job satisfaction is one of the main work attitude components. when people talk about employee attitudes, it usually means job satisfaction, which reflects positive feelings about a job, and results from evaluating its characteristics.someone with a high level of job satisfaction holds positive feelings about their work, whereas people with low levels hold negative feelings (robbins & judge, 2013: 74). thus, when the practice of nepotism increases in an organisation, not all employees in the organisation feel satisfied working.therefore, the results of research by arasli, bavik and ekiz, (2006) found that nepotism has a negative effect on job satisfaction. nepotism also negatively affects performance (elbaz, haddoud, & shehawy, 2018).from the results of the literature review above, we state the following hypothesis: h1: hrmps have a moderating effect on the relationship between nepotism and job satisfaction. 2.2 nepotism and ocb if nepotism has a negative impact on job satisfaction (arasli, bavik,& ekiz, 2006), then it will also have a negative impact on ocb. work attitude is conceptually and empirically related to ocb (bowling, wang, &li, 2012).specifically, according to dalal (2005), employees who have a positive work attitude are expected to provide a pleasant work environment and be involved in ocb. ocb is ‘positive, pro-social, and extra-role worker behaviour that promotes the effective functioning of an organization’(brenner et al., 2010; luthans, 2011: 149). in this study, ocb is a positive behaviour shown by an employee and does not conflict with organisational systems that can improve the effective functioning of the organisation.ocb consists of helpful behaviours and organisational compliance (podsakoff et al., 2000). helpful behaviours refer to employees’ voluntary efforts to help others or to prevent problems related to the work of their coworkers. some researchers have concluded thata positive correlation exists between ocb and job satisfaction (netemeyer et al., 1997; foote & li-ping tang, 2008; shafazawana et al., 2016; xie et al., 2017).from the results of the literature review above, we state the following hypothesis: does human resource management practices moderate the relationship between nepotism and attitude? 33 h2: hrmps have a moderating effect on the relationship between nepotism and ocb. 2.3 nepotism and organisational commitment nepotism is not good for large-scale business organisations but good for smallscale business organisations that belongto a certain family (hayajenh, maghrabi, & aldabbagh, 1994).therefore, when viewed from an organisational aspect, the practice of nepotism is considered to not have a significant effect on organisational commitment. organisational commitment is included in one component of work attitude (robbins & judge, 2013: 79). according to allen and meyer (1990), organisational commitment as a psychological relationship between an employee and an organisation makes it less likely that the employee will leave on his own volition.meanwhile, according to luthans (2011: 147), organisational commitment is a strong desire to remain as a member of a particular organisation, a willingness to exert a high level of effort on behalf of the organisationand a certain belief of acceptance, values and organisational goals. in this study, organisational commitment is an emotional attachment, identification and involvement of individuals with the organisation and the desire to remain a member of that organisation. we assume that the higher the practice of nepotism, the higher the tendency for the organisational commitment to decrease. furthermore, employees who are not committed and less loyal to the organisation will tend to show a lower level of attendance at the workplace (pohl & paillé, 2011).from the results of the literature review above, we state the following hypothesis: h3: hrmps have a moderating effect on the relationship between nepotism and organisational commitment. 2.4 hrmps according to sun, aryee and law (2007),hrmps are holistic practices that can improve staff skills, encourage employee participation and voice in decision making and increase motivation to conduct policies, which collectively influenceorganisational performance and sustainable competitive advantage.furthermore, arasli, bavik and ekiz, (2006) highlighted that human resource management (hrm) must be practised to increase employee competency in accordance with organisational goals. hrmps are very important in an organisation; these activities include recruitment, selection, training, career development, compensation and performance appraisal (arasli, bavik,& ekiz, 2006; tsaur & lin, 2002; reid et al., 2002). mondy and martocchio (2016)also stated that hrm is utilising employees to achieve organisational goals. hrmps are the main hrm functions that consist not only of training and development but also career planning and development activities (mondy & martocchio, 2016: 25).furthermore, arasli, bavik and ekiz (2006) found that the practice of nepotism has a significant negative effect on hrm and that hrm has a significant positive effect on job satisfaction.fındıklı, yozgat and rofcanin (2015) found that hrmps have a positive effect on organisational innovation and knowledge management capacity. this study aims to identify the moderating effect of hrmps on the relationship between the practice of nepotism and job satisfaction, organisational citizenship and organisational commitment. on the basis of the literature review, we developed a research framework, as shown in figure 2. afebi management and business review (ambr) vol.05 no.02 december 2020 34 figure 1 research and analysis framework 3. methodology 3.1 data collection and samples the data for this study were obtained from the three largest public hospitals in aceh province (two governmentowned and one private), with a total respondentsample of 300 medical and non-medical employees. primary data were obtained by distributing questionnaires. the characteristics of the respondents are as follows: 45% men and 55% women, average age of 37 years and average length of work of 13 years. 3.2 data analysis the hypotheses were tested using moderated regression analysis (mra)(cohen et al., 2003). based on the mra, three regression equations are considered: y = a + b1x1+ e, (1) y = a + b1x1+b2m + e, (2) y = a + b1x + b2m + b3 x1m + e, (3) where y is the dependent variable, x is the independent variable and m is the moderation variable. sharma et al. (1981) said that m can be considered a pure moderator if equations (1) and (2) are similar but different from equation (3), that is, b2 ≠ 0 but b3 ≠ 0. however, if b2 ≠ b3 ≠ 0, then m is referred to as a quasi-moderator. such variables are both a predictor and a moderator. the analysis was performed using statistical package for social science20. 3.3 measurement nepotism is defined as utilising the influence of family or relatives to achieve organisational goals and is measured through 10 items according to previous research (elbaz, haddoud, & shehawy, 2018; bute, 2011; arasli, bavik,& ekiz, 2006; abdalla, maghrabi, & raggad, 1998). in this study, the reliability level of the questionnaire is 0.83 (cronbach’s alpha). here, nepotism refers to the favouritism bias given to family and friends at work (e.g. ‘i always feel that i need someone i know or a friend in a high-level position’, ‘supervisors are afraid of subordinates related to high-level executives’ and ‘i am always careful when talking to family or executive relatives’). job satisfaction is defined as a holistic measure of a person’s attitudes and feelings towards work and is measured using a positive version of the michigan organizational assessment questionnaire job satisfaction scale (ginsburg et al., does human resource management practices moderate the relationship between nepotism and attitude? 35 2016; bowling & hammond, 2008).the results of the analysis report that the reliability level of the questionnaire is 0.74 (cronbach’s alpha). we modified it to give questions, (e.g. ‘overall, i am satisfied with my work’, ‘in general, i like my work’ and ‘in general, i like working in this hospital’). ocb is a positive behaviour of employees and does not conflict with organisational systems that can improve the effective functioning of the organisation. the assessment was adopted from previous studies conducted by ginsburg et al. (2016) and choi (2007).in this study, we took four items that we modified (e.g.‘i often find new ways to do my work’, ‘my work activities are personally meaningful to me’ and ‘when my friend seems to need help, i immediately help him’). based on the analysis results, the level of questionnaire reliability is 0.82 (cronbach’s alpha). organisational commitment is assessed using the organizational commitment questionnaire (ocq), developed by allen and meyer (1990). there are three dimensions of commitment: affective, normative and sustainability commitment. we used six items from all three dimensions:‘i would love to spend the rest of my career with this organization’, ‘it would be very difficult for me to leave this organization properly’ and ‘i do not believe that one must always be loyal to his organization’. previous research have also used ocq (kim et al., 2019; cao et al., 2019; pohl & paillé, 2011).the results of the data analysis showthat the level of questionnairereliability was 0.71 (at cronbach’s alpha). the hrmp variableswere measured based on six main work practices identified by purcell et al. (2003), namely,career development and opportunities for advancement, training opportunities, job influence and challenges, involvement and communication, performance management and appraisal processes andwork–life balance. we have adjusted 10 questions in accordancewith previous studies that used the same indicators (sun, aryee, & law, 2007; wong et al., 2019) (i.e.‘there are formal training programmes to teach new employees the skills they need to do their jobs’, ‘tasks in this job are clearly defined’ and ‘performance is more often measured by objective quantitative results’). the results show that the level of questionnaire reliability was 0.78 (cronbach’s alpha). all indicators of the research variables were measured using a likert scale (1 = strongly disagree, up to 5 = strongly agree). 4. results and discussion table 1 shows the results of the correlation analysis (pearson correlation).the results of the analysis show that the independent variable (nepotism) has a positive and strong correlation with all dependent variables (job satisfaction, ocb and organisational commitment) at a significance level (p < 0.01). on the basis of these results, the next analysis can be performed. table 1 correlation, means and standard deviations variables nepotism job satisfaction ocb org.commitment nepotism 1 job satisfaction 0.534** 1 ocb 0.493** 0.597** 1 org.commitment 0.578** 0.619** 0.486** 1 means 36.81 18.47 14.76 22.31 standard deviations 5.650 3.148 2.583 3.574 n 300 300 300 300 **. correlation is significant at the 0.01 level (two tailed). afebi management and business review (ambr) vol.05 no.02 december 2020 36 the results of the mra,showing the moderating effect of hrmps on the relationship between nepotism and job satisfaction, are presented in table 2.the results show that hrmpvariables (interaction) are significant at the 0.05 level. the magnitude of r2is 0.357 (table 5), which shows that 35.7% of the job satisfaction variables can be explained by the variables of nepotism, hrmps and moderation, whereas the rest (64.3%) is influenced by other factors not included in this model. our results support those of the research conducted by arasli, bavik and ekiz (2006), who also found that hrmps have a positive effect on job satisfaction and nepotism has a negative effect on job satisfaction. in other words, if an organisation practices hrm well, then the response to job satisfaction will also increase. table 2 the moderating effect of hrmps on the relationship between nepotism and job satisfaction model unstandardised coefficients standardised coefficients t sig. b std. error beta 1 (constant) 11.645 3.348 3,478 0.001 nepotism −0.035 0.092 −0.063 −0.378 0.705 hrmps 0.017 0.109 0.028 0.152 0.880 nepotism and hrmps 0.005 0.003 0.627 2.053 0.041 dependent variable: job satisfaction bold values are statistically significant (p< .05). table 3 shows the results of the analysis on the moderating effect of hrmps on the relationship between nepotism and ocb. the results of the mra show that hrmps have no moderating effect on this relationship. the magnitude of r2in this relationship is 0.313 (table 5), which means that 13.3% of the nepotism factors influence ocb, whereas the rest (86.7%) is influenced by other factors outside this model. basu, pradhan and tewari (2017) said that although ocb is not part of a formal organisational structure or reward system, it has broad implications on the performance and effectiveness of organisations and individuals. table 3 moderating effect of hrmps on the relationship between nepotism and ocb model unstandardised coefficients standardised coefficients t sig. b std. error beta 1 (constant) 6.370 2.838 2.244 0.026 nepotism 0.034 0.078 0.075 0.438 0.662 hrmps 0.131 0.093 0.272 1.411 0.159 nepotism and hrmps 0.002 0.002 0.231 0.732 0.465 dependent variable: ocb table 4 presentsthe mra resultson the moderatingeffects of hrmps on the relationship between nepotism and organisational commitment. the analysis shows that hrmps are variables that moderate the relationship, with a significance value of 0.039(p < 0.05).thus, hrmps are significant as moderation variables and can be categorised as pure moderation. in addition, the results of the coefficient of determination test (table 5) show an r2 value of 0.383 (38.3%), meaning that 38.3% of the nepotism variables affect the variation in terms oforganisational commitment, whereas the rest (61.7%) is influenced by other variables not examined here. does human resource management practices moderate the relationship between nepotism and attitude? 37 table 4 moderating effect of hrmps on the relationship between nepotism and organisational commitment model unstandardised coefficients standardised coefficients t sig. b std. error beta 1 (constant) 13.974 3.722 3.754 0.000 nepotism 0.027 0.103 0.043 0.266 0.790 hrmps −0.029 0.121 −0.044 −0.240 0.810 nepotism and hrmps 0.006 0.003 0.620 2.071 0.039 dependent variable: organisational commitment bold values are statistically significant (p< .05). table 5 presents the test results for the coefficient of determination of the direct and moderating effects. the results showthat the strengths of the direct influence of nepotism variables on job satisfaction, ocb and organisational commitment are 28.5%, 24.3% and 33.4%and the strengths of the moderating effect of hrmps are 35.7%, 31.3% and 38.3%, respectively. thus, the hrmp variable moderates the three dependent variables (job satisfaction, ocb and organisational commitment) because there is an increase in the effect strength of the nepotism variable after the variable moderation.however, there is no significant moderatingeffecton the relationship between nepotism and ocb. table 5 summary of test results for the coefficient of determination (direct and moderating effects) variable effect direct effect moderating effect r2 r2 nepotism job satisfaction 0.285 0.357 nepotism ocb 0.243 0.313 nepotism organisationalcommitment 0.334 0.383 bold values are statistically significant (p< .05). 5. conclusion in this study, we formulatedthreehypotheses.accordingly, we can conclude that, firstly,hrmps have a moderating effect on the relationship between nepotism and job satisfaction. this moderation is pure moderation because there is no direct effect between nepotism and hrmps on job satisfaction. secondly, hrmps have no moderating effect on the relationship between nepotism and ocb. third, hrmps have a moderating effect on the relationship between nepotism and organisational commitment. the limitation of our study is that the nepotism variable predicts only three components of attitude (job satisfaction, ocb and organisational commitment). for future research, it is necessary to predict other attitude elements that have a potential impact on nepotism(e.g. emotional intelligence, individual decision making, deviant workplace behaviour). variable moderation can also be used by other relevant variables. references abdalla, f.h., maghrabi, s., & raggad, g. b. 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can compete and have a sale value that can be relied on either in a company or organization. the purposes of this study was to answering the formulation of problems regarding the characteristics of millennial generation related to work culture and human resource development strategies for millennial generation. the research method used descriptive qualitative by library research or literature study. the results of this study prove that the strategy being carried out is a way to improve the ability of every individual likes a training responsibility, intensive learning, behavior modification, immediate information, learning practice and patterns. supporting sustainable factors are ability, motivation and opportunity. keywords: development strategy, human resource management, millennial generation 1. introduction the era of globalization is characterized by technological developments and information flows very fast. this causes the company or organization to understand and develop reliable resources to be able to compete in a competitive business environment. one resource in the basic activities of a company or organization is human resources (hr). human resource is the power that comes from in humans. this power called interpreted manpower expertise or skills possessed by every human (safri, 2019). human resorce is the ability within humans to create their status as social beings who can adapt and adjust and are able to regulate themselves and all the potentials contained in nature towards the achievement of the welfare of life in a balanced and sustainable order. the ability, expertise and creativity will not be optimal if it is not sharpened and developed with the development of human resources (farchan, 2018). human resource development is one of the important activities in the company or organization, where employees and companies work together in balance for the company's existence. human resource development can be done in several forms, usually each company has different characteristics according to the situation and also the needs of the company. this is usually done by increasing skills with training and coaching, increasing employee knowledge by means of socialization and education as well as various other ways. human resource development is an effort with the purpose of improving employee skills through education, training and final development in order to carry out duties as employees and have a long-term cycle (miftahuddin et al, 2018). human resource development is usually carried out through work programs in the personnel management department or also called human resource development (hrd). planning a good human resource development strategy in developing strategies to produce quality human resources is a necessity that is the duty of every company or organization leader to achieve the goals set. therefore we need reliable human resources, one of which is millennial generation. given millennial generation is a generation that grows and develops in the era of technological disruption that is very * corresponding author. email address: novikfbr@gmail.com afebi management and business review (ambr) vol.04 no.02, december 2019 92 advanced now. so that demands them to be able to compete so they can exist in their lives. millennial generation is an invaluable asset which if we can process it well it will have a very big impact on changes of company in the future, but if we do not care then it will become a boomerang in the future (armansyahfudin, 2019). millennial generation is a large capital that is expected to have superior potential and ability as a driving force for development. millennial generation in the world of work according to data from the central statistics agency (bps) in 2018 recorded millennial occupying the first position with 33.25% in terms of population composition in indonesia. then followed by generation of z (29.23%), generation of x (25.74%), and finally baby boomers (11.27%) (bps, 2020). these statistics show that the ability to maximize millennial generation and generation z is the key to the performance of the indonesian nation in the future in facing global competition while encouraging productivity growth that impacts the strengthening of the indonesian economy. millennial generation along with advances in information, technology and communication are at the forefront of changes in various socio-economic fields. these changes must be quickly anticipated by companies so they can be able to make adjustments to the changes. this has become one of the new challenges for the world of work, because this generation will dominate the world of work (perdana, 2019). the characteristics of millennial generation are different from previous generations. millennials have characteristics that tend to be critical, creative, have a concern for new technology in accordance with world developments, and want the opportunity to have an impact on company or organization (oktariani et al, 2017). even this will benefit the company, this generation of thought that thinks outside the box generates creative ideas that are useful for the company's progress. not surprisingly, many young employees today can occupy high positions in the company. but on the other hand millennial generation also has standards in finding work. millennials like work that has flexibility both in terms of time and place of work, wants jobs that have meaning as soon as possible, jobs that are challenging and that they think are fun, seek work-life balance and are very enthusiastic about work (berkup, 2014). through the ability of millennial generation as human resources will be able to put the company or organization in a position of competitiveness. based on the description above, it is clearly implied that excellence in competition is largely determined by, among others, human resource management strategies, especially millennial generation. with the development of appropriate human resource strategies, the superiority of human resources owned by company is expected to support the achievement of competitive advantages of company. therefore, it has become imperative that we can maximize this millennial generation in order to exist in their work-life, so we must prepare a development strategy that is very useful for them to face their lives, be it in the economic, social, cultural, knowledge, political, and technology. 2. literature study 2.1 human resources management human resource management is a comprehensive and coherent approach to employment and development people (amstrong, 2014). human resources are the people in the company or organization that contribute ideas and do various types of work in achieving company goals. the intended contribution is the thought and work they do in various activities within the company. in terms of human resources, what is covered is not limited to experts, education staff or experienced personnel, but all the workforce used by the company to realize its goals (sukirno, 2006). this can be understood because all the company's activities in achieving its goals, depends on the people who manage the company concerned. therefore, development strategy of human resource management for millennial generation 93 human resources must be managed in order to be effective and effective in achieving company goals (sopiah & mamang, 2018). the human resorce management factors consist of as follows (rivai, 2004): a. planning human resource planning is workforce planning effectively and efficiently to fit with the company's needs and help make it happen company goals. b. organizing organizing is an activity to organize all employees with a division of labor, employment relations, delegation of authority, integration, and coordination in parts organization. c. direction directing is an activity that directs all employees to cooperate and work effectively and efficiently in helping the achievement of company, employee and community goals. direction is done by the leader by assigning subordinates to do all their duties properly. d. control controlling is all control activities employees to obey company rules and work according to plan. if there are irregularities or mistakes, corrective and refinement measures are taken plan. employee control includes attendance, discipline, behavior, cooperation, work performance and maintain the work environment situation. e. procurement procurement is the process of withdrawal, selection, placement, orientation, and induction to get appropriate employees with company needs. good procurement will help realize the company's goals. f. development development is a process of increasing skills technical, theoretical, conceptual, and employee morale through education and training. education and training are given must be in accordance with the needs of today's work and the future. human resource development is a step continuation of the basic labor supply process aims to ensure and maintain a workforce available, in order to meet the required qualifications and can do work in harmony with strategic planning company, as well as achieving company goals as is planned. g. compensation compensation is direct and indirect granting of compensation directly, money or goods to employees in return services provided to companies. the principle of compensation is fair and worthy. fair is interpreted according to achievement it works, is worth interpreting as being able to meet its primary needs and guided by the government minimum wage and based on internal and external consistency. h. integration integration is an activity to unite the interests of the company and the needs of employees to create harmonious and mutually beneficial cooperation. the company makes a profit, employees can meet the needs and results of their work. i. maintenance maintenance is an activity to maintain or improve physical, mental, and employee loyalty conditions in order they still want to work together until retirement. maintenance which is well done with a welfare program based on the needs of most employees as well based on internal and external consistency. j. discipline discipline is a management function the most important human resource and the key to its realization goals because without discipline it's difficult to realize that goal maximum. discipline is the desire and awareness for obey company rules and norms social. afebi management and business review (ambr) vol.04 no.02, december 2019 94 k. dismissal dismissal of employment is a termination of one's employment from the company. termination is caused by desire employees, company desires, work contracts expire, retirement, and other reasons. human resources are a very valuable investment for an organization that needs to be maintained. each organization must prepare a program that contains activities that can improve the ability and professionalism of human resources so that the organization can survive and develop in accordance with the organizational environment. to achieve maximum productivity, organizations must ensure that the right workforce is chosen with the work and conditions that enable them to work optimally (hasibuan, 1986). the benefits of developing human resources, namely (mathis, 2002): a. increased work productivity. b. the realization of a harmonious relationship between superiors and subordinates. c. the availability of a decision process that is fast and precise. d. increased morale of all members in the organization. e. encourage management openness attitude. f. facilitating effective communication. g. functional conflict resolution. 2.2 millennial generation millennial generation is the generation born in the early 1980s to 2000. this generation is often referred to as gen-y, net generation, we generation, boomerang generation, peter pan generation, and others. they are called millennial generation because they are the generation that lives at the turn of the millennium. simultaneously in this era digital technology began to penetrate into all walks of life (hidayatullah et al, 2018). generation y is known as millennial or millennial generation. the phrase generation y began to be used in editorials of major us newspapers in august 1993. this generation uses a lot of instant communication technologies such as email, sms, instant messaging and social media such as facebook and twitter, instagram and others, so in other words generation y is generation that grew up in the era of the internet booming (ahmad et al, 2019). based on these definitions, it can be concluded that millennial generation is the generation born between 1980-2000 during the rapid technological progress. when viewed from the age group, millennial generation is the generation that is currently in the age range of 15-34 years. generation y has personal abilities or personal above average because they understand the work they are struggling and they are more confident with that ability they have, because of generations millennial is a generation that is live in an age of technology and information that is growing rapidly so they are easily deep finish the work they are do, assisted with abilities communicate good from their personality. 3. research methodology this research method used qualitative with research design by library research or literature study. literature study is a method that uses existing relevant reading sources, which are in line with the topics to be discussed and expanded on understanding (zed, 2014). the data obtained in this study obtained through library sources or documents. then the data processing is carried out. data processing purposes to facilitate the analysis data. the data analysis technique used is analysis descriptive research-related references. various references that are relevant and tied to the topic presented are used as reading material, to understand carefully the contents of development strategy of human resource management for millennial generation 95 the thoughts of the characters whose results are the subject of this paper or a variety of responses and studies that are crucial and important to the results of these thoughts. this paper was developed from a variety of reading sources that are presented with the purposes of answering the formulation of problems regarding the characteristics of millennial generation related to work culture and human resource development strategies for millennial generation. 4. results 4.1 development strategy of human resource management to improve human resources to be more effective and efficient, appropriate steps are needed so that the objectives to be achieved can be met. the strategy of developing human resource development is the steps taken so that each individual can be given a method that is in accordance with the capabilities they have, so that he can accept what is given to him to be used as stock to be able to compete in all sectors of life. in human resource management, there are strategies that can be used to improve the development of competencies or abilities for each individual to be able to exist and compete, known as human resource training and development. the various training and development programs are as follows: a. training responsibility (miftahuddin et al, 2018). b. intention to learn (armansyahfudin, 2019). c. behavior modification the following approaches can be taken to achieve these goals, namely as follows: (perdana, 2019). 1. positive reinforcement 2. negative reinforcement d. immediate information (safri, 2019). e. learning practice and patterns (farchan, 2018). employee performance and productivity is one of the core competencies that must be achieved, where employees not only have skills and experience, but commitments and motivations that are shaped by a good company’s culture and climate so that they can support the company's profit growth. the objective of a company in the era of technological disruption is no longer just about profit, but sustainability in the midst of intense competition. the company's success in surviving, even winning business competition becomes the main objective that must be supported and achieved by every element of the company. competent and superior human resource management, supported by a good company culture and climate, is one of the keys to success, which can be described in the model below (schneider, ehrhart and macey, 2012): afebi management and business review (ambr) vol.04 no.02, december 2019 96 type of culture assumptions belief (competing values framework) values behaviors effectiveness criteria phase of company adhocracy change people behave appropriately when they understand the importance and impact of the task growth, stimulation, variety, autonomy risk tasking, creativity, adaptability innovation the era of technological disruption figure 1 company sustainability 4.2 millennial generation characteristics related to work culture millennial generation has different characteristics from the previous generation. millennial generation is concerned about new technology in accordance with world developments. the impact of this generation tends to be more active in trying new things at work. this generation also tends not to be afraid of changes that occur in the company, this makes the millennial generation able to face problems that arise in the work (oktariani et al, 2017). millennial generation is more cooperative and optimistic compared to the previous generation and has a high educational background (yulyanti et al, 2016). however, it cannot be denied that the dependence of millennial generation on technology makes this generation spoiled with such convenience. this condition often leads to the assessment that millennial is an ambitious and arrogant generation. this is a consequence of the mastery of technology owned by millennials so that they can make them competitive in achieving an outcome. millennials are also known for their character of being easily bored, having a low tendency towards commitment and loyalty, being less serious and underestimating work (onibala, 2016). this is because this generation feels that their intelligence is needed by the company. millennials expect work that has meaning as soon as possible because of their impatient personalities. this generation can easily change jobs (turnover) if the company is not able to give the position they want (berkup, 2014). in addition to the above characteristics, millennial generation at work has different characteristics compared to previous generations, including (bps, 2018): a. millennial doesn't really pursue job satisfaction, but what millennial wants is the possibility of developing themselves in the job (learning new things, new internal promotion extensive training high pay non-union flexible work rules organization culture and climate core competency delivered by values skilled experienced committed motivated employees outstanding employee performance productivityup business outcome growth revenue lower cost growth profit suistainable competitive advantage development strategy of human resource management for millennial generation 97 skills, new angles, getting to know more people, taking opportunities to develop, etc.) b. millennials do not want a boss who is bossy and controlling. c. millennials don't want annual reviews, millennials want on going conversations. d. millennials do not think to improve their shortcomings, millennials think more about developing their strengths. e. millennials consider compensation in choosing work. f. millennial generation also prioritizes the value of a balance between work and personal life (work-life balance). g. the verbal communication behavior of millennial generation which is open, frontal, and confrontational. table 1 intergenerational characteristics (anantatmula & shrivastav, 2012) baby boomers gen-x gen-y (millennial) period 1946-1964 1965-1979 1980-2000 workplace traits team orientation, optimistic, loyal, hard working practical, pessimist, work life balance, technical, independent, be adapted ambitious, trust selft, work life balance, multi tasking, independent leadership style influencing, mentoring practical, goal oriented flexible, lack of social grace motivation ability, bonuses, incentives, contribution time-off as incentive higher position, monetary gains, lower need for social approval learning sytle clasroom, instructurefocused technology focus, mentors creative thinking, visual 5. discussion the role of human resources in companies can be elaborated in terms of human resource theory, where the function of the company or organization is to mobilize all resources or internal capabilities to face market interests as the main external factor. whatever its shape and purpose, a company is created based on various visions for human interests and in the implementation of its mission is managed and managed by humans. thus, humans are a strategic factor in all institutional or organizational activities. furthermore, human resource management means managing, managing human resources based on the company's vision so that organizational goals can be achieved optimally. human resource management is a comprehensive and coherent approach to employment and development people (amstrong, 2014). human resources are the people in the company or organization that contribute ideas and do various types of work in achieving company goals. the intended contribution is the thought and work they do in various activities within the company. in terms of human resources, what is covered is not limited to experts, education staff or experienced personnel, but all the workforce used by the company to realize its goals (sukirno, 2006). the main objective of human resource management is to increase the contribution of employees to the company or organization in order to achieve the productivity of the organization afebi management and business review (ambr) vol.04 no.02, december 2019 98 concerned. this can be understood because all the company's activities in achieving its goals, depends on the people who manage the company concerned. therefore giving effective development strategy and efficient especially for generations millennial now is a which must be done. remembering millennial generation is a generation that is grow and develop in the era very advanced technology now this. millennial generation is the generation born in the early 1980s to 2000. this generation is often referred to as gen-y, net generation, we generation, boomerang generation, peter pan generation, and others. they are called millennial generation because they are the generation that lives at the turn of the millennium. simultaneously in this era digital technology began to penetrate into all walks of life (hidayatullah et al, 2018). generation y has personal abilities or personal above average because they understand the work they are struggling and they are more confident with that ability they have, because of generations millennial is a generation that is live in an age of technology and information that is growing rapidly so they are easily deep finish the work they are do, assisted with abilities communicate good from their personality. millennial generation has different characteristics from the previous generation. millennial generation is concerned about new technology in accordance with world developments. the impact of this generation tends to be more active in trying new things at work. this generation also tends not to be afraid of changes that occur in the company, this makes the millennial generation able to face problems that arise in the work (oktariani et al, 2017). millennial generation is more cooperative and optimistic compared to the previous generation and has a high educational background (yulyanti et al, 2016). however, it cannot be denied that the dependence of millennial generation on technology makes this generation spoiled with such convenience. this condition often leads to the assessment that millennial is an ambitious and arrogant generation. this is a consequence of the mastery of technology owned by millennials so that they can make them competitive in achieving an outcome. millennials are also known for their character of being easily bored, having a low tendency towards commitment and loyalty, being less serious and underestimating work (onibala, 2016). this is because this generation feels that their intelligence is needed by the company. millennials expect work that has meaning as soon as possible because of their impatient personalities. this generation can easily change jobs (turnover) if the company is not able to give the position they want (berkup, 2014). in addition to the above characteristics, millennial generation at work has different characteristics compared to previous generations, including (bps, 2018): a. millennial doesn't really pursue job satisfaction, but what millennial wants is the possibility of developing themselves in the job (learning new things, new skills, new angles, getting to know more people, taking opportunities to develop, etc.) b. millennials do not want a boss who is bossy and controlling. c. millennials don't want annual reviews, millennials want on going conversations d. millennials do not think to improve their shortcomings, millennials think more about developing their strengths. e. millennials consider compensation in choosing work. f. millennial generation also prioritizes the value of a balance between work and personal life (work-life balance). g. the verbal communication behavior of millennial generation which is open, frontal, and confrontational. with behaviors that prioritize applicable processes and technology, millennials are willing to contribute more and extra work hours but they are sensitive to personal time related to hobbies. specifically millennials like work environments that have (a) clarity in their duties and responsibilities to manage work rhythm (b) time flexibility (c) comfortable work environment (d) opportunities to develop themselves according to aspirations and (e) challenges in profession (paramitha & ihalauw, 2018). this actually makes this generation more exploratory and has the intuition and courage to development strategy of human resource management for millennial generation 99 speak. but this behavior is also often misinterpreted by previous generations as a form of immaturity or immodesty (saragih et al, 2016). the characteristics of millennial generation show the opportunity for the development of mind sets as the workforce is so focused and structured. this requires several strategies for developing human resource management. to improve human resources to be more effective and efficient, appropriate steps are needed so that the objectives to be achieved can be met. the strategy of developing human resource development is the steps taken so that each individual can be given a method that is in accordance with the capabilities they have, so that he can accept what is given to him to be used as stock to be able to compete in all sectors of life. in human resource management, there are strategies that can be used to improve the development of competencies or abilities for each individual to be able to exist and compete, known as human resource training and development. the various training and development programs are as follows: a. training responsibility in increasing the competency of each individual responsible training is something that must be done. people who can take responsibility for their actions and take responsibility for their actions are only those who make decisions and act without pressure from any party or freely. training is carried out so that having a sense of responsibility must be carried out since they join a company or organization (miftahuddin et al, 2018). millennials are people who have extraordinary talent because they are developing in the world of advanced technology. therefore they will easily be able to adjust the work they will do. millennials are individuals who must be trained to have a high sense of responsibility. the process of developing a sense of responsibility for the millennial generation can be done by giving confidence to them to hold a position or job that requires them to be able to provide maximum results about the results of the position they hold or the work they do. a leader who has given responsibility to a millennial generation to hold a position must be able to set an example and control that individual so that the tasks and responsibilities that are given can be completed quickly and precisely according to the goals and ideals to be achieved. b. intention to learn intensive learning must be given to millennials. because with intensive learning (intention to learn) will increase the skills and abilities of each individual. intensive learning in an institution or company is a training that is given regularly and continuously in order to maintain the existence and hone the skills possessed to be better. improving the ability of self for each individual belonging to the millennial generation is a must and is very necessary, because the competition that occurs in the world of work is very tight and competitive (armansyahfudin, 2019). so for millennials who do not have abilities above the average will be easily excluded and will not be able to compete. therefore intensive learning that is given through structured and ongoing training such as giving seminars and workshops in accordance with the qualifications of the knowledge they have or the work that is being done is a very useful step. so that the goals or ideals of a company or organization will be very easily achieved, because it has quality and reliable human resources. c. behavior modification every work carried out by the millennial generation is very easily accomplished by them because they have an understanding of the structure in which they work and what systems help them. modifying behavior is an attempt to change human behavior and emotions in a way that is advantageous based on the laws of modern learning processes. behavior modification is an attempt to increase competitiveness or ability for each individual. the following approaches can be taken to achieve these goals, namely as follows (perdana, 2019): a) positive reinforcement the first approach is positive reinforcement. this approach will pair positive stimulus with behavior. this technique is very commonly done by strengthening afebi management and business review (ambr) vol.04 no.02, december 2019 100 behavior using a reward system. a leader who often gives rewards to every individual, especially the millennial generation will motivate the individual to continue to exist. because millennial generation is a generation that really needs respect for themselves. so that being given an award will increase their trust and existence to be higher. b) negative reinforcement contrary to the previous point about positive reinforcement, the second approach is negative reinforcement. this approach is a couple between certain behaviors and negative stimulus removal. this method will provide training on the subject of behavior using amplifiers that are negative. with this negative reinforcement, the behavior will be tried to be eliminated. one example of negative reinforcement is the application of disciplinary action by supervisors to make employees make sure their work is on target. in this case, disciplinary action is a negative reinforcement and completing work according to target is the expected behavior. d. immediate information the next strategy is immediate confirmation, which is a situation in which a person is demanded to be able to provide accurate and correct information in accordance with what can or can be heard or obtained from the field. how to confirm a job or information that is not in accordance with the events that occur will result in chaos in a company or organization. so the emphasis on confirming a truth must be instilled in each individual. for millennials who live in the era of technological disruption, confirming a truth is a must. therefore honesty for millennial generation is very expensive (safri, 2019). e. learning practice and patterns for millennial generation practices and learning patterns are demanded to be more varied. so that through practice and varied learning patterns will produce quality abilities and skills. in developing self ability, millennial generation must be demanded to carry out more practices in the field to produce superior individuals. one of the practices that can be done is on the job training. on the job training or also referred to as training with job instructions as a method of training by means of workers or prospective workers placed in real work conditions, under the guidance and supervision of experienced employees or a supervisor. next practice that can be done is an internship. internships involve learning from more experienced workers, and can be added to the off the job training technique. many workers skills are trained through official apprenticeship programs (farchan, 2018). employee performance and productivity is one of the core competencies that must be achieved, where employees not only have skills and experience, but commitments and motivations that are shaped by a good company’s culture and climate so that they can support the company's profit growth. the objective of a company in the era of technological disruption is no longer just about profit, but sustainability in the midst of intense competition. the company's success in surviving, even winning business competition becomes the main objective that must be supported and achieved by every element of the company (vittal and bobby, 2012). competent and superior human resource management, supported by a good company culture and climate, is one of the keys to success. sustainable strategies in developing human resource management for millennial generation can be done with a model of ability, motivation and opportunity. ability, namely the ability to perform tasks because they have knowledge, work abilities or skills, and talents. motivation, which is the desire to do the task of one's own desire or feel compelled to do the task. opportunity, which is a work structure and a supportive environment and a place to express oneself. the combination of the three strategies will support and spur employees to bring out the best potential in work so as to increase work productivity. this will have an impact on the company's revenue growth and lower costs. revenue growth and cost reduction will have an impact on profit growth development strategy of human resource management for millennial generation 101 in line with the company's long-term sustainability. 6. conclusion development strategy of human resource management for millennial generation is a step purposed at producing superior individuals who have characteristics and abilities that can compete and have a sale value that can be relied on either in a company or organization. the strategy being carried out is a way to improve the ability of every individual likes a training responsibility, intensive learning, behavior modification, immediate information, learning practice and patterns. supporting sustainable factors are ability, motivation and opportunity. planning a good human resource development strategy in developing strategies to produce quality human resources is a necessity that is the duty of every company or organization leader to achieve the goals set. therefore we need reliable human resources, one of which is millennial generation. the development strategy that has been analyzed is a strategy that can be used in order to develop interpersonal skills for millennial generation. references ahmad, w, 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(2014). metode penelitian kepustakaan. jakarta: yayasan pustaka obor indonesia. measuring the performance of regional government: using data envelopment analysis (dea) approach 24 measuring the performance of regional government: using data envelopment analysis (dea) approach zainal putra31*, muzakir2, and ishak hasan3 1, 2 universitas teuku umar, indonesia 3universitas syiah kuala, indonesia abstract the realization of regional government expenditure in aceh province from 2011 – 2015 has reached the figure of rp84.260.616.926.552,00. however, the indicator data of aceh people’s welfare in 2016 provided information of unemployment rate in aceh in 2015 at 9,93%. this exceeds the national unemployment rate in the same period of 6.2%. likewise, the poverty rate of aceh province in 2015 was at 17.08%. while nationally, the unemployment rate was at 11.13%. this condition indicated that the regional government were still unable to prosper the people, which also means that the governments were underperformed. this was possible because of inefficient use of resources. efficiency does not only apply to private sector but also public sector. public sector organizations are now required to be able to operate efficiently to improve the performance. nowadays, the performance of the local government has been criticized by the public. therefore, it is necessary to develop a performance measurement toward public organization to know the extent of performance in a certain period accurately. this study aims to determine the efficiency level of regency / city governments in aceh province. by using the data envelopment analysis (dea) approach, it is possible to observe which regency / city governments are performing well. this study uses input variables including regional expenditure, assets, population, civil servants and area. output variables used include regional original income (pad), human development index (hdi) and per capita income. the result shows that from 23 regency / city governments in aceh province, in the overall average from 2011 2015, there were only 5 regency / city governments (21.74%) who were efficient in running their government (efficiency score 1.00) , namely banda aceh, langsa, lhokseumawe, sabang and subulussalam. therefore, the regency / city government has a good performance. keywords: performance and dea, regency / city governments 1. introduction there are 18 regency government and 5 city government in aceh. based on the republic of indonesia bpk lhp data on lkpd, total assets of all regency / city governments in aceh province until 2015 were amounted to rp.43,431,771,119,138.60. in addition, the realization of regional expenditure from 2011 2015 had reached the figure of rp. 84,260,616,926,552.00. table 1 realization of regional expenditures of regency / city governments in aceh province, period 2011 2015 year regional expenditure realization 2015 23.195.489.404.293,10 2014 20.119.142.615.243,90 2013 15.362.169.716.206,90 2012 13.165.429.386.639,50 2011 12.418.385.804.168,70 total 84.260.616.926.552,00 * corresponding author. email address: zainalputra@utu.ac.id afebi management and business review (ambr) vol.03 no.02, december 2018 25 from the results of the evaluation of the performance accountability report for the 2017 fiscal year submitted by ministry of administrative and bureaucratic reform (menpan rb) on january 28, 2018 to the regional government, it was found that the aceh provincial government received "b" grade. meanwhile, for regency / city government, the average score is "c" (siswanto: 2018). it should be noted that the performance evaluation of local governments is carried out by the ministry of administrative and bureaucratic reform. in accordance to permenpan and rb number 25 of 2012 concerning the implementation guidelines for evaluating the performance of government agencies, there are 6 (six) categories of performance appraisal accountability of local governments, namely: aa category, with the scores of > 85 100, satisfactory. a category, with the score of > 75 85, very good. b category, with the score of > 65 75, good. cc category, with the score of > 50 65, enough. c category, with the score of > 30-50, less. d category, with the scores of 0 30, very less. therefore, aceh provincial government with "b” grade can be categorized as "performing well". whereas the regency / city governments that "c" grade, are categorized as underperformed. thus, it can be concluded that the funds of rp. 84,260,616,926,552.00 which have been spent by the regency / city government in the period 2011 2015 have not been able to prosper the community. this also means that the regional / city governments in aceh province were not efficient in using the resources which results in not achieving optimal output. ideally, every budget spent by the local government should provide added value to the community. this is supported by the indicator data of aceh people’s welfare in 2016 which provided information of unemployment rate in aceh in 2015 is at 9,93%. this exceeds the national unemployment rate in the same period of 6.2%. likewise, the poverty rate of aceh province in 2015 was at 17.08%. while nationally, the unemployment rate was at 11.13%. this condition indicated that the local government werestill unable to prosper the people, which also means that the governments were underperformed. this is possible because of inefficient use of resources. efficiency does not only apply to private sector but also public sector. public sector organizations are now required to be able to operate efficiently to improve the performance. nowadays, the performance of the local government has been criticized by the public. in other words, there is increasingly high demand of the society for the accountability of the performance of state administrators for the trust mandated to them (mahsun, 2016: 26). therefore, it is necessary to develop a performance measurement toward public organization to know the extent of performance in a certain period accurately. mardiasmo (2009: 121) states that accountability is not just the ability to show how public money is spent, but includes the ability to show that public money has been spent economically, efficiently and effectively. therefore the government is obliged to improve the efficiency and effectiveness of public services. thus, this study aims to analyse the efficiency level of regency/city government in aceh province to understand which regency / city governments have good performance. 2. literature review regional government every regional is led by a head of regional government known as local leader. the local leader of provincial area is called governor, for regency area it is called the regent, and for the city area it is called the mayor. the term of office of the regent/mayor is for 5 (five) years starting from inauguration day and can be re-elected for the same position for only one term of office afterwards. many people misunderstood the terminology of regional government and local leader. referring to article 1 paragraph (2) and paragraph (3) of law number 23 year 2014 concerning regional government, what is meant by regional government is the administration of measuring the performance of regional government: using data envelopment analysis (dea) approach 26 government affairs by regional governments and regional legislatures according to the principle of autonomy and co-administration with the principle of autonomy wideranging in the system and principles of the unitary state of the republic of indonesia as referred to in the 1945 constitution of the republic of indonesia. while the local leader is the regional head as an element of regional government administrators who lead the implementation of government affairs under the authority of autonomous regions. structurally, the indonesian government is divided into provincial and regency / city governments. the governor as head of the provincial government is the representative of the central government in the region. in order to assist in the administration of government affairs which are the authority of the regions, the regional heads form the regional apparatus. local government administrators in carrying out regional governance are guided by the principles of the implementation of state governance which consists of: legal certainty, orderly state administration, public interest, openness, proportionality, professionalism, accountability, efficiency, effectiveness and fairness (article 58 of law no. 23/2014 on government area). there are 18 regency governments and 5 city governments in aceh, namely aceh barat regency, aceh barat daya regency, aceh besar regency, aceh jaya regency, aceh jaya regency, aceh selatan regency, aceh singkil regency, aceh tamiang regency, aceh tengah regency, aceh tenggara regency, aceh timur regency, aceh timur regency, aceh utara regency, bener meriah regency, bireun regency, gayo lues regency, nagan raya regency, pidie regency, pidie raya regency, simeulue regency, banda aceh city, langsa city, lhokseumawe city, sabang city, dan subulussalam city. regional government performance in running the government organization, the regional government uses public funds called the regional budget (apbd). according to article 1 paragraph (9) ministry of home affair regulation number 13 of 2006 concerning guidelines for regional financial management, apbd is the annual financial plan of regional government discussed and agreed upon by the regional government and dprd and stipulated by regional regulations. apbd are implemented from january to december of the year concerned. in addition to routine expenditure on regional equipment, such as employee expenditure and office expenditure, the largest portion of the apbd is used for regional development expenditure and for public service expenditure. the regional government as the party that runs the apbd acts as a reporting entity. the reporting entity is a government unit consisting of one or more accounting entities that are obliged to submit accountability reports in the form of financial statements. in accordance to the mandate of article 2 of government regulation number 8 of 2006 concerning financial reporting and performance of government agencies, the regional government as a reporting entity is obliged to submit performance reports as a form of accountability for the implementation of the regional budget, in addition to the obligation to submit financial statements. the regent/mayor on behalf of the regional government submits the performance report and financial report to the dprd, the people's representative in the area. according to article 1 paragraph (2) government regulation number 8 of 2006 concerning financial reporting and performance of government agencies, performance is defined as the output / outcome of activities / programs that are intended or have been achieved related to the use of budget with measurable quantity and quality. while the performance report is an overview that explains the performance achievements which are compiled based on the work plan stipulated in the framework of implementing the apbd in a concise and complete manner. mahsun (2016 : 25) define performance as a description of the level of achievement of an activity / program / policy in achieving the goals, objectives, vision and mission of the organization stated in the organization strategic plan. the term performance is often used to refer to achievement, or the level of success of an afebi management and business review (ambr) vol.03 no.02, december 2018 27 individual or group. mahsun (2016: 25) further explained that performance measurement is a process of evaluating the progress of work towards predetermined goals and objectives. according to mardiasmo (2009: 121) the public-sector performance measurement system is a system that aims to help public sector managers to assess the achievement of a strategy through financial and non-financial instruments. performance measurement systems can be used as a performance control tool. it is known that performance measurement is very important to assess the accountability of organizations and managers in producing better public services. mardiasmo (2009: 121) further states that accountability is not just the ability to show how public money is spent but includes the ability to show that public money has been spent economically, efficiently and effectively. zhonghua and ye (2012) stated that public sector organizations are unique. generally, this organization have many stakeholders and goals. furthermore according to zhonghua and ye (2012) there are external factors and internal factors that affect the performance of public sector organizations. the external factors are the targeted service market and market share. while internal factors consist of: a. organizational strategy and objectives; b. system; c. structure and type of organization; d. organizational management level; e. organizational culture; f. high organizational commitment; g. autonomy for decision making. mardiasmo (2009: 122) admits that measuring the performance of public sector organizations is not as easy as measuring the performance of private sector organizations. this is because public sector organizations are multi-dimensional and non-profit oriented. on the other hand, performance measurements are used by the legislature to determine the feasibility of service costs charged to the users of public services. nowadays, the performance of government agencies has received much attention from the public. they began to question the benefits obtained from the services of government agencies. in other words, the demands of the community are increasingly high for the accountability of the performance of state administrators for the trust mandated to them (mahsun, 2016: 26). therefore, it is necessary to develop a performance measurement toward public organization to know the extent of performance in a certain period accurately compares to what has been planned. article 20 paragraph (6) government regulation number 8 of 2006 concerning financial reporting and performance of government agencies, confirms that there is a relationship between performance reports and financial statements. it was explained that the relationship lies in the implementation of government activities / programs, which use a number of financial resources. without budget support, the government activities / programs cannot be implemented. the accountability of the implementation of government activities / programs supported by the budget is explained in the performance report. while the responsibility for using a number of financial resources in the context of implementing government activities / programs is explained in financial statements. as a form of accountability to the people, the regional head is obliged to submit a performance report to the dprd no later than 2 (two) months after the fiscal year ends. the performance report contains the output of each activity and the results achieved from each program as stipulated in the apbd implementation document. the performance accountability system of government agencies is developed in an integrated manner with planning systems, budgeting systems, treasury systems and government accounting systems. the assessment of the financial management title by the regional government is carried out by the supreme audit agency (bpk) through an opinion statement on the local government financial report (lkpd). opinion is a professional statement as the conclusion of the examiner regarding the level of fairness of the information presented in the financial statements. according to article 16 paragraph (1) of law number 15 of 2004 concerning examination of management and responsibility of state finance, measuring the performance of regional government: using data envelopment analysis (dea) approach 28 there are 4 (four) types of opinions that can be given by the examiner, namely: unqualified opinion, qualified opinion, adversed opinion and disclaimer of opinion. the assessment of local government performance is carried out by the ministry of administrative reform and bureaucratic reform. according to the ministry of administrative reform and bureaucratic reform regulation (permenpan dan rb) number 25 year 2012 concerning implementation guidelines for evaluating performance accountability of government agencies, there are 6 (six) categories of performance accountability assessment as presented in the table below. tabel 2 performance accountability assessment category of local government / government agency no. category scores interpretation 1. aa > 85 100 satisfactory 2. a > 75 85 very good 3. b > 65 75 good 4. cc > 50 65 enough 5. c > 30 50 less 6. d 0 30 very less sources: ministry of administrative and bureaucratic reforms regulation number 25 year 2012 concerning implementation guidelines for evaluating performance accountability of government agencies therefore, according to the author, the status of the level opinion on the local government financial statements provided by the bpk to the local government should ideally be in line with the category of regional government performance appraisal provided by ministry of administrative and bureaucratic reforms. although the evidence in the field are contradicting each other. for example, a regional government gets a unqualified opinion (wtp) from the bpk for its lkpd, but ministry of administrative and bureaucratic reforms provides a "cc" scores for the performancse of the local government as mentioned above, performance measurement in public sector organizations is multi-dimensional, so it is rather difficult to do. the measurement of performance carried out so far is only based on the achievement of output as previously set. but according to the author it is not enough. the end result of performance measurement in public sector organizations should be the welfare or prosperity felt by the people. regarding this, as far as the authors know, there has been no research in that direction. therefore, the author in this study tried to measure the performance of public sector organizations, in this case the regional government in aceh province, in a different way by using the data envelopment analysis (dea) approach. this approach uses multi variable input and multi variable output. input variables include regional expenditure, assets, population, civil servants and area. input variables are input resources owned by the organization which further be used to create output. the output variables used are regional original income (pad), human development index (hdi) and per capita income. pad is regional income that is gained by the region itself from potential local sources of income, such as regional taxes, regional retribution, the results of separated regional wealth management and other legitimate local revenue. the greater the amount of pad gained, the more independence an area is. this means that the area is not too dependent on external funding sources. therefore, the area with higher pad is performing well. hdi is an important indicator to measure success in an effort to build the quality of human life. the hdi also explains how the people can access the development result in order to achieve income, health, education and so on. hdi was first introduced by undp in 1990. hdi was formed by three basic dimensions, namely longevity and healthy life, knowledge and decent living standards (central statistics agency, 2015). the benefits of hdi include: (a). an important indicator to measure afebi management and business review (ambr) vol.03 no.02, december 2018 29 success in an effort to build the quality of human life, (b). can determine the ranking or level of development of a region / country, and (c). as a measure of government performance. therefore, it is implied that high hdi rate indicates that the area is performing well. per capita income is the average income of the population of a country for a certain period. usually the higher the income per capita rate, the prosperity of the people is considered to be higher. per capita income is calculated by dividing national income (usually gross domestic product) by the number of population in a certain country. rahardja and manurung (2004: 221) states that there is a positive relationship between per capita income and the level of social welfare. this means that the higher the income per capita, the higher the level of social welfare. so that people's purchasing power, employment opportunities and the future of the economy are improving. data envelopment analysis (dea) dea was first introduced by charnes, cooper and rhodes (1978) from the university of texas, usa, harvard university, usa, and state university of new york, usa respectively. charnes, cooper and rhodes (1978) developed dea to evaluate non-profit sector organizations and public-sector organizations. dea is then growing and is widely used to measure performance in various other organizations. linear programming is the underlying methodology that makes the dea very strong when compared to alternative productivity management tools. dea has been widely studied, used and analyzed by academics who understand linear programming according to yannick, hongzhong and thierry (2016), dea is part of a nonparametric approach and is very useful for measuring the efficiency of decision-making units. in line with that, firdaus and hosen (2013) stated that dea is a non-parametric method used to measure the level of efficiency of an economic activity unit (uke). in addition, dea is a method used to evaluate the efficiency of a decision-making unit that is responsible for using a number of inputs to obtain a targeted output. in particular, dea is the development of linear programming techniques in which there are objective functions and constraint functions. dea was developed to measure organizational performance. this technique has been used successfully to assess the performance of a number of organizations that use a variety of similar inputs and also produce a variety of similar outputs. decisionmaking units (dmus) are decision-making units whose efficiency is being measured. therefore, dea measures how efficiently a dmu uses available resources to produce a set of outputs (ramanathan, 2003: 26). dmu can include manufacturing units, large organizations such as universities, schools, bank branches, hospitals, police stations, tax offices and so on. the performance of dmu assessed in dea is to use the concept of efficiency or productivity, which is the ratio of total output to total input. the best performing dmus are given a one or 100 percent efficiency score.dea is very suitable to measure the level of efficiency (performance) of a non-profit organization or public sector dmu. whereas with other methods it is difficult to do, because it uses multiple input variables and multiple output variables. the measurement of local government performance with the dea approach has never been conducted before. therefore, the author is only based on the idea of measuring performance on other public sectors that use this dea approach. the measurement of public sector performance with the dea approach has been carried out a lot. hookana (2011) measured the effectiveness, efficiency and quality of public sector services in finland. zhonghua and ye (2012), measured the performance of the public sector in beijing. mikusova (2015), measured the efficiency of public universities in czechoslovakia. mbonigaba and oumar (2016), measured the efficiency of city governments in south africa in providing health services to the community. alabdulmenem (2017), measured the efficiency of state universities in saudi arabia. silvia, alexandrina, andreea and razvan (2017), measured performance through the efficiency of the public health service system in romania. measuring the performance of regional government: using data envelopment analysis (dea) approach 30 3. research method research object in this study, data collection was conducted on 23 regency/city governments in aceh province, 2011 – 2015 period or for 5 years. table 3 lists of regency / city governments in aceh province no. regency/city period 2011 2012 2013 2014 2015 1. aceh barat √ √ √ √ √ 2. aceh barat daya √ √ √ √ √ 3. aceh besar √ √ √ √ √ 4. aceh jaya √ √ √ √ √ 5. aceh selatan √ √ √ √ √ 6. aceh singkil √ √ √ √ √ 7. aceh tamiang √ √ √ √ √ 8. aceh tengah √ √ √ √ √ 9. aceh tenggara √ √ √ √ √ 10. aceh timur √ √ √ √ √ 11. aceh utara √ √ √ √ √ 12. bener meriah √ √ √ √ √ 13. bireuen √ √ √ √ √ 14. gayo lues √ √ √ √ √ 15. nagan raya √ √ √ √ √ 16. pidie √ √ √ √ √ 17. pidie jaya √ √ √ √ √ 18. simeulue √ √ √ √ √ 19. banda aceh √ √ √ √ √ 20. langsa √ √ √ √ √ 21. lhokseumawe √ √ √ √ √ 22. sabang √ √ √ √ √ 23. subulussalam √ √ √ √ √ research variable and data collection. this study uses 5 input variables and 3 output variables. the input variables used are regional expenditure, assets, population, civil servants and area. while the output variables used are regional income (pad), human development index, and income per capita. the data for input and output variables were obtained from regency / city documents issued by the central bureau of statistics (bps) regency / city from 2011 2015 in the form of figures. some data were obtained from audited financial report document issued by the supreme audit agency (bpk) representatives of aceh province for each regency / city in aceh province from 2011 2015. afebi management and business review (ambr) vol.03 no.02, december 2018 31 table 4 operational variables variables definition scale a. input variables 1.regional expenditure regional expenditure is the regional government’s obligation which is recognized as a deduction from net worth. regional expenditure is measured in rupiah. data on regional expenditures are obtained from the report of bpk audit result of aceh province on the local government financial statements (lkpd) in aceh province. [1] & [2] ratio 2. asset assets are economic resources controlled and / or owned by the government as a result of past events and from which future economic and / or social benefits are expected to be obtained, both by the government and the community, and can be measured in money unit,including nonfinancial resources needed to provide services to the public and resources maintained for historical and cultural reasons. assets are measured in units of rupiah. asset data is obtained from audit report of bpk representatives of aceh province on local government financial statements (lkpd) in aceh province. [3] & [4] ratio 3. population population are all people domiciled in the territorial area of the regency / city government for 6 months or more and / or those who domicile less than 6 months but aim to settle. population is measured by person. population data were obtained from bps regency / city in aceh province. [5] & [6] ratio 4. civil servant civil servants (pns) are indonesian citizens who fulfill certain conditions, are appointed as state civil service officer (asn) permanently by staffing officials to hold government positions. civil servants are measured in person unit. pns data were obtained from bps regency / city in aceh province. [7] & [8] ratio 5. area the area is places located in the territorial power of a region (regency / city), both land and sea, in which the jurisdiction of the region (regency / city) is applied. the area ends at the boundary of the region with physical conditions such as rivers, mountains and others. the area is measured in units of m2. area area data were obtained from bps regency / city in aceh province. [9] & [10] ratio b. output variables 1. regional original income (pad) regional original income (pad) is all income received through a regional general cash account that adds funds equity, is a [11] & [12] ratio measuring the performance of regional government: using data envelopment analysis (dea) approach 32 regional right in one fiscal year and does not need to be repaid by the region. the pad group consists of regional taxes, regional levies, the results of separated regional wealth management and other legitimate local revenue. pad is measured in units of rupiah. the pad data of each regency / city government were obtained from the report bpk's audit results of province of aceh on the local government financial statements (lkpd) in aceh province. 2. human development index the human development index (hdi) measures human development outcomes based on a number of basic components of quality of life. as a measurement of life quality, hdi is built based on basic threedimensional approach. these dimensions include: longevity and healthy life, knowledge and decent living standards. hdi is measured in units of index numbers. the 2011 2015 hdi data were obtained from hdi data published by the central statistics agency (bps). [13] & [14] ratio 3. percapita income per capita income is the quotient between regional income at current prices and the number of mid-year residents. regional income per capita can be seen on the basis of current prices or at constant prices. in terms of macroeconomic, regional income per capita can be used as a measure of the prosperity level of a region. per capita income is measured in units of rupiah. data on per capita income were obtained from the central statistics agency. [15] & [16] ratio notes: [1] law number 17 year 2003 concerning state finance. [2], [4], [12] report on audit results of bpk representatives of aceh province on the local government financial statements (lkpd) in aceh province ta 2011, ta 2012, ta 2013, ta 2014 dan ta 2015. [3] government regulation number 71 year 2010 concerning government accounting standards. [5] aceh barat regency in figures 2018. [6] [8] [10] [16] bps data, regency /city in aceh province in figures 2011 – 2015. [7] law number 5 year 2014 concerning state civil apparatuslaw number 17 of 2003 concerning state finance. [9] https://brainly.co.id/tugas/2078089. [11] minister of home affairs regulation number 13 year 2006 concerning guidelines for regional financial management. [13] aceh province human development index data year 2011 – 2015, bps. [15] gross domestic regional product of aceh barat regency 2005 – 2008, bps. data analysis data analysis in this study uses data envelopment analysis (dea) approach by using excel solver parameter. dea is a linear program software which compares several service units of the same form, such as bank, hospital, restaurants, and school based on input and output. the results of the model solutions provide an indication of whether a particular unit is less productive or inefficient, compared to other units (taylor iii, 2013 : 142). 4. result and discussion the regency/city government is considered to have good performance if the government are able to carry out the operational efficiently. the more efficient the government in carrying out the operational, the better the performance of the government. this means that the government are able to manage the resources (input) afebi management and business review (ambr) vol.03 no.02, december 2018 33 better to create maximum output. regency/city government is efficient if the government are able to achieve efficiency scores of 1,00. based on table 6, it shows that from 23 regencies / cities in aceh province, in 2011, there are only 8 regency / city governments (34.78%) which had good performance by obtaining a perfect efficiency score of 1.00. those regency / city governments are aceh besar, nagan raya, pidie jaya, banda aceh, langsa, lhokseumawe, sabang, subulussalam. in 2012, there are also 8 regencies/cities (34,78%) which had good performance by obtaining a perfect efficiency score of 1,00, namely aceh barat daya, aceh besar, pidie jaya, banda aceh, langsa, lhokseumawe, sabang and subulussalam. in 2013, the number of regencies/cities which had good performance increased to 10 regencies/cities, namely aceh tengah, bener meriah, bireuen, gayo lues, pidie jaya, banda aceh, langsa, lhokseumawe, sabang and subulussalam. in 2014 the best performance decrease to 7 regency / city governments (30.43%), namely aceh tamiang, nagan raya, banda aceh, langsa, lhokseumawe, sabang and subulussalam. finally, in 2015 only 7 regency / city governments (30.43%) had an efficiency score of 1.00, namely aceh tengah, nagan raya, banda aceh, langsa, lhokseumawe, sabang and subulussalam. table 5 descriptive statistics of input and output variables used in analysis, period 2011 – 2015 variabel mean standard deviation maksimum minimum input regional expenditures 732.701.016.752,63 308.680.088.176,92 1.716.336.104.583,82 292.902.595.170,39 asset 1.791.114.426.683,26 993.767.232.986,13 5.212.093.165.869,66 420.306.944.761,08 population 209.202,90 132.920,67 583.890,00 31.314,00 civil servant 5.378,51 2.509,85 11.641,00 1.651,00 area 2.551,44 1.657,56 6.040,60 61,36 output regional original income 55.535.335.601,76 49.159.698.535,99 210.501.782.065,16 6.099.446.461,29 human development index 67,39 4,86 83,25 59,34 per capita income 17.982.362,49 9.827.790,84 53.339.694,25 3.717.891,16 table 6 performance of regency / city governments in aceh province period 2011 – 2015 no. regency/city efficiency scores mean rank 2011 2012 2013 2014 2015 1. aceh barat 0,80 0,72 0,70 0,82 0,84 0,78 11 2. aceh barat daya 0,88 1,00 0,86 0,81 0,73 0,86 7 3. aceh besar 1,00 1,00 0,76 0,62 0,70 0,82 9 4. aceh jaya 0,93 0,96 0,92 0,84 0,74 0,88 6 5. aceh selatan 0,66 0,82 0,72 0,60 0,71 0,70 13 6. aceh singkil 0,85 0,96 0,87 0,81 0,79 0,85 8 7. aceh tamiang 0,73 0,86 0,74 1,00 0,73 0,81 10 8. aceh tengah 0,70 0,96 1,00 0,93 1,00 0,92 4 9. aceh tenggara 0,60 0,73 0,72 0,62 0,55 0,64 14 10. aceh timur 0,48 0,54 0,62 0,48 0,52 0,53 16 11. aceh utara 0,41 0,50 0,57 0,68 0,70 0,57 15 12. bener meriah 0,89 0,82 1,00 0,83 0,88 0,88 6 13. bireuen 0,56 0,56 1,00 0,85 0,85 0,76 12 measuring the performance of regional government: using data envelopment analysis (dea) approach 34 14. gayo lues 0,87 0,97 1,00 0,78 0,65 0,85 8 15. nagan raya 1,00 0,91 0,85 1,00 1,00 0,95 2 16. pidie 0,55 0,80 0,87 0,85 0,97 0,81 10 17. pidie jaya 1,00 1,00 1,00 0,87 0,79 0,93 3 18. simeulue 0,96 0,86 0,99 0,83 0,82 0,89 5 19. banda aceh 1,00 1,00 1,00 1,00 1,00 1,00 1 20. langsa 1,00 1,00 1,00 1,00 1,00 1,00 1 21. lhokseumawe 1,00 1,00 1,00 1,00 1,00 1,00 1 22. sabang 1,00 1,00 1,00 1,00 1,00 1,00 1 23. subulussalam 1,00 1,00 1,00 1,00 1,00 1,00 1 graph 1 performance of regency / city governments in aceh province, period 2011– 2015 however, based on the average efficiency score, from 2011 2015 there are only 5 regencies / city governments (21.74%) that had efficiency score of 1.00, namely banda aceh, langsa, lhokseumawe, sabang and subulussalam. those regional governments consistently achieved perfect efficiency score of 1,00 every year. graph 2 average efficiency score of regency / city governments in aceh province, period 2011 2015 5. conclusion the result of this study shows that of the 23 regency / city governments in aceh province, from the overall average from 2011-2015, there were only 5 regency/city governments(21,74%) who were efficient in running their government wheels (efficiency score 1.00), namely banda aceh, langsa, lhokseumawe, sabang and subulussalam. therefore, it can be concluded that these regional government have 0.00 0.20 0.40 0.60 0.80 1.00 1.20 0.00 0.20 0.40 0.60 0.80 1.00 1.20 2011 2012 2013 2014 2015 0.00 0.20 0.40 0.60 0.80 1.00 1.20 a ce h b a ra t a ce h b a ra t d a y a a ce h b e sa r a ce h j a y a a ce h s e la ta n a ce h s in g k il a ce h t a m ia n g a ce h t e n g a h a ce h t e n g g a ra a ce h t im u r a ce h u ta ra b e n e r m e ri a h b ir e u e n g a y o l u e s n a g a n r a y a p id ie p id ie j a y a s im e u lu e b a n d a a ce h la n g sa lh o k se u m a w e s a b a n g s u b u lu ss a la m e ff ic ie n cy s co re afebi management and business review (ambr) vol.03 no.02, december 2018 35 good performance. this is in line with the unqualified opinion (wtp) given by the supreme audit agency (bpk) to the 5 regency / city governments from 2008 to 2015 (bpk representative of aceh province, 2016). on the other hand, most regency / city governments in aceh province (78.26%) are inefficient in conducting the government operational and therefore are not considered to have good performance. this is due to excessive use of resources (inputs), while the resulting output is not optimal. references alabdulmenem, f.h. 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(2012). research frontiers in public sector performance measurement. physics procedia, (25), 793 – 799. cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework 1 12 cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework suharnomo1* and ndaru risdanti2 1,2 diponegoro university, semarang, indonesia abstract the purpose of this paper is to investigate how south korean expatriate manager interact with indonesian subordinates and what the difference about their culture perspective in semarang garment enterprises and identify how the difference of culture could affect their ability to manage staff and doing their job normally. a qualitative study was conducted. triangulation methods are used to examine the validity of research data. the result indicated south korean manager characteristics with kluckhohn-strodtbeck’s dimension. there are contrast differences between south korean manager with indonesia employee in perception of time and space, which required adjustments in management practice for better performance results. keywords: expatriate manager, leadership, national culture, organizational culture 1. introduction from the very beginning there are three types of variable which commonly used to explain differences and similarities among management, are: economic, cultural, and psychological (ajiferuke, 1970). it is a three variable which is connected and will be focus of most research done, moreover in the era of rapid industry and followed with massive globalization, which make the world become borderless. the companies nowadays will be compete to increase their competitiveness in many ways, one of them is make branch company in other country. with the rapid innovations such as telecommunications, new transport systems for both goods and people and internet the world has become globalized which has made it possible for companies to expand their business from the own country to other parts of the world (hill, 2014). the idea to open a branch company in other countries, especially in countries that have many resources, both raw material and labor is to explore the new market and resource in order to reducing cost, more efficient production process, and economies of scale. therefore, there are many multi national company (mnc), includes that came from south korea, notice indonesia as a potential country because of abundant natural resources and a huge market share, which quite interesting and profitable to make branch company in indonesia. multi national corporation (mnc) should have a lot of strategy to face globalization (slavika et al.,(2015). those strategy is very useful to increase product competitiveness, give a knowledge about international behavior, examine competitor’s strategy, change of regulation of standart goal for manager who will * corresponding author. email address: suharnomo.undip@gmail.com mailto:suharnomo.undip@gmail.com afebi management and business review (ambr) vol.02 no.02, december 2017 2 be promoted to expatriates. expatriates is useful because managers will have a lot of experience with work domestic environment. their success become a standart for promotion. international assignment become more important and being part of managerial career. as a consequences from this condition, leadership competition across culture is needed by company which operate in international market. relations between south korea and indonesia started since 1973 in areas such as political, economic, social, and cultural. with huge domestic market potential, a wealth of natural as well as human resources and stable economic growth in the range of 6% per year; indonesia is one of the most attractive investment destinations. meanwhile, the south korean economy has grown rapidly with capital-intensive industries, high technology and skilled labor. due to certain year in the labor market, there are more than 2,200 companies south korea has been in operation in indonesia (tempo magazine, 2015). south korean companies in indonesia varied, ranging from world-class global companies like samsung, lg, hyundai, and small to medium-sized companies.31 south korean companies in indonesia employed around 500,000 workers in indonesia, ranging from the level of director, manager up to the level of ordinary employees. the number of south korean people who settled in indonesia is plentiful, which are approximately 30,000 people. according to redding (1990) employees’ expectations, behaviour and performance may be different with various national cultures. latham (2014) comes to a consistent conclusion that a universal answer on leadership does not exist. the influence of national culture on individual behaviour is well established and the differences are rather significant (hofstede, 1980; trompenaars and hampdenturner, 1998). within diversity culture that exist, the company must have an interaction of cross-cultural leadership among foreign managers (expatriates manager) and their local subordinates. the differences in national cultures are reflected in how organisations are structured and managed (chen, 2001). because of that manager and subordinates need adaptation in order to cooperate. this interaction and cross-cultural leadership is somewhat interesting. cross-cultural leadership research has largely been comparative research contrasting leadership styles of managers from different countries, for example the focus has been on understanding the differences and similarities across national cultures. the basic method for identifying such issues has been the use of quantitative questionnaire surveys. on the other hand, the implications of such cross-cultural differences in leadership inter action in multicultural settings has been clearly less studied (suutari et al., 2002) this study want to investigate how south korean expatriate manager interact with indonesian subordinates and what the difference about their culture perspective. this research was conducted in multi national company pt. semarang garment which is one of expansion company from kukdong corporation where based in seoul, south korea. the company has 2572 employees and led by a leader of south korean citizen named byun hyo su with other south korea nationality managers and a number of local employees from indonesia. to fulfill the research objective, we first carried out the past literatures and build the conceptual framework. in section 3 we explain the methodology that used 1 famous south korean brand in indonesia (millwardbrown report) cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework 3 to process the information obtained by depth interview with informants who was adjusted for purposes of research. in section 4 we give the result of this study and explain further in section 5. 2. literature study past research and study based on research conducted by hofstede et al (2010), national cultural characteristic of south korea, such as : 1) south korean people thought some people more superior than others because of social status, gender, race, age, education, birth, attainment, background, and others; 2) south korean people tended to uphold conformity and security; 3) people of south korea prefered to avoid risk; 4) south korean people always follow the formal rules and rituals that prevail in south korea; 5) in south korea, trust is only given to family and nearest friends; 6) south korean society tended to accept power relationship which autocratic and paternalistic, subordinates know the power of others through formality, for example, the position of the hierarchy. this south korea's national cultural criteria will vary with indonesia national culture, although some dimension of culture between the two countries had in common because they are on large umbrella culture, the culture of asia. table 1 cultural dimensions’ scores of indonesia and south korea dimension indonesia south korea score category score category power distance 78 large pd 60 large pd individualism vs. collectivism 14 collectivist 18 collectivist masculinity vs. femininity 46 low masculine 39 low masculine uncertainty avoidance (ua) 48 weak ua 85 high ua source: hofstede, hofstede, and minkov (2010) differences in responses to various behaviours of leaders in different national cultures also investigated by litrrell (2015) which observed manager from three different nationality, and investigate how national culture can affect behaviour. the differences among cultures also seen in research conducted by pan, yue et al., (2010) who investigate the difference work-value among china and usa. past research about interaction between expatriate manager with subordinates also done by suutari et al., (2002) the research investigate interaction expatriate manager with finnish nationality and indonesian subordinates. kluckhohn-strodtbeck value orientation one theory of basic human values which has been very influential is kluckhohn and strodtbeck (1961). the cultural orientations framework was presented by kluckhohn and strodtbeck in their book variations in value orientations (1961). the development of the theory, guided in part by parsons and shils (1951) general theory of action. kluckhohnand strodtbeck brings six dimensional value orientation which consists of the orientation of human nature, orientation of nature, time and space orientation, activities orientation, and relational orientation (gudykunstand and kim, 1997). kluckhohn and strodtbeck (1961) compared the culture based on several dimensions. the first dimension is afebi management and business review (ambr) vol.02 no.02, december 2017 4 orientation of human nature associated with traits. in this dimension, human beings are good or bad or a mixture of good and bad, which decides since birth. the second dimension, orientation of human relationships and nature. there are three types of relationships namely subdued, align, and control. the third dimension, time orientation. in this dimension, human life can be focused on the past, present, or future. the fourth dimension, orientation activities. according to kluckhohnstrodtbeck, the orientation to the activity could be seen as doing, being, and being in becoming. the fifth dimension, relational orientation, associated with individualism-collectivism dimension, and the sixth dimension are the conception of space. table 2 kluckhohn and strodtbeck dimensions no. dimension indicators i nature of humans • good/bad: the basic nature of people is essentially good (lower score) or evil (higher score). • changeable/unchangeable: the basic nature of humans is changeable (higher score) from good to evil or vice versa, or not changeable (lower score). ii relationships among people / focus responsibility • individual: our primary responsibility is to and for ourselves as individuals, and next for our immediate families. • collective: our primary responsibility is to and for a larger extended group of people, such as an extended family or society. • hierarchical: power and responsibility are naturally unequally distributed throughout society; those higher in the hierarchy have power over and responsibility for those lower. iii relation to broad environment • mastery: we should control, direct and change the environment around us. • subjugation: we should not try to change the basic direction of the broader environment around us, and we should allow ourselves to be influenced by a larger natural or supernatural element. • harmony: we should strive to maintain a balance among the elements of the environment, including ourselves. iv activity • doing: people should continually engage in activity to accomplish tangible tasks. • thinking: people should consider all aspects of a situation carefully and rationally before taking action. • being: people should be spontaneous, and do everything in its own time. cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework 5 no. dimension indicators v time • past: our decision criteria should be guided mostly by tradition. • present: our decision criteria should be guided mostly by immediate needs and circumstances. • future: our decision criteria should be guided by predicted long term future needs and circumstances. vi space • public: the space around someone belongs to everyone and may be used by everyone. • private: the space around someone belongs to that person and cannot be used by anyone else without permission. source: kluckhohn, f. r. & strodtbeck, f. l. (1961) this research want to finding more about how the two culture interact each other, in this case south korean nationality is the manager, and indonesia nationality as the subordinates, this research will be limited by the dimensions of the cultural framework kluckhohn and strodtbeck. the sixth dimension will be used to analyze the leadership style of south korean managers with south korean national cultural backgrounds, and how the local community (indonesian culture) contrast with the leadership of the south korean culture in indonesia. research framework. cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework afebi management and business review (ambr) vol.02 no.02, december 2017 6 3. research methodology this research is a qualitative, method used was triangulation where opinions of different informants confronted to see the essence of what is being studied. according to moleong (2007) a form of triangulation utilizing data validity checking something else beyond the data for the purpose of checking or as a comparison against the data. information obtained from depth interviews with informants who was adjusted for purposes of research. in depth interviews on qualitative research take a long time and many details, so the sample used typically limited, only understood informants and involved in the issues are used. triangulation methods are done in three ways, as follows; interviews, direct observation and indirect observation. indirect observation is intended to observe some of the studies in order to obtain ease in finding represents a connection between the events. data collection techniques used to complement the primary and secondary data obtained. observations and interviews used to collect primary data relating to the south korean style of leadership in indonesia. the number of participants in this study are three south korea nationality managers, seven supportive informant who is local (indonesian nationality) people and have worked there for at least five years. getting focus to the appropriate key informant research, the informant selected by using purposive sampling (sampling in accordance needs). the basis of a sample is south korean expatriate managers and indonesia local employees at pt. garment indonesia semarang which understand leadership, often interact with or feel leadership directly, already working in pt. garment semarang indonesia for a minimum three years, and can speak or answer interview accurately. table 3 respondent list code respondent name department work time nationality r1 kim hak hee (richard kim) manager of factory i 5 year south korea r2 byun sang in general manager accounting manager export-import manager 10 year south korea r3 park tae seon finishing manager 10 year south korea r4 tri j. labor concern manager 5 year indonesia r5 ambar sample chief 5 year indonesia r6 hernowo finishing chief 8 year indonesia r7 endang s. worker 5 year indonesia r8 winarni worker 6 year indonesia r9 rini cleaning service 10 year indonesia r10 hertanto security 10 year indonesia source: research data (2016) procedure face to face interviews were held. each informant or respondent had given participation form and was later contacted to confirm their participation. participants were advised that it was intended that their interviews would be voiced recorded to aid transcription. obtained information from interviews generally formed statement, which described the experience, knowledge, opinions and personal feelings. for obtaining this data, researchers used a scheduled cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework 7 standardized interview and informal interview. the three approaches can be done with technique as follows: (a) before the interview begins, introduce ourselves politely to create a good relationship. (b) showed respondents that they looked as “important”. exploring as much as possible. (d) no makes certain direction answer to informant. (e) repeating questions if necessary. (f) clarify answers. (g) record the interview (chariri, 2007). 4. results in examining the validity of research data using triangulation techniques. according to moleong (2007) a form of triangulation utilizing data validity checking something else beyond the data for the purpose of checking or as a comparison against the data. denzin (1978) in moleong (2007) distinguished four types of triangulation as a technical inspection or checking of the validity of the data that utilizes the use of sources, methods, investigators, and the supporting theory. in this study, triangulation using source type where the informants from different backgrounds are given the opportunity to give an opinion on the same issue. researchers conclude whether essentially, a statement in the research confirmed or not from different infomants. table 4 result analysis about south korean style leadership based on cultural dimensions by kluchkhon & strodtbeck: triangulation based on sources no dimension south korean employee’s perspective indonesian employee’s perspective triangulation 1. nature of humans r1, r2 and r3 states that the south korean manager believes the two kind of character; good and bad in man (the basic human characters). this value justified or validated by a statement by r4, r5 and r6. there are both good and bad in people. all informants provide a matching statement that there are good and bad sides of human and many factors that can influence people to be good or bad. “the philosophy in our country, there are two kind of characters of human which are good and bad. basically human being is born the same. but how do they grow, it’s depending on their surrounding, their education from home, school and society that determine what kind of “i know less about the korean people's views on this. but i know they believe the teaching of the chinese yin-yang, there is a good character (positive) and a bad character (negative).” (r4) afebi management and business review (ambr) vol.02 no.02, december 2017 8 no dimension south korean employee’s perspective indonesian employee’s perspective triangulation person he will be.” (r1) 2. focus responsibility responsibility for south korean employee: indonesia informants, r4, r5, r6, r7 and r8 also agree on what the collective feeling. among the three options, as follow: individual, collective and hierarchical, south korea manager that r1, r2 and r3 tend to choose collective. “our primary responsibility is to and for a larger extended group of people, such as an extended family or society.(r1) “responsibilities are divided based on their position within the company and everyone holds their respective roles for the survival of the company.”(r5) statement of r1, r2 and r3 leads to character of south korean managers who focus on collective responsibility validated by the statement of r4, r5, r6, r7 and r8. “i want make an example in this. you see this watch. the watch has so many materials that need to work together to make this watch is working. so as an individual we have to do our best in our each job to get this company work.(r2) “responsibility must be done. koreans are quite a responsibility to his subordinates.”(r7) “responsibility. it’s clearly divided as the structure organization.”(r3) 3. relation to broad environment “we need to live in harmony with the environment. in my opinion, our company manage everything quiet well related with the environment and also the surrounding. it shows that the “company relation with surrounding environment work well. many employees also come from around here. (r4) there are three tendencies which is mastery, subjugation or harmony. south korea employees choose harmony: we should strive to maintain a balance among the elements of cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework 9 no dimension south korean employee’s perspective indonesian employee’s perspective triangulation surrounding do not complain about the factory activity.”(r1) the environment, including ourselves. “we must protect our environment. the environment should remain good so that we may live comfortably in the world. factory we already had an environmentally friendly management.” (r2) factory activity not to interfere with the public. also working hours 7 am to 4 pm.” (r5) “sewage treatment management and disposal system in this factory is good enough and does not harm the surrounding community.” (r7) 4. activity “we need to consider many things in acting or doing something. but continued to run the things we should do.”(r2) “i saw my boss (manager) tried to do everything carefully (thoughtful) but they are quick to act.”(r5) among the selection of doing, thinking and being, thinking considered by informants in every aspect in making the decision. they act by considering everything would be done but chose to act quickly. work should be completed as a part of the responsibilities of each. think before act but don’t wait too long.”(r3) 5. time “of course we believe our past and want to keep our tradition until now. but the young generations now get a lot influenced by western culture. korea have “they really appreciate the time. loyalty at work is very high. one time there is one manager sick should infuse and two hour rest in the mess but statement of r1, r2 and r3 leads to a time dimension that shows the character of south korean managers are very concerned past and appreciate every time owned. but also afebi management and business review (ambr) vol.02 no.02, december 2017 10 no dimension south korean employee’s perspective indonesian employee’s perspective triangulation 5000 years history. also history of each family is important for us.”(r1) surprising after that he kept returning to work at the factory.” (r5) think about the future, not stuck in the past. “past made what we are now. the present (now) made what we are in the future. i will keep my tradition from the past (of my country) to work in everywhere even it is abroad.”(r2) “the manager had told me, in korea if a woman should give birth even to keep working until the time came to give birth and then was taken to hospital, but three hours after birth they are ready to return to work.” (r6) “working hours in korea longer than indonesia. our habit of working quickly with good results.”(r3) 6. space “i love the private rooms. but my room here was enough for me. i fused with other workers.” (r2) “the managers of korea tend to be serious at work and chose to limit themselves to employees.” (r6) statement of r1, r2 and r3 lead to spatial dimensions show south korean managers prefer private than public. “there are certain spaces that are specific to the boss and forbidden to be entered by employees without permission in advance to the manager.” (r4) source: research analysis (2016) 5. discussion based on previous analysis has known south korean leadership character style applied to the pt. semarang garment accordance with the dimensions restricted this research, which is cultural dimensions of kluckhohn and cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework 11 strodtbeck’s. in general, south korean culture is part of the eastern culture so that the character of the leadership style being applied is not difficult to be followed by local employees in the company. the results showed the character of the south korean style of leadership in indonesia, especially at pt. garment semarang. it is beneficial for the company if they can manage their local cultural differences with the south korean leadership style where the company has an array of managers and leaders from south korea, especially south korea and local employees who were mostly residents of central java 42. a. nature of humans south korean culture tends to see human has two different character in themselves, good and bad. this determines their characteristic in relation with other people. surely, they will be careful in relation with other people. “each people has each characteristic. some of them learn quickly. some of them are doing something slowly. some are good some are not good. the first two years i worked here, often found employees who often late, not fast, slowly learning, not working, and i got a lot of headache because of that. however, in current condition i am not really headache and stressful anymore. they become more skillful.” (r1). in addition, they also considered the indonesian people are very nice and friendly and make strangers as they feel comfortable and appreciated by employees. (r1, r2, r3). most of south korean managers believe that good environment could create someone grow better than before. based of fact, they will try to make good environment such as discipline, diligent and work hard in company in purpose to be followed by the local employees. both korean and indonesian cultures realized that human behavior could be classified into categories of good and bad. therefore, there are relatively no cultural barriers to make the employee management program to achieve superior performance. b. focus responsibility result analysis of focus responsibility proved that south korean managers apply leadership character that upheld responsibility for other people such as responsibility as a group. this related to their performance which aware of quality of cooperation and had work between employee to fulfill and actualize company target. in kluckhohn and strodbeck (1961) dimension, south korean tends to choose a collectively means the division of work and responsibility very prioritized. this value is equal to the culture of 'gotong-royong'53 in indonesia where heavy work can be done together and help each other to complete. in the perspective of the cultural dimensions of hofstede et al., (2010), the two nations are also included under the category of collective and equally high power distance. compared to korea, indonesia has particularly higher power distance, therefore ideals for employees is very important for indonesia employees. the leader has 2 central java is a capital of the java province in indonesia 3 ‘gotong royong’ or known as communal work in english. ‘gotong royong’ is a form of action usually done by several groups of people achieve shared objective. in the context of indonesia, the culture of ‘gotong royong’ is usually comes as a communal value and has become a culture of people. for example, farmers usually work together for the irrigation of their rice field, or the neighbourhood helping each other if there is natural disaster. afebi management and business review (ambr) vol.02 no.02, december 2017 12 incredible power that instantiate into practice in daily life, indonesian employee quickly adjust themselves according to the requirements of the behavior and performance of the company. c. relation to broad environment south korean manager character has a same view with east culture in general, which is always will to live in harmony with nature and environment. this will help and ease interaction of company and environment because with good management to the environment will minimize conflict with nearly society environment and do not disturb nature. this character is positively good either to company or nearly company environment. south korea manager is not a person who can work in spontaneity situations (being), but familiar in planned work with consider of many aspects (thinking). koreans also considers many things before making management decisions. these values are the same as the value of the employee indonesia. indonesia has thousands of ethnic nation and the local language thousands of species as well. therefore, the indonesian people familiar with the pattern of decision making that considers many aspects to maintain harmony. harmony is necessitated both by south korean managers and employees indonesia. employees indonesia even really appreciated events and religious customs. d. activity in case decided an action, south korean managers tend to consider multi aspects that related with the action. considering first before action is one of south korean manager character, but it does not create them slow in respond. all aspects considered deeply, and fast action implemented. this thing is all good for the company. eastern culture generally preferred harmony. in fact, in many instances tend to lead to subjugation. harmony with man and nature became a choice for most east people. the religious ceremonies and customs are also often done to show respect for people, nature and the x-factor in life. x factor for eastern nations is the extra power beyond the physical but very influential on the work conditions and the results of the company's performance. most convictions are the hope in god, others more confident with the spirit of animism or dynamism. the activities are a form of gratitude or belief procession is expected to do in the company. the event usually used for meeting and discussing a lot of things, especially about family and social life. e. time leadership south korean characteristic has high appreciation for the time, where they utilize every single second properly especially to work as their principle such as work hard to get anything better. moreover, they also uphold firmly to the past, so they still maintain tradition and culture from their country that has east culture and local customs. this does not make them shackled by the past, but this tradition which upheld by south korean people brought them to good behavior suited east culture and good future planning also considered well. based on that criteria, affection that given by south korean managers will sense positively to the company environment and ease the cooperation with the local employees. however south korean time perspective seen contrast difference with indonesia time perspective. indonesia is categorized as polychronic, means used to think and do a lot of activities in the same time. the remaining time is often not used for the perfection of the work but used for another job (which sometimes are not related cross-cultural study of korean leadership in indonesia by using kluckhohn-strodbeck's framework 13 to the achievement of company performance) or conducting a particular form of hobby or pleasure. “the first two years i worked here i often found employees who often late, not fast, slowly learning, not working. and i got a lot of headache because of that. however, now, i am not really headache and stressful anymore. they become more skillful.” that is, the statement of korean manager. another experience is also delivered by korean managers how about the perception of use time in vain. “do you know the sentences jam karet indonesia?4 that exactly often happen. in korea when working, our boss will tell to do it faster and faster. but in here, they take it easy, they think there is still tomorrow to do the job.” according to the manager, habits of indonesia employee are often delays their job, so it seems a long time to work. for them if there is time remaining, they can use them for other jobs or get some rest if nothing else is done. other differences regarding high uncertainty avoidance feeling for koreans. uncertainty avoidance hofstede version of the korean nation is very high (85) so that the future was met with anxiety and heightened alertness. time is very important and not repetitive, so they do work hard and often beyond normal human strength. in the case of the use of time, there is a contrast difference between the korean employee and the indonesian employee. in polychronic society perspective, as if time spinning where there is always a hazy day to finish the unfinished job. therefore, need to be made of company regulations that could accommodate both. strict rules need to be made although some social interests also need to be considered. f. space space can be interpreted in the perspective of physical and strata. south korean managers character want a private space for themselves and not disturbed by other employee. in a society with a high power distance as korea and indonesia, the position of the space and design in the space, are to mirror the difference in social strata. social strata do exist though starting to shift from the group known as the patrician shifts, toward a society where the highest social class is occupied by a group that has the highest achievement. “different class of society does exist. every person has a history and has a tree of family. it’s very wide cases. i can’t say it in a word. long time ago, we have something like that. kim family, choi family, for example, is famous as the rich family. it was very common. some name seen as rich families, some name seen as lower social class by the society. but nowadays, they are judged by the achievement they got. we have to see the people from the higher class so that we able to try harder and work harder for someday to be one of them. i think class of society in every part of the world does exist, even in america or in indonesia.” thus the explanation r1, korean manager. the statement strenghten by the only indonesia manager which charge and human resources as follows: "i've heard from my boss that there are social classifications in korea. the name "kim" is a name known to wealthy families as well as other names with different social classes. garment semarang company owner did not come from a family with the name and background are respected. "byun" is the name of the social classes were quite down but hard work from young until he became the honorable man today". based on the justification of the above, it can be said that the character profile korean manager still saw someone based on its position in the social classes. it is afebi management and business review (ambr) vol.02 no.02, december 2017 14 common in south korea. the family name given by his family history is seen as a wealthy family and has influence in korea. there is also another name with a particular social class. however, as time goes by and the times it can be said that the ascriptive views of korean began shift to a view with achievement orientation. no doubt if the name of a family is still seen and has value to them, but the achievement of a person become successful also make the person is respected in south korea. condition in pt semarang garment showed that several manager rooms merged with other employees without any borders. this condition makes them change a perspective about private space and adapt with condition and environment of company. 6. conclusions indonesian culture have many similarities with south korean culture, based on that the south korean manager in semarang garment can adapted with the culture of local subordinates, seen from the satisfaction of the manager, who did not experience any difficulties, except in the early days of their arrival only. open mind and courteous attitude that indonesian employees have greatly assisted the process of adaptation of the korean managers in adjusting to some aspects of the cultural values that differ especially in terms perspective of time and space. however, this study only took the object of research on the multi-national companies of south korea in indonesia as well as limited by the cultural dimensions of kluckhohn-strodtbeck’s. the theory of south korea's leadership style can be supported by other national cultural theories as well, which supports the depth of research. based on the result from this future study research is expected to examine the south korean style of leadership in several multi-national companies of south korea in indonesia to complete the justification of the cultural characteristics and leadership style of south korea. based on previous analysis, discover that south korean leadership style characters which applied to the pt. semarang garment, mostly suitable with the dimensions of indonesian culture. in general, south korean culture is part of the eastern culture so that the character of leadership style being applied is not difficult to follow by local employees of the company. in terms of perspective to time and place, the two cultures there are contrast different and thus require adjustments, such as the company can make strict rules regarding matter of time and discipline, and held meeting and discussion with manager and employee representation, to discuss about discipline and how they want to be treated. references ajiferuke, m., & boddewyn, j j. 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(2014). international business: competing in the global marketplace (10th edition). mcgrawhill education, new york. isbn-13: 978-0078112775. https://doi.org/10.5937/ekonhor1501073g kluckhohn, f. r., & strodtbeck, f. l. (1961). variations in value orientations. evanston, il: row, peterson. isbn : 978-0-9845627-0-1. https://doi.org/10.2307/480364 latham, j. r. (2014). leadership for quality and innovation: challenges, theories, and a framework for future research. quality management journal [online]. 21 (1), 11-15 [cit. 2014-08-19]. dostupne z: http://web.a.ebscohost.com.ezproxy.lib.vutbr.cz/ehost/detail/detail?vid=1 4&sid=161530e5-b027-4963-b687 littrel, r. f. (2005). preferred leadership behaviours: exploratory results from romania, germany, and the uk. journal of management development, 24 (5), 421-442. http://dx.doi.org/10.1108/02621710510598445. moleong, l. j. (2007). metodologi penelitian kualitatif. bandung: pt. remaja rosdakarya. isbn : 979-514-051-5. pan, yue et al. (2010). a cross-cultural investigation of work values among young excecutives in china and the usa. cross cultural management: an internasional journal, 17 (3), 283-298. http://dx.doi.org/10.1108/13527601011068379. parsons, t., & shils, e.a. (1951). toward a general theory of action. cambridge, ma:harvard university press. isbn : 9780674863507.https://doi.org/10.4159/harvard.9780674863507 rachel, k. (2004). culture, intercultural communication competence, and sales negotiation: a qualitative research approach. journal of business & industrial marketing, 19 (4), 267-282. http://dx.doi.org/10.1108/08858620410516745. afebi management and business review (ambr) vol.02 no.02, december 2017 16 redding, g. (1990). the spirit of chinese capitalism. walter de gruyter. new york. isbn : 978-3-11-088770-9. https://doi.org/10.1515/9783110887709 robbins, s. p., & judge, t. a. (2008). organizational behaviour. upper saddle river, n.j: pearson/prentice hall. isbn 13 : 978-0-13-283487-2 slavika et al. (2015). leadership as a tool of strategic management. procedia economics and finance, 26, 1159 – 1163. doi: 10.1016/s22125671(15)00946-6 suutari, vesa et al. (2002). the challenge of cross-cultural leadership interaction: finnish expatriates in indonesia. career development international, 7 (7), 415-429. http://dx.doi.org/10.1108/13620430210449948. the comparative analysis of village financial management 37 the comparative analysis of village financial management maya yusnita 1*4and wenni anggita2 1,2 universitas bangka belitung, indonesia abstract west bangka was the only regency in bangka belitung province that received a fair without exception (wtp) in 2013-2014. different with the east belitung which has never received a wtp, even in 2014 east belitung received unqualified opinion (tw). this study aims to analyze and compare village financial management and its level of suitability with the minister regulation number 113 year 2014. qualitative analysis used to identify the constraints on village financial management, analysis of quantitative using independent sample t test. the object of this research are 26 villages in west bangka and east belitung. the results of this study showed that the obstacles of financial administration was caused by lack of understanding and guidance regarding the tasks, principal and functions of village apparatus. reporting and financial accountability of the village is in accordance with the applicable rules, but there are 3 villages (11.54%) that have not been in accordance with the minister regulation number 113 year 2014. the results of descriptive statistics, there are differences in reporting and accountability of village finance. however, there is no difference regarding administration of village revenues, expenditures and financing in west bangka and east belitung. keywords: administration, accountability, village financial management 1. introduction according to the law of the republic of indonesia number 6 of 2014 about village, the village and the traditional village or called by other names, hereinafter called the village, is the unity of the legal community who have boundaries that are authorized to regulate and manage the affairs of government from local interests based on the initiative of the people, the rights of origin, or traditional rights recognized and respected by the government administration system of the republic of indonesia (astuti and yulianto (2016), widarnawati (2018)). village is defined as a legal community unit with its teterritorial boundaries which has the authority to manage and organize the duties of the related local communities interests based on the origin and the related local customs within the district/city recognized and respected by the governance system of the republic of indonesia (kadir, 2017). in law number 6 year 2014 on the village, provides government authority in the administration of village governance, implementation of development, community development and empowerment. based on this rule, the central government disbursed funds for programs and activities from various sources from the state budget (apbn) and the province/district (apbd) in the alocation of village funds (add) and village funds (dd). the village funds was source from the state budget (apbn) intended for villages that are transferred through the regency/city of regional revenue and expenditure budget and used to finance the government administration, development implementation, community development, and community empowerment (minister regulation number 113 year 2014). village financial management is the whole of activities which include planning, implementation, administration, reporting, and * corresponding author. email address: mayayusnitaubb@gmail.com afebi management and business review (ambr) vol.03 no.02, december 2018 38 accountability of village finance. this rule also stated that administration was carried out by the village treasurer who was obliged to record every receipt and expenditure and close the book at the end of the month and report to the village head. the competency of the village head, including the village treasurer, were seen very weak. this was caused by the low level of education, so it was feared that in the management of village finances there will be errors and it is alleged that there was potential misstatement both administratively and substantively. the amount of funds to be managed by the village of village government has a fairly high risk in the management so that the competence of human resources is very necessary to manage finances of village well. syaripudin (2014) showed that hr competencies did not influenced significantly on the quality of local government financial statements, this is different from wati’s study (2014), rulyanti (2016), karuniawan (2017), showed that the competence of human resources influenced significantly on the quality of the financial reporting of village (widarnawati, 2018). research conducted by barsap (2017) found that the quality of financial reporting villages influenced positively and significantly toward the good governance (amalya, 2017). syahril (2013) proves that the administration of assets belonging to the region through simbada carried out by the asset sector has not been reached optimally, there were still problems in the implementation. sutri kolinug et. al., (2015) shows that the management of fixed assets in the dppkad of tomohon city with the minister regulation number 17 year 2007 not yet fully in accordance. adi (2013) proves that the management and administration of village finance in mulawarman village is in accordance with the applicable laws and regulations. syaril (2013) shows that dr. h. moh. anwar sumenep has not fully implemented the regulations stipulated by the minister regulation number 61 year 2007. west bangka regency has succeeded in obtaining unqualified opinion (wtp) in 2013 and 2014. this achievement indicated that the financial statements have fairly presented and in accordance with government accounting standards (sap). west bangka regency government is expected to provide examples and guidance on good financial management to the village government below. the villages are expected to be able to manage their finances which include planning, implementation, administration, reporting, and accountability properly and correctly so that transparent and accountable principles can be achieved. this condition is different from east belitung regency which has never received a wtp opinion. even for the financial statements in 2014, east belitung regency was received unqualified opinion (tw), this was indicated that the financial statements didn’t present a fair financial position. many differences were also found in village funds utilization realization report between one village government with other village government in terms of accountability report content side (fatmawati, 2018). the government of east belitung regency was indicated unable to prepare its financial statements in accordance with sap, so it was suspected that it could not be expected to provide examples and guidance to villages in the region which eventually villages could not properly manage their finances. 2. literature review village financial management village financial management is the whole activity which includes planning, implementation, administration, reporting, and village financial accountability. the minister regulation number 113 year 2014, regulates the principles of village financial management: a) transparent, the principle of openness that allows the public to know and get access to information as widely as possible about village finance. b) accountable, the realization of the obligation to account for the management and control of resources and the implementation of the policies entrusted in order to achieve the stated objectives. the comparative analysis of village financial management 39 c) participatory, the administration of village government that includes village institutions and elements of village communities; d) order and budget discipline, village financial management must refer to the rules or guidelines that underlie it. the international monetary fund’s (imf) country poverty reduction report finds that village’s financial management challenges have been regularly cited as a major harmful factor to substantial socio-economic development fulfillment in the villages (kazimoto, 2013). effectiveness of village funds according to big indonesian dictionary, the word effective means the effect, effect, effect or can bring results. according to bastian (2010) effectiveness is the level where the actual performance is proportional to the targeted performance. in terms of management of village funds, the effectiveness of the management of village funds is related to the implementation of all budget targets in accordance with the desired target and can be accountable on time (azlina, 2017). village finance administration village finance administration is a recording activity specifically carried out by the village treasurer. the village treasurer must record all existing transactions in the form of receipts and expenses (bpkp, 2015). the village treasurer systematically and chronologically records financial transactions that occur. village financial administration carried out by the village treasurer is done in a simple way, namely in the form of bookkeeping not yet using accounting journals. administration of both cash receipts and disbursements using: general cash book; tax helper cash book; bank account book. the village treasurer records all receipts and expenses in the general cash book for cash. whereas transactions of receipts and expenses through banks/transfers are recorded in the bank book. the tax assistant cash register is used by the village treasurer to record receipts of money originating from tax collection and record expenses in the form of tax payments to the state treasury. specifically for opinions and financing, there is a subsidiary book in the form of income detail book and financing details book. reporting and accountability of village finance accountability is an obligation to provide accountability and describes the performance and actions of someone possessing a legal entity within an organization to the party who has the right or authority to ask information or explanations regarding to the performed activities. the implementation of accountability in government agencies should consider the following principles: 1). institution leader’s and the entire staffs’ commitment to manage the implementation of accountable missions; 2). system which ensures the utilization of resources consistent with the applicable legislations of law; 3). the demonstrated achievement level of the established goals and targets; 4). orientation on the vision and mission achievements as well as the results and benefits. 5). honesty, objectivity, transparency, and innovation as the catalyst for the managerial changes of the government agencies in the forms of method and performance measuring technique sophistication as well as the accountability report writing. accountability is one of the forms in realizing good governance ((lan & bpkp (2000), solikin (2006), kadir (2017)). reports that must be prepared by the village in the context of reporting and accountability for village finance (bpkp, 2015) are as follows: a) report on realization of village budget implementation the rehabilitation report of the village budget implementation is submitted to the regent/mayor through the sub-district head, consisting of the first semester report, submitted no later than the end of july of the current year and the year-end semester report, submitted no later than the end of january of the following year. afebi management and business review (ambr) vol.03 no.02, december 2018 40 b) village realization realization report this report presents the realization of income, expenditure and financing from the village government compared to its budget in accordance with the changes of village income and expenditure budget for a particular fiscal year. c) report on realization the use of village funds report on realization the use of village funds is submitted to the regent/mayor every semester. submission of reports on the realization of village fund use is conducted for the first semester no later than the fourth week of july of the current budget year and for the second semester no later than the fourth week of january of the following fiscal year. based on the village funds report from the villages in the regency/city area, the regent/mayor submits the realization of distribution and consolidation of village funds to the minister of finance with copies of the village-handling minister, technical minister/head of the relevant non-ministerial government agency, and most governor later on the fourth week of march of the next fiscal year. until this guide has been completed, there are no provisions that govern the village fund report format that must be submitted by the village and the format of compilation that must be prepared by the district/city government. d) report on the realization of the implementation of the village income and expenditure budget report on the realization of the implementation of the village income and expenditure budget is a report submitted periodically to the bpd at the beginning of the year in the form of a village regulation. e) village property report this report presents village property that basically represents the difference between assets owned by the village and the number of village obligations up to 31th december of a year (iai-kasp, 2015). 3. research methodology sample the populations in this study are the village government officials in charge of financial management of villages in west bangka and east belitung regency. sampling was done by technique purposive sampling with a technique of selecting samples based on specific criteria in order to obtain representative samples according to defined criteria (cooper and schindler, 2001 in widarnawati, 2018). table 1 the sample west bangka east belitung district subdistrict district subdistrict parit tiga 1. air gantang 2. bakit 3. cupat dendang 1. balok 2. dendang 3. jangkang kelapa 1. air bulin 2. beruas 3. dendang gantung 1. gantung 2. jangkar asam 3. lilangan simpang teritip 1. air nyatoh 2. berang 3. ibul kelapa kampit 1. senyubuk 2. buding 3. cendil tempilang 1. air lintang 2. benteng kota 3. buyan kelumbi 4. penyampak manggar 1. kurnia jaya 2. lalang 3. lalang jaya 4. baru from table 1 above, the sample of this study are village treasurer and village secretary from 26 villages in west bangka and east belitung. respondents in this the comparative analysis of village financial management 41 study amounted to 52 people consist of village treasurer and village secretary from each village. data collection and analysis techniques the data was collected by observation, documentation, literature study and interviews. this research method use mixed method that combines two forms of approaches in research, namely qualitative and quantitative (creswell, 2010). qualitative data analysis is used to answer the problem formulation regarding administration, reporting, and financial accountability in the villages of west bangka and east belitung. quantitative analysis using independent sample t test. in principle, the purpose of the two sample test is to find out the differences between two populations, by looking at the average of the samples. 4. results table 2 the characteristics of respondents village treasurer village secretary num. indicator frequency percentage (%) indicator frequency percentage (%) 1 age a. < 20 b. 20-30 c. 30-40 d. > 40 2 17 6 1 7,7 65,4 23,1 3,8 age a. < 20 b. 20-30 c. 30-40 d. > 40 11 9 6 42,3 34,6 23,1 total 26 100 total 26 100 2 gender a. male b. female 3 23 11,6 88,4 gender a. male b. female 16 10 61,5 38,5 total 26 100 total 26 100 3 working period a. < 1 b. 1-5 c. > 5 6 15 5 23,1 57,7 19,2 working period a. < 1 b. 1-5 c. > 5 11 8 7 42,3 30,7 27 total 26 100 total 26 100 source: primary data, 2017 from table 2 above, based on age characteristics, village treasurer is 30-40 years old (65.4%) with dominated by female (88.45%). grouping based on working period, on average the village treasurer has worked for 1-5 years (57.7%). the average age of village secretary is 20-30 years old (42.3%). furthermore, based on gender, the village secretary on average is a male (61.54%) with a working period mostly less than 1 year (42.3%). a. village fund administration constraints based on the results of the interviews with village secretary of west bangka and east belitung, constraints in village fund administration were found as follows: (a) delay in disbursing village funds; (b) there was no guidance for managing village funds; (c) lack of human resources; (d) the new village financial system; (e) communication; (f) the unclear regulations; (g) adjustment of the village's new system. b. reporting constraints and accountability of village funds the information about the various obstacles which faced by the village treasurers is expected to be the subject of study and evaluation especially for the east belitung regency government. the following are the obstacles experienced by the village treasurers: (a) lack of understanding regarding pph (income tax); (b) delay in responsibility report; (c) delay in disbursement of funds; (d) lack of understanding of village apparatus about the application of village financial system; (e) lack of guidance of village fund management; (f) lack of understanding of reporting and afebi management and business review (ambr) vol.03 no.02, december 2018 42 accountability of the village funds; (g) difficulty in dividing funds from detailed reporting. c. administration of village fund revenues, expenditures and financing table 3 paired samples statistics paired samples statistics mean n std. deviation std. error mean pair 1 west bangka 1,6923 13 ,63043 ,17485 east belitung 1,6923 13 ,94733 ,26274 based on the results of the descriptive statistics, there is no difference regarding the running process of administration of village revenue, expenditure and financing between village secretaries in west bangka and east belitung. table 4 paired samples test paired samples test paired differences t df sig. (2tailed) mean std. deviation std. error mean 95% confidence interval of the difference lower upper pair 1 west bangka east belitung 0,00000 1,41421 ,39223 -,85460 ,85460 0,000 12 1,000 based on the results of the analysis using spss, it can be concluded that h0 is accepted and ha is rejected because the sig value = 1,000> 0.005. this means that there is no difference regarding the running process of administration of village revenue, expenditure and financing between village secretaries in west bangka regency and east belitung regency. d. reporting and accountability of village finance table 5 paired samples statistics paired samples statistics mean n std. deviation std. error mean pair 1 west bangka 1,1538 13 ,55470 ,15385 east belitung 1,2308 13 ,43853 ,12163 based on the results of descriptive statistics, there are differences in reporting and village financial accountability between village treasurers in west bangka and east belitung. the comparative analysis of village financial management 43 table 6 paired samples test paired samples test paired differences t df sig. (2tailed) mean std. deviation std. error mean 95% confidence interval of the difference lower upper pair 1 west bangka – east belitung -,07692 ,75955 ,21066 -,53592 ,38207 -,365 12 ,721 based on the results of the analysis using spss, it can be concluded that h0 is accepted and ha is rejected because the sig value = 0.721> 0.005 means that there is no difference in reporting and village financial accountability between village treasurers in west bangka and east belitung. 5. discussion a. administration, reporting and accountability of village funds from the results of interview with the village apparatus of west bangka and east belitung, the constraints in administration, reporting and accountability of village funds are mostly regarding the lack of understanding and guidance of the village secretary and treasurer regarding the duties, principles and functions charged. in addition, other administrative issues also become obstacles. this may be an input for the local district government to provide assistance, training and intensive development so that it is expected to increase the competencies possessed by village officials. b. administration of revenues, expenditures and financing this study showed that the administration of revenues, expenditures and financing in west bangka and east belitung in general has been running safely, smoothly and transparently. however, there were some villages that do not have a good village administration. the results of the study also obtained 21 villages (80.76%) in accordance with the minister regulation number 113 year 2014. these results also showed that there were 5 villages (19.24%) that were not suitable so that they were expected to be given special attention in administering village finances. c. reporting and accountability of village finances west bangka and east belitung as a whole are in accordance with applicable regulations. a total of 23 villages (88.46%) were in accordance with the minister regulation number 113 of 2014. there were 3 villages (11.54%) which were not yet suitable, it was hoped that more attention could be given to the district government to socialize to local village officials. d. the descriptive statistics based on the results of descriptive statistics, there is no difference regarding the running process of administration of village revenue, expenditure and financing between village secretaries in west bangka and east belitung. the sig value = 1,000> 0.005 means that there is no difference regarding the running process of administration of village revenue, expenditure and financing between village secretaries in west bangka and east belitung. based on the results of descriptive statistics, there are differences in reporting and financial accountability of villages between village treasurers in west bangka and east belitung. 6. conclusion based on the results of qualitative and quantitative analysis, it can be concluded that the constraints of administration, reporting, and accountability in west bangka and afebi management and business review (ambr) vol.03 no.02, december 2018 44 east belitung in general related to the understanding of village apparatus about the duties, principal, and function that were caused by the lack of assistance, training and development provided. administration of revenues, expenditures and financing in west bangka and east belitung generally runs safe, smooth and transparent, but there were not all villages have followed the minister regulation number 113 year 2014. based on the results of the descriptive statistics, there were differences in reporting and village financial accountability between village treasurers in west bangka and east belitung. however, there was no difference regarding the running process of administration of village revenues, expenditures and financing between village secretaries in west bangka and east belitung. references adi, h. p. s. (2013). implementasi pengelolaan dan penatausahaan keuangan desa berdasarkan perda no 16 tahun 2007 tentang keuangan desa di desa mulawarman kecamatan tenggarong seberang kabupaten kutai kartanegara. e-journal ilmu pemerintahan, 1(4). amalya, t. et al. (2017). determinants of village financial management and its implication toward accountability: study on village governance in west lombok regency. international journal of research in advent technology, 5(12). e-issn: 2321-9637. astuti, t. p., & yulianto. (2016). good governance toward rural financial management applicability of law no. 6 year 2014. periodic journal of accounting and finance indonesia, 1(1), 1-14. azlina, n. et al. (2017). the effectiveness of village fund management (case study at villages in coastal areas in riau). international journal of economic research, 14(12). issn: 0972-9380,. barsap, r. s. m. (2017). the rural financial reporting quality: testing determinants and its implication toward good governance. [post-graduate thesis]. university of mataram. bpkp. (2015). petunjuk pelaksanaan bimbingan & konsultasi pengelolaan keuangan desa. jakarta: deputi bidang pengawasan penyelenggaraan keuangan daerah. creswell, j. w. (2010). research design pendekatan kualitatif, kuantitatif, dan mixed. yogyakarta: pustaka pelajar. fatmawati, a. et al. (2018). village funds accountability and misuse prevention. indonesian journal of business finance and accounting. issn 2598-6309, eissn 2598-6295. government regulation number 60 year 2014 on village funds. iai-kasp. (2015). pedoman asistensi akuntansi keuangan desa. jakarta: iai. kadir, a. et al (2017). the indonesian perspecttives on village financial management accountability. international journal of economics, business and management research, 1(4). issn: 2456-7760. kazimoto, p. (2013). assessment of villages financial management challenges and development strategies in tanzania, arumeru district. international journal of research in social sciences, 3(2). issn 2307-227x. the comparative analysis of village financial management 45 karuniawan. (2017). effect of competence of human resources, information technology application and locus of control on financial reports on credit institutions village in west buleleng. lembaga administrasi negara dan badan pengawasan keuangan dan pembangunan. (2000). akuntabilitas dan good governance, modul 1 dari 5 modul sosialisasi sistem akuntabilitas kinerja instansi pemerintah. penerbit: lembaga administrasi negara. rizqi, l. n., domai, t., & wachid, a. (2013). penatausahaan asset pemerintah daerah melalui sistem informasi manajemen barang daerah (simbada) di kabupaten malang (studi pada bidang asset dinas pendapatan pengelolaan keuangan dan asset kabupaten malang). jurnal administrasi publik (jap), 1(1). rulyanti, d., (2016). regulatory influence, organizational commitment, communication and human resources performance against village government with financial management of village as an intervening variable (studies in the village government in the regency). [thesis]. master of management faculty of economics, university of jember. santoso, s. (2011). buku latihan spss statistik parametrik. jakarta: pt. eleks media komputindo. solikin, a. (2006). penggabungan laporan keuangan dan laporan kinerja instansi pemerintah: perkembangan dan permasalahan. jap vol. 2, no. 2. departemen keuangan. sugiyono. (2013). metode penelitian pendidikan pendekatan kuantitatif, kualitatif, dan r&d. bandung: alfabeta. sutri, k. m., ilat, v., & pinatik, s. (2015). analisis pengelolaan aset tetap pada dinas pendapatan pengelolaan keuangan dan aset daerah kota tomohon. jurnal emba, 3(1). syahril. (2013). pola pengelolaan keuangan badan layanan umum daerah (ppkblud) pada rsud dr. h. moh. anwar sumenep. jurnal performance bisnis & akuntansi. vol. 3. no.1. syarifudin, a. (2014). influence of hr competency and role of internal audit on the quality of local government finance report to the government intervening variable internal controlling system (empirical study in kebumen regency). business focus journal, 14(2). the government regulation number 6 year 2014 on village. the minister regulation number 113 year 2014 on village financial management. wati, d. k. et al. (2014). effect of competence hr, sap implementation, and regional financial accounting system on the quality of the regional financial statements. e-journal ak ganesha education university, 2(1). widarnawati, b. w. et al. (2018). factors affecting of village financial management and its implication for stakeholders trust (studi on villages in central lombok, indonesia). international journal of economics, commerce and management, 4(3). issn: 2348-0386. competency based pay system design at kursus indonesia 16 competency based pay system design at kursus indonesia rahma dinda dwi putri2¹ ⃰ and aurik gustomo² 1,2 institut teknologi bandung, bandung, indonesia abstract in today globalization era, competition among business is getting tighter, and it is not only about attracting customers but also attracting and retaining human capital. kursus indonesia have a difficulty in attract and retain their employee, and founded that their current compensation not yet satisfying their employees. this study aims to find the root cause of kursus indonesia’s compensation problem, design a strategic compensation system and compare the new compensation proposed salary with benchmark salary. this study used qualitative research method and the data used are primary data (interview and observation) and secondary data (literature study). to process the data gained, this study used descriptive analysis with business situation analysis and current reality tree root cause analysis, job analysis and point method job evaluation. this study found that (1) the root cause of kursus indonesia’s compensation problem is no alignment between the current compensation strategy with company’s business strategy; (2) design a competency based pay system is a suitable approach to solve kursus indonesia’s compensation problem; (3) this solution propose some improvent in kursus indonesia’s employee salary by using lead pay policy that pay above benchmark salary. keywords: attract and retain, compensation, competency based pay, competition, salary 1. introduction the era of globalization today becomes a reality that must be faced by every country, not least indonesia. this era affects the increasingly tight competition among business and the bluring of boundaries to enter industry. for that each business should have strong competitive advantage to gain strategic competitiveness. human has a very important role to face competition today, as robert j. eaton, once said, the only way we can beat the competition is with people (moeljono, 2003:68). the major challanges today is to meet the increasing demand of qualified and unique human resources. company have to be able to attract and retain its qualified employees, and compensation has a big influence to that. kursus indonesia as a company engaged in bimbel or tutoring industry, was not strongly competitive yet compared to it’s competitors. table 1 shows that kursus indonesia does not appear on the list of five top brand bimbel for teen in indonesia from year 2015 until 2017. * corresponding author. email address: rahma.dinda@sbm-itb.ac.id afebi management and business review (ambr) vol.03 no.01, june 2018 17 table 1 top brand bimbel for teen year 2015-2017 2015 2016 2017 brand tbi top brand tbi top brand tbi top ganesha operation 31.2% top ganesha operation 29.3% top ganesha operation 32.0% top primagama 14.1% top primagama 24.3% top primagama 17.2% top kumon 11.7% top nurul fikri 10.5% top nurul fikri 12.9% top nurul fikri 6.8% kumon 6.1% kumon 10.6% medica 4.0% medica 5.0% ssc 4.2% source: www.topbrand-award.com this competitiveness problem could caused by several factors within all management fields in the company. in terms of finance and marketing, the achievement of revenue target and students target has not been optimal yet, with the average target student and target revenue achievement was only about 70% in 2017. in terms of operation, kursus indonesia does not have a structured performance management system to help manage corporate performance. in other area, kursus indonesia also does not have strong technological and research and development resource that important in adapting tecnological and industry changes. in terms of human resources, kursus indonesia has not been able to attract and retain its employees optimally. based on the company’s internal data, in 2017 the new employee recruitment target achievement is not optimal. the average achievement of new employee target from january to september 2017 is only about 54.44%. this problem indicates that company have difficulty in attracting new employee to join kursus indonesia. in addition to being less than optimal in attracting potential employees, kursus indonesia also has a severe disadvantage in terms of retaining their employees. for the period of 2016, kursus indonesia employee turnover was very high, rated 70.7%, and in the period of 2017 the rate decreasing but still very high, rated 48.7%. kursus indonesia has not yet capabale in making their employees stay and keep engage with the company. based on an employee satisfaction survey conducted by internal kursus indonesia, eight factors was measured to know the employees satisfaction and also measured the level of those factors importance in affecting employee productivity and performance improvement. an importance performance matrix was made to analyzed the survey result as seen in figure 1, employee preferences of the factors presented as importance in the y axis and employee satisfaction of the factors presented as performance in the x axis. competency based pay system design at kursus indonesia 18 figure 1 importance performance matrix (source: kursus indonesia indonesia (processed)) one factor that comes in quadrant 1 is compensation and benefit, where it has a high importance but the result of performance or employee satisfaction against it is low, indicates that compensation and benefit factor needs to be concentrated for deeper improvement. compensation and benefit factors obtained the lowest satisfaction score results, with above 50% dissatisfaction. this condition could make employees’ motivation weakened then lead them to produce performance that is less satisfactory. so this study aims to find the root cause of kursus indonesia’s current compensation problem, design a strategic compensation system and compare the new compensation system’s proposed worth salary with benchmark salary. 2. literature study this study using two conceptual framework from macro level view and messo level view. the macro level framework describes the variables and factors affecting the issue, and related concepts to solve the issue in broad view as illustrated in figure 2. in order to face the tight competition known from competitor analysis and five forces analysis, kursus indonesia should have a sustainable competitive advantage. as explained in the book strategic management: competitiveness and globalisation, a sustainable competitive advantage is source for a firm to achieve strategic competitiveness and earn above-average returns (hitt, ireland, & hoskisson, 2002). with internal analysis and swot analysis could be known the current kursus indonesia competitive advantage condition. afebi management and business review (ambr) vol.03 no.01, june 2018 19 figure 2 conceptual framework (macro level) in terms of human resources (hr), one emphasized way to gain and sustain competitive advantage is to attract and retain key employee. because attract and retain key talent is one of human resource matter in achive competitive advantage. but, alex denni (2011) explained in his disertation, that human resource management system which is developed in industrial era, has been transformed towards a human capital approach in the era of global and information recently. humans who used to be called as resources before, are defined as the most valuable assets for the company nowadays. human capital is an appropriate approach in value-creating strategy, as kearns (2006) revealed that human capital management focuses on adding and creating value for human development (baron, 2007). compensation is one of important factor in creating value of attract and retain key talent and boost employee motivation and productivity. compensation management motivates the employees and improving organizational effectiveness (naukrihub, 2015). singh (2007) also stated that compensation helps to retain competent employees in the organization. with analyzing the current kursus indonesia’s compensation system problem could be known the weakness and area of improvement to the compensation system. therefore, the determination of compensation system used for improvement must be considered comprehensively in order to strengthen company’s competitive advantage. competency based pay system design at kursus indonesia 20 a currently popular theory found in almost every book and consultant’s report tells manager to tailor they pay systems to align with the organization’s business strategy (milkovich, newman & gerhart, 2014). a compensation strategy that supports the business strategy implies alignment between compensation and overall human capital strategy. so the analysis of current kursus indonesia’s business strategy and human capital strategy is needed to a make an alignment between those strategies and compensation strategy. milkovich, newman and gerhat (2014) also said that the strategic perspective focuses on those compensation choices help the organization gain a sustain competitive advantage. this study will solve the kursus indonesia’s current compensation problem by designing a new compensation system in terms of base salary, not to the overall total compensation. meso level conceptual framework shows the corresponding variables, steps, and their interrelationships in designing compensation system as seen in figure 3. figure 3 conceptual framework (meso level) 3. research methodology this study used qualitative research method that emphasize the valueladen nature of inquiry and seek answers of questions that stress how social experience is created and given meaning. in the handbook of qualitative research denzin and lincoln describe qualitative research as involving an interpretive naturalistic approach to the world. this means that qualitative research study things in their natural settings, attempting to make sense of or interpret phenomena in terms of the meanings people bring to them (2005: 3). data collected in this study are primary data and secondary data. the primary data used in this research were obtained by discussion with company’s executives, interview employees, and direct field observation. the primary data were about employees’ view of current compensation system, job description afebi management and business review (ambr) vol.03 no.01, june 2018 21 and job specification, current company and employees’ performance, current compensation system, and other internal information. in this study, the secondary data was obtained by gathering some data from other source outside the company. those data are benchmark salary, industry top brand data, industry situation, competitors’ data and other complementary data. to process the data gained, this study used descriptive analysis with business situation analysis that consists of environmental scanning, current business strategy and human capital strategy analysis, current compensation problem analysis and leads to the current reality tree root cause analysis. from the root cause founded, the solution is to make a strategic compensation system and it could be done by doing job analysis and point method job evaluation. job analysis consisted by job description analysis and job specification analysis. the point method job evaluation evaluates jobs by comparing compensable factors. according to martocchio (2013), job evaluation commitees follow seven steps to complete the point method: 1. select benchmark jobs 2. choose compensable factors 3. define factor degrees 4. determine the weight of each factor 5. determine point values for each compensable factor 6. verify factor degrees and point values 7. evaluate all jobs 4. results 4.1 environmental scanning to view kursus indonesia's broader business conditions of the current situation of industry competition and their current competitive advantage, the environmental scanning with internal analysis and external analysis was conducted. this study used the porter’s five forces analysis and competitor analysis in the external analysis to see the competition faced in tutoring industry. competency based pay system design at kursus indonesia 22 figure 4 five forces analysis summary figure 4 is a summary of the five forces analysis conducted that shows the tutoring industry attractiveness and competition. in general, the stronger competitive forces are, the lower the profit potential for an industry. based on above porter 5 forces analysis, tutoring industry is moderately competitive or attractive. this study did a competitor analysis to ganesha operation, sony sugema college, and nurul fikri because of the similarity of the product, facilities, and quality with kursus indonesia, they also has a good brand position in the market. this study analyzed several strengths and weaknesses of those competitors. the internal analysis process considers the firm’s resources, capabilities, and core competencies as the foundation of competitive advantage. the analysis of kursus indonesia’s resources, capabilities and core competencies was obtain from the research conducted by zulkifli said (2017) resulted that kursus indonesia does not have a sustainable competitive advantage. there is only one temporary competitive advantage, that was human resources’ trust. the data obtained from external and internal analysis are summarized in swot analysis. according to jogiyanto (2005: 46), swot is used to assess the strengths and weaknesses of the company's resources and external opportunities and the challenges it faces. the swot analysis is shown in table 2. afebi management and business review (ambr) vol.03 no.01, june 2018 23 table 2 swot analysis of kursus indonesia strengths weaknesses homy and small class unstable management system high qualified teacher from reputable university high employee turnover rate talents mapping & finger reading employees unsatisfaction of the compensation student's graduation rate always above 80% weak in data processing and data storage management majority employees are young people in a productive age lack of performance management system academic and psychological approach difficulty in recruiting qualified employees lack of strategic planning lack of training program lack of employee work facilities unclear and unfair some company rules opportunities threats government regulation about un the products are easy to imitate incresing people’s income per year government policy of school hours addition increasing public awareness about the importance of education existence of some free online tutoring high market share opportunity for education industry high threats of subtitute products globalization and free market competitor’s fast adaptation to technological change 4.2 current business strategy and human capital strategy as described in the conceptual framework, to obtain the right compensation strategy in a company, it is necessary to link or adjust the compensation strategy to the company's business strategy. according to hitt, ireland, & hoskisson (2002), in the book strategic management: competitiveness and globalisation, business-level strategies are concerned with a firm’s industry position relative to those of competitors. firm choose from among four generic businesslevel strategies to establish and exploit a competitive advantage within a particular competitive scope: cost leadership, differentiation, focused cost leadership and focused differentiation. business strategy promoted by kursus indonesia is focus differentiation strategy. because kursus indonesia is different from other tutoring institution, they positioned their company as an education consultant. but kursus indonesia segment is more focus on highschool students, unlike other competitors that mostly cover a wider segment. the product offered by kursus indonesia is also distinguished with its competitors. michael e. porter (1998) described some example of value creating activities associated with the differentiation strategy, in terms of human resurces management, compensation programs intended to encourage worker creativity and productivity. indeed, kursus indonesia does not have a certain human capital strategy for their company. kursus indonesia might unaware or competency based pay system design at kursus indonesia 24 underestimate the importance of their human capital in order to achive company strategic competitiveness. 4.3 current compensation problem in the practice, employee dissatisfaction of kursus indonesia’s current compensation happened because of several problems in the current compensation system. based on the interview with three kursus indonesia’s employees from different job and levels of position, there are some problems exists in the current kursus indonesia’s compensation system: 1. not all salaries match the regional minimum wage. and some are only equivalent to the regional minimum wage. (compliance problem) 2. the majority of employees feel the salary is not fair. they said, there are some employees with different tenure but the salary remains the same. there are also jobs with the same tasks and workload but the salary is different. there is no basic clarity in the determination of salary at each position in the career path. then the workload is not worth the salary earned because they work with much times and energy sacrified, but gained an unworth payment. (fairness problem) 3. the majority of employees also feel that the salary earned has not been able to motivate employees to give their best performance. besides being a modest salary as well as the lack of bonus and reward system. (efficiency problem) 4. there is no clarity of overtime pay and payment. payment for overtime session and wage for official traveling tend to be more often not paid (compliance problem) futher more, above problems shows that kursus indonesia current compensation system can’t fulfill the objectives of pay model defined by milkovich, newman and gerhart (2011) there are efficiency, fairness, and compliance with laws and regulations. from the slight overview of the current kursus indonesia’s compensation system that present some of the forms and amount of salary for some positions, founded some strange and uncertainty in the base salary determination. the same job positions from various directorate at the same level was assessed with different salary payments. in addition, there are two employees with different working periods of about one month, but oddly the base salary of employees with a shorter working period is even greater than employees with longer tenure. there are also three ojt staff with different working period, two of them have the same working period, but gain the different salary amount. those problem shows that the current kursus indonesia compensation system does not have a clear bases for pay. 4.4 root cause analysis this research use the current reality tree (crt) as the tool for finding the root cause of current kursus indonesia’s busines issue. the current reality tree (crt) is a logic tree designed specifically to find hidden system-level problems in complex situations (dettmer, 2007). steve tendon (2012) explained that crt relate the undesirable effect (ude)s via a logical chain of cause and effect to root causes (rc). figure 5 shows the root cause analysis of kursus indonesia’s business issue. afebi management and business review (ambr) vol.03 no.01, june 2018 25 figure 5 root cause analysis 5. discussion 5.1. alternative business solution problems with the current kursus indonesia’s compensation system need to be addressed immediately by developing a new strategic compensation system that should aligned with company’s business strategy. the compensation system itself by berger & berger (2000) is grouped into four major components, namely base pay (salary), benefit (benefits), short term incentive and long term incentive. in this study, the base salary compensation system emphasized because the base salary is the main component of kursus indonesia’s compensation system and other forms of pay has not really implemented yet in kursus indonesia and not have any crucial problem. bases for pay kursus indonesia’s current compensation system does not have a clear bases for pay, then, before develop a new system, it is necessary to determine which bases for pay that suitable and needed to solve the current compensation problem. there are several bases for pay proposed by martocchio (2013), competency based pay system design at kursus indonesia 26 namely traditional bases for pay, incentive pay, and person-focused pay. person-focused pay is the the bases for pay that most suitable to solve the current compensation problem. advocates of person-focused pay programs offer two key reasons that firms seeking competitive advantage should adopt this form of compensation: technological innovation and increased global competition (martocchio, 2013). according to martocchio (2013), person-focused pay divided into competency-based, pay-for-knowledge, and skill-based pay. competency based pay could fulfill the kursus indonesia's need for a pay structure that supports business strategy because it is suitable with service industry to improve employee motivation and play a central role for sustainable competitive advantage. as ulrich and smallwood (2004) explained that today, the integration of human resources management policies and systems with the explicit objective of creating fit and alignment between individual competencies and organizational capabilities, plays a central role for sustainable competitive advantage. pay structures the pay structure used in this research is job based structure, that relate the salary with each job value. this pay structure could hep sustain company’s competitive advantage and drives the ideal behaviors to each individual in their job. as milkovich, newman, and gerhart (2011) explained that job based structures is one of design pay structures that will influence employee behavior and help organization sustain its competitive advantage. job evaluation method in building an internally consistent compensation system, job evaluation is needed to be done. according to milkovich, newman & gerhart (2014), there are three types of job evaluation methods commonly used by company; ranking method, classification method, and point method. before start designing a new system, it is necessary to determine what type of job evaluation to use. after discussion with kursus indonesia’s general manager human capital (gm hc), determined that point method job evaluation is a proper job evaluation method. as mentioned in milkovich, newman & gerhart (2014), the advantage of point method among other methods are; compensable factors call out basis for comparison, then compensable factors communicate what is valued. 5.2. analysis of business solution proposed competency based pay system from several approaches and methods of compensation system, determined that the competency based pay system is the pay structure that best suits the business strategy, drives employee behavior and could help attract and retain the qualified talents. to design the competency based compensation system, stage that need to be done are job analysis and job evaluation. job analysis at this stage job analysis was done by collecting information about each position’s job description and job specification. the job analysis was done for the benchmark jobs by interviewing human capital executive and some position’s holders about the jobs’s description and specification. the content of job description are task, performance indicator, authorities and work afebi management and business review (ambr) vol.03 no.01, june 2018 27 relationship. in the job specification, the competencies determined adjusted to the level of competency that inherent with each position. job evaluation the point method evaluates jobs by comparing compensable factors. according to martocchio (2013), job evaluation commitees follow seven steps to complete the point method. step 1: select benchmark jobs the salary datas was compared from three trusted indonesia’s job sites, which are jobstreet.co.id, job-like.com, and qerja.com. those sites are included in the 20 most trusted and best job sites in indonesia that can be used as a reference based on research done by maxmanroe.com (2017). the companies choosed as benchmark are ganesha operation, sony sugema college and nurul fikri. after comparing various data of competitors salary, ten jobs chosen to be used as the benchmark jobs. there are general manager, senior manager, branch manager, supervisor, educator, academic staff, administration staff, customer service, freelance tutor, and operational. those jobs chosen because those jobs common accross some different employers, and represent the entire range of jobs. step 2: choose compensable factors there are five competencies used as compensable factors, which are core comptency, managerial competency, functional competency, technical competency, and working condition. most of those factors was refferred by spencer and spencer competency dictionary. factors defined and leveled based on spencer and spencer are ach a, ach c, cso, flx, at and dev for core competency, oa, imp, int, dir, tl for managerial competency and info, scf, exp, tw, co for functional competency. working condition and technical competency factors was arranged by discussion with kursus indonesia’s gm hc, the subfactors and the levels determined based on joband business-related. the subfactors for technical competency are education and experience. the working condition are consist of comfort level and risk accident. step 3: define factor degrees the determination of level of every competency for each bencmark jobs was done by focus discussion with human capital general manager (gm hc) and some position’s holder. step 4: determine the weight of each factor in this study, the compensable factors weighted by using expert choice software. expert choice software is a multi-objective decision support tool based on the analytic hierarchy process (ahp). in this step, gm hc is the person who has the authority in making the desicion of factor’s importance comparation and the result shows in table 3. competency based pay system design at kursus indonesia 28 table 3 compensable factors and subfactors weight factor factor weight sub factor sub factor weight total weight core competency 38,30% cso 26,20% 10,03% flx 9,30% 3,56% ach a 14,30% 5,48% ach c 15,50% 5,94% at 14,70% 5,63% dev 20,00% 7,66% managerial competency 22,60% oa 6,40% 1,45% imp 15,30% 3,46% int 19,80% 4,47% dir 30,70% 6,94% tl 27,80% 6,28% functional competency 26,00% info 11,40% 2,96% scf 8,70% 2,26% exp 36,00% 9,36% tw 23,90% 6,21% co 20,00% 5,20% working condition 5,00% cl 25,00% 1,25% ra 75,00% 3,75% technical competency 8,10% education 50,00% 4,05% experience 50,00% 4,05% source: expert choice and calculation step 5: determine point values for each compensable factor the maximum point value for salary calculation gained by multiplied total weight of each subfactors with 100.000. as the maximum value determined to be the highest level of each subfactors, the lowest level of each subfactors is obtained by dividing the maximum value with 10. scale is to be made to determine the interval value between each scale by subtracting maximum value with minimum value and to divide it by total scale minus 1. step 6: verify factor degrees and point values table 4 shows the determination of factor degrees and the point values for each compensable factor. afebi management and business review (ambr) vol.03 no.01, june 2018 29 table 4 factor degrees and point values value of core competency scale sub factor 0 1 2 3 4 5 6 7 8 9 cso 0 1003,5 2132,4 3261,2 4390,1 5519,0 6647,9 7776,8 8905,7 10034,6 flx 0 356,2 997,3 1638,5 2279,6 2920,8 3561,9 at 0 563,0 1576,4 2589,8 3603,3 4616,7 5630,1 dev 0 766,0 1627,8 2489,5 3351,3 4213,0 5074,8 5936,5 6798,3 7660,0 ach a 0 547,7 1251,9 1956,0 2660,2 3364,4 4068,6 4772,7 5476,9 ach c 0 593,7 2374,6 4155,6 5936,5 value of managerial competency scale sub factor 0 1 2 3 4 5 6 7 8 9 oa 0 144,6 405,0 665,3 925,7 1186,0 1446,4 imp 0 345,8 790,4 1234,9 1679,5 2124,1 2568,7 3013,2 3457,8 int 0 447,5 950,9 1454,3 1957,7 2461,1 2964,6 3468,0 3971,4 4474,8 dir 0 693,8 1474,4 2254,9 3035,5 3816,0 4596,6 5377,1 6157,7 6938,2 tl 0 628,3 1570,7 2513,1 3455,5 4398,0 5340,4 6282,8 value of functional competency scale sub factor 0 1 2 3 4 5 6 7 8 9 info 0 296,4 741,0 1185,6 1630,2 2074,8 2519,4 2964,0 scf 0 226,2 735,2 1244,1 1753,1 2262,0 exp 0 936,0 2139,4 3342,9 4546,3 5749,7 6953,1 8156,6 9360,0 tw 0 621,4 1553,5 2485,6 3417,7 4349,8 5281,9 6214,0 co 0 520,0 1300,0 2080,0 2860,0 3640,0 4420,0 5200,0 value of working condition scale sub factor 0 1 2 3 4 5 6 7 8 9 cl 0 125 500 875 1250 ra 0 375 2062,5 3750 value of technical competency scale sub factor 0 1 2 3 4 5 6 7 8 9 education 0 405 2227,5 4050 experience 0 405 2227,5 4050 source: excel data processing step 7: evaluate all jobs those value then associated to each benchmark job’s competency spesification that has been determined before. all points are totaled for each job, and all jobs are ranked according to their point values. job worth and base salary to gain an externallly competitive compensation system, survey for benchmark salary is needed. from several salary data, choosen ganesha operation’s salary as the benchmark salary used. ganesha operation is the competency based pay system design at kursus indonesia 30 leader in tutoring industry as they could gained top brand award five years in a row. assumed that go salary is the most competitive salary that acceptable to their employee and lead to employees productivity and the corporate performance. so, in order to make the proposed competitive pay structure and boost company’s competitive advantage the go salary was chosen as benchmark salary. the benchmark salaries then devided with each position’s job value and used as the reference point or converter to calculate job salary of each position. before calculating the salary of the jobs, the appropriate pay policy have to be considered. to make a solutive and strategic compensation system due to the business issue, considered that lead pay policy is the suitable pay policy. with the policy of paying above-market rates it could maximizes the ability to attract and retain quality employees and minimizes employee dissatisfaction with pay. so that, decided to use the highest converter value as the basis for calculate job salary. the chosen converter value is 113, then it is multiplied with every job value, resulting each job’s worth salary. table 5 shows the calculation result of worth job salary. table 5 job salary position salary benchmark job value benchmark/job value job salary general manager rp10.000.000 88397,1 113 rp10.000.000 senior manager rp6.000.000 68289,9 88 rp7.725.362 branch manager rp4.610.000 64812,1 71 rp7.331.933 supervisor rp4.140.000 56079,0 74 rp6.343.983 academic staff rp2.300.000 31657,6 73 rp3.581.291 educator rp2.830.000 34649,1 82 rp3.919.715 hr staff rp2.000.000 30568,8 65 rp3.458.122 customer service rp2.360.000 28014,0 84 rp3.169.112 operational rp1.200.000 13999,3 86 rp1.583.685 freelance tutor rp1.710.000 15357,7 111 rp1.737.354 those salary then compared with benchmark salaries’ trendline, processed with linear regression using microsoft excel, resulted that those salary policy line was above the market pay line as seen in figure 6 afebi management and business review (ambr) vol.03 no.01, june 2018 31 figure 6 pay policy line nevertheless, the application of salary calculation results to the company should have to pay attention to company’s budget capability. therefore, the scenario of pay was made thus kursus indonesia could adjust their pay decision with their financial condition. table 6 shows some scenario of pay proposed with some percentage of pay compared to the worth salary and the budget needed to implement the pay scenario salaries. table 6 proposed scenario of pay position 100% 95% 90% general manager rp10.000.000 rp9.500.000 rp9.000.000 senior manager rp7.725.362 rp7.339.094 rp6.952.826 branch manager rp7.331.933 rp6.965.336 rp6.598.740 supervisor rp6.343.983 rp6.026.784 rp5.709.585 academic staff rp3.581.291 rp3.402.227 rp3.223.162 educator rp3.919.715 rp3.723.729 rp3.527.743 hr staff rp3.458.122 rp3.285.216 rp3.112.310 customer service rp3.169.112 rp3.010.656 rp2.852.201 operational rp1.583.685 rp1.504.501 rp1.425.317 freelance tutor rp1.737.354 rp1.650.487 rp1.563.619 budget needed rp1.118.415.14 2 rp1.062.494.38 5 rp1.006.573.62 8 in addition, due to some limitations to make job evaluation of all position in company, the pay grades was made by discussion with kursus indonesia’s gm hc. determined eight grades of jobs in accordance to kursus indonesia’s career level. the pay range was made by executive consideration adjusted with company’s carrer path and promotion policy. as shown in figure 7 the pay range between every jobs stated from the minimum range to maximum range above and below the midpoint of pay policy line. this simulation will help the competency based pay system design at kursus indonesia 32 company or compensation officer to determine salary point for employee promotion. figure 7 pay grade there is still salary that below the regional minimum wage for non staff and associate. this grades acceptable with payment below the regional minimum wage because this positions considered as non staff in the company with no career ladder. 6. conclusions based on the objectives of this study and the analysis, there are some outcome of this research that could be concluded: 1. from the root cause analysis, founded that the unalignment between compensation strategy and business strategy is the root cause of current kursus indonesia’s compensation problem. this is made the current compensation system failed to bring internally fair and externally competitive compensation to the employees. 2. the proposed solution to solve kursus indonesia’s compensation problem is by designing a competency based pay system. this is the most appropriate approach because this system is suits to service industry to increase employee motivation and boost competitive advantage by generate competencies that support employee’s needed behavior to support focus differentiation business strategy. 3. the salary recommendation result based on competency based pay system compared to the benchmark salary is more competitive, because it used a lead pay policy that could maximizes the ability to attract and retain quality employees and minimizes employee dissatisfaction with pay as seen in table 7. afebi management and business review (ambr) vol.03 no.01, june 2018 33 table 7 proposed worth salary compared with benchmark salary position salary benchmark proposed job salary general manager rp10.000.000 rp10.000.000 senior manager rp6.000.000 rp7.725.362 branch manager rp4.610.000 rp7.331.933 supervisor rp4.140.000 rp6.343.983 academic staff rp2.300.000 rp3.581.291 educator rp2.830.000 rp3.919.715 hr staff rp2.000.000 rp3.458.122 customer service rp2.360.000 rp3.169.112 operational rp1.200.000 rp1.583.685 freelance tutor rp 1.710.000 rp1.737.354 to implement the new compensation system, company should have a salary budget about 1 billion rupiah. the implementation of the new compensation system could be executed by kursus indonesia’s general manager of human capital working together with human capital directorate’s team by review the system, determine salary policies, obtain top’s approval, communicate, execute, and monitor the new system. references baron, a. 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(2014). compensation (11th edition). new york: mcgraw-hill education. moeljono, d. (2003). budaya korporat dan keunggulan korporasi. jakarta: pt elex media komputindo. naukrihub. (2015). payroll management. viewed 08 october, 2017 at http://www.naukrihub.com/payroll/ porter, m. e. (1998). competitive strategy: techniques for analyzing industries and competitors. new york: academy of management. said, z. (2017). proposed strategy formulation and implementation for pt kursus indonesia. bandung: school of business management itb. singh. (2007). compensation and reward management. india: excel books india. spencer., & spencer. (1993). competence at work: models for superior performance. canada: john wiley & sons, inc. ulrich, d., & smallwood, n. (2004). capitalizing on capabilities. harvard business review. http://www.naukrihub.com/payroll/ http://www.hbs.edu/faculty/product/195 http://www.hbs.edu/faculty/product/195 how differences between fashion innovators and non-innovators among young people? 42 3how differences between fashion innovators and noninnovators among young people? novika candra astuti1* 1 widyatama university, bandung, indonesia abstract fashion is important for our life because not only it allows you to dress fashionably but also help connect with people of same interest and provides as a form of entertainment. these days' youth are becoming so obsessed with fashion and mainly follow trends to get a sense of identity that they waste most part of their time and money on fashion. the purpose of this study is to identify the difference between innovators and non-innovator among young people in adopting new fashion item influenced by the selected determinants i.e. information seeking, variety seeking, product evaluation, price sensitivity, and hedonic shopping. this research also investigates shopping behavior and attitude among young consumers. total 121 questionnaires were distributed among undergraduate students in bandung. the result shows that price sensitivity and hedonic shopping significantly differentiate between fashion innovators and non-innovators. the results of the study provide guidance to designers and entrepreneurs in the fashion industry that greater focused on innovative consumers. keywords: fashion, innovators, non-innovator, young people 1. introduction fashion can be defined as a form of freedom including not only clothing but also accessories, jewellery, bag, shoes, hairstyles, beauty and body art. au, taylor and newton (2000) stated that fashion depicts a strong indicator of social identity, social class, self-image and the climate as what we wear and how and when we wear. the growth of the fashion world is like the movement of the earth's rotation around the sun. shapes, styles, shades, colors, and creativity never stops and continues to evolve keep pace with the times. the fashion industry has many fans not only of young people but also adult classes both women and men. any parent who has children also begins to notice the style and dress their children to follow the current fashion trends. these businesses have a large consumer attracting many business entrepreneurs and designers who compete in this industry. this can be seen by a growing number of shopping centers that provide variety of latest fashion, boutiques and fashion houses, and even many online businesses engaged in the field of fashion. due to a change in the pattern of people's lives, they become more modern and consumptive of fashion products ready for use and practical. the development of fashion in indonesia both in style and production has been in transformation for more than a century. the fashion industry players in * corresponding author. email address: novika.candra@widyatama.ac.id mailto:novika.candra@widyatama.ac.id how differences between fashion innovators and non-innovators among young people? 43 indonesia have started doing business with the development holding commercial events at home and abroad intensive, such as trade event, retail exhibitions, trunk show and fashion show. therefore, the fashion industry can increase the sale value of the trademark of product that necessarily can develop its business. now, there are many fashion event performances on many occasions such as indonesia fashion week, indonesia muslim fashion week, kick fest, hijab fest, etc. participants come from local designers on board with national work that does not lose quality with foreign designers. they utilize domestic resource-rich indonesian culture in every area such as songket, batik, woven, etc. bandung is one of cities in indonesia known as a center of creative industries especially in fashion. bandung has a lot of potential as a center of design and also the center of the fashion industry. the fashion industry has become one of the contributors to the high rate of economic growth in the city of bandung, reaching 8% per year. bandung is famous of variety of fashion facilities such as shopping centers from small to large scale, traditional and modern, and provides a wide range of latest fashion in accordance with market demand. the presence of several garment and textile industry in bandung support fashion development. besides that, bandung is also supported by a number of educational facilities such as universities that focus on the fashion industry that become a gathering place for students, designers, fashionista, business entrepreneurs to discuss and exchange ideas. the fashion industry is introducing new fashions every day. it’s now a challenge for the fashion industry that, how they can successfully position their products in the minds of the consumers to excel profitably. fashion adoption is focused on how consumers accept a prevailing style during a particular time. fashion is accepted by the consumers and influences their behavior in many ways. this study is a step towards the better understanding of consumer behavior to adopt a new fashion. consumer’s adoption behavior regarding new product is a key point for the researchers. more understanding is required to predict adoption behavior, especially for the success of innovation. managers who understand more about the innovators will be easier to communicate with them to persuade them to buy new products through smart marketing strategy. the information from this study will also add to our theoretical knowledge of innovators and their behavior, thereby improving this aspect of diffusion theory. this study tries to investigate the difference between innovators and non-innovator to adopt new fashion item influenced by the selected determinants i.e. information seeking, variety seeking, product evaluation, price sensitivity, and hedonism. this study also examines shopping behavior and attitude among young consumers. 2. literature study fashion as a domain specific of innovativeness goldsmith & newell (1997) states that domain specific which means that consumers tend to be innovators for a specific product or product category. fashion is one area that is found to be necessary in the diffusion of innovation, and the frequent introduction of new styles makes researchers’ interest to study focusing how differences between fashion innovators and non-innovators among young people? 44 on innovativeness (goldsmith et al, 1998). kaiser (1997:18) defines fashion as the process by which styles are introduced and accepted by consumers, and also to a particular style that is accepted by a large group of consumers at a particular time. muzinich et al (2003) suggests that fashion is a socially valued or universal standard of taste that also incorporates the singularity and subjectivity of individual tastes. fashion innovators are considered to help spread new fashion faster than others, so that by understanding this group should contribute to the development of new strategies to speed up adoption, and increase sales and profits. given the evidence that innovativeness is domain specific, this study focused on fashion as the domain of interest. therefore, fashion is seen as very relevant because of its symbolic properties and accessibility to most consumers. innovativeness and information seeking information seeking is defined as the activities that are brought out during looking for information. rogers (2003) mentioned that an innovative person seeks information actively and has a greater exposure to different media sources. because of greater information seeking, an innovator is more aware of the available information channel and maintains the quality of being an innovative individual. innovation is the disposition of attitude able to persuade a person to seek information from the channels to raise awareness and involve some experimentation and risk-taking. hirunyawipada and paswan (2006) found that domain-specific innovativeness positively related with acquire information associating with new products. innovativeness and variety seeking kahn (1995) defined variety-seeking as “the tendency of individuals to seek diversity in their choices of services or goods”. variety-seeking tendency is rooted in need for a change in an attempt to resolve the boredom associated with a brand and a product (van et al., 1996). hoyer and ridgway (1984) propose that personality traits are very essential for understanding variety seeking behavior. variety seeking behavior is thought to have relevance for several areas of marketing; most work has been concentrated in the area of exploratory purchase behavior i.e., brand switching and innovating behavior. one important outcome of the variety seeking drive in the context of consumer choice would be the desire for new or novel products manifested by purchase exploration (i.e., switching/innovating). innovativeness and product evaluation when we buy a product whether we are aware of it or not, we go through a process of evaluation. positive evaluation leads to acceptance and negative evaluation to rejection. product characteristics have been an essential part of innovation adoption research for decades (rogers, 1993; goldsmith and flynn, 1992; goldenberg et al., 2001; steenkamp and gielsens, 2003). they are said to be crucial for consumer decision-making with respect to new products. rogers (1993) categorized five characteristics of innovations, which significantly influenced the innovation-adoption process. these were: relative advantage, complexity, compatibility, trialability, and observability. the relative advantage of an innovation is the extent to which consumers in the target market perceive it to be how differences between fashion innovators and non-innovators among young people? 45 superior in some important way to existing products. compatibilty is the degree to which an innovation fits with the needs, values, and past experience of the consumer. compatibilty has an important relationship with the lifestyle of an individual (sääksjärvi, 2003). complexity represents the extent of difficulty that an individual perceives to experience while using as well as understanding an innovation (rogers, 2003). observability is the degree to which the results of an innovative are visible to others. the easier it is for individuals to see the results of an innovation, the more likely they are adopt it (rogers, 2003). trialability is the degree to which an innovation may be experimented with on a limited basis. innovativeness and price sensitivity price sensitivity is an individual difference variable describing how individual consumers react to price levels and changes in price levels. a consumer high in price sensitivity will manifest much less demand as price goes up (or higher demand as price goes down), and consumers low in price sensitivity will not react as strongly to a price change (goldsmith and newell, 1997). previous research has shown that innovators are relatively price insensitive, at least for new restaurant and fashionable clothing (goldsmith, 1996; goldsmith and newell, 1997). while they are involved in getting good deals, this seems to be a result of their interest in the market place and not from price sensitivity per se. innovators are more interested in acquiring the latest new product regardless of price owning to their involvement in the product category. innovativeness and hedonic shopping hedonic shopping value is more subjective and individualistic. its value is perceived through fun and pleasure as opposed to goal achievement (hirschman & holbrook, 1982). also, hedonic shopping value reflects the pleasure and emotional worth of shopping (bellenger et al., 1976). in the past, however, there was a considerable lack of papers examining hedonic shopping value compared to utilitarian shopping value (sherry, 1990). previous studies have identified and included fun, pleasure, recreation, freedom, fantasy, increased arousal, heightened involvement, new information, escape from reality, and others as hedonic shopping value (darden & reynolds, 1971; tauber, 1972; hirschman & holbrook, 1982; babin et al., 1994). therefore, hedonic shopping value refers to the level of perception where shopping is considered emotionally useful through various positive feelings and worthwhile. thus, hedonic shopping value can be understood as the emotional benefits the consumer perceives through the shopping experience other than the achievement of the original purchase intent (macinnis & price, 1987). westbrook and black (1985) suggested that shopping enjoyment includes the opportunity for social interactions with friends, family or even strangers and the sensory stimulation such as escapisms from routine life, and new information about upcoming trends and fashion. roehrich (1995) stated that innovativeness is an expression of two central needs; need for stimulation (berlyne, 1960) and need for uniqueness (snyder and fromkin, 1980). consequently, his scale comprises two dimensions: hedonist innovativeness (tied to need for stimulation) and social innovativeness (tied to need for uniqueness). in this study, we use pleasure and how differences between fashion innovators and non-innovators among young people? 46 gratification shopping, idea shopping, social shopping, role shopping, and value shopping to measure hedonic. 3. hypothesis development in figure 1, researcher present a theoretical model based on previous research as discussed in literature review. thus, the current study tried to understand differences consumer fashion innovativeness between innovators and noninnovators. the following hypotheses are formulated: h1: there are significant differences of information seeking between innovators and non-innovators h2: there are significant differences of variety seeking between innovators and non-innovators h3: there are significant differences of product evaluation between innovators and non-innovators h4: there are significant differences of price sensitivity between innovators and non-innovators h5: there are significant differences of hedonic shopping between innovators and non-innovators h6: there are significant differences of shopping behavior between innovators and non-innovators 4. research methodology sample researcher administered questionnaire to undergraduate students in widyatama university, bandung. student sample is appropriate for convenience for testing such as this study, but the results cannot be generalized to larger populations (calder et al., 1981). one hundred and twenty one students completed questionnaires. table 1 shows respondent profile including fashion products purchased in the last 3/4 months, number of fashion items purchased in the last 12 months, and the average cost spent to purchase fashion products every month. the number of females and males are balance, 49.6% of male and 50.4% of female. the sample ranged in age between 18 to 20 years is 93.4%. seventy one point nine percent respondents have month allowance between rp 1,000,100 and rp 2,000,000. clothing and shoes are fashion frequently bought by young consumer, constituting 32% and 29% respectively. number of items purchased in the last 12 months is between 1-3 items of 43.2% respondents and 20.3% respondents bought 4-5 items. almost 26.7% young consumers spent money between rp 300.100 and rp 500.000, 19.2% spent between rp 500.100 and rp 700.00 and 19.2% spent more than rp 1.000.000 to buy fashion products. table 1 respondent profile criteria frequency percentage (%) gender male 60 49.6 female 61 50.4 age 18 – 20 years old 113 93.4 how differences between fashion innovators and non-innovators among young people? 47 criteria frequency percentage (%) 21 – 23 years old 8 6.6 month allowance rp 500.000 rp 1.000.000 17 14.0 rp 1.000.100 – rp 1.500.000 49 40.5 rp 1.500.100 – rp 2.000.000 38 31.4 rp 2.000.100 – rp 2.500.000 11 9.1 rp 2.500.100 – rp 3.000.000 3 2.5 rp 3.000.100 – rp 3.500.000 1 0.8 rp 3.500.100 – rp 4.000.000 2 1.7 > rp 4.000.000 0 0 fashion products purchased in the last 3/4 months shoes 74 29 slipper 16 6 clothing 81 32 accessories (bracelets, necklaces, rings, etc.) 21 8 bag 46 18 headscarf / veil 11 4 others (shocks, jacket, etc) 6 2 number of fashion items purchased in the last 12 months none 2 1.7 1-3 51 43.2 4-5 24 20.3 5-7 20 16.9 > 7 item 21 17.8 the average cost spent to purchase fashion products every month < rp 100.000 4 3.3 rp 100.000 – rp 300.000 21 17.5 rp 300.100 – rp 500.000 32 26.7 rp 500.100 – rp 700.000 23 19.2 rp 700.100 – rp 1.000.000 17 14.2 > rp 1.000.000 23 19.2 instrument the measurement instrument consisted of a self completion questionnaire. the main body of the questionnaire is in the form of evaluation statements measuring the constructs identified from the relevant literature and the questionnaire mainly made use of by 5-point likert scale that ranges from (1 = strongly disagree, 2 = disagree, 3= neutral, 4= agree to 5 = strongly agree). five established scales were used to to measure the different constructs. the domain specific innovativeness scale (dsi) was used to measure fashion innovativeness (goldsmith et. al., 1998); information seeking scale to measure activities to look for information of fashion (raju, 1980); variety seeking scale to measure variety in fashion products choices (kahn, 1995); revised product evaluation scale to measure evaluation of fashion product (focus group discussion and breivik et al. (1998)); hedonic shopping scale to measure hedonism of consumer toward fashion including pleasure and gratification shopping, idea shopping, social shopping, role shopping, and value shopping (arnold and reynolds, 2003). how differences between fashion innovators and non-innovators among young people? 48 5. results scale reliability the data were encoded numerically in ms excel and statistically analysed and computed in spss 16.0. the reliability was calculated using cronbach’s coefficient alpha recommended to be accepted by nunnally (1978) that is between 0.50 and 0.70. however, we achieved the normality and reliability of the data with the values of cronbach’s alphas as shown in the table 2. table 2 scale reliability variable scale items alpha if deleted reliability information seeking is1 when i hear about a new store, i am keen on finding out more about. 0.749 0.749 is2 i often look through catalogues even i am not planning to order anything. 0.782 is4 i like testing free product samples of different brands because it enables me to compare. 0.668 is5 i often read advertisements just out of curiosity. 0.658 is6 if i see a new brand that seems to be somewhat to the one i usually buy, i am keen finding out more about it. 0.596 is7 i rarely read advertisements that just seem to contain a lot of information. 0.559 is8 sometimes i amble through stores with curiosity without planning to buy anything. 0.754 variety seeking vs1 i think it is boring to always buy the same brands even if they are good. 0.874 0.613 vs4 i enjoy exploring several different alternatives or brands when shopping. 0.520 vs5 to not always buy the same brands, i shop among a few different brands. 0.839 vs6 there are many products, where i always switch among few brands. 0.738 vs7 when old thing gets boring, i like to find some new styles and products. 0.759 how differences between fashion innovators and non-innovators among young people? 49 variable scale items alpha if deleted reliability product evaluation pe1 i evaluate products based on quality 0.801 0.713 pe2 when i consider buying something i ask other people around me for advice. 0.866 pe3 when choosing something, other people’s opinion is important to me. 0.868 pe4 i evaluate the products based on uniqueness / different from other people have 0.618 pe5 i need long time to evaluate product 0.705 pe6 i choose product that reflect my lifestyle 0.800 pe7 i usually think more deeply when choose products that are at high-risk than low-risk. 0.623 pe8 it is very difficult to discriminate between different items when i need one 0.850 price sensitivity ps1 i know that a new kind of product is likely to be more expensive than older ones, but does not matter to me. 0.858 0.550 ps2 i do not mind paying more to try out a new product. 0.817 ps3 a really great product is worth paying a lot of money for 0.870 ps4 i do not mind spending a lot of money to buy a product 0.889 hedonic shopping he1 to me, shopping is an adventure. 0.628 0.850 he2 i find shopping stimulating. 0.833 he3 shopping makes me feel like i am in my own universe. 0.700 he4 when i am in a down mood, i go shopping to make me feel better. 0.896 he5 to me, shopping is a way to relieve stress. 0.882 he6 i go shopping when i want to treat myself to something special. 0.798 how differences between fashion innovators and non-innovators among young people? 50 variable scale items alpha if deleted reliability he7 i go shopping to keep up with the trends. 0.865 he8 i go shopping to keep up with the fashion. 0.782 he9 i go shopping to see what new products are available. 0.832 he10 i enjoy socializing with others when i shop. 0.834 he11 i go shopping with my friends or family to socialize. 0.777 he12 shopping with others is a bonding experience. 0.860 he14 i enjoy shopping around to find the perfect gift for someone. 0.869 fashion innovativeness fi1 in general, i am among the last in my circle of friends to buy fashion when it appears. 0.862 0.660 fi2 if i heard that a new fashion was available in the store, i would be interested enough to buy it. 0.817 fi3 i will not buy a new fashion product if i haven't heard/tried it yet. 0.747 fi4 in general, i am the first in my circle of friends to know the brands of the latest consumer fashion. 0.817 fi5 i do not like to buy fashion before other people do. 0.650 the examination of the innovativeness scale and identification of adopter groups for fashion products consumer innovativeness scale developed by goldsmith and hofacker (1991) consists of six statements and is a balanced scale. in this study, we found that only five items of fashion innovativeness are valid. the summed the scores given to each item to obtain an innovativeness score for each observation as suggested in both the study of goldsmith and hofacker (1991) and the study of goldsmith and flynn (1992). summer scores on the innovativeness scale ranged from 8 to 29, with a mean of 20.25 (sd = 2.79) and a median of 20. for the purposes of the analysis, researcher split the distribution of innovativeness scores to form two groups of consumers, considering the standard deviation and the mean value using the same procedure followed in the study of goldsmith and flynn (1992). in this study, one standard deviation above the mean value for the innovativeness score was taken as a splitting point to form two groups of consumers. thus 16 respondents, the top how differences between fashion innovators and non-innovators among young people? 51 13.2 per cent of the sample distribution (those with scores 21 and above) were determined as innovators or early adopters. the remaining 105 individuals (86.8) were defined as non-innovators. the result of independent sample t-test analysis shows that the non-innovator group has significantly lower scores than the innovators. the evaluation also gives evidence the consistency of the method of segment between the innovators and non-innovators. fashion innovativeness and personality traits (is, vs, pe, ps, he) the study aims to examine whether innovators and non-innovators differ significantly in information seeking, variety seeking, product evaluation, price sensitivity, and hedonic. table 3 shows that results differences between innovators and non-innovators in those variables. price sensitivity and hedonic were found to be significantly different from early and late adopters (sig < 0.05). on the other sides, the significance value of information seeking, variety seeking, and product evaluation are more than 0.05; mean that there are no differences between these variables. we can conclude that we can reject h1, h2, h3 but accept h4 and h5. this study support previous research showing that innovators are relatively price insensitive in fashionable clothing (goldsmith and newell, 1997). price has a significance influence on young consumers’ purchase behavior toward fashion products. non-innovators are sensitive toward price but innovators do not react as strongly to a price change. consumers scoring high on hedonic shopping style are likely to obtain excitement and pleasure from seeking out new things through shopping. goldsmith (1983) stated that consumers who pursue gratification in venturesome and exciting behaviors are more likely to purchase new products. innovators tend to be consumers with the “recreational and hedonistic shopping consciousness” style possess the trait to find fashion shopping pleasant, and shop just for the fun of it and they consider shopping for recreation and entertainment compared to non-innovators. table 3 innovativeness and personality traits mean scores t significance personality traits innovators noninnovators information seeking 30.154 29.561 0.523 0.602 variety seeking 18.455 17.722 0.922 0.358 product evaluation 36.723 36.387 0.285 0.776 price sensitivity 15.455 13.170 3.599 0.001 hedonic 54.657 47.843 3.583 0.000 fashion innovativeness and shopping behavior one of the purposes of this study is to analyze whether innovators and noninnovators differ significantly in their shopping habits or not. this study found contrast finding that there are no differences of shopping behavior between innovators and later adopters. table 4 shows that there are no differences between innovators and non-innovators in shopping behavior (sig. values > 0.05). therefore we can conclude that we reject h6. how differences between fashion innovators and non-innovators among young people? 52 table 4 innovativeness and fashion behavior mean scores t significance shopping behavior innovators noninnovators number of fashion items purchased in the last 12 months 2.625 3.019 -1.175 0.242 the average cost spent to purchase fashion products every month 4.375 3.629 1.781 0.077 6. summary this research is an attempt to evaluate and illustrate the value of the innovativeness scale developed by goldsmith and hofacker (1991) to identify differences between innovators and non-innovators for a specific product category fashion product. the present study shows the use of a simple self-report scale to measure consumer innovativeness validly and reliably among young consumers within a specific product field. in this study, the researcher used the innovativeness scale to classify individuals into innovator and non-innovator groups. this study, the variables of price sensitivity and hedonic shopping are found to be significant variables in profiling innovators. this research is not consistent with previous research (uray and dedeoglu, 1997) that shopping attitude/behavior related variables were also significant in distinguishing one group of another. this study enriches knowledge about fashion innovativeness that there are no differences between early and late majority in information seeking, variety seeking, and product evaluation. young consumers both innovator and non-innovator have similar personality in looking for information for example “when i hear about a new store, i am keen on finding out more about”, “i often look through catalogues even i am not planning to order anything”, “when i hear about a new store, i am keen on finding out more about”. then, the tendency of young consumers to look for variety in their choices of fashion is found to be similar between two groups. they also have similar personality when they go through a process of evaluation. thus, the findings of this study indicate that not only demographic profile (i.e. sex, age and month allowance), but also shopping behavior related characteristics such as type of fashion products purchased in the last 3 or 4 months, number of fashion items purchased in the last 12 months, and the average cost spent to purchase fashion products every month. although this study is not a complete place of the characteristics of the fashion innovator, the results of this study can be useful for each fashion designer and retailer to identify, profile fashion innovators and determine marketing program plan and policies accordingly. 7. limitations and future research it is important to note that the results of this study cannot be generalized to all young consumers. the future research should not only use students for respondents but also research adults to identify fashion innovators that adults who have own income can be investigated more deeply in identifying innovativeness in fashion. how differences between fashion innovators and non-innovators among young people? 53 the probability sampling could be used the next research to avoid bias of the sample choice. research in one of cities from indonesia, bandung, could not represent innovativeness among young consumers in fashion so that the next research should use sample from different cities that can be more valid to depict differences between young innovators and non-innovators in fashion industry. in order to compare the early buyers, three groups such as innovators, early adopters, and early majority should be examined rather than only early adopter and late majority. future research should extend the approach of profiling fashion innovators systematically. in this today society, fashion products have important economic and social significance and should be a focus of many more studies. references arnold, m.j., & reynolds, k.e. 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(1996). why switch? product category-level explanations for true variety-seeking behavior. journal of marketing research (jmr), 33(3), 281-292. empirical investigation of five-factor model of personality 29 2empirical investigation of five-factor model of personality1 fahrudin js pareke1* and rina suthia hayu2 1,2 university of bengkulu, bengkulu, indonesia abstract the concept of five-factor model (ffm) of personality describes the basic dimension of human behavior, thinking, and emotions that related to the job. the ffm currently getting popular and reach more attention to from the scholars and practitioners as well, particularly in the area of human resource management. therefore, the main goal of current research is to compile and to test the dimensions of ffm and its measure empirically. eighty-four self report measures distributed to the 238 employees who work both for public and private organizations at the northern sumatera island, indonesia. the respondents are currently completing their graduate programs at the university of bengkulu. twohundred-and-eighteen questionnaires completed and returned by respondents, and analyzed using factor analysis with varimax approach to extract them in to the several components. based on the analyses, research confirmed the 5 dimensions for ffm, which is conscientiousness (18 items), extraversion-introversion (18 items), agreeableness (12 items), openness to experience (14 items), and emotional stability (12 items). the result strictly recommended that the use of ffp as a means of human resource practices such as selection, promotion, training, and the like. keywords: agreeableness, conscientiousness, emotional stability, extraversion, openness to experiences, personality 1. introduction personality refers to the way someone reacts and interacts with others (robbins and judge, 2009: 139). personality is defined as the patterns of behavior, thought, and unique emotion and relatively stable which is shown by someone (greenberg and baron, 2009: 97). mount (2005) concluded that personality refers to traits of characteristics that are stable over time, the reason underlying the one’s behavior. personality reflects the owner and generally determine one’s affective style, behavioral, and cognitive. definition specifically states that personality is the patterns of thought, emotions, and behaviors that are relatively stable and unchanged for certain period of time and explain human behavior in different situations (elanain, 2007). personality differeces between individuals explain someone gives different responses with others in the same situation. personality differences also explain * corresponding author. email address: pareke@uni.ac.id 1 earlier version of the manuscript has been presented in malaysia indonesia international conference on economics, management, and accounting, november 10th to 11th, 2014. kuala lumpur, malaysia. mailto:pareke@uni.ac.id empirical investigation of five-factor model of personality 30 why someone tends to show a certain behavior for a particular situation, while others show a different behavior for the same situation. basically, classify individuals in a certain personality group is very difficult. because it is hardly find 2 individuals who have identical thoughts, emotions, and behaviors, even 2 twin siblings. but experts in the field of organizational behavior has made great efforts to formulate a personality pattern that is able to gather a few people of a certain personality group. associated with it, has appeared various conceptualizations of personality that is quite popular, such as the big 5 of personality (costa and mccrae, 1992), possitive and negative affective (isen and baron, 1992), type a and type b behavior (friedman and rosenman, 1974), and morning-evening person (guthrie et al., 1995). among various personality conceptualizations above, the most popular and get a lot of attention from practitioners, academics, and researchers are personality conceptualization of the big 5 of personality (five-factor model/ ffm). this concept has been widely accepted as a complete picture of the nature of personality (saucier and ostedorf, 1999). in accordance with the table, this concept assumes that one’s personality can be measured for each of five different dimensions, namely conscientiousness, extraversion-introversion, agreeableness, emotional stability, and openness to experience. conscientiousness dimension describes the extend how far someone is hardworking, neat, self-contained, and diligent versus lazy, frivolous, and not reliable. extraversion-introversion dimension describes how far someone who likes to make friends, assertive, and tolerant versus loner, shy, and reserved. agreeableness shows how far someone is cooperative, warm, easy to fit versus quarrelsome, cold and not easily matched. emotional stability shows how far someone is someone who is anxious, worried, and depressed versus feel safe, calm and happy. and openness to experience dimension describes how far someone is someone who is creative, curious, and cultured versus practical and has little interest range. 1. extraversion relates to the degree how far someone is outgoing and active individual physically and verbally. individuals who have high score of extraversion dimension is individual who like adventure, frank, sociable, assertive and like to talk. individuals who have low score on this dimension are generally reclusive and look more reserved, shy, cautious, and dislike to socialize. individuals who have an average score for this dimension like mix situation between associate and aloof (weaven et.al.,2009). 2. agreeableness refers to the altruistic nature, guardian, care, and emotional support. consequently, someone who has a high score of this dimension is characterized by the nature of the good-natured, friendly, sympathetic, warm, and like to give. otherwise, the low individual score of agreeableness are individuals who like to compete, hostile, indifferent, selfish, vengeful, and jealous (weaven et al., 2009). 3. conscientiousness relates to the degree how far someone always set high standards, have a good job, and show goal oriented behavior. conscientiousness is very strongly associated with achievement and a desire empirical investigation of five-factor model of personality 31 to achieve it. an individual who has high score of this dimension is described as someone who concentrates on very limited number of goals, which is tried seriously. this type of individual is obedient, orderly, competent, responsible and conscientious. otherwise, individuals who have low score of this dimension are people who are easily confused, and impulsivity (weaven et al., 2009). 4. emotional stability refers to the degree how far someone is associated with stress. individuals who have high score of this dimension generally is quiet and relaxing person, and very rarely have a mental or physical pressure that is associated with stress. individuals who have low score of this dimension generally is a less stable, tend to feel fear, worry, easily influenced, and tend to be fear, depression, mental disorders due to the effect of stress (weaven et al., 2009). 5. openness to experience is degree how far someone opened to new ideas, interested in the culture/civilization and creative. individuals who have high score of this dimension is generally interested in the experiences which related with sensory and cognitive, like anything new, can grow in complicated situations, and very liberal. individuals who have low score of this dimension are people who are conventional, conservative, show interested in kinship, and dislike the changes (weaven et al., 2009). research in the field of personality shows an important role of ffm dimensions in predicting one’s performance (salgado, 1997; judge et al., 1998). salgado (1997) concluded that individuals with high scores of conscientiousness and emotional stability dimension has high performance for all types and aspects or the work. as for other dimensions of ffm, relevant only to certain types of work (judge et al., 1998). gill and hodgkinson (2007) noted that the concept of ffm has been so widely used in the practice of selection and assessment. dimensions of ffm implicated as predictors of career success for various types of work, starting from sales force and customer service up to managerial positions and roles of other semi-killed. ffm, as noted by salekin et al.,(2005), considered to have gained empirical support in terms of convergent and discriminant validity either self-assessment, peer, or partner. however according to gill and hodgkinson (2007), measurement techniques that have been used freely in field have many deficiencies. thus become an important task of empirical research to formulate and provide easier empirical evidence to be adopted for the importance of practice in the field. 2. methods data collection in this research were divided in three groups of respondents, consisted of experts group, employee group, and samples. each of the respondents group use different method and data collection technique, according to the type of data and data collection purposes. the data came from a team of experts will be collected be the method of in-depth interviews. these data collection method is used for digging sharper and detailed information about aspects or personality traits. with in-depth interview technique is expected can be identified personality empirical investigation of five-factor model of personality 32 traits of an employee in accordance with the conceptualization. fgd is used to confirm the data of personality traits which are netted through in-depth interviews, so obtained the measurement items that can then be tested through survey methods, namely the questionnaire. the number of participants was 12 people, consisting of private employees and civil servents working in various institutions in bengkulu. the research sample for the survey was 234 civil servents and private employees in various cities in bengkulu and surronding areas. the sample frame was the students who were studying in graduate programs in the faculty of economics and business in university of bengkulu, namely master of management, master of development planning, and master of accounting. samples were taken randomly, proportional to the number of students in each of graduate program. data collection instrument was a questionnaire which consisted of 84 items of question. questionnaires were given directly to the respondents. of 234 questionnaires distributed, only 218 respondents who fill out completely and return to the researcher. of the 218 respondents who participated in this research, 63% were male and 69% of respondents worked in government agencies. in term of age, 54.59% of respondents aged less than 26 to 35 years old. based on the period of employment, 62.39% of respondents had worked for their current organization in the span of less than 10 years. 68.55% of the respondents were employess of public agency, and 49.54% were staff or not having the structural position in the organization where they worked. analysis technique is the triangulation analysis, combining qualitative and quantitative technique. qualitative technique is used to analyze the data from the results of depth-interviews and fgd. qualitative analysis is conducted to identify the indicators and measurement items ffm constructs. qualitative analysis uses an interactive model approach developed by milles and hubberman (1992:20). four stages of analysis interact with each other to form a cycle of analysis, which consists of data collection, data presentation, data filtering, and inference data. quantitative analysis is applied by using analysis factor with the help of an application program, that is statistical product and service solutions (spss). analysis factor helps reduce the number of variables (items) very much (all the questions that form the desired variables in a questionnaire) to be a series of significant factors, can be interpreted, and handled. principal component analysis is applied to transform all items into a series of variables group that are not correlated with each other (sekaran, 2000: 409). linear combination of these variables are called factors, which calculates the variance contained in the data as a whole. the best combination to form the first principal component is the first factor. the second principal component is defined as a linear combination of the best variable to explain unaccounted variance through the first factor, and continued to the third factor, the fourth, and so on (cooper and schindler, 2001: 594). 3. results the results of factor analysis of 84 items of ffm question with varimax rotation method, producing 5 factors or components with loading factor score was empirical investigation of five-factor model of personality 33 more than 0.4. as shown in table 1, the first factor has 18 items of question, the second factor also has 18 items of question, the third factor has 12 items of question, the fourth factor has 14 items of question, and the fifth factor has 12 items of question. table 1 the number of explained data variance no. factor number of eligible items % explained variance explained variance cumulative 1. first 18 10.471 10.471 2. second 18 10.067 20.538 3. third 12 8.176 28.714 4. fourth 14 6.964 35.677 5. fifth 12 6.801 42.479 these factors or components of ffm were able to explain 42% of the total of data variance. the first factor is a collection of items that ask personal type characterized by the indicators: diligent, organized, neat, well-planned, thorough, passionate, reliable, responsible, and cautious. in accordance with the identification of theoretical that is proposed by the authors and previous researchers (ferguson, 2004; burke and witt, 2004; gill and hodgkinson, 2007; salgado, 1997; judge et al., 1998; judge and erez, 2007; furnham et al., 2005), this factor is called conscientiousness dimension. this factor was able to explain 10.47% of the data variance. the second factor is a collection of items that ask personal type characterized by the indicators: adaptive, likes to be the center of attention, talkactive, sociable, friendly, smart break the ice, cheerleaders, open, and assertive. in accordance with the definition of theoretical that is proposed by the authors and previous researchers (judge and erez, 2007; gill and hodgkinson, 2007; salgado, 1997; judge et al., 1998; furnham et al., 2005), this factor is named extraversion-introversion dimension. this factor was able to explain 10.7% of the data variance. the third factor consists of items that ask personal type characterized by the indicators: what it is, care, sensitive, tolerant, positive thinking, forgiving, seldom complain, and make friends easily. in accordance with the definition of theoretical that is proposed by the authors and previous researchers (juhasz et al., 2009; burke and witt, 2004; weaven et al., 2009; judge and erez, 2007; furnham et al., 2005), this factor is named agreeableness dimension name. this factor was able to explain 8.18% of the data variance. the fourth factor consists of items asking personal type characterized by the indicators: like abstract ideas, imaginative, complex, rich vocabulary, often using difficult words, like trying new things, like art, always curious, and willing to take risks. in accordance with the definition of theoretical that is proposed by the authors and previous researchers (weaven et al., 2009; gill and hodgkinson, 2007; salgado, 1997; judge et al., 1998; judge and erez, 2007; furnham et al., 2005), this factor is named openness to experience dimension. this factor was able to explain 6.80% of the data variance. the fifth factor consists of items that ask personal type characterized by the indicators: relaxed, calm, able to control the feeling, feeling happy, rational, empirical investigation of five-factor model of personality 34 patient, and feel safe. in accordance with the definition of theoretical that is proposed by the authors and previous researchers (marcus et al., 2007; ferguson, 2004; weaven et al., 2009; gill and hodgkinson, 2007; judge and erez, 2007), this factor was named emotional stability dimension. this factor is able to explain 6.80% of data variance. conscientiousness dimension based on the results shown in table 2, 18 items of question that are expected to form conscientiousness dimension has loading factor .400. nine items that use reverse score (reverse score symbolized by the mark ®) also has good loading factor, which the value is more than .400. the items of question that were given reverse score reflect the personality type that is reverse from the main concept. table 2 loading factor value of conscientiousness dimension (rotated component matrix) no. statements component 1 2 3 4 5 1. i always pursue what i am doing .545 2. i am the type of regularly person .480 3. i am the type of neat individual .615 4. i have a good plan for every thing .641 5. i am a careful person .694 6. i am always enthusiastic in doing every activities .705 7. i always reliable for a lot of things .592 8. i am the type of responsible individual for what i do .682 9. i am always careful in every my jobs .499 10. i would rather give up and do other things when faced with difficulties .467 11. i am the type of person who tends to fall apart .694 12. i prefer to finish my job before the time than spend the time to make it more presentable .638 13. i am the type of person who flows (not bound plan) .668 14. i tend to be reckless in doing my job .620 15. i am the type of lazy person .720 16. i am not person who can be relied .616 17. better i avoid or grant mistakes to others than sacrificing my self .668 18. i have felt to neglect many things in my life .528 extraversion-introversion dimension as shown in table 3, 18 items of question were estimated to form the extraversion-intraversion dimension has loading factor .400. 9 items of question that use reverse score (reverse score symbolized by the mark ®) also has good loading factor, which the value is more than .400. the items of question that were given reverse score reflect the personality type that is reverse from the main concept. empirical investigation of five-factor model of personality 35 table 3 loading factor value of extraversion dimension (rotated component matrix) no. statements component 1 2 3 4 5 1. i am individual who is easy to adjust .422 2. i like to be the center of attention .445 3. i am the type of person who likes to converse .513 4. i am the type of person who likes to hang out .498 5. in many situations i always start a conversation with others .697 6. i often dilute the atmosphere of conversation that is stiff and tense .742 7. i am a person who likes to be merry .670 8. i am easy to tell what i feel to others .465 9. i am a assertive person .676 10. i am the type of rigid person .655 11. i am the type of shy person .737 12. i am the type of reticent person .690 13. i am the type of person who prefers to be alone .574 14. i often speak in angry tone .677 15. i often get carried away by the atmosphere around me .699 16. i am the type of morose person .596 17. i feel that i am a closed person .433 18. i prefer to harbor feelings (such as angry, love, etc) than express spontaneously .523 agreeableness dimension based on the results shown in table 4, twelve of 16 items of question that are expected to form agreeableness dimension has loading factor .400. six of 8 items of question that use reverse score (reverse score symbolized by the mark ®) also has good loading factor, which the value is more than .400. the items of question were given reverse score reflect the personality type that is reverse from the main concept.. table 4 loading factor value of agreeableness (rotated component matrix) no. questions component/factor 1 2 3 4 5 1. i always look what it is .699 2. i am the type of person who cares about other people’s problems .682 3. i am easily to feel what experienced by other people .415 4. i am always tolerant of other people’s mistakes on me .384 5. i always take the possitives from other people’s actions .209 6. i am a person who easily forgive .691 7. i do not like to complain discomfort that i feel .734 empirical investigation of five-factor model of personality 36 no. questions component/factor 1 2 3 4 5 8. i easily make friends with anybody .664 9. i always try to cover my weakness .685 10. i am the type of indifferent person .562 11. i am the type of person who is not responsive .618 12. i am the type of selfish person .390 13. i often prejudiced -.150 14. i always remember the bad action of others to me, and if there is a chance i will avenge .560 15. i often complain that the problems i face become lighter .609 16. i do not easily make friends with new people i know and people who i believe have not been fully .574 openness to experience dimension based on the results shown in table 5, fifteen of 18 items of question that are expected to form openness to experience dimension has loading factor .400. eight of 9 items of question that use reverse score (reverse score symbolized by the mark ®) also has good loading factor, which the value is more than .400. however, one item of reverse score remains disposed despite having loading factor 0.631. this item was discarded because it is a negative question of item that has loading factor of less than 0.4. table 5 loading factor value of openness to experiences dimension (rotated component matrix) no. questions component/factor 1 2 3 4 5 1. i like abstract ideas and not be too predictable .219 2. i dream of many things in my life .444 3. i like complicated things .428 4. i always use different words so that my explanations are understandable .724 5. i often use new new vocabulary that is rarely used .627 6. i like trying new thing .520 7. i really like the art .581 8. i am the type of person who always wants to know .547 9. i am the type of person who likes to take risks .383 10. i tend to like things that are obvious and not abstract .631 11. i am the type of realistic person .518 12. i prefer practical things .415 13. i always repeat my words when explaining a problem to others .715 14. i am always straighforward in explaining .592 15. i am a person who prefer routine job than fluctuate job .549 empirical investigation of five-factor model of personality 37 no. questions component/factor 1 2 3 4 5 16. i do not occupy a specific hobby .595 17. i am the type of person who is not interested in things outside my job .474 18. i am the type of person who tries to avoid risky things .207 emotional stability dimension as shown in table 6, twelve of 14 items of question that are expected to form openness to experience dimension has loading factor .400. one of 7 items of question that use reverse score (reverse score symbolized by the mark ®) also has good loading factor, which the value is more than .400. table 6 loading factor value of emotional stability dimension (rotated component matrix) no. questions component/factor 1 2 3 4 5 1. i am a laid person .631 2. i am the type of person who is always calm .615 3. i am always able to control my feelings .173 4. i always feel happy with my self and my surroundings .517 5. i am type of rationally person .530 6. i am always patient for others’ attitudes, words, and actions to me .673 7. i feel safe from others’ threats and harassment .519 8. i am the type of person who rushes .577 9. i am the type of person who easily gets nervous .499 10. i am the type of person who is easily offended -.111 11. i feel that i am a unlucky person .694 12. i tend to follow my heart .502 13. i am the type of person who is easily angry .691 14. i worry many things .598 reliability and descriptive statistics means, standard deviation, and cronbach’s coefficient alpha of ffm dimension shown in table 7. with number of the same item for each variable of conscientiousness and extraversion dimension, the comparison between dimensions be much easier. mean value for the conscientiousness dimension is 69.85 (with standard deviation is 12.280) is higher than mean of extraversion dimension (with standard deviasion is 12.349). mean value for agreeableness dimension is 44.30 (with standard deviasion is 8.161) higher than mean of emotional stability dimension namely 39.93 (with standard deviation is 8.707). these three dimensions are the best overall score. it means, overall, mean of respondents for dimensions of ffm in this research had relatively high conscientiousness scores. similary, for emotional stability and openness to experience dimension, is in ithe range of high-to-very high. empirical investigation of five-factor model of personality 38 table 7 means, standard deviations, and cronbach’s alpha of five-factor dimension no. dimensions number of item means standard deviations cronbach’s aplha 1. conscintiousness 18 69.85 12.280 .918 2. extraversion-intraversion 18 64.23 12.349 .912 3. agreeableness 12 44.30 8.161 .887 4. openess to experience 14 49.68 7.527 .845 5. emotional stability 12 39.93 8.707 .875 table 7 also shows cronbach’s coefficient alpha. all dimensions which were produced ffm variable in this research have good level of reliability. this meant that level of inconsistency or unfamiliarity of respondents to the items of question tend low or included in acceptable category. so the items of question were tested in this research was very feasible in measuring ffm dimension, in accordance with the original concept discussed and proven in pervious empirical researchs (weaven et al., 2009; gill dan hodgkinson, 2007; salgado, 1997; judge et al., 1998; fergusen, 2004; judge dan erez, 2007; furnham et al., 2005; foldes et al., 2008; marcus et al., 2007). 4. discussion there were 9 of 84 items of predictabel question capable of measuring the dimensions of ffm, did not produce required loading factor value. 9 these items of question are 4 items for agreeableness dimension, 3 items of question for openness to experience dimension, and 2 items for emotional stability dimension. in addition to 9 items above, there is one item of question for openness to experience dimension which also rejected despite having loading factor more than 0.4. the rejection was based on consideration that score of couple item for these items were less than 0.4, so it was rejected. ten items were rejected because it did not meet the desired requirements were presentd in table 8. for agreeableness dimension, deleted items of question were: “i am always tolerant of other people’s mistakes on me, i always take the possitives from other people’s actions, i am the type of selfish person, i often prejudiced”. 4 these questions represented two personality traits, namely toleran-selfish and postivenegative. two these characteristics was originally thought to be most representative of this dimension, but it did not meet the requested loading factor requirement. the explanation that could be given for the rejection to the first nature is that the items of question may be considered unrealistic for now. excessive tolerant nature may be considered to reflect weakness while the selfish nature tends to be not favored. the second nature, the positive-negative thinking did not meet requesite of loading factor may be due to this nature was considered too directly on the issue. respondents were hesitant to admit that he/she was a tolerant or selfish and positive or negative thinking. at the fourth factor/component, namely openness to experience dimension, deleted items of question are: “i like abstract ideas and not be too predictable, i am the type of person who likes to take risks, i tend to like things that are obvious and empirical investigation of five-factor model of personality 39 not abstract, i am the type of person who tries to avoid risky things”. 4 these items reflected the views and interest of a person to something abstract and risky. two these natures were originally considered to represent this dimension, but it did not meet the requested loading factor requirement. the explanation that can be given for the rejection of the first nature is that the items of question may be considered to be a personality trait which tend to be negative and is something unusual. background of the community which this research was conducted may be assumed that someone who is not abstract precisely got a good place because it was not considered manipulative, dishonest, and not like the preamble. the rejection of nature that relate with the risk may be caused by the attitude of “middle” which is preferred by the public, including this research’s respondents. in indonesia, the nature which is too take the risk regarded as speculative, while attitude which is too avoid the risk regarded impossible. table 8 items of question that do not meet the requirements of factor loading value no. questions component/factor 1 2 3 4 5 1. i am always tolerant of other people’s mistakes on me .384 2. i always take the possitives from other people’s actions .209 3. i am the type of selfish person .390 4. i often prejudiced -.150 5. i like abstract ideas and not be too predictable .219 6. i am the type of person who likes to take risks .383 7. i tend to like things that are obvious and not abstract .631 8. i am the type of person who tries to avoid risky things .207 9. i am always able to control my feelings .173 10. i am the type of person who is easily offended -.111 two question items of emotional stability dimension, which the fifth factor/component was rejected because it had insufficient loading factor value. two items of question that were expected to help forming these dimensions did not meet the requirements of desired loading factor value, namely question: i am always able to control my feelings and i am the type of person who is easily offended. two items of this question essentially measures a person’s ability and inability to control the feelings. the nature based on respondents’ response in this research are not included in emotional stability dimension, while conceptually assumed be a major item for this dimension. a possible explanation is given for this result is that the respondents felt very hesitant to identify themselves on the side of feeling control or not control the feelings. the respondents generally felt empirical investigation of five-factor model of personality 40 that they were in some situations or for some things can control their feelings well, but for some others were not. 5. conclusion this research concluded that the conceptualization of ffm which consist of five main dimensions of personality, has met the requirements of construct validity. the test results of factor analysis produced five dimension of personality, in a row based on the percentage of data variance which was capable explained: conscientiousness (18 items), extraversion-introversion (18 items), agreeableness (12 items), openness to experience (14 items), and emotional stability (12 items). in addition, this five dimensions of ffm also have good level of reliability. this research provides the strong support for the conceptualization of the dimensions of ffm, so that the items of measurement can be considered more workable to be used in practical purposes such as employee selection, training and development, promotion, and other practices of human resources management (hrm). the practitioner of organizations, particularly hrm practitioners are advised to use the conceptualization and measurements that have been empirically proven to improve the fit among employees with job/profession that they run. future research also needs to clarify the influence of the ffm dimension on the performance of employees, especially in indonesia. therefore, should be conducted a research involving respondents from various professions to infer between the personality dimension score with job/profession that they run. references burke, l.a., & witt, l. a. 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(2009). franchisee personality an examination in the context of franchise unit density and service classification. european journal of marketing, 43(1/2), 90-109. the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 12 the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty jojor marintan silalahi 1*, lizar alfansi2, akram harmoni wiardi3 1,2,3 university of bengkulu, bengkulu, indonesia abstract this study investigates how brand affection, loyalty programs, and brand trust determine the loyalty in airways industry. we examined the influence of brand trust and brand affection on loyalty in airlines services. the airways companies applied loyalty programs as a trend. the purpose of the loyalty programs is to encourage the loyalty of the customers. the purpose of this study is to analyze the influence of brand affection and loyalty programs on brand trust and loyalty among garudamiles members. primary data were collected through a survey. data collected by online quistionnaire through social media and resulting 171 processable questionnaire. data were analysed using confirmatory factor analysis and structural equation modelling. confirmatory factor analysis within structural equation modeling were carried out to assess adequacy of the measurements and validity of the model. we found that brand affection is not significantly influence customer loyalty; brand affection significantly influence brand trust; and brand trust significantly influence customer loyalty. this result indicate that brand affection has an indirrect effect on loyalty, it’s mediated by brand trust. loyalty program is not significantly effect brand trust, it has direct effect on loyalty. it’s become clear that only brand trust mediates the relationship of brand affection and loyalty. the customers of the airways companies tend to be loyal because of the loyalty programs applied by the airways companies. these finding add performance effectiveness and long-term relationships with customers in airlines industry to the factors needed to respond to the highly competitive situation at present, which will be even more important with the asean economic community in 2015. keywords: brand affection, brand trust, loyalty, loyalty program 1. introduction in an growing competition environment, the brand becomes the most valuable asset. it is strategic and criticall for the company (kabadayi and alan, 2012). in the aviation industry, the industry continues to experience growth. international air transport association (iata) predict the global airline business net profit reached us $ 25 billion in 2015. it grows up 25.6 percent compared with last year at $ 19.9 billion. iata predicts that the aviation industry in indonesia will reach the 9th largest market in the world for domestic flights and for international flights indonesia was ranked on sixth, the fastest growth of the international aviation market in the world's (http://industri.kontan.co.id). in indonesia there are 17 http://industri.kontan.co.id/ the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 13 airlines that registered as the airlines that have fixed schedules and airport specific flight service. due to the growing number of airline company, the competition makes it difficult for airline company to increase the base customer and retain new customer. loyalty has been identified as an important factor to predict the success of the company in relationship marketing (griffin, 1996; oliver, 1999). oliver (1999) suggested that loyalty is an important factor to determine the success of a company. the company will be able to survive in a competitive market competition if they have loyal customer. loyal customers would be willing to pay more and repurchase for its brands, they consider some unique value that no other brands can provide (jacoby and chestnut, 1978). this unique value derived from greater confidence of the brand capacity or it can be described as a positive affection when customers use the brand (kabadayi and alan, 2012). kabadayi and alan (2012) suggested that the brand trust arrise after the customer evaluated companies offering. customers would feel confidence with the brand if the company give assurance on safety, honesty and reliability of their brand (doney & cannon, 1997). according to lau and lee (1999), the brand trust is the consumer's willingness to believe in the brand because there have more expectations to the brand that will give them good performance. the study on brand trust suggested that the high level of trust towards brand would lead to repurchase intention, brand satisfaction, loyalty and brand commitment. the consumption of services began to be seen as something that involves feelings (affection). the feelings or emotions can be triggered by the customers experiences of services. loyalty will be stronger under conditions of positive affection and will increase the positive attitude of consumers towards the brand (dick and basu, 1994). lin and lee (2012) suggested that brand affection would change customer’s perceptions and beliefs on brand, reduce the perceived risk, and increase the level of confidence to the brand. air plane crash incident, air asia qz8501 became the worse experience for aviation industry in indonesia. due to the indication of airline's flight schedule that was not official, these events led to poor air flight scheduling system. because of that incident, recently every airline tries ro rebuild the customer’s trust by establish the international safety standard and accomply the government’s rules. one of indonesian airlines that equiped by operational safety audit (iosa) origin of the international air transport association (iata) is garuda indonesia airlines (http://hubud.dephub.go.id/?id/news/detail/2366). garuda indonesia is a state owned aviation enterprise (bumn), which runs the service in the country and abroad. the airline has been operating since 1949. currently the loyalty program is an important component strategy of customer relationship management (crm). loyalty program is a program that allows consumers to accumulate free rewards when they make repeat purchases with the company (liu, 2007: 20). loyalty program aims to increase loyalty by rewarding customers for doing business with the company. this is supported by yi da jeon (2003) which states that the purpose of loyalty program is to build loyalty by providing the benefit that can motivate the customers. a high appraisal to a http://hubud.dephub.go.id/?id/news/detail/2366 the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 14 company's loyalty program is the reflection of higher trust to the company (ou et al., 2011). loyalty program was first used by american airlines in 1999 under the name of frequent flyer program. this is an entry point to the airline loyalty program. at garuda indonesia, loyalty program is called garuda frequent flyer (gff) which was established in 2001. in april 2014 gff had been renamed as garuda miles that provide benefits and privileges to the profitable customer (www.garudaindonesia.com). iata conclude that 14 percent of users of air transportation selected frequent flyer program as their first reason in choosing an airline to travel (see figure 1). figure 1 the customer’s first reason for choosing an airline this trend is also seen in the membership of garuda miles and recently reached 1 million members from six levels of membership, including junior, blue, silver, gold, ec plus, and platinum (http://ekbis.sindonews.com/read/847960/34/garuda-targetkan-peningkatan-50kartu-anggota-1395835326). currently customers require positive brand affection so that they can feel comfortable in traveling and indirectly improve the trust and loyalty. loyalty program which is currently being trend in the airlines industry, it is also one aspect in increasing loyalty. the purpose of this study was to examine the influence of brand affection to loyalty on garudamiles users, examine the influence of loyalty programs on loyalty, examines the effect of brand affection on brand trust, examine the influence http://www.garuda-indonesia.com/ http://www.garuda-indonesia.com/ http://ekbis.sindonews.com/read/847960/34/garuda-targetkan-peningkatan-50-kartu-anggota-1395835326 http://ekbis.sindonews.com/read/847960/34/garuda-targetkan-peningkatan-50-kartu-anggota-1395835326 the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 15 of loyalty programs on brand trust, and examine the effect of brand trust on loyalty of garudamiles users. we propose the model that describes the relationship between brand affection, lotalty programs, brand trust, and loyalty. 2. literature study and hypothesis develompment 2.1 brand affection brand is a company's long-term assets (wood, 2000). with the difference in brand name and specifications of each product or services and if the product or services with a 'brand' name that brings satisfaction and loyalty, the brand will generate revenue from the sale of its products and can be a long-term asset for the company. in the development of brand, the brand of affection also be a comprehensive study in the marketing literature (iglesias et al., 2011). hulten (2011) argues that emotional connection between brands and customers is important in building a strong brand in the minds of customers. brand affection are connected with emotional expressions or feelings of consumers (law et al., 2009), emotion is a major factor in affective perspective. chaudhuri and holbrook (2001: 82) defines brand affection as perspective of potential brand to get a positive emotional responses on customer as a result of the experience toward a product or services. in other words, brand affections can be described as an emotional response of consumers towards a brand in consequence of having experience with the brand. 2.2 loyalty programs one of the most valuable marketing strategy in which executives can expand is a loyalty program, which is a promotion plan designed to increase loyalty by providing incentives to customers through benefits (yi and jeon, 2003). loyalty programs have become an important component of customer relationship management (crm) because it is considered very effective in retaining customers and readily accepted both by customers and retailers (bose and rao, 2011; liu and yang, 2009). through this program, the company has the potential having customers repurchase intention and at the same time, acquire loyal consumer data that can assist future efforts. in some industry in which a variety of loyalty programs offered, these programs prompting a stiff competition. uncles et al., (1997) states that the loyalty program is important in increasing the overall value of the product or service because they motivate loyal buyers to make future purchases. liu (2007: 20) defines loyalty program as a program that allows consumers to accumulate free rewards when they make repeat purchases with the company. the program is intended to encourage loyalty from time to time. moreover, the loyalty program not only helps build customer commitment, but also demonstrates the company's commitment (liu, 2007). frequent flayer program was first used by american airlines in 1991. today, it is a form of loyalty program that is being implemented by many airline companies. the basic aim of this program is to encourage people to use the same airline companies as they travel (colakoglu and artuger, 2013). kopalle and neslin (2003) concluded that the the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 16 program frequentflyer increase the product value of an airline and an increase in consumer demand for airlines that offer such programs. 2.3 brand trust many research conducted in the various disciplines (psychology, economics, sociology, and others) related to the concept of trust, where the perspectives and definitions of the trust is in accordance with their respective fields (ayidin et al., 2014). in most studies related to trust, emphasized that trust is necessary to formalize and retain a good long-term relationship (quinton and march, 2008). delgado-ballester et al., (2003) confirmed that customer’s trust in a brand are based on the perception that the brand is consistent and responsible for the benefit and welfare of customers. herbst et al., (2011) describes brand trust as a customer’s belief to a product, or services companies that are reliable and competent. according to lau and lee (1999), there are three factors that affect trust in the brand, namely: 1. brand characteristic brand characteristic has a very important role in determining the customer’s decision to trust a brand. customer make an assessment before buying. brand characteristics related to brand trust are predictable, reputable, and competent. 2. company characteristic company characteristic can also affect the level of consumer trust in brand. consumer knowledge about the company’s image is a pre-consumer understanding of a product. these characteristics include the company's reputation, the company desired motivation, and integrity of the company. 3. consumer brand characteristic are the two groups who interact. therefore, the consumer brand characteristics can influence trust to the brand. these characteristics include the similarity between the concept of emotional consumer brand personality. customer will evaluate and assess a brand if a brand has congruencies. the existence of consumer trust to a brand will create a sense of pleasant and reduce consumers' perception of risk. build and maintain customer trust towards the brand is very important, because it is the key to successful long-term relationship between the company and customers. research on brand trust has supported that the high level of trust towards the brand leads to repurchase the brand, brand satisfaction, brand loyalty and brand commitment (lau and lee, 1999; delgado-ballesteret al., 2000). customers who believe that a brand can meet the expected performance, will tend to more often use a single brand instead of using other brands. 2.4 loyalty loyalty in the service industry has focused primarily in the marketing management theory and practice (ruyter and blomer, 1999). loyalty can act as a barrier to customer switching behavior and have an impact on the development of sustainable competitive advantage (gremler and brown, 1996). loyalty has been identified as an important factor for a company's success in marketing (oliver, 1993). dick and basu (1994) states that loyalty created by the relationship between the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 17 attitude to purchase and between attitudes to behavior, there are four conditions of loyalty, namely: 1. true loyalty, related on attitudes and repeat purchase. 2. latent loyalty, associated with high attitude, but low repeat purchase. 3. spurious loyalty, associated with a low attitude, with a high repeat purchase. 4. no loyalty, associated with a low attitude, combined with low purchase. oliver (1999) suggests that loyalty is a commitment that is firmly held by the consumer to repurchase consistently in the future, thereby causing repetitive purchase the same brand despite the influence of the environment that has the potential effect for them to switch. according to liu (2007) loyalty is a positive feeling toward the brand and a strong dedication to buy a product or service many times now and next of the same brand, regardless of the actions of competitors or environmental changes. griffin (1995) concluded that customer relationship to the company and its products is determined by two factors, namely preferences (the level of consumer trust in product or services) and the perception of product differentiation (the extent to which consumers see different companies and their products with alternative options on the market). 2.5 hypothesis development after using a product, consumers will have an emotional response to their experience on the brand. affection positively is associated with greater commitment to loyalty (lin and lee, 2012). those who have a positive affection on the brand or support the brand with her feelings are more likely to maintain a relationship with the brand (fullerton, 2005). chaudhuri and holbrook (2001: 82) defines a brand affection as a potential brand to get a positive emotional response to the consumer as a result of customer’s experiences of a product or services. they show that the strong value of the products categorized as directly related to the brand affection and is one important factor in building loyalty. this shows that loyalty will be greater under conditions of a positive emotional affection that will increase positive attitudes of customers to the brand (dick and basu, 1994). based on our review of the literature we formulate the following hypothesis: h1: brand affection have a positive effect on brand loyalty. appropriate loyalty programs not only increases customer trust that can be reflected in sales growth, it’s also contribute to increase the interaction between the business and the customer (huang and wonglorsaichon, 2013). omar et al., (2009) conclude that the existing benefits in the loyalty program is a determinant in satisfaction assessment program, and plays an important role to determine loyalty. ou et al., (2011) confirm that loyalty programs have an influence on loyalty. yi and jeon (2003) believe that loyalty program is a marketing plan designed to increase loyalty by providing incentives to customers through additional benefits. a successful loyalty program will further strengthen relationships with customers. based on literature review above, we propose the following hypothesis: h2: loyalty programs have a possitive effect on brand loyalty. the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 18 although the concept of brand trust and brand affection have an influence on both brand loyalty, but both have different characteristics. chaudhuri and holbrook (2001) states that brand trust involves a process that is well consider, while the development of brand affection is spontaneously. customers tend to use positive and negative affection as a source of information (fedorikhindancole, 2004). when consumers feel positive affection towards a brand, they will believe that the brand reliable, trustworthy, and they thought it would be willing to give priority to the customer’s benefit. brand affection can change perceptions and user’s belief to the brand, reduce the perceived risk, and increase the level of trust towards the brand (lin and lee, 2012). based on literature review, we propose the following hypothesis: h3: brand affection have a positive effect on brand trust. some researchers believe that loyalty programs affect the customer’s trust to a brand (ou et al.,. 2011; huang and wonglorsaichon, 2013). in this case, customers believe that they can receive a higher economic value, variety of awards system, and the chance to win prizes through the implementation of the company's loyalty program. therefore, when customers appreciate a high value to a company's loyalty program, they also reflect a higher level of trust towards the brand (ou et al., 2011). based on literature review, we propose the following hypothesis: h4: loyalty program have a positive effect on brand trust. brand is a sign of trust, it can became a symbol of quality and assurance in building trust (bart et al., 2005). the importance of building trust has been shown to support long-term relationship between buyers and sellers can trust is consumer confidence that he can rely on the seller to provide the promised services (agustin and singh, 2005). trust is very important in building a strong relationship between consumers and brands, and have a positive relationship on loyalty (lau and lee, 1999; urban et al., 2000). research on brand trust has supported that the high level of trust towards the brand leads to repurchase intention, brand satisfaction, brand commitment, and loyalty (lau and lee, 1999; delgado-ballester et al., 2000). based on our review of the literature we formulate the following hypothesis: h5: brand trust have positive effect on loyalty. 3. research methodology the design of this study was empirical study. we collected data via online survey among garudamiles members. we use non-probability sampling conducted by snowball sampling technique. this technique shows the customers criteria of garuda indonesia airlines loyalty program (garudamiles). customers who are not the members of garudamiles could not be the respondents in the study. we distribute 189 questionnairs to the members of garudamiles, and only 171 questionnaires are eligible to proceed. the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 19 table 1 list of the respondents demography frequency percent gender male 78 45,6% female 93 54,4% age 21-30 82 48,0% 31-40 51 29,8% 41-50 35 20,5% >50 3 1,8% income per-month <5 million 46 26,9% 5 million9 million 103 60,2% 10 million 15 million 19 11,1% 16 million 20 million 3 1,8% source: processed data 2015 based on table 1, it shows that the respondents as the member of garudamiles are 93 respondents were female and 78 respondents were male, with an age range of the most dominant in group between 21-30 years (82 respondents). most respondents are who have income between 5 million to 9 million rupiah (103 respondents or 60,2% of the total respondents). to test the hypothesis proposed in this study we use stuctural equation modeling (sem) as an analytical technique. before we perform hypothesis testing, we examine the measurement model on the validity and reliability of each construct, we use convergent validity and construct reliability technique to perform the examination. 4. results 4.1 validity and reliability to test the validity of each construct, we use convergent validity. convergent validity can be measured through measurement model of cfa, this technique used to determine whether each indicator is estimated to be a valid measurement of the concepts. hair et al., (1998: 111) suggested the value of the loading factor that are greater + 0,30 fulfilled the minimum level, the value of loading factor + 0:40 is considered better, and the loading factor> 0,50 is considered to be significant. based on table 2, the indicator bt1 and l1 has a loading factor value less than 0,40, so that both indicators do not meet the convergent validity as a indicant of their latent constructs. therefore, following the advice of raghunathan et al., (1999) which suggested that if the values of loading factor under 0,40 then these indicators should be excluded from the analysis as well. we perform the cfa test after the deletion of the indicator that have loading factor values less than 0,4. the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 20 table 2 the results of construct validity test constructs indicators estimate brand affection ba4 <--ba ,463 ba3 <--ba ,723 ba2 <--ba ,438 ba1 <--ba ,458 loyalty program lp4 <--lp ,735 lp3 <--lp ,797 lp2 <--lp ,641 lp1 <--lp ,649 brand trust bt4 <--bt ,652 bt3 <--bt ,570 bt2 <--bt ,429 bt1 <--bt ,124 loyalty l4 <--l ,690 l3 <--l ,870 l2 <--l ,601 l1 <--l ,362 source: processed data 2015 table 3 shows that the factor loading value for each indicator of each construct is higher than 0.4. it can be concluded that the indicators of each construct is valid. we assess construct reliability by measuring the instruments used on reliability index (composite reliability) of structural equation modelling. the limitation values to assess a level of reliability that is acceptable at least 0.70 (hair, et al., 1998). table 3 the results of construct validity test after the deletion of indicator bt1 and l1 variabel indicators estimate brand affection ba4 <--ba ,470 ba3 <--ba ,718 ba2 <--ba ,435 ba1 <--ba ,458 loyalty program lp4 <--lp ,731 lp3 <--lp ,796 lp2 <--lp ,644 lp1 <--lp ,651 brand trust bt4 <--bt ,622 bt3 <--bt ,629 bt2 <--bt ,434 loyalty l4 <--l ,672 l3 <--l ,918 the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 21 variabel indicators estimate l2 <--l ,586 source: processed data 2015 we use the minimum cr (construct reliability) proposed by ferdinand (2002) which suggested that the variable is reliable if it had an alpha reliability coefficient of 0.5 or higher. based on table 4, it shows that all construct are reliable because each latent construct have a reliability coefficient greater than 0.50. table 4 construct reliability construct value brand affection 0,60187 loyalty program 0,79979 brand trust 0,58320 loyalty 0,77657 source: processed data 2015 4.2 measurement model figure 2 confirmatory factor analysis of measurement models the results of confirmatory factor analysis of measurement models in figure 2 shows that the value of the measurement criteria of goodness-of-fit look much better. rmsea value of 0.079, gfi=0.895, agfi=0.845, cmin/df=2.064, tli=0.835, and cfi=0,871. the goodness of fit of measurement models indicates that all constructs are fit. 4.3 structural equation modelling the results of data processing for the structural model analysis are shown in figure 3. the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 22 figure 3 the results of structural equation modelling table 5 goodness of fit index goodness-of-fit cut off value results declaration rmsea ≤ 0.08 0,079 good gfi ≥ 0.90 0,895 marginal agfi ≥ 0.90 0, 845 marginal cmin / df ≤ 2.00 2,064 marginal tli ≥ 0.95 0, 835 marginal cfi ≥ 0.95 0, 871 marginal source: processed data 2015 table 5 shows that six index goodness-of-fit index has met the standard cutoff value that are recommended. the values of rmsea=0.079 while the recommended value of rmsea is equal to or less than 0.08. therefore, we conclude that the value of goodness-of-fit is good. gfi value obtained at 0.895 while the value recommended by gfi is equal or higher than 0.90. it indicates that the value is marginal because the gfi are closer to the recommended value. agfi value are equal or higher than 0.90. agfi value as presented in table 5 are 0.845 it shows that the value is marginal, because the value closer to the recommended value of agfi. the value of cmin/df=2.064 while recommend value for cmin/df are equal to or higher than 2.00. because the value of cmin/df are higher than 2,00 and still be within the tolerance level of the recomended value. based on the value of cmin/df in table 5, the model in this study is still acceptable. the recommended value of tli are ≥ 0.95 and the value of tli in this study are 0.835. the tli value is less than 0.95 and still be within the tolerance level. it shows that the tli value is marginal and closer to the recommended tli. the recommended value of cfi are ≥ 0.95 and the value of cfi=0.871. it shows that the value is marginal, because the value are closer to the recommended cfi. 4.4 hypothesis testing we perform the analysis of the correlation and significance level betweenconstruct which indicated by the probability level (p), standardize the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 23 estimate, and critical ratio (c.r.) betweenconstruct. the statistical testing results shown in table 6. table 6 regression weight of structural equation modelling construct estimate s.e. c.r. p bt <--ba ,495 ,240 2,063 ,039 bt <--lp -,026 ,111 -,230 ,818 l <--ba ,138 ,216 ,640 ,522 l <--bt ,274 ,129 2,133 ,033 l <--lp ,226 ,095 2,366 ,018 source: processed data 2015 table 6 shows the critical ratio value betweenconstruct brand affection (ba) and loyalty (l) are 0.640, standardize regression weight estimate=0.138 (p>0,05) it is indicate that brand affection (ba) has no significant effect on loyalty (h1=not supported). the critical ratio value betweenconstruct loyalty program (lp) and loyalty (l) are 2.366, standardize regression weight estimate=0.226 (p<0,05) it is indicate that loyalty program (lp) has a positive and significant effect on loyalty (h2= supported). the critical ratio value betweenconstruct brand affection (ba) and brand trust (bt) are 2.063, standardize regression weight estimate=0.495 (p<0,05) it is indicate that brand affection (ba) has a positive and significant effect on brand trust (bt) (h3= supported). the critical ratio value betweenconstruct loyalty program (lp) and brand trust (bt)= -0.230, standardize regression weight estimate=-0.26 (p>0,05) it is indicate that loyalty program (lp) has no significant effect on brand trust (bt) (h4= not supported). the critical ratio value betweenconstruct brand trust (bt) and loyalty (l)= 2.133, standardize regression weight estimate=-0.274 (p<0,05) it is indicate that brand trust (bt) has positive and significant effect on loyalty (h5= supported). 5. discussion 1. the effect of brand affection on brand loyalty the consumption of services began to be seen as something that involving feelings (affection). feelings or emotions can be determined by customer’s experiences of certain services. brand affection are important, because the customer who have a positive affection on brand or support the brand with her feelings may to maintain good relationships with the brand rather than the customer who had negative affection (fullerton, 2005). the results in this study shows that there is no association between the brand affection and loyalty in the cotext of garudamiles members, it means that if the members of garudamiles have positive or negative affectiion, it will not effect their loyalty towards service provider. song the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 24 et al. (2012) confirm that the brand affection has no significant effect in increasing loyalty. however, significantly increase the brand trust and then will increase significantly on loyalty. there is an indirrect effect of the brand affection to loyalty, it is mediated by brand trust. it’s need to be consider that the companies capability to build loyalty is not enough just to increase customers' positive affection but will need additional triggers such as increasing customer trust. 2. the effect of loyalty programs on loyalty liu (2007: 20) defines loyalty program as a program that allows consumers to accumulate free rewards when they make repeat purchases with the company. the results showed that the loyalty program (garudamiles) increase the loyalty of garudamiles members. this finding consistent with omar et al. (2009) which propose that the existing benefits in the loyalty program is a key determinant in satisfaction assessment program, and plays an important role in the formation of loyalty. yi and jeon (2003) states that the loyalty program is a marketing plan designed to increase loyalty by providing incentives to customers through additional benefits. this finding support the various theories and research results that can be concluded that the loyalty program has a positive effect on loyalty of garudamiles members in indonesia. 3. the effect of brand affection on brand trust the customers whose feel positive affection towards a brand would believe that the current brand are reliable, trustworthy, and would be willing to give priority to the customer’s benefit. brand affection can change the perceptions and customer’s trust to the brand as well as reduce the perceived risk and improve the level of trust towards the brand (lin and lee, 2012). this research support lin and lee (2012); chaudhuri and holbrook (2001) and song et al. (2012) which conclude that the brand affection positively influence brand trust. 4. the effect of loyalty programs on brand trust basically, customers believe that they can receive a higher economic value, the variety of awards, and the chance to win prizes through the implementation of the company's loyalty program (ou et al., 2011). the results of this study showed that loyalty programs did not significantly affect the brand trust in the context of garudamiles’s members. the members of loyalty program tend to be focus on loyalty program that give them more benefit rather than increasing their trust in brand. this finding consistent with wright and sparks (1999) in liu (2007) which suggested that the biggest attraction for customers to participate in a loyalty program is the reward program and free benefit program. they do not focus on company’s reputation but they intended to get the reward provided by the company for each purchase. 5. the effect of brand trust on loyalty trust is very important in building a strong relationship between consumers and brands. it has a positive effect on loyalty (lau and lee, 1999; urban et al., 2000). the result of this study shows that there is a positive relationship between brand trust and loyalty. this study support the research on brand trust that suggested that the high level of trust towards the brand leads to customer’s repurchase intention, satisfaction, loyalty, and commitment to the brand (lau and the role of brand trust in determining the relationship between brand affection and loyalty programs on customer loyalty 25 lee, 1999; delgado-ballester et al., 2000; urban et al., 2000). this finding confirmed that if the customer trust on a companies is high it would be necessary that they would stay on incumbend service provider. 6. conclusion we conclude that customer loyalty in the airlines industry are determined by the willingness of the customer to have positif affection and should be supported by customer’s trust on a company. brand affection has an influence on brand trust. the brand affections perceived by garuda indonesia customer as feeling good, happy, and calm during the flight can build their trust to fly with garuda indonesia. although brand affections are important in increasing competitiveness in airlines industry, but brand trustworthyness is also an important factor in increasing loyalty. loyalty program directly effect the loyalty, with reward and attractive prizes for customers through this loyalty programs garuda indonesia would retain and keep customers loyal in the future. loyalty program that has been done should be continuously upgraded in accordance with the needs of current customers, so that customers will be more interested when collecting miles. good communication through each account owner garudamiles also very important to be maintained. customer perception on brand trust has an influence on customer loyalty, the confidence feeling or trust would encourage the willingness to repurchase garuda indonesia services in the future and build up more commitment. references aaker, d.a. 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(1980). feeling and thinking: preferences need no inferences. american psychologist, 35, 151–175. http://hubud.dephub.go.id/?id/aoc/index/page:2 http://www.dephub.go.id/berita/baca/jumlah-penumpang-angkutan-udara-2014mencapai 72,6-juta-orang/ http://www.tempo.co/read/news/2015/01/09/092/langgar-izin-terbang-jonanberi-sanksi-5-maskapai http://keithnamariam.blogspot.com/2014/09/garuda-indonesia-airlines-danhrm.html http://hubud.dephub.go.id/?id/news/detail/2366 www.garuda-indonesia.com (http://industri.kontan.co.id). http://www.dephub.go.id/berita/baca/jumlah-penumpang-angkutan-udara-2014-mencapai http://www.dephub.go.id/berita/baca/jumlah-penumpang-angkutan-udara-2014-mencapai analysis of the effect of financial literation, financial technology, income, and locus of control on lecturer financial behavior 37 analysis of the effect of financial literation, financial technology, income, and locus of control on lecturer financial behavior wahyudi31*, brigitta azalea pulo tukan 2, and dahlia br. pinem3 1, 2, 3 universitas pembangunan nasional veteran jakarta, jakarta, indonesia abstract this research is a quantitative study that aims to determine the effect of financial literacy, financial technology, income, and locus of control on financial behavior. the population in this study were lecturers at the universitas pembangunan nasional veteran jakarta. the sample size was taken as many as 80 respondents, with methods through nonprobability sampling, purposive sampling. data collection was carried out through questionnaires. the analysis technique used is the pls (partial least square) analysis method with smartpls 3.0 software. the results of this study indicate that (1) financial literacy has a significant positive effect on financial behavior. (2) financial technology has no influence and is not significant in financial behavior. (3) income has a significant positive effect on financial behavior. (4) locus of control does not influence financial behavior. keywords: financial behavior, financial literacy, financial technology, income, locus of control. 1. introduction the development of the financial world today gives people many choices in making financial decisions. a variety of new and varied financial products require people to understand them more deeply if they want to use them. this is necessary to avoid making bad financial decisions or in other words, poor financial behavior. individual finance can be managed well if the financial behavior of the individual is responsible. financial behavior is one issue that is widely discussed today. this has an impact on the many phenomena that arise in indonesian society regarding poor financial management. so to minimize unfavorable financial behavior, every individual must have an understanding of good finance so that they can avoid financial problems that might occur. an understanding of finance can also be referred to as financial literacy. financial literacy is the level of knowledge, skills, beliefs that influence attitudes and behaviors to improve the quality of decision making, and financial management to prosper (otoritas jasa keuangan, 2016). based on research conducted by (anggraeni and tandika, 2019) and (mien and thao, 2015) stated that financial literacy and financial knowledge influence financial behavior. while the research conducted by (herdjiono and damanik, 2016) states that the financial knowledge one does not influence the financial behavior of the person. bank indonesia regulation number 19/12/pbi/2017, fintech is "the use of financial system technology that produces new products, services, technology and/or business models and can have an impact on monetary stability, financial system stability, efficiency, smoothness, security, and payment system reliability. "fintech is an innovation that provides convenience and comfort for people in the financial sector because people can make transactions only with smartphones and the internet. the presence of fintech has a positive impact on improving the economy because of the continued growth in volume and value of shopping transactions. however, behind the * corresponding author. email address: upnvj.wahyudi@gmail.com afebi management and business review (ambr) vol.05 no.01 june 2020 38 positive side, the culture of online shopping and cashless raises the problem of consumerism which can affect one's financial behavior. income received by someone should be directly proportional to the financial behavior of that person. because someone who has a higher income is likely to behave well financially because the available funds allow them to act more responsibly (purwidianti and mudjiyanti, 2016). while someone who has a low income, will have the opportunity to act responsibly because they have limited funds, not infrequently the income they have is only enough to meet their daily needs, so they do not have the opportunity to save or invest. based on research conducted by (andrew and linawati, 2014) states that income affects financial behavior. while research conducted by (purwidianti and mudjiyanti, 2016) states that the level of income does not affect financial behavior. financial behavior can be influenced by several factors, which is locus of control. based on research conducted by (alexander and pamungkas, 2019) revealed that locus of control has a significant positive effect on financial behavior. whereas research conducted by (ida and dwinta, 2010) states that locus of control has a negative relationship with financial behavior. based on the above problems, the problem formulation in this study is as follows: a. does financial literacy affect the financial behavior of the lecturer at the faculty of economics and business upn veteran jakarta? b. does financial technology affect the financial behavior of the lecturer at the faculty of economics and business upn veteran jakarta? c. does income affect the financial behavior of the lecturer at the faculty of economics and business upn veteran jakarta? d. does locus of control affect the financial behavior of the lecturer at the faculty of economics and business upn veteran jakarta? so the purpose of this research is to find out and analyze how much the influence of financial literacy, financial technology, income, and locus of control on the financial behavior of the lecturer at the faculty of economics and business upn veteran jakarta. 2. literature review 2.1 financial behavior financial behavior (financial behavior) emerged in the 1990s in line with the demands of the development of business and academic world that began to address the aspects or elements of behavior in the process of making financial and investment decisions. behavioral finance explains how people treat, manage, and use financial resources owned (suryanto, 2017). a person who has good financial behavior will be in charge of his finances and can be seen through the way that person uses money by budgeting, saving money and controlling expenses, making investments, and paying debts on time. financial behavior is the result of putting expectations and values into action, with the expectation that financial behavior will mediate the relationship of expectations on financial well-being (burcher et al, 2018). financial management behavior is related to a person's financial responsibilities regarding how to manage their finances (purwidianti and mudjiyanti, 2016). the process of financial management and other assets that are owned productively can be said as financial responsibility. this also relates to the process of mastering the use of financial assets. several elements are included in effective money management, such as budgeting, assessing the need for purchases, and pension debt in a reasonable time frame (purwidianti and mudjiyanti, 2016). analysis of the effect of financial literation, financial technology, income, and locus of control on lecturer financial behavior 39 2.2 financial literacy financial literacy or better known as knowledge in financial regulation is one of the economic behaviors that develop in a society that has consciously or not been carried out for a long time. based on the otoritas jasa keuangan 76/pojk.07/2016 on increasing financial literacy and inclusion in the financial services sector for consumers and/or communities, "financial literacy is knowledge, skills, beliefs, which influence attitudes and behaviors to improve the quality of decision making and financial management to prosper." a person's level of financial literacy can be divided into four types of levels ranging from best to worst, namely well literate, suff literate, less literate, and not literate. well literate indicates that someone already has knowledge, confidence, and is skilled in using financial products and services. suff literate indicates that someone already has knowledge and confidence in financial institutions, products, and services, but is not yet skilled in using it. less literate indicates that someone only knows financial institutions, products, and services. whereas not literate indicates that a person does not have knowledge and beliefs about financial institutions, products and services, and is not skilled in using them. 2.3 financial technology fintech comes from the term financial technology. financial technology according to bank indonesia reagulation 19/12/pbi/2017 is "the use of financial system technology that produces new products, services, technology and/or business models and can have an impact on monetary stability, financial system stability, efficiency, smoothness, security, and payment system reliability". bank indonesia (2016) classifies financial technology into four categories, as follows: a. crowdfunding and peer-to-peer (p2p) lending this category is a means of meeting between investors and capital seekers. this platform uses information technology, especially the internet, to provide easy loan services. capital providers only provide capital and the borrower makes the loan process through an online platform. b. market aggregator this category is a medium that collects and collects financial data from various data providers to be presented to users. this financial data can then be used to facilitate users in comparing and choosing the best financial products. c. risk and investment management the following categories are classifications for financial technology services that function as financial planners in digital form. so users can plan and know the financial condition at any time and all circumstances. d. payment, settlement, and clearing financial technology services in this category serve to facilitate users in making payments online quickly. in 2016, bank indonesia issued bank indonesia regulation 18/40/pbi/2016 concerning processing of payment transactions. this regulation aims to continue to support the creation of a smooth, safe, efficient and reliable payment system by prioritizing the fulfillment of prudential principles and adequate risk management and by taking into account the expansion of access, national interests, and consumer protection, including standards, and international practices. 2.4 income gross income is all revenue obtained from all branches in each business (subandriyo, 2016). then, personal income is personal income before tax (purwidianti and mudjiyanti, 2016). the biggest component of total income is wages and salaries. also, there are many other categories of income, including rental income, interest income, and dividend income. often salaries or wages are considered to have the same meaning, but in real wages and salaries have different meanings (larasati, 2018). afebi management and business review (ambr) vol.05 no.01 june 2020 40 salary is usually said as wages given to the leadership, supervisors, and administration of office employees or other management. salaries are generally higher than payments to wage workers. whereas wages are payments to workers or employees paid based on the length of time they worked. according to simamora (in larasati, 2018) compensation divided into three, namely : a. direct financial compensation this compensation consists of fees that someone gets in the form of salary, wages, bonuses, or commissions. b. indirect financial compensation this compensation is also referred to as benefits, covering all financial rewards that are not covered by direct compensation. c. nonfinancial compensation this compensation consists of satisfaction obtained by someone from the work itself or from the psychological and physical environment in which the person works. 2.5 locus of control locus of control according to (pradiningtyas and lukiastuti, 2019), is the attitude of someone who believes that what happens in him is a result of his actions. (yusnia and jubaedah, 2017) said that "the locus of control is where a person can control himself or can not control himself to determine his destiny in situations that occur to oneself or the environment." meanwhile, according to wibowo (2013), locus of control is a belief that an individual has about the amount of control they have over the events of personal life. locus of control is divided into two categories, internal and external. individuals with an internal locus of control have the point of view that all the results obtained are good or bad due to factors from within themselves such as ability, skills, and effort. individuals who have an internal locus of control also have a high work ethic, enduring various kinds of difficulties both in their lives and in their work. while individuals who have an external locus of control have a perspective where all the results obtained are good or bad outside their control caused by various external factors such as luck, opportunity, and destiny. individuals with an external locus of control will assume that the problems that come as a threat to themselves. if someone has a failure or can not solve a problem, then the individual will consider a failure is a fate that is owned and causes himself to want to run away from the problem. some people think that effort and ability are factors that can influence a person to achieve success, but some other people also have the idea that factors outside their control can lead them to success including luck, opportunity, fate, and destiny (amalini et al., 2016). 2.6 hypothesis based on the literature review above, the hypotheses in this study are: h1 : financial literacy affect financial behavior. h2 : financial technology affect financial behavior. h3 : income affect financial behavior. h4 : locus of control affect financial behavior. 3. research methodology this study used the lecturers of the faculty of economics and business upn veteran jakarta with 80 respondents as research objects so that the research location was in the area of the upn veteran jakarta. this study uses three independent variables and one dependent variable. the variables in this study consisted of: analysis of the effect of financial literation, financial technology, income, and locus of control on lecturer financial behavior 41 a. financial literacy is a person's ability to make effective decisions related to finance to improve financial welfare. in this study, financial literacy is an independent variable that has a score obtained from respondents' answers using a likert scale seen from several indicators namely personal financial knowledge, savings and loans, investment, and insurance. b. financial technology, is an innovation in the field of financial services that utilize technological developments. fintech is classified into several categories such as payments, investments, loans, and others. in this study, fintech is an independent variable that has a score obtained from respondents' answers using a likert scale seen from several indicators, namely an understanding of financial technology, knowledge, and understanding of financial technology products, and the use of financial technology. c. income is the level of monthly income obtained by respondents. in this study, income is an independent variable that has a score obtained from respondents' answers using a likert scale seen from the indicator that is financial income consisting of salary/wages and bonus/commission. d. financial behavior is a person's attitude in managing and using financial resources that are owned. financial behavior has a score obtained from respondents' responses to financial behavior using a likert scale of indicators that is paying bills on time, making expenditure budgets, making financial records, providing funds for unexpected expenses, saving regularly, investing a portion of income, and comparing prices before deciding on a purchase. e. locus of control is the level of confidence held by individuals in controlling themselves both from internal and external control over the causes of events that occur in their lives. locus of control has a score obtained from respondents' answers to the locus of control using a likert scale of indicators, namely the potential for behavior, expectations, the value of reinforcing elements, and the psychological atmosphere. in this study, researchers used smartpls 3.0 software to analyze data. test the quality of data in this research is how to test the validity and reliability of the data that has been collected from questionnaires filled out by respondents. the validity test is measured using fornell lacker-criterion and average variance extracted (ave). while the reliability test is measured using composite reliability and cronbach's alpha. while testing the hypothesis using test f2, test r2, and t-test. 4. results 4.1 validity test the results of the smart pls 3.0 software output obtained fornell-lacker criteri on value and ave (average variance extracted) value for each variable are as follows: table 1 validity test results fornell lacker-criterion average variance extracted (ave) financial literacy 0.708 0.501 financial technology 0.848 0.720 income 0.798 0.637 locus of control 0.738 0.545 financial behavior 0.749 0.562 source: smart pls 3.0 output table 1 shows the results of the validity test. lacker fornell-criterion value should be higher than the value of r2 and ave values should be above 0.5 so that it afebi management and business review (ambr) vol.05 no.01 june 2020 42 can be said to be valid (sujarweni, 2015). the value of r2 nature of this study was 0.697, so it can be said that the variables of financial literacy, financial technology, revenue, locus of control, and financial behavior are valid. 4.2 reliability test the results of the smart pls 3.0 software output obtained the value of composite reliability and cronbach’s alpha for each variable are as follows: table 2 reliability test results composite reliability cronbach’s alpha financial literacy 0.899 0.874 financial technology 0.926 0.899 income 0.837 0.704 locus of control 0.890 0.904 financial behavior 0.911 0.888 source: smart pls 3.0 output table 2 shows the results of the reliability test. composite reliability value must be above 0.6 and cronbach's alpha value must be above 0.7 in order to be said to be reliable (sujarweni, 2015). therefore, seen from the reliability test results, it can be said that the variables of financial literacy, financial technology, income, locus of control, and financial behavior have good reliability. 4.3 f2 test following are the results of f2 using smart pls 3.0 as follows: table 3 value of f2 financial behavior (y) financial technology (x2) 0.031 financial literacy (x1) 1.420 income (x3) 0.114 locus of control 0.013 source: smart pls 3.0 output table 8 shows that financial technology has a weak influence on financial behavior that is equal to 0.031 or 3.1%. financial literacy has a strong influence on financial behavior that is equal to 1.420, or 142%. income has an influence which is weak against financial behavior that is equal to 0.114 or 11.4% locus of control has a weak influence on financial behavior that is equal to 0.013 or 1.3%. 4.4 r2 test this test is used to find out how much the ability of all independent variables (x) in explaining the variance of the dependent variable (y). here are the results of r 2 based on the output using the smart pls 3.0: table 4 r2 dan r2 adjusted values r-square r-square adjusted financial behavior 0.713 0.697 source: smart pls 3.0 output according to the table 9, it can be seen that the magnitude of r-square adjusted of finance behavior amounted to 0.697 which means that the effect of financial technology, financial literacy, income, and locus of control on the financial behavior is strong that is equal to 0.697 or 69.7% and 30.3% influenced by other variables outside of this study. analysis of the effect of financial literation, financial technology, income, and locus of control on lecturer financial behavior 43 4.5 t-test following are the t-statistic results obtained after analysis using smart pls 3.0: table 5 t-test results original sample (o) t statistic (|o/stdev|) p values financial technology -> financial behavior 0.099 1.525 0.128 financial literacy -> financial behavior 0.702 10.435 0.000 income -> financial behavior 0.201 2.942 0.003 locus of control -> financial behavior -0.061 0.677 0.499 source: smart pls 3.0 output the original sample value is used to determine whether the effect of the independent variable on the dependent variable is positive or negative. the value of tstatistic is used to determine whether the independent variable influences the dependent variable, with the terms t-statistic > t-table so that it can be said to be influential. the value of p values is used to measure the level of significance of the influence of the independent variables on the dependent variable, with a significant requirement that is p values < 0.05. this study uses four independent variables, one dependent variable and 80 respondents so it gets a t-table value of 1.99210. so the results of this hypothesis test are that financial literacy has a significant positive effect on financial behavior, financial technology does not affect financial behavior, income has a significant positive effect on financial behavior, and locus of control has no effect on financial behavior. 5. discussion 5.1 effect of financial literacy on financial behavior based on hypothesis testing that has been done, it shows that the level of financial knowledge of a person can influence the way that person makes financial decisions. from the results of this study, it can be seen that the majority of lecturers in the faculty of economics and business at the upn veteran jakarta have general personal financial knowledge, savings and loans, investments, and insurance that are quite good. therefore, in this study, it can be said that more higher level of lecturer financial literacy, it will create better lecturers' financial behavior. it can be said if a lecturer has a low level of financial literacy, it will face financial problems in his life because financial literacy plays an important role in fixing someone's behavior. moreover, a majority of lecturers are married, their needs are very diverse and must be met with income that may be limited, so financial literacy is needed to form good financial behavior to avoid financial difficulties and to achieve financial prosperity in his life. the results of this study are consistent with research conducted by mien and thao (2015), erawati and susanti (2017), anggraeni, and tandika (2019), and herawati (2015) who state that financial knowledge influences financial behavior. 5.2 effect of financial technology on financial behavior based on the hypothesis testing that has been done, it shows that one's understanding of financial technology services and products and the use of financial technology does not affect the person's financial behavior. this is caused by the understanding and use of financial technology by the lecturer of the faculty of economics and business, upn veteran jakarta, which is not yet optimal. the presence of financial technology has a negative and positive impact. the impact that is generally obtained by the presence of fintech is that it becomes easier for someone to access various financial services and products, which can be in the form of ease of transaction, saving, investing, and making loans. the positive impact obtained is that someone can afebi management and business review (ambr) vol.05 no.01 june 2020 44 easily save and invest because it can be accessed only with a smartphone and at a more affordable cost. while the negative impact is that with the convenience provided in the field of payment, a person can be consumptive because they can easily spend money because they do not feel they are spending money physically. this indicates that someone must also have the good financial literacy to avoid irresponsible financial behavior. therefore, the otoritas jasa keuangan (ojk) in collaboration with various financial institutions, and the government continues to encourage the level of financial literacy of the indonesian people to avoid bad financial behavior. 5.3 effect of income on financial behavior based on the hypothesis test that has been done, states that income affects financial behavior. the salary received by the majority of lecturers in the faculty of economics and business, upn veteran jakarta has been in accordance with the work done and is sufficient to meet their daily needs for one month. the majority of income received by the lecturers at the faculty of economics and business, upn veteran jakarta, ranges from rp 6,000,000 to rp 9,999,999. from the above data, it can be said that many of the lecturers at the faculty of economics and business at the upn veteran jakarta have high incomes and this affects their financial management. low, moderate, and high income owned by someone has a difference in the financial behavior of that person. in other words, the higher a person's income level, the better the person's financial behavior. it can be said that a lecturer who has a higher income will have the opportunity to behave more responsibly financially than a lecturer who has a lower income so that lecturers with a higher income can behave better financially than a lecturer who has a lower income. likewise, a higher income can provide an opportunity for someone to save or invest because the possibility is still a surplus from his income. the results of this study are consistent with research conducted by andrew and linawati (2014) and zakaria, noor jaafar, and marican (2012) which state that income influences financial behavior. 5.4 effect of locus of control on financial behavior based on the hypothesis test that has been done, shows that the locus of control does not affect financial behavior. this can be interpreted that the good or bad locus of control at the lecturer of the faculty of economics and business upn veteran jakarta does not affect the financial behavior of the lecturer. it can also be interpreted in the locus of control indicators such as orientation towards potential behavior, expectations, the value of reinforcing elements, and psychological arrangements that do not affect financial behavior. the results of this study are consistent with research conducted by mien and thao (2015) which states that people who have a more external locus of control lead to worse financial behavior. external locus of control has a negative effect on financial behavior. however, the results of this study are inversely proportional to the research conducted by yusnia and jubaedah (2017) and kholihah and iramani (2013) who concluded that the locus of control variable had a significant influence on financial behavior. 6. conclusion based on the results of research and hypothesis testing that has been done through pls (partial least square) analysis in the previous discussion, the following conclusions can be drawn: a. financial literation effect on the financial behavior of the lecturer at the faculty of economics and business, universitas pembangunan nasional veteran jakarta. analysis of the effect of financial literation, financial technology, income, and locus of control on lecturer financial behavior 45 b. financial technology does not affect the financial behavior of the lecturer at the faculty of economics and business, universitas pembangunan nasional veteran jakarta. c. income effect on the financial behavior of lecturer at the faculty of economics and business, universitas pembangunan nasional veteran jakarta. d. locus of control does not affect the financial behavior of the lecturer at the faculty of economics and business, universitas pembangunan nasional veteran 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(2012). financial behavior and financial position: a structural equation modeling approach. the middle east. journal of scientific research, 11 (5), 1-16. the role of social media marketing activities on customer equity drivers and customer loyalty 1 the role of social media marketing activities on customer equity drivers and customer loyalty vika ansy anggraini 1 and arga hananto 2* 1,2 universitas indonesia, depok, indonesia abstract during the past few years, adoption of e-commerce in indonesia has been increasing along with other trends in information , communication and technology sector such as widespread use of smartphones and social media. to promote its services, e-commerce firms have also embraced social media and carry out social media marketing activities. this study is aimed to test the influence of social media marketing activities toward customer loyalty through customer equity drivers (i.e. value equity, brand equity, dan relationship equity.). a survey was conducted using convenience sampling technique to select respondents. a total of 161 usable responses were used in the main data analysis. this study found support for the five dimensions of social media marketing activities suggested from previous study. furthermore, this study found that social media marketing activities affect value equity, brand equity and relationship equity. this study also found that two customer equity drivers (brand equity and relationship equity)had a positive effect on customer loyalty, while value equity had a positive effect on customer loyalty, but it was not significant. discussion and managerial implications were also discussed in this study. keywords: brand equity, customer equity drivers, customer loyalty, relationship equity, social media marketing activities, value equity. 1. introduction firms are increasingly keen on using social media to build presence and connect with their stakeholders (chatterjee & kumar kar, 2020). this trend has been fueled primarily by the large number of active social media users that have reached 3.80 billion active social media users as of january 2020 (kemp, 2020). social media marketing is defined as the use of social media channels and technologies (including applications) to create, communicate, deliver and exchange valuable offerings with organization's stakeholders (tuten & solomon, 2018). jacobson, gruzd, & hernández-garcía (2020) summarized the various use of social media to support firms' marketing, such as to promote and sell products, share information, encourage user engagement, build a relationship and long-term relations, etc. past studies have linked social media marketing activities with loyalty (e.g., balakrishnan, dahnil, yi, yadav, & rahman, 2018; ismail, 2017; yadav & rahman, 2018). ismail (2017) highlighted that the literature on branding has suggested that firms can increase consumer loyalty toward their brands by building consumer-brand relationships, as the relationship can bring in many benefits to the consumers such as special price, special treatment, and improved service, which in turn might increase the consumers' satisfaction toward the brand. social media can aid marketers to achieve brand loyalty since social media has the potential to build engagement and relationship (e.g., barger, peltier, & schultz, 2016; hudson, huang, roth, & madden, 2015; lee, hosanagar, & nair, 2018; liu, shin, & burns, 2019). yadav & rahman (2018) propose that social media marketing's link with brand loyalty is mediated by brand equity drivers (value equity, brand equity and relationship equity) that follow the stimulus-organismresponse (s-o-r) that was reconceptualized by jacoby (2002). * corresponding author. email address: arga.hananto@ui.ac.id afebi management and business review (ambr) vol.05 no.01 june 2020 2 e-commerce firms also apply social media marketing to communicate with their target markets. for instance, indonesia's top e-commerce firms such as tokopedia, shopee, bukalapak, lazada, and blibli (kemp & moey, 2019) all have a presence in social media. through social media, these e-commerce firms try to reach and engage their target markets. just like any firms in the market, e-commerce firms also face the need to develop the long-term value of the firm by building customer equity, which according to (lemon, rust, & zeithaml, 2001) can be built through its three drivers, namely value equity, brand equity, and relationships equity. ou and verhoef (2017) summarized customers' equity drivers as "customers' assessment of value received, brand image received, and relationships established." the loyalty literature suggested that these three customer equity drivers have a significant influence on loyalty intentions (ou & verhoef, 2017; yadav & rahman, 2018). in this study, the authors are interested in investigating whether social media marketing activities engaged by indonesia's the top five e-commerce firms affect the value equity drivers and ultimately, on the loyalty intentions of e-commerce customers. this study replicates study by yadav & rahman (2018). yadav and rahman (2018) 's study was conducted in india, on students who were customers of e-commerce sites that were operating in india (such as amazon or flipkart). in this study, the authors applied yadav and rahman's model within the indonesian context to gain insight, whether the model they propose also holds in the indonesian context. even though this study replicates yadav and rahman’s model, this study still provides some contributions to the body of knowledge in terms of validating the model in another geographic context. this validation effort would arguably provide more insights as to the universality of the models under different market and culture. the structure of this paper is as follows: theoretical framework will be presented in the next section, followed by hypothesis development, research methodology, result and discussion, and conclusion. 2. literature review and hypothesis development 2.1. social media marketing and its dimensions social media consists of a group of web 2.0 internet-based applications (such a social networking site, blog, wikis, social worlds, etc.) that allow its users to create user-generated contents, and it can be integrated with a variety of sites in the form of user reviews, ratings, recommendations, forums and communities (hajli, 2015; kaplan & haenlein, 2010). it not uncommon for firms, including e-commerce firms, to set up a presence in various social media platforms to help introduce their products and services and encourage their customers to share their comments (hajli, 2015). these activities may be regarded as social media marketing activities. chang, yu, & lu (2015) defined social media marketing as the use of social networks to share content, diffuse innovation, build a relationship and build fans cohesion, while some other researchers like tuten & solomon (2018) define social media marketing as "the utilization of social media technologies, channels, and software to create, communicate, deliver and exchange offerings that have value for an organization's stakeholders." these two definitions were only two examples of varying social media marketing definitions in the literature. nevertheless, yadav and rahman (2017) suggest that despite having different definitions, the definitions proposed in the literature share similar components, i.e., the use of social media platforms as well as efforts to encourage users to share social media marketing content through social media marketing activities (e.g. interaction, personalization, word of mouth). according to tuten & solomon (2018), all social media share similar nature such as being technologically enabled, networked around relationships and operate based on the principles of shared participation. this nature coincides with relationship marketing paradigm, which, according to gronroos (1994) is characterized by long term focus, quality interaction with customers, interactivity and real-time customer feedback the role of social media marketing activities on customer equity drivers and customer loyalty 3 system. thus, social media can be regarded as a part of marketing and particularly relationship marketing (yadav & rahman, 2017). as social media becomes widely adopted by people globally, marketers have turned to social media to reach their customers and drive customer engagement (hudson et al., 2015). for example, a company can set up a facebook page and invite customers to share their comments about the company's products, which could help the company to market its products (hajli, 2015). research has substantiated the benefits of having a social media marketing strategy in place. for instance, a study by hudson et al. (2015) suggests that social media has a positive relationship with brand relationship quality. social media marketing was also found to have a positive impact on businesses such as in better customer relationship, increased sales, enquiries and more positive feedbacks (chatterjee & kumar kar, 2020). besides, social media marketing was also found to have a significant effect on brand loyalty (ismail, 2017). (yadav & rahman, 2018) suggest five dimensions that comprise the perceived social media marketing activities, namely perceived interactivity, perceived personalization, perceived informativeness, perceived trendiness, and perceived word of mouth. each of the five dimensions is explained in the following paragraphs. 2.1.1. perceived interactivity one of the most important features of social media is that it facilitates interaction (kim & ko, 2012). yadav & rahman (2018) defined perceived interactivity as "customers' perception about the extent to which e-commerce's social media facilitates customers to share content and views with the company and other customers. godey et al. (2016) indicate that social interaction serves as an important factor that motivates users to generate content since users tend to contribute to brand-related social media platforms to meet, interact and converse with other people about specific product/brands. according to kim & ko (2012), interactions between customers facilitated by social media sites such as facebook and twitter can build awareness. in some cases, kim and ko (2012) add that it might lead to affection toward brands and stimulates the customers' desire for the brand's value proposition. 2.1.2. perceived informativeness. this dimension refers to customers' perception about the accuracy, usefulness and comprehensiveness of the information offered by e-commerce's social media (yadav & rahman, 2018). previous research by lee & hong (2016) included informativeness as one of the factors that affect user response toward social media advertising. they suggest that informative advertising on social media can attract attention and drive positive consequences toward the advertised brand, such as positive image and desire to share the message with other users. yadav and rahman (2018) explained that informativeness might be important for online customers since they tend to buy a product based on accurate and sufficient information from many online sources such as social media or e-commerce sites. these studies suggest that effective social media marketing activities (including, but not limited to) advertising require message informativeness to yield positive consequences for the marketer and the brands they promote. 2.1.3 perceived word of mouth (perceived wom) electronic word of mouth (ewom) allows customers to share their opinion and experiences with other customers. customers regard information from ewom as highly credible and trustworthy (cheung, pires, & rosenberger, 2019). in this study, perceived word of mouth refers to this type of ewom shared by customers with other customers. yadav and rahman (2018) defined perceived wom as the degree to which customers provide recommendation and share their experience with an e-commerce brand on social media. cheung & thadani (2012) suggest that prior to purchasing a new product, over 90 per cent of respondents indicated that they look at online reviews, blogs and other forms of user-generated contents. moreover, studies indicate that online reviews tend to significantly affect consumers' purchase decision. 2.1.4. personalization afebi management and business review (ambr) vol.05 no.01 june 2020 4 before the advent of social media, marketers have employed the personalization strategy for advertising purposes. through personalized advertising, marketers can engage customers on a personal level to develop a more effective relationship and meet customer needs (shanahan, tran, & taylor, 2019). the increased social media proliferation along with e-commerce and smartphones allow firms to gather and analyze a vast amount of data that can be used to customize the firm’s interaction with customers, highlight specific, relevant products according to what the customer searched in the e-commerce web site/mobile application, etc. (shanahan et al., 2019) perceived personalization refers to the degree to which an e-commerce’s social media provides tailored services to meet customer preferences (yadav & rahman, 2018). based on previous studies, maslowska, smit, & van den putte (2016) suggest that the three most popular personalization strategy consists of raising expectation (e.g. by including statements like “this offer is just for you”, etc.), identification (e.g. identify customers by name), and contextualization (i.e. framing a message with a context that is meaningful to the customer using contextual variable such as social identifties; an example of this technique for instance by showing pictures depicting people from the same age, gender and ethnicity as the receiving customer). the three techniques can affect customers in several ways. maslowska et al. (2016) suggest that raising expectation can evoke self-referencing, and create positive expectation, while identification can evoke feelings of closeness and familiarity, and contextualization is suggested to attract attention and increase the motivation to process the message.. 2.1.5. perceived trendiness with the rise of social media, customers started to demand the latest and trendiest information related to a brand (liu et al., 2019). (yadav & rahman, 2018) defined perceived trendiness as the extent to which customers perceive that e-commerce's social media offers trendy content. (kim & ko, 2012) indicated that trendiness is reflected by two key terms/phrases: "newest information" and "trendy". based past studies, cheung, pires, rosenberger, leung, & ting (2020) contend that the trendier the information provided in a brand's social media pages, the more effective the brand's posts in those pages in increasing their customers' motivation to learn more about the brand, hence supporting the rationale of keeping social media brand pages up to date. 2.2. customer equity drivers (ced) customer equity drivers (ced) which consist of value equity, brand equity and relationship equity were proposed by (zeithaml, lemon, & rust, 2001) as drivers of loyalty intentions. based on the work of (lemon et al., 2001; rust, lemon, & zeithaml, 2004), ou, verhoef, & wiesel (2017) defined the three customer equity drivers as follows. value equity refers to customers' objective evaluation of the utility provided by a product based on what is given up for what is received; it reflects the result of the comparison between customer expectation and marketer performance. meanwhile, brand equity refers to customers’ intangible and subjective evaluation of the brand image, which consists of brand strength and brand innovativeness (ou et al., 2017). lastly, the third ced, relationship equity refers to the customers’ overall evaluation of their interaction quality with a company. this definition is somewhat more specific and elaborates the definition provided in lemon et al. (2001) as “the tendency of the customer to stick with the brand, above and beyond the customer’s objective and subjective assessments of the brand. relationship equity is built upon customers relationships with firm personnel (e.g. sales and service personnel), loyalty programs, customer communities, and knowledge-building programs (lemon et al., 2001; ou, de vries, wiesel, & verhoef, 2014). these programs are intended to create and sustain firm bonds with customer while reducing cost in the process (lemon et al., 2001). the role of social media marketing activities on customer equity drivers and customer loyalty 5 2.3 customer loyalty loyalty is regarded as one of the prime focus of marketing (yadav & rahman, 2018). oliver (1999) defined loyalty as “a deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior.” past research has suggested that loyalty presents many benefits for marketers. for instance, (tran & strutton, 2020) summarized several benefits that come from achieving customer loyalty, such as additional purchases, less brand switching, lower marketing costs (due to less need to acquire new customers), opportunity to boost revenue by asking loyal customers to buy more, and opportunity to get word of mouth from loyal customers, since they would be more willing to engage in spreading word of mouth (in person or through e-channels). 3. conceptual framework and hypothesis development this study follows the research model proposed in yadav & rahman (2018). yadav and rahman (2018) studied how social media marketing activities affect customer loyalty toward e-commerce sites through three customer equity drivers. figure 1 shows the research model adopted in this study. figure 1 research model source: yadav and rahman (2018) drawing on earlier works from other researchers, yadav & rahman (2018) suggest that prudent consumers tend to be value-conscious and concerned about quality and price. these consumers would tend to be more motivated to seek product information, process product information and arguments in marketing messages more systematically. consequently, consumers would utilize social media sites and social commerce platforms as information sources to research products that can deliver the lowest available price for the desired level of quality and features (yadav & rahman, 2018). given the definition of value equity as an objective evaluation of the utility provided by a product based on what is given up for what is received (ou et al., 2017), the more effective social media marketing activities engaged by an e-commerce firm, the more consumers able to assess the value utility of products they offer. customer equity drivers perceived dimensions of smma afebi management and business review (ambr) vol.05 no.01 june 2020 6 the purpose of marketing activities is essentially establishing and maintaining communication with a large base of customers so that marketers can share product information and offerings to customers (kim & ko, 2012). through frequent and meaningful communication, marketers can enhance brand equity, which according to keller (1993) is “the differential effect of brand knowledge on consumer response to the marketing of the brand”. keller (1993) propose that this brand knowledge stems from brand awareness and brand image (i.e. the perceptions about a brand as reflected by brand associations in consumers’ memory. social media marketing activities can contribute to building higher awareness and brand image through brand posts and engagements in social media. bruhn, schoenmueller, & schäfer (2012) suggest that communication stimuli (e.g. brand posts in social media and communication between consumers in social media) can trigger a positive effect in the consumer who received the communication stimuli. consequently, bruhn et al. (2012) suggest that the consumer’s perception of the communication stimuli can result in a positive effect on the consumers’ awareness and image of a brand. communication between a firm and its customers need to be maintained in the long term to build and increase relationship equity (kotler & keller, 2016). ou et al. (2017) propose that relationship quality reflect the customers’ overall evaluation of their interaction quality with a company. relationship quality reflects customers’ tendency to remain in a relationship with a brand or firms beyond their objective and subjective assessments about the brand or firm (kim & ko, 2012). kim & ko (2012) suggest a brand’s social media marketing activities through various social media platforms provide opportunities for customers to engage in communication with the brand and fellow users with a sincere and friendly manner so that the brand’s communication efforts can result in increased relationship equity and brand equity. overall, the relationship between social media marketing activities and customer equity drivers was demonstrated in past research (e.g. kim & ko, 2012; yadav & rahman, 2018). therefore, based on the aforementioned discussion and past research, the authors hypothesize: h1: perceived social media marketing activities has a direct positive influence on value equity h2: perceived social media marketing activities has a direct positive influence on brand equity h3: perceived social media marketing activities has a direct positive influence on relationship equity the role of value equity, brand equity and relationship equity as loyalty drivers have been documented in past studies (ou & verhoef, 2017; ou et al., 2017; rust et al., 2004). drawing on past studies, vogel, evanschitzky, & ramaseshan (2008) explained the relationship between each element of customer equity drivers. vogel et al. (2008) argue that since value equity can be regarded as the perceived ratio of what is received and what must be sacrificed, it can be explained using the equity theory perspective. equity theory suggests that if someone’s perceived outcome-input ratio corresponds to his/her reference outcome-input ratio, inner fairness is perceived. consequently, it produces positive affective states that invoke positive attitudes such as satisfaction, loyalty and reduce switching propensity, which is a construct akin to loyalty (vogel et al., 2008). brands with strong equity enjoy more favorable brand awareness and brand image, which is made of a set of brand associations formed through marketing communication efforts, such as building strong and unique selling proposition (keller, 1993). thus, a brand with strong equity can reduce perceived performance risk, and can lead to higher intentions to remain loyal to the brand. a brand with strong brand equity can also enjoy loyalty due to a more favorable perception of the brand that leads the role of social media marketing activities on customer equity drivers and customer loyalty 7 to an affective commitment toward it, which might consequently result in the improved likelihood of choosing that brand rather than competing brand (vogel et al., 2008). brand equity and value equity may not be enough to maintain customers, and it requires relationship equity to tie customers to the firm (lemon et al., 2001). relationship equity refers to the customers’ overall evaluation of their interaction quality with a company (ou et al., 2017). if perceived relationship equity is high, consumers tend to feel a familiarity with the brand/store or personnel of the store/firm. in addition, they would tend to trust the product quality offered by the brand or store/firm and feel that the firm treat the customers well (vogel et al., 2008). vogel et al. (2008) suggest that based on confirmation-disconfirmation paradigm, consumers who believe that the interaction quality between them and the firm is better than what others experience would likely be satisfied with the offering, brand or the store, and therefore become more loyal. in a similar vein, ou et al. (2017) maintain that based on reciprocity principle, customers who perceive a good relationship with a company tend to care about its welfare and avoid decisions that might harm the company (e.g. switch to competitors). based on the aforementioned discussion, the authors hypothesize: h4: value equity has a direct positive effect on customer loyalty. h5: brand equity has a direct positive effect on customer loyalty. h6: relationship equity has a direct positive effect on customer loyalty. 4. research method 4.1. sample and data collection the respondents in this study consist of social media users in greater jakarta area who access social media daily, in possession of an account (as a shopper) in one of indonesia’s e-commerce firms, and at least had purchased from the e-commerce firm during the past three months before the survey was conducted. sampling was conducted with convenience sampling as no sampling frame was available to the researchers. the data were collected using a self-administered questionnaire created using google forms, with the link to survey distributed through one of the authors’ social media account and communication channels. before conducting the main survey, a pre-test was conducted on 40 respondents. pre-test results indicated that all items met the minimum threshold of cronbach’s alpha (0.6) and factor loading of 0.7 as prescribed in (hair jr et al., 2014). upon verification of preliminary item reliability, the authors proceeded with the main survey. from the main survey, there were 242 total responses. nevertheless, only 161 responses that met the screening criteria and subsequently used in data analysis. the sample size of 161 is deemed adequate since it has met the minimum sample size suggested by anderson and gerbing (1988 in holbert & stephenson, 2002). these respondents consist of 54.7% female respondents and 45,3 % male respondents, with 45% resided in jakarta, and the remaining resided in the suburbs around jakarta (bogor, depok, tangerang and bekasi). in terms of educational attainment, the majority of the respondents had attained an undergraduate or associate degree (68%), and the rest (32%) had attained a high school degree. this composition of educational attainment can be explained by the fact that 48% and 34% of the respondents had an occupation as employee and students, respectively. 4.2. measures all measures used in this study follows the measures used in yadav & rahman (2018), translated to bahasa indonesia with some adaptations when required to suit the context. all translations were verified through back-translation into english to check for any possible mistranslation. also, wording test was carried out before pre-testing afebi management and business review (ambr) vol.05 no.01 june 2020 8 to ensure questionnaire clarity and understandability. all indicators were measured with a seven-point likert scale. 5. result to analyze the data, the authors used lisrel 8.51 for structural equation modelling, which consists of two stages: confirmatory factor analysis or measurement model analysis and structural model analysis. for the confirmatory factor analysis stage, most of the goodness of fit test for the measurement model indicated a marginal fit with the data (𝑥2/𝑑𝑓= 2.090, gfi = 0.76, agfi = 0.71, nfi = 0.75, cfi = 0.85), but the root mean square error of approximation (rmsea = 0.076) shows a good fit (cf. hair jr et al., 2014). table 1 indicates the confirmatory factor analysis and reliability of each construct. construct reliability was ascertained based on composite reliability (cr), and convergent validity was ascertained based on average variance extracted (ave) and factor loadings of the indicators. from table 1, it can be seen that all first-order constructs demonstrated value between 0.75 and 0.98, which is above the recommended threshold of 0.7 (nunnally & bernstein, 1994). meanwhile, in terms of convergent validity, almost all indicators construct exhibited factor loadings above 0.5 with significant t-value (above 1.96). social media marketing activities construct was modelled as a second-order construct that consists of five dimensions (i.e. interactivity, informativeness, word of mouth, personalization and trendiness). from table 1, have cr and ave (0.81 and 0.60, respectively) fulfilled the minimum value of cr and ave prescribed by nunnally & bernstein (1994). in terms of factor loadings, all factor loadings of the second-order factor were significant (t value > 1.96). table 1 confirmatory factor analysis and reliability construct indicator standardized factor loadings t-value. cr ave interactivity int1 int2 int3 0.80 0.79 0.68 10.85 10.71 8.89 0.80 0.58 informativeness inf1 inf2 inf3 0.68 0.81 0.76 9.20 11.47 10.47 0.80 0.57 word of mouth wom1 wom2 wom3 0.81 0.85 0.72 11.48 12.26 9.83 0.87 0.68 personalization pers1 pers2 pers3 0.74 0.80 0.73 10.08 11.11 9.88 0.80 0.57 trendiness trend1 trend2 trend3 0.54 0.83 0.87 6.92 11.96 12.66 0.80 0.58 smma interactivity 0.44 4.66 0.81 0.60 informativeness 0.79 7.44 word of mouth 0.59 6.43 personalization 0.71 7.19 trendiness 0.63 5.46 value equity ve1 ve2 ve3 0.66 0.83 0.84 8.96 12.18 12.38 0.82 0.61 brand equity be1 be2 0.80 0.83 11.78 12.59 0.98 0.61 the role of social media marketing activities on customer equity drivers and customer loyalty 9 be3 be4 be5 0.83 0.74 0.78 12.64 10.62 11.53 relationship equity re1 re2 re3 0.63 0.70 0.79 8.47 9.79 11.35 0.75 0.50 customer loyalty cli1 cl2 cl3 cl4 cl5 0.70 0.71 0.82 0.74 0.73 9.70 9.95 12.19 10.44 10.33 0.97 0.53 the path diagram from the structural model analysis is presented in figure 2. before examining the significance and beta coefficients of the paths, the goodness of fit needs to be examined. in terms of overall fit indices, the model exhibited 𝑥2/𝑑𝑓= 2.23, gfi = 0.73, agfi = 0.68, nfi = 0.71, cfi = 0.82 and rmsea = 0.076. these fit indices are fairly similar to the results from the cfa stage, which mostly suggest marginal fit and only rmsea that suggest good fit. however, hair jr et al. (2014) suggest that besides aiming to achieve a good fit, a model should also ensure other measures of validity. despite having a marginal fit, this research model has fulfilled validity and reliability criteria that warrant some merit on this structural model. from figure 2 and table 2, the structural model indicated that all paths from social media marketing activities (smma) to the three customer equity drivers (h1-h3) were found significant at p < 0.01. table 2 indicates that perceived smma has a positive relationship with value equity (β = 0.75, t = 7.07, p < 0.0001), brand equity (β = 0.70, t = 7.90, p < 0.0001), and relationship equity (β = 0.90, t = 8.65, p < 0.0001). among the three customer equity drivers (h4-h6), only value equity that was not found to have a significant positif relationship with customer loyalty (β = 0.18, t = 1.62, p > 0.05). in contrast, brand equity has a positive relationship with customer loyalty (β = 0.30, t = 3.06, p < 0.01), and relationship equity also has a positive relationship with customer loyalty (β = 0.41, t = 3.06, p < 0.01). the mediating effect of the three customer equity drivers was also examined. table 3 shows the indirect effects of social media marketing activities on customer loyalty through the three customer equity drivers. besides calculating the indirect effect size, the authors also include a sobel test calculated with an online sobel test calculator (preacher & leonardelli, 2020). the indirect effect analysis suggests that the strongest indirect effect demonstrated by smma → relationship equity → customer loyalty path (β = 0.369, p < 0.005). the smma→ brand equity → customer loyalty path (β = 0.21, p < 0.005) had the second-highest indirect effect. on the other hand, the smma → value equity → customer loyalty path was the weakest of the three and not found significant (β = 0.135, p < 0.005) since the path between value equity and customer loyalty was not significant (β = 0.18, t = 1.62, p > 0.05). table 2 hypothesis testing results hypothesis β t-value test results h1: smma →value equity 0.75 7.07 supported h2: smma → brand equity 0.70 7.90 supported h3: smma → relationship equity 0.90 8.65 supported h4: value equity →customer loyalty 0.18 1.62 not supported h5: brand equity →customer loyalty 0.30 3.06 supported h6: relationship equity →customer loyalty 0.41 3.06 supported afebi management and business review (ambr) vol.05 no.01 june 2020 10 figure 1 structural model table 3 indirect effects path indirect effects sobel test p-value smma → value equity → customer loyalty 0.135 0.108 (ns) smma→ brand equity → customer loyalty 0.21 0.004 smma → relationship equity → customer loyalty 0.369 0.003 6. discussion most of the findings from this study confirm the findings of yadav & rahman (2018). yadav and rahman (2018) found that social media marketing activities affect all customer equity drivers, and all three customer equity drivers affect customer loyalty. this study found a similar result, with one exception: the path between value equity and customer loyalty was not found significant. notwithstanding, the notion from past studies (e.g. kim & ko, 2012) that social media marketing activities conducted by e-commerce firm can affect customer equity drivers seem to be validated in this study. a well-targeted and well-crafted social media marketing messages aimed at e-commerce customers can engage the customers and “glue” the customers into a relationship with the e-commerce firms. kim and ko (2012) also suggest that social media marketing messages build value equity by providing novel value to customers. they suggest that this novel value may come from the e-commerce’s use of social media platforms to reach and communicate with their customers, which allow customers to engage in sincere and friendly communication with the firm and other users, thereby building relationship equity and brand equity along with value equity (kim & ko, 2012). this suggestion is corroborated with the confirmatory factor analysis result that indicates the significance of the interactivity dimension of social media marketing activities, indicating that the customers perceived that social media marketing activities engaged by e-commerce firms in indonesia reflect interactivity dimension. customer equity drivers perceived dimensions of smma the role of social media marketing activities on customer equity drivers and customer loyalty 11 besides interactivity, results from this study indicate that informativeness, personalization and trendiness were the three most important dimensions of social media marketing activities. lee & hong (2016) also suggest that informativeness, a dimension of social media marketing activity, can also shape value and fulfil customers’ utilitarian need by providing quality information that can help consumers make optimal purchases. in addition, they also added that the need to consume something new, original and novel is a fundamental human need (i.e. something trendy). thus, it is logical that if an e-commerce firm can deliver informative and trendy messages in its social media posts, it can build its relationship equity, value equity and value equity. in this study, social media marketing activities had the highest effect on relationship equity, followed by value equity and brand equity. this finding suggests that from this study, e-commerce users who follow the e-commerce firms’ social media accounts seem to perceive that the e-commerce firms’ social media promotes relationship equity. relationship equity can be built through various ways, such as loyalty programs, customer communities, and knowledge-building programs (lemon et al., 2001; ou et al., 2014) as well as by building engagement with customers. zollo, filieri, rialti, & yoon (2020) suggest that past research has indicated that social media marketing activities often involve raffles, design contests, and customization opportunities that enhance brand-to-customer interaction and customer-to-customer interaction, which in turn make customers feel like part of a community. this sense of community is an important source of relationship equity (ou et al., 2014). a casual observation of indonesia’s top e-commerce firms’ social media pages suggests that their brand posts did consist of raffles, contests and informational posts such as product-related and sales promotion related information. besides, the tone they used reflects the current trend that seems to be aimed at millennials, hence enhancing resonance with the target market. this study only managed to find support for the relationship between brand equity and customer loyalty and the relationship between relationship equity and customer loyalty, with relationship equity demonstrated higher effect on customer loyalty. analysis of indirect effect also suggests that the indirect effect of social media marketing activities was stronger through relationship equity. this finding reflects the explanation from vogel et al. (2008) discussed in the literature review section that perceived relationship equity can induce customers to fell a familiarity with the ecommerce firm, and subsequently build trust and satisfaction with the product quality and services provided by the e-commerce firm, and eventually becomes more loyal. the role of social media marketing activities in building brand equity, which subsequently affects loyalty, was also validated in this study. given the concept of brand equity as a positive differential effect brought by brand awareness and set of favorable associations (brand image) proposed by (keller, 1993), it can be construed that social media marketing activities can be used by e-commerce firms as a means to build awareness and positive brand associations that increase preference and affective commitment toward the brand (vogel et al., 2008). the path between value equity and customer loyalty was not significant at a 95 per cent confidence level. in this study, value equity was operationalized as the perceived ratio of what is received and what must be sacrificed, which among others, include the level of effort and price-quality ratio as it measures. this finding may be explained with the three-factor theory of satisfaction (matzler & sauerwein, 2002). the three-factor theory of satisfaction suggests three satisfaction factors that consist of basic factors, excitement factors, and performance factors. the basic factors are called dissatisfiers. these factors serve as minimum requirements which must be provided, otherwise might lead to customer dissatisfaction. but its mere existence is not sufficient to create satisfaction. meanwhile, excitement factors (satisfiers) are unexpected factors that are not expected, and it tends to increase customer satisfaction if provided, but do not lead to dissatisfaction if not provided. the third factor, which is called the afebi management and business review (ambr) vol.05 no.01 june 2020 12 performance factors, could stimulate satisfaction if its performance is high, and it could lead to dissatisfaction if its performance is low (matzler & sauerwein, 2002). the ecommerce competitive landscape in indonesia has been relatively intense. prominent e-commerce firms in indonesia strive to outperform each other by providing various features, ease of use and competitive prices (including sales promotions) aimed at providing the best value equity for their customers. one can look up the same product on different e-commerce firms application or website. the search results normally yield in products that are comparable in price and sales promotions available for customers (e.g. free delivery fees, cashback, etc.), even sometimes the products were offered by the same seller in two or more marketplaces (in case of c to c ecommerce/marketplace). this condition might cause the customers to view value equity not as a motivating factor, but maybe as a basic factor that must be provided, but not necessarily make the customers loyal to the e-commerce firm. note that despite the three-factor theory specifically related to satisfaction, but the marketing literature is rife with evidence of a strong link between satisfaction and loyalty (choi, seol, lee, cho, & park, 2008; faraoni, rialti, zollo, & pellicelli, 2019; tzavlopoulos, gotzamani, andronikidis, & vassiliadis, 2019). 7. conclusion this study examined the role of social media marketing activities in affecting customer loyalty through customer equity drivers as mediating variables. this study offers several findings. firstly, the social media marketing activities dimensions (interactivity, informativeness, word-of-mouth, personalization, and trendiness) proposed in (yadav & rahman, 2018) was supported. secondly, this study also corroborates yadav & rahman's (2018) finding that social media marketing activities affect customer equity drivers (value equity, brand equity, and relationship equity). thirdly, in contrast to yadav & rahman (2018), this study only found support for the relationship between two out of three elements customer equity drivers and customer loyalty (i.e. brand equity and relationship equity), while the relationship between value equity and customer loyalty was not found significant. theoretical implications of this study are twofold. firstly, since the proposed dimensions of social media marketing activities proposed by (yadav & rahman, 2018) was evident from this study, future research could try to investigate further how ecommerce firms (particularly in indonesia) apply each dimension in their social media marketing activities. by documenting how the e-commerce firms conduct their social media marketing activities (i.e. examine the form of message/activities, the appeal, tone, and execution-style used in brand posts), researchers in social media field can get some insights as to the how the effective elements marketing message that resonates with each was crafted, and how effective those social media messages are in delivering the desired outcome. this type of research can contribute further understanding of persuasive message characteristics e-commerce and social media context. secondly, this study did not find enough evidence of the relationship between value equity and customer loyalty. the fact that the t-value on the value equity → customer loyalty path (β = 0.18, t = 1.62, p > 0.05). was only slightly below the critical value of t-value = 1.65 suggest that perhaps this condition was caused by the small number of respondents (161) in this study. further research can attempt to validate this result using a larger sample size. the five social media marketing dimensions proposed in yadav and rahman (2018) were found to be valid dimensions of social media marketing activities. in addition, from the study, social media marketing activities seem to affect customer loyalty through the relationship equity pathway more than through brand equity and value equity pathways. this finding emphasizes the need for marketers to use social media marketing activities to build relationship equity as a means to foster customer loyalty. for managers of e-commerce firms, there are several managerial implications the role of social media marketing activities on customer equity drivers and customer loyalty 13 derived from these findings that might be relevant. first, e-commerce firms need to pay attention along the informativeness dimension, as it was shown to be the most important social media marketing activity dimensions. not only marketers need to ensure continual updating of social media contents, but they also need to make sure the brand posts provide information that resonates with the needs and desire of customers. informativeness also needs to be coupled with trendiness, whereby e-commerce firms need to ensure that the execution-style (e.g. appeal, tone and message strategy) of their social media posts need to reflect the style, issues or language, etc. that is currently “happening” or trending. secondly, e-commerce firms need to ensure a lively interaction between the firm and its customers who subscribe to its social media pages or channels. prompt responses to comments and direct messages are key activities that can help build interactivity, which not only helps to create and nurture a relationship between the firm and its customers, but it eventually might help to foster loyalty. a high factor loading on personalization dimension also implied that e-commerce firms need to try to deliver personalization of its social media marketing activities. at a very minimum, every response to comments or direct messages should address the customer by name, and avoid using standardized response template. whereby possible, each response to comments or direct messages needs to be perceived as if it was written personally by human administrators for each customer who made the comments/direct messages, even if, in reality, it was crafted by an artificial intelligence/bots. a perceived human touch with remarks tailored for each query would arguably improve the social media marketing activity along the personalization dimension. third, the e-commerce firms must strive to create brand posts that are worthy for e-wom. perhaps giveaways or sales promotion programs that require users to tag other users or share contents to other users can be considered as a means to increase ewom. alternatively, e-commerce firms can regularly create special promotions (but at a random interval or schedule) that are available only for customers who follow the firm’s social media channels and allow the customers to share information about such special promotions to other customers. these programs might help to address the importance of perceived word of mouth dimension. in terms of limitations, this study faced some limitations. first, the authors only managed to gather a usable sample size of 161 respondents due to time constraints and limited data collection resources. also, the demographic makeup in this sample was limited to customers who lived in the greater jakarta area. future research can expand the geographic coverage to include other major cities in indonesia, or perhaps smaller cities or regencies in indonesia, and see if there is any different result in terms of the factor structure of social media marketing activities as well as the structural relationships between the cities. the second limitation is in terms of the variables studied. this study was only focused on variables proposed by yadav and rahman (2018), and did not modify or added new variables. zollo et al. 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(1988). consumer perceptions of price, quality and value: a means-end model and synthesis of evidence. journal of marketing, 52. 2-22. 10.1177/002224298805200302. effect of corporate social responsibility (csr) and compensation for performance management manufacturing companies listed in indonesia stock exchange year 2014-2018 115 effect of corporate social responsibility (csr) and compensation for performance management manufacturing companies listed in indonesia stock exchange year 2014-2018 yosafat gea 111* and haryetti 2 1, 2 universitas riau, pekanbaru, indonesia abstract in the midst of an increasingly modern business, requires companies to compete in maintaining their business and increase profits. companies are also required not only for profit, but also improve the lives of the people, workers, stakeholders and gain confidence in the public eye. to achieve these objectives the company must pay attention to the company's performance and the factors that support the continuity of the company's performance. corporate social responsibility and compensation management is an important aspect that should be viewed by the company to the sustainability of future performance. with the background of the problem, this study aims to examine the influence of corporate social responsibility and management compensation to company performance. the population in this study are all manufacturing companies listed in indonesia stock exchange 2014-2018 period as many as 153 companies with a total sample of 21 companies were selected based on criteria predetermined. the analytical method used in this research is multiple linear regression and the results show that corporate social responsibility is a significant positive effect on company performance and compensation management is not significant positive effect on company performance. the more disclosures made by the company in the annual report the company's performance is increasing. keywords: corporate social responsibility, compensation management, performance of the company. 1. introduction the development of science and technology which is characterized by increasingly advanced industrial impact on the increasing complexity of operational activities as well as corporate social responsibility. it's resulted in claims against the company are also getting bigger. good company is not only required to generate a large profit (profit). but also has a concern for the environment (planet) and the welfare of society (people), is due to carry out its operations the company will interact directly or indirectly with the environment. indonesian state government are aware of the importance of preserving the environment, issued law no. 40 of 2007 on limited liability companies, in particular article 74, paragraph 1 which states that companies running business in the field of natural resources and areas related to natural resources required to implement social and environmental responsibility. although governed by statute but not of necessity, but voluntary csr. this is because the purpose of the company in running its business in the long term is for profit stakeholders (dawn, 2010). the company also must pay attention to the costs incurred for csr and the benefits to be obtained. if the benefits outweigh the costs of social enterprise to disclose information, corporate social responsibility basically departs from the philosophy of how to manage the company in part or as a whole has a positive impact for themselves and the environment. to that end, the company should be able to manage business operations by delivering products that positively oriented towards society and the environment. * corresponding author. email address: yosafatgea.y@ gmail.com afebi management and business review (ambr) vol.04 no.02, december 2019 116 purnaningsih corporate social responsibility is one form of sustainability reporting which provides information about the various aspects of the company from the aspect economic, environmental, labor, human rights, social, and product responsibility. corporate social responsibility can have a positive impact for the company, where the company's csr activities can enhance public trust so that the company's products also increased the company's reputation in the eyes of society. so people will want to buy the company's products. more and sell the company's products in the market, the profit (profit) that can be produced by the company will increase. with the increase in profit will be able to attract investors, because the profitability is an important consideration for investors in their investment decisions. this will significantly affect its financial performance. after recognizing the usefulness of social responsibility disclosure will then deciding disclose social information, the company will consider the costs and benefits to be obtained. if the benefits outweigh the costs to disclose social information of the company, the company will voluntarily disclose such information. but not if it costs the company to disclose csr is greater than the benefit gained (anggraini, 2006). to carry out corporate social responsibility, the company would not incur additional costs which are few in number, but the additional cost this shows the magnitude of the company's commitment to undertake social responsibilities. according kamaludin (2010), the additional costs incurred by the company as a form of social responsibility does not lead to the exchange of negative and will continue to show good performance. the csr activities are carried out continuously and in the long run it will help the company in reducing various costs, such as promotion and advertising expenses, the costs of hiring and replacement costs due to conflicts that have arisen, so that csr activities can help companies reduce costs and improve the profitability of the company (kamaludin, 2010). besides the importance of corporate social responsibility, the management company also has a responsibility to manage investors' funds that provide benefits to them and to seek funding from other investors to develop the business. the company makes an accountability report on each year as a reflection of the year's performance of the company to investors. the annual report also serves as a tool to attract investors in order to invest in the company. in the report there are reports of the company's financial performance. financial performance report is an overview of the financial condition of a company at a certain period. financial performance assessment can be done through the analysis of ratios that among them there profabilitas ratio analysis. profitability is kemempuan companies in the search for profits. profitability ratio also provides a measure of the effectiveness of management of a company. this is demonstrated by the profit generated from sales and investment income. the point is that the use of this ratio shows the effectiveness of the company, the higher the profit generated then the company is more effective. profitability ratio can be measured by several indicators, one of which uses indicators return on assets (roa). implementation of csr affect the company's financial performance, it is in accordance with the statement of robinson and pearce (2005) in gantino (2016) that the implementation of csr create savings so as to increase profits. profit is one measure of financial performance. according sugiyono (2012) in gantino (2016), the financial performance is the end result of the accounting activities (accounting cycle). arif, et al (2008) in gantino (2016) stated that the financial statements reflect the financial condition and results of operations. csr is run by the management (agent) as the participation of the mandate given by shareholders (principals). to carry out the tasks given by the shareholders, the shareholders provide compensation to management in order for them to work harder. shareholders gave a mandate to management to act on behalf of shareholders. management is a party entrusted by shareholders to run the company. management is obliged to account for what has been mandated by shareholders him. management effect of corporate social responsibility (csr) and compensation for performance management manufacturing companies listed in indonesia stock exchange year 2014-2018 117 should carry out obligations optimistic, and then given a special incentive or reward satisfactory from shareholders to management. if the ceo or executive managers tend to do a csr activity will increase repurtasi themselves as good citizens and become their personal gain. good repurtasi will improve management careers both within the company and outside. this would make it more valuable managers and their bargaining power will be higher. the shareholders would pay a manager who has a good repurtasi with high compensation. it dimaksdkan for an agent or shareholders do not lose a director of the company (of management). agency theory states csr engagement as principal-agent relationship or the relationship between managers and shareholders. agency theory emphasizes shareholder wealth maximization.agency theory proposes that when a company follows the structure of separating ownership from control, where the company shareholders delegate to rent control professionals such as ceos and executives to manage the company on their behalf, there should be no conflict of interest between owners and their agents or their executive (anderson et al., 2007; badertscher et al., 2013; berle and means, 1968; foss and stea, 2014; hansmann and kraakman, 2004; puffer and weintrop, 1991) in buachoom (2017). the contract is the mechanism for granting incentive compensation to align the interests of executives and shareholders. the executives clearly compensated for their benefits based on their efforts to improve the performance of the company, so the compensation should motivate executives to improve the company's performance or maximize shareholder value (anderson and bizjak, 2003; holmstrom, 1979) in buachoom (2017). with regard to the system of incentives, conflicts between owners and executives can be reduced through executive compensation contracts, as executive satisfying reward for their efforts to improve the wealth of the owner (florackis 2008) in buachoom (2017). especially when it satisfactory executive benefits, when the conflict between the owners and their agents to overcome, executives can be identified as the selfish who manage the company according to their own benefit rather than for the benefit of the owner, so the owner is faced with finding a way to ensure that the agents perform their duties in the interests of the owner (anderson et al ., 2007; eisenhardt, 1989; puffer and weintrop, 1991) in buachoom (2017), this strategy suggests incentives as a way to ensure that owners can use to motivate executive behavior that must be played to serve the interests of the owner or for maximizing corporate wealth. based on research conducted by suciwati et al. (2016) stated that the disclosure of corporate social responsibility when increasing the rate of return of equity capital will rise, and vice versa, when the disclosure of corporate social responsibility falls, the rate of return on own capital will also decrease. research of heryanto and juliarto (2017) states that the accountability activities of the company will influence what will be produced by the company. research parengkuan (2017) stated that corporate social responsibility (csr) has no effect on roa (return on assets). selcuk and kiymaz (2017) research on corporate social responsibility and corporate performance. its discovery found found a negative relationship between csr and financial performance, which means that companies disclose more information about csr initiatives in their annual reports have a lower return on assets. research on executive compensation by buachoom (2017) states that there is significant between executive compensation to the improved performance of the company. research results stated that the higher compensation is predicted as a motivating factor in the company's executives to do a good performance in the next year. sigler (2011) examined the relationship between executive compensation and firm performance. results of research found that there is a positive and significant relationship between executive compensation and company performance measured by afebi management and business review (ambr) vol.04 no.02, december 2019 118 roe on an accounting basis. to get the expertise of the company's managers to pay higher. kurawa and saidu (2014) investigated the influence of executive compensation on the financial performance of banks nigeria causal research design. the results of his research found a positive and significant relationship between executive compensation and profit before tax of sample bank (the main explanatory variable). kuo, li & yu (2013) focus on share-based payments to the ceo and the impact on company performance. the study found that the share-based salary increases have beneficial effects on the company's performance. research kazan (2016). studies conducts research on ceo compensation and the impact on company performance for listed companies in the nordic countries. the results showed that there was a significant negative correlation between total no compensation for the ceo and the company's performance. ozkan (2011) found no significant relationship between the total compensation for the ceo and the company's performance. these findings indicate that nonexecutive directors do not seem to provide monitoring in determining ceo compensation. matolcsy et al. (2012) have done more research on ceo compensation structure changes and their consequences on the performance of the company for australian companies. they make a distinction between companies that change from cash-based compensation structure into an equity and a company that only uses cash-based structure. the results showed that a change in ceo compensation structure is negatively related to firm performance. based on the background described above, the authors are interested in doing research on "the effect of corporate social responsibility (csr) and compensation management performance against manufacturing companies listed in indonesia stock exchange year 2014 to 2018" based on the data that has been analyzed is found that corporate social responsibility significant positive effect on the performance of integration and management compensation is not significant positive effect on company performance. this suggests that the development of the islamic capital market information asymmetry and abnormal returns are also lower so the efficiency of the capital market has also increased. furthermore, the explanation in this article will be divided into three parts, the first is a literature review that will explain any theory used in this study and previous research that referenced researcher. the second part is the results and discussion will explain the results of research and discussion of results have been found. then, the third part is the conclusion that a more concise outline of the research study. 2. literature review and research hypotheses agency theory agency theory relating to the relationship between the management company (agent) with shareholders (principal). according moeljono (2005) in gantino (2016), agency theory is a theory that emphasizes the importance of the owner of the company (principles) in handing the management of the company to the professionals (agents) who understand and understand how to run a business. the emergence of the relationship between agent and principal (agency problems) occurs when managers do not always act in accordance with the interests of shareholders (ni nyoman, 2011) in gantino (2016). stakeholder theory stakeholder theory said that the company not only operating entity for its own sake. but also must provide benefits to the relevant stakeholders, namely shareholders, creditors, customers, suppliers, governments, communities and other parties. the existence of stakeholder groups into consideration for the management company to effect of corporate social responsibility (csr) and compensation for performance management manufacturing companies listed in indonesia stock exchange year 2014-2018 119 disclose or not any information in the report of the company (ulum et al., 2008) in widarjo (2011). corporate social responsibility corporate social responsibility (csr) is the commitment of the company or the business world to contribute to the sustainable economic development with attention to corporate social responsibility and focuses on the balance between attention to aspects of economic, social, and environmental. a concept whereby companies integrate social and environmental issues in its interaction with stakeholders voluntarily. compensation management compensation system in the organization must be linked with the objectives and strategy of the organization but also demanding compensation balance between benefits and costs employers with the expectations of the employees. the compensation fee should be at a level that ensures the effectiveness of the company as well as the provision of proper remuneration for all employees to abilities, skills, knowledge and achievement of their performance. company performance performance is defined in the big indonesian dictionary (1997) as a noun (noun) means something that is achievable, and demonstrated achievement or ability to work. while the performance is based on the dictionary of business and management is achieved tangible results and can be used to show the positive results achieved. parameters that are often used to assess the performance of a company is done by using the approach of the financial information taken from the financial statements or other financial statements from the aspects of finance by using financial ratios that can provide guidance and other financial information (mulyadi, 2001) in widamunti (2010). influence of corporate social responsibility corporate performance against corporate social responsibility (csr) is a concept that an organization, in particular the company has a responsibility to its stakeholders, namely customers, employees, shareholders, communities and the environment in all aspects of company operations. csr will affect the company's performance (indrawan & mutmainah, 2011). according wahyuningsih (2012) in indrawan and mutmainah (2011) the company's performance can be measured by financial ratios, such as roa, roe, sales growth and other ratios. according to indrawan and mutmainah (2011) the disclosure of the expanded will provide a positive signal to the parties interested in the company (stakeholders) as well as the company's shareholders (shareholder). the more extensive the information presented to stakeholders and shareholders will increasingly augment the information received about the company. this will cause the trust to the company's stakeholders and shareholders. this causes the csr activities undertaken by the company will have an impact on the performance of the company. based on the description above, it can be formulated hypothesis of the study as follows: h1 : suspected influential against corporate social responsibility corporate performance. compensation effect against corporate performance management masson (1971) and hanlon et al., (2003) in buachoom (2017) states that the executive compensation package based on performance ret provides a good incentive to improve the future performance of the company. sun et al., (2009) in buachoom (2017) supports this view that the stock options granted to company executives is positively related to the performance of the company in the future is measured by afebi management and business review (ambr) vol.04 no.02, december 2019 120 operating income. additionally, abowd (1990) in buachoom (2017) documented that cash compensation, primarily in the form of bonuses, linked to increased market-based corporate performance in the next year. jensen and murphy (1990) in buachoom (2017) supports that change the company's performance as measured by the share price in accordance with the increase in salaries and executive bonuses. thus, we can conclude that when executives are satisfied with their compensation, they usually perform their duties based on good decision making to improve the performance of companies that produce the improvement of their rewards in the future. direction of the relationship between executive compensation and corporate performance results in the following hypothesis: h2 : suspected compensation effect against corporate performance management. 3. methods the population in this study are all companies listed on the stock exchange in 2014-2018. the basis for determining the sample in this research is purposive sampling.based on the criteria established, acquired 21 companies of 153 manufacturing companies that meet the criteria of the sample with 5-year study period. the data used in this research is quantitative data is data that is expressed in the figures. the source of data on research ni is of secondary data that have been published by the indonesia stock exchange in the form of the company's annual financial statement data for the period 2014 to 2018 were taken through the indonesia stock exchange website (www.idx.co.id). operational definition and measurement of variables independent variables corporate social responsibility measurement corporate social responsibility (csr) is to evaluate each of the items disclosed in the company's annual report and sustainability report. rated 1 if disclosed and rated 0 if it is not disclosed. then the value of each item is summed to obtain the value of their overall csr of a company. broad index calculation formula penungkapan csr (csri) as follows: csrij = ∑ 𝑋𝑖𝑗 𝑛 × 100% (1) compensation management this study uses a component of total compensation received by executives of companies in the form of base salary is the salary received by executives and variable salary in the form of an annual bonus, long term incentives, additional income and stock options disclosed in the nominal amount of the company's annual financial statements. the formula to calculate management compensation formulated as follows (widamunti, 2010): 𝐶𝑂𝑀𝑃it ×= total kompensasi direksi dan komisaris (eksekutif) jumlah anggota direksi dan komisaris (2) dependent variables company performance a company's performance is a performance that has been achieved by the company in a given period and contained in the financial statements of the company concerned. daft (2002) in indrawan and mutmainah (2011) suggests that the performance is the ability of an organization to achieve its objectives through the effective use of resources and efficient. the company's performance can be measured using profitability ratios of roa. roa is known, used by companies to assess the efficiency of its assets in operating activities to generate keuantungan. return on assets (roa) can be formulated as follows (horne and wachhowicz, 1997) in indrawan and mutmainah (2011): effect of corporate social responsibility (csr) and compensation for performance management manufacturing companies listed in indonesia stock exchange year 2014-2018 121 𝑅𝑂𝐴 = net profit after tax total assets x 100% (3) 4. results and discussion descriptive statistics analysis a description of the variables of this study are presented in table descriptive statistics which show the minimum, maximum, mean, and stansar deviation that can be seen in this table. table 1 descriptive statistics test results variables n minimum maximum mean std. deviation corporate social responsibility 105 4:40 56.04 20.6907 10.28318 compensation management 105 1:33 4:49 2.9866 .64063 company performance 105 -22.23 18:26 3.2320 7.80021 source: data processing (2019) classical assumption test results normality test results the test results normality of the data in this study can be seen in table 2 below. table 2 results one sample kolmogorov-smirnov residual unstandardized n 105 normal parameters a, b mean .0000000 std. deviation 7.31137467 most extreme differences absolute .086 positive .047 negative -.086 test statistic .086 asymp. sig. (2-tailed) .054c a. test distribution is normal. b. calculated from data. significance lilliefors correction. source: data processing (2019) according to the table 2 values kolmogorov-smirnov test statistic obtained significance value of 0.054> 0.05. thus, it means that the regression model to meet the assumptions of normality. test multicollinearity the test results multicollinearity in this study are presented in table 3 below. table 3 test results multicollinearity model collinearity statistics tolerance vif 1 (constant) corporate social responsibility .916 1,092 compensation management .916 1,092 dependent variable: corporate performance source: data processing (2019) afebi management and business review (ambr) vol.04 no.02, december 2019 122 from table 3 is the variance inflation factor (vif) all independent variables <10 and tolerance> 0.10. it has been suggested that the regression model is free from multicollinearity. autocorrelation test the test results autocorrelation in this study are presented in table 4 below. table 4 autocorrelation test results model r r square adjusted r square std. error of the estimate durbin-watson 1 .348a .121 .104 7.38271 .775 a. predictors: (constant), compensation management, corporate social responsibility dependent variable: corporate performance source: data processing, 2019 obtained from tests performed durbin watson value of 0.775 which lies between -2 and +2 = -2 <0.775 <+2. thus it can be interpreted that there is no autocorrelation in the regression model. heteroscedasticity test the test results heteroskedastisity in this study are presented in table 5 below. table 5 test results heteroskidastity model coefficients unstandardized standardized coefficients t sig. b std. error beta 1 (constant) 2,172 1,058 2,054 .043 corporate social responsibility -.037 .022 -.168 -1653 .101 compensation management .381 .358 .108 1,063 .290 dependent variable: lnei2 source: data processing (2019) from the above test park is known that the independent variable is not significant to lnei2 (0.101 and 0.290> 0.05). it has been suggested that there is no regression model heterokedastisitas in this study. test results the coefficient of determination (r2 test) test results the coefficient of determination can be seen in table 6 below. table 6 coefficient determination test results model r r square adjusted r square std. error of the estimate durbin-watson 1 .348a .121 .104 7.38271 .775 a. predictors: (constant), compensation management, corporate social responsibility dependent variable: corporate performance source: data processing (2019) based on the results uj coefficient of determination in table 6 above, the value of determination coefficient of 0.121. what this means is that the percentage of csr and compensation management influence on the performance of the company is 12.1%. while the remaining 87.9% is influenced by other variables not included in this regression model. simultaneous effect test (f test) test results simultaneous effect can be seen in table 7 below. effect of corporate social responsibility (csr) and compensation for performance management manufacturing companies listed in indonesia stock exchange year 2014-2018 123 table 7 results of regression coefficients simultaneous test (test f) model sum of squares df mean square f sig. 1 regression 768 257 2 384 128 7048 .001b residual 5559.445 102 54 504 total 6327.702 104 a. dependent variable: corporate performance b. predictors: (constant), compensation management, corporate social responsibility source: data processing (2019) from the table above f count f test (7.048)> f table (3.085) with sig. (0.001) <0.05. what this means is that csr and management compensation jointly affect the performance of the company. partial test (t test) test results simultaneous effect can be seen in table 8 below. table 8 test results partial regression coefficients (test t) model coefficients unstandardized standardized coefficients t sig. b std. error beta 1 (constant) -3359 3487 -.963 .338 corporate social responsibility .255 .074 .336 3467 .001 compensation management .440 1,181 .036 .372 .710 dependent variable: corporate performance source: data processing (2019) discussion influence of corporate social responsibility to corporate performance known t arithmetic (3.467)> t table (1,983) or sig. (0.001) <0.05. this means that csr affects the performance of the company. compensation effect on corporate performance management known t arithmetic (0.372) <t table (1,983) or sig. (0.710)> 0.05. this means that managerial compensation does not affect the performance of the company. 5. conclusion based on the results of research and discussion in the previous chapter, it can be concluded: 1. corporate social responsibility significant positive effect on the company's performance. 2. compensation management does not affect the performance of the company. references anggraini, f. r. r. (2006). disclosure of social information and factors affecting social information disclosure in annual financial statements (empirical study on enterprises listed in jakarta stock exchange. the national symposium akuntansi 9 padang. buachoom, w. (2017). simultaneous relationship between performance and executive compensation of thai non-financial firms. asian review of accounting, 25(3), 404-423. afebi management and business review (ambr) vol.04 no.02, december 2019 124 dawn, m. f. n. 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(2011). ceo compensation and firm performance: an empirical investigation of the uk panel data. the european financial management, 17(2), 260-285. parengkuan, w. e. (2017). the influence of corporate social responsibility (csr) to manufacture financial performance that listed in indonesian stock exchange through stock corner of faculty of economy and business unsrat. journal emba, 5(2), 564-571. selcuk, e. a., & kiymaz, h. (2017). corporate social responsibility and firm performance: evidence from an emerging market. accounting and finance research, 6(4). sigler, k. j. (2011). ceo compensation and company performance. business and economics journal. effect of corporate social responsibility (csr) and compensation for performance management manufacturing companies listed in indonesia stock exchange year 2014-2018 125 suciwati, d. p., pradnyan, d. p. a., & ardina, c. (2016). influence of corporate social responsibility toward financial performance (on mining sector companies in bei years 2010-2013). journal of business and entrepreneurship, 12(2). widamunti, y. (2010). executive management compensation effect analysis of performance against companies with dividend policy as an intervening variable. [skripsi]. surakarta: universitas negeri sebelas maret. widarjo, w. (2011). the effect of the intellectual capital and intellectual capital disclosures on value company conducting an initial public offering. journal of accounting and finance indonesia, 8(2), 157-170. competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 16 competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach zainal putra 21 ⃰ and muzakir 2 1,2 universitas teuku umar, aceh barat, indonesia abstract this research aims to find out the most competitive retail company operating in current global market based on the perspective of efficiency. a well-performed company is the company that is efficient in its operations. by using data envelopment analysis (dea) approach, this research differs from prior research because we used multivariable inputs, namely: asset, operational expense and the number of employees. the output variables used in this research are: total revenue, net profit, return on equity (roe), return on assets (roa), return on investment (roi), dividend yield ratio and asset turnover ratio. the analysis results shows that six retail companies are “efficient” in its operation (efficiency score of 1.00), namely: carrefour, costco, kroger company, home depot inc, jd.com inc adr and alibaba group holdings ltd adr. therefore, these companies are considered the most competitive in its operation strategy in the current global market, whereas there are four retail companies falls into category of “inefficient” (efficiency score < 1.00), namely: walmart, amazon.com inc, tesco plc and walgreens boots alliance inc. keywords: competitive, dea, efficient, retail 1. introduction retailing serves the selling of goods and services toward the consumers, both for household and personal consumption. there are various types of goods available in retail shops, including: food, clothes, electronics, drugs, books, and many others (marketos & theodoridis, 2006). retail industry has a long process of supply chain, starting from supplier, importer, producer, distributor, wholesaler, and retailer. thus the retail store is at the very end of the supply chain. based on its supply chain, retailer directly interact with the end-consumers. advances in information technology have been applied in this sector, both for data management, supply chain, and also in terms of marketing strategies. as the result, the consumers can enjoy a quick and quality services. the retail industry is one of the sectors that is most sought after by capital owners. with a high level of sales, they managed to reap relatively large profits at the end of each year. one of the reasons is because this industry usually provides essential goods for the needs of the community. in 2019, walmart as a giant retailer, ranked first in the largest revenue, amounting to us$ 127,991 million, followed by amazon and carrefour, each of which managed to record revenues of us$ 87,436 million and us$ 41,611 million. regarding the top three retail companies which managed to record the largest revenue in 2019, we will briefly review the company's profile. the first is walmart; the largest retail company in the world headquartered in bentonnile, akansas, united * corresponding author. email address: zainalputra@utu.ac.id afebi management and business review (ambr) vol.05 no.01 june 2020 17 states. the company was established on july 2, 1962 by sam walton. currently, walmart has 11,690 outlets worldwide employing 2,200,000 employees. the second is amazon; this e-commerce company based in seattle washington was established by jeff bezos on july 5, 1994. the company, operating under amazone.com, has separate retail websites in various countries. for example, for india, the website name is amazon.in, and so on. amazon has 534 outlets around the globe, employing 798,000 employees. the third is carrefour, a retail company headquartered in boulognrbillancourt, france. established on january 1, 1958 by marcel fournier, denis defforey, and jacques defforey, carrefour now are operating in america, asia, and africa. carrefour has around 11,935 outlets worldwide and now employs 321,383 employees. one interesting thing to note is that in terms of its revenue, alibaba was ranked tenth in 2019 as the company managed to make a profit of us$ 7,397 million. this means that of the top ten retail companies operating in the global market, alibaba has been ranked first in terms of profitability. alibaba is an e-commerce giant headquartered in binjiang district, hangzhou, china. the company, founded by jack ma in 1999, now employs 116,519 employees. the top ten global retail companies based on revenue in 2019 are presented below. table 1 top ten global retail companies based on the biggest revenue in 2019 no companies revenue (million usd) net profit (million usd) 1. walmart 127,991 3,288 2. amazon.com inc 87,436 3,268 3. carrefour sa 41,611 1,719 4. tesco plc 39,864 405 5. costco 37,040 844 6. walgreens boots alliance inc 34,339 844 7. kroger company 27,974 263 8. home depot inc 27,223 2,769 9. jd.com inc adr 24,135 514 10. alibaba group holdings ltd adr 22,830 7,397 source: summarized from https://id.investing.com in this regard, the researchers conclude that it is very important for company managers to conduct an environmental analysis to maintain a sustainable competitive advantage, including retail industry sector. in line with what birkinshaw, morrison, & hulland (1995) suggest, that the analysis of the competitive environment is very important for corporate strategy, business strategy and competitive strategy in the global market. this statement also supported by ward & duray (2000) and gong (2013), who emphasized that analysis of the competitive environment is very important for decision making in global retail organizations. previous research on the importance of analyzing the competitive environment for companies in an industry has been carried out using a variety of methods, both using qualitative and quantitative methods, some of which we present in the table below. competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 18 table 2 previous research related to competitive environmental analysis researchers theme method industry/sector birkinshaw et al. (1995) structural and competitive determinants of a global integration strategy partial least square (pls) models trade industry geys (2006) looking across borders: a test of spatial policy interdependence using local government efficiency ratings spatial lag model goverment burt et al. (2011) standardized marketing strategies in retailing? ikea’s marketing strategies in sweden, the uk and china ikea’s marketing strategy retail outlets operating in sweden, uk, and china pang et al. (2013) information technology and administrative efficiency in u.s. state governments – a stochastic frontier approach min-seok stochastic frontier approach goverment ahmad et al. (2014) a comparative study on service quality in the grocery retailing: evidence from malaysia and turkey comparative study grocery retailing in malaysia and turkey ko et al. (2017) efficiency analysis of retail chain stores in korea data envelopment analysis (dea) and tobit regression model household retailer in korea liu et al. (2018) a dea-based approach for competitive environment analysis in global operations strategies data envelopment analysis (dea) global retail outlets gong et al. (2019) when to increase firms’ sustainable operations for efficiency? a data envelopment analysis in the retailing industry data envelopment analysis (dea) global retailing industry in this study, we conduct an analysis of the competitive environment through an efficiency perspective. retail companies that are considered the most competitive are those who are most efficient in their operating strategies in a global market environment. we measure it with the data envelopment analysis (dea) approach. to the best of our knowledge, this research is different from the previous mentioned researches , especially in terms of the measurement approach used. although some previous studies as shown in the above table also have used the dea approach, the input and output variables are different. as research by ko et al. (2017), the input used in its dea model is: store size, number of items, number of employees and rental costs. while the output used is sales revenue and number of customers. as research by liu et al. (2018), the input used in tis dea model is: outlets, warehouses, supplier and inhabitants. while the output used is market concentration, consumer spending and market share. as research by gong et al. (2019) the input used in its dea model is: supply chain coordination and sustainability level. while the output used is: cost competency, flexibility competency, social competency, environmental competency and business performance. this research is different from the previous researches since in this research we used multiple input variables, namely: assets, operating costs and number of employees. we also use multi output variables, namely: total revenue, net profit, roe, roa, roi, dividend payout ratio and asset turnover ratio. afebi management and business review (ambr) vol.05 no.01 june 2020 19 based on the gap research we feel it is very important to conduct this research, with the aim of: first, to find out the most competitive retail companies operating in today's global market environment, viewed from an efficiency perspective. a wellperformed company is the company that is efficient in its operations. second, trying to give a picture of solutions to companies that are not yet competitive/efficient, on how to improve their performance. 2. literature review 2.1. competitive environment analysis basically, strategic management is about how to obtain and maintain competitive advantage. this term can be interpreted as anything that can be done much better by a company when compared with rival companies (david & david, 2017). in strategic management theory, it is emphasized that to be able to maintain its competitive advantage, organizations must adapt to their environment. this has long been echoed by ginter & duncan (1990), that environmental analysis is an integral and very important part of the strategic planning process itself. furthermore, david & david (2017) stated that one important part of the analysis of the external environment is identifying competing companies, determining their strengths, weaknesses, capabilities, opportunities, threats, goals and strategies. wheelen, hunger, hoffman, & bamford (2018) assert that it is essential for the managers to understand the environmental context in which their organizations compete before formulating business strategy. it is impossible for companies to design strategies without a deep understanding of the external environment. wheelen et al. (2018) further explains that environmental scanning is a comprehensive term that includes monitoring, evaluating, and disseminating information relevant to the development of organizational strategy. after management has captured all aspects of the external environment that have an impact on the business, then the company's competitive advantage can be determined. industry is defined as a group of companies that produce similar products or services, such as soft drinks or financial services. conducting an analysis of stakeholder groups in an industry is very important, for example an analysis of suppliers and customers in the environment of a particular company is part of the industry analysis. meanwhile hitt, ireland, & hoskisson (2017) explained that to achieve strategic competitiveness, companies must formulate and implement a value creation strategy. strategy is a set of commitments and integrated and coordinated actions designed to exploit core competencies and gain competitive advantage. however, to achieve competitive advantage, the company must be responsive to the changing environment. in fact, even adapting to the local environment, sometimes companies have to make big changes. one of the companies which adopted and demonstrated this strategic is abibaba, which has now become a leader in its industry as one of the most successful online sales facilitators in china and is striving to become a successful global business. according to hitt et al. (2017) a company achieves competitive advantage when they are able to implement strategies that create superior value for customers and cannot be duplicated by the competitors or are too expensive to emulate. however, it is important to note that there is no permanent competitive advantage in the company. in 1997, russo & fouts conducted a research on the relationship between the company's environmental performance and the level of profit generated (profitability). the results indicate that: a) a high level of environmental performance is associated with increased profitability; b) the greater the company's growth, the greater the positive impact of environmental performance on company profitability. russo & fouts (1997) links corporate environmental performance with three aspects, namely: a) physical assets and technology; b) human resources and organizational capabilities; and c) intangible resources. where intangible resources are the reputation of leadership competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 20 in caring for the environment, so that ultimately it can increase sales among customers who are sensitive to the problem (environment) (russo & fouts, 1997). a research by mckinsey & company in 2011 found that an analysis of the external environment was the most important information for executives to consider when developing company strategies. the results prove that there is a positive relationship between environmental analysis and profit (wheelen et al., 2018). golovko & valentini (2011) found out that internal environmental factors, in this case innovation has a positive effect on company growth. other research by pang et al. (2013) shows evidence that environmental factors such as market share, rural populations and politically divided governments have a moderate effect on the relationship between information technology and administrative efficiency, and several environmental factors that are treated as control variables in their research, such as population, household income and gross domestic product (gdp), also have an influence on operational efficiency. 2.2. data envelopment analysis (dea) dea has been widely studied, used and analyzed by academics who understand linear programming. dea was developed to measure organizational performance. this technique has been used successfully to assess the performance of a number of organizations that use a variety of similar inputs and also produce the same variety of outputs. the efficiency measured in dea is known as decision-making unit (dmu). jadi dea measures how efficient a dmu is in using available resources to produce a set of outputs. linear programming is the underlying methodology that makes dea very powerful when compared to other alternative productivity management tools. dmu can include manufacturing units, large organizations such as universities, schools, bank branches, hospitals, police stations, tax offices, companies and so on. the dmu performance assessed in dea uses the concept of efficiency or productivity, which is the ratio of total output to total input. the best performing dmus are given an efficiency score of one or 100 percent (ramanathan, 2003). taylor iii (2016) also states that dea is a linear programming application that compares a number of service units of the same type, such as banks, hospitals, restaurants and schools based on their inputs and outputs. the results of the model solution indicate whether certain units are less productive, or inefficient, compared to other units. for example, dea has compared hospitals where input includes hospital beds and staff size and output including patient days for different age groups. liu et al. (2018) explain that dea is an important non-parametric method in management of production and operations. as an optimization method, dea enables multi-input, multi-output measurement of the relative performance of production units and has been widely used to assess operational performance in various industries. in the classical dea model there is an implicit assumption that all inputs and outputs are 'discretionary variables', which can vary depending on the policy of the company manager. the non-discretionary dea model seeks to overcome the problem of input from the external environment. input 'non-discretionary variables' (cooper, seifod, & tone, 2006), such as economic and environmental factors, are where companies do not have the ability to decide or adjust according to their own discretion or judgment. such inputs are important to be taken into account from the industrial environment when we evaluate operational efficiency, especially in retail companies. initially charnes, cooper & rhodes (1978) developed dea to evaluate nonprofit and public sector organizations (prakash & annapoorni, 2015). afterwards, research using dea continues to grow rapidly for various sectors, for example in the banking sector (ohsato & takahashi, 2015; sufian, kamarudin, & nassir, 2016), the college sector (goksen, dogan, & ozkarabacak, 2015; ohsato & takahashi, 2015), public/ government sector organizations (zhonghua & ye, 2012; jorge, carvalho, jorge, medeiros, & ferreira, 2013; pang et al., 2013; buleca & mura, 2014; chitnis & mishra, 2019), the hospitality sector (barros, 2005; sanjeev, 2007), the aviation sector (singh, afebi management and business review (ambr) vol.05 no.01 june 2020 21 2011; zhu, 2011), the retail sector (barros, 2005; yu & ramanathan, 2008; lau, 2013; ahmad et al., 2014; ko et al., 2017; liu et al., 2018; gong et al., 2019). 2.3. operational performance many researchers in the operations management community are interested in evaluating the performance of retail companies and assessing the impact of improved operations, both on operational performance and on financial performance. most retail company performance measurements use a number of financial measures, such as return on investment (roi), return on asset roa), or return on capital employed (roce) (panigyrakis & theodoridis, 2007). meanwhile according to liu et al. (2018), retail company performance can be seen through its level of productivity, such as: inventory turnover ratio, accounts receivable turnover ratio, total assets or current assets turnover ratio, gross margin, and long-term stock returns. many researchers criticize such performance measurement models, because they fail to measure various dimensions of performance. explicitly, there is still limited research that considers aspects of the competitive environment and operating strategies in global markets relating to the operating efficiency of retail companies. in fact, for it is very important for retail company to do environmental analysis both internal and external. it is important to note that retail companies in their operations rely on their supply chains, where they will face strong pressure from various stakeholder groups, such as end customers, industrial customers, suppliers and financial institutions (hendricks & singhal, 2005). retail companies operating in various regions will certainly develop diverse business models that are in accordance with the characteristics of consumers in the region. they also must adjust to the diversity of policies, culture, legislation and politics in the area. as a result of the diversity of such treatments, it may produce varying levels of efficiency from each retail company. this is consistent with the statement of slater & narver (1994), that the competitive environment in various regions affects the operational efficiency of retail companies. nowadays, globally integrated retail companies operate in a highly competitive market environment. the operations strategy can be carried out by importing governance management from home countries or mimicking the governance management practices of successful local companies. it can help them carry out their responsibilities, make it easier to make relevant decisions so they can be efficient in operations. measuring the performance of retail companies is a complex phenomenon (liu et al., 2018). researchers often face difficulties in trying to get accurate financial performance measures. the most common problems are information sensitivity and the unavailability of information for the public. however panigyrakis & theodoridis (2007) has measured the business performance of retail companies (supermarkets) in greece, using two dimensions, financial performance and non-financial performance. financial performance is measured by four indicator; total sales, growth rate of sales and gross margin and non-financial performance is measured by three indicators; market share, space productivity and stock age. the findings indicate a positive relationship between market orientation and the performance of retail companies. in other words market orientation is an important determinant of company performance. market orientation is defined as the company's ability to understand customers, competitors and environmental factors in a sustainable manner that enables them to act according to current market trends. meanwhile johlke & iyer's research (2013), regarding the performance of retail companies in the united states proves that employee ambiguity towards customers and external customer mindset sets are related to sales performance. mertens, recker, kummer, kohlborn, & viaene (2016) conducted a research on constructive deviance as a driver of performance in retail companies. the study was conducted on food retail stores operating in australia. the results prove that constructive deviance that occurs in retail companies can improve organizational performance. therefore the application competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 22 of constructive deviance as a strategic tool in retail companies can be considered. constructive deviance is deviant behavior carried out with positive intentions that aim to provide positive or beneficial results for the organization without harming other parties or violating norms at a higher level. 3. research method 3.1. research object this research focuses on the top ten retail companies operating in the global market, as presented in the table below. table 3 top ten global retail companies in 2019 dmu company code country industry 1. walmart wmt united states retail (groceries) 2. amazon.com inc amzn united states retail (via catalogue & courier) 3. carrefour sa carr france retail (groceries) 4. tesco plc tsco great britain retail (groceries) 5. costco cost united states retail (spesific) 6. walgreens boots alliance inc wba united states retail (drugs) 7. kroger company kr united states retail (groceries) 8. home depot inc hd united states retail (households) 9. jd.com inc adr jd china retail (via catalogue & courier) 10. alibaba group holdings ltd adr baba china retail (via catalogue & courier) sources: summarized from https://id.investing.com and other various sources 3.2. research variables and data collection there are three input variables used in this study, namely: assets, operating costs and number of employees. in addition there are seven output variables used, namely: total revenue, net profit, return on equity (roe), return on assets (roa), return on investment (roi), dividend payout ratio and asset turnover ratio. data was obtained from financial reports published on the investing.com website. we focus on the financial statements of the top ten retail companies operating in the global market. the operational variables in this research are presented in the table below. table 4 operational variables a. input definition ref. scale asset an asset definition according to ifrs is a source that is controlled by an entity as a result of a past event (for example creating itself or buying) and from future economic benefits (cash inflows and other assets) expected to flow to the entity. assets are measured in united states dollars (usd). [1] ratio operating cost operating costs or operating expenses are all expenses directly used to produce goods, including general costs, sales costs, administrative costs, and loan interest; costs directly related to the production and distribution of goods. operating costs are measured in united states dollars (usd). [2a, 2b] ratio employee employees are the people working in an institution (office, company, etc.) with a salary (wages). employees are measured in units of people. [3] ratio b. output revenue according to ifrs revenue is defined as income arising from the normal activities of an entity and is often known by different names, such as: sales, [4] ratio https://id.investing.com/ afebi management and business review (ambr) vol.05 no.01 june 2020 23 turnover, costs, interest, dividends and royalties. revenue is measured in united states dollars (usd). net profit net profit is the amount of profit obtained after tax deduction. profit is often used as a financial measure. net income is measured in united states dollars (usd). [5a & 5b] ratio roe return on equity (roe) is defined as net income divided by shareholder equity. roe shows the ability to generate a return on investment based on the book value of the shareholders. roe is measured in percentage (%). [6a, 6b, 6c, 6d, 6e] ratio roa return on assets is defined as net income divided by total assets. roa is measured in percent (%). [7a, 7b, 7c, 7d] ratio roi return on investment (roi) is defined as net operating profit divided by average operating assets. the higher the roi of a business segment, the greater the profit generated from each dollar invested in its assets. roi is measured in percentage (%). [8] ratio dividend yield ratio dividend yield ratio is used to measured rate of return (only in the form of cash dividends) received by the investor who purchase ordinary stock at the current market price. dividend yield ratio is calculated by dividing the dividend per share with the market price per share. this ratio is measured in percent (%). [9] ratio asset turnover ratio asset turnover ratio is defined as sales divided by total assets. this ratio shows how many sales are generated from each dollar of company assets. this ratio is measured in percent (%). [10a, 10b, 10c] ratio notes: [1] icaew, 2008, page 25; [2a & 2b] kb, 2020; scarborough & cornwall, 2016, page 425; [3] kbbi, 2016; [4] icaew, 2008, page 62; [5a & 5b] iai, 2013; icaew, 2008 page 24; [6a, 6b, 6c, 6d, 6e] horne & wachowicz, 2009, page 150; ross, westerfield, jaffe, & jordan, 2018, page 53; gorrison et al., 2018, page 739; brealey, myers, & marcus, 2018, page 95; brigham & houston, 2019, page 119; [7a, 7b, 7c & 7d] horne & wachowicz, 2009, page 157; brealey, myers, & marcus, 2018, page 94; ross, westerfield, jaffe, & jordan, 2018, page 53; brigham & houston, 2019, page 119; [8] gorrison et al., 2018, page 509; horne & wachowicz, 2009, page 150; [9] gorrison, noreen, & brewer, 2018, page 742; [10a, 10b & 10c] brealey et al., 2018, page 96; gorrison et al., 2018, page 735; brigham & houston, 2019, page 113. 3.3. data analysis data envelopment analysis (dea) approach is used for data analysis in this reserach. dea is a linear programming application that compares a number of company units in the same industry. the results of the model solution provide an indication whether a particular company is less productive or inefficient, compared to other units (taylor iii, 2016, p.164). according to storto (2013), dea has the advantage as it is able measure multi-variable input and multi-variable output. in this research, ten retail companies operating in the global market are treated as a decision making unit (dmu). the formula used to calculate unit efficiency (ragsdale, 2008, p.103-104; ragsdale, 2018, p. 107-108) is as follows: 𝑢𝑛𝑖𝑡 𝑒𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 𝑖 = 𝑊𝑒𝑖𝑔ℎ𝑡 𝑜𝑓 𝑜𝑢𝑡𝑝𝑢𝑡 𝑢𝑛𝑖𝑡 𝑖 𝑊𝑒𝑖𝑔ℎ𝑡 𝑜𝑓 𝑖𝑛𝑝𝑢𝑡 𝑢𝑛𝑖𝑡 𝑖 = ∑ 𝑂𝑖𝑗 𝑋𝑗 𝑛0 𝑗=1 ∑ 𝐼𝑖𝑗 𝑌𝑗 𝑛𝐼 𝑗=1 (1) where: oij = the value of unit i on output j iij = the value of unit i on input j xj = non-negatif weight assigned to output j yj = non-negatif weight assigned to input j no = the number of output variables competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 24 ni = the number of input variables objective function: 𝑀𝐴𝑋: ∑ 𝑂𝑖𝑗 𝑋𝑗 𝑛𝑂 𝑗=1 (2) constraint function: ∑ 𝑂𝑘𝑗 𝑋𝑗 ≤ 𝑛0 𝑗=1 ∑ 𝐼𝑘𝑗 𝑌𝑗 𝑛𝐼 𝑗=1 where k = 1 (3) or in other words: ∑ 𝑂𝑘𝑗 𝑋𝑗 − 𝑛0 𝑗=1 ∑ 𝐼𝑘𝑗 𝑌𝑗 𝑛𝐼 𝑗=1 ≤ 0 where k = 1 (4) the weighted input weight for the unit under investigation (unit i) must be equal to 1 (one), then: ∑ 𝐼𝑖𝑗 𝑌𝑗 𝑛𝐼 𝑗=1 = 1 (5) to provide accurate results, in solving this problem we use the parameter solver tool available in microsoft excel. macro facilities found in excel were also used so that the calculation can be conducted simultaneously. the efficiency score of a dmu must be less than or equal to one (≤ 1.00). if the score isequal to one (= 1.00), then the dmu is said to be 'efficient', or has 'good performance'. whereas if the score of dmu is less than one (<1.00), then the dmu is said to be 'inefficient', or has 'poor performance'. 4. results this research uses three input variables, namely: total assets, total operating costs and number of employees. in addition, there are seven output variables used, namely: total revenue, net profit, roe, roa, roi, dividend payout ratio and asset turnover ratio. data of input variables and output variables used in the analysis are presented in the table below. table 5 input variable data used in the analysis, 2019 dmu company input ref. asset (million usd) operational cost (million usd) employees (person) 1. walmart 239,830 136,349 2,200,000 [1] 2. amazon.com inc 225,248 83,557 798,000 [2] 3. carrefour sa 55,064 40,475 321,383 [3] 4. tesco plc 70,758 38,447 464,505 [4] 5. costco 51,431 35,979 149,000 [5] 6. walgreens boots alliance inc 90,807 34,339 232,000 [6] 7. kroger company 45,393 27,720 435,000 [7] 8. home depot inc 52,309 23,276 415,700 [8] 9. jd.com inc adr 36,725 24,060 178,927 [9] 10. alibaba group holdings ltd adr 186,577 17,236 116,519 [10] table 6 output variable data used in the analysis, 2019 dmu company output ref. revenue (million usd) net profit (million usd) roe (%) roa (%) roi (%) dividend yield (%) asset turnover (%) 1. walmart 127,991 3,288 20.22 6.67 10.61 1.68 2.30 [1] 2. amazon.com inc 87,436 3,268 21.95 5.98 10.01 17.20 1.45 [2] 3. carrefour sa 41,611 1,719 0.33 0.44 0.91 3.26 1.51 [3] 4. tesco plc 39,864 405 9.71 2.28 3.65 3.93 1.12 [4] afebi management and business review (ambr) vol.05 no.01 june 2020 25 5. costco 37,040 844 24.59 8.29 16.61 0.84 3.46 [5] 6. walgreens boots alliance inc 34,339 844 14.41 4.38 6.67 4.21 1.73 [6] 7. kroger company 27,974 263 19.91 3.63 5.50 2.00 2.93 [7] 8. home depot inc 27,223 2,769 79.26 23.61 37.38 3.02 2.31 [8] 9. jd.com inc adr 24,135 514 17.21 5.07 13.81 17.20 2.46 [9] 10. alibaba group holdings ltd adr 22,830 7,397 28.54 15.36 22.16 17.20 0.44 [10] notes: the data sources listed in table 5 and table 6 above are [1] investing.com, 2020j; [2] investing.com, 2020b; [3] investing.com, 2020c; [4] investing.com, 2020h; [5] investing.com, 2020d; [6] investing.com, 2020g; [7] investing.com, 2020g; [8] investing.com, 2020e; [9] investing.com, 2020f; [10] investing.com, 2020a. for information, some of the companies in this research presented their financial report in different currencies other than united states dollar (usd) . tesco plc presented their financial report in great britain pound (gbp), carrefour sa uses euro (eur), jd.com inc. adr and alibaba group holdings ltd. adr uses chinese yuan (cny). therefore, for uniformity we converted the currencies into united states dollars (usd) using a currency converter (investing.com, 2020e). by using this tool, currency conversion can be done retroactively in accordance with the date of the company's financial statements, which are at the end of 2019. to evaluate the efficiency of retail companies from unit 1 to unit 10, we formulated a linear dea program with the implementation of the model as follows: dmu 1: walmart max: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.3x7 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 239,830y1 + 136,349y2 + 2,200,000y3 = 1 input constrain for unit 1 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 2: amazon.com max: 87,436x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 225,248y1 + 83,557y2 + 798,000y3 = 1 input constrain competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 26 for unit 2 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 3: carrefour sa max: 41,611x1 + 1,719x2 + 0.33x3 + 0.44x4 + 0.91x5 + 3.26x6 + 1.51x7 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 55,064y1 + 40,475y2 + 321,383y3 = 1 input constrain for unit 3 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 4: tesco plc max: 39,864x1 + 405x2 + 9.71x3 + 2.28x4 + 3.65x5 + 3.93x6 + 1.12x6 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436 x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 70,758y1 + 38,447y2 + 464,505y3 = 1 input constrain for unit 4 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 5: costco max: 37,040x1 + 844x2 + 24.59x3 + 8.29x4 + 16.61x5 + 0.84x6 + 3.46x7 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436 x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 afebi management and business review (ambr) vol.05 no.01 june 2020 27 51,431y1 + 35,979y2 + 149,000y3 = 1 input constrain for unit 5 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 6: walgreens boots alliance inc max: 34,339x1 + 844x2 + 14.41x3 + 4.38x4 + 6.67x5 + 4.21x6 + 1.73x7 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 90,807y1 + 34,339y2 + 232,000y3 = 1 input constrain for unit 6 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 7: kroger company max: 27,974x1 + 263x2 + 19.91x3 + 3.63x4 + 5.50x5 + 2.00x6 + 2.93x7 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 45,393y1 + 27,720y2 + 435,000y3 = 1 input constrain for unit 7 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 8: home depot inc max: 27,223x1 + 2,769x2 + 79.26x3 + 23.61x4 + 37.38x5 + 3.02x6 + 2.31x7 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 28 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 52,309y1 + 23,276y2 + 415,700y3 = 1 input constrain for unit 8 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 9: jd.com inc adr max: 24.135x1 + 514x2 + 17,21x3 + 5,07x4 + 13,81x5 + 17,20x6 + 2,46x7 subject to: 127.991x1 + 3.288x2 + 20,22x3 + 6,67x4 + 10,61x5 + 1,68x6 + 2,30x7 239.830y1 136.349y2 2.200.000y3 ≤ 0 constrain for unit 1 87.436x1 + 3.268x2 + 21,95x3 + 5,98x4 + 10,01x5 + 17,20x6 + 1,45x7 – 225.248y1 83.557y2 798.000y3 ≤ 0 constrain for unit 2 and so on to ... 22.830x1 + 7.397x2 + 28,54x3 + 15,36x4 + 22,16x5 + 17,20x6 + 0,44x7 – 186.577y1 17.236y2 116.519y3 ≤ 0 constrain for unit 10 36.725y1 + 24.060 y2 + 178.927y3 = 1 input constrain for unit 9 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions dmu 10: alibaba group holdings ltd adr max: 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 subject to: 127,991x1 + 3,288x2 + 20.22x3 + 6.67x4 + 10.61x5 + 1.68x6 + 2.30x7 – 239,830y1 – 136,349y2 – 2,200,000y3 ≤ 0 constrain for unit 1 87,436x1 + 3,268x2 + 21.95x3 + 5.98x4 + 10.01x5 + 17.20x6 + 1.45x7 – 225,248y1 – 83,557y2 – 798,000y3 ≤ 0 constrain for unit 2 and so on to ... 22,830x1 + 7,397x2 + 28.54x3 + 15.36x4 + 22.16x5 + 17.20x6 + 0.44x7 – 186,577y1 – 17,236y2 – 116,519y3 ≤ 0 constrain for unit 10 186,577y1 + 17,236y2 + 116,519y3 = 1 input constrain for unit 10 x1, x2, x3, x4, x5, x6, x7, y1, y2, y3 ≥ 0 nonnegativity conditions to solve this complex problem, we used parameter solver tool and macro facilities found in microsoft excel for data processing. the results of data processing as shown in the table below. afebi management and business review (ambr) vol.05 no.01 june 2020 29 table 7 global retail company efficiency score data, 2019 dmu company efficiency score conclusion 1. walmart 0.86 inefficient 2. amazon.com inc 0.94 inefficient 3. carrefour sa 1.00 efficient 4. tesco plc 0.94 inefficient 5. costco 1.00 efficient 6. walgreens boots alliance inc 0.92 inefficient 7. kroger company 1.00 efficient 8. home depot inc 1.00 efficient 9. jd.com inc adr 1.00 efficient 10. alibaba group holdings ltd adr 1.00 efficient source: dea result 5. discussion based on table 7 above, we obtained the information that from the top ten (top ten) retail companies operating in the global market, there are six companies that are efficient in carrying out their operations, thus the companies are considered to be the most competitive company in the global market, they are: carrefour, costco, kroger company, home depot inc., jd.com and alibaba group holdings ltd. while the remaining four companies, namely: walmart, amazon.com, tesco and walgreens boots alliance are considered to be inefficient in conducting operations in the global market. thus it can be concluded that the companies are less competitive. although retail companies such as walmart has the largest total revenue and amazon.com has the second largest total revenue, the results of the model solutions show that they are inefficient. that is because they are unable to utilize available abundant input resources to produce maximum output. below we outline the dea's suggestions for these inefficient retail companies to be more competitive in the global market environment, which can be seen from the composite value and sensitivity report. 0.75 0.80 0.85 0.90 0.95 1.00 walmart amazon.com carrefour tesco costco walgreens kroger company home depot jd.com alibaba 0.86 0.94 1.00 0.94 1.00 0.92 1.00 1.00 1.00 1.00 figure 1 radar chart of global retail companies efficiency figure 2 bar chart of global retail companies efficiency competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 30 table 8 inefficient global retail company, 2019 dmu company efficiency score conclusion 1. walmart 0.86 inefficient 2. amazon.com inc 0.94 inefficient 4. tesco plc 0.94 inefficient 6. walgreens boots alliance inc 0.92 inefficient based on the composite value, to achieve high level of performance (efficiency score 1.00), for walmart, amazon.com inc., tesco plc and walgreens boots alliance inc., it is recommended to decrease the number of inputs and increase a certain number of outputs, sequentially shown below this. dmu 1: walmart input initial final increase (decrease) asset (million usd) 239,830 206, 28 (33,602) operational cost (million usd) 136,349 117,246 (19,103) employees 2,200,000 1,453,520 (746,480) output initial final increase (decrease) revenue (million usd) 127,991 127,991 0 net profit (milliom usd) 3,288 9,010 5,722 roe (%) 20.22 179.92 159.70 roa (%) 6.67 54.14 47.47 roi (%) 10.61 86.05 75.44 dividend yield (%) 1.68 12.04 10.36 asset turnover (%) 2.30 7.64 5.34 dmu 2: amazon.com inc input initial final increase (decrease) asset (million usd) 225,248 212,830 (12,418) operational cost (million usd) 83,557 78,951 (4,606) employees 798,000 754,007 (43,993) output initial final increase (decrease) revenue (million usd) 87,436 87,436 0 net profit (million usd) 3,268 7,816 4,548 roe (%) 21.95 138.37 116.42 roa (%) 5.98 45.41 39.43 roi (%) 10.01 75.95 65.94 dividend yield (%) 17.20 17.20 0.00 asset turnover (%) 1.45 7.14 5.69 afebi management and business review (ambr) vol.05 no.01 june 2020 31 dmu 4: tesco plc input initial final increase (decrease) asset (million usd) 70,758 66,647 (4,111) operational cost (million usd) 38,447 36,213 (2,234) employees 464,505 437,516 (26,989) output initial final increase (decrease) revenue (million usd) 39,864 39,864 0 net profit (million usd) 405 2,772 2,368 roe (%) 9.71 70.72 61.01 roa (%) 2.28 21.37 19.09 roi (%) 3.65 35.01 31.36 dividend yield (%) 3.93 3.93 0.00 asset turnover (%) 1.12 3.11 1.99 dmu 6: walgreens boots alliance inc input initial final increase (decrease) asset (million usd) 90,807 83,543 (7,264) operational cost (million usd) 34,339 31,592 (2,747) employees 232,000 213,442 (18,558) output initial final increase (decrease) revenue (million usd) 34,339 34,339 0 net profit (million usd) 844 2,719 1,875 roe (%) 14.41 39.62 25.21 roa (%) 4.38 13.85 9.47 roi (%) 6.67 23.67 17.00 dividend yield (%) 4.21 4.83 0.62 asset turnover (%) 1.73 2.80 1.07 based on the sensitivity report, for walmart, amazon.com, tesco and walgreens boots alliance to be "efficient", it is suggested for these companies to increase their output. there are two options available for walmart. they are either increasing output by 159.52% when referring to dmu 3 (carrefour), or by 226.33% when referring to dmu 8 (home depot). for amazon.com there are four options available. they are either to increase output by 101.04% when referring to dmu 5 (costco), or by 120.43% when referring to dmu 8 (home depot), or by 26.73% when referring to dmu 9 (jd.com), or by 47.19% when referring to dmu 10 (alibaba.com). in addition, tesco has four options available. they are either increasing output by 18.10% when referring to dmu 3 (carrefour), or by 25.61% when referring to dmu 5 (costco), or by 80.33% when referring to dmu 8 (home depot), or by 4.06% when referring to dmu 9 (jd.com). for walgreens boots alliance there are three options available. they are either to increase output by 63.93% when referring to dmu 5 competitive environment analysis in global retail companies operation strategy: a data envelopment analysis (dea) based approach 32 (costco), or by 22.90% when referring to dmu 8 (home depot), or by 21.01% when referring to on dmu 10 (alibaba.com). 6. conclusion the analysis results shows that from top ten global retail companies operating in current global market, six retail companies are “efficient” in its operation (efficiency score of 1.00), namely: carrefour, costco, kroger company, home depot inc, jd.com inc adr and alibaba group holdings ltd adr. therefore, these companies are considered the most competitive in its operation strategy in the current global market, whereas there are four retail companies falls into category of “inefficient” (efficiency score < 1.00), namely: walmart, amazon.com inc, tesco plc and walgreens boots alliance inc. it is implied that these companies were unable to utilize their resources (input) to produce maximum output. 7. research limitation this research has limitations since a number of inputs such as: number of outlets, number of product items sold and number of suppliers have not been included in the analysis. in addition, a number of non-financial performance outputs such as: market share, customer satisfaction and number of customers have also not been included in the analysis. that is because the authors are having difficulty to obtain these data. it is expected that the limitation of this research can be refined further by future researchers, and it is possible for the next researcher to increase the number of years of observation to a 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(2011). airlines performance via two-stage network dea approach. journal of centrum cathedra, 4(2), 260–269. the antecedent of regional financial report quality 38 the antecedent of regional financial report quality slamet widodo 1*4, akram harmoni wiardi2, and tri deni prabowo3 1,2,3 universitas bengkulu, bengkulu, indonesia abstract the objective of this research is to analyze the competency, the comprehension of the government accounting standard, the implementation of internal control system and the quality of financial report in kepahiang regency.this research was done to financial managers. the data were gathered by distributing the questionnaire to 102 respondents. this study used the data analysis of multiple linear regression. the result of this research showed that competency has significant effect on the quality of financial report. the comprehension of the government accounting standard has significant effecton the quality of financial report. the implementation of internal control system significant effect on the quality of financial report. keywords: accounting standard, competency, internal control, quality 1. introduction government as the largest public sector organizations take full responsibility for improving the welfare of the people, uphold the wishes of the people, sustainable development and social justice, runs the functional aspects of an efficient and effective government that can be tangible good governance. as one form of accountability in the implementation of government presented in the financial statements set forth in law no. 17 of 2003 on state finances and law no. 32 of 2004 on regional government. the financial statements are presented to stakeholders to assist with higher quality decision making. financial quality statements are the financial statements which have the characteristics of relevant, reliable, comparable and understandable so as to provide useful information for the consumer (sudiarianti et al. 2015). assessment of the quality of local government financial statements (lkpd) is conducted by the state audit board (bpk) by conducting annual audits. the results of the bpk assessment are expressed in 4 (four) opinion forms that are unqualified (wtp) including unqualified with explanatory paragraph (wtp-dpp), fair with exception (wdp), unreasonable (tw) and no opinion (tmp) . fair representation is expressed in the form of opinion by considering the criteria of conformity of financial report with government accounting standard (sap), adequacy of disclosure, compliance with statutory regulations, and effectiveness of internal control (indriasih, 2014). local government financial statements in kepahiang district in 2015 has received the title of wtp by the cpc, but there are still weaknesses that become records should be corrected, examination findings include: 1. taxes on routine expenditures and activities on the four work units within the kepahiang regency government have not been collected for remittance to the state treasury; 2. the accountability report for the transfer of financial aid for the allocation of village funds has not been submitted to the regional head; 3. errors of budgeting of goods and services expenditure in the form of procurement of subsidized nine basic necessities at the department of cooperatives, smes and trade industry; * corresponding author. email address: swidodo@unib.ac.id afebi management and business review (ambr) vol.04 no.01, june 2019 39 4. there is an asset of equipment and machinery at the regent's official house and the vice regent's office home kepahiang that is not mastered. the problems faced by the current local government is low competencies of financial managers and limited eo financial expert. it also became a phenomenon as a major problem of local governments in indonesia (hyacinth, et al., 2008). according to wibowo (2014), the success of an organization is achieved by strong foundation of human resources competencies. competency is an ability to perform or perform a job or task based on skills and knowledge and supported by the work attitude required. competencies indicates a skill or knowledge characterized by professionalism in a particular field as the most important (wibowo, 2014). according to bastian (2001) qualified financial statements can not present by itself. a financial report quality can not be separated from good governance of financial management. good financial governance is an early reflection that financial reporting is also good. competence financial manager can be interpreted as a financial manager who has the competencies to present good quality of financial reports. the government publishes the government accounting standards established by government regulation no. 71 of 2010 which will be used to produce a reliable financial statement which can be the basis for decision making and is expected to become a reference and standard application. the central government, local governments and organizational units within the central / regional government are obliged to present financial statements in order to create more accountability and transparency of financial management. the understanding of government accounting standards is required in the preparation of financial statements. first is the conversion from the cash basis points to accrual basis guided by the pp 71 of 2010 which requires the financial management staff who understand very well the logic of accounting and government accounting standards. halim and kusufi (2014) stated that financial managers in preparing financial statements should understand government accounting standards. according to fikri et al. (2015) a good understanding of government accounting standards by financial managers in regional work stations will certainly improve the quality of financial statements. financial managers who already have an understanding of government accounting standards mean that they are able to understand the established accounting principles and able to apply the accounting standards in preparing and presenting government financial reports so as to produce quality financial reports. in addition to improve the quality of financial statements, the financial managers required the implementation of internal control system. according to arens et al. (2008) the application of effective internal financial controls can improve the quality of financial statements. so that the financial manager must be able to apply effective internal control system in order to produce quality financial reports. with the enactment of government regulation no. 60 of 2008 on government internal control system (spip) which states that the purpose of government internal control system is to provide adequate assurance for the achievement of effectiveness and efficiency in achieving the objectives of state administration, the reliability of financial statements, and the safeguarding of state assets. based on the phenomenon and the research background we analyze: 1. how is the description of competence, the understanding of government accounting standards, the implementation of internal control system and the quality of financial statements in kepahiang regency 2. how is the influence of competence, understanding of government accounting standards and the application of internal control system to the quality of financial statements in kepahiang regency the antecedent of regional financial report quality 40 2. literature review and hypotheses development 1. quality of financial statements the financial statements are the representation of financial information also serves as a means of accountability and evaluation of financial performance (mahmudi, 2016). john et al. (2007) defines financial reporting is the process of communicating the company's financial accounting information to external parties. according to law no. 17 of 2003 on state finance (article 30-32), the government's financial report is the responsibility of state finance management by the president as the head of government and the holder of state financial management authority as well as the governors / regents / mayors as the holders of financial management power area. government financial reports covering central government financial report (lkpp) and local government financial report (lkpd) are prepared under sap. the general purpose of the financial statements according to government regulation no. 71 of 2010 is that government financial reporting should provide useful information for users in assessing accountability and making decisions in economic, social and political decisions by: a. provide information about the source, the allocation and use of financial resources; b. provide information on the adequacy of current receipts to finance all expenditures; c. provide information on the amount of economic resources used in the activities of reporting entities and the results achieved; d. provides information on how the reporting entity is funding all of its activities and sufficient for its cash needs; e. provide information about the financial position and condition reporting entity related to the source the source of acceptance, both short and long term, including those derived from taxation and borrowing; f. provides information on the changes in the financial position of the reporting entity, whether increased or decreased, as a result of activities carried out during the reporting period. the quality of financial reporting is complete and transparent information, designed not to mislead users (jonas & blanchet, 2000). biddle et al. (2009) describes the quality of financial statements is the accuracy of financial statements that provide information on the performance of the company, especially cash flow capital investors are expected. tang et al. (2008) states that financial statements provide true and reasonable information on performance and financial position. hilton (2011) suggests the characteristics of information determine its usefulness in decision making are: (1) relevant information, (2) accuracy (3) timeliness. relevant and accurate data is only valuable if it is timely, that is, available in time for a decision. based on government regulation no. 71 of 2010 on government accounting standards that the characteristics of financial statements are normative measures that need to be manifested in accounting information so as to meet its objectives. beest et al. (2009) indicates that qualitative characteristics are valid and reliable measures to assess the quality of financial statements. the following four characteristics are a necessary normative prerequisite for government financial reports to meet the desired quality: 1. relevant information, the information contained in it, can influence user decisions by helping them evaluate past or present events and predict the future, as well as correcting their evaluation results in the past. 2. reliably, the information in the financial statements is free of misleading notions and material errors, presenting every fact honestly, and verifiable. reliable information meets the following characteristics: 3. can be compared, ie information contained in the financial statements will be more useful if it can be compared with the previous period financial statements or financial statements of other reporting entities in general. afebi management and business review (ambr) vol.04 no.01, june 2019 41 4. understandable the information presented in the financial statements can be understood by the user and expressed in terms and terms tailored to the limits of the user's understanding. 2. competency according to hitt et al.(1999) competency is a combination of knowledge, skills, attitudes and experience. explanation of the same competence is also expressed by wibowo (2012) competence is an ability to perform or perform a job or task based on skills and knowledge and supported by work attitude demanded by the work. hutapea and thoha (2008), revealed that there are three main components of the formation of competence, namely: knowledge, skills, and behavior. 3. comprehension of the government accounting standard understanding government accounting standards, is able to distinguish, present and define accounting transactions according to government accounting standards. mahmudi (2010) states that the government accounting standards contain accounting principles applied in preparing and presenting financial statements to government organizations.based on government regulation no. 71 of 2010, government accounting standards are the accounting principles adopted in preparing and presenting government financial reports.transactions in accordance with government accounting standards are revenue recognition, expense recognition and depreciation of property and equipment (tanjung, 2013). 4. implementation of internal control system the implementation of the internal control system is an integral process for the actions and activities undertaken continuously by the leadership and all employees to provide reasonable assurance on the achievement of organizational goals through effective and efficient activities, reliability of financial reporting, security of state assets and compliance with laws and regulations. internal controls are designed and implemented by management to be reasonable ensure organizational objectives will be achieved (arens et al., 2008). elements of internal control applied in the government according to government regulation no. 60 of 2008 consists of elements: (1) the control environment, (2) risk assessment, (3) control activities, (4) information and communication and (5) monitoring. 5. development of hypotheses according sekaran (2010) research hypothesis is an initial suspicion / interim conclusion of the relationship influence between independent variables to the dependent variable before the research and must be proven through research. qualified financial statements should have the qualitative characteristics required as mentioned in the government conceptual framework (government regulation no. 71 of 2010) including: relevant, reliable, comparable, and understandable information. according wahyono (2004) competence of human resources play a role in generating information of value (reliable). based on research conducted anggun (2016) shows that the competence of human resources positively affect the quality of local financial statements. accounting standards which the government is a guide to be able to present the financial statements qualified as a form of government responsibility for financial management (nuraini & sumiyati, 2014). financial managers to develop quality financial statements should understand government accounting standards (halim & kusufi, 2014). research conducted by sari et al. (2014) states that there is a positive and significant influence on the understanding of government accounting standards on the quality of local government financial statements the antecedent of regional financial report quality 42 research conducted nuryanto and afiah (2013) states internal control affects the quality of financial statements. princess et al. (2016) indicates that the implementation of internal control system has an influence on the quality of financial reporting. based on the reviewd literature, we finally propose the following hypothesis. picture 1. research model source: adapted from sari et al. (2014) and princess et al. (2016) h1: competence, understanding of government accounting standards and the implementation of internal control systems simultaneously significant effect on the quality of financial reporting. h2: competence significant effect on the quality of financial reporting. h3: understanding government accounting standards significantly influence the quality of financial reporting. h4: the implementation of internal control systems significant effect on the quality of financial reporting 3. research methodology 1. population and sample the population in this study is the finance managers who works at the regional government office in kabupaten kepahiang, bengkulu province. furthermore, according to sugiono (2015) the sample is part of the number and characteristics possessed by the population. we operate purposive sampling technique to obtain primary data. respondents in this study were 1) financial administration officer regional work units 2) spending treasurer 3) financial management staff. the sample size is 130 respondent that works in the financial administration officer regional units (50 resondent), spending treasury officer (30 respondent), and financial management staff (50 respondent). the respondents are the officer that has been worked for 2 years minimum at regional government office. we distribute 130 questionnaire to the respondent and obtain 102 processable questionnaire, the rest of it were not returned. 2. data collection the data of this research are primary data. the data collected by this approach is done through survey method. according zikmund (2010) survey research method is a form of research techniques in which information is collected from a sample of people, through questions. the survey in this study used questionnaires as the instrument of data collection. the goal is to obtain information needed in this study regarding the responses of respondents about competence, understanding of government accounting standards, implementation of internal control system and quality of financial statements on regional work stations in kepahiang regency. h1 competency (x1) understanding of sap (x2) implementation of spi (x3) quality of financial report (y) h2 h3 afebi management and business review (ambr) vol.04 no.01, june 2019 43 3. variable the dependent variable of this study is the quality of financial statements. the financial statement quality variable consists of four dimensions: relevant, reliable, comparable and understandable. independent variables from this research are: 1. competence consists of three dimensions: knowledge, as well as the inability to conduct 2. the understanding of government accounting standards consists of three dimensions: distinguishing revenue recognition, presentation of the recognition of expenses and determine the depreciation of fixed assets 3. implementation of internal control system consists of five dimensions: environmental control, risk assessment, control activities, information and communications, and monitoring 4. results and discussion 1. test validity and reliability there are two types of construct validity, namely convergent and discriminant validation. according to sekaran (2010), convergent validity is a way of measuring scores with two different instruments in measuring the same concept showing a high correlation, whereas discriminant validity is a way of measuring the score of two predicted uncorrelated variables and the score obtained by measuring it is completely evident empirical. based on the types of validity, we apply the convergent validity in this study. the result of validity test for competence correlation value is in the range of 0.603 to 0.819, sap understanding in the range of 0.502 to 0.797, spi application in the range of 0.515 to 0.930, and financial statements in the range of 0.459 to 0.796. these results indicate that the instrument is valid based on validity test. to measure the reliability we use thealpha coefficient of each variable, the result shows that each variable are in the range 0.606 to 0.794.these results indicate that all the variables in this study is reliable. 2. hypothesis test results based on the results of research data is processed and calculated using spss program.the results obtained as in table 1. table 1 summary of results of multiple regression analysis variable standardized coefficientsbeta t – test sig. competency (x1) ,370 4,240 ,000 understanding of sap (x2) ,236 2,456 ,016 implementation spi (x3) ,228 2,505 ,014 ftest= 28,435 signifikansi = 0,000 adjusted r 2 = 0,449 α =0,05 table 1 shows that the f-test for the effect of competence, understanding of government accounting standards and the implementation of internal control systems affect the quality of financial reporting was significant (f test=28.435; sig. = 0.000). based on the result of multiple linear regression calculation from spss application, then regression equation that can be formed that is: y = 0.370x1 + 0.236x2+ 0.228x3+ e the equation shows that competence, understanding of government accounting standards and the implementation of internal control system have a positive and the antecedent of regional financial report quality 44 significant impact on the quality of financial statements.that is, the increased competence, understanding of government accounting standards and the implementation of internal control system the more qualified financial statements produced by financial managers in regional work stations in kepahiang district.the coefficient of influence of competence variable is highest among other variables (0.370) while the understanding of accounting standards and the application of internal control system are (0,236 and 0,228). the contributions these three variables on the quality of financial reporting is high, which is 45 percent (adj r 2 = 0.449).while the rest, 55 percent, the quality of financial statements influenced by the other factors despite of competence, the understanding of government accounting standards and the implementation of internal control system. table 1 shows that there is simultaneously a significant influence between competence, understanding of accounting standards and the application of internal control system of the quality of financial statements (fchange = 28.435; ρ value= 0.000). thus, the first hypothesis (h1) is supported (ρ <0.05). we state that the more competent, the more understand the government accounting standards and can apply the internal control system together to give a significant effect on the quality of financial statements. the result of statistic analysis shows that the competency significantly affect the quality of financial reports (t test = 4.240; = 0.000).because the value of <0.05, we conclude that the second hypothesis (h2) is supported. the results of this test interpret the competence variables significantly influence the quality of financial statements.this means that the higher the competence will be the more qualified financial statements generated. the result of the third hypothesis (h3) indicate that government accounting standards understanding effect the quality of financial reports significantly (ttest = 2.456; value = 0.016). because the value of value<0.05, we conclude that the third hypothesis (h3) is supported.the results of this test interpreted that the variable understanding of accounting standards have a significant effect on the quality of financial statements.this means that the higher the level of understanding of accounting standards will be the more qualified financial statements generated. the results of data analysis states that the fourth hypothesis testing (h 4), namely the implementation of internal control systems significant effect on the quality of financial reports (t test = 2.505; = 0.014).because the value of <0.05, we conclude that the fourth hypothesis (h4) is supported.the results of this test interpret that the variables of internal control system implementation significantly influence the quality of financial statement information. this means that the higher the application of internal control system will be more qualified financial reports generated. 3. discussion according to (arens et al., 2008) internal controls are designed and implemented by management to be reasonable ensure organizational objectives will be achieved. the benefit of internal control application is to provide reasonable assurance on the achievement of organizational goals through effective and efficient activities, reliability of financial reporting, security of state assets and compliance with laws and regulations. the understanding of government accounting standards and the application of internal control systems also influence the quality of financial statements. regional government financial manager already has an understanding of the applicable government accounting standards.this can be seen from the answers of respondents in answering each question by obtaining the average value in the category of understand.the understanding of government accounting standards owned by regional work stations financial managers has been able to distinguish revenue recognition by, presentation of expense recognition, and determination of depreciation of property and equipment. financial managers are able to record and present accounting transactions in accordance with the rules. afebi management and business review (ambr) vol.04 no.01, june 2019 45 xuet al.(2003) propose factors that affect the quality of financial statements are human resources, systems, organizations and external factors. while supporting the achievement of quality financial statements, the organization must provide human resources competencies, relevant accounting standards, implementation of supervision and control, and working mechanisms within the organization (mardiasmo, 2009).research conducted by wati et al.(2014) explains that the competence and application of government accounting standards have a significant effect on the quality of financial statements. the result of regression analysis and hypothesis test shows that competence, understanding of government accounting standard and internal control system implementation significantly influence the quality of financial report produced by manager at every station of regional government in kepahiang. where competence has the highest contribution in affecting the quality of financial statements. competencies of regional financial manager in kepahiang regency can be interpreed as highly competent in producing financial statements. this can be seen from the opinion of bpk on the financial reports of local governments that obtain wtp opinion. regional financial manager at kepahiang regency in presenting the financial statements is using government accounting standard, where the government accounting standard which is valid since 2015 is accounting standard of government based on accrual. according to hitt et al. (1999) competency is a combination of knowledge, skills, attitudes and experience. regional financial manager are known to have knowledge, ability, and behavior to achieve the government's goal of compiling and presenting quality financial report. knowledge of the financial manager is the ability to prepare financial statements. knowledge in preparing financial statements is supported by the knowledge gained from the formal level. this can be seen from the characteristics of respondents who majority have undergraduate education background s-1, so that in the application of applicable accounting standards can be quickly understood and applied.as it has the ability possessed by regional work stations financial managers in preparing financial statements already have the ability to operate financial applications. kepahiang regency has been using the appropriate financial applications that bpkp. so in the use of financial applications only require more ability in following the development of the financial application version. furthermore, the research conducted by nagor et al.(2015) shows that the implementation of internal control system affect the quality of local government financial statements. we suggest that the future research use the experiment methods that specifically analyze the precedence and antecedent of financial report quality and also comparing the financial report of public and private sector. 5. conclusion this study offers theoretical and practical implication on the implementation of internal control system in producing quality financial report that can be applied continuously for the regional financial managers. according to bastian (2001) qualified financial statements can not present by itself. a quality financial report of course can not be separated from good financial management. good financial management is an early reflection that financial reporting is well presented. a good financial manager can be interpreted as a financial manager who has the competence so as to present high quality of financial reports. in the preparation of financial statements, financial managers have been able to enforce appropriate actions in the event of any deviation from policies, procedures or violations of applicable rules, to identify and manage risks so as to minimize failure in presenting financial statements and to follow up on any findings / reviews and advice given by the inspectorate / bpk, may evaluate the findings / reviews and suggestions for improvement in the preparation of the financial statements. based on the results of research and discussion we drawn the following conclusions: the antecedent of regional financial report quality 46 1. competence positive and significant impact on the quality of the financial statements, so the more competent financial manager it will be the quality of financial reports generated. 2. comprehension government accounting standards and significant positive effect on the quality of financial statements, thus increasing the level of understanding of government accounting standards, the more the air quality of the resulting financial statements. 3. the implementation of internal control systems and a significant positive effect toward the quality of financial statements, thus increasing p application of the internal control system, the more the air quality of the resulting financial statements. competence, comprehension government accounting standards and the application of systems internal control simultaneously positive and significant impact on the quality report finance. that is, if competence, understanding of government accounting standards and the application of systems internal control will influence enhancement quality report finance. references arens, a. a., elder, j. ., & beasley, s. m. 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(2003). key issues of accounting information quality management: autralian case study. industrial management and data system. vol 103. issue 7. 86 management of occupational health and safety during the covid-19 pandemic: facts and challenges wahyuni diah ekasari* universitas terbuka, indonesia suharnomo universitas diponegoro, indonesia intiyas utami universitas kristen satya wacana, indonesia abstract the covid-19 pandemic has resulted in drastic changes as well as losses for the business world. this causes various companies to carry out occupational safety and health procedures for their employees. the purpose of this research is to dig deeper and understand the policies for managing occupational health and safety during the covid-19 pandemic, implementation, challenges, and solutions. the number of informants in this study was ten people, including five subject informants and five informants for triangulation. data analysis was performed using the qualitative data analysis method with the critical phenomenology approach of the stevick-colaizzi-keen model. this study modifies that is both use the theory of occupational health and safety which is modified into occupational health and safety regulations known as strict 5m health protocol doe to covid-19 pandemic.the results of the analysis show that the management of occupational health and safety during the covid-19 pandemic at the rembang post has been carried out properly office by implementing the 5m health protocol, namely putting on mask, washing hands, social distancing, staying away from crowds, and reducing mobility, according to the circular of the ministry of manpower number b.5/51/as.0202/i/2020 to urge people not to cause the spread of the covid19 cluster in the work environment of rembang post office. keywords: occupational health, work safety, 5m health protocol, job satisfaction, performance, rembang post office *corresponding author. email address: wahyunidiah.ekasari@gmail.com management of occupational health and safety during the covid19 pandemic: facts and challenges received may 15th 2021 review september 14th 2021 publish december 1st 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/402 mailto:wahyunidiah.ekasari@gmail.com http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/402 87 ambr introduction humans acts as a subject that must be considered by entrepreneurs and corporate leaders. a healthy workforce is essential for sustainable social and economic development at the global, national, regional, and local levels (sewu et al., 2019). a healthy and safe workplace is the basis for achieving higher productivity and performance and enhancing a quality work life for the employees. several studies state that occupational health provides direct benefits to employee performance which in turn can increase organizational productivity. safety and risk management procedures, occupational safety and health regulations, and organizational commitment have an indirect effect on employee performance (kaynak et al., 2016). occupational health and safety indirectly have a significant effect on employee performance through job satisfaction as an intervening variable (wibowo & utomo, 2016). emotional intelligence and work health simultaneously affect employee performance (purnama, 2017). occupational health and safety, work environment, and discipline have simultaneous partial effects on employee performance (putri et al., 2018). work security, work safety, and occupational health affect employee performance (safriansyah & naim, 2019). meanwhile, sewu et al. (2019) stated that there is a positive correlation between occupational safety and health on bank performance. however, there are several studies that have slightly different results from the above studies. ahmad et al. (2017) stated that workers who are dissatisfied with their work can perform poorly even though occupational safety and health practices have been carried out well in their workplace. occupational health and safety does not have a direct effect on employee performance (ekowati & amin, 2018). occupational health and safety management systems can improve occupational health and safety conditions and support the creation of a healthy and safe workplace (mohammadfam et al., 2017). meanwhile, sembe & ayuo (2017) stated that the combined effects of psychological, health, and safety factors significantly affect the level of employee job satisfaction. in the beginning of 2020, a global pandemic which was quite disturbing for the public had spread, namely the covid-19, had an impact on social, economic, and health orders. the covid-19 has resulted in a global crisis. a crisis is an event that will lead to an unstable and dangerous situation that affects individuals, groups, communities, or the entire society (goniewicz, 2020). crises are perceived as negative changes in security, economic, political, social, or environmental issues, especially when they occur suddenly with little or no warning. on march 2, 2020, the first case of the covid-19 was found in indonesia and since then, various efforts have been made to prevent the spread of the covid-19, including in the work environment. efforts to prevent the covid-19 at work sites include complying with regulations related to occupational safety and health (osh). the directorate general of labor inspection and k3 issued a circular number b.5/51/as.0202/i/2020 which urges all heads of the manpower office and company leaders to be aware of the spread of severe pneumonia with unknown causes in workers. this circular also applies to pt pos indonesia (persero) rembang, which is the brach of one of the state-owned companies engaged in postal and current account services which operate in indonesian and international regions. pt pos indonesia (persero) rembang is committed to carrying out health protocols in order to provide maximum protection for employees, their families, and even postal customers. pt pos indonesia (persero) during the covid-19 pandemic also assumed the task of distributing cash social assistance from the ministry of social affairs. the distribution of cash social assistance by pt pos indonesia (persero) was carried out through the cash social assistance channels at the post office, at the community level, and directly to the residents. cash social assistance is cash assistance provided to poor, underprivileged, and/or vulnerable families who are affected by the covid-19 outbreak. from the web source https://rembangkab.go.id/bansos-bantuan-social/, rembang post office was assigned the task of distributing cash social assistance funds from the ministry of social affairs in several phases: phase i with an allocation of 33,897 beneficiary families (kpm), phase ii of 33,897 kpm, phase iii of 33,894 kpm, phase iv of 32,259 kpm, phase v of 32,259 kpm, phase vi of 32,321, and phase vii of 32,855 kpm (see table 1. data on the number of kpm through rembang post office). this task was not easy because rembang is a small district with limited hospitals/health facilities and a limited number of post office employees. the rembang post office area itself is not large but they must be able to distribute the cash social assistance funds to tens of thousands of kpm during the covid-19 pandemic. meanwhile, the number of confirmed covid-19 cases in rembang regency continued to increase every month (see figure 1 . data on the development of covid-19 cases in rembang regency). with the obligation to comply with regulations related to occupational safety and health in a disciplined manner, workers were familiar with the term, but strictly adhering to health protocols so as not to become a cluster for the spread of the covid-19 was not easy. this had become a separate problem, with the social distancing, the adequacy of the place for washing hands with a soap, the speed of service at the time of fund disbursement, and the data on the fund allocation reaching tens of thousands of cash social assistance recipients. 88 phase month kpm i april 2020 33.987 ii may 2020 33.987 ii june 2020 33.894 iv august 2020 32.259 v august 2020 32.259 vi september 2020 32.321 vii october 2020 32.855 source: https://rembangkab.go.id/bansos-bantuan-sosial/ source: https://www.covid19.rembangkab.go.id the research aims to dig deeper and understand the policies of occupational health and safety management during the covid-19 pandemic at rembang post office, its implementation, challenges, and solutions. the application of this model from the previous ones is different in the way it compares the implementation of occupational health and safety management in the period before and after the covid-19 pandemic. however, in the implementation of this research, the elements of occupational health and safety were modified into 5m health protocol regulations which will encourage companies to be disciplined and to innovate to improve their performance during the pandemic. this is a topic that has not been much discussed by previous reseachers literature study occupational health panggabean (2016) stated that health refers to the freedom of employees from illness physically or mentally. health is the most important element so that we can enjoy a quality life, both at home and at work. health is also the most important factor in maintaining the survival of an organization or company. meanwhile, purnama (2017) stated that occupational health is a part of health science which aims to make workers obtain physical, mental, and social health conditions so that it is possible to work optimally. ekowati and amin (2018) stated that occupational health is freedom both physically and emotionally. wibowo and utomo (2016) stated that occupational health is an effort to guarantee and maintain the health, physical, and spiritual integrity of workers, especially humans, towards a just and prosperous society. from some of the definitions above, it can be concluded that occupational health is an effort to ensure and maintain health conditions physically, mentally, and socially so that it is possible to work optimally for the achievement of a just and prosperous society. according to the international labor organization (ilo), occupational safety and health is the promotion and maintenance of the highest degree of physical, mental, and social well-being of all workers in all types of work, preventing occupational health problems (https://www.ilo.org/global/publications). workers should be protected in each job from risks arising from factors that can interfere with health, also placed and maintained in a work environment that is in accordance with their physiological and psychological conditions so they can fit well with their work and duties. work safety panggabean (2016) stated that work safety is protection for employees from accidents while carrying out their duties and responsibilities at work. matters included in the scope of work safety include all factors related to injury, repeated stress, and violence at work and in the household. sari (2018) stated that work safety is the protection of work security experienced by workers, both physically and mentally in the work environment. meanwhile, panggabean (2016) stated that work safety is an instrument that protects workers, companies, the environment, and the surrounding community from hazards management of occupational health and safety during the covid-19 pandemic: facts and challenges table 1. data on the number of kpm through rembang post office figure 1. data on the development of covid-19 cases in rembang regency 0 150 300 450 600 750 900 mar-20 apr-20 mei-20 jun-20 jul-20 agust-20 sep-20 okt-20 n u m b e r o f p e o p l e development of covid-19 cases in rembang case death 89 ambr due to work accidents. from several definitions of work safety above, it can be concluded that work safety is the process of protecting employees, companies, the environment, and the community against injuries, stress, violence, and hazards that arise in the work environment. occupational health and safety is the promotion and maintenance of the highest degree of physical, mental, and social well-being of all occupation; the prevention among workers of departures from health caused by their working conditions; the protection of workers in their employment against risks due to factors detrimental to health; the placing and maintenance of workers in an occupational environment adapted to his physiological and psychological equipment to summarize the adaptation of work for them and each of them to their job. 5m health protocol in indonesia, the number of positive cases of the covid-19 has approached 1.5 million people (18/03/2021). the good news is that around 1.3 million people have recovered from the sars-cov-2 virus that causes the covid-19. however, unfortunately, 40,449 thousand people have lost their lives due to the virus. defeating the spread and transmission of covid-19 in the world is not easy. however, various efforts continue to be made by experts and the global population to end the threat of the coronavirus. in several countries, the government has developed health guidelines and protocols to deal with the covid-19. in indonesia, this health protocol is known as 5m that means washing hands, putting on mask, social distancing, staying away from the crowd, and reducing mobility (source:https://padk.kemkes.go.id.). washing hands routinely washing hands thoroughly is one of the health protocols that is quite effective in preventing covid-19 transmission. for maximum results, people need to wash hands for at least 20 seconds after doing an activity. to kill viruses and other germs, people should wash their hands with water and soap or apply hand sanitizer with at least 60 percent alcohol. putting on mask at the beginning of the covid-19 pandemic last year, the world health organization (who) stated that the use of masks was only recommended for sick people, not healthy people. however, the sars-cov-2 virus is completely new, so health protocols can change over time. sometime after the release of the policy above, who finally issued an appeal for everyone (whether healthy or sick) to always use a mask when doing activities outside the house. social distancing social distancing means keeping a minimum distance of 1 meter from other people to avoid getting droplets from people while talking, coughing, or sneezing and avoiding crowds. if it is not possible to maintain a distance, various administrative and technical engineering can be carried out. administrative engineering can be in the forms of limiting the number of people, setting schedules, and so on. meanwhile, technical engineering, among others, can be in the forms of partitioning, setting entrances and exit routes, and so on. staying away from the crowd apart from the three things above, staying away from the crowd is a health protocol that must also be done. according to the indonesian ministry of health, people are asked to stay away from the crowd when they are outside the house. the more often people meet each other, the higher the chance of being infected with the coronavirus. therefore, people are urged to avoid crowded places, especially when they are sick or over 60 years old (elderly). according to research, the elderly and people with chronic diseases have a higher risk of contracting the coronavirus. reducing mobility the coronavirus that causes the covid-19 can be anywhere. so, the more time people spend outdoors, the higher their exposure to this evil virus. therefore, if there is no urgent need, people should stay at home. according to the ministry of health, even though someone is healthy and has no symptoms of disease, it is not certain that they go home with the same condition. the reason is because the coronavirus can spread and infect someone quickly. rembang post office the main activities of the branch post office are making job descriptions at the branch post offices in accordance with the applicable regulations as work guidelines; ensuring that the implementation of work at the branch post office is in accordance with the sop and company regulations; receiving transactions for package services, agency, bpm (postage stamp) and philatelic products, mail services, financial services, savings, current accounts and fund distribution, pension payments, and postal money orders; responsible for financial receipt and expenditure transactions that occur at the branch post office on the n2 insurance list; making requests for postal goods, stamps, and philatelic products; packing the letters and packages that will be sent to the relevant checking post office every day in accordance with the closing schedule determined by the inspection post office; matching the amount of money from the receipt and payment of financial transactions at the branch post office with related 90 manuscripts and source documents; sending the manuscripts of financial coverage, source documents, transaction receipts together with postal items in post bags to the inspecting post office; opening a postal bag received from the examiner's post office in front of the witness; and supervising the delivery of letters and packages carried out by postal courier at the post branch offices as well as the inspection of remaining deliveries. the following is a picture of the organizational structure of rembang post office: the researcher chose this post office branch over other places because this post office is located at jl. diponegoro no. 61, tasik agung village, rembang district, rembang regency, only has 11 employees, and the office space is not too large, has the task of distributing cash and social assistance from the ministry of social affairs reaching thirty thousand kpm, with the obligation to strictly implement the 5m health protocol. the researchers chose to research post offices rather than other places because the post office as one of the state-owned companies is committed to always protecting both employees, postal customers, and also the environment so that they are not exposed to the covid-19 virus and do not become a cluster of the spread of covid-19. until now there has been no research on covid-19 at the post office related to the completion of covid-19 cases. job satisfaction job satisfaction is a person's perspective, both positive and negative, on the job that has been given (nurmaningsih and wahyono, 2017). employees who are satisfied with the company will provide remuneration for the company by maximizing their performance. ahmad et al. (2017) stated that job satisfaction is the psychological state of employees at work when their needs and aspirations are met and they feel satisfied and happy. wibowo (2016) stated that job satisfaction is an attitude of enjoying at work, outside of work, and a combination of inside and outside of work which is reflected by work morale, discipline, and performance. meanwhile, sembe and ayuo (2017) defined job satisfaction as a combination of cognitive, affective, and behavioral states that cause a person to feel satisfied with their job. from some of the definitions of job satisfaction above, the authors concluded that job satisfaction is a way of seeing someone enjoying at work and outside of work that causes someone to feel satisfied with their work and can affect their performance results. performance some sources state that the term “performance” has been known since the imperial period of the wei dynasty in 221-265 ad. sobirin (2016) stated that the understanding and meaning of performance are as follows: 1) performance is something that can be measured, whether using numbers or an expression that allows communication to occur; 2) performance means striving in accordance with a specific purpose to produce something; 3) performance is the result of an action; 4) performance is the ability to produce or the potential to create; 5) performance is a comparison between the results and certain benchmarks, both internally and externally; 6) performance is an unexpected (surprising) outcome compared to an expected one; 7) in the discipline of psychology, performance is acting out; 8) performance is a performance, especially in performing arts, which involves the actors, their roles, and how the roles are played and involving outsiders who watch the performance; 9) performance is a decision or judgment which is based on something else as a comparison. sariansyah and naim (2019) said that employee performance is the result of work in quality and quantity achieved by an employee in carrying out his duties in accordance with the responsibilities assigned to him. meanwhile, wibowo and utomo (2016) argued that performance is a series of results obtained by an employee during a certain period of time and does not include the personal characteristics of the employee being assessed. sobirin (2016) considered performance as events that occur simultaneously involving actions, the results of these actions, and the comparison between the results of the actions with certain measures or benchmarks. ahmad et al. (2017) stated that performance is the result obtained by a person or group in an organization in the form of what they do or do not do. based on the understanding of the experts above, the authors conclude that performance is the result or level of success that has been achieved by a person or group within the organization as a whole during a certain period which has a positive impact on improving the company performance in achieving organizational goals. management of occupational health and safety during the covid-19 pandemic: facts and challenges figure 2. post office organizational structure postmaster post office branch counter staff oranger staff delivery staff shipping staff 91 ambr figure 3. research and analysis framework table 2. informants existing variables were adopted from previous studies (wibowo & utomo, 2016; ahmad et al., 2017; ekowati & amin, 2018). in contrast, the model developed in this study is a new concept of occupational health and safety management during the covid-19 pandemic with the 5m health protocol. the study of occupational safety and health in previous studies refers to occupational safety and health variables that have a significant effect on employee performance through job satisfaction as an intervening variable. however, the model developed which was applied to this study is the existence of a covid-19 pandemic which requires every employee to strictly discipline the 5m health protocol. figure 1, which is a research and analysis framework, to formulate a hypothesis is described as follows: research methodology this study used primary data and secondary data. according to hamzah (2020) primary data were data obtained by the researchers through interview and observation by seeing and observing directly the conditions in the field so that the researchers got a broader picture of the problem being researched. meanwhile, secondary data were obtained from non-human sources, including photographs, documents, and statistical materials. the researcher did not get permission to obtain daily consumer data at the rembang branch post office, so this study used informants as research samples and used interview techniques to collect primary data. the interview was carried out to obtain the general description of rembang post office, the occupational health and safety management policies implemented at rembang post office, the implementation of health protocols in rembang post office, the obstacles faced due to the health. protocols, and the solutions to overcome the obstacles to implementing health protocols. this study used the informants’ responses as the research sample. as for those who became informants in this study were ten people consisting of five people as subjective informants, namely employees of rembang post office, and five people as triangulation informants, namely the head of p2 rembang regency health office and four post office customers (see table 2. informants). the qualitative data analysis was performed using a critical phenomenology approach using the stevick-colaizzi-keen model. no. status amount 1 postmaster rembang branch office 1 2 rembang post office employee; a. rembang branch post counter clerk b. postal courier c. oranger post 2 1 1 3 rembang branch postal customer 4 4 head of p2 rembang regency health office amount 10 the qualitative data analysis with a critical phenomenology approach using the stevick-colaizzi-keen model was adjusted to the stages of this study as follows: 1) providing complete descriptions of events/phenomena experienced directly by the informants; 2) examining and recording each statement of the informants, make a list 92 based on the statements, grouping them into certain themes, combining descriptions and structures to determine the meaning and essence of the phenomena; and 3) making a comprehensive explanation of each meaning and essence of the phenomena (hamzah, 2020) result and discussion occupational health and safety management policies during the covid-19 pandemic at rembang post office prior to the covid-19 pandemic, the management of occupational health and safety at the rembang branch post office included:postal courier officers and postal clerks were required to wear helmets, wear jackets, carry sim and stnk when carrying out their duties. for the rembang branch post office counter staff, there is no obligation to wearing mask and wash hands. for customers of the rembang post office, there is no obligation to putting on mask and washing hands when coming to the post office, there is no distance between seats when queuing. the rembang post office does not provide hand washing facilities near the post office entrance. it can be concluded that prior to the covid-19 pandemic the 5m health protocol was not implemented at the rembang branch post office. positive cases of covid-19 in indonesia in general and positive cases of covid-19 in rembang regency in particular have not shown a declining graph to date. in line with the steps to prevent the spread of the covid-19 that are continuously being developed by the government, pt pos indonesia (persero) has consistently attempted to minimize the spread of the covid-19 virus in the post office environment to protect post officers and customers. rembang post office implements all occupational safety and health regulations contained in the circular number b.5/51/as.0202/i/2020 issued by the directorate general of labor inspection and occupational safety and health as an effort to prevent the spread of the virus covid-19 in the rembang post office environment. at the beginning of the circular, the occupational safety and health regulations were disseminated during the covid-19 pandemic known as the 3m health protocols, namely putting on mask, washing hands, and social distancing. however, along with the development of the handling of the covid-19 pandemic carried out by the government, the occupational safety and health regulations during the covid-19 pandemic were known as 5m namely putting on mask, washing hands, social distancing, staying away from crowds, and reducing mobility. implementation of the covid-19 prevention protocol at rembang post office the 5m health protocols that have been implemented by rembang post office include: 1) putting on mask (it is mandatory for all post office employees, postal customers, or guests to wear masks; body temperature should not be more than 37.5 degrees celsius for employees as well as postal customers who will enter rembang post office; and the obligation to wear gloves for counter officers, postal couriers, and postal orangers); 2) washing hands (it is mandatory for all post office employees, postal customers, or guests to wash their hands before entering the post office and after carrying out activities; rembang post office provides two sinks and hand washing soap which is placed in front of and beside the post office); 3) social distancing (it is mandatory for all post office employees to always maintain a safe distance of at least one meter; seats both during morning briefing and on duty are given a minimum distance of one meter; seats for postal customers are given a safe distance with a sticker and a cross; seats for cash social assistance fund recipients are arranged in such a way as to meet a safety distance of at least one meter; post office service counters are insulated with clear screen; spraying disinfectant liquid in the rembang post office environment in collaboration with indonesian red cross rembang); 4) staying away from the crowds (to avoid congestion at the postal service counters, the counter opening hours are extended, monday to friday from 07.30 am to 07.00 pm, saturday from 07.30 am to 04.00 pm, and sunday from 09.00 am to 02.00 pm; to avoid long queues during the payment of pension funds, the pension fund payment period is extended from 1-27 days of each month; the distribution of cash social assistance funds is scheduled according to the village of the recipients); 5) reducing mobility (if not urgent, post office employees are advised not to travel out of town; if there are employees returning from work outside the city, they will be self-isolated at home for fourteen days; collaborating with the population and civil registration office to carry out cod service for sending ktp, kk, or birth certificates to the address of the applicants; collaborating with several schools in rembang regency to send graduation certificates to the addresses of students) challenges in implementing occupational health and safety management policies during the covid-19 pandemic occupational health and safety regulations during the covid-19 pandemic known as the 5m health protocols have a very good purpose to protect all parties from being positive for covid-19, but they are very difficult to implement. some of the challenges that must be faced in implementing the 5m health protocols in the work environment of rembang post office include: 1) from the employee's perspective, there is discomfort when having to wear masks and gloves when carrying out tasks; negligence to wear masks again after having finished eating, drinking, or after ablution; inability of some employees to wear masks according to who health standards; management of occupational health and safety during the covid-19 pandemic: facts and challenges 93 ambr table 3. mapping the effectiveness osh policy implementation 2) from the management perspective, there is no budget planning for the procurement of hand soap, medical masks, gloves, faceshields, and hand sanitizers; there is not enough time to provide occupational safety and health training/5m health protocols for post office employees so that it is done every morning briefing; 3) from the perspective of consumers at rembang post office, most of them neglected to wear masks because they did not know the information about mandatory masks, felt uncomfortable putting on a mask, lack of funds to buy masks, lack of information about the virus pandemic covid-19, neglected to wash hands because postal consumers know how to wash their hands only before and after eating, are not used to washing their hands before entering the post office or before doing activities, do not apply a minimum safety distance of one meter due to the customs of the rembang people who like to shake hands upon meeting, like to discuss and chat when waiting for the queue, shift their seat position so that they are closer to fellow postal consumers; and the cash social assistance recipients who come to collect funds not according to the specified schedule even though the scheduling has been arranged in such a way as to avoid crowds at the office post. solutions to overcome the obstacles in implementing occupational health and safety management in facing the covid-19 pandemic despite facing many obstacles and challenges in implementing the 5m health protocol, the post office is committed to implementing the health protocol properly to protect post office employees and their families as well as postal customers so that there is no cluster spread of the covid-19 in the rembang post office environment. the head of rembang post office constantly promotes the 5m health protocol and updates information about the development of the covid-19 pandemic to the post office employees every morning briefing. employees reprimand, advise, and remind each other if there are other employees who are negligent of the 5m health protocols. the post office clerk reprimand and ask the postal customers or recipients of cash social assistance funds who do not wear masks to go home. post office staff warns postal customers who shift their seats or those who sit on a seat marked with a cross to remain disciplined in maintaining a safety distance of at least one meter. post office staff reminds postal customers to wash their hands with soap before entering the post office and after carrying out activities. the management provids masks, hand sanitizers, face shields, and gloves to the postal officers who are on duty at the time of distributing cash social assistance funds. rembang post office promotes post oranger services, extended service period for pension fund payments and postal counter services, and collaborating with other parties for cod services (see table 3. mapping the effectiveness of pt pos indonesia (persero) osh policy implementation during the covid-19 pandemic period). positive negative 1. there is awareness of employees of rembang post office to be disciplined in complying with health protocols for the common good. 1. employees of rembang post office feel uncomfortable when working with masks and gloves. 2. there is an active role from the management of rembang post office to promote health protocols. 2. there are difficulties in socializing the 5m health protocols to post customers, especially for the implementation of social distancing, which is influenced by the culture of the people in the city of rembang who like to socialize. 3. there is cooperation between management, employees, and post customers so that the 5m health protocol can be implemented properly so that it does not become a cluster of covid-19 transmission. 3. there are additional expenses to buy masks. 4. there is empathy for employees of rembang post office to remind and reprimand each other if there is a violation of the 5m health protocols. 5. the pickup service program (oranger post) is becoming popular to the people of the city of rembang and is increasingly being used by post customers during the pandemic. 6. the existence of service innovations from rembang post office so that there is not good 94 with the covid-19 pandemic, the rembang branch post office is serious about implementing occupational health and safety by implementing the 5m health protocol. the head of the rembang post office actively disseminates the 5m health protocol every morning. rembang branch post office employees re mind each other if there are post office employees or customers who neglect the 5m health protocol for the common good. the more disciplined employees carry out the health protocol, the employee's performance increases by showing the enthusiasm of the employees at work, the employees rarely get sick leave, the employees can complete their duties and responsibilities on time. the level of employee satisfaction has also increased which is shown by employees feeling calm at work even in the covid -19 pandemic situation because the 5m health protocol facilities have been fulfilled. conclusion the occupational health and safety management policies implemented by rembang post office to face of the covid-19 pandemic and its implications are the 5m health protocols, namely putting on a mask, washing hands, social distancing, staying away from crowds, and reducing mobility. this is in accordance with the circular number b.5/51/as.0202/i/2020 from the directorate general of labor inspection and occupational safety and health. challenges faced in implementing the 5m health protocol policy in dealing with the covid-19 pandemic include the discomfort of using masks and gloves while working; negligence to wash hands before entering the post office; negligence to wear a mask again after performing ablution or after eating and drinking; constraints on the provision of hand soap, medical masks, and latex gloves; constraints on regularly spraying disinfectants; and difficulty in implementing safe distance due to the social culture of the people in rembang. several factors influence the constraints in implementing health protocols, including the lack of public awareness of the importance of adhering to the 5m health protocols, low community discipline, low level of education of some of the people of rembang regency, the culture and habits of the people in rembang regency that are difficult to adapt to new habits/5m health protocols that have been established by the government, and the relatively low economic capacity of the people to buy masks. solutions to overcome the obstacles in the implementation of occupational health and safety management in dealing with the covid-19 pandemic at rembang post office include: 1) always promoting the 5m health protocols and the importance of implementing the 5m health protocols for the company, employees, and customers to protect the postal employees and their families as well as postal customers from the covid-19, 2) reminding and reprimanding each other in case of violations of health protocols, 3) extending the retirement fund payment periods 4) extending post counter opening hours, 5) maximizing and promoting post oranger services. in this study, the researchers found that the company paid attention to the occupational health and safety merely because they want to get an occupational safety and health certification (ohsas 18001) or fear of an occupational safety and health audit caused by a high number of work accidents or low level of employee health. however, due to the covid-19 pandemic, the management of occupational health and safety inevitably requires the company to implement the 5m health protocols properly to prevent the spread of the covid-19 in the work environment. during this period of the covid-19 pandemic, we are reminded again that the management of occupational health and safety is not only the responsibility of the company, but also the responsibility of various parties, namely employees and consumers to comply with and implement the 5m health protocols for the sake of common good. occupational health and safety management runs well if the interests of the management, employees and consumers are well fulfilled. the researchers found that the implementation of the 5m health protocols that has been carried out by all employees of rembang post office every day has become a behavioral element of organizational culture (daily belief). the head of rembang post office has a transformational leadership style where the head of rembang post office is disciplined to implement the 5m health protocosl and invites all employees of rembang post office during morning briefing to be disciplined in implementing health protocols so that rembang post office does not become a cluster for the spread of the covid-19 in order to maintain the good image of rembang post office. this study also proved that occupational health and safety does not have a direct influence on employee performance (ekowati & amin, 2018) and occupational health and safety management systems can improve occupational health and safety conditions and support the creation of a healthy and safe workplace (mohammadfam et al., 2017). the covid-19 pandemic has forced companies, especially post offices, as public service offices to comply with occupational health and safety by being disciplined in carrying out health protocols. the existence of discipline in carrying out health protocols indirectly improves employee performance. improved employee performance indirectly affects employee satisfaction. 5m health protocol can be implemented properly if there is good cooperation between post office management, employees, and postal customers. management of occupational health and safety during the covid-19 pandemic: facts and challenges 95 ambr limitations some of the limitations of this study include: 1) the researchers do not get access to attendance list data, for example data on the number of post deliveries to see the performance level of post employees during the pandemic, which caused the discussion to be based only on interviews; 2) the researchers did not get permission to access the data on the number of occupational accidents and health that occur at rembang post office; 3) the covid-19 pandemic and limited signal access in rembang regency and the smartphone technology used by the community in rembang regency resulted in the researchers unable to distribute questionnaires (in the form of googe forms/online form) to the informants. recommendation the researchers suggested the management of rembang post office distribute vitamin c supplements and carry out regular health checks to the employees of rembang post office to motivate post office employees to maintain their health; if they see post office customers coming to the branch post office and not pu tting on a mask, it is better if they are not sent home or prohibited from entering the post office but given a mask for free (this, in addition to educating the postal customer about the 5m health protocols, provides a good image and concern for postal customers); 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(2021). retrived from https://www.padk.kemkes.go.id management of occupational health and safety during the covid-19 pandemic: facts and challenges https://www.ilo.org/global/publications https://www.padk.kemkes.go.id/ development strategy tourism tikus island bengkulu province with swot analysis 60 development strategy tourism tikus island bengkulu province with swot analysis herlin 61* and rina trisna yati 2 1,2 universitas dehasen, bengkulu, indonesia abstract the purpose of this study was to find out how the strategy of developing tikus island of bengkulu province tourism. this type of research is a descriptive exploratory study, using primary (observation and questionnaire) and secondary data obtained by the bengkulu province tourism office, with samples in this study totaling 125 people. methods of data analysis using swot analysis. based on the results of the swot analysis (strenghts, weakness, opportunity and treaths) showed that the strategy of developing tikus island bengkulu province consisting of internal strategic factors (ifas) consisting of strength (s) and weakness (w) obtained a total score of 4.28, this means that the attraction tikus island bengkulu province has a strength that is greater than weakness. whereas external factors (efas), which consist of opportunities and threats (t) with a total score of 4.25 and opportunities (o) of 2.32, which means that the attraction tikus island bengkulu province has a greater opportunity from threats. the meeting point between strengths, weaknesses, opportunities and threats is in quadrant i, which means that the strategy implemented is to support aggressive strategy. in this quadrant i shows that attractions tikus island bengkulu province have equal opportunities and weakness (w) so that the strategy that can be applied is to support aggressive policies (growth oriented strategy, namely by developing transportation and supporting facilities to the region). keywords: development strategy tourism, tikus island, swot analysiys 1. introduction bengkulu province is one of the provinces in the western part of the island of sumatra at latitude 2016'3031 ls and longitude 10101'103041 'bt. bengkulu province is a mountainous area of bukit barisan and extends from the border of west sumatra province to the border of lampung province along approximately 567 km with an area of 151.70 km2, located on the west coast of sumatra island with a coastal area of around 525 km (bappeda, 2016). bengkulu province has several small islands, one of which is tikus island, which is the only island in the city of bengkulu. tikus island is surrounded by a vast expanse of coral reef so that it can protect this island from abrasion due to large waves. damage to coral reefs has had a negative impact on tikus island, this can be seen with the decreasing area of tikus island due to abrasion which has progressed faster from year to year. beach erosion is one of the serious problems that cause changes in coastline. in addition to natural processes, such as wind, currents and waves, human activities also cause coastal erosion (bakhtiar, 2013). tikus island is a small coral island that is about 0.8 ha in the west of bengkulu city. with a distance of about 10 km from the city center, tikus island is surrounded by coral and is rich in biological resources and has been designated as a tourist forest with minister of forestry decree no. 602 / kpts-ii / 1991. tikus island has maritime ecotourism potential the potential of fauna in the form of coral reef ecosystems and marine biota with clear and clean waters and not too deep, and various types of beautiful ornamental fish, besides that in the sea area there are safe locations for basic diving activities the sea, with its clear water and beautiful coral stone, so it is very suitable for diving and snorkeling, this is a special attraction for visitors and an attractive marine tourism destination. the condition of the white sand at night becomes the habitat of hawksbill * corresponding author. email address: herlin_olin81@yahoo.com afebi management and business review (ambr) vol.04 no.01, june 2019 61 turtles. under the waters around tikus island there is a beautiful natural panorama of the sea, and is very suitable for tourists who enjoy diving. other than that. to get to tikus island tourism object, it can be reached for 30 minutes from tapak padri beach, bengkulu city by using a fishing boat, as well as providing local boats for rent are also ready to be a guide for tourists visiting tikus island. the purpose of this study was to find out how the strategy of developing tikus island of bengkulu province tourism. fahmi (2016) defines swot is the identification of strengths and weaknesses internally and externally from an opportunity and threat that will come from the environment around the business tikus island has a selling value in terms of tourism and a variety of economic potential that can be developed to increase pad regional original income) bengkulu provincial government, this is in line with the bengkulu provincial government program to make bengkulu province as a province of international tourism destinations, development of tourism sector is a program the superior of tikus island government which is one of the natural tourism islands in bengkulu province has its own advantages in addition to having superiority and selling value from its natural conditions also has a unique and distinctive name which gives a special attraction for tourists. however, from the many tourist advantages possessed by the tikus island, there are not many known tourists, and have not been exploited by the bengkulu province government so that it has not contributed to the bengkulu province pad and lack of facilities that can support the pariwisa sector in tikus island.tourism development to tikus island. one of the biggest contributors to increasing regional original income (pad) is the tourism sector. so that the need for a tourism development strategy is one of the strategic agendas in increasing the economy and regional revenue (pad) of bengkulu province. in an effort to support the government's program towards bengkulu province of tourism through the development and development of tourism potential on the tikus island. 2. literature review tourism in ethomology tourism comes the word "tourism" means the main journey (utama, 2016).tourism is closely related to social, political, economic, security, order, hospitality, culture, health issues, including various social institutions that regulate it (pitana and gayatri, 2005 p. 34). tourism is the whole activity of the government, the business world and the community to organizing, manage and service the needs of tourists in sakukani (sakukani 2003). tourism according to a.j. norval in muljadi and siti nurhayati (2012) are all activities related to the entry, residence, and movement of foreign populations within or outside a particular country, city, or region. according to the broader definition put forward by h. kodhyat (2003) tourism is a trip from one place to another in the temporary, carried out by individuals or groups, as an effort to find balance and happiness with the environment in the dimensions of social, cultural, natural , and science. furthermore, according to (musanef, 2005) defines tourism as a journey that is carried out for a while, which is carried out from one place to another to enjoy trips for sightseeing and recreation.tourism has the role of empowering scarce resources and making the tourism industry sustainable and life cycle (theobald, 2004 in main, 2016). yoeti (2008) tourism must meet the four criteria below, namely: a. the trip is carried out from one place to another, the trip is done outside the residence where the person usually lives. b. the purpose of the trip is done solely for fun, without copying in the country, city or dtw visited. c. the money spent by tourists is brought from their home countries, where they can live or stay, and not be obtained because of the results of the business during the tour. development strategy tourism tikus island bengkulu province with swot analysis 62 d. travel is carried out at least 24 hours or more. in terms of tourism there are four factors that must be within the limits of a definition of tourism. these factors are that the trip is carried out from one place to another, the trip must be associated with people who travel only as visitors to the tourist attractions. development strategy tourism suryono (2004) the strategy in principle is related to the problem: policy, determining the objectives to be achieved and determining the ways or methods of using facilities and infrastructure. hasan (2015). strategy is an integrated and coordinated action designed to exploit all existing capabilities to gain competitive advantage in order to achieve goals (reksohadiprodjo, 2000). rivew's strategy must be able to provide a useful picture of the prospects and market share of tourists towards tourist attractions and who (segments) might be interested in the product. the main elements that must receive attention in order to support the development of tourism in tourist destinations involving planning, implementation of development and tourism development (suwantoro, 2004), covering 5 (five) elements : a. tourist attractions and attractions attraction is a potential that drives the presence of tourists to a tourist destination. b. tourist infrastructure tourism infrastructure is natural resources and man-made resources that are absolutely needed by tourists in their travels in tourist destinations, such as roads, electricity, water, telecommunications, terminals, bridges and so forth. c. tourist facilities tourist facilities are a complete tourist destination that is needed to serve the needs of tourists in enjoying their sightseeing trips. d. management / infrastructure infrastructure is a situation supporting the function of tourism facilities and infrastructure, both in the form of regulatory systems and physical buildings above the ground and underground. e. community / environment communities in tourist areas need to understand the various types and quality of services needed by tourists. the environment around tourism objects needs to be considered carefully so as not to be damaged and polluted. yoeti (2008) development is a business or a way to advance and develop something that already exists. tourism development in a tourist destination will always be taken into account with the benefits and benefits for the community around it. in carrying out its functions and roles in regional tourism development, regional governments must make various efforts in developing tourism facilities and infrastructure. suryadana and oktavia (2015) components of tourism development can be grouped as follows: a. anthrax and tourist activities b. accommodation c. tourist facilities and services d. transportation facilities and services e. other infrastructure f. institutional element marine tourism marine tourism is often interpreted as activities such as: diving, snorkeling, fishing, surfing, sunbathing, watching sunset and sunrise. but maritime tourism is not only limited to the activities mentioned above but also activities that are more about adding knowledge, especially knowledge of the sea and how to live by relying on the results of the sea and much more. more importantly, to go to a maritime tourist spot, one must take the sea route by ship. sumantoro (2004 h.17) defines marine tours, namely a visit to a tourist attraction, especially to witness the beauty of the ocean, diving ( wreck-diving) with complete diving equipment. in indonesia there are many areas that have the potential for marine tourism, namely the thousand islands in jakarta bay, toba lake, bali island beach and the surrounding small islands and many other marine tourism in each of the provinces indonesia. afebi management and business review (ambr) vol.04 no.01, june 2019 63 swot analysis swot stands for strength (s), weaknesses (w), opportunities (o) and threats (t). fahmi (2016) defines swot is the identification of strengths and weaknesses internally and externally from an opportunity and threat that will come from the environment around the business. swot benefits the development of strategies because it can find the elements of weakness and strength that are owned, so that it can formulate a strategy that is good at achieving the expected goals. regional original income utama (2016) explains that the impact of tourism on the economy is exchange of foreign exchange, government revenues, employment, infrastructure development and improving the economy of the community. according to law number 33 of 2004 concerning financial balance central government and the regional government, it is intended that the source of regional original revenue consists of: a. local tax b. regional retribution c. separate results of regional wealth management d. other legitimate pad. in accordance with the explanation above that the source of regional income is part of voluntary contributions from all producers such as regional taxes, regional levies, the results of separated regional wealth management and other legitimate regional original income is all revenues received by the region from sources within its own domain which are collected based on regional regulations in accordance with the prevailing laws and regulations (halim, 2004). tourism sector is one of the sectors that plays an important role in increasing pad and can finance government activities and regional development, so the need for the tikus island tourism development strategy of bengkulu province is part of regional original revenue. 3. research method the type of this research is descriptive exploratory research through data collection related to tikus island tourism development strategy. data retrieval used in this study consists of primary data and secondary data. obtaining primary data is done through questionnaires. the population in this research were all visitors, community providers of transportation facilities to the tikus island and the bengkulu province, which amounted to 125 people or visitor who come to tikus island bengkulu. table 1 number of respondents no respondents population (people) sampel (people) respondents internal 1. head of service and employess dinas pariwisata pariwisata 15 1 5 2 society and service provider transportation 10 1 0 respondents exstenal 1 visitor 100 1 00 total 125 1 25 to get the data needed, the data collection method used is: a. primary data, namely data collected directly from the research object selected as a sample. b. observation, conducting direct observation and systematic recording of symptoms that appear on the object of research. development strategy tourism tikus island bengkulu province with swot analysis 64 c. questionnaire, data collection is done by using questions that have been prepared by previous researchers. the questionnaire assessment uses a likert scale (sugiyono, 2010), with the following provisions: 1. strongly agree (score 5) 2. agree (score 4) 3. doubt (score 3) 4. disagree (score 2) 5. strongly disagree (score 1) d. secondary data, data obtained from the bengkulu province tourism service. analysis methods swot analysis the swot analysis method where s is strengt means strength, w is weakness means weakness, o is opportunity means opportunity and t is threats means threat. the data obtained will be assessed based on respondents' perceptions and analyzed descriptively by analyzing strengths, weaknesses, opportunities, and threats (swot analysis) as the basis for determining the development of tikus island tourism development strategy.to find out the state of the environment by analyzing internal strengths and weaknesses, opportunities and external threats are needed to collect data that can be divided into two external data and internal data. according to fahmi (2013 p. 262) to form a representative swot formula by compiling and calculating weight values, rating and scores for external and internal tables. swot analysis is determined by a combination of internal and external factors. swot analysis uses a swot matrix that can clearly illustrate how the external opportunities and threats faced by rat island visitors can be adjusted to their strengths and weaknesses. 1. internal factor analysis (ifas) the ife matrix is used to determine the internal factors of a weak strategy that are considered important. according to rangkuti (2015 p.262) the work stages of the ife matrix are as follows : a. determine the factors that are the strengths and weaknesses of the development of tikus island tourism. b. give the weight of each of these factors a scale ranging from 1.0 (most important) to 0.0 (not important), based on the influence of these factors on the strategic position of the development of tikus island tourism. (all of these weights cannot exceed the total score of 1.00). c. calculate the rating for each factor by scaling from 4 (outstanding) to 1 (poor), based on the influence of these factors on the development strategy of tikus island tourism. d. multiply the weights by rating to get the weighting factor. the result is a weighting score for each factor whose value varies from 4.0 (outstanding) to 1.0 (poor). e. add up the weighting score, to get the total weighting score for the variable concerned. this total value shows how the condition of rat island tourism reacts to its internal strategic factors. 2. external factor analysis (efas) evaluate external factors the efas matrix is used, which is used to find out the external factors related to opportunities and threats, with the following stages of work: a. determine the factors that become opportunities and threats to the development of the island rat tourism. b. give the weight of each of these factors a scale ranging from 1.0 (most important) to 0.0 (not important), based on the influence of these factors on the strategic position of increasing the income of the fishing community. (all of these weights must not exceed the total score of 1.00). calculate the rating for afebi management and business review (ambr) vol.04 no.01, june 2019 65 each factor by scaling from 4 (outstanding) to 1 (poor), based on the effect of these factors on the development of tikus island tourism. c. multiply the weights by rating to get the weighting factor. the result is a weighting score for each of the factors whose values vary from 4.0 (outstanding) to 1.0 (poor). d. add up the weighting score, to get the total weighting score for the respondent concerned. this total value shows how rodent island visitors react to external strategic factors. swot analysis is determined by a combination of internal and external factors. the swot analysis uses a swot matrix that can clearly illustrate how external opportunities and threats faced by visitors to the rat island can be adjusted to their strengths and weaknesses. table 2 swot matrix ifas efas strenght weaknesses oppurtunities strategy s-o create strategies using strength strategy w-o create strategy for minimize weaknesses threats strategy s-t create strategy using threats for strenght resolve threats strategy w-t create strategy for minimize weaknesses resolve threats explanation : a. s-o strategy is used to utilize all existing strengths and to make the best use of all opportunities. b. s-t strategy is a strategy to use the power to overcome threats and minimize weaknesses c. w-o strategy is a strategy used to take advantage of existing opportunities by minimizing weaknesses. d. w-t strategy is this strategy based on defensive activities and seeks to minimize existing weaknesses and avoid threats. the following development strategies are carried out by looking at external factors and which internal factors can be best utilized and what threats to avoid and weaknesses that must be minimized can be seen in the following explanation of the swot quadrant (rangkuti, 2016) : a. quadrant 1 is a very favorable situation for managers, namely the bengkulu province tourism service, because it has the opportunity and strength that exists. b. quadrant 2 is despite facing various threats, the manager (bengkulu province tourism office) still has the power to take advantage of long-term opportunities. c. quadrant 3, namely the manager (bengkulu province tourism office) faces a huge market opportunity, but on the other hand there are several internal weaknesses. d. quadrant 4, this position is the most unprofitable, where the manager (bengkulu provincial tourism office) faces various threats. development strategy tourism tikus island bengkulu province with swot analysis 66 quadran 3 quadran 1 support strategy support strategy turn around aggresive 0,26 quadran 4 quadran 2 support strategy supportystrategi diifensive diversification figure 1 swot analysis diagram in the diagram above shows that the meeting point between strengths, weaknesses, opportunities and threats is quadrant i, which means that the strategy applied is to support aggressive strategy. in this quadrant i shows that the rat island tourism object of bengkulu province has the same opportunity (opportunity) and weakness (weakness) so that the strategy that can be applied is supporting aggressive policy (growth oriented strategy). 4. result research and discussion initially this tikus island was a place for fishermen to stop when they were looking for fish. tikus island is a small island located in the west of bengkulu city, 10 km from the center of bengkulu city, which is directly connected to the indian ocean, geographically located at the coordinate point 3050'17.55 "ls and 102010'50,59" bt which have an area of 2 ha at first, and now the area of rat islands is only 0.6 ha which is supported by 200 ha of coral reefs. to go to the rat island can be obtained through the fishing village of sepang bay, jakat beach and the port of bengkulu, bengkulu, which can be taken approximately 1.5 hours tikus island is located in teluk segara district, marlborough. internal factor analysis (ifas) internal factor swot analysis (ifas). obtained internal strategic factors consisting of strength (s) and weakness (w) obtained a total score of 4.28, so it can be concluded that the attraction of bengkulu tikus island has strength (s) of 2.27 which is greater than weakness (w) of 2.01. 1. strength a. people know the attraction of the tikus island the tikus island attraction is the only nearest island in bengkulu province and the distance covered is very affordable, which is less than 1 hour. b. small island with coral and a variety of amazing biological resources the beauty of the tikus island consisting of attractive corals and marine life with various types that are not found in other tourist attractions in the province of bengkulu. c. unspoiled marine tourism opportunity weakness strength threath afebi management and business review (ambr) vol.04 no.01, june 2019 67 sea conditions on the island of rats that have not been polluted and are still natural have a special attraction. d. have an interesting view the beauty offered on the tikus island, natural conditions that are still beautiful and beautiful underwater tours. e. hit destination in the city of bengkulu tikus island, which offers its own beauty, where tourists can do snrokling and diving while traveling there which is not obtained in other tourist sites in bengkulu province, has become a rat island, a tourist destination that is starting to be visited. 2. weaknesess a. lack of promotion, so far, the information of the tikus island attraction is only known from the closest people and social media. b. transportation is still limited for trips to the island of rats, visitors must use sea transportation (ships), only so far sea transportation is still few that are provided by service providers. c. no lodging available on site tikus island tourist attractions, do not yet provide lodging places for tourists who want to spend the night in the island of mice, so tourists visiting the island of mice have to go home today when they want to travel to the island of mice d. located far from the city center, to visit the tikus island tourist attractions, visitors must travel 45 minutes from the city of bengkulu. e. depends on weather conditions uncertain weather conditions make tourist trips to the island of mice disrupted, because the means of transportation used cannot deliver visitors to the island of mice. besides that, if the weather conditions are not good, the visitors who are already on the island of rats cannot snorkel and dive in the attractions of the tikus island. external factor analysis (efas) while the results of the swot analysis of external factors (efas), which consists of opportunities (o) and threats (t) with a total score of 4.25, so it can be concluded that the bengkulu tikus island has an opportunity (o) of 2.32 more the amount of threat (t) is 1.93. 1. opportunity a. can be used as a challenging marine tourism the attraction of the tikus island is an interesting marine tourism destination that allows visitors to enjoy the underwater beauty that is very interesting. b. pendapatan asli daerah (pad) more and more visitors who travel to the tikus island, will indirectly have a positive impact on the community and the government. c. can be used as bengkulu tourism icon travel to the tikus island is the only marine tourism in the province of bengkulu, so that if managed properly will become a very interesting tourist icon. d. can attract tourism interest with its natural beauty the natural beauty offered by the attraction of the tikus island, can attract tourism both from within the city of bengkulu or from outside the city of bengkulu. e. on the tikus island can interact with marine life through snorkeling. interacting with marine life via snorkeling, one of the flag ship offered on the tikus island attraction that is not in the attractions in bengkulu province f. development strategy tourism tikus island bengkulu province with swot analysis 68 2. threats a. the occurrence of abrasion the occurrence of abrasion or erosion process by waves on the rat island will damage the beauty of the rat island region, namely the shrinking of the beach area. the occurrence of erosion by sea waves if not immediately addressed will threaten the existence of tikus islands which will be lost hit by the waves, because the land area will become a part that is inundated with water. b. the existence of animal habitats from the threat of extinction if not treated immediately, due to abrasion will threaten the habitat of animals on the rat island threatened with extinction, because of the damage to the reefs due to the pounding waves. c. management of tikus island is inadequate nadequate management of the tikus island has made the lack of visitor interest, such as the lack of facilities and infrastructure for visitors who travel to the island of mice. d. other tourist attractions in the city of bengkulu easily accessible the number of other tourist attractions in the city of bengkulu that are easily reached makes visitors prefer less interested in the island of mice. e. reduction in the physical quality of the natural environment and the attractiveness of the tikus island if it is not managed properly and there is no prevention due to abrasion in the tikus iland attraction, it will result in a decrease in the physical quality of the natural environment and the attractiveness of the rat island, which will make visitors less interested in traveling to the tikus island. ifas and efas swot analysis, following the results of recapitulation scores related to strength (s), weaknesses (w), opportunities (o) and threats (t) : table 4. recapitulation ifas and efas ifas efas s w o t development strategy 2,2 7 2,01 2,32 1,93 quadran 2,27–2,01= 0,26 2,32 – 1,93 = 0,39 the results of ifas and efas calculations in table 2 above show that the meeting point between strengths, weaknesses, opportunities and threats is quadrant i, which means that the strategy applied is to support aggressive strategy. in this quadrant i shows that the tikus island tourism object of bengkulu province has equal opportunities (o) and weakness (w) so that the strategy that can be applied is to support aggressive wisdom (growth oriented strategy). a. development strategy tourism tikus island bengkulu province the strategy for developing bengkulu tikus island attractions has a greater opportunity to development, namely: 1) development of transportation and supporting facilities to the tikus island tourist area 2) development of facilities and infrastructure such as structuring the area of tikus island tourist attraction. 3) organizing tourism events organized by the regional government in the tikus island tourist area. 4) the existence of community participation in tourism awareness 5) the existence of tourism business actors afebi management and business review (ambr) vol.04 no.01, june 2019 69 based on the results of the analysis that have been carried out on the tourism development strategy of the tikus island of bengkulu province in increasing the regional original revenue that need to be raised are : 1) making tikus island tourist attraction as a superior area for marine tourism destinations that will potentially be developed, with consideration of multiflyer economic effects that aim to improve the welfare of the community. 2) development of various other supporting facilities such as lodging. 3) making a tourist attraction for tikus islands is one of the icons of marine tourism in bengkulu province,. 4) improve partnership relationships between institutions in the management of tikus island attractions. collaboration between the management of tikus island attractions by the private sector and optimal government parties has its contribution to regional original income. 5) support for tourism supporting infrastructure. 6) the existence of regulation and development of tourism human resources. quadran 3 quadran 1 support strategy support strategy turn around aggresive 0,39 0,26 quadran 4 quadran 2 support strategy supportystrategi difensive diversification figure 2 swot analysis diagram in the diagram above shows that the meeting point between strengths, weaknesses, opportunities and threats is quadrant i, which means that the strategy applied is to support aggressive strategy. in this quadrant i shows that the tikus island tourism object of bengkulu province has the same opportunity (opportunity) and weakness (weakness) so that the strategy that can be applied is supporting aggressive policy (growth oriented strategy). 5. conclusion swot analysis of internal factors (ifas) consisting of strength (s) and weakness (w) obtained a total score of 4.28, so it can be concluded that the attraction of bengkulu tikus island has strength of 2.27 which is greater than weakness of 2.01. while external factors (efas), which consist of opportunities (o) and threats (t) with a total opportunity 2,32 weakness 2,01 strength 2,27 threath 1,93 0,26 development strategy tourism tikus island bengkulu province with swot analysis 70 score of 4.25, so it can be concluded that the bengkulu tikus island has an opportunity (o) of 2.32 which is greater than the threat (treaths) of 1.93. the swot diagram shows that the meeting point between strengths, weaknesses, opportunities and threats is in quadrant i, which means that the strategy applied is to support aggressive strategy. in quadrant i this shows that tourism objects in the tikus island of bengkulu province have equal opportunities (o) and weakness (w) so that the strategy that can be applied is to support aggressive policy (growth oriented strategy), namely by developing transportation and supporting facilities to rat island tourist area. the selection of the right strategy in developing tikus island tourism in bengkulu province will have an impact on regional original revenue (pad) such as increasing 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(1994). pengantar ilmu pariwisata. bandung : angkasa. afebi management and business review (ambr) vol.04 no.01, june 2019 71 dinas pariwisata provinsi bengkulu. bengkulu province tourism booklet edition 01 kementerian kebudayaan dan pariwisata republik indonesia. informasi pariwisata nusantara profitability condition with stylized fact of banking industries in indonesia, malaysia and thailand 15 profitability condition with stylized fact of banking industries in indonesia, malaysia and thailand helma malini 21 ⃰ 1 universitas tanjungpura, pontianak, indonesia abstract the survival of banking industries is determined by many factor including profitability earn during the years. therefore, this study investigates factors affecting profitability of banks in asean. this study uses 10 banks with the largest assets in indonesia, malaysia, and thailand with sample studies of 30 banks in asean with 10 years of operationalization duration. return on assets (roa) is the dependent variable and the independent variables used are non-performing loans (npl), capital adequacy ratios (car), total assets (size), loan-to-deposit ratio (ldr), domestic product growth gross (gdp growth), inflation, interest rates and exchange rates. data is processed using panel data regression with the cochrance orcutt method of the common and fixed effect model with the combination of stylized facts among each country. the results of this study are varied among countries. in indonesia only npls have a significant significance of roa, which is a significant negative. in malaysia, only the exchange rate is significant to roa, which is a significant negative. in thailand, only npi has a significant effect on roa, which is a significant negative. overall, in southeast asia, only npls, interest rates and exchange rates significantly affect roa, which is a significant negative. in other independent variables, it does not have a significant effect on roa. keywords: capital adequacy ratio (car), non-performing loans (npl), profitability, return on assets (roa), total assets (size). 1. introduction the world is currently experiencing an era of globalization, an era filled with international integration processes that occur due to the exchange of views, products, thoughts, and other aspects of culture. one of the effects of globalization is the open trade between nations and the development of increasingly sophisticated information technology. this world trade will certainly affect the economic growth of a country (weill, et al. 2003; mongid, 2007; hamza and katctouli, 2014; sufian, 2014). economic growth open investment opportunities and integration, however, concern occurs with a question around whether the development contributed toward company’s profitability. one of the efforts to achieve profitability, banks implement a variety of strategies to maximize its profits. the profitability of bank refers to the difference between the amount of income from the assets and the expense of the liabilities. in literature, micro and macro determinants affecting bank profitability. micro variables consist of the accounts in the balance sheet and income statement. therefore, they are also named as bank-specific variables. on the other hand, macro variables are not linked to the banks internal process, but they have a significant impact on profitability. in general, size, assets, risk management, cost control, marketable securities and non-performing loans are included in micro variables (güngör 2007, pp. 42–43; * corresponding author. email address: helma.malini@ekonomi.untan.ac.id afebi management and business review (ambr) vol.05 no.02 december 2020 16 wibowo, 2012). the macro factors are inflation, interest rate, gdp growth and exchange rate. in the beginning of financial integration of the asean economic community (mea) by 2020, banks in asean must ensure the sustainability of the business and enlarge the market share. the larger the market share, the larger the profitability earned by a bank. in the implementation, banks depends on both equity and debt where the proportion of savings are not allowed to be considered as assets. this study seeks to analyze profitability condition both from micro and macro perspective. this research helps to fill the literature gap of with previous research that only focusing on profitability variable but failed to focus on the issues of stylized facts (berger, et al. (2009); khediri et al (2015); gelos and roldos, 2004) by examining bank profitability condition from southeast asia. this study contributes to the literature by comprehensively examining of banking system in indonesia, malaysia and thailand over the period 2009-2019. indonesia, malaysia and thailand are three countries in south east asia that includes in emerging market while policy, competition and changing business environment could have an impact on the profitability of banking industry in those countries. this study thus examines and compares the profitability condition between selected banks with stylized fact. for each bank, the aim of comparison is to identify the factors that contributes to based on their countries environment. however for the bank itself, the study about profitability condition is expected to be a guide for stakeholders, investors and government on the level of performance of their banking industry. 2. literature review according to abreu and mendes (2001) capital has positive impact towards banks profitability by using capital adequacy ratio as variables for european union countries by using regression where interest and profitability becoming dependent variables. however, capital is not merely the only variable that determine a bank profitability where al-jafari (2014) and zeitun (2012) stated that macroeconomic variables as one the major determines of banks profitability in syria by using inflation and gdp with gmm method. inflation and economic growth are two mainly variables that affect bank profitability. a company performance also contributes toward bank profitability’s by several variable ratios and the result pointing out that although company’s performances in financial report show a huge contribution. however, due to market volatilities, a bank should focus on macro variables such as gdp growth, inflation and income percapita (alshatti, 2015; boitan 2015). internal factors or the bank-specific variable such as the liquidity, creadit risk, operational efficiency, capital adequacy of the banks are also considered in number of studies perspective. in banking industry, it is usually argued that banks have higher degree of credit risks than interest-based banks mainly because of their nature of trade based investment (norman et al, 2015). the ratio of loan provisions to total loans (llp/tl) is incorporated as an independent variable in the regression analysis as a proxy of credit risk (goddard et al 2004). the coefficient of llp/tl is expected to be negative because bad loans to reduce bank profitability (buchory, 2015). miller and noulas (1997) suggest that the greater the financial institutions exposure towards high risk loans, the higher would be the accumulation of unpaid loans resulting in a lower profitability where the co-efficient of llp/tl is expected to be negative because bad loans are likely to decrease profitability. in addition to this, the total cost of a bank can be divided into operating cost and other expenses (sufian, 2011). the relationship between the costs to income is related and dependent, since banks should focus on becoming productive and efficient. gelos and roldos (2004) and masood, et al. (2011) found a positive impact on cost to income of the islamic banks, while ratna, et al. (2013) and rini (2004) found a negative relation on cost to income performance of the islamic banks. a study conducted by berger, et al. (2009); profitability condition with stylized fact of banking industries in indonesia, malaysia and thailand 17 khediri et al (2015); gelos and roldos (2004) concludes that assets size, risky assets ratio and islamic banks management efficiency effect found statistically significant on islamic banks credit risk. a study conducted by chin and ito (2007) examined the internal variables and economic environment impact on the performance of islamic banks where a positive relationship founds between capital adequacy and profitability of islamic banks. while most of the research (berger, et al. (2009); khediri et al (2015); gelos and roldos (2004) has highlighted the growth of the financial industry and the determinants of such growth, robust further study is essential for the future potential and growth of the industry. to that effect, there is a strong demand to put the future prospects for the industry’s development within the overall context of financial and institutional development especially in the member states of the oic countries. the expected finding of the study will add new dimension in the south east asian banking industry. 3. research methodhology 3.1 data the population in this study is all banks listed in the capital markets of indonesia, malaysia, and thailand from 2009 to 2019. indonesia, malaysia and thailand are three countries in south east asia that includes in emerging market while policy, competition and changing business environment could have an impact on the profitability of banking industry in those countries the sample selection is determined by taking ten banks with the largest assets in each country. the total banking used is 30 banks that have the largest assets in indonesia, malaysia, and thailand where all data are taken from data stream and central bank of indonesia, malaysia and thailand. internal factors (-) (+) (+) (+) external factors (-) (+) (+) (+) figure 1 conceptual framework size npl ldr car inflation rate interest rate exchange rate gdp growth profitability r e g re ss io n a n a ly si s afebi management and business review (ambr) vol.05 no.02 december 2020 18 hypothesis development a. effect of npl on banks’ profitability non-performing loan ratio is a of ratios to measure the credit risk of a bank. this ratio showed bank capabilities in managing non-performing loans provided by banks. h1: npl has negative impact on profitability b. effect of ldr on banks’ profitability liquidity risk is the ability of banks to fulfill its obligations without disrupting financial condition of the bank. h2: ldr has positive impact on profitability c. effect of car on banks’ profitability capital adequacy is an essential component in bank business to accommodate the risk of loss. h3: car has positive impact on profitability d. effect of size on banks’ profitability the size of banks can be seen from the total assets owned by the company. the greater the assets owned by a bank, the greater the size of the company. h4: size has positive impact on profitability e. effect of inflation on banks’ profitability high inflation will disrupt the function of money, especially to the value of savings. h5: inflation has negative impact on profitability f. effect of interest rate on banks’ profitability interest rate is the amount of interest paid per unit time. in other words, consumers have to pay for opportunities to borrow money. h6: interest rate has positive impact on profitability g. effect of exchange rate on banks’ profitability exchange rates affect banks in term of decreasing profitability if the exchange rate for 1us $ increases because the costs incurred will be greater. h7: exchange rate has positive impact on profitability h. effect of gdp growth on banks’ profitability gross domestic product (gdp) reflects the activities of the population in a country in producing goods in a certain period. the linkage of gdp with the banking world is where gdp is related to saving. h8: gdp growth has positive impact on profitability 3.2 research variables 3.2.1 dependent variable dependent variables can be defined as variables that measure the effect of the independent variables on the test units (malhotra, 2014). this research chooses roa and dependent variable since it is represents bank assets particularly from third party funding. return on asset (roa) = 𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐵𝑒𝑓𝑜𝑟𝑒 𝑇𝑎𝑥 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 x100% (1) 3.2.2 independent variable independent variable is variable or alternative that are manipulated whose effect is measured and compared (malhotra, 2014). independent variables in this research: profitability condition with stylized fact of banking industries in indonesia, malaysia and thailand 19 table 1 independent variables variables formula of ratio non-performing loan (non-performing loan/total loan) x 100% capital adequacy ratio (bank capital/ risk weighted assets) x 100% loan to deposit ratio (amount of credit granted/ third party funds) x 100% size natural logarithm of total asset inflation rate consumer price index interest rate deposit interest rate exchange rate natural logarithm of exchange rate (indirect quote) gdp growth (gdpt-gdpt-1)/gdpt-1) 3.3 analysis methods according to the objective and the data used in this research, multiple regressions is used in this study. the multiple regressions enable the author to determine the simultaneous effect of several independent variables on the dependent variable using the least square model (newbold, carlson, & thorne, 2003). first, to check the data distribution, the classic hypothesis analysis is also performed. these steps are done to fulfill the linear assumption in multiple regression analyzes to avoid infringement of those assumptions and to obtain the best linear unbiased estimator (blue). several tools used in this study are microsoft excel 2010, e-views 9.0 with a 95 percent confidence interval. the analytical measures are described as follows: 1. descriptive statistics the descriptive statistics are used to describe the mean, standard deviation, maximum, and minimum values of the data. this study helps the author to visualize the raw data in a meaningful way by summarizing the data. the writer can therefore define the variance and error in the data and minimize the frequency of the question of sample distribution. 2. model specification multiple regression analysis is a simple regression extension that allows multiple independent variables to estimate a statistical dependent variable (zikmund, babin, carr, & griffin, 2010). this study uses (gujarati, 2003) methodology to find out regression coefficients and other statistical results by using multiple least square on panel data. the best model among the common effect model, fixed effect model, and random effect model will be evaluated and compared to find the most effective model for estimating the outcome of this study. to further validate our results, random effect and fixed effect model testing have also been used. the econometric model under study is as follows: yit = cit + β1.x1it + β2.x2it + β3.x3it + β4.x4it + β5.x5it+ β6.x6it + β7.x7it+ β8.x8it+ ℇit (2) whereas: y = roa x1 = npl x2 = car x3 = logarithm of total asset x4 = ldr x5 = gdp growth x6 = inflation rate x7 = deposit rate x8 = exchange rate i = each firm t = each period (year) the model could be the difference after the model chosen later will determine i and t of the model as this research will use panel data. the objective of regression on panel data is the same with simple regression. nonetheless, the result of the intercept afebi management and business review (ambr) vol.05 no.02 december 2020 20 and slope will be different for each entity in a certain period. according to (widarjono, 2007; karim. b.k et al, 2010) there are several possibilities that will occur due to the assumption of intercepts, slopes, and errors. therefore, from all the possibilities, we could conclude the model of regression into these three models: a. common effect model this approach is the easiest in the panel data regression model as it integrates all the cross-section and time-series data without tracking the time and cross differences. the ordinary least square (ols) is the most common approach in this model. b. fixed effect model the fixed effect model method assumes that all cross-section intercepts are different while the slopes remain constant. the dummy variable is used in this technique to differentiate each cross data so that the intercept will be different as well. 4. results and discussion table 2 descriptive statistics of selected countries in asean item y indonesia malaysia thailand mean 0.02 0.02 0.17 15.08 median 0.02 0.02 0.17 13.39 maximum 0.05 0.04 0.25 20.91 minimum 0.001 0.004 0.11 10.98 std. dev. 0.01 0.01 0.03 3.20 skewness 0.24 0.05 0.32 0.44 kurtosis 2.22 2.20 2.31 1.52 sum 2.62 2.26 17.9 1508 sum sq. dev. 0.01 0.01 0.10 1013 observations 100 100 100 100 source: eviews 9.0 (processed data) based on the table 2 the number of total observations is 100 with 30 cross section data and 11-year period. the dependent variable y represents return on asset (roa) of a bank asset from the accumulation of bank asset from 2009-2019 and we regress the number with minimum and maximum value by 0.001 and 0.052. it means the standard deviation of the companies’ return on asset has minimum value by 0.001 point, and maximum value by 0.052 point. indonesia has the minimum value by 0.004 and maximum value by 0.047. it means the data have a small range. in addition, the skewness and kurtosis of npl show that sample is normally distributed. which means the level of volatility is quite similar for all cross section. the second independent variable is malaysia with the maximum value is 0.253 and minimum value is 0.118. it means the data have small range. for the skewness and kurtosis of car shows that overall volatility of the sample is normally distributed, which means the level of volatility is similar. the result shows that the maximum total asset of bank in malaysia is 20.910 and its minimum is 10.980. the average of total asset is 15.080 while median is slightly lower, 13.390. it means the data were skewed positively. the fourth is thailand with maximum value and minimum value is 1.089 and 0.503. the average of ldr is 0.871 while the median is slightly higher, 0.880. it means that data were skewed negatively. profitability condition with stylized fact of banking industries in indonesia, malaysia and thailand 21 table 3 common effect model of indonesia variable coefficient std. error t-statistic prob. c 0.129 0.071 1.814 0.073 x1 -0.387 0.097 -3.973 0.000 x2 0.116 0.035 3.305 0.001 x3 -0.001 0.000 -2.289 0.024 x4 -0.041 0.009 -4.418 0.000 x5 -0.002 0.009 -0.224 0.824 x6 0.131 0.096 1.368 0.175 x7 -0.164 0.092 -1.782 0.078 x8 -0.007 0.008 -0.845 0.401 r-squared 0.470 mean dependent var 0.026 adjusted rsquared 0.424 s.d. dependent var 0.011 s.e. of regression 0.009 akaike info criterion -6.591 sum squared resid 0.007 schwarz criterion -6.356 log likelihood 338.531 hannan-quinn criter. -6.496 f-statistic 10.103 durbin-watson stat 0.382 prob(f-statistic) 0 table 3 shows that the impact of non-performing loan is incredibly significant toward the return on asset as the probability is lower than p-value (0.05 or 5%). the coefficient of npl (x1) means every 1 point of change in npl, there will be 0.387 point of change in roa on the opposite direction, or by the other word, negative strong relationship. the results of this study indicate that non-performing loans have a negative and significant effect on return on assets in banking companies. the higher the npl indicates the worse the quality of bank credit which causes the number of problem loans to be higher (fifit, 2013). the high level of npls makes banking companies must bear losses in their operational activities so that it affects the decrease in return on assets. in addition, capital adequacy ratio (x2) has significant effect toward the roa as the probability is lower than 0.05. the coefficient of car means every 1point change in car, there will be 0.116 point of change in roa on the same direction, or it has positive strong relationship between car and roa. this favourable condition for the bank will contribute significantly to profitability. this capital is used to maintain public trust in the bank's performance. this is reasonable because the banking business is a business that is based on trust. in addition, there are various forms of great risk that may occur to banks, so it can be concluded that the higher the car, the higher the bank roa. beside it, there is negative significant relationship between total asset (x3) toward roa, it showed by the probability is lower than 5% and the coefficient is negative 0.001 which means, when total asset increases 1 point, the roa will decrease by 0.001 point. in addition, the coefficient of loan deposit ratio (x4) is -0.041 and the probability is 0.000 which means, loan deposit ratio has negative significant effect toward the roa, when the ldr increase by 1 point the roa will decrease 0.041. the high loan to deposit ratio can lead to high credit risk which will result in a decrease in company profitability. it also shows that the gdp’s growth (x5) of indonesia does not have significant effect toward the roa of banking industry because the probability is greater than 0.05. the coefficient is -0.002 which means when the gdp growth increase 1 point, the roa of bank will decrease 0.002. in conclusion, there is weak effect of gdp growth toward roa. afebi management and business review (ambr) vol.05 no.02 december 2020 22 based on the above result, we can summarize the stylized facts for indonesia banking industry is that empirical studies show volatilities in financial and trade channels however the impact on financial channels can be analyzed directly and indirectly where the direct impact affects banks in indonesia with poor asset quality. this problem caused a substantial shift from more risky investment to safer portfolios to other asean countries during the study period. on the contrary, domestic investors shifting their investment from rupiah to be denominated in u.s. dollar. as a result, bank industry in indonesia received the lowest revenue in 2017-2019 (bank indonesia fact sheet, 2019). table 4 common effect model of malaysia common effect model of malaysia variable coefficient std. error t-statistic prob. c 0.068 0.007 10.102 0.000 x1 -0.089 0.039 -2.312 0.023 x2 0.068 0.019 3.579 0.001 x3 -0.005 0.001 -8.263 0.000 x4 0.009 0.005 1.716 0.090 x5 -0.002 0.003 -0.575 0.567 x6 0.015 0.040 0.364 0.717 x7 0.040 0.139 0.290 0.772 x8 -0.011 0.003 -3.178 0.002 r-squared 0.536 mean dependent var 0.014 adjusted r-squared 0.495 s.d. dependent var 0.005 s.e. of regression 0.003 akaike info criterion -8.390 sum squared resid 0.001 schwarz criterion -8.155 log likelihood 428.49 hannan-quinn criter. -8.295 f-statistic 13.131 durbin-watson stat 0.443 prob(f-statistic) 0 table 4 shows that the impact of non-performing loan is incredibly significant toward the return on asset as the probability is lower than p-value (0.05 or 5%). the coefficient of npl (x1) where 1 point of change in npl, resulting into 0.089 point of change in roa on the opposite direction, or by the other word, negative strong relationship. the results of this study indicate that non-performing loans have a negative and significant effect on return on assets in banking companies. the higher the npl indicates the worse the quality of bank credit which causes the number of problem loans to be higher (fifit, 2013). the high level of npls affecting bank must bear losses in their operational activities so that it affects the decrease in return on assets. in addition, capital adequacy ratio (x2) has significant effect toward the roa as the probability is lower than 0.05. the coefficient of car means every 1-point change in car, there will be 0.068 point of change in roa on the same direction, or it has positive strong relationship between car and roa. this favourable condition for the bank will contribute significantly to profitability. in addition, there are various forms of great risk that may occur to banks, so it can be concluded that the higher the car, the higher the bank roa. in addition, the coefficient of loan deposit ratio (x4) is 0.009 and the probability is 0.090 which means lower than 10%. conclusion, loan deposit ratio has positive significant effect toward the roa, when the ldr increase by 1 point the roa will increase 0.009. an increase in ldr means an increase in interest income earned by banks. an increasing ldr means increased in profitability which indicates greater profitability condition with stylized fact of banking industries in indonesia, malaysia and thailand 23 profit growth. it also shows that the gdp’s growth (x5) of malaysia doesn’t have significant effect toward the roa of banking industry because the probability is greater than 0.10. the coefficient is -0.002 which means when the gdp growth increase 1 point, the roa of bank will decrease 0.002. in conclusion, inflation does not have effect on roa. the stylized facts for malaysia banking industry relate with the implementation of dual banking system in malaysia where it has its own benefit and weaknesses. one of the benefits is that malaysia government have two platforms for mobilizing fund from public including from the conventional sector where both works hand in hand to improve the capability of financing for the national economy. the characteristics of risk sharing in shariah banks focus on transaction fairness, ethics investment and avoiding speculative activities in finance transaction that can be achieving by providing banking products that accordance with shariah principal norm. on the other side, risk sharing principle offer solution with its own problem particularly relates with malaysia socio economic problems that are changing day by day. this study found that profitability in malaysia banking industries derives from gdp growth for investor. however, this result should be examined further on whether gdp growth translated into government intervention since the implementation of dual banking system in malaysia will make distinctive line between conventional and shariah banking to prevent trade off. trade off in dual banking system banking is something that will significantly occur since the integration between regulation and religion that leads to the mismatch in implementing banking policy malaysia (bank negara malaysia fact sheet, 2019). table 5 common effect model of thailand variable coefficient std. error t-statistic prob. c 0.086 0.090 0.959 0.340 x1 -0.109 0.029 -3.710 0.000 x2 0.032 0.025 1.288 0.201 x3 0.000 0.001 0.103 0.918 x4 0.005 0.005 0.975 0.332 x5 -0.006 0.011 -0.495 0.622 x6 0.012 0.079 0.158 0.875 x7 -0.194 0.182 -1.062 0.291 x8 -0.022 0.025 -0.870 0.387 r-squared 0.190 mean dependent var 0.012 adjusted rsquared 0.119 s.d. dependent var 0.005 s.e. of regression 0.005 akaike info criterion -7.796 sum squared resid 0.002 schwarz criterion -7.562 log likelihood 398.806 hannan-quinn criter. -7.701 f-statistic 2.671 durbin-watson stat 0.403 prob(fstatistic) 0.011 source: eviews9.0 (processed data) table 5 shows that the impact of non-performing loan is very significant toward the return on asset as the probability is lower than p-value (0.05 or 5%). the coefficient of npl (x1) means every 1 point of change in npl, there will be 0.109 point of change afebi management and business review (ambr) vol.05 no.02 december 2020 24 in roa on the opposite direction, or by the other word, negative strong relationship. the results of this study indicate that non-performing loans have a negative and significant effect on return on assets in banking companies. the higher the npl indicates the worse the quality of bank credit which causes the number of problem loans to be higher (fifit, 2013). the high level of npls makes banking companies must bear losses in their operational activities so that it affects the decrease in return on assets. in addition, capital adequacy ratio (x2) has no significant effect toward the roa, as the probability is higher than 0.10. the coefficient of car means every 1-point change in car, there will be 0.032 point of change in roa on the same direction, or it has no significant effect of car toward roa. beside it, there is no significant relationship between total asset (x3) toward roa, it showed by the probability is higher than 10% and the coefficient is negative 0.001 which means, when total asset increases 1 point, the roa will decrease by 0.0001 point. the sixth variable, inflation, does not have significant effect toward the roa of banking industry because the probability is greater than 0.10, and the coefficient is 0.012. in conclusion, inflation does not have effect the roa. for the seventh variable which is deposit rate, has probability value that is greater than 10%, it means there are no significant effects of deposit rate toward roa. beside it, the coefficient is -.0.194 which means when the deposit rate increase, the roa will decrease 0.194. exchange rate as represented by x8, does not have significant effect on roa, because the probability value is lower than 0.05. the coefficient value is -0.022 which mean when exchange rate increases by 1 point, the roa will decrease 0.022 point. in thailand's stylized fact, domestic banks dominate the domestic market share in thailand through the approach of adding networks with local customers. however, after the financial crisis in asian countries in 1997, the government opened up opportunities for foreign banks to operate in thailand and the infiltration of foreign banks was getting stronger when foreign banks were able to control a majority stake in domestic banks. post-2000, foreign banks began to expand by offering a variety of financial services so that competition was tighter and banking product offerings were increasingly focused on increasing the number of customers rather than maintaining quality and risk. therefore, the increasing competition between foreign banks and local banks in thailand made the government through the central bank in thailand ask the banking industry in thailand to focus on risk management in order to increase a broader understanding of the risks involved in the financial and banking sector and encourage action. together to develop and strengthen prudential risk management standards for the stability of the thai financial system. meanwhile for transparency and disclosure, the bank of thailand has asked financial institutions to disclose the necessary information along the same lines as accounting standards. in addition, they must disclose their npl and related loans on a monthly basis. the bank of thailand has also shifted its supervisory emphasis to focus more on risk and not on verification of transactions. examiners specialize through effective scoping and scoping planning to match the size and activity of financial institutions and to concentrate on areas exposing financial institutions to the greatest levels of risk (bank of thailand fact sheet, 2019) table 6 fixed effect model of indonesia variable coefficient std. error t-statistic prob. c 0.155 0.046 3.341 0.001 x1 -0.241 0.089 -2.717 0.008 x2 0.020 0.029 0.702 0.485 x3 0.000 0.003 0.130 0.897 x4 0.006 0.011 0.608 0.545 profitability condition with stylized fact of banking industries in indonesia, malaysia and thailand 25 x5 -0.001 0.005 -0.139 0.890 x6 0.018 0.058 0.312 0.756 x7 -0.075 0.083 -0.900 0.371 x8 -0.014 0.009 -1.547 0.126 effects specification cross-section fixed (dummy variables) r-squared 0.864 mean dependent var 0.026 adjusted r-squared 0.836 s.d. dependent var 0.011 s.e. of regression 0.005 akaike info criterion -7.770 sum squared resid 0.002 schwarz criterion -7.301 log likelihood 406.491 hannan-quinn criter. -7.580 f-statistic 30.633 durbin-watson stat 0.990 prob(f-statistic) 0 fixed effect model malaysia variable coefficient std. error t-statistic prob. c 0.031 0.020 1.602 0.113 x1 -0.055 0.056 -0.988 0.326 x2 0.016 0.019 0.807 0.422 x3 -0.0002 0.002 -0.133 0.895 x4 -0.001 0.006 -0.205 0.838 x5 0.0002 0.002 0.085 0.933 x6 -0.001 0.027 -0.047 0.963 x7 -0.068 0.147 -0.462 0.645 x8 -0.010 0.003 -3.261 0.002 effects specification cross-section fixed (dummy variables) r-squared 0.815 mean dependent var 0.014 adjusted r-squared 0.776 s.d. dependent var 0.005 s.e. of regression 0.002 akaike info criterion -9.127 sum squared resid 0.000 schwarz criterion -8.658 log likelihood 474.369 hannan-quinn criter. -8.938 f-statistic 21.187 durbin-watson stat 1.029 prob(f-statistic) 0 fixed effect model thailand variable coefficient std. error t-stat. prob. c 0.082 0.010 8.129 0.000 x1 -0.109 0.020 -5.459 0.000 x2 0.010 0.013 0.751 0.453 x3 -0.002 0.001 -1.615 0.108 x4 0.005 0.004 1.090 0.277 x5 -0.002 0.002 -1.086 0.278 x6 0.022 0.019 1.179 0.239 x7 -0.133 0.030 -4.375 0.000 afebi management and business review (ambr) vol.05 no.02 december 2020 26 x8 -0.010 0.003 -3.716 0.000 effects specification cross-section fixed (dummy variables) r-squared 0.901 mean dependent var 0.018 adjusted r-squared 0.887 s.d. dependent var 0.010 s.e. of regression 0.003 akaike info criterion -8.470 sum squared resid 0.003 schwarz criterion -8.001 log likelihood 1308.5 hannan-quinn criter. -8.282 f-statistic 64.561 durbin-watson stat 1.055 prob(f-statistic) 0 source: eviews9.0 (processed data) from all variables above, only x1 (non-performing loan) has significant effect toward roa of banking industry in indonesia, because only x1 has lower probability value than 10% and the rest of other variable have higher probability value than 10%. when the non-performing loan (x1) increases by 1 point, the roa will decrease 0.241. according to fifit (2013), the higher the npl indicates the worse the quality of bank credit which leads to a higher number of problem loans. the high level of npls makes it necessary for banking companies to bear losses in their operational activities, thus affecting the decrease in return on assets. there are several variables effect roa positively although they are not significant. they are car (x2), total asset (x3), ldr (x4) and inflation (x6). in another hand, gdp growth (x5), deposit rate (x7) and exchange rate (x8) have weak negative impact toward roa. table 7 f-test (chow test) of all samples redundant fixed effects tests equation: untitled test cross-section fixed effects effects test statistic d.f. prob. cross-section f 34.3146 -29,262 0.000 cross-section chi-square 470.471 29 0.000 source: eviews9.0 (processed data) as shown in the table, the result of the cross-section f probability is lower than p-value (0.0000<0.05). therefore, we should reject the null hypothesis, and fem is better to be applied on this research rather than cem. table 8 durbin watson result countries indonesia malaysia thailand composite durbin watson 0.990 1.029 1.360 1.055 source: eviews9.0 (processed data) to correct the auto correlation problem, the author will carry out the cochraneorcutt procedure, which is expressed as ρ (rho). the repetition method in cochraneorcutt is performed by running a regression equation with ar (1) or up to ar (2), to eliminate the correlation between errors. profitability condition with stylized fact of banking industries in indonesia, malaysia and thailand 27 table 9 cochrane orcutt of all countries dependent variable: y method: panel least squares date: 01/16/20 time: 15:10 sample (adjusted): 2010 2018 periods included: 9 cross-sections included: 30 total panel (balanced) observations: 270 convergence achieved after 9 iterations variable coefficient std. error t-stat prob. c 0.088 0.017 5.158 0.000 x1 -0.121 0.029 -4.114 0.000 x2 0.002 0.014 0.157 0.876 x3 -0.002 0.002 -1.345 0.180 x4 0.001 0.005 0.239 0.811 x5 -0.001 0.002 -0.478 0.633 x6 0.001 0.016 0.040 0.968 x7 -0.089 0.033 -2.674 0.008 x8 -0.008 0.003 -2.541 0.012 ar(1) 0.439 0.056 7.790 0.000 effects specification cross-section fixed (dummy variables) r-squared 0.932 mean dependent var 0.018 adjusted r-squared 0.920 s.d. dependent var 0.010 s.e. of regression 0.003 akaike info criterion -8.80 sum squared resid 0.002 schwarz criterion -8.29 log likelihood 1227.636 hannan-quinn criter. -8.60 f-statistic 82.858 durbin-watson stat 1.938 prob(f-statistic) 0 inverted ar roots 0.44 source: eviews 9.0 (processed data) for indonesia, malaysia and thailand data on this research consist 8 independent variables and 100 observation, thus, the value of dl = 1.5060 and du = 1.8489 (the value of 4 – 1.8489 = 2.1511). the requirement is that the value of durbin watson should be dl < d < (4 – du) to have no autocorrelation. therefore, there is no autocorrelation problem for each country research because it fulfills the requirement of durbin watson value 1.5060 < d < 2.1511. in banks in the south asia emerging market, non-performing loans have a significant negative impact on roa; this can be seen from the exceedingly small probability value and the value of the coefficient that is negative. a high npl value will cause a decline in profitability of a bank. if the npl rises by 1 point, the roa value will decrease by 0.121 points. capital adequacy ratio has a positive impact on bank roa but capital adequacy ratio also does not have a significant impact on changes in bank profitability in composite countries, because the probability value is more than 10%. for total assets, the results obtained in this study have the same results as the npl, which has a negative impact on the bank's profitability, although not significant. if total assets increase by 1 point, roa will decrease by 0.002 points. loan to deposit ratio also has a negative impact on roa, but not significant, this is afebi management and business review (ambr) vol.05 no.02 december 2020 28 evident from the probability value of more than 10%. if the ldr goes up by 1 point, roa will decrease by 0.001 point. in gdp growth shows that there is no significant impact on bank roa, although in fact gdp growth has a negative relationship to roa, if gdp rises by 1 point then roa will decrease by 0.001 point. inflation also has an insignificant impact on bank roa in south asia; however, inflation has a positive impact on roa, if inflation rises by 1 point, roa will rise by 0.001 point. the overall deposit rate in southeast asia has a positive impact on bank profitability; this is evident from the probability value of less than 5%. in addition, the value of the inflation coefficient is 0.089 which means that if inflation rises by 1 point, roa will decrease by 0.089 points. the exchange rate also has the same results as the deposit rate, which has a significant negative impact, where the probability is less than 5%. in addition, the coefficient of the exchange rate is -0.008 which means that if the exchange rate rises by 1 point, the profitability of banks will decrease by 0.008 points. 5. conclusion this research provides a various model of estimating the panel data of the banking industry in indonesia, malaysia, and thailand by using common effect model and fixed effect model. after several tests, fixed effect model with cochrance orcutt method is chosen as the final method. the result show that banks in indonesia experience negative npl toward roa. while, banks in malaysia exchange rate shown negative significant effect toward roa. on the other hand, banks in thailand experience negative npl on bank profitability. based on the result, banking industry should maintain their capital adequacy ratio in order to fulfill the ratio from central bank in each countries. on the other hand, banking industries must carefully execute their npl (non performing loans) to have a balanced profitability and liquidity while focusing on ratio of loans to achieve productivity in generating profits. for macroeconomic variables, banking industries in indonesia, malaysia, thailand should focus on the particular variables with huge influence toward banking industries; inflation, gdp, interest rate and exchange rate since those variables have high interconnectedness to each other. references abreu, m. a. 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(2012). determinants of islamic and conventional banks performance in gcc countries using panel data analysis. global economy and finance journal, 5(1), 53-72. servicescape and group references in determining hedonic value and its implication on impulsive buying 59 servicescape and group references in determining hedonic value and its implication on impulsive buying aa willy nugraha61* and yusuf abdullah2 1 politeknik lp3i, tasikmalaya, indonesia 2 universitas siliwangi, tasikmalaya, indonesia abstract consumer decision in purchasing product generally depend on his/her needs. the impulsive buying as the purchasing activity, in contrast, was based on the emotional encouragement. in the other hand, customer got pleasant experiences after purchasing that product spontaneously. that is a hedonic value which is customer circumstances encouraging buying decision. the study objectives were to know whether the servicescape and reference group could be determinant factors of hedonic value and impulsive buying activity in plaza asia tasikmalaya. this study was quantitative research approach, a statistical data based, with survey method. the data collected was by fulfiling questionnaire by respondent with convenience sampling technique, a type of non-probability sampling method, which was taken from a group of people easy to contact or reach. the literature studies also applied to enrich the explanation of the variables analyzed. the sample size was 255 visitors of plaza asia tasikmalaya. then, the data was analyzed using the structural equation modeling (sem) technique to know the influence between variables directly and indirectly. the result indicated that the servicescape and reference group had effects significantly to hedonic value and had implication on impulse buying partially and simultaneously. keywords: hedonic value, impulsive buying, reference group, servicescape. 1. introduction globalization and world trade liberalization implicated rise changes in the business environment, especially in developing countries such as indonesia. therefore, every company must adapt to existing changes and have its own competitive advantage. competitive advantage can be achieved through value creation of the retail/store effort such as comfortable store situation, facilities and services so that customer satisfaction can be achieved. this results in a long-term relationship between the customer and the company. the retail business sector is one of the business sectors that is affected by global economic developments, even it becomes a measure of a country's economic success. in indonesia, competition for retail business such as supermarkets, minimarket, and hypermarkets is increasingly mushrooming. according to ac nielsen in the industry update of bank mandiri (2012) in yuliartini and sulistyawati (2013) stated that during the 2004 to 2010 period, the average retail growth per year in that period was 20.2% of minimarkets followed by convenience stores amounted to 19.6%. hypermarkets amounted to 14.6% and supermarket only 2.6%. the indonesian retail entrepreneurs association (aprindo) in halomoney research explained that the growth of the retail industry was below 5% during january to june 2017. in 2018, indonesia is in eighth position or down three places from 2016. kearney, a global management consulting, stated that retail sales in indonesia reached us $ 350 billion this year, or only an increase of 8.02 percent from last year (angga yuniar, 2017). the business page of liputan6.com reported that in 2017 there were several modern retailers that experienced bankrupt (angga yuniar, 2017). this is due to * corresponding author. email address: aawillynugraha@gmail.com afebi management and business review (ambr) vol.05 no.02 december 2020 60 changes in consumption patterns and a decrease in people's purchasing power. some of the modern retail outlets that have closed are lotus, seven leven, debenhams, matahari and ramayana (partially closed). there are several things that make the retail industry important to study, namely: (1) the implications of retail in the global economy. it because retail sales and labor absorption are key to the global economy; (2) the retail function in the distribution chain, namely to act as a liaison between the final consumer and the manufacturer and wholesaler; (3) the relationship between retailers and customers (berman and evans, 2010). in the first semester of 2020, indonesia has a population of 268.5 million people of the population (dian, 2020), and based on statement of the indonesia minister of trade that was fifty percent of the population is consumptive (thomas, 2016). thus, retail businesses rely on people's consumption patterns as a business opportunity. however, the development of ecommerce has caused a shift in people's consumption patterns, thus it becomes a big challenge for retail businesses. thus, retailers need to create value added value such as an outlet environment (servicescape) to create a good impression during a visit. tasikmalaya is administratively located in the province of west java with several excellent resources and a creative economy potential, so that it is one of the regions in west java that has a lot of business potential including retail. there are many modern retailers scattered in tasikmalaya, especially large retailers located in downtown tasikmalaya. the author will only examine large retailers, such as supermarket. a supermarket is a type of shopping center that is architecturally a closed building with regulated temperatures and has paths to walk regularly so that it is between small shops facing each other. it provides household needs, electronic equipment, clothing, gadgets, basic necessities, atm centers, restaurants, hotels and water recreation /tourism facilities namely teejay water park and office facilities and xxi cinema. then, author was interested in choosing plaza asia tasikmalaya as a research object because this supermarket is the largest supermarket in east priangan and located at center of tasikmalaya city. in addition, the parameters of a city are classified as a "big city" not only by the establishment of factories, crowded traditional markets, and the density of population, but whether there is a shopping center even though it only has a small place or just a place for goods and services transaction, but as a display of the latest cultural instruments so that consumerism is spoiled. supermarket becomes a perfect communication space, as a form of interpersonal communication to mass communication taking place simultaneously. in addition, interactions between community members take place more dynamically than anywhere else in tasikmalaya city. the integrated facilities provided such as hotel (asri hotel) and children's playgrounds, business center, and other recreation destinations are available. all facilities provided by plaza asia indirectly make the people feel comfort and enjoy. public enthusiasm is necessary for the presence of plaza asia, this is evidenced by the increase in the number of visitors in its first year even by event organizers carried out various events at plaza asia tasikmalaya. the following is a graph of the number of visits from 2017 to 2019, as follows: figure 1 numbers of plaza asia visitor in 2017 – 2019 source: plaza asia tasikmalaya servicescape and group references in determining hedonic value and its implication on impulsive buying 61 based on the figure above, the number of visit in 2017 was 3,003,265 visitors, in 2018 experienced increase 10 percent to 3,393,689 visitors and in the period of 2019 the number of visit was increasingly to 3,869,273 visitors. then, the author was interested in investigating the factors causing the growth of the number of visitor in plaza asia tasikmalaya. the visitor behavior in purchasing product including hedonic value and impulsive buying were predicted by factors affecting it. they were servicescape and reference group. the impulsive buying is a shopping behavior that occurs unplanned, emotionally interested, in which the decision-making process. supermarket, plaza asia tasikmalaya, is a pleasant place for several consumer in making enjoyment and fulfilling them needs. the environment due to the environmental and psychological issues linked with the visitor. the experience feelings of anxiety, stress and excitement which make them react in unusual ways. the plaza’s environments therefore differ from more day-to-day channels of distribution. consequently, retailers' approaches must also differ in order to optimize performance. there is evidence of a considerable impulse bulying effect in plaza asia tasikmalaya which caused by hedonic value, servicescape and reference group. the impulse was effected by the factors mentioned was wished to increase the purchase decision. beside it, the emotional encouragement had a role in supporting the customer decision in buying the product. the hedonic value as the value of shopping experiences including fantasy, arousal, sensory-stimulation, enjoyment, pleasure, curiosity, and entertainment in buying product also related with the emotional sense supporting the impulse buying. the previous research was by rachmawati in yistiani, et al (2012) who stated that consumers are more likely to be involved in impulse buying when they are motivated by hedonic desires or economic reasons, such as pleasure, fantasy, and social or emotional satisfaction. supermarket, as the shopping place, consists of variety of stores and brands need a servicescape to be more attractive. the servicescape is the communication way of store atmosphere in which the services are assembled, the place where the consumer and seller are interact each other, and it is a combination of the tangible commodities and service. this atmosphere created by the store in supermarket will give the influence to the hedonic value of the consumer and cause the impulse buying. the earlier research was by yistiani, et al (2012) that stated the servicescape including the atmosphere store will affect the hedonic value, so does the impulse buying will be implicated. other factor which was being determinant aspect was a group reference, means recommendation of buying the product. the hedonic value and impulse buying will be affected by it. the research about it was by sastradhi and widagda k (2013) which stated that the atmosphere of outlets and reference groups has an influence on hedonic value and impulse buying. other study was by dedeoglu, et al (2018) that stated that servicescape can affect the hedonic value of consumer. based on the research background explained, this study entitled servicescape and reference group in determining hedonic value and its implications of impulsive buying. so that the main objectives of this study were analyzing the influence of servicescape and reference group on the hedonic value and its implication on impulsive buying of plaza asia tasikmalaya visitors partially and simultaneously. 2. literature study/hypotheses development in this study, the literatures related to the study were about servicescape, reference group, hedonic value, and impulsive buying. 1. impulsive buying bayley and nancarrow (in yistiani, et al, 2012) defined impulsive buying as shopping behavior that occurs unplanned, emotionally interested, in which the decision-making process is carried out quickly without thinking wisely and considering all available information and alternatives. shiffman & kanuk (2010) stated impulsive afebi management and business review (ambr) vol.05 no.02 december 2020 62 buying was happening when the consumers who like shopping find the innovation and creative sales promotion used by retail shop. the big discount aimed to target the customer who liked the promotional price and so on. impulsive buying occur when consumers see a certain product or brand, then consumers become interested in getting it, usually because of an attractive stimulus from the store (utami, 2010). purchasing activities held without prior shopping intentions and without considering the results of the purchase. or it can also be said of a sudden, strong, persistent urge to buy something directly, without paying much attention to the consequences (mowen and minor, 2012). impulsive buying is a sudden desire to buy a product without planning or prior purchase intentions without much consideration and tends to use emotions in the purchasing decision-making process (octa, et al, 2014). impulsive buying can be said to be a sudden impulse with full force, persistence and not being planned to buy something directly, without paying much attention to the consequences (rachmawati in yistiani, et al, 2012). thus, it can be concluded that impulsive buying is a shopping behavior that occurs unplanned, attracted emotionally, where the decision-making process is done quickly without thinking further. there are several indicators that can measure impulsive buying, there are (yistiani, et al, 2012): (1) spontaneity, which is a situation where customers often buy something without being planned first; (2) purchasing without thinking consequences, which is a condition where customers often make purchases without thinking about the consequences of the purchases made; (3) rush purchases, is a situation where customers often feel that they are too hasty in buying something; (4) emotional, customer assessment where customers do shopping activities influenced by the consumer’s emotional state. 2. hedonic value hedonism is a greek word “hedone” which means pleasure or enjoyment. hedonic consumption reflects the value of shopping experiences such as fantasy, arousal, sensory-stimulation, enjoyment, pleasure, curiosity, and entertainment (scarpi in octa, et al, 2014). the hedonic value of consumption is a consumption experience related to feelings, fantasies, pleasures, and the senses, where these experiences affect one's emotions (asnawati and wahyuni, 2018). hedonic value is a feeling of pleasure when someone is shopping to find an item that is good and valuable to him, where the good goods can be defined by a low price, advantage, quality and others. in addition, hedonic motivation is a purchasing activity that is driven by behaviors related to the five senses, delusions and emotions that make pleasure and material enjoyment the main goal of life (darma and japarianto, 2014). hedonic consumption as an aspect of behavior related to multi-sensory, fantasy, and emotional aspects of consumption. this view shows that consumption is driven by the pleasure in using the product. hedonic shopping motivation is similar to utilitarian shopping motive, but only purchasing decisions are related to fulfilling hedonic shopping values, such as pleasant experiences, entertainment, and fantasies. hedonic shopping value refers to the sense of enjoyment and pleasure that consumers receive from all buying experiences related to shopping activities (octa, et al, 2014). thus, it can be concluded that hedonic value is an emotional feeling that consumers feel from their shopping experience. scarpi in octa, et al, (2014) stated indicators of hedonic value as follow: (1) enjoyment, means customers enjoy shopping activities; (2) pleasure, means customers feel happy when visiting and when shopping; (3) curiosity, namely by making visits to outlets, customers can help fulfill their curiosity about the latest products; (4) entertainment, means a shopping as an entertainment; (5) social interaction, where customers can make social interactions during shopping. 3. servicescape bitner in rashid, et al (2015) stated that servicescape refer to build environtment or man-made physical surrounding that opposed to the natural (social environtment). servicescape and group references in determining hedonic value and its implication on impulsive buying 63 ballantine, et al (2010) stated that designed shopping environment with specific purposes such as creating emotional of the customer would make purchase decision. as defined by bitner in dedeoglu, et al (2018), the servicescape is an overall or holistic structuring of environmental dimension rather than a single component. it can help explain cognitive responses that affect people’s opinions about a place, other people, and or product. heide, et al in dedeoglu, et al (2018) stated that atmosphere, including heat, scent, voice, music, and lightning. this atmosphere is a part of ambience. the physical dimension, according to research of zeithaml in rashid, et al (2015), is a tangible cues that associated with service quality including all aspect of the services provider physical facilities exterior, interior, and other tangible factors. the dimensions of servicescape according to research of rashid, et al (2015) are (1) ambient condition; (2) functionality; (3) explicit cues; and (4) implicit cues. 4. reference group a reference group is someone who is directly (face-to-face) or indirectly influence on that person's attitude or behavior (kotler and keller, 2016). in connection with the social environment, it is a presence of other people participating in shopping activity such as family or friends that are influencing consumer decision in shopping. consumers who shop with family or friends usually don't just buy products, but also look for fun dedeoglu, et al (2018) based on the definitions by several experts above, it can be concluded that the reference group is a group that can influence consumer attitudes and behavior directly or indirectly. in this study, the indicators of the reference group are (indrawati, 2017) (1) primary group, including family, friends, neighbors and colleagues; (2) secondary groups, including community, religious, professional, and trade union groups; (3) aspirational group, namely the group that the person wants to join; (4) dissociative group, is a group that values and behavior rejected by the person. the research hypothesis were (1) servicescape and reference groups has an effect on the hedonic value of plaza asia tasikmalaya visitors, simultaneously or partially; (2) servicescape, reference group and hedonic value influence the impulsive buying of plaza asia tasikmalaya visitors simultaneously and partially. 3. research methodology the research method used was survey method with quantitative approach. verification research method was also used also in confirming the current study and the previous study. this research also aimed to determine the relationship between research variables and to examine the effect of servicescape and reference groups on hedonic value and its implications of impulsive buying of visitors of plaza asia tasikmalaya. this study used structural equation model (sem) analysis techniques which were used to determine how much the relationship between the variables studied. the statistical tests included the suitability of the model analysis, normality test, the interpretation of the estimated value of the model and the final stage in testing the hypothesis and knowing direct and indirect effects. this analysis technique was many advantages, were analyzing not only the latent variables but also its observed variables. the analysis was including normality testing, goodness of fit analysis. the results were obtained, then it would be analyzed and finally stated conclusions and suggestions. the sample size was 255 visitors of plaza asia tasikmalaya. the qualified respondent was chosen from how often they visit the plaza. the sample size was counted by 15 times of the number of observed variables (17 observed variables x 15) as explained by singgih santoso (2015). the sampling technique used convenience sampling technique. this sampling technique is a type of no-probability sampling method which was taken from a group of people easy to contact or reach. the data collection technique was by distributing questionnaire and the respondent filled it on the spot. beside it, the secondary data was collected by literature study from the electronic journals, plaza asia management and articles in the internet afebi management and business review (ambr) vol.05 no.02 december 2020 64 4. result in the beginning of data analysis, the author firstly use normality test, model fit test, parameter evaluation and finally hypothesis test. a. normality test based on the normality testing criteria, it could be concluded that the data used for the exogenous construct was normally distributed at both the univariate and multivariate levels, as shown in the following table. table 1 data normality testing observed var min max skew cr kurtosis cr (1) (2) (3) (4) (5) (6) (7) item 1 1.000 5.000 -.554 -1.173 .153 .577 item 2 1.000 5.000 -.607 -2.410 .170 .588 item 3 1.000 5.000 -.646 -2.466 .250 .824 item 4 1.000 5.000 -.923 -2.140 1.882 2.083 item 5 1.000 5.000 -.847 -2.380 1.146 2.315 item 6 1.000 5.000 -.576 -1.335 .661 .986 item 7 1.000 5.000 -.779 -2.561 .996 1.047 item 8 1.000 5.000 -.722 -2.433 .360 .396 (1) (2) (3) (4) (5) (6) (7) item 9 1.000 5.000 -.155 -.698 1.508 1.570 item 10 1.000 5.000 -.737 -2.545 1.594 2.229 item 11 1.000 5.000 -.594 -1.468 1.071 2.029 item 12 1.000 5.000 -.686 -2.163 .981 1.093 item 13 1.000 5.000 -.874 -2.570 1.375 1.928 item 14 2.000 5.000 -.192 -1.103 .654 .461 item 15 1.000 5.000 -.431 -1.446 .757 .849 item 16 1.000 5.000 -.446 -1.357 1.484 2.385 item 17 1.000 5.000 -.840 -1.323 1.889 2.108 multivariate 24.296 15.342 source: data analysis (2020) based on the information of the table above, the univariate skewness value was greater than 3 and none of the univariate kurtosis exceeds 10 as suggested by kline (2011). this condition is supported by the value of the critical ratio (cr) for skewness and kurtosis for each variable, none of which is greater than ± 2.58, so it can be concluded that the data is normally distributed at the univariate and multivariate levels. b. model fit test model suitability test can be seen from the table below: table 2. the goodness of fit index criteria criteria analysis results critical value model evaluation χ 2 chi-square 155.853 <341.395 good fit significance probability 0.472 ≥ 0.05 good fit rmsea 0.033 ≤ 0.08 good fit gfi 0.949 ≥ 0.90 good fit agfi 0.931 ≥ 0.90 good fit cmin / df 1.379 ≤ 2.00 acceptable fit tli 0.961 ≥ 0.95 good fit cfi 1.000 ≥ 0.95 good fit source: data analysis (2020) servicescape and group references in determining hedonic value and its implication on impulsive buying 65 based on the data analysis result, the model was fit (good level of acceptance). the value of χ 2 -chi-square was 155.853 which was smaller than 341.395 (chi-square table). this meant that the research model was good fit. the value of significance probability was 0.472 is greater than 0.05. this means that the research model was good fit. the rmsea value was 0.033 less equal to 0.08. this means that the research model was good fit. the value of gfi and agfi respectively were 0.949 and 0.931, which was greater than 0.90 which mean that the research model was good fit. the cmin/df value was 1.379 smaller than 2.00 which mean good fit. meanwhile, the tli and cfi values were 0.961 and 0.958 greater than 0.95, which means that the research model is fit. c. parameter evaluation the parameter estimates result by sem analysis was served in table 3. as follow: table 3 parameter estimates description regression weights: estimate (b) standardized regression weights : estimate (β) se cr p (1) (2) (3) (4) (5) (6) sc hv .362 .541 .409 .886 *** rg hv .276 .422 .296 1.945 .003 hv ib .389 .420 .379 1.025 *** sc ib .242 .501 .400 .605 *** gr ib .376 .204 .305 1.230 *** smc (1) .713 smc (2) .752 notes: sc= servivescape; rg=reference group; hv=hedonic value; ib=impulsive buying source: data analysis (2020) based on the analysis result it could be explained that the regression coefficient (standardized regression weights) of the servicescape variable on the hedonic value was 0.541, while the regression coefficient for the reference group variable on the hedonic value variable was 0.422. this meant that the servicescape was more dominant in influencing the hedonic value of visitors of plaza asia tasikmalaya. meanwhile, to find out the estimated value of the servicescape variable and the reference group for the hedonic value, it can be seen from the squared multiple correlation (smc) or r2, which was a value of 0.713. this value was the amount of influence simultaneously between the servicescape variable and the reference group on the hedonic value. it meant that the influence of servicescape and reference groups affected the hedonic value of visitors of plaza asia tasikmalaya was 71.3%. the regression coefficient (standardized regression weights) of the servicescape variable on impulsive buying was 0.501 while the regression coefficient for the reference group variable on the impulsive purchasing variable was 0.204. the regression value of the hedonic value variable on impulsive buying is 0.420. this means that the outlet atmosphere variable is more dominant in influencing the impulsive purchases of plaza asia tasikmalaya visitors. for knowing how the estimated value of the servicescape variable, reference groups and hedonic value toward impulse buying could be seen from the squared multiple correlation (smc) or r2 value was 0.752. this value was the amount of influence simultaneously between the servicescape variables, the reference group and the hedonic value on impulsive buying. it meant that the influence of servicescape, reference groups and hedonic value affected impulsive buying of plaza asia tasikmalaya visitors was 75.2%. furthermore, to determine the direct effect and indirect effect could be seen from the following table: afebi management and business review (ambr) vol.05 no.02 december 2020 66 table 4 direct and indirect effects information direct influence indirect influence total effect x1y1 0.541 x 0.541 0.293 x1x2y1 0.541 x 0.53 x 0.422 0.121 total x1 y1 0.414 x2y1 0.422 x 0.422 0.178 x2x1y1 0.541 x 0.53 x 0.422 0.121 total effect x2 y1 0.299 squared multiple correlation (r2 ) 0.713 notes: x1= servicescape; x2= reference group; x2= reference group; y1= hedonic value source: data analysis (2020) based on the table above, it can be explained that the direct effect of the servicescape on the hedonic value was 0.293, the indirect effect of the servicescape on the hedonic value through the reference group was 0.121, so that the total influence of the servicescape on the hedonic value was 0.414. the direct effect of the reference group on the hedonic value was 0.178, the indirect effect of the reference group on the hedonic value through the servicescape was 0.121, so the total effect of the reference group on the hedonic value was 0.299. the total influence of the servicescape and reference group on the hedonic value was 0.713. then it could be concluded that the influence of the servicescape was more dominant in influencing the hedonic value. 5. discussion the servicescape including ambient condition, functionality, explicit cues and implicit cues of plaza asia tasikmalaya which could provide special satisfaction to visitors in creating hedonic value. the servicescape created by plaza asia tasikmalaya will make visitors feel comfortable when visiting the plaza asia tasikmalaya.this finding was tested by interpreting the critical ratio (cr) and probability values. based on the parameter estimation, the cr value of the servicescape variable on the hedonic value was 0.886 which met the requirements, was between ± 2.58 and the probability value of 0.000 which met the requirements was less than 0.05. this meant that the servicescape had a significant effect on the hedonic value of visitors of plaza asia tasikmalaya. thus hypothesis 1 in this study was proven. the results were in line with the research of yistiani et al. (2012) and dedeoglu, et al (2018) which stated that servicescape had a significant effect on customer hedonic value. meanwhile, this research conducted by lin (2016) also stated that servicescape affected consumer experience, then after it, the top of mind of consumer will be created. beside it, pleasure will be created which refers to consumer pleasure when in the supermarket. reference group including family, friends, idols and other social groups that can influence hedonic values when visiting plaza asia tasikmalaya. the cr value of reference group variable in influencing hedonic value was 1.945 which met requirements, that was between ± 2.58 and the probability value was 0.003 which was less than 0.05. this meant that the reference group had a significant influence on the hedonic value of visitors of plaza asia tasikmalaya. thus the second hypothesis in this study was proven. this results was in line with research of dedeoglu, et al (2018) which stated that the influence of the social environment in the shop proved to have a significant impact on the hedonic value. in addition, for some people, shopping had a meaning of getting closer to family members or friends. to test the simultaneous hypothesis between servicescape and reference group effects on the hedonic value of plaza asia tasikmalaya visitors statistically could be tested by the f-test. the result of the calculation of f-count was 223.36 more than f-table servicescape and group references in determining hedonic value and its implication on impulsive buying 67 value (3.04) so that the simultaneous hypothesis of the effect of servicescape and reference groups on the hedonic value was accepted. thus hypothesis 3 was proven. the results of this study were in line with the research of sastradhi and widagda k (2013) which stated that retail atmosphere, including servicescape and reference groups had an influence on hedonic value and impulsive buying. the servicescape including ambient condition, functionality, explicit cues and implicit cues will attract the attention of visitors to visit. in addition, the good servicescape provided will encourage visitors to make purchases, especially impulsive buying. this finding was based on the cr value of servicescape towards impulsive buying that was 0.605 which met the requirements (between ± 2.58) and the probability value was 0.000 which met the requirements. this meant that the servicescape has an influence on impulsive buying of visitor of plaza asia tasikmalaya. thus the fourth hypothesis in this study was proven. the results of this study was in line with the research of herthatie (2012); yuliantini and sulistyawati (2013) stated that the servicescape has influence on impulsive buying. visitors consider suggestions from their social environment which include family, friends, community, idols and others in making purchases. the group referred to visit plaza asia tasikmalaya after gaining good impressions and experiences during their visit. so that the possibility of making impulsive purchases will be even greater. the cr value of the reference group variable on impulsive buying was 1.230 which met the requirements, which was between ± 2.58 and the probability value was 0.000 which met the requirements (less than 0.05). this meant that the reference group had significant influence on impulsive buying of plaza asia tasikmalaya visitors. thus the fifth hypothesis in this study was proven. the results of this study was in line with research by yistiani et al (2012); and risqiani (2015) which stated that the reference group can influence impulsive buying. to test the simultaneous hypothesis of the effect of servicescape, reference groups and hedonic value on impulsive purchases of plaza asia tasikmalaya visitors statistically, by f-test was used. the result of f count value was 533.58 was more than f-table value (3.04) so that the simultaneous hypothesis of the effect of servicescape, reference groups and hedonic value on impulsive buying was accepted. thus hypothesis sixth was proven. the results of this study were in line with the research of sastradhi and widagda k (2013) which stated that the servicescape and reference groups had an influence on hedonic value and impulsive buying. in addition, according to rachmawati (2009) consumers are more likely to be involved in impulsive buying when they were motivated by hedonic desires or economic reasons, such as pleasure, fantasy, and social or emotional satisfaction. 6. conclussion based on the result, it could be concluded that there was a significant influence of servicescape and reference group variables on the hedonic value of visitors of plaza asia tasikmalaya partially or simultaneously. there was a significant influence of servicescape variables, reference groups and hedonic values on impulsive buying of visitors to plaza asia tasikmalaya partially or simultaneously. the implication of this research hopefully could contribute to the existing student in enriching management sciences, motivating them in increasing literation skills, such as writing journal and doing the current issues research. for the retailer, especially plaza asia tasikmalaya, this study can be useful in developing servicescape and motivate the consumer/visitor to make reference in determining the hedonic value and impulsive buying. otherwise, the visitor would feel uncomfortable and annoyed. thus, they will not back to visit and then never recommend to others. the author also provided some suggestions as follows: (1) plaza asia tasikmalaya should pay attention to the servicescape, related to ambience, explicit cues and implicit cues that caused afebi management and business review (ambr) vol.05 no.02 december 2020 68 visitors becoming comfortable and getting pleasant; (2) advised to organize activities that can attract the attention of visitors so that interested visitors could provide recommendations to friends/family; (3) improving its facilities and services so that visitors feel comfort and enjoyment. so that they get a good impression when they visit plaza asia tasikmalaya; (4) complement the products offered, provide attractive promotion so that visitors were interested in purchasing products even though they did not need them (impulsive buying). this study was taken place in plaza asia tasikmalaya, the biggest mall in east priangan of west java. the data collective was by using convenience sampling. the analysis technique included common analysis by amos program. for the further study must take an action in choosing more supermarkets especially in west java indonesia for comparative study in determining hedonic value and impulsive buying and factors affecting them. related to the results, obtained a fairly large coefficient of nondetermination, so that it could be concluded that there were still other variables that affected the hedonic value variable and impulsive buying, and other variables can be tested in further research. so, deep analysis needed to understand customer behaviour especially in hedonic value and impulsive buying. references asnawati., & wahyuni, s. 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(2009). services marketing: integrating customer focus across the firm. boston: mcgraw-hill. https://nasional.kompas.com/read/2020/08/12/15261351/data-kependudukan-2020-penduduk-indonesia-268583016-jiwa?page=all https://nasional.kompas.com/read/2020/08/12/15261351/data-kependudukan-2020-penduduk-indonesia-268583016-jiwa?page=all https://ojs.unud.ac.id/index.php/manajemen/article/view/6795 https://www.viva.co.id/arsip/765421-mendag-50-persen-orang-indonesia-sangat-konsumtif https://www.viva.co.id/arsip/765421-mendag-50-persen-orang-indonesia-sangat-konsumtif the operational indicator of "insani" resources criteria as the implementation of islamic human resource management 79 the operational indicator of "insani" resources criteria as the implementation of islamic human resource management ali arifin21 ⃰ and nurlaili adkhi rizfa faiza 2 1,2 universitas islam negeri sunan ampel, surabaya, indonesia abstract human being has function as khalifah fil arḍ means that has qualification as man power in maximizing the function of organizing resources. in an organization, the khalifah function is to achieve a maximum results acknowledge as insani resources (ir). the aims of this writing are to break down the criteria of insani to be operatively in strengthening the theory of human resource management. this paper focusing on three criteria of insani resources; al-qawiy al-amīn (qs: [28]: 26), makīnun amīnun (surah: [12]: 54) and ḥafīẓun alīmun (surah: [12]: 55). in sort, the relevance of alqawiy al-amīn, makīnun amīnun and ḥafīẓun alīmun, that the criteria of ir al-qawiy al-amīn, makīnun amīnun and ḥafīẓun alīmun have entered the standard of ir qualification of islamic economics keywords: al-qawiy al-amīn, ḥafīẓun alīmun, insani resource (ir), makīnun amīnun 1. introduction the position of human resources in economic activities is urgent. in some aspect its play significantly in generating multiplier value of economic. richard floridas’ theory about creative class underlines the position of human resources as the main factors in economic growth. in islamic prospection, human resources tend to have similar function and use insan kamil or perfect man in explaining human resources. referring to yusuf suit almasdi in ardana postulate that explain the position of human resources as the center of thinking, innovating, initiating, and developing nearby resources for the welfare of human life. therefore the quality of human resources determine the ability in anticipating future demands, having positive attitudes, behaving commendable, and insightful, and also has skills and expertise to suit the needs. there three basic characteristics of high quality human resources, first has adequate skill and ability in certain tasks both physically and mentally. second has affordable knowledge through adequate education and experience. the last but not least is having a good attitude and manner in interacting or communicating with fellow human beings. national professional certification board (badan nasional sertifikasi profesi bnsp) has three components of adequate human resources. the first component is having technical competence, a competence that related to ability to deal with technical issues. second component is having spiritual competence. a competence related to discipline, dedication, integrity and loyalty, work ethic, work motivation. the last component is having social competence. a competence in work together, to get along, to communicate, to coordinate, the ability to appreciate the opinions of others and the ability of cooperation in the team. * corresponding author. email address: aaarifin07@uinsby.ac.id afebi management and business review (ambr) vol.04 no.02, december 2019 80 ahmad hawari (2009) have four qualification about man power: having intelligent quotient (iq), having emotional quotient (eq), having creativity quotient (cq), and having spiritual quotient (sq). whereas syafi’i antonio summarized into two criteria: having professional quality and quality. in islam, man is the most perfect creation of allah swt. with the perfection given by god to man, then man has the power or potential that if developed will become insani resources (hereinafter called ir) that has a certain quality. and with that perfection, human is able to carry out his function as khalifah on earth. the aspect of professional quality and moral quality tend not sustainable and balanced due to have no balance in iman (faith) and knowledge. because the level of dignity will not be obtained if no faith and knowledge. with regard to economic activity, the aspect of faith and science as a catalyst of professional quality and moral quality leads to the function of man as khalīfah fil arḍ. to support the development of sharia financial institutions, ir is needed is those who have competence in modern financial management problems and also understand the laws of sharia, especially about muamalah. to realize the system and order of sharia financial institutions are healthy and istiqomah in the implementation of sharia principles are required also ir capable of mastering sharia and financial techniques. every ir in sharia financial institutions should be familiar with all islamic finance concepts. the lack of skills and cognition ir in the field of islamic isntitutions can lead to serious negative impacts such as the implementation of sharia banking is not optimal and can make the practice of islamic isntitutions tainted by conventional culture. whereas, qur'an has explained that in delivering the amanah must be to the capable receiver, it is a person who really expert in their field. because putting someone according to his skills is one of the characteristics of islamic professionalism. here, the concept of insani (human-based sharia) is needed as a guide. 2. literature study islam defines human resources in several terms bāni ādam, al-basyar, annās, and al-insān. the term of bāni ādam means that human being are the descendant of adam. the term of al-basyar means that human is categorized of biological creature. the term of an-nās means human that associated to social creature that cannot life alone and always need the others supports. the term of al-insān means as represent of al mighty god as khalifah on earth and receives taklif and mandate for science including al-bayan, al-aql and altamyiz. in sort, the term of al-insān encourage humane to act creative and innovate in their life. in the qur'an has been explained how to choose and determine candidates insani resource (ir) based on certain criteria. this is in accordance with the word of allah on qs. al-qaṣaṣ [28]: 26: أََبِت ٱْستَـِْٔجْرهُ ۖ إِنَّ َخْيَر َمِن ٱْستَـَْٔجْرَت ٱْلقَِوىُّ ٱْْلَِمينُ َٰٓ قَالَْت إِْحدَٰىُهَما َيٰ “one of the women said, "o my father, hire him. indeed, the best one you can hire is the strong and the trustworthy." (qs. al-qaṣaṣ [28] : 26) the statement of the verse on how to choose the ir feasibility, is also present in the word of allah on qs. yusuf [12]: 54-55. يٌظ َعِليمٌ آَٰئِِن ٱْْلَْرِض ۖ إِن ِى َحفِ قَاَل ٱْجعَْلنِى َعلَٰى َخزَ ا َكلََّمهُۥ َوقَاَل ٱْلمَ ۝ ِلُك ٱْئتُونِى ِبهِۦَٰٓ أَْستَْخِلْصهُ ِلنَْفِسى ۖ فَلَمَّ قَاَل إِنََّك ٱْلَيْوَم لَدَْينَا َمِكيٌن أَِمينٌ “and the king said, "bring him to me; i will appoint him exclusively for myself." and when he spoke to him, he said, "indeed, you are today established [in position] and trusted." 55. [yusuf] said, "appoint me over the storehouses of the land. indeed, i will be a knowing guardian." (qs. yusuf [12] : 54-55) the operational indicator of "insani" resources criteria as the implementation of islamic human resource management 81 islam advocates to workers or irs, to perform their duties and jobs without any misuse and neglect and to work efficiently. perseverance and words in work are regarded as respectable. a small work done constantly and professionally is better than a big job done in a seasonal and unprofessional way. this is in accordance with the words of rasulullah saw which reads: “allah loveth any one of you that if you do a job, he pursue it (earnestly and with expertise)” competence and honesty are two traits that make a person considered a leading worker. qur'an is asserted that competence is the most important factor in initiating one's step. in the qur'an, it is explained about the prohibition of following what one has no knowledge of it as allah's word on qs. al-isrā [17]: 36: ئَِك َكاَن َعْنهُ َمْسـُٔوًَل َوََل تَْقُف َما لَْيَس لََك بِهِۦ ِعْلٌم ۚ إِنَّ ٱ َٰٓ لسَّْمَع َوٱْلَبَصَر َوٱْلفَُؤادَ ُكلُّ أُ۟ولَٰ “and do not pursue that of which you have no knowledge. indeed, the hearing, the sight and the heart about all those [one] will be questioned.” (qs. al-isrā [17] :36) rasulullah is an example for the establishment of a good character for ir, especially in the economic field. the beginning of the prophet's gait was as a merchant, whereby he started his trade with only intangible assets. with the capital of honesty, he started his cooperation with khadijah. based on the first character that must be grown for ir is honesty. competencies that are not supported with honesty will cause inequality. then after awakening honesty and good competence, someone in addition is required to work with a team. (fauzia & riyadi, 2018) from the encyclopedia of islam states that the main properties possessed by the prophet are ṣiddiq (true or honest), amānah (responsibility), faṭanah (smart) and tablīg (capable). (drei, 1999) a. ṣiddiq (honest) honest characters that reflect the insani resources of sharia are not only limited to say as truth, but also act according to reality. the unity between speech and action in the direction of truth is one of the characteristics of an ideal sharia insani resource. b. amānah (believed) responsible is a further appreciation of the character of insani resources with integrity. actions that move in accordance with commitment, business qualifications that seek every means to keep the word, and the courage to stand firm at risk for an achievement, that is the character of a responsible man. man who has sharia character is an insan who dare to take full responsibility. c. faṭanah (smart) a sharia human resource is required to be an intelligent human being. intelligent character in question is intelligence in accordance with the field of ability that is involved. d. tablīg (capable) a qualified insani resource is someone who has the ability at the level of ability to do the job well. in islam rasulullah is a recognized character excellence, and the messenger of allah is also an example of the insan kamil character. based on that, the human resources should have imitated the nature of the prophet muhammad, as contained in the word of allah on qs. al-aḥzāb [33]: 21: َ َ َوٱْلَيْوَم ٱْلَءاِخَر َوذََكَر ٱَّللَّ ِ أُْسَوةٌ َحَسنَةٌ ل َِمن َكاَن َيْرُجو۟ا ٱَّللَّ َكِثيًرا لَّقَدْ َكاَن لَُكْم فِى َرُسوِل ٱَّللَّ afebi management and business review (ambr) vol.04 no.02, december 2019 82 “there has certainly been for you in the messenger of allah an excellent pattern for anyone whose hope is in allah and the last day and [who] remembers allah often.” (qs. al-aḥzāb [33] : 21) the above verse is a verse that explains the necessity of every human being to imitate the messenger of allah in various words, deeds and behavior. the issue of sharia-based human resources is a basic development of the theory of islamic economic system. islamic values that are considered universal since the beginning of the development of islamic teachings to date, it can be implemented into spirit al-insaniyyah (humanistic). the form of the ideal islamic sharia resources according to islamic economics is similar to the teachings of islam that urges followers to imitate the nature of prophet muhammad saw. (rasyid, 2014) insan kamil is a perfect man, in islam rasulullah is a human who has reached the degree of insan kamil because all the qualities are praised in the prophet. (figure 1) figure 1 insan kamil ways 3. research methodology the method used in this study is library research, the research conducted by using document literature, either in the form of books, notes, or research reports from previous researchers. in this study, researchers put the focus of research on the criteria of insani resources contained in the qs. al-qaṣaṣ [28]: 26 and qs. yūsuf [12]: 54-55. 4. result and discussion insani resource criteria: theologycaloperational insani resource criteria: al-qawiy al-amīn in accordance with the criteria contained in the qs. al-qaṣaṣ [28]: 26 which mentions the criteria of ir as al-qawiy al-amīn, the authors describe it as follows: first, al-qawiy's criterion means strong, according to the author based on some references, can be interpreted the ability of ir in achieving the goal. psychologically, the ability (ability) ir consists of potential ability (iq) and the ability of reality insan kamil rasulullah ṣiddiq amanah faṭonah tabligh soft skill (sq & eq) hard skill (iq & cq) qualified / excellence insani resources the operational indicator of "insani" resources criteria as the implementation of islamic human resource management 83 (education). therefore, the employee needs to be placed on the job in accordance with his expertise. strong here can also be interpreted the power, ie power to a field. the criteria of ir al-qawiy are strong include the physical strength31 and mental strength (emotional42, intellectual53, spiritual64). physical strength is the ability necessary to perform tasks that demand stamina, dexterity and strength and other characteristics. while mental strength that includes emotional, intellectual, and spiritual abilities is the necessary ability to perform various mental activities, such as thinking, reasoning and solving problems. the right mental attitude also has an important role in everything we do, including in matters relating to the economy. mental ability plays a bigger role in complicated work, whereas physical ability has significance for performing less demanding tasks, such as jobs whose success requires stamina, dexterity, and otherwise. strength or ability in relation to work is a situation in an ir that is full of sincerity, efficient and successful to carry out the work to produce something optimal. moenir (1983) in his humanitarian & organization approach to personnel development said that in the ability there are 3 elements, these are the element of skill, physical elements and mental elements. these three elements are mutually supportive and the harmonious mix of the three produces something to match the requirements. suppose a person will do something but the element of skill is not owned then even if physically and mentally he can work, then the work will not be completed. conversely, if a person has his or her skills and physiology, it is possible but not done sincerely and mentally, the work may not be completed properly. regarding skills, it can be explained that it is closely related to the quality of work. one of the things that is needed by humans to achieve a goal with good results is strength. although not enough if only by relying on strength alone. but the nature of qawiy itself is an absolute thing that must be owned by each irs. so, ir qawiy is ir that has the ability to do something with agile and deft and has a lot of knowledge, able to apply everything well in accordance with the field of ability and can produce something of quality. the second criteria is al-amīn (trusted). the meaning of al-amīn here refers to personal integrity that demands the nature of trust. ir al-amīn means that ir is capable of undergoing and not abusing the beliefs it holds for its own sake. ir alamīn should be able to fulfill the amanah given to him well. characteristics of a professional ie must have the nature of trust, the ir is trusted and responsible. ir is a professional irworking in accordance with the field of expertise and profession. the character of ir al-amīn is not only limited to say the truth, but also acts according to reality. unity between speech and action and fully responsible for what has been done. responsibility can mean to reflect a willingness to bear all the 1 in addition to the state of health and level of physical strength, it is important in physical ability is good or poor biological function of certain parts of the body, for example between hr one very sharp eyesight and hearing, while hr others lacking in either of these two things . (gondokusumo, 1983) 2 emotion is a condition of the organism or the individual at a certain time characterized by effective gradation from the weak level to the deep level, such as not too disappointed and very disappointed. emotional strength can be interpreted as a person's ability to overcome emotions and can direct the positive direction. (jahja, 2013) 3 individuals will be called intelligent if it can think abstractly and good, if less able to think abstractly, the individual concerned is less good intellect. there are seven dimensions that form the intellectual ability, these are (1) the ability to count quickly and precisely, (2) the ability to understand what is read and heard and connect words to one another, (3) the ability of similarity and visual difference quickly and precisely , (4) the ability to recognize a logical sequence in a problem and then solve the problem, (5) the ability to use logic and assess the implications of an argument, (6) the ability to imagine how an object would appear if its position in space is altered (7) retaining and recalling past experiences. (rivai, 2012b) 4 spiritual power is one of the highest abilities, spiritual power is the non-material and soul dimension. a person who has a good spiritual ability will be able to cope with problems with well and patience. (jahja, 2013) afebi management and business review (ambr) vol.04 no.02, december 2019 84 risks resulting from actions. responsibility is a very good trait for human beings.57 any matter relating to the problem of duties and responsibilities or rights and obligations of the principle of amanah which became its basic value. qardawi (2004) said that muslims are obliged to improve the quality of education and training system and to prepare qualified human resources in all fields of life. next, placing personal on the right job and in accordance with the expertise of each, so it can develop the potential optimally. based on this, it is appropriate whenever and wherever ir to always behave and act professionally. by actually giving a business only to the right person. in accordance with the term "the right man, in the right place and in the right time" the right person, for the appropriate position (with expertise) and in the right moment as well. this term is in accordance with the meaning of al-qawiy al-amīn, if an ir meets the criteria of the nature of al-qawiy al-amīn, it will bring profits and succeed in carrying out a job. the strong and trustworthy ir (al-qawiy al-amīn) is an ir with the power of which he is able to carry out the work given to him, with the amanah he fulfills in accordance with his duties and responsibilities. with trust he will put things in his place. by force he is able to fulfill his duty. the effectiveness of job implementation is the foundation for success in achieving organizational goals. so the criteria of ir al-qawiy al-amīn is ir that has the power or ability (skill) in various fields according to the digelutinya, both the physical and mental strength and the strength of the nature of amanah which they use to solve jobs that are indeed handed over and entrusted to him. in terms of economics, qawiy's criteria must be strong in the field of islamic economics. he must master all forms of muamalah. ir in sharia financial institutions, are required to have expertise (qawiy) in the field of islamic economics. successful development of sharia financial institution is determined by the quality of ir in it. competence in the field of islamic economics is the absolute thing that must be owned by ir in islamic financial institution. qawiy ir is the criteria that ir should have in islamic financial institutions. qawiy's ir criteria are ir criteria that are capable of applying syariah values because they are able to master sharia and technical banking. with mental strength (emotional, intellectual and spiritual) he will be able to overcome all forms of economic problems. in addition to qawiy's criteria, the amīn criterion is also an absolute must for the ir, because the amīn (trustworthy) criterion will create harmonization in all life's activities, including in the economy. an islamic economic theorist named m. n. siddiqi takes the mandate as the most important principle of the enactment of the islamic bank system, he also said "deposits will also be accepted as loans paid on demand, as a trust that can be cashed at any time (rahardjo, 2002). insani resource criteria: makīnun amīnun based on previous explanation of makīnun amīnun (qs. yusuf [12] : 54), according to the authors in accordance with the research context, the authors describe it as follows: the first, criteria of makīnun, a high-ranking ir (strong due to position) is an ir who holds high positions in an organization (government, private or otherwise) in the place where he works. makīn ir also can be said as a strong ir, because he has a high authority power, the power is seen from the side of his position, with the position he has the power to determine and manage all what will be planned and will be done within the organization. 5 narrowly responsibility is vested in trust someone else to do. the term in islamic responsibility is an amanah. broadly defined responsibility as a human effort to do the mandate carefully, thoroughly, think of the good and bad, profit and loss and all things related to the act transparently causing people to believe and believe so that the deed gets a good reward or praise from others. (abdullah, 2006) the operational indicator of "insani" resources criteria as the implementation of islamic human resource management 85 according to the authors that the criteria of ir makīn (strong because of position) can not be considered feasible if he lacks competence that is ability and skill (ir criterion qawiy: strong or criteria ir ‘alīm: knowledgeable). the criteria of ir makīn which can be said worthy according to the author if the power or position is owned by the expertise called the power of expertise. the power of expertise is the power gained on the basis of expertise that is formed by the ability to perform a job based on individual knowledge, information, or expertise. this power is primarily concerned with the concept of leadership which shows that the leader's ability is due to his ability better than others. commands or other communications are accepted by others because of their assurance of their ability. power is the ability to influence others to achieve something in the desired way. power is closely related to authority, but these two concepts are different. power involves force and coercion, authority is part of a narrower scope of power. authority is a formal power possessed by a person because of the position held in an organization. authority is the right to do something or to order others to do or not to do something to achieve goals. the wise use of authority is a critical factor for organizational effectiveness. talking about the criteria of makīnun ir that is ir having high position or position if termed in indonesian a person like this is called as “leader”. while in arabic it is called khalīfah. regarding the leader of prophet muhammad saw said: “you are all leaders and be held accountable, the government must be responsible for its people. the husband is the leader of his family and is responsible for the family he leads. the wife is the household leader of her husband and children, she is obliged to take responsibility for them. a servant is the keeper of his master's property, he is responsible for the guarded property. remember, you are all leaders and will be responsible for that leadership.” (muttafaq alaih) each ir in an organization has a certain position as the person or employee responsible for completing a field or part of the work in the organization. so the position is not solely as a leader but can be in charge of a field of work that is not classified leadership. secondly, the criteria of amīnun, ir that can be trusted and responsible. amanah which is a further appreciation of the character of ir with integrity. actions that move in accordance with commitment, business qualifications that seek all means to keep the word, and courage to stand firmly face the risks that are made for the achievement. ir amīn is an ir who can indeed trust and be responsible in resolving all affairs or duties properly and in accordance with the goals to be achieved. in this chapter the authors do not really describe how ir amīn criteria as already discussed in the previous discussion. ir makīnun amīnun is an ir (leader) who has the power, has the power or ability and is trusted to manage and run the activities for the achievement of organizational goals with effective and efficient. every leader in a job will be held responsible for himself and the people he leads. the author concludes that the criteria of makīnun amīnun ir, that is: has the power or position where he works both institutional government, in private institutions or companies including sharia institutions, have the competence (ability or skill) with what will be the duty and responsibility and have the nature of trust is to do with sincerity of the heart and not abuse the power and authority it has. insani resource criteria: ḥafīẓun ‘alīmun based on the above explanation about the content of qs. yūsuf [12]: 55, then according to the authors who fit the research context, the authors describe it as follows: first, the criteria ḥafīẓun is to maintain or preserve. according to the author based on some references that the author understands, that ḥafīẓun ir as well as amanah ir which refers to the integrity of a person. ḥafīẓun ir is a person who can afebi management and business review (ambr) vol.04 no.02, december 2019 86 maintain a trust which has been entrusted to him, fulfill, execute and be fully responsible for the mandate given to him. so ḥafīẓun ir is ir which always keep trust. according to al-ghazali, as cited by rivai (2012a) said that the main purpose of the shari'a is to preserve the human welfare that includes the protection of their faith (aqidah), life, mind, descendants and their possessions. everything that guarantees the protection of these five things is a blessing for humanity and the will of man. secondly, ‘alīmun is knowledgeable criterion, ‘alīmun ir in english is known as knowledge worker which means knowledgeable worker. ‘alīmun ir is a highly knowledgeable and high-knowledge ir that is needed to handle a kind of work that can make a real good contribution. knowledge is the state of knowing, knowledge means all that is known. based on this, we can understand that science and knowledge is very important for ir in work, because with science an ir can work in a professional and can achieve the goal with optimal expectations. this ir is said as ‘alīmun ir. in islamic economics ir in islamic financial institutions not only have knowledge in the field of economics and finance, but also all forms of transactions in muamalah and know how the ethics that should be applied in the shariah financial institutions. the characteristics of alīmun/knowledge ir are: 1. have high proactivity. knowledgeable irs have a sense of responsibility and take the initiative to accomplish their tasks in accordance with their beliefs. a high sense of responsibility that led him to find alternatives to complete his work. 2. have a willingness and high learning ability. knowledgeable irs have a sense of responsibility for the development of his ability and work encourages him to always learn in various opportunities. 3. have an abundance mentality. knowledgeable irs have a humility that always shares their knowledge and believes that their knowledge will not diminish because of the sharing of knowledge with others, others will not share knowledge with it. 4. have the ability to synergize. knowledgeable irs hav the ability to realize creative cooperation based on the ability to appreciate differences. knowledgeable irs realize that the best results will be achieved if they are able to synergize their knowledge and ability with others. so ḥafīẓun ‘alīmun ir is an ir that has the ability to maintain the trust and has a high intellectual intelligence that can be relied upon to achieve the goals of the organization. in an organization such as a sharia financial institution, all ir should meet the criteria of ḥafīẓun ‘alīmun. because if the practitioners of sharia financial institutions do not meet the criteria of ḥafīẓun ‘will make all customers no longer want to transact or use banking services, and if ir sharia financial institutions do not have criteria ‘alīmun about syariah financial institutions, it will lead to implementation of sharia in the banking becomes not optimal and no difference with the existing hr conventional. so, should ir in sharia financial institutions must meet the criteria of ḥafīẓun ‘alīmun in accordance with the part of his position. but in reality there are still many irs in sharia banks that are still less knowledgeable in the field of islamic economics. this is because the ir in islamic financial institutions are mostly graduates of conventional or non-syariah study programs. even sometimes choose and determine the candidate ir because of the askriptif factors. as a person concerned there is still a family relationship or factors other than ignoring the factors of competence (skills and abilities)68. regarding matters relating to economic activities that become the reference for the success of ir in managing its business. for example when wanting to determine an ir for sharia banking is needed not only intelligence, but also their honesty. competence without integrity destroys a business, while integrity without competence 6 in q, s. an-nisā "[4]: 58 it is said that: indeed, allah commands you to render trusts to whom they are due. in addition, there is also in the hadith of the prophet which means: "if a business is handed over to not the experts, then wait for its destruction (hr bukhari & ahmad). the operational indicator of "insani" resources criteria as the implementation of islamic human resource management 87 will hinder the progress of the business. so between competence and integrity must be balanced. for islamic financial institutions, the criterion of ḥafīẓun which is preferred over ‘alīmun, because ḥafīẓun} ir will always hold the nature of his trust, a man who can keep his knowledge and will be motivated to gain knowledge which he does not yet have, while alīmun ir may use his ability to betray his trust. qawiy (strong) ir is an ir that has two abilities namely physical ability and mental ability (emotional ability, intellectual ability, and spiritual ability), makīn and alīm (high and knowledgeable) ir can also be said as qawiy ir but criteria makīn and alīm lead to leadership criteria. alīm ir can also be said as qawiy ir. alīm ir is the same as makīn ir. thus qawiy, makīn and alīm ir lead to reliability of reliable ir (proffesionalism). while amīn ir and hafiẓ ir have the same meaning that refers to the integrity of the unity between words and deeds (honest and can hold the trust and responsible). however, if professionalism and trust can not be obtained simultaneously in a person. if this is the case, then the most useful person in the appropriate position. for example, what is needed is the war leadership, the strong criteria required in this case. but, if a position requires more trust, people who have a mandate take precedence. for the problem of syariah banking that ir still has minimal skill in syariah banking (especially muamalah field) hence in this case which is preferred is the nature of amanah, because amanah will encourage someone to be professional to its field. the character that should be owned by each ir is a character possessed by the messenger of allah that is trustworthiness, ir really responsible with trust. ir is able to maintain confidence by keeping something secret that it must be kept secret, able to convey something that is supposed to be delivered. man with all the potential given by allah will be able to perform functions as khalifah on earth properly. man created and made as khalīfah aims to manage everything on earth as best as possible to achieve prosperity. to achieve results that match the goal, then it is necessary also qualified ir. the role of ir in having a very important meaning to achieve the desired goals. ir as one of the determinants of the organization's success. with the ability of an ir, the goal can be achieved optimally. ir plays an important role in the progress of islamic economy both in terms of quality and quantity. shariah institutions, especially financial institutions, sharia are quite different institutions, because they should involve qualified persons who are not only experts in economics and finance, but they must have qualifications in sharia economic too. fauzia and riyadi (2014) in their book entitled the basic principles of islamic economics: maqāṣid al-shariah perspective says that in a company, financial institution or other activities related to economy, credibility and professionalism if the organization has three devices, namely: insani device (humanware), hardware, software. insani devices are individuals among institutions, from owners, directors, managers, to workers at the bottom. the human device of an institution must be adequate from quantity and harmonious in quality and praiseworthy in personality. hardware is a means of production and the completeness of physical work that becomes a vehicle and facilities and infrastructure of the work or activities in an institution. while the software includes non-physical or virtual things such as division of work fields, decision-making procedures, authority and responsibilities of officials or workers, customer service processes, systems that organize and establish work mechanisms between sections, including software in matters related to computerial work. in an institution, such as sharia banking, competence and integrity (criteria of alqawiy al-amīn, makīnun amīnun and ḥafīẓun alimun) are the reference for the success of ir in managing its business. for example, if you want to determine an ir that you want to put in a certain field that is needed not only intelligence, but also their afebi management and business review (ambr) vol.04 no.02, december 2019 88 honesty. competence without integrity destroys a business, while integrity without competence will hinder the progress of the business. so between competence and integrity must be balanced. if classified the criteria of al-qawiy al-amīn, makīnun amīnun, and ḥafīẓun alīmun ir with the four characteristics of the prophet saft (ṣiddiq, amānah, faṭanah and tablīg) can be described as follows: 1. ṣiddiq (honest) and amānah (trusted) / amīn (trustworthy) and ḥafīẓ (guard) ṣiddiq (internal) is true in the word, amānah (external) is true in words and deeds. ṣiddiq and amānah are the traits of a person amīn and ḥafīẓ. the amīn ir criteria is an ir criterion that has a character of an honest nature that reflects it as an ir that not only speaks according to the truth but also acts according to reality. the similarity between speech and action. unity between speech and action. while ḥafīẓ ir is similar to amīn ir which equally refers to integrity (is amanah). the responsibility is a further appreciation of the character of ir integrity with actions that seek all means to keep the word with deeds. the ir criteria of sharia character is an honest and trustworthy and responsible ir. 2. faṭanah (smart) and tablīg (proficient) / qawiy (strong), makīn (high-ranking) and alīm (knowledgeable) an ir is required to be an intelligent person. intelligent character in question is intelligence in accordance with the field of ability that is involved. proficient is someone who has the ability at the level of ability to do the job well. this skilled character is a continuation of the intelligent character. every insan is required not only to know, but also to apply the knowledge well. the lack of skills and knowledge of ir in institutions that operating in the field of sharia such as sharia banking can cause negative impacts such as the implementation of islamic sharia becomes not optimal. ir that meets the criteria of al-qawiy al-amīn, makīnun amīnun and ḥafīẓun alīmun can be regarded as a key element in the practice of islamic economic development. sharia institutions are a way for qualified ir to develop islamic economic system. developing ir in sharia banking is indispensable, because the success of shariah bank development is determined by the quality of management and the level of knowledge and skill of bank managers. ir in sharia banking requires not only extensive knowledge in banking but also understanding how to implement the principles of sharia in banking practices and have a strong commitment to apply consistently. in addition to requiring an in-depth understanding of sharia values and implementation in the form of real practice, it also requires strategic steps in shaping the values of sharia. in this case the ir fulfilling the criteria of al-qawiy al-amīn, makīnun amīnun and ḥafīẓun '‘alīmun which is also in line with the four characteristics of the saft prophet has entered the standard of qualification ir in islamic economic. according to the authors qualifications ir in islamic economics, these are: 1. qawiy, makīn, and ‘alīm ir a. have expertise and skill. b. knowing the concept and purpose of islamic economics, namely the attainment of falāh. c. knowing the concept of muamalah and can apply in islamic economic practices such as practices in islamic banking or other sharia financial institutions. 2. amīn and ḥafīẓ ir a. in the context of worship is an amanah to worship god. b. in the context of muamalah that is becoming khalīfah of allah, such as: 1) honest. 2) trustworthy. 3) transparent. 4) responsible. the operational indicator of "insani" resources criteria as the implementation of islamic human resource management 89 the criteria of al-qawiy al-amīn, makīnun amīnun and ḥafīẓun ‘alīmun is what every economic actor must have, this character will survive and be able to face the increasingly competitive business competition in the globalisai era. therefore, the competence and integrity in the self must be balanced. 5. conclusion insani in relation to human resources based on the islamic theological aspect has the criteria of al-qawiy al-amīn, makīnun amīnun and ḥafīẓun ‘alīmun. the criteria of ir al-qawiy al-amīn in the qs. al-qaṣ aṣ [28]: 26 ie strong and trusted, strong (al-qawiy) in question includes physical strength and mental strength. physical strength can be seen from the physical ability, while the mental strength includes emotional, intellectual and spiritual abilities. al-amīn is a criterion of the nature of trust that is not feared betrayed. ir criteria makīnun amīnun in qs. yūsuf [12]: 54 is a high-ranking, trustworthy, highranking one (makīnun) in the sense that a person has a high position (strong because of position), while amīnun is similar to the meaning of al-amīn contained in qs. al-qaṣaṣ [28]: 26. this verse is more directed towards leadership criteria. criteria ir ḥafīẓun ‘alīmun in qs. yūsuf [12]: 55 that is able to nurture knowledgeable, can nourish (ḥafīẓun) is meant to maintain a mandate (amanah), so the criteria of hafiẓun as well as the criteria of al-amīn / amīnun. while alīmun is knowledgeable in the sense of having knowledge or knowledge with what he maintains and with what has become his duty and responsibility. relevance of al-qawiy al-amīn, makīnun amīnun and ḥafīẓun alīmun in the islamic economic context that the criteria of ir al-qawiy al-amīn, makīnun amīnun and ḥafīẓun alīmun have entered the standard of ir qualification of islamic economics capable of surviving and able to face business competition. references abdullah, m.y. 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(2012b). organizational leadership and behavior. jakarta : rajawali pers. http://www.tafsirweb.com evaluation of taxation provisions on transactions e-commerce on the marketplace platform 26 evaluation of taxation provisions on transactions e-commerce on the marketplace platform posma leonardo31* and christine tjen2 1, 2 universitas indonesia, depok, indonesia abstract this research is based on the problem of the development of transactions ecommerce that do not necessarily boost state revenues from the taxation sector. the directorate general of taxation has made an affirmation regarding e-commerce by issuing se-62 / pj / 2013 dated december 27, 2013 concerning affirmation of provisions on taxation of transactions e-commerce, where transactions e-commerce are subject to the same tax as conventional business actors. this study aims to analyze the application of se-62 / pj / 2013 at pt bukalapak.com and provide recommendations to pt bukalapak.com related to the taxation aspect of transactions e-commerce. the object of the research is pt bukalapak.com with the tax division as a unit of analysis. the research instrument uses interviews with pt bukalapak.com and questionnaires to sellers who transact using the marketplace platform. the conclusion of the study is that pt bukalapak.com does not implement or apply specific provisions for users of the bukalapak application, this refers to the taxation system carried out in indonesia, namely self assessment. lack of tax knowledge on taxation obligations causes less success in maximizing tax payments on transactions e-commerce. pt bukalapak.com has the initiative to become a partner of the taxation authority. keywords: e-commerce, platform marketplace, taxation, transaction 1. introduction information technology has been successful in developing business transaction processes. one of them is that prospective buyers no longer need to come to the store to buy a product, only by using a smartphone they can buy the desired product. this activity is known as online transactions or e-commerce. online business / commerce is a business activity that uses internet and information technology. e-commerce helps companies to expand market share at the national level and expand business throughout the country. online business has its own advantages compared to conventional, the use of technology in online business makes it easy for aspiring entrepreneurs to start their business (testa, 2017). in an article in the online newspaper kompas.com explains some of the advantages in online business. first, the relatively low investment value; the main investment is only for goods sold, it doesn't need a lot of money to build a shop or rent an annual kiosk. second, the main working capital is in the internet connection, computers, and the goods and services offered. third, the risk of online business investment is also low, free business owners improvise to find the most appropriate products and the best way to market their business. fourth: potential customers reach millions of people. fifth, the cost of setting up an online store is lower than an offline store, on the platform it ecommerce does not charge registration fees or the establishment of a shop (dini, 2011). the increase in e-commerce transactions has a positive impact on the country's economy. this was stated by the governor of the bank of indonesia (bi) agus martowardojo stated that the improvement of digital technology in economic activities could drive growth above national economic growth (nababan, 2017). the government through the directorate general of taxes (djp) has regulated e-commerce transactions by issuing se-62 / pj / 2013 dated december 27, 2013 concerning affirmation of taxation provisions for e-commerce transactions, which states that the taxation treatment of e-commerce transactions is the same as conventional transactions. * corresponding author. email address: posmaleonardo@gmail.com afebi management and business review (ambr) vol.04 no.01, june 2019 27 therefore, the seller or buyer may be taxed in accordance with applicable tax laws. the potential taxation arising from online transactions can be of the type of value added tax (vat) and income tax. taxes on e-commerce transactions aim to apply justice to all conventional and e-commerce taxpayers. thus the increase in e-commerce transactions is naturally proportional to the tax increase from value added tax and income tax. based on the sea 2018 economy report released by google temasek, e-commerce is the fastest growing sector of digital economic activity. during 2018 digital economy activities in indonesia reached us $ 27 billion and will continue to grow to us $ 100 billion by 2025 (google & temasek, 2018). the executive director of the center for indonesia taxation analysis (cita), yustinus prastowo, if the directorate general of taxation is cannot collect taxes from this sector, the country loses tax potential of up to 10% of transactions (setyowati, 2017). so that problems arise, the existing provisions have not been sufficiently successful in maximizing taxes on e-commerce transactions. previous research has been conducted on the application of taxation aspects to ecommerce transactions. taxes on sales generally occur when the seller and buyer are in the same country, and the seller can be an extension of the government in tax collection (barsade & elyashiv, 2009). taxation policy based on region and jurisdiction becomes a problem in determining the potential for taxation in e-commerce transactions, because it is difficult to determine the location of sellers and buyers on transactions conducted through the internet so that it can be concluded that trading transactions over the internet without restrictions can cause problems in the application of taxation (yapar, bayrakdar, & yapar, 2015). there are difficulties in taxing e-commerce transactions, so special rules are needed to regulate e-commerce transactions to increase tax revenue from the sector. (sari, 2018). naicker in his research stated that e-commerce is a global business revolution and economic culture, so the government and tax authorities need to develop a taxation framework for e-commerce (naicker, 2003). this research was conducted by researchers to study and answer the problem formulation as follows: 1. how is the application of se-62 / pj / 2013 in pt bukalapak.com according to attribution theory? 2. how does seller apply tax provisions based on se-62 / pj / 2013 for transactions conducted on the marketplace platform according to attribution theory? 3. how to supervise taxation of transactions e-commerce conducted by pt bukalapak.com based on supervision theory? this research aim to: 1. analyze the application of se-62 / pj / 2013 in pt bukalapak.com according to attribution theory. 2. analyze the application of se-62 / pj / 2013 by sellers who make transactions on the marketplace platform according to attribution theory. 3. analyzing tax control overtransactions e-commerce conducted by pt bukalapak.com. this research is a case study and uses an approach mixed-method. the use of mixed methods is a combination of quantitative methods and qualitative methods so as to produce more accurate data. the researcher hopes that the research can provide benefits and suggestions that can be used as an evaluation and analysis of the se-62 / pj / 2013 application dated december 27, 2013 concerning affirmation of taxation provisions for e-commerce transactions that occur on the market platform, pt bukalapak.com and provide recommendations on the taxation aspects of e-commerce transactions to marketplace platform providers. prior study. previous studies have been carried out by previous researchers regarding the application of aspects of taxation to e-commerce transactions. taxes on sales generally occur when sellers and buyers are in the same country, and sellers can be an extension of the government in tax collection (barsade & elyashiv, 2009). taxation policies based on regions and jurisdictions have problems in making taxation in eevaluation of taxation provisions on transactions e-commerce on the marketplace platform 28 commerce transactions, because it is difficult to determine the location of sellers and buyers on transactions conducted via the internet so it is concluded that buying and selling transactions via the internet without restrictions can cause problems in taxation (yapar et al., 2015). because of this difficulty in taxing e-commerce transactions, special rules are needed to regulate e-commerce transactions to increase tax revenue from the sector (sari, 2018). e-commerce transactions are a challenge in tax policy, because they can lead to debate in the taxation and double tax authorities, until the organization for economic co-operation and development (oecd) regulates them in the tax treaty(cockfield, 2006). taxation in e-commerce is a global challenge for the government and business people so that a tax framework is needed to keep up with the development of ecommerce businesses (naicker, 2003). in india the implementation of good and service tax enhances the framework of the tax assessment that impacts on e-commerce in the country (anand & bhraguram, 2017) research with the title "treatment of vat on e-commerce transactions", this study aims to analyze the treatment of value added tax (vat) for e-commerce transactions. the study states that online transactions are included in the e-commerce category because each stage is both a process of buying and selling products or services that are done electronically by utilizing internet technology. the study states that ecommerce can be categorized as the distribution or marketing of services through electronic systems such as the internet or other computer networks. e-commerce also involves electronic funds transfers, inventory management systems and automated data collection systems. the study links value added tax due to taxes arising from each value added for factors that occur starting from preparing to selling goods or services to buyers. the results of the study state that e-commerce transactions are no different from conventional transactions, so they still have value added tax obligations (lomanto & mangoting, 2013). previous research entitled "revealing the issues of e-commerce taxation in indonesia and the solution to the solution". the aim of the study was to provide feedback on taxation in indonesia with various types of assessments and how to overcome tax loopholes in e-commerce activities. the study states that the principle of e-commerce transactions is the same as other transactions, but different in the way and tools used. the study describes the form of e-commerce in indonesia according to the rules se-62 / pj / 2013 divided into four groups, namely: • classified ads, is a classified ad site, but there are no online transaction activities. examples such as: olx.co.id, rumah123.com • marketplace, this business model provides a place of business activities such as an online mall as a place to sell goods and services. so that the website provider is not the owner of the goods being traded. examples such as: bukalapak, tokopedia, shopee • retail online, this business model is an online store that has its own web address, so that activities to sell goods or services are carried out by retail providers. examples include: blibli, bhinneka.com, alfamart • daily deals, in the form of sites that provide sales of vouchers as a means of payment for transactions of goods or services. examples such as: groupon, lakupon. the results of the study indicate that it is necessary to establish a supervisory body for e-commerce transactions through world-class website traffic, so that human resources are needed in this field (pangesti, 2017). in a study entitled "e-commerce transactions as a potential tax revenue in indonesia" published by the indonesian tax journal, it aims to determine the potential tax revenue from e-commerce transactions in indonesia. in this study the researchers explained that in indonesia, because there is still no proper regulation on e-commerce transactions so that it can cause a loss of potential tax revenue. the results of the study suggested that the directorate general of taxes collaborate with related parties such as apjii and the ministry of communication and information to consider tax regulations afebi management and business review (ambr) vol.04 no.01, june 2019 29 on e-commerce transactions, pay attention to effective tax collection systems and converge with international standards in avoiding double taxation (utomo, 2017). on december 31, 2018, the minister of finance of the republic of indonesia established the minister of finance regulation of the republic of indonesia number 210 /pmk.010/2018 concerning tax treatment of trade transactions through the electronic system (e-commerce) which took effect on april 1, 2019. obligation to sell goods or services in the marketplace platform and provider of marketplace platforms. but before the enactment of pmk-210 / pmk.010 / 2018, on march 29, 2019, the minister of finance announced the withdrawal of the provisions (pramesti, 2019). the pmk regulates the technical provider of platform marketplace to pay and report income tax and vat for services performed as well as provisions related to tax obligations for sellers of products or services on the marketplace platform. the regulation only regulates e-commerce transactions on the marketplace platform, while transactions carried out through social media are not regulated in detail. theoretical basis. attribution theory presents a framework that aims to provide an understanding of how each individual evaluates his own behavior and the behavior of others. attribution theory states that individuals seek an explanation of the events that occur to them and those around them (schisler & galbreath, 2015). the theory-related study was first conducted by fritz heider in 1958. heider (1958) in sukarma (2016) states that each individual is a scientist who tries to understand and understand the behavior of others through gathering information so that he can obtain a reasonable explanation about cause-effect of other people's behavior (sukarma & wirama, 2016). in the process of understanding your paper and style, you will try to determine the cause of the behavior, whether internal / external or external. robbins (2008) in sukarma (2016) states that there are three things in determining internal or external factors (sukarma & wirama, 2016), namely: a. specificity if someone will perceive differently from other people's behavior when different situations occur. for example, if someone does an extraordinary action then it is classified as external attribution. and vice versa, when doing things that are considered biased, they will be assessed as internal attribution. b. consensus if everyone has the same view in responding to someone's behavior in the same situation. if contribution is high, it will be in internal attribution. but if the contribution is low then it will be classified into external attribution. c. consistency if a person evaluates the behavior of others with the same response from time to time. the more consistent the behavior will be attributed to internal attribution. hite (1987) in schisler and galbreath (2015) states that in line with attribution theory found that there is a relationship between tax avoidance behavior and external factors when making taxpayer avoidance observations with taxpayer personal factors (schisler & galbreath, 2015). in the development of attribution theory, weiner combines the factors put forward by heider and rotter, namely internal factors (ability and effort) and external factors (difficulty and luck) (weiner, 2012). this research uses attribution theory, because the willingness of the public or taxpayers to implement tax provisions related to the perception of the tax itself. 2. research methodology this study uses a mixed-method approach. mixed methods can be used in research when in the process researchers use quantitative and qualitative data, where the use of these types of data can provide a better understanding of research problems (kurniasih, 2015). mixed research is used when researchers see that the use of quantitative and evaluation of taxation provisions on transactions e-commerce on the marketplace platform 30 qualitative methods will be very useful for answering existing research questions (shauki, 2018b). the data used in this study are primary data. primary data are the results of interviews with pt bukalapak.com, as well as the results of questionnaires to sellers who make sales transactions using the marketplace platform and questionnaires to sellers who transact using the marketplace platform. this study establishes pt bukalapak.com as an object in this study because pt bukalapak.com can answer the research question in this study. pt bukalapak.com is a member of the indonesian e-commerce association (idea). this study uses interviews and questionnaires as research instruments. interviews were conducted to obtain relevant information regarding research problems. interviews were conducted with bukalapak.com on the part responsible for reporting and taxation of pt bukalapak.com. the interview process begins with submitting an interview permit letter to pt bukalapak.com hrd, as well as requesting competent employee data to become a resource person. then submit a request to hold a meeting for an interview. the interview was conducted on tuesday, april 23, 2019 at the pt bukalapak.com office location. the informants appointed by pt bukalapak.com are senior tax manager and r2p with 1 year and 7 months working period at pt bukapalak.com and tax supervisor with 1 year and 4 months working period at pt bukalapak.com. the interview technique used is semi-structured interviews (shauki, 2019). the questionnaire was conducted to obtain relevant information regarding research problems. the questionnaire was conducted using an online survey tool with survey monkey media. questionnaires are conducted to sellers who conduct e-commerce transactions through the marketplace platform. the selection of sellers participating in the questionnaire is the seller in the nintendo buying and selling forum that sells goods / products with transactions using a marketplace platform such as bukalapak. the questionnaire contains how long they have been active in sales through e-commerce as well as a basic understanding of tax obligations. the questionnaire was conducted from march 14, 2019 to april 25, 2019. the questionnaire was sent using email, facebook messenger and whatsapp by sending the questionnaire link. there were 65 respondents who had filled out a survey of 80 sellers. questionnaire questions consisted of 10 questions with 4 being closed ended questions and 6 being open ended questions. data analysis. this research in the analysis data uses the content analysis approach. according to wilkinson and birmingham (2003) in shauki (2018), content analysis can be used in both quantitative and qualitative approaches to conduct analysis (shauki, 2018a). the case study in this study is a single case study. while the object of the research was pt bukalapak.com, a start up company that provides a "market" for online transactions both through websites and applications that can be obtained from the app store or google play. the bukalapak application is one of the e-commerce startups in indonesia that has succeeded in getting the title of unicorn. as well as ecommerce sellers who transact using the marketplace platform. 3. results and discussion in this chapter, we discuss the results and discussion to answer the questions from this study as follows (1) how is the application of se-62 / pj / 2013 in pt bukalapak.com according to attribution theory, (2) how does seller apply tax provisions based on se-62 / pj / 2013 for transactions conducted on the marketplace platform according to attribution theory, and (3) how to supervise taxation of transactions ecommerce conducted by pt bukalapak.com based on supervision theory. results. this study uses a research approach with case studies. in this study, in the analysis of data using the content analysis approach, by paying attention to the words of each word taking into account the main topics carried out. the data used uses primary afebi management and business review (ambr) vol.04 no.01, june 2019 31 data, using research instruments in the form of interviews and questionnaires. in processing data researchers use nvivo 12 software using tools words frequency. interview. the interview was conducted at pt bukalapak.com. with the tax division from pt bukalapak.com. the interview was conducted to pt bukalapak.com, because according to pt bukalapak.com researchers could answer the research question from this study. pt bukalapak as a member of the indonesian e-commerce association (idea), also places its representatives in the management of idea. here's a list of questions in the interview: • how are the stages / processes carried out by prospective sellers to be able to transact in the bukalapak application? • are there certain conditions for becoming a seller in the bukalapak application? • how does bukalapak validate or verify data submitted by prospective sellers? • can foreign or indonesian domiciled abroad become sellers in the bukalapak application? if yes, are there special provisions? • according to se-62 / pj / 2013 dated december 27, 2013 concerning affirmation of provisions on taxation on e-commerce transactions, which states that there are no new taxes in e-commerce transactions. what is bukalapak's view of this? • as of december 31, 2018, minister of finance regulation number 210 / pmk.010 / 2018 has been stipulated concerning the taxation treatment for trade transactions through electronic systems (e-commerce), which regulates the provider of platform marketplace. did bukalapak know about this? • before the revocation of pmk 210/2018 was announced, what preparations had been made by bukalapak? • do you think that a special tax for e-commerce transactions is needed? • do marketplace platforms need to be involved in overseeing taxation of ecommerce transactions? • what is bukalapak's hope for the directorate general of tax regarding taxation supervision on e-commerce transactions? • is bukalapak's advice and input on the directorate general of tax regarding tax supervision on e-commerce transactions? • in the last 5 years ecommerce transactions have shot up but not accompanied by tax growth. how do you think about this? based on questions about the stages / processes carried out by prospective sellers to be able to transact in the bukalapak application. respondent b explained that the stages carried out by prospective sellers to be able to transact in the bukalapak application by creating an account in the bukalapak application by simply registering the email address and telephone number of the prospective seller. based on questions regarding specific provisions or certain conditions for selling in the bukalapak application. respondent stated that there were no special conditions for selling in the bukalapak application, in the application it offered the convenience to transact and sell through the platform. questions about how the platform performs validation or verification of data submitted by prospective sellers. respondent stated that bukalapak continued to apply the validation process for the e-mail address and telephone number for the registration process for creating a new account in the application. questions about foreign nationals or indonesian citizens domiciled outside indonesia become sellers in the bukalapak application. respondent stated that bukalapak can be used by anyone, whether foreign citizens or indonesian citizens domiciled in indonesia as long as they fulfill the requirements in the account creation process. questions about bukalapak's view towards se-62 / pj / 2013 dated december 27, 2013 concerning affirmation of taxation terms for e-commerce transactions. evaluation of taxation provisions on transactions e-commerce on the marketplace platform 32 respondent stated that provisions for new types of tax on e-commerce transactions were not needed, because basically they were the same as conventional transactions. the question is whether bukalapak knows about the minister of finance regulation number 210 / pmk.010 / 2018 concerning the tax treatment of trade transactions through electronic systems (e-commerce) which should take effect on april 1, 2019. respondents stated that bukalapak knew about the issuance of taxation on e-commerce but was quite shocked at the time the regulation was issued because it felt that the rule was not final. questions about the preparations that have been made by bukalapak relate to the application of the minister of finance regulation number 210 / pmk.010 / 2018. respondent stated that bukalapak was waiting for the implementation rules for pmk210 / pmk.010 / 2018 so that there was no special preparation. questions about the urgency to do a special tax for e-commerce transactions. respondent stated that bukalapak stated that the determination of special taxes on ecommerce transactions could potentially conflict with the existing system. questions about involving the marketplace platform in monitoring taxation on ecommerce transactions. respondent stated that bukalapak offered to carry out socialization of tax obligations for e-commerce players. besides offering themselves to be an asp (active server page) which is given access to be a means of reporting and payment of taxes. questions about bukalapak's expectations of the directorate general of tax concerning taxation supervision on e-commerce transactions. respondent stated that there was a need for equality in tax supervision on e-commerce transactions both on platforms and social media.. questions about bukalapak's advice and input to the directorate general of tax concerning taxation supervision on e-commerce transactions. respondent stated that tax provisions must be balanced for all types of activities not only the marketplace platform is regulated. questions about bukalapak's opinion on the increase in e-commerce transactions are not comparable with tax growth. respondent stated that public knowledge of taxes is still an obstacle, it is necessary to change the paradigm of the community towards taxes. because of that, it needs improvement in terms of socialization to increase public awareness. the researcher used the content analysis method by using nvivo 12 software based on the word frequency so that the words that often appeared in the interview data were obtained. based on the word frequency result there are 1,019 words, researchers eliminate words that have no meaning and are not related to the topic. this shows that respondents emphasized and gave important things to this. respondents put emphasis on taxes, transactions, platforms, socialization, ecommerce sellers, marketplace. figure 1 word cloud interview questionnaire. the questionnaire was conducted using an online survey using survey monkey. questionnaires were carried out to sellers at the nintendo indonesia buying and selling forum who made sales transactions using the marketplace platform. there were 65 respondents who had filled out questionnaires from 80 sellers. questionnaire afebi management and business review (ambr) vol.04 no.01, june 2019 33 questions consist of 10 questions with 4 close-ended questions and 6 open-ended questions. the following questions in the questionnaire: • how long have you been selling online using a platform marketplace (tokopedia, bukalapak, shopee, etc.)? • in which marketplace platform do you sell products or services?? • do you also sell products or services offline (have a physical store or trade with conventional methods)? • is it when you register to become a merchant or seller on the marketplace platform that special verification is carried out by the marketplace platform? • do you have a npwp? • in your opinion, what tax obligations do individuals who have a npwp have to do? • do you think there is a connection between taxation and e-commerce transactions? give your opinion. • do you agree if the platform market service provider is authorized to collect taxes on e-commerce transactions and report your transaction to the djp? give your opinion. • based on se-62 / pj / 2013 concerning affirmation of taxation terms for ecommerce transactions, states that the application of taxation on e-commerce transactions applies equally to conventional transactions. do you agree on this? give your opinion. • how do you apply the provisions of se-62 / pj / 2013 to your e-commerce transactions in the marketplace platform? the results of the questionnaire were analyzed by content analysis, using nvivo by looking at the word frequency of the respondents' answers. top of the query results using the cluster analysis display. figure 2 result cluster analysis in this section we will discuss the results, which were obtained from the analysis of the results of interviews and questionnaires, on the research questions. how is the application of se-62 / pj / 2013 in pt bukalapak.com according to attribution theory? to answer this research question, the researcher conducted an interview with pt bukalapak.com through the results of an interview with the tax division of pt bukalapak.com. it was known that the company did not implement or provide specific provisions related to taxes on buying and selling transactions in its application, it refers evaluation of taxation provisions on transactions e-commerce on the marketplace platform 34 to the taxation system carried out in indonesia, self assessment. in this system the taxpayer is authorized by the tax authority to calculate, pay and report on its own tax obligations. so that the income tax or value added tax that may occur in transaction activities then it is a personal taxation obligation of each related party. because it is a personal obligation, no special application of tax obligations is required. on se-62 / pj / 2013 also stated that the application of taxation provisions on e-commerce transactions is the same as general tax provisions. therefore, pt bukalapak.com does not provide special conditions or conditions, including for foreign nationals who sell in the bukalapak application. in attribution theory there are factors that are taken into consideration in carrying out an action or act. for the formulation of this problem the data obtained from interviews and questionnaires fall into the category of consensus value factors in attribution theory. it refers to how someone does the same actions or actions with other people in general (the majority), then the action has a high consensus. it was shown that not only bukalapak but also other marketplace platforms did the same with regard to tax provisions for the application users. by not applying the provisions of se-62 / pj / 2013 specifically for users of the application both for sellers and buyers. one of the interesting information obtained in the interview process is that due to business competition in the marketplace platform high, the orientation reduces or even eliminates barriers for sellers or buyers to transact in their applications. in the absence of special provisions applied by the marketplace platform , the tax provisions contained in se-62 / pj / 2013 are not implemented. how does seller apply tax provisions based on se-62 / pj / 2013 for transactions conducted on the marketplace platform according to attribution theory? to answer this research question obtained from the results of a questionnaire to ecommerce sellers in the marketplace. based on the results of the questionnaire 26.56% of respondents who tried online did not have a npwp, in question number 10 in the questionnaire the researchers asked that the application of se-62 / pj / 2013 as many as 51.51% stated negative sentiment by stating they had never done, did not understand or not understand, 30.30% stated positive sentiments by stating that they were in accordance with pp 23/46 or implementing the provisions and 16.67% did not answer the question. the willingness of the public or taxpayers to implement tax provisions related to the perception of the tax itself, the negative sentiment contained in the results of the questionnaire shows the public perception of taxation. when the community does not yet have the correct understanding due to lack of information, it results in low awareness of taxation. this is the cause of "causal attribution". based on the formulation of the problem regarding the application of taxation provisions based on se-62 / pj / 2013 on transactions e-commerce on the marketplace platform by the seller according to attribution theory and based on data obtained through the research process, it can be seen that the majority of sellers have not carried out tax obligations in accordance with taxation provisions especially related to se-62 / pj / 2013. how to supervise taxation of transactions e-commerce conducted by pt bukalapak.com based on supervision theory? to answer this question this study was obtained from the results of interviews with pt bukalapak.com, based on the results of interviews obtained information if pt bukalapak.com has the initiative to become a partner of the tax authority by submitting themselves as asp, so that tax reporting and tax payments can be made through the bukalapak application . when it can be done in the application, bukalapak can encourage sellers in their application to report and pay their taxes. so as to help the tax authorities in the socialization of tax compliance to taxpayers. the role of application providers that can be done that can contribute to tax revenue is to provide data reports feeding on transactions that occur on the platform to the tax authorities. so that the taxing authority can supervise business actors who run their afebi management and business review (ambr) vol.04 no.01, june 2019 35 businesses using the media platform marketplace. this is necessary considering the system self assessment on taxation in indonesia needs to be balanced with a good tax supervision system. platform providers need to consider making npwp as one of the provisions for sellers who will sell in their applications. this is due to the fact that transactions are online included in the final income tax category for certain turnover so that they do not consider non-taxable income, the same as final income tax on deposit interest, leasing rights on land and / or buildings. in attribution theory the thing that drives pt bukalapak.com in doing that behavior can be driven by obligation (feeling to do something) and being permitted (allowed to do something). therefore it is necessary to have binding and obligatory provisions, because of transactions e-commerce there are no technical regulations governing it. se-62 / pj / 2013 does not have permanent legal force, because. so it needs to be considered for the issuance of regulation of the director general of tax or regulation of the minister of finance. pt bukalapak.com stated in an interview that it was ready to support every provision stipulated by the government, but asked to continue to consider equal treatment, especially for foreign marketplace platforms that do not have permanent establishment in indonesia and the social media that are widely used to sell online. 4. conclusions in this chapter we discuss the conclusions of the discussion of results and descriptions to answer some of the research questions discussed in the previous chapter. to answer the research question (1) pt bukalapak.com has a view that the taxation obligation is an individual obligation of each taxpayer, so it does not apply special provisions for the application of se-62 / pj / 2013 for the users of the application, it is also carried out by all marketplace platforms in the association. to answer the research question (2) most of the sellers who carry out transactions on the marketplace platform have not implemented tax obligations properly based on applicable regulations, the public's willingness or taxpayers to implement taxation provisions related to the perception of the tax itself, there are negative sentiments that indicate people's perceptions of taxation. to answer the research question (3) tax monitoring of transactions e-commerce providers marketplace platform has not been conducted. internal supervision is carried out by providers marketplace platform on activities related to business processes ranging from registration to transactions, this is done for the convenience of users in using their applications and to avoid fictitious transactions that utilize bukalapak promos and promotional programs. limitations. in this study has limitations that cannot be controlled by researchers. this research is only limited to transactions e-commerce that use the marketplace platform. the researcher also limited the distribution of questionnaires only to sellers who made transactions through the buy and sell forum marketplace platform due to time constraints in conducting the questionnaire process. this study of transactions ecommerce in indonesia, by conducting interviews with pt bukalapak.com which can only be used in indonesia's domicile. subsequent research proposal. considering that e-commerce transactions are not only limited to the marketplace platform, researchers propose that further research be conducted on non-platform marketplace. references anand, p., & bhraguram, t. m. 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(2017). vat treatment of e-commerce intermediaries table of contents. utomo, r. u. (2017). tantangan pengawasan ppn atas transaksi konten digital. jurnal pajak indonesia, 1–6. weiner, b. (2012). handbook of theories of social psychology : volume 1 an attribution theory of motivation. (p. van lange, a. kruglanski, & e. higgins, eds.) (vol. 1). london: sage. https://doi.org/http://dx.doi.org/10.4135/9781446249215.n8 yapar, b. k., bayrakdar, s., & yapar, m. (2015). the role of taxation problems on the development of e-commerce. procedia social and behavioral sciences, 195, 642–648. https://doi.org/10.1016/j.sbspro.2015.06.145 123 ownership-retention and the value of indonesian initial public offering (ipo) firms in 2013-2016 ernie hendrawaty*, syifa fadiah adlina management, faculty of economics and business, lampung university, indonesia abstract the study investigates information asymmetry between security issuers and other market participants. investors and entrepreneurs require reliable information about the firms. therefore, it is crucial to examine how the top management information can be communicated to other market participants. the empirical implications of the model are tested on the set of 28 of 89 indonesian firms that made an initial public offering in 2013-2016. the asymmetry problem is most significant when a firm makes a first public issue. furthermore, the study explains the number of shares retained by the entrepreneur as a signal of ipo firm value. the test results are generally consistent with the signaling model's predictions, while the role of the controlling variables does not support the firm value . keywords: ownership-retention, firm value, initial public offering, ipo. *corresponding author. email address: ernie.hendrawaty@feb.unila.ac.id ownershipretention and the value of indonesian initial public offering (ipo) firms in 2013-2016 received july 1st 2021 review september 9th 2021 publish december 31st 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/466 mailto:ernie.hendrawaty@feb.unila.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/466 124 ambr introduction a company to develop its business must have a decision to increase capital, either by borrowing money or issuing shares in the capital market. the capital market is often used as alternative funding for companies with relatively low costs than debt. the first public offering transaction occurs in the primary market, and this activity is called the initial public offering or ipo (widarjo, 2011). the general objective is to develop its business, provide maximum prosperity to its shareholders, and optimize its value. the company's value is determined by the demand and supply of the shares concerned in the stock market (faza and hidayah, 2014). firm value can be proxied by tobin's q ratio. tobin's q is an indicator to measure the company's performance, especially the value, which shows a management performance in managing company assets (aida and rahmawati, 2015). firm value can be said to have a good performance if the average value of tobin's q ratio is more than one, and vice versa if the average value of tobin's q is less than one, then the firm value can be said to have a bad performance. ownership retention is the percentage of the old owner's shares that the old owners still retain after the company made an initial public offering (widarjo, 2010). initial public offerings have information that is not symmetric between the old owners of the company and shareholders. this imbalance of information can be minimized, so the old owner must convey a signal about the company's prospects to be offered to shareholders. the signal conveyed by the old owner will provide information to shareholders to find out the company's prospects in the future. according to fan (2007), ownership retention can be measured by the number of new shares issued by the previous owner divided by the total number of shares issued after the ipo. analyzing a problem in research can be easier by using control variables. the control variables used in this study were intellectual capital, leverage, and growth. intellectual capital is all knowledge assets that are divided into stakeholder resources (relations stakeholder and human resources) and structural resources (physical infrastructure and virtual infrastructure) that contribute significantly to improving the competitive position by adding value to interest parties (marr and schiuma, 2004). intellectual capital can be measured by the value added intellectual coefficient (vaic) (pulic, in sayyidah and saifi 2017). according to sayyidah and saifi, intellectual capital can be said well if the company can develop the ability to motivate their employees in order to make them innovative, increase productivity, and has a system also structure that can support the company for maintaining and even increasing the profitability and value of the company. according to hasibuan, dzulkirom, and endang (2016), company funds come from internal and external funds. internal funds are sources of funds that originate from the company, such as retained earnings and depreciation, while external funds come from outside the company that obtained from suppliers, such as bank loans (loans) or leverage, securities (bonds), issuance of new shares, suppliers, creditors, and others. leverage is the company's ability to meet its financial obligations both in the short and long term or measure the extent to which the company is financed with debt (novari and putu, 2016). leverage can be measured using the debt-toequity ratio (der). debt to equity ratio (der) compares the total debt owned by the company to its own capital. according to sari and abudanti (2015), large companies are more in demand than small companies, so that company’s growth greatly affects the company's value. furthermore, to rapid growth in managing growth, companies must have operational control, emphasizing cost control. therefore, its faster growth can reflect the significant need for funds to expand its business and increase its desire to retain profits. this research was conducted based on the inconsistency of the result from the previous studies, so further research is needed. therefore, the above research is used as the basis by the author to research with the title " ownership retention and the value of initial public offering (ipo) firms in 2013-2016”. literature study signaling theory signaling theory indicates that the company will try to show the signal in positive information to potential investors through disclosure in the financial statements (miller and whiting 2005). the signal theory states how a company should convey information signals obtained and valuable to investors to assess companies with good performance. the company's annual report is crucial information and can influence shareholders in decisionmaking. signal theory starts from the assumption that each interested party does not get the same information. unbalanced information about the company's prospects occurs between prospective shareholders and the company's former owners when conducting an initial public offering of shares in the capital market. the company owner certainly has much better information about the company's prospects than potential investors. actions that the old owner of the company will take to communicate information to potential investors are called signals. a positive signal from the company can be expected to get a positive response from the market and provide competitive profits for the company and benefit investors. 125 methodology this correlational research uses secondary data from the indonesia stock exchange (idx) database. the variables were from the indonesian ipo's annual financial statements and prospectus reports in 2013-2016. the number of companies was 89, while a number of samples were 28 companies according to predetermined criteria the dependent variable is firm value. the firm value is the shareholders' understanding of the company's level of success in managing resources, as seen in the company's share price. so, if the stock price is high, the company's value will be higher, and vice versa. conversely, if the stock price is low, the company's value will be lower. firm value is defined as market value because the company's value can provide maximum benefits for shareholders if the company's share price increases (nurlela and islahuddin, 2008). to measure the firm value, we use tobin's q. according to lastanti (2004), tobin's q can be calculated using the following formula: q = (emv+d) / (ebv+d) description: tobin's q = firm value emv = market equity value equity market value closing price x number of shares outstanding d = book value of total debt ebv = book value of equity equity book value the primary independent variable is ownership-retention. the ownership-retention is the proportion of shares retained by the company after the ipo. ownership-retention is the number of shares retained by the first owner of the shares that are still maintained until the company goes public, grouped in a percentage format. ownership-retention is measured by the number of new shares issued after the previous owner divided by the total number of shares issued after the ipo (fan qintao, 2007), which can be formulated as follows: ownership-retention = (n before – n secondary) n after description: n before = number of shares outstanding before the ipo n secondary = number of shares issued during the ipo n after = number of shares issued after the ipo the other primary variable is intellectual capita. it can be interpreted as the distance between the value of the company and the cost of returning assets to company assets. intellectual capital can be divided into three categories, namely knowledge related to employees (human capital), knowledge related to company partners (customer capital), and knowledge related only to companies (structural capital). intellectual capital in this study is measured as follows: a. value-added (va), namely the difference between output and input. va = out in description: output out = total sales and other income. input in = expenses and costs other than employee expenses b. value-added capital employed vaca, showing the contribution made by each unit of ce to the valueadded organizations. vaca = va/ce description: value-added va = difference between output and input capital employed ce = funds available equity c. value-added human capital vahu shows the contribution made by every rupiah invested in hc to the value-added organizations. vahu = va/hc description: value added va = difference between output and input human capital hc = employee expense ownershipretention and the value of indonesian initial public offering (ipo) firms in 2013-2016 126 ambr table 1. descriptive statistics d. structural capital value-added stva measures the amount of sc needed to generate 1 rupiah from va and is an indication of the success of sc in value creation. stva = sc/va description: structural capital sc = difference between value added and human capital value added va = the difference between output and input human capital hc = employee expenses e. value-added intellectual coefficient vaic, indicating the intellectual ability of the organization, which is calculated by the formula: vaic = vaca + vahu + stva statistical model of research to test the effect of ownership-retention and intelectual capital on the firm value is as follows: 𝑌 = 𝛼 + 𝛽1 𝑋1 𝛽1 𝑋1 + 𝛽2 𝑋2 𝛽2 𝑋2 + 𝛽3 𝑋3 𝛽3 𝑋3 + 𝛽4 𝑋4 𝛽4 𝑋4 + 𝜀 description: y = value company α = constant x1 = ownership retention x2 = intellectual capital x3 = leverage x4 = growth β1, β2, β3, β4 = regression coefficient (the value increases or decreases) ε = error term result and discussion descriptive statistics on each variable can be seen from table 1 as follows: firm value (y) intellectual capital (x1) ownership retention (x2) leverage (x3) growth (x4) mean 1.91392 2.61642 0.53928 0.75535 0.69250 median 1.42500 2.75000 0.53500 0.61500 0.45000 maximum 4.50000 6.93000 0.93000 2.53000 2.52000 minimum 0.21000 -2.74000 0.05000 0.01000 0.30000 std. deviation 1.13232 2.44960 0.21874 0.61156 0.67899 observation 28 28 28 28 28 table 1 shows that the lowest firm value is 0.21 from mega manunggal property tbk (mmlp), which means that the company performance was poor because the company's value is less than 1. so, it indicates that the company cannot maximize the market value. in this study, the maximum value was found in the siloam international hospitals tbk (silo) company, which was 4.50, meaning that this value indicated that the silo company value was valued at four times greater than its book value. the mean value of the variable is 1.91. therefore, the mean value above shows that the sample company has a higher market value than its book value. the ownership-retention (x1) variable shows that the ownership-retention of blue bird tbk (bird) is the high have est, which means that the entrepreneur still maintains the company shares and has better information about the company. the minimum value is 0.05 from bintang oto global tbk (boga), which means that the company does not maintain the shares. the mean value of ownership retention is 0.53, which means that companies in indonesia were likely to maintain share ownership. 127 the intellectual capital (x2) variable shows a minimum value of -2.74 from siloam international hospitals tbk (silo) company. the company is too small to provide information about its intangible assets, while intellectual capital must provide information about its intangible assets because it can affect its value. the mean value of the intellectual capital (x1) variable is 2.61. the mean value is good if the value is above 2.5, or it can be categorized as bad companies (sunarsih and mendra, 2012). the leverage (x3) variable shows the maximum value is 2.53 originated from dharma satya nusantara tbk (dsng), which means the company has more debt or relies more on debt. the minimum value is 0.01means that the most negligible total assets are financed by debt. the mean value is 0.75, which means that the total assets financed by the company's debt are still relatively low and means that the company's total debt is smaller than its total assets so that the company's financial condition in this study is still relatively good. the growth (x4) variable shows that graha layar prima tbk (bltz) has a value of 0.03, which means that the company is low growth because of the increasing uncontrollable costs. the maximum value is 2.52 were from protech mitra perkasa (oasa). the mean value was 0.69 shows that, on average, the growth is still low. the data of all the variables were estimated using the ols model. the model tests the effect of ownership-retention, intellectual capital, leverage, and growth on the firm value. variable coefficient tstatistic c 0.8193 1.0300 ownership-retention (x1) 2.6328 2.6696 ** intellectual capital (x2) -0.1281 -1.6571 leverage (x3) -0.5272 -1.6118 growth (x4) 0.5895 1.7784 * observations 28 28 r-squared 0.3661 sum squared resid 21.942 f-statistic 3.3215 prob (f-statistic) 0.0275 durbin watson stat 2.2937 table 2 shows that the variable of ownership-retention has a probability value of 0.0137; therefore, the hypothesis is supported at the significance level of 5%. the study support that ownership retention positively affects the value of indonesian ipo companies in 2013 2016. the intellectual capital variable shows a probability value of 0.1111, which means that intellectual capital does not affect on firm value of indonesian ipo companies in 2013 2016. the controlling variables, the leverage, show a probability value of 0.1206 which means the leverage has no significant effect on firm value. therefore, the role of leverage to increase the firms' value is not supported by this study. the other controlling variable, the growth, positively affects the value of indonesian ipo firms for 2013 2016. so that, the hypothesis is supported in this study at the significance level of 10%. retaining parts of its equity is a signal from the entrepreneurs to convince the investors about the firm and pay the value of its shares because the entrepreneur has superior knowledge about the firm's future performance. however, this signal is costly for entrepreneurs since it prevents them from holding an entire portfolio and exposes them to firm-specific risk.. conclusion based on the results, it can be concluded that this study supports the signaling theory. this signaling theory will show a signal in the form of positive information. a positive signal from the company is expected to get a positive response from the market because this can provide a higher value for the company. according to rock (1986), informed investors know more information about the company's prospects for buying or investing in ipo shares if the expected market price exceeds the initial price, and is supported by a prospectus or information issued by the company at the time of going public that gives a positive signal. it is concluded that this occurs because investors see their own more. the company also considers leverage and growth as control variables to control the influence of the independent variable on the dependent variable, even though the role of leverage is not significant to increase the value. ownershipretention and the value of indonesian initial public offering (ipo) firms in 2013-2016 table 2. test of t statistics 128 ambr agus, w. 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(2011). pengaruh modal intelektual dan pengungkapan modal intelektual pada nilai perusahaan. simposium nasional akuntansi xiv aceh, 2122.widarjono, electronic worth of mouth and destination image and it’s affects on visiting tourists decision in the tikus island 58 electronic worth of mouth and destination image and it’s affects on visiting tourists decision in the tikus island eska prima monique damarsiwi 61* and wagini 2 1,2 universitas dehasen, bengkulu, indonesia abstract tourism is one of the mainstays to obtain the country's foreign exchange and its development is expected to spur indonesia's economic growth. every area in indonesia has the potential to be used as a tourist attraction, as well as the area of bengkulu city which has exotic marine tourism, namely in tikus island. the purpose of this study was to analyze the effect of electronic word of mouth (ewom) on tourist visiting decisions to tikus island and to analyze the influence of destination image on tourist visiting decisions to tikus island and to analyze which variables had the most dominant influences of visiting tourists to tikus island. this research also has an output target that is expected to be achieved, including this research can provide input for the government and employers to find out electronic word of mouth (ewom) and destination image so that it can ultimately increase tourist interest.. this research was conducted in the area of tourist objects that are often visited by local and outside tourists in the city of bengkulu. the sampling method in this study is a survey using a cross sectional questionnaire and the sample used is 385 respondents. the results of the research are concern for other independent variables, helping the company and destination image partially have significant positive influence on visiting decisions. while expressing positive filling variables did not have a significant effect on visiting decisions. however, simultaneously concern for other, expressing positive filling, helping the company and the destination image have a significant positive effect on the dependent variable of visiting decisions. while the destination image variable is considered as the dominant variable in influencing tourists visiting decisions to tikus island bengkulu keywords: consumer satisfaction, destination image, electronic word of mouth, visiting decision 1. introduction the tourism industry according to yoeti 2008 in santoso 2009 is one of the mainstays to obtain state foreign exchange and the development is expected to spur indonesia's economic growth. bengkulu province is one of the provinces directly adjacent to the indonesian ocean, precisely at 5040 '200' ls and 100040 '10400' bt. this bengkulu province region have exocratic maritime tourism, bay the existence of the tikus island (sustirahmah.2013). tikus island is located to the west of bengkulu city with a distance of 10 km from the center of bengkulu city and directly connected to the indian ocean with a geographical location of 30 ° 50'17.55 "ls and 102 ° 10'50,59" bt (http: // www. ppk-kp3k.kkp.go.id) although is not famous like the other tourist attraction, but natural beauty of the underwater panorama is a hidden pearl. its start from from beach tourism (walking and jogging on the beach, sun bathing), diving (diving), surfing (surfing), snorkeling (observation from the surface of the water), camping and out bond, canoeing (sailing), sailing / cruising (sailing / cruise ships), bird watching (bird observation), mangrove tracking, dolphin watching (watching dolphins), whale watching (watching whales), release of hatchlings, sport fishing, volly beach, * corresponding author. email address: ds.monique@gmail.com afebi management and business review (ambr) vol.03 no.02, december 2018 59 refreshing, culinary tourism, jet ski sport (sports jet ski), sea kayaking (kayak on the sea) (http://www.unib.ac.id). however, the existing potential has not been utilized properly and managed optimally, this can be seen from the results of the bengkulu province bps data (2015) that economic development in bengkulu is still very small and has not been able to reduce poverty which reaches 16% of the total population of 1.884.788 people. in order to increase economic development, the government launched the wonderful bengkulu 2020 program that is in line with the visit indonesia program. so that it is expected to be able to boost the interest of local, national and foreign tourists to be able to visit bengkulu. this is felt because the tourism sector is a sector that is able to provide a multidimensional effect, create jobs, reduce poverty and if it has been very advanced will be able to help bengkulu provincial pad. according to santoso (2009) the local government has realized the potential of the coastal area of the city of bengkulu, then made one of the strategic policies that is expected to be able to absorb not only local tourists but also national and international tourists. there are six focused forms of tourism planned namely coastal tourism, urban tourism, public tourism, water tourism, ecotourism tourism and port tourism. the development of tourism in the coastal area of the city of bengkulu is expected to be able to increase regional original revenue (pad) and the welfare of the people of bengkulu city and its surroundings. whereas according to spillane (1994) a tourist object or destination, must include 5 (five) important elements so that tourists can feel satisfied in enjoying their journey, namely: attractions, facility, infrastructure, transportasion. so that for the successful management of the tourism sector, the government needs to carry out management involving other parties or the private sector. as stated above, the government must be serious in improving strategic facilities and infrastructure such as airports, transportation insite and outside the city, telecommunications, immigration systems and rules that make it easier for developing business people in this sector. based on data from the ministry of communication and information technology (kemkominfo) internet use in indonesia in 2017 reached 112.6 million. with this achievement, indonesia ranks 6th in the world. whereas according to the data obtained from the association of indonesian internet service providers (apjii) until march 2015 there were 87.4% netizens to access social networks, then followed by browsing 68.7% and the last instant massaging 59.9% (teknisi.news.viva.co.id). so that through the presentation of the data it can be stated that the majority of internet users use their time to access social media. malita (2010) explains that social media is an evolution phenomenon, a shit in how people discover, read and share: news, information, content. hennig thurau et. al., (2004), argues that electronic word of mouth is a positive or negative statement made by potential customers or former customers about the product or company, which is intended for many people and institutions via the internet. people are getting to know various kinds of applications and various tools that are easy to use, friendlier, free to use and use to (re) build. no matter what application they use to spend time using it. every consumer who has consumed a product will give their own assessment of the product, and cannot be influenced by others because the decision comes from themselves, if the consumer feels satisfied or dissatisfied then the consumer will give the review of the product to someone else who has an account disocial media, e-mail, blogs, and websites that have been there before. (lee, park, and han, 2008). the involvement of consumers in providing responses and responses to the uploaded content as a media to find and exchange information is what is called electronic worth of mouth (ewom). according to research jeonga et. al., (2011) which focuses on positive electronic worth of mouth (ewom) dimensions, they stated that the positive electronic worth of mouth (ewom) dimension can be seen through three dimensions, namely: concern for the others, expressing positive feelings, helping the company. while henningthureau et.al., (2004) says there are eight dimensions of electronic word of mouth http://www.unib.ac.id/ electronic worth of mouth and destination image and it’s affects on visiting tourists decision in the tikus island 60 (ewom) namely platform assistance, venting negative feelings, concern for others consumers, extraversion / positive self enhancement, social benefits, economic incentives, the helping company, and seeking advice. in this study the researchers chose to take 3 dimensions from ewom namely concern for the others, expressing positive feelings, helping the company. according to hanif (2010) destination image is the belief / knowledge about a destination and what is felt by tourists during the tour. deep understanding about the destination image is believed to be able to make a significant contribution to in-depth knowledge in the field of tourism, such as tourist decision making and destination selection behavior (fakeye and crompton, 1991; goodrich, 1978). some researchers stated that the destination image can attract pre-visit visitors, even though they have never visited a tourist destination at all (echtner and ritchie, 2003; henkel et al., 2006). however, the image formed by pre-visit visitors may change if the actual conditions of tourist destinations do not match what they expect. kotler (2000) explains that interest is an impulse, or strong internal stimulation that motivates actions where this drive is influenced by stimulus and positive feelings about the product. some studies state that identification of attributes of a destination needs to be done to determine the important factors considered by tourists in deciding to visit a particular tourist destination (echtner and ritchie, 2003). based on the opinions stated above, it can be concluded that visiting is an impulse that arises from within a person to act before making a decision to visit a tourist destination not many studies have tried to identify attributes that are considered important for tourists to a particular tourist destination in a destination that still does not have a good level of popularity (developing regions). for this reason, this study aims to investigate the factors considered important for tourists to visit a particular destination and its relation to the level of tourist satisfaction at a destination. 2. literature review visiting decision in relation to the world of tourism, purchasing decisions are assumed to be a visiting decision so theories about purchasing decisions are also used in visiting decisions. consumer purchasing decisions are a process of fulfilling the need for goods and services. usually consumer stimuli to buy are obtained from outside themselves, both in the form of marketing stimuli and stimuli from other environments. consumer purchasing decisions can take place coherently in five stages, but not all of the consumers pass through these stages. the five stages include: introduction of problems, tracking information, evaluating alternatives, purchasing decisions and pre-purchase activities of consumers. tourist satisfaction is an overall measure of tourist opinions on each destination quality (prayag, 2008 in coban, 2012). according to yuksel et al. (2010) measure satisfaction with three items, first relates to whether or not tourists are happy with their decision to visit a tourism destination, second is the belief that choosing a related destination is the right thing, and thirdly the overall level of satisfaction during a tour to a tourism destination. electronic worth of mouth (ewom) according to kevin, dwayne and gremler in hadi (2013) are positive and negative statements by potential, actual or former consumers regarding a product or company and distributed to others via the internet. electronic worth of mouth (ewom) is often referred to as viral marketing, a marketing technique used to spread a marketing message from a website or use social networking sites which can create exponential growth like a virus. three stages of ewom according to sumardi in nugraha (2013) are talking, promotion, selling (taps). talking is the stage where a consumer talks about a product or company to other consumers. promotion is when someone or group is not just talking about but also willing to introduce it to other consumers. selling is a stage afebi management and business review (ambr) vol.03 no.02, december 2018 61 where someone or group sells a brand or product to someone else. one of the electronic worth of mouth (ewom) media commonly used by a person or company is social media. hasan (2015) mentions that social media marketing is the practice of facilitating a dialoque, using various online platforms including blogs, professional and social networks, video and photo sharing, wikis, forums and related web technologies to promote brands or introduce places they have visit. in the study of jasen et al (2009), microblogs are short comments that are usually sent to isolated networks. microblogging is often called micro-sharing, microupdating, twiterring (the most popular microbloging application) or other blogging terms. jeonga et al (2011) divided the electronic worth of mouth (ewom) into three dimensions, namely: concern for other (concern for others), expressing positive filling, helping the company. destination image image or image is an important element for a tourist destination. this is because the image is a picture of the conditions of the elements contained in the tourist attraction that was created in a long time. therefore, tourists usually use the destination image as one of the guidelines in making decisions leading to the tourism object. according to arafat (2006) image or image can be interpreted as a public perception of the identity of the company or association. the destination image in this study refers to brand image theory, where the brand can provide an overview of a product where the brand cannot be separated from its product, namely a tourist destination. the results of research conducted by semuel and lianto (2014) explained that brand image proved to have a significant effect on buying interests. this means that a product with a brand that is good or good, consumers are more likely to repeat purchases on that brand. for that semuel and lianto (2014) explain that the high and low brand image has an impact on buying interest. based on the research results of musay (2013), it was explained that brand image has a significant influence on purchasing decisions. previous research has found that destination images have a significant influence on destination selection by pre-visit tourists, travel-related decisions, and visit behavior intentions (echtner and ritchie, 2003; henkel et al., 2006; rittichainuwat et al., 2001) . the destination image also has a significant effect on purchasing behavior during the visit and the level of satisfaction with the destination (chon, 1990). destination images are formed when tourists create mental images of a destination based on information they receive from actual experience as well as from advertising media, and other marketing media (gartner, 1994). individuals can develop a destination image even without personal experience in a destination. destination images formed before a visit may change after individuals make actual visits, because the image of the destination before the visit may include information that is less precise or personal bias (balogu and mccleary, 1999; beerli and martin, 2004). in line with the wonderful bengkulu visit 2020 program launched by the bengkulu provincial government, the tourism sector is one of the leading sectors in increasing regional economic growth and society. (https://travel.detik.com/advertorialnews) starting in 2017 bengkulu starts heading to the bengkulu visit 2020, by making 7 events exposing bengkulu tourism potential both natural tourism, culinary and cultural arts to support the bengkulu 2020 program visit according to governor rohidin mirsah there are at least 7 tourism events that we will hold, the activity focuses more on events that expose the natural, culinary, and cultural arts of bengkulu province, which will come from all regencies and cities in bengkulu province, which the peak will be in 2020, at the 52nd anniversary of bengkulu province, which will be accompanied by 52 wonderful bengkulu festival events (https://bengkuluprov.go.id/tahun-2017-bengkulu-bersiap-menuju-visitwonderfullbengkulu-2020). https://bengkuluprov.go.id/tahun-2017-bengkulu-bersiap-menuju-visit-wonderfull-%20bengkulu-2020 https://bengkuluprov.go.id/tahun-2017-bengkulu-bersiap-menuju-visit-wonderfull-%20bengkulu-2020 electronic worth of mouth and destination image and it’s affects on visiting tourists decision in the tikus island 62 starting to improve bengkulu province to welcome the wonderful bengkulu visit program in 2020, it is hoped that it can improve the image or image of tourists towards bengkulu regency and province tourism objects, so that it can create a strong brand image in the minds of tourists and be positively accepted. currently pulau tikus is one of the islands prepared for the bengkulu wonderful visit program 2020. so that when pulau tikus has a strong and positive image in the minds of consumers, the tikus island will always be remembered and the possibility of consumers returning. so in this case if a good image is formed for pulau tikus tourism objects, consumers will be interested in visiting and making repeat visits. conceptual frame 3. research method this research was conducted in the area of tourist objects that are often visited by local tourists and outside tourists in the city of bengkulu. the researcher will distribute the questionaire to the respondents who are currently at the tourist attractions. data collection will be carried out for 3 months in 2018. this analysis technique which is used is the quantitative analysis technique which is the double regresion linear that is use to count the influence and make linear equation which are abel to be reference to project y variable (visiting decision) base on the x1 variable (concern for other), the x2 variable (expressing positive filling), the x3 variable (helping the company), the x4 variable (destinasion image). the research method in this study is a survey using a cross-sectional questionaire. the type of data used is primary data. the way to collect primary data is by distributing questionaires. in this study the population is tourists who visit the city of bengkulu. the sampling method used the accidental sampling technique, namely the taking of respondents as a sample based on coincidence, that is anyone who accidentally meets with a researcher can be used as a sample if the person met is in accordance with the criteria of the data source. the criteria determined by the researcher are: respondents are all consumers, both local residents and tourists in the tourist area of bengkulu city. 1. respondents are consumers who already know the tikus island or those who do not know figure 1 analysis frame destination image (x4) helping company (x3) expressing positif feeling (x2) concern of other (x1) afebi management and business review (ambr) vol.03 no.02, december 2018 63 2. reponden are consumers who can use the internet or other social media accounts. rao purba (1996), said that in determining the sample size, if the population is large and the number is unknown, then the formula is used as follows: information: n = number of samples z = normal distribution level at a significant level of 5% = 1.96 moe = margin of error which is the maximum error rate of sampling that can still be tolerated or desired by 5% or 0.05 according to arwiedya in nugraha (2013), the influence factor in purchasing decisions is online word of mouth by revealing that electronic worth of mouth (ewom) is interpersonal communication between two or more individuals where everyone has influence over continuous purchases using internet media or web. ali hasan (2014) mentions social media marketing is the practice of facilitating a dialoque, using various online platforms including blogs, professional and social networks, video and photo sharing, wikis, forums and related web technologies to promote. jeonga et al (2011) devide electronic worth of mouth (ewom) into three dimension: (1) concern for other. (2) expressing positive filling, (3) helping the company. base on the word above the writer summarizes the hypotesis: ha1 : concern for other has a positife influence to tourism visiting decision to tikus island ha2 : expressing positive filling has a positife influence to tourism visiting decision to tikus island ha3 : helping the company has a positife influence to tourism visiting decision to tikus island the destination image in this study refers to brand image theory, where the brand can provide an overview of a product where the brand cannot be separated from its product, namely a tourist destination.based on research results by semuel and lianto (2014) explained that brand image proved have a significant effect on buying interests. this means that a product with a good brand will attract buyers to repeat purchases on that brand. base on those conclusions explain that the high and low brand image has an impact on buying interest. musay (2013), it was explained that brand image has a significant influence on purchasing decisions. therefore based on the previous research results, the writer concludes the fourth and fifth hypothesis ha4 : destinasion image has a positife influence to tourism visiting decision to tikus island ha5 : concern for other (x1), expressing positive filling(x2) , helping the company (x3) and destinasion image simultaneously influence to tourism visiting decision to tikus island based on the formula above, the number of samples to be used by researchers is 385 respondents scattered throughout the tourist areas of bengkulu city. hypothesis testing in this study uses a simultaneous test (f-test) and partial test (t-test) to determine the effect between independent variables (x) and the dependent variable (y) and test the coefficient of determination (r2). the classic assumption test in this study is the normality test, heterocedasticity test, multicollinearity test and autocorrelation test. 4. result and discussion validity test to find out whether the validity of research data is valid, a comparison of the r table values with r count is done. if the value of r count is greater than the value of r table, it can be concluded that the research data is valid. from the spss results it can be electronic worth of mouth and destination image and it’s affects on visiting tourists decision in the tikus island 64 seen that r value y1.1 (0.709); y1.2 (0.754); y1.3 (0.755); y1.4 (0.667); y1.5 (0.747); x1.1 (0.767); x1.2 (0.818); x1.3 (0.815); x1.4 (0.733) ; x2.1 (0.824); x2.2 (0.83); x2.3 (0.792); x2.4 (0.732); x3.1 (0.844); x3.2 (0.905); x3.3 (0.872); x3.4 (0.857); x4.1 (0.842); x4.2 (0.906) x4.3 (0.910); x4.4 (0.711) and the r table value for n = 385 and α = 5% is 0.0998. so that it can be concluded that the question variable in the study is valid this is because the calculated r value is greater than r table and the significance is smaller than 0.05. reability test reability testing in this study is seen from the value of croncbach's alpha generated from data processed using spss software. according to george and mallery (2003), to measure the level of reliability of instruments based on cronbach’alpa. from the spss results, it can be seen that the value of croncbach's alpha = 0.900 so that it can be concluded that the research data is very good because the value of croncbach's alpha is above 0.80. so the data can continue to be used to the next test. classic assumptions before implementing multiple regression testing, the existing data must be free from classic assumptions, namely: 1. normality test to test the normality of the data can be done by kolgomorof-smirnov test. if the p-value ≥ α, then the data is normally distributed, whereas if the p-value ≤ α, the data is not normally distribut. from the results of the table above it can be seen that the pvalue in each variable is: 0.458 (kpbjk variable), 0.550 (concof variable), 0.210 (expres variable), 0.158 (help variable), 0.230 (image variable). the p-value value is greater than 0.05, so it can be concluded that the research data is normally distributed. after knowing the results that the data is normally distributed, the research data can be continued to be used in subsequent test 2. multicollinearity test the spss output results show that the vif value of each independent variable is far below 10, namely concof (x1) = 1,327, expres (x2) = 1,549, help (x3) = 2,111, image (x4) = 1,870. it can be concluded that there is no multicollinearity between the independent variables concern for other (concof), expressing positive feeling (expres), helping the company (help), destination image (citra). 3. autocorrelation test to be able to find out whether the research data is free from autocorrelation, we must first know the value of the durbin-watson table which will later be compared with the calculated durbin-watson value. after looking at the spss output for α = 0.05, k = 4 and n = 385 obtained the value of dl = 1.81577, du = 1.84758 and 4-du = 2.15242, 4-dl = 2.18423. because the value of durbin watson of 2.133 lies between du and 4-du, it can be concluded that the model is free from autocorrelation. 4. heteroscedasticity test heterokedastic testing aims to test whether in the regression model variance occurs from residual inequalities, one observation to another observation. in this study heterokedastis testing uses the glejser test, while the basis for testing decisions is seen from the significance value of the spss output in the coefficient table. if the value of significance is greater than α (0.05) then heterokedastic does not occur. the test results are as follows: from the spss output, it can be seen that the significance value of the concof variable (x1) = 0.241, expres (x2) = 0.111, help (x3) = 0.460, image (x4) = 0.141 greater than α (0.05) so that it can be concluded that the data does not have heteroscedasticy. afebi management and business review (ambr) vol.03 no.02, december 2018 65 multiple regression analysis 1. t test this t test is often used to determine whether in the independent variable regression model (x1, x2, ... xn) partially has a significant effect on the dependent variable (y). the results of the research data are as follows: table 1 t test result model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 5.361 1.144 4.688 .000 concof . 276 .051 .318 8.615 .000 expres .100 .067 .080 1.488 .138 help .136 .055 .154 2.477 .014 citra .619 .072 .426 5.422 .000 a. dependent variable: kpbkj source: result of spss data processing from the table result above it can be seen the regression equation and the relationship of each independent variable to the dependent variable: ŷ = 5,361 + 0,276 concof + 0,100 expres + 0,136 help + 0,619 citra tcount = (4,688) (8,615) (1,488) (2,477) (5,422) sig = (0,000) (0,000) (0,138) (0,014) (0,000) a) the first hypothesis (h1): : concern for other has a positife influence to tourism visiting decision to tikus island from the results of the test, the value of tcount for concof (x1) (8,615)> t table (1,966) and the value of sig is obtained. (0,000) < α (0,05), then h0 is rejected and ha is accepted, meaning that concern for other (x1) has a significant effect on the decision to visit tourists to rats. variable concern for other (x1) has a positive effect, meaning that every increase in concern for other (x1) is 1%, the visiting decision will increase by 0,276%, ceteris paribus. the results of this study are in accordance with the research put forward by jeonga (2011), this is probably due to the large number of users of social media accounts who have used their accounts to the maximum and there is concern for others to give the impression of the tourist destination they have visited. users of social media accounts can provide positive and negative experiences, with the hope that they can be used as a reference or input for visitors to tourist destinations. b) the second hypothesis (h2): expressing positive filling (x2) has an influence on the decision to visit tourists to tikus island. from the results of the test, the tcount expres (x2) (1,488) <ttable (1,966) and the sig value are obtained. (0.138) > α (0.05), the expressing positive filling (x2) variable is stated to have no effect and is significant for the decision to visit tourists to the rat island. the results of this study are not in accordance with jeonga (2011) research in sari (2012) which states that satisfying experiences can trigger consumer interest in visiting. this may be because many social media users are smarter in filtering out news or information that is widespread on social media. so that users do not easily believe the information that exists before they experience or even experience their own experience visiting these attractions c) the third hypothesis (h3): helping the company (x3) has an influence on the decision to visit tourists to tikus island. from the results of the test obtained tcount help (x3) (2.477) > t table (1,966) and the value of sig. (0.014) < α (0.05), the variable helping the company (x3) was stated to have a significant effect on the decision to visit tourists to the rat island. the variable helping the company (x3) has a positive effect, meaning that every increase electronic worth of mouth and destination image and it’s affects on visiting tourists decision in the tikus island 66 in helping the company (x3) is 1%, the visiting decision will decrease by 0.136%, ceteris paribus research is in accordance with hasan (2015) research which states one form of customer satisfaction with services provided by the company by helping to publish online. satisfied consumers can by themselves or voluntarily provide information about the company to other parties, both online and offline. this form of mouth-to-mouth communication is intended to help promote the company. d) the fourth hypothesis (h4): destination image (x4) has an influence on the decision to visit tourists to tikus island. from the results of the test, it was obtained the citra (x4) tcount (5,422) > t table (1,966) and the sig value. (0,000)> α (0,05), the destination image variable (x4) is stated to have a significant effect on the decision to visit tourists to the rat island. the variable destination image (x4) has a positive effect, meaning that every increase in the destination image (x4) by 1%, the visiting decision will increase by 0.619%, ceteris paribus. the results of the study are in accordance with isnaini's research (2018). come visit. this might happen because the image of a positive tourist destination on social media will attract consumers who seek satisfaction from the results of the photos and videos they upload on social media. 2. f test the f test is used to determine the effect of independent variables (x) together (simultaneous) on the dependent variable (y). in the study of independent variables (x), namely: concern for other (x1), expressing positive filling (x2), helping the company (x3) and destination image (x4). while the dependent variable is the visiting decision (y). as for the results of the research data as follows: table 2 f test result anovaa model sum of squares df mean square f sig. 1 regression 1162.865 4 290.716 40.956 .000b residual 2690.258 379 7.098 total 3853.122 383 a. dependent variable: kpbkj b. predictors: (constant), citra, concof, expres, help source: result of spss data processing the results of the f statistic test indicate whether all independent variables are have influencing together to dependent variable. such as seen in table 2, obtained the value of f count (40,956)> ftable (5.65) with a value of sig (0,000) < α (0.05), then the decision that the independent variables concern for other (x1), expressing positive filling (x2), helping the company (x3) and destination image (x4) simultaneously / simultaneously influence the dependent variable of the visiting decision (y) . this is in accordance with the fifth hypothesis (h5): there are influences of concern for other (x1), expressing positive filling (x2), helping the company (x3) and destination imagery (x4) variables simultaneously on visiting (y) tourists to the tikus island. table 3 from table 3 the value of r2 (r square) = 0.302 (30.2%) can be seen, this shows that concern for other (x1), expressing positive filling (x2), helping the company (x3) and destination image (x4) ) can only explain visiting decisions (y) of 30.2% and the remaining 69.8% is influenced by other independent variables not used model summaryb model r r square adjusted r square std. error of the estimate durbinwatson 1 .549a .302 .294 2.664 2.133 a. predictors: (constant), citra, concof, expres, help b. dependent variable: kpbkj afebi management and business review (ambr) vol.03 no.02, december 2018 67 in this study. to find out which variable is the most dominant one influencing the decision to visit tourists in mouse islands can be seen from the value of β in the coefficient table. from the spss output, the following data are obtained: table 4 coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 5.361 1.144 4.688 .000 concof . 276 .051 .318 8.615 .000 expres .100 .067 .080 1.488 .138 help .136 .055 .154 2.477 .014 citra .619 .072 .426 5.422 .000 a. dependent variable: kpbkj from the results of table 4 above, it can be seen that the concern for other (x1) = 0.276 (27.6%), expressing positive filling (x2) = 0.100 (10%), helping the company (x3) = 0.136 (13, 6%) and destination image (x4) = 0.619 (61.9%). so that the destination image variable (x4) has the most dominant influence on the tourists the decision to visit bengkulu tikus island. this is because the existence of a positive destination image that is disseminated through social media will increasingly attract tourists visiting interest. as well as the development of technological advancements, it is easier for the public to be able to access various information and tourism potential found on bengkulu tikus island. 5. conclusion and recomendations from the results of these studies, conclusions can be drawn as follows: partially the concern for other (x1) variable (8,615)> t table (1,966) and the sig value. (0,000) <α (0.05), helping the company (x3) (2,477)> ttable (1,966) and sig. (0.014) <α (0.05) and destination image (x4) (5,422)> t table (1,966) and sig. (0,000)> α (0,05) has a significant positive effect on the variable visiting decision (y). simultaneously concern for other (x1), expressing positive filling (x2), helping the company (x3) and destination image (x4) variables have influence on the dependent variable of visiting decision (y) with fcount value (40,956)> ftable ( 5.65) and sig (0,000) <α (0.05). from the partial coefficient table can be seen, that the variable destination image (x4) has the most dominant influence on the tourists decision to visit bengkulu tikus island, this is because consumers will decide to do more tourist visits based on the positive image of tourism objects that will be on go to. the suggestions that can be given by the author are as follows: in further research, it is necessary to add other external factors that can influence visiting decisions such as improving the quality of tourist destinations both from facilities and infrastructure, local governments can work with tour and travel to be able to publish tikus island attractions by making tour packages for tikus island destinations. in line with the wonderful bengkulu 2020 program, the regional government regularly holds photo or video contests about bengkulu tikus island tourism objects, in order to attract local and foreign tourists and upload them to social media. improve facilities on tikus island such as building places of worship and other public facilities, so that consumers can feel comfortable and satisfied when visiting tikus island. the government can upgrade ship transportation which was once confessional to be a glass bottom vessel where the lower part of the ship's hull is made of tempered glas. so that allows tourists to enjoy the beauty of coral reefs and various types of fish found on tikus island from a different perspective. further research can be done on foreign tourists so that they can find out about the influence of electronic worth of mouth (ewom) and the image electronic worth of mouth and destination image and it’s affects on visiting tourists decision in the tikus island 68 of pulau tikus tourist destinations in the minds of foreign tourists, so that the government and other related parties can plan a more appropriate marketing strategy. references arafat, w. 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(2010). destination attachment: effects on customer satisfactionand cognitive, affective and conative loyalty. tourism management, 31(2), 274-284. undang-undang republik indonesia nomer 10 tahun 2009 tentang kepariwisataan. https://bengkulu.bps.go.id/brs/view/id/153 (accesed on juni 8 2017) http://www.ppk-kp3k.kkp.go.id/direktopulau/index.php/public_c/pulau_info/1749 (accesed on june 11 2017) http://www.unib.ac.id/2017/04/seminar-nasional-potensi-pariwisata-baharmenujuwonderful-bengkulu-2020. (accesed on june 10 2017) https://bengkulu.bps.go.id/brs/view/id/153 http://www.ppk-kp3k.kkp.go.id/direktopulau/index.php/public_c/pulau_info/1749 http://www.unib.ac.id/2017/04/seminar-nasional-potensi-pariwisata-baharmenuju-wonderful-bengkulu-2020 http://www.unib.ac.id/2017/04/seminar-nasional-potensi-pariwisata-baharmenuju-wonderful-bengkulu-2020 the effect of social media marketing and brand awarness on purchase decisions with viral marketing as intervening variables on janji jiwa coffee consumers among students using social media area jabodeta 54 the effect of social media marketing and brand awarness on purchase decisions with viral marketing as intervening variables on janji jiwa coffee consumers among students using social media area jabodeta muhammad nurfauzi awaludin 51* and sigit sukmono 2 1, 2 universitas gunadarma, depok, indonesia abstract the purpose of this study was to analyze the influence of social media marketing and brand awareness on purchasing decisions with viral marketing as an intervening variable in janji jiwa coffee consumers among students who use social media in jabodeta. convenience sampling with samples used as many as 214 respondents to fill out an online questionnaire with certain criteria. this research uses two independent variables, namely social media marketing and brand awareness, the dependent variable is the purchase decision and as an intervening variable (mediation), namely viral marketing. the method used in this study uses path analysis which is the development of multiple linear regression andprocessed using spss software. from the research results, it is known that social media marketing has an effect on purchasing decisions both directly and indirectly through viral marketin mediation, and brand awareness influences purchasing decisions both directly and indirectly through viral marketing mediation. of the two, the direct influence on purchasing decisions is greater than the indirect effect through viral marketing mediation. keywords: brand awarness, purchasing decisions, social media marketing, viral marketing. 1. introduction the world of marketing has entered a revolutionary new era. to increase the globalization of the world economy in broad market opportunities for companies. this of course leads to competition for market players to achieve better performance. while the effectiveness of traditional marketing communications has decreased, new methods of marketing are experiencing significant growth. this new method is known as "digital marketing or digital marketing" which combines psychological, humanistic, anthropological and technological factors through multimedia with a large capacity and more interactive. the result is a new chapter of interaction between producers, markets and consumers, through the technology (cellular) media as the dominant element. digital marketing can simplify the process of marketing a product no longer hindered by barriers such as distance, time and language. the convenience offered by this can also make it easier for businesses to expand their business by utilizing digital marketing (chua, rashid, law, hamizah, khairul, and chua, 2010). with digital marketing communication and transactions can be done at any time / real time and can be global or global. with the large number of internet users that include a marketplace or chat-based social media which is growing and increasing every day, it opens up opportunities for every company to develop its market in the hands of a smartphone. with digital marketing communications and transactions can be done at any time / real time and can be global or global. with the large number of internet users that include a marketplace or chat-based social media, which are increasing every day, it opens up opportunities for each company to develop its market in the hands of a smartphone. with digital marketing communication and transactions can be done at any time / real * corresponding author. email address: fauzmalik29@gmail.com afebi management and business review (ambr) vol.05 no.01 june 2020 55 time and can be global or global. with the large number of internet users that include a marketplace or chat-based social media, which are increasing every day, it opens up opportunities for each company to develop its market in the hands of a smartphone. based on kemp's latest report in we are social, in 2020 it was stated that there were 175.4 million internet users in indonesia. compared to the previous year, there was an increase of 17% or 25 million internet users in this country. based on the total population of indonesia, which amounts to 272.1 million people, it means that 64% of indonesia's population has experienced access to cyberspace. percentage of internet users aged 16 to 64 who own each type of device, including mobile phones (96%), smartphones (94%), non-smartphone mobile phones (21%), laptops or desktop computers (66%), table (23%), game consoles (16%), to virtual reality devices (5.1%). in this report it is also known that currently 338.2 million indonesians who use cell phones. likewise data that is no less interesting, there are 160 million active users of social media (medsos). when compared to 2019, this year we are social found an increase of 10 million indonesians who are active on social media. indonesia itself is in third place with a population growth that accesses the internet by 17 percent in the past year. this figure is equal to 25.3 million new internet users in a year. indonesia's ranking is only behind india and china. today the internet is not limited only to the use of information that can be accessed through one medium but can also be used as a means of conducting transactions that can lead to a new marketplace and a broad business network that is not limited by place and time. the increasing number of internet users in indonesia makes it a very good market for players in the e-commerce / online shopping industry. so it is not surprising that in indonesia there are large e-commerce and marketplaces with fantastic capital for the size of the industry in indonesia, namely matahari mall, bukalapak, lazada, blibli, tokopedia, shopee and others. not only official shopping sites have sprung up, but there are also those that only use personal accounts from ecommerce players on social media such as instagram, facebook, whatsapp, one of the strategies in digital marketing is the use of social media marketing. many companies think that just applying social media marketing can make it easier and add value to their products, cheaper and more efficiently. the impact on sales will be great if many consumers and customers visit the site and know the brands that are being offered. one of the goals of effective marketing is to introduce the existence of a product into top of mind and become the choice of consumers to buy the product offered. besides digital marketing, of course there are other things that should not be forgotten, such as brands. brand (brand) plays an important role in marketing. there is quite a difference between a product and a brand. a product is just something that a factory produces, whereas a brand is something that consumers buy. if a product can be easily imitated by competitors, then the brand always has a unique characteristic that is relatively difficult to copy. brand is closely related to perception, so that in fact the competition that occurs between companies is a battle of perceptions and not just a battle of products (suciningtyas, 2012). brand is actually a seller's promise to consistently provide certain features, benefits and services to buyers. the best brands provide quality assurance (rangkuti, 2004). therefore it is very important for a company to build brand awareness (brand awareness) in consumers. brand awareness is the ability of consumers to identify a brand in different conditions, it can be done with brand recognition and recollection of a particular brand. with the existence of digital marketing and brand awarness, it is hoped that it can stimulate consumers in forming purchasing decisions for the products we offer. according to kotler (2015) the notion of a purchase decision is the action of consumers to want to buy or not to a product. the decision-making process to buy a product starts from identifying the problem, searching for information, evaluating several alternatives, which in turn will create a purchase decision and form post-purchase behavior. the effect of social media marketing and brand awarness on purchase decisions with viral marketing as intervening variables on janji jiwa coffee consumers among students using social media area jabodeta 56 seeing the development of business through the internet or social media, and what is currently being developed is also called viral marketing, or wom (word of mouth marketting). viral marketing is a technology that uses word of mouth marketting by using a variety of content which is expected to strengthen the influence of social media marketing and brand awareness on purchasing decisions. viral marketing uses the internet network, which means that they are not face to face in transactions. so here the company must be able to make a consumer or customer trust in the company. there are various ways that companies take, such as offering a product that can convince consumers to make purchasing decisions, create attractive website designs, kopi janji jiwa is a local coffee that has many fans. janji jiwa itself has expanded to dozens of cities with hundreds of outlets. in fact, this coffee brand has won the indonesian world record museum (muri) award for "the fastest coffee shop growth in one year" in 2019. the furthest coffee shop janji jiwa is in the city of timika, papua. the founder and ceo, billy kurniawan, founded kopi janji jiwa since 2018 under the auspices of the jiwa group at pt. luna boga narayan (fajria in wartaekonomi.co.id). factors that can influence decisions in this study include social media marketing, brand awareness and viral marketing which are used as intervening variables. companies need to consider the market aspects that exist in social media and create interesting content in order to improve consumer purchasing decisions. based on research results ansari, ansari, ghori, and kazi (2019) as well as research from farih, jauhari, and widodo (2019) state that social media marketing has an effect on purchasing decisions. to improve purchasing decisions, another thing that needs to be considered is brand awareness so that consumers recognize the product or product brand we are selling. based on research conducted by ansari et al. (2019) show that brand awareness and purchasing decisions have a weak influence. then research from kurniasari and agung (2018) shows that brand awareness affects purchasing decisions. viral marketingusing the internet network, which means that they do not meet face to face in transactions. so here the company must be able to make a consumer or customer trust in the company. there are various ways that companies do, such as offering a product that can convince consumers to make purchasing decisions. based on research wiludjeng and nurlela (2013) viral marketing influence on purchasing decisions. based on the description above, it can be seen that purchasing decisions are important things for business people. thus the authors are interested in conducting research on the factors that trigger purchasing decisions, especially those measured by social media marketing and brand awareness strengthened by viral marketing as an intervening. therefore, a research will be conducted with the title "the influence of social media marketing and brand awarness on purchasing decisions with viral marketing as an intervening variable in consumers of kopi janji jiwa" among students who use social media in the jabodeta area. 2. literature review social media marketing according to kaplan and haenlein (2010), social media is defined as a group of internet-based applications built on the basis of web 2.0 ideology and technology. web 2.0 is the foundation of social media platforms. social media itself consists of many different forms, such as social networks, internet forums, weblogs, social blogs, micro blogging, wikis, prodcasts, pictures, videos, ratings and social bookmarking. social media marketing is a form of marketing that is used to create awareness, recognition, memory and even action against a brand, product, business, individual, or group either afebi management and business review (ambr) vol.05 no.01 june 2020 57 directly or indirectly by using tools from the social web such as blogging, microblogging, and social networking. (kurniasari & agung, 2018). according to ristania and jerry (2015) indicators that can be used to measure social media marketing include the following: 1) promotion range 2) the quantity of updates in the media 3) message quality brand awarness according to hermawan (2014) brand awareness is the ability of a potential buyer to recognize or recall a brand that is part of a product category. consciousness also influences perception and behavior. so if the awareness is very low then it is almost certain that the brand equity is also low. the role of brand awareness in overall brand equity depends on the level of awareness achieved by a brand. there are four levels of consumer memory regarding brands from the lowest level to the highest level as well as an indicator used in measuring the brand awareness variable (durianto, 2004) 1) unware of brand (not aware of the brand) 2) brand recognition (brand recognition) 3) brand recall (brand recall) 4) top of mind (peak of mind) buying decision according to suharno (2010) a purchase decision is a stage where the buyer has made his choice and made a purchase of a product, as well as consumes it. decision making by consumers to purchase a product begins with an awareness of their needs and desires. according to kotler (2007) a purchase decision is "the act of a consumer to want to buy or not to a product". the definition of a purchase decision, according to kotler & armstrong (2015), is a stage in the buyer's decision-making process where consumers actually buy. according to kotler (2008) the purchasing decision-making process consists of five stages, which are presented in the following figure: figure 1 stages in a purchase source: kotler (2008) the process image is based on the assumption that consumers will carry out all five steps for the purchases they make in a given situation. the indicators used (akbar & sugiono, 2011) are as follows: 1) planning a purchase 2) looking for more information on a product 3) according to his wishes 4) confidence in buying 5) adds a sense of trust 6) awareness of needs. viral marketing the term viral marketing was coined by rayport in an article in 1996 entitled "the virus of marketing". the article was written what if the virus was used as a marketing program. because the marketing message will be spread using only very little time, unnecessary budgets are too large and the impact is very wide (farih et al., 2019). according to kotler and armstrong (2004), viral marketing is the internet marketing version of the use of word of mouth marketing, which is closely related to creating messages or marketing methods that are so contagious that customers want to pengenalan masalah pencarian informasi evaluasi alternatif keputusan pembelian perilaku pasca pembelian the effect of social media marketing and brand awarness on purchase decisions with viral marketing as intervening variables on janji jiwa coffee consumers among students using social media area jabodeta 58 convey them to their friends. according to skrob (2005), components in viral marketing as well as indicators used include consumer, buzz, and supporting conditions. 3. research methodology the object of research is an attribute or nature or value of people, objects or activities that have certain variables that are determined to be studied and drawn conclusions. from the above understanding that the definition of the object of research is something that is the target of scientific research. the research object in this study were students using social media in jabodeta (jakarta bogor depok tangerang). population according to sugiyono (2011) population is a generalization area consisting of objects / subjects that have certain qualities and characteristics that are determined by researchers to be studied and then draw conclusions. so the population is not only people, but also objects and other natural objects. population is also not just the number that is in the object / subject being studied, but includes all the characteristics / properties possessed by the subject or object. the population in this study were students and female students using social media in jabodeta. sample according to sugiyono (2016) the sample is the part or number and characteristics of the population. if the population is large, and it is impossible for the researcher to study everything in the population, for example because of limited funds, energy and time, the researcher will take a sample from that population. the method used in sampling is non-probability sampling, which is a sampling method that does not provide equal opportunities or opportunities for each element or member of the population to be selected as samples for certain considerations (sugiyono, 2016). sampling was carried out using convenience sampling technique, which is a technique used to take samples of people who are easiest to find or are asked to fill out a questionnaire. in this study the minimum number of samples that must be taken, using the sampling technique according to joreskog and sorbom (riduwan & kuncoro, 2012), where the minimum sample determination can be seen in table 1 below: table 1 minimum sample size and number of joreskog and sorbom variables number of variables minimum sample size 3 200 5 200 10 200 15 360 20 630 25 975 30 1395 source: riduwan and kuncoro (2012) if you look at table 1, the minimum sample size taken in this study is 200 respondents because the number of variables tested was 4 variables (between 3 and 5 variables). this number can increase because the more samples the better. types and sources of data the data used in this study are primary data and secondary data. according to syafizal (2010) primary data is data that is collected by individuals or an organization directly from the object under study and for the purposes of the study concerned, which can be in the form of interviews and observations. in this study, researchers used a questionnaire regarding questions distributed to respondents. secondary data is data obtained or collected and put together from previous studies or published by various other agencies according to syafizal (2010). secondary afebi management and business review (ambr) vol.05 no.01 june 2020 59 data used includes library material in the form of books, journals and other media that are related to the study material in this study. method of collecting data the data collection method was carried out by distributing online questionnaires. the questionnaire is a data collection technique which is done by giving a set of written questions to respondents to answer them (sugiyono, 2011). the previous questionnaire has been structured with several alternative answer choices which are then given a score for each answer. questions are made in the form of a questionnaire using a likert scale. according to sugiyono (2011) the likert scale is a scale used to measure the attitudes, opinions and perceptions of a person or group of people about social events or symptoms. the method of measurement is by confronting the respondent with a question and then being asked to answer it, where the value of each answer has a different value. research methods according to sugiyono (2011) the research method is basically a scientific way to get data with specific purposes and uses. the method used in this research is the verification method, according to sugiyono (2016) argues that verification is a study aimed at testing theory and trying to produce a scientific method, namely the status of the hypothesis in the form of a conclusion, whether a hypothesis is accepted or rejected. this method is used to test the truth of the hypothesis, namely how the influence of social media marketing and brand awareness on the decision to buy janji jiwa coffee with viral marketing as a mediating variable. analysis of the data used in this study using the method of path analysis (path analysis) carried out with multiple linear regression analysis model using spss version 20 software. 4. results and discussion research overview kopi janji jiwa. janji jiwa is an authentic indonesian coffee shop owned by pt. luna boga narayan, which was first founded by billy kurniawan as a business owner at itc kuningan in 2018. kedai kopi janji jiwa started as the owner of this beverage business, who had a passion in the coffee sector. this brand was issued as a promise from the bottom of his heart to serve coffee as one of his passions. janji jiwa coffee serves a wide selection of local indonesian coffee at affordable prices that adopt the fresh-to-cup concept and is known for its 'grab and go' system in the form of small outlets for sales only. instrument quality test in testing the quality of the instrument using validity and reliability tests which are processed using spss (statistical package for social science) version 20. validity test the validity test is useful to find out whether there are statements on the questionnaire that should be removed / replaced because they are considered irrelevant. if rcount> rtabel = valid and if rcount <rtabel = invalid. table 2 summary of validity test results statement items r hitung r table information social media marketing item 1 0.814 0.2787 valid item 2 0.824 0.2787 valid item 3 0.824 0.2787 valid item 4 0.820 0.2787 valid item 5 0.800 0.2787 valid item 6 0.861 0.2787 valid brand awarness the effect of social media marketing and brand awarness on purchase decisions with viral marketing as intervening variables on janji jiwa coffee consumers among students using social media area jabodeta 60 item 1 0.523 0.2787 valid item 2 0.614 0.2787 valid item 3 0.772 0.2787 valid item 4 0.620 0.2787 valid item 5 0.735 0.2787 valid buying decision item 1 0.818 0.2787 valid item 2 0.615 0.2787 valid item 3 0.840 0.2787 valid item 4 0.760 0.2787 valid item 5 0.792 0.2787 valid item 6 0.832 0.2787 valid viral marketing item 1 0.903 0.2787 valid item 2 0.823 0.2787 valid item 3 0.827 0.2787 valid item 4 0.776 0.2787 valid item 5 0.887 0.2787 valid item 6 0.837 0.2787 valid source: primary data processed, 2020 the results of the validity test on all items of each variable carried out on 50 respondents can be declared valid, because the minimum requirement for a statement to be said to be valid is greater than the r table which is valued at 0.2787 has been fulfilled. reliability test according to ghozali (2013), reliability testing in this study is to use the cronbach's alpha formula which shows the answer must be> 0.60. conversely, if the cronbach's alpha value of a variable is <0.60, the question item is not reliable. table 3 reliability test results variable cronbach's alpha cut of value information social media marketing 0.905 0.60 reliable brand awarness 0.656 0.60 reliable purchase decisions 0.870 0.60 reliable viral marketing 0.916 0.60 reliable source: primary data processed, 2020 based on table 3, the results of the reliability test carried out on 50 respondents produced values, namely social media marketing of 0.905, brand awareness of 0.656, purchasing decision of 0.870 and viral marketing of 0.916. the minimum requirements for questions to be declared reliable are greater than 0.60 have been met, so it can be concluded that social media marketing, brand awareness, purchasing decisions and viral marketing can be declared reliable. classic assumption test the classic assumption test is to provide certainty that the regression equation obtained has accuracy in estimation, is unbiased and consistent. it is possible that the actual data does not fulfill all of these classic assumptions. the classic assumptions in this study are: normality test according to ghozali (2013), the normality test aims to test whether in the model, confounding or residual variables have a normal distribution. confounding variables from a regression are required to be normally distributed, so the variables under study are also normally distributed. afebi management and business review (ambr) vol.05 no.01 june 2020 61 table 4 normality test results unstandardized residual asymp. sig. information equation 1 0.324 normally distributed data equation 2 0.638 normally distributed data source: primary data processed, 2020 the kolmogorov-smirnov calculation results show that the respective significance values from equation 1 and equation 2 all values> 0.05. thus, it can be concluded that the regression model is feasible because it fulfills the assumption of normality or it can be said that the distribution of research data is normally distributed. multicollinearity test the multicolonierity test was carried out by looking at the variance inflation factor (vif) value and the tolerance value on the spss multicolonierity test results. the cut off value that is commonly used to indicate multicolonierity is the tolerance value> 0.10 or the same as the vif value <10 (ghozali, 2013). the multicolonierity test results can be seen briefly in table 5 as follows: table 5 multicollinearity test results variable tolerance vif information equation 1 social media marketing 0.588 1,701 multicolonierity does not occur brand awareness 0.588 1,701 multicolonierity does not occur equation 2 social media marketing 0.570 1,753 multicolonierity does not occur brand awareness 0.469 2,131 multicolonierity does not occur viral marketing 0.597 1,675 multicolonierity does not occur source: primary data processed, 2020 based on table 5 above, it shows that each of the variables both from equations 1 and 2 has a tolerance value> 0.10 and a vif value <10. this indicates that there is no multicollinearity problem in the regression model, so that it meets the regression analysis requirements. heteroscedasticity test to detect the heteriskedasticity of the significance level, the glejser test or absolute resudual data can be used. if the significance level is above 5%, it means there is no heteroscedasticity, but if it is below 5%, it means that there are symptoms of heteroscedasticity (ghozali, 2013). the results of the heteroscedasticity test can be seen in table 6 below: table 6 heteroscedasticity test results variable don't count sig. information equation 1 social media marketing 0.882 0.379 heteroscedasticity does not occur brand awareness 0.170 0.865 heteroscedasticity does not occur equation 2 social media marketing 1,067 0.287 heteroscedasticity does not occur brand awareness 0.830 0.407 heteroscedasticity does not occur viral marketing -1,773 0.078 heteroscedasticity does not occur source: primary data processed, 2020 the effect of social media marketing and brand awarness on purchase decisions with viral marketing as intervening variables on janji jiwa coffee consumers among students using social media area jabodeta 62 based on the results of the analysis as in table 6 above, it can be seen that each variable both in equations 1 and 2 has a significance value (p value)> 0.05, it can be concluded that each variable does not contain heteroscedasticity so that it meets the requirements in regression analysis. determination coefficient test the coefficient of determination (r2) is used to measure the ability of the model to explain the variation in the dependent variable. the coefficient of determination is between 0 and 1. table 7 test result of the coefficient of determination model summary model r r square adjusted r square std. error of the estimate 1 .792a .628 .623 2,662 source: primary data processed, 2020 from the analysis of the coefficient of determination (r2), it is known that the r square value is 0.628. this relationship will be perfect (100%) or close if other independent variables are included in the model. this means that social media marketing, brand awareness and viral marketing for kopi janji jiwa consumers explains 62.8% of purchasing decisions among jabodeta students and the remaining 37.2% is explained by other variables outside the model. path analysis path analysis is used to test the effect of the intervening variables. path analysis is an extension of multiple linear analysis. the path analysis carried out using regression analysis in spss 20.0 software obtained the results shown in table 8 as follows: table 8 results of path analysis of the regression equation 1 coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 1 (constant) 3,332 1,592 2,093 .038 social media marketing .208 .082 .176 2,543 .012 brand awarness .639 .087 .507 7,307 .000 source: primary data processed, 2020 the value of e1 in the first regression equation can be calculated using the formula e1 =. the value of r square 1 (r21) means the magnitude of the r square value in the first equation, the value of r21 can be seen in table 4:18 below:√1 − r21 z = 3,332 + 0,208 x1 +0.639 x2 + e1 afebi management and business review (ambr) vol.05 no.01 june 2020 63 table 9 result of r square value 1 model summary b model r r square adjusted r square std. error of the estimate 1 .635a .403 .397 3,670 source: primary data processed, 2020 so that the value of e1 can be calculated as e1 = √1 − 0,403 and the result is 0.635. the value of e1 is entered into the regression equation 1 above to become z = 3,332 + 0.208 x1 + 0.639 x2 + 0.635. this means that if the social media marketing score increases by one unit, it will increase the viral marketing score felt by consumers by 0.208 with an error of 0.635 and if the brand awareness score increases by one unit, it will increase the viral marketing score felt by consumers by 0.639 with an error of 0.635. table 10 results of path analysis of regression equations 2 coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 3,171 1,167 2,718 .007 social media marketing .173 .060 .160 2,873 .004 brand awarness .579 .071 .502 8,164 .000 viral marketing .222 .050 .242 4,436 .000 source: primary data processed, 2020 the value of e2 in the second regression equation can be calculated using the formula e2 =. the value of r square 2 (r22) means the magnitude of the r square value in the second equation, the value of r22 can be seen in table 4:20 below:√1 − r22 table 11 result of r square value 2 model summary b model r r square adjusted r square std. error of the estimate 1 .792a .628 .623 2,662 source: primary data processed, 2020 so that the value of e2 can be calculated as e2 = √1 − 0,628 and the result is 0.610. the value of e2 is entered into the regression equation 2 above, so the equation becomes y = 3.171 + 0.173 x1 + 0.579 x2 + 0.222 z + 0.610. it means scoresocial media marketingincreasing by one unit will increase the purchase decision score by 0.173 with an error of 0.610. furthermore, if the brand awareness score increases by one unit, it will increase the purchase decision score felt by consumers by 0.579 with an error of 0.610 and if the viral marketing score felt by consumers increases by one unit it will also increase the purchase decision score by 0.222 with an error of 0.610. thus it can be seen that the path analysis model of the two equations above is as follows: y = 3.171 + 0.173 x1 + 0.579 x2 + 0.222z + e2 the effect of social media marketing and brand awarness on purchase decisions with viral marketing as intervening variables on janji jiwa coffee consumers among students using social media area jabodeta 64 figure 2 path analysis model source: primary data processed, 2020 t test 1) direct social media marketing influence on purchasing decisions of janji jiwa cofee consumers among jabodeta students. based on the results of the analysis of the influence of social media marketing on purchasing decisions, the sig. 0.04 with a beta coefficient value of 0.173. sig value. 0.04 <0.05. this result means that social media marketing has a significant positive effect on purchasing decisions. the magnitude of the influence of promotion through social media on purchasing decisions is 0.173. social media marketingplaying a major role in this technology driven era, powerful content will persuade consumers towards the desired result, namely making purchasing decisions. the more appropriate promotion through social media can improve purchasing decisions. this research is in line with research conducted by ristania and jerry (2014) as well as ansari et al. (2019) which state that social media marketing affects purchasing decisions. 2) direct brand awareness influence on purchasing decisions on janji jiwa cofee consumers among jabodeta students. based on the results of the analysis of the influence of brand awareness on purchasing decisions, the sig. as big as 0,000 with a beta coefficient value of 0.579. sig value. 0.000 <0.05. this result means that brand awareness has a significant positive effect on purchasing decisions. the magnitude of the influence of promotion through social media on purchasing decisions is 0.579. the results of this study indicate that if consumers are well aware of the brand then there is a higher chance of making a purchase decision because awareness helps them clear their doubts about the brand. this research is in line with the research conducted by kurniasari and agung (2018) stated that brand awareness has an effect on purchasing decisions. 3) the influence of social media marketing directly on viral marketing in consumers of janji jiwa coffee among jabodeta students. based on the results of the analysis of the influence of social media marketing on viral marketing, the sig. amounted to 0.012 with a beta coefficient value of 0.208. sig value. 0.012 <0.05. this result means that social media marketing has a significant positive effect on viral marketing. the magnitude of the influence of promotion through social media on purchasing decisions is 0.208. the results of this study have shown that promotion through social media has a significant positive effect on viral marketing. with promotions that are offered to innovate and be carried out properly, these promotions will go viral on social media by consumers. thus this research is in line with the research of farih et al. (2019). 4) direct influence of brand awarness on viral marketing to consumers of janji jiwa cofee among jabodeta students. based on the analysis of the effect of brand awareness on viral marketing, the sig. as much as 0.000 with a beta coefficient value of 0.639. sig value. 0.000 <0.05. afebi management and business review (ambr) vol.05 no.01 june 2020 65 this result means that brand awareness has a significant positive effect on viral marketing. the magnitude of the influence of promotion through social media on purchasing decisions is 0.639. according to chaffey, mayer, johnston, and chadwick (2000) viral marketing refers to marketing techniques that seek to exploit pre-existing social networks to produce exponential increases in brand awareness. it can be said that with brand awareness the spread of viral marketing can increase. this research is in line with research from mustikasari and widaningsih (2018) which states that viral marketing can increase brand awareness. 5) effect of viral marketing directly on purchasing decisions on consumers of janji jiwa coffee among jabodeta students. based on the results of the analysis of the effect of viral marketing on purchasing decisions, the sig. as big as 0,000 with a beta coefficient value of 0.222. sig value. 0.000 <0.05. this result means that viral marketing has a significant positive effect on purchasing decisions. the magnitude of the influence of promotion through social media on purchasing decisions is 0.222. disseminating promotional information with a viral marketing system can improve consumer purchasing decisions, thus viral marketing can be a positive thing that a company can do for promotion. according to farih et al. (2019) who state that the level of effectiveness of viral marketing is obtained from consumers' liking, so that consumers will make purchase decisions, these results are in line with this research. this research is in line with research from wiludjeng and nurlela (2013), mustikasari and widaningsih (2018) as well as farih et al. (2019). mediation effect test sobel testused to test whether the effect of the intervening variable or indirect effect generated in the path analysis is significant or not. the sobel test approach uses the standard error of the indirect effect coefficient (sat), and to determine whether there is mediation or not, it can be done by calculating the t statistical value. 1) the influence of social media marketing indirectly on purchasing decisions with viral marketing as an intervening variable on the janji jiwa cofee among jabodeta students. the results of calculations using a calculation for sobel test (quantpsy.org) with the following results: figure 3 sobel test results 1 source: calculation results quantpsy.org, 2020 the test results above show that the value of tcount> ttable is 2.2025> 1.9712 with a significance level of 0.05. the results of this study indicate that viral marketing is a significant intervening variable in relation to the relationship between social media marketing and purchasing decisions. the effect of viral marketing as an intervening variable between social media marketing and purchasing decisions is 0.046 (0.208x0.222) or the amount of the indirect relationship in this study is 0.046. when compared to a direct relationship which has an effect of 0.173, it can be concluded that a direct relationship has greater influence. viral marketingproved to be a variable that mediates the influence of social media marketing on purchasing decisions. the proper use of promotion through social media is the essence of the formation of a viral marketing. consumers who like and are satisfied with promotions on social media will influence viral marketing and also have an impact on consumer purchasing decisions. this research is in line with the results the effect of social media marketing and brand awarness on purchase decisions with viral marketing as intervening variables on janji jiwa coffee consumers among students using social media area jabodeta 66 of research obtained by farih et al. (2019) showing that its effect can be mediated by viral marketing. 2) the influence of brand awareness indirectly on purchasing decisions with viral marketing as an intervening variable on the janji jiwa cofee consumers of the soul among jabodeta students. the results of calculations using a calculation for sobel test (quantpsy.org) with the following results: figure 4 sobel test results 2 source: calculation results quantpsy.org, 2020 the test results above show that the value of tcount> ttable is 3.7997> 1.9712 with a significance level of 0.05. the results of this study indicate that viral marketing is a significant intervening variable in relation to the relationship between brand awareness and purchasing decisions. the effect of viral marketing as an intervening variable between brand awareness and purchasing decisions is 0.142 (0.639x0.222) or the magnitude of the indirect relationship in this study is 0.142. when compared to the direct relationship which has an effect of 0.579, it can be concluded that the direct relationship has a greater influence. the existence of viral marketing as an intervening variable can strengthen the influence of brand awareness on purchasing decisions. because if a company disseminates information or promotion (with a viral marketing system) about its products using the internet, it will increase and encourage purchasing decisions. this research is in line with mustikasari and widaningsih's (2018) research which states that viral marketing can mediate between variables. 5. conclusions and recommendations conclusion based on the results of the research description and discussion, the conclusions that can be drawn from this study are as follows: 1. social media marketing directly has a significant positive effect on purchasing decisions. 2. brand awareness directly has a significant positive effect on purchasing decisions. 3. social media marketing directly has a significant positive effect on viral marketing. 4. brand awareness directly has a significant positive effect on viral marketing. 5. viral marketing directly has a significant positive effect on purchasing decisions. 6. social media marketing indirectly has a significant positive effect on purchasing decisions through viral marketing. 7. brand awareness indirectly has a significant positive effect on purchasing decisions through viral marketing. suggestion based on the description of the research results and conclusions, there are a number of things that are recommended to the parties related to this research as follows: 1. for it is hoped that kopi janji jiwa will pay more attention to branding to increase brand awareness so that consumer interest and purchasing decisions will increase and to do better and more precise social media marketing by maximizing the effectiveness of viral marketing. afebi management and business review (ambr) vol.05 no.01 june 2020 67 2. for future researchers who want to research or continue this research, it is advisable to continue or develop this research by looking for other variables that can influence purchasing decisions in the context of social media marketing, brand awareness and viral marketing. references ansari, s., ansari, g., ghori, m. u., & kazi, a.g. 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(2013). the influence of viral marketing on purchasing decisions at pt "x". proceedings of the national seminar and call for papers sancall 2013. voluntary disclosure on pt semen indonesia tbk: legitimacy crisis on rembang plant construction 1 voluntary disclosure on pt semen indonesia tbk: legitimacy crisis on rembang plant construction gentiga muhammad zairin 1*and elvia r. shauki 2 1,2 universitas indonesia, depok, indonesia abstract this study aims to evaluate how the legitimacy strategy was carried out by pt semen indonesia tbk to repair the legitimacy due to the construction of the rembang plant which was suspected of damaging the environment. research problems arose due to inadequate company disclosures, resulting in a series of protests. this research has a contribution to understanding further how the company's strategy in facing the crisis of legitimacy. this research also uses web-based disclosure data and is processed with nvivo 12 pro software that has never been done before. this research uses legitimacy theory, especially strategies to repair legitimacy. this study uses case studies with triangulation of qualitative data and quantitative data, all of which are secondary data. qualitative data in this study is the result of data processing using nvivo 12 pro software from disclosure media such as annual reports, sustainability reports, websites, online-based newspaper, and corporate social media accounts. quantitative data in this study include the number of words, number of sentences, and percentage of disclosures. the findings in this study were the strategy of "deny", "justify", "create monitors", "replace personnel", "revise practices", and "avoid panic" were used by companies. the strategy of "excuse" is not used because the company does not feel guilty. the dominant media used is a statement through the online-based newspaper. the use of social media and sustainability report shows very little legitimacy efforts. keywords: legitimacy crisis, legitimacy theory, plant construction, repairing legitimacy, voluntary disclosure 1. introduction the environment is a topic that is often discussed at this time, especially about sustainable development. russell & thomson (2009) state that sustainable development is now a narrative that has been developed in many western countries and has become a lifestyle and form of social order. moneva, archel, and correa (2006) state that before the 1980s, social issues and ecological issues were ignored in shaping management goals because they did not have a significant impact on the company's financial performance. after the brundtland report was introduced in 1987, the concept of sustainable development was widely implemented by companies in the world. pt semen gresik (persero) tbk, was established on march 25, 1953, where the government of the republic of indonesia had 51.01% ownership of the company, while 48.99% of the remaining shares were public property. the company is engaged in the cement industry. the company has been listed as a public company on the indonesia stock exchange (formerly the jakarta stock exchange) since july 8, 1991, with a stock code: smgr. on december 20, 2012, the company officially acted as the strategic holding company and at the same time changed its name, from pt semen gresik (persero) tbk to pt semen indonesia (persero) tbk (pt semen indonesia tbk, 2017), from now on referred to as pt semen indonesia. included in the series of refusal actions was the act of cementing the feet in front of the state palace (cnnindonesia.com, 2016). this group came to be known as various names, such as kendeng farmers, kendeng activists, kartini kendeng, and others. had subsided, the protests of these farmers occurred again in 2017. precisely starting again on march 13, 2017, even, on a larger scale. more and more people sympathize with * corresponding author. email address: gentigamz@outlook.com afebi management and business review (ambr) vol.03 no.02, december 2018 2 these farmers, both from within the country and abroad. some people intentionally came to the action of cementing their feet and joined in trying to cement their feet as a form of solidarity with these farmers. this solidarity action was also carried out in germany (bbc.com, 2017). the action of cementing this leg then began to take casualties. after several people were disturbed by their health during the day-to-night protest, patmi, one of the participants in the action died of a heart attack on march 21, 2017 (kompas.com, 2017). this incident increasingly attracted sympathy from the wider community. the protest which was initially attended by only nine people in 2016, in 2017 was carried out by hundreds of people in turn. the exposure of the media is indeed inevitable. the company's reputation is threatened with damage due to exposure to the preaching of these protests. the company experienced a legitimacy crisis over the construction of this rembang cement plant and needed to restore its legitimacy so that plant construction could be continued. moreover, the company has invested 4.9 trillion rupiah to build this plant so that if the permit is revoked, the company will experience a significant loss (bisnis.com, 2017) where this will have an impact on the financial performance and performance of the company's shares, especially almost all the construction costs are financed by bank loans. eugénio, lourenço, and morais (2013) conducted a study of cement companies from portugal whose legitimacy was disrupted due to the burning of waste and the location of the company's factories. the study uses sustainability reports and interviews with the company's internals as data to analyze disclosures made by the company. the results of the research are that several strategies can be found by the company reflected in the sustainability report. the limitations of this study are that other forms of disclosures other than sustainability reports are not examined and do not see the views of those outside the company. watson (2011) examined the conflict between the four largest diamond companies in south africa and how the legitimacy of each was seen from the disclosures in the annual report. furthermore, watson (2011) found that changes in exposure or attention from the media were reflected in the disclosure of the company's annual report. however, watson's research does not include web-based disclosures related to the legitimacy provided by the company. suchman (1995) defines legitimacy as a general perception or assumption on the actions taken by an entity so that the actions taken can be accepted by the social system that has been formed, for example from values, norms, and beliefs. furthermore, this legitimacy has a goal in at least two dimensions — first, the purpose of continuity or the purpose of credibility. second, the purpose of obtaining passive support or active support. suchman (1995) also divided the legitimacy into three, namely: pragmatic legitimacy, moral legitimacy, and cognitive legitimacy. according to the legitimacy theory, company behavior or activity is considered to have legitimacy when it has been deemed reasonable and deserves support from the social environment. legitimacy gaps arise when the manager's expectations of social values of company behavior and social perceptions of the behavior are different (deegan, rankin, & tobin, 2002). in this case, the company needs to carry out a process of legitimacy both to gain legitimacy, maintain legitimacy, and improve the legitimacy to continue its operational activities (o’donovan, 2002). meanwhile, if the company faces a legitimacy crisis due to an activity that occurs suddenly, the company needs to implement a strategy to improve legitimacy. suchman (1995) explained that three strategies could be done when a company faced a crisis of legitimacy. first, making normalizing accounts that can take the form of denials, excuses, justifications, and explanations. secondly, companies can restructure by establishing a better monitoring and supervision system or conducting disassociation with parties that have bad influences for the company. third, companies must always be calm, careful, and avoid panic in making decisions regarding efforts to improve legitimacy. voluntary disclosure on pt semen indonesia tbk: legitimacy crisis on rembang plant construction 3 based on the legitimacy theory, the company needs to take steps to legitimize the construction of the cement plant and prove that the cement plant does not damage the environment. one way that companies do is by voluntary disclosure. the company provides quite a lot of disclosure both in reports made and in the form of statements through the media. laine (2005) says that disclosures made by companies can be seen as a medium or the way companies build social reality. furthermore, laine (2005) explains that there is a possibility of a relationship between disclosures made by the company and other efforts made by the company to legitimize its activities. this study uses a case study approach and in general, will use content analysis assisted by using nvivo 12 pro software. nvivo 12 pro is software that can be used to process qualitative data in a very large number. all data are secondary data in the form of documents, online-based newspaper, websites, annual reports, sustainability reports, and other forms of disclosure such as the use of various corporate social media accounts. the social media studied, for example, are facebook, twitter, youtube, instagram, and others. this research will focus on explaining how the legitimacy strategy used by pt semen indonesia tbk in voluntary disclosures related to the construction and operation of a new plant in rembang, central java to repair legitimacy and then attaining legitimacy again. every disclosure given by the company will be analyzed by content to find out the legitimacy strategies that have been carried out. the analysis will also be carried out between periods of important events so that there will be a change in the issue or strategy that occurs. 2. literature study eugénio et al. (2013) examined the cement company from portugal (timorl) whose legitimacy was disrupted due to environmental problems in the form of burning waste and the location of the company's plant. the study uses sustainability reports and interviews from internal parties as research data to analyze disclosures made by the company. the results of the study are that there can be found several strategies to improve the legitimacy of the companies reflected in the company's sustainability report. the company is engaged in the cement industry which is very sensitive to social issues and environmental issues. thus, it is likely that the voluntary disclosure practices of the company are inadequate if they only use sustainability reports. not all corporate stakeholders have read or used sustainability reports. therefore, the limitations of this study are that other forms of disclosures other than sustainability reports are not examined and do not see the views of those outside the company. the limitations of these studies will be overcome by exploring different forms of disclosure issued by companies such as information on websites, online-based newspaper, and corporate social media accounts. the interviews with managers are not carried out because this study will focus on the form of disclosure that is issued by the company and does not discuss the true intention of management. watson (2011) examined the conflict between the four largest gem companies in south africa and how the legitimacy of each was seen from the disclosures in the annual report. furthermore, watson (2011) found that changes in exposure from the media were reflected in the disclosures of the company's annual report. however, watson's research does not include web-based disclosures related to the legitimacy provided by the company. watson (2011) looks at research conducted by branco, eugénio, and ribeiro (2008) which says that companies can overcome or respond to external impressions/issues by making disclosures on the internet, but annual reports are still the most important compared to the form other forms of disclosures. however, the research was done in 2008. the internet is now more accessible to all groups. stakeholders will certainly seek faster disclosures compared to annual reports which afebi management and business review (ambr) vol.03 no.02, december 2018 4 are only issued once a year. thus, the research that will be carried out will address this problem by examining all forms of disclosure in both annual reports, sustainability reports, and all types of disclosures that are web-based. the concept of legitimacy is critical in analyzing the relationship between companies and the environment. parsons (1960) defines legitimacy as an assessment of an action that is of general value or acceptable in the social context of society. meanwhile, maurer (1971) said that legitimacy is a process in which organizations try to justify the system concerning continuing the organization's right to keep, change, receive or send material or information. legitimacy is the result of congruence between the actions of institutions/companies with social values (preston, cooper, scarbrough, & chilton, 1995). so, it can be said that legitimacy is an action that can be used by institutions to signal the similarity of values or even to change the social values that have existed. legitimacy can be achieved by showing that company activities are under existing social values. legitimacy can be conducted in many different ways. first, companies must comply with applicable laws and regulations. secondly, companies can create environmental committees or environmental managers to oversee the ecological impacts produced by the company. third, companies need to build relationships with representatives of local communities around the company. fourth, companies are encouraged to conduct environmental audits. fifth, companies need to create a system to respond to emerging environmental problems. sixth is aligning companies with environmental advocates (bansal & roth, 2000). the legitimacy theory is also highly concentrated on the concept of social contracts which has implications that a company must operate within the limits of prevailing social norms. suchman (1995) considers legitimacy to be a general perception or assumption that the action of an entity is under the system of norms, values, beliefs, and definitions of the community around the company. suchman (1995) defines legitimacy into three types, namely pragmatic legitimacy, moral legitimacy, and cognitive legitimacy. pragmatic legitimacy includes support for practices carried out by companies based on the consequences the company receives on these practices from the main constituents/audiences (o’dwyer, owen, & unerman, 2011). pragmatic legitimacy is divided into three, namely: exchange legitimacy, influence legitimacy, and dispositional legitimacy. this pragmatic legitimacy is very dependent on the main audience of the organization (suchman, 1995). often, this audience is very closely related to organizational activities. it is likely that the audience of the organization's activities will be a constituent, paying attention to all organizational activities and what consequences might arise from these activities (wood, 1991). so, simply, this pragmatic legitimacy becomes exchange legitimacy, organizational policy will be based on how the values desired by its constituents (dowling & pfeffer, 1975). slightly different from exchange legitimacy, palazzo and scherer (2006) explain that pragmatic legitimacy is not merely a matter of the relationship of one constituent party with the organization. constituents can support things that do not fit the values they believe in, but they believe that the activities of the company represent greater interests. influence legitimacy focuses more on broader constituent perceptions than the interests of smaller groups. suchman (1995) explained, in its development pragmatic legitimacy also developed into dispositional legitimacy. organizations will increasingly be considered as an individual who has goals, values, and morals (zucker, 1983). thus, constituents will support organizations that have good values. moral legitimacy is legitimacy based on constituent assessment of the issues or practices that occur. these constituents will then assess whether the practice carried out by organization a is correct, or precisely wrong (o’dwyer et al., 2011). suchman voluntary disclosure on pt semen indonesia tbk: legitimacy crisis on rembang plant construction 5 (1995) divided this moral legitimacy into four major parts, namely consequential legitimacy, procedural legitimacy, structural legitimacy, and personal legitimacy. organizations must be assessed based on what has been achieved or has been achieved (meyer & rowan, 1977). for example, an organization or company sells its goods in an impersonal market, where buyers assess the quality and value (two main factors) of the item. the buyers pay attention to the values of each producer. furthermore, even in markets where competition is not tight, there will be an audience, usually from the regulator, who pays attention to specific activities carried out by the organization (w. r. scott, 1977). brinkerhoff (2005) explains that procedural legitimacy is a practice that can be accepted socially by the constituents, then the practice is assessed by the constituents whether it has been appropriately implemented. scott (1981) explains that a procedural legitimacy is a significant form of legitimacy when there are no clear outcomes for a practice. furthermore, scott (1981) argues that practices that are by procedures can show that the organization has taken the appropriate path so that legitimacy can be achieved. in structural legitimacy, the audience sees the organization as something that should be supported because its structural characteristics match the moral taxonomy category that is carried out by the audience (w. r. scott, 1977). furthermore, the structure in question is social indicators that must be met when the company carries out specific activities. different activities will have different social indicators, depending on the social conditions of the community. this legitimacy is also often referred to as categorical legitimacy (zucker, 1986). the final form of moral legitimacy is personal legitimacy. suchman (1995) says that personal legitimacy is the legitimacy that arises from the charisma of individuals. the individual in question is usually the leader of the company, for example, the ceo or directors. o’dwyer et al. (2011) say that cognitive legitimacy is the legitimacy carried out by organizations so that constituents believe immediately that the activities carried out by the organization are by the rules, quite understandable, and indeed desired by the company. suchman (1995) divides cognitive legitimacy into two, namely based on comprehensibility (understandability) and based on taken-for-grantedness. furthermore, o’dwyer et al. (2011) explained that comprehensibility would depend on how to popularize the practice by creating cultural accounts that can provide a reasonable explanation of the practices carried out by the organization and how these explanations are carried out. meanwhile, taken-for-grantedness is the most subtle way, even the most powerful source of legitimacy, but it is very difficult to achieve by the organization. the three big groups of legitimacy above do not occur individually or independently in every issue/activity of the company. they are co-existed or exist together, and organizations try to gain legitimacy in these ways (brinkerhoff, 2005). ruef and scott (1998) state that although the three types of legitimacy are mutually reinforcing, it is not uncommon for conflicts to occur between types of legitimacy. efforts to improve legitimacy are similar to attempts to gain legitimacy. the different thing is strategies to improve legitimacy reflect the reaction to a crisis. when managers begin to solve problems, perhaps the legitimacy is gone, so more effort is needed to repair legitimacy (suchman, 1995). strategies to improve legitimacy are divided into three major groups: (a) offer normalizing accounts, (b) restructuring, and (c) do not panic. even though legitimacy crises can be seen in company performance, the greatest challenges are in the failure of the company to maintain meaning and perception. the example in question includes: the audience begins to suspect that the output produced by the company contains dangerous ingredients or the audience suspects that there are procedures that are not carried out by the company. therefore, the first task in improving legitimacy is to form normalizing accounts. that is, the company prepares various formulas to reduce threats afebi management and business review (ambr) vol.03 no.02, december 2018 6 to legitimacy so as not to spread to the company's overall assessment (marcus & goodman, 1991; scott & lyman, 1968). four types of normalizing accounts can be formulated by companies, namely: denials, excuses, justifications, and explanations (ashforth & gibbs, 1990; elsbach, 1994; staw, mckechnie, & puffer, 1983). the first thing a manager can do is denying that there has been a problem with the company. denial is done in the hope of being able to calm the (pragmatic) audience and at the same time prepare compensation. however, if the denial is wrong, the impact on the company's legitimacy is even more significant. therefore, managers can not choose to deny they decided to make excuses. in this case, moral legitimacy will be questioned. in the end, usually, individuals or external parties will be blamed. however, if it is not careful, the company will be deemed not to have a good control system (ashforth & gibbs, 1990; salancik & meindl, 1984; staw et al., 1983; sutton & callahan, 1987). next, to avoid the notion that the company does not have good control, managers can justify the problem. redefine the problem so that it doesn't look like a problem. the problems that occur are then explained in other words which ultimately correspond to the moral and belief of the audience. when managers cannot provide denials, excuses, or justifications, managers can choose to offer explanations to the events as they are in the hope of protecting a little from cognitive legitimacy. furthermore, companies can conduct restructuring, as a step to restore legitimacy (pfeffer, 1981). the negative impact of this method is that the company will look unstable (hannan & freeman, 1984). there are two types of restructuring that the company can do. first, create a monitoring and monitoring system (creation of monitors and watchdogs). this can be done by asking for government activities to be regulated, determining ombudsperson, and making a proper complaints system (pfeffer, 1981). this method cannot immediately restore legitimacy in its entirety, but it can show some constituents that they can continue pragmatic exchanges. second, do disassociation. this method is done by keeping companies away from "bad influence." the most common thing is to replace company executives because they can show the company's desire to change (gephart jr, 1978; pfeffer, 1981; weber, 1978). besides, companies can also disassociate improper procedures and structures. the last strategy managers can do when facing a legitimacy crisis is not to panic. that is, companies cannot panic in the face of problems. this is because, companies that have been disrupted by their legitimacy will be in a very sensitive environment (staw et al., 1983). companies that try to restore legitimacy in a panic will find it difficult to regain legitimacy, but if the same effort is carried out with caution, then the legitimacy may be saved (ashforth & gibbs, 1990). 3. research methodology the approach in this study is case study. case studies are in-depth and contextual studies of a phenomenon or a case. for this study, the case study only examined one entity, pt semen indonesia tbk. the case study conducted was to evaluate the disclosures made by the company in legitimizing the construction and operation of a new cement plant in rembang, central java, which was suspected of damaging the environment. the case study approach is used because this phenomenon is unique in pt semen indonesia tbk. there are several other cement plants that have stood in the same mountainous area as the company's plant but have not received too much public attention. besides, there were no "extreme" protests such as cementing the feet that were carried out to protest the company's activities. thus, research on the cement foot action case is more appropriate to use a case study approach because the phenomenon is unique in pt semen indonesia tbk only and occurs in a long time (divided into several periods). voluntary disclosure on pt semen indonesia tbk: legitimacy crisis on rembang plant construction 7 this research was conducted using the triangulation method or commonly called mixed-method. data collection with triangulation can be interpreted as collecting data by combining various techniques of collecting data and existing data sources. the triangulation method in this study combines qualitative data and quantitative data to analyze disclosures made by the company in legitimizing its activities related to the construction and operation of a new plant in rembang, central java. this study only uses data triangulation. this study uses qualitative data and quantitative data, all of which are secondary data. secondary data is data available to the public. qualitative data in this study is in the form of data processing using nvivo 12 pro software from documents such as the sustainability report of pt semen indonesia tbk, annual reports of pt semen indonesia tbk, online-based newspaper, and information on pt semen indonesia websites tbk. quantitative data in this study also uses nvivo 12 pro software, but data in the form of numbers such as the number of words, number of sentences, number of paragraphs, and the amount of disclosure made by the company. the research instruments used included annual reports, sustainability reports, websites, press remarks in the form of an online-based newspaper, and corporate social media accounts. the research instruments used included annual reports, sustainability reports, websites, press remarks in the form of an online-based newspaper, and corporate social media accounts. both annual reports and sustainability reports used are from 2014 to 2017. websites article are from 2014 to 2018. the onlinebased newspaper that is collected is from 2014 to 2018. corporate social media accounts consisted of facebook, twitter, youtube, instagram, and linkedin. for social media accounts, data is collected from the moment the account is made public. company's facebook account is created in 2014, while other forms of social media are created later in 2015 and 2016. the data in this study were analyzed by content analysis method. bowen (2009) says that the use of content analysis in documents issued by companies is not only used to analyze csr practices, but also to analyze corporate practices in general. du and vieira (2012) use content analysis to identify csr strategies and csr communication tactics by examining company pages/websites. the analysis was carried out using nvivo 12 pro software. nvivo 12 pro is one of the software for processing information data in the form of text or other multimedia. unerman (2000) states that content analysis can be used as a method to quantify disclosures. content analysis can be used to better understand text-based data (elo & kyngäs, 2008). disclosures are often text-based that are difficult to measure using conventional calculations. this method can be used to measure the content of disclosures based on characters, words, sentences, pages, the proportion of disclosure contents, and others. the content analysis carried out is divided into two. the first is the word frequency test. its function is to get the most discussed ideas or issues in the media. second is the text search test. its function is to look for words that reflect the strategies that the company might use. word indicators used for the text search can be seen in table 1. the words are taken from the merriam-webster dictionary which is then translated into indonesian and adjusted according to the habits when people use indonesian. after that, the theme will be analyzed based on which indicator words are used. the themes studied were only themes related to the company's legitimacy strategy. also, the dominant disclosure media used in each company's legitimacy strategy was analyzed. 4. results when companies make disclosures to legitimize their activities, companies need to know what issues are dominant in the media coverage. for this reason, an analysis of all the news in online-based newspaper-based newspapers is carried out. because the research problem is about the construction of the rembang cement plant, the afebi management and business review (ambr) vol.03 no.02, december 2018 8 keyword used to search related online-based newspaper is the "rembang cement plant." these keywords are entered into the google search engine. based on google's search results from 2014 to october 2018, there was at least 241 news related to the construction of the rembang cement plant. the following is figure 1 which shows a graph of the amount of online-based newspaper news that appeared in the period 2014 to 2018. based on figure 1, the number of news related to the construction of the rembang cement plant in 2016-2017 is much higher than in other periods. here, it appears that there is considerable media exposure to the case of the construction of the company's rembang cement plant. figure 1 indicates that there is a legitimacy crisis faced by the company. to find out more about the issues that develop from year to year, content analysis is carried out on the news. based on the results as presented in figure 2, the three most dominant issues appear in the news in 2014, namely farmers, rejects, and the environment. farmers around the plant construction site were the hardest to protest the construction of the plant. this is because farmers fear that their harvest will decline due to the activities of the cement plant. thus, the company must make greater legitimacy efforts towards the farmers as constituents who are most affected by the company's operations. second, a term "protest" which is an issue of rejection of the construction of the rembang cement plant. this rejection was carried out not only by farmers but also by other villagers, communities, ngos and environmental activists. so, companies need to pay attention to these parties when making legitimate efforts. next is the environmental issue, which in this case is the construction of a cement plant can damage the environment. however, in 2014 this environmental damage did not appear. companies must make legitimate efforts to show that the construction of factories does not damage the environment. in 2015, there was a shift in issues that developed in the media coverage. the most dominant issue is "investment." the company has issued substantial capital to build the new plant. if finally, the company cannot continue the construction of the rembang cement plant, the company's investment will be lost. so, the company will try to legitimize to protect the investment that has been issued. environmental issues are also still a dominant issue. the company's cement plant is suspected to have damaged the water absorption area because of the location of the plant in the mountains. companies must legitimize that the existence of a cement plant does not harm water absorption. the company can also offer policies or assistance as a consequence if it is true that the presence of a plant harms water absorption. in 2016, as seen in figure 2, environmental issues are still the most dominant issue because the exposure of the news is very massive. the company's efforts to make disclosures must be even greater because negative reporting on the environment is also quite large. in 2016, the term "kendeng farmers" began to appear dominant. kendeng is the village closest to the existence of the company's plant. this group is the company's main constituent whose legitimacy must be achieved at the earliest. the issue of protest is still the same as that in 2014, except that the protest in 2016 was broader. while in 2016, this rejection has become a national issue. the indication is that the rejection in 2014 was only delivered around the construction site while the 2016 refusal was delivered in front of the state palace. the company's efforts to legitimize its activities are getting heavier because more and more audiences to be heard. the dominant issue in 2017 has not changed much compared to 2017. however, the issue of farmers is re-emerging due to the protests carried out at the state palace; there was one farmer who died. the deceased farmer is one of those who participated in cementing the foot as a protest against the construction of a cement plant. the news made more audiences sides with the farmers as audience appeal to social issue more than an environmental issue. voluntary disclosure on pt semen indonesia tbk: legitimacy crisis on rembang plant construction 9 as shown in figure 2, in 2018, no negative issues were found such as in 20142017. the dominant issue is precisely about aid or assistance. in 2018, the company gave a lot of aid to villages around the plant site. the most given help is water aid during the dry season. in the dry season the area is always difficult to water, so the presence or absence of the plant is not too influential. this step can be seen as a legitimate effort by providing something for the company's main constituents (pragmatic legitimacy). the company is also active in carrying out other csr activities such as workshops, renovating houses in villages around the plant, providing capital for msmes, and others. the company continues to take steps to improve and further maintain the legitimacy of the establishment of the rembang cement plant. based on the development of 2017 news reports until 2018, it can be said that the legitimacy efforts carried out were quite successful. 5. discussion there are seven legitimacy strategies to be analyzed, namely: denial, excuse, justify, create monitors, replace personnel, revise practice, and avoid panic. the explain strategy is not analyzed because strategy explain is used to obtain cognitive legitimacy whose conditions require the audience to have a strong understanding of the company and the business activities carried out. based on issues that are developing in the news and seeing parties protesting and the general public, the condition of cognitive legitimacy will be difficult to achieve. denial denial is a common strategy when a company is faced with a problem. based on the results of the analysis in table 2, it was found that the company had carried out a denial strategy in its efforts to restore the legitimacy of the construction of the rembang cement plant. the two words that most often appear are the words "clarification" and "argue." in clarifying and arguing, companies use online news and websites more often. this media is more likely to be used because every time there are journalist questions, company representatives can immediately answer or give a rebuttal. the coverage of this denial strategy is not too high, which is around 3.03% of all disclosures made by the company. in some arguments, the company alludes to some themes or issues. the first issue is that the company denies damaging the environment in locations around the plant. this is by the issues circulating in the news, where environmental issues are very dominant in the news coverage. the company's denial of environmental destruction is by the problems that need to be sought for its legitimacy. second, the news circulated that the farmers were the ones most affected by the construction of the plant. they feel disadvantaged over the construction of the plant and on behalf of several villages around the plant. however, this issue was denied by the company through the statement of the company's commissioners who directly visited villages around the plant. the rebuttal has answered the issue of rejection of farmers and citizens who often appear in the news. excuse based on the results of the analysis in table 3, no company disclosures were found regarding the excuse strategy. some indicators do find the use of words that show an attitude of looking for reasons, but after further analysis to look for themes, nothing is intended to legitimize the construction of factories. this indicates that the company did not feel guilty about the construction of this cement plant. this finding is by the research of eugénio et al. (2013) that companies that do not use excuse strategy are companies that feel they have done nothing wrong or violated the rules. afebi management and business review (ambr) vol.03 no.02, december 2018 10 justify based on the results presented in table 4, it is seen that the company is trying to be quite large in justifying the construction of the cement plant. this can be seen from a fairly high coverage. the company uses almost all media disclosures to give justification but uses more means of statement through the press (news). this finding indicates that the company is trying to reach all stakeholders through a press statement to "fight" the issue in the news that has developed so far that the company is damaging the environment. there are several themes promoted by the company in justifying. the most dominant theme is the concept of the green industry. this concept is often repeated in various media, such as the annual report, sustainability report, and through press statements. the company is trying to influence the audience that by implementing this concept, it is impossible for companies to be involved in environmental destruction. the next dominant theme is the abundant harvest and the absence of drought. this needs to be explained by the company because previously the company was suspected of damaging water catchment areas which could harm farmers. the company tried to change the moral view of the audience who had thought that natural conditions were damaged by the plant, in fact, the results were not so. there are no droughts that hit people's farms, and the harvest of surrounding farmers has even increased. the last major theme is about csr and cid (community involvement and development). the company also provides a lot of disclosures related to csr and cid. by continuing to disclose csr, it is expected that the audience will assume the company has a good attitude towards its environment. the cid concept is also often echoed, especially regarding this rembang plant. the case for the construction of the rembang plant gave the impression that there was a wide gap or gap between the existence of the plant (company) and the residents. the cid concept seeks to impress the general audience that cement factories and residents can work together and have harmonious goals. create monitors create monitors is one of the restructuring efforts aimed at showing the audience that the company will take steps to monitor the activity. based on the results in table 5, it seems that there is not enough effort by companies to look to do something to prevent the same things from happening again in the future. according to suchman (1995), companies will usually ask the government to make regulations or companies create special committees to oversee the activities of companies that are in trouble. forming a new oversight committee is to signal to the audience that the company is fixing the problem of the activity. based on the results of the analysis, there is indeed an effort made. for example, the manager conducts socialization regarding the planned mining activities. this socialization invites various parties, such as residents who live near plants, community leaders, journalists, students from several schools in rembang, and others. the socialization is to show the mining process carried out and explain that they do not damage the environment. another effort is to encourage the community to be involved in making environmental permit because one of the causes of this problem is the result of a legal decision which states that the permit is defective and must be re-made. despite efforts made by the company, there is no real effort to create a better supervision system. so, it can be concluded that indeed the company does not feel that it has made a mistake and the few new monitoring efforts that are carried out are just a momentary gimmick. replace personnel replace personnel is the company's effort to eliminate "bad influence" so that they feel the need to replace or dismiss these people. based on the results of the analysis in table 6, no attempt was made to replace people who were perceived as having a voluntary disclosure on pt semen indonesia tbk: legitimacy crisis on rembang plant construction 11 negative impact on the company. there are several reasons that might underlie this. the first reason is that there are no company directors or other internal parties guilty. the second reason is that the activities carried out are not problematic, but the lack of communication and disclosure to the public is the cause of the issue of developing wildly in the media. although there were no parties considered to be "bad influence" in the company, there was one replacement for the board of commissioners who had become media coverage. sutiyoso, former governor of dki jakarta and former head of indonesian state intelligence agency was appointed as the company's president commissioner. there are assertions that this appointment is based on his experience in resolving conflicts while serving in the military and his ability in the field of bureaucracy. the assertion was proven through sutiyoso's report coming directly to the location around the plant and hearing how the residents responded to the construction of the plant. sutiyoso began serving as president commissioner in april 2017 and shortly after, he immediately came to the location of the rembang plant. this was never done by the directors and board of commissioners before. in 2018, negative issues regarding the company disappeared from the media. based on these findings, replace personnel does not merely explain the turn of the guilty person or "bad influence" but can also replace the good with the better. revise practice revising practice is usually done when the practices carried out by the company are not under applicable norms. the practice here can be seen regarding the law, procedure, or the impact that has been caused to the audience. it could be legally an activity is legal, but it is not following the norm of the audience around the activity. then these activities can lose legitimacy. this is likely to happen here because based on the findings in table 7, there are very few revisions to practice. coverages from "build" and "make" are indeed quite high, but after a more in-depth examination of the legitimacy theme, there are only two themes that emerge. first is the construction of waste heat recovery power generator (whrpg). this concept is included in the green industry concept that is carried out in the justification strategy. based on the results of the analysis of news issues in the results section, the environment, especially water availability, is the most dominant issue. the whrpg concept was adopted by the company in 2016 or two years after the rejection of the rembang plant began. whrpg is generally a new technology to collect heat arising from the combustion process in the plant to be converted into electricity. in other words, waste heat and co2 will decrease, and companies can produce electricity themselves. reduced waste heat and co2 produced by the plant will certainly have a direct impact on the surrounding environment. the use of this technology will make agricultural land around the plant not dry. this is confirmed by reports that the yield of residents around the plant has increased. even on websites, the company revealed that they would provide electricity for villagers around the plant from whrpg. by involving citizens directly, damaged moral legitimacy can be restored. concerns about damage to recharge and the availability of water can be controlled by the company. the next theme is the construction of water reservoirs. still, regarding water, the company is trying to make it easy for residents to get water. so, the company made several water reservoirs which happened to be also a program of the governor of central java. in addition to meeting the needs of the surrounding community, the company also showed a good corporate citizenship attitude towards the government. avoid panic avoid panic is just a general strategy that wants to remind managers and company executives to always act calmly despite facing a crisis. this is because, in a afebi management and business review (ambr) vol.03 no.02, december 2018 12 crisis, everything becomes sensitive. if the wrong action is made, the consequences will be enormous. based on the results of the analysis in table 8, the executive has tried to maintain internal conditions and in the environment of the rembang plant to remain conducive. this is shown through appeals both internally and externally. this appeal is needed so that if something happens, such as a protest in a plant environment, can hold back. company executives also often show that they hear all the aspirations of residents around the plant site. in a crisis, the company must be passive. in addition to avoiding mistakes when talking a lot of things, being passive will lower the temperature of the party who protests. for example, in 2016 and 2017, when farmers protested by cementing their feet, the company could not "attack" the participants of the action. commenting on the participants of the action will only heat the emotion of those who are protesting. when faced with such a situation, the company chose to concentrate on ongoing legal processes and immediately hear other constituents around the plant. people who did not take part in the protest did not necessarily support the existence of the plant, but communicating with residents who did not would be easier. a calm attitude is also shown through the company's corporate strategy. as explained previously, the company has indeed denied allegations, especially regarding environmental damage. however, the company provides a rebuttal as needed. the denial that is expressed continuously will only increasingly show that there is something that the company wants to cover up. in general, the attitude to avoid corporate panic has been very good. 6. conclusion this study aims to provide an evaluation of strategies to repair the legitimacy of pt semen indonesia in voluntary disclosures related to the construction and operation of a new plant in rembang, central java. based on the results of research conducted on all research instruments, several conclusions are made. the "deny," "justify," "create monitors," "replace personnel," "revise practices" and "avoid panic" strategies were used by the company to repair the legitimacy due to the construction of the rembang cement plant which was suspected of damaging the environment. the "excuse" strategy is not done because the company does not feel guilty. the "deny" strategy combined with "avoid panic," shows the company is innocent while maintaining the audience's emotions. the "do not panic" strategy was shown by the ceo by appealing to his internal ranks to maintain conduciveness at the rembang cement plant. this condition is needed as a form of caution because if there is violence, the legitimate narrative that is being built by the company will be damaged. a very minimal "create monitors" strategy is thought to be just a "gimmick" to get pragmatic legitimacy quickly. this gimmick is performed because the company does not feel that something is missing from the internal supervision system that has been built. “replace personnel” strategies are not carried out in the form of eliminating bad influence, which is usually done by dismissing board members or executives deemed responsible for the many protests that occur. replace personnel strategy is done by recruiting boards that have high capability and good communication skills in the face of conflict. the new chief commissioner was able to solve the problem of building this rembang plant. the strategy of "justify" and "revise practice" are both used to obtain moral legitimacy. the "justify" strategy is shown by showing claims for the impact of the green industry policies that have been made. example: agricultural land does not experience drought, even harvest increases. meanwhile, "revise practice" is demonstrated by introducing the waste heat recovery power generator (whrpg) voluntary disclosure on pt semen indonesia tbk: legitimacy crisis on rembang plant construction 13 technology which can reduce combustion heat while providing electricity to surrounding villagers. the dominant media used for repairing legitimacy is a statement through the press or online-based newspaper. then websites and annual reports. the use of sustainability report is very minimal. the use of social media is also more about branding; it is not used as a means to legitimize issues. future studies may consider adding research instruments in the form of interviews. interviews can be conducted on internal companies, such as managers or other executive ranks. interviews with stakeholders (audience), both those that are close to company activities 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(1986). production of trust: institutional sources of economic structure, 1840–1920. research in organizational behavior. https://www.cnnindonesia.com/nasional/20160412180316-22-123440/merendam-kaki-di-semen-demi-pegunungan-kendeng https://www.cnnindonesia.com/nasional/20160412180316-22-123440/merendam-kaki-di-semen-demi-pegunungan-kendeng the influence of self-control and mindfulness on counterproductive academic behavior 1 12 the influence of self-control and mindfulness on counterproductive academic behavior zainnur m. rusdi 1* 1 university of lampung, bandar lampung, indonesia abstract some forms of academic behavior of counter-productive that many college students are doing is plagiarism, cheating, absenteeism, and postponing the task. counterproductive academic behavior such as plagiarism and cheating among students can be reduced if the student has self-control and good mindfulness. this study aims to examine the negative effects of self-control and mindfulness on counter-productive academic behavior. the results of hypothesis testing showed that each variable of self-control and mindfulness have positive effect on counterproductive academic behavior. the low mean value in this study indicates that the average of college students who become respondents have a low level of self-control and low mindfulness that has a tendency to perform counterproductive academic behavior. keywords: counterproductive academic behavior, mindfulness, self-control 1. introduction university is the center of scientific activity that includes teaching, research, and community service, known as “tridharma”. “tridharma” must be implemented consistently and qualified to ensure the quality of education. continuous improvement of education quality will produce graduates who are able to work and contribute in building society. the quality of education in indonesia compared to other asean countries is still far behind, so the quality improvement must be implemented intensively. the ranking of education system in indonesia occupies position 69 of 76 countries, while singapore is ranked one (www.bbc.com, 2015). one indicator of the quality of education is the number of scientific publications in accredited national journals and international journals. based on the scimago portal it is known that indonesia is ranked 61st out of 239 countries with 25,481 publications. indonesia is far behind asean neighboring countries such as malaysia, which ranks 37th with the number of scientific publications 125,084, singapore which is ranked 32nd with the number of publications 171,037, and thailand at number 43 with the number of publications 95,690 (www.nasional.sindonews.com, 2015). publication of scientific papers can be improved through academic culture that is reading and writing early because the lack of reading culture will cause difficulties for lecturers and students to analyze various things and convey the subject into writing. based on the results of the unesco study in 2013, in indonesia only one person out of 1000 people who like to read and bps survey in * corresponding author. email address: zainnur@gmail.com mailto:zainnur@gmail.com afebi management and business review (ambr) vol.02 no.01, june 2017 2 indonesia in 2013 showed that the people of indonesia most liked to watch television, that is as much as 91.68% while those who read the newspaper only 17.6% (www.suara.com, 2015). lack of interest in reading also makes most students unable to produce quality scientific work. such inability often results in a lazy and instant attitude in the form of copy-paste works of others. it certainly leads to counterproductive academic behavior. hakstian et al. (2002) explains that counterproductive behavior is a behavioral that harms organizational and or workgroup objectives behavioral abuses such as property, drug and alcohol theft, dishonesty, disruptive behavior, failing to meet standards, absences, delays, and lack of effort. some forms of academic behavior of counter-productive that many college students are doing is plagiarism, cheating, absenteeism, and postponing the task. professor of political science from northwestern university, chicago united states, jeffrey a winters, claimed to still find plagiarism in the writing of academic essay of indonesian students, this indication of plagiarism often appears in the selection of academic writing contest in 2015 isrsf held in indonesia which is about a quarter of the entry essay do plagiarism in large quantities (www.tempo.co.id, 2016). plagiarism has also increased in several overseas universities not only in indonesia. according to a report by the west australian figures obtained from four universities in western australia this indicates that in the past two years, 4,000 students have received warnings or disciplinary action for including noncopyrighted work, collaborating or cheating during exams, the previous year only 2,000 cases (www.internasional.kompas.com, 2013). in addition to plagiarism, cheating culture among students shows an alarming rate. assessment based on the outcome and not based on the process contributes to the culture of cheating. counterproductive academic behavior such as plagiarism and cheating among students can be reduced if the student has self-control and good mindfulness. according to tangney et al. (2004), self-control is the ability of the existing response in a person to refrain from negative behavior. self-control has a negative influence on counterproductive academic behavior or in other words the higher one's self-control will be less likely to engage in counterproductive academic behavior (zettler, 2011). the insertion of citation and paraphrasing the opinions of others as a form of self-control can prevent and reduce plagiarism among students. mindfulness describes a conscious state characterized by clarity and clarity to the functions and experiences that occur today (brown and ryan, 2003). higher mindfulness will reduce counterproductive academic behavior (schwager, 2015), through awareness of the importance of reading, writing early on, and value-based judgments not only of the final outcome, can reduce counter-productive academic behavior. counterproductive academic behavior is our responsibility to be prevented and minimized, resulting university graduates who are professional, moral, and innovative. 2. literature study and hypotheses development self-control according to tangney et al. (2004), self-control is the ability of the existing response in a person to refrain from negative behavior. individuals with high selfcontrol seem more able to consider the possible long-term consequences of their behavior therefore they adhere to goals such as completing tasks on time, and more the influence of self-control and mindfulness on counterproductive academic behavior 3 likely to avoid actions with undesirable long-term consequences such as substance abuse (zettler, 2011) . mindfulness mindfulness describes a conscious state characterized by clarity and clarity to the functions and experiences that occur today (brown and ryan, 2003). schwager (2015) explains the definition of mindfulness as a state of consciousness in which the individual is aware of what is happening right now with a nonjudgmental attitude. the relationship between mindfulness and self-control is negatively related to negative behavior (tangney et al, 2004; schwager, 2015). counterproductive academic behavior counterproductive academic behavior is a negative behavior that harms the organization as quoted from hakstian et al. (2002) misuse of behaviors such as property theft, drugs and alcohol, dishonesty, disruptive attitudes, failing to meet standards, absenteeism, delay, and lack of effort are forms of counter-productive academic behavior. self-control and counterproductive academic behavior based on a study conducted by zettler (2011) on social psychology students, explaining that self-control influenced the counterproductive academic behavior, a person with high self-control had a negative effect on counterproductive academic behavior (r = 0.57, p <0.005). ha1: self-control negatively affects counterproductive academic behavior. mindfulness and counter-productive academic behavior schwager et al. (2015) conducted a study on 281 students, the results obtained from the study that mindfulness negatively affect the counterproductive academic behavior (β = -0.13, p <0.05). ha2: mindfulness negatively affects counterproductive academic behavior. 3. research methodology operational definition and variable measurement variables used in this study consist of independent variables (x) and dependent variable (y). independent variables are self-control (x1) and mindfulness (x2), while the dependent variable is counterproductive academic behavior (y). self-control according to tangney et al. (2004), self-control is the ability of the existing response in a person to refrain from negative behavior. self-control is measured using the self-control scale brief by tangney et al. (2004) as many as 13 items statement. scale used 1 = sts (strongly disagree) up to 5 = ss (strongly agree), example item is "i'm lazy", or "i'm hard to concentrate". mindfulness mindfulness describes a conscious state characterized by clarity and clarity to the functions and experiences that occur today (brown and ryan, 2003). the quality of consciousness was measured using mindful attention awareness scale (maas) by brown and ryan (2003) as many as 15 items statement. scale used 1 afebi management and business review (ambr) vol.02 no.01, june 2017 4 = sts (strongly disagree up to 5 = ss (strongly agree), an example statement item is "i find it hard to focus on things happening right now". counterproductive academic behavior according to hakstian et al. (2002), counterproductive behavior is a negative behavior that harms the organization behavioral abuses such as property, drug and alcohol theft, dishonesty, disruptive behavior, failing to meet standards, absences, delays and less effort. counter-productive academic behavior is measured using inventory of counterproductive behavior "during the exam, seeing and getting information from peer paper". data collection method researcher use questionnaires to obtain data, because the study designs using survey. questionnaires are distributed directly to respondents. respondents were given time to fill out the questionnaires. population and sample the population in this study is undergraduate student university in bandar lampung. the sample in this research was determined by using non probability sampling method with convenience sampling technique. roscoe (1975) in sekaran and bougie (2010) explain that sample sizes greater than 30 and less than 500 are appropriate for most studies. the sample used 200 respondents. research model the research model can be seen in figure 1 below: figure 1 research model validity test and reliability test of research instruments validity test is done by using confirmatory factor analysis (cfa) to obtain construct validity by using factor analysis. test reliability is using cronbach's alpha value. the value of cronbach's alpha coefficient ≤ 0.6 signifies bad reliability, reliability value between 0.6 to 0.7 is acceptable, and if it exceeds 0.8, reliability is good (sekaran and bougie, 2010). data analysis technique data analysis techniques used are simple regression and multiple regression. regression is used to determine the effect of independent variables (x) on the dependent variable (y). a simple regression uses one independent variable to the dependent variable, whereas multiple regressions use more than one independent or dependent variable. regression equation in this research is: y = a + b1x1 + et (1) y = a + b2x2 + et (2) self control mindfulness counterproductive academic behavior the influence of self-control and mindfulness on counterproductive academic behavior 5 information: y = counterproductive academic behavior a = constants b1 = regression coefficients of variable x1 b2 = regression coefficient of variable x2 x1 = self-control x2 = mindfulness 4. results validity and reliability test results the results of the validity test of the research questionnaire showed the value of kmo and bartlett's test for self-control (sc) of 0.685 (p <0.05), mindfulness (m) of 0.738 ((p <0.05), and counterproductive academic behavior (cab) (p <0,05) at the time of validity test of sc there are 3 item that must be removed because of factor loading <0,5 that is sc2, sc3, and sc13 four item in variable m that is m5, m8, m9, and m12, and 3 item on cab variables should also be deleted i.e. cab4, cab5, and cab17 because the items has a factor loading <0.5 and cross loading occurred. the reliability test results show the cronbach's alpha value of 0.545 (sc), 0.679 (m), and 0, 898 (cab). hypotheses testing results hypotheses testing results do not support the first and second hypothesis. the following summarizes the hypotheses test in table 1. table 1 hypotheses testing results hypotheses description ha1: self-control negatively affects counterproductive academic behavior not supported (β=0,499079, t = 8,104112, p < 0,05) mean self-control = 2,435 mean cab = 2,73 the results show that self-control has a positive effect on counterproductive academic behavior ha2: mindfulness negatively affects counterproductive academic behavior. not supported (β=0,452941, t = 7,148797, p < 0,05) mean mindfulness = 2,21 mean cab = 2,73 the results show that mindfulness has a positive effect on counterproductive academic behavior 5. discussion the test results using linear regression explains that self-control has a positive effect on counterproductive academic behavior where the hypothesis proposed is self-control has a negative effect on counterproductive academic behavior. the results of these analyzes have shown that the level of self-control of college students have an influence on the tendency of individuals with counterproductive academic behavior. in this study, the low mean results indicate that the average of afebi management and business review (ambr) vol.02 no.01, june 2017 6 students who become respondents have a low level of self-control that has a tendency to perform counterproductive academic behavior. as zettler (2011) argues that a person with a high degree of self-control will have a negative tendency toward counterproductive academic behavior, and otherwise a person with low self-control will have a positive tendency toward counterproductive academic behavior. the result of data analysis also shows that mindfulness have positive effect on counterproductive academic behavior, this result is in contrast to the second hypothesis that states mindfulness negatively affect the counterproductive academic behavior. these results indicate a low level of mindfulness that will tend to engage in counterproductive academic behavior, where these results are characterized by a low mean value. schwager et al. (2015) explains that the level of mindfulness will determine the tendency of students to engage in counterproductive academic behavior. the higher the level of mindfulness then negatively affect the counterproductive academic behavior, and the lower the level of mindfulness then positively influence on counterproductive academic behavior. 6. conclusions self-control and mindfulness affect the counterproductive academic behavior. however, the influence of self-control and mindfulness can be positive or negative depending on the level of self-control and mindfulness possessed by the student. therefore, to reduce the tendency of counterproductive academic behavior, students should be aware with self-control and mindfulness, realize that any form of counterproductive academic behavior can bring negative results that will adversely affect students. the university should continue to socialize the adverse impacts of counterproductive academic behavior for students through the implementation of academic rules with full discipline and improvement of academic and non academic skills through seminars and various training that benefit the students. references ____________. (2015). available at http://www.suara.com/news /2015/11/27/131119/ pemerintah-akui-minat-baca-di-indonesia-masih-rendah [accessed on march 2nd 2016]. ______________. (2015). available at (http://www.bbc.com/indonesia /majalah/2015/05/ 150513_majalah_asia_sekolah_terbaik. [accessed on march 3rd 2016] brown, k. w., & ryan, r. m. (2003). the benefits of being present: mindfulness and its role in psychological well-being. journal of personality and social psychology, 84(4), 822–848. hakstian, a. r., farrell, s., & tweed, r. g. (2002). the assessment of counterproductive tendencies by means of the california psychological inventory. international journal of selection and assessment, 10(1/2), 58-86. http://www.bbc.com/indonesia%20/majalah/2015/05/ http://www.bbc.com/indonesia%20/majalah/2015/05/ the influence of self-control and mindfulness on counterproductive academic behavior 7 schwager, i. t. l., hülsheger, u. r., & lang, j. w. b. (2015). be aware to be on the square: mindfulness and counterproductive academic behavior. personality and individual differences, 1-6. sekaran, u., & bougie, r. (2010). research methods for business. united kingdom: john wiley & sons ltd. subekti, n. a. (2015). available at http://nasional.sindonews.com/read /988644/162/ rangking-publikasi-ilmiah-internasional-indonesia1428903924 [accessed accessed on march 3rd 2016. tangney, j. p., baumeister, r. f., & boone, a. l. (2004). high self-control predicts good adjustment, less pathology, better grades, and interpersonal success. journal of personality, 72(2), 271-322. tarigan, m. (2016). seperempat esai mahasiswa indonesia terindikasi plagiat. available at https://m.tempo.co/read/news/ 2016/02/09/079743504/ seperempat-esai-mahasiswa-indonesia-terindikasi-plagiat. [accessed on march 2nd 2016]. wijaya, l. s. (2013). semakin banyak mahasiswa di australia menjadi plagiat. available at.http://internasional.kompas.com/read /2013/04/19/09161797/ semakin.banyak.mahasiswa.di.australia.menjadi.plagiat. [accessed on march 2nd 2016] zettler, i. (2011). self-control and academic performance: two field studies on university citizenship behavior and counterproductive academic behavior. learning and individual differences, 21, 119–123. mediating effect of capital expenditure on the effect of revenues, allocation fund, and tax/nontax sharing on economic growth (empirical study of regencies in bengkulu province period of 2009-2015) 43 8 mediating effect of capital expenditure on the effect of revenues, allocation fund, and tax/nontax sharing on economic growth (empirical study of regencies in bengkulu province period of 2009-2015) elsivera1* and willy abdillah2 1 university of bengkulu, bengkulu, indonesia abstract this research examines the mediating effect of capital expenditure on the relationship between regional revenues (pad), general allocation fund (dau), specific allocation fund (dak), and tax sharing fund/non tax sharing (dbh) on the economic growth. secondary data were collected from 10 regencies in bengkulu province for the period of 2009 to 2015. this research used panel data analysis. the results showed that capital expenditure did not mediate the relationship between regional generated revenues, general allocation fund, specific allocation fund, and tax sharing fund/non tax sharing to economic growth. meanwhile, general allocation fund have positif effect on economic growth. regional generated revenues and specific allocation fund have negative effect on economic growth, regional revenues and specific allocation fund also have positive effect on capital expenditure. implication for stakeholders and further research are discussed. keywords: capital expenditure, economic growth, general allocation fund, regional generated revenues, , specific allocation fund, tax sharing fund /non tax sharing 1. introduction reform of local financial management in indonesia in the form of fiscal decentralization, aims to encourage the realization of good governance. it is governed by law number 2 year 2015 and law number 33 year 2004, which explains the objectives of fiscal decentralization within the framework of the implementation of regional financial management in indonesia is for fiscal sustainability, corrects vertical imbalance, corrects horizontal imbalance, reduces dependency regional levels to the center, increasing accountability, effectiveness and efficiency in the framework of improving regional performance, improving the quality of public services, and increasing public participation in decision making in the public sector. thus, fiscal decentralization is a central government financial management instrument in distributing resources in the form of budgets to regions to realize public services which in turn leads to prosperity. the budget distribution process from the central government to local governments is manifested in the form of balancing fund transfer (saragih 2003: 83). according to law no. 2 of 2015 article 288 and act no. 33 of 2004 article 10, the balance fund consists of tax-sharing / non-tax revenue-sharing funds, dau, * corresponding author. email address: ciciferry76@gmail.com mailto:ciciferry76@gmail.com afebi management and business review (ambr) vol.02 no.02, december 2017 44 and dak. balancing funds are also called transfers or grants. in line with the objective of fiscal decentralization, transfers aim to reduce horizontal financial inequality between regions, reduce central and regional vertical gaps, address the effects of public service delivery among regions, and create stability of economic activity in the regions. decades of decentralization have been passed, but in reality the regions are still heavily dependent on balancing transfers, thus still the main source of revenue for local government expenditure. this is indicated in 2013, the share of district / city equity funds in indonesia is 72.61 percent (rp 378.26 billion) of the total revenue of districts / cities in indonesia. this reality shows that the average districts / cities in indonesia are still not able to independently by increasing the taxing power of regions through local revenue (pad) as the main support of local expenditure. this is due to many inefficient enterprises, local levies have begun to be trimmed due to causing high cost economy and hampering investment. however, with the implementation of fiscal decentralization through the pattern of balancing funds is expected to create an increase in regional economic activity that in real terms have an impact on increasing regional independence through increasing pad. excavation of local tax potency, regional retribution, result of separated regional wealth management and other legitimate pad for the improvement of pad should duly improve the regional capability in allocating capital expenditure for infrastructure development well. furthermore, if local governments want to achieve economic growth objectives, then the implication of the government should be to set the appropriate direction of public finance policy and public financial management. mahmudi (2010: 14) states that the key to the success of local financial management is actually located manajamen income, expenditure management and financing management. this means that the success of apbd management depends heavily on the pattern of allocating resources through revenue management, the pattern of expenditure arrangements through expenditure management and coping patterns of deficit and surplus through financing management by local government. accuracy in financial management is a driving force of economic activity of the society. meanwhile, article 66 of law number 33 year 2004 mandates that regional finance should be managed in an orderly, law-abiding, efficient, economical, effective, transparent and accountable manner with due regard to justice, compliance and benefits to the community. the law provides a framework to local governments in managing local finances to provide the greatest benefit to the community. that is, the allocation of development expenditure that will increase capital investment in the form of fixed assets ie equipment, buildings, infrastructure and other fixed assets by the local government is absolutely done. the higher level of capital investment is expected to improve the quality of public services. the allocation of capital expenditure is based on the regional need for facilities and infrastructure, both for the smooth implementation of government duties and for public facilities. improving public services is expected to encourage a better investment climate in the region so it can be an attraction for investors to open businesses in the region. the role of capital expenditure in promoting growth has been assessed in earlier empirical studies. kuspita (2015) found that capital expenditures mediated the effects of pad, dau, silpa on regional economic growth the following year. mediating effect of capital expenditure on the effect of revenues, allocation fund, and tax/nontax sharing on economic growth (empirical study of regencies in bengkulu province period of 2009-2015) 45 in line with that, muis (2012) reported that capital expenditures can mediate the relationship between dau and dak with economic growth. however, uhise (2013) finds capital expenditure mediating negatively the relationship between dau and dak with economic growth. in fact, afriani et al. (2012) did not find any effect of capital expenditure mediation on the relationship between pad and dau with economic growth. the inconsistency of the findings of these studies, giving researchers the opportunity to review the role of capital expenditure mediation. this paper describes the results of studies on the effect of capital expenditure mediation on the effect of pad, dau, dak, dbh on economic growth. systematic exposure begins from literature review, research methods, and discussion of research findings. the final section of this paper discusses the implications of research findings for similar studies and stakeholders. 2. literature background agency theory according to jensen and meckling (1976), agency relationships are defined as contractual relationships between principals and agents enabling principals as the owner of the capital to delegate authority to the agent for its importance. the consequence that must be borne by the agent as the recipient of the delegation of authority is to account the performance to the principal as the owner of capital. furthermore, if there is an equally strong economic boost from both parties in the relationship, then it is possible that the agent can not always make decisions in accordance with the wishes of the owner of capital. conflicts of interest is then called the term agency conflict. the clash raises moral hazard and adverse selection, ie the agent does not run the deal. in the context of government organizations, the people as principals mandate the government as an agent, to organize the government in order to improve the welfare of the community. but in the process of carrying out these mandates, there is often an asymmetric desire or purpose between the principal and the agent, especially on public sector budgeting. this is because of the tendency of the agent to be opportunistic in allocating the budget so that it is not in accordance with the wishes and goals of the capital owner in delegating his authority. implementation of principal agent theory in indonesia, especially in the process of budget preparation is on budget allocation process which is result of cooperation of two parties, which is legislative and executive. the form of agency responsibility is to realize the welfare of society in regencies / city in bengkulu province. in addition, the community as a principal must know the budget management information conducted by the agent, so that no information asymmetry occurs. one indicator of the welfare of the community is economic growth. economic growth also signifies the successful development of a region. if economic growth increases then the level of people's welfare and productivity will be higher, so unemployment is reduced and poverty goes down. economic growth can be achieved when apbd expenditure is allocated efficiently and effectively, meaning that budgeting focuses on programs that are capable of driving the wheels of the community's economy. if a program is efficient and effective in realizing the afebi management and business review (ambr) vol.02 no.02, december 2017 46 fulfillment of public needs, then the program is said to be effective in the realization of expenditure. hypotheses capital expenditure mediates pad effect on economic growth pad is one of the indicators of regional autonomy because the increase in pad reduces the regional fiscal dependence on the central government so that regions become autonomous. increased pad can encourage local government capital expenditures, such as facilities and infrastructure, infrastructure in the form of land, equipment and machinery, buildings and buildings, roads, networks and irrigation and other fixed assets, which in turn is expected to encourage increased regional economic growth through improved investment climate area. previous empirical studies have found a positive influence of pad on economic growth (andriana, 2009) through the improvement of public service facilities (gunantara and dwirandra, 2014). increased pad provides local flexibility in developing its economic agenda (brata, 2004) as long as the regions are not too offensive in an effort to increase local revenue. meanwhile, other study groups found positive influence of pad on capital expenditure (kusnandar and siswantoro, 2012; solikin, 2007). pad encourages lgs to realize capital expenditures for the next year. increased capital investment is expected to improve the quality of public services (mardiasmo, 2002). thus, pad becomes one of the decisive factors in determining the allocation of capital expenditure. the larger the pad received will increase the allocation of regional capital expenditures that ultimately drive economic growth. therefore, the proposed hypothesis is as follows. h1: capital expenditure mediates pad effect on economic growth capital expenditure mediates dau effect on economic growth dau is one of the regional financing sources derived from central government balancing fund which is a block grant. the allocated dau aims to reduce the inequality of financial capacity between central and local governments as well as between local governments. local governments are given full authority in the management of dau, but must be adjusted to the priorities and needs of the regions for improving services to the community within the framework of decentralization. dau can be allocated to direct expenditure, such as capital expenditures and indirect expenditure, ie personnel expenditure. the direct expenditure is intended for the administration of obligatory affairs as well as the affairs of choice. expenditure on business should be prioritized in order to realize the regional government's sustainability and investment in the form of improving basic services, education, health, social facilities and decent public facilities and developing social security system (permendagri no. 52 year 2015). with the increase of dau in the form of capital expenditure, it can encourage economic growth (sumartini, 2015, kuspita, 2015, oktriniatmaja, 2011; anriati, 2010; hendriwiyanto, 2014) and pdrb (kurni, 2012), especially when dau as a source of financing both development of facilities and infrastructure infrastructure that will impact on regional economic growth. thus, the proposed hypothesis is as follows. mediating effect of capital expenditure on the effect of revenues, allocation fund, and tax/nontax sharing on economic growth (empirical study of regencies in bengkulu province period of 2009-2015) 47 h2: capital expenditure mediates dau effect on economic growth capital expenditure mediates dak effect on economic growth dak transfers by the government for specific regions aim at reducing local burdens in funding special activities that are regional affairs and in line with national priorities. dak is a special grant, meaning that its designation has been determined by the central government. dak is allocated to realize the balance of prioritized inter-regional public services in the areas of education, health, infrastructure, marine, fisheries, livestock, local government infrastructure and the environment. effective and effective dak management of the procurement, development, upgrading and rehabilitation of the infrastructure is expected to increase the economic life of public service infrastructure in developing the local economy (taaha et al., 2009; santosa, 2013). thus, the utilization of dak should be directed to the capital expenditures of novianto and hanafiah, 2015). increased capital expenditure sourced from dak is expected to encourage economic growth (sularso and restianto, 2011). based on the explanation, the proposed hypothesis is as follows. h3: capital expenditure mediates dak effect on economic growth capital expenditure mediates tax/non tax dbh effect on economic growth the revenue-sharing fund comes from taxes and natural resources. dbh is based on principle by origin with channeling based on revenue realization. wandira (2013) explains that dbh is a potential source of local revenue and is one of the basic capital of local government in obtaining development funds and meeting regional expenditures other than those derived from pad, dau and dak. taaha et al. (2009), found a positive relationship between dbh and economic growth. dbh allocation as a source of infrastructure financing in the form of economic facilities and infrastructure will support the production activities of goods and services by investors, either from the local community or from outside the area concerned. activity of further investment activities will create job opportunities, and create multiple effects that encourage economic growth (hendriwiyanto, 2014; pujiati, 2008; santosa, 2013). rostow and musgrave (1996) explain that the pattern of government capital expenditure in the early stages of economic development is characterized by the large percentage of government investment to total investment. this is because the government must provide infrastructure and infrastructure for education, health and transportation. therefore, the increase of dbh has an impact on the increase of capital expenditure. thus, the proposed hypothesis is as follows. h4: capital expenditure mediates tax/non tax dbh effect on economic growth 3. research methods this type of research is explanatory with archival data survey design. dependent variable in this research is economic growth at regencies / city government in bengkulu province which is real increase of physical goods and service production capacity in a certain period with quantitative measure using afebi management and business review (ambr) vol.02 no.02, december 2017 48 grdp at constant 2010 prices in percent unit. mediation variable at this research is capital expenditure that is realization of capital expenditure at district / city government in bengkulu province. capital expenditures represent budgetary expenditures for the acquisition of property and equipment and other assets (fixed assets) that benefit more than one accounting period, consisting of land expenditures, equipment and machinery expenditures, building and building expenditures, road expenditure, irrigation and asset networks and expenditures others, measured in millions of rupiah. the independent variables in this study are pad, dau, dak and dbh. local revenue (pad) in this research is pad at district / municipality government in bengkulu province, which is all regional revenue derived from indigenous economic source determined by local regulation. indigenous revenues are separated into four types of revenues: local taxes, regional retributions, the results of management of separated property, and other legitimate pad measured in millions of rupiah. dau in this study is the realization of dau from the amount of transfer receipts granted by the central government to district / municipal governments in bengkulu province derived from apbn revenues and allocated for the purpose of equitable inter-regional financial capacity to fund regional needs in the context of decentralization implementation as measured in millions of rupiah. the dak in this study is the realization of a special allocation fund (dak) which is the amount of dak received by the central government to the district / municipal governments in bengkulu province derived from apbn revenues and allocated for the purpose of assisting in financing specific activities which are regional and appropriate with national priorities measured in millions of rupiah. tax / non-tax revenue sharing (dbh) in this study is the realization of tax-sharing dbh / nontax revenues from the amount of transfer receipts granted by the central government to the district / city government in bengkulu province derived from apbn revenues and allocated to the regions based on percentage figures to finance regional needs in the context of decentralization in the form of regional portions derived from land and building taxes other than the land tax and rural and urban sector buildings, income tax article 25, income tax article 29 personal domestic taxpayers and income tax article 21. meanwhile, natural resource-sharing funds are part of areas derived from natural resources, forestry, fishery, general mining, petroleum mining, natural gas mining and geothermal mining, measured in millions of rupiah. secondary data in the form of panel data (combined time series and cross section), sourced from report of audit result (lhp) of bpk ri of bengkulu representative on local government financial report (lkpd) book i in 10 (ten) regencies / cities in bengkulu province in the period 2009-2015. the data sources contain realization of pad, dau, dak, dbh tax / non-tax revenue share, and capital expenditures that have been audited. meanwhile, the secondary data of economic growth is obtained through the publication of badan pusat statistik. data analysis method used in this research is baron and kenny mediated regression (1986). before hypothesis testing is done, testing begins with the fulfillment of classical assumptions. the entire testing process uses the help of spss and eviews software. 4. analysis and discussion mediating effect of capital expenditure on the effect of revenues, allocation fund, and tax/nontax sharing on economic growth (empirical study of regencies in bengkulu province period of 2009-2015) 49 in determining the regression estimation approach using panel data, it must first be tested through chow test and hausman test on three model approach ie pooled least square model, fixed effect model and random effect model. the summary of the model estimation and comparative model of equations in i to iv with chow test and hausman test, can be seen in table 1 below. table 1 summary of model comparison and estimation equation i fixed effect model equation ii random effect model equation iii random effect model equation iv random effect model koef. t koef. t koef. t koef. t c 4.468241 13.37093 3.27e+10 1.905275 6.027388 -1.642506 5.196503 18.11705 ln pad -4.40e-11 -5.156616* 0.867656 2.214698** -9.95e-12 -1.352202 ln dau 7.67e-12 5.384627* 0.068100 1.009897 6.00e-12 5.080766* ln dak -1.03e-11 -3.124892* 0.930782 6.087339* -2.08e-12 -0.588062 ln dbh -1.97e-12 -0.279503 -0.040981 -0.128372 -5.97e-12 -1.187709 ln bm -3.04e-12 -1.642506 -9.87e-12 -5.218915* f 5.984654* 29.73775* 2.698909 13.57195* r2 0.581466 0.646645 0.038175 0.514636 ad r2 0.484307 0.624900 0.024030 0.476717 * significant pada α = 0.01 ** significant pada α = 0.05 sources: data processed, 2016. the first hypothesis (h1) examines the role of capital expenditure in mediating the effect of pad on economic growth. the results showed that capital expenditure did not mediate the effect of realization of pad on economic growth in regencies / cities in bengkulu province. thus, hypothesis one (h1) is rejected. this indicates that capital expenditure has not played a role in mediating pad to economic growth in regencies / cities in bengkulu province in the period 20092015. the increase in capital expenditures sourced from pad with the value of 0.867656 elasticity is not able to influence the increase of economic growth but it actually plays a role in realizing the economic slowdown. this is a contradictory condition of the objectives of apbd management, namely the realization of people's welfare through the improvement of economic growth. based on the results of the research shows that the realization of pad with an average value of rp. 23,044,366,792.46 has been allocated optimally to capital expenditure, but capital expenditure derived from pad is in fact precisely the role of realizing the economic slowdown. this indicates that the allocated capital expenditures are unproductive capital expenditures that do not directly impact the driving force of economic activity. as known, based on permendagri number 21 year 2011, capital expenditure is generally divided into 2 (two) major groups, namely capital expenditures for apparatus in the provision of government infrastructure and capital expenditure for provision of public service infrastructure infrastructure facilities. the type of capital expenditure allocated by districts / afebi management and business review (ambr) vol.02 no.02, december 2017 50 municipalities in bengkulu province for the period of 2009-2015 is dominated by the types of capital expenditures that meet the needs of apparatus such as the construction of office buildings, the purchase of official apparatus vehicles, the procurement of office furniture, purchases, the construction of office / computer office equipment, projector tools, cameras, handycam, monument construction, monument construction, and purchase of office land. furthermore, added capital expenditures for the fulfillment of the needs of this apparatus tend to be spent outside the region, such as buying a service vehicle, so that economic activity does not occur within the region. the more budget allocated to this type of capital expenditure to meet the needs of this apparatus, it will further reduce the share of productive capital expenditures that touch the economic activities of the community at the apbd. it is also supported by the allocation of capital expenditures for infrastructure development which is not effective in providing benefits and the impact of economic growth improvement, such as the construction of an untapped regional government mess, a monument that can become a tourist attraction not well managed so as to become abandoned assets, and traditional markets has been built but not utilized for the activity of buying and selling society so that become market building which become gathering of livestock because not correct in setting location of market development likewise with terminal. if wellearned allocated capital expenditures are increasingly distorted, this will certainly have an impact on the economic slowdown. indeed, capital expenditure is allocated to productive capital expenditure that touches the economic activities of the community such as capital expenditures for road construction, bridges, construction of market buildings, irrigation development, procurement of water transportation equipment, air transport equipment, land transportation equipment, livestock procurement, procurement of seeds, agricultural equipment, telecommunication procurement, land purchase for the market, terminal construction, construction of slaughterhouses, dock construction, airfield construction, procurement of agricultural land, procurement of plantation land, livestock procurement, public recreation facilities and others appropriately, construction time or place or location. the availability of infrastructure and infrastructures will be the attraction of incoming investment, the production of goods and community services will increase, the efficiency of economic activity, economical, suppress inflation and the increase of money circulation. so the impact of this capital expenditure will affect the growth of economic growth. this figure shows that despite an increase in income, but when shopping management is done inappropriately, the outcomes generated will deviate far from the goal. the results of this study are slightly different from the directorate general of regional finance ministry of home affairs (2013) that pad has not been able to encourage the allocation of capital expenditures, because in general the local government is still dependent on regional transfers. this means that the pad is not significant to the capital expenditure because the portion of pad is still relatively small, not because it is not appropriate in determining the type of realized capital expenditure. while the results of this study show that, although the realization of pad is still relatively small (3.8 percent) of revenues in apbd), pad has been able to affect capital expenditure, but the allocation on the type of capital expenditure is still not appropriate because it is still dominated by unproductive capital expenditure. mediating effect of capital expenditure on the effect of revenues, allocation fund, and tax/nontax sharing on economic growth (empirical study of regencies in bengkulu province period of 2009-2015) 51 empirical facts of this study then support agency theory (jensen and meckling, 1976) and einsenhardt (1989), which states that between the principal as the owner of capital and agent as the recipient of the delegation of authority often occurs agency conflict. this is because principal and agent have different goals and desires. people as the principal mandate the government as an agent to organize the government with the goal of improving the welfare of society. but in the process of such mandate occurs asymmetric desire, especially on public sector budgeting. the tendency of agents to be opportunistic in allocating and realizing the budget is not in accordance with the wishes and goals of the owners of capital. related to the results of this research, the agent in realizing pad is not allocated for productive capital expenditure that directly touches the economic activities of the community, but tends to allocate to capital expenditure to meet the needs of the apparatus, thus reducing the share of capital expenditure for the community. this has an impact on the economic slowdown. the second hypothesis (h2) examines the role of capital expenditure in mediating the effect of dau on economic growth. the results show that capital expenditure does not mediate the influence of dau on economic growth in bengkulu province. thus, hypothesis two (h2) is rejected. based on the estimation result of equation i, explaining that the increase of dau realization will lead to an increase of economic growth in regencies / cities in bengkulu province. similarly, if the opposite happens, if the allocation and realization of dau decreases or is trimmed, it will significantly lead to an economic slowdown. dau is a balancing fund transferred to the regions in order to reduce the inequality of financial capabilities between regions in indonesia. in the districts of bengkulu province, dau is the main source of revenue in apbd posture, as is the case with the majority of regions in indonesia. in the period of 2009-2015, the average realization of dau to total regional revenues in districts / cities in bengkulu province amounted to 67.65 percent. so it can be said that the velocity of money in districts / cities in bengkulu province sourced from apbd, 67.65 percent was contributed by the realization of this fund. the velocity of money in the regencies / municipality in bengkulu province then causes an increase in economic growth. however, the reality of the results of this study shows the velocity of money sourced from the dau is not optimally allocated to capital expenditure. indeed, an increase in the realization of dau with an average value of rp. 363,220,898,935.21 is directly proportional to the increase in capital expenditure which gives direct impact to economic growth, so that the growth of economic growth can be optimal. the broad scope of the dau allocated under the regulation, has resulted in local governments having an opportunity not to prioritize the allocation of dau to capital expenditures. the optimum portion of capital expenditure realization sourced from dau by district / municipal government in bengkulu province is the cause of not yet significant role of capital expenditure in spurring economic growth. the allocation of revenues sourced from the dau on apbd is still dominated by personnel expenditure. as it is known that dau is a transfer fund given by the central government to the regional government that is a block grant. that is, the use is submitted to the region in accordance with the priorities and needs of the regions for improving services to the community in the context of implementation of regional autonomy. afebi management and business review (ambr) vol.02 no.02, december 2017 52 the allocation of dau regulated by regulation can be allocated to personnel expenditures, capital expenditures, goods and services expenditures, grant expenditures, unexpected expenditures, interest expenditures, subsidy expenditure and revenue-sharing expenditures to village governments. in the apbd posture, personnel expenditure still dominates, thus causing capital expenditures to be distorted. that is, personnel expenditure is still a shopping sector that became the main focus of apbd. whereas with the dau as the largest contributor to apbd revenues, it gives an opportunity for the local government to allocate dau to capital expenditure optimally. however, these opportunities are not utilized by local governments in order to maximize economic growth through the realization of productive capital expenditures such as the allocation of land, equipment and machinery, roads, irrigation, networks, buildings and buildings that touch the needs of economic activities of the community. meanwhile, according to the pan-rb ministry, by the end of 2015 there are 235 local governments that have personnel expenditure above 50% of the total apbd. furthermore, according to director general of fiscal balance of the ministry of finance of the republic of indonesia (2016), the average portion of district / municipality expenditures on apbd in indonesia in 2015 reached 46 percent. it is not much different from the districts / cities in bengkulu province that based on the audit report (lhp) of bpk ri on the local government financial report of the regencies / municipality in bengkulu province, in 2015 the average realization of personnel expenditure on apbd is 46,41 percent to income (rp 351,008,329,439.63), in the year 2014 the average realization of personnel expenditure of 54.24 percent (rp 348.408.298.750,79) and in the year 2013 was 51.53 percent (rp 314,206.142.227,40). the empirical facts indicate that the increase of regencies / city economic growth in bengkulu province has not been initiated by capital expenditures sourced from the realization of dau. dau-driven economic growth is attributed to government consumption expenditure on employee expenditure and expenditure on goods and services, which is certainly not as optimal as if they were allocated to productive capital expenditure. furthermore, based on the results of research can be explained that the allocation of capital expenditures in the apbd on districts / cities in the province of bengkulu sourced from dau has not reached the optimal portion to be able to spur economic growth, based on lhp bpk ri, the realization of capital expenditures districts / cities in bengkulu province for the period 2009-2015 amounted to 23.11 percent of revenue. dau has not contributed to the portion. the portion of capital expenditure should be able to reach at least 30 percent of apbd revenues (as directed by the ministry of home affairs 2013 and finance ministry 2014) if the dau contributes to realization of productive capital expenditure. the average realization of distrit/city capital expenditures in bengkulu province in the period 2009-2015 amounted to 23.11 percent is not able to encourage economic growth in the district / city in the province of bengkulu well. the result of the research shows that the fact that illustrates in the non optimal portion (23.11 percent) has been burdened also by capital expenditure for the fulfillment of personnel requirement such as official vehicle expenditure, official housing expenditure, office building expenditure, machine and office equipment expenditure such as computer, handycam, genset, infocus and so forth. so that mediating effect of capital expenditure on the effect of revenues, allocation fund, and tax/nontax sharing on economic growth (empirical study of regencies in bengkulu province period of 2009-2015) 53 productive capital expenditure for the provision of infrastructure and infrastructure for the community is again distorted by unproductive capital expenditures. the results of this study support the concept proposed by anthony and govindarajan (1995) which states that one key element of agency theory is that principal and agent have different preferences and goals, all individuals acting on their behalf. agent in this case the district / city government is not optimal in implementing the contract given by the people as principal in improving their welfare. so asymmetric interest continues, without any significant evaluation and follow-up in improving the structure and posture of the apbd focusing on productive expenditure on improving economic growth. the third hypothesis (h3) examines the role of capital expenditure in mediating the impact of dak on economic growth. the results showed that capital expenditure did not mediate the effect of dak realization on economic growth in regencies / cities in bengkulu province. thus, hypothesis three (h3) is rejected. these findings indicate that capital expenditure has not played a role in mediating the impact of dak on economic growth. this is a conclusion from the results of research which states that the increase of dak realization causes an economic slowdown, although the increase of dak realization impacts to the increase of capital expenditure realization. but the realization of this capital expenditure in reality does not spur an increase in economic growth. furthermore, when dak together with capital expenditure tested its impact on economic growth, it turned out that dak did not give a role to economic growth and the increase of capital expenditure realization would cause economic slowdown. however, the significant realization of dak in spurring capital expenditure was not able to boost economic growth, but instead led to an economic slowdown. this is because the type of capital expenditure allocated is still dominated by the type of capital expenditure that touches health and education infrastructure facilities, so the allocation of capital expenditure on productive type has a relatively small portion. the average realization of dak in regencies / cities in bengkulu province is rp51.454.749.078,57. when compared with the average income in the district / city apbd in bengkulu province, the dak contribution is 9.85 percent. the frequent delays in the handover of operational guidelines and technical guidelines from the central government to the local government and the late delivery of dak implementation reports from local governments to the central government resulted in delays in the implementation of the absorption or realization of dak. furthermore, there is an obligation to provide dak counterpart funds to the apbd at a minimum of 10 (ten) percent of the total dak, so that the allocation and companion for the development of public health centers, schools and others will reduce the allocation of other productive expenditures. if dak is realized larger, capital expenditures will be higher, this will be followed by a larger companion fund as well. in turn it will cause an economic slowdown. because apbd revenues are absorbed into expenditure that is not a stimulant to increase production of goods and services that increase people's incomes. in general it can be explained that capital expenditures do not mediate the impact of dak realization on economic growth due to the relatively small portion of dak, allocation of capital expenditures on non-productive expenditure, delays in the distribution of operational guidelines and technical guidelines and afebi management and business review (ambr) vol.02 no.02, december 2017 54 compensation funding obligations for dak by 10 per cent apbd. this has an impact on the economic slowdown. the government aims to allocate dak to local governments to support the achievement of national priorities both through physical dak and nonphysical dak. physical dak is mainly realized in the field of education and health. in addition, physical dak is also allocated to the areas of sanitation and drinking water, settlement, irrigation, forestry transportation, marine, fishery and agriculture in general along with the facilities and infrastructure and so forth. nonphysical dak is allocated to the education sector (school operational assistance, pnsd teacher support allowance, operational assistance for early childhood education, etc.), health sector (health operational support and family planning operational assistance), and assistance for capacity building of cooperatives and smes. dak is allocated to priority areas such as underdeveloped areas, border areas, archipelagic coastal areas, disaster prone areas, areas of defense of food security, tourism developing areas. the regencies / municipalities in bengkulu province are regions that meet the criteria of the regions that receive dak allocation priorities, namely underdeveloped regions, border areas, coastal areas of the archipelago, and disaster prone areas. the increase of dak realization in regencies / municipality in bengkulu province has a role to increase capital expenditure, this is because the allocation of dak has been regulated by the central government through operational guidelines and technical guidelines. in accordance with the operational guidelines, the allocation of dak is dominated by capital expenditures for the development of education and health infrastructure, such as the construction and rehabilitation of school buildings, health facilities in the form of development and rehabilitation of healthcare facilitation. furthermore, based on the results of research can be explained that the allocation of capital expenditures in the apbd on districts / cities in bengkulu province sourced from dak has not reached the optimal portion to be able to spur economic growth, it happened something in the allocation so that the increase in capital expenditure led to economic slowdown. based on lhp bpk ri, the realization of capital expenditure of regencies / cities in bengkulu province during the period of 2009-2015 is 23.11 percent of revenues, although the portion is not optimal yet approaching the minimum allocation of 30 percent (according to appeal of kemendagri 2013 and financial kemeneterian 2014). the average realized capital expenditure of 23.11 percent should be able to encourage economic growth in the regencies / cities in bengkulu province well. however, the result of the research shows that the fact that the portfolio is not optimal, the allocation of capital expenditures sourced from dak is dominated by the development of educational infrastructure, the health that indirectly gives an impact to the increase of economic growth. so that productive capital expenditure for the provision of infrastructure and infrastructure for the community is again distorted by unproductive capital expenditures. the distribution of productive capital expenditures by unproductive capital expenditures is what causes the greater realization of capital expenditure in the regencies / cities in bengkulu province, hence it leads to an economic slowdown. this is because the greater the allocation of capital expenditures, the greater the companion funds should be allocated to dak derived from apbd revenues, absorbed to capital expenditures for the fulfillment of educational mediating effect of capital expenditure on the effect of revenues, allocation fund, and tax/nontax sharing on economic growth (empirical study of regencies in bengkulu province period of 2009-2015) 55 infrastructure facilities and the needs of the apparatus not for capital expenditure of infrastructure facilities and infrastructure. the results of this study support the neo classical economic growth theory proposed by solow-swan, that factors that play a role in encouraging economic growth are labor, capital accumulation and technological progress. that is, the availability of capital in the form of good infrastructure is an important factor that must be met in order to build an increase in economic growth. the fourth hypothesis (h4) examines the role of capital expenditure in mediating the effect of tax dbs / non-tax revenue share on economic growth. the results showed that capital expenditure did not mediate the effect of dbh realization on economic growth in regencies / cities in bengkulu province. thus, hypothesis four (h4) is rejected. these findings indicate that capital expenditure has not played a role in mediating dbh tax / non-tax revenue share on economic growth because the tax-sharing dbh / non-tax revenue share from central government to districts in bengkulu province has a relatively small portion of this, rp.30.267.537.355,98 or 5.97% of total revenue in apbd. in addition, the relatively small portion of the tax-sharing / non-tax revenue dbh is partially allocated to capital expenditures. the results indicate that capital expenditures sourced from tax dbh / non-tax revenue share have been allocated to both types of capital expenditure that is productive and not productive. allocation to unproductive capital expenditure certainly does not provide an increase in economic growth. however, when tax-sharing / non-tax dbes are allocated to productive capital expenditures it has an impact on the economic slowdown. this is because it is not right on the location of development, so that the economic infrastructure facilities become dormant and not functioning in spurring economic growth. furthermore, there is no mediating role of capital expenditure on the impact of tax-sharing dbh on tax / non-tax revenues on economic growth is also supported by the allocation of tax-sharing dbh / non-tax revenues to other expenditures, including personnel expenditures related to official travel, procurement of official clothing, honorarium pns, bansos expenditure, grant expenditure, emergency response expenditures that do not directly impact economic growth. the dominance of regional travel expenditures impacts money circulating touched productive sectors outside districts / municipalities. whereas according to kuncoro (2014) the allocation of tax dbh / non-tax revenue share to overcome revenue from tax sources for the allocation of expenditure, based on a certain percentage adjusted to the potential producing regions. that is, one of the government's efforts to help the region to optimally allocate regional expenditure that aims to drive the local economy is through the tax-sharing dbh / profit sharing. 5. conclusion and research implications this study aims to examine the effects of local revenue (pad), general allocation funds (dau), special allocation funds (dak), tax-sharing / dbe funds on economic growth with capital expenditure as a mediating variable. the results did not find the effect of capital expenditure mediation. however, this study found the effect of pad on economic growth and capital expenditure, and the effect of dau and dak on economic growth and capital expenditure. the implications of the research results are as follows. afebi management and business review (ambr) vol.02 no.02, december 2017 56 a. structural reforms in the priority areas of regencies budget apbd in bengkulu province need to be done. b. in achieving the effectiveness of programs and activities that impact on the improvement of regional economic growth through capital expenditure, the capital expenditure priority should really be realized to the type of capital expenditure that is productive, not the type of capital expenditure that actually re-meet the needs of employees such as official vehicles, office buildings which is not as needed. c. an integrated and sustained monitoring, evaluation, and assessment should be carried out by the central government, the inspectorate, bpkp and bpk ri on the allocation of productive capital expenditure in the management of expenditure. d. improving the management of government local business unit (bumd) regarding to generate government revenues. e. program and activity priorities for infrastructure development sourced from dak should be synchronized between top down and bottom up, thus creating a balance of program and needs priorities between central and local 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(2013). effect of pad, dau, dak and dbh on allocation of capital expenditures. accounting analysis journal. semarang state university. 39 understanding use behavior in mobile banking: an extended utaut perspective rahmiati* management doctoral program, faculty of economics, universitas andalas, indonesia department of management, faculty of economics, universitas negeri padang, indonesia perengki susanto department of management, faculty of economics, universitas negeri padang, indonesia alizar hasan, vera pujani department of management, faculty of economics and business, universitas andalas, indonesia mobile banking is a service bank that benefits both banks and customers by providing value and convenience. however, the success of mobile banking is mainly dependent on how thoroughly customers want to adopt it. thus, this study recognizes the need to examine the factors that could predict the use of mobile banking and how such a system could contribute to increasing the intensity of use of mobile banking by customers. the conceptual model of this study uses extended utaut2, including price value, hedonic motivation, and habit. data collection was carried out through a questionnaire survey by 137 respondents. partial least square-structural equation modeling (pls-sem) was employed for analyzing the data. the study showed that hedonic motivation significantly and positively influenced behavioral intention and habit. meanwhile, habit and behavioral intention significantly and positively influence user behavior. nonetheless, price value was found to have an insignificant impact on behavioral intention to use mobile banking. the implications of the study can allow bank managers to have a better understanding of the critical factors that customers evaluate while using mobile banking apps. keywords: mobile banking, price value, habit, behavioral intention, use mobile behavior. understanding use behavior in mobile banking: an extended utaut perspective received may 28th 2022 review june 10th, 2022 publish june 30th, 2022 afebi management and business review (ambr) p-issn 2548 530x e-issn 2548 5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/555 http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/555 4 *corresponding author. email address: rahmifeunp@gmail.com mailto:rahmifeunp@gmail.com 41 ambr introduction financial technology advancements, such as mobile banking (also known as m-banking), have caused various changes in the banking business services. this service allows users to use banking services through their mobile phones as a result of the availability of mobile platforms. some advantages include improved service quality because users can conduct banking transactions at any time and from any location (hanafizadeh et al., 2014). furthermore, m-banking customers can access real-time account information and help banks reduce costs (baabdullah et al., 2019). it acts as a new service channel, allowing customers to gain extra service and value (alalwan et al., 2017). as a result, retail banks prefer m-banking to provide m-banking services in order to cut costs on infrastructure (shankar & rishi, 2020). m-banking allows retail banks to improve their services while also lowering their operating costs, despite the fact that its development comes at a high cost (suhartanto et al., 2020). the we are social survey data shows the number of bank customers in 2019 reached 49% of the total population in indonesia (adhitya & sembel, 2020). this shows the size of the banking market in indonesia. however, the number of m-banking users is still far lower than the number of bank customers themselves (sitorus et al., 2019) and rather than the number of internet and smartphone users (zulfauzy & rachmawati, 2018), even though m-banking has features that will make users much more effective and profitable. m-banking infrastructure development involves several significant investments (banerjee & sreejesh, 2022), and consequences, the use of m-banking sustainably by consumers is an essential plan for banks to get a profitable return on this investment. the task of the bank marketer is to ensure that interest users in technology have not decreased since the adoption of mbanking (foroughi et al., 2019). the objective of this study is to look into the factors that influence how individuals use mobile banking in indonesia, specifically in west sumatra. this research uses extended utaut2 proposed by (venkatesh et al., 2012). utaut has been praised as a more robust theory to predict the acceptance of technology, thanks to its ability to explain 70 percent variance in the intention of behaving and 50 percent variance in the behavior of use (thusi & maduku, 2020). venkatesh et al. (2012) developed utaut by adding three variables, namely hedonic motivation, price value, and habit, to consider the acceptance of technology and behavior of the use of individual users. these three variables are known as psychological factors for the consumer. adoption of m-banking has attracted the attention of many researchers (baptista & oliveira, 2015; farah et al., 2018; rodrigo f. malaquias & hwang, 2019; rodrigo fernandes malaquias & silva, 2020; purohit & arora, 2021; raza et al., 2019; suhartanto et al., 2020). most explore the factors that affect the adoption of mbanking using tam and utaut models. review literature also shows the limited application of the primary model to test the acceptance of the m-banking application in the context of indonesia's developing countries. in addition, this study contributes to the literature by combining the utaut and consumer psychology factor approach, including value, habit, and hedonic motivation. literature review mobile banking mobile banking refers to financial activities such as checking balances, account transactions, bill payments, and other financial services through mobile devices such as mobile phones and tablets (goh et al., 2014). m-banking is closely related to mobile devices and communication networks as a tool to interact with banking applications by receiving or sending information and transactions from/to banks (baptista & oliveira, 2015). banking uses various approaches to m-banking, such as short message services (sms banking) and mbanking applications. consumers may have different perceptions of these approaches, so their acceptance of mbanking services is also different according to the method used by the bank (thusi & maduku, 2020). at present, the adoption of m-banking has not been in the development stage among users. hence, the bank uses various media platforms for advertising m-banking to capture the potential customer base that has not been used mbanking (sharma et al., 2022). suhartanto et al. (2020) used the technology acceptance model (tam) to investigate mobile banking adoption in islamic banks in indonesia. their research show that perceived usefulness, perceived ease of use, and religiosity are determinants of intention to use mobile banking. price value price value is a cognitive consumer consideration regarding the trade-off between the benefits and costs incurred when using an innovation (venkatesh et al., 2012). therefore venkatesh et al. (2012) add price value as a predictor of behavioral intention to use certain technologies. costs incurred related to m-banking are generally due to the need for smartphones, internet connections, and the necessity to use the m-banking application (merhi et al., 2019). price value is positive when the benefits of using technology are perceived as more than the monetary cost. the benefits consumers feel when using m-banking will encourage consumers to continue to use m-banking so that it becomes a habit or repeated behavior. consumers prefer to use 42 products/services that are believed to offer better performance, values, and profits (dootson et al., 2016). research by susanto et al. (2022) regarding the adoption of e-money in indonesia shows that consumers consider the benefits and monetary costs of e-money services. if the perceived benefits are greater than the costs, consumers will have a stronger intention to adopt it. in research on m-banking, price value was found to positively affect behavioral intention (baptista & oliveira, 2015; raza et al., 2019; zulfauzy & rachmawati, 2018). therefore, the following hypotheses are formulated: h1: price value has a positive influence on habit h2: price value has a positive influence on behavioral intention hedonic motivation in the primary model, venkatesh et al. (2012) explain that hedonic motivation is the pleasure gained when using certain technologies. baabdullah et al. (2019) prove the importance of intrinsic motivation by finding a strong relationship between hedonic motivation and actual use of behavior and states that the increase in m-banking usage by consumers is caused by the rise in the hedonic motivation level contained in the mbanking application. studies conducted by nikolopoulou et al. (2021) about mobile internet found a positive effect on hedonic motivation on behavioral intention. hedonic motivation is also the most powerful determinant of intention to adopt m-banking services because mobile devices tend to be associated with pleasure that can reduce the pressure caused by traditional banking and create more pleasant experiences (farah et al., 2018). the pleasure obtained from using certain technologies can also encourage the emergence of habit because of the tendency to use technology repeatedly. as stated by venkatesh et al. (2012), habit is a perceptual construct that reflects the results of previous experience. thus, if consumers feel a pleasant experience of using m-banking, the possibility consumers will use it again in the future so that it can become a habit. based on this description, this study formulated the following hypotheses: h3: hedonic motivation has a positive influence on habit h4: hedonic motivation has a positive influence on behavioral intention habit habit refers to how people tend to do behave automatically because they learn from previous experiences (venkatesh et al., 2012). in other words, habit is the behavior learned in responding to an unconscious stimulus that leads to fun results (merhi et al., 2019). in the m-banking perspective, habit is created when consumers use m-banking more often. habit is predicted in many studies to be a determining factor for the intention and behavior of the use of specific technology (baptista & oliveira, 2015; chávez herting et al., 2020; farah et al., 2018; gupta & arora, 2020; khatimah et al., 2019; macedo, 2017). related to the adoption of m-banking, baabdullah et al. (2019) asserted that as long as consumers are accustomed to using a new system, they have good experience and knowledge to use m-banking, and subsequently reflected in the extent to which consumers use m-banking. research conducted by khatimah et al. (2019) regarding the behavior of using e-money in indonesia shows that habit can influence behavioral intention. in the context of m-banking, someone who has a habit of using m-banking will automatically make daily transaction payments using m-banking. therefore, this research proposes the following hypotheses: h5: habit has a positive and significant impact on behavioral intention h6: habit has a positive and significant effect on use behavior behavioral intention and use behavior based on previous research on information and information technology systems, behavioral intention is reported to have an important role in influencing the adoption and use of the actual system/technology (baptista & oliveira, 2015; macedo, 2017; owusu kwateng et al., 2019; shankar & rishi, 2020; thusi & maduku, 2020). studies conducted by gupta & arora (2020) found behavioral intention positively predicted user behavior in using mobile payment in india. previous studies on information and communication technology usage by older adults in portugal also proved the effect of significant behavioral intention on use behavior (macedo, 2017). the positive influence of the intention to use of m-banking services is also supported by the study result by jadil et al. (2021). based on these findings, it is hypothesized: h7: behavioral intention has a positive influence on use behavior understanding use behavior in mobile banking: an extended of utaut perspective 43 ambr figure 1. research model figure 2. outer loading of indicators method this study uses a quantitative statistical approach. data were obtained through a survey of mobile banking users in west sumatra, totaling 137 people. respondents range from 17 to 58 years, with education levels ranging from high school to doctor (s3). data is processed with the smartpls 3.2 program. analysis of the data includes the measurement and structural model analysis. the measurement model testing consists of the validity and reliability of the instrument. validity is assessed based on convergent and discriminant validity, referring to the value of outer loading, cross-loading, and average variance extract (ave). for testing instrument reliability is assessed based on composite reliability and cronbach alpha. structural models are evaluated based on adjusted r-square, path coefficient, and significance of relationships which are at the same time the basis for receiving or rejection of hypotheses. result and discussion result measurement model analysis the measurement model testing is carried out to ensure that the instrument used meets valid and reliable criteria. there are two validity criteria tested, namely convergent and discriminant validity. convergent validity illustrates a positive correlation between indicators that measure the same construct. therefore, measuring indicators of a reflective construct should share high variance proportions (hair, jr. joseph f., hult, g. tomas m., ringle, christian m., sarstedt, 2017). the convergent validity of a construct can be evaluated based on the outer loading indicator and average variance extracted (ave) value. a high outer loading on the construct indicates that the related indicators have much in common with the construct. the rule of thumb commonly used to assess convergent validity is that outer loading must be more than 0.7 for confirmatory research, while 44 the ave value must be greater than 0.5 (ghozali, imam., latan, 2014). figure 2 shows that all indicators have met convergent validity based on outer loading, greater than 0.70. the other convergent validity testing is based on the ave value. table 1 shows that all variables have ave values above 0.5. therefore it can be concluded that all variables meet convergent validity according to ave value. variable ave behavioral intention 0.735 hedonic motivation 0.763 habit 0.753 price value 0.752 use behavior 1.000 discriminant validity denotes that a construct is empirically unique from the other constructs (hair jr. et al., 2017). it is evaluated by fornell-larcker criterion. validity discriminant test results in table 2 show that the square root of ave for each construct (diagonals in bold) is higher than the construct correlation value with other constructs. thus, all constructs have fulfilled discriminant validity. behavioral intention hedonic motivation habit price value use behavior behavioral intention 0.857 hedonic motivation 0.608 0.873 habit 0.769 0.593 0.868 price value 0.589 0.747 0.665 0.867 use behavior 0.540 0.395 0.503 0.427 1.000 construct reliability testing is seen from the value of cronbach alpha and composite reliability. table 3 shows that all constructs have been reliable with a value above 0.7. overall the measurement model shows that the model meets the validity and reliability requirements so that it can be continued in testing the structural model. composite reliability cronbach alpha behavioral intention 0.892 0.820 hedonic motivation 0.906 0.846 habit 0.901 0.836 price value 0.924 0.890 use behavior 1.000 1.000 structural model analysis structural model analysis is carried out to evaluate whether the proposed hypothesis is acceptable. table 4 summarized the results of hypothesis testing and showed 6 of the seven hypotheses submitted are significantly with the coefficient of positive direct relationships. therefore, h1, h3, h4, h5, h6, and h7 are accepted. the influence of price value on behavioral intention is insignificant, so h2 is rejected. hypotheses coefficient t-statistics p-values result h1: pv -> ht 0.502 5.792 0.000 supported h2: pv -> bi -0.013 0.143 0.886 not supported h3: hm -> ht 0.218 2.454 0.014 supported h4: hm -> bi 0.241 3.448 0.001 supported h5: ht -> bi 0.635 7.954 0.000 supported h6: ht -> ub 0.214 2.199 0.028 supported h7: bi -> ub 0.375 3.807 0.000 supported understanding use behavior in mobile banking: an extended of utaut perspective table 1. average variance extract (ave) table 2. discriminant validity (fornell-larcker criterion) table 3. reliability of construct table 4. result of hypotheses testing 45 ambr table 5. coefficient of determination (r2) and adjusted r2 in table 5, the explained variance (r2) and adjusted r2 for each endogenous variable ranging from moderate to high (ghozali, imam., & latan, 2014). variations in behavioral intention can be explained by price value, habit, and hedonic motivation by 61.9 percent. the rest is influenced by other variables that are not examined in this study. furthermore, variations in the habit are influenced by price value and hedonic motivation by 45.6 percent. the remaining 54.4 percent is influenced by other variables that are not explained in this study. the model also explains 30 percent variance of use behavior determined by habit and behavioral intention. the r2 value is included in the moderate category for behavioral intention and weak for habit and use behavior (kwateng et al., 2019). r2 adjusted r2 behavioral intention 0.628 0.619 habit 0.464 0.456 use behavior 0.310 0.300 discussion this study integrates the consumer psychological factors that are price value (pv), hedonic motivation (hm), and habit (ht) with utaut variables (behavioral intention and use behavior) to investigate user adoption of mobile banking. the results of this study indicate that the price value affects the habit (h1). the study suggests that the cost and benefit considerations of the use of mobile banking will affect the habit of using mobile banking. if consumers feel the benefits of using mobile banking are more significant than the costs incurred, then consumers will tend to repeat it in the future. as stated by merhi et al. (2019), the response to the stimulus that leads to a pleasant result will form a habit. the value obtained from mobile banking is an enjoyable experience that will direct consumers to repeated behavior and become a habit. however, contrary to previous studies, price value does not affect behavioral intention (h2). in this study, a possible explanation is that consumer intention to adopt mobile banking does not depend on cost constraints. hypothesis testing shows a significant positive effect of hedonic motivation on behavioral intention and habit. this result indicates that the underlying motivation influences the user's intention to use mobile banking services (h4). a pleasant previous experience in using mobile banking also played a role in forming habits (h3). direct effect of hedonic motivation on behavioral intention consistent with previous research (baabdullah, 2018; khatimah et al., 2019; nikolopoulou et al., 2021). furthermore, the research findings show a direct influence of habit on behavioral intention and use behavior (h5 & h6). the effect of habit on behavioral intention is the highest among other constructs. thus, it can suggest that habit is the main predictor of intention to use mobile banking. this finding confirmed the research of macedo (2017) and thusi & maduku (2020). the following results show the effect of behavioral intention on use behavior (h7). these results support previous studies from oliveira et al. (2016), raza et al. (2019), and (shankar & rishi, 2020). this finding implies that consumers' intention to use mobile banking can predict their behavior. conclusion the results showed that habit had the most significant influence on the behavioral intention of mobile banking. this finding indicates that transactions with mobile banking must be a habit to increase user behavioral intention. an activity becomes a habit if the action is entertaining and enjoyable to do. it can be done by increasing the comfort of transactions with mobile banking. the results of this study also have implications for policymakers. bank retail needs to create a fun mobile banking application for pleasure and enjoyment, so consumers prefer mobile banking transactions rather than traditional banking. the pleasure obtained from mobile banking will increase the frequency and intensity of mobile banking use. a pleasant experience also encourages the emergence of habits as described. when mobile banking has become a habit, the next will promote an increase in the use of mobile banking. this research has limitations that encourage further investigation. one main limitation is the relatively small number of samples and the possibility of reducing the generalization of the results obtained. subsequent research is suggested to increase the samples and conduct research in several places to compare the results. the following limitation is that this research does not consider other important factors that may affect mobile banking adoption, such as risk and trust. entering these variables in the following study will help better understand mobile banking adoption behavior. future research should examine additional banking products mobile, such as mobile money and internet banking. the study focused on mobile banking. in light of these situations, it could be more interesting to add to the information management literature by contrasting the results of various digital banking products. 46 references adhitya, a., & sembel, h. m. r. 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(2018). analysis of factors influencing adoption of mobile banking in indonesia. international journal of science and research (ijsr), 7(2), 868–874. https://doi.org/10.21275/art20185 https://doi.org/10.1016/j.chb.2017.06.013 https://doi.org/10.1108/jima-04-2017-0038 48 103 the ocb roles as a mediator self-actualization, psychological well-being, and work environment on health worker performance: study during covid-19 pandemic in indonesia anthonie wenda*, b. tewal, olivia s. nelwan, greis m. sendow, viktor p.k. lengkong universitas sam ratulangi, indonesia abstract this study focuses on determining the role of organizational citizenship behavior or ocb as a mediator the relationship between self-actualization, psychological well-being, and the work environment on the performance of health workers with studies during the covid-19 pandemic in indonesia. data were collected from 89 nurses who work in hospitals owned by police institutions in manado city, indonesia. respondents were surveyed directly about their perceptions related to the research topic. the results showed that ocb acts as a mediator between self actualization, psychological well-being, and the work environment on the performance of health workers. directly only the work environment has an insignificant effect on the performance of health workers, while other variables indicate a positive and significant relationship. these findings contribute to hospital management and other relevant institutions, as well as human resource research during the covid-19 pandemic. some of the limitations of this study are described at the end of this article. keywords: self-actualization; psychological well-being; work environment; ocb; performance; healthcare workers; covid-19 *corresponding author. email address: anthoniewenda@gmail.com the ocb roles as a mediator selfactualization, psychological wellbeing, and work environment on health worker performance: study during covid-19 pandemic in indonesia received september 6th 2021 review september 14th 2021 publish december 31st 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/499 mailto:anthoniewenda@gmail.com http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/499514 104 ambr introduction the emergence of covid-19 as a new infectious disease has seriously tested public health systems in various countries. in this context, medical workers or health care providers, as a major force in the fight against the epidemic, bear a monumental task. unfortunately, many frontline personnel have sacrificed their own wellbeing and have been infected or even died, causing increased psychological stress. indonesia is currently still experiencing a covid-19 epidemic, where the situation of the spread of covid-19 has reached all regions in the province in indonesia with the number of cases and/or the number of deaths increasing. as long as this pandemic continues, nurses will sacrifice their own needs to actively participate in anti-epidemic work and make selfless contributions from moral and professional responsibilities. at the same time, nurses will be in a state of physical and mental stress and feel isolated and powerless in the face of the health threats and pressures of high-intensity work caused by the public health emergency. other research conducted by kim and kim (2018); khalid, et al (2016); liu, et al (2020), showed that when nurses are in close contact with patients with infectious diseases such as sars, mers-cov, ebola, h1n1, they will suffer from loneliness, anxiety, fear, fatigue, sleep disturbances, and other physical and mental health problems. caused by not having or lack of appropriate information, guidelines for patient care, individual protective equipment and lack of experience in dealing with patients with new infectious diseases. the results of a study conducted by liu, et al (2020) with the title "online mental health services in china during the covid-19 outbreak”, suggesting that frontline healthcare providers treating patients with covid-19 are at greater risk of mental health problems, such as anxiety, depression, insomnia, and stress. facing this pandemic, nurses have a dual role as personnel to serve the care of the sick or specifically to explore certain areas of care in serving during the covid-19 pandemic. self-actualization needs are the final needs of every individual who works in a company, where the company must be able to understand the needs of its employees so that employees are able to provide positive feedback for the company. psychological well-being is one of the factors that can affect a person's life, not least in the world of work. if it is associated with the world of work, employees who have high psychological wellbeing will have good work performance (wright & bonnett, 1997). in addition, employees who have high psychological well-being will feel satisfied and enjoy their work more, are more capable and skilled at solving problems. related to their work so as to improve their performance in the organization (wright, cropanzano & bonett, 2007). a conducive work environment can improve employee performance and vice versa, an inadequate work environment will reduce employee performance. the condition of the work environment is said to be good if humans can carry out activities optimally, healthy, safe and comfortable. the suitability of the work environment can be seen as a result in the long term. an unfavorable work environment can demand more labor and time and does not support obtaining an efficient work system design. the company that the researchers chose was bhayangkara level iii hospital manado because it is a hospital that has more partner staff than organic workers (more than 90% of the nurses are partner staff). partner employees are non-permanent employees employed by the company for a job without a contract for a certain period of time or receiving a certain income and depending on the contract as stated in the cooperation agreement. the selection of partner employees as research objects is because partner employees are the layer most closely related in providing services in handling covid-19 patients, so it can be said that partner employees play an important role in the implementation of company performance. this shows how important mitra's employees are at bhayangkara manado hospital. each partner employee must be responsible for the targets set by the company regardless of the existing field conditions and conditions, especially with the covid-19 pandemic, although they play an important role in achieving targets at bhayangkara hospital, in reality there are still many differences in meeting the needs received by partner employees. compared to permanent employees who tend to get more facilities, self-actualization, appreciation and fulfilled social needs. this study focuses on determining the role of organizational citizenship behavior or ocb as a mediator of the relationship between self-actualization, psychological well-being, and the work environment on the performance of health workers with studies in indonesia during the covid-19 pandemic. this article is divided into several sections. first, an introduction that discusses the background of this article as well as some of the theories that underlie the research model. second, research methods that discuss the methods as well as the data and analysis used. third, research results and discussion of this research. fourth, the conclusions as well as some limitations are discussed at the end of this article. literature study self actualization according to maslow (1954) self-actualization is: "the process of becoming oneself and developing unique psychological traits and potentials". robbins and coulter (2017) state that the need for self-actualization is a person's need to be able to become what he wants according to his potential. for example a musician must play music, a professor must teach, and so on. maslow said that "what a man can be, he must be". (2013) states that 105 self-actualization is a process of becoming oneself and developing unique talents, traits and psychological potentials. meanwhile, perfilyeva (2012) states that self-actualization is an individual's implementation process of interest, creativity, desire to develop, ability to be responsible and independent. from some of the definitions above, the basis used in this research is the understanding that is most appropriate to the situation in the company, namely the opinion of robbins and coulter (2017) which states that the need for self-actualization is a person's need to be able to become what he wants according to his potential. . it can be concluded that self-actualization is the use of all talents, fulfillment of all qualities and capacities in an individual. psychological well-being lawton (1983), defines psychological well-being as the level of evaluation of one's competence and self, which emphasizes the hierarchy of individual goals. furthermore, snyder and lopez (2002) state that psychological well-being is not only the absence of suffering, but psychological well-being includes how individuals play a role in life, how individuals understand the meaning and purpose of life, and how an individual is able to build relationships with other individuals. psychological well-being is characterized by obtaining happiness, life satisfaction and the absence of depressive symptoms (ryff & keyes, 1995). according to bradburn (1969) happiness is the result of psychological well-being and is the highest goal to be achieved by every human being. ryff & keyes (1995) states that psychological well-being consists of six dimensions, namely acceptance of oneself, having positive relationships with others, independence, mastery of the environment, having a purpose and meaning in life as well as sustainable growth and development. each dimension of psychological well-being describes the different challenges that individuals must face in attempting to function positively (ryff & keyes, 1995). from the above understanding it can be concluded that psychological well-being is an individual condition characterized by feelings of happiness, life satisfaction and the absence of symptoms of depression. this condition is influenced by self-acceptance, purpose in life, being able to develop positive relationships with others, becoming an independent person, being able to control the environment, and continuing to grow personally. work environment according to terry (2006) "the work environment can be defined as the forces that influence, either directly or indirectly, on the performance of the organization or company". furthermore, according to gomes (2011) "the work environment is a work process where the environment interacts according to a certain pattern, and each has certain characteristics or values about the organization that will not be separated from the environment in which the organization is located, and the people who are the center of it." everything". armstrong (2017) stated "the work environment is an environment that refers to institutions or forces outside the organization that have the potential to affect organizational performance. the condition of the work environment is said to be good or appropriate if humans can carry out activities optimally, healthy, safe, and comfortable. a pleasant work environment will produce a positive relationship for performance and the achievement of company goals. based on some of the opinions of the experts above, it can be said that the work environment is everything that is around employees that can affect employees in carrying out the tasks assigned by the office. but in general, the understanding of the work environment is the conditions and atmosphere in which the employees carry out their duties and work to the fullest. organizational citizenship behavior organization citizenship behavior (ocb) is a work behavior that exceeds the basic needs of an employee (basu dkk., 2017). according to chelagat et al. (2015) say organizational citizenship behavior (ocb) is the freedom of individual behavior, which is indirectly or explicitly recognized by the reward system, and contributes to the effectiveness and efficiency of organizational functioning. ocb is also a behavior and attitude that benefits the organization that cannot be grown on the basis of formal role obligations or in the form of contracts or recompensation. examples include helping coworkers to lighten their workload, taking less breaks, carrying out unsolicited tasks, and helping others to solve problems. ocb contributions are contributors that may or may not be profitable in the future. the point is that the increased rewards for ocb are indirect and uncertain, compared to formal contributions such as high productivity or good engineering or innovative solutions (organ et al., 2006). in general, ocb refers to behavior that is not part of the employee's formal job description (eg, helping coworkers; being courteous to others), or behavior for which the employee is not formally rewarded (ismaeelzadeh et al., 2016). rodrigues and ferreira (2015) stated that organizational citizenship behavior is voluntary behavior directed by individuals or the organization as a whole. from several opinions regarding ocb, it can be concluded that ocb is a voluntary behavior that exceeds the basic needs of workers such as helping colleagues and being polite to others, which benefits the organization and is not related to the compensation system. the ocb roles as a mediator selfactualization, psychological wellbeing, and work environment on health worker performance: study during covid-19 pandemic in indonesia 106 ambr table 1. sociodemographic characteristics summary of the study sample table 2. research instrument reliability test results worker performance according to joshi (2013) worker performance is the result of work both in quality and quantity achieved by a person in carrying out tasks according to the responsibilities given. according to simamora (2011) employee performance that to achieve the organization to function effectively and in accordance with organizational goals, the organization must have good employee performance, namely by carrying out their duties in a reliable way. according to rivai and sagala (2011) performance is the willingness of a person or group of people to carry out an activity and perfect it according to responsibilities with the expected results. according to lankeshwara (2016) employee performance is the result of a certain work process in a planned manner at the time and place of the employee and the organization concerned. according to mondy and mondy (2015) employee performance as expressions such as output, efficiency and effectiveness are often associated with productivity. while torrington et al. (2008) performance is a comparison of the work achieved by employees with predetermined standards. based on the understanding of performance from some of the opinions above, performance is a comparison of the work achieved by employees with predetermined standards. performance also means the results achieved by a person, both quantity and quality in an organization in accordance with the responsibilities assigned to him. research methodology this research is a quantitative research in the form of a survey of a sample of the research population. the research sample was hospital health workers in indonesia with a case study on nurses at bhayangkara hospital in manado city, north sulawesi province. the number of samples is as much as the population of nurses in the object of research, namely as many as 89 respondents. the research was carried out during the covid-19 pandemic, which was still ongoing in indonesia. data analysis uses path analysis that examines the relationship between self-actualization (11 items), psychological well-being (23 items), and work environment (18 items) on the performance of health workers (29 items) with organizational citizenship behavior (ocb) (11 items) as mediating variable. data analysis was assisted by ibm spss version 25 software to examine the relationship between variables in the research model. result and discussion demographically, of the 89 research respondents studied, there are several characteristics. these characteristics can be seen in table 1, a summary of the characteristics of research respondents: characteristics of the participants n=89 mean, [range] or % gender male 21 23,6 famale 68 76,4 ages (years) 20-25 20 22,5 26-30 5 61,8 31-40 13 14,6 > 41 1 1,1 source: data proceed (2021) from table 1 above, it can be seen that the number of employees based on gender is 21 men or 23.6% and 68 women or 76.4%, so it can be concluded that the most dominant employees in this study are in bhayangkara’s hospitals are woman. from table 1 above, it can be seen that as many as 20 people or 22.5% aged 20-25 years, 61.8% or 55 people aged 26-30 years, 14.6% or 13 people aged 31-41 years , and only 1.1% % or 1 person who is more than 41 years old, so it can be concluded that the age range of employees in the bhayangkara’s hospital are aged 26 to 30 years, amounting to 61.8%. the research instrument test, namely the research reliability, can be seen in table 2 below. variables cronbach alpha (α) description self actualization (x1) 0,826 reliable psychological well-being (x2) 0,845 reliable work environment (x3) 0,880 reliable ocb (z) 0,864 reliable performance (y) 0,956 reliable 107 source: data procees (2021) based on table 2, it can be seen that all variables are reliable, this can be seen from the value of the alpha coefficient (cronbach alpha) which has a value of more than 0.60. the value of the alpha coefficient (cronbach alpha) of the variables of self-actualization, psychological welfare, work environment, ocb, and employee performance is close to 1, which means that it has high accuracy or reliability to be used as a variable in a study. figure 1 below is the result of the research path analysis. source: data procees (2021) no hypothesis conclusions 1. self-actualization has a positive and significant effect on organizational citizenship behavior (ocb) accept 2. psychological well-being has a positive and significant effect on organizational citizenship behavior (ocb) accept 3. work environment has a positive and significant effect on organizational citizenship behavior (ocb) accept 4. self-actualization has a positive and significant effect on performance accept 5. psychological well-being has a positive and significant effect on performance accept 6. work environment has a positive and insignificant effect on performance accept 7. organizational citizenship behavior (ocb) has a positive and significant effect on performance accept based on figure 1 and table 3, the results of the path analysis of the research model are explained: (1) the effect of self-actualization on organizational citizenship behavior (ocb). based on the t test, the coefficient value is 0.254 with a significance level of 0.002 less than 0.05. this shows that self-actualization has a positive and significant effect on organizational citizenship behavior (ocb), so h1 is accepted. (2) the effect of psychological well-being on organizational citizenship behavior (ocb). based on the t test, the coefficient value is 0.256 with a significance level of 0.001 less than 0.05. this shows that psychological well-being has a positive and significant effect on organizational citizenship behavior (ocb), so h2 is accepted. (3) the effect of work environment on organizational citizenship behavior (ocb). based on the t test, the coefficient value is 0.459 with a significance level of 0.000 less than 0.05. this shows that the work environment has a positive and significant effect on organizational citizenship behavior (ocb), so h3 is accepted. (4) effect of selfactualization on performance. based on the t-test, the coefficient value is 0.220 with a significance level of 0.023 which is smaller than 0.05. this shows that self-actualization has a positive and significant effect on performance, so h4 is accepted. (5) effect of psychological well-being on performance. based on the t-test, the coefficient value is 0.220 with a significance level of 0.023 which is smaller than 0.05. this shows that psychological wellbeing has a positive and significant effect on performance, so h5 is accepted. (6) effect of work environment on performance. based on the t test, the coefficient value is 0.120 with a significance level of 0.179 greater than 0.05. the ocb roles as a mediator selfactualization, psychological well-being, and work environment on health worker performance: study during covid-19 pandemic in indonesia figure 1. results of research model path analysis table 3. hypothesis test results 108 ambr this shows that the work environment has a positive and insignificant effect on performance, so h6 is rejected. (7) effect of organizational citizenship behavior (ocb) on performance. based on the t test, the coefficient value is 0.767 with a significance level of 0.000 less than 0.05. this shows that organizational citizenship behavior (ocb) has a positive and significant effect on performance, so h7 is accepted. conclusion the conclusions of this study include: (1) self-actualization has a positive and significant effect on organizational citizenship behavior (ocb) rs. bhayangkara manado; (2) psychological well-being has a positive and significant effect on the hospital's organizational citizenship behavior (ocb). bhayangkara manado; (3) the work environment has a positive and significant effect on the hospital's organizational citizenship behavior (ocb). bhayangkara manado; (4) self-actualization has a positive and significant effect on hospital performance. bhayangkara manado; (5) self-actualization has a positive and significant effect on hospital performance. bhayangkara manado; (6) work environment has a positive and insignificant effect on hospital performance. bhayangkara manado; (7) organizational citizenship behavior (ocb) has a positive and significant effect on hospital performance. bhayangkara manado; and (8) while the result of indirect influence, or as a mediator variable organizational citizenship behavior (ocb) can be a mediator between self-actualization, psychological welfare, and the work environment with the performance of hospital employees. bhayangkara, manado. some suggestions and implications of the research include: (1) for further research related to employee performance, it is necessary to look at other factors that can develop and improve employee performance, with more variables, and involve more respondents in conducting research that can affect employee performance so that the significance value is greater. (2) to the management of bhayangkara manado hospital to provide rewards or awards to nurse partner employees whose performance assessment results are good some of the limitations of the study include: (1) the sample is limited to nurses and only on objects in hospitals based on police institutions in indonesia so that the sample has limitations on generalization in general in indonesia; (2) the number of samples is only limited, namely less than one hundred respondents so that the statistical power is still not strong; and lastly (3) the ability of respondents to respond to surveys in a pandemic situation which in a situation of severe pressure reduces the effectiveness in filling out this questionnaire. references armstrong, m. (2017). a handbook of human resources management practice (14 ed.). cambridge university press. basu, e., pradhan, r. k., & tewari, h. r. 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(2008). human resource management. pearson education inc the ocb roles as a mediator selfactualization, psychological well-being, and work environment on health worker performance: study during covid-19 pandemic in indonesia http://www.scielo.br/scielo.php?script=sci_arttext&pid=s1413-82712015000300493 investigating the acceptance and use of performance information system (sip bdg juara) on bandung city 72 10 11investigating the acceptance and use of performance information system (sip bdg juara) on bandung city zati woro shabrina1*, dini turipanam alamanda2, and fajar sidiq adi prabowo3 1,2,3 telkom university, bandung, indonesia abstract improving the utilization of ict is one of many solutions proposed by the municipal government of bandung to overcome urban problems. in its entirity, the concept is well-known as bandung smart city. there are many smart government programs that have been implemented in bandung. one of them is performance information system of bandung juara or known as sip bdg juara. but the acceptance of sip bdg juara are relatively low. furthermore, not all of the citizens have thoroughly understood the system. hence, it is important to find out the acceptance of this website. this research uses modified utaut 2 model which was taken from the utaut 2 theory by venkatesh et al. (2012) that consist of seven main variables; performance expectancy, effort expectancy, social influence, facillitating conditions, hedonic motivation, price value, and habit. moreover, two moderating variables of age and gender were also involved. this research used sem-pls method to analyze the data. for the data collection, questionnaires were distributed to 400 residents living in the city of bandung as the respondents whether they have or have not participated yet in sip bdg juara website. finally, this study found that the most influential factor of interest in using sip bdg juara website is price value, followed by hedonic motivation and then habit in which all of those three factors have positive influence in both types of latent variables. while the variables affecting use behavior related to the use of sip bdg juara wesite are habit and behavioral intention. these findings are expected to provide valuable insights for the government in improving the success rate of ict-based governance programs. keywords: bandung smart city, modified utaut 2, sip bdg juara, techonology acceptance 1. introduction the urban transition due to rapid population growth has resulted in many challenges of city planning, development and operations which stimulate the emergence of new ideas (harrison and donnelly, 2013). smart city is a concept created to solve the current city problems and will continue to be developed. technology is not the only key component of the smart city concept, there are also * corresponding author. email address: zwshabrina@gmail.com mailto:zwshabrina@gmail.com afebi management and business review (ambr) vol.02 no.02, december 2017 73 two other important components in it such as the society in terms of the creativities, diversities, and educations, as well as the supporting institutions such as the government and policies (alawadhi et al., 2012). the relationship between the two components supported by ict infrastucture will generate a very smart city. this can become the resource of the city sustainable development which will improve the life quality of the people (alawadhi et al., 2012). in indonesia, the smart city program has been implemented in big cities, one of them is bandung city. along with the rapid development of technology, bandung tries to overcome the distance and time constraints faced by the society and government through the utilization of ict. ridwan kamil as the mayor of bandung at kompas.com's official website, claimed that 70 percent of problems in bandung city have been resolved by the smart city concept through the use of information technology or service-oriented applications (ramdhani, 2016). the government of bandung has made more than 300 applications to solve problems both in the society and internal bureaucracy, one of them is the creation of website based assessment information system application of bandung juara (sip bdg juara). the presence of sip bdg juara website as an implementation of the smart government programs which is expected to be a forum for public participation or feedbacks to assess the service performance of the sub-districts and urban village areas in bandung. therefore, the involvement of as many people as possible in the utilization of sip bdg juara is needed in order to know if the services they receive have complied with the predetemined standards. however, the expectations and achievements obtained from the presence of sip bdg juara is still low, since there are still many people in bandung who are not familiar with it and even do not know how to utilize it. as quoted in pikiranrakyat.com, the main constraint for people not to use sip bdg juara is that not all of them know how to use it on computers and mobile devices, and there are still people who think that their inputs or criticisms will not get a response. in addition, a number of people also concern that criticizing the government will have a negative impact on them (heriyanto, 2016). therefore, the researchers tried to evaluate the causes of the lack of public participation in using sip bdg juara by utaut 2 model as the base of the research theory. this theory is one of the theoretical approaches to describe the level of acceptance and use of a technology created by venkatesh, thong, and xu (2012). by considering utaut 2 model as the model, the research questions for technology acceptance problems as explained above are: 1. how is the influence of performance expectancy on behavioral intention? 2. how is age moderate the influence of performance expectancy on behavioral intention? 3. how is gender moderate the influence of performance expectancy on behavioral intention? 4. how is the influence of effort expectancy on behavioral intention? 5. how is age moderate the influence of effort expectancy on behavioral intention? 6. how is gender moderate the influence of effort expectancy on behavioral intention? 7. how is the influence of social influence on behavioral intention? 8. how is age moderate the influence of social influence on behavioral intention? investigating the acceptance and use of performance information system (sip bdg juara) on bandung city 74 9. how is gender moderate the influence of social influence on behavioral intention? 10. how is the influence of facilitating conditions on behavioral intention? 11. how is age moderate the influence of facilitating conditions on behavioral intention? 12. how is gender moderate the influence of facilitating conditions on behavioral intention? 13. how is the influence of hedonic motivation on behavioral intention? 14. how is age moderate the influence of hedonic motivation on behavioral intention? 15. how is gender moderate the influence of hedonic motivation on behavioral intention? 16. how is the influence of habit on behavioral intention? 17. how is age moderate the influence of habit on behavioral intention? 18. how is gender moderate the influence of habit on behavioral intention? 19. how is the influence of behavioral intention on use behavior? this study used a multivariate analysis technique (structural equation modeling) which is a method of quantitative statistical analysis which allows researchers to test more than two variables simultaneously (indrawati, 2015). primary data collection was done in two ways, namely by spreading online and printed questionnaires to 400 respondents. while the secondary data was obtained through literature studies, journals, research results, articles, internet, and other media information related to the research topic. 2. literature study 2.1 research-related theory 2.1.1 smart city a smart city is the city which invests in human and social capital, supported by ict infrastructure and transportation to foster sustainable economic growth and quality of life improvement while maintaining the environment through participatory governance simultaneously (caragliu et al., 2011). a city conducting advanced developments in economy, society, government, mobility, environment, and life through an ingenious combination of grants and activities convincingly and independently with the citizen awareness (giffinger et al., 2007). 2.1.2 smart government smart government is one of the basic elements of a smart city. in general, smart government is a term referring to the effective implementation of ict for public services by the government. in addition to covering government administration, smart city also handles health services, transportation, education, and so on (gamatechnoblog, 2015). ibm says that smart government will do more than regulate the output of economic and social systems (nam and pardo, 2011). furthermore, smart government makes a dynamic interconnection among the citizens, communities, and businesses in real time to trigger growth, innovation and progress (nam and pardo, 2011). on the other hand, other experts conclude that smart government is an integration of technology, people, policies, practices, resources, social norms and information interacting to support the activities of the city government (chourabi, et al., 2012) 2.1.3 government 3.0 afebi management and business review (ambr) vol.02 no.02, december 2017 75 government 3.0 is a new paradigm in government operations through providing customized public services and new jobs creatively by opening and sharing government data to public and encouraging communication and collaboration among the government departments (ministry of public safety and security korea, 2015). government 3.0 is a more service-oriented, competent, and transparent government aiming to pursue the citizens' happiness (ministry of public safety and security korea, 2015). others argue that government 3.0 refers to the use of information and communication technology (ict) and the surrounding scientific and technological domains towards the community solutions, resource optimization and citizen welfare, through civic and corporate collaboration both locally and internationally (information system laboratory, 2015). 2.1.4 open government open government is an institutional platform of technology in which the confidential government data becomes open for public (almazán, 2011). this is done to enable the government to collaborate with the society in making decisions for improving public services (almazán, 2011). in an open government, the state is committed that all government agencies and service providers provide all relevant information in appropriate manners (parycek and sachs, 2010). 2.1.5 utaut 2 utaut model was one of the best models to predict the acceptance of technology and describe the users’ behavior in utilizing it. (kumar s. , 2013). utaut model was later developed to be utaut 2 model in 2012 by venkatesh, thong, and xu by adding three new factors, such as hedonic motivation, price value and habit. it has then improved the behavioral analysis using behavioral intention from 54% to 74% and the use of technology from 40% to 52%. the develoment of the utaut 2 model has resulted in having nine variables, namely behavioral intention, use behavior, performance expectancy, effort expectancy, social influence, facilitating condition, hedonic motivation, price value and habit (venkatesh et al., 2012). experts point out that the utaut 2 model can account for up to 70% of consumer behavioral trends toward the use of information technology when viewed from the value of the resulting variance (venkatesh et al., 2012). the definition of each construct in this study is based on the definitions put forward by venkatesh et al. (2003) and venkatesh et al. (2012). a series of variable relationships forming this research framework is as follows: 1) relationship between performance expectancy and behavioral intention performance expectancy is defined as the extent to which individuals believe that the use of a system will help them to achieve maximum performance in their works (venkatesh et al., 2003). ajzen (1991:181) mentioned that intention is one of the motivating factors which influences behavior. behavioral intention indicates the extent to which a person will use a particular technology in the future (marhaeni, 2014). performance expectancy is the strongest predictor of behavioral intention (venkatesh et al., 2003). it was also expressed through the study of alkhunaizan and love (2012), on the use of mobile commerce in saudi arabia, performance expectancy had the strongest influence on behavioral intention. in the context of organizational research, the same results were also expressed in the research of pahnila et al. (2011:20) that performance expectancy is one of the factors having the most significant influence on behavioral intention. however, in investigating the acceptance and use of performance information system (sip bdg juara) on bandung city 76 relation with the moderating variables of age and gender, the research conducted by yu (2012) proved that the influence of performance expectancy on behavioral intention is only moderated by gender, without age. while al-gahtani, hubona, and wang (2007) even stated that there is no significant interaction of age and gender on performance expectancy's influence on behavioral intention. 2) relationship between effort expectancy and behavioral intention effort expectancy is the level of ease perceived by the users in using a system (venkatesh et al., 2003). the results of venkatesh et al. (2003) showed that effort expectancy has a positive influence on behavioral intention. the same was expressed by pahnila et al. (2011) stating that effort expectancy was one of the important factors in the acceptance of tao bao, chinese ebay. then, in the foon and fah’s (2011) research on the study of internet banking adoption in kuala lumpur, it was stated that effort expectancy was one of the factors that directly affected behavioral intention. regarding the relationship with the moderating variables of age and gender, the findings of yu (2012:104) revealed that none of either the age or gender influences effort expectancy’s influence on behavioral intention. 3) relationship between social influence and behavioral intention social influence is the extent to which a person perceives that other people around him or her (eg, family and friends) can influence him or her to use a certain technology (venkatesh et al., 2012). according to the research of (foon and fah (2011), social influence has a significant influence on behavioral intention, it is also supported by a research conducted by indrawati and haryoto (2015) showing that social influence has a positive influence on behavioral intention. according to venkatesh et al. (2003), social influence is the factor determining behavioral intention directly. while xu (2014) argued that social influence is the most important determinant of the continuous intention. in the relationship influenced by the moderating variables, indrawati and haryoto's (2015) study found that the age variable can moderate the relationship of social influence variable and behavioral intention. whereas the involvement of gender moderating variable was stated by another research not to moderate that the influence of social influence on behavioral intention (yu, 2012). 4) relationship between facilitating conditions and behavioral intention facilitating conditions are defined as the extent to which an individual believes that organizational and technical infrastructures exist to support the use of a system (venkatesh et al., 2003). a research by foon and fah (2011) stated that facilitating conditions are the factors influencing behavioral intention. in the utaut 2 model, venkatesh et al. (2012:162) added that the direct influence of facilitating conditions on behavioral intention is moderated by gender and age variables. in contrast, in indrawati and haryoto's (2015) study, it was found that there is no evidence to suggest that facilitating condition variables have a positive influence on behavioral intention. 5) relationship between hedonic motivation and behavioral intention hedonic motivation is defined as the pleasure or convenience derived from the use of technology, and it plays an important role in determining the acceptance and use of technology (brown and venkatesh, 2005 in venkatesh et al., 2012). furthermore, according to venkatesh et al. (2012: 171), hedonic motivation is the important determinant of behavioral intention and considered as a more important booster than performance expectancy in a non-organizational context. afebi management and business review (ambr) vol.02 no.02, december 2017 77 it was also revealed through the research of indrawati and marhaeni (2015), that the use of instant messaging application in bandung shows that hedonic motivation influences behavioral intention and also moderated by age and gender. 6) relationship between price value and behavioral intention price value means the value of the price or cost incurred by the consumer in the use of technology is in accordance with the expectations or hopes wished before using it (venkatesh et al., 2012). according to the research of indrawati and marhaeni (2015), price value has an influence on behavioral intention and also moderated by age and gender. on the other side, kumar (2013) used the term “price level” to replace the term “price value”, which is defined as consumer attitudes toward a technology at a certain price level (will accept or reject), including whether the consumer is satisfied with the service at a certain price level or not, and how much money the consumers expect to be spend for the service offered. furthermore, kumar showed that price level has a negative influence on behavioral intention. 7) relationship between habit and behavioral intention habit is defined as the tendency of the consumer to use a technology automatically because of the previous learning experience which will become a habit later on (venkatesh et al., 2012). furthermore, the findings from a research showed that facilitating conditions, hedonic motivation, price value, and habit predictors of behavioral intention succeeded in increasing the r2 value of behavioral intention from 70% to 74% (venkatesh et al., 2012). research by indrawati and marhaeni (2015) found that the age and gender variables can moderate the relationship of habit variable and behavioral intention. 8) relationship between behavioral intention and use behavior according to wu et al. (2012), use behavior measures the actual use frequency of a technology by the users. use behavior is defined as the use behavior measured from the actual frequency of a particular technology use (venkatesh et al., 2003). research by indrawati and marhaeni (2015) found that use behavior variable has a positive and significant influence on behavioral intention. the utaut 2 model by venkatesh et al. (2012), stated that the influence of use behavior is determined by behavioral intention variable. in the study of wu et al. (2012), it was found that behavioral intention is one of the variables having an influence on use behavior. this is followed by a research of indrawati and marhaeni (2015) which found that behavioral intention variable has an influence on use behavior. 9) relationship between facilitating condition and use behavior based on utaut model formulated by venkatesh et al. (2012), use behavior is determined by two factors, namely facilitating conditions and behavioral intention. in the study by wu et al. (2012), facilitating condition variables were found to positively affect behavioral intention variable, and their relationship is moderated by age and experience variables. the results are also supported by the research of indrawati and marhaeni (2015) which stated that both variables have positive influences moderated by age variable. investigating the acceptance and use of performance information system (sip bdg juara) on bandung city 78 10) relationship between habit and use behavior in the utaut 2 model, the influence on use behavior is also determined by the habit factor, in which venkatesh et al. (2012) found that older men with more experienced use of technology tend to be more accustomed to using technology. pahnila et al. (2011) conducted a study on the adoption of chinese ebay using the term “actual use” instead of use behavior found that habit has a significant influence on actual use. 2.2 hypotheses development the framework of this research refers to the modified utaut 2 model used by indrawati and marhaeni (2015). the differences between this study and venkatesh et al’s. (2012) are: 1) this study added the relationship between facilitating conditions and use behavior moderated by age, and the result indicated that there is a positive and significant influence in the relationship; 2) this study used only the moderating variables of age and gender. meanwhile, the moderating variable of experience was not included since the operation of experience variable requires the post-training period which is a length of time after the start of a system to be available for use, i.e 1 month; and 3 months (venkatesh et al., 2003), and there was no post-training done in this research. a previous research on the use of technology in classroom learning also used only age and gender as the moderating variables and the two variables were able to increase the r2 value of behavioral intention and use behavior (alkhunaizan and love, 2012). another reason why this study did not involve the experience moderator in the model is because this research includes cross sectional research. therefore, this study as a whole uses nine major variables and two moderating variables. the conceptual framework used in this study is shown in the following figure: figure 1 conceptual framework modified from: venkatesh, thong, & xu (2012) afebi management and business review (ambr) vol.02 no.02, december 2017 79 hypothesis is a temporary answer to the formulation of research problems (sugiyono, 2016). it is called temporary because the answer given is based on the relevant theory, and it has not been based on empirical facts obtained through data collection. the hypothesis can be defined as a logically expected relationship between two or more variables expressed in the form of a testable statement. the relationship is estimated based on the network association specified in the theoretical framework formulated for the research study (sekaran, 2011:135). based on the theories and results of the previous researches, the hypotheses used in this research are as follows: table 1 hypotheses no. hypotheses h1 performance expectancy has a positive and significant influence on behavioral intention. h1a the influence of performance expectancy on behavioral intention is moderated by age. h1b the influence of performance expectancy on behavioral intention is moderated by gender. h2 effort expectancy has a positive and significant influence on behavioral intention. h2a the influence of effort expectancy on behavioral intention is moderated by age. h2b the influence of effort expectancy on behavioral intention is moderated by gender. h3 social influence has a positive and significant influence on behavioral intention h3a the influence of social influence on behavioral intention is moderated by age. h3b the influence of social influence on behavioral intention is moderated by gender. h4 facilitating conditions have a positive and significant influence on behavioral intention. h4a the influence of facilitating conditions on behavioral intention is moderated by age. h4b the influence of facilitating conditions on behavioral intention is moderated by gender. h5 hedonic motivation has a positive and significant influence on behavioral intention. h5a the influence of hedonic motivation on behavioral intention is moderated by age. h5b the influence of hedonic motivation on behavioral intention is moderated by gender. h6 price value has a positive and significant influence on behavioral intention. h6a the influence of price value on behavioral intention is moderated by age. h6b the influence of price value on behavioral intention is moderated by gender. h7 habit has a positive and significant influence on behavioral intention. h7a the influence of habit on behavioral intention is moderated by age. h7b the influence of habit on behavioral intention is moderated by gender. h8 facilitating conditions have a positive and significant influence on use behavior. h8a the influence of facilitating conditions on use behavior is moderated by age. h9 habit has a positive and significant influence on use behavior. h9a the influence of habit on use behavior is moderated by age. h9b the influence of habit on use behavior is moderated by gender. h10 behavioral intention has a positive and significant influence on use behavior. investigating the acceptance and use of performance information system (sip bdg juara) on bandung city 80 3. research methodology this research used quantitative method. the purpose of the quantitative research is to determine exactly whether the null hypothesis is accepted and the alternative hypothesis can be rejected or otherwise (indrawati, 2015:184). based on its purpose, this research can be classified into a descriptive research which is usually done when the researchers have already known the factors or variables to measure an object or field, but they have not yet known the relationship among the factors or variables (indrawati, 2015:115). according to sekaran (2007:159), the purpose of a descriptive study is to provide the researchers with a history or description of aspects relevant to the phenomenon from the perspective of a person, organization, industry, or the other. the type of investigation in the design of this study is the causal one. a causal research is done if the researchers want to describe the cause of a problem, whether it is carried out through experiments or non-experiments (indrawati, 2015: 117). in this study, the involvement of the researchers is limited by not interfering with data. it means that the researchers do not provide any intervention towards the variables to be measured. the researchers directly collect data and measure the independent variables toward the dependent ones (indrawati, 2015:118). the unit of analysis refers to the level of data units collected during the data analysis stage (sekaran, 2007:173). in this case, the unit of analysis is individual. data was collected in one period, then it was processed, analyzed and then drawn in conclusion. hence, this research used cross-sectional method (indrawati, 2015:118). indrawati (2015:117) mentioned that research design based on the study setting can be divided into two, namely the contrived setting and the non-contrived one. this study belongs to the non-contrived setting, which means that this research was conducted in a normal environment without any manipulation or intervention from researchers (indrawati, 2015:117). data collection method in this study involves the primary and secondary data. according to sekaran and bougie (2010:180), primary data refers to the information gained first-hand by researchers related to the interest variables for specific study purposes. the primary data collection method used was through distribution of questionnaires. according to sujarweni (2015:94), questionnaire is a data collection technique done by giving a set of questions to be answered. the primary data collection was conducted in april 2017. it was done by distributing the questionnaires in two ways: online questionnaires and printed questionnaires. the online distribution was carried out through instant applications and social media networks to the people living in bandung city. while printed questionnaire was distributed by visiting public venue, such as city squares or city parks. on the other side, the secondary data collection which refers to information collected from the existing sources (sekaran and bougie, 2010:180) was held through the studies of literatures, journals, research results, articles, internet, and other media related to the research topic. in this study, the researchers used non-probability sampling technique since the exact number of population associated with the daily use of sip bdg juara was not known, therefore the chances of the population members in using the application are not known whether equal or not. more specifically, the type of nonprobability sampling technique used in this study is the purposive sampling. according to zikmund, babin, carr, and grifin (2010: 396), the purposive sampling is a nonprobability sampling technique in which certain individuals are afebi management and business review (ambr) vol.02 no.02, december 2017 81 selected as the samples based on the conformity of required characteristics. the characteristics or criteria set by the writers for this study samples are: 1) citizens that registered and reside on bandung city; and 2) aged that range from 15 to 60 years old this study used age as the moderating variable and it was divided into two categories; young age and old age. according to the united nations (un), the category of young age is represented by the ages of 15-24 years old, while the ages above 24 years old are categorized as old age. therefore, this study considered the ages of 15 24 years old as the category of young age, while the ages above 24 years old is categorized as old age. 4. results the characteristics of respondents in this study are seen from two aspects, such as gender and age. viewed from gender, 45% of the respondents were male and 55% were female. based on age, 80% of the respondents belonged to the young category (young age) and 20% are classified as old (old age). out of the 400 respondents, 169 have accessed the sip bdg juara website and 39 respondents said that the website is "very good", 135 respondents stated "good", 52 respondents stated "good enough", and 5 respondents stated "not good". 4.1 test results of the measurement model (outer model) evaluation of the measurement models with reflective variables in pls can be started by looking at the value of indicator reliability which is the magnitude of the variance of the indicators to explain the latent variable. the test results of indicator reliability are said to be reliable if the indicator loading value is more than 0.7. out of all the indicators tested, twenty-five are considered reliable. here is the test design of the research measurement model in figure 2, in which the indicator loading value of each variable can also be seen in the picture. figure 2 outputs of the outer model from smart pls 3.0 investigating the acceptance and use of performance information system (sip bdg juara) on bandung city 82 for performance expectancy variable, the indicators are pe1, pe2, and pe3 with the values of 0.842; 0.724; and 0.836. the three indicators of the effort expectancy variable are declared reliable with ee1 value of 0.827; ee2 of 0.861; and ee3 of 0.836, while the indicators of social influence variable are si1: 0.851, si2: 0.134, and si3: 0.811. furthermore, facilitating conditions variables have three indicators which are fc1, fc2, and fc3 with each value of 0.833; 0.852; and 0.835. in hedonic motivation variable, the values of the indicators are 0.819 for hm1, 0.834 for hm2, and 0.787 for hm3. price value’s indicators are of pv1 equal to 0.786; pv2 of 0.861; and pv3 of 0.866. then, the habit variable with ha1 and ha2 indicators have the loading indicator values of 0.867 and 0.862. and for the endogenous latent variables, behavior intention with the indicators of bi1, bi2, and bi3 respectively valued of 0.871; 0.854; and 0.867. then, the last variable of use behavior is also declared reliable, with the indicators: ub1 and ub2 have the values of 0.931 and 0.924. switching to the measurement of the second outer model, composite reliability which is used as the benchmark of variable reliability as a whole. the value of the rule of thumb used as the standard analysis is 0.70, so the variables used were declared reliable (garson, 2016) because their respective values are above 0.70. performance expectancy has a value of 0.844. effort expectancy and social influence obtain 0.879 and 0.865. the facilitating condition variables have a value of 0.878. furthermore, hedonic motivation, price value, and habit each gets 0.854; 0.878; and 0.855. behavioral intention is worth of 0.898, and use behavior gets the value equal to 0.925. the next measurement stage is convergent validity. this stage focuses on the value of ave (average variance extracted) which should be 0.5 or greater, which means that a variable can explain the indicators well (hair et al., 2014). variable of performance expectancy has a value of 0,644. effort expectancy has an ave value of 0.708. social influence and facilitating conditions variables obtained 0.681 and 0.706. hedonic motivation, price value, and habit each has the ave values of 0.662; 0.706; and 0.747. furthermore, behavioral intention got a value of 0.747, and use behavior has an ave value of 0.861. so it can be concluded that the nine variables in this study have values above 0.5, meaning that they can explain the indicators well. the criterion used in the discriminant validity stage is the average variance extracted (ave) square root which must be higher than the correlation between the latent variable and the value in the ave column (hair et al., 2014). variable of performance expectancy has the value √ave value of 0.80234. effort expectancy is worth 0.84142 and social influence gets the value equal to 0.82552. on the other side, facilitating conditions, hedonic motivation, and price value each has the √ave values of 0.84011; 0.81351; and 0.84047. habit variable is worth 0.8644. furthermore, behavioral intention and use behavior respectively get the values of 0.86423 and 0.9277. so it can be concluded that the overall variable in this study is valid because each of their √ave value is greater than the value of ave. 4.2 test results of structural model tests (inner model) the r-square adjusted (r²adj) value is used to assess the accuracy level of endogenous latent variables. in the inner model tests of pls, the r2 adjusted (r2adj) criteria are used, as hair et al. (2014) recommended the use of r²adj as the afebi management and business review (ambr) vol.02 no.02, december 2017 83 determinant to avoid bias. therefore, the values of r² and r2adj for each endogenous latent variable in this study is as the following: behavioral intention variable has the r2adj value of 0.447, which means the endogenous latent variable of behavioral intention is influenced by performance expectancy, effort expectancy, social influence, facilitating condition, hedonic motivation, price value, and habit for 44.7% while the rest 55.3% is affected by other variables outside of this study. in addition, the endogenous latent variable of use behavior is 25.3% influenced by behavioral intention, facilitating condition, and habit while the remaining 74.7% is influenced by other variables outside of this study. in this study, the q2 or predictive relevance has a value of 0.598 or 59.8%. so, it can be concluded that the model in this study can explain the data through behavioral intention and use behavior influenced by the other variables at 59.8%. the inner model (path diagram) in this study is shown in figure 3 below. figure 3 outputs of the outer model from smartpls 3.0 4.3 hypotheses tests hypothesis tests on the effect of exogenous latent variable and endogenous latent variable in this study use one-tailed test with 5% error rate. therefore, the critical value to be met by the error rate is 1.645. it means, if the value of t-statistics or t-value is greater than 1.645, then there is a significant influence between the endogenous latent variable and the exogenous latent variable being tested. in addition, the positive or negative influences of the endogenous and exogenous latent variables are observed from the value of the path coefficient (original sample). if the value of the path coefficient indicates a positive value, then the distance between the variables is positive, whereas if the path coefficient value indicates a negative value, then the distance between the variables is negative. moreover, there are other criteria regarding the hypothesis tests as described below: 1) if t-statistics> t-table, which is greater than 1.645 then h0 is rejected; 2) if t-statistics ≤ t-table, which is smaller than 1.645 then h0 is accepted. investigating the acceptance and use of performance information system (sip bdg juara) on bandung city 84 as the hypotheses test to examine the influence of exogenous and endogenous latent variables in this study used a one-tailed test with an error rate of 5%, therefore, the critical value must be met for the error rate is 1.645. table 2 hypothesis test results hypothesis relation path coefficient t-statistics t-table conclusion h1 pe → bi 0.048 0.785 1.645 h0 accepted h2 ee → bi 0.079 1.644 1.645 h0 accepted h3 si → bi 0.076 1.438 1.645 h0 accepted h4 fc → bi -0.112 2.193 1.645 h0 accepted h5 hm → bi 0.291 5.005 1.645 h0 rejected h6 pv → bi 0.507 9.784 1.645 h0 rejected h7 ha → bi 0.142 2.585 1.645 h0 rejected h8 fc → ub 0.074 1.315 1.645 h0 accepted h9 ha → ub 0.122 1.99 1.645 h0 rejected h10 bi → ub 0.104 2.012 1.645 h0 rejected the results of t-statistics on the hypotheses of h1, h2, h3 and h8 show that h0 is accepted, it means there is no significant influence of performance expectancy, effort expectancy and social influence on behavioral intention, and facilitating condition variable on use behavior. while the other hypotheses of h4, h5, h6, h7, h9, and h10 show that h0 is rejected or h1 is accepted which means that there is a significant influence of facilitating condition, hedonic motivation, price value variables, and habit on behavioral intention, and habit and behavioral intention variables on use behavior. 4.4 influence of moderating variables involvement this research uses two moderating variables which are age and gender. thus, the influence of each moderator to the relationship of exogenous and endogenous latent variables will be tested. since the tests of performance expectancy, effort expectancy and social influence variables on behavioral intention is not significant, facilitating condition on use behavior is not significant, and facilitating condition towards the use behavior has negative path coefficient value, so the relationship between the variables is not included in the tests of moderating variables with this smartpls 3.0. to determine the influence of the moderators’ engagement within the smartpls application, the measurement of the moderator variables is done by the bootstrapping method to obtain tstatistics. table 3 variable test of age moderator hypothesis relation t-statistics t-table conclusion h5a hm → bi 0.819 1.645 h0 accepted h6a pv → bi 0.481 1.645 h0 accepted h7a ha → bi 0.198 1.645 h0 accepted h9a ha → ub 0.815 1.645 h0 accepted afebi management and business review (ambr) vol.02 no.02, december 2017 85 in table 3, it is illustrated that the hypothesis test results involving the moderating variable of age related to the influences of hedonic motivation, price value and habit on behavioral intention and habit on use behavior show that the relationships of the variables in the hypotheses are not moderated by age. it is explained by each t-statistics value of 0.819, 0.481, 0.198 and 0.815 which are smaller than the t-table value, which is 1.645. table 4 variable test of gender moderator hypothesis relation t-statistics t-table conclusion h5b hm → bi 0.537 1.645 h0 accepted h6b pv → bi 1.382 1.645 h0 accepted h7b ha → bi 0.749 1.645 h0 accepted h9b ha → ub 1.102 1.645 h0 accepted table 4 shows the hypothesis test results of gender moderator involvement on the influences of hedonic motivation, price value and habit on behavioral intention and habit on use behavior which reveal that the relationships of the variables in the hypotheses are not moderated by gender. this is because tstatistics values of 0.537, 1.382, 0.749 and 1.102 are smaller than the t-table value, which is 1.645. 5. discussion this study examined nine variables consisting of seven exogenous latent variables (independent variables) and two endogenous latent variables (dependent variable). the nine variables consist of performance expectancy (pe), effort expectancy (ee), social influence (si), facilitating conditions (fc), hedonic motivation (hm), price value (pv), habit (h), behavioral intention (bi), and use behavior (ub). this study also uses two moderating variables namely age and gender. the variables were tested using 25 items of questionnaire questions. testing of these variables refers to t-statistics and path coefficient of the relationships of each variable to see the level of significance as well as the positive and negative influences. based on the result of h1 test, it is stated that h0 is accepted which means that the exogenous latent variable of performance expectancy has no positive and significant influence on the endogenous latent variable of behavioral intention in the context of sip bdg juara website usage, this is because the path coefficient value is 0,048 and the t-statistics is declared significant for its value of 0.785. it can be interpreted that the extent to which the residents of bandung city believe that the use of sip bdg juara website can help them in submitting complaints and aspirations have not affected their intentions and motivation in using the public services. these results are not in line with previous research by indrawati and marhaeni (2015), foon and fah (2011), indrawati and haryoto (2015) and pahnila et al. (2011) which stated that there is a significant influence between the two variables, although in different research contexts. based on h2 test, it is deduced that h0 is accepted which means that effort expectancy does not positively and significantly influence behavioral intention in context of the use sip bdg juara website in bandung. it means that asking to use the website of sip bdg juara is not determined from the ease of using the website. investigating the acceptance and use of performance information system (sip bdg juara) on bandung city 86 these results are in line with a research by taiwo and downe (2013) in which they stated that users of information systems are concerned about the ease with which the information systems are used. the complex system of apps/webs which are difficult to navigate can make a person less interested in adopting an application system or a website. however, the hypothesis test result is correctly in line with the research of indrawati and marhaeni (2015). h3 test result showing that h0 is accepted illustrates that social influence has a not-positive and significant influence on behavioral intention in the context of sip bdg juara website usage in bandung city. this means that the influences of the people in the user’s social environmrnt such as family members or friends do not specify a person's interest in using the sip bdg juara website. this result does not go along with the previous researches from indrawati and marhaeni (2015), foon and fah (2011), indrawati and haryoto (2015) and pahnila et al. (2011) within different research contexts stated that there was a significant influence between the two variables. in this study, facilitating conditions have no positive and significant influence on behavioral intention in the use of sip bdg juara website. it means that conditions such as the availability of devices, internet connection, or knowledge and instructions, and others do not affect the interest of bandung city residents in using the website of sip bdg juara. this is in contrast with the research by indrawati and marhaeni (2015) on instant messaging applications, which explained that the better the conditions that facilitate the use of a system, the higher the interest of a person to use the system/application. however, it turns out that in the context of sip bdg juara website, the statement is not applicable. in the results of this study, a fact was obtained in the h5 test, in which hedonic motivation has positive and significant influence on behavioral intention in the context of the use of sip bdg juara website in bandung city. it means that the higher the sense of pleasure, comfort and prestige obtained in the use of sip bdg juara website, the higher the interest of bandung society to use the website. this is relevant with the researches of indrawati and marhaeni (2015) and indrawati and haryoto (2015). the influence of hedonic motivation on behavioral intention is in accordance with the results of xu’s research (2014) which revealed that perceived enjoyment has a significant influence on behavioral intention on social networks games. h6 test result revealed that price value in the context of the use of sip bdg juara website by bandung society positively influences their behavioral intention. this is because the value of the path coefficient is 0.507 and the value of t-statistics is declared significant at 9.784. this can be interpreted that the consideration of the benefits obtained from the cost incurred in using the sip bdg juara website becomes one of the factors that influence a person's interest in using the website. further research from putra and ariyanti (2013) explained that price value is one of the normal assessments of each individual towards various types of decisions. it is also supported by the statement of indrawati and marhaeni (2015) mentioning that the greater the benefits derive from the use of a system, the greater the interest of a person to use the system. in h7 test result, there is a description explaining that h0 is rejected because the value of t-statistics is greater than the t-table value at 1.645. this result proves that h7 is accepted since habit has a positive and significant influence on behavioral intention in the context of the use of sip bdg juara website in bandung afebi management and business review (ambr) vol.02 no.02, december 2017 87 city. it means that someone's interest in using the sip bdg juara website can be determined from how often the person is accustomed to using the application. furthermore, it was explained by indrawati and marhaeni (2015) that the more accustomed someone in using the website, the higher the possibility of that someone to be interested and continue to use the website. based on the h8 test, it is explained that the facilitating conditions have no positive and significant influence on use behavior in the context of the use of sip bdg juara website in bandung. this shows that conditions such as the availability of the devices, internet connection, or knowledge and instructions, and other people from the social group cannot fully support the behavior to use the sip bdg juara website by bandung society. h9 research result proved that habit has a positive and significant influence on use behavior in the context of the use of sip bdg juara website in bandung city. it has the meaning that the habit factor is not only able to influence the interest in using the sip bdg juara website, but also able to influence the use behavior of the website. based on h10 test, it was stated that h1 is accepted, in which behavioral intention has a positive and significant influence on use behavior in the context of the use of sip bdg juara website in bandung. it is understood that intention can influence the users not only to access the website, but also to participate in the assessment of the sub-district and urban village where they live. this is also in line with research conducted by indrawati and marhaeni (2015), in which they also found that the influence of behavioral intention on use behavior is significant. 6. conclusion & recommendations based on the modified model of utaut 2, the variables influencing user to accept and use the sip bdg juara website are price value, hedonic motivation and habit, since all the three factors have positive and significant influences on behavioral intention. the hypothesized influence on behavioral intention of several variables are not evident on the results. those variables including performance expectancy, effort expectancy, social influence, and facilitating conditions. while the variables that influence use behavior are habit and behavioral intention. however, the moderating variables of age and gender do not have any influence on previously mentioned relationships regarding the use of the sip bdg juara website. this research possesses some limitations. firstly, the data was collected in one time or cross-sectional. it prohibit this research to investigate the influence of experience as moderator in the model since periodical data collection (longitudinal) are needed to observe it. secondly, future research must consider the proportion of respondents in each category so that the results shown will be more representative and able to describe the actual situations which can allow more specific advices to be given. this research also suggest the government of bandung to optimize those three variables that possess positive and significant influence on intention to 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(2010). business research methods 8th edition. canada: cengage learning. 37 the effect of experienced high-performance work system and perceived organizational support on perceived workload through psychological empowerment and job demands heldy theresia simanjuntak* university of indonesia, indonesia abstract discussion of the integrative model of high-performance work systems experienced by employees (experienced hpws) and the perceived organizational support simultaneously test for positive and negative effects on perceived workload (pw). a recent study shows the situation that occurs in the company where employees feel burdened by the workload they have and do not get additional compensation for the excess work they do. as a company, bayer indonesia regularly conducts surveys to assess several aspects, including employee engagement. based on the 2020’s employee survey result, employees perceive their current workload to be relatively high, which is evaluates as a result of processes, policies, and systems that occur in the company. this research is using job demands (jd) and psychological empowerment (pe) as a mediating. this research is an empirical study using quantitative data using a one-time data collection from survey to 200 employees. data analysis using structural equation model (sem) -amos 22 software. the research has expected to provide insights to the respective company to evaluate existing policies and consider making programs that improve engagement and performance. in addition to these objectives, this study's results can add references for other researchers who want to do similar research or its modifications. keywords: high-performance work systems; perceived organizational support; perceived workload; psychological empowerment, job demands *corresponding author. email address: heldytheresia.s@gmail.com the effect of experienced highperformance work system and perceived organizational support on perceived workload through psychological empowerment and job demands received may 15th 2021 review july 28th 2021 publish august 19th 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: http://journal.afebi.org/index.php/ambr/article/view/420 mailto:heldytheresia.s@gmail.com http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& http://journal.afebi.org/index.php/ambr/article/view/420 38 ambr introduction a quarter of all employees view their jobs as the number one stressor in their lives, according to the centers for disease control and prevention. the world health organization describes stress as the “global health epidemic of the 21st century.” many of us now work in constantly connected, always-on, highly demanding work cultures where stress and the risk of burnout are widespread. since the pace and intensity of contemporary work culture are not likely to change, it’s more important than ever to build resilience skills to effectively navigate your work life (hbr, 2016). in a study conducted by ibm institute for business value in late 2015, a survey of 5,247 business executives from 21 industries in over 70 countries reported that the “scope, scale and speed” of their businesses were increasing at an accelerated rate, especially as the competitive landscape becomes increasingly disrupted by technology and radically different business models. the result is at times a frenetic way of working. being hyperconnected and responsive to work anytime, anywhere, can be extremely taxing. in a 2014 global survey of human capital trends conducted by deloitte, 57% of respondents said that their organizations are “weak” when it comes to helping leaders manage difficult schedules and helping employees manage information flow, and that there is an urgent need to address this challenge (hbr, 2016). stress and burnout related to the increasing pace and intensity of work are on the rise globally. a survey of over 100,000 employees across asia, europe, africa, north america, and south america found that emp loyee depression, stress and anxiety accounted for 82.6% of all emotional health cases in employee assistance programs in 2014, up from 55.2% in 2012. also, a recent large-scale, longitudinal survey of over 1.5 million employees in 4,500 companies across 185 countries conducted as part of the global corporate challenge found that approximately 75% of the workforce experienced moderate to high stress levels — and more specifically, that 36% of employees reported feeling highly or extremely stressed at work, with a further 39% reporting moderate levels of workplace stress (hbr, 2016). the current and rising levels of stress in the workplace should be cause for concern, as there is a direct and adverse relationship between negative stress, wellness and productivity. according to mercer (2020), across job functions and countries in asia, high work demands have emerged as the top driver of stress in the workplace. nine in 10 indicated that their jobs required high mental focus and multi tasking, while six in 10 reported a lack of control over the pace and order of work that they need to complete. only 41% reported being able to take breaks when necessary. these are among initial findings of the healthy minds at work assessment conducted by mercer between july and september in 2020 to help companies assess and address mental well-being in the workplace. the survey is the first of its kind in asia to provide businesses with insights into their progress against four key workplace dimensions – “leadership and management support”; “culture and social interactions”; “work demands and career development”; and “well-being” – of mental health risks. the asia-wide survey, which involved 2500 employees across nine industries (aerospace, consumer goods, chemicals, finance, healthcare, logistics & supply chain, consulting and industrial automation), also found that strenuous work demands have resulted in poor work-life balance. for 83% of employees, working overtime more than three times a week is common. over 70% report working on rest days or beyond regular work hours. the impact is greater for those in more senior positions (mercer, 2020). the survey also found that more employees in asia are reporting high stress levels since the start of the pandemic. while only a handful of employees (7%) reported a high level of pressure before the onset of the pandemic, the percentage has now tripled. the percentage of senior management and sales professionals who reported experiencing high levels of stress jumped from 9% to 33% and 37% respectively. respondents who are divorced saw similar hikes in stress levels from 7% to 39% (mercer, 2020). despite elevated stress levels, employees across the board reflect that they feel well-supported by their managers and teams. six in 10 shared that they always receive clear communication (67%) and support from their managers. support includes assistance to solve problems (66%) or pointing them to others who can help (61%). respondents also appreciate being heard; with 61% sharing that their individual opinions and views are always taken into account.. according to morgan mckinley (2019), based on survey to 1,500 individuals, who perform a range of different roles across financial services, professional services and commerce industries in the uk, asking about their normal working weeks to investigate exactly what the different levels of working hours are and what the availability of flexibility is like for employees. the greatest proportion of respondents from each sector selected 38-42 hours. the industry with the highest percentage of employees working 43+ hours every week was banking at 14%, followed by professional services (11%) and then commerce & industry (9%). in terms of how many extra hours are worked per week, banking employees were the hardest pressed out of the three sectors, with a significant 20% working 10 or more extra hours every week, closely followed by professional services at 18% but are their employers even aware? it seems not: regardless of industry, employees work extra hours witho ut recognition. 92% from the banking sector, 89% from professional services and 90% of commerce employees who work overtime receive no form of compensation. one of the commerce is bayer indonesia who currently employs 215 permanent employees in the crop science division. 39 the company’s success is driven by the engagement of its people and leader playing a critical to foster individual development and enhance the engagement of your team. there are several tools to assess employee's voices, such as using check-ins as a dialogue between responsible manager with team member with employee. the company also has 360 degrees feedback mechanism, leadership pulse survey, and employee survey than conducted periodically. this study derived from the recent employee survey results (2020) show that there are four problems that employees perceive as daily and most important to them. the four variables are employee engagement, leadership and philosophy, perceived workload, and daily job & operating model. the survey results show that of the four variables, then in fact, all four variables are problematic for employees. however, of the four variables, the most problematic is the variable (perceived) workload. in this variable, most employees do not agree that the workload so far is a natural thing and a necessity. most of the employees tend to feel that the workload is too heavy. based on the survey results, it means that the main problem felt by pt bayer indonesia's employees is the workload that is too heavy without any additional compensations. that is why there are some employees who are preparing to move to another company if the opportunity arises. using the survey result, bayer indonesia is reflecting and recreating the solution that motivated their employees. literature study perceived workload is a job stressor or demand which consume individuals' energy in terms of psychological resources and time. such demands acquire individuals' addition resources (time) (sadiq, 2020). workload is a workload associated with information processing tasks, but human activities include mental processing (mansour & tremblay, 2016) high-performance work system (hpws) or high-performance systems are a series of human resource management (hrm) activities that are designed to encourage skills, motivation and engagement of employees to enable businesses to gain a sustainable competitive advantage (tang et al., 2017). hpws is described by abubakar et al (2019) as a framework of human resources practices related to the attraction, selection, management, and retention of top human resources (abubakar et al., 2019). hpws can be measured into eight dimensions, namely selective staffing, comprehensive preparation, internal mobility, jobs stability, work description, result-oriented assessment, incentive incentives, and participation practice (garcía-chas et al., 2014) perceived organizational support is addresses socio-emotional needs, contributes to greater organizational identification and engagement, an increased willingness to support the organization, and good psychological wellbeing (kurtessis et al., 2017). psychological empowerment (pe) is a concept associated with positive psychology. being motivational in orientation, pe is the feeling of being in control over the situations at work (abbasi et al., 2020). job demands refer to those ‘physical, psychological, social, or organizational aspects of the job that require sustained physical and/or psychological effort and are therefore associated with certain physiological and/or psychological costs’ (e.g., highwork pressure and exhaustion) (kloutsiniotis & mihail, 2020). the preparation of the research model began with the discovery of human resource problems at pt bayer indonesia, namely the occurrence of excessive workloads (perceived workload). the problems faced by pt bayer indonesia, perceived workload, theoretically means the dependent variable. furthermore, a solution is sought for the dependent variable (perceived workload) which means looking for the independent variable and the mediating variable. based on the search results, it was found that empirical research conducted by (liu et al., 2020), which positions perceived workload as the dependent variable, then experienced hpws as an independent variable, as well as two mediating variables (perceived organizational support, and psychological empowerment). liu et al (2019) 's empirical research model is the main reference in this study. furthermore, in order for this research to have a difference and novelty (research novelty) with the empirical research model of liu, chow, zhu & chen (2019), one more mediating variable is sought which can be influenced by the dependent variable experienced hpws and at the same time the mediating variable affects the dependent variable perceived workload. the variables found were job demands used in (kloutsiniotis & mihail, 2020) research model. figure 6 presents the position of the variable job demands in kloutsiniotis & mihail's (2019) empirical study (colored in red) affecting work overload. after finding the variable job demands, a research model that combines the results of liu et al (2019) and kloutsinotis & mihail (2019) is created. the contribution of lie et al (2019) is four variables, consisting of one independent variable (experienced hpws), one dependent variable (perceived workload), and two mediating variables (perceived organizational support, and psychological), which are all used in this study. the contribution of kloutsinotis & mihail (2019) is a mediating variable (job demands). the combined contributions of lie et al (2019) and kloutsinotis & mihail (2019) form a suitable model proposed in this study. the model uses five variables, consisting of one dependent variable (perceived workload), two independent variable (experienced hpws) and perceived organizational support (pos) and two mediating variables psychological empowerment, and job demands. the effect of experienced highperformance work system and perceived organizational support on perceived workload through psychological empowerment and job demands 40 ambr in accordance with the formulation of the problem, research objectives, theoretical studies, and previous research, 4 hypotheses were formulated: the findings of allen, armstrong, reid & riemenschneider (2008) empirical research show that 23 agencies and found increased workload resulted in dissatisfaction and demotivation. the result was not significant, therefore the expected high perceived workload to have a strongly negative relationship with pos was supported. based on the results of this study, the first hypothesis is compiled as follows: hypothesis 1: there will be a negative relationship between perceived organizational support (pos) and perceived workload (pw) is mediated by psychological empowerment (pe). according to (ghislieri et al., 2017), work demands were possible predictors of wfc, consistent with previous research (o'driscoll et al. 2006, van veldhoven & beijer 2012). emotional dissonance was significant in work-to-family interactions: the effort required to display emotions at work different from those felt could have spillover effects in other life domains, supporting findings from other careers (emanuel et al. 2014). wfc was negatively correlated with pos (cf. gurbuz et al. 2012). based on the results of this study, a second hypothesis is compiled as follows: hypothesis 2: the relationship between perceived organizational support (pos) and perceived workload (pw) are positively related is mediated by job demand (jd). the findings of (mat et al., 2021) empirical research show that a predicted that perceived hpws and service employees’ performance in the automotive retail industry is mediated by psychological empowerment. the research takes 4 steps to analyze the mediating effect. firstly, perceived hpws (independent variable) have to directly affect service employee performance (dependent variable). next, to test the perceived hpws have to directly influence the psychological empowerment (proposed mediator) and the proposed mediator has to directly influence the dependent variable. finally, comparison of the significant values when the variables are added to the regression analysis. the results will be fully mediated when the significant relationship between independent variables and dependent variables must become insignificant after incorporating the mediator into the regression analysis. based on the results of this study, the third hypothesis is compiled as follows: hypothesis 3: the relationship between perceived hpws (hpws) and perceived workload (pw) is mediated by psychological empowerment (pe). the results of empirical research by (kloutsiniotis & mihail, 2020) proposed that employees’ perceptions of hpws will be positively associated with job demands (work overload and worked family conflict) and job resources, respectively. the findings showed that the relationship between hpws and both job demands was negative and significant. based on the results of this study, a fourth hypothesis is compiled as follows: hypothesis 4: the relationship between perceived hpws (hpws) and perceived workload (pw) is negative mediated by job demand (jd). research methodology the unit of analysis in this study is the individual level of pt bayer indonesia employees. population refers to a group of required information, whether a group of people, events, or interesting things being investigated by researchers (sekaran & boeugie, 2016). the population includes the general population (general population), target population (target population), and accessible population (accessible population) (asiamah et al., 2017). in this study, the general population (general population) are all permanent employees of pt bayer indonesia division crop science division around 200 employees. meanwhile, the sample is part of the population that can be used to generalize the population (tabachnick, bg, & fidell, 2013). however, considering that this research uses sem amos 22 software, it means that it is included covariance-based (cb) sem which is more compatible with a large sample size (hair, jf, hult, gtm, ringle, cm, & sarstedt, 2014), so the entire target population in this study is used as the research sample. sugiyono, 2013). the reason for using sem is because the sem method is a continuation of the multiple regression method and path analysis. all of which are multivariate analysis formats. 41 compared to the regression and path analysis methods, the sem method is superior, because the sem method can analyze data more comprehensively. in multiple regression analysis and path analysis, the analysis can only be carried out at the level of the latent variable (unobserved variable), while the sem method can analyze at a more detailed level, namely the level of dimensions and indicators. sem combines structural model testing and measurement models (the relationship between indicators and constructs), so that through sem researchers can test measurement errors, and perform factor analysis along with hypothesis testing. another advantage of sem is that it is able to analyze the reciprocal relationship model (recursive) simultaneously, where this model cannot be solved by linear regression analysis simultaneously. through sem, bootstrapping can be done, an assumption facility for an increase in the number of samples, which linear regression analysis cannot do (haryono, 2017: 9). result and discussion testing the measurement model (cfa) the critical ratio (cr) values from most measure was greater than the preferred >1.96 requirements of acceptability it is indicating a high level of internal consistency. there is relationship with cr <1.96, latent jd to pw, 1.751, latent pos to pw -1.476, and latent hpws to pw -1.139. there are some measures with cr value > two digits, the highest is latent pos to pos indicator 11,565 and minimum cr value is relationship of latent pe to pw -1.958. significant test there are 39 out of 40 regression relationships were <0.05. that indicating a significant influence. the relationship of jd and pw has (p), 0.08, pe and pw 0.05, pos and pw 0.14 and hpws and pw 0.255. among the 42 internal relationships between constructs and latent, only one relationship is not significant is between jd and pw, probability value (p) = 0.08 which > preferred acceptability and cfa is 1.751. thus, both p and cfa test for jd and pw construct is not passed. the effect of experienced highperformance work system and perceived organizational support on perceived workload through psychological empowerment and job demands figur 1. cfa test figur 2. significant test 42 ambr figur 3. factor loading figur 4. ave validity & reliability test variable is said to have good validity to something latent construct if: (i) factor loading is greater than the critical t score ≥ 1.96 or practically ≥ 2. this value is seen at the amos output "variances (group number 1 default model)". (ii) standardized loading factors ≥ 0.7. estimate values of all relationship each latent with its indicators internally as well as the relationship between latent were greater or equal to the preferred loading factor ≥ 0.05 requirements of accep tability. all construct is valid. construct has good reliability, if: (i) the value of construct reliability (cr)> 0.7; and (ii) the average (average) variance extracted (ve) or ave ≥ 0.5. ave value of all indicator elements was greater or equal to the preferred ave ≥ 0.50 requirements of acceptability. all construct is reliable. the relationship between perceived organizational support (pos) and perceived workload (pw) is mediated by psychological empowerment (pe). hypothesis 1 reads: there will be a negative relationship between perceived organizational support (pos) and perceived workload (pw) is mediated by psychological empowerment (pe). 43 based on the research results, it is proven that the relationship between pos and pw through pe is -9.721804, which means that the t-value or cr score is -9.721804 ≥ 1.967. significance (p) ≤ 0.05, this means that h0 is rejected, ha is accepted, which means pos has a negative and significant effect on pe. the mean of this research hypothesis 1 is proven through this research. the findings of allen, armstrong, reid & riemenschneider (2008) empirical research show that 23 agencies and found increased workload in dissatisfaction and demotivation. the result was not significant, therefore the expected high perceived workload to have a strongly negative relationship with pos was supported. this means that the results of this study support allen et al (2008). the relationship between perceived organizational support (pos) and perceived workload (pw) are positively related is mediated by job demand (jd). hypothesis 2 reads: the relationship between perceived organizational support (pos) and perceived workload (pw) are positively related is mediated by job demand (jd). based on the research results, it is proven that the pos relationship with pw through jd is 7,616943. which mean score t-value or cr of 7,616943. ≥ 1,967. significance (p) ≤ 0.05, this means that h0 is rejected, ha is accepted, which means pos has a positive and significant effect on pe. the mean of this research hypothesis 2 is proven through this research. the results of this study support the research results of ghislieri, gatti, molino, and cortese (2016) which state that work demands were possible predictors of wfc, consistent with previous research (o'driscoll et al. 2006, van veldhoven & beijer 2012). emotional dissonance was significant in work-to-family interactions: the effort required to display emotions at work different from those felt could have spillover effects in other life domains, supporting findings from other careers (emanuel et al. 2014). however, the results of this study contradict the results of research (gurbuz et al. 2012) who found that wfc was negatively correlated with pos. the relationship between perceived hpws (hpws) and perceived workload (pw) is mediated by psychological empowerment (pe). hypothesis 3 reads: the relationship between perceived hpws (hpws) and perceived workload (pw) is mediated by psychological empowerment (pe). based on the results of the study, it was proven that the relationship between hpws and pw through pe was 7.177472. which means the t-value or cr is -7.177472. ≥ 1,967. the significance (p) ≤ 0.05, this means h0 is accepted and ha is rejected, which means that hpws has a negative and significant effect on pw mediated by pe. it means that hypothesis 3 is not proven through this research. the results of this study are in line with the findings of rani, rahman & yusak (2021) empirical research show that a predicted that perceived hpws and service employees' performance in the automotive retail industry is mediated by psychological empowerment. the research takes 4 steps to analyze the mediating effect. firstly, the perceived hpws (independent variable) has to directly affect service employee performance (dependent variable). next, to test the perceived hpws have to directly influence the psychological empowerment (proposed mediator) and the proposed mediator has to directly influence the dependent variable. finally, comparison of the significant values when the variables are added to the regression analysis. the results will be fully mediated when the significant relationship between independent variables and dependent variables must become insignificant after incorporating the mediator into the regression analysis. the relationship between perceived hpws (hpws) and perceived workload (pw) is negative mediated by job demand (jd). hypothesis 4 reads: the relationship between perceived hpws (hpws) and perceived workload (pw) is negative mediated by job demand (jd). based on the research results, the relationship between hpws and pw through jd is 7.479422 which mean t-value or cr score of 7.479422 ≥ 1.967. significance (p) ≤ 0.05, this means that h0 is accepted, ha is rejected, which means hpws has a positive and significant effect to pw mediated by jd. the mean of hypothesis 4 was not proven through this study. however, the results of this study are in line with the results of empirical research by kloutsiniotis & mihail (2020) proposed that employees' perceptions of hpws will be positively associated with job demands (work overload and worked family conflict) and job resources, respectively. the findings showed that the relationship between hpws and both job demands is negative and significant. the effect of experienced highperformance work system and perceived organizational support on perceived workload through psychological empowerment and job demands 44 ambr conclusion based on the research results and related to the formulation of the problem, it can be concluded that: 1 the results showed that pos has a negative and significant effect to pw mediated by pe. this means that hypothesis 1 is proven. hypothesis 1 reads: there will be a negative relationship between perceived organizational support (pos) and perceived workload (pw) is mediated by psychological empowerment (pe). 2 the results showed that pos had a positive and significant effect on pw with jd mediation. this means that hypothesis 2 is proven. hypothesis 2 reads: the relationship between perceived organizational support (pos) and perceived workload (pw) are positively related is mediated by job demand (jd). 3 the results showed that hpws has a negative and significant effect to pw mediated by pe. this means that hypothesis 3 is not proven. hypothesis 3 reads: the relationship between perceived hpws (hpws) and perceived workload (pw) is mediated by psychological empowerment (pe). 4 the results showed that hpws had a positive and significant effect on pw with jd mediation. this means that hypothesis 4 is not proven. hypothesis 4 reads: the relationship between perceived-hpws (hpws) and perceived workload (pw) is negative mediated by job demand (jd). based on the research results, the following suggestions can be made: 1 given that pos is proven to have a negative effect on pw through pe, management should continue to demonstrate its commitment to ongoing essential management that provides support to employees at work. management support in various forms such financial and non-financial support will ease employees’ careers even though they are overloaded. 2 likewise, hpws without being mediated by other variables has a negative effect on pw. it means that hpws has a positive value for employees so that employees do not feel burdened by so much work; management must accommodate the hpws (system) adequately. reference abbasi, s. g., shabbir, m. s., abbas, m., & tahir, m. s. 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(2020). policing in pandemic: is perception of workload causing work–family conflict, job dissatisfaction and job stress? journal of public affairs, september. https://doi.org/10.1002/pa.2486 tang, g., yu, b., cooke, f. l., & chen, y. (2017). high-performance work system and employee creativity: the roles of perceived organisational support and devolved management. personnel review, 46(7), 1318–1334. https://doi.org/10.1108/pr-09-2016-0235 1 decision making in the culture and creative industries environment: lessons from the cultural village chrisna t. permana universitas sebelas maret, surakarta, indonesia budi harsanto* universitas padjadjaran, bandung, indonesia abstract purpose – cultural village is an area-based development concept that engages with the culture and creative industries as well as tactical urbanism. typically, a cultural village is situated in geographical areas that have traditionally had strong cultural themes and have the potential for socio-economic growth in the surrounding region. decision-making in this environment differs from pure-profit sector decision-making. this study set out to draw lessons from the cultural village, especially in global south, where the culturally-led consensus approach is used to reshape group decision-making processes. design/methodology/approach – this study uses a systematic review method as a way to search, screen, analyze and synthesize knowledge from the academic database. the scopus academic database is used for the search process. findings – this paper concludes that the inclusion of culture into decision-making offers three stages of fundamental lessons for the community, which are flexibility, openness, and innovation. these three forms the foundation for the five main elements of decision-making in the cultural village, which include inclusive, participatory, collaborative, agreement-seeking, and cooperative. research limitations/implications – this paper certainly has limitations, especially in terms of the number of papers reviewed. future reviews can be carried out more broadly by expanding search keywords as well as subject areas and regions. originality/value – this study concludes that the implementation of culturally-based consensus approach (ca) in cultural villages has generally promoted inclusive, participatory, collaborative, agree ment seeking, and cooperative decision-making process, although in several cases, the approach was struggled to encourage equal collaboration and effective agreement seeking. keywords: decision-making, cultural village, creative industry, consensus approach paper type research paper *corresponding author. email address: budi.harsanto@unpad.ac.id decision making in the culture and industries environment received may 15th 2021 review july 22nd 2021 publish august 19th 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: http://journal.afebi.org/index.php/ambr/article/view/403 mailto:budi.harsanto@unpad.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& http://journal.afebi.org/index.php/ambr/article/view/403 2 ambr introduction decision-making in the profit sector has different characteristics from the nonprofit sector. for example, decision-making in the profit sector is characterized by high demands for accountability from its stakeholders (leroux & wright, 2010). a more peculiar thing happens to entities that combine profits and nonprofits, as is generally the case of cultural villages. cultural village refers to an area-based development concept that engages with the culture and creative industries as well as tactical urbanism (park, 2015; talen, 2015). cultural villages apply the specific theme of culture and creative industries as a platform and branding, which mobilize surrounding people to engage and work together for area development programs (harsanto & permana, 2020; wang, 2009). cultural villages usually encourage their people, centered on community leaders, activists, and academics, to be key facilitators to create more independent communities to manage local resources, address local priority issues, and organize local plans (wagenaar & healey, 2015). the actions of organizing decision-making together within the community in the cultural villages, thus, have promoted an innovative consensus approach in the decisionmaking process in which we refer to as the culturally-led consensus approach (amy, 2017; healey, 2015). this approach emphasizes various innovations in terms of the inclusion of norms, values, social structure, and habits into decision-making procedures (coaffee & healey, 2003; fahmi et al., 2016). the culturally-led approach is expanded from the generic consensus approach (ca) in decision-making (woltjer, 2000). the ca reflects a process upon involving multiple actors and their socio-cultural backgrounds, preferences, and values into interactive processes to produce strategic decisions. the ca adds legitimacy and acceptability to the decision-making process (woltjer, 2000). the ca comprises of five pillars: inclusive, participatory, collaborative, agreement seeking, and cooperative (healey, 2003; innes & booher, 2000; mallett & cherniak, 2018; swyngedouw, 2005; woltjer, 2000). inclusive indicates an open decision-making process, which is accessible for people from various backgrounds (nakagawa, 2010). participatory is actions that are contributed and characterized by participation, especially from multiple actors (widianingsih & morrell, 2007). the collaborative is the next stage of participatory, where such multiple actors are encouraged to share values, strategies, and commitments (healey, 1997). agreement seeking is a process to negotiate and accept certain 'winwin solutions' or decisions together (innes & booher, 2010). meanwhile, cooperation focuses on the social building to achieve common ends together, ensuring all parties are benefited from the decisions (tang et al., 2018). the purpose of this paper is to study various implementations of the culturally-led consensus approach in the cultural villages. our intention is to highlight the overall process and its outcomes. we limit our exploration towards cultural villages in the global south as a place where various culturally-led values, norms, and activities are still widely applied as the most important 'rules of the game' for the communities (harsanto & permana, 2019; permana & harsanto, 2020; yuen, 2011). we positioned this paper as a review to help to advance the field of decision-making in the cultural village, which provides a unique context. literature study decision-making concern with the process of making choices from the various alternatives available, with the approach to systematically conducting analysis in decision making is known as decision theory (render et al., 2018). in general, the steps for making a decision including defining the problem, list possible alternatives, identify possible outcomes, analysis the payoff, selection, and implementation (render et al., 2018). the decision-making can be individual or non-individual in nature. research on decision-making has a very long history, even since pre-history (buchanan, 2006). buchanan (2006), in harvard business review, developed a timeline that illustrates that decision-making has a rich and long history from pre-history as a starting points to the current era in the 21st century. the development of decision-making studies in the 20th century was influenced, among others, from the fields of psychology and business economics. from a psychological point of view, the influential work, for example from sigmund freud in the 1900s who suggested that human decision-making is often based on something hidden (buchanan, 2006). meanwhile, in the field of business economics, several important studies, for example from irving fisher in the 1900s who introduced the concept of net present value, or chester barnard in the 1930s which distinguished between personal decision making and organizational decision making in the context of business (buchanan, 2006). some well-known theories or concepts in the subsequent development including game theory from von neumann & morgenstern in 1944 (von neumann & morgenstern, 2007) or bounded rationality from herbert simon in 1947 (brown, 2004). the study of decision making has not only been going on for a long time, but it also involves a wide range of disciplines, for example to mention a few mathematics, sociology, psychology, economics, management, political science, and others (buchanan, 2006). ward edwards' classic article in psychological bulletin, for example, interestingly combines psychological perspectives and business economics in the development of decision-making theory (edwards, 1954). edwards' discusses the risk aspects as well as the use of statistics in psychological experiments in a business economics situation (edwards, 1954). 3 and the study of decision-making naturally evolves into more specific topics such as collective decision making (e.g., van deemen & rusinowska, 2010), collaborative decision-making (gillgren et al., 2019), or decision support system (e.g., dagnino & viarengo, 2014; gumbira & harsanto, 2019). much of the literature since the end of the 20th century pays particular attention to decision making in business economics, which is predominantly carried out in the context of profit, with not so many studies have been conducted in a nonprofit context. in fact, decision-making in the profit sector has different characteristics from the nonprofit sector. among the examples of the difference is the level of accountability that is usually high in the profit sector because of the demands of various stakeholders for it, while in the nonprofit usually different (leroux & wright, 2010). even more interesting is the decision-making in a mixed context between profit and nonprofit, for example, in a cultural village. a cultural village is typically a village that combines culture and creative industries and represents the intersection of fields such as culture, business economics, and urban planning (park, 2015; talen, 2015). cultural villages are usually located in certain geographic areas that have historically had a strong cultural theme and economically have the potential for socio-economic development in the surrounding area. examples of cultural villages, for example, are laweyan villages in indonesia, insadong in south korea, ærøskøbing in denmark, or woodstock in south africa (grydehøj, 2012; harsanto & permana, 2020). the approach to decision-making in the cultural village is unique because it is involved both in the cultural aspect and in the business economics aspect (howkin, 2001). the uniqueness of this decision-making process, for example, is the involvement of facilitators such as community leaders or academics to help understand and manage their resources as well as develop plans for the development of their village (wagenaar & healey, 2015). among the prominent approaches used to understand decision-making in the village context is the culturally-lead approach, which is a development of the generic consensus approach (amy, 2017; woltjer, 2000). there are five elements in this approach, including inclusive, participation, collaborative, agreement seeking, and cooperative (healey, 2003; innes & booher, 2000; mallett & cherniak, 2018; swyngedouw, 2005; woltjer, 2000). inclusive and participation refer to the accessibility for a wide range of stakeholders to participate in the decision-making process (nakagawa, 2010; widianingsih & morrell, 2007). collaborative, consensus-seeking, and cooperative work entails the effort to discuss strategies and commitments in order to make collective decisions that favor all parties concerned (healey, 1997). consensus requires a certain amount of effort to achieve it. buchanan (2006) highlighted that consensus is a good thing unless it is reached too quickly. research methodology to understand the decision-making process in the cultural villages, we use a systematic review method. in this method, the searching and screening process is carried out systematically on a certain database before analyzed using a certain technique (denyer & tranfield, 2009). this technique is useful for being able to synthesize knowledge from existing publications and play an important role in developing a body of knowledge and informing practice as well as policy-making (harsanto, 2020; tranfield et al., 2003). systematic reviews have the character of being replicable and transparent in the process so as to minimize the bias commonly found in traditional reviews (denyer & tranfield, 2009). the systematic review approach has historically developed since the 1970s through evidence-based policy and practice (ebpp) in the discipline of medicine to develop the best evidence for providing the best care for patients (denyer & tranfield, 2009). this approach later developed in various disciplines, both hard and soft science (petticrew, 2001). considering that the main concept being sought is a combination of the cultural village and decision making, the keywords used in the search process are "decision and cultural village," which covers the two concepts as a whole. the search was conducted on the academic database of scopus in the second half of 2020. the results of the rough search resulted in 422 articles. initial screening was carried out by involving three criteria, i.e., publication type (journal article), subject area (social science), and language (english). the screening was focused on journal articles to obtain publications that have passed through the peer-review process. the subject area is focused on social science, considering that decision-making in the cultural village is most likely discussed in this subject area. this screening was conducted to help to obtain specific literature discussing the topic being researched. this initial screening yielded 89 articles potentially relevant for this review. the next screening was the manual reading of the title and abstract. the results of this final screening yielded 33 articles. lastly, the final screening was performed by re-reading again more carefully the articles, to ensure the relevance with decision making as well as cultural village and global south context. this screening resulted in 11 articles. this number is not too many, but it is reasonable for a review in a preliminary or in a highly specific field (e.g., burke, 2010). a schematic diagram of this systematic search process is shown in figure 1. we used a qualitative approach to conduct the analysis, capturing the research findings from each of the publications included in this review. in carrying out the analysis, we are guided by a culturally-based consensus approach consisting of inclusive, participation, collaborative, agreement seeking, and cooperative (healey, 2003; innes & booher, 2000; mallett & cherniak, 2018; swyngedouw, 2005; woltjer, 2000). decision making in the culture and industries environment 4 ambr figure 1. systematic review process table 1. reviewed articles technically, we read the articles included in the review manually, then create a matrix comprised of elements of the culturally-led consensus approach to capture the essence of the article findings on these five elements of the approach. in addition, we also connect the analysis with three stages of fundamental lessons for the community in their decision-making, including which are flexibility, openness, and innovation (cars et al., 2002; healey, 2003; innes & booher, 2000; mallett & cherniak, 2018; martiskainen, 2017; swyngedouw, 2005; woltjer, 2000). following that, the review findings are presented in the results and discussion section for later conclusions to be drawn. result and discussion the profile of the articles included in this preliminary review can be seen in table 1. we found that scholarly articles with topics related to decision-making and cultural villages are widely published in various journals from different subjects, highlighting social science amongst the most publishing subjects. the international journal of the commons, the geography review, and the humanities and social sciences reviews appeared as the most publishers that issued relevant articles. since our paper was focused on the global south context, we excluded journals from the majority of europe and the us. our screening process finally guided us to focus on 11 (eleven) articles mainly located in southeast and south asia, including nepal, indonesia, and china as the most appeared context. no author(s) and year context journal 1. ching (2020) mekong (thailand, laos, cambodia, vietnam) water alternatives 2. cordero et al. (2018) nilgiri hills, india palgrave communications 3. downie & dearden (2018) villages in tanzania south african geographical journal 5 generally, the eleven articles suggest that the culturally-led consensus approach (ca) is preferred to be applied by cultural villages in the global south rather than the normal consensus approach due to reasons such as to engage the community, to disperse power, and to resolve conflict. the culturally-led ca, for instance, brings more participation, allowing people from different socio-cultural backgrounds, especially those usually being excluded by the policy, to know each other, to respect differences, and seek for middle grounds (khanal, 2013). their continuous process to learn and work with a different socio-cultural background also gradually improves people's capacity for the provision and management of various development issues together (khanal, 2013). in addition, culturally-led ca also builds people's enthusiasm towards decision making, brings back trust, and develops people's knowledge (jayasinghe & wickramasinghe, 2011). generally, the eleven articles suggest that the culturally-led consensus approach (ca) is preferred to be applied by cultural villages in the global south rather than the normal consensus approach due to reasons such as to engage the community, to disperse power, and to resolve conflict. the culturally-led ca, for instance, brings more participation, allowing people from different socio-cultural backgrounds, especially those usually being excluded by the policy, to know each other, to respect differences, and seek for middle grounds (khanal, 2013). their continuous process to learn and work with a different socio-cultural background also gradually improves people's capacity for the provision and management of various development issues together (khanal, 2013). in addition, culturally-led ca also builds people's enthusiasm towards decision making, brings back trust, and develops people's knowledge (jayasinghe & wickramasinghe, 2011). three lessons: flexibility, openness, and innovation the inclusion of culture into decision-making offers three stages of fundamental lessons for the community, which are flexibility, openness, and innovation (cars et al., 2002; healey, 2003; innes & booher, 2000; mallett & cherniak, 2018; martiskainen, 2017; swyngedouw, 2005; woltjer, 2000). these three principle lessons penetrate through all people's activities and their daily interactions. flexibility is the first crucial principle that ensures people's activities, especially in working and making decisions. it reflects the ability to follow and adapt to the social dynamics, including local priority issues as well as external trends (holvandus & leetmaa, 2016). this lesson helps the community to be more capable and familiar in working with different situations and different groups of people. in the case of peon (a traditional health practitioner) in nepal, for instance, the culturally-led ca was applied to set local health service improvement and taught flexibility in terms of the gradual inclusion of the traditional culture of healthcare and its practitioner (the peon) into a new and modern medical system, to succeed the introduction of the better medical standard of services for rural communities (justice, 1983). decision making in the culture and industries environment no author(s) and year context journal 4. garro (1998) pichataro, mexico medical anthropology quarterly 5. ghate et al. (2013) eight villages in india international journal of the commons 6. hasbi et al. (2019) toraja in indonesia humanities & social sciences reviews 7. jayasinghe & wickramasinghe (2011) kalametiya in sri lanka critical perspectives on accounting 8. justice (1983) villages in nepal social science and medicine 9. khanal (2013) villages in nepal asia pacific journal of education 10. shepherd & terry (2004) bajau, indonesia geography 11. wahyuningtyas et al. (2019) segenter in indonesia geojournal of tourism and geosites 6 ambr the peon was a win-win solution for the policymakers, which were expected to improve the health service quality and raise the overall wellbeing. as for the community, which seemed reluctant to accept new ideas, this decision attracted them to agree and support the new approach (justice, 1983). both parties agreed to negotiate and change their current ways of doing things and adapted to new approaches. another interesting example is in bajau, indonesia, where village decision-making, especially in conflict resolution, is the responsibility of the village headmen who coordinate with key authorities in decision making in the area, that is wakatobi marine national park (mnp) authorities. in the case of a decline in fish stocks, flexibility is evident from this village by reacting positively to initiatives to protect these communal resources. this rarely occurs in other villages, which often show a fatalistic attitude towards communal resource degradation (r. burke, 2001). it shows the flexibility of the bajau institution in dealing with pressure and being able to react well to it (shepherd & terry, 2004). openness is another important principle that ensures people's social activity within a community being accessible and free for all in the surrounding, moreover, the externals to participate. this usually occurs when communities begin to be more flexible. this lesson helps the community to be more respectful, encouraging, and shaping solidarity and a sense of belonging. in the case of disaster management in a cultural village in indonesia, the so-called segenter indigenous village community demonstrates its openness to external people as long as the external and their interactions provide advantages for the community (wahyuningtyas et al., 2019). their openness, through the introduction of the culturally-led ca – through regular consensus meetings was seen from their willingness to accept ngos from different countries and their ideas, allowing the existing people to commit to supporting new programs introduced by externals, including from different countries, such as training for building houses, bridges, and barns, workshops, and knowledge sharing on how to conserve the ecosystem, and projects on the provision of plantation equipment and mechanisms (wahyuningtyas et al., 2019). innovation, on the other hand, relates to the further implications from the previous two lessons, flexibility and openness. once communities are able to be more flexible and open, they communicate and exchange values with their externals (d’ovidio & rodríguez morató, 2017). not only do they provide new values to their externals, the externals also promote new value to the existing communities. the more communication built, the more cooperation existed, and more learning exchanges are conducted, resulting in optimal practices and solutions for common benefits (ghate et al., 2013). in the traditional cultural villages in india, an experiment to introduce collaborative meetings has caused many villagers to gain new skills, including communication, business, and harvesting (ghate et al., 2013). in return, the government and related stakeholders, as the externals, have also learned some traditional values to improve their proposed system (ghate et al., 2013). in the following section, our paper reviews how the culturally-led consensus approach (ca) was implemented in the eleven cases of the cultural village. it is highlighted that the three fundamental lessons guided the decision-making process into inclusive, participatory, collaborative, agreement seeking, and cooperative – or the five pillars of a consensus approach. decision making in the cultural village framework both flexibility and openness have guided the consensus approach (ca) decision-making process. the commitment to include rambu solo – a local death ceremony – into essential public actions of the villagers in toraja (hasbi et al., 2019) and to accommodate rituals related to the traditional style of harvesting zone in lombok (wahyuningtyas et al., 2019) have successfully engaged the local people to work each other and build strong social capital amongst themselves. on the other case, the top-down management of the saadani park in tanzania has challenged public enthusiasm as many people were felt left aside and were not compromised, and thus, reduced productivity and income of the existing agricultural activities (downie & dearden, 2018). however, the new approach to engage and involve the surrounding community members to share opinions, asset management, and actions together has changed enthusiasm, and in return, attracted more people to commit to supporting the development initiative (downie & dearden, 2018). this situation indicates the effectiveness of culturally-led ca to promote inclusiveness which stimulates high engagement while also encouraging community members' enthusiasm. culturally-led consensus approach (ca) that were applied in the eleven cases reviewed in this paper also successfully indicated the increasing of participatory mechanisms in the various decision-making process. this is measured through the ability of the public decision-making process to invite, engage, and elaborate people from different backgrounds, highlighting the community members, the government, and think tanks (ngos). in the case of the improvement of health services in nepal, the peon (traditional health practitioner) was a symbol of participatory action where the community, the health professionals, and the government worked together to negotiate disputes and to seek a more effective solution. 7 it was also a commitment that members of the public were allowed to participate in the program, as the peon and supervisors (justice, 1983). the same situation was also reflected in the case of public participation in the schooling program in nepal. various decisions and executions of their programs were undertaken and supported together by all the components in the school services, including the students, parents, teachers, operators, and community organizations (khanal, 2013). the examples indicate that the participatory aspect involves a worktogether process and negotiations from diverse stakeholders. the collaborative process becomes important because the larger community is sometimes excluded from decision-making processes, limiting its ability to contribute. the main impediment is usually social status, which makes forming a collaborative process difficult (ching, 2020; hasbi et al., 2019). in fact, in a cultural village context, such as in the nilgiri hills in india, engage more on collective decisions than individual decisions (cordero et al., 2018). to encourage the collaborative aspect so that it can be realized, an open environment that allows the community to respect and contribute equally need to be developed (wahyuningtyas et al., 2019). as for agreement seeking, gaps can occur between community members and leaders because of differences in position (ching, 2020); in the cultural village context, social strata and cultural values dominate the decisionmaking process rather than mutual sharing (hasbi et al., 2019). when the local community is involved and accommodated in the decision-making process, usually agreement seeking, both internally and with an outsider, will be achieved more easily. for example, in bajau in indonesia, the wakatobi marine national park authority concluded an agreement with the community to enforce a no fishing zone policy around their area to protect reef fish breeding stock and has proven effective in its implementation (shepherd & terry, 2004). as the cooperative focuses on the social building to achieve common ends together, ensuring all parties are benefited from the decisions, our reviews of the eleven cases of culturally-led ca have shown that the majority of stakeholders were able to demonstrate cooperation. both in the case of eight villages in india and their aims to improve productivity (ghate et al., 2013), the disaster risk mitigation in cultural villages in lombok (wahyuningtyas et al., 2019), the community schooling project in nepal (khanal, 2013), both community, government, and ngos were actually sharing similar values, objectives, and expectations, despite differences in their capacity, actions, and contributions. almost all articles also indicated that the interactions between different groups have successfully led to new skills, habits, knowledge, and strategies, all of which were the key important realization of the innovation. in the case of the peon, for instance, a new approach in the mix of traditional and modern service was used as an effective way to improve public health services in traditional villages (justice, 1983). decision making in the culture and industries environment figure. 2 decision making in the cultural village framework 8 ambr there is an implication of the culturally-led consensus approach (ca) in decision making in the form of power imbalance. power imbalance has caused many ca practices were ended in the domination of elites rather than a whole public power and bargaining power. this situation has made the culturally-led ca actually far from the idea of a collaborative process where multiple actors are encouraged to share values, strategies, and commitments agreement seeking where a process to negotiate and accept certain 'win-win solutions' or decisions is fully managed by equal power and mutual agreement together [16]. we highlight a case from several srilankan villages, where the process of the engaging community into a series of decision making without strong facilitation from the government or community organization as mediators would only cause decision making ends up in a few community leaders, government elites, and those with direct access to policymakers (jayasinghe & wickramasinghe, 2011). in the case of community schooling in nepal, this situation was also reflected from their participatory meetings where many decisions were actually set and agreed upon by a few parents and school operators who have access to local leaders and politicians (khanal, 2013). conclusion the present study was aimed to explore the various implementation of the culturally-led consensus approach in the cultural villages. this study concludes that the implementation of culturally-based ca in cultural villages has generally promoted inclusive, participatory, collaborative, agreement seeking, and cooperative decisionmaking process, although in several cases, the approach was struggled to encourage equal collaboration and effective agreement seeking. findings from this paper indicate the culturally-led ca as a potential tool for policymakers to work with the community, especially to organize more bottom-up decision-making processes in traditional conservative environments. these findings suggest that flexibility, openness, and innovation helped penetrate various village member interactions in their activities. this study strengthens the relevance of the culturally-led consensus approach in decision-making in the cultural village context. although this study focuses on the cultural village context, the findings may well have relevance to the other type of villages. this study contributes to the understanding of decision-making in a specific context of a cultural village. by analyzing peer-reviewed publications from various geographical regions in the global south, this study has extended our knowledge about the framework of decision-making in the cultural village. as the results of this study may be relevant for other village types besides cultural villages, the results of this study may also be useful in understanding cultural villages in a non-global south context. as a review, this paper certainly has limitations, especially in terms of the number of papers reviewed. future reviews can be carried out more 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(2011). urban planning in southeast asia: perspective from singapore. town planning review, 82(2), 146–167. decision making in the culture and industries environment 111 information technology role on private commercial banks’ efficiency with cost and profit dea technology md. azizul baten* shahjalal university of science and technology, bangladesh abstract information technology plays a pivotal role to improve the competitiveness of the bank by providing its existing customers with satisfactory services, while at the same time bringing about a significant reduction in cost. this study measures the effect of it factors on cost and profit efficiency of private commercial banks (pcbs) in bangladesh employing cost and profit data envelopment analysis (dea) and ordinary least sq uare (ols) method. the average cost efficiency (41.4%) was recorded higher than the average profit efficiency (18.8%) for pcbs. prime bank was the most cost and profit efficient among pcbs. the credit card transaction (0.000006) and credit card expenses (0.0002) were observed positively significant for cost efficiency of pcbs and the it personnel expenses (0.0015) and credit card transaction (0.00008) were found positively significant for profit efficiency of pcbs. it factors were found more significant for pcbs in profit efficiency. the results attained from this study could aid government, managers and depositors to remove the hindrance of progress in bangladesh. this type of empirical analysis could be applied in another sector of the economic market. keywords: efficiency, it, cost dea, profit dea, pcbs. *corresponding author. email address: baten-sta@sust.edu information technology role on private commercial banks’ efficiency with cost and profit dea technology received august 27th 2021 review september 14th 2021 publish december 1st 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/496 mailto:baten-sta@sust.edu http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/496 112 ambr introduction internationally, information technology (it) is now more available and vital worldwide, than it was ever before in the past days. but in bangladesh, there is still a long way to go to successfully virtualize the long -run banking transactions. technology has presented all new extents to the banking sector creating the scope for many opportunities for product marketing and enabling the organizations to manage their branches. the online banking system performs the banking transactions via internet, intranet and extranet and the influence of it in banking sector is huge and has worldwide influence. the augmented demand for it turned into looming and inevitable in bangladesh banking industry (https://www.thefinancialexpress.com.bd/views/ict-in-banking-industry). huda, momen and ahmed (2004) commented the importance of information technology for the success in the banking sector in bangladesh. rahman (2010) argued that most recently with the introduction of e-commerce has taken away from the conventional banking is a giant pace towards digital bangladesh. according to (ovia, 2005) they deliberated the use of it based bank’s products such as atm, smart cards, internet banking, mobile/telephone banking, micr, electronic funds transfer, electronic data interchange, point of sale terminals, computerized financial accounting and reporting, and electronic home and office banking. most of the private commercial banks (pcbs) perform e-bankiing. banking sector of bangladesh consists of six state-owned commercial banks (socbs), thirty nine private commercial banks (pcbs), nine foreign banks (fbs), two specialized banks (sbs), and four non-scheduled banks. according to the bibm report, socbs are large in terms of shares in assets and number of branches; they could cover only around 72.3 per cent of their branches under computerization by 2015 while the pcbs and fcbs brought 99.5 and 100 per cent of their branches, respectively, under computerization. in the context of computerization of the maximum branches of pcbs, this study assess the role of it on both cost and profit efficiency of pcbs in bangladesh. the estimation of efficiency can be categorized according to the assumptions and techniques used to construct the efficient frontier. non-parametric methods like dea rely on linear programming to calculate piecewise linear segments of the efficient frontier and do neither impose any assumptions about functional form of the frontier nor any distributional assumptions about inefficiency. in addition, dea also allows random error in observed input-output combination. on the other hand, parametric methods impose an explicit functional form for both the frontier and deviations from inefficiency. the bank efficiency works have been accomplished with dea technology without it variables in bangladesh and other countries (e.g., ahmed & liza 2013; hoque & rayhan 2012; hossain et al. 2016; ariff & can 2008; isik & hassan 2002). a few studies have been conducted in bangladesh by using sfa and dea on both cost and profit efficiency of banks (hasib & mahmud, 2018; ara, 2016) without it variables. on the other hand, other researchers considered it variables (sadekin & sheik 2016; alam et al. 2017) in bangladesh but they did not measure the cost and profit efficiency of banks. therefore, the goal of this study is to investigate the it influence on 17 private commercial banks (pcbs) in the context of both cost and profit efficiency in bangladesh by vrs cost dea and profit dea models. examining the role of it components on pcbs banks with the efficiency of both cost and profit by using ordinary least square (ols) method is a concern. in addition, the year-wise and bank-wise cost and profit efficiency comparison are made for pcbs. specifically this study undertakes to investigate the use and development of some classes of it applications such as it expenses, it income, it investment, it personnel, it personnel expenses, atm transaction, atm expenses, credit card transaction, and credit card expenses on the selected 17 private commercial banks (pcbs) which are only available for the ict data during the period from 2008 to 2017. literature study a lot of studies have been performed over the past decade in the area of measuring efficiency of firm companies, banks and other decision making units. the basic dea model developed by charnes, cooper and rhodes (1978) was based on the assumption of constant return to scale and this model has been modified by banker, charnes and cooper (1984) with the assumption of variable return to scale. since 1985 dea has been extensively functional in the banking sector. dea has been applied widely in measuring efficiency of indian banks by pramodh et al. (2008). berger and humphery (1997) reviewed 130 efficiency studies of financial institutions including commercial banks and explained that efficiency estimates of financial institutions in 21 countries vary across studies due to use of different methods in different studies. the different applications of dea are used to assess the bank efficiencies by the researchers (e.g., tuškan & stojanovi´c 2016; paradi et al. 2018). a few studies are found in bank efficiency analysis using dea in bangladesh (e.g., hoque & rayhan 2012; bhuia et al. 2012; ahmed & liza 2013; hossain et al. 2016; islam et al. 2017; fatema et al. 2019; azad et al. 2020). there are several studies available on the analysis of cost and / or profit efficiency in latvian banking (titko et al. 2014); in slovak banking (grmanova´ & ivanova´ 2018); and in the banking sectors of developing countries (sohrab & suzuki 2011). besides, ramona and estelle (2009) evaluated cost efficiency of french was around 86.40 to 91.52%, and spanish banks was around 95.07% to 98.32%, while in the other countries a declined in cost efficiency is noted. kristina (2015) showed that the czech 113 banks were more cost, revenue and profit efficient than slovak ones during the whole analyzed period. gulati and kumar (2016) found that the impact of global financial crisis on profit efficiency of indian banking industry was modest and short-lived since the profit efficiency declined only by about 3 percentage points during the crisis years. in the context of it, dea is used to examine the bank or firm’s efficiency widely. the application of information technology in banking sector and organizational it firms is investigated by (titko et al. 2014; abri & mahmoudzadeh 2014; grmanova´ & ivanova´ 2018; peter et al. 2019). chu-fen li (2007) explored, banks can reduce operating costs by increasing the number of financial cards issued and improve operational efficiency by installing more automated teller machines and providing customers with a wide variety of information technology services. methodology data description and the variables only 17 private commercial banks have been selected for this study because the ict data are not available for all the banks. the data were collected from the annual report of individual bank over the period 2008 to 2017. the link of the annual reports the samples of banks in bangladesh are given below. https://www.dutchbanglabank.com/investor-relations/financial-statements.html https://www.bracbank.com/en/investor-relations https://www.thecitybank.com/report/annualreports https://www.ebl.com.bd/home/annual_reports http://www.mblbd.com/home/annual_reports https://www.mutualtrustbank.com/investor-relations/annual-report/ https://www.primebank.com.bd/index.php/home/financial_reports http://premierbankltd.com/pbl/financial-reports/ https://www.onebank.com.bd/home/financial/annual-reports/ https://www.southeastbank.com.bd/annual_reports.php https://www.ucb.com.bd/index.php?page=know-ucb/investor-relations/annual-report http://www.ificbank.com.bd/annual_report.php https://www.islamibankbd.com/annual_report.php https://al-arafahbank.com/annual-reports.php https://www.sjiblbd.com/financial_statements_2017.php https://www.siblbd.com/home/annual_reports http://www.eximbankbd.com/report/annual_reports in this study the yearly data such as non-it and it are used by the table 1. variable definition dependent variables operating cost total cost comprises the income salaried to investor, staff expenditures, and other functioning expenditures. profit after tax total profit is subtracted of the entire cost from entire income. output quantity loan the sum of long-term and short-term loan, trade bills and reduced bills and other loans. off balance sheet item off-balance sheet items measures the sum of guarantees, commitment and financial derivative instrument output price price of loan price of loan measures the net interest income or net interest expenditures divided by total loan price of off balance sheet items price of off-balance sheet items is defined the ratio of total operating expenses and the total securities input quantity total fund total funds measures the sum of deposit and non-deposit funds at the end of the respective years information technology role on private commercial banks’ efficiency with cost and profit dea technology table-1: definitions of the variables for dea (outputs, input quantity, output and input prices variables) and it variables 114 ambr fixed assets fixed assets measure the book, the value of premises and fixed capital. labor the quantity of labor measures the number of bank staff members. input price price of fund price of fund is defined by the ratio of total interest expenditures to all deposits. price of fixed assets price of fixed assets measures the ratio of noninterest expenditures to fixed assets. price of labor price of labor calculates the ratio of personnel expenses to the number of bank staffs. it variables it expenses the total it refers to the expenses of the maintenance and repair, rent, depletion of it equipment and information sourcing services. it income the total income from it sector in bank. it investment it investment is total it budget of the bank which included hardware, software, network, security training and other it purpose it personnel the total no of it staff member in the bank. it personnel expenses it personnel expenses are designed as total salaries of it staff expenses. atm transaction the total amount of deposit is withdrawn by atm card. atm expenses banking service charge is provided by atm card. credit card transaction the total amount of deposit is withdrawn by credit card. credit card expenses credit card service charge is calculated price of credit card. vrs cost minimization dea model specification the specification of vrs cost dea model is followed by (coelli et al. 2005) as follows: n.........,1,2,......j; 0 1 s........,1,2,......r ; m......,1,2,......i; st m j n 1j j n 1 * 1 * m 1i = = = = =     = = = =     j rqrjj iqij n j j iqiqk yy xx xwhin where wiq is a vector of input prices such as (price of fund, price of fixed assets and price of labor) of j th bank; xiq * is the vector of input quantities such as (total fund, fixed assets and labor) for jth bank; are the rth output such as (loan, off-balance sheet items) into jth bank. the overall cost efficiency (ceq) is defined as   = = = m i iqiq m i iqiq xw xw 1 1 * q ce the cost efficiency is the product of technical and allocative efficiency and the value of cost efficiency is restricted by zero and one. 115 vrs profit maximization dea model specification the profit maximization dea model is specified as follows: n..,..........1,2,......j; 0 1 m,..........1,2,......i; s,..........1,2,......r; j 1 * 1 j * 1 * 11 * = = = =     = = = ==     n j j rjij n j rjrj n j j iq m i iq s r rqrq xx yy xwypmax where pr are the rth output price (price of loan, price of off-balance sheet items); y * are the rth output (loan, off-balance sheet items) into jth bank; wi are the ith input price ((price of fund, price of fixed assets and price of labor) into jth bank; x * are the ith input ((total fund, fixed assets and labor) into jth bank. the profit efficiency (peq) can be calculated by the ratio of observed profit to maximum profit for the decision making unit (dmu)q (coelli et al. 2005): peq = * 11 * 11 iq m i iq s r rqrq iq m i iq s r rqrq xwyp xwyp   == == the profit efficiency measure is not bounded by zero and one as well as it is negative if a profit is negative, or it is undefined if profit is zero (coelli et al. 2005). empirical specification of ordinary least square method the specification of the ordinary least square method is defined as . 98765 43210 itititititit ititititit ccecctatmeatmtitpe itpitinitiitee   +++++ +++++= where eit represents both the cost and profit efficiency estimated by vrs cost dea and profit dea respectively for the i-th bank in period t; iteit is the it expense of bank; itiit is the it income of bank; itinit is the it investment of bank; itpit is the it personnel of bank; itpeit is the it personnel expenses of bank; atmtit is the atm transaction of bank; atmeit is the atm expenses of bank; cct is the credit card transaction of bank; cce is the credit card expenses of bank. ξit is the error term. results and discussion yearly average cost and profit efficiency score of pcbs with dea both the cost and profit efficiency scores of pcbs using dea are presented in figure 1. the average cost efficiency (41.4%) was higher than profit efficiency (18.8%) score implies that pcbs were most cost efficient and less profit efficient. these results show that the banks are 55.6% highest cost efficient in the year of 2008 and then it decreased gradually at 44% to 28.7% until 2012 and after then it increased 40.2% in 2013 and next year it fell and finally it rose at 50% on the last year. contrarily, the profit efficiency scores were very low and the profit efficiency score had 20% below over the period. the highest profit efficiency score was occurred (31.1%) in the year of 2017. this study is supported by (gulati & kumar, 2016) who found that indian banking industry was less profit efficient rather than cost efficient. this study is contradicted by (kristina, 2015) who examined that commercial banks were observed the most revenue efficient rather than cost and profit efficient. generally, during the period of study, we found the highest cost efficiency in 2008 while the lowest cost efficiency in 2012. this indicates 2012 as the best year in the sample period in terms of pcbs efficiency in bangladesh. in terms of individual pcbs performance based on cost efficiency, we can see the downward trend of the contribution of the percentage of the pcbs to the cost efficiency frontier in figure 1. after that in 2013, there was a slight upturn of the contribution. however, due to the political stability, the trend again, increases. if we analyse the crisis period of the study in figure 1, we find that overall profit efficiency of the pcbs in 2009 is lower than in 2008 and 2010. information technology role on private commercial banks’ efficiency with cost and profit dea technology 116 ambr figure 1. yearly cost and profit efficiency score of pcbs with dea table 1. bank-wise vrs cost efficiency of pcbs using dea however, the profit efficiency level declined sharply in 2013 and these results suggested that banking profit efficiency was affected by the crisis. though there was an downturn in profit efficiency in 2013, the overall profit efficiency is going to increase from 2014. this can be explained by the fact that the political stability of bangladesh could be one of the main reasons for the increase in the profit efficiency of the pcbs. source: author’s calculation bank-wise vrs cost efficiency of pcbs using dea the results of vrs cost efficiency of pcbs are offered in table 1 source: author's calculation the average cost technical, and allocative efficiency scores were 41.4%, 59.5%, and 92% respectively. the results show that prime bank was the most cost efficient (71.3%) and their technical and allocative efficiency score of 81%, and 92.3% respectively. moreover, the mercantile bank was the 2nd cost efficient with the score of 64.5% and their technical and allocative efficiency score of 78%, and 93% respectively. besides dbbl bank was the less cost efficient with the score of 22.3% and their technical and allocative efficiency score of 34.6%, and name of banks cost dea model cost efficiency technical efficiency allocative efficiency dbbl 0.223 0.346 0.931 brac 0.251 0.365 0.910 city 0.380 0.464 0.891 mercentile 0.645 0.780 0.930 mutual 0.357 0.626 0.920 one 0.425 0.654 0.912 premium 0.513 0.744 0.915 prime 0.713 0.810 0.923 southeast 0.468 0.657 0.915 eastern 0.378 0.472 0.926 ucb limited 0.439 0.788 0.904 ific 0.314 0.513 0.930 ibbl 0.528 0.559 0.943 al-arafah 0.318 0.490 0.926 social 0.401 0.573 0.908 exim 0.313 0.706 0.923 shajalal 0.374 0.572 0.933 mean 0.414 0.595 0.920 117 93.1% respectively. furthermore, the allocative efficiencies had greater than technical efficiency in case of pcbs. these results were found different of majid (2012) who examined public sector banks were more efficient in india. the average cost efficiency (inefficiency) score of pcbs operating in bangladesh is 41.4% (58.9%), which depicts that they exploit 41.4% of their inputs to produce the current output. allocative efficiency (inefficiency) is 92.0% (8.0%) whereas technical efficiency (inefficiency) is 59.5% (40.5%). that means, average pcbs in bangladesh can improve their efficiency by some 40.5% with better input-output structure (i.e., technical efficiency), and around another 40.5% by adjusting to the most effective production scale. the focus of this study on technical efficiency also based on findings from previous studies such as berger et al. (1993), which argued that technical efficiency accounts for around 20 percent of costs in banking. the above results in table 1 highlight that allocative inefficiency seems to be the major cause of cost inefficiency among pcbs. the allocative efficiency scores are higher as compared to the technical efficiency scores. this depicts that bank managers being aware about the input prices so they are to some extent able to select the cost minimizing combinations. bank-wise vrs cost and profit efficiency of pcbs bank-wise cost and profit efficiency of pcbs using dea is offered in figure 2. the results show that prime bank was the most cost and profit efficient with 71.3% and 53.7% respectively. moreover, the mercantile bank was the second cost (64.5%) and profit efficient (35.8%). besides dbbl bank was the less cost efficient (22.3%) and alarafah was the less profit efficient (2.6%) respectively. furthermore, the ibbl and the premium bank had 50% above cost efficiency scores but the majority of the pcbs were around 20% to 40% regarding cost efficiency and around 10% to 20% in terms of profit efficiency. the bank-wise average cost and profit efficiency were 41.4% and 18.2% respectively. according to the argument of sathye (2001), there is ample room for pcbs in bangladesh move towards the frontier of world’s best practice. thus, there is a need for the bangladesh government to create a more favourable environment for the development of banking sector. in the case of this study, dea results show that the importance of efficient banks (i.e., banks that were referred to many times as peers for inefficient banks) may differ among the pcbs. for example, the prime bank in bangladesh is considered to have an influential role to be both profit efficient and cost efficient compared to others. source: author’s calculation it determinants on cost dea efficiency for pcbs by ols method table 2 represents the results of it determinants on cost dea efficiency for pcbs during 2007-2018. the it personnel ɸ4 (-0.0009) was negatively significant and credit card transaction ɸ8 (0.000006) and credit card expenses ɸ9 (0.0002) were positively significant for the cost efficiency of pcbs. the results convey that pcbs have shown a significant and improving trend in their performance due to the adoption of it. this adoption is required mandatory to take the country into the 21st century. again bangladesh banking environment has become more compatible as compare to the standards of international financial system, by the positive impact of all these efforts. the results suggest that it impact on banks performance was positive which is also consistent with previous studies such as chen et al. (2006), chen and zhu, (2004) and wang et al. (1997). also the it expenses ɸ1 (-0.00007), it income ɸ2 (-0.00003), it investment ɸ3 (-0.000004) and atm transaction ɸ6 (-0.00003) had negative effect on the cost efficiency of pcbs. this result contradicts to syrine, (2013) who assessed the impact of various categories of it investments on banks’ cost efficiencies. information technology role on private commercial banks’ efficiency with cost and profit dea technology figure 2: bankwise vrs cost and profit efficiency of pcbs 118 ambr table 2: it determinants of cost dea efficiency for pcbs by ols method table 3. it determinants of profit dea efficiency for pcbs by ordinary least square source: author’s calculation it determinants of profit dea efficiency for pcbs by ols method table 3 represents the results of it determinants on profit dea efficiency for pcbs from 2007 to 2018. the it personnel expenses ɸ5 (0.0015) and credit card transaction ɸ8 (0.00008) were positively significant and it investment ɸ3 (-0.00007), it personnel ɸ4 (-0.0007) and credit card expenses ɸ9 (-0.0001) were negatively significant for the profit efficiency of pcbs. also the it expenses ɸ1 (-0.000002), atm transaction ɸ6 (-0.00002) and atm expenses ɸ7 (-0.0002) had negative effect on the profit efficiency of pcbs. this result contradicts with the study of loveman (1994) who used ordinary least square method to assess the productivity effect of it on manufacturing firms. bangladesh banking industry and other firms may benefit from the results of this study as they may have a better understanding of relationship between it investment and bank’s efficiency. customers’ and investors may benefit from the findings of this study as the findings would add value to their knowledge of how efficient their various bank branches are, in terms of managing their investments. source: author’s calculation conclusion this study examined the role of it on the cost and profit efficiency of 17 pcbs in bangladesh during 2007-2018 employing vrs cost dea and profit dea. the tobit regression model could not apply for estimating the it determinants of vrs profit model for dea because the tobit model is used when the dependent variable was bounded [0,1]. so the ordinary least square method is employed to evaluate the it determinants of both vrs cost dea efficiency and profit dea efficiency on pcbs with ordinary least square method. in pcbs, the average cost efficiency (41.4%) was higher than profit efficiency (18.8%). prime bank was the most cost and profit efficient with 71.3% and 53.7% respectively. besides dbbl bank was the less cost efficient (16.2%) and al-arafah was cost dea efficiency private commercial banks variable parameters coefficient p-value intercept ɸ0 0.44*** 0.0000 it expenses ɸ1 -0.00007 0.189 it income ɸ2 -0.00003 0.684 it investment ɸ3 -0.000004 0.075 it personnel ɸ4 -0.0009** 0.003 it personnel expenses ɸ5 0.00056 0.183 atm transaction ɸ6 -0.00003 0.232 atm expenses ɸ7 0.00009 0.587 credit card transaction ɸ8 0.000006** 0.004 credit card expenses ɸ9 0.0002*** 0.000 profit dea efficiency private commercial banks variable parameters coefficient p-value intercept ɸ0 0.078** 0.001 it expenses ɸ1 -0.000002 0.956 it income ɸ2 0.00006 0.456 it investment ɸ3 -0.00007** 0.003 it personnel ɸ4 -0.0007* 0.031 it personnel expenses ɸ5 0.0015*** 0.000 atm transaction ɸ6 -0.00002 0.373 atm expenses ɸ7 -0.0002 0.311 credit card transaction ɸ8 0.00008*** 0.000 credit card expenses ɸ9 -0.0001* 0.049 119 the less profit efficient (2.6%) respectively. in it determinants of cost dea efficiency for pcbs, the it personnel ɸ4 (-0.0009) was negatively significant and credit card transaction ɸ8 (0.000006) and credit card expenses ɸ9 (0.0002) were positively significant for the cost efficiency of pcbs. since the profit dea efficiency score is recorded negative, we used the ordinary least square method to analyze the impact of ict factor on banks. it personnel expenses ɸ5 (0.0015) and credit card transaction ɸ8 (0.00008) were positively significant and it investment ɸ3 (-0.00007) and it personnel ɸ4 (0.00007) were found negatively significant for the profit efficiency of pcbs. overall, the it factors are found more significant for pcbs. finally, the ict component had great impact on pcbs. this study shapes a new measure of efficiency because this study employs the it data for gauging the role of it components on bangladeshi banking industry with cost dea and profit dea efficiency. in this study, the researchers found that the company paid attention to the occupational health and safety merely because they want to get an occupational safety and health certification (ohsas 18001) or fear of an occupational safety and health audit caused by a high number of work accidents or low level of employee health. however, due to the covid-19 pandemic, the management of occupational health and safety inevitably requires the company to implement the 5m health protocols properly to prevent the spread of the covid-19 in the work environment. during this period of the covid-19 pandemic, we are reminded again that the management of occupational health and safety is not only the responsibility of the company, but also the responsibility of various parties, namely employees and consumers to comply with and implement the 5m health protocols for the sake of common good. occupational health and safety management runs well if the interests of the management, employees and consumers are well fulfilled. the researchers found that the implementation of the 5m health protocols that has been carried out by all employees of rembang post office every day has become a behavioral element of organizational culture (daily belief). the head of rembang post office has a transformational leadership style where the head of rembang post office is disciplined to implement the 5m health protocosl and invites all employees of rembang post office during morning briefing to be disciplined in implementing health protocols so that rembang post office does not become a cluster for the spread of the covid-19 in order to maintain the good image of rembang post office. this study also proved that occupational health and safety does not have a direct influence on employee performance (ekowati & amin, 2018) and occupational health and safety management systems can improve occupational health and safety conditions and support the creation of a healthy and safe workplace (mohammadfam et al., 2017). the covid-19 pandemic has forced companies, especially post offices, as public service offices to comply with occupational health and safety by being disciplined in carrying out health protocols. the existence of discipline in carrying out health protocols indirectly improves employee performance. improved employee performance indirectly affects employee satisfaction. 5m health protocol can be implemented properly if there is good cooperation between post office management, employees, and postal customers. research implication it is very important to the fact that in the modern age, ict is a crucial resource of an organization like banks. the banking industries are influenced by technology, mostly in the following three aspects: 1. ict increases competition and the degree of contest-ability among the banks. 2. technology impacts the economy of scale in banking. 3. technology provides better services in the economy. this study builds a new measure of efficiency because this study employs the huge ict data for measuring the impact of ict component on cost and profit efficiency of pcbs in bangladesh which is different from other studies. this study emphasized the pcbs that has to be internally efficient and technologically advanced. the information obtained from efficiency studies can be used to help government, regulators, and investors to remove the hindrance of progress in economy of bangladesh. limitation and further study specifically the study undertakes to investigate the use of it variables (e.g., it expenses, it income, it investment, it personnel, it personnel expenses, atm transaction, atm expenses, credit card transaction, and credit card expenses) on the selected 17 pcbs in bangladesh where it data are available. there are a few it factors, cannot be used in this study as banks are unwilling to disclose data bothering on these issues for competitive reasons. so data obtained from published reports and banks officials are expected to serve the objectives of the study. again, dea is limited in terms of using it to estimate the efficiency of new banks in the information technology role on private commercial banks’ efficiency with cost and profit dea technology 120 ambr face of their it variables. future studies can combine dea model and machine learning algorithms like random forest, decision trees, and artificial neural network to develop models for predicting future bank’s efficiency. conflicts of interest: the authors declare no conflict of interest including any 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(1997). use of data envelopment analysis in assessing information technology impact on firm performance. ann oper res, 73, 191–213. http://www.ccsenet.org/journal/index.php/ijbm/article/view/8759 http://www.ccsenet.org/journal/index.php/ijbm/article/view/8759 https://ideas.repec.org/a/usm/journl/aamjaf00902_95-125.html https://ideas.repec.org/a/usm/journl/aamjaf00902_95-125.html https://ideas.repec.org/s/usm/journl.html https://ideas.repec.org/s/usm/journl.html 12 hospital location selection targeting indonesian nhi patients for a sustainable business ireneus ezra tjitradi* universitas indonesia, indonesia arviansyah arviansyah universitas indonesia, indonesia abstract finding an optimal location is a strategic decision, and an error of location judgment causes problems in the process and directly affects cost and profitability. currently, indonesian national health insurance (bpjs) program has high coverage growth in indonesia; however, building hospitals targeting bpjs patients have faced some challenges and may lead to an unprofitable business. therefore, location selection is a crucial aspect of a hospital’s operation, highly relates to profitability, and impacts business performance. moreover, being profitable is not enough for businesses to survive in the long run; they have to be sustainable. the purpose of this study is to develop a reference for a location selection for healthcare management when building hospitals targeting bpjs patients. this paper utilizes the egsee framework for a sustainable business to evaluate comprehensive hospital location selection sub-factors. the study employs a systematic literature review and a modified delphi method to examine the experts’ judgment. finally, the analytic hierarchy process is applied to develop the evaluation method. keywords: bpjs, hospital location selection, jkn, national health insurance, sustainable business *corresponding author. email address: ireneus.ezra@ui.ac.id hospital location selection targeting indonesian nhi patients for a sustainable business received may 15th 2021 review june 14th 2021 publish august 19th 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: http://journal.afebi.org/index.php/ambr/article/view/416 mailto:ireneus.ezra@ui.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& http://journal.afebi.org/index.php/ambr/article/view/416 13 ambr introduction good health and well-being is among the united nations' sustainable development goals. realizing universal health coverage (uhc) is essential to determine good health and well-being. however, uhc continues to be a challenge for nations worldwide. according to who and the world bank [1], more than half of the global population doesn’t have access to necessary health care. indonesia’s response to provide universal health coverage was establishing national health insurance (nhi) for all residents in 2014. the deployment of nhi has intensified competition in the local healthcare industry. consumer health awareness and demand for medical services are increasing, therefore encouraging new hospital establishments. however, running hospitals is a sophisticated work. hospital is considered a business since it produces something in exchange for payment to obtain profit. successful businesses are those with profitable business models. nevertheless, being profitable is not enough for businesses to survive in the long run, they have to be sustainable. businesses are said to be sustainable when not only profitability is achieved, but can also deliver enduring performance that adds value to shareholders [2]. therefore, hospitals must also be sustainable as businesses. both sustainable hospital businesses along with nhi jointly create a sustainable national healthcare ecosystem. citizens of a country can have necessary health services without economic difficulties. accordingly, good health and well-being can be attained, and to great extent assisting people to maximize capabilities for fulfilling their goals [1]. this is crucial to united nations' sustainable development goals as other aspects such as economic growth will also automatically be accomplished. according to the agglomeration literature [3], the business location would impact the performance of a company. locating an excellent location is a tactical choice and an error of judgment causes issues with the procedure and straightforwardly affects cost and profitability [4]. in such circumstances, it is of priority concern to select the optimal location of hospitals to be built. studies in the past have attempted to find the best hospital location by using traditional mathematical or statistical approaches and linear programming was used in its early stage to address location-selection-related problems [5]. when deciding where to choose a location, business groups also consider how finding the appropriate location during the decision-making process could potentially impact the company’s performance [6]. taken into account high healthcare services demand and still low supply side, this research is intended to establish an assessment method to evaluate the best business location for hospitals. this work will get into details on location selection factors influencing the sustainability of hospital businesses targeting bpjs patients. consequently, hospital management can utilize this work to enable hospitals to adopt strategies to enhance their capabilities running business aiming at bpjs patients. this research will utilize modified delphi method and the analytic hierarchy process (ahp). the result of this research is in the hope to help hospital management serving as guidelines for hospital location selection targeting bpjs patients. literature study periodically, united nations (un) will set development goals with the intention to be followed globally as prioritized common goals [7]. un established the development goals by first investigating current problems to be tackled and share them globally to engage everyone in finding the solutions for a better future. in 2000, the un had set millennium development goals (mdg) to be achieved in the future. among them are: reducing child mortality; improving maternal health; combating hiv/aids, malaria, and other diseases. three out of eight mdg are strongly related to the healthcare ecosystem. subsequently, in 2015 un intervened and set another development goals as the new shared goals for everyone to pursue by the label of sustainable development goals (sdg). the goals for a better and more sustainable future consist of seventeen points, including good health and well-being. one of the newly established sdg is also directly associated with the healthcare ecosystem, which suggests the un has put big attention on the healthcare sector, with two of the main drivers are healthcare facilities and national health insurance. a. hospitals as healthcare facilities according to who, hospitals as healthcare facilities are crucial to providing uhc to comply with the population health needs. morgan, mays, & holland [8] also supported the idea of hospitals are population needs. moreover, as one of the most critical infrastructures, demand for hospitals is proportional to population, that is a surge in population will urge demand for hospitals [4]. 14 conventionally, the description of a hospital is an establishment for unhealthy individuals that seek refuge to get treatments and attention from medical professionals [9]. however, the modern function of hospitals is much more than that. nowadays, a hospital is considered a complete set of healthcare providers. each set is called a department as an administrative body, and within or between departments there exist functional entities named units. for example, the cardiovascular medicine department utilizes the catheterization laboratory (cathlab) unit to treat its patient, yet the department of neuroscience can treat its patient using the cathlab unit as well. some of the most well-known hospital departments are: accident & emergency (a&e) department; ear, nose, & throat (ent) department; radiology department; oncology department; pharmacy department; and many more. furthermore, generally known hospital units are: different types of intensive care units (icus) such as neonatal intensive care unit (nicu), pediatric intensive care unit (picu), coronary care & cardiothoracic unit (ccu/ctu), etc.; medical records unit; computed tomography (ct) scan unit; blood bank unit; operating theatre (ot) unit; and the rest. hospital also offers various kinds of treatment to patients from disease prevention, rehabilitation, health curative services, and health palliative services depending on its size. those are almost every function of healthcare facilities. this further reflects the importance of a hospital in communities because of its comprehensiveness. nonetheless, hospital management should take note that studies showed primary care provider is sufficient to increase the quality of life [10] and even reducing hospital admissions [11, 12]. this infers that demand for hospitals might be lower with the presence of primary care providers. b. national health insurance (nhi) besides healthcare facilities, medical care such as health insurance is usually associated with health. levy & meltzer [13] found an interesting association from observing hundreds of literature which concludes people with insurance have a higher quality of health. despite that, the researchers pointed out there is no causal interconnection between health insurance on the quality of health in the same study. however, a further observational study involving several papers suggested that for susceptible low-paid subpopulations, health insurance enhances health by promoting particular health measures [14]. levy & meltzer [14] also justified the presence of health insurance increases the total spending of healthcare consumption because of more medical treatments. even though fisher [15] argued the more medical practice is not always good and the conservative one is better that indicates the rise of healthcare consumption doesn’t consistently mean health quality is getting better clinically, health service facilities are benefited since more expenditure goes to them. this would significantly have direct effects on hospitals’ profitability as major health service facilities. hospitals can then reinvest the funds to provide even more advanced services and facilities. in addition, it is important to understand the contribution of health insurance to uhc. studies showed the broader the health coverage, the more positive the impacts on health [16, 17]. nhi plays an integral role as wide areas are covered and citizens are mandated to participate. taiwan is a good example of having nhi would increase hospital competitions and consequently provide better care/incentives to patients [18]. indonesia launched bpjs in 2014 as the nation’s nhi. considering health expenses as a major barrier to accessing healthcare [19], bpjs is expected to ease indonesian citizens accessing healthcare. not to mention the indonesian government supports the premium payment of the low-income to further facilitate access to healthcare. for the future, the government is targeting to obtain coverage of at least 95%. c. business sustainability sustainability is a topic for finding the right move to bring us forward in terms of shaping the future [20]. the term sustainability mainly talks about the development that not only for the present but the future [21]. accordingly, in a business context, sustainability implies the ability to perform exceptionally both in the short and the long run [22, 23]. even more, griffiths [20] suggests a sustainable business must be developed to last indefinitely. the history of sustainability dated back to the early twentieth century, when the conservation movement was perceived as sustainability [24]. subsequently, the environmental movement became popular in the 1960s and early 1970s [24]. at the same time during 1953, howard bowen issued a book highlighting the significance of moral values in a company's actions for the community and the relevance of ethics to stakeholders through the concept of corporate social responsibility (csr) [25]. then in 1970 csr became well-known as corporate or business sustainability [26]. in 1979, carroll contributed by creating a famous csr framework centered on four attributes of business performance: economic, legal, ethical, and discretionary (philanthropic) [27]. not until 1994, the definition of business sustainability started to transform with the introduction of the concept of triple bottom line (tbl) by john elkington [26]. elkington’s [28] interpretation of business sustainability is about the advancement of economic growth, environmental condition, and social justice all at the same time. nonetheless, tbl has constraints of being too diverse, difficult to measure, and portrayed as disengaged performance elements instead of the outcome of an integrated method [26]. in the early 2000s, the modern definition of business sustainability called environmental, social, and governance (esg) concepts emerged as the outcome of numerous ideas [26]. hospital location selection targeting indonesian nhi patients for a sustainable business 15 ambr the development of sustainability also urged global standardization for its measurement, therefore organizations developing worldwide sustainability guidelines began to emerge. including in 1997, the global reporting initiative (gri) was founded and had issued “sustainability reporting guidelines” several times since its first publication in 2000 [2]. not to mention the securities and exchange commission (sec) published guidance in february 2010 that mandates publicly traded entities to disclose reports related to climate change as part of sustainability reporting [29]. additionally, the international integrated reporting committee (iirc) was established in 2010 to promote a consolidated reporting framework by concentrating on the interaction among all elements of business sustainability [2]. finally, in november 2010 the international organization for standardization (iso) established iso 26000 which contributes to the development of the most comprehensive sustainability performance indicator yet since it takes into account multiple bottom line (mbl) of five sustainability dimensions also known as egsee [2]. egsee refers to economic, governance, social, ethical, and environmental. a.a. egsee as five dimensions of sustainability the success of firm value creation is determined by the combination of all egsee dimensions [23]. brockett & rezaee [2] explained aspects of sustainability performance using egsee framework as follows, a. economic: organizations can only succeed and deliver long-term results if they remain profitable and add value to shareholders. profitability is maintained through economic performance and was reported in financial statements. b. governance: compliance with all applicable laws, rules, regulations, and standards. c. social: concern for the society wherein a business exists. empowering a business to take actions giving benefit to society by raising positive effects and lowering negative effects. d. ethical: moral principles to determine right or wrong. regulations and ethics are different, something that is ethical might not be addressed in the regulation and vice versa. e. environment: environmental quality and its effort to prepare for future generations. d. location theory burdurlu & ejder [30] described the importance of a business location as a proper spot to do its operation such as basic material supply, stockpile, fabrication, and delivery for economic purposes. appropriate location selection can allow businesses to cut expenses and maximize earnings, as well as improving the capabilities for prospective growth [6]. this is also true in the healthcare field. early research into location theory concentrated on factory location selection by considering transportation expenses [6]. although early research considered quantitative factors such as cost and distance, the issue now includes qualitative factors, making it far more complex [4]. kobu [31] suggests considering four fundamental aspects for industrial location, (1) the business's priorities must be investigated carefully and without bias, (2) the investigations must be done in a systematic manner, using a variety of reliable resources, (3) location selection process must be carried out bit by bit with no phase being blended, (4) experts and organizations must contribute in the process. different goals can be determined depending on the characteristics of the issue for location selection [4]. according to farahani, steadieseifi, & asgari [32], examples of common goals are, (1) reducing the overall expense of the setup, (2) reducing the maximum distance from new facilities, (3) reducing fixed costs, (4) reducing the annual average cost of activities, (5) operation optimizing, (6) reducing the average travel time/distance, (7) reducing the amount of location, (8) optimizing reaction. in addition to these issues, ecological and social priorities focused on energy costs, land use and building costs, traffic, sound pollution, standard of living, emissions, the fossil fuel crisis, and tourist activities have recently become influential. accordingly, determining a way to calculate these parameters is amongst the most significant challenges in solving the issues [32]. in this study, the location selection goal is to establish a sustainable business by utilizing egsee framework. the use of egsee framework is also to make measurements more convenient since there exist guidelines for sustainability performance reporting using five dimensions of egsee [2]. research methodology a. systematic literature review the role of a literature review is vital to academic work. it resolves critical questions by learning the subject based on previous works, deeply explores existing works on a particular subject, and provides a conceptual foundation for future study [34]. fink [35] highlights the characteristics of a literature review should be systematic, explicit, comprehensive, and reproducible. such a review can be produced using a structured literature review with the help of instructions like fink's [35] book. rousseau, manning, & denyer [36] also support the idea of the structured literature review by calling it a systematic literature review. according to rousseau, manning, & denyer [36], systematic indicates extensive collection, clear evaluation, and can picture the perception of entire works related to a particular topic. 16 b. modified delphi method delphi has three main characteristics that set it apart from other group interaction techniques like the nominal group technique [37]. they have to be maintained during all the process, the three features are, a. anonymous panel communication and answer, b. several rounds of data accumulation with review under the supervision of researchers, c. deliver panel answers using statistical reports. according to murry & hammons [37], delphi started with the panel selection consists of experts in a particular field. after experts are selected, the first round of the questionnaire is given. when the first-round questionnaires are submitted, the researchers observe, evaluate, and assemble the panel’s responses. if consensus is not made in the panel’s answer, the next questionnaire round is needed. the researchers then give an additional questionnaire to the panel that includes feedback about the prior round and ask to consider, modify, and comment on their opinion. the round continues until consensus is created, and eventually, the delphi technique is finished. the difference between traditional delphi and modified delphi is in the first-round questionnaire [37]. the first-round questionnaire of traditional delphi comprises of unsystematic questions, while in modified delphi systematic questions have been established to reduce time and cost and enable experts to concentrate on the problems right away [37]. the workflow of the modified delphi comprises several stages, (1) initial questionnaire, (2) panel selection, (3) invitations to panelists, (4) previous questionnaire analysis for the next round questionnaire, (5) next round questionnaire, (6) consensus/stability, (7) conclusion. c. ahp method decision-making and its assessment had existed for a long time and are an integral aspect of management science [32]. a complex analysis for decision-making consists of multiple goals or factors to be taken into account before determining any decision [32]. researchers usually resolve the decision-making issue using a multiobjective decision-making (modm) method or a multi-attribute decision-making (madm) method [32]. the combination of modm and madm methods is multi-criteria decision-making (mcdm) methods [32]. various types of mcdm methods can be used for hospital location analysis. for the record, simple additive weighted [38], geographic information system (gis) [39, 40, 41, 42], belief rule-based inference [43], vise kriterijumska optimizacija i kompromisno resenje (vikor) [44], additive ratio assessment with gray values (aras-g) [45], extended elimination and choice expressing reality (electre) [46, 38], evidential reasoning (er) [47], grey relational analysis (gra) [48], primitive cognitive network process (p-cnp) [49], topsis [38], analytic hierarchy process (ahp) [6], analytic network process (anp) [50] have been used for hospital location selection problems. not only using stand-alone mcdm methods, but scholars also have attempted to utilize integrations of mcdm methods for hospital location selection problems. several examples are (1) using ahp and gis [51, 52, 53, 54, 55], (2) combining criteria importance through intercriteria correlation (critic) with topsis, evaluation based on distance from average solution (edas), and combinative distance-based assessment (codas) [56], (3) using critic and combined compromise solution (cocoso) [57], (4) using anp and topsis [58, 59], (5) using belief-desire-intention (bdi) and gis [60], (6) using gra and ahp [4], (7) using a kind of multi-criteria decision analysis (mcda) and gis [61]. although there are many options out there, this research will utilize stand-alone ahp. besides widely used for hospital location selection researches [62, 38, 63, 6, 64, 65, 66, 67], ahp have the following features as well, a. one of the most comprehensive for evaluating multiple criteria [62, 38], b. a solid and versatile method for quantitative and qualitative analysis [68, 38], c. simple and easy to use [63], d. availability of consistency test for minimizing errors [63]. ahp also can be used with its fuzzy extension [69, 70]. ahp and its fuzzy extension are not used against each other [71]. when the users are sure with the data, the ahp can be utilized, alternatively, fuzzy ahp is more favorable [71]. in this research, the subject of the research are experts who know the theory, practice, and the nature of the selected topic, therefore their justification for the opinions is strong [72]. consequently, ahp is preferred since according to helmer & rescher [73], experts are capable to make precise predictions in the long run. eventually, the information given by the experts is credible and can be considered certain. hospital location selection targeting indonesian nhi patients for a sustainable business 17 ambr table 1. members of the panel table 2. sub-factors description ahp breaks down a complex multi-criteria decision issue into a hierarchy [74]. the method employs prioritization and consistency tests of the collected data for measurement [6]. ahp can combine all decisionmakers assessments into an ultimate judgment without the need to draw out any part on the parameters [6]. the process of the ahp consists of multiple steps, (1) establish a hierarchical structure, (2) data collection using a nine-point scale, (3) utilizing paired comparisons as ratios, (4) consistency tests, (5) establishing local and global weights. result a. preliminary factors and sub-factors papers selected from the systematic literature review are analyzed one at a time along with extracting hospital location criteria highlighted by each paper and were labeled under sub-factors. the evaluation of 41 papers contributed to the establishment of 21 sub-factors. the twenty-one sub-factors are (1) investment cost, (2) operating cost, (3) competition, (4) supply chain, (5) regulations, (6) urban planning, (7) policymak ers attitude, (8) tax/incentives, (9) population, (10) demography, (11) distance to the target area, (12) social inconvenience, (13) land specifications, (14) organization strategy, (15) safety & security, (16) area size, (17) pollution, (18) network infrastructure, (19) public transport, (20) main road, (21) climate. b. determining factors and sub-factors for hospital targeting indonesian nhi patients using the modified delphi method, questionnaires are used to obtain the experts' opinions. the members of the panel comprise 11 experts from the hospital industry of various hospitals. the details of the experts can be seen in table iv.i. name position experience in hospital industry expert 1 hospital manager 15 years expert 2 president director 26 years expert 3 president director 16 years expert 4 strategic team director 10 years expert 5 commissioner 36 years expert 6 internal auditor 13 years expert 7 finance director 20 years expert 8 project director 3 years expert 9 medical specialist 15 years expert 10 medical specialist 4 years expert 11 vice president 20 years two rounds of questionnaire were conducted. the first stage of the questionnaire is to question which subfactors among the preliminary sub-factors are considered for selecting hospital locations targeting bpjs patients. the description of each sub-factor is defined in table iv.ii. investment cost the amount of money needed to start a business. operating cost the expenses needed to keep a business operates. 18 competition organizations offering similar services that one's gain is the other's loss. supply chain quality and quantity of a network between a company and its suppliers to produce and distribute a specific product to the final buyer. regulations rules to comply. urban planning current and future developments of the region by the government. policymakers attitude government’s attitude towards the medical industry. tax/incentives a compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental organization or financial support (funds) from government and independent organizations population hospital is a key factor of good health & wellbeing, therefore people need hospitals. demography statistical study of populations. distance to the target area physical access to medical centers as patient convenience in obtaining medical treatment. social inconvenience the opinion from people living nearby about the hospital establishment. land specifications the specifications of the land for hospital establishment. safety & security the aspect of being secure against unintended threats and protection against deliberate threats for hospitals. organization strategy compliance with the management vision, mission, and values. area size the size of the land for hospital establishment. pollution contamination of harmful materials in the environment. network infrastructure the availability of utilities for hospital operation. public transport enable patients & hospital staffs to visit the hospital with ease. main road enable delivery to be made quick and efficient. climate the long-term average of weather affecting the hospital construction & its operation. the experts were asked to respond to each sub-factor by giving a score out of the four-point scale, namely (1) strongly disagree, (2) moderately disagree, (3) moderately agree, and (4) strongly agree. additionally, experts were also asked whether the categorization into the egsee framework is relevant or not. if any disagreement persists, experts are suggested to give arguments and recommendations. using the 70 percent apmo cut-off rate, twelve sub-factors are eliminated and considered irrelevant for hospital location selection targeting bpjs patients. the remaining nine subfactors are presented in figure . furthermore, several experts argued to put one of the chosen sub-factors into a different factor category, particularly area size was moved from the environment category to the economic category. the second stage questionnaire is conducted to further confirm the result of the first stage questionnaire. the experts were asked for confirmation on each chosen sub-factor and its categorization using a four-point scale. through the questionnaire, a consensus is reached when at least 70 percent agreement by the members of the panel is achieved. the response rate for the second stage questionnaire was 100% and a consensus was reached with the nine sub-factors and their category classification obtained more than 70 percent vote of the panel members. the result as well as the final hierarchical structure of factors and sub-factors influencing hospital location selection targeting bpjs patients can be shown in figure iv.ii. hospital location selection targeting indonesian nhi patients for a sustainable business 19 ambr figure 1. result from the first stage questionnaire figure 2. result from the second stage questionnaire c. ahp process experts as the members of the panel in the previous stage were also the respondents for the ahp process. experts were asked to rate the importance of each sub-factors through pair-wise comparison using a nine-point scale, namely (1) equal importance, (3) moderate importance of one over another, (5) essential or strong importance, (7) very strong importance, and (9) extreme importance. a total of thirty-six pair-wise comparisons are presented to be evaluated. the response rate of the respondents is 90.91% (10 out of 11 experts). each response of the experts was evaluated to test its consistency before aggregating them. if any of the results is found to be not consistent (cr > 1), further examination on the specific result is necessary, and if needed, a reassessment by the particular expert. the calculation of the consistency test based on the questionnaire result can be seen in error! reference source not found.. since the consistency ratios of all respondents are below 0.1, no further examination is needed and therefore can proceed to aggregate the results. the pair-wise comparisons are aggregated using geometric mean and a further consistency test for the aggregated pair-wise comparison is computed. the detail of the aggregate pair-wise comparison matrix for the sub-factors is displayed in error! reference source not found.. since the consistency ratio of the aggregate pair-wise comparison is below 0.1, hence it is consistent and can be used for the next stage 20 to compute the criteria weights, the normalized pair-wise comparison matrix has to be established first. a normalized pair-wise comparison matrix can be solved using the aggregate pair-wise comparison matrix by applying ahp formula. the result of the calculation is shown in table iv.v. finally, criteria weight can be found by taking the arithmetic average of each row on the normalized pair-wise comparison matrix for each criterion/subfactors. each sub-factor weight can be seen in table v.i. discussion based on the result in table v.i, population has the highest priority when considering hospital location for bpjs. followed by investment cost, demography, public transport, distance to target area, area size, main road, competition, and supply chain. in terms of the factor categorization, social factor has the highest priority with a total weight of 42%, followed by economic factor (38%), and environment factor (20%). this implies hospitals that targeting bpjs patients can build a sustainable business even when hospitals concern much about social factor. hospital can focus on the area where populatio n is large, dense, with the demography such that people in the environment are bpjs holder, moreover the distance to the target market is also fundamental when considering social aspec t of hospital location selection. conclusion and recommendations bpjs and hospital are major contributors to uhc. through this research, the main factor that contributes to hospital sustainable business is the social factor. this explains even if hospital management is becoming social that they build a hospital where bpjs patients have no access to the facility before, the hospital business will also follow to be sustainable. also from this research, besides hospital targeting bpjs patients have a sustainable business, by being social, hospitals also contribute to increase the welfare of people living near the facility. hospital location selection targeting indonesian nhi patients for a sustainable business table 3. respondents consistency test table 4 aggregate pair-wise comparison matrix name max consistency index (ci) consistency ratio (cr  0.1) ri = 1.45 expert 1 9.004969 0.000621115 0.000428355 expert 2 9.028165951 0.003520744 0.002428099 expert 3 9.276488333 0.034561042 0.023835201 expert 4 9.309106409 0.038638301 0.026647104 expert 5 9.269133426 0.033641678 0.023201157 expert 6 9.156805219 0.019600652 0.013517691 expert 7 9.037310029 0.004663754 0.003216382 expert 8 9.131707578 0.016463447 0.011354102 expert 9 9 0 0 expert 10 9.004626722 0.00057834 0.000398855 (1) (2) (3) (4) (5) (6) (7) (8) (9) (1) 1 1.7504 2.1663 0.664 1.0537 1.2904 1.3741 1.1822 1.6438 (2) 0.5713 1 1.2821 0.4152 0.664 0.8762 0.9124 0.7538 1.0414 (3) 0.4616 0.78 1 0.3321 0.5531 0.5653 0.6497 0.5781 0.749 (4) 1.506 2.4082 3.0109 1 1.5337 1.8131 2.2206 1.6438 2.2855 (5) 0.949 1.506 1.808 0.652 1 1.0718 1.2311 1 1.3741 (6) 0.775 1.1413 1.7689 0.5515 0.933 1 1.1044 0.9779 1.3057 (7) 0.7277 1.096 1.5393 0.4503 0.8123 0.9054 1 0.8414 1.1352 (8) 0.8459 1.3266 1.7299 0.6084 1 1.0226 1.1885 1 1.2457 (9) 0.6084 0.9603 1.3351 0.4375 0.7277 0.7659 0.8809 0.8027 1 max = 9.007745711; ci = 0.000968214; cr = 0.000667734  0.1 21 ambr table 5. normalized pairwise comparison matrix table 6. sub-factors global weight no. sub-factors global weight (1) investment cost 0.135462714 (2) competition 0.084275372 (3) supply chain 0.063839298 (4) population 0.195905083 (5) demography 0.119943914 (6) distance to the target area 0.107484975 (7) area size 0.095343699 (8) public transport 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[74] t. l. saaty, "how to make a decision: the analytic hierarchy process," european journal of operational research, vol. 48, p. 9–26, 9 1990. hospital location selection targeting indonesian nhi patients for a sustainable business 140 the influence of motivation, working environment and career development toward employees’ loyalty nada fadhila, endang sulistyani* business administration department, politeknik negeri semarang, indonesia abstract this research aims to determine the effect of motivation, working environment, and career development toward employees’ loyalty at the pt tawada healthcare semarang, which is one of the regional offices of pt tawada healthcare. pt tawada healthcare semarang branch is one of pt tawada healthcare office branch, a company engaged in medical devices provider that has been established since 1999. pt tawada healthcare has 13 branches throughout indonesia and also provides medical devices in many hospitals in indonesia.the data collection method used in this research are questionnaires, literature study, and interview. sampling method used census. the sample are all population who are 35 data. the methods of data analysis used is multiple linear regression, goodnes s of fit regression equation used are coefficient of determination, and t test. the results of this research shows that motivation, working environment, and career development have positive and significant influence on employees’ loyalty. working environment has a dominant influence in increasing employee loyalty. keywords: career development, employees’ loyalty, motivation, working environment. *corresponding author. email address: endangsulis15@polines.ac.id the influence of motivation, working environment and career development toward employees’ loyalty received october 20th 2021 review desember 20th 2021 publish december 31st 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/503 mailto:endangsulis15@polines.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/5036 141 ambr introduction in this era of technological development, the field of health services increasingly needs very sophisticated tools to provide the best service for patients. the medical devices also need to be elevated in line with the advancement of the technology and the needs of the patients as well. therefore, this kind of situation produces very competitive competition. thus, to be able to survive in the competition, the company is required to always develop itself in order to win in the competition and achieve its goals in this era of competitive competition. human is the most valuable and most important asset that is owned by an organization because the success of the organization is determined by the human resources ardana et al. (2012). the contribution which is required for a company from its employees is not only in the form of energy contributions but also conceptual contribution and employees’ loyalty to the company. loyalty should be measured by how much thought, attention, ideas, and dedication an employee puts into the job. now employee loyalty is no longer just an employee's ability to complete their duties and obligations in accordance with the job description, but also how employees carry out their duties as optimally as possible to get the best results for the company. the definition of employees’ loyalty by becker et al. (1995) supports this; it can be defined as a strong desire to maintain a member of an organization, a willingness to perform high efforts for the sake of the organization, and a belief in and admissibility of the values and goals of the organization. allen and grisaffe (2001) explain that loyalty is a psychological state which can characterize the relationship of an employee with the organization and that it affects their decision to stay with the organization. companies can give salary to an employee, but not necessarily be able to buy loyalty. there are many factors that make an employee can become loyal, such as the working environment, compensation, effective communication, motivation provided by the company, a comfortable workplace, career development, procurement of employee training and education, work participation, implementation of occupational health and safety as well as the relationship between superiors and subordinates and employee relationships with each other (susanto in (purba and andri 2017). every organization wants to achieve its goals. to move people to conform to what the organization wants, it must be understood the motivation of humans working in the organization. work motivation is an internal state that leads to the effort expended by a person towards goals and activities undertaken to encourage someone to complete work (dubrin 2015). the research that conducted by citra (2019) stated that motivation had a positive and significant effect to employees’ loyalty. another factor that can make employees loyal to the company is the existence of a safe and comfortable working environment. a place where employees perform it works is called a working environment. working environment consists of physical working environment and non-physical working environment (sedarmayanti 2011). the spirit and passion of employees' work in carrying out work is influenced by many factors of the work environment. to achieve its result, working environment can bring positive or negative effect (juliarti et al. 2018). based on the research of susita et al. (2020). working environment has a positive and significant effect on employee loyalty another encouragement that should be given to employees is career development. career development is not only oriented to the company's goals but also to improve the ability, competence, and self-development of employees. career development is a process in achieving individual work performance in achieving a future plan. mangkunegara in (utami and dwiatmadja 2020) explains that career development is a work process that aims at career planning of employees within the company and relates to individuals in self-development. every employee must be allowed to develop his career, namely as a tool to maintain the loyalty of every employee. career development can also foster a commitment to employees. purnamasari and sintaasih (2019), who said that career development had a positive and significant effect on employees’ loyalty. pt tawada healthcare is a company engaged in medical devices provider that has been established since 1999. pt tawada healthcare has 13 branches throughout indonesia and also provides medical devices in many hospitals in indonesia. due to pt tawada healthcare is engaged in the supplier of medical devices, marketing activities are one of the main supports for the company. employee loyalty is needed because to achieve sales targets, employees need to give time, energy to build trusting relationships with customers and attract them to buy their products. there are still many employees who feel unsatisfied. this is proven by the employees’ turnover rate in past 5 years. there is a fluctuating employee turnover at pt tawada healthcare semarang from 2016 to 2020. the turnover rate of pt tawada healthcare semarang is always above 5% and the highest is in pandemic era in 2020 which is reach more than 10% and it is categorized as high. from the pre-research interviews, employees who resigned because some of them were accepted in other companies with higher position and some were expelled for violating company’s regulations. 142 year employees out (person) average number of employee (person) turnover (%) 2016 3 38 7.89 2017 3 39 7.69 2018 4 36 11.1 2019 3 37 8.1 2020 5 38 13.15 source: pt tawada healthcare semarang, 2021 those phenomena above can be seen that the loyalty of employees of tawada healthcare semarang has decreased. companies need to give encouragement to employees and give more attention to the needs of employees so that they are more enthusiastic and passionate in their work. some of the encouragement that can be given by the company to maintain the loyalty of its employees are in the form of giving motivation, providing a comfortable working environment for its employees, and also providing career development programs. based on those problems description then the research problems can be asked as follows: a. how is the effect of motivation toward employees’ loyalty? b. how is the effect of work environment toward employees’ loyalty? c. how is the effect of career development toward employees’ loyalty? litelature review employees’ loyalty employees’ loyalty is compliance committed by employees to the organization where he works, in which there is obedience and responsibility and strive to provide the best service and behaviour (onsardi 2017). loyalty is individuals’ willingness to continuously identify organizational goals and objectives, believing in the organization’s values and principles without questioning (sazkaya and dede 2018). employees’ loyalty is a psychological condition in which an employee is willing to make sacrifices, obey all the rules, and conditions in which the employee feels himself or herself bound by the company. so that the employee will work as much as possible not only for himself but for the progress of his company. indicator employees’ loyalty ar e: compliance with regulations, responsibility to the company, willingness to corporate, sense of belonging the company, interpersonal relationship, and loving the job (sukawati and suwandana 2021). motivation motivation is a process of giving encouragement to subordinates so that subordinates can work in line with the given limits in order to achieve organizational goals optimally (sulistiyani 2018). motivation is also referred to as a driver, desire, supporter or need that can make a person excited and motivated to reduce and fulfill one's own impulses, so that they can act and act in certain ways that will lead to an optimal direction. (jufrizen 2017). thus, work motivation is given to employees so that they can work more optimally so that company goals can be achieved. indicator of motivation are: physiological needs, safety and security needs, affiliation or acceptance needs, esteem or status needs, self-actualization abraham maslow in (mangkunegara 2017). working environment according to sedarmayanti (2017) working environment is a place for employees in which there are several supporting facilities to achieve company goals in accordance with the company's vision and mission. sunyoto (2012) said that “working environment is everything that is around the workers and that can affect them in carrying out the tasks assigned, such as cleanliness, music, lighting, and others.” thus, working environment is anything about the place where employees do their job include building and the work atmosphere that directly or indirectly affect employees’ work. indicator of working environment according to sedarmayanti in (sulistiawan et al. 2018) are: lighting, air circulation, noise, work safety, employees’ relationship. career development career management is the process by an organization to selects, assesses, assigns, and develops its employees to provide a pool of competent people to meet future needs (shaputra and hendriani 2015). career planning helps employees to be more motivated to do their job as much as possible in order to get promotions from superiors. robbins in (wicaksono and bieantri 2014), in career development opportunities, cooperation from both parties is needed, both from the company and from the employee side. career development is future plan about career for employees that can they get as a reward for their work. career development can be implied as education or training for employees’ self-development. indicator of career development siagian (2012) are: fair treatment in career, superiors’ concern, information about promotion, interest to be promotes, satisfaction level. the influence of motivation, working environment and career development toward employees’ loyalty table 1. employes’ turnover data at pt tawada healthcare semarang 143 ambr relationship between motivation and employees’ loyalty according to hasibuan (2014), motivation is about how to encourage the passion of subordinates, so that they are willing to work hard by giving all the abilities and skills to realize the company's goals. a high level of effort to get the best results will lead to profitable loyalty results which is give benefits for the organization. work motivation is the driving force or impetus in a person to want to behave and work diligently and well in accordance with the duties and obligations that have been given to him (kadarisman 2017). hasibuan (2012) also stated that the purpose of work motivation is to maintain and increase employee loyalty. the research conducted by sari (2018) mentioned that employee’s motivation significantly influences loyalty and company’s advantage. in line with that the research conducted by musnadi (2018) proved that work motivation had a positive and significant effect to employees’ loyalty. from those theories, motivation that provide by the company will drive employees become loyal to the company. employees who feel motivated will love their job and carry out their work seriously. work motivation will foster the desire of employees to stay and survive to develop the company. thus hypothesis 1 can be formulated as follows: ha1: motivation influence employees’ loyalty relationship between working environment and employees’ loyalty sarwoto (2017) states that working environment is a place where an employee works including physical and non-physical environments that can affect morale in carrying out work. according to leblebici (2012), those who work in an inconvenient environment will most probably engage with low performance and end up with occupational issues such as absenteeism. a comfortable and appropriate working environment will encourage employees to work as well as possible, it will expedite the company's production process (ramadhani 2016). many researchers have shown that employees prefer a safe and comfortable working environment. the research by mandala and astika (2019) said that employees will have a high loyalty if the employee has a comfortable working environment. (al-anzi 2009) mentioned in his study that due to the trend of working environment that creates positive outcome, most organizations face new a challenge to generate a working environment that attracts, maintains, and motivates the workforce. working environment can have a positive or negative impact on employee productivity. company must create a positive working environment and provide employees’ need when they are doing their job so the employees will feel satisfied and tend to stay with the company. this means that the environment of the workplace has to be where the employees enjoy and increase productivity and create loyalty towards the organization. thus hypothesis 2 can be formulated as follows: ha2: working environment influence employees’ loyalty. relationship between career development and employees’ loyalty career development is a series of activity or the ongoing process of developing one’s career and a lifetime process of managing your organization’s employees (samat et al. 2020). few companies plan and develop employee careers with clear, measurable bases and considerations. career development is certainly something that every employee wants because generally, the higher a position is, the more prosperous their lives will be (susita et al. 2020). lack of career development and opportunities for promotion were key aspects associated with employee turnover (ineson and berechet 2011), indicating poor employee loyalty. according to research conducted by (utami and dwiatmadja 2020) that career development proved to have an influence on employee work loyalty because employees think that loyalty to the company needs to be carried out in proportion to the work expended and rewarded with career advancement in employees. also the research by majid et al. (2017) also stated that career development had significant positive correlations employees’ loyalty. a clear career planning will make employees feel that the company already understands their career needs. every employee will definitely consider on how much the company supports themselves to develop and develop their careers. in addition, career development can also be assessed as a company award for the hard work that has been done by its employees. many employees resign because they are dissatisfied with the position given by the company or it’s hard for them to get promotion. career development make employees feel valued so they become loyal to the company. thus hypothesis 3 can be formulated as follows: ha3: career development influence employees’ loyalty 144 methodology population and sample the population in this study are all employees of pt tawada healthcare semarang who are 35 employees. in this study, the researcher used total sampling or census. the sample in this study are all of pt tawada healthcare semarang who are 35 employees. the data collection method that use in this research are questionnaire, literature review, and interview. the data measurement technique in this study is using an interval scale. the interval scale that used in this study is agree-disagree scale by developing statements that produce agree-disagree answers in various ranges of values from 1-10. the data analysis method in this research is multiple regression analysis, using program ibm statistic spss 24. the method that used are descriptive analysis, instrument test thet contains of validity test and reliability test, classic assumption test that contains of normality test, multicollinearity test, and heterocedasticity test, multiple linear regression,and goodness of fit test that contains of f-test, t-test, coefficient determination test. results and discussion respondents’ characteristic 35 employees of pt tawada healthcare semarang branch are divided into several characteristics. characteristics by gender, male employees are more dominant with a percentage of 57.1%. according to age, employees in the age range of 21-40 years are the most numerous with a percentage of 80%. according to the latest education, employees with bachelor's degrees are the most with a percentage of 51.4%. and according to the length of work, employees with a length of work between 1,01 years – 4,5 years are the most with a percentage of 51.4%. descriptive analysis scoring of variables is done using a questionnaire with a semantic difference scale in the range of 1-10 which produces interval data. using the three box method, the range is 90 (100-10=90) divided into 3 will produce a range of 30 which will be used on the basis of the index value interpretation, are: low interpretation, medium interpretation, and high interpretation. instrument test according to the results of the validity test that all items in the questionnaire have value above 0.05 which is indicate that all question items in independent and dependent variable are valid. the result of reliability test are motivation, working environment, career development and employee’s loyalty variables are reliable because the cronbach's alpha value has exceeded the alpha guideline used, which is 0.6. the influence of motivation, working environment and career development toward employees’ loyalty figure 1. theoretical framework 145 ambr table 2. multiple linear regression analysis table 3. determination test table 4. t test classic assumption tests before carrying out the goodness of fit test, a classic assumption test is carried out which aims to provide certainty that the regression equation obtained has accuracy in estimation, is unbiased, and consistent. classic assumption test consists of multicollinearity test, heteroscedasticity test, and normality test. the result of multicollinearity test shows that the tolerance value for all independent variables is greater than 0.10.meanwhile, the vif value for all independent variables is less than 10.00. so referring to the basis of decision making in the multicollinearity test, it can be concluded that there are no symptoms of multicollinearity among the independent variables. the result of heteroscedasticity test shows that the point distribution did not form a particular pattern. the points also spread at random areas both above and below zero (0) on y axis. so, it can be concluded that heteroscedasticity did not occur in this analysis. in other words, this model is homoscedasticity. the result of normality test is the sig value is 0.810 > 0.05, then the data is normally distributed. multiple linear regression the analytical method used in this study is multiple linear regression analysis using statistical test tools ibm spss 20.0. the variables studied are motivation, working environment, and career development as independent variables and employees’ loyalty as the dependent variable. the result of multiple linear regression analysis are: model unstandardized coefficient unstandardized coefficient beta se beta 1 (constant) 13.521 7.455 motivation (m) .327 .161 .308 working environment (wk) .427 .120 .408 career development (cd) .284 .133 .276 so, the multiple regression equation obtained is: y= 13.521+ 0.372m + 0.427wk + 0.284cd goodness of fit multiple regression equation determination correlation test the coefficient of determination is used to measure the ability of the model to explain the variation of the dependent ghozali (2018). model r r square adjusted r square se 1 .911 .830 .813 4.322 the result of the test is the value of adjusted r2 is 0,813 which means that the variability of the dependent variable (employees’ loyalty) can be explained by the variability of the independent variable (motivation, working environment, and career development) of 81.3%. while the remaining 18.7% is explained by other variables not included in the regression model. t-test the t-test is known as a partial test, which is to test how the influence of each independent variable individually explain the dependent variable (ghozali 2018). the criteria of decision making in the hypothesis testing are as follows: if probability > α 0.05, so ho is accepted. opposite from it, if probability < α 0.05, so ho is rejected model t sig. (constant) 1.814 .079 motivation 2.305 .028 working environment 2.323 .002 career development 2.133 .041 146 the result of the test are: the sig. value of motivation is 0.028 which is below 0.05. therefore, h01 is rejected and ha1 is accepted. thus, it can be concluded that motivation has significant effect on employees’ loyalty. the sig. value of working environment is 0.002 which is less than 0.05. it means h02 is rejected and ha2 is accepted, it can be said that working environment has significant effect on employees’ loyalty. the sig. value of career development is 0.041 which is below 0.05. it indicates that h03 is rejected and ha3 is accepted. thus the conclusion is career development has significant effect on employees’ loyalty. discussion the relation between motivation and employees’ loyalty following the results of the test, motivation is determined to have significant effect toward employees’ loyalty. having the sig. value 0.028 which is less than 0.05 bring the conclusion of rejecting h01. motivation is increasingly important because the company's resource management is to delegate tasks to employees to be completed properly and together to achieve the goals that have been set collectively. good personal characteristics. of an employee are not only desired by the company but also abilities, skills and skills are important factors that can help companies achieve optimal work performance. if an employee's sense of loyalty or loyalty is high, usually the employee is willing to do the work assigned to them more than they should. the research conducted by citra (2019) stated that motivation had an influence on employee loyalty the relation between working environment and employees’ loyalty the result of the test on working environment toward employee loyalty shows that it have significant effect. the outcomes shows a significant value of working environment variable of 0.002 is less than 0.05. hence, it comes to a conclusion that ha2 is accepted and h02 is rejected. the more company pay attention to working environment, the more employees will be loyal. suitability of the working environment can be seen as the consequences in the long term. furthermore, environments poor working and labour can demand more time and do not support obtaining plan efficient working system. the research by susita et al. (2020) also proved that working environment have a significant effect toward employees’ loyalty. in addition, based on the opinion of andrews in putra and sriathi (2019), it states that a good work environment will lead to comfort in carrying out daily work activities. a comfort work environment will create good atmosphere to work and attract them to become loyal to the company the relation between career development and employees’ loyalty the variable career development has a sig. value 0.041 which is less than 0.05. that outcomes indicate that ha3 is accepted and h03 is rejected which mean that employees’ loyalty is influenced by career development. the factor of placing the right individual into a position by looking at his abilities is also considered important. a company that has started implementing the right placement and started from the recruitment period, is considered to be able to manage human resources more directed. further explanation is related to samat et al. (2020) stated that employees’ loyalty also influenced by career development. hedge and rineer (2017), a strong career development and progression system will recognize that careers are nether static nor developed in a vacuum. workers’ decisions about their career moves are determined by current skills and interests, as well as previous work histories and long-term plans. career development as a factor to predict loyalty. conclusion motivation, working environment, and career development have a positive and significant effect toward employees’ loyalty both partially. working environment has a dominant influence in increasing employee loyalty. furthermore, the determination coefficient result was 0,813 which means employees’ loyalty can be explained by motivation, working environment, and career development as much 81.3%. the remaining 18.7% was explained by other factors that not explained in this research. according to t-test, it was found that the resulting regression equation function can be used to estimate the changes in employees’ loyalty at pt tawada healthcare semarang. based on t-test result, it showed that partially all of the independent variables influenced employees’ loyalty in pt tawada healthcare semarang. motivation had a positive and significant influence toward employees’ loyalty. working environment had positive and significant influence toward employees’ loyalty. also, career development had a positive and significant influence toward employees’ loyalty. this study only examine motivation, working environment, and career development as independent variable. there are still many variables that also can affect employees’ loyalty that can be used for future studies. this study only used sample data at pt tawada healthcare semarang branch which is has 35 employees. future research needs to be carried out on a larger scale, such as all branch office of pt tawada healthcare in indonesia or other medical device distributor company. the influence of motivation, working environment and career development toward employees’ loyalty 147 ambr al-anzi, n. m. 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"pengaruh pengembangan karir, motivasi kerja dan pemberian kompensasi terhadap loyalitas kerja karyawan (studi kasus pada karyawan pt. tribun berita online)." international journal of social science business 4(2): 267-275. the influence of motivation, working environment and career development toward employees’ loyalty 57 cash reserve, ceo health risk, the price reaction due to covid-19 first announcement on leisure industry muhammad afif arsyad*, cynthia afriani utama department of management, faculty of economics and business, universitas indonesia, indonesia abstract this study investigates stock market reaction on leisure industries to first announcement of covid-19 case which affected indonesia on 2nd march 2020. the method of this research is event study and supported by multiple linear regression to analyze the relationship between market reaction and independent variables. this paper uses fama french three-factor models to estimate expected return on firms due to the covid-19 announcement. based on a calculation of cumulative abnormal returns, the stock of tourism industries has a more negative reaction towards a confirmed first case of covid-19 compared to other industries. we also find that indonesian firms with greater cash reserves experienced less negative returns while firms with higher leverage ratios were penalized more. additionally, we don’t find that firms with ceos who were exposed to significant health risks from covid-19 experienced worse stock market performances keywords: covid-19, cash reserve, ceo health risk, event study, fama-french three-factor model *corresponding author. email address: muhammad.afif04@ui.ac.id cash reserve, ceo health risk, the price reaction due to covid-19 first announcement on leisure industry received may 29th 2022 review june 11th 2022 publish june 30th 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/559 mailto:muhammad.afif04@ui.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/559 58 ambr introduction previous studies have identified major events that affected stock market returns. several events such as oil price fluctuation (khamis et al, 2018), political communication (conrad & zumbach, 2016; pereira et al, 2018; gustavo et al, 2021), the exchange rate (khan, 2019) government policy announcements (gursida & indrayono, 2019; wibowo & puji, 2019), terrorism activity (ahmad et al, 2022) and disaster (kowalewski& śpiewanowski, 2020) were causing impact to market returns. based in who, at the end of 2019 in wuhan, there was an infectious virus caused by a new variant, coronavirus sars cov-2 which spread to 216 countries with a total of 3,406,824 confirmed cases and 252,478 deaths by 27 april 2020. it is also known as covid-19, one of the severe acute respiratory syndrome family of viruses which easily transmitted by droplets and small airborne particles from people that have been infected. the symptoms can be quite serious for the elderly or those with chronic medical problems such as cancer, cardiovascular disease, diabetes, and chronic respiratory problems. on march 11, who officially declared the covid-19 outbreak as a pandemic therefore almost all countries did regulations such as lockdown, business closures, and social distancing to prevent rapid transmission of the virus. the covid-19 pandemic generates severe operation risks and financial losses for corporations overall across the globe (goodell, 2020; shen et al, 2020). it also caused global stock markets to plummet as negatively react to growth in covid-19 confirmed cases. the stock market returns decline as the number of confirmed cases increases in a country. in terms of the growing number of death due to covid-19, the correlation is positive but not significant as the number of confirmed cases (ashraf, 2020; harjoto & rossi, 2021) this paper focuses on the indonesian stock market because of its peculiar situation. as harvard academics have suggested there could be undetected cases in indonesia, the world`s fourth most populous country, which has close links to china. using mathematical modelling based on air travel volume estimates between the country and the central chinese city of wuhan, indonesia is expected to have approximately five cases (salazar et al, 2020) in february 2020. despite what academics had predicted, indonesia has just announced the first confirmed positive test of covid-19 by 2nd march 2020. due to the pandemic outbreak has reported, regulations such as “stay at home” orders, travel restrictions, and termination of tourism activities had been implemented. it caused a crisis and led to significant declines in revenue and profitability for airlines (mhalla, 2020), hotel and restaurant firms (gossling et al, 2020), and the tourism sector (nayak et al, 2022) by using panel structural vector auto-regression (psvar), previous research predicts that recovery of the travel-related industry will take a longer time compared to sars-2002 and h1n1-2009 crisis (rahman et al, 2021). covid-19 causes a high destructive impact on the travel and tourism industry where the virus spreads extremely fast. as a result, governments of each country have imposed unprecedented policies, especially for travel-related activities. in the airlines industry, as indonesian central bureau of statistics claims that total passengers of domestic and international flights dropped drastically up to 98,26% in march 2020 compared to march 2019. therefore, more than 11,680 domestic flights and 1,023 international flights at 15 airports were cancelled due to pandemic announcements and travel restriction policy. tourist numbers decreased up to 6,800 per day. in terms of hotels and restaurants, occupancy rates were declining. around 6,000 hotels in indonesia can reach 50% occupancy rates which has affected the decline of tourism foreign exchange more than half a year ago (atmojo & fridayani, 2021). specifically, we examine firms in leisure industries such as airlines, hospitality, restaurant, and tourism that have experienced negative impacts significantly due to the covid-19 (devi et al, 2020). the motivation why we select these firms is to determine how investors priced the business that was severely affected by the pandemic outbreak. it is also the sector who particularly vulnerable where the solutions to boost performance are contrary strategies against the spread of viruses. finally, this paper contributes to the covid-19 literature to understand how investors incorporated new information related to covid-19. moreover, we might see how important cash reserves are due to economic crashes and operational restrictions by covid-19 pandemic outbreaks in industries that experienced negative significantly. in terms of upper echelons theory, the analysis of market reaction that sudden implicate to ceo`s health risk caused by covid-19 provides an opportunity to evaluate the investor view on ceos to the firm performance. evidence about the “ceo effect” is inconclusive with studies reflecting the growing influence of the ceo on the firm’s affairs. we also register control variable, the financial leverage of firms, to determine how the investors react to pre-covid firms’ performance. 59 literature study efficient market hypothesis according to fama (1970), the stock price generated in the market reflects all available information about the company's value. stocks always trade at their fair value on exchanges, making it impossible for investors to purchase undervalued stocks or sell stocks for inflated prices. therefore, it should be impossible to outperform the overall market through expert stock selection or market timing, and the only way an investor can obtain higher returns is by purchasing riskier investments. event study according to damodaran (2012). event studies are thus used to examine the market reaction and excess return in the case of an event that contains specific information. such information may be market-wide, such as macroeconomic policy announcements, occurrences of force majeure, or firm-specific events. it is crucial however that the event window is known so that the event does not become contaminated by news of other events. this is an important part of the analysis process so that the result is not biased. fama french three factor models the fama and french three-factor model is an asset pricing model developed in 1992 that expands on the capital asset pricing model (capm) by adding size risk and value risk factors to the market risk factor in capm. this model considers the fact that value and small-cap stocks outperform markets on a regular basis. by including these two additional factors, the model adjusts for this outperforming tendency, which is thought to make it a better tool for evaluating manager performance. the fama and french model has three factors: the size of firms, book-to-market values, and excess return on the market. in other words, the three factors used are small minus big (smb), high minus low (hml), and the portfolio's return less the risk-free rate of return. smb accounts for publicly traded companies with small market caps that generate higher returns, while hml accounts for value stocks with high book-to-market ratios that generate higher returns in comparison to the market. hypothesis development the market reaction due to the australian government`s announcement of public health emergency and the who`s declaration of covid-19 as a pandemic had a negative impact on the market in australia, with an average cumulative abnormal return of -4,39% or an average capitalization loss of aud 8352 m per company, according to rahman et al (2021). the coronavirus pandemic, according to herwany et al (2021), had a significant impact on the indonesian stock market. the impact is shown that there is an abnormal return on negative sentiment from the time of the announcement and the following three days. the financial industry is the most affected by anomalous returns during the event period up to the next 30 days, followed by the services trade and investment sectors. this is related to a drop in exports, output, economic activity, and investment concerns. h1: market reaction will be more negative after the announcement of the covid-19 confirmed case compared to normal conditions in indonesia due to preventing the spread of the virus, the implementation of a “lockdown” policy and restrictions on mobility from countries that have been affected by corona virus first made the stock market react negatively. it also caused airlines and tourism industries are most critical due to the spread of corona virus (nayak et al, 2020). using a structural vector auto-regression (psvar) panel, skare et al (2021) predict that recovery of tourism industry will take longer time than sars 2002 crisis and h1n1 2009 crisis. h2: market reaction will be more negative for industries that related to airlines, hospitality and tourism compared to other industries furthermore, to better understand how investors used new information and preferences in response to the pandemic situation, we investigate the following two indicators: first is cash reserve. in pandemic outbreaks, adequate liquidity is very important given the possibility of severe financial distress due to limited operational activities to prevent the spread of the virus. carter et al (2021) found that u.s travel-related firms with greater cash reserves experienced less negative returns over the period. a cash reserve can represent the ability of firms to meet their obligations. therefore, investors see that if firms had enough cash reserve during pandemic situations, then the financial risk of firms is lower than firms that do not have enough cash reserve. h3: market reaction will be more negative for companies that have smaller cash reserves compared to firms with larger cash reserves second is the chief executive officer fatality rate of covid-19. in the absence of effective medical treatment, panic caused by dreadful news of covid-19 and the only feasible solutions to handle covid-19 were hygiene and social distancing on the early stage of pandemic outbreaks change the preference of investors. one of the obvious effects is the disruption on firms` operations due to the threat posed to the workforce’s health. the effect is relevant for key employees, the ceo, as suggested by the upper echelon’s theory (hambrick and mason, 1984). cash reserve, ceo health risk, the price reaction due to covid-19 first announcement on leisure industry 60 ambr from the first stages of covid-19 news, there was a widespread notion that older adults are exposed to fatal outcomes, especially those who are over 60 years. in china, there is also abundant evidence that indicates older age experiences higher disease severity and mortality (huang et al., 2020 (chen et al.,2020). mendez and pathan (2021) found in the australian stock market, firms with ceos who were exposed to significant health risks of the covid-19 experienced poorer performance than firms with aged ceos during pandemic situations. therefore, the australian stock market perceives disruptive effect of ceo health risk due to covid-19. indeed, an abrupt ceo turnover event due to sudden death or even illness is a disruptive event for the firm that timeconsuming and costly process of an unplanned succession. ballinger and marcel (2010) found that unplanned ceo turnover often leads to a temporary ceo succession, which is associated to lower firm performance. h4: market reaction will be more negative for firms that have a higher fatality rate of ceo`s due to coronavirus disease compared to firms that lower fatality rate of ceo`s. methodology data this study uses secondary data obtained from thomson reuters datastream, bloomberg, and companies`2019 annual reports. in terms of firms that were investigated, we classified firms in the gic sub industries: airlines & airport services, restaurants, hotels, resorts & cruise ships, and leisure facilities. we obtain daily stock price data for the 210-trading days for the estimation period (anintyarini & utama, 2018) from april 10th, 2019 to february 14th, 2020 for estimating beta values. we apply several standard filters to clean the data. first, we drop the penny stocks. then, we drop firms that trade less than 210-trading days, to estimate consistent beta. we also drop firms that do corporate actions in the estimation period. finally, we only include firms whose financial data is available. as a result, the firms investigated in this paper consist of 31 observations from industries that were most negatively impacted during covid-19 and 457 firms from other industries. measures of variables this paper analyzes how the market reacts to covid-19’s first case announcement and the market assessment of the firm`s cash reserve, ceo`s health risk, market capitalization, and book-to-market ratios during a pandemic crisis. the dependent variable is the continuously compounded cumulative abnormal return (car) during the event window which was the first announcement of covid-19 cases in indonesia. we use t(-10,+10) (sharma, 2017) from the event date, march 2nd, 2020. the formula to calculate the daily individual stock return is given as follows: rit = ln (pt/pt-1) rit = stock return of firm i for period t pt = stock price of firm i for period t pt-1 = stock price of firm i for period t-1 calculation of expected return on this paper by using fama-french three factor model. they described value and size are the most significant factors, outside of market risk, for explaining the realized returns of the stocks, to represent these risks, there are two factors; smb to address size risk and hml to address value risk (fama and french, 1993). the formula for fama-french three-factor model is given as follows: rit rf = β1 (rm – rf) + β2(smb) + β3 (hml) + α rit = stock returns of firm i for period t α = an intercept from regression process result of daily return during estimation period (210 days before event window) β1,2,3 = regression coefficient rf = risk-free based on indonesia government bond yield rm = market return during estimation period smb = small minus big factor hml = high minus low factor based on the efficient market hypothesis, stock prices must reflect information about risks of the assets and an expectation of future returns. the actual return is called a normal return when there is no important information or event during a given period. however, if there is important information. 61 or event that reflect to stock price and the market is not efficient, then the actual return is called an abnormal return. therefore, abnormal return defines as the difference between actual return and expected return obtained by investors for a period of time. calculation of abnormal return is performed using the following formula: arit = rit – e (rit) arit = abnormal return of stock i during period t rit = stock returns of firm i for period t e (rit) = expect return of firm i for period t as a result, we use the cumulative abnormal return to describe the total abnormal return observed during event window. the following formula is used to calculate the value of car: car= σ_(ⅈ-1)^n art car = cumulative abnormal return i during estimation period art = abnormal stock return i in period t in terms of independent variables, there are two variables in this study. the first variable is the firm`s cash reserves (cashta = cash and short-term investment to total asset ratio followed literature (carter and simkins, 2004; cardella et al, 2021). the second variable is the ceo health risk due to covid-19. it can be defined that corresponding fatality rates by age group as published by cdc (chinese center for disease control and prevention) as of feb 17th (ceofat = the log transformation of fatality rate followed literature mendez and pathan, 2022). empirical framework following existing literature of ashraf (2020), al awadhi et al., (2020), and mugiarni and wulandari (2021), we use multiple linear regression to examine the effect of covid-19 first cases announcement on stock performance of airlines, hotels, and tourism industries. thus, we estimate the following equation that presents the regression model of this paper: carit = α + β1 cashta + β2 ceofat + β3 lev + β4 ind where subscript i denotes individual firms. the coefficients α and β are the parameters to be estimated. in terms of a dependent variable, car is the cumulative abnormal return of several dates representing covid-19 first case announcement. in terms of independent variables, cashta represents the cash reserve that firms have, ceofat represents the ceo`s health risk exposure due to covid-19 and lev represents financial leverage of firms. in addition, we apply industry dummies (ind) to control for industry fixed effect. we use the multicollinearity and autocorrelation test as classical assumption tests that must be fulfilled to create best linear unbiased estimator. result and discussion expected return market returns are obtained from jakarta composite index (jci) data. we calculate 210 days before the event window to estimate the alpha and beta for each portfolio in the event window, as previously mentioned. in terms of risk-free rate, we use indonesian government bond with tenor a year which is divided daily because this study uses daily abnormal returns, therefore the risk-free rate is 0.000135% per day. to calculate fama-french three-factor model, we follow instructions (awwaliyah & husodo, 2017). table 1 show descriptive statistics of each portfolio to calculate expected return by ff3. b/h b/m b/l s/h s/m s/l mean -0.001049 -0.00111 -0.001333 -0.000265 0.00042 -0.000299 std dev 0.007616 0.007114 0.005555 0.004568 0.005892 0.007581 table 2. describes the summary statistic of the expected return for each event window. these descriptive statistics provide us with an explanation of normal returns that should investors get if there is no information about the covid-19 announcement by president joko widodo. we find that the average expected return is mostly negative. overall, the expected return before the announcement of covid-19’s first case was higher than after the announcement. er t-10 er t-9 er t-8 er t-7 er t-6 er t-5 er t-4 er t-3 er t-2 er t-1 er t0 mean 0.0026 -0.0014 0.0003 0.0000 -0.0002 -0.0047 -0.0012 -0.0044 -0.0073 -0.0100 -0.0066 er t+1 er t+2 er t+3 er t+4 er t+5 er t+6 er t+7 er t+8 er t+9 er t+10 mean -0.0017 0.0068 0.0058 -0.0065 -0.0177 -0.0092 -0.0006 -0.0148 -0.0084 -0.0130 cash reserve, ceo health risk, the price reaction due to covid-19 first announcement on leisure industry table 1. descriptive statistics of portfolio table 2. descriptive statistics of expected return in event window 62 ambr table 3. descriptive statistics of cumulative abnormal return market reaction in this section, we present the empirical result of event study calculation before and after the announcement. the range of observations used to calculate the car is (t-10, t+10). we also do a normality test to determine whether the car value is normally distributed. by shapiro-wilk test, kurtosis, and skewness value, we conclude the car value distributes unnormal, therefore we transform (utama and hapsari, 2012) to log (1+car) in order to normalize the data. the car calculation result shows that the market responded negatively when the first case of covid19 was announced on that day (t0). however, the following day (t+1) and the day after (t+2) market experienced an increase in abnormal returns. then, market reaction was always negative from the third (t+3) to the tenth (t+10) day after president joko widodo`s declared the first case of covid-19 in indonesia except on the sixth (t+6) day. moreover, the values are -0.0082 and -0.0274 correspondingly when examined based on an average value of the ten (t-10, t-1) days before and ten days after (t+1, t+10). this result proves previous research (dunford & qi, 2020; harjoto & rossi, 2021; herwany et al, 2021). follows: log car t-10 log car t-9 log car t-8 log car t-7 log car t-6 log car t-5 log car t-4 log car t-3 log car t-2 log car t-1 log car t0 mean 0.00 23* 0.000 1 0.000 2 0.000 4 0.003 9* 0.007 2* 0.010 2*** 0.013 4*** 0.020 4*** 0.024 7*** 0.026 3*** std dev 0.02 785 0.045 83 0.061 37 0.051 54 0.052 15 0.055 97 0.066 7 0.071 63 0.084 7 0.089 58 0.097 79 log car t+1 log car t+2 log car t+3 log car t+4 log car t+5 log car t+6 log car t+7 log car t+8 log car t+9 log car t+10 mean 0.02 1** * 0.012 7*** 0.014 7*** 0.016 4*** 0.027 8*** 0.018 9*** 0.029 1*** 0.043 *** 0.042 *** 0.048 5*** std dev 0.13 758 0.088 92 0.089 55 0.087 11 0.088 84 0.091 68 0.096 93 0.117 07 0.112 04 0.124 18 notes: * sig 10% | ** sig 5% |*** sig 1% industry reaction table 4 illustrates the compared means and t-test of market reaction due to covid-19 first case announcement by type of industries. we used a dummy variable in this research to explain the industry categorization. for the airlines, hospitality, and tourism industries, the dummy index is 1 whereas 0 is for other industries. we obtain negative and statistically significant coefficients across all columns for dummy index 1. these results suggest that the market perceives airlines, hospitality, and tourism as the most impacted industries by the covid-19 crisis. the result data presents that airlines, hospitality, and tourism had a more negative impact than other industries after the announcement of the first confirmed case of covid-19 on march 2nd 2020. the results are consistent with previous research (alam et al, 2021; clark et al, 2021) and the research hypothesis, which predicts that airlines, hospitality, and tourism industries experience greater negative reactions. determinant factors we discuss in this section the main result for analysis of the market assessment of the firm`s cash reserve and the ceo`s health risk exposure due and financial leverage of firms to covid-19’s first announcement. we do a multicollinearity test to determine whether there is a relationship between independent variables, with a tolerance value > 0.1 and vif value < 10 indicating no multicollinearity24. due to the tolerance value being 0.912 and vif 1.097, the result demonstrates that there is no correlation between independent variables. as a result, there is no evidence of multicollinearity. in terms of the autocorrelation test, the values of the durbin-watson test are around 2 which means the independent variables have autocorrelation 63 variables ind n mean p-value std. dev logcar t0 1 31 -0.0723*** 0.007 0.2467 0 457 -0.0234*** 0.0778 logcar t+1 1 31 -0.0649* 0.066 0.2434 0 457 -0.0182* 0.1272 logcar t+2 1 31 -0.0638*** 0.001 0.2427 0 457 -0.0093*** 0.0662 logcar t+3 1 31 -0.0729*** 0.000 0.2406 0 457 -0.0110*** 0.0671 logcar t+4 1 31 -0.0792*** 0.000 0.2393 0 457 -0.0124*** 0.0637 logcar t+5 1 31 -0.0904*** 0.000 0.2494 0 457 -0.0239*** 0.0636 logcar t+6 1 31 -0,0728*** 0.001 0.2510 0 457 -0.0156*** 0.0679 logcar t+7 1 31 -0.0905*** 0.000 0.2474 0 457 -0.0253*** 0.0757 logcar t+8 1 31 -0.1032*** 0.003 0.2630 0 457 -0.0392*** 0.0991 logcar t+9 1 31 -0.1105*** 0.000 0.2750 0 457 -0.0376*** 0.0899 logcar t+10 1 31 -0.1220*** 0.001 0.2819 0 457 -0.0439*** 0.1042 . notes: * sig 10% | ** sig 5% |*** sig 1% c cashta ceofat lev ind r2 adj r2 f logcar t0 -0.027 (0.196) 0.262*** (0.001) -0.001 (0.802) -0.727*** (0.000) -0.045*** (0.010) 0.080 0.072 10.317*** (0.000) logcar t+1 -0.11 (0.701) 0.287** (0.013) -0.007 (0.418) -0.644*** (0.001) -0.045* (0.077) 0.036 0.028 4.435*** (0.002) logcar t+2 -0.016 (0.379) 0.234*** (0.001) 0.001 (0.874) -0.717*** (0.000) -0.050*** (0.002) 0.096 0.089 12.696*** (0.000) logcar t+3 -0.024 (0.200) 0.210*** (0.004) 0.004 (0.470) -0.719*** (0.000) -0.057*** (0.000) 0.101 0.094 13.467*** (0.000) logcar t+4 -0.020 (0.264) 0.184*** (0.009) 0.002 (0.622) -0.658*** (0.000) -0.063*** (0.000) 0.099 0.091 13.034*** (0.000) logcar t+5 -0.011 (0.559) 0.193*** (0.007) -0.004 (0.445) -0.717*** (0.000) -0.063*** (0.000) 0.106 0.098 14.043*** (0.000) logcar t+6 -0.006 (0.758) 0.196*** (0.009) -0.003 (0.527) -0.680*** (0.000) -0.054*** (0.001) 0.084 0.077 10.972*** (0.000) logcar t+7 -0.016 (0.447) 0.203** (0.011) -0.004 (0.470) -0.641*** (0.000) -0.063*** (0.000) 0.077 0.069 9.908*** (0.000) logcar t+8 -0.047* (0.059) 0.198** (0.040) 0.003 (0.632) -0.778*** (0.000) -0.059*** (0.006) 0.067 0.059 8.496*** (0.000) logcar t+9 -0.028 (0.236) 0.189** (0.040) -0.002 (0.785) -0.786*** (0.000) -0.069*** (0.001) 0.078 0.071 10.131*** (0.000) logcar t+10 -0.034 (0.200) 0.156 (0.127) 0.000 (0.955) -0.799*** (0.000) -0.073*** (0.001) 0.068 0.060 8.686*** (0.000) notes: * sig 10% | ** sig 5% |*** sig 1% table 5 shows regression results that predict the effect of independent variables on covid-19’s first announcement in each event window. by interpreting r2, an examination of the result reveals that the influence of a firm`s cash reserve, ceo`s fatality rate due to covid-19 and financial leverage are only able to affect 8.1% of cumulative abnormal returns in each event window, while 91.9% is influenced by other variables. cash reserve, ceo health risk, the price reaction due to covid-19 first announcement on leisure industry table 4. descriptive statistics of cumulative abnormal return table 5. regression results 64 ambr 2 furthermore, coefficients in cashta are all positive across all columns and statistically significant to forecast cumulative abnormal return on each event window. these results provide strong support to the notion that the market has evaluated positively the firm`s cash reserve. on the contrary, the coefficients in ceofat are not consistent and statistically not significant. therefore, we may conclude that the market does not use the ceo fatality rate as a benchmark for its investment portfolio due to the covid-19 announcement in indonesia. in terms of control variable, negative remarks on coefficient in lev show an inverse relationship between the financial leverage of firms and cumulative abnormal returns. conclusion the outbreak of the covid-19 has caused a worldwide deterioration of economic conditions including in indonesia. to shed light on how stock markets respond to the covid-19 pandemic by industry type and whether the firm`s cash reserves and upper echelons characteristics due to the covid-19 crisis, we construct a regression analysis and evaluate the relationship between cumulative abnormal return and firm characteristics. in short, our findings indicate that airlines, hospitality, and tourism industries have more negative returns than other industries due to covid-19 confirmed case announcement. we also obtain evidence indicating that firms with greater cash reserves were associated with less negative returns. however, we do not find that firms whose ceos were exposed to high health risks due to covid-19 suffer higher market value losses. additionally, the results add more valuable insight for the investor in making decision-related to investing in the indonesian stock market, especially in health crisis announcements. thus, an interesting task of future research would be to add more events such as a new variant of covid-19, vaccine discovery, and first or second waves of covid pandemic announcement to analyze more deeply. furthermore, the following research also could add more independent variables in upper echelons theory and financial ratios. references abd al-awadhi, a. m., alsaifi, k., al-awadhi, a., & alhammadi, s. (2020). death and contagious infectious diseases: impact of the covid-19 virus on stock market returns. journal of behavioral and experimental finance, 27. https://doi.org/10.1016/j.jbef.2020.100326 ahmad, t., hussain, s., akbar, m., & rehman, a. u. (2022). impact of terrorism on stock market: evidence from developed and developing markets. international journal of disaster risk reduction, 70. https://doi.org/10.1016/j.ijdrr.2022.102786 alam, m. m., wei, h., & wahid, a. n. m. (2021). covid-19 outbreak and sectoral performance of the australian stock market: an event study analysis. australian economic papers, 60(3), 482– 495. https://doi.org/10.1111/1467-8454.12215 anintyarini, c., & utama, c. a. (2019). market reaction to announcement of the corporate governance “comply or explain” regulation and determinants of compliance level. ashraf, b. n. (2020). stock markets’ reaction to covid-19: cases or fatalities? research in international business and finance, 54. https://doi.org/10.1016/j.ribaf.2020.101249 atmojo, m. e., & fridayani, h. d. (2021). an assessment of covid-19 pandemic impact on indonesian tourism sector. journal of governance and public policy, 8(1), 1–9. https://doi.org/10.18196/jgpp.811338 au yong, h. h., & laing, e. (2021). stock market reaction to covid-19: evidence from u.s. firms’ international exposure. international review of financial analysis, 76. https://doi.org/10.1016/j.irfa.2020.101656 awwaliyah, i. n., & husodo, z. a. (2017). the extended fama-french three factor model: revisited. bodie, z., kane, a., & marcus, alan. j. (2014). investments (douglas reiner, ed.; 10th edition). mcgraw hill. 65 cardella, l., fairhurst, d., & klasa, s. (2021). what determines the composition of a firm’s cash reserves? journal of corporate finance, 68 https://doi.org/10.1016/j.jcorpfin.2021.101924 carter, d., mazumder, s., simkins, b., & sisneros, e. (2022). the stock price reaction of the covid-19 pandemic on the airline, hotel, and tourism industries. finance research letters, 44. https://doi.org/10.1016/j.frl.2021.102047 chen, m. h., demir, e., garcía-gómez, c. d., & zaremba, a. (2020). the impact of policy responses to covid19 on u.s. travel and leisure companies. annals of tourism research empirical insights, 1(1). https://doi.org/10.1016/j.annale.2020.100003 clark, j., mauck, n., & pruitt, s. w. (2021). the financial impact of covid-19: evidence from an event study of global hospitality firms. research in international business and finance, 58. https://doi.org/10.1016/j.ribaf.2021.101452 cash reserve, ceo health risk, the price reaction due to covid-19 first announcement on leisure industry https://doi.org/10.1016/j.ribaf.2021.101452 129 the effect of esg performance on the financial performance of manufacturing companies listed in the indonesian barraq mellina zahroh, hersugondo hersugondo* management, faculty of economics and business, diponegoro university, indonesia abstract this study was conducted to analyze the effect of environmental, social, and governance (environmental, social, and governance (esg) performance on the company's financial performance. the company's financial performance is proxied by using return on assets. the population in this study are manufacturing companies listed on the indonesia stock exchange in the 2015-2019 period. the sampling technique used purposive sampling to obtain a total of 13 manufacturing companies whose annual reports were published on idx.co.id and disclosed environmental, social, and governance scores on bloomberg. the analytical method used is panel data regression using the e-views 9 program. the results of this study indicate that social performance, governance performance and esg performance have a positive and significant effect on the company's financial performance while environmental performance has a negative and insignificant effect on the company's financial performance . keywords: environmental performance, social performance, governance performance, esg performance, financial performance. *corresponding author. email address: hersugondo@lecturer.undip.ac.id the effect of esg performance on the financial performance of manufacturing companies listed in the indonesian received juky 21st 2021 review november 23th 2021 publish december 31st 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/475 mailto:hersugondo@lecturer.undip.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/475 130 ambr table 1. list of manufacturing companies that have problems regarding financial performance, environmental, social, and governance dea table 2. mean roa, ens, sos, gs, esg from 13 manufacturing companies listed in bei for the 20102015 period introduction maintaining the long-term sustainability of the company by adhering to the guidelines for corporate governance is the key to increasing the company's value which is increasingly optimal for all company stakeholders. especially for companies that pay attention to environmental, social, and governance issues (environmental, social, governance/esg) can attract investors to make socially responsible investment decisions (de lucia et al., 2020). because investors realize that companies that ignore esg performance are not unlikely to have an impact on company performance. corporate social responsibility (csr) as the main element of company stakeholder management is required to report the disclosure of information on sustainability reports on environmental, social, and governance (esg) issues velte (2019). based on the results of the globescan survey and the global reporting initiative (gri) regarding the level of public trust in the disclosure of information in the 2020 sustainability report, it showed a significant increase reaching an average of 51%. this result increased sharply when compared to the same survey result in 2003 which was 30%. of the 27 countries surveyed, the highest level of public trust in indonesia reached 81% as well as being the first to beat china's position, which previously stood at 80% to 73%. meanwhile, indonesia rose 2% from the previous achievement in 2016 of 79%, which means that the need for disclosure of sustainability information is increasingly needed because investors and other stakeholders have begun to disclose the performance of environmental, social, and governance (esg) as an indicator of the company's strength. this situation is also supported by observations on the global stock market where companies with good esg performance are better able to maintain their performance. this was also marked by the launch of a new index themed idx esg leaders (esgl) by the indonesia stock exchange (idx). in practice, there are still problems that arise in indonesia related to the implementation of company operations that do not pay attention to environmental, social and governance (esg) conditions around them, especially for companies whose business activities are related to natural resource management. some of these companies are attached in table 1 below. company name problems pt. kalista alam tbk. received an environmental compensation sanction of 300 billion for being proven to have burned the forest in the clearing of its area. pt. eterindo wahanatama tbk. the company does not disclose its environmental performance in its annual report. pt. selamet sempurna tbk. the company does not disclose its environmental performance in its annual report. pt. mukomuko indah lestari tbk. air pollution that afflicts the community around the company pt. kabelindo tbk. not making changes in environmental management because in 2012 it did not get the environmental performance predicate. some of these problems are evidence that there are still companies that only focus on achieving financial performance and forgetting their responsibilities to environmental, social, and governance (esg) performance. deviations from the business ethics that have been determined by the company as implementing good governance are not obeyed by the company's own internal parties. this can have an impact on the business climate in indonesia such as its effect on stock prices and the good reputation of the company. table 2 illustrates how the relationship between environmental, social, and governance (esg) performance on the financial performance of manufacturing companies listed on the indonesia stock exchange for the period 2015 to 2019. ratio 2015 2016 2017 2018 2019 roa 10,76 11,78 9,98 10,78 9,17 ens 19,75 20,83 23,51 26,61 27,31 sos 33,60 35,49 38,19 39,95 42,78 gs 54,12 56,87 54,46 57,14 58,24 esg 30,79 32,55 35,36 35,36 38,21 131 based on table 2, it is found that there is an inconsistent relationship between roa as a proxy of financial performance and environmental, social, governance (esg) performance. the average financial performance of manufacturing companies listed on the indonesia stock exchange fluctuates every year from 2015 to 2019. even though the greater the roa indicates the company's financial performance is getting better, because the returns are getting bigger so that the level of profitability also increases. while the other variables continue to increase. in this case, there has been a gap in the relationship between variables. should the higher disclosure of environmental, social and governance (esg) performance is expected to lead to an increase in the results of the company's financial performance velte (2019). continuing with this statement, buallay (2019) said that the disclosure of environmental, social and governance (esg) performance can reduce the level of business risk that may occur due to practices related to the surrounding social environment carried out by the company and will attract the attention of stakeholders because they view the company as have a good level of sustainability so that they are able to gain support from the company's stakeholders through the trust given to equity participation and the use of company products and services. however, it appears in the table that the continuous improvement in environmental, social, governance, and esg performance in total is not accompanied by an increase in financial performance as proxied by return on assets (roa), what happens is that the average percentage of roa is inconsistent. experienced an increase and decrease until it finally declined again in 2019. several previous studies have discussed the effect of environmental, social, and governance (environmental, social, and governance/esg) performance on the company's financial performance. the research results obtained vary, but each researcher has his own explanation behind the differences in existing research results. ladyve et al. (2020) and zainab & burhany (2020) found that environmental performance had a positive and significant effect on the company's financial performance, while alareeni & hamdan (2020) found a negative and significant effect on the company's financial performance. research on the effect of social performance on the company's financial performance conducted by velte (2019) found a positive and significant effect on the company's financial performance. meanwhile, buallay (2019) found a negative and significant effect on the company's financial performance. previous research on the effect of governance performance on the company's financial performance still found differences in results. the results of the research by sitanggang & ratmono (2019) found that corporate governance had a positive and significant effect on the company's financial performance, while buallay (2019) found a negative effect on the company's financial performance. previous research on the effect of environmental, social, and governance (esg) performance on the company's financial performance conducted by safriani, m. n dan utomo (2020) found that esg performance had a positive and significant effect on the company's financial performance. however, different results were shown by buallay et al. (2020) that the performance of environmental, social, and governance (esg) has a negative and significant effect on financial performance. while junius et al. (2020) found that the performance of environmental, social, and governance (esg) had no significant effect in a negative direction. based on the explanation above, it is known that there are variations in the results of previous studies and this creates a gap that needs to be identified further through this research, the following questions are formulated: (1) how does environmental performance affect the financial performance? (2) how does social performance affect the financial performance? (3) how does governance performance affect the financial performance? (4) how does esg performance affect the financial performance? literature study stakeholder theory extends to all stakeholders, so that it does not only focus on shareholders but also on investors or owners of corporate responsibility (donaldson & preston, 1995). value and satisfaction with coalition partners (stakeholders) are part of business activities that lead to the company's long-term success (freeman, 2004). legitimacy theory asserts that the company seeks to pay attention to all its activities in accordance with the values and norms that exist in the society where the company operates with the aim of gaining legitimacy from its social environment (carlson & bierman, 1966). the echelon theory means that the achievement of organizational goals such as the achievement of strategy and company performance is a reflection of the characteristics of managerial skills led by organizational leaders (hambrick, 1986). signaling theory was put forward by arkelof in 1970 that in a transaction the parties involved in it have different levels of information (information asymmetry) from each other and are valuable. this theory also suggests the importance of information issued by the company to investment decisions. the effect of esg performance on the financial performance of manufacturing companies listed in the indonesian 132 ambr hypothesis development the effect of environmental performance on the company's financial performance ladyve et al. (2020) also found a positive and significant relationship between environmental performance and company financial performance. if the environmental performance is good, it can affect the financial performance which will increase, and vice versa. information on environmental performance is important for the company to be known by stakeholders in order to avoid demands from the community and stakeholders, so that it will affect the financial performance and sustainability of the company. the same thing was also expressed by zainab & burhany (2020) that good environmental performance can be evidence that the company can grow sustainably and in the long term, because it reflects that the company has fulfilled its responsibilities and can avoid damage problems. environment that can lead to greater expenses and even closure of the company's business activities. h1: environmental performance has a positive effect on the company's financial performance. the effect of social performance on the company's financial performance danovan & gibson (2000) say that based on legitimacy theory, one opinion in the relationship between profitability and social performance is that when the company has a high level of profit, (management) the company considers it unnecessary to report things that can interfere with information about the company's financial success. and conversely, when profitability is low, they expect users of the report to read good news about the company's performance, such as in the social sphere, thus investors will continue to invest in the company. according to the theory of legitimacy, companies will try to build and maintain relationships with the environment, social, and politics in which the company operates(ismail & laksito, 2020). this is done so that the company gets strong legitimacy so that the company can run alive regardless of the aspect of the company's financial performance (gray et al., 1995). therefore the company will build and maintain corporate social relations by having to carry out corporate social responsibility (csr) in the social sphere and as a form of responsibility to develop the surrounding environment and to gain legitimacy so that the company continues to survive. this statement is supported by the results of research by velte (2019) which found that successful csr involvement will lead to an increase in financial performance with positive and significant results. h2: social performance has a positive effect on the company's financial performance. the effect of governance performance on the company's financial performance companies that implement good corporate governance are expected to have good financial performance so that the company's stock price will rise and can also have an impact on increasing company value (agustini & gunadarma, 2015). based on signaling signalling theory, the results of implementing good governance are positive information for stakeholders. this is because the results of good corporate governance show the company's management commitment to evaluate and improve in line with improving the company's financial performance (mumtazah & purwanto, 2020). in line with this, research conducted by sitanggang & ratmono (2019) found that corporate governance has a positive effect on the company's financial performance, meaning that the better corporate governance is implemented by the company, the better the company's financial performance can be with the indicator used, namely are audit committee size, audit committee meeting activity, proportion of independent commissioners, and audit quality. h3: governance performance has a positive effect on the company's financial performance. the effect of esg performance on the company's financial performance disclosure of esg information is a form of communication between the company and the stakeholders involved. safriani, m. n dan utomo (2020) in their research said that the company will seek to disclose information on its business activities in order to change the views and expectations of stakeholders. esg disclosure is used by companies as a tool to gain strong legitimacy in the eyes of the community and stakeholders. thus, it is expected to create a good image for the company for a disclosure made. buallay (2019)in his research states that a positive esg disclosure score is believed to bring greater asset returns. the same thing was also expressed by velte (2017) that esg performance has a positive linear impact on roa. likewise, the stakeholder theory and the legitimacy theory that have/ has been described previously that companies are required to provide benefits to all company stakeholders so that they are not only oriented towards profitability but in practice must be in accordance with social norms and values that develop in the community where the company is located. h4: esg performance has a positive effect on the company's financial performance. 133 research methodology source of data and sample the data used in this research are secondary data consisting of the annual reports of audited sample manufacturing companies listed in the indonesian stock exchange (bei) from 2015 – 2019. these data were taken from the bloomberg and also bei (www.idx.co.id). samples for this research were taken using the purposive sampling method. the criteria included manufacturing companies are listed in bei continuously from 2015 – 2019, sample companies that present complete and consecutive annual reports data (no missing data) from 20152019 and sample companies that publish the environmental disclosure score, social disclosure score, governance disclosure score, esg disclosure score completely and consecutively (no missing data) by bloomberg from 2015-2019. these criteria found 13 manufacturing companies. the other variables included in this research are given in the framework as shown in figure 1 definition of operational variable the independent variable is a variable that affects or causes a change or emergence of the variable. in this research are environmental performance, social performance, governance performance, and esg performance. variable is a variable that is influenced or caused by the presence of independent variables. in this study, financial performance is proxied by return on assets. method of analysis the analysis method used is panel data regression using the e-views 9 program. where one of the three models in the panel data will be selected, namely, the common effect model, fixed effect model, and random effect model. the regression equation model is as follows: roa = α + β1ens + β2sos + β3gs + β4esg + e the effect of esg performance on the financial performance of manufacturing companies listed in the indonesian figure 1. theoretical framework 134 ambr table 3. variable and operational definition table 4. result of descriptive analysis variable description scale measurement return on asset (roa) the ratio between profit before tax and total asset (brigham, eugene f., & houston, 2010). ratio roa = net profit after tax x100% total assets environment al performance (ens) a pillar score that measures a company's impact on living natural systems, including air, land and water (velte, 2019). ratio the percentage of the number of items issued by the company through the environmental disclosure score in the bloomberg terminal with a value in the range of 0 to 100. social performan ce (sos) a pillar score that measures a company's capacity to generate trust and loyalty with its workforce, customers and communities (velte, 2019). ratio the percentage of the number of items issued by the company through the social disclosure score in the bloomberg terminal with a value in the range of 0 to 100. governan ce performa nce (gs) a pillar score that measures a company's systems and processes that ensure that board members and executives act in their best interests as long-term shareholders (velte, 2019). ratio the percentage of the number of items issued by the company through the governance disclosure score in the bloomberg terminal with a value in the range of 0 to 100. esg performan ce (esg) environmental, social, and governance performance scores compiled by the bloomberg esg database (velte, 2019). ratio the percentage of the number of items issued by the company through the esg disclosure score in the bloomberg terminal with a value in the range of 0 to 100. source: books and journals result and discussion descriptive statistics descriptive statistics is aimed at providing general description of the data obtained such as minimum, maximum, mean, median, standard deviation. the following are the results of statistical descriptive analysis of research variables using the e-views 9 program in table 4. ens sos gs esg roa mean 22.62655 39.22846 58.86369 31.83231 17.14877 median 21.70500 38.60000 57.14000 29.77000 15.34000 maximum 55.81400 63.16000 78.02000 50.00000 41.01000 minimum 2.326000 15.54000 48.20000 19.42000 1.220000 std. dev. 13.84688 13.18661 7.003027 8.672169 10.69213 observations 65 65 65 65 65 135 based on the data in table 4, it can be concluded that the number of observations in this study was 65 observational data which were obtained from 13 samples of research objects conducted in the 2015 to 2019 period. the variables roa, ens, sos, gs, esg had an average value of higher than the standard deviation. this shows that the data has a small distribution so that it indicates that the data is good datas. model selection test langrange multiplier test (lm test) the following are the results of the lm test using the e-views 9 program: test hypothesis cross-section time both breusch-pagan 1.913298 1.178311 3.091609 (0.1666) (0.2777) (0.0787) source: author’s calculation based on the lm test, it is known that the statistical lm value is 1.913298 and the probability value for both breusch-pagan is 0.0787, which is greater than 0.05. thus, the common effect model is more appropriate to use than the random effect model. classic assumption normality test the following are the results of the normality test using the e-views 9 program: based on the normality test, it is known that the jarque-bera value is 0.995073 and the jarque-bera probability value is 0.608027 which is greater than 0.05. thus, the residuals are normally distributed multicollinearity test the following are the results of the multicollinearity test using the e-views 9 program: coefficient uncentered centered variable variance vif vif c 684.7982 1898.698 na tens 9.555594 44.71130 2.258005 tsos 0.727561 79.13413 2.272096 tgs 289.9683 2511.999 2.035692 tesg 1.327285 117.1455 2.116469 the effect of esg performance on the financial performance of manufacturing companies listed in the indonesian table 5. lm test results figure 2. normality test results table 6. multicollinearity tes results 136 ambr table 7. heteroscedasticity test results table 8. result of the model f test table 9. result of the t model tst table 10. coefficient of determinant test results based on the multicollinearity test, it is known that the centered vif value of all independent variables, namely ens, sos, gs, and esg, shows less than 10. thus, there is no multicollinearity in a regression model. heteroscedasticity test the following are the results of the heteroscedasticity test using the e -views 9 program: heteroskedasticity test: glejser f-statistic 1.101335 prob. f(9,55) 0.3773 obs*r-squared 9.925448 prob. chi-square(9) 0.3566 scaled explained ss 9.227145 prob. chi-square(9) 0.4166 based on the heteroscedasticity test, it is known that the chi-square probability value is 0.4166, which is greater than 0.05. thus, there is no heteroscedasticity in a regression model. panel data regression analysis f test the following are the results of the f test using the e-views 9 program: f-statistic 381.1280 prob(f-statistic) 0.000000 t test the following are the results of the t test using the e-views 9 program: variable coefficient std. error t-statistic prob. c -39.24132 9.273578 -4.231519 0.0001 ens -0.083590 0.076377 -1.094442 0.2785 sos 0.251507 0.111960 2.246392 0.0287 gs 0.542316 0.237104 2.287255 0.0261 esg 0.527257 0.228091 2.311609 0.0246 coefficient of determination the following are the results of the coefficient of determination test using the e -views 9 program: r-squared 0.984219 adjusted r-squared 0.981636 based on table 9, it can be seen that the r-squared value is 0.984219. this shows that the independent and moderating variables can explain variations in financial performance by 98.4%, while the remaining 1.6% is explained by other variables outside this research model. 137 discussions hypothesis 1, shows that ens has a coefficient value of -0.083590 with a significance value greater than 0.05, which is 0.2785. the results of this test state that environmental performance has a negative and insignificant effect on the company's financial performance. thus, hypothesis 1 is rejected. the results of this study indicate that the direction of the coefficie nt is negative, indicating that environmental performance can have an unfavorable effect on the company's financial performance which is proxyed by roa. this result may occur because companies with environmental performance disclosure practices will incur higher costs followed by higher prices (alareeni & hamdan, 2020). in addition, it is also possible for this to occur as a result of environmental damage caused by irresponsible company activities. meanwhile, positive environmental performance will be able to spur increased sales because consumers want environmentally friendly products. companies that are consistent with environmental responsibility tend to have external benefits such as getting a good image from potential investors (d.r. hansen & m/m. mowen, 2018). this study is in line with the results of research conducted by (alareeni & hamdan, 2020). hypothesis 2, shows that sos has a coefficient value of 0.251507 with a significance value less than 0.05, namely 0.0287. the results of this test state that social performance has a positive and significant effect on the company's financial performance. thus, hypothesis 2 is accepted. obtaining positive results on social performance indicates that the disclosure of social performance is able to/can give a good influence on the company's financial performance. this is in accordance with research conducted by velte (2019) that successful csr activities will result in better corporate reputation and social performance. in addition, the disclosure of social performance by the company is able to encourage better financial performance of the company. hypothesis 3, shows that gs has a coefficient value of 0.542316 with a significance value less than 0.05, namely 0.0261. the results of this test state that the performance of governance has a positive and significant effect on the company's financial performance. thus, hypothesis 3 is accepted. governance disclosures that have a positive effect on financial performance can improve asset efficiency (roa). effendi (2005) states that the existence of an audit committee is very important in improving financial performance, especially in controlling aspects. this is because the larger the size of the audit committee, the more effective its role in controlling or controlling and monitoring top management will be. the existence of an effective audit committee is one aspect of a good corporate governance mechanism (sitanggang & ratmono, 2019). the implementation of good corporate governance is needed to anticipate risks, both financial and company reputation as well as protect stakeholders, improve compliance and maintain generally accepted ethical values (pratiwi et al., 2018). these results support the research conducted by (sitanggang & ratmono, 2019). hypothesis 4, shows that esg has a coefficient value of 0.527257 with a significance value less than 0.05, namely 0.0246. the results of this test state that esg performance has a positive and significant effect on the company's financial performance. thus, hypothesis 4 is accepted. this result is in line with the stakeholder theory where the theory assumes that the existence of these stakeholders has an important effect on the sustainability of the company's operations through the support and trust that has been given and is able to increase the level of the company's reputation so that superior performance is expected to be achieved (safriani, m. n dan utomo, 2020). in addition, the results of this study are also in line with the theory of legitimacy where one way to obtain strong legitimacy from the public is to provide non-financial information. the information disclosed by the company will be able to invite support and trust from the public and stakeholders through trust in the use of company products or through the inclusion of working capital in the form of assets which will certainly improve the company's operations so that it is expected that the rate of return on company assets used to generate company profits will increase. the results of this study support research conducted by velte (2019) and buallay (2019). conclusions the hypotheses in this research are aimed at figuring out both their significant and insignificant effect. results of testing for all hypotheses are given as follow: 1. testing on hypothesis 1 shows that environmental performance has a negative and insignificant effect on the company's financial performance. these results are shown through the negative regression coefficient value of -0.083590 with a significance value of 0.2785 where the value is greater than the 5% significance value. 2. testing on hypothesis 2 shows that social performance has a positive and significant effect on the company's financial performance. these results are shown through the positive regression coefficient value of 0.251507 with a significance value of 0.0287 where the value is smaller than the 5% significance value. 3. testing on hypothesis 3 shows that governance performance has a positive and significant effect on the company's financial performance. these results are shown through a positive regression coefficient value of 0.542316 with a significance value of 0.0261 where the value is smaller than the 5% significance value. 4. testing on hypothesis 4 shows that esg performance has a positive and significant effect on the company's financial performance. these results are shown through a positive regression coefficient value of0.527257 with a significance value of 0.0246 where the value is smaller than the 5% significance value. the effect of esg performance on the financial performance of manufacturing companies listed in the indonesian 138 ambr references agustini, r. m., & gunadarma, u. 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indonesia abstract technological advances require companies to follow and adapt to technological developments and require companies to move with existing changes. companies need a strategy to have a competitive advantage and improve organizational performance in dealing with these conditions. the study empirically tested the effect of mediating supply chain management (scm) implementation on the relationship between organizational performance and enterprise resource planning (erp). the sample of this study were employees of pt. semen padang is involved in the supply chain management process and runs an enterprise resource planning system with 100 employees. the results of data processing using pls-sem showed a positive and significant effect in the direct relationship between erp to scm and scm to performance. furthermore, scm mediates the relationship between erp and company performance. keywords: organizational performance, enterprise resource planning, and supply chain management. *corresponding author. email address: muthia@fe.unp.ac.id organizational performance: the role of enterprise resource planning and supply chain management received may 29th 2022 review june 13th 2022 publish june 30th 2022 afebi management and business review (ambr) p-issn 2548 530x e-issn 2548 5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/558 mailto:muthia@fe.unp.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/558 48 ambr introduction each company continually reviews the company's survival every certain period to find out the status of a healthy company and maintain the company's existence (al-dhaafri, al-swidi, & yusoff, 2016). company performance is measured through financial and non-financial methods or approaches. performance relates to the organization's strength to achieve goals using the company's resources (abujarad, yusof, & nikbin, 2010). in addition, performance is an organizational process from every previous action of the organization (taleghani & liyasi, 2013). many factors affect the company's performance, especially in the era of the industrial revolution 4.0, which is synonymous with automated, fast, and accurate information technology systems. technological advances require companies to follow and adapt to technological developments and move with existing changes, so that company performance remains good.” to compete in the market and have good performance, one way that companies can do this is to implement and develop information technology systems. one of the information technology systems widely used by companies today is the enterprise resources planning (erp) system. enterprise resources planning (erp) is an integrated system for managing and describing all processes and resources contained within the company (abdo, aldhoiena, al-amrib, & hashbol, 2019) technology plays a vital role in supply chain management. enterprise resource planning systems have long helped companies monitor and control costs, productivity, and inventory. scm is a set of approaches to streamline the integration of suppliers, manufacturers, warehouses, and storage to produce and distribute goods in the right quantity, location, and time to minimize costs and provide service satisfaction to consumers (assauri, 2011). according to (heizer, render, & munson, 2021), supply chain management is an organizational network that involves upstream and downstream relationships in different processes and activities that provide value in products and services to consumers. so supply chain management (scm) has become a strategy for companies to improve business performance and create competitive advantage (li, ragu-nathan, ragu-nathan, & subba rao, 2006). erp provides complete visibility across the supply chain network, which is impossible in manual processes. erp implementations can monitor all suppliers, factories, storage facilities, and all members of the supply chain, which facilitates communication across the network. this erp implementation, in turn, assists in the effective tracking and management of all processes, from order to manufacture and delivery of finished goods to customers (hasan, 2018). from several types of companies that implement erp as well as supply chain management, manufacturing companies have a close relationship with the implementation of information systems due to systematically integrating all production activities to meet customer needs and reduce operational costs by saving operational activities that the use of information systems can replace and also to increase the effectiveness of supply chain activities within the company from upstream to downstream (wullur & wardaya, 2015). with this situation, there is a need for supply chain management where relationship management from all elements involved, both direct and indirect, is needed to meet customer needs. optimal supply chain management of a company can affect several essential aspects of product production activities and customer satisfaction (linda, thabrani, chandra, & firman, 2020). supply chain management requires an appropriate and credible information system. therefore, the use of information systems has a close relationship with the company's goals to achieve effectiveness and efficiency (hassab elnaby, hwang, & vonderembse, 2012). a reliable information system gives the company more value in terms of competitive advantage than other companies. (tseng, wu, & nguyen, 2011) suggests that information obtained from parties in the supply chain will be realized according to the company's wishes. it directs leaders to the right decision-makers and creates a low-risk company (sumangkut, 2013). supply chain management requires the help of an information system that can work reliably. information systems are needed because of the complex activities and the pressure from the leadership in making decisions and controlling the supply chain. the development of information systems in the last year provides an overview of technological developments that are getting further ahead, including enterprise resource planning. organizations now widely use enterprise resource planning in planning, inventory control, and logistics. software companies providing erp services, including jda software, microsoft, oracle, and sap, provide state-of-the-art services. a system that is applied to provide real-time information provides supporting information for the right decision-makers, simplifying transaction processes, merging across functions or departments in the company, and increasing knowledge about how businesses can run well (aremu, shahzad, & hassan, 2020). 49 this research is important because scm in the company will run well if it is supported by information technology. using appropriate and integrated information technology, in this case, erp-scm for companies engaged in manufacture, can improve overall organizational performance (siregar, 2019). this research contributes to the availability of models for implementing scm to enhance business performance in companies by implementing an erp system that can be used as a reference and studied by businessman and academics. previous research only looked at the effect of erp on competitive advantage or performance. based on the authors' knowledge, no one has investigated the relationship between erp and performance that mediated scm. the findings in this study contribute to the theory base by linking the concept of erp, scm, to performance. research was conducted on employees who work at pt. semen padang and are involved in supply chain management practices. the selection of employees as research subjects was deemed appropriate to assess how to implement enterprise resource planning systems and supply chain management practices. selection of pt. semen padang is the object of research because pt semen padang has been using an enterprise resource planning system since 2008, so it can be said that pt semen padang has been implementing erp for quite a long time. the structure of this research is preceded by an introduction that explains the background of this research. then proceed with a literature review that contains the theories used and the elaboration of hypotheses. then proceed with the research methodology and results and end with conclusions and future research. literature review organizational performance organizational performance is a picture produced by an organization. in general, the company must have goals to be achieved, determined by the desires to be fulfilled (abujarad et al., 2010). assessment of company performance can be seen what factors affect company performance and their impact on company or organization profits, solve problems that occur within the company and solving to improve company performance for the better, and provide clear information to bridge the implementation of cooperation and enhance performance such as improvement after evaluating the results of the performance appraisal (siahaan t, nazaruddin, & sadalia, 2020) according to (siahaan t et al., 2020), company performance can be measured through (1) operational performance, which refers to the organization's ability to be more efficiently produce and deliver products to customers with better quality and in a shorter time (younis, sundarakani, & vel, 2016). this performance can be assessed through several factors such as market share, new product launches, quality, marketing effectiveness, and consumer satisfaction (taleghani & liyasi, 2013). (2) financial performance leads to an increase in the company's position compared to the industry average. financial improvements include increased costs for purchasing materials, decreased production costs, increased average return on sales, profit growth, and increased market share growth (younis et al., 2016). financial performance is not only measured based on accounting data alone. some accountants use return on sales, profitability, sales growth, work productivity improvements, and production cost improvements to measure financial performance (hassab elnaby et al., 2012). supply chain management supply chain management (scm) manages supply chain activities to increase customer value. scm is useful for integrating supply chain activities to increase the company's competitive advantage (chopra, meindl, & vir kalra, 2017). in addition, scm is a collection of networks of several organizations and members of a business ranging from suppliers to consumers that aim to produce value in the form of products and services to consumers (assauri, 2011). in addition, the supply chain helps minimize waste from company activities that cause additional costs along the supply chain path. the parties involved in the supply chain include suppliers, manufacturers, distributors, retailers, sellers, and finally, consumers (jacobs & chase, 2018). all of these parts must be considered because they are closely related to the company's survival in the business world, so coordination is needed between supply chain members. according to (li et al., 2006), in the supply chain, there is often uncertainty in business competition in the same line of business with unhealthy competition. uncertainty impacts increasing costs, one of which is due to running out of raw material supplies. when the level of uncertainty is high and consumer demand is uneven, the company's performance will fluctuate (zhou & li, 2020). uncertainty in the supply chain is divided into three: supplier uncertainty, process uncertainty, and supply uncertainty. supplier uncertainty includes delivery problems, inappropriate materials, and uncertain lead times. uncertainty process, such as engine failure. supply uncertainty is when demand sometimes tends to be high and sometimes tends to be low (chopra et al., 2017). companies must be able to respond to changes in demand and also respond to complaints about products, so that product quality is guaranteed (al-dhaafri et al., 2016). one way that can be done is to work with partners in the supply chain. organizational performance: the role of enterprise resource planning and supply chain management 50 ambr good cooperation with partners will produce up-to-date information on market conditions and customer demands to determine the best future policy for the company. data quality can provide a low-risk value caused by supply and market uncertainty and reduce the bullwhip effect (al-shboul, barber, garzareyes, kumar, & abdi, 2017). (al-shboul et al., 2017) says, good scm practices can be seen from (1) strategic supplier partnership, strategic partnerships with suppliers make the company work well where several suppliers will provide information regarding product success strategies; (2) customer relationship, explains the practice of maintaining customer loyalty to the company's products by responding to customer complaints, requests and suggestions so that the products we produce are as expected and become better; (3) level of information sharing, sharing information with partners related to market conditions, customer demand, product innovation so that the information obtained is expected to become a reference for better products and continuous improvement; (4) quality of information sharing, including factors such as time, accuracy, adequacy and reliable information exchanged; (5) internal lean practices, explains that this practice aims to eliminate waste throughout the product value stream, but this is not only internal but also includes all members of the supply chain; (6) postponement, defined as a step to accelerate one activity from another; and (7) total quality management is a management philosophy that specializes in meeting the needs of internal and external customers and the importance of doing things right the first time (chopra et al., 2017). scm has consequences at the corporate level; therefore, it is necessary to measure the effect of scm practices on organizational performance (green, mcgaughey, & casey, 2006). the results of research conducted by (gandhi, shaikh, & sheorey, 2017), and (truong et al., 2017) show that it has a positive and significant effect on organizational performance. h1: scm has a positive and significant effect on organizational performance enterprise resource planning an enterprise resources planning (erp) system is defined as “a system based on computer information technology that offers integration of various company business processes that increase time and cost savings. an erp system refers to a comprehensive software package that seeks to integrate all business processes and functions (abdo et al., 2019). erp systems use one database. more specifically, erp consists of several modules in finance, hr, inventory, planning, etc., with one integrated software divided into several modules (abdo et al., 2019). erp integrates all business processes throughout the company to increase its efficiency (aziz, ragheb, ragab, & mokadem, 2018). (al zoubi, 2018), and (altamony et al., 2016) argue that erp is a computer-based integrity system designed to process company transactions and facilitate integrated and real-time planning, production, and consumer response. erp systems in organizations provide benefits and impacts on other parts of the organization or other it systems, such as the supply chain management (scm) system that is integrated with it (tarhini, ammar, tarhini, & masa'deh, 2015), and erp implementation will improve scm performance (putra & fiolyta, 2018). supply chain management is a necessary business process in every company today. scm, through its network, connects consumer needs with suppliers through channels. companies need to implement information technology to improve the performance of scm, which consists of many subprocesses. the use of information technology can improve the supply chain performance of the production-distribution system. of all the technologies, erp has the most tangible impact on the supply chain, improving its operations and maturing its practitioners (banerjee, 2018). many previous research findings support that erp has a positive effect on the company's supply chain performance there are several elements needed in carrying out the erp process consisting of (nah, 2002): (1) physical components (server, network, storage, client), (2) people (business staff, operation staff, development staff), (3) organizational process (program and project management, change management, support service) (elfarmawi, 2020). companies that implement erp can improve innovation performance and the quality of their performance, which will directly impact company performance. (sutduean, singsa, sriyakul, & jermsittiparsert, 2019); (tarhini et al., 2015); (tian & xu, 2015); (umble, haft, & umble, 2003) found that enterprise resource planning affected increasing company performance. likewise, the results of research conducted by (shatat & udin, 2012) suggest a significant relationship between erp and scm. in addition, the results of a study conducted (al-dhaafri et al., 2016), and (madapusi & d'souza, 2012) state that the implementation of the enterprise resource planning system has a significant positive effect on organizational performance. research (zhou & li, 2020), (al-shboul et al., 2017), and (al-dhaafri et al., 2016) that explains erp implementation and supply chain management have a positive influence on organizational performance. 51 any kind of information, including sales data, can be accessed by all actors in the supply chain at various levels through the use of erp systems to avoid demand falsification of information and prevent the bullwhip effect. effective information sharing among supply chain actors enables production and delivery synchronization, better forecasting, coordination of inventory-related decisions, and facilitation of a shared understanding of performance bottlenecks (rai et al., 2006). based on the opinion (rai et al., 2006), it can be concluded that the implementation of an erp system can improve the performance of scm, which in turn will have an impact on increasing the performance of companies in the supply chain. research conducted by (acar, zaim, isik, & calisir, 2017) shows that the indirect effect of erp implementation on performance is more robust with the supply chain mediating impact than the direct effect. h2: erp has a positive and significant effect on scm h3: erp has a positive and significant effect on performance mediated by scm method this type of research is a case study conducted at pt semen padang so that the population in this study are employees who are users of the enterprise resources planning system and are involved in supply chain management practices in the company at pt semen padang. this study uses a survey-approach method in data collection. the number of respondents for survey research is at least 30 people (hair, black, babin, and anderson, 2010). therefore, the researchers tried to get more respondents than the minimum requirements. with a sample of 100 employees. in this study, researchers used questionnaires to collect information related to research variables. a questionnaire is several questions related to the indicators of research variables. the questionnaire was designed to investigate the impact of erp and scm system implementation on company performance. the survey was conducted on members of a cement company located in padang, indonesia, implementing an erp system to manage its business. this study used pls-sem to test all hypothesized relationships. pls-sem was chosen because it can test complex reflective models, does not require normality assumptions, and is suitable for small amounts of data. in addition, because of the high predictive criteria of the nature of pls, it is most appropriate and efficient for testing causal relationships between constructs (ringle, wende, & becker, 2015). variabel definisi operasional indikator organizational performance the benchmark of how the company can achieve its goals so that it becomes a consideration in the next period both in terms of financial and non-financial 1. operational performance (market share, new product launches, quality, marketing effectiveness, and customer satisfaction) (taleghani & liyasi, 2013). 2. financial performance (increase in material purchasing costs, decrease in production costs, increase in average return on sales, profit growth, and increase in market share growth (younis, sundarakani, & vel, 2016) supply chain management a collection of networks of several organizations that are members of a business ranging from suppliers to consumers that aim to produce value in the form of products and services to consumers 1. strategic supplier partnership 2. customer relationship 3. information sharing 4. quality of information sharing 5. internal lean practices 6. postponement 7. total quality management (al-shboul, 2017) enterprise resource planning systems based on computer information technology that offer integration of various company business processes increase time and cost savings. 1. physical component (server, network, storage, client) 2. people (business staff, operation staff, development staff) 3. organizational process (program and project management, change management, support service). (nah, 2002) organizational performance: the role of enterprise resource planning and supply chain management table 1. variable operational definition 52 ambr table 2. construct reliability and convergent validity table 3. fornell-larcker criterion result and discussion measurement model before testing the research hypothesis, the validity and reliability of the research instrument were first tested, which consisted of construct reliability tests, convergent validity, and discriminant validity to ensure that the data obtained could be used to predict research objectives. construct reliability dan convergent validity construct validity is based on cronbach's alpha value which is greater than 0.7, and composite reliability above 0.6 (hair et al., 2019), and (sarstedt, hair, ringle, thiele, & gudergan, 2016). convergent validity is estimated with an ave value and a loading factor of more than 0.5. construct factor loading cronbach’s alph composite reliability ave organizational performance (op1) (op2) (op3) (op9) 0.827 0.835 0.681 0.772 0.837 0.880 0.551 supply chain management (scm8) (scm11) (scm12) (scm14) (scm15) (scm17) 0.758 0.707 0.767 0.761 0.741 0.758 0.787 0.862 0.610 enterprise resource planning (erp3) (erp5) (erp6) (erp9) (erp11) 0.606 0.774 0.721 0.656 0.779 0.761 0.835 0.504 table 1 shows that cronbach's alpha value meets the minimum measurement requirements where all values are above 0.7, 0.837, 0.787, and 0.761, respectively. likewise, the composite reliability value meets the acceptable requirements (all values are within 0.880, 0.862, and 0.835). table 1 shows that the factor loading is within an acceptable range (above 0.6) regarding convergent validity. it is important to underline that all factor loadings that do not meet the threshold are carefully removed to strengthen the ave, and the entire model is reflective. finally, all the ave values exceed the set minimum conditions (at 0.551, 0.610, and 0.504). based on the results of this data analysis, we can confirm that our model has no problems with construct reliability and convergent validity. discriminant validity discriminant validity is the level of uniqueness of a given construction relative to all other constructs in the reflective model by looking at the fornell-larcker criterion value and the htmt ratio. the fornell–larcker criterion value compares the square root of the ave value with the correlation of the latent construction. table 2 shows that the fornell-larcker values are met in this study. erp organizational performance scm erp 0,710 organizational performance 0,325 0,781 scm 0,610 0,511 0,742 53 besides the fornell-larcker criterion value, discriminant validity is also conducted by looking at the htmt ratio. the htmt ratio value is smaller than 0.85 (benitez, henseler, castillo, & schuberth, 2020). table 3 shows that the value of the htmt ratio is below the recommended threshold (ranging between 0.420 and 0.706). therefore, it can be concluded that the data meets the requirements of discriminant validity. erp organizational performance scm erp organizational performance 0,420 scm 0,706 0,608 structural model r-square after confirming that the research model does not meet the measurement model, we continue to carry out a structural model by analyzing the r-square (r2) related to the model's prediction accuracy and looking at the variance in endogenous explained by exogenous variables. r square r square adjusted organizational performance 0,261 0,254 scm 0,373 0,366 table 4 shows the r2 value of 0.261, which means that scm accounts for about 26.1% of the total variance in organizational performance. meanwhile, erp accounts for about 37.3% of the total variance in scm. the estimation results of pls (direct and mediating effects) are shown in figure 1. in addition, this study applies the bootstrap method to determine the path significance. direct effect the bootstrap procedure was carried out to see the direct effect and the level of significance. the direct influence of research variables can be seen in the path coefficient values. hypotheses path original sample (o) t statistic p values supported? h1 erp -> scm 0,610 8,536 0,000 yes h2 scm -> organizational performance 0,511 7,331 0,000 yes regarding the hypothetical relationship shown in table 5, the results show that erp has a significant positive impact on scm (β=0.620, t = 8.536, p-value = 0.000), thus supporting h1. these results follow those presented by (tarhini et al., 2015), and (putra & fiolyta, 2018), where stated that erp implementation would improve scm performance. the results of this study can be interpreted that the benefits of erp implementation can reduce cycle time and improve quality management and control. erp implementation can meet customer needs proactively and more efficiently so that the performance of scm in the internal business processes of pt. semen padang will experience an increase. the results also indicate that scm has a positive and significant effect on company performance ((β=0.511, t = 7.331, p-value = 0.000), thus supporting h2. the results of this study are in line with research conducted by (truong et al., 2017), (gandhi et al., 2017), and (green et al., 2006), where the results of their research show that scm has a significant effect on organizational performance. organizational performance: the role of enterprise resource planning and supply chain management table 4. the heterotraitmonotrait ratio (htmt) table 5. coefficient of determination (r2) and adjusted r2 figure 1. structural model table 6. path coefficient and result of hypotheses testing 54 ambr table 7. indirect effect this study indicates that companies can improve their organizational performance if they apply scm practices. the better the company's scm practices, the better the company's organizational performance will be. mediation effect further research was conducted to determine whether scm is mediating between erp implementation and organizational performance. the results are presented in table 6. the results show that scm plays a mediating role between erp and organizational performance (β = 0.312, t = 4.925, p-value = 0.000), so h3 is supported in this study; namely, erp has a significant effect on organizational performance mediated by scm. hypotheses path original sample (o) t statistic p values supported? h1 erp -> scm -> organizational performance 0,312 4,925 0,000 yes based on the research results shown in table 5 and table 6, it can be concluded that scm has a partial mediation between erp and organizational performance because erp can also directly affect organizational performance. conclusion this study was conducted to examine the relationship between erp, scm, and organizational performance and advance the mediation approach. the results show that erp directly has a positive and significant effect on scm, and scm directly also has a positive and significant impact on organizational performance. in addition, it was also found that scm plays a mediating role between erp and organizational performance. the mediating role played by scm is partial mediation. based on the study results, we conclude that erp and scm can affect organizational performance. this finding is valuable for the company's stakeholders to improve erp implementation in every company's business processes and carry out scm practices in maintaining the relationship between suppliers and customers. the limitations of this study are that it only focuses on one company, so it cannot be generalized to other companies, and the data are cross-sectional because they are only taken at one time. therefore, based on the study's limitations, further research can try to validate and use the same conceptual model with a large sample of the company population that is expanded into manufacturing companies, and data collection is carried out longitudinally. researchers also suggest that research can be carried out in the future on small and medium enterprises, not only on large-scale companies. reference abdo, a., aldhoiena, s., al-amrib, a., & hashbol. 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(2020). the impact of supply chain practices and quality management on firm performance: evidence from china's small and medium manufacturing enterprises. international journal of production economics, 230, 107816. doi:https://doi.org/10.1016/j.ijpe.2020.107816 https://doi.org/10.35794/emba.1.3.2013.1900 https://doi.org/10.1016/j.sbspro.2011.10.546 http://dx.doi.org/10.25292/j.mtl.v2i2.119 https://doi.org/10.1016/j.ijpe.2020.107816 1 importance performance analysis of msme's digitalization strategy to increase competitiveness post covid-19 nizwan zukhri*, nanang wahyudin, maya yusnita department of management, faculty of economics, bangka belitung university, indonesia abstract in the post-covid-19 situation, the micro, small and medium enterprises (msme) sector needs serious attention from the government because it is the largest contributor to gdp and can be a factor in labor recruitment. to revive the performance of msmes in pangkalpinang city which experienced a slump as a result of the covid-19 pandemic, this study aims to produce a model for increasing the competitiveness of msmes globally during the covid-19 pandemic as an effort to revive msmes through financial technology, digital marketing and digital leadership in msmes. in the city of pangkalpinang, bangka belitung islands, indonesia. this research uses mixed research methods which is a combination of qualitative and quantitative research methods with the number of samples in this study is 100 respondents who are smes in pangkalpinang city. the sampling technique in this research is accidental sampling. the analysis used is importance performance analysis (ipa). the results of the study show that the implementation of financial technology, digital marketing and digital leadership on msmes in pangkalpinang city is expected to be accelerated, this can be seen from the results of research which show that the majority of msmes have implemented financial technology such as mobile payments and digital banking. the analysis used is importance performance analysis (ipa). the results of the study show that the implementation of financial technology, digital marketing and digital leadership on msmes in pangkalpinang city is expected to be accelerated, this can be seen from the results of research which show that the majority of msmes have implemented financial technology such as mobile payments and digital banking. the analysis used is importance performance analysis (ipa). the results of the study show that the implementation of financial technology, digital marketing and digital leadership on msmes in pangkalpinang city is expected to be accelerated, this can be seen from the results of research which show that the majority of msmes have implemented financial technology such as mobile payments and digital banking. keywords: financial technology, digital marketing, digital leadership, msme, post covid-19. * corresponding author. email addresses: nizwan_ubb@yahoo.com importance performance analysis of msme's digitalization strategy to increase competitiveness post covid-19 received october 4th 2022 review october 24th 2022 publish june 15th 2022 afebi management and business review (ambr) p-issn2548530x e-issn2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/613 http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/613 2 ambr introduction organizationfor economic cooperation and development (oecd) stated that covid-19 has had a significant impact on the condition of msmes which are very vulnerable to being affected by business disruptions, because they are often directly related to tourism, transportation and the culinary industry, which require fast suppliers, all of which are significantly affected by covid. -19 (hardilawati, 2020). meanwhile, the msme sector really needs special attention from the government because it is the largest contributor to gdp and can be a mainstay in absorbing labor, substituting the production of consumer goods or semi-finished goods (pratiwi, 2020). sari's research (2020) found that there were obstacles experienced by msmes due to the covid-19 pandemic such as decreased sales, difficulty in obtaining raw materials, difficulties in collecting receivables and difficulties in paying employee salaries. according to ling et al., (2022), digitalization in small and medium enterprises has developed rapidly in recent years with the formation of an contactless society and also the government's agenda in the industrial revolution 4.0 (ir4.0). one of the uses of digitalization is the use of financial technology (fintech). the results of research by raharjo, et al (2019) showed thatfinancial technologyplay an important role in improving the performance of smes in the form of increasing operational efficiency.financial technologyis an innovative step from the financial sector that is integrated with technology to produce facilities without intermediaries, changing the company's method of providing services and products, while also providing privacy, regulatory and legal challenges and enablinggiveinclusive growth (dhar & stein, 2017). according to bank indonesia (2017), financial technology is the use of technology to produce new financial systems, products, services, technology/business models and can have an impact on monetary stability, financial system stability, and/or efficiency, smoothness, security and reliability of the payment system. a new marketing approach, namely digital marketing, can help smes in anticipating and managing the impact of disruptive technology (sidi & yogatama, 2019). krisnawati's research (2018) finds that digital marketing technology has a major role in msme business and marketing. according to ali (2013), digital marketing is defined as the use of digital technology to achieve marketing goals as well as efforts to develop or adapt the marketing concept itself, communicate on a global scale, and change the way companies do business with customers. according to sawicky (2016) which means that digital marketing is an exploitation of digital technology that is used to create a channel to achieverecipientpotential to achieve company goals through meeting consumer needs more effectively (purwana et al., 2017). it is very important for msmes to innovate in increasing competitiveness (khotimah & budi, 2020). the results of lestari's research (2020) show that there is a significant influence between digital leadership and creative leadership on innovation. digital leadership not only has knowledge and mastery of digital techniques, but also management processes, materials, and analog techniques. digital leadership places more emphasis on a sharp understanding of how digital is a blend of methodology and technology that brings together skills and knowledge (zupanzic et al., 2016).el sawy, et al (2016) define digital leadership as a successful digital strategy for the organization and its ecosystem. this study aims to analyze the impact of covid-19 on the competitiveness of msmes and what are government policies to improve the competitiveness of msmes in pangkalpinang city. another objective is to look at the implications of implementing financial technology, digital marketing and digital leadership in improving the performance of msmes in pangkalpinang city. literature study micro, small medium enterprise (msme) msme is a company or industry with the following characteristics: (a) the capital is less than rp. 20,000,000; (b) for one round of business it only requires rp 5,000,000; (c) have maximum assets of rp 600,000,000 excluding land and buildings; and (d) annual turnover of rp 1,000,000,000 (bank indonesia, 2021). the definition of msmes according to law number 20 of 2008 is as follows: 1. micro business is a productive business owned by an individual/individual business entity that meets the criteria for micro business based on the law. 2. small business is a productive economic business that is independent, carried out by individuals/business entities that are not subsidiaries/branches of companies that are owned, controlled, or become a part either directly or indirectly of medium/large enterprises that meet the criteria for small businesses based on the law. 3. medium enterprises are productive economic businesses that stand alone, carried out by individuals/business entities that are not subsidiaries/branches of companies that are owned, controlled, or become a direct or indirect part of small businesses/large enterprises with total net assets based on the law. 3 financial technology financial technology is an innovation step from the financial sector that is integrated with technology to produce facilities without any intermediaries, changing the company's method of providing services and products, while also providing privacy, regulatory and legal challenges and enabling inclusive growth (dhar & stein, 2003). 2017). according to bank indonesia (2017), financial technology is the use of technology in producing a new financial system for products, services, technology/business models and can have an impact on monetary stability, financial system stability, and/or efficiency, smoothness, security and reliability of the payment system. digital marketing according to chaffey (2015), digital marketing is carrying out all economic activities to achieve marketing goals using technology and digital media. explained again by desai (2019), digital marketing is the marketing of products or services using digital technology, especially on the internet, but also includes mobile phones, advertising layers, and other digital media. digital leadership el sawy, et al (2016) define digital leadership as carrying out a successful digital strategy for the organization and its ecosystem. meanwhile, according to sheninger (2014), digital leadership is defined as setting direction, influencing others and initiating sustainable change through access to information and building relationships to anticipate changes that are important for future success. research methodology this research uses mixed research methods which is a combination of qualitative and quantitative research methods. qualitative analysis uses an interpretive approach while quantitative analysis uses important performance analysis (ipa) both methods are carried out separately but at the same time. the object of this research is the msme actors in pangkalpinang city. by using the slovin method, the sample calculation is taken from the total number of msmes in pangkalpinang city, bangka belitung islands province in 2021 as many as 27,703 units (babel.bps.go.id, 2021), obtained 100 respondents who were selected and spread throughout the city. pangkalpinang, bangka belitung islands province. respondents were spread over 7 (seven) sub-districts, namely girimaya, gabek, gerunggang, rangkui, bukit intan, and taman sari sub-districts. sampling in this study was conducted using accidental sampling technique, namely respondents who were selected because of their willingness to fill out the questionnaire or questionnaire given, and conduct interviews (deep interviews) at the time of data collection. results and discussion variable financial technology the cartesian diagram aims to see what indicators need to be improved and maintained from the financial technology variable by the msmes which have 4 quadrants. the calculation results can be seen in figure 1 below:. source: researcher analysis results 9 importance performance analysis of msme's digitalization strategy to increase competitiveness post covid-19 image 1. ipa analysis on financial technology variables 4 ambr figure 2. science analysis on digital marketing variables figure 1 can be described in quadrant a, showing that indicators that have top priority are considered very important for consumers but the level of performance is still not optimal or satisfaction is still low so that improvements are needed to increase satisfaction of the attributes in this quadrant. as forattributes included in quadrant a focus on the application of online payment methods can increase revenue, the application of online payment methods can compete with other businesses competitively, the application of online payment methods can be further developed, excellent experience in implementing online payment methods, trust in the application of online payment methods for business, the use of digital bank services for personal purposes, and transactions through digital bank services have a high level of risk. quadrant b explains the indicators that are considered to be balanced between the level of importance and the level of performance of msmes so that msmes need to maintain them for the future. indicators included in the b . quadrantfocusing on online payment service systems that can be used easily without much effort, facilitating monitoring related to business finances through services at digital banks, and digital bank services making business operations easier. quadrant c describes the attributes that according to consumers have a low level of importance and the level of performance is also less than optimal. attributes included in this quadrant can be ignored from management's attention in the future but can also be prioritized so that services are better by focusing on the use of online payment methods for business implementation, the use of online payment methods consumers are more interested in than cash payments, the application of methods payments for businesses are safer, the risk of loss/fraud is smaller in the application of online payment methods, the use of digital bank services to shop for business-related needs, and borrowing capital through services provided at digital bank services. quadrant d is a quadrant that has a satisfactory level of performance value or is excessive but the level of importance is low or the attribute is not important for the msmes who are in this quadrant is an online payment method that can be accessed anywhere and anytime easily, online payment services are an ideal medium in payment transactions, services at digital banks streamline time, use digital bank services wherever and whenever, the implementation of services at digital banks is ideal, use digital bank services to shop for business-related needs, trust in the security of transactions made through digital bank services, and provide the need to conduct transactions through digital bank services. digital marketing variables the cartesian diagram aims to see what indicators need to be improved and maintained from digital marketing variables by msmes which have 4 quadrants. the calculation results can be seen in figure 2 below: source: researcher analysis results on quadrant a attribute that considered very important for consumers but the level of performance is still not optimal, namely the use of websites to market products, the use of websites that are easy to access by users from various devices, the use of websites to share content related to products, the use of banner ads on websites to market products, the use of search engines. optimization (seo) to increase the number of website visitors, and the important thing is that the website appears at the top of the search engine. quadrant b explains the indicators that are considered to be balanced between the level of importance and the performance level of msmes so that they need to be maintained, such as the use of social media to share content. related to products, using social media to maintain good relations with customers, and cooperating with other parties in marketing products on social media 5 on quadrant c attributes that have a low level of importance and the level of performance is also less than optimal, among others, are website design adjustments with the products being sold, the use of e-mail to share product-related content, the use of e-mail to market business social media accounts, the use of e-mail. mail to interact with potential customers and customers, sending e-mails to prospective customers and customers regularly, using search engine optimization (seo) is very effective to increase the number of website visitors, and using search engine optimization (seo) makes it easier to get traffic targeted customers rather than traditional sales. quadrant d describes a quadrant that has a satisfactory or excessive level of performance but a low level of importance such as the use of social media to market products and the use of social media to interact with potential customers or customers. digital leadership variables the cartesian diagram aims to see what indicators need to be improved and maintained from digital leadership variables by msmes, which have 4 quadrants. the calculation results can be seen in figure 3 below: source: researcher analysis results quadrant a on the digital leadership variable has attributes such as communicating digital vision with employees or anyone else, implementing the planned digital vision, long-term professional development activities, creating employee learning opportunities digitally, measuring and evaluating the digital performance of oneself and employees, knowledge and understanding in using technology, collaborating with anyone according to the company's digitalization goals, establishing a new organizational structure, use of new technology to create innovation and reduce labor producer quuadrant b on the digital leadership variable has attributes such as a good sense of humor in employees, creative thoughts and opinions, able to adapt to situations, open to new ideas, making improvements from previous activities/activities, considering opportunities on an ongoing basis, able to determine high risks and low, paying attention to quality control, innovation, selecting suppliers based on quality criteria. quadrant c or quadrant that can be ignored from management attention in the future but can also be prioritized for better service is creating a digital vision in opening a business, communicating digital vision with employees or anyone else, the ability to use digital technology, using computers or smartphones. in carrying out work and digital monitoring processes. finally, quadrant d contains attributes such as a high level of imagination in solving problems, solving problems using methods that have not existed before, finding answers to problems creatively, being able to adapt to situations, clear plans, selecting resource allocations according to the criteria set out. have been determined, continue what was done according to plan, create things that have never existed before, determine changes to the framework according to the work environment, determine administrative processes in changing the new framework, use computers or smartphones in doing work, improve performance quality even though employees have switched to using computers or smartphones, they are trying to reduce the level of product defects. conclusion based on the results of the study and discussion, it was concluded that (1) the covid-19 pandemic had a negative impact on the performance of msmes in pangkalpinang city. the majority of msmes experienced a slump due to a decrease in sales transactions which resulted in a decrease in profitability. importance performance analysis of msme's digitalization strategy to increase competitiveness post covid-19 figure 3. science analysis on digital leadership variables 6 ambr (2) to revive the performance of msmes in pangkalpinang city which are experiencing a slump as a result of the covid-19 pandemic, the government, both the central government and local governments, especially the pangkalpinang city government, must take accelerated or accelerated steps that can immediately revive the performance of msmes in pangkalpinang city. these steps are through the application of financial technology, digital marketing and digital leadership to msmes in pangkalpinang city. (3) the application of financial technology, the implementation of digital marketing and digital leadership on msmes in pangkalpinang city can be accelerated, this can be seen from the results of research showing that the majority of msmes have implemented financial technology such as mobile payments and digital banking. the application of digital marketing is carried out through social media marketing, website marketing, and email marketing. the application of digital leadership is carried out through digital leader vision, digital human resource development, and digital competence. the implications of the application of financial technology, digital marketing and digital leadership have a positive impact on msmes in pangkalpinang city to be able to survive during the covid-19 pandemic and accelerate to rise from adversity after covid-19. this can be seen from the results of research showing that the majority of msmes have implemented financial technology such as mobile payments and digital banking. the application of digital marketing is carried out through social media marketing, website marketing, and email marketing. the application of digital leadership is carried out through digital leader vision, digital human resource development, and digital competence. the implications of the application of financial technology, digital marketing and digital leadership have a positive impact on msmes in pangkalpinang city to be able to survive during the covid-19 pandemic and accelerate to rise from adversity after covid-19. this can be seen from the results of research showing that the majority of msmes have implemented financial technology such as mobile payments and digital banking. the application of digital marketing is carried out through social media marketing, website marketing, and email marketing. the application of digital leadership is carried out through digital leader vision, digital human resource development, and digital competence. the implications of the application of financial technology, digital marketing and digital leadership have a positive impact on msmes in pangkalpinang city to be able to survive during the covid-19 pandemic and accelerate to rise from adversity after covid-19. the application of digital marketing is carried out through social media marketing, website marketing, and email marketing. the application of digital leadership is carried out through digital leader vision, digital human resource development, and digital competence. the implications of the application of financial technology, digital marketing and digital leadership have a positive impact on msmes in pangkalpinang city to be able to survive during the covid-19 pandemic and accelerate to rise from adversity after covid-19. the application of digital marketing is carried out through social media marketing, website marketing, and email marketing. the application of digital leadership is carried out through digital leader vision, digital human resource development, and digital competence. the implications of the application of financial technology, digital marketing and digital leadership have a positive impact on msmes in pangkalpinang city to be able to survive during the covid-19 pandemic and accelerate to rise from adversity after covid-19. reference dhar, vasant and stein, m. roger (2017). fintech platforms and strategies. stern school of business and center for data science, new york university. el sawy, oa, kræmmergaard, p., amsinck, h., & vinther, al (2020). how lego built the foundations and enterprise capabilities for digital leadership. mis quarterly executive, 15(2). hardilawati, wan laura. (2020). msme survival strategy in the midst of the covid-19 pandemic journal of accounting and economics, vol. 10 no. june 1, 2020. hendrawan, a. (2019). the effect of digital marketing on the sales performance of asti gauri msme products in bantarsari district, cilacap. journal of administration and secretarial, 4(1), 50-61. khotimah, h., & budi, s. (2020). analysis of the role of innovation, accounting competence, and government support on the competitiveness of msmes in south tangerang city. sustainability: journal of management and journal of accounting, 5(2), 117-130. lestari, nining widya. (2020). study of digital leadership and creative leadership that affects innovation in msmes, jatimulya, bekasi, west java. parameter journal. vol. 5, no. 2, p. 97-106. ling f., ling p., s. & michael v. (2022). assessing the performance of mobile payment: a study on sarawak pay using fuzzy importance-performance analysis. international journal of academic research in business and social sciences. pratiwi, maya intan. 2020. the impact of covid-19 on the economic deceleration of the msme sector. journal of ners vol. 4 no. 2 of 2020, issn: 2580-2194. 7 purwana, d., rahmi, r., & aditya, s. (2017). utilization of digital marketing for micro, small and medium enterprises (umkm) in malaka sari village, duren sawit. journal of civil society empowerment (jpmm), 1(1), 1-17. sari, rosa nindia & alwiyah. 2020. the impact of the covid-19 pandemic on batik msmes in sumenep regency. journal of resistance (accounting research) vol. 1 no. december 1, 2020. sidi, ap, & yogatama, an (2019). intellectual capital mediation on the effect of digital marketing on marketing performance. iqtishoduna, 15(2), 129-152. zupanzic, t., verbeke, j., achten, h., & herneoja, a. (2016). digital leadership. complexity, simplicity. vol. 1, p. 63–68. importance performance analysis of msme's digitalization strategy to increase competitiveness post covid-19 1 effect of employee competence and perceived organizational support on organizational commitment mediated by employee performance hendry kurniawan* universitas pasir pengaraian, indonesia abstract this study aimed to determine the effect of employee competence and perceived organizational support on organizational commitment with performance as a mediating variable. this study uses a quantitative approach. the quantitative research method aims to test the established hypotheses. the population in this study were employees of the service organization in rokan hulu using a total sampling technique, which means using the entire population as the research sample. in this study, researchers involved 100 employees in service organizations in rokan hulu. the analysis used in this study is a structural approach to the equation model (sem) assisted by the smartpls application. based on the research that has been done, it can be concluded that there is a significant positive effect between the variables of employee competence, perceived organizational on organizational commitment. there is a significant positive effect between the variables of employee competence and perceived organizational on performance. the performance is able to partially mediate the relationship between employee competence, perceived organizational and organizational commitment. it is hoped that the service industry providers in rokan hulu regency can always synergize with the government so that the existence of the service industry in rokan hulu regency can continue to grow. keywords: employee competence, perceived organizational support, organizational commitment, employee performance *corresponding author. email address: hkurniawan354@gmail.com effect of employee competence and perceived organizational support on organizational commitment mediated by employee performance received december 20th 2021 review february 15th 2022 publish june 30th 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/514 mailto:hkurniawan354@gmail.com http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/514 2 ambr introduction commitment is a condition in which a person becomes bound by his actions. it gives rise to beliefs that support his activities and involvement. in other words, commitment is a form of dedication or obligation that binds to other people, certain things, or specific actions (agustian et al., 2018). employee commitment is one of the keys that determine the success or failure of an organization to achieve its goals. employees committed to the organization usually show a work attitude that is attentive to their duties; they are very responsible for carrying out their duties and are very loyal to the company (arifin, 2012). according to (portalhr, 2007) lack of understanding of commitment makes the state of indonesia in the indonesian employee commitment index only 57% 7 points lower than the asia pacific. guest stated that hrm (human resource management) policies are designed to maximize organizational integration, organizational commitment, employee commitment, flexibility, and work quality. a high organizational commitment to employees will make employees avoid negative organizational behaviors. such as truancy, absenteeism, moving to another company, leaving working hours, etc. organizational commitment is a picture of the relationship between workers and the organization. individuals who have a high commitment to the organization can be seen from a strong desire to remain a member, a willingness to try their best for the benefit of the organization, and belief in and a strong acceptance of the values and goals of the organization. individuals who have a high commitment to the organization can be seen from a strong desire to remain a member, a willingness to try their best for the organization's benefit, and belief in and a strong acceptance of the organization's values and goals. organizational commitment is needed as an indicator of employee performance. employees with high commitment can be expected to show optimal performance. one aspect of organizational commitment stated by agustian et al., (2018) is the willingness to work as much as possible for the organization's benefit. employee performance will increase along with the amount of commitment to the organization and will impact the achievement of organizational performance. this is exact with ardiansyah & sulistiyowati, (2018), where employees committed to the organization will have maximum performance at work, and employees will also have an attitude that supports organizational performance. however, if employees do not commit to the organization or company, it will have the opposite impact; employees do not have maximum performance at work, and employees will also have attitudes that do not support organizational performance. some of the attitudes of employees who are not committed to the organization or company include not giving the best for the organization or company, not developing knowledge and skills, not being serious on behalf of the company, not completing the tasks and responsibilities assigned, and not carrying out policies from superiors to support the company's success (christiana, 2015). one of the internal factors that exist in individual employees is competence. this is because competence is one of the capitals to achieve adequate performance. this author's opinion is by wibowo, wahyu hidayat, (2020) which states that competence is an ability to carry out or perform a job or task based on skills and knowledge and supported by the work attitude required by the job. thus, competence shows skills and knowledge characterized by professionalism in a particular field as the most important thing, as the superior of that field. an employee who excels is an employee who demonstrates competence at a higher-level scale, with a higher frequency, and with better results than an ordinary or average employee. therefore, competence is a basic characteristic of each individual, which is related to the criteria required for superior and effective performance. thus, competent employees are full of confidence because they know they have skills and a positive attitude in their field of work according to their fields. this study will elaborate on employee competence and perceived organizational support for organizational commitment with performance as a mediating variable. the potential in rokan hulu regency is strong enough to support its small industry development efforts. this is quite reasonable, especially considering the status of rokan hulu, the wealth and variety of natural resources in the rokan hulu regency area, as well as the availability of infrastructure (economic infrastructure) that can guarantee the service organization process. therefore, rokan hulu regency encourages and makes decisions to attract investors, as well as upper middle class in potential industrial zones, including in rokan hulu regency. several previous studies reviewed employee competence and organizational support influencing organizational commitment (sudarma & murniasih, 2016; yustina & zutiasari, 2020). at the same time, this research is more on an effort to determine the influence of employee competence and perceived organizational support on organizational commitment, which is also mediated by the performance variable. the higher the employee's competence and the support felt by the employee, the stronger the employee's commitment to the organization. the mediation of employee performance also reinforces this. 3 literature study employee competence competence is a factor that affects employee performance improvement, and performance has a relationship with competence. performance is a function of competence, attitude, and action (setiawan, 2021). competence is a characteristic of knowledge, skills, behavior, and experience to effectively perform a particular job or role. competence can be objectively measured and developed through supervision, work management, and human resource development programs. competence is not just knowledge and skills. competence is a very complex special ability. suppose employees' competence, attitudes, and actions towards their work are high. in that case, it can be predicted that their behavior will work hard to achieve organizational goals. employee competence in carrying out work or tasks based on skills and knowledge. it is supported by the work attitude demanded by the job (agustian et al., 2018). the skills or abilities needed by employees are demonstrated by consistently providing an adequate or high level of performance in a job function (mujiatun, 2015). competence is one of a person's basic characteristics that allow employees to produce superior performance. in order to determine the competence of employees, it is necessary to measure with several indicators, in this case, are as follows. according to the international labor organization (ilo), occupational safety and health is the promotion and maintenance of the highest degree of physical, mental, and social well-being of all workers in all types of work, preventing occupational health problems (https://www.ilo.org/global/publications). workers should be protected in each job from risks arising from factors that can interfere with health, also placed and maintained in a work environment that is in accordance with their physiological and psychological conditions so they can fit well with their work and duties. perceive organizational support according to hajihasani & kave, (2016) perceived organizational support is employee beliefs about the extent to which the organization values employee contributions and cares deeply about their welfare. according to anshori & wangi, (2017) perceived organizational support is the belief that organizations value employee contributions through their work and show concern for their welfare. based on this, it can be concluded that perceived organizational support has positive employee characteristics regarding the extent to which the organization values employee contributions and welfare. perceived organizational support refers to employees' perceptions of the extent to which the organization values contributions, provides support, and cares about welfare (ru & h, 2018). suppose employees perceive that the organizational support they receive is high. in that case, the employee will integrate membership as a member of the organization into their self-identity and develop more positive relationships and perceptions. by unifying membership in the organization with the employee's identity, the employee feels part of the organization and feels responsible for contributing and giving his best performance (le & lei, 2019). each employee's perception of organizational support is also considered a global belief regarding their assessment of organizational policies and procedures. this belief is formed based on their experience of organizational policies and procedures, acceptance of resources, interaction with organizational agents, and perception of the organization's concern for their welfare. indicators of perceived organizational support according to rhoades & eisenberger (2002:699) dalam (linda et al., 2019), yaitu: effect of employee competence and perceived organizational support on organizational commitment mediated by employee performance table 1. dimensions of employee competency variable indicators dimensions indicator knowledge 1. factual experience 2. conceptual experience 3. procedural experience skills 4. administrative skills 5. managerial skills 6. technical skills 7. social skills motive 8. economic boost 9. social boost 10. psychological boost self image 11. self confidence 12. attitude 13. personal values 4 ambr table 2. dimensions and indicators of organizational commitment table 3. dimensions and indicators of organizational commitment source: rhoades & eisenberger (2002:699) organizational commitment organizational commitment is a feeling of connection or psychological and physical attachment of employees to the organization he works or the organization of which he is a member. psychological linkage means that employees feel happy and proud to work for or become members (arifin, 2012). this linkage or attachment has three forms of complying with organizational norms, values, and regulations, identifying with the organization, and internalizing organizational norms, values, and regulations (rohmatiah & amadi, 2020). in other words, it is an attitude that reflects employee loyalty to the organization and the ongoing process in which members of the organization express their concern for the organization and its continued success and progress. arifudin, (2020) states organizational commitment, which means that a worker identifies an organization, its goals, and expectations to remain a member. most research has focused on emotional engagement in organizations and belief in their values as the 'gold standard for employee commitment. colquitt, dkk (in (wibowo, 2016)) define organizational commitment as the desire of some workers to remain members of the organization. according to lincoln and bashaw (in (suharto et al., 2019)); newstrom (in (eliyana et al., 2019)); robbins and judge in (wang et al., 2020), organizational commitment has indicators, namely: dimension indicator affective commitment 1. employees' emotional feelings for the organization 2. employee confidence for the organization normative commitment 1. employees believe they have an obligation to stay in the organization 2. employees believe in continuing to be committed to the organization normative commitment 1. the perceived economic value of staying in an organization as compared to leaving the organization 2. employees are committed to the employer because he is highly paid 3. employees believe that leaving the company will destroy their families source: (lincoln and bashaw; newstrom; robbins) dimension indicators appreciation for employee contributions 1. organizations value employee contributions 2. the organization appreciates the extra effort that employees have put in 3. the organization feels proud of the success of employees at work concern or care for the welfare of employees 4. the organization will pay attention to all complaints from employees. 5. the organization cares deeply about the welfare of its employees. 6. the organization will notify employees if they do not do a good job. 7. organizations are concerned with the general satisfaction of employees' work. 8. organizations show great concern for employees. 5 employee performance performance is the result of work in quality and quantity achieved by an employee carrying out his duties by the responsibilities given to him (waris, 2015). furthermore, according to (ardiansyah & sulistiyowati, 2018), several situations require the same standards for all employees who do similar work. a performance for employees can be said to be good or not good can be known after an assessment. therefore, according to setiobudi, (2017) performance needs to be measured by assessing the indicators of each performance. dimension indicator work quality 1. ability 2. skill 3. work result 4. independence working quantity 5. time at work 6. target achievement cooperation 7. collaboration 8. compactness responsibility 9. work result 10. decision making research methodology research design this study uses a quantitative approach. the quantitative research method aims to test the established hypotheses. this method is in the form of numbers derived from measurements using a questionnaire on the variables that exist in the study. the population in this study were employees of the service organization in rokan hulu. the sample is part of the number and characteristics possessed by the population (sugiyono, 2013:149). the sample size was taken using the hair formula. the hair formula is used because the population size is not known for sure. according to hair (2010:176) that if the sample size is too large, for example 400, then method becomes so sensitive that it is difficult to get good fit measures. so, through calculations based on the formula, the number of samples obtained from this study was 100 people who came from service industry employees in rokan hulu regency. the analysis used in this study is a structural equation model (sem) approach assisted by smart pls applications (ghozali, 2018). outer model analysis 1. validity and reliability test validity and reliability tests are carried out to ensure that the measurement used is feasible to be used as a measurement (valid and reliable). testing the validity and reliability can be seen from: first, convergent validity is an indicator assessed based on the correlation between the item score/component score and the construct score, which can be seen from the standardized loading factor, which describes the magnitude of the correlation between each measurement item (indicator) and its construct. individual reflexive measures are high if the correlation is > 0.7. second, discriminant validity is a measurement model with reflexive indicators assessed based on crossloading measurements with constructs. discriminant validity, namely comparing the value of the square-root of average variance extracted (ave), the instrument is declared valid if it has an ave score > 0.5 third, composite reliability is an indicator to measure a construct that can be seen in the view of latent variable coefficients. in this measurement, if the value achieved is > 0.70, it can be said that the construct has high reliability. fourth, cronbach's alpha is a reliability test carried out to strengthen the results of composite reliability. a variable can be declared reliable if it has cronbach's alpha value > 0.7. 2. r-square test r-square for the dependent construct is used to assess the effect of certain independent latent variables on the dependent latent variable which shows the presentation of the magnitude of the effect. changes in the value of r-squares (r2) can be used to explain the effect of certain exogenous latent variables on endogenous latent variables whether they have a substantive effect. the results of the pls r-squares represent the amount of variance of the construct described by the model (ghozali and latan, 2015). the higher the r2 value, the better the prediction model and the proposed research model. effect of employee competence and perceived organizational support on organizational commitment mediated by employee performance table 4. dimensions and performance indicators of employee performance 6 ambr table 6. validity test 3. inner model analysis the inner model analysis or commonly called the structural model is used to predict the causal relationship between the variables tested in the model. the analysis of the inner model in testing using smart pls is done by testing the hypothesis. in testing the hypothesis, it can be seen from the t-statistical value and probability value. to test the hypothesis by using statistical values, for alpha 5% the t-statistic value used is 1.96, while the beta score is used to determine the direction of the influence of the relationship between variables. the criteria for acceptance/rejection of the hypothesis are: ha = t-statistic > 1.98 with a score of p-values <0.05. h0= t-statistic <1.98 with p-values>0.05 result and discussion outer model analysis 1. validity test validity test is used to measure the validity or validity of a questionnaire. in this research, validity testing is carried out using convergent validity and ave. the instrument is declared valid if the ave value is > 0.05 and the outer loading value is (> 0.6). variable indicator ave outer loading valid employee competence (x1) kp.1 0.533 0.712 valid kp.10 0.750 valid kp.11 0.717 valid kp.12 0.742 valid kp.13 0.777 valid kp.2 0.723 valid kp.3 0.705 valid kp.4 0.719 valid kp.5 0.759 valid kp.6 0.720 valid kp.7 0.708 valid kp.8 0.713 valid kp.9 0.744 valid perceived organizational (x2) po.1 0.583 0.717 valid po.2 0.780 valid po.3 0.723 valid po.4 0.812 valid po.5 0.783 valid po.6 0.785 valid po.7 0.771 valid po.8 0.732 valid organizational commitment (y) ko.1 0.576 0.758 valid ko.2 0.776 valid ko.3 0.733 valid ko.4 0.754 valid ko.5 0.797 valid ko.6 0.732 valid ko.7 0.762 valid work performance (m) kin.1 0.532 0.745 valid kin.10 0.705 valid kin.2 0.714 valid kin.3 0.711 valid kin.4 0.722 valid 7 kin.5 0.779 valid kin.6 0.728 valid kin.7 0.734 valid kin.8 0.723 valid kin.9 0.732 valid 2. reliability test researchers used 2 types of reliability tests, namely the cronbach alpha test and the composite reliability test. cronbach alpha measures the lowest value (lowerbound) reliability. the data is declared good if the data has a cronbach alpha value> 0.7. meanwhile, composite reliability measures the actual reliability value of a variable. the data is declared to have high reliability if it has a composite reliability score >0.7.\ variable cronbach's alpha composite reliability work performance (m) 0.902 0.919 organizational commitment (y) 0.877 0.905 employee competence (x1) 0.927 0.937 perceived organizational (x2) 0.898 0.918 3. r-square test the r-square coefficient determination (r-square) test is used in the measurement to measure how much the endogenous variable is influenced by other variables. based on the data analysis carried out through the use of the smartpls program, the r-square value is obtained as shown in the following table: variable r square r square adjusted work performance (m) 0.880 0.878 organizational commitment (y) 0.954 0.952 based on the test results, the r-square score for performance (m) is 0.880, which means that performance is influenced by employee competence and perceived organization by 88%, and the other 12% is influenced by variables that have not been explained in this study. the r-square score for organizational commitment (y) is 0.954, which means that employee competence, performance, and perceived organizational affect organizational commitment by 95.4%. the other 4.6% is influenced by variables not explained in this study. 4. hypothesis test based on the results of data processing that has been carried out to answer the proposed hypothesis, it is known that all three hypotheses are accepted. this shows that there is a significant influence between the independent and dependent variables. the following is an analysis related to the influence between variables according to the proposed hypothesis: hypothesis β t statistics p values information employee competence (x1) -> work performance (m) 0.617 9.484 0.000 positive significant employee competence (x1) -> organizational commitment (y) 0.330 2.830 0.021 positive significant perceived organizational (x2) -> work performance (m) 0.354 5.318 0.000 positive significant perceived organizational (x2) -> organizational commitment (y) 0.944 20.306 0.000 positive significant employee competence (x1) -> work performance (m) -> organizational commitment (y) 0.480 2.235 0.031 partially mediation perceived organizational (x2) -> work performance (m) > organizational commitment (y) 0.536 2.240 0.019 partially mediation effect of employee competence and perceived organizational support on organizational commitment mediated by employee performance table 7. reliability test results table 8. r-square test results table 9. hypothesis test results 8 ambr result and discussion the results of hypothesis testing the effect of employee competence (x1) on organizational commitment (y) obtained a positive beta score (p = 0.330) with p values 0.000 (p <0.05) with a t statistic of 2.830 (p> 1.96) indicating that there is a significant positive effect between employee competence variable on organizational commitment. the higher the competence possessed by employees, the higher the organizational commitment. the higher the competence possessed by service organization employees in rokan hulu, the higher the commitment of service organizations. competence shows skills and knowledge characterized by professionalism in a particular field as the most important thing, service organization employees who have a high commitment to the organization can be seen from a strong desire to remain an employee of service organizations in rokan hulu. this is in accordance with research conducted b y (pramukti, 2019; purwanto & soliha, 2017; supiyanto, 2015) which found that competence has a positive and significant effect on organizational commitment. in contrast to silen's, (2016) the results of the influence of competence on commitment are not si gnificant. influence of perceived organizational (x2) on organizational commitment (y) the results of hypothesis testing the effect of perceived organizational (x2) on organizational commitment (y) obtained a positive beta score (p = 0.944) with p values 0.000 (p <0.05) with a t statistic of 20.306 (p> 1.96) indicating that there is a significant positive effect between perceived organizational variable on organizational commitment. the higher the perceived organizational owned by the service organization's employees towards the company, the higher the organizational commitment will be. awards received as well as comfortable employee conditions as in service organizations in rokan hulu. make employees feel more valued and feel at home. so that it will form a mindset that employees are part of the service company concerned. this will generate organizational commitment that exists in employees so that employees will continue to try to make the company grow. this is in line with research conducted by (sandra et al., 2015; pratiwi et al., 2021) the effect of employee competence (x1) on performance (m) the results of hypothesis testing the effect of employee competence (x1) on performance (m) obtained a positive beta score (p = 0.617) with p values 0.000 (p <0.05) with a t statistic of 9.484 (p> 1.96) indicating that there is a significant positive influence between variables employee competence on performance. the higher the competence possessed by service organization employee at rokan hulu impact on employee per formance. mangkunegara (2012) states that one factor that influences a person's performance is the ability consisting of potential abilities and reality abilities (knowledge and skill s). according to kartika & sugiarto, (2016), competence and its various c onstituent components will interact in such a way that will produce specific performance. influence of perceived organizational (x2) on performance (m) the results of hypothesis testing the effect of perceived organizational (x2) on performance (m) obtained a positive beta score (p = 0.354) with p values 0.000 (p <0.05) with a t statistic of 5.318 (p> 1.96) indicating that there is a signifi cant positive influence between perceived organizational on performance. it means that to improve employee perf ormance, a strategy that needs to be taken by the company must be related to these variables. that includes creating a supportive work environment, providing good facilities and infrastructure in the work environment, giving awards for efforts and work res ults, giving promotions, and bonuses, applying the principle of fairness in work, and fair and supportive leadership as has been do ne by the government of rokan hulu in supporting industrial activities. this is in line with research conducted by (i. putra & rahyuda, 2016; y. t. d. putra et al., 2019) effect of employee competence (x1) mediation performance (m) on organizational commitment (y) the results of hypothesis testing the effect of employee competence (x1) on organizational commitment (y) mediated by performance (m) obtained a positive beta score (p = 0.480) with p values of 0.031 (p <0.05) with a t statistic of 2.235 (p> 1.96) shows that employee performance is partially mediated the relationship between employee competence and organizational commitment. the higher the competence of the employee, the higher the organizational commitment possessed by the employee. this is also strengthened by the mediation of the employee performance variable. individuals who have a high commitment to the organization can be seen from a strong desire to remain a member, a willingness to try their best for the benefit of the organization, and belief in and a strong acceptance of the values and goals of the organization. employees with high commitment can be expected to show optimal performance. one aspect of organizational commitment stated by setiawan, (2021) is the willingness to work as much as possible for the benefit of the organization. this is in line with research conducted by (syahid sampunto, y. sutomo, 2019). the effect of perceived organizational (x2) mediated performance (m) on organizational commitment (y) the results of hypothesis testing the influence of perceived organizational (x2) on organizational commitment (y) mediated by performance (m) obtained a positive beta score (p = 0.536) with p values of 0.031 (p <0.05) with a t statistic of 2.240 (p> 1.96) shows that employee performance is partially mediated the relationship between perceived organizational on on organizational commitment. higher the perceived organization, the higher the organizational commitment of the employees; the performance of the employees also reinforces this. awards received and comfortable employee conditions. make employees feel more valued and feel at home. so that it will form a mindset that employees are part of the company. this will improve employee performance and generate organizational commitment owned by employees so that employees 9 will continue to make the company grow. this is in line with research conducted by (indrawiani et al., 2018). conclusion based on the research that has been done, it can be concluded that there is a significant positive effect between the variables of employee competence, perceived organizational on organizational commitment. there is a significant positive effect between the variables of employee competence and perceived organizational on performance. the performance is able to partially mediate the relationship between employee competence, perceived organizational and organizational commitment. it is hoped that the service industry providers in rokan hulu regency can always synergize with the government so that the existence of 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in this study. the method of analysis used the normality test, the independent sample t-test, and the mann-whitney test. the results showed that tthere is no significant difference in the capital adequency ratio between conventional commercial banks and islamic commercial banks, there is a significant difference in non-performing loans / financing (npl / npf) between conventional commercial banks and islamic commercial banks, there is a significant difference in return on assets (roa) between commercial banks conventional with islamic commercial banks, there is a significant difference in operating expenses to operating revenue (bopo) between conventional commercial banks and islamic commercial banks, there is a significant difference in loan / financing to deposit ratio between conventional commercial banks and shari'ah commercial banks. keywords: car, npl / npf, roa, bopo, ldr / fdr *corresponding author. email address: akhmadi@untirta.ac.id financial performance comparison (empiric study on conventional commercial banks and sharia commercial banks 2012-2018) received may 31st 2021 review june 8th 2021 publish august 19th 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: http://journal.afebi.org/index.php/ambr/article/view/439 mailto:akhmadi@untirta.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& http://journal.afebi.org/index.php/ambr/article/view/439 60 ambr graph 1. islamic commercial bank ratio introduction every society is inseparable from economic activities and these activities certainly require transactions. transactions are often carried out through a face-to-face process or transfer of funds through banks. the world of banking has currently implemented law no. 10 of 1998, namely the dual banking system,which means that conventional banks in indonesia are encouraged to open sharia business units or even fully convert them into sharia banks. the existence of two different banking systems in indonesia triggers competition, this is because each bank must be more trustworthy and have its own advantages to gain loyalty from both customers and investors. for investors who rely on fundamental information, the source of information used as the basis for decision making is financial reports, in addition to other non-fundamental information. financial reports issued by companies are a form of communication from management to investors. from these financial reports, investors can assess the performance of management. the difference in the financial performance conditions of islamic commercial banks and conventional commercial banks can be explained in the banking financial ratios in accordance with provisions no. 6/10 / pbi / 2004 dated 12 april 2004 which was later refined through regulation no 13/24 / dpnp dated 25 october 2011. the researcher presents financial performance ratios in the form of capital adequency ratio (car), non performing loan / financing (npl / npf) , return asset ratio (roa), operating expenses, operating income (bopo), and loan / financing depositor ratio (ldr / fdr) in islamic commercial banks and conventional commercial banks based on national banking statistics published by the financial services authority (ojk), as presented on the following chart: graph 1. the performance of syari'ah commercial banks during the 2012-2018 period was marked by a sharp decline in return on assets (roa), from 2.14% in 2012 to only 0.41 in 2014 indicating a decrease in the optimization of company assets in generating profits. even though in 2018 the ratio increased back to 1.28%, but it was still below the 2012 ratio. bopo also tended to increase from 74.97% in 2012 to 89.18% in 2018, indicating a growth in operating costs that exceeded operating income. car tends to increase sharply from 14.13% in 2012 to 20.39 indicating strengthening company capital. the npf also tended to increase from 2.22% to 3.26%, indicating a decline in the quality of credit to borrowers. the tendency of fdr to decline quite significantly from 100% in 2012 to 78.53% indicates that it is less than optimal in channeling third party funds to debtors. in addition, the bopo ratio from 2014 to 2018 was generally relatively stable at 74.97% 88.03%, indicating that the company is able to control operating costs over its operating income. based on the bank indonesia regulation, bopo is said to be quite healthy at a ratio of 85% -87%. there is a downward trend in fdr from 100% in 2012 to 78.53% in 2018. based on the bank indonesia regulation, bopo is said to be quite healthy at a ratio of 85% -87%. there is a downward trend in fdr from 100% in 2012 to 78.53% in 2018. based on the bank indonesia regulation, bopo is said to be quite healthy at a ratio of 85% -87%. there is a downward trend in fdr from 100% in 2012 to 78.53% in 2018. 61 the performance of syari'ah commercial banks is marked by an increasing trend in car from 17.43% in 2012 to 22.97% in 2018. roa has experienced a downward trend from 3.11% in 2012 to 2.55% in 2018. npls fluctuated briefly from 0.81% in 2012 to 1.88% in 2014, but after that the trend increased significantly so that it became 2.95 in 2018. oeoi was relatively stable at a ratio of 74.10% 82.22%. the ldr trend showed an increase from 83.58% in 2012 to 94.78%.it is clear that the car and roa of conventional commercial banks are higher than syari'ah commercial banks, indicating that conventional commercial banks have better capital adequacy ratios and operational efficiency. the npf of syari'ah commercial banks is higher than the npl of conventional commercial banks, indicating that the quality of financing for syari'ah commercial banks is worse.the fdr of syari'ah commercial banks is higher than the ldr conventional commercial bank, indicating channeling credit / financingshari'ah commercial banks are more aggressive. meanwhile, there is no significant difference for bopo. differences in performance are also described in previous studies. researchthayib et.al (2017) who prove that the car ratio in conventional commercial banks is higher than the car for islamic commercial banks. it's differenttoin (2014) provides proves empirically that the car of conventional commercial banks and islamic commercial banks is not a significant difference. researchsetyaningsih and utami (2013) prove that the npl / npf of islamic commercial banksbetter than conventional commercial banks. in contrast totoin (2014) which proves that there is none the difference in npl / npf between islamic commercial banks and conventional commercial banks. arinta's research (2016) proves that the roa of conventional commercial banks is superior to islamic commercial banks. different fromsolikah et.al (2017) which proves that there is no significant difference between roa of conventional commercial banks and islamic commercial banks. suyono's research (2017) proves thatthere is no significant difference between the bopo of islamic commercial banks and the bopo of conventional commercial banks. different fromwijayanti et.al (2017) which proves that bopo of conventional commercial banks is better than islamic commercial banks. rosiana and triaryati's (2016) research proves thatthe ldr / fdr of islamic commercial banks is higher than conventional commercial banks. in contrast to fahmi, et.al (2018) which proved that there was no significant difference in ldr / fdr between islamic commercial banks and conventional commercial banks. based on the business phenomenon and the inconsistency of the results of previous research, the researchers reviewed the financial performance of islamic commercial banks with conventional commercial banks. although similar studies have been conducted, they are still in limited numbers. disanmping that previous studies still present mixed results or are still ambiguous, thus indicating that the results are not yet well established. based on these reasons, the researcher intends to examine more deeply the research with this topic. it is hoped that a clear comparison of financial performance can be obtained between islamic commercial banks and conventional commercial banks. hypothesis development comparison of capital adequacy ratio between conventional commercial banks and islamic commercial banks agency theory is closely related to the performance of conventional commercial banks and islamic commercial banks. shareholders as principals must control to determine the bank's financial performance during a certain period. the information submitted by the company will be considered by customers and investors (budiartini, et.al, 2017). the results of the research are in accordance with the explanation presented bysapariyah et.al (2017), rahayu et.al (2017), thayib et.al (2017), samad and anan (2017), and tabash et.al (2017), that there is a difference in car between conventional commercial banks and banks sharia general. hi: there are significant differences in cars in conventional commercial banks and sharia commercial banks.. financial performance comparison (empiric study on conventional commercial banks and sharia commercial banks 2012-2018) graph 2. conventional commercial bank 62 ambr comparison of non performing loans / financing between conventional commercial banks and islamic commercial banks agency theory is closely related to the performance of conventional commercial banks and islamic commercial banks. shareholders as principals must know the bank's financial performance in the company in terms of agents. this is because the information submitted by the company will be considered by customers and investors (budiartini, et.al, 2017). research results that are in accordance with the researcher's hypothesis include research bywijayanti et.al (2017), samad and anan (2017), setyabudi et.al (2017), fahmi et.al (2018), ramlan et.al (2018), that there is a difference in npl / npf between conventional commercial banks and sharia commercial bank. h2: there is a significant difference in npl / npf in conventional commercial banks and sharia commercial banks comparison of return on asset ratio between conventional commercial banks and islamic commercial banks agency theory is closely related to the performance of conventional commercial banks and islamic commercial banks. shareholders as principals must know the bank's financial performance in the company in terms of agents. this is because the information submitted by the company will be considered by customers and investors (budiartini, et.al, 2017). research results that are in accordance with the researcher's hypothesis include research byibrahim (2016), samad and anan (2017), wijayanti (2017), sapariyah et.al (2017) and khan (2018), that there is a difference in roa between conventional commercial banks and islamic commercial banks. h3: there is a significant difference in roa in conventional commercial banks and islamic commercial banks. comparison of operating expenses to operating avanue between conventional commercial banks and islamic commercial banks agency theory is closely related to the performance of conventional commercial banks and islamic commercial banks. shareholders as principals must know the bank's financial performance in the company in terms of agents. this is because the information submitted by the company will be considered by customers and investors (budiartini, et.al, 2017). research results that are in accordance with the researcher's hypothesis include research bysolikah et.al (2016), wijayanti (2017), wahyuni and efriza (2017), tabash (2017) and khan (2017), that there is a difference in bopo between conventional commercial banks and islamic commercial banks. h4: there is a significant difference between bopo in conventional commercial banks and islamic commercial banks. comparison of loan / financing to deposit ratio between conventional commercial banks and islamic commercial banks agency theory is closely related to the performance of conventional commercial banks and islamic commercial banks. shareholders as principals must know the bank's financial performance in the company in terms of agents. this is because the information submitted by the company will be considered by customers and investors (budiartini, et.al, 2017). the results of the research are in accordance with the researcher's hypothesis among other research bythayib et.al (2017), sapariyah et.al (2017), hardianti and saifi (2018), khan (2018) and dodoev (2018), that there is a difference in ldr / fdr between conventional commercial banks and islamic commercial banks. h5: there is a significant difference in ldr / fdr in conventional commercial banks and islamic commercial banks methodology types of research this research is a comparative study (comparative study), in this study it is used to compare financial performance between conventional banks and islamic banks. population and sample. the population in this study includes conventional banking companies and islamic banking which are listed on the indonesia stock exchange and supervised by the financial services authority (ojk) for the period 20122018 as many as 114 companies. while the sample was determined as many as 14 companies that were determined by prurposive sampling technique with criteria; consiten listing on the indonesia stock exchange during the period 2012-2018, and witnessing complete financial data in accordance with the variables observed in the study. the observation data used were 56 data, derived from 14 samples of conventional commercial banks and islamic commercial banks, multiplied by 4 quarters in a year, then clicked by 7 years of the observation period. observation data is intended to be collected from the indonesian directory exchane (idx) of the indonesia stock exchang. 63 operational definition of variables the variable examined in this research is car, which is proxied by the comparison of core capital and supplementary capital with risk weighted assets. npl / npf is proxied by the ratio of total non performing loans to total loans. roa is proxied by the ratio of net profit before tax to total assets. bopo is proxied by a comparison of operating costs and operating income. ldr / fdr is proxied by the ratio of third party funds to total loans, (rivai, et.al 2013). statistical data analysis descriptive statistics in order to know the distribution of data, descriptive statistics are used using descriptive parameters to describe the data related to the minimum value, maximum value, average value and standard deviation value. meanwhile, to test the difference in performance used inferential statistics with different test parameters using the independent sample t-test to test the mean difference between the two independent groups on the interval / ratio scale. mann-whitney test, to determine the difference between 2 independent groups on a ratio scale, (wijayanti et.al 2017). inferential statistics normality test using the kolmogrov-smirnov (ks) test parameters. the distributed data is said to be normal if the significance value is ≥ 0.05 then ho is accepted and the data is said to be abnormal if it has a significant value ≤ 0.05 then ho is rejected,(ghozali, 2016). hypothesis test: test independent sample t-test to find out whether there is a difference in the mean between the two independent groups on the interval / ratio scale, it is used independent sample t-test. if the significance value or sig. (2-tailed) <0.05, t count> t table then ho is rejected and ha is accepted. meanwhile, if the significance value or sig. (2-tailed)> 0.05, t count <t table then h0 is accepted and ha is rejected (wijayanti et al., 2017). in this regard, the test was carried out to determine the difference in performance between conventional commercial banks and syari'ah public banks. mann-whitney test the mann whitney test is a non-parametric test that is used to determine the difference between the 2 independent groups on the ratio scale. this test is used to test the financial performance of conventional banks and islamic banks if the data is not normally distributed.if the value of significance or asymp. sig. (2-tailed) <0.05, then ho is rejected. meanwhile, if the significance value or asymp. sig. (2-tailed)> 0.05, then ho is accepted (wijayanti et al, 2017). results descriptive statistics commercial banks n minimum maximum mean std. deviation std. mean error capital adequency ratio conventional 196 10.52 26.21 18.0833 3,03720 , 21694 sharia 196 10.74 44.50 19,1380 6.77265 , 48376 source: spss 20 output (processed data) financial performance comparison (empiric study on conventional commercial banks and sharia commercial banks 2012-2018) table 1 descriptive statistics capital adequency ratio (car) conventional commercial banks and islamic commercial banks 2012-2018 64 ambr table 2 non-performing loan / financing (npl / npf) descriptive statistics conventional commercial banks and islamic commercial banks 2012-2018 table 3 descriptive statistics return on assets (roa) conventional commercial banks and islamic commercial banks 2012-2018 table 4 descriptive statistics operating expenses to operating avanue (bopo) conventional commercial banks and islamic commercial banks 2012-2018 the higher the car value, the better the bank's management of capital, especially in facing possible risk of loss. based on these conditions, islamic commercial banks are proven to be superior to conventional commercial banks, namely 19.138%> 18.083%. this means that islamic commercial banks have better capital quality compared to conventional commercial banks. commercial banks n minimum maximum mean std. deviation std. mean error non performing loan / financing conventional 196 0.00 6.37 1,2924 1.10656 , 07904 sharia 196 -0.04 6.44 2,2628 1,50088 , 10721 source: spss 20 output (processed data) the smaller the npl / npf value indicates the better the bank is in asset management, especially in analyzing the level of non-performing loans. judging from the magnitude of the ratio calculation, islamic commercial banks are superior to conventional commercial banks, namely 1.2924% <2.2628%. this means that islamic commercial banks have better credit management quality compared to conventional commercial banks. commercial banks n minimum maximum mean std. deviation std. mean error non performing loan / financing conventional 196 0.09 5.15 2.6245 1,18760 , 08483 sharia 196 -8.18 4.86 1,0948 1,54856 , 11061 source: spss 20 output (processed data) the greater the roa value indicates that the bank is better at managing assets in increasing revenue. judging from the calculation of the roa ratio, conventional commercial banks are superior to islamic commercial banks, namely 2.2645%> 1.0948%. this means that conventional commercial banks are better at managing overall profits. commercial banks n minimum maximum mean std. deviation std. mean error operating expenses to operating avanue conventional 196 58.24 100.24 75,607 10,5817 , 77513 sharia 196 60.91 177.90 92,357 12,3283 , 88060 source: spss 20 output (processed data) the smaller the bopo value indicates the better the bank is in managing its operations in increasing revenue. judging from the magnitude of the calculation of the bopo ratio, conventional commercial banks are superior to islamic commercial banks, namely 75.607% <92.357%. this means that conventional commercial banks are better at taking advantage of their operational management. 65 commercial banks n minimum maximum mean std. deviation std. mean error loan / financing deposit ratio conventional 196 52.39 96.74 78,807 10,0322 , 71659 sharia 196 46.08 110.13 92,357 8,57782 , 61270 source: spss 20 output (processed data) the smaller the ldr value indicates the bank is getting better at managing its operations in increasing revenue, but at a certain point it should not be smaller than the specified ratio. judging from the magnitude of the calculation of the ldr ratio, conventional commercial banks are superior to islamic commercial banks, namely 75.607% <92.357%. the meaningconventional commercial banks have a better level of liquidation, so that conventional commercial banks have a better ability to meet credit requests submitted by customers. inferential statistics normality test commercial banks kolmogorov-smirnova shapiro-wilk statistics df sig. statistics df sig. capital adequency ratio conventional , 077 196 , 007 , 980 196 , 006 sharia , 160 196 , 000 , 861 196 , 000 a. lilliefors significance correction source: spss 20 output (processed data) the kolmogrov-smirnov test shows asymp. the sig of conventional commercial banks has a value of 0.007 <0.05, and islamic commercial banks have a value of 0.000 <0.05, this indicates that the data is not normally distributed. solutions to make data normally distributed include transforming it into ln form, removing data that deviates / outliers and leaving it alone and then using other alternative tests, one of which is testing data with mann whitney (suliyanto, 2011: 78:79). the transformation of the observational data has been attempted to use natural logs (ln), and discarding some of the oulier data, the normality test results still produce a sig value of kolmogrov smirnov <0.05. these results indicate that the datacapital adequency ratio (car)not normally distributed. commercial banks kolmogorov-smirnova shapiro-wilk statistics df sig. statistics df sig. non performing loan / financing conventional , 147 196 , 000 , 860 196 , 000 sharia , 090 196 , 001 , 951 196 , 000 a. lilliefors significance correction source: spss 20 output (processed data) kolmogrov-smirnov test looks asymp. the sig of conventional commercial banks has a value of 0.000 <0.05, and islamic commercial banks have a value of 0.001 <0.05, this indicates that the data is abnormally distributed. there is a solution to making data normally distributed, among others, by transforming it into an ln form, issuing data that is not normally distributed. deviating / outlier and being left alone then using other test alternatives, one of which is testing the data with mann whitney (suliyanto, 2011: 78:79). the observation data has been transformed into a natural log (ln) form, and discarding some of the oulier data, the normality test results still produce the sig value of kolmogrov smirnov <0.05. these results indicate that the datanon performing loan / financing (npf / npl) not normally distributed. financial performance comparison (empiric study on conventional commercial banks and sharia commercial banks 2012-2018) table 5 loan / financing deposit ratio (ldr / fdr) descriptive statistics conventional commercial banks and islamic commercial banks 2012-2018 table 6 kolmogorovsmirnov normality test capital adequency ratio (car) table 7 kolmogorovsmirnov normality test for non performing loan / financing (npf / npl) 66 ambr table 8 kolmogorovsmirnov normality test return on asset (roa) table 9 kolmogorovsmirnov normality test operating expenses to operating avanue (bopo) table 10 kolmogorovsmirnov normality test for outlier data operating expenses to operating avanue (bopo) table 11 kolmogorovsmirnov normality test loan / financing deposit ratio (ldr / fdr) commercial banks kolmogorov-smirnova shapiro-wilk statistics df sig. statistics df sig. return on assets conventional , 099 196 , 000 , 974 196 , 001 sharia , 183 196 , 000 , 802 196 , 000 a. lilliefors significance correction source: spss 20 output (processed data) kolmogrov-smirnov test looks asymp. the sig of conventional commercial banks has a value of 0.000 <0.05, and islamic commercial banks have a value of 0.000 <0.05, this indicates that the data is abnormally distributed.there is a solution to making data normally distributed, among others, by transforming it into an ln form, issuing data that is not normally distributed. deviating / outlier and being left alone then using other test alternatives, one of which is testing the data with mann whitney (suliyanto, 2011: 78:79). the observation data has been transformed into a natural log (ln) form, and discarding some of the oulier data, the normality test results still produce the sig value of kolmogrov smirnov <0.05. these results indicate that the datareturn on asset (roa) not normally distributed. commercial banks kolmogorov-smirnova shapiro-wilk statistics df sig. statistics df sig. operating expenses to operating avanue conventional , 126 196 , 000 , 945 196 , 000 sharia , 213 196 , 000 , 701 196 , 000 a. lilliefors significance correction source: spss 20 output (processed data) kolmogrov-smirnov test looks asymp. the sig of conventional commercial banks has a value of 0.000 <0.05, and islamic commercial banks have a value of 0.000 <0.05, this indicates that the data is not normally distributed. solutions to make data normally distributed include transforming it into an ln form, removing distorted data / outliers and leaving it alone then using other testing alternatives, one of which is data testing with mann whitney (suliyanto, 2011: 78:79). the observation data has been transformed into a natural log (ln) form, still resulting in the sig value of kolmogrov smirnov <0.05. however, after removing some of the oulier data, the normality test results still produced the sig value of kolmogrov smirnov = 0.359> 0.05. these results indicate that the dataoperating expenses to operating revenue (bopo) normally distributed. commercial banks kolmogorov-smirnova shapiro-wilk statistics df sig. statistics df sig. operating expenses to operating avanue conventional , 126 196 , 000 , 945 196 , 000 sharia , 046 174 , 200 * , 991 174 , 359 a. lilliefors significance correction source: spss 20 output (processed data) commercial banks kolmogorov-smirnova shapiro-wilk statistics df sig. statistics df sig. loan / financing deposit ratio conventional , 078 196 , 005 , 962 196 , 000 sharia , 059 196 , 094 , 968 196 , 000 a. lilliefors significance correction source: spss 20 output (processed data) 67 kolmogrov-smirnov test looks asymp. sig conventional commercial banks have a value of 0.005 <0.05, and islamic commercial banks have a value of 0.094> 0.05. even though islamic commercial banks are normally distributed, conventional commercial banks are not normally distributed. so the solution to making data is normally distributed, among others, is transformed into an ln form, removing deviating data / outliers and leaving it alone then using other testing alternatives, one of which is testing the data with mann whitney (suliyanto, 2011: 78:79). the observation data has been transformed into a natural log (ln) form, still resulting in the sig value of kolmogrov smirnov <0.05. however, after removing some of the oulier data, the normality test results still produce the sig value of kolmogrov smirnov = 0.361> 0,loan / financing deposit ratio (ldr / fdr) normally distributed. commercial banks kolmogorov-smirnova shapiro-wilk statistics df sig. statistics df sig. loan / financing deposit ratio conventional , 078 196 , 005 , 962 196 , 000 sharia , 056 195 , 200 * , 992 195 , 361 a. lilliefors significance correction source: spss 20 output (processed data) mann-whitney difference test the difference test in this study uses the mann-whitney difference test, because most of the observation data are not normally distributed, (wijayanti et.al, 2017). following are the test results for each variable. statistics test a capital adequency ratio mann-whitney u 17813,500 wilcoxon w. 37119,500 z -1,243 asymp. sig. (2-tailed) , 214 a. grouping variable: commercial banks source: spss output (processed data) the results of the asymp sig value of the capital adequency ratio based on the mann-whitney test were 0.214> 0.05 with a z value of -1.243 and the mann-whitney u of 17813.5. the difference is significant if asymp. the mann-whitney sig (2-tailed) shows a number <0.05. whereas there is no significant difference if the mannwhitney asymp.sig (2-tailed) shows a number> 0.05 (wiayanti et.al, 2017). based on these results, there is no significant difference in the capital adequency ratio between conventional commercial banks and islamic commercial banks. in conclusion h01 accepted. non performing loan / financing mann-whitney u 12078,500 wilcoxon w. 31384,500 z -6,356 asymp. sig. (2-tailed) , 000 a. grouping variable: commercial banks financial performance comparison (empiric study on conventional commercial banks and sharia commercial banks 2012-2018) table 12 kolmogorovsmirnov normality test for outlier data loan / financing deposit ratio (ldr / fdr) table 13 the mann-whitney capital adequency difference test ratio (car) table 14 mann-whitney normality test non performing loan / financing (npl / npf) 68 ambr table 15 mann-whitney normality test return on asset ratio (roa) table 16 mann-whitney normality test operating expenses to operating avannue (bopo) table 17 mann-whitney normality test loan / financing to deposit ratio (ldr / fdr) the result of the asymp sig value of non performing loan / financing based on the mann-whitney test is 0.000 <0.05 with a z value of -6.356 and a mann-whitney u of 12078.5. based on these results, there is a significant difference in non performing loans / financing between conventional commercial banks and islamic commercial banks. in accordance with (wiayanti et.al, 2017), that the difference is significant if asymp. the mann-whitney sig (2-tailed) shows a number <0.05. whereas there is no significant difference if the mannwhitney asymp.sig (2-tailed) shows a number> 0.05. in conclusion h02 rejected. return on asset ratio mann-whitney u 7471,500 wilcoxon w. 26777,500 z -10,464 asymp. sig. (2-tailed) , 000 a. grouping variable: commercial banks the result of the asymp sig value of return on asset ratio based on the mann-whitney test is 0.000 <0.05 with a z value of -10.464 and a mann-whitney u of 7471.5. based on these results, there is a significant difference in the return on asset ratio between conventional commercial banks and islamic commercial banks. in accordance (wiayanti et.al, 2017), that the difference is significant if asymp. the mann-whitney sig (2-tailed) shows a number <0.05. whereas there is no significant difference if the mann-whitney asymp.sig (2-tailed) shows a number> 0.05. based on these results, the conclusion is h03 rejected. operating expenses to operating avanue mann-whitney u 5133,000 wilcoxon w. 24439,000 z -12,548 asymp. sig. (2-tailed) , 000 a. grouping variable: commercial banks source: spss output (processed data) the results of the asymp sig value of operating expenses to operating avanue based on the mannwhitney test are 0.000 <0.05 with a z value of -12.548 and a mann-whitney u of 5133.5. referring to (wiayanti et.al, 2017), that the difference is significant if asymp. the mann-whitney sig (2-tailed) shows a number <0.05. meanwhile, there is no significant difference if the mann-whitney asymp.sig (2-tailed) shows a number> 0.05. based on these results, there is a significant difference in operating expenses to operating avanue between conventional commercial banks and islamic commercial banks. in conclusion h04 rejected. loan / financing deposit ratio mann-whitney u 8063,000 wilcoxon w. 27369,000 z -9,936 asymp. sig. (2-tailed) , 000 a. grouping variable: commercial banks source: spss output (processed data) 69 the result of the asymp sig value of the loan / financing to deposit ratio based on the mann-whitney test is 0.000 <0.05 with a z value of -12.548 and a mann-whitney u of 5133.5. referring to (wiayanti et.al, 2017), that the difference is significant if asymp. the mann-whitney sig (2-tailed) shows a number <0.05. whereas there is no significant difference if the mann-whitney asymp.sig (2-tailed) shows a number> 0.05. based on these results, there is a significant difference in the loan / financing to deposit ratio between conventional commercial banks and islamic commercial banks. in conclusion h05 rejected. discussion comparison of capital adequacy ratio between conventional commercial banks and islamic commercial banks the test results which show that there is no significant difference in the capital adequency ratio between conventional commercial banks and islamic commercial banks, are not in accordance with the expectations of the researcher. the results are also irrelevant sapariyah et.al (2017), rahayu et.al (2017), thayib et.al (2017), samad and anan (2017) which prove that there are significant differences. however, the results are in accordance with arinta (2016), fahmi et.al (2018), and hardianti and saifi (2018) which prove that there is no significant difference between the capital adequacy ratio of islamic commercial banks and conventional commercial banks. the implication of the research results is that there is a tendency for bank indonesia (bi) policy regarding the capital adequacy ratio (car) in national banking, empirically presenting a ratio that does not differ significantly between conventional commercial banks and syari'ah commercial banks. although these two types of banking have different characteristics. shari'ah banking does not impose a fixed interest charge on customer funds deposited in the bank, because it is replaced by a profit-sharing concept compared to conventional banking, which apparently does not cause a significant difference in car with conventional banking. this is quite reasonable because bi uses the same standards that must be adhered to by the two types of banking, namely a minimum car of 8% so that each must refer to the car provisions set by the ojk. comparison of non performing loans / financing between conventional commercial banks and islamic commercial banks the test results show that there are significant differences in non-performing loans / financing (npl / npf) between conventional commercial banks and islamic commercial banks, according to the researchers' expectations. the results are also consistent with the research sapariyah et.al (2017), wijayanti et.al (2017), samad and anan (2017), setyabudi et.al (2017), fahmi et.al (2018) which prove that there are significant differences in non-performing loans / financing between conventional commercial banks with islamic commercial banks. implications of the results of the study show that there is a level of management differences in the management of non-performing loans in banks, so that it greatly determines the quality of credit / financing that is distributed. bank indonesia regulations stipulate that the npl / npf is below 5%. sharia commercial banks have better credit management quality than conventional commercial banks because of this many islamic banks do not yet have a corporate segment so that the npf risk is smaller. in addition, many islamic banking financing has entered the non-productive or consumer sector, which has a lower risk character. comparison of return on asset ratio between conventional commercial banks and islamic commercial banks the test results show that there is a significant difference in return on assets (roa) between conventional commercial banks and islamic commercial banks, according to the researchers' expectations. the results correspond to ibrahim (2016), samad and anan (2017), wijayanti (2017), sapariyah et.al (2017), hardianti and saifi (2018) which prove that there is a significant difference in return on assets between conventional commercial banks and islamic commercial banks. the results imply that there is a tendency for return on assets (roa) of islamic general banks to be worse than return on assets of syari'ah commercial banks. why is that?, because islamic banks are more focused on the function as an ordinary commercial bank, while the function as an investment bank is not maximized. this is understandable because there is indeed an inadequate competency side when engaged in investment financing. meanwhile, conventional commercial banks, which are more likely to carry out their functions as investment banks, generate very high potential for profitability so that they greatly support their profitability performance. financial performance comparison (empiric study on conventional commercial banks and sharia commercial banks 2012-2018) 70 ambr commercial banks the results showed that there were significant differences in operating expenses to operating revenue (bopo) between conventional commercial banks and islamic commercial banks, according to the researchers' expectations. the results are also in accordance with solikah et.al (2016), wijayanti (2017), wahyuni and efriza (2017), tabash (2017), khan (2017) which proves that there is a significant difference between operating expenses to operating avanue for conventional commercial banks and banks. sharia general. this difference shows that conventional commercial banks are more optimal in managing operations in increasing revenue compared to islamic commercial banks. the results imply that there is a tendency that conventional commercial banks are better at maximizing their use of funds so that there is no idle and are better able to maintain credit quality so that the burden of ckpn for credit can be more controlled, compared to syari'ah commercial banks. in addition, conventional banks are also better able to reduce interest expenses by encouraging cheap savings funds, as well as making operational costs efficiency. comparison of loan / financing deposit ratio between conventional commercial banks and islamic commercial banks the results showed that there was a significant difference in loan / financing to deposit ratio between conventional commercial banks and islamic commercial banks according to the expectations of the researchers. resultin accordance with thesaputra (2016), solikah (2017), thayib et.al (2017), sapariyah et.al (2017), hardianti and saifi (2018) who prove that there are significant differences in loan / financing deposit ratio conventional commercial banks and islamic commercial banks. . this difference shows that conventional commercial banks have a better level of liquidation. these results imply that there is a tendency that conventional commercial banks, in the midst of a fairly rapid growth of third party funds (dpk), are more capable of channeling credit, especially for mortgage and commercial (construction) loans than syari'ah commercial banks. so even though there is a growing trend of new funds, but able to be balanced with lending has moved positively. conclusion there is no significant difference in the capital adequency ratio between conventional commercial banks and islamic commercial banks, indicating that the main difference between islamic banking isapply a fixed interest charge on customer funds, as applied to conventional banking does not cause a significant difference in car. there is a significant difference in non-performing loan / financing (npl / npf) between conventional commercial banks and islamic commercial banks, indicating that islamic commercial banks are better than conventional commercial banks in managing npl / npf, because they do not have or are still very limited in the general corporate segment. has a high level of risk. the significant difference in return on assets (roa) between conventional commercial banks and islamic commercial banks, indicates that conventional commercial banks are better at their profitability performance, because they tend to carry out more functions as investment banks that have the potential to generate very high profitability. meanwhile, shari'ah commercial banks are morefocuses on functioning as an ordinary commercial bank. the significant difference between operating expenses to operating revenue (bopo) between conventional commercial banks and islamic commercial banks indicates that conventional commercial banks are better at utilizing funds maximally so that they are better able to maintain credit quality, compared to syari'ah commercial banks. the significant difference between the loan / financing to deposit ratio between conventional commercial banks and syari'ah commercial banks indicates that conventional commercial banks are more capable of extending credit, especially for mortgage and commercial (construction) loans compared to syari'ah commercial banks. references arinta, yn (2016). comparative analysis of financial performance between islamic banks and conventional banks (case study on bank syariah mandiri and bank mandiri). muqtasid: journal of islamic economics and banking, 7 (1), 119-140. budiartini, sn, agung, ap, & gama, aw (2017). comparative analysis of the performance of islamic commercial banks and conventional commercial banks in indonesia. journal of management forum, 15 (2). dodoev, k. 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(2018). comparative analysis of the financial performance of conventional commercial banks and sharia commercial banks based on bank financial ratios (studies on conventional commercial banks and sharia commercial banks registered and supervised by the financial services authority (ojk) for the 2013–2016 period). journal of business administration, 60 (2), 10-18. ibrahim, aj (2015). empirical findings on the profitability of banks in qatar: islamic vs. conventional. international journal of business and commerce, 5 (4), 63-78. jahja, usa (2012). comparative analysis of the financial performance of islamic banking with conventional banking. epistemé: journal of the development of islamic sciences, 7 (2), 337-360. khan, a. (2018). financial performance analysis of public and private sector banks through camel model. asian j. appl. sci. technol. (open. khan, i., khan, m., & tahir, m. (2017). performance comparison of islamic and conventional banks: empirical evidence from pakistan. international journal of islamic and middle eastern finance and management. rahayu, e., isharijadi, i., & amah, n. (2017, october). comparison between the financial performance of conventional commercial banks and islamic commercial banks through liquidity, solvency and profitability approaches. in fipa: accounting education scientific forum (vol. 5, no. 1). ramadhan, kd (2016). financial statement analysis in measuring company performance at pt. ricky kurniawan kertapersada (makin group) jambi. valuta, 2 (2), 190-207. rivai, v., basyir, s., sudarto, s., & veitzal, ap (2013). commercial bank management from theory to practice. depok: pt rajagraffindo persada. rosiana, d., & triaryati, n. (2016). comparative study of financial performance in conventional banks and islamic banks in indonesia. management e-journal, 5 (2). samad, a., & anan, e. 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(2017). financial performance comparison of islamic and conventional banks in the united arab emirates (uae). icabml conference proceedings, 20 (07). thayib, b., murni, s., & maramis, j. (2017). comparative analysis of the financial performance of islamic banks and conventional banks. emba journal, 5 (2), 1759-1768. wahyuni, m., & efriza, re (2017). comparative analysis of the financial performance of islamic banks and conventional banks in indonesia. international juornal of social science and business, 1 (2), 66-74. wijayanti, a., nisari, lk, & titisari, kh (2017). sharia banks vs conventional banks: financial performance based on financial ratios. journal of socio-economic dynamics, 6 (2). financial performance comparison (empiric study on conventional commercial banks and sharia commercial banks 2012-2018) 72 ambr other references: bank indonesia (2011). bank indonesia regulation no.13 / 24./dpnp dated 25 october 2011. 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(http://www.ojk.go.id, accessed 8 february 2018) the factors underpricing level in the companies conducting initial public offering at indonesia stock exchange 8 3 the factors underpricing level in the companies conducting initial public offering at indonesia stock exchange yohandes rabiqy1* and yusnaidi2 1,2 teuku umar university, meulaboh, indonesia abstract the purpose of this research is to examine and analyze the influence of of the variables current ratio, firm size, financial leverage, and return on equity to underpricing level. this research used the initial public offerings companies which was listed its stock to indonesian stock exchange. the data that is used at this research was taken from the annual published financial report of each company. the population in this research is companies that were listed to indonesian stock exchange during period 2012 through 2016. the amount of population was 115 companies. based on certain criteria, there are 62 samples from population. method of multiple linear regressions on panel data approach using common effect model (the pooled least square). simultaneous test in hypotesis results shows that current ratio, firm size, financial leverage, and return on equity have a significant effect on the underpricing level of initial public offerings companies. partial test (t-test) in hypothesis result shows that firm size have a negative and significant effect on the underpricing level of initial public offerings companies that listed in indonesian stock exchange. current ratio, financial leverage, and return on equity have a negatif and insignificant on the underpricing level of initial public offerings companies that listed in indonesian stock exchange. keywords: common effect model, financial leverage, firm size, return on equity, underpricing current ratio 1. introduction this section describes the background of the study that supported with information from existing literatures, underlines the issues and states the research objectives. many businesses think that by making the company as one of the company that go public will enhance the company’s image. this thinking is not completely wrong, because the fact shows that most of the best companies in indonesia are the open companies or the company that go public. the tendency can be found in both large company and small company. nevertheless, the greatest tendency can be found in small-medium company, sometimes the companies want to be strong while they did not want to release the stock to the public. then, the companies attempt to make the brand to be strong in the gobal market. it is realized by making the company go public or do an ipo. * corresponding author. email address: rabiqy85@gmail.com mailto:rabiqy85@gmail.com afebi management and business review (ambr) vol.02 no.01, june 2017 9 the additional capital from public for the company is also one of the factors that company to sell the stocks to the public in order to receive large profit or fund directly and not staged. the people who enter the possession or ownership is usually not interested to include into the management so that the interest of the majority of the company owner can run stable. to create the openness to the public. the openness is created because of the tight regulation at the capital market, therefore everything is transparent. the transparent here means there’s no hidden information to the public. the dividend payment based on the profit to give the value of a company. because the companies that go public have the high prestige image in the public and also the company’s market value can be known. more the companies are doing the ipo, there will be an increase in the number of the companies that listed on the indonesian stock exchange resulted in an increased number of shares in the stock market so that investors can pick stocks to be bought. this circumstances would require a specific strategy to buy the stocks if it can be selected in investing and can generate the profits. the emiten company expects through the ipo activities will improve the company’s prospect for expansion will be done and an improving outlook for the company will make the stocks price offered is higher. in additional, the company’s capital can increase through the go public activities and also create a public market where the founder and the other stockholder to convert the majority of their stocks in cash immediately at a same time in the future, hence increasing the publicity that plays a cmplementary role for most huge companies. eventhough the needs of the additional capital for a company can be fulfilled through many ways, by selling the new stocks is one way. if a company has a legal entity such as a limited company wants to seek the additional funds for business expansion, the company was able to raise the funds through some of the following alternatives: applying for a loans to banks, by finding the short-term loans (through the financial market). issuing bonds, which is a loan debt form for long-term debt or issuing stocks. issuing bonds or stocks made through the capital markets. if the companies chooses the issuing stocks, then the company should prepare the go public process. the problem can be faced by the companies when doing the ipo in the capital market is the determination of the initial offering price. on one hand, the company wants to set the high prices in order to gain the acceptance of result of high proceeds. on the other hand, the expensive stock prices influences investor intensions to buy that stocks, and the expensive stock prices also affect the offering stocks less interesting because the investors want to get the initial return from the differences between the stock prices in the secondary market and the stock purchase in the primary market, therefore, this circumtances are not favorable for the issuers, because they sacrifice the returs that should be obtained. the precense of initial return indentify the underpricing phenomenon in the primary market. if the stock prices in the primary market lower than the stock prices in the secondary market at the first day, the underpricing phenomenon will be happened. the underpricing of the stock prices depend on demand and offer on the first day that stocks traded on the exchange. the price can be used from the offering price (ipo price) or closing price on the first day of the transaction in the secondary market. if the price that offered to the public on the first day is rp395 per stocks the factors underpricing level in the companies conducting initial public offering at indonesia stock exchange 10 and on the first day the stocks are transactioned with the closing price is rp550 per stocks, therefore the stocks price is assumed the underpricing. it means the reasonable price is the demand and offer is rp550. the following data is the price of five companies that experience underpricing from 64 samples which is used on 2012 to 2016. no company code ipo price (rp) closing price (rp) cr (%) dar (%) roe (%) 1 sraj 120 200 0,717 24,84 0,724 2 alto 210 315 214, 3 41, 8 8,56 3 naga 180 305 7,25 87, 56 2,12 4 asmi 270 405 633,11 60, 83 11, 96 5 dpum 555 825 4,99 21, 36 6, 44 the table above describes the underpricing conditions in five companies that happened in 2011-2015 where the ipo price that offered on the first day in the primary market is lower than closing price stocks on the first day is traded in the secondary market. the investors who buy the stocks in ipo always want the price stocks increased in the secondary market, therefore the investors obtain the stocks return. the grade of stocks return on the first day is known as initial return. however, because of the underpricing condition which happened in indonesia’s capital market as seen on the table 1.2, it is definitely detrimental the company that go public, because the fund that obtained from the public is not maximal. generally, the occurance of this condition caused by a variety of factors, both through financial ratio (cr, dar, roe) and non-financial (stock price, total assets owned, etc). the underpricing phenomenon occures because of a variety factors, first of all underpricing is deliberately done to attract investors in the primary market. in addition, to provide benefits to the underwriter, and secondly, the asymmetry information. the assymetry may occur between issuers and underwriters as well as between investors. in order to reduce the assymetry information, therefore the company conducted the issuance of a prospectus. the prospectus detailing the information and material facts about the public offering of the issuer in the form of the financial and non-financial information (suyatmin and sujadi, 2006). the firm size factor is one of the factor which plays an important role in helping to convince the investors to assess the stock price, therefore the possibility of underpricing can be minimized. this case also investigated by islam dkk (2010), yolana and martani (2005), hapsari and mahfud (2012 ) found that the firm size positive significant effect on underpricing. the financial leverage is also one of the factors that influence, such the research that conducted by isfattun and hatta (2010), wulandari (2011) that stating the financial leverage is effected positive significant on the level of underpricing. in addition, the roe is also one of the factors that effected the underpricing level. the research by yolana and martani (2005), hapsari mahfud (2012)found that the roe factor effects positive significant on the level underpricing. the research conducted by isfattun and hatta (2010) discovered another result about afebi management and business review (ambr) vol.02 no.01, june 2017 11 roe factor, they discovered that roe is not effected significantly on the initial return. 2. literature study the stock market is the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets also known as the equity market, the stock market is one of the most vital components of a free-market economy, as it provides companies with access to capital in exchange for giving investors a slice of ownership in the company. the stock market makes it possible to grow small initial sums of money into large ones, and to become wealthy without taking the risk of starting a business or making the sacrifices that often accompany a high-paying career. organized and regulated financial market where securities (bonds, notes, shares) are bought and sold at prices governed by the forces of demand and supply. stock exchanges basically serve as primary markets where corporations, governments, municipalities, and other incorporated bodies can raise capital by channeling savings of the investors into productive ventures; and secondary markets where investors can sell their securities to other investors for cash, thus reducing the risk of investment and maintaining liquidity in the system. stock exchanges impose stringent rules, listing requirements, and statutory requirements that are binding on all listed and trading parties. 2.1 stock exchange function rivai, et al. (2013:97-98) said that capital market has several functions as belows : 1. provide a source of financing (long-term) for the business while enabling optimal resource allocation 2. provide an investment vehicle for investors while allowing diversification efforts; 3. provide a leading indicator for the country's economic trends. 4. distribution of corporate ownership into the general public; 5. provide an opportunity to have a healthy company and prospects; 6. create jobs were interesting; 7. creating liquidity of trading in securities; 8. the spread of ownership, openness and professionalism as well as creating a good business climate. 2.2 go public going public and offering stock in an initial public offering represents a milestone for most privately owned companies. a large number of reasons exist for a company to decide to go public, such as obtaining financing outside of the banking system or reducing debt. furthermore, taking a company public reduces the overall cost of capital and gives the company a more solid standing when negotiating interest rates with banks. this would reduce interest costs on existing debt the company might have. the main reason companies decide to go public, however, is to raise money a lot of money and spread the risk of ownership among a large group of shareholders. spreading the risk of ownership is especially important when a company grows, with the original shareholders wanting to cash in some of their profits while still retaining a percentage of the company. the factors underpricing level in the companies conducting initial public offering at indonesia stock exchange 12 table 1 the difference between go public company and non go public company table no aspect non go public go public 1 minimum disclosure requirements not absolute absolute 2 investor limited more than 300 investor 3 financial report (reguler or insidentil) not absolute absolute 4 segmented between owner and managerial low high 5 ownership low high 6 managerial not figure figure 2.3 initial public offering an initial public offering (ipo) is the first time that the stock of a private company is offered to the public. ipos are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately owned companies looking to become publicly traded. in an ipo, the issuer obtains the assistance of an underwriting firm, which helps determine what type of security to issue, the best offering price, the amounts of shares to be issued and the time to bring it to market. ipos are introduced to the market by an underwriting investment bank, which aids the issuing company by soliciting potential investors. in addition, the underwriter helps the issuing company to settle on the price at which the stock should be offered to investors. ipos represent the first time an issuing company will financially benefit from the public sale of its stock. following the ipo, shares trade between buyers and sellers on the open market, whereby the underlying company receives no compensation. 2.4 underpricing an initial public offering (ipo) is the first time that the stock of a private company is offered to the public. ipos are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately owned companies looking to become publicly traded. in an ipo, the issuer obtains the assistance of an underwriting firm, which helps determine what type of security to issue, the best offering price, the amount of shares to be issued and the time to bring it to market. an ipo is also referred to as a public offering. when a company initiates the ipo process, a very specific set of events occurs. the chosen underwriters facilitate all of these steps. 3. research methodology the current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay off its short-term liabilities with its current assets. the current ratio is an important measure of liquidity because short-term liabilities are due within the next year. afebi management and business review (ambr) vol.02 no.01, june 2017 13 for the size of the companies in this research is a reflection of the size of the companies that appear in the value of total assets of the company. with the growing size of the company, there is a tendency that more investors are paying attention to the company. this is because large companies tend to have a more stable condition. this stability to attract investors to own shares in the company. this condition is a cause for rising share prices of companies in the capital market. investors have great expectations vis large enterprises. insvestor expectation of acquiring the dividend from the company. increased demand for the company's stock will be able to spur the increase in stock prices in the capital market (shofwatul, 2011). the level of leverage describes the risk level of the company measured by comparing total liabilities to total assets owned by the company. the higher the level of leverage of a company, the higher the level of uncertainty factors will negatively affect the company so that the initial return (sulistio, 2005). this is also supported by firth and smith in trisnaningsih (2005) that financial leverage is a high level of obligations to make the company's management becomes more difficult to make a firm prediction. return on equity (roe) is a ratio that is often used by shareholders to assess the performance of the company concerned. roe measures the level of return on capital of the company. considerations include variables roe for the company's profitability provides information to outside parties regarding the operational effectiveness of the company. in this research, the variables represented profitability with roe assumed as investors' expectations for funds invested in the company's ipo. the greater profitability (roe), then the investor would be interested in buying or looking for a company's stock ipo because hope in the future will get large returns on their ownership. it this suggests the increase in the offer price of shares traded on the secondary market caused the demand for the stock price to rise (yolana and martani, 2005). 3.1 research hypothesis based on the conceptual framework that has been described, the hypothesis of this research is the currentratio,the size of the company(firmsize), financial leverage and profitability (roe) simultaneously and partially significant effect on underpricing currents ratio company size financial leverage profitabilitas the factors underpricing level in the companies conducting initial public offering at indonesia stock exchange 14 the level of underpricing shares when the company made an initial public offering (ipo) at the indonesian stock exchange (bei). 4. methods based on the formulation of the problem and research objectives, this research is the kind of associative research with the aim to determine the relationship between two or more variables. this research aimed to analyze the influence of the currentratio,the size of the company(firmsize), financial leverage and profitability (roe) to underpricing. 4.1 operational segment operational segment of this research are as follows: a. dependent variable (variable bound) in this research was underpricing. b. independent variables (variables) this research consist of current ratio (x1), company size (x2), financial leverage (x3), profitability of the company (x4). c. the object of this research is a company whose shares suffered underpricing at the time of ipoin indonesia stock exchange period january 2012 december 2016 4.2 independent variable (x) 4.2.1 current ratio (x1) current ratio is the ratio used to measure a company's ability to meet current liabilities from current assets owned by the company. the higher this ratio, means the greater the company's ability to meet short-term financial obligations that negatively affect the level of underpricing.the calculation of this ratio is: 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 current liabilities 4.2.2 company size in general, the size of the company can be seen from the total assets of the company in the last year before the company's listing.company size is measured by calculating the natural logarithm (ln) in total assets last year before the company's listing.the higher this ratio, the higher the level of investor confidence given to the company that negatively affect the level of underpricing. size = natural logarithm of total assets 4.2.3 financial leverage (x3) degree ofcan leverage describe the level of risk of the company measured by comparing the company's total liabilities to total assets owned by the company. the higher the level of leverage,the higher the level of uncertainty will be the company that makes the management of investor is more difficult to make predictions this company means the ratio of positive effect on the level of underpricing.calculations: debt to total assets ratio = 𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 afebi management and business review (ambr) vol.02 no.01, june 2017 15 4.2.4 profitability of the company (x4) roe is a commonly used ratio of shareholders to assess the performance of the company concerned. this ratio measures the ability of the company makes a profit available to shareholders of the company. the higher this ratio, investors will be more interested to embed a number of shares in the company because the company considered more capable and to meet the expectations of investors will profit earned on funds invested in the company, this means that this ratio had a negative impact on the level of underpricing.roe can be used to measure the following formula: 𝑅𝑂𝐸 = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟′𝑠 𝐸𝑞𝑢𝑖𝑡𝑦 𝑥 100% 4.2.5 dependent variable dependent variables in this research is underpricing shares, measured by initialreturn. initial returns are the benefits of shareholders because of the difference in price of shares purchased in the market at the prime time of the ipo stock price on the first day in the secondary market. 4.2.6 population and sample the population in this research are all companies that gopublic in indonesia stock exchange (bei) in the period 2012-2016. total population earned during the period amounted to 118 companies. the sampling method using certain criteria. the criteria are as follows: 1. the company performs its ipo during the period 2012-2016. 2. the company is experiencing underpricing in which the stock price lower than the ipo price on the first day in the secondary market. 3. publishes financial statements for the period 2012-2016 with complete data in accordance with that required in this research. date of listing on the stock exchange and the ipo price available. the financial statements used are the financial statements obtained from bei. 4. data's closing price(closingprice),total assets, liabilities and equity are listed in idx fact book on the stock exchange. based on the sampling criteria, the obtained sample as many as 62 firm votes. 5. results the descriptive analysis describes the phenomenon or characteristics of the data. the purpose of descriptive analysis is to make it easier to read the data and understand the meaning. the data processed in the form of descriptive statistics will display the characteristics of the sample that used in this research includes the number of sample (n), the average of the sample (mean), minimum and maximum, and standard deviation. the description in this research consists of five variables; current ratio, size of firm, financial leverage (dar), return on equity (roe), and underpricing, that shows in the table below: the factors underpricing level in the companies conducting initial public offering at indonesia stock exchange 16 table 2 descriptive statistic result table underpricing current ratio size of firm financial leverage roe mean 24.82592 264.7296 27.61075 47.73995 17.47621 median 14.21000 166.9100 27.74500 47.96500 11.85000 maximum 95.08200 1273.090 30.68000 89.30664 201.1700 minimum 1.080000 33.40000 20.31000 7.560000 0.160000 std. dev 22.30132 267.3955 1.404158 23.81435 29.71917 observation 62 62 62 62 62 the appendix table above describes the amount data that used in this research is approximately 62 samples of data which is taken from the company’s annual financial statement that listed on the indonesia stock exchange that is accessed from the website www.idx.co.id a. current ratio has the average (mean) aproximately 264.7296, the minimum value approximately 33.4 was obtained by pt. bali tower indo sentra, tbk. in 2014, the maximum value approximately 1273,090 was obtained pt. mitra keluarga karya sehat, tbk. in 2015, and the standard deviation approximately 267.3955. b. the size of firm has the average (mean) aproximately 27.61075, the minimum value approximately 20.31 that was obtained by pt. bali tower indo sentra, tbk. in 2014, the maximum value approximately 30.68 was obtained by pt. salim ivomas pratama, tbk in 2011 and the standard deviatio appoximately 1.404158. c. the financial leverage (dar) has the average (mean) approximately 47.73995, the minimum value approximately 7.56 was obtained pt. victoria investama, tbk. in 2013, the maximum value approximately 89.30664 was obtained by pt. bank yudha bhakti, tbk. in 2015, and the standard deviation approximately 23.81435. d. the roe (return on equity) has the average (mean) approximately 17.47621, the minimum value approximately 0.16 was obtained by pt. intan baruprana finance, tbk. in 2014, the maximum value approximately 201.17 was obtained by pt. alkindo naratama, tbk. in 2011, and the standard deviation appromately 29.71917. the underpricing has the average (mean) approximately 24.82592, the minimum value 1.08 was obtained by pt. sri rejeki isman, tbk. in 2013, the maximum value appromately 95.082 was obtained by pt. surya essa perkasa, tbk. in 2012, and the standard deviation approximately 22.30132. 5.1 classic assumption test 5.1.2 normality test in this research, the normality test of the residuals using the jarque-bera (j-b) test, with a significance level used. the basic desicions is based on the probability value from the j-b statistic, with the following provisions: 1. if the probability value more than 0.05, therefore the normality assumption is met. 2. if the probability value less than 0.05, therefore the normality assumption is not met. http://www.idx.co.id/ afebi management and business review (ambr) vol.02 no.01, june 2017 17 the probability value of the j-b statistic is 0.054158. because of the probability value is 0.054158, more than the significance level (0.05). therefore, the normality assumption was met. 5.2 hypothesis test on the hypothesis test, the partial regression coefficient significance testing will be performed comprehensively and simultaneously (f-test), the partial regression coefficient significance testing will be performed individually (t-test) and determination coefficient analysis. 5.2.1 f-test the known probability value of the f-test is 0.0284. because of the p-value (0.0284) less than the significance level is 0.05, therefore the null hypothesis is rejected and the alternative hypothesis is accepted. in clonclusion, current ratio, firm size, financial leverage, and the roe is significantly effected to the underpricing stock level when the company doing the ipo in the indonesia stock exchange. 5.2.2 t test test the significance of the partial effect is a test to see significant or not, the influence of each independent variable on the dependent variable. decision making can be done by comparing the probability value or sig. with a value of significance level, ie. if the value of the probability significance level used in this research, the value of partial regression coefficient. this means that the effect of independent variables to variable stock price is not statistically significant at the 5% significance level. however, if the probability value <significance level is used, then the value of partial regression coefficient. this means that the influence of independent variables on the stock price variables are statistically significant at the 5% significance level. another way of decision-making of the hypothesis can be done by comparing the value of the test statistic to the critical value based on the distribution table. before calculating the critical value, the first calculating the value of degrees. here's the formula for calculating the value of degrees of freedom. degrees of freedom = n k note that the stated number of elements in the sample, while a number of variables. an unknown number of elements in a sample of 44 and the number of variables is 5, so the degree of freedom is. the significance level used was 5%, so the critical value with 57 degrees of freedom and a level of significance based distribution table is. ± 1.67203. the following decision rule based on the test of the hypothesis (gio, 2015: 61): if |𝑇𝑡 | ≤ | 𝑡𝐶𝑟𝑖𝑡𝑖𝑐𝑎𝑙 |, then 𝐻0 is received and 𝐻1 rejected if |𝑇𝑡 | > | 𝑡𝐶𝑟𝑖𝑡𝑖𝑐𝑎𝑙 |, then 𝐻0 𝑖𝑠 rejected and 𝐻1 accepted 6. discussion 6.1 effect of current ratio (cr) to the level underpricing results of this research indicate an increase or decrease in the current ratio during the research period did not affectthe level underpricing. significantly partially it can be seen that the cr and no significant negative effect on stock prices. the higher the cr, therate underpricing will decline, but the effect shown is not statistically significant or insignificant, since the possibility of the investor the factors underpricing level in the companies conducting initial public offering at indonesia stock exchange 18 as having excess funds paid little attention to the information about current ratio a company'swhen doing an ipo. variable current ratio does not affect the level of underpricing shares as investors judged that the company's goal go public is tolongterm goals, so the liquidity of companies that demonstrate the company's ability to repay short-term obligations less attention investors. this is according to research conducted by hapsari and the mahfud (2012), the results of the research showed avariable current ratio but notnegative effect significanton the level of underpricing shares. 6.2 effect of size of firm towards underpricing results of this research indicate an increase or decrease in the variable size of the firm during the research period affect the level of underpricing shares significantly. partially it can be seen that the size a significant negative effect on the level of underpricing shares. the higher the size variable, then the level of underpricing of shares will decline. the high size of the firm can be used as a benchmark by investors in viewing quality companies because large companies tend to have a stable condition, the stability will attract investors to own shares in the company. this is consistent with the results of research conducted by boubaker and mezhoud (2011), yolana and martani (2005), and wulandari (2011), but in contrast to the results of research on islam et al.(2010) who found that the variable size of the company giving positive and significant impact on the level of underpricing shares. 6.3 effect of financial leverage (dar) on the level underpricing results of this research indicate an increase or decrease in financial leverage (dar) during the research period did not affect the level of underpricing shares significantly. partially it can be seen that the dar and no significant negative effect on the level of underpricing shares. the use of high debt in the company's operations will lead to disinterest of investors to invest. the higher level of financial leverage of a company, the higher the level of risk faced by the company, which means the higher the leverage, the higher the uncertainty factor will be the company. accordingly, investors will be more selective in choosing shares to be purchased and avoid investing in companies with high dar value so the impact of the uncertainty of the price of a stock. this is according to research conducted by junaeni and agustian (2013). 6.4 effect of corporate profitability (roe) on the level underpricing results of this research indicate an increase or drop in the company's profitability (roe) during the research period did not affect the level of underpricing shares significantly. partially it can be seen that the roe is negative and not significant to the level of underpricing shares. roe is a ratio that provides information to investors about how much the return on capital of the company resulting from the performance of companies that generate profits. the greater the value of roe, the expected rate of return is also a large investor, which means the company considered more profitable. prospective investors will consider the percentage of the profitability of the company before making their investment decisions so that the lower the uncertainty value, which will also reduce the level of underpricing the company. the results support the research that has been done isfaatun and hatta (2010). afebi management and business review (ambr) vol.02 no.01, june 2017 19 7. conclusion 7.1 conclusions based on the results of research and discussion that has been stated previously, the conclusions of this research are as follows: 1. this research aims to identify and analyze the factors that influence simultaneously on the level of underpricing shares at the time of its initial public offering in the indonesia stock exchange , the results showed that simultaneous, currentratio,the size of the company(firmsize), financial leverage and profitability (roe) significantly affects the level of underpricing shares when the company made an initial public offer (ipo) 2011-2015. 2. this research aims to identify and analyze the factors that influence partially on the level of underpricing shares at the time of its initial public offering in the indonesia stock exchange. the results showed that partially, size of firm a significant negative effect on the level of underpricing shares. while the current ratio, financial leverage (dar) and profitability (roe) and no significant negative effect on the level of underpricing shares when the company made an initial public offer (ipo) 2011-2015. 7.2 recommendations based on the findings, the researchers tried to provide suggestions and input for the company, investors as well as further research as follows: 1. given this research, the company is expected to pay more attention to the factors that affect the level of underpricing in order to reduce the risk of underpricing current share public offering premiered at the indonesia stock exchange, so that the funds expected from the opening can be obtained with a maximum investment. 2. for investors, it is expected to be much more selective in choosing the company that will be a place to invest. one consideration that can be drawn from this research is that the investor can see that the company has good growth rates to manage the company. thus, investors have more consideration for investment decisions. for further research, it is advisable to use more of the other independent variables outside the variable currentratio,the size of the company(firmsize), financial leverage and profitability (roe). future studies are also advised to do research per-sector companies with the characteristics of a more diverse, so the results obtained can represent to be concluded by comparing each sector companies listed on the indonesia stock exchange, and further research is also expected to conduct research usingdata series time up to date/ the latest, so that the results will also be more accurate. references brealey, r. .a., stewart, c. m., & allen, f. 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(2012). analisis faktor-faktor yang mempengaruhi underpricing saham pada penawaran umum perdana di bei periode 2008-2010. diponegoro journal of management, 1(1), 1-9. isfattun, e., & hatta, a. j. 2010. analisis informasi penentu harga saham saat initial public offering. jurnal ekonomi dan bisnis, 15(1), 66-74. junaeni, i., & agustian, r. 2013. analisis faktor-faktor yang mempengaruhi tingkat underpricing saham pada perusahaan yang melakukan initial public offering di bei. jurnal ilmiah widya, 1(1), 52-59. mayo, h. b. (2008). investments: an introduction. canada: thomson southwestern. rivai, h. v., modding, h. b., veithzal, a. p., & mariyanti, s. m. (2006). pasar modal dan manajemen portofolio. jakarta: erlangga. shofwatul, a. (2012). pengaruh struktur aktiva, ukuran perusahaan dan profitabilitas terhadap struktur modal. [skripsi]. universitas diponegoro. sulistio, h. (2005). pengaruh informasi akuntansi dan non akuntansi terhadap initial return: studi pada perusahaan yang melakukan initial public offering di bursa efek jakarta. simposium nasional akuntansi viii solo, 8799. suyatmin., & sujadi. (2006). faktor-faktor yang mempengaruhi tingkat underpricing pada penawaran umum perdana di bursa efek jakarta. jurnal ekonomi benefit, 10(1), 11-32. trisnaningsih, s. (2005). analisis fakor-faktor yang mempengaruhi tingkat underpricing pada perusahaan yang go public di bursa efek jakarta. jurnal akuntansi dan keuangan, 4(2), 195-210. van horne, j. c., & machowicz, jr, j. m., (2008). fundamentals of financial management (13th edition). united kingdom: pearson education. walsh, c. (2012). key management ratios (edisi keempat). jakarta: erlangga. widjaja, g., & risnamanitis, w. (2009). go public dan go private di indonesia (edisi pertama, cetakan pertama). jakarta: kencana prenada media group. wulandari, a. (2011). analisis faktor-faktor yang mempengaruhi tingkat underpricing pada penawaran umum perdana (ipo). [skripsi]. universitas diponegoro. 45 increasing organizational citizenship behavior through quality of work life and organizational commitment endang susilawati shofia amin* musnaini universitas jambi, indonesia abstract this study aims to examine the effect of quality of work life on organizational citizenship behavior through organizational commitment as a mediating variable. the population in this study were all permanent employees of pt. petro china international jabung ltd with a sample of 120 respondents. the data collection method uses questionnaire method which is measured using likert scale and the hypotheses was tested by using the pls (partial least square) program. the results showed that the quality of work life has positive and significant effect on organizational citizenship behavior, the quality of work life is proven to have positive and significant effect on organizational commitment, organizational commitment has positive and significant effect on organizational citizenship behavior, and organizational commitment partially mediates the relationship between the quality of work life and organizational citizenship behavior. the implication of this research is that the increasing quality of work life will increase organizational commitment so that it can improve organizational citizenship behavior. the company must continuously improve the quality of work life program to increase the employee performance with objective and systematic procedures. keywords: quality of work life, organizational commitment, organizational citizenship behavior, *corresponding author. email address: shofia.mgt@gmail.com increasing organizational citizenship behavior through quality of work life and organizational commitment received may 15th 2021 review june 17th 2021 publish august 19th 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: http://journal.afebi.org/index.php/ambr/article/view/421 mailto:shofia.mgt@gmail.com http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& http://journal.afebi.org/index.php/ambr/article/view/421 46 ambr introduction organizational citizenship behavior (ocb) is a unique aspect of individual activity at work. tambe and shanker (2014) explained that ocb is the behavior of employees at a time which shows certain behaviors that go beyond the employee's duties. ocb is a form of behavior that is an individual choice and initiative, not related to the organization's formal reward system but in aggregate to increase organizational effectiveness (marlina, wulandari & ramashar, 2020). in line with saepudin and djati (2019) explained that ocb is the freedom of individual behavior, which is indirectly or explicitly recognized by the reward system, and contributes to the effectiveness and efficiency of organizational functions. this statement shows that ocb is not included in the job requirements or formal job descriptions of employees so that if it is not displayed it will not be sanctioned by the company but as a whole it can affect the effectiveness of the organization, so it also explains that the company will be successful if its employees do not only do it. main task, but also willing to do extra tasks, such as willing to cooperate, provide advice, help to help, participate actively, and willing to use his work time effectively. the statement regarding the importance of organizational citizenship behavior was also put forward by the research of traiyotee, taeporamaysamai and saksamrit (2019), ocb behavior is very important for employees in the company because having extra role behavior means that employees can serve and be dedicated to work, which projects a positive effect on the success and welfare of the company. this is also reinforced by a statement of robbins & judge (2016) which states that companies that have employees with a high level of organizational citizenship behavior will show better performance and ultimately contribute more to the achievement of organizational goals. rosario, marquez, zayas and lópez (2020) explain that ocb is considered important and valuable for the survival of the organization. ocb can increase both coworker and managerial productivity, besides that it can increase the efficiency of the use of organizational resources, stability of organizational performance, increase the ability of organizations to adapt to changes in the business environment, and become an effective basis for coordination activities between team members and between work groups. if ocb does not materialize in the organization, it will result in when the organization requires the energy and thoughts of employees outside their role, the organization will encounter difficulties so that in the end the organizational goals cannot be achieved properly (aini, hardjajani & priyatama, 2014). recognizing the importance of the influence of organizational citizenship behavior in improving employee performance and contributing to the achievement of organizational goals. aisyah and wartini (2016) said that ocb’s employee can be influenced by several factors, including the quality of work life and organizational commitment. suriyana, wijaya and kumbara (2020) in their research also states that the ocb that will support the success of the company is also influenced by the quality of work life. in line with research from kurniawati (2018) that employees who have a high quality of work life will encourage actions taken by employees that exceed the minimum requirements expected by the role of the company and promote the welfare of colleagues, work groups, and the company. therefore, of course, the organization needs to create a quality work life within the company because this factor has an influence on the emergence of positive behavior among employees, one of which is the behavior that shows the organizational citizenship behavior. srivastava, misra and madan (2019) in their research states that improving the quality of employee work life is very important for companies to improve performance and productivity. the positive results of implementing this quality of work life include a reduction in work fatigue, a reduction in absenteeism and turnover and an increase in organizational commitment. companies that have high quality of work life ultimately lead to more sustainable efficiency, productivity and profitability (mebarki, fouatih & mokdad, 2018). the description above explains that the quality of work life is an important problem for organizations to achieve competitive advantage, this is due to the view that the quality of work life is considered capable of increasing the role and contribution of organizational members. with the implementation of the optimal quality of work life in the company, it is hoped that it will be able to encourage the ocb or the extra role behavior of employees in the company. apart from the quality of work life, the next variable that affects organizational citizen behavior is organizational commitment. organizational commitment is an important behavioral dimension that can be used to assess the tendency of employees to stay as members of the organization. commitment is the identification and connection of a person who is relatively strong in the organization. the study of widodo, sunaryo & k. (2019) found that high organizational commitment has different attitudes than those with low commitment. organizational commitment behavior results in work performance, low levels of absenteeism and low levels of employee turnover. so that with a high commitment within employees, it increases awareness that what is done solely for the company has a direct impact on its performance. in other words, the employee's organizational commitment will be able to hold himself back from moving to another company so that it can reduce the turnover cost of a company and also maximize his work in that one company. 47 in line with the statements of maghfironsyah and yuniawan (2019) that when someone has a strong commitment to their organization, that person will try their best to give their best in order to survive in the organization and will also have a good impact on the organization, and the level of loyalty of its members will be. is automatically formed and tends to be high. vice versa, if someone has a commitment that is considered or felt to be lacking, then the level of loyalty will also be less and even tend to be low. thus, the higher the employee's commitment to the organization, the emotional relationship between the employee and the company will indirectly. this statement is supported by gunastri et al., (2019) explaining that employees who have organizational commitment will carry out tasks that are not only tasks that have become their obligations according to existing jobs, but also do other work (extra role), where if there are employees who are not able to do a job, then this committed employee will tend to help his colleagues to achieve the goals expected by the organization without comparing their abilities with other employees. organizational commitment in this study is used as a mediating variable in creating extra role behavior (ocb) in the organization. employee work patterns at pt. petrochina international jabung ltd is very interesting to study, because employees have an uniqueness that distinguishes them from employees of other organizations, namely organizations with various educational backgrounds, various skills, and different job characteristics, thoroughness, technological literacy, and various skills. from the various backgrounds, each plays a different role. when employees play a role in accordance with the demands of their duties and responsibilities, it is called in role behavior. however, sometimes jobs at pt. petro china international jabung ltd cannot be completed in one work unit alone, and cross-unit cooperation is required. for example, in the maintenance and operations work unit, staff can help each other with the smooth running of work because of limited human resources and the demands of work to be completed on time as scheduled, they can even do work outside of their duties beyond the perception of their role. this behavior phenomenon is often referred to as organizational citizenship behavior, or the extra-role behavior ”. research results from novelia et al., (2016) explain that employees with high ocb behavior will increase their productivity and success in an organization. the statement regarding the importance of organizational citizen behavior is also supported by research by prasetio (2016) which states that organizations that have employees with high levels of ocb will be more effective and run smoothly because employees have good social bonds and in the end the organization will have higher performance. the role of employees in pt. petro china international jabung ltd must pay attention to the quality of its work, with employees having extra role behavior, of course it can increase work productivity. extra role behavior has a role to be able to improve the bad side of employees who do not want to cooperate among employees considering that this company requires good cooperation between employees in completing their work. as in the condition of employees whose jobs are not too dense, they can help other employees who are in trouble in their work that is already pressed for time. based on the results of preliminary interviews conducted by researchers on several employees at pt. petro china international jabung ltd can be seen that the role of workers in helping colleagues who have problems at work is still lacking. this can be seen in table 1 below: no number of people problems from employees 1 7 employees do not want to help their co-workers because these employees feel they have their respective duties and also the lack of these employees in interacting with fellow co-workers 2 3 employees often complain when given additional tasks by the leadership 3 4 employees are often lazy while working 4 2 employees often ignore or are not interested in the activities carried out by the company total 16 source: survey, 2020 table 1 shows that there are several employee problems working at pt. petro china international jabung ltd, which can be said that workers have ocb levels is still quite low. the table above shows 7 out of 16 people do not want to help their coworkers because these employees feel they have their respective duties and also the lack of these employees in interacting with fellow colleagues, 3 out of 16 often complain if they are given additional assignments from company leaders, 4 out of 16 people employees are often lazy in carrying out their duties in the company, and 2 out of 16 people often ignore or are not interested in activities or events carried out by the company. seeing the low ocb in this company, it is necessary to find the root cause of the low level of ocb at pt. petrochina international jabung ltd. this low level of ocb can have negative impacts on the company, such as reducing the productivity of colleagues, reducing managerial productivity, and reducing the efficient use of organizational resources (belwalkar et al., 2018). increasing organizational citizenship behavior through quality of work life and organizational commitment table 1. problems of some employees who work at pt. petrochina international jabung ltd 48 ambr from the description of the phenomenon above, it can be concluded that companies really need the support of competent human resources or workers who have a loyal attitude towards their organization so that the company's goals can be achieved. the results of research from syahbanuari and abdurrahman (2019) explain that to achieve the desired level of organizational citizenship behavior, every organization must pay attention to, including the quality of work life and organizational commitment of each employee. therefore, to overcome the problems revealed above, where employees are faced with a number of large duties and responsibilities as well as guidance on their professional roles, and on the other hand the lack of employee characteristics in helping fellow colleagues voluntarily, therefore extra behavior is needed. the role of the employees of pt. petrochina international jabung ltd which is known as organizational citizenship behavior. literature study organizational citizenship behavior the concept of ocb was introduced firstly by organ et al in the 1980s which was re-updated in 2006. shahin et al., (2014) stated that organizational citizenship behavior is individual behavior and, because of its optional nature, has not defined directly in formal reward systems in organizations, doing so leads to increased effectiveness and efficiency of organizational performance. in connection with this statement, hermawati & mas (2016) also explained that ocb arises because of feelings of being a member of the organization and feeling satisfied if they can do something more to the organization. likewise, putra et all, (2018) stated that ocb is the behavior of employees who work outside the job desk but provide benefits to the company or in other words employee voluntary behavior that helps organizational productivity. the company hopes that employees must be able to do the assigned tasks even though they are not the main task, where employees will get feedback if they are able to make a positive contribution to the company. the literature was established that there are five dimensions of ocb, namely (1) altruism, (2) civic virtue, (3) sportmanship, (4) conscientiousness and (5) courtesy (organ, 1980). quality of work life the concept of quality of work life was originally born in 1972 since the industrial revolution and the formation of labor unions. the trade union held the first international labor conference and produced a concept of quality of work life (golkar, 2013). in his research, rahman (2017) explained that the quality of work life (qwl) was applied for the first time to formulate that every initial process decided by the company is a response to what their workers want and hopes are, this is realized by discussing problems and uniting their views (company and employees) into in the same goal, namely improving the performance of employees and the company. basically, the quality of work life can be concluded as a concept that talks about three things: 1). meeting the personal needs of employees, 2). there is authority in determining work, and 3). there is satisfaction in the environment and employee work. from these three things, it can be interpreted that the quality of work life is a concept that talks about the welfare of employees at work. the quality of work life means the extent to which the employees live in the organization in the environment in which they work (rahman, 2017). in contrast to avianti & kartika (2017), in their research using the cascio concept by using nine indicators in the application of the quality of work life, namely: (1) safety of the work environment (save environment), (2) equitable compensation, (3) communication, (4) conflict resolution, (5) career development, (6) employee participation, (7) job security, (8) facilities available (wellness) and (9) pride in the institution (pride). organizational commitment sarhan et al., (2019) explain that organizational commitment is defined as the relative strength of the identification of individuals with and involvement in a particular organization, the individual has a strong belief in and approval of the principles and goals of the organization, the willingness to apply more energy to the work of the organization, and want to remain as a member in the organization. organizational commitment can also be described as a psychological emotional state that describes the employee's identification with the company. saridakis et al., (2020) organizational commitment is defined as individual identification and involvement in work organizations in particular and includes individual acceptance of the goals and values of the organization, the desire to work hard for the organization together with different ambitions to continue working for the organization. furthermore, according to widodo et al., (2019) organizational commitment is an important dimension of behavior that can be used to assess the tendency of employees to stay as members of the organization. commitment is the identification and connection of a person who is relatively strong in the organization. high organizational commitment has a different attitude than those with low commitment. organizational commitment behavior results in work performance, low levels of absenteeism and low levels of employee turnover. 49 robbins & judge (2016) says organizational commitment is defined as a condition in which an employee sides with a particular organization and its goals, and intends to maintain membership in that organization. furthermore, robbins & judge (2016) also views organizational commitment as one of the work attitudes defined as an individual orientation towards the organization which includes loyalty, identification, and involvement, according to him, committed employees are less likely to withdraw jobs even if they are not. satisfied, because they have a sense of loyalty to the organization. the literature of organizational commitment was established three dimensions of organizational commitment, namely: (1) affective commitment, (2) continuance commitment and (3) normative commitment. based on the introduction and literature review, the hypothesis formulation can be described as follows: hypothesis development from the research conceptual model, the following hypotheses can be formulated: h1 : quality of work life has a positive and significant effect on ocb h2 : quality of work life has a positive and significant effect on organizational commitment. h3 : organizational commitment has a positive and significant effect on ocb h4 : organizational commitment mediates the relationship between qwl and ocb research methodology in this study, the population is 442 of the permanent employees who worked at pt. petrochina international jabung ltd. if the population is less than 100 people, the total sample is taken, but if the population is greater than 100 people, 10-15% or 20-25% or more of the population can be taken (arikunto, 2016). the sampling method used is non-probability sampling with purposive sampling technique, which is a sampling technique with certain considerations and criteria (saunders et al., 2016). this technique was chosen because researchers have their own considerations, by deliberately selecting members of the population who are considered to be able to provide information, where the selected respondents have terms and conditions, namely permanent employees and a minimum length of work over 5 years. the number of samples in this study were 120 respondents. the data collection method uses a questionnaire on line method which is measured using a likert scale of 1 to 7. the hypotheses was tested using pls (partial least square) method with the smartpls program. results evaluation of the measurement model (outer model) convergent validity test convergent validity can be seen from the loading factor for each construct indicator. the rule of thumb used to assess convergent validity is that the loading factor value must be greater than 0.7. there are two criteria for assessing the outer model that meets the convergent validity requirements for a reflective construct, namely (1) loading must be above 0.7 and (2) significant p value < 0.05 (abdillah & jogiyanto 2016). according to ghozali & latan (2019) a questionnaire is declared valid if the ave value > 0.5. if the loading score is between 0.5 0.7, the researcher should not delete the indicator that has the loading score as long as the ave score and the indicator's communality > 0.5 (abdillah & hartono, 2015). in this research, an indicator is declared valid if it has a loading factor above 0.7 for a targeted construct and ave value > 0.5. tables 2 to 4 are the results of loading factor for question items for each variable after all initial data is entered into the smartpls program and run through the pls algoritm. the first variable is quality of work life which is formulated in 35 question indicators. the loading factor for the quality of work life variable can be seen in table 2 below: increasing organizational citizenship behavior through quality of work life and organizational commitment figure 1. research framework 50 ambr table 2. quality of work life loading factor dimension indicator loading factor result work environment safety (x1) x.1.1 0,463 invalid x.1.2 0, 172 invalid x.1.3 0,712 valid balanced compensation (x2) x.2.1 0,723 valid x.2.2 0,641 invalid x.2.3 0,710 valid x.2.4 0,748 valid communication (x3) x.3.1 0,725 valid x.3.2 0,800 valid x.3.3 0,722 valid x.3.4 0,824 valid conflict resolution (x4) x.4.1 0,720 valid x.4.2 0,771 valid x.4.3 0,783 valid career development (x5) x.5.1 0,784 valid x5.2 0,737 valid x.5.3 0,663 invalid x.5.4 0,724 valid x.5.5 0,701 valid employee participation (x6) x.6.1 0,778 valid x.6.2 0,757 valid x.6.3 0,762 valid x.6.4 0,658 invalid job security (x7) x.7.1 0,828 valid x.7.2 0,699 invalid x.7.3 0,606 invalid x.7.4 0,757 valid available facilities (x8) x.8.1 0,714 valid x.8.2 0,807 valid x.8.3 0,749 valid x.8.4 0,615 invalid pride in the institution (x9) x.9.1 0,689 invalid x.9.2 0,649 invalid x.9.3 0,780 valid x.9.4 0,741 valid source: results of smartpls 3.3.3 data processing based on the loading factor value in table 2, it is found that there are 10 indicators that have a loading factor value < 0.7. the ten indicators will be deleted because they cannot fulfill the construct validity in this research. the second variable is organizational commitment which is formulated in 24 question indicators. loading factor for organizational commitment can be seen in table 3 below: 51 source: results of smartpls 3.3.3 data processing based on the loading factor value in table 3 it is found that of the 24 (twenty four) indicators of organizational commitment questions, there are 12 (twelve) invalid question indicators because they have a loading factor value < 0.7 so that the twelve indicators will be deleted because it cannot fulfill the construct validity in this research. the third variable is organizational citizenship behavior which is formulated in 23 (twenty three) question indicators. loading factors for ocb can be seen in table 4 below: dimension indicator loading factor result altruism (y1) y.1.1 0,731 valid y.1.2 0,585 invalid y.1.3 0,712 valid y.1.4 0,653 invalid conscientiousness (y2) y.2.1 0,775 valid y.2.2 0,768 valid y.2.3 0,768 valid y.2.4 0,775 valid y.2.5 0,827 valid y.2.6 0,489 invalid sportmanship (y3) y.3.1 0,846 valid y.3.2 0,825 valid y.3.3 0,557 invalid y.3.4 0,737 valid y.3.5 0,676 invalid courtesy (y4) y.4.1 0,797 valid y.4.2 0,628 invalid y.4.3 0,823 valid y.4.4 0,682 invalid civic virtue (y5) y.5.1 0,864 valid y.5.2 0,865 valid y.5.3 0,757 valid y.5.4 0,601 invalid increasing organizational citizenship behavior through quality of work life and organizational commitment table 3. organizational commitment loading factor table 4. organizational citizenship behavior loading factor dimension indicator loading factor result altruism (y1) y.1.1 0,731 valid y.1.2 0,585 invalid y.1.3 0,712 valid y.1.4 0,653 invalid conscientiousness (y2) y.2.1 0,775 valid y.2.2 0,768 valid y.2.3 0,768 valid y.2.4 0,775 valid y.2.5 0,827 valid y.2.6 0,489 invalid sportmanship (y3) y.3.1 0,846 valid y.3.2 0,825 valid y.3.3 0,557 invalid y.3.4 0,737 valid y.3.5 0,676 invalid courtesy (y4) y.4.1 0,797 valid y.4.2 0,628 invalid y.4.3 0,823 valid y.4.4 0,682 invalid civic virtue (y5) y.5.1 0,864 valid y.5.2 0,865 valid y.5.3 0,757 valid y.5.4 0,601 invalid 52 table 5. ave value in each construct (research variable) table 6. measurement results of composite reliability and cronbach alpha table 7. output r-square based on the loading factor value in table 4, it is found that of the 23 (twenty three) indicators of organizational citizen behavior questions, there are 8 (eight) invalid question indicators because they have a loading factor value < 0.7. the eight indicators will be deleted because they cannot fulfill the construct validity in this research. discriminant validity test to assess discriminant validity using the square root of ave value for each construct. if the ave value of each construct is greater than 0.50, it is said that the construct has a good validity discriminant value. the ave value for each construct can be seen in table 5 below: no construct ave 1 quality of work life (x) 0,598 2 commitment organization (m) 0,726 3 organizational citizenship behavior (y) 0,670 source: results of smartpls 3.3.3 data processing based on the ave value of each construct in the table above, it shows that the value is greater than 0.50, which means that each of these constructs has good discriminant validity. reliability test after measuring the convergent validity and measuring the discriminant validity, finally the internal reliability test was carried out which was measured by two criteria, namely composite reliability and cronbach alpha from the indicator block measuring the variables. the construct is declared reliable if the composite reliability and cronbach alpha value is above 0.70 (ghozali and latan, 2019). variabel composite reliability cronbach alpha quality of work life (x) 0,970 0,968 commitment organization (m) 0,964 0,958 organizational citizenship behavior (y) 0,963 0,958 source: results of smartpls 3.3.3 data processing based on the data table 6 shows the results of the composite reliability and cronbach alpha output for each variable, the quality of work life, organizational commitment and organizational citizenship behavior are very reliable because they have a measurement value above 0.7, meaning that the indicators of all variables are considered reliable to be used as research instrument. based on the values of composite reliability in table 6, it can be concluded that the actual data of this study meets the reliability test. inner model evaluation ghozali and latan (2019) state that the inner model or structural model testing is carried out to see the relationship between constructs or latent variables seen from the r-square of the research model. construct variables r-square r-square adjusted commitment organization 0,606 0,602 organizational citizenship behavior 0,513 0,504 source: results of smartpls 3.3.3 data processing the r-square value from the results of the analysis using smartpls software, obtained a value of 0.513 to the dependent variable organizational citizenship behavior. thus it can be said that organizational citizenship behavior can be explained by the quality of work life and organizational commitment by 51% while the rest, namely 49%, is influenced by other variables that are not explained in this research. meanwhile, the r-square for the mediating variable of organizational commitment has a value of 0.606. thus it can be said that organizational commitment can be explained by the quality of work life by 61%, while the rest, which is 39%, is influenced by other variables that cannot be explained in this research. 53 hypothesis testing direct effect hypothesis testing in this study is used to test the direct effect of the independent variable (x) on the dependent variable (y), and the effect of the independent variable (x) on the dependent variable (y) after being mediated by the mediating variable (m) by looking at the t-values in each path. the calculated t value is obtained from the results of data processing using a procedure called bootstrap, smartpls version 3.3.3 can produce t statistics of path coefficients (inner model) and t-statistics of outer loadings to test the significance of structural models and measurement models. to test the hypothesis, it can be seen from the magnitude of the p-value. if the p-value is ≤ 0.05, the variable relationship is significant. the following table is the result of smartpls 3.3.3 data processing. original sample (o) sample mean (m) standard deviation (stdev) t statistics (|o/stdev|) p values information qwl -> oc 0,778 0,784 0,038 20,257 0,000 accepted qwl -> ocb 0,319 0,323 0,100 3,193 0,001 accepted oc -> ocb 0,440 0,444 0,110 3,988 0,000 accepted source: results of smartpls 3.3.3 data processing indirect effect testing the indirect effect by involving the mediating variable can be seen from the comparison of the direct effect with the total effect (ghozali and latan, 2019). if the direct effect is smaller than the total effect, it is evident that the organizational commitment variable is a mediating variable or it can also be seen by the probability value, where if the p-value is < 0.05, the organizational commitment variable can mediate the influence between the quality of work life and organizational citizenship behavior. original sample (o) sample mean (m) standard deviation (stdev) t statistics (|o/stdev|) p values information qwl -> oc>ocb 0,342 0,348 0,087 3,945 0,000 accepted the results show that the influence between the quality of work life on organizational citizenship behavior results in a path coefficient value of 0.342 and a t-statistic value of 3.945 (t > 1.96) with a significance level of p-value = 0.000 ( p-value < 0.05). these results indicate that the influence of the quality of work life on organizational citizenship behavior mediated by organizational commitment is positive and significant, so that hypothesis 4 (h4) accepted mediation effect according to sholihin dan ratmono (2013) the mediation testing procedure in sem-pls with the variance accounted for (vaf) method as follows: a) the direct effect (x → y) when the mediating variable has not been included must be significant. it is known that the path coefficient of the quality of work life on organizational citizenship behavior before being mediated by organizational commitment is 0.319 with p-value 0.001 (significant). b) the indirect effect of x → m then m → y after the mediating variable is entered into the model must be significant. it is known that the path coefficient of the quality of work life to organizational commitment is 0.778 with p-value 0.000 (significant) then the path coefficient of organizational commitment to organizational citizenship behavior is 0.440 with p-value 0.000 (significant). c) it is known that the direct effect of x → y (significant) and the indirect effect of x → m (significant) then m → y (significant), so this condition fulfills the procedure in mediation testing in sem-pls with the variance accounted for (vaf) method. the following table show the vaf calculation increasing organizational citizenship behavior through quality of work life and organizational commitment table 8. path coefficients testing results table 9. total indirect effect 54 ambr table 10. variance accounted for (vaf) calculation influence description the calculation results indirect effect qwl → commitment = 0,778 commitment → ocb = 0,440 0,778 * 0,440 = 0, 342 direct effect qwl → ocb = 0,319 0,319 total effect 0,342 + 0,319 = 0,661 variance accounted for (vaf) (indirect effect/ total effect 0,342 / 0,661 = 0,517 atau 51,7% source: primary data processed in (2021) from the calculation of table 10 above, it can be seen that the calculation results of the variance accounted for (vaf) table are 51.7%. the vaf value is greater than 20% but less than 80%, this indicates that the variable organizational commitment as a partial mediation influences the quality of work life on organizational citizenship behavior (ocb), which means that the quality of work life in part has a direct effect on organizational citizenship behavior (ocb) of employees and partially mediated by organizational commitment. discussion the first finding of this study show the positive correlation coefficient. it indicates that the higher the quality of work life, the higher the employee's ocb, vice versa. this finding is in line with kurniawati (2018) which concluded that the quality of work life has a significant effect on the ocb. kurniawati (2018) also explained that in an organization the quality of work life is very important to be considered as a supporter of the ocb, because employees who have high quality of work life will encourage actions taken by employees that exceed the minimum requirements expected by the role of the organization. with the implementation of good quality of work life in the organization, it is expected that it will be able to encourage the behavior of the employees of the employee organization in the organization. this confirms that the quality of work life has become a necessity for organizations out of necessity (duyan, serpil, neslihan and darren, 2013). the results of this study are also supported by the results of research conducted by pio & lengkong (2020) ; ojo et al., (2020) and wibowo et al., (2020) which revealed that the quality of work life has a significant effect on the organizational citizenship behavior. according to susanti (2015) in developing organizational citizenship behavior, it also requires the creation of good quality of work life. employees who have a high quality of work life will encourage the emergence of organizational citizenship behavior in employees, because they have a greater possibility to speak positively about the organization, willingness to help others and do work to exceed what the organization expects. this contribution indicates that the variable quality of work life has an important role in shaping employee organizational citizenship behavior (ocb). the second finding of this this study indicate a positive and significant influence between the quality of work life and organizational commitment. quality of work life is a process in which organizations respond to employee needs by developing mechanisms to allow employees to give full contribution and participate in making decisions and regulating their work life in a company. quality of work life for employees is one of the important goals in meeting the needs and desires of employees. quality of work life is the employee's perception of his physical and well-being at work. there are two views as to what the quality of work life means. first, the quality of work life is a number of circumstances and practices of the organization (eg worker involvement, comfortable working conditions, and career development). while the second, the quality of work life is the perception of employees that they want to feel safe, they feel satisfied, and get the opportunity to grow and develop as human beings. quality of work life as a management system approach to coordinating and linking the potential of human resources in the organization, as an effort by the leadership to meet the needs of members and organizations simultaneously and continuously. quality of work life is a form of philosophy applied by management in managing organizations in general and human resources in particular. as a philosophy, the quality of work life is a management perspective on people, workers and organizations. the findings in this study indicate that the quality of work life has a positive and significant effect on organizational commitment. this means that changes in organizational commitment by employees are influenced by the quality of work life. in line with the research conducted by agus & selvaraj (2020) that employee commitment partially mediates the relationship between the quality of work life and the intention to stay. in conclusion, if employees are satisfied with the quality of their work life, the stronger the employee's commitment to being in the organization and ultimately their intention to stay. 55 the same research was also conducted by pramudena (2019) ; akar (2018) and farid et al., (2015) which show that the variable quality of work life has a positive and significant effect on organizational commitment. with a good quality of work life, employee commitment will increase. employees who value the achievement of the quality of work life will give more commitment in return for the organization. the third finding of this study indicate a positive and significant influence between organizational commitment and organizational citizenship behavior. it means that the higher the organizational commitment of the employees, the higher the organizational citizenship behavior of employees. it shows that employees who have organizational commitment will do not only tasks that have become their obligations but will voluntarily do things that are extra efforts, high dedication to the company and a level of sacrifice to existing work, support and comply with every policy issued by the workplace, accept every policy, regulation and procedure established by the company and there is high loyalty to the company so that it will foster the organizational citizenship behavior in itself. this research is supported by vincent obedgiu & vincent bagire (2017) ; zayas-ortiz, m., rosario, e., marquez, e., & gruñeiro (2015) ; sumiati et al., (2018) ; wibawa (2019) ; nurwadi & ardana (2019) and biswan (2019) who prove that organizational commitment has significant effect on the organizational citizenship behavior where employees with high organizational commitment will have a positive impact at work, by giving their best efforts to carry out their duties. the fourth findings indicate that organizational commitment mediates the effect of the quality of work life on the organizational citizenship behavior of employees the mediation testing shows that this model is a partial mediation, which means the affects of quality of work life to the organizational citizenship behavior not only directly, but also indirectly through organizational commitment as mediators. this result means that the implementation of the quality of work life can optimally foster ocb if the petrochina company increases organizational commitment of employees. moreover, it is supported by the optimal application of the 9 dimensions of quality of work life as stated by cascio (2003) and avianti & kartika (2017). increasing qwl is very supportive in creating and encouraging the formation of employee ocb behavior and this is done in order to streamline and develop the organization. organizational commitment has an important role in mediating the effect of quality of work life on the organizational citizenship behavior, employees who have high organizational commitment will have loyalty, doing work not only tasks that have become their obligations, but will voluntarily do things that can be classified. as an extra effort, the quality of work life is seen as being able to increase the participation and contribution of employees to the company, the quality of work life is a level where members of an organization are able to satisfy important personal needs through their experience in doing work for the company. this study supports the study of chrisienty (2015) which shows that the quality of work life has a positive effect on employee organizational commitment. the quality of work life can be said to be a concept that seeks to condition the work environment in the company optimally so that each employee is able to mobilize all the ability it has. in addition, employees who have organizational commitment will do work that is not only in accordance with existing jobs, but also perform other jobs (extra roles), this extra-role behavior is also known as organizational citizenship behavior (gunastri et al., 2019). this finding is also in line with research conducted by akar (2018). his finding show that someone who is committed to his organization will often display ocb which will support organizational success. this research also shows that it turns out that organizational commitment is a factor that strengthens the mediating effect of the quality of work life on the organizational citizenship behavior. the ocb are influenced by several motives, including commitment to the organization where there is a desire to participate well in the organization and pride to be part of the organization, this includes ways of developing goals or meeting organizational needs which essentially put the mission of the organization ahead of personal interests (wahyuni and supartha, 2019), conclusions quality of work life has positive and significant effect on the organizational citizenship behavior. this means that the better of the implementation of quality work life programs, the higher the employee's ocb level. quality of work life also has positive and significant effect on employee organizational commitment. this means that with good quality of work life, employee commitment will increase. organizational commitment has positive and significant effect on the organizational citizenship behavior. this imply to increase ocb can be conducted by increasing the organizational commitment directly.indirectly, through the increasing of quality of work life and then organizational commitment. increasing 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(2015). relationship between organizational commitments and organizational citizenship behaviour in a sample of private banking employees. international journal of sociology and social policy, vol. 35, no. 1/2, 91-106. 121 the effect of work conflict and transformational leadership on the performance of pt kai’s operational employees yohanes danang priyo pramono* universitas padjadjaran, indonesia abstract the challenge concerning the future of any organization is the task of a transformational leader to bring his team to solutions and to see and take advantage of various opportunities so that the company's goals can be achieved. working to achieve high performance is not without problems. every individual every unit must work together to build good performance to deal with dynamic problems. problems at work experienced by employees can lead to work conflicts. this conflict can interfere with target achievement and performance. this study aims to analyze the influence of transformational leadership factors and work conflict factors on employee performance. the population of this research is the office employees of the directorate of operations of pt kereta api indonesia (persero) spread across the working areas in java and sumatra (s = 207), where s is the number of samples of office employees of the directorate of operations of pt kereta api indonesia (persero). the data analysis method used is pls-sem to test the relationship between variables that have been conceptualized using smart pls 3.0 software. the results show that transformational leadership has a positive effect on employee performance, while work conflict has a negative effect on employee performance. keywords: transformational leadership, work conflict, employee performance *corresponding author. email address yohanes12006@unpad.ac.id the effect of work conflict and transformational leadership on the performance of pt kai’s operational employees received september 26th 2022 review october 4th 2022 publish december 31st 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/604 mailto:yohanes12006@unpad.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/604 122 ambr introduction the challenge concerning the future of any company or organization is the task of a transformational leader to bring his team to solutions to problems and to see and take advantage of various opportunities so that company goals can be achieved. today, a world that is increasingly vuca (vulnerable, uncertainty, complexity, and ambiguity) due to the progress of a growing and increasingly sophisticated industry must be anticipated, because problems and challenges will continue to move, differ, and evolve throughout the history of human civilization. thus the future will be increasingly difficult to predict, the causes of problems become increasingly unclear, the direction of policies made by business actors in the industry is increasingly uncertain, so a good leader must be able to influence and motivate employees in order to improve the performance of their employees towards change. better than the previous period. especially in this case, the leader must be able to encourage his employees to be able to think in a new way, adapting to problems that continue to develop following the dynamics of the industry. in the world economy forum it is said that the biggest crisis today is the leadership crisis (shahid, 2015). leadership can be the root of the solution or the root of the problem. the deloitte survey in leading the new world of work human capital trend 2014 2015 shows that leadership is increasingly important in its position, but at the same time the gap in leader readiness is widening (deloitte, 2015). transformational leadership is a type of leadership that is able to transform subordinates to perform better than expected (pieterse, et al., 2010). this type of leadership is a type of leadership that can boost employee motivation so as to increase performance targets. providing motivation through transformational leadership is important to get the best results. leaders who have a transformational attitude will motivate their employees by providing various responses related to empowering their employees' competencies so that they can adjust the goals and targets of employees individually, in groups, and in the organization and in the end can have an impact on employee confidence in leadership abilities which can affect employee confidence, overall involvement emotions, and the drive to perform at a higher level. working to achieve high performance is not without problems. every individual and even every unit must work together to build good performance to deal with dynamic problems. working together can be done by means of collaboration. collaboration is very important to do to achieve success in the business world, where in collaboration there is a win-win solution, no party is harmed in this case so that collaboration is the best conflict management in reaching agreements with other organizations in the business (weingart and jehn, 2012). magdaleno, et al. (2009) said that in the current practice of the business world, collaboration is not considered a competitive advantage, and companies often neglect to promote this so that the initiatives they undertake are often fragile and difficult to implement. neglecting collaboration can result in problems at work. problems at work experienced by employees can lead to work conflicts. individuals exist in teams, and teams themselves exist in organizations. therefore, organizational performance is highly dependent on employee performance, therefore each employee contributes through their best performance (gibson, et al., 1995). effendi (2006) also said that organizational performance is the output of individual performance in the organization, even though there are differences in the contribution given by each individual. the transportation service industry is one of the industries undergoing rapid changes in this vuca era. the government has focused on infrastructure development spread throughout indonesia, as an effort to advance the nation's economy. the means of public transportation commonly used by people in indonesia to travel generally are trains, airplanes, and ships. the growth of passengers using the train mode is increasingly favored by the public. this certainly provides a great opportunity for companies engaged in the railway sector to gain profits from the growing trend of passengers using trains to travel. pt kereta api indonesia (persero) continues to strive to implement the best standards in its field based on the applicable management system. pt kai has established various strategies and programs to achieve its vision of "being the best transportation ecosystem solution for indonesia" through the development and innovation of various services in building multimodal transportation connectivity that makes it easier for its customers. people's interest in using train services to travel can be influenced by several factors such as being on time, safe, and faster than other land modes, which makes people interested in using trains for transportation (hastuti, et al., 2020). the directorate of operations of pt kai is a directorate that plays an important role in regulating and managing railway operations in generating the company's main source of income, so that the performance achieved by this directorate can be said to be the backbone of the company's operational performance. with competition in the transportation industry that is getting faster, expect changes that continue to improve from time to time. therefore, the authors are encouraged to conduct research on “the effect of work conflict and transformational leadership on the performance of pt kai's operational employees” literature review the process of digitization, new connectivity, freedom of trade between organizations or countries, wide competition, and innovation of business models. disruptive innovation causes conditions where the state of the industry experiences vuca (volatile, uncertainty, complexity, and ambiguity), where dynamic and unpredictable changes occur with complex issues so that the problems faced become unclear. the existence of 123 these conditions causes the organization or company to be required to quickly adapt, so it must involve the right abilities in making decisions. achievement of performance cannot be separated from the influence of conflict variables. in his research, rahim (2001) suggests that conflicts that occur at moderate levels can increase performance at high levels, while conflicts at low and high levels will actually reduce performance. the same thing was also conveyed by jehn and mannix (2001) which stated that high work conflict will have an impact on decreasing performance. these differences can cause obstacles in obtaining important information or knowledge that can detect or correct errors in the organization, so that it can maintain its best performance (de waal, et al., 2019). a situation in which a team or department is unwilling to share knowledge or an organization, which can interfere with collaboration and learning activities within the organization that can interfere with the achievement of high performance and organizational sustainability is known as a silo. problems at work experienced by employees can lead to work conflicts. conflicts that occur in various forms are generally common in any industry and anywhere. jehn, et al. (2011) divides the dimensions of conflict into several parts, namely task conflict, process conflict, and relationship conflict. the ability to lead is needed by a superior to encourage and direct his subordinates in their efforts to achieve the goals of a company (robbins, 2012). more fully, dubrin (2015) argues that leadership is an attempt to influence people through communication to achieve goals, how to influence people using instructions or orders, actions that cause others to act and cause positive change, dynamic forces that motivate and coordinate organizations in order to achieve positive goals. achieve goals, the ability to create confidence and support among subordinates so that company goals can be realized. the ability to influence from a superior is very influential for the achievement of goals in the company. through the opinions of these experts, it can be found similarities in leadership, namely: 1) there are leaders and followers, so there is a process to lead; 2) the existence of social influence caused; and 3) focus on goals. bass (1985) argues that in achieving performance that exceeds the limits of subordinates, the leadership that is practiced must be transformational, so that further arguments arise that transformational leadership is better, because it is more effective and leaders contribute more in motivating their subordinates to achieve better performance. in the era of vuca (volatility, uncertainty, complexity, and ambiguity) which cannot be avoided by companies today, vision is the best proxy to be able to predict the possibility and unstable conditions in the future. then, leaders are also required to be able to read the surrounding environment and be able to mobilize their human resources through recognition and communication. rafferty and griffin (2005) identified that transformational leadership is a type of leadership that has a vision, inspires communication, supports leadership, encourages intellectual stimulation of its employees, and recognizes its personnel. performance is the level of success of employees in completing the tasks and responsibilities given within a certain time. the concept of performance is defined as work performance, namely by comparing work results with expected work standards (dessler, 1999). the main focus of employee performance is task performance, which can be interpreted as a person's ability to carry out substantive core or important technical tasks in the employee's work. this is in line with the opinion of campbell (1990) in koopmans, et al. (2014). to support the implementation of these core tasks, it is also necessary to measure contextual performance, and adaptive performance. research methodology this study uses quantitative methods to test predetermined hypotheses. quantitative research contains numbers collected using measurements with variable scales in the study. the required data collection is done by sending a questionnaire to the respondents, to then be filled in according to the actual situation. the object of research to be studied is the operating unit of pt kereta api indonesia (persero) which is spread across all working areas in java and sumatra. the data contained in the questionnaire are respondents' perceptions of the variables of work conflict, transformational leadership, and employee performance. the population of this study is kai operational office employees spread across all work areas in java and sumatra, totaling 429 people, of which 278 employees in java and 151 people in sumatra. in this research, author successfully collect 207 answers from respondents. research data collected through questionnaires will be explained in detail using descriptive analysis. the process is carried out using descriptive statistics by describing or explaining the data that has been collected. in this study, what will be described are the variables of work conflict, transformational leadership, and employee performance. in addition, verification analysis is used to find the truth of the hypotheses that have been previously proposed. the effect of verification from this study is to determine the effect of work conflict, transformational leadership on employee performance. analysis of the multivariate data analysis (mda) model using the partial least square (pls) method. pls is able to consider all the direction of the coefficients together to be able to analyze direct, indirect, or false relationships that regression analysis does not have. the paradigm of the research is shown below in figure 1. the effect of work conflict and transformational leadership on the performance of pt kai’s operational employees 124 ambr figure 1. research paradigm table 1. recapitulation of descriptive analysis of variables the hypotheses proposed based on the explanation of the framework above are as follows: h1: transformational leadership has an effect on employee performance. h2: work conflict affects employee performance. h3: transformational leadership and work conflict affect employee performance. result and discussion the variable of transformational leadership (x1) consists of 5 dimensions and a total of 14 questions, while the variable of work conflict (x2) contains 3 dimensions and 12 questions, last but not least the variable of employee performance (y) contains 3 dimensions and a total of 22 questions. those all questionnaire are distributed to 207 respondents, and the descriptive statistics are shown below in table 2. variable dimension average category overall transformational leadership vision 3,15 decent decent intellectual stimulation 2,86 decent inspirational communication 2,98 decent supportive leadership 2,84 decent personal recognition 2,94 decent work conflict task conflict 2,68 medium high relationship conflict 2,36 high process conflict 2,66 medium employee performance task performance 3,01 decent decent contextual performance 3,05 decent adaptive performance 2,84 decent source: data processing (2022) vision is the most prominent dimension for transformational leadership at pt kai. this shows that the leaders who serve in the pt kai operations directorate are able to demonstrate their commitment to the goals to be achieved. however, this has not been able to be realized properly because the organizational abilities possessed by superiors are considered not yet able to support the activities that are expected to bring the organization towards the desired goals. supportive leadership is the dimension of transformational leadership that has the lowest average value in this variable. operations directorate employees assume that their superiors have not fully supported career development. the lowest dimension in work conflict variable is the dimension of relationship conflict, with an average value of 2.36. this value is below the average variable. this shows that the relationship conflict that occurs is quite high. among the dimensions of employee performance, it was found that there are two dimensions that are above the average variable, namely the task performance dimension and contextual performance dimension with an average score of 3.01 and 3.05 respectively. this indicates that kai's operational employees know the 125 output that must be produced from the work they do. meanwhile, the adaptive performance dimension has an average value that is below the variable average, which is 2.84. this indicates that the directorate of operations staff is still lacking in adapting to the latest technology that can help with daily work. the questionnaire is said to be valid if the questions contained can reveal something that will be measured by the questionnaire, therefore validity test is used to measure the validity of it. based on the results of model testing, the results show that all manifest (observed variable) has a loading factor value greater than 0.70. so the sem-pls model is said to have good construct validity. the result is shown below in table 2. furthermore, the average variance extracted (ave) test will be carried out to further strengthen the results of convergent validity with the criteria if the ave value is > 0.5, then the construct used in the study is valid. these results shown in table 3 indicate that all latent variables have an ave value of more than 0.5. this indicates that the indicators that make up the latent construct have good convergent validity when viewed from the average variance extracted value. construct loading factor critical result construct loading factor critical result v1x11 0.939 0.70 valid tp1y1 0.915 0.70 valid v2x11 0.900 0.70 valid tp2y1 0.969 0.70 valid v3x11 0.949 0.70 valid tp3y1 0.931 0.70 valid is1x12 0.969 0.70 valid tp4y1 0.964 0.70 valid is2x12 0.973 0.70 valid tp5y1 0.972 0.70 valid is3x12 0.887 0.70 valid tp6y1 0.971 0.70 valid ic1x13 0.921 0.70 valid tp7y1 0.966 0.70 valid ic2x13 0.933 0.70 valid cp1y2 0.979 0.70 valid sl1x14 0.917 0.70 valid cp2y2 0.953 0.70 valid sl2x14 0.927 0.70 valid cp3y2 0.986 0.70 valid sl3x14 0.909 0.70 valid cp4y2 0.960 0.70 valid pr1x15 0.875 0.70 valid cp5y2 0.979 0.70 valid pr2x15 0.951 0.70 valid cp6y2 0.977 0.70 valid pr3x15 0.909 0.70 valid cp7y2 0.981 0.70 valid tc1x21 0.849 0.70 valid cp8y2 0.970 0.70 valid tc2x21 0.934 0.70 valid cp9y2 0.948 0.70 valid tc3x21 0.900 0.70 valid ap1y3 0.940 0.70 valid tc4x21 0.761 0.70 valid ap2y3 0.963 0.70 valid rc1x22 0.849 0.70 valid ap3y3 0.880 0.70 valid rc2x22 0.838 0.70 valid ap4y3 0.926 0.70 valid rc3x22 0.928 0.70 valid ap5y3 0.767 0.70 valid rc4x22 0.920 0.70 valid ap6y3 0.946 0.70 valid pc1x23 0.777 0.70 valid pc2x23 0.914 0.70 valid pc3x23 0.870 0.70 valid pc4x23 0.826 0.70 valid construct ave critical result transformational leadership (x1) 0.807 0.5 valid work conflict (x2) 0.657 0.5 valid employee performance (y) 0.883 0.5 valid source: data processing (2022) based on the ave value of each construct in the table above, it shows that the value is greater than 0.50, which means that each of these constructs has good discriminant validity. based on table 2 and table 3 about the validity of the four research variables and their construct,it can be seen that all statement items from the the effect of work conflict and transformational leadership on the performance of pt kai’s operational employees table 2. construct’s loading factor validity result table 3. ave value in each construct 126 ambr table 4. table of reliability test result table 5. the value of rsquare and fsquare table 6. results of path coefficient values, t-statistics, and pvalues four variables are valid. so that all the statements listed in the questionnaire above are eligible to reflect the variables in the study. cronbach's alpha and composite reliability to determine whether the construct reliability is good or not. each construct is said to be reliable if it has cronbach's alpha and composite reliability greater than 0.70 (hair et al, 2017). it can be seen that there is a latent construct having cronbach's alpha value of more than 0.70; where it indicates that the latent construct has good reliability. in addition, the composite reliability value of all latent constructs also has a value greater than 0.70. based on the value of cronbach's alpha and composite reliability obtained, it shows that the model has good reliability. the results are shown in table 4 below. latent cronbach's alpha composite reliability transformational leadership (x1) 0.981 0.983 work conflict (x2) 0.951 0.958 employee performance (y) 0.994 0.994 source: data processing (2022) the estimation of the relationship between constructs can be seen as follows: the latent variable of employee performance (y) is influenced by the latent variable of transformational leadership (x1) and work conflict (x2). according to chin (1998) in yamin and kurniawan (2011:21), an r-square with a value of 0.67 indicates a strong model, a value of 0.33 indicates a moderate model and a value of 0.19 indicates a weak model. this value indicates the extent to which the ability of the independent construct to explain the variation in the dependent construct. the r-square for the variable employee performance of 0.764 which means thattransformational leadership and work conflict simultaneously affect the performance of kai's operational employees by 76.4%, while the remaining 23.6% is influenced by other variables not examined in this study. next is to see the value of the f-square. the effect size calculation is carried out to determine the change in the value of the endogenous construct. changes in value indicate the effect of exogenous constructs on endogenous constructs whether they have a substantive effect. the f-square value of 0.02 indicates a small rating, effect size 0.15 indicates a medium rating and effect size 0.35 indicates a large rating (cohen, 1988 in yamin and kurniawan (2011:21). the variables of transformational leadership (x1) and work conflict (x2) each have an influence with a large and moderate category in influencing the employee performance variable (y). the results for r-square and f-square is shown in the table 5. endogenous rsquare relationship variable effect size rating employee performance (y) 0.764 strong employee performance (y) transformational leadership (x1) 0.606 big work conflict (x2) 0.199 moderate source: data processing (2022) hypothesis testing in this study was carried out using the path coefficient, t-value, and p-value values. to assess the significance and predictions in hypothesis testing, it can be seen from the path coefficient and t-value (kock, n. 2016). according to kock, n (2016) assessing the prediction and significance in hypothesis testing can be seen from the p-value. according to kock, n. (2016), with a 95% confidence level (alpha 5%), two tailed, the t-table values are obtained as follows: if the value of t-statistic > 1.96 (used for direct effect), then h0 is rejected and h1 is accepted, while if the value of t-statistic < 1.96 (used for direct effect), then h0 is accepted and h1 is rejected. hypothesis original sample(o) t-stats p-value conclusion transformational leadership on the performance of kai's operational employees 0.588 10,551 0.000 reject h0.1 work conflicts on the performance of kai's operational employees -0.337 6,266 0.000 reject h0.2 source: data processing (2022) 127 based on the results of the analysis of the influence of transformational leadership variables and work conflict on the performance of kai's operational employees, the r square value is 0.764, so that the f count is then calculated to assess the effect of transformational leadership and work conflict on the performance of kai's operational employees as follows f count = (𝒏−𝒌−𝟏)𝑹𝟐 𝒌(𝟏−𝑹𝟐) where: n = amount of data r2 = coefficient of determination k = number of independent variables f count = 330,203 based on the above calculations, it can be seen that the calculated f is 330,203 at the significance level in the simultaneous test using = 0.05 or 5% with degrees of freedom df1 = k = 2, df2 = n –k –1 = 207-2-1 = 204, obtained the value of f table of 3,040. so it can be concluded, with the acceptance criteria of significance f count > 3.040 or 330.203 > 3.040, it is known that h1.3 is accepted, meaning that transformational leadership and work conflict affect the performance of kai operational employees. discussion based on the results of the analysis that has been done, it is known that the three hypotheses proposed in this study are accepted. kai's transformational leadership variable is in the poor category, while the work conflict variable is in the high category and the employee performance variable is in the poor category. the transformational leadership applied at kai emphasizes the vision from superiors to subordinates. however, the practice of transformational leadership is not something that can only be stated, but also needs to be applied in organizational practices within the directorate of operations of kai. from the work conflict variables in the work environment, relationship conflict is the highest cause of conflict that occurs in the directorate of operations of kai. the silo attitude that occurs between units in the directorate of operations and errors in communication are still homework that must be completed, by emphasizing collaborative practices where win-win solutions can occur between teams that intersect each other in working on a project or routine task. task performance and contextu al performance that occur in the directorate of operations of kai tend to be the same, but there are dimensions that need to be improved, namely adaptive performance. adaptive performance is important to note because of the era of the vuca world that is happening in today's world. the more adaptive to the market, the better the organization will be to become the choice for consumers. for profit-oriented organizations, employee performance is one of the keys to success to improve organizational performance. the test for the first hypothesis of research on the effect of transformational leadership on the performance of kai's operational employees, it was found that the variable of transformational leadership had a significant positive effect on employee performance. descriptive results regarding transformational leadership obtained show signs that are not good and cause poor employee performance as well. similar results were found in a study conducted by wang, et al. (2011) where his research studies the effect of transformational leadership on employee performance. the study said that transformational leadership is positively related to employee performance. with the employee's performance getting better because of the transformational leadership factor, the performance from a wider level, namely organizational performance is also getting better. another study initiated by buil et al. (2019) stated that transformational leadership is an important thing that can drive employee performance. managers who have transformational leadership practices such as: good communication in conveying the vision, mission, and goals of an organization, creating a supportive organizational culture, acting as a mentor, and understanding the needs of their subordinates can support better employee performance. the results of domestic research on similar research objects, namely the transformational leadership style and employee performance are also similar. testing the second hypothesis relates to work conflict and the performance of kai's operational employees. descriptive research results obtained through questionnaires distributed showed that high conflict and poor employee performance. the study found that work conflict had a negative and significant effect on employee performance. this means that the higher the work conflict that occurs in the work environment, the employee's the effect of work conflict and transformational leadership on the performance of pt kai’s operational employees 128 ambr performance will decrease. this finding supports the research conducted by jehn , et al. (2011) that a low level of work conflict will perform well. research from jungst and blumberg (2016) also says that conflict has a significant negative relationship with individual performance at work, but if the relationship between employees is well established, then the conflict will have less effect on the individual's performance. this shows the importance of handling conflict that is relationship between individuals and between teams/groups. claro, et al. (2018) mentions in his research that an increase in excessive amounts of conflict can interfere with performance, for this reason it is necessary to have the ability to handle conflict, namely conflict management that can be applied in company operations. the research hypothesis shows that transformational leadership and work conflict affect the performance of kai's operational employees. transformational leadership has a significant influence on employee performance and work conflict has a moderate effect on employee performance at the pt k ai directorate. this shows that the transformational leadership variable has a greater influence than the influence of work conflict in influencing employee performance. the directorate of operations of kai can recruit or promote managerial candidates who have high transformational leadership. managers with good transformational leadership can apply transformational leadership practices such as communication and overseeing the vision, mission. in creating a conducive work environment and able to develop exi sting employees, companies need to maintain a good level of work conflict, one of which is conflict management. conflict management that can be applied in the current vuca era is by collaborating. collaboration is one of the corporate cultures, especially soes that are incorporated in the "akhlak" culture (many, competent, harmonious, loyal, adaptive, collaborative) in accordance with the circular letter of the minister of soes se-7/mbu/07/2020 dated july 1, 2020 concerning values core values human resources of stateowned enterprises under the leadership of erick thohir. waal, et al. (2019) also offers an approach to eliminating silos, tak ing into account the following factors, namely: value, collaborative operating model, collaborative environment, leade rship, and human development and appreciation. in this way, the results of collaboration will be obtained, namely: better cooperation wi th other units, increased efficiency, more satisfied customers, and increased flexibility. a conducive environment can c reate proactive employees. the right application and combination of transformative leaders and proactive employees can increase work engagement (buil, et al., 2019) and ultimately improve employee performance and company performance. conclusion the authors can make conclusions based on the explanations contained in the previous chapter . transformational leadership variables and employee performance variables are included in decent category. meanwhile, the work conflict variable is classified as high category and all hypotheses can be accepted based on statistical calculations that have been done. the lower the work conflict, the better the resulting employee performance. vice versa, if the work conflict is high, the performance achieved will be deficient. good transformational leadership is expected to be able to become a compass in daily work, direct employees to work effectively and efficiently, and be a guide in resolving existing conflicts so that conflicts that occur do not enlarge and interfere with employee performance. further research can add aspects outside of this research variable, such as the level of employee job satisfaction or organizational culture. in addition, it can also use aspects of employee motivation in determining the level of employee performance. academics who study human resources studies can explore further by using other units of analysis, or those that are broader and can also be compared with other industrial analysis units references bass, b. m. 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(2012). manage intra‐team conflict through collaboration. handbook of principles of organizational behavior: indispensable knowledge for evidence‐based management , 327-346. yamin, sofyan dan heri kurniawan. 2011. generasi baru mengolah data penelitian dengan partial least square path modeling : aplikasi dengan software xlstat, smartpls, dan visual pls. salemba infotek. jakarta. the effect of work conflict and transformational leadership on the performance of pt kai’s operational employees 73 influence of flexible work arrangement and work environment on employee performance through work-life balance aditya indra bagaskara* hilmiana irfanul kamal universitas padjadjaran, bandung, indonesia abstract the success of an organization is influenced by employee performance, so every company will try to improve the performance of its employees in achieving the organizational goals that have been set. during the covid -19 pandemic, there are several factors that can support employee performance, one of which is flexible work arrangements. however, not only work methods are needed to improve employee performance, the work environment and aspects of work-life balance are expected to improve employee performance. this study aims to determine the effect of flexible work arrangements and work environment on employee performance directly or indirectly through work-life balances as an intervening variable. the data in this study were collected by distributing online questionnaires. this research on employees of pt. telkom indonesia, tbk in west java (s=193), where s is the sample of employees at telkom west java. the method used in this research is pls-sem which is processed using smart pls 3 software. the results showed that there was a direct influence between flexible work arrangements and work environment on employee performance. in addition, the results of other studies also show that there is an indirect effect between flexible work arrangements and work environment on employee performance through work-life balance as an intervening variable. keywords: flexible working arrangement, work environment, work life balance, employee performance *corresponding author. email address: aditya19002@mail.unpad.ac.id influence of flexible work arrangement and work environment on employee performance through worklife ballance received august 6th 2021 review september 14th 2021 publish september 22nd 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/481 mailto:aditya19002@mail.unpad.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/481 74 ambr introduction every organization has an identity that functions as a value or organizational identity in the organizational environment. organizational identity is an effort to introduce oneself to the public as a form of the existence and accountability of the organization to the vision and mission of the organization. the identity of an organization can be a differentiator between one company and another. an organization that has a strong identity cannot be separated from members who excel in organizational commitment, self-competence and have good intellectual capital. superior hr (human resources) cannot be separated from the role of human capital which functions to develop hr in the organization. even today, hr competence also gives its own weight to the assessment of an organization. according to ulrich et al., (2001) hr is the design of a formal system in an organization to ensure the use of talent and human potential effectively and efficiently to achieve organizational goals. ulrich et al., (2001) also mention the new role of hr is to support the competence of the resources themselves that are demanded by the organization to survive by always providing the best performance for the organization. it is natural for organizations to want to get the best performance from a series of systems within the organization. human resource management is one of the key factors to get good performance for an organization, in addition to dealing with skills and expertise issues, hr management is also obliged to build conducive behaviour for employees to get the best performance. the year 2020 is a tough year for all countries in the world due to the covid-19 virus pandemic, indonesia is no exception. almost all industrial sectors have weakened due to the impact of this pandemic, there are even industries that have gone out of business. during the horrors of the covid-19 pandemic, the indonesian government took a 50:50 policy in responding to the pandemic, which was to allow people to continue working by complying with health protocols or working from home or wfh (work from home). this policy was taken by the indonesian government because if the indonesian economy worsens, the indonesian government will be increasingly overwhelmed by this pandemic. pt. telkom indonesia, tbk is a state-owned company engaged in telecommunications with one of its trademarks being indihome. pt. telkom indonesia, tbk or better known as telkom is a company that prioritizes human resources. this is evidenced by the existence of the directorate of hcm (human capital management) which functions to manage and develop human resources at telkom. as a bumn, telkom is tasked with providing telecommunications service facilities and infrastructure (especially the internet) to the wider community to remote areas throughout indonesia. telkom's goal in 2021 is "to create a more prosperous and competitive nation and to provide the best-added value for stakeholders". during the covid-19 pandemic, employees are forced to adapt to be able to work from home (wfh), work in offices (wfo), or from anywhere while still complying with protocols (fwa). nguyen et al., (2015) and chandra & priyono (2016) through hastutiningsih, (2019) simultaneously through their research state that the work environment has a positive effect on employee performance. adhitama & riyanto, (2020) argue that the needs of each employee's work environment are unique, if the company can provide the work environment that every employee need, it will improve employee performance and motivation. organizations that implement fwa have an awareness that changes in dynamics and flexible work patterns can make employees have better aspects of work life balance (wlb), resulting in good performance as well (garg & yajurvedi, 2016). according to singh and khanna through tumbel et al., (2017) wlb is a broad concept that involves setting the right priorities between work (career and ambition) on the one hand and life (happiness, leisure, family, and spiritual development). meanwhile, according to handayani & munawar, (2015), wlb is a condition when a person can share roles at home and at work and feel satisfaction in these roles. prior to the pandemic, most employees had high mobility at work so it would be a waste of time and could cause feelings of being physically and mentally burdened. on the other hand, employees have a need to fulfil their social status both in the home and family environment, this can trigger a conflict of interest for employees if there are aspects that are not met. during the covid-19 pandemic, changing the way employees work to online methods can affect aspects of wlb. this is supported by the results of pre-research questionnaires that have been filled out by respondents, that wlb is an aspect that makes their performance improve. based on the above background, the performance of telkom employees during the covid-19 pandemic is very interesting to study by linking fwa factors, the work environment and wlb. in this study, the application of the fwa method triggers changes in the work environment and aspects of employee wlb. therefore, researchers are interested in analysing more deeply about "the influence of flexy work arrangements and work environments on employee performance through work life balance during the covid-19 pandemic". literature study the world was shocked by the covid-19 pandemic in 2020. the impact of this pandemic disrupts activities in various sectors, one of the sectors most affected is the economic sector. many companies in the world have experienced a decline in revenue due to this epidemic (hartono & rahadi, 2021). companies operating during the 75 covid-19 pandemic must comply with existing health protocols. some employees who work at the company are temporarily laid off and some are working from home (work from home). as stated by dingel & neiman, (2020) through (hartono & rahadi, 2021) that work cannot be done from home. the theory proves that working from home is not easy, let alone improving performance. basically, employee performance is seen from the quality of work, quantity of work, discipline, effectiveness, and timeliness of employees at work (mathis & jackson, 2014). the dimensions of employee performance can trigger a company's competition with other companies. companies that have good employee performance will easily achieve their goals. therefore, it is natural that companies want to get the best performance from their employees. the covid 19 pandemic that has hit the world has changed all aspects of people's lives, from lifestyle, work habits, to the management of human resources within companies. the government's policy to limit physical and social contact has limited the lifestyle of gathering with many people, the world of work in all sectors has changed, not only in the economic sector but also in the human resources management sector. this condition causes some employees who previously worked from office (wfo) to work from home (wfh). wlb is achieved by an employee when he can comfortably meet the demands of his work and personal life. wlb in the formal sector shows that the flexibility of working hours if less will cause a decrease in employee satisfaction and performance, but in the informal sector the flexibility of working hours has an indirect effect on performance (putranti & susilo, 2020). every individual's wlb is different from time to time, often every day it can change, including during this pandemic. the wlb that is right for today may be different in the future. the flexible working arrangement (fwa) was initiated by the drive to change the way the world's big companies work, especially digital companies (google, apple, microsoft, facebook) that can do their jobs without having to be in the office. fwa is also supported by tools for virtual collaboration that allow the exec ution of work without the need to meet physically. according to shrm, (2015) fwa is a method of working in various ways, such as telecommuting, compressed work weeks, and flexible scheduling that make employees more flexible in their work. in addition, another definition of fwa according to stefanie et al., (2020) is a choice of work that allows flexibility in terms of "where" where the work is completed or commonly referred to as telecommuting/flex place or "when" the work can be done. finished. complete. the work environment during the covid-19 pandemic can be divided into two. the first work environment is a work environment at home when employees do wfh and the second work environment is a work environment in the office when employees are required to do wfo. both of these work environments can affect employee performance. as stated by hustia, (2020) that a good work environment will also have a good impact on employee performance, so having a conducive work environment is a must for an employee. research methodology to understand the decision-making process in the cultural villages, we use a systematic review method. in this this research method is quantitative because it aims to examine a population or a sample of a particular population with data collected through research instruments to test hypotheses that have been determined in accordance with the research conducted. in this research, the population is 342 employees who worked at pt. telkom indonesia, tbk region west java and the minimum sample is 175 respondents. in this reasearch author success collect 193 answers from respondents using online questionnaire, details of the data can be seen in table 1. the method used in this research is descriptive with a verification approach. descriptive method is applied by describing the data that has been collected as it is without intending to make general conclusions. region frequency percentage bandung 45 23.32% bandung barat 31 16.06% cirebon 33 17.10% karawang 27 13.99% sukabumi 32 16.58% tasikmalaya 25 12.95% total 193 100% source: data processing (2021) . influence of flexible work arrangement and work environment on employee performance through worklife ballance table 1 respondents list 76 ambr figure 1 research conceptual model table 2 recapitulation of descriptive analysis of flexible work arrangement variables (x1) meanwhile, to test the hypothesis that has been set, in this study a verification approach will be carried out. with reference to the purpose of the first research, descriptive method is used to provide an overview of the variables studied, namely flexible work arrangements, work environment, work-life balance and employee performance. in addition, the verification approach is used to explain the extent of the relationship between variables, either directly or indirectly. the analysis method begins by looking at the characteristics of the data through descriptive statistics and then analyzing the multivariate data analysis (mda) model using the partial least square (pls) method. the pls model is used in this study because the model can predict constructions built from several variables and can explain complex structural models. this research also involves several variables with dimensions that are adjusted to be more relevant to the industry discussion, thus forming formative variables. the paradigm of this research can be seen in figure 1 below: from the research conceptual model in figure 1, the following hypotheses can be formulated: h1: flexible work arrangement has a significant positive effect on work life balance h2: work environtment has a significant positive effect on work life balance h3: flexible work arrangement has a significant positive effect on employee performance h4: work environment has a significant positive effect on employee performance h5: work life balance has a significant positive effect on employee performance h6: flexible work arrangement has a significant positive effect on employee performance through work life balance h7: work environment has a significant positive effect on employee performance through work life balance result and discussion descriptive analysis of variables the questionnaire regarding respondents' responses to the flexible work arrangement (x1) variable consists of 3 dimensions (flexy time, job sharing, and teleworking/flexy place), 8 statement items, and 193 respondents. the following are the results of the recapitulation of data processing that has been carried out regarding the dimensions of the flexible work arrangement (x1) variable, which are presented as follows: no. dimension total score average category 1 flexy time 814.00 4.22 very high 2 job sharing 792.00 4.10 high 3 teleworking / flexy place 812.67 4.21 very high average 806.22 4.18 high source: data processing (2021) 77 based on table 2, the average respondents' responses to the flexible work arrangement variable (x1). the high fulfilment of the flexy time dimension occurs because every human being has their own productive hours which if working at that time can increase their performance productivity. the low dimension of job sharing occurs because online communication is a new habit, so there are still frequent communication problems between employees. the achievement of the flexible work arrangement aspect is due to the compatibility of the existing work culture with the flexible work arrangement work method that was recently implemented by telkom management during the pandemic. the score interpretation criteria for the flexible work arrangement variable with a value of 4.18 is high. the questionnaire regarding respondents' opinions about the work environment variable (x2) consists of 3 dimensions (physical conditions, social conditions, and psychological conditions), 9 statement items, and 193 respondents. the following presents the results of data processing that has been carried out regarding the dimensions of the work environment (x2) variable as follows: no. dimension total score average category 1 physical condition 836.50 4.33 very high 2 social condition 819.67 4.25 very high 3 psychological condition 721.50 3.74 high average 792.56 4.11 high source: data processing (2021) based on table 3, the average respondents' responses to the work environment variable (x2). the physical condition of an employee's work environment can greatly affect their productivity, this can happen because they will feel comfortable and relaxed if they are in a place they like. during the pandemic, employees must limit their movement space so as not to be exposed to the covid-19 virus, but employees are still free to determine their own workplace and time even though boredom and boredom may arise. the criteria for interpreting the score on the work environment variable with a value of 4.11 is high. the questionnaire regarding respondents' opinions about the work life balance (z) variable consists of 4 dimensions of work interfere personal life (wipl), work enhance personal life (wepl), personal life interfere work (pliw), and personal life enhance work (plew)), 9 statement items, and 193 respondents. the following presents the results of data processing that has been carried out regarding the dimensions of the work life balance (z) variable as follows: no. dimension total score average category 1 work interfere personal life (wipl) 806.33 4.18 high 2 work enhance personal life (wepl) 797.50 4.13 high 3 personal life interfere work (pliw) 780.00 4.04 high 4 personal life enhance work (plew) 772.00 4.00 high average 788.96 4.09 high source: data processing (2021) based on table 4, the average respondents' responses regarding the work life balance (z) variable. work interfere personal life is the dimension with the highest value because during the pandemic, employees do not feel that their personal lives are disturbed by work. while the lowest average is for the enhance personal life work (plew) dimension, this can happen because during a pandemic personal life can easily interfere with work life and motivate work life. according to most respondents, even in a pandemic, they can still communicate and interact with their friends or family and can still carry out their hobbies. in addition, the combination of personal life and work life is an important aspect to maintain their work life balance. the score interpretation criteria on the work life balance variable with a value of 4.09 is high. the questionnaire regarding respondents' opinions about employee performance (y) consists of 6 dimensions quality, quantity, timeliness, cost effectiveness, needs supervision, and impersonal impact, 12 statement items, and 193 respondents. the following is a recapitulation of the results of data processing that has been carried out regarding the dimensions of the employee performance variable (y) as follows: influence of flexible work arrangement and work environment on employee performance through worklife balance table 3 recapitulation of descriptive analysis of work environment variables (x2) table 4 recapitulation of descriptive analysis of work life balance (z) variables 78 ambr table 5 recapitulation of descriptive analysis of employee performance variables (y) table 6 construct’s loading factor validity result no. dimension total score average category 1 quality 867.50 4.49 very high 2 quantity 851.50 4.41 very high 3 timeliness 857.50 4.44 very high 4 cost effectiveness 864.00 4.48 very high 5 need for supervision 855.50 4.43 very high 6 impersonal impact 878.00 4.55 very high average 862.33 4.47 very high source: data processing (2021) based on table 5, the average respondents' responses regarding the employee performance variable (y). the high dimension of impersonal impact is because respondents can collaborate well during the pandemic. although the quantity dimension is the lowest, most of the respondents are still able to complete their work well. according to respondents, even during the pandemic they were still able to complete their work very well, as evidenced by all dimensions being in the very high category. the criteria for interpretation of the score on th e employee performance variable with a value of 4.47 is very high. outer model evaluation validity test source: data processing (2021) construct loading factor critical result x1.1.1 0.916 0.5 valid x1.1.2 0.924 0.5 valid x1.1.3 0.903 0.5 valid x1.2.1 0.929 0.5 valid x1.2.2 0.935 0.5 valid x1.3.1 0.924 0.5 valid x1.3.2 0.923 0.5 valid x1.3.3 0.903 0.5 valid x2.1.1 0.846 0.5 valid x2.1.2 0.866 0.5 valid x2.1.3 0.831 0.5 valid x2.1.4 0.829 0.5 valid x2.2.1 0.910 0.5 valid x2.2.2 0.918 0.5 valid x2.3.1 0.939 0.5 valid x2.3.2 0.946 0.5 valid y.1.1 0.897 0.5 valid y.1.2 0.869 0.5 valid y.2.1 0.871 0.5 valid y.2.2 0.895 0.5 valid y.3.1 0.881 0.5 valid y.3.2 0.885 0.5 valid y.4.1 0.892 0.5 valid y.4.2 0.878 0.5 valid y.5.1 0.935 0.5 valid y.5.2 0.938 0.5 valid y.6.1 0.923 0.5 valid y.6.2 0.916 0.5 valid z.1.1 0.942 0.5 valid z.1.2 0.939 0.5 valid z.2.1 0.907 0.5 valid z.2.2 0.913 0.5 valid z.3.1 0.933 0.5 valid z.3.2 0.925 0.5 valid z.4.1 0.911 0.5 valid z.4.2 0.865 0.5 valid x1.1 0.946 0.5 valid x1.2 0.836 0.5 valid x1.3 0.940 0.5 valid x2.1 0.924 0.5 valid x2.2 0.827 0.5 valid x2.3 0.624 0.5 valid z1 0.916 0.5 valid z2 0.893 0.5 valid z3 0.898 0.5 valid z4 0.847 0.5 valid y1 0.840 0.5 valid y2 0.798 0.5 valid y3 0.837 0.5 valid y4 0.832 0.5 valid y5 0.791 0.5 valid y6 0.807 0.5 valid y.6.1 0.923 0.5 valid y.6.2 0.916 0.5 valid z.1.1 0.942 0.5 valid z.1.2 0.939 0.5 valid z.2.1 0.907 0.5 valid z.2.2 0.913 0.5 valid z.3.1 0.933 0.5 valid z.3.2 0.925 0.5 valid z.4.1 0.911 0.5 valid z.4.2 0.865 0.5 valid x1.1 0.946 0.5 valid x1.2 0.836 0.5 valid x1.3 0.940 0.5 valid x2.1 0.924 0.5 valid x2.2 0.827 0.5 valid x2.3 0.624 0.5 valid z1 0.916 0.5 valid z2 0.893 0.5 valid z3 0.898 0.5 valid z4 0.847 0.5 valid y1 0.840 0.5 valid y2 0.798 0.5 valid y3 0.837 0.5 valid y4 0.832 0.5 valid y5 0.791 0.5 valid y6 0.807 0.5 valid y.6.1 0.923 0.5 valid y.6.2 0.916 0.5 valid z.1.1 0.942 0.5 valid z.1.2 0.939 0.5 valid z.2.1 0.907 0.5 valid z.2.2 0.913 0.5 valid z.3.1 0.933 0.5 valid z.3.2 0.925 0.5 valid z.4.1 0.911 0.5 valid z.4.2 0.865 0.5 valid x1.1 0.946 0.5 valid x1.2 0.836 0.5 valid x1.3 0.940 0.5 valid x2.1 0.924 0.5 valid x2.2 0.827 0.5 valid x2.3 0.624 0.5 valid z1 0.916 0.5 valid z2 0.893 0.5 valid z3 0.898 0.5 valid z4 0.847 0.5 valid y1 0.840 0.5 valid y2 0.798 0.5 valid y3 0.837 0.5 valid y4 0.832 0.5 valid y5 0.791 0.5 valid y6 0.807 0.5 valid y.6.1 0.923 0.5 valid y.6.2 0.916 0.5 valid z.1.1 0.942 0.5 valid z.1.2 0.939 0.5 valid z.2.1 0.907 0.5 valid z.2.2 0.913 0.5 valid z.3.1 0.933 0.5 valid z.3.2 0.925 0.5 valid z.4.1 0.911 0.5 valid z.4.2 0.865 0.5 valid x1.1 0.946 0.5 valid x1.2 0.836 0.5 valid x1.3 0.940 0.5 valid x2.1 0.924 0.5 valid x2.2 0.827 0.5 valid x2.3 0.624 0.5 valid z1 0.916 0.5 valid z2 0.893 0.5 valid z3 0.898 0.5 valid z4 0.847 0.5 valid y1 0.840 0.5 valid y2 0.798 0.5 valid y3 0.837 0.5 valid y4 0.832 0.5 valid y5 0.791 0.5 valid y6 0.807 0.5 valid construct loading factor critical result x1.1.1 0.916 0.5 valid x1.1.2 0.924 0.5 valid x1.1.3 0.903 0.5 valid x1.2.1 0.929 0.5 valid x1.2.2 0.935 0.5 valid x1.3.1 0.924 0.5 valid x1.3.2 0.923 0.5 valid x1.3.3 0.903 0.5 valid x2.1.1 0.846 0.5 valid x2.1.2 0.866 0.5 valid x2.1.3 0.831 0.5 valid x2.1.4 0.829 0.5 valid x2.2.1 0.910 0.5 valid x2.2.2 0.918 0.5 valid x2.3.1 0.939 0.5 valid x2.3.2 0.946 0.5 valid y.1.1 0.897 0.5 valid y.1.2 0.869 0.5 valid y.2.1 0.871 0.5 valid y.2.2 0.895 0.5 valid y.3.1 0.881 0.5 valid y.3.2 0.885 0.5 valid y.4.1 0.892 0.5 valid y.4.2 0.878 0.5 valid y.5.1 0.935 0.5 valid y.5.2 0.938 0.5 valid 79 based on the loading factor value in table 6, it is found that of the all question indicators are valid because they have a loading factor value more than 0.5. so that all the statements listed in the questionnaire above are eligible to reflect the variables in the study. to assess discriminant validity using the square root of ave value for each construct. if the ave value of each construct is greater than 0.50, it is said that the construct has a good validity discriminant value. the ave value for each construct can be seen in table 7 below: construct ave critical result x1 0.711 0.5 valid x2 0.532 0.5 valid y 0.539 0.5 valid z 0.665 0.5 valid source: data processing (2021) based on the ave value of each construct in the table above, it shows that the value is greater than 0.50, which means that each of these constructs has good discriminant validity. based on table 2 and table 3 about the validity of the four research variables and their construct, it can be seen that all statement items from the four variables are valid. so that all the statements listed in the questionnaire above are eligible to reflect the variables in the study. reliability test after measuring the convergent validity and measuring the discriminant validity, finally the internal eliability test was carried out which was measured by two criteria, namely composite reliability and cronbach alpha from the indicator block measuring the variables. the construct is declared reliable if the composite reliability and cronbach alpha value is above 0.70 (ghozali, 2013). laten cronbach's alpha composite reliability x1 0.942 0.952 x2 0.872 0.900 y 0.922 0.933 z 0.927 0.941 source: data processing (2021) based on table 4 regarding the reliability test of the three research variables obtained from a sample of 193 respondents, the results of the reliability test for each variable have good reliability, indicated by the reliability coefficient exceeding the critical value (0.7). therefore, all statements in the questionnaire can be analyzed further. inner model evaluation r square based on the test results with smartpls 3.0, the results obtained r square as table 9 below: endogen r square relationship work life balance (z) 0.540 moderate employee performance (y) 0.688 strong source: data processing (2021) from the results of table 9 the r-square for the variable work life balance (z) as big as 0.540 which means that flexible work arrangement (x1) and work environment (x2) contribute an influence of 0.540 or 54.0% to work life balanze (z) in moderate category. while the remaining 46.0% is the influence of other factors that are not observed. and r-square for variable employee performance (y) as big as 0.688 which means that flexible work arrangement (x1), work environment (x2), and work life balance (z) contribute an influence of 0.688 or 68.8% to employee performance (y) in strong category. while the remaining 31.2% is the influence of other factors that are not observed. influence of flexible work arrangement and work environment on employee performance through worklife balance table 7 ave value in each construct table 8 table of reliability test results table 9 r square 80 ambr table 10 f square table 11 value t-table table 12 results of path coefficient values, t-count, and pvalue f square source: data processing (2021) based on table 10 it can be seen that it shows the influence of latent variable predictors at the structural level. on variable flexible work arrangement (x1) have an influence with a big category in influencing work life balance (z), and work environment (x2) have an influence with a medium category in influencing work life balance (z). while flexible work arrangement (x1), work environment (x2), and work life balance (z) each have an influence to employee performance (y) with medium, small, and big category in influence. hypothesis testing one tailed two tailed t-table 1.64 1.96 source: ghozali, (2014) testing criteria: 1. if the value of t-statistics > t-table, then h0 is rejected and h1 is accepted 2. if the value of t-statistics < t-table, then h0 is accepted and h1 is rejected from the results of calculations using smartpls, the magnitude of the t-count significance value in the table below states the magnitude of the significance value between the variables tested. the t-count value states the significance value between flexible working arrangement (x1), work environment (x2), work life balance (z) and employee performance (y) variables. hypothesis path coefficient t-count p value conclusion x 1 -> z 0.609 12.756 0.000 accept h1 x 2 -> z 0.279 4.680 0.000 accept h2 x 1 -> y 0.301 5.307 0.000 accept h3 x 2 -> y 0.177 2,673 0.008 accept h4 z -> y 0.502 8,211 0.000 accept h5 x 1 -> z -> y 0.306 7.122 0.000 accept h6 x 2 -> z -> y 0.140 4.039 0.000 accept h7 source: data processing (2021) based on the results of the quantitative analysis that has been carried out, it is known that all hypothesis in this study are accepted. this shows that employee performance can be driven by aspects of flexible work arrangement, work environment and work life balance. for profit-oriented organizations, employee performance is one of the keys to success in improving organizational performance (zainie et al., 2015). the following is a description of the table12 about hypothesis testing. hypothesis 1 was accepeted due to the t count of h1 which greater than t table and the p-value is less than 0.005. it can be concluded that flexible work arrangement has a significant positive effect on work life balance. this means that flevible work arrangement has a positive and significant impact on the aspects of the work life balance of employees. employees can carry out activities that they previously could not do because they variable effect size rating work life balance (z) flexible work arrangement (x1) 0.747 big work environment (x2) 0.157 medium employee performance (y) flexible work arrangement (x1) 0.155 medium work environment (x2) 0.080 small work life balance (z) 0.372 big 81 previously collided with the time and place of formal work. in addition, if employees perform fwa, the stress experienced by employees will be reduced and will trigger an increase in aspects of work life balance. this state happened because when employees do fwa, they free to choose the time and place of work so that they can save time, energy, and transportation costs to get to the office. time savings can be used to do other things so employees will be more productive in carrying out other activities (including their personal activities). hypothesis 2 was accepeted due to the t count of h2 which greater than t table and the p-value is less than 0.005. it can be concluded that work environtment has a significant positive effect on work life balance. the influence of the work environment on work life balance is very broad, meaning that each individual employee has his own preferences and standards for his work life balance aspects. similarly, the work environment can be a preference for everyone. during the covid-19 pandemic, telkom employees, especially region 3 west java, began to implement fwa which allowed employees to work freely from anywhere. work environment preferences when doing fwa or wfh can be fully determined by employees, so employees will feel more comfortable with their own work environment. the comfort that is obtained at work can improve aspects of work life balance because the employee gets self-satisfaction. hypothesis 3 was accepeted due to the t count of h3 which greater than t table and the p-value is less than 0.005. it can be concluded that flexible work arrangement has a significant positive effect on employee performance. this can happen because the employee must choose the time and place according to his preferences so that there will be comfort which can have a positive impact on his performance. one of the dimensions of a flexible work arrangement is that flexy time is not suitable for all types of industries. industries such as manufacturing, construction, and transportation are more difficult to apply the concept of flexy time. unlike the case with telkom which is suitable to apply the concept of flexy time because it is in the digital-telco industry which demands high flexibility. during the covid-19 pandemic in 2020, telkom managed to increase its revenue from the previous year. this happens because the influence of the flexy working arrangement method carried out by telkom management is considered appropriate and favored by telkom employees, as evidenced by the increase in telkom's operational performance during 2020. hypothesis 4 was accepeted due to the t count of h4 which greater than t table and the p-value is less than 0.005. it can be concluded that work environment has a significant positive effect on employee performance. the work environment in this research is a dynamic work environment where when this research was conducted, the covid-19 pandemic was occurring so that the employee's work environment was home, office, or other places. a good work environment will also have a good impact on employee performance, so having a conducive work environment is a must for an employee. so, it can be concluded that the dynamic work environment during this pandemic did not reduce the performance of telkom regional-3 employees. hypothesis 5 was accepeted due to the t count of h5 which greater than t table and the p-value is less than 0.005. it can be concluded that work life balance has a significant positive effect on employee performance. employee performance resulting from employees who get a balance between work life and personal life usually has a much better level of performance. so, if the employee's work life balance is not maintained properly by the company, it will have a negative impact on the company and the employees themselves. in this covid-19 pandemic, telkom employees have the choice to be able to determine their own workplace and time. this can be an advantage because employees can carry out several roles at a time, for example when working at home employees can carry out their roles as family members. in addition, if employees choose to do their work from tourist attractions, personal life aspects will be more fulfilled because they can feel the experience of working in tourist attractions. the state of the covid-19 pandemic where all community movements are restricted by the government increases the aspect of the work life balance of employees which has an impact on employee performance. hypothesis 6 was accepeted due to the t count of h6 which greater than t table and the p-value is less than 0.005. it can be concluded that flexible work arrangement has a significant positive effect on employee performance through work life balance. flexible work arrangement being an exogenous variable has a significant effect on employee performance directly. however, this study also looks at the relationship between the two exogenous variables on employee performance indirectly through the intervening/mediation variable of work life balance. these exogenous variables have a significant effect on employee performance through work life discussion the first hypothesis of this research is how the effect of flexible work arrangement on work life balance at telkom regional 3 during the covid-19 pandemic. based on the hypothesis test that has been done, it can be concluded that flexible work arrangement has a significant positive effect on work life balance. this is in accordance with research conducted by stefanie et al., (2020) which states that the flexibility of the way of working provided by the company has a positive and significant effect on aspects of the work life balance of employees. in addition, according to stefanie et al., (2020) during this pandemic, the employee's work life balance aspect is more fulfilled because of the contribution of the company's flexible work arrangement practice. employees can carry out activities that previously could not be done because previously constrained by time and formal influence of flexible work arrangement and work environment on employee performance through worklife balance 82 ambr workplace. another study on flexible work arrangement has a significant positive effect on aspects of work life balance, which was also conducted by (maharani et al., 2020). maharani et al., (2020) said that when employees perform fwa, the stress experienced by employees will be reduced and will trigger an increase in aspects of work life balance. this can happen because when employees do fwa, they are free to choose the time and place of work (according to the boss's permission) so they can save time, energy and transportation costs to get to the office. the time saved can be used to do other things to make employees more productive. mattis, (1990) through pandiangan, (2018) states that flexible working hours can increase job satisfaction, where currently wages are not the benchmark that employees are looking for but other benefits such as time and hours of work, facilities provided by the company, and the promised career journey. all of this refers to the concept of work life balance which is a combination of aspects of work life and aspects of personal life. in addition, enre et al., (2020) in their research found that when doing wfh employees were not worried about being exposed to the covid-19 virus, so they could move more comfortably. the second hypothesis of this research is how the influence of the work environment on the work life balance. based on the hypothesis test that has been done, it can be concluded that the work environment has a significant positive effect on work life balance. this is in accordance with research conducted by aifha & suwarsi, (2018) at pt. pos indonesia which states that the work environment has a significant effect on aspects of work life balance. aifha & suwarsi, (2018) in their research also said that companies must retain their employees as long as possible in order to continue to maintain their existence in business competition, one of the most effective ways to make employees feel at home is to fulfil the work life balance aspects that employees need. another study with similar results conducted by anila & krishnaveni, (2016) stated that the work environment has a significant positive effect on aspects of work life balance. in addition, according to anila & krishnaveni, (2016) the influence of the work environment on work life balance is very broad, meaning that each individual employee has their own preferences and standards for aspects of their work life balance. similarly, the work environment can be a preference for everyone. during the covid-19 pandemic, telkom employees, especially regional 3 west java, began to implement fwa which allows employees to work freely from anywhere. the preference of the work environment when doing fwa or wfh is entirely determined by the employee, so that employees will feel more comfortable with their own work environment. the comfort obtained at work can improve aspects of work life balance because employees get self-satisfaction (nurwahyuni, 2019). the third hypothesis of this study is how the effect of flexible work arrangements on employee performance. based on the hypothesis test that has been done, it can be concluded that flexible work arrangement has a significant positive effect on employee performance. this is in line with research conducted by kipkoech, (2018) that flexible work arrangement has a significant positive effect on employee performance. working with flexible working hours can improve employee performance (kipkoech, 2018). this can happen because employees must choose a time and place that suits their preferences so that a sense of comfort will arise which can have a positive impact on their performance (tumbel et al., 2017). in line with this study, there is research from abid & barech, (2017) which reveals that the flexible work arrangement variable has a significant positive effect on the employee performance variable. this study highlights that one dimension of flexible work arrangements, namely flexible time, is not suitable for all types of industries. industries such as manufacturing, construction, and transportation are more difficult to apply the concept of flexible time. unlike the case with telkom which is suitable to apply the concept of flexy time because it is in the digital-telco industry which demands high flexibility. during the covid-19 pandemic in 2020, telkom managed to increase revenue from the previous year. this happens because the way the work carried out by the management of telkom flexy is considered their own right as well as being liked by telkom employees, as evidenced by the improvement in telkom's operational performance during 2020. in accordance with armstrong's opinion through the book sopiah & sangadji, (2018) which states that one of the factors that affect employee performance are system factors related to work methods, in the context of this study the flexible work arrangement variable. the next hypothesis that is accepted is the influence of the work environment on employee performance. the answer to the fourth hypothesis in this study has similarities with research from hastutiningsih, (2019), namely the work environment has a significant positive effect on employee performance. hastutiningsih, (2019) also states that employee performance can be influenced by internal and external factors, in this study the work environment is an external factor that can affect employee performance. the work environment in this study is a dynamic work environment where at the time this research was conducted there was a covid-19 pandemic so that the employee's work environment was home, office, or another place. this is reinforced by the opinion of indarti et al., (2014) that the work environment is a factor outside of humans, both physical and non-physical in an organization that can affect performance. in line with research from hustia, (2020) which found that the work environment had a significant positive effect on employee performance. as stated by hustia, (2020) in his research that a good work environment will also have a good impact on employee performance, so having a conducive work environment is a must for an employee. therefore, it can be concluded that the dynamic work environment during this pandemic does not reduce the performance of 83 telkom regional -3 employees. the fifth hypothesis that is accepted in this study is that work life balance has an effect on employee performance. this is in accordance with research conducted by nurwahyuni, (2019) at telkom regional v east java. nurwahyuni, (2019) in her research states that the performance resulting from employees who get a balance between work life and personal life usually has a much better level of performance. therefore, if the employee's work life balance is not maintained properly by the company, it will have a negative impact on the company and the employees themselves. during this covid-19 pandemic, telkom employees have the choice to be able to determine their own workplace and time. this can be an advantage because employees can carry out several roles at the same time, for example when working at home employees can carry out their roles as family members. in addition, if employees choose to do their work from a tourist place, aspects of their personal life will be more fulfilled because they can feel the experience of working in a tourist place. wolor et al., (2020) and ratnawati et al., (2020) in their research on the relationship of work life balance to employee performance during the pandemic simultaneously also argue that the work life balance variable has a significant positive effect on the employee performance variable. the state of the covid-19 pandemic where all community movements are restricted by the government increases aspects of the work life balance of employees which has an impact on employee performance. flexible work arrangements and work environment which are exogenous variables have a significant direct effect on employee performance. however, this study also looks at the relationship between the two exogenous variables on employee performance indirectly through the intervening/mediation variable of work life balance. both exogenous variables have a significant effect on employee performance through work life balance. meanwhile, for employees of telkom regional 3 west java, the exogenous variable that has the greatest direct or indirect influence on employee performance is the flexible work arrangement variable. while the direct or indirect relationship of the work environment variable to employee performance is weaker than the influence caused by the flexible work arrangement variable. conclusion after the author discussed in the previous chapter the description of the effect of flexible work arrangements and work environment on employee performance through work life balance, the authors in this chapter will try to draw conclusions and provide suggestions based on the description. which was stated in the previous chapter. flexible work arrangements, work environment, and work life balance of treg-3 employees during the covid-19 pandemic are in the high category, the performance of treg-3 employees during the covid-19 pandemic is in the very high category. this shows that the working atmosphere at treg-3 during the covid-19 pandemic is quite conducive. and all hypotheses can be accepted based on statistical calculations that have been done. for further research, it is possible to conduct research not only on the dependent variable of employee performance, but also the level of employee satisfaction and employee engagement. in addition, further research can also use aspects of leadership with an online context in determining the level of employee performance. in addition, studies in the field of human resource management during the covid-19 pandemic are still very few, this research can be used as a reference. in addition, if in the future there is another pandemic with a similar work situation, this research can be used as a reference in making decisions. in this study it is known that the flexible work arrangement method can increase the level of employee performance. therefore, telkom must continue to apply this way of working even though the pandemic has ended. based on the research conducted, the flexible work arrangement method provides work effectiveness and efficiency for treg-3 employees so that it can directly or indirectly benefit telkom. in this study also found the influence of work life balance aspects on employee performance is quite large. so that if telkom can improve the work life balance aspect of its employees, the company's performance will also increase. during this pandemic, most of the employee's working time is spent from home and the working hours are too flexible resulting in frequent video conferences or other tasks that must be done at night. if this condition does not change within a certain period, this can lead to a decrease in the aspect of work-life balance due to reduced quality time with family and normal rest time. one way that telkom can do to keep the work life balance aspect of its employee high is to make a policy regarding working time limits. based on the research conducted, the influence of the work environment on employee performance is the lowest, either directly or indirectly. so that telkom and treg-3 must be able to ensure a conducive work environment for employees when carrying out flexible work arrangements. in addition, this control function is still needed so that employees do not lose control and stay on track to achieve the goals set by the company. this control function can be obtained from the employee's direct supervisor in the form of supervision from the supervisor, or it can be in the form of other tools such as mobile apps or other it tools. the company's efforts to adapt quickly in this pandemic era require the formulation of the right strategy. based on the current situation, influence of flexible work arrangement and work environment on employee performance through worklife balance 84 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(2020). effectiveness of e-training, e-leadership, and work life balance on employee performance during covid-19. journal of asian finance, economics and business, 7(10), 443–450. https://doi.org/10.13106/jafeb.2020.vol7.no10.443 influensce of flexible work arrangement and work environment on employee performance through worklife balance 110 entrepreneurial orientation, market orientation and business performance (frozen food retail entrepreneurs of xyz business) annisa auliya rohmah*, fauzan aziz telkom university, indonesia abstract the lifestyle has changed and affects changes in consumption patterns leading to consuming processed or frozen products (frozen food). however, the change in consumption also causes the high demand for products from frozen food retail entrepreneurs among similar businesses. every frozen food retail entre preneur of xyz business has a different way of making strategies for its retail. this research aims to determine and analyze the effect of entrepreneurial and market orientation on xyz's business performance in their entrepreneur's frozen food retail. the research method used in this study is a quantitative method with a descriptive type of research. sampling was done using the saturated sample method of 37 xyz frozen food retail entrepreneurs as respondents with questionnaire distribution. the data analysis technique used is descriptive analysis and multiple linear regression analysis. the data processing results using spss-25 showed a positive and significant effect of entrepreneurial orientation and market orientation on business performance. furthermore, entrepreneurial and market orientation affects business performance simultaneously among frozen food retail entrepreneurs of xyz business. keywords: entrepreneurial orientation, market orientation, business performance *corresponding author. email address: annisauliya@student.telkomuniversity.ac.id entrepreneurial orientation, market orientation and business performance (frozen food retail entrepreneurs of xyz business) received september 15th 2021 review september 26th 2021 publish december 31st 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/601 mailto:annisauliya@student.telkomuniversity.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/601 111 ambr introduction facing changes in times and lifestyles also changes in people's lifestyles that are starting to switch from conventional to modern. indonesians are beginning to adapt to consumption patterns in developed countries, consuming frozen food or processed products. it is also accompanied by an increase in various types of business during the pandemic. the lifestyle of modern society with changing consumption patterns, especially the indonesian people today, demands that everything goes fast, economical, practical, and delicious such as the need for instant food. it has the potential to become a means of equity in increasing people's income due to the growing middle-class population and the tendency of current public consumption patterns that lead to the consumption of processed or frozen products (frozen food). nowadays, the business environment is increasingly competitive. in order to meet this competition, a business activity must have the appropriate strategy, contribute to the business's survival, and have an advantage over competing businesses. every company activity must evolve to address every opportunity and risk from the business competition. many factors influence being an entrepreneur, one of which is that market-oriented entrepreneurs have better performance than an entrepreneur who does not have a market orientation. likewise, entrepreneurial orientation means that when carrying out business activities, an entrepreneur has to consider whether these activities are relevant to their goals, dare to take profitable risks, and provide new ideas to be integrated into activities. in addition to requiring entrepreneurial and market orientation, entrepreneurs must have their measure of achieving their business quality targets, in other words, performance. business performance measures not only have short-term goals but are also future-oriented with stable growth from year to year and able to face new competitors. moreover, the business performance focuses not only on financial and non-financial improvements that must be a concern. tricahyadinata (2018) states that entrepreneurial orientation is an approach that focuses on productmarket innovation and project risk. it tends to be a pioneer in innovation and stands out from rivals. according to previous studies (hamel & wijaya, 2020), entrepreneurial orientation, which is reflected in an attitude full of innovation, proactiveness and the courage to take risks, is believed to boost the company's performance. in addition to being entrepreneurially minded to win a company competition, an entrepreneur must also enhance marketing performance by identifying the marketing methods typically employed by businesses or businesses, called market orientation (kurniawan, 2019). according to na et al. (2019) research, market orientation is discovering and comprehending the demands of current and prospective customers and observing and overcoming the behavior of existing prospective competitors through the processes and practices that form the organization and management system. darmanto et al. (2015) state that performance can also be said as a result (output) of a particular process carried out by all components of the organization against specific sources that use (input). business performance is measured in two dimensions, financial and non-financial, which was adopted from previous research by kurniawan (2019). in general, most smes are limited in using financial performance indicators. it happens because smes lack the human resources to make performance measurements and are suitable for making decisions. furthermore, performance results from process activities to achieve specific organizational goals. xyz business frozen food is a small-medium business that only provides an opportunity to open a subdistrict as their frozen food retail. it can be a good opportunity for entrepreneurs to sell frozen food products as retail from xyz business. before that, the frozen food retail entrepreneurs of xyz business currently have 37 retails with at least one owner in each retail, and they have different attitudes and ways of selling their products and the market, affecting business performance. requiring the right strategy can affect the entrepreneurial and market-oriented process, run optimally, and provide maximum benefits to business actors, especially the frozen food retail entrepreneurs xyz business owners. information was collected by doing the pre-survey interview with the owner of xyz business frozen food. in conclusion, the owner said that the other retail entrepreneurs are still not market-oriented and entrepreneurial in carrying out their business activities. so, it can be acquired that the ability to entrepreneurial and market orientation is essential and must be owned by business owners to improve their business performance. it is reflected in the researchers' aim in the frozen food retail entrepreneurs of xyz business. much research on smes has been carried out. however, assessments of business performance that are influenced by market orientation and entrepreneurial orientation in the context of frozen food retail, especially retail entrepreneurs or branch owners, are rarely conducted. for this reason, this research will only take the object of research on the entrepreneurs' frozen food retail of xyz business. therefore, this study examines how entrepreneurial and market orientation affect business performance in frozen food retail entrepreneurs of xyz. 112 literature study entrepreneurship according to (hisrich et al., 2017), entrepreneurship is essential for forming and expanding businesses and developing prosperous regions and nations. entrepreneurs take advantage of what they perceive to be an opportunity. entrepreneurs must use their discretion when deciding whether or not to act because opportunities are available in (creates or generate) high uncertainty. however, scepticism can hinder entrepreneurial initiative. therefore, the ability to analyze the level of perceived uncertainty surrounding a possible opportunity and the individual's willingness to accept that uncertainty is essential to understanding entrepreneurial behavior. prior understanding of the individual can reduce uncertainty, and his or her motivation suggests a readiness to tolerate ambiguity. entrepreneurship, proposed by tricahyadinata (2018), is seen as a mechanism that seeks competitive advantage through product, process, and market innovation. entrepreneurship has attitudinal and behavioral components and can be practised by all organizations, including small and large companies in general, it can be concluded that entrepreneurship can be defined as creating a new business and assuming the risk related to the business in exchange for profits generated from exploiting market opportunities. at the same time, it can be said that entrepreneurship is a discipline that studies a person's values, abilities, and behavior in facing life's challenges and obtaining opportunities with various risks they may face. entrepreneurial orientation entrepreneurial orientation is an approach that focuses on product-market innovation and project risk. it tends to be a pioneer in innovation and stands out from rivals, according to miller (2011) in tricahyadinata (2018). companies with higher entrepreneurial orientation will act independently and are always encouraged to make innovations, dare risk-taking, be proactive, and compete more aggressively. entrepreneurial orientation is a combination of innovative, proactive, and risk-taking behavior intended to create value in the organization. an organization can have an entrepreneurial structure and members of an organization (mcdougall & oviatt in (feranita & setiawan, 2018). according to (covin & miller, 2013), entrepreneurial orientation (eo) has become one of the most well-established conceptions in entrepreneurial and broader management study, and several recent assessments of eo literature have been done. therefore, an entrepreneurial orientation used by miller (1983) developed (miller, 2011) describes an entrepreneurial organization as one that engages in product market innovation, conducts relatively risky projects, and is first to come up with proactive innovation, beating competitors to the punch. three dimensions of entrepreneurial orientation were identified: proactive, innovative, and risk-taking behavior. it can be concluded from the above understanding that pursuing new opportunities innovatively, taking risks, and being proactive are closely related to the concept of entrepreneurial orientation. therefore, in this research, the author focuses on the orientation of the entrepreneur who believes that entrepreneurship attitudes should tend towards innovative, proactive, and brave ways to take risks. the dimension used to measure entrepreneurial orientation according to miller, which is cited by (felisia et al., 2020) as follows: 1. innovative is a new idea or idea in a product or service that has value for customers in a way that a sustainable and profitable business model supports. innovative refers to an entrepreneur's attitude to engage creatively in experimenting with new ideas that make it possible to produce a new method of production to produce a new product or service, both for the existing market and for new markets. 2. pro-active, according to previous research by (wardoyo et al., 2015), proactive reflects the willingness of entrepreneurs to dominate competitors through a combination and aggressive and proactive movement, such as introducing new products or services on top of competition and activities to anticipate future demand to create change and shape the environment. in this case, when starting a new market already available, entrepreneurs must be one step ahead of competitors with changes and the development of a product by anticipating the change and opportunity. 3. according to (hujayanti, 2020) risk-taking proposed that every new and long-running business will always face risks. when the risk exists in the future is not known with certainty. so, humans as individuals, humans as members of groups and humans as members of society must develop various methods to anticipate the impact of the occurrence of risk by managing because eliminating the impact of the occurrence of risk can be impossible. according to previous studies by (silviasih et al., 2016), companies with entrepreneurial-oriented leaders have a clear vision and dare to face risks to create better performance. entrepreneurial orientation's influence entrepreneurial orientation, market orientation and business performance (frozen food retail entrepreneurs of xyz business) 113 ambr on company performance is positive, which means that a greater entrepreneurial orientation can boost business performance. likewise, strengthened by several studies conducted (gs & soemantri, 2020), indicates that entrepreneurial orientation partially has a significant effect on business performance. the greater the level of entrepreneurial orientation, the greater the business performance obtained. the results of this research support (octavia & ali, 2017) that the results of this research found a significant influence on entrepreneurial orientation to business performance, and between variable entrepreneurial orientation and business performance are met. based on several studies mentioned aboce, entrepreneurial orientation can be said to directly or indirectly have a positive and significant relationship with business performance. it means that a business that adopts an entrepreneurial orientation has superior performance compared to one that does not. thus the hypothesis is h1: entrepreneurial orientation has a significant positive effect partially on business performance. market orientation (felisia et al., 2020) describe the market orientation as related to the company's emphasis on creating and maintaining superior customer value. the requirement is to still pay attention to the interests of stakeholders and the provision of norms for organizational development behavior and have a responsive attitude to market information. on the other hand, market orientation is more likely to result in larger benefits for the organization when its many aspects of dimension are fully integrated. market orientation developed by naver & slater based on previous research by tricahyadinata (2018) is a business culture created by companies to respond to competition through the creation of employee behavior in such a way as to create competitive advantage through customer orientation, competitor orientation, and coordination between functions. therefore, the definition given refers more to the perspective of market orientation. the market orientation dimension used in this research is almost similar to (darmanto et al., 2015), and below is the dimension used to measure market orientation based on naver & slater cited by (darmanto et al., 2015) as follows: 1. customer orientation understands the target customer's purchase by placing the customer's interests first without ignoring other stakeholders like owners, managers, and employees to consistently produce superior value for buyers 2. competitor orientation is based on utilizing all the company's resources in a coordinated manner to create superior value for its targeted customers. it refers to specific aspects of the organizational structure that facilitated communication between different organizational functions 3. inter-functional coordination can enhance communication and exchange between all organizational functions that care about customers and competitors and inform the latest market trends companies with a market orientation will make market demand and customer needs the basis for making decisions so that business performance will increase. increased customer orientation, competitor orientation, and inter-functional coordination can improve market orientation. these results are in accordance with yuliana & pujiastuti (2018) research, which states that market orientation has a positive and significant effect on business performance. in line with research conducted by hamel & wijaya (2020), there is a positive and significant influence between market orientation and a significant effect on business performance. likewise, strengthened studies conducted by (buli, 2017), market orientation has a positive influence on business performance. so, based on the understanding above, market orientation is said to be a measure of behavior and activities that reflect the implementation of the marketing concept. therefore, market orientation can also be interpreted as the most effective organizational culture in creating important behaviors to create superior value for buyers and performance in business. thus, the hypothesis is: h2: market orientation has a significant positive effect partially on business performance 114 business performance according to darmanto et al. (2015), performance can also be said as a result (output) of a particular process carried out by all components of the organization against specific sources that use (input). furthermore, performance is also the result of a series of process activities carried out to achieve specific goals in an organization the level of an entrepreneur and the business's existence can be measured by performance. performance is the level of ability of a business owned by the business owner in carrying out every aspect of the business to achieve business goals or targets (kurniawan, 2019). the company's performance can be seen in sales, profit, capital return, turnover rate and market share (jauch and glueck in umar, 2014). according to previous research by (zulkarnain & mukarramah, 2019), profit, a comparison of inputs and outputs, and the market can be used to determine the performance of a business. the achievement of funds or profits following the organization's plans reveals aspects of profit. the financial side focuses on reaching sales, income, net profit, cash management, and break-event points for return on capital and business income. aspects relating to inputs and outputs are determined by the state of the company's structure in terms of production activities aimed at satisfying consumer requirements and desires, followed by productivity activities. the outcome of market-based business labour is the accomplishment of product sales volume, market conditions, and market levels.business performance is measured in two dimensions, financial and non-financial, adopted from kurniawan research (2019). in general, most smes are limited in using financial performance indicators. it happens because smes lack the human resources needed to make performance measurements and are suitable for making decisions. according to darmanto et al. (2015), the company's strategy is always directed to produce organizational performance, namely sales volume, market share, and sales growth and organizational performance as an effort to measure the level of performance, including sales turnover, number of buyers, profits and sales growth. below is the dimension used to measure market orientation based on chung cited by kurniawan (2019), as follows: 1. financial measures of business performance are market share, increased sales and profits, and sales returns. 2. the non-financial measure of business performance is an increase in customers, workers, and market share according to tricahyadinata (2018), the alignment between entrepreneurial orientation and market orientation can make companies valuable, difficult to imitate, and scarce resources that can provide companies with the ability to develop and market products/services to customers with superior benefits to those provided by competitors. furthermore, studies conducted by kurniawan (2019) show that simultaneously significant test results show that the entrepreneurial and market orientation variables positively and significantly influence business performance. likewise, strengthened studies conducted by gs & soemantri (2020) indicate that simultaneously significant entrepreneurial orientation and market orientation significantly affect business performance. thus, the hypothesis is: h3: entrepreneurial and market orientation has a significant effect simultaneously on business performance. research methodology this research uses a quantitative method with descriptive and multiple linear regression analysis. the sampling technique used in this research is saturation sampling in the non-probability sampling method of 37 xyz frozen food retail entrepreneurs as respondents with questionnaire distribution. the measurement scale researchers in this study used an ordinal likert scale with the research data processing using spss 25. entrepreneurial orientation, market orientation and business performance (frozen food retail entrepreneurs of xyz business) figure 1. study framework 115 ambr table 1. variable operational table 2. descriptive analysis variable dimension indicator entrepreneurial orientation (x1) innovative 1. create new products between competitors 2. create new opportunities 3. create a strategy for products that are innovative and different from competitors 4. create a strategy for product marketing creative 5. lead a business well pro-active 1. have a high ability to adapt 2. classify the business environment. 3. encourage businesses to rise and survive in competition. 4. create solutions to a problem. 5. fixed the business weakness risktaking 1. create the steps in the response risk. 2. improve aspects of the business strength. 3. understand the situation business environment. market orientation (x2) customer orientation 1. provide appropriate service with customer needs 2. measure the level of customer satisfaction 3. the owner carry-out communication interactions and service with customers competitor orientation 1. influence many brands in the same segment 2. respond to other competitors 3. lead the discussion of competition between similar businesses interfunctional coordinati on 1. understand how workers can contribute to customer 2. the integrated marketing function in the product development process 3. expand the target market to have superior opportunities 4. integrate the internal business functions to serve the needs of the target market business performance (y) financial 1. turnover on sales and an increase in sales 2. there is an increase in profit that continues to increase 3. low sales returns on products nonfinancial 1. the scope of the business area is quite wide 2. turnover of the workers (human resources) in business 3. there is an increase in consumers. result and discussion descriptive analysis no variable % category 1 entrepreneurial orientation 85% very good 2 market orientation 88% very good 3 business performance 82% good table 2 above shows that entrepreneurial orientation has a percentage of 85% with a very good category, market orientation has a percentage of 88% with a very good category, and business performance has a percentage of 82%. 116 classical assumption normality test table 3 above shows that the results of the normality test using the one-sample kolmogorov smirnov (k-s) method obtained the asymp sig (2-tailed) of 0.2, which is greater than 0.05, which means the data in this study are normally distributed. the result figure 2 in histogram graph shows that the residuals are normally distributed and symmetrically shaped, not skewed to the right or the left. based on the normality probability plots graph above, it can be seen that the points spread close together around the line, showing that the residuals are normally distributed. multicollinearity test based on the results table above, it is obtained that the tolerance value of each independent variable is above 0.1, which is 0.587. likewise, the value of the vif of each independent variable is less than 10, which is 1.704, which means the data has no multicollinearity in this research. heteroscedasticity test based on figure 2 the scatterplot graph data above, it can be seen that the dots spread randomly both above and below the number 0 on the y axis, which means there is no heteroscedasticity. entrepreneurial orientation, market orientation and business performance (frozen food retail entrepreneurs of xyz business) table 3. kolmogrovsmirnov figure 2. normality test table 4. multicollinearity test figure 3. scatter plot 117 ambr table 5. multiple linear regression table 6. f-test table 7. r-square multiple linear regression based on table 5, calculation results in the table above, the following form of multiple linear regression is obtained: υ = a+ b1χ1 +b2χ2 +e y= 7.043 + 0.176x1+0.276x2 to be clear about the above equation, the following interpretation: 1. in the above equation, it is known that the constant value of 7.043 states that when the entrepreneurial orientation (x1) and market orientation (x2) variables are 0 (zero), the business performance (y) variable is 7.043. 2. the value of the regression coefficient on the entrepreneurial orientation variable (x1) is 0.176. so, it can be interpreted that every one-point increase in the business performance variable (y) will get a value of 0.176. 3. the value of the regression coefficient on the market orientation variable (x2) is 0.276. so, it can be interpreted that every one-point increase in the price variable (x2) will get a business performance value (y) of 0.276. t-test following table 5 results of the t-test calculations performed with the spss 25 software above, then: 1. entrepreneurial orientation variable obtained tcount is 2.238 with ttable is 2.032, so (tcount > ttable = 2.238 > 2.032), with a significance level of 0.032, this significance is smaller than the value significance level, which is 0.05 (sig < = 0.032 < 0.050), then it is ho rejected and ha accepted. it means there is a significant partial influence between the entrepreneurial orientation variable and business performance. 2. market orientation variable obtained tcount is 2.534 with ttable is 2.032, so (tcount > ttable = 2.238 > 2.032), with a significance level of 0.016, this significance is smaller than the value significance level, which is 0.05 (sig < = 0.016 < 0.050), then it is ho rejected and ha accepted. it means there is a significant partial influence between the market orientation variable and business performance. f-test from table 6 above, it can be seen that the fcount value is 15.952 > ftable is 3.28. for the significance value, the result is 0.000 < 0.05. so, it can be concluded that ho is rejected and ha is accepted. it means that entrepreneurial and market orientation significantly simulant affect business performance . r-square based on table 7 above, the coefficient of determination (r square) with a value of 48.4%. it means that the entrepreneurial and market orientation variables affect business performance by 48.4%. meanwhile, the remaining 51.6 % is influenced by other variables and factors not examined in this study . 118 discussion entrepreneurial orientation have a positive effect on business performance based on the partial t-test with a significance level of 5% (2,238 > 2.032). it means ha is accepted, where entrepreneurial orientation positively impacts business performance in xyz business frozen food retail. it is in line with th e two-tailed criterion that the t-count must be >2.032 and a significant level <0.05. a partial test found a signif icant positive relationship between entrepreneurial orientation and business performance. empirical test results support hypothesis 1 that there are significant and positive influences on entrepreneurial orientation towards business performance. entrepreneurial orientation's positive effect on business performance indicates that better entrepreneurial orientation will improve business performance at xyz business frozen food retail. it means that the entrepreneurs of the xyz business develops entrepreneuria l orientation through its strategy by innovating in product development and running its business. more courage to develop its business and is not afraid of the risks it will face consid ering the growth of entrepreneurs in the frozen food business is gettin g tighter so that they can also integrate the concept of entrepreneurial orientation into themselves and their efforts. moreover, some research results have proven a strong link, consistent with (andika, 2019), research, that entrepreneurial orientation partially affects business performance in small ornamental plant businesses in sidomulyo village, batu city. likewise, strengthened studies by hamel & wijaya (2020) showed a positive and significant influence between entrepreneurial orientation and busines s performance in smes in the west jakarta area. market orientation have a positive effect on business performance based on the results of the partial t-test with a significance level of 5% (2,238 > 2.032), it means that ha is accepted, where market orientation has a positive impact on business performance in xyz business frozen food retail, and this is in line with the two-tailed criterion that the t-count must be >2.032 and significant level <0.05. a partial test found a significant positive relationship between market orientation and business performance. empirical test results support hypothesis 2 that there is a significant and positive influence on market orientation towards business performance. it caused the owner of the at xyz business frozen food retail to strive to create the best valu e for customers, maintain customer loyalty, compete competitively, and have good coordination with all employees in their business. people who spend their money, time, and energy expect benefits, not just goods, and services, because, market-oriented firms focus on customers’ needs and preferences (lamb et al., 2019). considering the market growth for frozen food consumption is getting tighter. hence, they can also integrate the concept of market orientation into themselves and their frozen food business. some research results have proven a strong link, and it is consistent with gs & soemantri (2020) research that indicates that market orientation has a significant effect partially on business performance on msmes. likewise, strengthened studies by (sriayudha et al., 2020) show a positive influence of market orientation on business performance. it means that market orientation significantly affects business performance. effect of entrepreneurial orientation and market orientation on business performance. the study's results show that entrepreneurial orientation and market orientation significantly simultaneously affect business performance, with the fcount value of 15.952 > ftable is 3.28. for the significance value, the result is 0.000 < 0.05. so, it can be concluded that ho is rejected and ha is accepted. empirical test result on hypothesis 3 that entrepreneurial and market orientation have significant simultaneous effects on business performance. it shows that market orientation can help frozen food retail entrepreneur of xyz business to create the best value for customers, outperform competitors, and improve business performance. in contrast, entrepreneurial orientation can help frozen food retail entrepreneur of xyz business find and exploit opportunities. where competitors cannot reach, take risks and introduce new products to achieve sustainable advantage.some research results have proven a strong link, consistent with ie & pratama (2019) research that entrepreneurial orientation and market orientation affect business performance in small and medium enterprises in the retail sector. likewise, strengthened studies by zulkarnain & mukarramah (2019) showed that entrepreneurial orientation and market orientation had a positive and significant effect on the business performance of the sme food and beverage sector in langsa city. conclusion this study was conducted to examine the relationship between entrepreneurial orientation, maret orientation, and business performance. the results show that entrepreneurial orientation directly has a positive and significant effect on business performance, and market orientation directly also has a positive and significant impact on business performance. furthermore, it was also found that eo and mo has a simultaneously significant on business performance. based on the study results, it can be conclude that eo and mo can affect business performance. this finding is valuable for the entrepreneurs to improve eo and mo implementation in every business processes and carry out business performance in maintaining the long-term business especially in a frozen food retail. entrepreneurial orientation, market 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(2019). pengaruh orientasi kewiraushaan dan orientasi pasar terhadap kinerja umkm sektor makanan dan minuman. jurnal akuntansi, ekonomi dan manajemen bisnis, 7(2), 192– 200. https://doi.org/https://doi.org/10.30871/jaemb.v7i2.1675 entrepreneurial orientation, market orientation and business performance (frozen food retail entrepreneurs of xyz business) https://doi.org/https:/dx.doi.org/10.2991/aebmr.k.200626.029 design of risk management based on iso 31000 in pdam tirta meulaboh 21 4 design of risk management based on iso 31000 in pdam tirta meulaboh zainal putra1*, syafruddin chan2, and moenawar iha3 1,3 teuku umar university, meulaboh, indonesia 2 syiah kuala university, banda aceh, indonesia abstract regional water company (pdam) tirta meulaboh is the only stateownedof west aceh district that provides clean water for the residents of west aceh, especially the residents of the city of meulaboh and its surroundings. but in its operation the company has not yet to have a risk management system, so it has the impact on the company's survival and not optimal service to its customers. the study aims to identify risk, risk analysis and risk evaluation, in order to do prevention and mitigation of the impact of risk on each section in pdam tirta meulaboh using risk management system standard iso 31000. the process steps of risk management based on iso 31000, starting from risk identification to methods risk breakdown structure (rbs), risk analysis using matrix risk quantification and risk priority number (rpn), and the evaluation of risks by using risk map. the results showed that in pdam tirta meulaboh there were 43 risk events that have the potential business problems, which if they were not solved immediately it could affect the performance of the company, even the survival of the company. of the 43 potential risks that were logged to the red zone, there were 5 potential risks which occupies the first rank is on productions departement: the defective of production water meter, the defective of distribution water meter and retrieval water by tank car without through the water meter. branch kaway xvi: customers are reluctant to pay the water bill and in ikk rantau panjang: water meter of raw water was damaged. the efforts to mitigate against the risk of those 43 events which were logged in the red zone has not been planned and done yet by the management of pdam tirta meulaboh. keywords: iso 31000, pdam tirta meulaboh, risk management 1. introduction risk is everywhere, can come at any time and are difficult to avoid. if such risks overwrite the organization, then the organization could experience significant losses. in some situations, the risk could lead to the destruction of the organization. so it is important risk to manage the risk. risk management organization aims to create a system or mechanism within the organization so that the risks that could harm the organization can be anticipated and managed for the purpose of increasing the company's value (hanafi, 2014: 8). * corresponding author. email address: zainalputra@utu.ac.id mailto:zainalputra@utu.ac.id afebi management and business review (ambr) vol.02 no.01, june 2017 22 risk management in an enterprise will be very helpful in several ways, namely: (a). foreseeing the base, the magnitude and frequency of potential losses suffered when an event occurred that could not previously suspected, (b). creating a basis for reducing or limiting the emergence of a risk, (c). provide a basis for a decision to estimate the risks that may arise. so risk management is an executive decision which aims at managing the risks that would be faced by the company, which can result in losses for the company (harimurti in abisay and nurhadi, 2013). companies will always face an uncertain work environment, so that every company faces risks. pdam tirta meulaboh is the only stateowned west aceh district that provides clean water for the residents of west aceh, especially the residents of the city of meulaboh and its surroundings. in this case, pdam tirta meulaboh have not been able to provide optimum service to the community. this is evidenced by the frequent customer complaints were reported in the local media about murky water, salty water, muddy water, and the water was not drain. from the author's observation, it was also known that the company does not yet have adequate risk management systems. this was reflected due to the time of the study, pdam tirta meulaboh has not yet to have a risk management document. supposedly every company must establish adequate risk management systems in order to ensure the survival of the company and can provide optimal service to the customers. therefore, it is necessary to study to design a risk management system in pdam tirta meulaboh with reference to international standards. the study aims to identify risk, risk analysis, risk evaluation to be carried out as prevention and mitigation of the impact of risk on each section in pdam tirta meulaboh by using the risk management system of international standard. with this research, the benefits of a good understanding of risk management based on iso 31000 standards and able to develop the design of prevention and risk control system. previous research related to this topic has been done by febriyanti and hidayanto (2012), with the title of the study of risk management for data management in the data processing section of pt petro kimia gresik. dewi (2012), examines the implementation of a risk management system for the national industry as input for nuclear power programs. abisay and nurhadi (2013), examines the risk management at soekarno hatta airport based on iso 31000. nurochman (2014), examines the risk management library information system (a case study in the library of university of gajah mada). li guo (2015), examines the implementation of a risk management plan in operating room of peking university third hospital. we can claim that is this study differs from previous studies, due to the characteristics of different companies, so that the results of research and discussion differ from the previous research. design of risk management based on iso 31000 in pdam tirta meulaboh 23 2. literature study understanding risks and risk management tugiman (2009), defines risk as an adverse event or not achieving the expected goals. risks associated with uncertainty. this uncertainty happens due to the lack or unavailability of information about what is going to happen. for organizations, especially companies unpredictability can be detrimental or beneficial impact. if uncertainty profitable then it is called opportunity. while uncertainty is detrimental then known as risk. cppr mep ugm (2012: 2) define risk as an opportunity or possibility of danger, loss, injury, or other unintended consequences. according to dewi (2012), the risk is the possibility of adverse events. the same thing was said by hanafi (2014: 1), which defines risk as an adverse event. another defined that is often used for investment analysis, is the possibility of the results obtained deviates from the expected. risk is the uncertainty that may be a positive or negative expectation meanwhile, the organization's risk management according to mamduh in tugiman (2009), is an organization's risk control system faced by organizations in a comprehensive manner for the purpose of increasing the company's value. also sbc warburg in tugiman (2009) said that risk management is a set of policies, procedures complete, that belong to organizations to manage, monitor and control the organization's exposure to risk. gibson in nurochman (2014), defines risk management as a practical activity on the identification, assessment, control and mitigation of risk. likewise hanafi (2014: 9), said risk management is how an organization can manage the risks it faces. basically, risk management is done through a process of risk identification, evaluation, risk measurement and risk management. each organization must be able to manage the risks. if organizations fail to manage risk, the consequences could be serious enough and certainly detrimental to the company. according to hanafi (2014: 11), there were six ways to manage organizational risk, namely avoidance, detained, diversification, risk transfer, risk control and risk financing. iso 31000 and risk management process with the various risk management standards and global consensus in risk management, the international standards organization (iso), started to draw up a risk management standards. after going through the voting process and the revision of all the members of iso, the standard was launched as an international standard (susilo and kaho, 2010: 6). by stating that iso 31000 is a generic risk management standard, this standard does not negate the risk management standards created for specific. both can co-exist and complement each other. one thing that distinguishes the iso 31000 with other risk management standard that iso 31000 is broader and more conceptual than others. the risk management process includes five activities, namely communication and consultation, determine the context, risk assessment, risk treatment and monitoring as well as the review. for the risk assessment it self includes three parts in it: risk identification, risk analysis and risk evaluation. afebi management and business review (ambr) vol.02 no.01, june 2017 24 figure 1 process risk management according to iso 31000 source: susilo, l.j. and kaho, v.r. (2010: 78). meanwhile, according to peltier (2004), there are six stages in the process of risk analysis, namely the definition of an asset, threat identification, determine the probability of occurrence, determine the impact of threats, recommendations and documentation control. risk mitigation is a systematic methodology that is used by senior management to reduce the risk of the organization. there are five methods in mitigating risk, the acceptance of risk (risk assumption), the reduction of risk (risk alleviation), risk aversion (risk avoidance), the limitation of risk (risk limitation) and planning risk (risk planning) (peltier, 2004). 3. research methodology the research method of risk management was done based on iso 31000. the phases starting from risk identification, risk analysis and risk evaluation. risk identification aims to identify risks that must be managed by the organization through a systematic and structured process. this process is very important because the risks are not identified in this process will not be dealt with in the production process. risk identification target is to develop a list of sources of risk and a comprehensive events as well as having an impact on the achievement of the goals and targets identified from the context. the main document that is generated in this process is a list of risk risk identification was done by the method of risk breakdown structure (rbs), followed by brainstorming with the employee responsible for each section, including the top leaders. risk analysis is an attempt to more deeply understand the risks, including ways and strategies in treating those risks. the purpose of risk analysis is to analyze 5.3. define the context 5.4. risk assement 5.4.2.risk identification identifikasi risiko 5.4.3. risk anaysis 5.4.4. risk evaluation 5.5. risk treatment 5 .2 . c o m m u n ic a t io n a n d c o n s u l t a t io n 5 .6 . m o n it o r in g a n d r e v ie w design of risk management based on iso 31000 in pdam tirta meulaboh 25 the impact and possibilities of all the risks that may impede the achievement of the organization's objectives. event risk is analyzed using matrix quantification of risk, then the risk is classified in the red, yellow or green, according to its level. risk quantification matrix can be seen in table 1. the purpose of risk assessment is to help the decision-making process based on the results of risk analysis. risk evaluation process will determine which risks need treatment and how to treat priority over those risks. treatment risks include efforts to select the options that can reduce or negate the impact and likelihood of risk occurrence, then apply the selection. tabel 1 – risk quantification matrix likelihood consequence insignificant minor moderate major extreme 1 2 3 4 5 almost certain 5 5 10 15 20 25 likely 4 4 8 12 16 20 possible 3 3 6 9 12 15 unlikely 2 2 4 6 8 10 remote 1 1 2 3 4 5 source: li guo (2015) low medium high 4. results and discussion organization overview pdam tirta meulaboh is a business entity owned by the government of west aceh which was founded in 1983 under the name water management agency (bpam). the company began operations in 1984. based on regional regulation no. 11 of 1993, it renamed to became pdam tirta meulaboh. the company has the mission of "excellent service, healthy and independent". based on data as of february 2016, the service of the company covered three districts: a. johan pahlawan sub-district: the number of customers 4,668 house connections (sr). b. kawai xvi subdistrict: the number of customers 1,546 house connections (sr). c. meureubo subdistrict: customer number 246 house connections (sr). pdam tirta meulaboh has three water treatment facilities (water treatment plant / wtp), located in the lapang village, johan pahlawan subdistrict, in ikk rantau panjang, meureubo subdistrict and in beureugang village, kaway xvi subdistrict. the company located at jalan purnama meulaboh no. 01, has an installed production capacity of 6.14952 million m3, with the volume of water produced afebi management and business review (ambr) vol.02 no.01, june 2017 26 reaches 2.1024 million m3. the company has 51 permanent employees and assisted by 19 contract employees. risk identification risk identification in this study is done by testing the document by using risk breakdown structure (rbs) method, conducting interviews and brainstorming with the stakeholders related. from the document test results, obtained the information that there were as many as 9 units under pdam tirta meulaboh have potential risk, namely the financial, administrative and general, ikk rantau panjang, branch of kaway xvi, part of customer relations and account, planning section and supervision, production and transmission and distribution units. the risk is described in figure 1. based on interviews and brainstorming with related stakeholders, can be identified as many as 54 risks. figure 1 rbs pdam tirta meulaboh risk analysis in this study, the risk analysis process was done using quantitative methods with qualitative parameters. assessment was done by distributing questionnaires to get answers from the respondents.the respondents were 12 people whowere related risk stakeholders of pdam tirta meulaboh. the questionnaire was divided into two parts, the possible risks and impacts. the questionnaire has been tested by using normality test, validity and reliability test of spss software. normality test was done by using kolmogorovsmirnov methods. the resalt indikacted that the data were normally distributed, both variable and variable risk of impact, as shown in figure 2 and figure 3. tests of normality kolmogorov-smirnova shapiro-wilk statistic df sig. statistic df sig. risk 0,138 12 0,200 * 0,962 12 0,815 figure 2 result of nornality test for the risk variable pdam tirta meulaboh risks financial risks operational risks production risks 1. receivable risks 2. payable risks 1. maintenance risks 2. risks of inventory 3. risks of information technology 4.risks of facilities and infrastructure 5. risks of human error 1. internal control risk 2. risiko maintanance risk 3. natural risks design of risk management based on iso 31000 in pdam tirta meulaboh 27 tests of normality kolmogorov-smirnova shapiro-wilk statistic df sig. statistic df sig. impact 0,169 12 0,200* 0,961 12 0,791 figure 3 results of normality test for the impact variable from figure 2 and figure 3 above, indicated that each number kolmogorovsmirnov test of significance sig. = 0.200> α = 0.05, which means that the data distributed normally. validity test results show that all the items in the questionnaire were valid question. furthermore, the reliability test gave risk variables cronbach's alpha value of 0.917. while the impact of variable reliability test gives cronbach's alpha value of 0.897. each value of cronbach's alpha, both impact variable and risk variable were more than 0.60, which means that the questionnaire of risk variables and impact variables were reliable. event risk that had been analyzed, then be put on the red, yellow or green zone. all the risks in the red zone became priority to receive special treatment in the form of further treatment, so-called risk priority numbers (rpn), as presented in table 2. table 2 risk rpn for events in the red zone kode r/d* unit risks kk* d* rpn* rangking 1 financial department arrears of customer accounts (accounts receivable). 4 5 20 2 3 financial department water from reservoir be put in the water tank car, so it was not recorded in a water meter. 4 5 20 2 4 financial department the company's long-term debt from the ministry of finance since 19962015. 4 4 16 3 5 financial department debt of chemicals alum from supplier. 4 4 16 3 6 financial department debt of employee’s pension fund at dapenmapamsi. 4 5 20 2 7 financial department debt of electricity from pln 4 5 20 2 8 financial department company debt of the social security contribution on bpjs. 4 5 20 2 9 financial department debt of salary of supervisory board. 4 4 16 3 10 financial department debt of employee meal 4 5 20 2 11 adm section and general late order of alum. 4 5 20 2 afebi management and business review (ambr) vol.02 no.01, june 2017 28 kode r/d* unit risks kk* d* rpn* rangking 15 ikk rantau panjang less stable of electric current from pln 4 5 20 2 17 ikk rantau panjang leaks in distribution pipes. 4 4 16 3 18 ikk rantau panjang turbid water. 4 4 16 3 19 ikk rantau panjang delays of alum delivery 4 5 20 2 20 ikk rantau panjang shortage of maintenance funds. 4 4 16 3 21 ikk rantau panjang distribution pumps only 1 unit being used of 3 units available. 4 4 16 3 22 ikk rantau panjang 4 units of alum mixer machines and 3 units of alum dozing machines that have been installed by a partner since 2015 were not working. 4 4 16 3 23 ikk rantau panjang water meters was damaged. 5 5 25 1 24 ikk rantau panjang office furniture were unusable. 4 4 16 3 26 branch of kaway xvi turbid water. 4 4 16 3 27 branch of kaway xvi unstable electric current (often fails). 4 4 16 3 28 branch of kaway xvi most customers in blang beurandang were no not get water supply. 4 5 20 2 29 branch of kaway xvi distribution pumps could not be used continuously. 4 5 20 2 30 branch of kaway xvi customers reluctant to pay their water bill. 5 5 25 1 31 branch of kaway xvi complaints from customers presented directly to the head of the branch. 4 5 20 2 32 part of customer relationship and account error record water meter at the customer's home. 4 4 16 3 33 part of customer relationship and account water meter was lost. 4 4 16 3 34 part of customer relationship and account complained by customers 4 5 20 2 35 part of customer relationship and account customer's home were not be able to be identified 4 5 20 2 36 the planning and control data base of transmission and distribution pipelines inaccurate. 4 5 20 2 design of risk management based on iso 31000 in pdam tirta meulaboh 29 kode r/d* unit risks kk* d* rpn* rangking 37 the planning and control installation of transmission and distribution pipelines by the contractor did not comply with the specification. 4 5 20 2 38 the planning and control monitoring software for water pressure was not yet available 4 5 20 2 41 warehousing dept. flood 4 4 16 42 production dept. turbid water. 4 5 20 2 43 production dept. burning of the intake pump 4 5 20 2 46 production dept. red colored water. 4 4 16 3 48 production dept. laboratory equipment incomplete and laboratory reagents have been expired. 4 4 16 3 49 production dept. water meter production was damaged 5 5 25 1 50 production dept. water meter distribution was damaged. 5 5 25 1 51 production dept. there is no water meter for water tank car. 5 5 25 1 52 transmission and distribution section leaks in the p transmission and distribution pipelines. 4 4 16 3 53 transmission and distribution section the occurrence of illegal connections 4 5 20 2 54 transmission and distribution section the water supply to the customer was stop 4 5 20 2 note: *kk = kemungkinan kejadian, *d = dampak, *r/d = risiko/dampak risk evaluation the purpose of the risk evaluation process is to determine the priority of risk management in order to know any risks that require attention and further treatment. this phase was conducted to determine how much risk was extreme, major, moderate, minor or insignificant. the risk classification can be seen on a map of risk presented in table 3. from a total of 55 potential risks identified, 43 potential risks (78.18%) were included in the red zone, consist of 9 potential risk from finance department, one from administration and the public department, , 9 potential risks from ikk rantau panjang, 6 from kaway xvi branch, 4 from customer relations and account afebi management and business review (ambr) vol.02 no.01, june 2017 30 department, 3 from planning and supervision, 1 from warehousing, 7 from production department and 3 potential risk from transmission and distribution. furthermore, the potential risks that fall into the red zone were ranked in accordance with the value of the rpn. the objective was to facilitate in determining the priority of risk mitigation. from table 1 above, there are 5 potential risks which occupies the first rank, in the second rank there were 21 potential risks and the remaining 17 potential risks logged in third rank. potential risks were included in the red zone should receive serious attention from the management to be handled immediately. table 3 risk map of pdam tirta meulaboh likelihood consequence insignificant minor moderate major extreme 1 2 3 4 5 almost certain 5 r23, r30, r49, r50, r51 likely 4 r4, r5, r9, r17, r18, r20, r21, r22, r24, r26, r27, r32, r33, r41, r46, r48, r52 r1, r3, r6, r7, r8, r10, r11, r15, r19, r28, r29, r31, r34, r35, r36, r37, r38, r42, r43, r53, r54 possible 3 r2, r13, r16, r25, r45, r47 r14, r39, r44, r55 unlikely 2 r12 r40 remote 1 low medium high treatment risks risk treatment system was designed to assist managers in making decisions. because in general the potential risks were identified based on events that happened before, then the election strategy of risk treatment performed in this study was to mitigate risk, as presented in table 4. design of risk management based on iso 31000 in pdam tirta meulaboh 31 table 4 risk mitigation strategy loggof ed in red zone code r/d* unit risks causes impact mitigation strategy 1 financial department arrears of customer accounts (accounts receivable). (a). customers are reluctant to pay the bills, and (b) customer less satisfied with the services constrained in the implementation of the company's operations (a) to form billing team and (b) to stop water connections. 3 financial department water from reservoir be put in the water tank car, so it was not recorded in a water meter. mains water meter was damaged the potential occurrence of fraud that may harm the company's finances. supply and installation of water meters for water collection by water tank car 4 financial department the company's long-term debt from the ministry of finance since 19962015. installment repayment had never been done financial burden on the company. grant from central government to local government through apbk 2017 5 financial department debt of chemicals alum from supplier. the lack of payment of water bills by customers, thus constrained in covering the operating costs of the company. financial burden on the company and delay of procurement of alum for the next period. intensifying water accounts receivable billing to the customer or a financial subsidy from the government. 6 financial department debt of employee’s pension fund at dapenmapamsi. the lack of payment of water bills by customers financial burden on the company and the company's employees in danger of not receive a pension. intensifying water accounts receivable billing to customers. 7 financial department debt of electricity from pln the lack of payment of water bills by customers financial burden on the company and threatened disconnection of the electricity to the company. intensifying water accounts receivable billing to customers. 8 financial department company debt of the social security contribution on bpjs. the lack of payment of water bills by customers financial burden on companies and potential employees do not receive social intensifying water accounts receivable billing to customers. afebi management and business review (ambr) vol.02 no.01, june 2017 32 code r/d* unit risks causes impact mitigation strategy security services by bpjs. 9 financial department debt of salary of supervisory board. the lack of payment of water bills by customers financial burden on the company. intensifying water accounts receivable billing to customers. 10 financial department debt of employee meal the lack of payment of water bills by customers financial burden on the company and potentially complied by employees. intensifying water accounts receivable billing to customers. 11 adm section and general late order of alum. constrained transport from medan, north sumatra. operational cessation in kaway xvi and ranto panyang. borrow alum from nearby counties. 15 ikk rantau panjang less stable of electric current from pln disruption in electricity generation pump intake could not be functioned. provision of a backup generator to overcome temporary blackouts pln. 17 ikk rantau panjang leaks in distribution pipes. a). excavation on the road that affect the pipelines b). very old distribution pipe. lack of water pressure, so that water could not reach the customers a). improvements of the leaking pipe. (b) to do coordination and communication with the road contractor 18 ikk rantau panjang turbid water. a). clogged / damage to the pump dozing. (b). shortage mixture of chemicals alum. (c) .kerusakan on wtp, but do not care. complied by. (a). do back wash in tubs and tubs wtp reservoir. (b). repair / maintenance wtp. 19 ikk rantau panjang delays of alum delivery transport delays from medan, north sumatra. unable to make raw water treatment / cessation of operations. borrowing while alum in nearby counties taps (nagan raya). 20 ikk rantau panjang shortage of maintenance funds. the company's revenues had not been optimal. implementation of the treatment could not be done optimally. proposed government funding. design of risk management based on iso 31000 in pdam tirta meulaboh 33 code r/d* unit risks causes impact mitigation strategy 21 ikk rantau panjang distribution pumps only 1 unit being used of 3 units available. damage to the second and third distribution pump yet there have been no improvement. when the main distribution pump damage no backup distribution pumps. restoration 2 distribution pumps. 22 ikk rantau panjang 4 units of alum mixer machines and 3 units of alum dozing machines that have been installed by a partner since 2015 were not working. the unit have not been connected to the electricity yet a. mixing of alum was still done manually. b. injection of alum into the raw water and wtp were still using the old dozing machine pdam tirta meulaboh trying to reach back through satker contractor concerned. 23 ikk rantau panjang water meters was damaged. water meters are old. the amount of water that would be treated at the wtp tub could not be known the new water meter procurement of raw water. 24 ikk rantau panjang office furniture were unusable. quite old office furniture customers who came to the office could not be served well. new procurement of offices furniture (desks and chairs). 26 branch of kaway xvi turbid water. (a). heavy rain which causes the river water as a source of raw water becomes cloudy. (b) dozing pump damaged. complained by customers doing back wash in the wtp and reservoir tub 27 branch of kaway xvi unstable electric current (often fails). installation of underground electricity work by pln contractor cease operation of the machine, so that water could not be distributed to the customers contacting pln to redo the work afebi management and business review (ambr) vol.02 no.01, june 2017 34 code r/d* unit risks causes impact mitigation strategy 28 branch of kaway xvi most customers in blang beurandang were no not get water supply. the installation of water pipelines by the ngo caritas in 2007 did not coordinate with the pdam tirta meulaboh so they could able to not identify water pipelines in that area most customers in blang beurandang were no not get water supply. pdam tirta meulaboh need to identify the existing gate valve at each intersection in the housing complex of blang beurandang. 29 branch of kaway xvi distribution pumps could not be used continuously. water pipelines installed is not in accordance with the technical specifications, so it easy to leak when the water pumped continuously. most customers in the area blang beurandang not get clean water supply. water distribution to customers using gravity. 30 branch of kaway xvi customers reluctant to pay their water bill. the water supply could not reach the customer and murky water. the emergence of customer receivables. (a). ask payment from customers (b) dispensation installments in arrears, (c) disscount to customers who pay their debts at once, and (d). improve the service to customers. 31 branch of kaway xvi complaints from customers presented directly to the head of the branch. there were no employee in charge to response the problems. all complaints could not be able to response properly need to develop job descriptions as needed. 32 part of customer relationship and account error record water meter at the customer's home. (a). by the time officer arrived to the customer's home to record water meter, they found the gate was locked and nobody at home (b) blurr water meter mark and (c) inaccurate record by officers inputting the wrong data into customer's water bill, so it swells to bill customers. the calculation of the amount of water usage was conducted by cubication. design of risk management based on iso 31000 in pdam tirta meulaboh 35 code r/d* unit risks causes impact mitigation strategy 33 part of customer relationship and account water meter was lost. theft of water meters by unknown persons. losses for the company and the use of water could not be known installation of the iron box at the customers water meter 34 part of customer relationship and account complained by customers (a)murky water and (b) swell of customers water bill officers can suffer from work stress. improve service to customers. 35 part of customer relationship and account customer's home were not be able to be identified initial information about customer data less accurate. could not be able to do the billing to the customer's account. collecting data on the customers 36 the planning and control data base of transmission and distribution pipelines inaccurate. when new pipelines added, not the preliminary information related to existing pipelines available (a). no work efficiency when conducting repair leaking pipes and house connections, and (b) difficult to detect the position of gate valve and the mains water meter when it leakage redo the mapping existing pipelines network 37 the planning and control installation of transmission and distribution pipelines by the contractor did not comply with the specification. did it on purpose by contractors easy leak in the transmission and distribution pipelines. conduct parallel surveillance by pdam tirta meulaboh at the time of installation of the pipeline by the contractor. 38 the planning and control monitoring software for water pressure was not yet available lack of funds. decision-making in the management of water could not be done on time. proposed support from the government, both local and central government 41 warehousing dept. flood rain and low warehouse building foundation caused the items store in the warehouse damage, such as: water meter, water meter accessories and other items. renovation of the warehouse afebi management and business review (ambr) vol.02 no.01, june 2017 36 code r/d* unit risks causes impact mitigation strategy 42 production dept. turbid water. (a). due to heavy rain (b). because of the hot weather, (c). damage of dozing pump (d) lack of focus of officers who preparing chemicals for injection to the wtp. complained by customers (a). chcek the water condition periodically (every 2 hours) (b) .when the source of raw water turbid, then the operator must be alert in adjusting the dozing pump engines and increase the use of alum, and (c) operator should able to read nature signs to be ready of heavy rain. 43 production dept. burning of the intake pump (a). sedimentation of mud and garbage enter to vacuum machine (well pump), (b) unstable pln electricity cease operation of intake pump (a) do the cleaning the intake structure for at least 6 months to 1 year, (b) operator obliged to check the sludge sediment intake structure, (c) contact pln to stabilize the electric current. 46 production dept. red colored water. (a). due to natural factors, such as rain, and (b) red leuhan river water enter to the intake due to the rainy season. complied by customer. (a). relocating the intake structure passed through / over the mouth of the river leuhan, and b). adding raw water suction pipe length. design of risk management based on iso 31000 in pdam tirta meulaboh 37 code r/d* unit risks causes impact mitigation strategy 48 production dept. laboratory equipment incomplete and laboratory reagents have been expired. companies are constrained in financial terms. the company could not conduct examination of biological and chemical water so that the water supplied to customers did not meet the conditions required by the minister of health. proposed funding support from local government, provincial government and central government 49 production dept. water meter production was damaged rubbish is often caught in the propeller water meter, thereby disrupting the supply of water from the intake to the wtp. not be able to measure the amount of water produced in the wtp. procurement of digital production water meter 50 production dept. water meter distribution was damaged. rubbish is often caught in the propeller water meter that disrupts water supply from the reservoir basin to customers. not be able to measure the amount of water distributed to customers procurement of digital distribution water meter 51 production dept. there is no water meter for water tank car. procurement has not been done yet the potential occurrence of fraud and potential loss of water. procurement of water meters for water collection by tank car. afebi management and business review (ambr) vol.02 no.01, june 2017 38 code r/d* unit risks causes impact mitigation strategy 52 transmissio n and distribution section leaks in the transmission and distribution pipelines. (a) pipelines were already old, (b) excavation of road and (c) installment of underground telkom cable network. (a) .distrupt water supply to customers, (b). the water pressure is reduced, and (c) create loss to the company. (a). fixing leaky pipes, (b). coordinate with the department of public works and telkom during the excavation of the road to avoid pipe leaking in the future. 53 transmissio n and distribution section the occurrence of illegal connections lack of supervision from internal of the company detrimental to the company. (a).improve the supervision, (b).stop the connection (c).fine up to rp2 mil/month) 54 transmissio n and distribution section the water supply to the customer was stop (a). leaking pipelines (b). distribution pipe to the customers was not flow smoothly (c). murky water. complained by customers. (a). repair and clean the leak pipe. (b). install new pipelines. 5. conclusion at pdam tirta meulaboh there were 43 risk events that have the potential dangers, which if not be handled immediately may affect the company's performance and even survival of the company. of the 43 potential risks that logged to the red zone, there were 5 potential risks in the first rank, 21 potential risks in the second rank and the remaining 17 potential risks were in the third rank. as for the 5 potential risks in the first rank were in the production department: the defective of production water meter, the defective of distribution water meter wate and water meter of tank car was not functioning . in branch of kaway xvi: customers were reluctant to pay the water bill and in the ikk rantau panjang: water meter of raw water damaged. efforts to mitigate against the 43 risks logged in the red zone have not been planned and done by the management of pdam tirta meulaboh yet. references abisay, t.g., & nurhadi. 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(2009). manajemen risiko organisasi. jurnal manajemen indonesia, 9 (1), 36-64. the role of the store atmosphere to impulsive purchasing (study in matahari cilandak town square) 80 78 the role of the store atmosphere to impulsive purchasing (study in matahari cilandak town square) mamlu atul hasanah1*, prasetyo hadi2, and hariyanto ridwan3 1,2,3 national development university “veteran” jakarta, jakarta, indonesia abstract impulsive purchases is one factor, which are considered by retailers and manufacturers. the purpose of this study was to determine the role of positive emotions in mediating the store atmosphere on impulsive purchases. the population in this study is the community in cilandak west district which often make impulsive purchases in matahari cilandak town square. the size of the samples which are taken by as many as 50 people, with a non-probability sampling method particularly purposive sampling. data is collected through questionnaires. the data analysis technique used is the pls (partial least square) method of analysis. these results indicate that the store atmosphere has a positive and significant impact on impulsive purchases at 0.387. indirect effect store atmosphere of impulsive purchases through positive emotion at 0.431. hence the indirect effect has more impact on the direct effect. keywords: impulsive purchases, positive emotion, store atmosphere 1. introduction the economy in indonesia today is dominated by the development of the business world, from the goods business and the service business. today the marketing of goods and services generally are not able to be done directly from the producer to the consumer, but through several intermediaries that distribute goods from producers to consumers or are known as retailers. the retail business in indonesia is felt more crowded as days pass and competition between retail owners are unavoidable. the more new companies that pop, the products that are offered in the market will be more and more. this marketing activity cannot be separated from the behavior of consumers that are the target market and the rate of the indonesian population growth that is ever increasing so the prospect of retail business in indonesia becomes interesting enough for retailers where today’s market is potential enough. some examples of “retail business” such as hypermarkets, supermarkets, superstores, department stores, convenience stores and the like are: carrefour, giant, hypermart, lotte mart, matahari, ramayana, sogo, yogya supermarket, super indo, hero, tiptop, alfamart, indomaret, and others. one business that develops rapidly today is the retail business in the form of department stores. with * corresponding author. email address: mamluatulhasanah@ymail.com mailto:mamluatulhasanah@ymail.com afebi management and business review (ambr) vol.02 no.01, june 2017 81 more and more department stores that are present, an accurate strategy is needed for attracting consumers. table 1 top brands index department store brand year 2014 2015 2016 matahari 55.3% 50.4% 53.6% ramayana 16.5% 15.5% 21.4% yogya supermarket 7.6% 5.3% 6.7% sogo 4.9% 6.3 % 4.4% source: www.topbrand-award.com based on the top brands index in the department store category table above, matahari still occupies the highest brand level compared with other competitors such as ramayana, yogya supermarket, and sogo. matahari has a top brand index as large as 55.3% in 2014, in 2015 matahari experienced a decrease with a top brand index as large as 50.4% then in 2016 the top brand index of matahari increased as large as 53.6%. the position of matahari today can only be caused by the people that are accustomed and adapt with the presence of matahari in the retail business. in implementing modern retail business opportunities, a retail booth of course, has to be paid attention especially in the creation of the booth environment. a comfortable shopping environment is able to make consumers spend more time in the booth so it is able to trigger impulse buying. impulse buying is a strong urge for buying something soon that is more emotional than rational. abdolvand et al. (2011) states that impulse buying is an important aspect in consumer behavior and a vital concept for retailers because unplanned buying that is done by consumers directly will contribute to the turnover value of sales obtained by the retailer. problem formulation based on the background above, several issues are able to be formulated that will become the issue in this research. some of the issues are among others: a. does the store environment have a direct influence to impulsive buying? b. does the store environment have an indirect influence to impulsive buying that is mediated by positive emotion? research purpose based on the background from the issues that are formulated, the purpose of this research is for proving the following: a. for proving that store environment has a direct influence to impulsive buying. b. for proving that store environment has an indirect influence to impulsive buying that is mediated by positive emotion. http://www.topbrand-award.com/ the role of the store atmosphere to impulsive purchasing (study in matahari cilandak town square) 82 2. theoretical basis retail definition according to utami (2010:5) the word retail is from the french reteller which means to cut and break something. in connection with the activities implemented, retail shows effort for breaking products that are produced and distributed by manufacturers or companies in large and massive numbers for consumption by final consumers in small numbers according to their needs. according to sunyoto (2015:1) states that the definition of retailing is all activities that includes the marketing of goods and services directly to customers. impulse buying according to marwardi in sumarwan & co (2011:159) states that ‘unplanned buying is buying behavior where consumers do not consider for buying or considering for buying but has not yet decided the product to buy. meanwhile according to utami (2010:50) it has been defined before that unplanned buying is a buying action that is made without being planned before, or the buying decision is done when inside the store. types of impulse buying according to stern in the book of utami (2010:68) states that there are four types of impulse buying which are: a. pure impulse: this definition refers to the action of buying something because of an appealing reason, usually a buy takes place because of loyalty to a brand or buying behavior that is usually done. example: buying a can of asparagus and not buying a can of macaroni as usual. b. reminder impulse: when a consumer buys based on this type of impulse, this is because the unit is indeed bought, but does not take place for anticipation or noted in the shopping list. example: when waiting in line for buying shampoo in a drugstore counter, the consumer sees a brand of aspirin in the shelf and remembers that the supply at home will run out, so the memory of sight in the product triggers an unplanned buy. c. suggestion impulse: a product that a consumer finds for the first time will stimulate the desire to try it. example: a housewife that accidentally sees a deodorizing product in a display counter, this directly will relate the product based on the consideration of the presence of odor caused by cooking activity in the house and then will buy it. d. planned impulse: the planning aspect in this behavior shows the response of consumers to some special incentives for buying units that are not anticipated. this impulse is usually stimulated by announcements of coupon sales, discount coupons, or other tempting offers. positive emotion according to leba (2015) positive emotion is able to be defined as a delightful feeling that someone experiences that is able to encourage someone for making a buying decision of a product spontaneously. according to kotler & keller (2012:185) states that: consumer response is not all cognitive and rational; much may be emotional and invoke different kinds of feelings. a brand or product may make a consumer feel proud, excited, or confident. an ad may create feelings of amusement, disgust, or wonder. afebi management and business review (ambr) vol.02 no.01, june 2017 83 while according to supranto & limakrisna (2011:108) previously it has been defined that emotion is a feeling that is relatively uncontrolled that influences behavior strongly. emotion is usually triggered by environmental occurrences. store atmosphere the store atmosphere is one of the mixture elements of retail marketing that is connected in the creation of a shopping atmosphere. the creation of an atmosphere means ‘environmental design through visual communication, lighting, color, music and fragrances for designing an emotional response and customer perception and for influencing customers in buying goods’. utami (2010:279). according to donovan & rossiter in the book of peter & olson (2014:265), contends that store atmosphere involves affection in the form of the emotional situation of the consumers that shop in the stores that they may not realize fully. the making of the conceptual framework is as the following: figure 1 conceptual framework hypothesis based on the background, problem formulation, and theoretical basis, the hypothesis is able to be formulated as the following: h1: store atmosphere is suspected to have a direct influence to impulse buying. h2: store atmosphere is suspected to have an indirect influence to impulse buying that is mediated by positive emotion. 3. research method population and sample in this research the population that is used are the consumers that have visited the matahari department store in cilandak town square specifically consumers in west cilandak district south jakarta. in this research non-probability sampling is used which is ‘a sample pickup technique that does not provide the same chance for every element or member of the population for being selected to become samples’ (sugiyono, 2014:125). the pickup of samples is implemented by using the purposive sampling technique, where according to sugiyono (2014:126), purposive sampling is a sample determining technique by considering and assigning certain criteria for certain purposes that want to be reached. store atmosph -ere (x) positive emotion (z) impulse buying (y) the role of the store atmosphere to impulsive purchasing (study in matahari cilandak town square) 84 as for the considerations that are implemented in sample pickup that will be studied are among others: a. respondents that are studied are consumers that have visited matahari department store cilandak town square. b. respondents that are studied are respondents that are 17-50 years old. according to roscoe in the book of sugiyono (2012:129) “states that sample sizes are more than 30 and less than 500 are appropriate for most research”. for ease of research, the researcher uses a sample of 50 respondents of matahari department store cilandak town square. the type of data used in this research is primary data. the source of data in this research is from primary data, which is data pickup by handing out questionnaires to respondents that have visited matahari department store cilandak town square specifically that are in the area of west cilandak district south jakarta. in this research, the data pickup uses a questionnaire scattering data pickup method, where the answers from respondents will be measured using the likert scale. the likert scale has two forms of questions which are: positive questions and negative questions. positive questions are given scores of 5, 4, 3, 2, and 1; while negative questions are given scores of 1, 2, 3, 4, and 5. the form of answers in the likert scale consists of strongly agree, agree, neutral, do not agree, and strongly do not agree. 4. results and discussion the following are the characteristics of respondents that are visitors of matahari department store cilandak town square that is used for research. a. respondent characteristics according to sex table 2 respondent characteristics according to sex the table above shows that the total respondents that are male are as many as 18 persons (36%), while respondents that are female are as many as 32 persons (64%). so the respondents that are female dominate. it is able to be summarized that the needs of female respondents are higher than the needs of males such as the need for fashion products, accessories, beauty products (make up) and skin health products and the need for household products. no respondent characteristic frequency percentage 1 sex male 18 36% female 32 64% total 50 100% afebi management and business review (ambr) vol.02 no.01, june 2017 85 b. respondent characteristics according to age table 3 respondent characteristics according to age no respondent characteristic frequency percentage 2 age 17 25 years 23 46% 26 35 years 15 30% 36 45 years 9 18% above 45 years 3 6% unknown total 50 100% the table above shows that total respondents based on age levels are categorized into 5 categories which are: age 17 – 25 years as many as 23 persons (46%), age 26 – 35 years as many as 15 persons (30%), age 36 – 45 years as many as 9 persons (18%), age above 45 years as many as 3 persons (6%) and persons of unknown age as many as 0 persons (0%). so the respondents that are aged 17 – 25 years dominate more. it is able to be summarized that in the consumptive lifestyle of today there are more respondents aged 17 – 25 years in fulfilling needs such as fashion products, accessories, and others. c. respondent characteristics according to occupation table 4 respondent characteristics according to occupation based on the table above, it shows that total respondents based on occupation are categorized into 6 categories which are: civil employees as many as 5 persons (10%), private employees as many as 13 persons (26%), students/college students as many as 17 persons (34%), professionals/experts as many as 0 persons (0%), entrepreneurs as many as 5 persons (10%), others as many as 6 persons (12%) and the persons that are unknown as many as 4 persons (8%). so the respondents with the occupation as students/college students dominate more. this shows that students/college students prefer a shopping point that is complete in one location. no respondent characteristic frequency percentage 3 occupation civil employees 5 10% private employees 13 26% students/college students 17 34% professionals/experts entrepreneurs 5 10% others 6 12% unknown 4 8% total 50 100% the role of the store atmosphere to impulsive purchasing (study in matahari cilandak town square) 86 d. respondent characteristics according to visits table 5 respondent characteristics according to visits based on the table above, it shows that total respondents based on visits are categorized into 3 categories which are: 1 time visits as many as 0 persons (0%), 2 – 4 times of visits as many as 21 persons (42%), and above 4 times of visits as many as 29 persons (58%). so the respondents with visits above 4 times dominate more. it is able to be summarized that respondents with visits above 4 times feel that the shopping point that they visit gives pleasure and comfort when shopping and supported by a complete line of products that are offered so the visitors are interested into coming again. table 6 respondent characteristics according to shopping expense based on table above, it shows that total respondents based on shopping expense are categorized into 3 categories which are: shopping expense of under 1 million as many as 27 persons (54%), shopping expense of 1 million – 5 million as many as 21 persons (42%), and shopping expense of above 5 million as many as 2 persons (4%). so the respondents with a shopping expense of under 1 million dominate more. it is able to be summarized that a shopping expense of under 1 million is more because some of the visitors are teenagers that does not yet have an income. measuring model (outer model) the first step that is implemented is to test if the model has already fulfilled convergent validity which is if the loading factor indicator for each construct has already fulfilled convergent validity. validity test results of the initial path diagram with smart pls 3.0 shows the path diagram that is formed as the following: no respondent characteristic frequency percentage 4 visits 1 time 0 2 – 4 times 21 42% above 4 times 29 58% total 50 100% no respondent characteristics frequency percentage 5 shopping expense under 1 million 27 54% 1 million 5 million 21 42% above 5 million 2 4% total 50 100% afebi management and business review (ambr) vol.02 no.01, june 2017 87 figure 2 outer model source: pls output results the indicator is considered valid if it has a correlation value above 0.70. though in the research of the scale development phase, a loading of 0.50 to 0.60 is still acceptable (ghozali, 2014). it is able to be summarized from the diagram above that all individual indicators in every variable have already fulfilled requirements because all correlation values are above 0.50. convergent validity test output results of the smartpls 3.0 software obtained loading factor values of each indicator each construct as the following: table 7 outer loading factor positive emotion (z) impulse buying (y) store atmosphere (x) ep1 0.916 ep2 0.755 ep3 0.891 ep4 0.886 pi1 0.750 pi2 0.728 pi3 0.769 pi4 0.832 st1 0.831 st2 0.730 st3 0.754 st4 0.597 st5 0.865 source: pls output results the table above shows that all loading factor values are above 0.5 and the smallest value is as large as 0.597 for the st4 indicator. which means that the indicator that is used in this research is valid or has already fulfilled convergent validity. the role of the store atmosphere to impulsive purchasing (study in matahari cilandak town square) 88 for observing discriminant validity the square root of average variance extracted (ave) is observed. the suggested values are above 0.5. the following are the ave values in this research: table 8 average variance extracted (ave) average variance extracted (ave) positive emotion(z) 0.747 impulse buying (y) 0.594 store atmosphere (x) 0.579 the table above shows ave values above 0.5 for all constructs that are in the research model. the lowest ave value is as large as 0.579 in the store atmosphere construct, impulse buying and positive emotion are valid. structural modelbu (inner model) the test to this model is implemented by observing the rsquare, qsquare, path coefficient analysis values and the t-statistic value. r square where the r square is used for dependent variables. the output results of the smartpls 3.0 software is as the following: table 9 r square values r square positive emotion (z) 0.576 impulse buying (y) 0.805 source: pls output results from the table above, it is able to be known that the r square (r2) amount of positive emotion is as large as 0.576 therefore it shows that the influence between store atmosphere and positive emotion is as large as 57.6% and the rest as large as 42.4% is influenced by other factors. based on the table above, it is able to be known that the r square (r2) amount of impulse buying is 0.805 therefore it shows that the influence between store atmosphere and positive emotion to impulse buying is as large as 80.5% and the rest as large as 19.5% are influenced by other factors. based on table 9, the q-square count : afebi management and business review (ambr) vol.02 no.01, june 2017 89 q2 = 1 – (1 – r1 2) (1 – r2 2) = 1 – (1 – 0,576) (1 – 0,805) = 1 – (0,424) (0,195) = 1 – 0,082 = 0,918 it is seen that the q2 result above is as large as 0.918. this result is corresponding with the determination that : the q2 amount has values with a range of 0 < q2 < 1, where the closer it is to 1 means that the model is better. so the 0 < 0.918 < 1 model has a good predictive relevance. t-statistic test table 10 t-statistic test results t statistics (|o/stdev|) p values positive emotion (z) -> impulse buying (y) 3.646 0.000 store atmosphere (x) -> positive emotion (z) 12.737 0.000 based on table 10 above it is able to be seen that variable test results of store atmosphere to impulse buying show the value of tcount > ttable which is 2.345 > 2.012 and a sig value of 0.019 < 0.05 this shows that store atmosphere has a significant influence to impulse buying. based on table 10 above it is able to be seen that variable test results of store atmosphere to positive emotion show the value of tcount > ttable which is 12.737 > 2.012 and a sig value of 0.000 < 0.05 this shows that store atmosphere has a significant influence to positive emotion. based on table 10 above it is able to be seen that variable test results of positive emotion to impulse buying show the value of tcount > ttable which is 3.646 > 2.012 and a sig value of 0.000 < 0.05 this shows that positive emotion has a significant influence to impulse buying. the following is a summary of counting results and path coefficient tests, as the following. path coefficients table 11 interpretation of path coefficient results based on the table above it is able to be seen as the following: a. the path coefficient of variable x to y is as large as 0.387 variable coefficient direct total influence indirect x to y 0,387 0,387 0,387 x to z 0,759 0,759 0,759 x 0,568 = 0,431 0,431 z to y 0,568 0,568 the role of the store atmosphere to impulsive purchasing (study in matahari cilandak town square) 90 b. the path coefficient of variable x has a direct influence to y as large as 0.387 and also has an indirect influence through z as large as 0.431. figure 3 inner model source: pls output results discussion from research results about store atmosphere to impulse buying through positive emotion by using the partial least square method with the smart-pls 3.0 software the following results are obtained. relation of store atmosphere with impulse buying based on results from this research that hypothesis test results show that store atmosphere has a positive and significant influence to impulse buying with a path coefficient result value as large as 0.387 and the t-statistic test shows the value of tcount > ttable which is as large as 2.345 > 2.012 and a sig. value of 0.019 < 0.05. which means the store atmosphere variable that is measured through the indicators of visual communication, lighting, color, music, and aroma that is used in this research has a direct influence to the impulse buying variable (unplanned buying) in matahari department store cilandak town square. the application of a good store atmosphere with the availability of product signage for consumer ease of searching product locations, the right room lighting, an attractive interior design, the melody of music that is played and the fragrances that are used in the booth needs to be paid attention by store businesspeople because those factors are proven in this research that they are able to influence the impulse buying of consumers. results of this research support the research implemented by abdolvand, et al (2011), graa & dani (2012), leba (2015), and dewi & giantari (2015). if based on a theory, the relation between store atmosphere and impulse buying according to utami (2010:69) that states that one of the causes of the occurrence of impulse buying is the influence of stimulus from the place of retail that refers to the stimulus of the store atmosphere that is purposely made by the marketers to create the store’s physical attraction. observing research result that were already implemented and with the available theoretical understanding, the results of this research are relevant. relation of store atmosphere with impulse buying that is mediated by positive emotion based on results from this research states that hypothesis test results show that store atmosphere has an influence to impulse buying mediated by positive emotion with a path coefficient value result as large as 0.431. and based on results obtained that indirect influence is more dominant than direct influence. which afebi management and business review (ambr) vol.02 no.01, june 2017 91 means that the positive emotion variable that is measured through indicators of pleasure inside the store, happiness inside the store, shopping interest and active inside the store that are used in this research are able to mediate the influence of store atmosphere to the impulse buying of consumers in matahari department store cilandak town square. according to peter & olson (2014:265) that basically, the stimulus of store atmosphere influences the emotional condition of consumers. so the creation of a good store atmosphere is able to shape the positive emotion of visitors. this needs to be paid attention by store businesspeople for influencing the comfort and pleasure of consumers when shopping, the comfort and pleasure of consumers when shopping can be created by providing chairs for waiting (resting), the presence of polite employees, friendly, respond quickly and neat in serving customers, the availability of a spacious fitting room, clean, the right lighting and large windows, then an interior design with an attractive choice of room colors, the availability of audio visual in the form of picture & sound components such as a special television program that is aired by store management for marketing the best chosen products and the music that is played are matching with today’s music growth. with the presence of those factors, the comfort and pleasure of consumers when shopping will gain so the positive emotion that is formed by a good store atmosphere is able to influence the impulse buying of consumers. where the results of this research support the research implemented by leba (2015) which is that positive emotion is able to mediate the influence of booth atmosphere to impulse buying, and the results of research by dewi & giantari (2015) that store atmosphere directly is able to influence impulse buying, yet impulse buying of course will increase more if the store atmosphere is also able to increase positive emotion, where positive emotion will also influence impulse buying. research limits this research has limits as the following: a. this research only uses 50 questionnaires that were spread to 50 respondents so the summary that is able to be taken is only based on the data that was gathered through those questionnaires. b. respondents in this research only take respondents that have shopped in matahari department store cilandak town square so results of this research are not able to be generalized for impulse buying of visitors in other areas or other shopping booths. c. this research only uses the store atmosphere, positive emotion and impulse buying variables. summary based on analysis results and discussion that was outlined, the summary is able to be taken as the following: a. store atmosphere influences directly, positively and significantly to impulse buying b. store atmosphere influences indirectly to impulse buying that is mediated by positive emotion. the role of the store atmosphere to impulsive purchasing (study in matahari cilandak town square) 92 5. practical contribution suggestions that the writer are able to give are based on the outline of the summary above, which are the following: a. for the management of matahari department store cilandak town square it is expected to pay more attention to the music that is played in the matahari department store booth, the distribution of respondents’ answers to the store atmosphere variable, the lowest value is pointed to the played music statement in the store. so it needs to be improved to increase consumer comfort when shopping by paying attention to the types of music present today and the choice of the right type of music so it does not disturb the hearing sense of consumers when shopping. then for the management of matahari department store cilandak town square it is expected to pay attention to promotions where the distribution of respondents’ answers to the positive emotion variable, the lowest score is pointed at the statement of the presence of promotions offered in the store. so that factor needs to be increased for influencing the impulse buying of consumers and for increasing the turnover of the company seller. and for the management of matahari department store cilandak town square is expected to pay attention to the display inside the booth where respondents’ answers to the impulse buying variable with the lowest value is pointed to the statement of memory because of the influence of display, that factor has to be paid attention and improved for influencing the impulse buying of consumers when inside the booth. the management is expected to pay attention to a good choice of display and the right display location so that it is attractive to consumers. b. for future research that want to implement the same type of research, it is suggested to study other variables other than store atmosphere and positive 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(2010). manajemen ritel: strategi dan implementasi operasional bisnis ritel modern di indonesia. jakarta: salemba empat. 78 scheduling process analysis distribution of product using the distribution requirement planning (drp) method moh. mukhsin*, m. tajus sobirin faculty of economic and business, universitas sultan ageng tirtayasa, indonesia abstarct the research aims to analyze product distribution scheduling planning, create a more efficient product distribution scheduling system by using distribution requirement planning (drp) method in pt. nusa abadi commerce is a company engaged in distribution. the results of calculations using the company method with the drp method. in the distribution period of 2019 it showed that the drp method of rp. 431,510,000, and the company's method of rp. 563,970,000, so the company is able to save costs by rp. 132,460,000, or 23.49% more efficient. the results of calculations using the company method with the drp method. the distribution period in 2020 shows that the drp method of rp. 368,182,500 and company method of rp. rp. 450,840,000, so the company is able to save costs by rp. 82,657,500, or the company is able to be more efficient 18.33%. based on the results of research that has been done in 2019 to 2020 drp method is consistently more efficient than the company's method, therefore the company is advised to use drp in planning distribution activities for the future period. keywords: distribution, distribution requirement planning, forecasting *corresponding author. email address: moh.mukhsin@untirta.ac. scheduling process analysis distribution of product using the distribution requirement planning (drp) method received september 16th 2022 review october 15th 2022 publish december 31st 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/602 mailto:moh.mukhsin@untirta.ac http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1 http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1 https://journal.afebi.org/index.php/ambr/article/view/514 79 ambr introduction the development of the business world is currently increasing the rate of growth is very rapid, this is marked by the development of various specialized businesses in the field of manufacturing. most of these companies will invite competition. in winning several competitions the company uses various ways to increase customer satisfaction through quality products, on time delivery, and cost efficiency (kurniawan kelen & sikas, 2019). is the main ingredient to support the sustainability of the production process. factors that support good planning and regulation so that there are those who can meet production needs at low cost (nunung indra lesmana 2016). in indonesia, the manufacturing industry is very diverse, one of which is the manufacturing industry in the cigarette field. where cigarettes have a relatively high position in the space of indonesia's economic allocation. the cigarette industry is part of a sector that has high domestic competitiveness, so that it is able to contribute to the national economy(ikhsan, kurnianto, apriyanto, nurdin, & puji, 2019). in the business world, transportation and distribution are two components that increase company excellence because the reduction in transportation costs can increase company profits (yuniarti & astuti, 2013). distribution is the process of distributing goods from producers to consumers which is an important factor for companies to be able to deliver products precisely to consumers. inventory placement at each location needs to be considered and handled properly so that the inventory can be optimal, ie not doing too much storage (wahyuniardi, syarwani, & anggani, 2017). distributors are required to distribute products quickly and precisely to prevent the vacancy of existing stock in consumers or customers. consumers will feel satisfied with the distributor's service, if the product arrives on time, on the right quantity, and on the right quality (harsono & putro, 2017). fulfillment of requests that are not fulfilled on time can result in transportation (truck) to wait quite a long time, because the desired finished product is not available on the production floor. products that are not available in warehouses are caused by poor production scheduling that does not have a good forecast basis and there are variations in product shipments, resulting in non-smooth distribution of products (mak wai kin et al., 2015) the phenomenon in this study is the distribution of activities at pt niaga nusa abadi, serang city. with fluctuating demand for goods, the flow of goods has fluctuated between demand for goods and delivery of goods that fluctuates but in the monthly period there is often a gap between the amount of goods sent and the demand for goods that can be illustrated in figure 1). source. pt niaga nusa abadi, serang city 2019. based on figure 1, it can be seen that there is a difference between the number of requests and the number of goods delivered by pt niaga nusa abadi, serang city, as in january there were 192 bales, february 602 bales, march experienced a shortage of 692 bales, month april experienced a shortage of 616 bales, in may it was over 292 bales, in june it was over 534 bales, in july it was down by 400 bales, in august it was down by 106 bales, in september had an excess of 114 bales, in october had a shortage of 236 bales, november experienced a shortage of 1046 bales, and december had an excess of 30 bales. things that can be done by pt niaga nusa abadi is planning and scheduling replenishment of inventory for distribution needs. according to (sutoni & agustian (universitas suryakancana), 2017) there are several 0 2000 4000 6000 8000 10000 12000 pt niaga nusa abadi, serang city demand sales 80 models of inventory replenishment systems in distribution, namely re-order points (periodic reorder point systems), periodic review systems, multiple point ordering systems, the sales replacement system (replacement system sales), and distribution requirement planning (distribution activity scheduling system). with these problems, distribution planning and scheduling is carried out using the distribution requirement planning (drp) method. it is expected that with good planning and scheduling of distribution activities, success in fulfilling requests will be more optimal (kurniawan kelen & sikas, 2019). literature study distribution distribution is one aspect of marketing. distribution can also be interpreted as marketing activities that seek to facilitate and facilitate the delivery of goods and services from producers to consumers, so that their use is appropriate to what is needed (type, amount, price, place, and when needed). a distributor or company is an intermediary that distributes products from the manufacturer (manufacturer) to retailers (retailers). after a product is produced by the factory, the product is sent (and usually sold at once) to a distributor. the distributor then sells the product to the retailer or customer. (http://id.wikipedia.org/wiki/distribution.bisnis). physical distribution flexibility is the company's ability to quickly and effectively adjust inventory, packaging, warehousing and physical transportation of products to respond to customer needs (harsono & putro, 2017). according to (wahyuni et al, 2017: 24) distribution is the process of delivering goods from producers to consumers. distribution is also an activity of moving goods and services from the source to the customer or end consumer through timely distribution channels (sutoni & agustian, 2018: 122). distribution in the logistics world has become an important and very important part, where distribution is the process of moving goods from suppliers to the last customers involved in the supply chain, because it can affect supply chain costs (harsono & putro, 2017). the main objective of distribution strategy is placing the product as close as possible to the consumer, so the product can be grabbed by users. thus every time a consumer needs an item, they can buy it easily. distribution requirement planning distribution requirement planning (drp) is an application of numbers using time phased on point (tpop) logic which functions to determine the needs to replenish inventory in a brance warehouse (sutoni & agustian (universitas suryakancana), 2017). according to (sutoni & agustian (universitas suryakancana), 2017) distribution requirment planning (drp) is a method used to determine when to refill inventory based on the demand phase for each item in a distribution channel. drp is based on forecasting needs at the lowest level in the network (dc or depo) which will determine the inventory needs at a higher level (factory). distribution requirment planning (drp) is a method for handling inventory procurement in a multi-echelon distribution network. this metendatang dengan perencanaan pada setiap level pada jaringaan distribusi (kurniawan kelen & sikas, 2019). inputs in the calculation of distribution requirement planning some of the inputs required in the calculation of distribution requirement planning (drp) include: 1. bill of distribution (bod), which is information that can describe levels in a distribution system. 2. lead time data or time data needed from the beginning of the order process to the process of goods being received by the customer. 3. historical demand data, i.e. recording past requests. 4. forecasting or forecasting requests. 5. the size of the lost size or size of the order that can be ordered by the customer 6. fleet capacity which is the limit in the process of delivering products. 7. safety stock or safety stock. components of distribution requirement planning (mak wai kin et al., 2015) states that the following are the components in making scheduling using drp: 1. lot size, is a size commonly used in one transfer, which is in accordance with the transfer capacity. lot size states the determination of the lot when ordering goods. 2. lead time, states the time required to send a number of goods with a certain lot. 3. safety stock, states that inventory reserves must exist in anticipation of needs. 4. gross demand, is the result of forecasting consumer demand that has been made at a certain time. gross demand usually shows the market demand that must be met by the company at a certain time. 5. net requirements, states the net amount of goods needed to meet deficiencies in existing requests and adjusted planned order release, safety stock, and reorder points. 6. planned order receipt, states the quantity of orders needed in a period. planned order receipt appears at the same time as net requirements, but the size of the order depends on the order policy and takes into account the safety stock. 7. planned order release, states when an order must be made, so that the goods are available when a request occurs. order time depends on the lead time available scheduling process analysis distribution of product using the distribution requirement planning (drp) method 81 ambr forecasting forecasting is an art and science in predicting future events. forecasting will involve taking historical data (such as last year's sales) and projecting them into the future with mathematical models (rahman & sastro, 2019). according to (gifari & suliantoro, 2016) forecasting activity is a business function that tries to estimate the sale and use of products so that the products can be made in the right quantity. forecasting types (rahman & sastro, 2019) has divided several types of forecasting into three main types of forecasting in planning future operational activities, namely: economic forecasting (economic forecasts), forecasting technology (technological forecasts), forecasting demand (demand forecasts). forecasting components (according to (rahman & sastro, 2019) forecasting has four important components, namely: trends, is the movement of data little by little. season, is a pattern of data that repeats over a certain period of time, such as day, week, month or quarter. cycles, are patterns in data that occur every few years. variation, random is a special point in the data caused by opportunities and unusual situations. random variations do not have a specific pattern, so they cannot be predicted. time horizon forecasting rahman & sastro 2019 classifies forecasting with the time horizon that surrounds it. the time horizon is divided into three categories as follows: short-term forecasting: this forecast has a vulnerable time of 3 months 1 year. used for planning planning, job scheduling and job assignments, medium-term forecasting: forecasting generally spans more than 3 months less than 3 years. useful in the design of sales production planning, long-term forecasting: generally up to more than 3 years, long-term forecasting is used in planning for new products, and research and development research methodology this research is an applied research, which is a research that aims to solve a problem currently faced by a particular company or management (harsono & putro, 2017). by counting: 1. calculate oq (order quantity) oq (order quantity) is calculated using the cargowizz software, a cargo transportation planning software based on the volume of goods to be loaded. 2. calculating safety stock for each sub depo in order to keep the stock status (stock level) safe, a safety inventory must be made for each distribution center (dc) according to the variance of average demand for lead time with rumors: where: zα : service level company ơ : standar deviasi l : lead time 3. create a distribution requirement planning (drp) worksheet. after the optimal order quantity is determined monthly product order planning using the drp method. the steps in calculating drp can be determined using the following formula: a. requirement demand. taken based on historical and forecasting. b. net requirements are calculated from: the net requirement value recorded is positive. c. planned order receipt is a plan for receiving a product for the order quantity set at the same time as the net requirement occurs. d. planned order release is a plan for releasing orders to a higher level of distribution, obtained from. e. projected on hand is calculated from: ss = zα . ơ . √𝑳 nr = (gr + ss) – (sr + poh n-1) 82 4. calculating costs based on company method. 5. calculate company costs based on the drp method. 6. comparing the distribution costs of the drp method with those of the company. if the company's distribution costs are <drp distribution costs, the proposal is rejected. if the company distribution cost> drp distribution fee, the proposal is accepted. 7. if the proposal is accepted, the 2020 period is calculated using the distribution requirement planning (drp) method. 8. determine the demand for requests for each sub-depot. at this initial stage, data requests for each subdepot are predicted using the help of the pom software for windows. then calculated one by one and then selected which has the smallest mean square of error (mse) which will be chosen as a method for forecasting in the period 2020. 9. calculating the safety stock (ss) peride 2020 based on the results of forecasting. 10. calculates the 2020 drp based on existing forecasting. 11. conclusions, the last step taken is drawing conclusions from all stages that have been passed. the conclusion must be able to reveal the main things obtained from the essence of the study. result and discussion data collection data collected by requesting historical company records and direct observations in the field, include: 1. product demand data 2. data inventory on hand 3. data on anggkut fleet capacity and volume of goods 4. lead time 5. shipping costs 6. product prices 7. storage cost these data are data that are needed by researchers in processing data to determine the efficiency of product distribution and compare which is better between the company methods or using the distribution requirements planning method. data on product demand in 2019 inventory on hand city type of products class mild matra aroma minak djinggo cilegon 350 225 50 30 pandeglang 300 200 100 75 labuan 250 175 75 50 source: pt niaga nusa abadi, serang city (data is processed) the amount of inventory available at each distribution center is not the same, depending on the magnitude of fluctuations that occur at the distribution center. the initial inventory level is determined based on the end of the previous period. lead time type of products lead time (day) class mild 2 matra 2 aroma 2 minak djinggo 2 s o u r c e : p t n i a g a n u s a a b a d i , s e r a n g c i t y ( d a t a i s p r o c e s s e d ) poh = (poh n-1 + sr + porc) gr scheduling process analysis distribution of product using the distribution requirement planning (drp) method table 1. inventory on hand table 2. load time 83 ambr table 3. shipping cost table 4. safety stock (bal) lead time is the waiting time needed from the time the product is ordered until the product arrives at the location, the lead time needed in this study is 2 days. shipping costs. cost deatils cilegon pandeglang labuan installation fee (telephone) rp 10.000 rp 10.000 rp 10.000 order file and delivery note rp 12.500 rp 12.500 rp 12.500 labor costs involved (driver and sales) rp 250.000 rp 250.000 rp 250.000 cost of supervisor / inspection rp 25.000 rp 25.000 rp 25.000 road fees (gasoline & toll) rp 500.000 rp 750.000 rp 1.000.000 total shipping costs rp 797.500 rp 1.047.500 rp 1.297.500 source: pt niaga nusa abadi, serang city (data is processed) shipping costs represent the amount of costs that must be incurred by the company to make deliveries to each location of the distribution center of each region. total shipping costs using the company method in 2019. storage cost product in 2019 storage costs = storage costs + total shipping cost product = (rp. 25.000.000 x 12) + (rp. 75.420.000 + rp. 75.420.000 + rp. 75.420.000 + rp. 37.710.000) = rp. 300.000.000 + rp. 263.970.000 = rp. 563.970.000 by using the company method used by the company, a grand total cost distribution of rp. 563,970,000, for the period 2019. safety stock in 2019 type of products city safety stock class mild cilegon 71 pandeglang 53 labuan 43 matra cilegon 70 pandeglang 76 labuan 53 aroma cilegon 45 pandeglang 40 labuan 32 minak djinggo cilegon 30 pandeglang 27 labuan 22 source: pt niaga nusa abadi data processing results (with safety stock formula) safety stock is a safety stock prepared by each distribution center that intends to maintain stock of goods in the event of a problem both in shipping and in the production activities of the goods. order quantity 84 type of products order quantity class mild 883 bal matra 1034 bal aroma 409 bal minak djinggo 511 bal source: pt niaga nusa abadi data processing results (with cargowizz) order quantity is the optimum amount of product load in one shipment which is calculated using the cargowizz tool. calculations using the 2019 drp method storage costs = rp. 25.000.000,x 1 tahun = rp. 25.000.000, shipping costs = 20 x rp 797.500,= rp. rp. 15.950.000, total cost = rp. 25.000.000,+ rp. 15.950.000 = rp. 40.950.000, grand total cost using the method distribution requirement planning 2019 type of products city total cost class mild cilegon rp. 40.950.000 pandeglang rp. 37.750.000 labuan rp. 40.570.000 matra cilegon rp. 36.165.000 pandeglang rp. 38.617.500 labuan rp. 39.272.500 aroma cilegon rp. 32.975.000 pandeglang rp. 38.617.500 labuan rp. 39.272.500 minak djinggo cilegon rp. 28.190.000 pandeglang rp. 30.237.500 labuan rp. 28.892.500 total rp. 431.510.000 after calculating the distribution costs during 2019 using the company method and the drp method, it turns out the total cost if using the company method, which is rp. 563,970,000, greater than the drp method, namely: rp. 431,510,000, with the difference, as follows rp. 563.970.000 rp. 431.510.000 = rp. 132.460.000, table 5. order quantity table 6. grand total cost drp 2019 scheduling process analysis distribution of product using the distribution requirement planning (drp) method 85 ambr with presentase: 𝑅𝑝. 132.460.000 𝑅𝑝. 563.970.000 𝑋 100 = 𝟐𝟑, 𝟒𝟗% the difference obtained by comparing the company's method with the drp method is the difference of 23.49%, so that the drp method can be chosen to plan and schedule product distribution for the cities of cilegon, pandeglang and labuan for the following periods, the drp method is considered more efficient than the method company. request forecasting requeste forecasting pt niaga nusa abadi, serang city 2020 the calculation is done in units (bal) product month cilegon pandeglang labuan c l a s s m i l d january 746 470 517 february 491 392 249 march 530 419 340 april 584 405 510 may 593 431 429 june 510 544 406 july 699 467 335 august 444 388 497 september 483 415 229 october 537 402 369 november 546 428 490 desember 463 541 409 source: operation forecast from pom for windows product month cilegon pandeglang labuan m a t r a january 547 569 496 february 692 494 364 march 481 516 451 april 669 487 493 may 553 418 361 june 698 403 447 july 488 540 490 august 676 466 357 september 560 488 444 october 705 458 487 november 494 390 354 desember 683 374 441 source: operation forecast from pom for windows table 7. request forecasting class mild year 2020 table 8. request forecasting aroma year 2020 86 product month cilegon pandeglang labuan a r o m a january 183 239 127 february 94 258 162 march 179 216 72 april 182 247 162 may 93 247 162 june 178 266 149 july 180 225 59 august 91 255 149 september 176 256 101 october 178 274 137 november 89 233 47 desember 174 263 136 source: operation forecast from pom for windows product month cilegon pandeglang labuan m i n k d j i n g g o january 176 84 110 february 199 196 64 march 184 195 97 april 207 200 51 may 192 198 85 june 214 203 38 july 199 202 72 august 222 206 26 september 207 205 59 october 230 209 13 november 215 208 47 desember 238 213 18 source: operation forecast from pom for windows forecasting is done with the pom for windows tool by calculating trend analysis, linear regretion, multiplicative decompotition and additvie decompotition. then look for the smallest mse value which later will be used as the basis for forecasting. total shipping costs using the company method in 2020 distribution cost product in 2020 distribution cost = storage costs + total shipping costs product = (rp. 25.000.000 x 12) + (rp. 37.710.000 + = rp.37.710.000 + rp. 37.710.000 + rp. 37.710.000) = rp. 300.000.000 + 150.840.000 = rp. 450.840.000, by using the methods used by the company. the grand total cost of distribution is rp. 450,840,000 for distribution in 2020. safety stock in 2020 scheduling process analysis distribution of product using the distribution requirement planning (drp) method table 9. request forecasting aroma tahun 2020 table 10. request forecasting minak djinggo tahun 2020 87 ambr . product city safety stock class mild cilegon 31 pandeglang 18 labuan 33 matra cilegon 31 pandeglang 21 labuan 20 aroma cilegon 15 pandeglang 6 labuan 14 minak djinggo cilegon 7 pandeglang 12 labuan 11 source: pt niaga nusa abadi data processing results (with safety stock formula) calculation method drp tahun 2020 stroge costs = rp. 25.000.000,x 1 tahun = rp. 25.000.000, shipping cost = 8 x rp 797.500,= rp. rp. 6.380.000, total costs = rp. 25.000.000,+ rp. 6.380.000 = rp. 31.380.000, grand total cost uses the distribution requirement planning method in 2020 product city total cost class mild cilegon rp. 31.380.000 pandeglang rp. 31.285.000 labuan rp. 32.785.000 matra cilegon rp. 30.582.500 pandeglang rp. 31.285.000 labuan rp. 31.487.500 aroma cilegon rp. 28.987.500 pandeglang rp. 33.380.000 labuan rp. 30.190.000 minak djinggo cilegon rp. 28.987.500 pandeglang rp. 30.237.500 labuan rp. 27.595.000 total rp. 368.182.500 source: results of data processing using the drp worksheet table 11. safety stock 2020 table 12. grand total cost drp 2019 88 comparison of corporate methods with drp for 2020 after calculating the distribution costs during 2020 using the company and drp methods, it turns out that the total cost using the company method is rp. 450,840,000, greater than the drp method of rp. 368,182,500, by the difference: rp. 431,985,000 rp. 368,182,500 = rp. 82,657,500 with presentase: 𝑅𝑝. 82.657.500 𝑅𝑝. 450.840.000 𝑋 100 = 𝟏𝟖, 𝟑𝟑 % for 2020 the difference obtained by comparing the company and drp methods was 18.33%. comparison of company and drp methods information year 2019 2020 company method rp 563.970.000 rp 450.840.000 drp method rp 431.510.000 rp 368.182.500 difference rp 132.460.000 rp 82.657.500 percentage 23,49% 18,33% source: results of company method data & drp method in (table 17) the total cost to be incurred by the company will be more efficient if using the distribution requirement planning method, the cost efficiency can reach 14.76% 23.49% of the total cost that must be incurred by the company for each year without considering several other external factors. this efficient total cost can be obtained because the drp method will optimize every product shipment made to the regional distribution center, so that each order of the product and its delivery will be as needed conclusion 1. distribution of products for 2019 a. the number of items that must be available to prevent the occurrence of indent conditions at each distribution center for class mild cigarettes is cilegon 71 bales, pandeglang 53 bales, and labuan 43 bales. matra types of cigarettes are cilegon 76 bales, pandeglang 70 bales, and labuan 53 bales. aroma types of cigarettes are cilegon 45 bales, pandeglang 40 bales, and labuan 32 bales. and for djinggo minak cigarettes are cilegon 30 bales, pandeglang 27 bales, and labuan 22 bal. b. effective delivery based on the drp method for the entire distribution center for class mild, matra, aroma and minak djinggo products is 128 times. c. the number of items sent on a single shipment is based on cargowizz software for class mild 883 bales, matra 1034 bales, aroma 409 bales, and djinggo minak 511 bales. d. the results of calculations using the company method with the drp method. in the distribution period of 2019 it showed that the drp method of rp. 431,510,000, and the company's method of rp. 563,970,000, so the company is able to save costs by rp. 132,460,000, or 23.49% more efficient. 2. distribution of products for 2020 a. the need for goods in the 2020 period can be seen in the results of forecasting that can be seen in (table 11 table 14) which have been calculated using the pom for windows software. b. the number of items that must be available to prevent the occurrence of indent conditions at each distribution center for class mild cigarettes is cilegon 31 bales, pandeglang 18 bales, and labuan 33 bales. matra types of cigarettes are cilegon 31 bales, pandeglang 21 bales, and labuan 20 bales. aroma types of cigarettes are cilegon 15 bales, pandeglang 6 bales, and labuan 14 bales. and for djinggo minak cigarettes are cilegon 7 bales, pandeglang 12 bales, and labuan 11 bales. c. effective deliveries based on the drp method for the entire distribution center for class mild, matra, aroma and minak djinggo products are 62 times. d. the number of items sent on a single shipment is based on cargowizz software for class mild 883 bales, matra 1034 bales, aroma 409 bales, and djinggo minak 511 bales. e. the results of calculations using the company method with the drp method. the distribution period in 2020 shows that the drp method of rp. 368,182,500 and company method of rp. rp. 450,840,000, so the company is able to save costs by rp. 82,657,500, or the company is able to be more efficient 18.33%. scheduling process analysis distribution of product using the distribution requirement planning (drp) method table 13. research results 89 ambr reference gifari, a. r., & suliantoro, h. 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(2013). penerapan metode saving matrix dalam penjadwalan dan penentuan rute distribusi premium di spbu kota malang. rekayasa mesin, 4(1), pp.17-26. https://doi.org/10.21776/ub.jrm 27 factors affecting beef volume imported from australia juliarti mega pertiwi, endang sulistiyani*, luqman khakim business administration department, politeknik negeri semarang, indonesia abstract indonesia has a shortage supply of some foods. as a developing country that ranks fourth in the world as the country with the largest population. indonesia has a high demand for foods that cannot be fulfilled by domestic products. the degree of concentration for beef in indonesia is relatively distributed. it means that indonesia is still depend on beef import. it is necessary to analyze the increase in the volume of beef imports because the dependence on imports on a product shows that the government has ruled out indonesia's potential to produce more domestic beef. the aim of this study is to analyze the influence of consumption, production and gross domestic product on the volume of beef import from australia in period 20102019. this research applied explanatory research method with quantitative approach. the data sources collected from badan pusat statistik (bps) and trademap.org. the sample in this research is determined by purposive sampling the study explored with multiple linear regression statisti cal analysis. the result showed that consumption had insignificant effect on the volume of beef import partially. meanwhile, production had significant negative effect on the volume of beef import. gross domestic product also had partial significant positive effect on the volume of beef import. keywords: consumption, production, gross domestic product, beef import *corresponding author. email address: endangsulis15@polines.ac.id factors affecting beef volume imported from australia received march 8th 2022 review march 10th 2022 publish june 30th 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/521 mailto:endangsulis15@polines.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/521 28 ambr figure 1. beef import volume by country of origin (20102019) introduction trading between countries has been carried out to fulfill global needs. countries benefit from international trade because they are exposed to new markets and products. opening trade with diverse countries throughout the world will help the country and lead to economic progress, either directly through effect on resource allocation and efficiency, or indirectly by increased investment level (rusydiana, 2009). indonesia has a shortage supply of some foods. as a developing country that ranks fourth in the world as the country with the largest population. indonesia has a high demand for foods that can not be fulfilled by domestic products. thus, it cause import increase. various policies have been implemented by the government to fulfill domestic production, one of which is importing. import is an activity of selling goods and services from abroad to the customs area (supardi, 2019). the degree of concentration for beef in indonesia is relatively distributed (hanum & setyari, 2015). it means that indonesia is still depending on beef import. it is necessary to analyze the increase in the volume of beef imports because the dependence on imports on a product shows that the government has ruled out indonesia's potential to produce more domestic beef. in the beginning of 2020, a global pandemic which was quite disturbing for the public had spread, namely the covid-19, had an impact on social, economic, and health orders. the covid-19 has resulted in a global crisis. a crisis is an event that will lead to an unstable and dangerous situation that affects individuals, groups, communities, or the entire society (goniewicz, 2020). crises are perceived as negative changes in security, economic, political, social, or environmental issues, especially when they occur suddenly with little or no warning. on march 2, 2020, the first case of the covid-19 was found in indonesia and since then, various efforts have been made to prevent the spread of the covid-19, including in the work environment. efforts to prevent the covid-19 at work sites include complying with regulations related to occupational safety and health (osh). it can be seen from figure 1 that the volume of indonesia’s beef imports fluctuated and tended to experience and increase from 2015 which was 50,689.7 tons to 262,251.3 tons in 2019. in 2010 there was a beef imports volume of 104,141.2 tons and then decreased until 2012 to 40,340 tons. the largest beef imports for indonesia come from australia, new zealand, and the united states. ningrum (2018:3) said that the increase in import volume was influenced by several factors, including consumption and production. population growth that always increases every year, changes in people's tastes and accompanied by technological advances may make people more aware to consume balanced nutritional foods. there is a complete and balanced essential amino acid in beef protein and also contains a number of minerals and vitamins. essential amino acids cannot be produced by the human body, while non-essential amino acids can be produced by the human body itself. in addition, beef also has a soft meat texture so it doesn't require a lot of time and spices to cook. however the increase in consumption is not matched by production. beef import volume by country of origin (ton) 140000 120000 100000 80000 60000 40000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 australia selandia baru amerika serikat lainnya 29 source: https://rembangkab.go.id/bansos-bantuan-sosial/ from the table above, it can be seen that the lowest amount of consumption was in 2013 and 2014 which was 0.261kg. since 2014, consumption has increased to the largest consumption rate, which is from 2017 to 2019 of 0.469 kg. in previous research, chisilia & widanta (2019) stated that consumption has a positive and significant effect on the volume of beef imports. thus, if consumption increases, the volume of imports will also increase. this happens because the increase in population is accompanied by increasing needs then the state will fulfill it by importing. on the contrary, oktaviarosa (2019) stated that consumption has no significant effect on the volume of beef imports. it is because there are still many household consumers who prefer fresh meat which means it comes from domestic production. year production (ton kg) 2010 436.450 2011 485.335 2012 508.905 2013 504.819 2014 497.669 2015 506.660 2016 518.484 2017 486.319 2018 497.971 2019 504.802 based on the table 1, it can be seen that from 2010 to 2019 beef production in indonesia fluctuated. from 2010 to 2012 there was an increase every year from 436.450 tons to 508.905 tons. however, in 2013 it decreased, the production was only 504.819 tons. a previous study yudhanto (2019) showed that production has a negative and significant effect on the volume of beef imports. this means if production increases, the volume of imports will decreases. it happen because if domestic production is able to fulfill domestic needs then imports will be reduced. on the contrary, chisilia & widanta (2019) stated production has no significant effect on the volume of beef imports. this is because there is a perception that imported beef has better quality than domestic beef. there are other factors that affect the amount and value of imports in a country, one of which is gross domestic product (gdp). putong (2003) declared gross domestic product (gdp) is the market value of goods and services produced by a country in a certain period by accumulating the production of that country's citizens plus foreign who working in that country. an increase in a country's gdp reflects an increase in people's ability to import products. factors affecting beef volume imported from australia figure 2. total consumption of beef in indonesia (2010 – 2019) table 1. total production of beef in indonesia (2010 – 2019) 2010 2011 2012 2013 2014 2015 total consumption of beef in indonesia (kg/capita/year) 0,365 0,417 0,365 0,261 0,261 0,469 0,469 https://rembangkab.go.id/bansos-bantuan-sosial/ 30 ambr figure 3. real gross domestic product (2010 2019)) from figure 3 it can be seen that indonesia's gross domestic product (gdp) has always increased starting in 2010 which was 6,864,133.10 million rupiahs until 2019 reaching 10,949.037.80 million rupiahs. anggiani & azizah (2018:129) mentioned gross domestic product (gdp) has a positive and significant effect on the volume of beef imports. it is because the higher the income, the higher the people's purchasing power which causes an increase in consumption. on the contrary, anggara (2020:73) stated that gross domestic product (gdp) has no significant effect on the volume of beef imports. it can happen because of the import restriction policy that sometimes changes then it makes people allocating their income for the consumption in other commodities. based on the data and statements elaborated how is the influence of consumption, production, and gross domestic product (gdp) on the volume of beef import from australia. literature study international trade theory trade is an activity of exchanging goods and services at the will of each party conducting trade. international trade is a trade agreement of goods or services between one place and another that crosses national borders to obtain profits by following all applicable regulations in both countries (supardi, 2019:4) 1. some experts have a view on international trade which is based on the superiority of a commodity traded by two or more countries. adam smith : absolute advantage according to adam smith in ekananda (2014:20), the theory of absolute advantage used labor value theory. the labor theory of value is very simple because it uses the assumption that labor is the only factor of production. absolute advantage became the basis in trade between two countries. if a country is more efficient and has an absolute advantage over other countries in producing other commodities, then both countries can benefit by specializing in producing a commodity. through this activity, resources in both countries can be used in the most efficient way, commodity produced will increase. the increase in production is a measure of the benefits of specialization in production for the two countries that carry out trade. 2. david ricardo : comparative advantage a british economist, david ricardo, developed a model of international trade in the early nineteenth century that introduced the concept of comparative advantage. ekananda (2014:23) said this theory in contrary to the absolute advantage theory which prioritizes absolute advantage in certain productions owned by a country compared to other countries, comparative advantage theory argued that international trade can occur even though a country does not have an absolute advantage, as long as the comparative prices in the two countries are different. in other words, a country will product goods that can be produced more cheap than other countries and will import goods which if produced itself costs a lot of money. import supardi (2019:5) said import is an activity of entering goods from abroad into the customs area. imports consist of imports of goods and services. meanwhile, according to the customs law, import is the activity of entering goods into the customs area. the goods referred to are goods in any form and type that enter the customs area. real gross domestic product (billion rupiahs) 12000000 8000000 10425851,9 4000000 2000000 31 krugman in surbakti & gulo (2017:6) explained several factors encourage imports : 1. limited quality of human resources and technology to process available natural resources to achieve optimal effectiveness and efficiency in domestic production activities. 2. some goods and services have not been or cannot be produced domestically. 3. there is an insufficient quantity or quantity of goods in the country. meanwhile hairani (2014:78) revealed factors affecting imports from the demand side are as follows: 1. price high price indicates an increase in demand that is not accompanied by an increase in supply. when prices rise, imports are carried out to stabilize prices at a level that is affordable to the public. 2. exchange rate the increase in the rupiah exchange rate against other currencies will cause exporters' interest to export goods because the rupiah exchange rate is getting weaker, thus exporter will gain more profit (the number of imports will increase) and vice versa. 3. previous import volume the volume of import in the previous year has an effect on the volume of import in the next year. this is because the volume of imports of a country reflects the inability of domestic production to meet domestic demand. 4. consumption the higher the consumption, it means that there is an increase in demand. thus, the demand for imports also increases. 5. gross domestic product an increase in per capita income will affect demand, income will shift the demand curve to the right, which means an increase in people's purchasing power. demand theory putong (2003:32) indicated that demand is the amount of demand in a certain market at a certain price, income, and period. there are several factors that affect the demand for a product. 1. price the demand for goods will increase if the price of an item is getting cheaper and vice versa. 2. income income reflects people's ability to buy something. the higher the income, the higher the purchasing power so that the demand for an item also increases 3. population the increase in population is always accompanied by an increase in consumption, so the demand also increases. 4. taste and estimation in the future the level of demand is determined by changes in one's tastes and estimates of the availability of certain products in the future. 5. price of other goods/substitutions the amount of demand is affected if there are two price choices for an item that are substitutes and complementary. consumption life cycle hypothesis theory explained individual consumption is not only from income, also depends on the wealth owned, this wealth comes from the allowance for income that is not consumed, namely savings and from inherited or hereditary wealth. this hypothesis sees that people plan their consumption and saving behavior over the long term with the aim of allocating their consumption in the best possible way over their lifetime (hasyim, 2016:148) production according to joesron & fathorrazi (2012:87) the definition of production is the process of combining existing goods and services, while economically, namely the creation or addition of new value, use, or benefits through a process. the production function is a technical relationship between inputs and outputs. inputs used in the production process (x_1, x_(2,) x_3…x_n) can be written as follows. where : q is for the output, and x is for the input factors affecting beef volume imported from australia figure 2. post office organizational structure 32 ambr figure 3. research and analysis framework unlimited needs while the means to satisfy these needs are very limited. to solve this problem, the act of choosing various possible alternatives to meet unlimited needs arises. in addition, humans are also trying to produce optimal output using limited inputs. gross domestic product gross domestic product (gdp) is the market value of goods and services produced by a country in a certain period by accumulating the production of that country's citizens plus foreign who working in that country (putong, 2003:162) . an increase in a country's gdp reflects an increase in people's ability to import products. gross domestic product (gdp) is categorized into two, namely nominal and real. nominal gdp is the total gdp valued at current prices while real gdp is gdp valued at prices that have been set in a certain period. gdp can be determined via three primary methods. all three methods should yield the same figure when correctly calculated. these three approaches are often termed the expenditure approach, the output (or production) approach, and the income approach. 1) the expenditure approach gdp = consumption+government spending + investment + net export 2) the production approach gdp = gross value of output – value of intermediate consumption 3) the income approach 4) gdp = total national income +sales taxes+depreciation+net foreign factor income correlation between variables and research hypothesis development effect of consumption on beef import keynes in nasrullah (2020) explained that current consumption is strongly influenced by current disposable income. there is a minimum consumption limit that does not depend on the level of income. that is, the level of consumption must be met, even though the level of income is equal to zero. that is called autonomous consumption. high population growth in indonesia is accompanied by growth in autonomous consumption. indonesia as a developing country requires more production of varied goods where there is a possibility that the country has not been able to produce efficiently enough to meet demand. this theory is also in accordance with the theory of international trade by adam smith that international trade can occur due to differences between the factors of production of each country with different amounts of production from each country. if applied in this study with the existence of international trade, then indonesia can import beef to cover the shortage of beef consumption in the country which is not matched by the increasing number of beef production levels. therefore, consumption in this study is considered as a factor affecting import. thus, the following hypothesis is obtained. ha1: beef consumption influences the volume of beef import from australia effect of production on beef import krugman in surbakti & gulo (2017) explains that there are several factors that encourage imports, including the limited quality of human resources and technology owned to process available natural resources in order to achieve optimal effectiveness and efficiency in domestic production activities, the existence of goods and services that cannot be produced domestically, and the number or quantity of goods in the country is not sufficient. the use of consumer goods in indonesian society is quite a lot and it is not common for domestic production to be unable to meet all public demands. so that the indonesian government takes several options and policies, one of which is by importing or purchasing goods and services from abroad. this is in line with theory of absolute advantage by adam smith which said a country will import a type of goods, if the country cannot specialize in the production of commodities and earns an absolute loss. if applied in this study with different productivity levels from other countries, it causes differences in the amount of beef production in each country. thus, the government can import beef from countries with high production levels in order to cover the shortage of domestic production. therefore, production in this study is considered as a factor affecting import. thus, the following hypothesis is obtained. ha2: beef production influences the volume of beef import from australia effect of gdp on beef impor an increase in national income (gdp) will increase the purchasing power which can increase the preference of consumers to consume imported goods. according to hairani (2014) increasing gdp per capita of the importing country will increase the the country’s consumption, thus the demand for import will also increase. it is also 33 also believed in the theory of adam smith that income will influence import, the higher the income, the more a country will import. therefore, gdp in this study is considered as a factor affecting import. thus, the following hypothesis is obtained. ha3: gross domestic product influences the volume of beef import from australia method the population used in this research is data of beef import by indonesia in period of 2010-2019. in this research, a sample is chosen after a certain characteristic. the characteristics are beef import data of indonesia from australia, data of indonesia’s beef consumption, data of indonesia’s beef production, and data of indonesia's gross domestic product in period of 2010-2019. total sample in this study is n=40. the type of data used in this research is is secondary data. the data analysis method used in this study is multiple linear regression analysis, classical assumption test consisting of normality test, heteroscedasticity test, multicollinearity test, autocorrelation test, and linearity test and goodness of fit test. uma sekaran in sugiyono (2019) stated that theoretical framework is a conceptual model of how the theory relates to the various factors that have been identified as important issues. result and discussion descriptive statistics descriptive statistics explain the distribution of data collected in the research. data is processed and classified into minimum values, maximum values, mean values, and standard deviation of each variable defined in this study. n minimum maximum mean std. deviation consumption 40 0.06525 0.11725 0.0977505 0.0188494 production 40 109087.5 129621 123682.85 5487.2336 gdp 40 1642356.3 2818721.5 2207629.112 5 331273.831 53 beef import 40 7320.75 31928.75 17704.775 7328.42441 valid n (listwise) 40 the table shows the number of data (n) is 40 which is a time series data collected from 2010 to 2019. the consumption variable has the lowest value at 0.06525 on 2013 to 2014; the highest is 0,11725 on 2017 to 2019; with average value of 0.0977505; and standard deviation at 0.0188494. on the other hand, the production variable has the lowest value at 109087.5 on 2010; the highest is 129621 on 2016; with average value of 123682,85; and standard deviation at 5487.2336. meanwhile, the lowest value of gdp is 1642356.3 on 2010; the highest is 2818721.5 on 2019; with average value of 2207629.1125; and standard deviation at 331273.83153. the beef import variable has the lowest value at 7320.75 on 2012; the highest is 31928.75 on 2019; with average value of 17704.7750; and standard deviation at 7328.42441.; factors affecting beef volume imported from australia figure 4. theoritical frame work table 2. variable descriptive statistics 34 ambr figure 5. scatter plot classical assumption test normality test one – sample kolmogorov smirnov test is carried out to determine the normality of the regression model. we can see from the result that the significance value is 0.843, higher than 0.05. hence, the assumption of normality was fulfilled according to the statistical test result. heteroscedastisity test scatterplot diagram pattern is used to determine the heteroscedastisity of the regression model. figure explains that the point distribution did not form a particular pattern. the points also spread at random areas both above and below zero (0 ) on y-axis. therefore it can be concluded that heter oscedasticity did not undergo in this analysis. in other words, this model is homoscedastisity. the heteroscedasticity test aims to test whether in the regression model there is an inequality of variance from the residuals of one observation to another. a good regression model is the one with homoscedasticity (ghozali, 2018) solutions to overcome the obstacles in implementing occupational health and safety management in facing the covid-19 pandemic despite facing many obstacles and challenges in implementing the 5m health protocol, the post office is committed to implementing the health protocol properly to protect post office employees and their families as well as postal customers so that there is no cluster spread of the covid-19 in the rembang post office environment. the head of rembang post office constantly promotes the 5m health protocol and updates information about the development of the covid-19 pandemic to the post office employees every morning briefing. employees reprimand, advise, and remind each other if there are other employees who are negligent of the 5m health protocols. the post office clerk reprimand and ask the postal customers or recipients of cash social assistance funds who do not wear masks to go home. post office staff warns postal customers who shift their seats or those who sit on a seat marked with a cross to remain disciplined in maintaining a safety distance of at least one meter. post office staff reminds postal figure explains that the point distribution did not form a particular pattern. the points also spread at random areas both above and below zero (0) on y-axis. therefore it can be concluded that heteroscedasticity did not undergo in this analysis. in other words, this model is homoscedastisity multicolinearity test the multicollinearity test is used to test whether there is a correlation between the independent variables in the regression model. based on the results obtained the value of tolerance for each variable is greater than 0.10. therefore, it can be concluded that there is no correlation among independent variable. moreover, the vif value of each variable is less than 1 0 which inferred that there is no multicollinearity among independent variables and each variable is feasible to use in the regression model. the multicollinearity test aims to test whether there is a correlation between the independent variables in the regression model. a good regression model should not have a correlation between independent variables (ghozali, 2018) autocorrelation test durbin-watson test is applied to determine the autocorrelation of the regression model. based on the output, 35 the durbin watson value is 1.734. the dw value of 1.734 will be compared with the durbin watson table using significance value of 5%. the number of independent variables is 3 (k=3) and the number of samples is 32 (n=32). then the following values will be obtained dl=1.2437 and du=1.6505. the value of dw located on the between of the value of du and the value of 4-du. therefore, it could be concluded that there is no autocorrelation detected. autocorrelation occurs because successive observations (time series) are related to each other. this problem arises because the residuals are not independent from one observation to another. a good regression model is a regression that is free from autocorrelation coefficients model unstandardized coefficients t sig. adjusted r square beta 1 (constant) 55796.233 4.613 .000 0.733 consumption 6,325.860 .180 .858 production -0.724 -6.648 .000 gross domestic product 0.023 9.957 .000 based on the spss calculation, the following multiple regression equations are obtained as follows: y = 55,796.233 + 6,325.86 c – 0.724 p + 0,023 gdp the equation above can be explained as follows: a. the constant value is 55,796.233 which mean suppose the consumption, production, and gdp are constant, the volume of beef import from australia will be 55,796.233 ton kg. b. the coefficient of consumption is 6,325.86. it shows that every addition of one (kg/capita) of consumption could increase the volume of beef import from australia by 6,325.86 (ton kg) and vice versa with an assumption if the other variables were constant (ceteris paribus). c. the coefficient of production is -0.724. it shows that every addition of one (ton kg) of production could decrease the volume of beef import from australia by 0.724 (ton kg) and vice versa with an assumption if the other variabl es were constant (ceteris paribus). d. the coefficient of gdp is 0.023. it shows that every addition of one (billion rupiah) of gdp could increase the volume of beef import from australia by 0.023 (ton kg) and vice versa with an assumption if the other variab les were constant (ceteris paribus). goodness of fit determination coefficient (r2) determination coefficient is used to measure how much the independent variables contributes to the dependent variable. the coefficient of determination is between 0 and 1. the value of adjusted r square is 0.733. it means that independent variables which were consumption (x1), production (x2), and gdp (x3) have a contribution (influence) of 73.3% to the dependent variable which is the volume of beef import from australia. meanwhile, the remaining 26,7% is influenced by other variables that is not observes in this study. f test the f test is a statistical test for additional contributions to the predictive accuracy of variables in research. an insignificant f value indicates a low or insignificant contribution to the research model. the results of the coefficient of determination in this study can be seen the value of sig. f (0.000) < (0.05), which means that the variables of consumption, production, and gdp can show a significant contribution. based on these data, it can be concluded that the research model with consumption, production, and gdp variables can be used to predict the variable volume of beef imports from australia. t test the t test is used to determine how far consumption, production, and gdp influence the volume of beef import from australia. the result of hypothesis is obtained as follows: factors affecting beef volume imported from australia table 3. multiple linear regression analysis 36 ambr a. the sign value of production is 0.000 which is less than 0.05 and t-count is -6.648. therefore, 𝐻𝑜$ is rejected and 𝐻𝑎$ is accepted. thus, it can be concluded that production has a negative and significant effect toward the volume of beef import from australia. b. the sign value of gross domestic product is 0.000 which is less than 0.05 and t-count is 9.957. therefore, 𝐻𝑜3 is rejected and 𝐻𝑎3 is accepted. thus, it can be concluded that gross domestic product has a positive and significant effect toward the volume of beef import from australia. the effect of consumption on beef import following the results of the test, consumption is determined to have insignificant on the volume of beef import from australia. having the sig value of 0.858 which is higher than 0.05, bring the conclusion of rejecting h_a1. this result is in contrary to the previous research and theory. chisilia & widanta (2019:210) stated that the volume of import is influenced by consumption because the increase in population is accompanied by increasing needs then the country will fulfill it by importing. the result also does not in line with hairani (2014:78) which said that imports are influenced by consumption from demand side. demand exists because humans need to consume the goods they demand. humans will take various actions to meet their needs with limited resources, one of which is imports. if beef consumption increase or decrease, indonesia will import beef. this can be caused by various factors. according to oktaviarosa (2019:6), this can be caused by households that prefer to consume fresh meat rather than frozen or chilled meat. this fresh meat comes from domestic production. another reason is people replace protein needs by using substitute goods, namely vegetable protein. vegetable protein comes from plants, such as soybeans and edamame. soybeans and edamame are much cheaper and healthier than beef. we also can see from the fact, another influencing factor is the unavailability of reliable beef consumption data. thus the consumption data cannot predict the amount of imports needed in the next period. nevertheless, the insignificant effect of consumption in this research supports previous research by oktaviarosa (2019:6) who found that consumption has no significant effect on the volume of beef imports. the insignificancy might be caused by household consumers who prefer to consuming fresh meat which comes from domestic production. here is the reason of the insignificant influence; first the consumption variable used in this study is consumption per capita which reflects direct household consumption. the volume of this consumption differs from the overall consumption regarding household consumption, the food industry, and restaurants where the figure will be more appropriate. household consumption usually consume beef which bought in the market and did not see that it is imported beef or domestically produced. while the overall consumption includes household consumption, the food industry, and restaurants, it is possible that the beef used is the result of domestic production or imported by the factory itself. second, people replace protein needs by using substitute goods, namely vegetable protein. vegetable protein comes from plants, such as soybeans and edamame. soybeans and edamame are much cheaper and healthier than beef. third, households that prefer to consume fresh meat rather than frozen or chilled meat. this fresh meat comes from domestic production. this might be an explanation to which insignificant effect of consumption on the volume of beef imports. the effect of production on beef import by looking at the t-test result, the significant value of production is 0.000 which is less than 0.05 and tcount is -6.648. the outcome indicates that h_o2 is rejected and h_a2 is accepted. thus, it can be concluded that partially, production has a negative and significant effect toward the volume of beef import from australia. independent variable is production. production is found to be negatively affecting the volume of beef import with coefficients of -0.724 which mean the higher the production will result a decrease the volume of beef import. it shows that every addition of one (ton kg) of production could decrease the volume of beef import from australia by 0.724 (ton kg). this result in line with krugman in surbakti & gulo (2017:6), which mentioned that production has a negative effect on the volume of import. production affects imports due to the limited quality of human resources and technology owned to process available natural resources in order to achieve optimal effectiveness and efficiency in domestic production activities, the existence of goods and services that cannot be produced domestically, and the number or quantity of goods in the country is not sufficient. domestic production is unable to meet all public demands. thus the indonesian government need to import or purchase goods and services from abroad. the outcome also in line with the theory of comparative advantage by david ricardo. he argues that a country will import if the country can not produce more efficiently. as we can see from the fact, australia is the largest beef importer in the world, this shows that australia has the ability to produce beef at a lower price than domestic production. australia also has good quality beef where australian cattle are free from foot and mouth disease. 37 the effect of gross domestic product on beef import following the result of the test, the variable of gdp has a significant value of 0.000 which is less than 0.05 and t-count is 9.957. the outcome indicates that h_o3 is rejected and h_a3 is accepted. thus, it can be concluded that gdp has a positive and significant effect toward the volume of beef import from australia. the results therefore would be an addition of supporting research to the few of existing studies examining performance effect of gdp. the outcome is in line with hairani (2014:78) which argues that gdp will have a positive effect on the volume of import. increasing gdp per capita of the importing country will increase the the country’s consumption, thus the demand for import will also increase. as the matter of fact, we can see that indonesia's increasing gdp is accompanied by the number of beef imports which tend to increase every year. further explain is related to wanuri (2018:138) which mentioned that income will influence import, the higher the income, the more a country will import. the increase in national income (gdp) will increase people’s purchasing power to import. income is economic access which is closely related to access to food consumed. with income, households have the ability to obtain sufficient food for energy and nutritional needs. in addition, income also affects a person's purchasing power. the higher the income, the purchasing power of a person also increases in choosing and buying a variety of foods. conclusion based on the analysis result, there were several conclusions obtained in the study entitled the influence of consumption, production and gross domestic product on the volume of beef imports from australia that can be described below: 1. from the results of this study, it was found that production has a positive and significant effect the volume of beef import from australia. gdp has a positive and significant effect on the volume of beef import from australia. while consumption has no significant effect on the volume of beef import from australia. 2. according to multiple linear regression result, the most dominant variable affecting beef imports from australia is production. suggestion this study only uses limited data, namely data on meat imports from australia between 2010-2019. further research needs to add more data and other importing countries such as new zealand, the us and so on. import performance antecedent variables only use three independent variables. further research needs to add variables that affect the performance of imports such as exchange rates, inflation rates and so on. 1. the government should pay more attention to production factors that need to be improved to be able to produce more. thus, domestic production increases, increased production can contribute to gdp that can be used to facilitate imports of other goods that really cannot be produced in indonesia. 2. the government should open a wider competition for beef imports from other countries (not only australia, new zealand and usa). thus, people can get cheaper beef. 3. reduce the demand for imported beef by increase the domestic production as a substitute for imported products by produce better quality and control the increase in domestic production costs. 4. it is hoped for the further research to explore other factors influenced that were not included and discussed in this study and observe the differences in meat import behavior of each asean country from australia factors affecting beef volume imported from australia 38 ambr references anggara, r. 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(2019). pengaruh produksi daging sapi dalam negeri, permintaan daging sapi dan harga daging sapi internasional terhadap volume impor daging sapi di indonesia (survei pada volume impor daging sapi 2006-2013). 67(1), 1–7. 90 carbon disclosure and firm performance: the role of the upper echelons ega annisa rizti*, cynthia afriani utama universitas indonesia, indonesia abstract the characteristics of the upper echelons reflect the propensity of firms to disclose their carbon. this study examines gender diversity and family ownership in indonesia as the instrumental variables in mediating the relationship between carbon disclosure and firm performance. the sample consists of 423 firm-year observations from 2008 to 2020. the findings validate gender diversity and family firm as instrumental variables. women within the board of commissionaires (boc) and the board of directors (bod) positively impact carbon disclosure, while family firms are found to disclose less. furthermore, the supervisory function of the boc has a positive effect on carbon disclosure in companies with low carbon disclosure scores, while companies with high scores are more prone to strategies adopted by the bod. this research contributes to prolong the discussion about which upper echelons’ characteristics influence carbon disclosure. keywords: carbon disclosure; family firms; firm performance; gender diversity; upper echelon theory *corresponding author. email address: ega.annisa01@ui.ac.id carbon disclosure and firm performance: the role of the upper echelons received july 12th 2022 review july 27th 2022 publish december 31st 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/576 mailto:ega.annisa01@ui.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/576 91 ambr introduction the demand for environmental commitment is regularly heard in indonesia. the 2018 world air quality report designates jakarta as the most polluted city in southeast asia (greenpeace indonesia, 2019a). in 2019, a civil lawsuit was filed against several government officials (greenpeace indonesia, 2019b). during the 2021 united nations climate change conference (cop26), indonesia reassured its commitment to mitigating climate change (reuters, 2021). under act 51 of 2017 of the financial services authority, financial service institutions, issuers, and public companies in indonesia were obligated to prepare sustainability reports. the report should describe the number of emissions produced (ojk, 2017a) as well as efforts and achievements in reducing them (ojk, 2017b). indonesia is now the world’s eighth-largest ghg (reuters, 2021). upper echelon theory demonstrates that a company’s action, as well as its success, is a reflection of its upper echelons’ characteristics (hambrick & mason, 1984). thus, it is impossible to underestimate the influence of upper echelons’ characteristics on firms’ carbon disclosure. among the characteristics are gender diversity and ownership concentration. studies which assess the impact of gender diversity on sustainability reporting in african and asian countries are still rare (cicchiello, fellegara, kazemikhasragh, & monferrà, 2021; tilt, qian, kuruppu, & dissanayake, 2021). previous studies are more concentrated in the united states and european countries, and less concentrated in the asia-pacific region (lin, liu, huang, & chen, 2018). less developed nations have different characteristics in terms of gender inequalities, hence they might provide more insights (cicchiello et al., 2021). aksoy, yilmaz, tatoglu, and basar (2020) classified four ownership structures that influence firms’ voluntary disclosures, among which are family ownership, foreign ownership, institutional ownership, and public ownership. businesses in indonesia are 95% family-owned (pwc, 2014), hence mimicking the family ownership structure of aksoy et al. (2020). corporate sustainability reporting will increase firms’ long-term performance (oncioui et al., 2020). however, gender diversity within the board (gordini & rancati, 2017; kılıç & kuzey, 2016) and family ownership structure (badrul muttakin, khan, & subramaniam, 2014; shyu, 2011) are also found to directly influence firm financial performance. madaleno and vieira (2020) used the generalized method of moments (gmm) and found that sustainability initiatives and firm performance have a mutual relationship. hence, this study aims to explore the relationship between carbon disclosure and firm performance when intermediated by gender diversity and family ownership. this study contributes by using the two-stage leastsquares (2sls) regression method. this study also conducted an ordinary least-squares (ols) regression method to measure the impact of gender diversity and family ownership on carbon disclosure. in the following sections, we will first elaborate on the literature relevant to our hypotheses development, describe our research design, and discuss the results and implications of our research. literature study how upper echelons impact firm carbon disclosure according to upper echelon theory, the outcomes of an organization or firm are subject to the characteristics of its upper echelons (hambrick & mason, 1984). this is mainly because the strategic choices taken by the upper echelons influence firms’ performance (hambrick & mason, 1984). many studies have attempted to link the characteristics of upper echelons and firms’ environmental strategies. for instance, elsayih, datt, and hamid (2021) provided empirical evidence on how ceo executive experience and ceo duality positively affect the carbon performance of australian firms. gender diversity is another characteristic that has been regularly examined. gender diversity is found to improve firms’ public disclosure, which enhances stock price informativeness (gul, srinidhi, & ng, 2011). gender diversity in the upper echelons also increases the probability of a firm obtaining iso 14001 certification (saeed, riaz, liedong, & rajwani, 2022), environmental transparency (post, rahman, & rubow, 2011; van hoang, przychodzen, przychodzen, & segbotangni, 2021), and corporate governance practices (ararat, claessens, & yurtoglu, 2021). meanwhile, family firms generally invest less interest in environmental matters, resulting in lower participation in pollution prevention, green supply chain management, and green product development (miroshnychenko & de massis, 2022). to measure the amount of carbon disclosure, we used a checklist developed by choi, lee, and psaros (2013), which is based on the carbon disclosure project (cdp) information request sheets. the checklist consists of five main categories, which are further classified into 18 components (choi et al., 2013). among the categories included are the implication of climate change toward the firm, carbon emission accounting, energy consumption accounting, targets or strategies for reducing emissions, and the existence of an internal supervision mechanism within the firm (choi et al., 2013). each criterion is equally-weighted and will be given a score of one if satisfied (choi et al., 2013). hence, the maximum score is 18 (choi et al., 2013). 92 firms’ carbon disclosure and firm performance sustainability reporting is an aspect of firms’ public relations, but it could also become a tool to assess firms’ strengths and weaknesses (oncioui et al., 2020; sukitsch, engert, & baumgartner, 2015). as a form of accountability, public firms might disclose their financial and non-financial information (oncioui et al., 2020). however, by disclosing more non-financial information such as carbon disclosure, firms will reach a wider audience and attract new sources of funding (chen, feldmann, & tang, 2015; oncioui et al., 2020), compared to only disclosing their financial information targeted for the current investors (oncioui et al., 2020). investors’ attention toward sustainability reporting is increasing (oncioui et al., 2020). this is because sustainability reporting is perceived as a tool to lower information asymmetry and ensure the quality and transparency of disclosure (oncioui et al., 2020). there is potential to gain superior financial performance by disclosing more. according to the voluntary disclosure theory, there should be a positive relationship between carbon disclosure and performance (oncioui et al., 2020; siddique, akhtaruzzaman, rashid, & hammami, 2021). when firms are more transparent about their carbon-related activities, they will generate lower financial performance in the short term, but this will gradually increase in the long term (siddique et al., 2021). therefore, lower-performing firms may want to increase their environmental, social, and governance (esg) disclosures to yield better performance (mohammad & wasiuzzaman, 2021). previous studies that assess the mutual relationship between carbon disclosure and firm performance are still rare. madaleno and vieira (2020) posit a mutual relationship between sustainability initiatives and firm performance. the propensity of firms to engage in sustainable activities depend on their financial abilities (madaleno & vieira, 2020). firms that are inferior in carbon performance disclose more to satisfy their key stakeholders and maintain their legitimacy (siddique et al., 2021). however, the potential gains from carbon disclosure also depend on the quality of the disclosure itself (abdullah, hamzah, ali, tseng, & brander, 2020). a previous study found that indonesian public firms that disclose their environmental activities didn’t generate a significantly positive impact on their performance because they possess lower accountability and transparency than their malaysian counterparts (abdullah et al., 2020). hence, better accountability and transparency disclosure demonstrated by the malaysian firms contribute to higher performance (abdullah et al., 2020). higher-quality carbon disclosure is found to increase long-term financial performance (siddique et al., 2021). superior esg disclosures also lead to a higher competitive advantage (mohammad & wasiuzzaman, 2021). hence, to generate higher financial performance, firms must first ensure both the quantity and quality of the environmental disclosures (abdullah et al., 2020). firms must also acquire sufficient funds to enhance their sustainability initiatives (madaleno & vieira, 2020). to ensure that both characteristics are found in our data, we follow choi et al. (2013). we arrive at our first research hypothesis, as follows: h1: carbon disclosure has a significantly positive relationship with firm performance. gender diversity within the upper echelons and firm carbon disclosure gender inequality within african and asian countries caused a disparity in the participation of women on the board (cicchiello et al., 2021). this is unfortunate since gender diversity is one of the characteristics that influence a company’s decision-making process, including those related to environmental management (van hoang et al., 2021). gender diversity within the board will also increase the firms’ initiatives to reduce the number of emissions (cicchiello et al., 2021; haque, 2017). women are said to possess different characteristics compared to men when placed in the upper echelon positions. female directors tend to be more sensitive toward the common interest and hold higher moral standards and ethics compared to male directors (cicchiello et al., 2021; yasser, al mamun, & ahmed, 2017). female ceos are also said to take fewer risks compared to male ceos (daily & dalton, 2003; malik, wang, naseem, ikram, & ali, 2020). hence, female ceos are more sensitive to stakeholder demands to increase environmental disclosure (daily & dalton, 2003; malik et al., 2020). environmental disclosure increases if there are at least three women on the board (post et al., 2011; van hoang et al., 2021), while male-dominated firms disclose less about their environmental stance (pucheta-martínez & gallego-álvarez, 2019; van hoang et al., 2021). when women are more involved within the board of directors (bod), there is less manipulation found in the firms’ environmental disclosure (prado-lorenzo & garcia-sanchez, 2010; van hoang et al., 2021). women also increase the quality of firms’ csr disclosure, which will in turn increase the firms’ economic prospects (nekhili, nagati, chtioui, & nekhili, 2017; van hoang et al., 2021). in this study, we focus on gender diversity within the bod, the board of commissionaires (boc), and the corporate secretary. based on previous studies, the amount of gender diversity in these positions should increase the amount of carbon disclosure. hence, we argue for the second hypothesis as follows: h2: gender diversity within the upper echelons has a significantly positive relationship with carbon disclosure carbon disclosure and firm performance: the role of the upper echelons 93 ambr family ownership and firm carbon disclosure 95% of indonesian businesses are family-owned (pwc, 2014). this is similar to most emerging markets, in which firms are mostly family-owned (aksoy et al., 2020). the impact of family ownership on corporate sustainability remains debatable. aksoy et al. (2020) find that family ownership has no significant impact on corporate sustainability performance. a study conducted in 45 countries also found that family firms participate less in pollution prevention, green supply chain management, and green product development (miroshnychenko & de massis, 2022). in general, the propensity of family firms to disclose more of their esg activities depends on the opinions of the shareholders. when both shareholders and society have voiced similar interests in investing in the environment, family firms tend to do more or less the same as non-family firms (abeysekera & fernando, 2020). however, family firms tend to lower their environmental investments when they will not be profitable for the shareholders (abeysekera & fernando, 2020). the degree of their involvement also depends on the family members’ positions within the firm. as owners, family firms are less likely to comply with the standards of sustainability reporting or corporate sustainability activities since they are not profitable in the short term (aksoy et al., 2020). when family members own shares of the company but are not involved in day-to-day activities as managers, family firms are more likely to possess higher socioemotional considerations (ernst, gerken, hack, & hülsbeck, 2022). when family members act as managers, however, they are more likely to be risk-averse in increasing corporate sustainability (ernst et al., 2022). this is because sustainability initiatives are believed to be more prone to risk and yield uncertain returns (ernst et al., 2022). as carbon disclosure is likely to be lower for family firms, the third research hypothesis is as follows: h3: family ownership has a significantly negative relationship with carbon disclosure. research methodology methodology the analysis conducted in this study is divided into two parts. in the first part, hereby referred to as model 1, we examined the impact of the instrumental variables gender diversity and family ownership in mediating the relationship between carbon disclosure and firm performance. this study implemented the 2sls regression method in model 1 to measure the relationship between the predicted values of carbon disclosure (firm performance) toward firm performance (carbon disclosure). the findings of model 1 will be applied to answer hypothesis 1. furthermore, in model 2, we examined the instrumental variables’ degrees of impact. to do this, we implemented the ordinary least-squares (ols) regression method. the objective of model 2 is to determine our stance on hypothesis 2 and hypothesis 3. data collection method most of our data were collected by using thomson reuters eikon. the firms included in the sample are listed on the indonesia stock exchange (idx). the first step is collecting carbon disclosure information for each firm. even though mandatory carbon disclosure in indonesia started in 2017, some of the data were available for collection from 2008 until 2020. hence, we set the years from 2008 to 2020 as our research period. the second step was to collect data on gender diversity, family ownership, and financial statements. the shape of the data was unbalanced because we omitted all the missing data. during the data collection period, we were able to gather 432 firm-year observations. research variables for model 1, we use the natural logarithm of the carbon disclosure score based on choi et al. (2013), hereafter referred to as disclosure. it becomes a proxy for the carbon disclosure score. among the many proxies for firm performance, we use one of the most common proxies, return on assets (roa). in this study, we define roa as net profit divided by total assets based on hongming et al. (2020). among the instrumental variables are fceo, fdir, fcom, and fcorsec which are proxies for gender diversity within the upper echelons’ positions. for fceo and fcorsec, we use dummy variables to denote the existence of a female ceo (gul et al., 2011) and female corporate secretaries within the companies. to determine fdir and fcom, we used the percentages of women within the bod (gul et al., 2011) and boc. 94 the independent variable family is a dummy variable for family firms, for which we followed santoso (2017) in classifying family-owned firms in indonesia. the remaining variables are control variables. ghg refers to the total of scope 1 (direct) and scope 2 (indirect) ghg emissions (konadu, ahinful, boakye, & elbardan, 2022); size, measured as the natural logarithm of total assets (elsayih et al., 2021; konadu et al., 2022; malik et al., 2020); leverage, or the natural logarithm of total debt divided by total assets (elsayih et al., 2021); and the dummy variable d_2020 to signify the year 2020 or the covid-19 pandemic. the last control variable would be useful for assessing whether the results differed before and after the pandemic. table 1 below summarizes our discussion. variables description disclosure the dependent variable for model 1 – the natural logarithm of the carbon disclosure score (siddique et al., 2021). roa the dependent variable for model 2 – net profit divided by the total asset (hongming et al., 2020). fceo independent variable – dummy variable, “1” if the ceo is female and “0” if the ceo is male (gul et al., 2011; kubo & nguyen, 2021). dir independent variable – the natural logarithm of the number of executive directors within the company (gul et al., 2011). fdir independent variable – the percentage of females within the executive directors position (gul et al., 2011; konadu et al., 2022; kubo & nguyen, 2021). com independent variable – the natural logarithm of the number of commissionaires within the company. fcom independent variable – the percentage of females within the commissionaires position. fcorsec independent variable – dummy variable, “1” if the corporate secretary is female and “0” if the corporate secretary is male. family independent variable – dummy variable, “1” if the company is considered a family firm and “0” if it isn’t (santoso, 2017). ghg independent variable – the natural logarithm of total emission produced, measured as the total of scope 1 and scope 2 emissions (konadu et al., 2022). size control variable – the natural logarithm of the total asset (elsayih et al., 2021; konadu et al., 2022; malik et al., 2020). leverage control variable – the logarithm of the total debt divided by the total asset (elsayih et al., 2021). d_2020 control variable – dummy variable, “1” to denote the year 2020 and “0” for the rest of the period. result and discussion summary statistics variables (n = 423) mean median standard deviation minimum value maximum value disclosure 1.841 1.792 0.207 1.609 2.398 roa 0.093 0.061 0.121 -0.567 1.190 ghg 12.339 11.866 2.363 6.326 20.996 fceo 0.021 0.000 0.144 0.000 1.000 dir 8.965 8.000 4.241 2.000 38.000 fdir 0.145 0.125 0.151 0.000 0.667 fcorsec 0.322 0.000 0.468 0.000 1.000 com 7.307 7.000 3.006 1.000 19.000 fcom 0.072 0.000 0.102 0.000 0.500 family 0.303 0.000 0.460 0.000 1.000 size 15.219 15.010 1.304 12.392 18.491 leverage -2.007 -1.554 1.529 -10.465 0.370 d_2020 0.118 0.000 0.323 0.000 1.000 source: the authors’ calculations. carbon disclosure and firm performance: the role of the upper echelons table 1. research variables table 2. descriptive statistics 95 ambr table 3. pearson’s correlation matrix table 4. carbon disclosure scores distribution table 2 provides the descriptive statistics of our data. in our study, only nine female ceos were recorded. to put it into perspective, there is only 2.1% of firms led by female ceos, while the other 97.9% are lead by male ceos. there are approximately 14.5% female bod and 7.2% female boc members. the percentage is higher for female corporate secretaries, with an average of 32.2% for each firm. in addition, out of the 423 firm-year observations, there were a total of 128 samples regarded as family firms. in other words, we have approximately 30.3% of family firms in our data. table 3 denotes pearson’s correlation matrix. as there are no correlation coefficients greater than 0.80, there is no multicollinearity problem in our data (konadu et al., 2022). since there is no correlation coefficient higher than 0.5, we can also say that there is no high degree of association between the variables included (priyastama, 2020).the distribution of the carbon disclosure scores among the samples is shown in table 4. no firm received the maximum score of 18. only 1.7% of the total sample received the highest score of 11. meanwhile, 33.1% of the samples received the lowest score of five. the average carbon disclosure score among the sample was approximately 6.4. variable (1) disclosure (2) (3) (4) (5) (6) (7) (8) (2) roa 0.129 (3) ghg 0.389 0.128 (4) fceo 0.043 -0.069 -0.150 (5) dir -0.057 -0.249 -0.115 0.055 (6) fdir -0.140 0.044 -0.249 0.220 -0.023 (7) fcorsec -0.024 -0.047 -0.020 0.179 0.104 0.490 (8) com 0.178 -0.262 0.103 0.094 0.417 -0.188 0.071 (9) fcom -0.024 -0.034 -0.116 0.061 -0.074 0.186 0.089 -0.076 (10) family -0.312 -0.007 -0.082 -0.097 -0.097 0.386 0.042 -0.311 (11) size -0.029 -0.436 -0.057 0.003 0.499 -0.157 0.019 0.443 (12) leverage 0.155 -0.164 -0.064 0.103 -0.003 -0.001 0.000 0.038 (13) d_2020 0.134 -0.159 -0.087 0.048 0.109 0.050 0.046 -0.020 variable (9) (10) (11) (12) (10) 0.294 (11) -0.021 -0.304 (12) 0.022 0.172 -0.120 (13) 0.061 0.062 -0.021 0.014 source: the authors’ calculations. note: the numbers included in the table above denotes the pearson’s correlation. score frequency percentage 5 140 33.1 6 98 23.2 7 99 23.4 8 45 10.6 9 31 7.3 10 3 0.7 11 7 1.7 total 423 100 source: the authors’ calculations. empirical findings variable roa disclosure coefficient p-value standard error coefficient p-value standard error constant 0.274* 0.036 0.152 -0.415 0.2665 0.666 disclosure 0.245*** 0.003 0.088 roa 2.989*** 0.001 0.969 96 dir 0.002* 0.098 0.002 -0.007* 0.068 0.005 com -0.007*** 0.002 0.002 0.026*** 0.000 0.007 ghg -0.003 0.187 0.004 0.018** 0.017 0.008 size -0.037*** 0.000 0.005 0.109*** 0.005 0.042 leverage -0.011*** 0.002 0.004 0.028* 0.074 0.019 d_2020 -0.089*** 0.000 0.019 0.298*** 0.000 0.078 r-square 0.315 0.295 adjusted rsquare 0.297 0.276 f-statistics 9.768*** 0.000 2.296* 0.045 n 423 423 tests of endogeneity (h0: variables are exogenous) durbin (score) 5.004** 0.025 29.655*** 0.000 chi2 (1) wu-hausman f(1.414) 4.957** 0.027 31.213*** 0.000 tests of overidentifying restrictions sargan (score) 2.831 0.586 3.467 0.483 chi2 (4) bassman chi2 (4) 2.769 0.597 3.396 0.494 source: the authors’ calculations. notes: *** p < 0.01. ** p < 0.05. * p < 0.1. table 5 presents the regression results for model 1. we run endogeneity tests for disclosure and roa using the durbin and wu-hausman tests. while the null hypothesis states that the variables are exogenous, all of the coefficients are statistically significant. hence it will be better for us to use 2sls since the results can justify the possibility of both variables being mutually related. we also run tests for overidentifying restrictions by implementing the sargan (1958) and basmann (1960) tests. the null hypothesis suspects an overidentification within the model. our findings confirm that the instruments used in this study are valid because there is no significant sargan score and bassman chi2. hence, the findings of model 1 as included in table 5 are valid. the findings demonstrate that the predicted values of disclosure, when mediated by fceo, fdir, fcom, and fcorsec, generate a positive relationship with roa with a coefficient of 0.245 (p-value < 1%). on the other hand, the predicted values of roa, influenced by fceo, fdir, fcom, and fcorsec, also contribute to a significantly positive relationship with disclosure with a coefficient of 2.989 (p-value < 1%). the findings signify a mutual relationship between firms’ carbon disclosure and firms’ financial performance. our findings indicate the direction to be positive. in other words, firms with higher transparency and higher quality carbon disclosure are more likely to achieve higher financial performance. our findings suggest that they generate a 24.5% higher financial performance. additionally, superior firms are more likely to disclose their carbon-related activities. gender diversity within the upper echelon positions and family ownership structure mediate this relationship. hence, we have enough evidence to substantiate hypothesis 1. variable coefficient p-value standard error constant 1.607*** 0.000 0.141 roa 0.134* 0.054 0.083 fceo 0.073 0.123 0.063 dir -0.002 0.184 0.002 fdir 0.107* 0.082 0.076 fcorsec -0.031* 0.078 0.022 com 0.011*** 0.001 0.003 carbon disclosure and firm performance: the role of the upper echelons table 5. model 1 2sls regression results table 6. model 2 ols regression results 97 ambr table 7. robustness test fcom 0.203** 0.011 0.089 family -0.143*** 0.000 0.023 ghg 0.033*** 0.000 0.004 size -0.017** 0.028 0.009 leverage -0.013** 0.016 0.006 d_2020 0.126*** 0.000 0.027 r-square 0.319 adjusted r2 0.299 f-statistic 16.014*** 0.000 standard error 0.174 n 423 source: the authors’ calculations. notes: *** p < 0.01. ** p < 0.05. * p < 0.1. meanwhile, ols regression is used to test for the relationship between the instrumental variables toward disclosure. table 6 summarizes the findings of model 2. our model generated significant results for fdir, fcom, fcorsec, and fcom. both fdir and fcom have a significantly positive relationship with disclosure. these findings suggest that for every additional woman within the bod and boc positions, the propensity of firms to disclose their carbon emissions increases by 0.107 (p-value < 10%) and 0.203 (p-value < 5%) units, respectively. meanwhile, fcorsec is found to have a negative relationship with carbon disclosure with a coefficient of -0.031 (p-value < 10%). female ceos in indonesian public companies, denoted by fceo, do not significantly impact carbon disclosure. this might be because there are only a small number of female ceos in the sample. therefore, our findings suggest that the participation of women in increasing firms’ carbon disclosure is only visible if there is an increase in the proportion of women in the bod and the boc. that said, we have enough evidence to partially support the second hypothesis. in hypothesis 3, we predicted that family ownership has a negative relationship with carbon disclosure. in model 2, the dummy variable family is found to have a significantly negative relationship with carbon disclosure, with a coefficient of -0.143 (p-value < 1%). hence, in general, family firms in indonesia disclose 14.3% less carbon disclosure than other firms. this result substantiates our third hypothesis robustness test our findings add to the discussion of the impact of gender diversity and family f irms on carbon disclosure. in particular, we find that fdir and fcom are significantly positive, whereas fcorsec is the opposite. to ensure the robustness of our findings, we conducted a robustness test by replicating van hoang et al. (2021), who divided the samples based on the environmental disclosure score (eds). in table 4, our carbon disclosure scores are distributed between the scores 5 -11. hence, the first category includes samples that received carbon disclosure scores between 5 -7, which accounts for 79.7% of the total samples. those with carbon disclosure scores of 8-11 are gathered in the second category. the results of the robustness test are shown in table 7. variable category 1: scores 5-7 category 2: scores 8-11 coefficient p-value standard error coefficient p-value standard error constant 1.454*** 0.000 0,112 2,792*** 0,000 0,213 roa 0.038 0.296 0,070 -0,394*** 0,001 0,118 fceo 0.038 0.230 0,051 0,013 0,416 0,060 dir -0.004** 0.015 0,002 0,006** 0,042 0,004 fdir 0.095* 0.059 0,061 0,311*** 0,000 0,083 fcorsec -0.026* 0.068 0,017 0,029 0,136 0,026 com 0.005** 0.027 0,003 -0,003 0,263 0,004 fcom 0.108* 0.065 0,071 -0,361*** 0,001 0,110 family -0.104*** 0.000 0,019 -0,076*** 0,005 0,029 ghg 0.022** 0.000 0,003 -0,001 0,424 0,005 size 0.004 0.296 0,007 -0,042*** 0,001 0,012 leverage 0.003 0.319 0,005 -0,005 0,150 0,005 98 d_2020 0.083*** 0.000 0,022 0,040* 0,065 0,026 r-square 0.269 0.482 adjusted r2 0.242 0.397 standard error 0.123 0.075 f-statistic 9.929*** 0.000 5,655*** 0,000 n 337 86 source: the authors’ calculations. notes: *** p < 0.01. ** p < 0.05. * p < 0.1. for the first category, the results of our robustness check were consistent with those of model 2. every additional female bod and boc member will increase the propensity of firms with lower carbon disclosure scores to disclose their carbon. female ceos do not significantly affect firms’ carbon disclosure score, while female corporate secretary negatively affects firms’ carbon disclosure. hence, the findings of the first category are more or less the same as the findings of model 2. hypothesis 2 is also partially supported for firms with lower carbon disclosure scores. family ownership structure has a negative relationship with carbon disclosure for firms in the first category. this result is in line with the ols regression in model 2, hence hypothesis 3 is validated. we test the same for the firms within the second category. the findings for fceo and fdir are in line with model 2. however, for the second category, we find that fcom affects disclosure negatively. furthermore, every additional member in the bod (boc) increases (decreases) firms’ carbon disclosure. these conditions are the opposite of what we found in the first category, in which firms’ carbon disclosure increases (decreases) as a response to an additional member within the boc (bod). these could further suggest that firms with lower carbon disclosure scores require higher supervision by the boc to increase the transparency and quality of their carbon disclosure. however, when firms have reached certain scores, the corporate strategies taken by the bod are more significant in increasing carbon disclosure. family ownership structure also has a significantly negative relationship with firms’ carbon disclosure. this result is consistent with model 2; hence we can move to substantiate hypothesis 3. discussion this section discusses the implications of the findings. this study examines how gender diversity and family ownership mediate the relationship between firms’ carbon disclosure and firm performance. model 1 indicates a reciprocal relationship between firms’ carbon disclosure and firm performance. the direction of the relationship is found to be positive. this corroborates the findings of madaleno and vieira (2020), who found a mutual relationship between firms’ sustainability initiatives and firms’ financial performance. hence, hypothesis 1 is substantiated. the findings raise questions about the magnitude of influence of the two instrumental variables. in hypothesis 2, we expect gender diversity within any upper echelon position will increase firms’ carbon disclosure. our findings in model 2 demonstrate that while increasing the proportion of women within the bod and boc positions increases firm carbon disclosure, we could not state the same for other positions. nonetheless, our findings are in line with liao, luo, and tang (2015) and van hoang et al. (2021), who stated that the proportion of female directors on the board increases firms’ ghg disclosure. based on our results, it turns out that the female corporate secretary has a significantly negative impact on firms’ carbon disclosure; hence, we cannot fully support hypothesis 2. at best, we can distinguish which upper echelon positions benefit from inducing gender diversity. furthermore, our results also demonstrate that firms generally exhibit higher carbon disclosure when exposed to higher supervision by the boc. this effect was found to be greater when there were a significant number of women in the boc position. hence, our results not only imply that upper echelon positions would benefit from inducing gender diversity but also indicate that superior oversight is needed to escalate carbon disclosure. however, our findings demonstrate that when firms have reached a certain degree of carbon disclosure, high supervision by the boc will lower the propensity of firms to disclose their carbon. firms with higher carbon disclosure scores rely more on the corporate strategies taken by the bod. there appears to be an ongoing debate on whether family firms differ in disclosing their esg activities. regarding their stance on carbon disclosure, we hypothesize that they would generally disclose less. our findings carbon disclosure and firm performance: the role of the upper echelons 99 ambr table 8. summary findings confirm this proposition, validating the findings of miroshnychenko and de massis (2022). abeysekera and fernando (2020) propose that this may be a result of diverging interests between shareholders and society. according to ernst et al. (2022), family members who are involved in managerial positions are also more riskaverse toward corporate sustainability initiatives. however, as our results suggest, not only do firms achieve higher performance when they disclose more carbon-related activities, but superior firms also impose higher transparency regarding carbon disclosure. therefore, family firms will also reap more benefits by disclosing more. conclusions this study aims to analyze the relationship between the characteristics of the upper echelons and firms’ carbon disclosure and whether firms will reap higher financial performance by becoming more transparent in their carbon-related activities. hypothesis variables predicted findings decision hypothesis 1 carbon disclosure and firm performance. (+) (+) hypothesis 1 is substantiated. hypothesis 2 gender diversity and carbon disclosure. (-) (-) hypothesis 2 is partially substantiated. hypothesis 3 family firms and carbon disclosure. (+) (+) hypothesis 3 is substantiated. source: the authors table 8 summarizes our findings. this study shows that gender diversity and family ownership are the instrumental variables that cause a mutual relationship between firms’ carbon disclosure and firms’ financial performance. these suggest that firms with higher carbon disclosure scores generally have better financial performance. furthermore, superior firms tend to have higher carbon disclosures. hypothesis 1 is substantiated. for the second hypothesis, we find that gender diversity within the bod and boc positively affects the amount of carbon disclosure. while our model finds no significant relationship between female ceos and firms’ carbon disclosure, we suspect that this might be because there is only a small number of female ceos during our research period. it should also be noted that owing to the lack of time and manpower in conducting this research, we used secondary data to collect our samples. thus, future studies may attempt to delve into each firm’s annual reports to obtain more precise data. nonetheless, we have enough evidence to partially support hypothesis 2. for the third hypothesis, the results demonstrate that family firms in indonesia generally disclose less about carbon-related activities, resulting in lower carbon disclosure scores. thus, hypothesis 3 is substantiated. our study implies that there is a mutual relationship between firms’ carbon disclosure and financial performance. to achieve higher financial performance, firms should improve their environmental transparency, specifically carbon disclosure. to increase carbon disclosure, firms should involve more women, specifically within the bod and the boc. higher supervision by the bod is required to ensure the quality of carbon disclosure until firms reach a certain degree of carbon disclosure scores. firms with higher carbon disclosure scores should focus more on implementing low-carbon strategies to further increase their carbon disclosure scores. finally, family firms are encouraged to improve their carbon disclosure, as doing so will yield greater benefits for shareholders. few mechanisms have been developed specifically for measuring carbon disclosure. thus, future research should develop and implement other methodologies to extend the discussion in this area of research. references abdullah, m., hamzah, n., ali, m. h., tseng, m.-l., & brander, m. 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(2017). corporate social responsibility and gender diversity: insights from asia pacific. corporate social responsibility and environmental management, 24(3), 210-221. doi:https://doi.org/10.1002/csr.1400 carbon disclosure and firm performance: the role of the upper echelons https://doi.org/10.1016/j.indic.2021.100123 https://doi.org/10.1002/csr.1400 12 digital readiness of smes: an insight from indonesia kurnia khafidhatur rafiah *, sunu widianto, irsyad kamal, amaliya shofiana, a. malik fajar, agung anggara rudini department management and business, faculty of economic and business, universitas padjajaran, indonesia abstract in the era of industrial revolution 4.0, digital technology is constantly improving in many areas of industry, particularly in business. it forces every business, whether large corporations or small businesses, to make various adjustments in order to keep up with the advancement of digital technology. they should be aware of how far their improvement and readiness have advanced in the digital era. this paper measures the digital readiness of smes and categorizes them into the level of digital readiness. the research examined the level of digital readiness among businesses, particularly small and medium-sized enterprises (smes) in west java. a survey of 113 smes in west java was conducted to assess their digital readiness. this research used a descriptive survey research approach. the research method itself is carried out by using a cross sectional survey method. five variables used in this research include people, process, strategy, technology, and integration. findings indicated that smes in indonesia show a low level of readiness in relation to industry 4.0. the majority of the respondents are aware about the phenomenon of digitalization, but they are currently not ready to adapt or use various innovations in their businesses. people, process, strategy, technology, and integration are the five variables analyzed, and the variable showing the best readiness to face digitization is people. smes business owners are still taking initial steps to identify the most appropriate strategy to approach industrial revolution 4.0. smes must take advantage of existing opportunities, especially with the availability of various information and data to develop business and make decisions. in general, the majority of businesses in indonesia are small and medium-sized enterprises (smes) that are aware of the development of digitalization but are hesitant to implement it and require extensive assistance from various parties to understand and implement digitalization in their business. keywords: digital readiness index, smes, industry 4.0, digitalization *corresponding author. email address: kurnia.khafidhatur@unpad.ac.id digital readiness of smes: an insight from indonesia received january 27th 2022 review february 22nd 2022 publish june 30th 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/517 mailto:kurnia.khafidhatur@unpad.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/517 13 ambr introduction the fourth industrial revolution (industrial revolution 4.0) brought fundamental changes to many aspects in global life, characterized by the increasing development of creativity and innovation through the use of information technology, disrupting various aspects of global life, including competition in the economic field. rapid changes triggered by the use of human-machine interfaces, artificial intelligence (ai), the internet of things (iot), and the proliferation of the shared economy phenomenon characterize this revolution, making creativity and innovation crucial factors in winning global economic competition. this rapid change is a challenge for business people, both in large corporations and smes. the transition to industry 4.0 requires an appropriate strategy and organizational model, as it necessitates significant changes around the entire organization in terms of physical infrastructure, manufacturing processes and technology, as well as human resources and process management [26]. indonesia is one of the countries that relies on the industrial sector as one of the largest contributors to its economy [41]. however, according to measurements carried out by cisco, namely digital maturity index 2019, indonesia is not included in the world's community of developed industrial countries. this is caused by various issues that arise in the growth of the national industrial sector. one of them is the lack of readiness among entrepreneurs in the development of the industrial sector. these measurements show that nine of the 14 countries in asia pacific are at the digital observer level, while the other five, including indonesia, are only at the digital indifferent level. the digital indifferent level shows that the company is reactive to market changes, but there is no digital effort, no automation (the majority of manual processes), no use of digital technology, and no use of cloud services. in fact, technology adoption is one of the implementations of industrial revolution 4.0, and according to research conducted by mckinsey, technology adoption also has a large potential to increase industrial growth [15]. various limitations of the development and implementation of digital technology have triggered indonesia’s government to seriously prepare in adapting and implementing digital technology in various aspects for any industrial sectors. it is shown by the efforts made by the indonesian ministry of industry through the launch of making indonesia 4.0. making indonesia 4.0. is an integrated roadmap and strategy as an effort to accelerate the implementation of industry 4.0. in order to increase the competitiveness of the national industry through the use of the latest technology and innovation. one of the strategic steps in making indonesia 4.0 is the empowerment of smes to optimize the use of digital technology to optimize productivity which can be able to penetrate the global market [42]. smes must be able to use technological advancements in the era of the industrial revolution 4.0 as an opportunity to optimize the operating system within the company by integrating various processes, resulting in more effective and efficient processes [14]. since smes are one of the aspects that drive growth and development of the economy in a country [14] including indonesia, the development of smes is a concern for various parties, including the government, companies, related business owners, experts and so forth. in addition to optimizing the implementation of industrial revolution 4.0, smes' participation in making indonesia 4.0 also aims to strengthen the national economy and increase annual economic growth. smes have an influence on indonesia's economic sectors, which account for 99% of the total number of enterprises, can absorb 97% of the labor force, and contribute 57% of indonesia's annual gdp [42]. the number of smes increased by 7.3% in 2015 compared to 2012, which undoubtedly supports the influence of smes [11]. the rapid growth of smes and the strategic role of smes in indonesia do not necessarily enable smes to optimize in all aspects in order to continue to grow. most smes run their business in the traditional way, including in production and marketing, even though the use of various technologies allows smes to develop businesses globally [53] and can continue to grow so that they are able to continue increasing their business scale. one of the most important aspects in the development of smes is the readiness of smes to face various challenges, especially those related to digital transformation, where smes are required to quickly adapt to digital developments in today's business world. westermann, bonnet, & mcafee prove the success of companies that have good digital readiness in creating much higher revenue and profitability than companies with lower levels of digital readiness [49]. digital readiness itself has various meanings in various literatures. digital readiness can be interpreted as the readiness of individuals, institutions, industries or even countries in adopting and utilizing digital technology to obtain maximum benefits from the technology. as quaicoe and pata define digital readiness, namely the readiness of teachers' skills, knowledge, and confidence to adopt digital learning in the primary school education system in ghana [50]. punchihewa uses the term digital readiness in a study of institutional readiness in sri lanka to implement e-government [51]. hamzah and mustafa (2014) used digital readiness in a study on the digital readiness of journalists in malaysia. meanwhile, the queensland department of trade and industry uses digital readiness to refer to the state's industry readiness to describe the opportunities of the digital economy. in addition, there are also differences in terminology in addressing digital readiness. some scholars discuss and associate digital readiness with e-readiness, e-business readiness, e-government readiness, digital readiness, mobile readiness, network readiness and generally as technology readiness. the differences in terminology create many challenges in the development of digital readiness constructs which in the end cause no general definition of digital readiness that may be universally accepted. the inconsistent use of digital readiness 14 concepts and models cause research findings to be in-comparable and cannot be used to form the same perspective or knowledge about digital readiness. [12]. for example, hanafizadeh, hanafizadeh, khodabakhshi [27] propose e-readiness assessment model which consist of 6 dimensions (e.g., e-business, e-government, e-education, infrastructure and access, access to use of ict, and basic enabling indicator). yet, our study particularly prioritizes digital readiness of smes which have been developed by pirola et al., [36]. pirola et al [36] see the digital readiness of smes based on five criteria e.g., people, strategy, technology, integration and process which focus on micro level (internal aspect). thus, we focus on pirola’s model due to the fact that we would like to focus on how smes transform to industry 4.0 internally rather than readiness at macro/general level. this study used the definition of digital readiness as a metric that can be used to assess the readiness of entrepreneurs towards digital transformation. digital readiness measures how well the technology is managed within an organization or company, as well as how well the organization or business can adjust to change and take advantage of new opportunities in the digital business era. digital readiness is defined as the tendency and willingness to switch and adopt digital technology and the readiness to create new innovative opportunities by using this technology to bring individuals, organizations, industries and countries to achieve their goals faster with great results. due to the exploratory intent of this research, we do this research with qualitative method that aims to answer the research question: rq: what is the current level of digital readiness in smes? how can this impact the digital transformation? this research replicates the research which has been done by pirola,et.al., about the digital readiness of italian smes. the previous research used the empirical method of multiple case studies. the research was conducted through a literature review of the industry 4.0 maturity and readiness evaluation model, and then the research model was developed and validated through two pilot case studies, and tested to measure digital readiness in a sample of 20 smes in italy [36]. meanwhile, this research uses descriptive and quantitative methods to measure the level of digital readiness of smes in indonesia, especially west java. thus, we contribute to generalizing pirola’s model in different settings e.g., south east asia country. west java is one of the provinces with the percentage of smes reaching 98.84 percent of the total number of non-agricultural businesses in west java (jabar.bps.go.id., 2020). in addition, the west java government is also very massive in supporting the digitization of smes in west java. this research aims to allow smes to evaluate their digital readiness level by answering the questions in the questionnaire, and then calculated using a formula that has been formulated in previous research so that the results of the digital readiness level of the smes concerned are obtained. these results can be used as a reference to determine the best strategy for the business concerned in competing in the era of the industrial revolution 4.0. the five variables used in the current study consist of people, process, strategy, technology and integration. this paper consists of four parts, the first part is introduction. after the introduction, there is a literature study section that explains about smes in indonesia, the industrial revolution 4.0 in smes, and digital readiness. next, the third section discusses the findings and results. at the end there are conclusions and suggestions for further research. literature study smes in indonesia the industry 4.0 era expanded the competitive market in every industry, making technological advancement critical and occurring at a rapid pace. smes are required to demonstrate technological sophistication in competitive markets [18]. industry 4.0 ap-plies to the most recent technological developments, with the internet as the supporting infrastructure, and it requires guidance and assistance to align business strategies and operations [1]. industry 4.0 focuses on human integration resulting in continuous improvement [47]. industry 4.0 is a term that was first coined in germany in 2011, characterized by the digital revolution. this is a digitally connected industrial process that involves various types of technology, such as 3d printing and robotics that are thought to improve productivity. industry 4.0 focuses on the end-to-end digitization of all physical assets in order to optimize the use of technology for integration into the eco-system [31]. this entails an effective and efficient use of technology to create products and services [13; 43]. the synergy of various technologies in creating products and ser-vices has been seen through various emerging technologies such as augmented reality, artificial intelligence (ai), autonomous robotics, big data analytics, cloud systems and iot which have the potential for integration in value chains for various industries [48; 29]. according to a mckinsey survey in 2017 towards 300 leading company leaders in southeast asia, as many as 9 out of 10 respondents believe in the effectiveness of industry 4.0. and almost no one has any concern about it. when asked whether they were prepared for the transition, only 48 percent said they were. in fact, the private sector would benefit from this move toward industry 4.0. the supply chains of large integrated manufacturers would be able to be optimized and simplified. meanwhile, a digitally-controlled manufacturing system would create new market opportunities for smes that include sensors, robotics, 3d printing, or inter digital readiness of smes: an insight from indonesia 15 ambr machine communication technology. industry 4.0 can be a way to regain infrastructure competitiveness for developing countries. industry 4.0 can also assist in the simplification of the manufacturing supply chain, which is crucial in light of rising labor costs [42]. the global development of industry 4.0 has an impact on indonesia, leading the ministry of industry to launch the "making indonesia 4.0" strategy as a road map for indonesia's strategy in implementing industry 4.0 so that indonesia can compete with other countries. one of the national priority strategies of "making indonesia 4.0" is the empowerment of micro, small and medium enterprises [28]. referring to a brief study by venti eka santya, expertise researcher agency of the people's representative council of indonesia on "indonesia's strategy for facing industry 4.0", industry 4.0 can help developing countries recover infrastructure competitiveness. industry 4.0, on the other hand, can help developing countries simplify their production supply chain, which is crucia in light of increasing labor costs. as a result, as the industrial revolution 4.0 unfolds, smes would need to develop their skills and technological mastery in order to remain competitive in this era. the most common obstacles cited by smes in industry 4.0 were a lack of digital strategy, vision, and action plan, suggesting that top management should embrace industry 4.0 initiatives and provide the necessary resources and support in all implementation phases [36]. furthermore, difficulties of smes in applying industrial technology 4.0 are caused by a lack of manpower, as well as a barrier to entry into new product and development areas, as well as refusal to allow new technology investments [41]. the findings from case studies – along with these industry 4.0 principles and technology trends, such as horizontal and vertical integration – indicate that information technology (it) plays an important role in the digital transformation, which must be characterized by precise definitions of requirements, objectives, to-be situations and activity planning [36]. therefore, considering the readiness of a business for industry 4.0 is a good way to find ways to develop a particular area of the business. small and medium-sized enterprises (smes) are steadily driving global economic recovery [5]. it provides great opportunities for the development of smes in various countries around the world, including indonesia. smes are one of the types of businesses that the indonesian people are most interested in. smes are constantly forming and expanding in order to participate in various industrial sectors. smes use existing technologies in addition to production and promotion as it evolves. smes have grown to be an important pillar of national economic development in a number of countries, including those in the asean region. smes are a significant driver of economic development and technological changes in the united states, as well as other developed industrial countries that are members of the oecd [46]. the law of the republic of indonesia no. 20 of 2008 concerning micro, small and medium enterprises stated that small businesses are productive economic enterprises that are independent, carried out by individuals or business entities that are not subsidiaries or branches of companies that are owned, regulated, or become part of medium or large businesses either directly or indirectly. meanwhile, several criteria that must be fulfilled by small businesses based on the law is that the business must own a net asset of more than usd 3.500 up to a maximum of usd 350.000 excluding land and buildings for business premises; or obtain an annual sales revenue of more than usd 20.000 up to a maximum of usd 175.000. another explanation can be found in the law of the republic of indonesia no. 20 of 2008, which relates to medium enterprises. it stated that medium enterprises are characterized as independent economic enterprises that are run by individuals or business entities that are not subsidiaries or branches of companies that are owned, regulated, or directly or indirectly part of small or large businesses. the company must either have a net asset of more than usd 3.500 up to a maximum of usd 700.000 excluding land and buildings for business premises; or annual sales revenue of more than usd 175.000 up to a maximum of usd 3.500.000. in terms of the growth of smes in indonesia, smes have a competitive advantage based on innovation and creativity, but these need more focus in terms of durability and business sustainability. smes, as part of the economy, must strive to boost their competitiveness by conducting business innovations [16]. furthermore, statistics from bps statistics indonesia show that the number of smes in indonesia has grown steadily from 1997 to 2013, indicating an upward trend in the development of smes in indonesia. this research focuses on the readiness of smes for the industrial 4.0 era. the development of smes cannot be separated from the role and use of technology in this digital transformation era. digital readiness refers to the abilities of smes to adapt to digital transformation. measuring and analyzing digital readiness is carried out to determine how smes in various sub sectors are prepared to face digital transformation and continue to thrive in the era of the industrial revolution 4.0. this research aims to ad-dress the issue of how smes in the creative industry of indonesia will continue to develop and maintain their business. digital readiness we now live in a digital world. digital innovations are rapidly advancing, bringing people from all over the world together and generating exciting new opportunities. as a result of technological developments, people today have more access to information, facilities and resources than at any other time in human history. automation, artificial intelligence, and internet of things (iot) have an effect on almost everywhere in every country, industry, and everyday life [15]. however, while digitization has a wide-ranging effect, the benefits it creates are unevenly 16 distributed. it is crucial to evaluate the digital readiness of a country, organization, or individual to help build a more inclusive future for everyone. the terms of digital readiness are made up of two syllables, namely digital and readiness. according to oxfordlearnersdictionaries.com, readiness is a state of being fully prepared for something, as well as willingness to do something. according to dictionary.cambridge.org, digital refers to a system that can be used by a computer and other electronic equipment, as well as computer technology in general, including the internet. thus, digital readiness is characterized as inclination and willingness to turn to and adopt digital technology, as well as the willingness to use this technology to create new creative opportunities in order to help a person, organization, industry, and country achieve their goals faster with greater results, or in this case, people and agencies/organizations are prepared to embrace digital technology and can make the best use of this it [12]. based on the above definition, a tool is developed to measure the level of digital readiness based on predetermined parameters. the tool is then referred to as the digital readiness level (drl). digital readiness level is based on pre-existing readiness level models, such as the technology readiness level, which is used to assess the readiness level of certain technologies [36; 32], the design readiness level, the software readiness level, and several other models [44]. the readiness level model is a method for assessing the respondent's level of readiness for the best possible implementation of the research product. there are some research models that assess digital readiness such as research by lichtblau,et.al., with title industry 4.0 readiness online self-check for business (impuls). the research developed a digital readiness measurement and classified digital readiness into 6 levels. they specifically examine companies in the engineering sector. the dimensions of the research are strategy and organization, smart factory, smart operations, smart products, data-driven services, employees [53]. other research by pirola, et.al with title digital readiness assessment of italian smes: case study research proposes a comprehensive assessment model suitable for evaluating smalland medium-size enterprises’ (smes) digital readiness levels. they compare and identify some model and dimension of digitalization measurement from any previous research, then formulate the dimension to five dimensions that are strategy, people, process, technology, and integration [36]. research about digital readiness itself in indonesia focuses more on big companies and other specific to identify digital maturity index than measure the digital readiness level specially for smes. it causes researcher interest to do research about digital readiness especially for smes. according to literature review which has been done by researchers, the digital readiness level model which is proposed by pirola, et.al., has relevant dimensions which can be used to address the level of digital readiness especially for smes. digital readiness level model was used in this research to determine the readiness level of smes in west java to adapt digital technologies such as cloud, it tools, robotics, and so forth. several variables are required to calculate the drl which refer to the dimensions of digital readiness index. beside the dimensions of digital readiness index, to draw conclusions about the position of a digital readiness of smes, this research also calculates the digital readiness level. the description about dimension of digital readiness index can be found at table 1 and the description about the level of digital readiness can be found at table 2. digital readiness assessment model a digital and industry 4.0 index has proven to be successful at the macro level [35]. this index is used or applied to measure and compare the digital performance of various countries, for example, industry 4.0 readiness index from a consultancy company called roland berger (2020), networked readiness index (nri) from the world economic forum (2016), cisco digital readiness index (2019), digitization index (digix) from bbva research. some aspects have become very important over time, namely the in-creasing number of digital readiness indexes and industry 4.0, as well as the maturity model that has been developed over the past few years to analyze and measure digital performance and the readiness of industry 4.0 on micro-level companies. digital and industry 4.0 readiness index assessment and maturity models can assist management in making comparisons, and planning a road map for their company's digital transformation by auditing the current digitization status of a benchmarked firm [38]. in this case, the digital readiness index is a crucial metric to assess the success of small and medium-sized enterprises (smes) in the digital domain. it is a tool that assists smes in recognizing gaps when using digital technology. it is determined by taking into account the degree of: • the digital divide between one to another small and medium-sized enterprises; • the potential for ict development and the degree to which small and medium-sized enterprises can make use of it; • availability of the digital technologies required to make the small and medium-sized enterprises 'digitally ready'. digital readiness of smes: an insight from indonesia 17 ambr table 1. dimension of digital readiness index people analyses the strengths of individuals and how the know-how is handled inside the people/culture market strategy analyzes the company's digitalization plan and implementation of the industry 4.0 concepts process analyses how internal processes are handled from the point of view of digitalization and how data is processed, exchanged and managed within the business technology analyses the latest adoption of the technology supporting industry 4.0 integration analyses the degree of digitalization and convergence with other value chain actors source: pirola, et.al.,2019 readiness evaluation methods offer structured mechanisms for benchmarking and enhancement of outcomes, and they generally provide a set of explanations for the business performance of distinct organizational elements. descriptions are sorted into power groups, from "digital novice" to "digital master". the majority of tools have five levels, but other models with three and nine levels are also available [36]. the frame-work of each level involves a set of objectives that must be addressed in order to achieve maturity at that specific level, as well as supporting sub-goals that define the scope, limitations, and actions required for a specific level, as well as activities and tasks that must be completed to achieve the objectives of each level [45]. a company (or a business unit within it) must pursue improvement measures in order to advance from one stage to the next. readiness and maturity evaluation models are formulated using a tacit logical step-by-step progression, with maturity increasing from the lowest to the highest levels [17]. determining the current level of a company may provide a variety of benefits to an organization. first, a situational analysis of its capabilities is required, as well as a starting point and a behavior-prioritizing framework. the determined readiness or maturity can then be used as a benchmark to better illustrate and promote continuous improvement by understanding the needs of the organization. research methodology this research used a descriptive survey research approach. descriptive research provides a description of the situation as clearly as possible without any treatment of the object under study. a descriptive survey used to identify and describe the digital readiness level of smes in indonesia, particularly west java. the research method itself is carried out by using a cross sectional survey method. the cross-sectional survey method was carried out because the object of this research involved various sme sectors without limiting one or two types of smes, but any type of sme can measure their digital readiness. in principle, cross-sectional research is a type of research methodology with an extensive dataset to look at many cases and the relationship between variables. this number of cases and variables makes it possible to conduct inter-sectional analysis between many cases and many variables. in addition, there are five variables involved which consist of strategy, people, process, technology, and integration. data was collected through a survey using a questionnaire which was distributed to various smes in west java. researchers made adjustments to the questions on the questionnaire so it can be used to generally measure the digital readiness of smes in indonesia especially west java with various characteristics and types. the questionnaire is then filled out by the one who has authority and capacity as well as a good under-standing of the business processes of the smes, such as owners or managers. questionnaire is structured in such a way that it is suitable to be filled out by various types of companies in various industrial sectors. the unit of analysis of this research itself is the organization or company. the questionnaire consists of 46 questions. in the first part of the questionnaire, there are 12 closed questions regarding the company's vital statistics aimed at identifying company size in terms of employment and turnover, industry and general features of the production process. the second part includes 24 five-point likert scale questions about the implementation of industry 4.0 technology within the company, covering five different dimensions (described in table 1). these questions are a core contribution to the drl assessment. the final section includes ten single choice questions about the short-term investments of each company. considering the question in the second section, the respondent should answer aj € {1,…,5} (five-point likert scale) with score si € [1,5] which define for each dimension i as follows: si=(∑_j€qi bj)/mi …………………………………………………………………………………………. (1) where qi is the subset questions referring to the dimension i, and bj is a parameter calculated as follows: bj = 0 if the technology/feature j is deemed not applicable; bj = aj if the technology/feature is applicable, and the company is not planning to invest in it (or the investment already has been carried out and completed); and 18 bj = min (aj + 1;5) if the technology/feature is applicable, and the company cur-rently is investing in it. and mi is defined as: mi = card ({j: j € qi ∧ bj > 0}) ……………………………………………………………………………… (2) from these scores, a single index i is calculated: i = (∑_(i=1)^n si)/n ……………..…………………………………………………………………………... (3) where n = 5 is the total number of dimensions. the final score i defines the company’s digital readiness level according to the rules presented in table 2, which also provide the definition of digital readiness level. digital outsider (1 < l ≤ 1.8) identify which businesses are not interested in participating in industry 4.0 pilot projects. only a few processes are compatible with information technology (it) systems (processes are either partially or fully not digitized, and the existing architecture prevents process integration). data collection from the area is not carried out. the skills required to extend industry 4.0 are only found in a few areas of the enterprise. horizontal integration and internal exchange of knowledge are minimal, although no convergence with other value chain actors is foreseen. the company does not follow service-oriented and cloud-based strategies. digital novice (1.8 < l ≤ 2.6) determine which companies at the intermediate level are integrating industry 4.0 into their strategic plans. some pilot projects are being designed by the company. information technology (it) systems support routine operations (processes are highly digitized) and the current infrastructure allows for some process convergence. only certain performance data is obtained automatically and in real-time, and it is only used to a minimal extent. horizontal integration and internal exchange of information are restricted to some areas and the first steps toward integrating data with supply chain participants are being taken. only in some areas do workers possess requisite skills with respect to industry 4.0. digital adopter (2.6 < l ≤ 3.4) identify the business that has created a plan for industry 4.0 and is investing in supporting the implementation of smart development. most processes are supported by information technology (it) systems, and process integration is facilitated by the existing infrastructure. data is automatically collected in real-time in key areas of development. information exchange is partially incorporated into the system, both internally and with external actors. at this stage, the company produces goods fitted with it-based features, allowing the company to provide the first data-driven services, which still account for a small proportion of revenue. employee capabilities expansion efforts are currently underway. digital experienc ed (3. 4 < l ≤ 4.2) identify the business that has already implemented an industry 4.0 strategy and keep track of its progress using appropriate indicators. the business is interconnected horizontally and vertically, and within the sector, industry 4.0 standards have been introduced, automating knowledge flows. investments span almost all relevant areas, and the mechanism is assisted by inter-departmental innovation management. information on production processes is collected and used for optimization. the exchange of knowledge is largely incorporated, both internally and with value chain partners into the system. it-based features are included in the products, allowing data collection during the use process, enabling and promoting data-driven services. services are available ubiquitously within the company and can be accessed anywhere, allowing staff to retrieve data through mobile devices. the company has the necessary expertise in most of the relevant fields. digital master (4.2 < l ≤ 5) identify the company that has already implemented and actively tracks the execution of its industry 4.0 strategy. the company is fully digitized and integrated with the supply chain, both within and outside corporate boundaries. investments are made in the whole sector. significant volumes of production process data are obtained and used for the optimization of processes. some manufacturing areas currently use autonomously driven work lines and processes that can respond on their own. the information obtained during the process of the product is used significantly for functions such as product creation and remote maintenance. data-driven services for consumers account for a significant share of revenues, and the producer is fully integrated with the customer. in all critical areas, the organization has the internal human skills required. source: pirola, et.al.,2019 digital readiness of smes: an insight from indonesia table 2. digital readiness level 19 ambr table 3. list of sample per sub-sector figure 1. total asset and monthly turnover of sample smes result and discussion the results of processing and analysis of data collected from 113 smes in west java is discussed within this section. we collect data from various sectors of smes in indonesia which are listed in table 1. from the data collected, we found that most of th e samples are from the culinary and fashion industry. it was in line with the research by bps (badan pusat stat istik) and bekraf (badan ekonomi kreatif) indonesia which found that culinary and fashion were the most contributed sectors in creative industries indonesia [11]. also, supported by the statement of the minister of cooperatives and smes which stated that t wo industries that continue to grow and increase from year to year are culinary and fashion. the samples from the culinary indus try are 42 (37.2%), fashion 34 (30.1%), and the other from architecture, interior design, farm, movies, etc. in addition to grouping into sub-sectors, we also recorded a sample based on assets and monthly turnover which can be seen in table 3. there are three groups of samples which are listed based on the law of the republic of indonesia no. 20 of 2008 concerning micro, small and medium enterprises source: researcher data based on figure 1, the majority of the data samples are small enterprises with total assets between usd 3.500 350.000 (80 %) and monthly turnover between usd 14.000-270.000 (52 %). source: researcher data from the data which has been collected, researchers conducted a quantitative method of data processing using the formula described in the section of research methods in order to obtain results as in the following pictures. in figure 2 we can see that the majority of these sample’s smes were found to be at level 2 or "digital novice" category. the level of readiness is represented by 43.86 % of the 113 respondents, and then 31.58% of the respond ents are in the level 1 “digital novice”. it shows that digital readiness in indonesia, especially in west java, is still quite low. alth ough, there are some smes which are in the three top levels. 20 source: researcher data after calculating the respondent's digital readiness level. we analyzed the 5-dimensional digital readiness index which then obtained the results as shown in figure 3. we found that from five dimensions, people are the first dimension which has been the strength of smes in indonesia. this proves that in fact human resources or people in smes in indonesia are quite ready to accept the development of digital technology in their business, however, other supporting things such as the willingness of the technology itself are not sufficiently supportive. source: researcher data source: researcher data digital readiness of smes: an insight from indonesia figure 2. digital readiness level figure 3. digital readiness index figure 4. barriers 21 ambr figure 5. use of it tools figure 6. technology-related competency source: researcher data of the five conditions for using it instruments, the majority of answers from the 113 responded is dominated by the red one (not using it instruments). 72.57 % and 68.14 % of the total respondents have also responded that they have not used computer-aided manufacturing (cam) and enterprise resource planning (erp), respectively. according to the average 'not using it instruments' category, more than 49 % of the 113 smes did not use it tools for their business. the current figure indicates that the vast majority of smes have not accepted or used these it methods. this can be related to the barrier chart in figure 2, in which many sme actors lack knowledge of service providers and technologies source: researcher data figure 3 shows the overall average smart technology-related competency, with an assessment ranging from 1 (no competence at all) to number 5 (high competence), and the result shows the value of 2.31. this figure shows that small and medium-sized enterprises also lack adequate smart technology-related competence; only a few small and medium-sized enterprises have adopted smart technology, such as process automation. for this purpose, upskilling and reskilling actions should be developed to encourage workers to leverage the potential of new technology. in particular, lifelong learning and preparation are important 22 source: researcher data in this figure, there are different types of support systems for every method. content management, integrated business information systems for applications, and stand-alone applications are some of the examples. it can be seen that the majority of smes do not use the support system in each process. it is worth mentioning that most planning/scheduling methods for the production/ordering of smes provide a support mechanism in the form of document management. it can be seen that, in the context of record management, many regular or repetitive tasks use a support system. this research was found that 43.86 % of the 113 respondents are at level 2 or "digital novice" category. it means that the level of readiness of smes in west java is still quite low in particular. there are numerous obstacles that make digitization difficult for smes in indonesia. from the five dimensions studied, it is known that the weakness or unpreparedness of smes in west java lies in technological advancement. since there are so many sme in indonesia that are personal businesses and home goods, they seem to be cautious about incorporating new technology into their operations. the findings of the research were also affected by the types of businesses examined. the majority of the 113 smes surveyed were not technology-based businesses, such as those in the fashion and food and beverage industries, which continued to only use basic digitization for marketing purposes using different online media. the vast geographical position of indonesia, with gaps in the distribution of information and technology, is one of the obstacles in digitizing smes in the region. there is a digitalization gap among smes in cities and villages, and it technology is unevenly distributed. the index of information and communication technology development is still not equally distributed in indonesia, according to the bps statistics indonesia. people are the most mature dimension, despite the fact that the average figure is not particularly large. this demonstrates that the majority of indonesians are aware of and concerned about the value of digitalization, despite the fact that the capabilities and various supporting factors for digitalization are still missing. smes are still unsure about the benefits of digitalization, identifying the most appropriate strategy for the industrial revolution 4.0, and identifying what investments are needed for a successful transition to digitalization. integrity between large-level companies and smes is almost limited to csr (company social responsibility) which is regulated by the indonesian government in the law no. 40 of 2007 about the company. the indonesian government itself strongly encourages partnership programs between large companies and smes that aim to help the development of smes in indonesia. the government monitors and determines the csr criteria that companies must carry out, this shows that csr is very important and can affect the relationship between companies and stakeholders [3]. however, research conducted by ghassani & wardiyanto [24] states that the implementation of sme partnerships often fails. partnership failures are generally caused by the weak foundation of partnership relationships and differences in organizational culture in partnerships and various other factors [24]. while implementing 4.0 requires a strong foundation of partnership and higher level of integrity in order to get more effective and efficient results. large companies should be able to collaborate more intensively with smes to improve the efficacy and quality of their operations through the use of digital technologies. digital readiness of smes: an insight from indonesia figure 7. types of support system 23 ambr despite the real conditions in the field, there are several significant barriers to digital readiness, especially for smes in the culinary and fashion sectors in west java. every company, organization and business must be able to commit and have corporate goals and strategies that are aligned with the use of digital technology [20; 21; 25]. strategy is one of the most critical aspects of business planning for both large corporations and smes. the most frequently cited constraints are the lack of a digital strategy, vision and action plan. business owners must support industry 4.0 initiatives and provide the necessary resources and support during all phases of implementing digitization. using digital technologies to execute a business strategy involves collaboration from all parties in the organization, including top management and business owners, as well as all staff and employees [22]. industry 4.0 strategy must include all facets of business activities from upstream to downstream, starting from product manufacturing, product offerings to customer relationships. the more software and knowledge incorporated in a product during strategy 4.0 implementation, the more data relevant to all phases of the life cycle is available, assisting companies in developing new businesses. predictive technology, combined with intelligent algorithms, may allow product performance degradation to be predicted, as well as the ability to independently manage and optimize product and service requirements [30]. this assists manufacturers in transitioning to service transformation particularly in offering services enabled by digital technology and connectivity, such as remote monitoring and predictive maintenance [4], and shifting the manufacturing paradigm away from product-to-product usage [8]. apart from technology, automation, processes and strategies, human resource is one of the most important considerations for companies, especially smes, when implementing digitization in their businesses. people who are knowledgeable and willing to adapt and operate efficiently using different digital technology are needed by businesses of all sizes. human resources must also possess problem-solving, optimization, and analytics skills, as well as big data and cognitive abilities [37]. furthermore, industry 4.0 would necessitate a wider work climate. conclusion it is critical to note that smes must establish a long-term plan for coping with the fourth industrial revolution. until developing a plan and defining the investments that smes will need for the industrial revolution 4.0, smes must first consider and assess their current business' digital readiness. the main objective of this study is to assess the level of digital readiness of smes in indonesia, especially in west java, in light of the industrial revolution 4.0's progress. this research is intended to assess smes' level of digital readiness in order to determine what needs to be improved and/or retained. with relation to the five key dimensions, namely individuals, process, strategy, technology, and honesty, we were able to recognize the current conditions of digitalization readiness of 113 smes and identify many items that need to be prioritized in the transition to industry 4.0. other factors that could have a major effect on the transformation of smes in the face of the industrial revolution 4.0, such as indonesian government regulatory factors, should be considered in future research. further study is also needed to enrich sample grouping so that the characteristics of each smes can be defined in greater detail and accuracy. in terms of limitations, this review acknowledges that it only looked at a few variables that could be expanded in future research as technology advances. the drawback of this research is the number of samples that are not uniformly distributed around each sector. further research can be carried out by increasing the sample size and taking into account other variables such as governance. as we all know, the development of smes in indonesia is also influenced by government support and regulations. the government should take into consideration that given our results find that the digital readiness level is 2 (e.g., digital novice), thus technology infrastructure should be strengthened while the capability of the management (owner/senior manager) of a smes should be trained to adopt current digital 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(2015), “impuls, industrie 4.0 readiness”, available at: https://industrie40.vdma. org/documents/4214230/26342484/industrie_40_readiness_study_1529498007918.pdf/0b5fd52 1-9ee2-2de0f377-93bdd01ed1c8 (accessed 6 july 2018). digital readiness of smes: an insight from indonesia 97 transformational leadership, procedural justice, and emotion of indonesia civil state apparatus: does it matter? shine pintor* universitas terbuka, indonesia maylitha achmad puslatbang kmp lan abstract this study aims to uncover the effect of transformational leadership toward procedural justice and its impact on the positive emotions of the indonesia civil state apparatus (csa). this study involved respondents which are in jakarta, makassar, palu, and ambon. as far as we know, the perceptions of transformational leadership and procedural justice in the government environment can be variably different by each employee. thus, this will tend to affect positive emotions. to prevent the bias response, the social desirability response (sdr) test was conducted. the sample size in this study was 572 respondents. a purposive sampling technique was used to gain respondents. this study gave a piece of evidence that transformational leadership in government agencies could explain and predict procedural justice which is perceived by csa. subsequently, procedural justice could affect csa positive emotions. this study proved that transformational leadership could explain and predict organizational citizenship behavior. keywords: leadership; transformational; justice; procedural; sdr *corresponding author. email address: shinepintor@ecampus.ut.ac.id transformational leadership, procedural justice, and emotion of indonesia civil state apparatus: does it matter? received june 7th 2021 review september 16th 2021 publish december 1st 2021 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/449 mailto:shinepintor@ecampus.ut.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/449 98 ambr introduction human resources are one of the important assets in the organization, both business and government organizations. they have a role as subjects to implement policies and activities in the organization. without them and their performance, organizational resources such as capital, methods, and machines will not work for optimal results (wright and pandey, 2010). based on the literature on leadership, ingraham and getha-taylor (2004) argued that transformational leadership is very important to pursue organization effectiveness, and government organizations are no exception. this type of leadership will create a positive culture, strengthen motivation, clarify the mission and goals, and bring the organization to gain productive and high-performance outcomes (ingraham and getha-taylor, 2004). furthermore, leadership factors determine the success or failure of carrying out its organization operations. so, the capacity of government organizations should give a supporting toward the implementation of good governance. however, according to thoha (2008) weaknesses of leadership is one of the so many factors which caused the fault of bureaucratic performance in indonesia. this is in line with the argument proposed by crosby and bryson (2018). they argued that many studies of leadership in government organizations domain, always merely focused on transformational leadership and transactional leadership. this is because there are always exchange relationships between superiors and subordinates in government organizations so fellow employees created affection and motivation (crosby and bryson, 2018). furthermore, the real phenomena in the organization are indicated by different perspectives between employees with other employees regarding organizational justice. as an example: the treatment of leaders to subordinates, the provision of wages or policies which are given, etc. thus, according to colquitt et al (2001), there are several kinds of organizational justice perceived by an employee, namely the distribution of rewards or incentives, the allocation process, and how to treat them in the organization. budiyanti et al (2018) proved, there are always organizational injustices in government organizations perceived by subordinates. this is caused by leader behavior to treat subordinates and subsequently affect positive and negative emotions (budiyanti et al., 2018). generally, this phenomenon is caused by several factors, such as the distribution of official travel and incentive activities (budiyanti et al., 2018). as a result, it will affect positive and negative emotions of the civil state apparatus which subsequently impact job satisfaction (budiyanti et al., 2018). moreover, many studies have shown that leadership and justice have an important effect on the organization (wang et al., 2010; guh et al., 2013; chen and jin, 2014; kim et al., 2017; unterhitzenberger and bryde, 2019). furthermore, iqbal et al. (2018) argued that organizational justice has a significant effect on leadership in the organization. in line with iqbal et al. (2018), sharma (2016) also argued by giving an opinion, that managers should realize the importance of organizational justice because it could prevent refusing and being boycotted by their subordinates. furthermore, chen et al. (2018) also argued, in the context of social exchange, leadership and organizational justice could affect organizational citizenship behavior. according to colquitt et al. (2001), in the organizational justice domain, several studies shows that justice perception could affect organizational commitment, job satisfaction, turnover intention, organizational citizenship behavior, and job performance. furthermore, it is also acknowledged that justice can explain and predict emotional responses, especially when an individual perceived injustice (cohen-charash and spector, 2001; barclay et al., 2005; cropanzano et al., 2007). moreover, other studies show that emotions have a close relationship between injustice experience and tendency to retaliate (barclay et al., 2005; tracy et al., 2007; skarlicki et al., 2008). furthermore, cohen-charash and spector (2001), barclay et al (2005), and cropanzano et al (2007) argued there is a lack of studies that investigate the effect of justice on emotions. even though, many studies showed that organizational justice which consists of procedural justice, distributive justice, and interactional justice affect emotions and subsequently impact job satisfaction. these studies are conducted by cohen-charash and spector (2001), rupp et al. (2006), gotlib (2011), and mazurkiewicz, (2009). thus, in government organizations, the empirical evidence showed that civil state apparatus always compares their gaining with their co-worker to ensure that justice has been created. in most organizations, such as government organizations, civil stated apparatus always view that when the leaders treated them fairly, they would feel satisfaction and perceived that organizational justice has been created (cropanzano et al., 2008). based on our initial observations through interviews with 100 civil state apparatus that worked in jakarta, 73 employees (73%) were dissatisfied with their leader and 27 employees (27%) stated that they perceived injustices. furthermore, also, the initial interview shows that leadership characteristics by civil state apparatus in indonesian government agencies are transformational behavior. this is because of those leaders whose behavior like the way dare to be open each toward his/her subordinates regarding the operating procedures which carry out activities within the organization. 99 the number showed that civil state apparatus in government organizations tend to experience unfair treatment and dissatisfaction with the leader. based on the results of our initial interview and research conducted by strom et al. (2014), wu et al.(2017), and budiyanti et al. (2018), when subordinate is not allowed to develop competency as a state civil apparatus, they will feel dissatisfied. moreover, one example regarding the form of injustice is complaining of civil state apparatus regarding the issuance of regulations on cutting performance benefits when they do not come to work even because of illness. overall, based on the preliminary observations, it can be presumed that leadership style has a significant effect on organizational citizenship behavior. as argued by organ (1990) and podsakoff et al. (2000) that organizational citizenship behavior, as an example: serious, helpful, and responsible; do the assignment beyond the leader's expectations; involved in any extra activities in the organization, and improving aspects of the work even though it is not obligatory. according to this case, good leadership will affect motivation, commitment, subordinate’s involvement, job satisfaction, and subordinate's trust toward the leader. thus, good and appropriate leadership behavior will predict subordinates' positive perceptions regarding organizational justice (cropanzano et al., 2002; susanj and jakopec, 2012). as one of leadership style, transformational behavior is important in a government agency, because the organization operate in high risk-averse work environments where mistakes can inflict unintended harm on the most vulnerable populations, which can result in career-ending outcomes (van wart, 2003). according to it, for helping executives to manage organizational and personal risks, they often release their span of control and empower their subordinates to make decisions (van wart, 2003). while this leadership strategy could be considered transformational, an unintended consequence is a noticeable loss of managerial accountability (mccracken et al., 2012; srithongrung, 2011). wright and pandey (2010) argued when leaders actively empower their subordinates, it raises concerns in the executive ranks that inappropriate decision-making will occur due to failure, accountability, and job loss. this often cause subordinates to feel procedural unfairness which has an impact on their emotions (trottier et al., 2008; wright and pandey, 2010). therefore, transformational leadership and procedural justice play an important role in forming positive emotions for civil state apparatus who work in government organizations (trottier et al., 2008; wright and pandey, 2010). according to the results of the initial interview, organizational injustice perceived by the civil state apparatus will affect negative emotions (barclay et al., 2005; barclay and skarlicki, 2009). negative emotions, such as anger, shame, hostility, and retaliation, would be formed because of injustice perception (barclay et al., 2005; barclay and skarlicki, 2009). this phenomenon is in line with research which is conducted by morris and keltner (2000) and cohen-charash and spector (2001). they argued that organizational justice could affect employee emotions, such as delight, angry, and sadness. the gap of this research is based on research conducted by several researchers such as susanj and jakopec (2012), gillet et al. (2013), and deschamps et al. (2016). they argued that there is a close relationship between leadership and organizational justice. however, there is a lack of research that linked organizational justice and leadership (armagan and erzen, 2015). according to bass (1995), leadership effectiveness, satisfaction, innovation, quality improvement, performance evaluation both subjectively and objectively and organizational justice could be affected by transformational behavior. the next gap is regarding emotion as an affection variable. even though emotions are always discussed in justice theories, there is a still lack of research on organizational justice that accounts for emotions (e.g., devonish et al., 2012; barclay and saldanha, 2015). likewise, fambrough and hart (2008) and rupp et al (2014) argued, mediating or moderating variables should be stated in the relationship between leadership and emotions. as an example, leader-member exchange and organizational justice. in line with fambrough and hart (2008) and rupp et al (2014), strom et al. (2014) stated that the formation of employee emotions can be caused by leader characteristics or perceptions of fairness in organizations. thus, there is a significant correlation between justice and emotions. in line with them, weiss et al. (1999) argued, emotions could be understood as a special form of the organizational justice evaluation process. this research concern transformational leadership and procedural justice. the main reason for this is because the civil state apparatus always concerns with transformational leadership which is considered as a capable leadership in providing a sense of justice related to systems and procedures for implementing operational activities in government organizations (trottier et al., 2008; wright and pandey, 2010). as argued by trottier et al (2008) and wright and pandey (2010), further research is needed on transformational leadership and procedural justice that can form positive emotions for civil state apparatus who work in government organizations. therefore, the objective of this study is to uncover the effect of transformational leadership toward procedural justice and its subsequent impact on positive emotions of indonesia civil state apparatus. transformational leadership, procedural justice, and emotion of indonesia civil state apparatus: does it matter? 100 ambr literature study transformational leadership a transformational leader is someone whose competencies motivate his/her members and pursue the goals of the organization (bass and riggio, 2006). driving subordinates as individuals and teams to work beyond the status quo, and have a clear vision to make various changes in organizational culture is transformational leader characteristics (northouse, 2016). transformational leadership is an activity to influence people so that they like to try to achieve group goals. according to bass and riggio (2006), transformational leadership is the activity to affect people for working together to achieve their goals. furthermore, also, they define that leadership as a form of domination based on personal abilities that can encourage or invite others to do something, based on acceptance by the group and have special skills that are appropriate for special situations. according to bass and avolio (1993), transformational as a leader has the power to affect subordinates in certain ways. through transformational leadership, subordinates will feel trusted, valued, loyal and respectful to their leaders. thus, transformational leadership is a leadership style used by a manager when he wants a group to expand and perform beyond the status quo or achieve an entirely new set of organizational goals. transformational leadership in principle motivates subordinates to do better than what can be done, in other words, it can increase the confidence or self-confidence of subordinates which will affect performance improvement (yukl, 2013). idealized influence, individualized consideration, inspirational motivation, and intellectual stimulation are the dimensions of transformational leadership (yukl, 2013). procedural justice cropanzano et al. (2007; 2008) and cropanzano and stein (2009) argued procedural justice is related to the perception of fairness of the procedures used for and the process to arrive at a decision. fair procedures and processes also tend to moderate the impact of negative reactions arising from decisions that result in undesirable outcomes for workers (barclay and skarlicki, 2009). the effect of procedural justice is also known as the effect of a fair process (fair process effect) because the perception of the fairness of the process can have an effect in increasing the acceptance of outcomes even when the outcome has undesirable implications (barclay and skarlicki, 2009). the factors that are taken into consideration in a person's assessment of the fairness of a particular process or procedure are grouped twofold, namely: structural and social factors. procedural justice, namely the fairness of the procedures used to determine the outcomes received by workers is a structural aspect of justice (barclay and skarlicki, 2009). emotion emotions are defined as reactions to certain situations by the body (tracy et al., 2007). things that are usually related to a person's (cognitive) thinking activity, namely the nature and intensity of emotions, are due to the result of the perception of the situation (tracy et al., 2007). emotion is one aspect that has a major influence on human attitudes. this is accompanied by two other aspects, namely the power of thought (cognitive) and psychomotor (conative), usually, emotions are often known as affective aspects, this is from the attitudes determination, which is one of the predispositions of human behavior (tracy et al., 2007). the effect of transformational leadership on procedural justice empower subordinates, giving individual consideration to subordinates and supporting their ideas are the main characteristics of transformational leadership (bass and avolio, 1993). pillai et al (1999) in their research argued that the outcome of organizational decisions could be affected by subordinates’ interests because of a transformational leader. furthermore, transformational leaders could motivate subordinates to engage in fair exchange relations between them in an organization (pillai et al., 1999). therefore, from this point of view, it forms procedural justice. in other words, subordinates have an opportunity to participate in the decision-making process (pillai et al., 1999). moreover, selznick in his research argued employee agreement regarding psychological contracts is affected by managerial authority (folger and bies, 1989). thus, subordinates are coincident that their activities are managed by the management (folger and bies, 1989). in line with folger and bies (1989), song et al. (2012) and kim and kim (2015) argued that allocating process of organizational resources to improve employee skills development comes from or is affected by transformational leadership. thus, the point is, procedural fairness could be formed by implementing decision-making as managerial responsibility and empower subordinates to participate (pillai et al., 1999). h1: transformational leadership affect procedural justice perception of indonesia civil state apparatus. n 101 this study is based on the model developed by mehrabian and russell (1974) (see: namkung and jang, 2010). they argued that environmental stimuli will affect individual emotions which in turn will affect their response in the form of approach or avoidance (namkung and jang, 2010). according to it, bagozzi (1986) states that stimuli are external to people and consist of various physical elements (namkung and jang, 2010). furthermore, organism refers to internal structures and processes that will subsequently intervene in the relationship between external stimuli in people and displayed behavior or responses (bagozzi, 1986) (see: namkung and jang, 2010). this suggests that the impact of a stimulus on human behavior is mediated by emotion. (namkung and jang, 2010). subordinates would perceive emotions when they are rewarded for his/her job performance, receives a promotion, or receives gratitude from a colleague. thus, an emotional experience is one of the organizational justice consequences (cohen-charash and spector, 2001; barclay et al., 2005; cassar and buttigieg, 2015). other studies conducted by ledimo (2015) and budiyanti et al. (2018) argued individual emotions could be predicted by procedural justice. furthermore, the relationship between perceived organizational justice and actions to take revenge could be mediated by employee emotions (cassar and buttigieg, 2015). cassar and buttigieg (2015) argued that psychological contracts breach mediate the relationship of organizational justice and emotions. dzansi (2016) shows that perceived organizational justice affects the quality of services provided by employees. in line with him, moon (2017) argued that procedural justice could affect positive emotions. thus, the second hypothesis in this study is: h2: procedural justice affects positive emotions perception of indonesia civil state apparatus. thus, based on the main objective of this study, the theoretical models proposed in this study are as follow: transformational leadership procedural justice positive emotion research methodology a questionnaire was developed as a tool for gaining information through survey methods. the questionnaire was developed based on the results from initial interviews which included 100 key respondents. after compiling the questionnaire, content validity (face validity), social desirability response test, and construct validity (convergence and discriminant validity) were conducted. furthermore, after the validity results were obtained such as our expectations, we conduct the measurement to uncover the effect of transformational leadership toward procedural justice which subsequently affects positive emotions. management measurement indicators were developed based on previous studies. those are conducted by bass and riggio (2006) and yukl (2013) for transformational leadership. as a formative construct, transformational leadership consists of four dimensions, namely, idealized influence (example: “the interests of the organization are considered as important by a leader”); intellectual stimulation (exp: “subordinates are always encouraged by leader to solve work problems rationally”); individualized consideration (exp: “self-development of subordinates is always improved by a leader”), and inspirational motivation (exp: “optimistic in performing duties and responsibilities is our leader characteristics”). furthermore, operational definitions of procedural justice is an example: the rules procedure in our organization are always consistent (cohen-charash and spector (2001); colquitt et al. (2001)), and the last construct is positive emotions (morris and keltner (2000) which operational definition is an example: “the leader treat its staff nicely”. likert scales were used as measurement scales ranging from 1 to 7. 1 = strongly disagree and 7 = strongly agree. instruments testing content validity (face validity), convergence validity, and discriminant validity (hair et al., 2010) were also conducted to confirmed measurement indicators validity. social desirability response (sdr) test was also conducted in this study to convince that respondents fill the questionnaire naturally. in the next step, we conduct construct reliability testing which aims to investigate the consistency of the measurement indicators. transformational leadership, procedural justice, and emotion of indonesia civil state apparatus: does it matter? figure 1. research model. 102 ambr table 2. respondent characteristics according to chin et al. (1995) that the minimum sample size in research when using variance-based sem is 5 (five) to 10 (ten) times the number of indicators or 10 times the number of parameters which are contained in the research model. based on our model, there are four parameters. the meaning of parameter in this regard is the number of arrows that are from the independent variable to the dependent variable. thus the minimum sample size for this study is 4 x 10 = 40 respondents (chin et al., 1995) hair et al. (2014) argued the greater the sample size used, the better results would be achieved because it will reduce the sampling error. thus, the sample size in this study was set as many as 650 respondents. we use survey methods to collect the data. of 700 questionnaires that are distributed by online survey, only 572 are feasible to further analyze. so, the response rate of this study is 88%. data analysis variance-based sem is used for data analysis and smart pls as software. the main reason for using variance-based sem, because of two constructs with formative indicators, namely transformational leadership and procedural justice. mackenzie et al. (2005) argued we must notice when using sem for measuring constructs with formative indicators. this is because many researchers made the mistake of treating formative constructs such as reflective constructs, such as transformational leadership and procedural justice (mackenzie et al., 2005). thus, the appropriate sem used in this measurement is a covariance-based sem (pls-sem). furthermore, hair et al (2011), argued that pls‑sem can be used for measuring both formative and reflective constructs. result and discussion variables categories sum percentage gender male 230 40.21 female 342 59.79 age 25-30 years 30 5.24 31-35 years 86 15.03 36-40 years 50 8.74 41-45 years 190 33.22 46-50 years 216 37.76 marital status single 234 40.91 married 338 59.09 job tenure lower than 1 year 0 0 1-5 years 0 0 5-10 years 248 43.36 above 10 years 324 56.64 education senior high school 80 13.98 bachelor 243 42.48 master 149 26.05 doctor 100 17.48 monthly income idr 0 – 1,000,000 0 0 idr 1,000,001 – 2,500,000 200 34.97 idr 2,500,001 – 5,000,000 320 55.94 idr 5,000,001 – 10,000,000 52 9.09 above idr 10,000,000 0 0 table 1 showed the characteristic of the respondents in this study. moreover, we conducted the socially desirable response (sdr) test with the non-paired sample, for five constructs in this study. this test is carried out by distributed questionnaires to civil state apparatus who lived in jakarta (30 people) and makassar (30 people). those who lived in jakarta received questionnaires with direct questions and others in makassar were given the questionnaires with indirect questions. by using spss with non-parametric statistics, the mann whitney test, results show the p-value of each indicator more than 0.05 which means that the two samples (non-paired) come from populations with similar average (mean) or expectations. in other words, the average of respondents' answers from those samples is similar. for more details, it can be seen in table 2. 103 constructs measurement indicators p-value procedural justice jp1 0.321 jp2 0.122 jp3 0.111 jp4 0.412 jp5 0.178 jp6 0.190 positive emotion e1 0.333 e2 0.298 e3 0.097 e4 0.067 transformational leadership tl1 0.567 tl2 0.666 tl3 0.687 tl4 0.777 tl5 0.311 the ave value of positive emotional construct is 0.586 (more than 0.5) which indicates a good convergence validity (hair et al., 2014) (see table 3). ave values could be seen only for one construct, namely positive emotional. this is because of the construct with reflective indicators. for constructs with formative indicators (transformational leadership and procedural justice), ave value does not provide any information. furthermore, the construct reliability values are only owned by the one with reflective indicators, namely positive emotions. the measurement of construct reliability in this study uses cronbach alpha (α) and composite reliability. cronbach alpha value is 0.811. as argued by nunnally (1978) and kaplan and saccuzzo (1982) that a good α value for each construct used in basic research is 0.70 to 0.80. however, according to baumgartner and homburg (1996), composite reliability is favourable to use for estimating the internal consistency. based on table 3, its value is above 0.6. thus, the construct reliability used in this study is considered good. overall, based on table 3, the results of convergence validity and internal consistency especially for reflective constructs (positive emotions) in this study are good. this is indicated by the ave value for the construct, which is above 0.5, which means the convergence validity is good. constructs ave cronbach alpha composite reliability positive emotion 0.581642 0.765787 0.846720 the validity of formative constructs in this study (procedural justice and transformational leadership) is proved through a bootstrapping process on the smart pls program. the results are based on the outer weight output in table 4. if there are indicators of these formative constructs with a t-statistic value > 1.96 (pvalue < 0.05), then it is a significant construct. therefore, the construct doesn't meet the construct validity test criteria (jogiyanto and abdillah, 2009). if the formative construct does not meet the construct validity test criteria (i.e., there are one or more insignificant indicators), so those cannot be used in further structural model testing. item tstatistics (|o/sterr|) p-value e1 <positive emotion 9.050871 0.000 e2 <positive emotion 8.492833 0.000 e3 <positive emotion 9.093269 0.000 e4 <positive emotion 5.755835 0.000 transformational leadership, procedural justice, and emotion of indonesia civil state apparatus: does it matter? table 2. results of the sdr test table 3. results of measurement models evaluation with reflective indicators 104 ambr table 4. results of measurement models evaluation with formative indicators figure 2. structural model test tl1 -> transformational leadership 4.170481 0.000 tl2 -> transformational leadership 4.763946 0.000 tl3 -> transformational leadership 5.970384 0.000 tl4 -> transformational leadership 3.535633 0.000 tl5 -> transformational leadership 2.035186 0.042 jp1 -> procedural justice 2.669267 0.008 jp2 -> procedural justice 5.762983 0.000 jp3 -> procedural justice 4.736943 0.000 jp4 -> procedural justice 2.567120 0.011 jp5 -> procedural justice 2.499867 0.013 jp6 -> procedural justice 2.016246 0.044 based on table 4, the outer weight output, t-statistic value for formative construct indicators is > 1.96 (t-table) or p-value < 0.05. it could be concluded the formative construct in this research (procedural justice and transformational leadership) can be used in further structural model testing. transformational leadership procedural justice r square = 0.81 positive emotion r square = 0.57 tl1 tl2 tl3 tl4 tl5 pj1 pj2 pj3 pj4 pj5 pj6 e1 e2 e4e3 0 .5 4 5 0 .5 7 9 the goodness of fit model in this study is explained in figure 2. the r-square value for each endogenous variable (procedural and positive emotion) in the model produced by smart pls. the r-square value shows the ability of the independent variables in explaining the variance of the dependent variables. the results of this study indicate that transformational leadership could explain the 81.30% variance of procedural justice and 0.565% o variance of positive emotional explained by procedural justice. as argued by chin (1998) and höck and ringle (2006), the r-square value categories consist of strongly, moderately, and weakly. the r-square value of 0.67 is categorized as strong, 0.33 as moderate, and 0.19 as weak. thus, the overall research model shows that transformational leadership has a strong ability to explain procedural justice and procedural justice has a strong ability to explain positive emotions. furthermore, the value of f square (effect size) shows the magnitude effect of the predictor on the criterion. effect size values can be grouped into three categories: weak (0.02), moderate (0.15), and strong (0.35) (kock, 2013; hair et al., 2013). the effect size value below 0.02 indicates that the effect of the predictor variable is very weak from a practical perspective even though it has a significant p-value. the results show the effect size of transformational leadership on procedural justice is 0.813 and procedural justice on positive emotions is 0.492. 105 the effect size value of transformational leadership on procedural justice is classified as a large effect size group as well as the procedural justice on positive emotions. thus, from a practical perspective, transformational leadership has an important role to influence procedural justice, as well as procedural justice toward positive emotions. moreover, for the predictive validity model, we used q-square (usually also called the stone-geisser coefficient) as a non-parametric measure obtained through the blindfolding algorithm as argued by solihin and ratmono (2013). models with predictive validity should have q-square values greater than zero (solihin and ratmono, 2013). the results show that this model research has a good predictive validity because the q-square value is above zero. overall, the goodness of fit (gof) index of this research model is calculated based on the formula proposed by tenenhaus et al. (2005) gof = √𝒎𝒆𝒂𝒏 𝒄𝒐𝒎𝒎𝒖𝒏𝒂𝒍𝒊𝒕𝒚 𝑿 𝒎𝒆𝒂𝒏 𝑹 − 𝒔𝒒𝒖𝒂𝒓𝒆 information: mean (average) from this model research, the average value of communality is 0.734 and r-square is 0.722, then the goodness of fit (gof) index of the research model is √0.734 𝑋 0.722 = 0.728 as stated by tenenhaus et al. (2005) that a gof value above 0.5 can be categorized favourable. proposed research hypotheses estimated parameter values, standardized regression coefficients critical ratio (cr) = t p-value direction decision h1: transformational leadership has a positive effect on the perception of civil servants regarding procedural justice. 0.902 5.614 0.000 positive supported h2: procedural justice has a positive effect on the positive emotions of civil servants 0.299 4.149 0.000 positive supported table 5 shows sem estimation and hypothesis testing results. all research hypotheses are supported because the value of critical ratio (cr) or t is statistically significant, and has an expected direction as stated in the hypothesis, namely positive direction. the recommended cr value in sem analysis is more than 1.96 (garson, 2016) which means a good level of significance. overall, the leadership perception model can explain and predict organizational justice and organizational justice can explain and predict the positive emotions of civil servants in jakarta, makassar, palu, and ambon. the first hypothesis that transformational leadership has a positive effect on procedural justice perceived by civil state apparatus is supported. this study is consistent with the results of research conducted by tyler (1986). he argued that procedural fairness has an important role in evaluating the leadership process which in this case is transformational leadership. in this study, transformational leadership could explain and predict perceptions of procedural fairness by 81.30% (r2 = 0.813). one important aspect of transformational leadership is that the leader could encourage subordinates to go beyond their interests to achieve the goals of the larger group collectively (group, organization, or country) (bass & riggio, 2006). this concept is following procedural justice, that leaders can increase welfare and group solidarity in the long term (yukl, 2013; northouse, 2016). such transformational leaders could promote procedural justice. hypotheses 2 in this study that procedural justice has a positive effect on the positive emotions of civil state apparatus are also supported. this study is also generally in line with the results of research which conducted by cohen-charash and spector (2001). they argued that organizational justice could explain and predict the employee’s emotions in an organization. this study shows, the procedural fairness perceived by civil state apparatus in jakarta, makassar, palu, and ambon could explain and predict they're positive emotions by 56.50% (r2 = 0.565). indonesia civil state apparatus would see procedural fairness if it should meet the following criteria. this is an transformational leadership, procedural justice, and emotion of indonesia civil state apparatus: does it matter? table 5. results of sem estimates and hypotheses tests 106 ambr extent to which it suppresses bias, creates consistent allocations, rely on accurate information, is correctable, represent the concerns of all the recipients, and is based on moral and ethical standards (budiyanti et al., 2018). as another aspect of civil state apparatus justice perception, procedural justice seems to be a basic requirement. the violation of procedural fairness would elicit negative emotions (budiyanti et al., 2018). conclusion the model in this study tested using the research background of civil state apparatus which considered as representatives of indonesia regions, namely ambon (eastern indonesia region), palu and makassar (central indonesia region), and jakarta (western indonesia region). we use a variety of literature that is integrated to produce a model that connects transformational leadership with procedural justice. overall, the results indicate that among civil state apparatus there is a significant relationship between transformational leadership and procedural. based on the phenomena and our literature review, there is still a lack of empirical testing regarding relationships. hence, this study supported the view that transformational leadership could have a different effect on organizational justice which is perceived by subordinates based on social exchange relations. social exchanges occur because of the involvement of individual trust in the relationship regarding their obligations in the long run. transformational leadership is closely related to perceptions of organizational justice, namely procedural justice. the policies and procedures implemented by the leadership mostly determine the formation of justice perceptions that affect employee emotion. the effect of procedural justice toward positive emotions, this because positive emotions are often something that results from extraordinary leadership, such as transformational, charismatic, and visionary leadership. generally, employees in an organization will disappoint and be angry when they received an inappropriate award and feel guilty when they are overrated. emotions are an important part of organizational life, provide characteristics, and inform processes in organizations. emotions also have a role in individual communication relating to the main problems in social life. overall, this study showed the emotional role consequently in the relationship between transformational leadership and procedural justice by indonesia civil state apparatus. this study only included respondents in four cities, namely: ambon, jakarta, makassar, and palu. for further research, it would be better to involve respondents who are located in the whole of indonesia regions, to generalize the research results properly. this research only looked into the relationship between transformational leadership, procedural justice, and emotions of civil state apparatus. future research should develop this research for other variables including transactional leadership, distributive and interactional justice which affect positive and negative emotions. therefore, the result of this study can be generalized, it is comprehensively systematic and theoretic, random, and controllable for understanding and explaining a phenomenon regarding indonesia civil state apparatus. references armagan, y. & erzen. e. 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(2013). leadership in organization (8th ed.). pearson education, inc technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city 62 6 technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city helga meizhura1*, dini turipanam alamanda2, and fajar sidiq adi prabowo3 1,2,3 telkom university, bandung, indonesia abstract the city government of bandung has made serious efforts in solving the urban problems creatively through the utilization of ict, known as smart city. one of the smart government programs being implemented is the online public aspirations and complaints service through an application system called lapor. so far, the application is considered effective enough to engage public participation, eventhough there are also many contradictory and negative comments shared by the users. therefore, it is important to find out the actual description of public acceptances for the lapor system. the affecting factors of interest and behavior in using the system were identified by the model of utaut 2 developed by venkatesh et al. in 2012. the data in this study was collected using questionnaires distributed to 405 respondents of those who live in bandung city, either the users of lapor application or those who have not used it yet. the results showed that the most influential factor of interest in using the lapor system is price value. this indicates that public wants the proportional benefits of the costs incurred for using the system.other influential factors are hedonic motivation, social influence, habit, and facilitating condition. hence, these findings will enable practitioners to gain information in improving the successful implementation of technology-based governance programs. keywords: smart city, smart government, utaut 2 1. introduction the development of ict (information and communication technology) has brought significant impacts in human life, one of them is the internet. it is not only limited to personal computers (pc) and smartphone devices, but ict has also entered various sectors, included the government. the development of technology and information in the governmenthas become a new innovation in urban areas to provide better services to the public, it is known as smart city. among several smart cities in indonesia, bandung is the one which has made serious efforts in becoming a smart city through the utilization of ict to serve the community. in august 2016, bandung was named the only city whose government has been using smart city contents wholly connected until the level of kelurahan (urban village). it is known as the smart government (pikiran rakyat, 2016). smart government is defined as the transformation of local government to be more transparent, efficient and open to their citizens through the use of ict and * corresponding author. email address: helgameizhura95@gmail.com mailto:helgameizhura95@gmail.com afebi management and business review (ambr) vol.02 no.01, june 2017 63 the formulation of the smart city policies (anthopoulos and reddick, 2016). bandung city government has been very serious in making efforts to solvethe urban problems creatively through the utilization of ict. one of the programs carried out is the system of online public aspirations and complaints service (lapor). the system is a means of receiving aspirations and complaints from the citizens which are then managed and disposed to various related institutions to be responded directly. though the application is considered to be quite effective in engaging public participation, this is in fact contrary to the user feedbacks on google play in which there are more negative comments than the positive ones concerning the lapor system. to find out the actual description of public acceptance for the lapor system aiming to realize the efficiency, effectiveness, transparency, and accountability of governance, this research has adopted the modified utaut 2 thinking framework by marhaeni and indrawati which consists of seven indicators taken from the previous model of utaut: performance expectancy, effort expectancy, social influence, and facillitating condition, and three additional constructs: hedonic motivation, price value, and habit (venkatesh et al., 2012). by using this model, the factors of user considerations and behavioral tendencies in the utilization of the lapor system could be identified. 2. literature study and hyphoteses development 2.1 literature study 2.1.1 smart city the concept of smart city is defined as the icon of a habitable city with sustainable developments (chourabi et al., 2012). while other notions say that smart city is a city which encourages sustainable economic growth by utilizing information to make better decisions, anticipate problems proactively, and coordinate resources to effectively operate (ibm, 2011). smart city is categorized into six smart characteristics: smart economy, smart people, smart government, smart mobility, smart environment, and smart living (giffinger and gudrun, 2010). 2.1.2 smart government many countries in the world have now also benefited from the emergence of icts which improve their urban governances. an ictbased government is known as smart government which is broadly interpreted as the integration of technology, society, policies, practices, resources, social norms and information interacting to support the activities of the city government (chourabi et al., 2012). today, the concept of e-government has led to a higher level called smart government which leverages the power of "data" in the efforts to improve public services; to carry out integrated services; to engage with citizens; to work together in developing policies; and to implement solutions for the welfare of society (harsh and ichalkaranje, 2015). technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city 64 2.1.3 government 3.0 government 3.0 is known as a new paradigm in government activities to provide more customized public services and generate new jobs creatively. this is done by opening and sharing government data to public in order to encourage communications and collaborations between government departments and the society. based on the executive summary of south korea conducted by open government partnership, government 3.0 aims to make government more serviceoriented, competent, and more transparent in order to achieve the happiness of every citizen (cain, 2015). 2.1.4 open government an open government generally means a broad-based and global movement to expand citizen access to the government works involving three core principles: transparency: civic access, participation: civic engagement, and collaboration: civic involvement (rogers and lindsey, 2012). in practice, the term "open government" is often used to describe the initiative of placing government documents and information in cyberspace (the internet). technological developments encourage open governance which facilitates people's access to information. website development is considered to be important in the open government practices. it is not only limited in providing information but also enabling interactions between government and the citizens (meijer et al., 2012). 2.1.5 unified theory of acceptance and use of technology (utaut) 2 utaut 2 is the development of the previous utaut model formulated by venkatesh et al. in 2003. utaut 2 is one of the best models to predict the acceptance of technology and explain the user’s behavior in using the technology (kumar, 2013). a research conducted by venkatesh et al. in 2012 presented` utaut 2 by adding extra key constructs and their relations to each other into the previous utaut model to be tailored to the context ofthe consumer use. the three other new constructs added are hedonic motivation, price value, and habit, and the moderating variables used are age, gender, and experience. a) performance expectancy → behavioral intention the definition ofperformance expectancy (pe) according to venkatesh et al. (2003) is the extent to which individuals believe that the use of a system will help them to achieve the maximum performance in their works. furthermore, it is explained that pe is the strongest predictor of behavioral intention (bi). while, according to marhaeni and indrawati (2015) bi is defined as the extent to which a person will use a particular technology in the future. a research by alkhunaizan and love (2012) concerning the use of mobile commerce (m-commerce) in saudi arabia discovered that pe provides the strongest influence on bi. it is in line with oye et al's research (2011) regarding the acceptance and use of ict by the academic staff at lasu university, nigeria in which pe was found to be the most influencing factor of interest for technology use at the university. in addition, in terms of their relations afebi management and business review (ambr) vol.02 no.01, june 2017 65 moderated by age and gender, a research by al-gahtani et al. (2007)figured out that there are no significant interactions of age and gender on the influence of pe against bi. b) effort expectancy → behavioral intention according to venkatesh et al. (2003), effort expectancy (ee) is the level of convenience perceived by the users in using a system. based on a study by oye et al. (2011), ee wasfound to be the most influential factor toward bi in the use of ict by the academic staff at lasu university, nigeria. then, the same thing was also expressed by pahnila et al. (2011) that ee was an important factor in the acceptance of tao bao, the chinese ebay. furthermore, the ee's influence on bi moderated by gender and age was more significant in older female employees (venkatesh et al., 2003). however, a research by yu (2012) found that none of the age and gender affect the influence of ee on bi. c) social influence → behavioral intention social influence (si) is defined by venkatesh et al. (2003) as the extent to which a person perceives the people in his or her social environment, friends and family, can influence his behavior to use a system. furthermore,it was also explained that si is the factor determining bi directly, the most significant influence takes place in older female employees. another study by lewis et al. (2013) also showed that si has an influence on bi and its effect becomes more complex when the moderating variable of gender is involved. d) facilitating conditions → behavioral intention the definition of facilitating conditions (fcs) is how much someone believes in factors such as the presence of devices, knowledge, guidance, and other people in the social groupcan support the use of a system (venkatesh et al., 2003). based on the results of research by venkatesh et al. (2012) regarding the utaut 2 model, fcs were also found to have an influence on bi moderated by gender and age. e) hedonic motivation → behavioral intention hedonic motivation (hm) is defined by venkatesh et al. (2012) as the sense of pleasure and comfort felt from the use of a technology, which plays an important role in determining the acceptance and use of technology. further research by venkatesh et al. (2012) then found that hm influenced bi and the influence was stronger in younger men who had little experience in usingthe technology. another study conducted by kumar (2013) mentioned the term “perceived enjoyment” which focuses on whether consumers use the service or technology for convenience or not. these studies revealed that perceived enjoyment had a positive influence on bi. while, xu (2014) who conducted a research in the context of social network games also found that the perceived enjoyment had a significant influence on bi. technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city 66 f) price value → behavioral intention venkatesh et al. (2012) defined prive value (pv) as the benefit perceived by users over the costs incurred for using a technology / system. a research conducted by kumar (2013) used the term “price level”, meaning the consumer attitudes toward a technology at a certain price level (will accept or reject), including whether the consumer is satisfied with the service of the certain price level and how much money the consumer expect to spend for the service. the result of kumar’s study (2013) found that price level had a negative influence on bi. yet, another study by alkhunaizan and love (2012), using the term “cost” to describe pv, stated that cost was significantly able to predict usage intention in the context of mobile commerce customers in saudi arabia. g) habit → behavioral intention habit is the extent to which someone automatically tends to use an information system which he or she has learned (venkatesh et al., 2012). based on the research, the additional variables of facilitating conditions, hedonic motivation, price value, and habit as the predictors of bi could increase the value of bi’s r2 which was originally only 70% becoming 74%. lewis et al., (2013) also suggested that habit has a significant influence on bi. h) behavioral intention → use behavior use behavior (ub) is mentioned as a measure of the actual use frequency of a technology by the users (wu et al., 2012). in the utaut 2 model, the effect on ub is also determined by the habit factor, in which venkatesh et al. (2012) found that older men with more experienced use of technology tended to be more accustomed to using technology. furthermore, the research conducted by wu et al.(2012) also revealed that bi has a positive influence on ub. i) facilitating conditions → use behavior venkatesh et al. (2003) explained that the effect of fcs on the use of technology is stronger in older employees and it will be stronger and stronger as the experience increases. another study conducted by fillion et al. (2012) found that fc had a positive influence on the use of technology, but that effect was not moderated by age, gender, and experience. j) habit → use behavior based on the research conducted by venkatesh et al. (2012),the influence of habit on ub is stronger in older men who have more experience. in addition, pahnila et al. (2011) who conducted research on the use of chinese ebay used another term “actual use” for ub and found that habit hasa significant influence on the actual use. 2.2 hypotheses development in this study, the compilation of the framework refers to the modified model of utaut 2 developed by marhaeni and indrawati as in figure 2.1, with the explanation of the variables as follows: afebi management and business review (ambr) vol.02 no.01, june 2017 67 a) independent variables (exogen): performance expectancy (pe), effort expectancy (ee), social influence (si), facilitating conditions (fc), hedonic motivation (hm), price value (pv), and habit (h). b) dependent variable (endogen): use behavior (ub). c) intervening variable (second endogen): behavioral intention (bi). d) moderating variables: age and gender. figure 1 the modified thinking framework of utaut 2 this study only usesage and gender as the moderating variables, it wasexplained that the two moderating variables could increase the r2value ofbehavioral intention and use behavior (marhaeni and indrawati, 2015). the study modified the previous utaut 2 model by venkatesh, et al. by addingage which moderated the relationship between facilitating conditions anduse behavior. this is supported by the hypothesis test results from marhaeni and indrawati’s research which found that facilitating conditions hada positive and significant impact on use behavior moderated by age. furthermore, this study also eliminatedthe moderator variable of experience since the data was only retrievedat a particular time. this opinion is supported by venkatesh et al. who operated the variable of experience into three levels of time: the post-training period, a lenght of time a system takes technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city 68 after it starts to be in use, ie one month; and three months. it means the variable of experience requires a period of post-training for retrieving data. hence, this study also eliminated the moderating variable of experience from the utaut 2 model. from the results of theoretical searches and previous studies, the hypotheses used in this research are as follows: table 1 research hypotheses h1 performance expectancy has a positive and significant effect on behavioral intention. h1a the effect of performance expectancy on behavioral intention is moderated by age. h1b the effect of performance expectancy on behavioral intention is moderated by gender. h2 effort expectancy has a positive and significant effect on behavioral intention. h2a the effect of effort expectancy on behavioral intention is moderated by age. h2b the effect of effort expectancy on behavioral intention is moderated by gender. h3 social influence has a positive and significant effect on behavioral intention h3a the effect of social influence on behavioral intention is moderated by age. h3b the effect of social influence on behavioral intention is moderated by gender. h4 facilitating conditions has a positive and significant effect on behavioral intention. h4a the effect of facilitating conditions on behavioral intention is moderated by age. h4b the effect of facilitating conditions on behavioral intention is moderated by gender. h5 hedonic motivation has a positive and significant effect on behavioral intention. h5a the effect of hedonic motivation on behavioral intention is moderated by age. h5b the effect of hedonic motivation on behavioral intention is moderated by gender. h6 price value has a positive and significant effect on behavioral intention. h6a the effect of price value on behavioral intention is moderated by age. h6b the effect of price value on behavioral intention is moderated by gender. h7 habit has a positive and significant effect on behavioral intention. h7a the effect of habit on behavioral intention is moderated by age. h7b the effect of habit on behavioral intention is moderated by gender. h8 facilitating conditions has a positive and significant effect on use behavior. h8a the effect of facilitating conditions on use behavior is moderated by age. h9 habit has a positive and significant effect on use behavior. h9a the effect of habit on use behavior is moderated by age. h9b the effect of habit on use behavior is moderated by gender. h10 behavioral intention has a positive and significant effect on use behavior. 3. research methodology 3.1 research characteristics this research uses quantitative approach method, in which according to sugiyono (2016: 7) that quantitative method is a scientific method because it has fulfilled the scientific norms which are concrete / empirical, objective, measurable, rational, and systematic. based on its purpose, this research is classified into a descriptive research in which the reasearch is usually done afebi management and business review (ambr) vol.02 no.01, june 2017 69 when the researchers have already known the factors or variables to measure an object or field but not the relationship amongthe factors or variables. based on the type of investigation, this research belongs to causal research aiming to understand the variables of cause and effect. the characteristics of this study when viewed from the time of execution isa cross-sectional research type, as described by sekaran (2006: 177) that a cross-sectional study is done using a one-timed data collection only, for example during the period of a day, a week, or a month to answer the research questions. 3.2 sampling technique this research used non-probability sampling technique since the exact number of population related to the amount of lapor application usage was not known. in detail, this research used non-probability sampling technique with the purposive sampling type. according to zikmund et al. (2010: 396), the purposive sampling is a non-probability sampling technique in which certain individuals are selected to be sampled based on the conformity of required characteristics. the characteristics set by the researchers for the samples were: 1) people who live in the city of bandung. 2) the moderating variable of age was used and divided into two categories, namely young age and old age. according to the united nations (un), the category of young is represented by the ages of 1524 years, while the ages above 24 years are categorized old. therefore, this study uses the ages of 15-24 for the young age category, while the ages above 24 years are categorized as old. since the population number in this study was unknown, then the determination of the sample number used the bernoulli formula. in accordance with the sample size calculation using the formula, the minimum sample size used in this study was 385 respondents and the numbers were rounded from 384.16. this study used sem analysis technique, in which according to kline, the appropriate number of samples for the sem calculations is more than 200 for more complex models (latan, 2012: 45). eventually, the researchers set the total samples to be used were 400 respondents of the people who lived in the city of bandung, both the users of the lapor system andthose who have notused it yet. 4. results this research used two main characteristics as the moderating variables, they were age and gender. based on age, 67% of the respondents were dominated by people aged 15-24 years and 33% of the ages over 24 years old. based on gender, women were dominated by 57%, and men as much as 43%. while, for the test model, in the sem-pls method, it was divided into two stages namely outer model and inner model. 4.1 outer model for the outer model, the validity and reliability tests were carried out against the indicators used in the study. the first stage done was the indicator reliability test in which the loading factor must be > 0.70 to be considered valid. based on technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city 70 the test results, all indicators of the questionnaire in this study werethereby stated valid. this could happen due to the overall loading factor of the indicatorswhich was bigger than 0.7 and these results were referred to the rule of thumb (garson, 2016), as can be seen in table 2. table 2 results of indicator loadingvalues construct item indicator loading rule of thumb conclusion performance expectancy pe1 0.875 0.7 valid pe2 0.906 0.7 valid pe3 0.879 0.7 valid effort expectancy ee1 0.894 0.7 valid ee2 0.900 0.7 valid ee3 0.877 0.7 valid social influence si1 0.885 0.7 valid si2 0.884 0.7 valid si3 0.837 0.7 valid facilitating conditions fc1 0.901 0.7 valid fc2 0.898 0.7 valid fc3 0.870 0.7 valid hedonic motivation hm1 0.872 0.7 valid hm2 0.870 0.7 valid hm3 0.806 0.7 valid the next stage conducted was the internal consistency reliability test, it is usually usedas the reference to measure the overall reliability of the constructs. the criterion is that the value of the composite reliability must be > 0.70 for a construct to be considered reliable (hair et al., 2014). since all variables in this research have the value of composite reliability bigger than 0.7. thus, the nine constructs / research variables can be said to be reliable. this can be seen in table 3 below. table 3 results of composite reliabilityvalues construct composite reliability rule of thumb conclusion performance expectancy 0.917 0.7 reliable effort expectancy 0.920 0.7 reliable social influence 0.903 0.7 reliable facilitating conditions 0.919 0.7 reliable hedonic motivation 0.887 0.7 reliable price value 0.918 0.7 reliable habit 0.874 0.7 reliable behavioral intention 0.935 0.7 reliable use behavior 0.965 0.7 reliable after measuring the reliability of the constructs and indicators performed, the next step taken was measuring the validity of the research model. so, then the test of convergent validity was done. this test requires that the ave (average variance extracted) value must be 0.5 or bigger, which means that a construct has afebi management and business review (ambr) vol.02 no.01, june 2017 71 a good ability explain the indicator. (hair et al., 2014). according to the test results, the nine constructs in this study had the ave value above 0.5 which means that the constructs have good abilities to explain the indicators. the results are shown in table 4 below. table 4 results of ave value construct ave rule of thumb conclusion performance expectancy 0.787 0.5 good effort expectancy 0.793 0.5 good social influence 0.756 0.5 good facilitating conditions 0.792 0.5 good hedonic motivation 0.723 0.5 good price value 0.789 0.5 good habit 0.777 0.5 good behavioral intention 0.827 0.5 good use behavior 0.932 0.5 good the last stage done in testing the outer model was the discriminant validity test. hair et al. (2014) explained that this step requires the ave square root value of each construct must be bigger than the ave value of the construct to be declared valid. based on the test results as in table 5, it was found that allthe constructs in this study are valid because each of the √ave value is bigger than the ave values. table 5 comparison results of ave and √ave values construct ave √ave conclusion performance expectancy 0.787 0.887 valid effort expectancy 0.793 0.890 valid social influence 0.756 0,869 valid facilitating conditions 0,792 0.890 valid hedonic motivation 0.723 0.850 valid price value 0.789 0.888 valid habit 0.777 0.881 valid behavioral intention 0.827 0.910 valid use behavior 0.932 0.965 valid the indicator loadingvalue of each variable can also be seen in the model of calculation results with smartpls 3.0 as in figure 2 which shows valid numbers for 25 indicators in this study. technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city 72 figure 2 output of the outer model using smart pls 3.0 4.2 inner model in the inner model test of pls, the criterion of adjusted r2 (r2adj) was used. hair et al. (2014) recommended the use of the r2adj to avoid any bias. the following table 6 describes the value of r² and r2adj of the endogenous latent constructs. table 6 the r² and r2adj values of endogenous latent constructs the value of r2adj in the behavioral intention construct is 0.532, which means the behavioral intention is influenced by performance expectancy, effort expectancy, social influence, facilitating condition, hedonic motivation, price value, and habit amounted to 53.2% while the rest 46.8% is influenced by other constructs beyond this study. furthermore, the use behavior construct is influenced by behavioral intention, facilitating condition, and habit at 38.3% while 61.7% are influenced by other constructs outside of this study. then the value of r² in table 6 will be calculated by the q² formula as follows: q2 = 1 – (1 – r12) (1 – r22) = 1 – (1 – 0.540) (1 – 0.387) = 1 – (0.46) (0.613) construct value of r² value of r2adj behavioral intention 0.540 0.532 use behavior 0.387 0.383 afebi management and business review (ambr) vol.02 no.01, june 2017 73 = 1 – (0.28198) = 0.71802 ≈ 0.718 or 71.8% in this study, the q ² or predictive relevance score is 0.718 or 71.8%. so, it can be concluded that the model can explain the data through behavioral intention and use behavior constructs influenced by other constructs at 71.8%. the next step wasthe hypotheses test with the criteria taken from the tstatistics or t-value of the research. in addition, the original sample number in the path coefficient is used to determine the positive or negative effects of latent constructs on the indicators and other constructs. these criteria are described as follows: 1) if the value of path coefficient is positive, then there is a positive influence between one construct and the others. 2) if the value of path coefficient is negative, then the influence direction of the constructs in this study is negative 3) if t count > 1.65 (one-tailed), then h0 is rejected 4) if t count ≤ 1.65 (one-tailed), then h0 is accepted table 7 hypothesis test results hypothesis relationship path coefficient t count t table conclusion h1 pe -> bi -0.028 0.468 1.650 h0 accepted h2 ee -> bi -0.028 0.496 1.650 h0 accepted h3 si -> bi 0.163 3.012 1.650 h0 rejected h4 fc -> bi 0.116 2.363 1.650 h0 rejected h5 hm -> bi 0.259 4.814 1.650 h0 rejected h6 pv -> bi 0.669 14.442 1.650 h0 rejected h7 ha -> bi 0.171 2.694 1.650 h0 rejected h8 fc -> ub 0.121 2.191 1.650 h0 rejected h9 ha -> ub 0.176 2.955 1.650 h0 rejected h10 bi -> ub -0.032 0.612 1.650 h0 accepted based on table 7, the results of t count on the hypotheses of h1, h2, and h10 show that h0 is accepted which means there is no significant influence of performance expectancy and effort expectancy variables on behavioral intention, and behavioral intention variable on use behavior. while the other hypotheses of h3, h4, h5, h6, h7, h8, and h9 show that h0 is rejected or h1 is accepted which means there are significant influences from the variables of social influence, facilitating condition, hedonic motivation, price value, and habit on behavioral intention, as well as the variables of facilitating condition and habit on use behavior. this study uses two moderating variables namely age and gender. both moderators were tested for their influences using multigroup analysis toward the relationship between the exogenous latent constructs and endogenous latent constructs by bootstrapping method. the test results can be seen in table 8. related to age moderator. technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city 74 table 8 results of bootstrapping t value intothe moderating variable of age in table 9, the results of comparing t count and t table show the numbers of t count are smaller than 1.65. thus, all hypotheses tested; h1a, h3a, h4a, h5a, h6a, h7a, h8a, and h9a did not show any relationship of the variables moderated by age. table 9 results of bootstrapping t value on the moderating variable of gender table 9 describes the results of bootstrapping t count intothe moderating variable of gender. in hypothesis h5b, it can be seen that the value of t count is 1.841 in which the number is bigger than t table. so, it can be concluded that the influence between hedonic motivation toward behavioral intention is moderated by gender. meanwhile, the hypotheses of h3b, h4b, h6b, h7b, and h9b show that the values of t count are smaller than t table, this means the variable relationships in the hypotheses are not moderated by gender. 5. discussion this study examined nine variables consisting of performance expectancy (pe), effort expectancy (ee), social influence (si), facilitating conditions (fcs), hedonic motivation (hm), price value (pv), habit (h), behavioral intention (bi), and use behavior (ub). the variables were tested using 25 items of questionnaire questions. the tests of the variables refer to t statistics or t count and path coefficient of the relationsamong the variables to see the level of significance, and the positive and negative influences. the result of the research on h1 shows the path coefficient value of -0.028 and the value of t count is not significant at 0.468. this explains that h0 is accepted, which means performance expectancy has no positive and significant effect on behavioral intention in the use of lapor system in bandung city. it can be interpreted that the extent to which a person believes that the use of the lapor hypothesis relation t count t table conclusion h3a si -> bi 0.149 1.650 h0 accepted h4a fc -> bi 1.348 1.650 h0 accepted h5a hm -> bi 0.467 1.650 h0 accepted h6a pv -> bi 1.168 1.650 h0 accepted h7a ha -> bi 0.259 1.650 h0 accepted h8a fc -> ub 1.451 1.650 h0 accepted h9a ha -> ub 0.179 1.650 h0 accepted hypothesis relation t count t table conclusion h3b si -> bi 0.089 1.650 h0 accepted h4b fc -> bi 1.386 1.650 h0 accepted h5b hm -> bi 1.841 1.650 h0 rejected h6b pv -> bi 0.678 1.650 h0 accepted h7b ha -> bi 0.066 1.650 h0 accepted h9b ha -> ub 0.260 1.650 h0 accepted afebi management and business review (ambr) vol.02 no.01, june 2017 75 system can assist him or her in delivering complaints and aspirations has not affected their intentions and motivations in using the system. this result is not in line with the previous research by marhaeni and indrawati (2015) stating that there is a significant influence between the two variables. in h2, the relationship between effort expectancy and behavioral intentionis also not positive and significant sincethe path coefficient value is -0.028 and the t count value is not significant at 0.496. this means that the level of convenience expected by the respondents has not been able to influence their interest or motivation in using the lapor system. this result is in accordance with the research by taiwo and downe (2013), stated that the users of information systems are concerned about the ease of information system utilization. the complex system of apps / webs which are difficult to navigate can make a person less interested in adopting the app system or website. h3 describes the positive and significant influential relationship between social influence and behavioral intention. itis supported by the positive path coefficient value of 0.163 and t count value at 3.012. this can be interpreted that the people in the social environments of the respondents influence to their intentions to use the lapor system. besides, this result is also supported by the research conducted by marhaeni and indrawati (2015), which explained that the people around the usersof a system not only determine their interest to using it at that moment, but will also influence their interest in continuing to use it in the future. the calculation result for h4 shows the positive path coefficient value at 0.116 and significant t count value at 2.363. the figures state that facilitating conditions have a positive and significant effect on behavioral intention. this can be interpreted as the availability of tools, knowledge, guidance, and other people around to support the use of the lapor system affects someone’s intention to use the system. this statement goes along with the research conducted by marhaeni and indrawati (2015) on instant messaging applications, in which it was explained that the better the conditions that facilitate the use of a system, the higher the interest of a person to use the system / application. it was explained in h5 that there is a positive and significant relationship between hedonic motivation and behavioral intention. it is indicated by the positive value of the path coefficient at 0.259 and the significant t count value at 4.814. this means that the enjoyment and convenience perceived in using the lapor system may affect a person's interest and motivation in adopting the system. this is supported by the research conducted by putra and ariyanti (2013) stating that hedonic motivation shows the highest influence over other variables. another study conducted by marhaeni and indrawati (2015) also explained that the higher the comfort obtained from the use of a system, the higher the interest of someone to use it. h6 in this study states the relationship between price value and behavioral intention, in which the value of the path coefficient is positive at 0.669 and the t count value is significant at 14.442. the values show a positive and significant relationship between both variables. it can be interpreted that people’s perceptions of the benefit over the financial costs incurred to use the lapor system may influence their intentions to use the system. the above statement is supported by the previous research conducted by marhaeni and indrawati (2015), stated that the greater the benefits derived from the use of a system, the greater the interest of a technological adoption for the online system of public aspirations and complaints service (lapor) in bandung city 76 person to use the system. further research by putra and ariyanti (2013) also explained that price value is one of the normal assessment of each individual against various types of decisions. the calculation result of h7 shows significant t count value at 2,694 and positive path coefficient value at 0,171. this means that habitpositively and significantly influences behavioral intention in the use of lapor system in bandung. the statement can be interpreted that the degree to which a person tends to use the system is automatically based on learning so that it affects his or her interest in using a technology. the result of the previous research by marhaeni and indrawati (2015) explained that the more someone uses a technology, the stronger the habit will become. the growing habit will also strengthen the interest of someone to use the system. h8 in this study stated that facilitating conditions have a positive and significant impact on use behavior. it is proven by thesignificant t count value of 2,191 and the positive path coefficient value of 0,121. this means that the presence of tools, knowledge, guidance, and other people of the social groups to support the use of the lapor system not only affects a person's interest, but also influences his or her usage behavior. this result is supported by the research conducted by marhaeni and indrawati (2015) regarding the use of instant messaging applications which explain that the compatibility of a system with its devices determines whether the user will be willing to use or just reject it. h9 test shows significant t value at 2,955 and positive path coefficient value at 0,176. these values indicate that habit has a positive and significant effect on use behavior. it means, the habit factor is not only able to influence the interest in using lapor system, but may also influence the behavior in using the system. this is in line with the research by marhaeni and indrawati (2015) stating that the use of multiple technologies at once in a person's daily life can improve his or her habit in using the technology. venkatesh et al. (2012) also explained that in the case of a multifunctional system, the users can select several different applications and use them in different ways so that they will tend to have a higher habit. h10 describes the relationship between behavioral intention and use behavior on the lapor system.the test shows the value of path coefficient is 0.032 and the t count value is not significant at 0.612. these results can be interpreted that the relationship of both does not have any positive and significant effect. it means that the intention of a person in using a system has not been able to influence his or her habit to continue usingthe system. this also goes along with the research conducted by taiwo and downe (2013), in which they also found that the influence between behavioral intention on use behavior was not significant. in the moderatingvariable test of age category, there is no correlation between the variables moderated by that category. while for the moderator of gender, it appears that the moderator influences the relationship between hedonic motivation towards behavioral intention. this is in line with the research conducted by marhaeni and indrawati (2015) also the study by putra and ariyanti (2013). based on the results of marhaeni and indrawati’s research (2015), men tend to have higher attention to the factors of pleasure and comfort in using technology. afebi management and business review (ambr) vol.02 no.01, june 2017 77 6. conclusion and recommendation 6.1 conclusion based on the results of the research, it can be concluded that price value, hedonic motivation, social influence, habit, and facilitating conditions have positive and significant impact on behavioral intention. the moderator of gender moderates the relationship between hedonic motivation and behavioral intention positively and significantly, whereas age is not found to moderate the relationships among other variables. furthermore, the variables affecting use behavior positively and significantly are habit and facilitating conditions, but there is no influence found among the variables moderated by age or gender. 6.2 recommendation in accordance with the conclusion, there are some suggestions to be given; firstly, the city government of bandung should optimize the factors which influence the utilization of the existing resources and opportunities, so that the government can improve the implementation of the lapor program to be better. secondly, for further research, the composition of respondents in each category is suggested to be more proportional so that the results will be more representative and describe the real situation. in addition, the future research may also include the moderating variable of experience which is not examined in predicting the adoption and use of the lapor system on this study. in order to know the impact of the experience moderator, a periodical data collection in a certain lenght of time can be done for more complex analysis and better result. references al-gahtani, s. s., hubona, g. s., & wang, j. 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(2010). business research methods 8th edition. canada: south-western cengage learning. 66 the association between tax aggressiveness, sustainability disclosure and cost of equity novelyn debora sinaga department of accounting, polytechnic of state finance stan, indonesia amrie firmansyah* department of public sector accounting, polytechnic of state finance stan, indonesia abstract companies that have a high cost of capital show high risk. investors expect a higher rate of return to compensate for the investors they will bear. this study examines whether sustainability disclosure and tax aggressiveness affect the equity cost. the research data were obtained from company financial statements, annual reports, and sustainability reports of non-financial sector companies listed in the 50 companies with market capitalization from 2017 to 2020. data sourced from www.idx.co.id, www.idnfinancial.com and the company's official website. based on purposive sampling, the total sample used in this study amounted to 108 observations. hypothesis testing is conducted by using multiple linear regression analysis for panel data. the results suggest that sustainability disclosure is negatively associated with the cost of equity, while tax aggressiveness is positively associated with the cost of equity. this research indicates that the indonesia financial services authority needs to increase supervision over the implementation of sustainability carried out by listed companies. keywords: tax aggressiveness, cost of equity, corporate social responsibility. *corresponding author. email address: amrie@pknstan.ac.id the association between tax aggressiveness, sustainability disclosure and cost of equity received august 21st 2022 review september 29th 2022 publish december 31st 2022 afebi management and business review (ambr) p-issn 2548530x e-issn 2548-5318 the current issue and full text archive of this journal is available on afebi management and business review at: https://journal.afebi.org/index.php/ambr/article/view/595 mailto:amrie@pknstan.ac.id http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479692235&1&& http://issn.pdii.lipi.go.id/issn.cgi?daftar&1479693409&1&& https://journal.afebi.org/index.php/ambr/article/view/5954 67 ambr introduction the cost of equity is a cost that arises as a result of capital funding in the form of the issuance of company shares (harsono & halim, 2020). the company leads to additional costs in return for the available funds provided by investors (kurnia & arafat, 2015). investors expect a high rate of return on the funds that have been given to the company (febriyanto & firmansyah, 2018). the rate of return expected by investors will change the company's policy in its funding strategy. the company will set a higher cost of equity by increasing dividends and decreasing stock prices to exceed the expected return rate expected by investors (febrininta & siregar, 2014). a capital market is a place that provides facilities for conducting transactions related to the sale and purchase of securities, both bonds and stocks or other securities (widyowati, 2020). the stock price in the capital market, which reflects the relevant information, is a characteristic of an efficient market (kusumaningtyas, 2019). market efficiency based on information is divided into three forms: weak, semi-strong, and strong (fama, 1970). the weak form of an efficient market is a market where the price of securities reflects past information (mar'ati, 2012). the semi-strong form of an efficient market is a market where the price of securities reflects all published information (ady, 2017). meanwhile, the strong form of an efficient market is a market where the price of securities reflects relevant past information and published information and is only known by a few parties (fama, 1970). the issuance of shares leads to companies bearing costs as a return for the provision of funds provided by investors, which is called the cost of equity capital (brigham & houston, 2019). the cost of equity capital is the return expected rate of investors on their company investment (perwira & darsono, 2015). for investors, the expected rate of return is relevant to the firm risk. risk is defined as the possibility of the actual rate of return that is different from the expected rate of return (mardhiyah, 2017). also, it reflects the company's capital structure from the cost of capital. investors and creditors expect higher investment returns to compensate for the risk they should bear. the level of cost of equity borne by the company shows the level of investor confidence in the company's ability to relate to the return on investment. thus, the company's high equity cost indicates high risk borne (apriliani & harto, 2016). the available information will be a consideration for investors in making investment decisions. one of the investment risks is the uncertainty or inaccuracy of information due to information asymmetry (bhattacharya et al., 2012). information asymmetry is part of agency theory, a condition where one party has more information than the other. generally, company managers have more complete and precise information about the company's condition than investors. under investment law, high risk-high return and low risk-low return. the rate of return expected by investors is high because investors perceive the company as having a high risk, and the company will bear a high cost of equity. therefore, tests of the cost of equity need to be investigated further. tests on the cost of equity have been carried out in previous studies, including corporate governance (amelia & yadnyana, 2016; nugroho & meiranto, 2014; sari & tjen, 2016; teti et al., 2016), corporate social responsibility (ariyani & nugrahanti, 2013; hmaittane et al., 2019; rinobel & laksito, 2015; zakia, 2018), information asymmetry (astutik et al., 2018; darma & irwanto, 2017; ningsih & ariani, 2016; nurjanati & rodoni, 2015; prabowo, 2017), earnings management (barvidi, 2015; entezarian et al., 2014; febriyanto & firmansyah, 2018; houqe et al., 2017; kurnia & arafat, 2015), voluntary disclosure (barvidi, 2015; darma & irwanto, 2017; lahaya, 2017; lopes & alencar, 2010), tax aggressiveness (masri et al., 2017), tax avoidance (dewiyanti & burhan, 2020; febriyanto & firmansyah, 2018; ghelichli et al., 2017; goh et al., 2016; harsono & halim, 2020; yang & liu, 2019), and firm size (kurnia & arafat, 2015; llukani, 2013). stakeholder theory states that a company should meet its interests and benefit stakeholders (deegan, 2014). stakeholders expect the company to act ethically and transparently in running the company. meanwhile, to keep the company's stock price high, companies always achieve high profits, their main goal, but the company intends a low-profit value for tax purposes (francis et al., 2014). to achieve this goal, companies usually carry out aggressive tax avoidance to keep tax costs to a minimum. this action is unethical and should be avoided by the company to meet stakeholder expectations. meanwhile, to meet stakeholders' expectations regarding the transparency of company information, disclosure of the company's sustainability report would be the right choice. hanlon & slemrod (2009) examined how investors react to tax protection activities and found that a company's stock price fell when there was information about its involvement in tax protection. falling stock prices result in the company bearing a higher cost of equity. tax is an expense that will reduce net income, so companies wish to pay minimum taxes (kurniasih & sari, 2013). it causes companies to manage and even practice tax avoidance through tax aggressiveness. tax aggressiveness is a management effort to reduce taxable income through tax planning, legally, illegally, and in between (a gray area) (lietz, 2013). the panama papers is one of the biggest cases of tax aggressiveness. the leak of more than 11 million financial document files has exposed facts about how the parties involved have avoided their tax obligations (pohan, 2017). the tax aggressiveness practices include placing assets in tax haven countries, establishing shell companies that are legally established but not used for operations but tac avoidance pratices, and so on (rante, 2019). 68 tax aggressiveness, tax avoidance and tax management are activities that have the same meaning (lanis & richardson, 2012). previous research that examined the association between tax aggressiveness and the cost of equity is still very rare. masri et al. (2017) concluded that tax aggressiveness is negatively associated with the cost of equity. lietz (2013) stated that tax aggressiveness is part of tax avoidance. thus, testing the effect of tax aggressiveness on the cost of equity is still relevant compared to testing the effect of tax avoidance on the cost of equity. dewiyanti & burhan (2020), febriyanto & firmansyah (2018), and yang & liu (2019) suggested that tax avoidance is positively associated with the cost of equity. ghelichli et al. (2017) and goh et al. (2016) found that tax avoidance is negatively associated with the cost of equity. harsono & halim (2020) concluded that tax avoidance is not associated with the cost of equity. related studies have different test results, so the tax aggressiveness test on the cost of equity needs to be conducted. the information investors need to make investment decisions relates to financial and non-financial aspects such as social and environmental aspects. to answer the information needs of investors, companies need to make sustainability disclosures that contain information on company performance and risk management (fernandez-feijoo et al., 2018). sustainability disclosure is the publication of company information that reflects the organization's economic, social and environmental performance (global reporting initiative, 2016). elkington (1997) stated that the sustainability disclosure report contains financial performance and non-financial information on social and environmental activities that enable companies to grow sustainably. according to revi (2016), a sustainability disclosure report is a form of reporting on corporate social and environmental responsibility or what is known as corporate social responsibility (csr). in preparing sustainability reports, companies need to use standards that become benchmarks in making sustainability reports. just like financial reports that have standards in the form of financial accounting standards, sustainability disclosure reports also have global reporting initiative (gri) standards. gri gssb has made several revisions to the sustainability report guidelines since 2000, starting from gri g2, gri g3, gri g3.1, and gri g4 to the birth of gri standards in 2016 (majalahcsr.id, 2017). ariyani & nugrahanti (2013) concluded that sustainability disclosure is not associated with the cost of equity. adiputra et al. (2017) found that sustainability disclosure is positively associated with the cost of equity. dhaliwal et al. (2014), hmaittane et al. (2019), rinobel & laksito (2015), and zakia (2018) proved that the disclosure of sustainability is negatively associated with the cost of equity. it is supported by firmansyah et al. (2021), who found that sustainability disclosure is negatively associated with the cost of capital. there are inconsistencies in the test results in the related studies, so examining the association between sustainability disclosure and cost of equity must be conducted. this study aims to analyze the effect of tax aggressiveness and sustainability disclosure on the cost of equity. this research complements the tax aggressiveness test on the cost of equity which was rarely conducted. previous tests regarding the effect of sustainability disclosure on the cost of equity include csdi proxy with gri g3 disclosures (ariyani & nugrahanti, 2013; rinobel & laksito, 2015). adiputra et al. (2017) and zakia (2018) employed an indicator of gri g4 disclosures. in comparison, this study uses sustainability disclosures by the gri standards 2016. the gri standards became effective in indonesia on june 8, 2017. the assessment with the gri standards index was chosen because it is an internationally applicable standard and has been applied in indonesia (pusaka, 2017). in addition, gri standards provide guidelines that are easier to understand than previous versions of gri and provide indicators that align with current issues (pusaka, 2017). in addition, gri standards 2016 positively impact sustainable development goals, which will facilitate achieving sustainable development goals (pusaka, 2017). this study employs control variables, e.g., profitability, firm size and leverage. profitability is the company's net income in operational activities (caisari & herawaty, 2019). the higher the profit earned can trigger an increase in demand for shares by corporate investors (hardiyanti, 2012). according to the law of economics, high demand will cause prices to increase, and low demand will cause prices to fall. an increase in demand for shares by investors will cause an increase in stock prices. an increase in stock prices will cause a decrease in the cost of equity borne by the company (febrininta & siregar, 2014). meanwhile, the decline in profitability can lead to a decrease in investor confidence in investing (dalimunthe, 2018). as a result, the stock price will fall, and the cost of equity will be higher (febrininta & siregar, 2014). the firm size is an exhibit of the welfare of stakeholders; the larger the firm size, the more prosperous the owner is (rinobel & laksito, 2015). large companies will be more supervised by external parties so that the level of company disclosure will be wider (rinobel & laksito, 2015). the larger the size of the company, the lower the cost of equity that must be borne by the company (rinobel & laksito, 2015). leverage is a tool that can be used to measure the effectiveness of the use of debt in a company (caisari & herawaty, 2019). companies with high levels of leverage tend to experience delays in paying debts, which causes a decrease in investor confidence in the company (fatmala & riharjo, 2021). delay in paying debts results in the risk borne by stakeholders increasing. it causes an increase in the cost of equity that must be borne by the company (caisari & herawaty, 2019). this research contributes to literature, especially in developing capital market-based financial accounting research using company data in indonesia. this research can also be used by the financial services authority, the the association between tax aggressiveness, sustainability disclosure and cost of equity 69 ambr institution responsible for overseeing the capital market in indonesia, to improve policies related to investor protection and supervision of the implementation of sustainability by issuers on the indonesia stock exchange. literature study based on the concept of agency theory, it is stated that the principal or shareholders run the company through management (amaliah, 2013). the principal gives part of the authority to the company related to the company's decision-making (jensen & meckling, 1976). management who directly sees the company's operational activities has more information than the principal, which is the concept of information asymmetry that occurs due to the separation of functions between the principal and management. management who recognizes more information and company operations often takes action for personal gain (bendickson et al., 2016). while shareholders expect relevant information in making investment decisions (lisa, 2012), information related to the company will be the basis for shareholders to assess the risks that exist in the company. the high or low risk assessed by shareholders will determine the high or low equity cost or the expected return rate by shareholders on their investment. stakeholder theory explains that companies cannot survive without the support or role of parties called stakeholders. companies need to meet the interests of stakeholders. any strategy or decision that has a negative impact on the interests of stakeholders can cause problems for the company (dmytriyev et al., 2021). as an interested party, the opinion of stakeholders regarding the company's actions will affect the company's reputation. therefore, the company gets pressure from stakeholders regarding the company's actions. if stakeholders assess the action will have a positive impact on the company's reputation will improve. on the contrary, the company's reputation will decline if stakeholders assess the action's negative impact. one of the company's actions that stakeholders assess will negatively impact is tax aggressiveness. tax aggressiveness actions taken by companies violate the concept of stakeholder theory. tax aggressiveness is an action taken by the company to reduce the tax burden borne by the company both legally and illegally (suyanto & supramono, 2012). if the tax burden is successfully reduced through tax aggressiveness by management, the company's cash inflows will increase so that this can benefit stakeholders, especially shareholders. however, tax aggressiveness also has risks and costs, so stakeholders consider this action negatively. dewiyanti & burhan (2020), febriyanto & firmansyah (2018) and yang & liu (2019) concluded that tax avoidance practices positively affect the company's cost of equity. tax avoidance actions containing risks can reduce the quality of financial statements, so investors perceive uncertainty about future cash flows. testing of tax aggressiveness on the cost of equity is still rarely conducted in previous studies. masri et al. (2017) conducted tests and found that tax aggressiveness is negatively associated with the cost of equity. lietz (2013) stated that tax aggressiveness is a form of tax avoidance. pamungkas & firmansyah (2021) concluded that tax aggressiveness could reduce earnings informativeness. investors perceive tax aggressiveness as an action that does not align with their interests and increases information asymmetry. in addition, tax aggressiveness is an action in a gray area that can increase the company's risk (lietz, 2013). thus, investors expect a high rate of return for companies that take tax aggressiveness actions to compensate for the risks they will bear. h1: tax aggressiveness is positively associated with the cost of equity based on agency theory, in running a business, shareholders delegate duties and authority to company management (jensen & meckling, 1976). management is tasked with running the company's business and ensuring the welfare of stakeholders (freeman, 1984). as a result of the delegation of tasks, following information asymmetry, management knows more about the company's performance and prospects in the future than other parties (chod & lyandres, 2021). based on the main task of management to prosper shareholders as stakeholders, it is important for management to report relevant matters regarding the company so that stakeholders can make the right decisions for the company. stakeholders are now increasingly concerned about environmental and social issues, and the risks faced by the company can significantly drop stock prices drastically. therefore, management needs to carry out corporate social responsibility or sustainability in addition to activities related to company operations. companies must disclose sustainability activities through annual or sustainability reports to improve their reputation. a sustainability report that reports on the company's performance and issues related to the company can provide an overview of the company for investors (ningrum et al., 2021). sustainability disclosure is one of the actions that positively impact stakeholders (braam & peeters, 2018). sustainability disclosure conducted by companies is in line with the concept of stakeholder theory. with sustainability disclosures made by the company, stakeholders will be more prosperous because, with information related to stakeholders, they will better recognize the risks that exist in the company, prospects and their impacts, so that investors are interested in placing their funds in the company without worrying about other risks that will arise. investors will put their capital in, hoping for a lower rate of return or cost of equity. 70 dhaliwal et al. (2014), hmaittane et al. (2019), rinobel & laksito (2015) and zakia (2018) concluded that sustainability disclosure is negatively associated with the cost of equity. stakeholders, especially investors, need adequate information about the company in making investment decisions. if the information disclosure level provided by management is inadequate or low, investors will judge the company as risky (barvidi, 2015). investors will assume that companies that have carried out sustainability activities are transparent in providing information on companies to the public. sustainability activities are the corporate responsibility of shareholders in providing non-financial information. companies that disclose social responsibility activities are considered to be able to reduce the company because the company involves various stakeholders in supervising the company's operations. h2: sustainability disclosure is negatively associated with the cost of equity research methodology this study used secondary data from financial statements, annual reports, and sustainability reports from 2017 to 2020. these data are obtained from www.idnfinancial.com, www.idnfinancials.com and the company's official website. in addition, to find the level of stock volatility, this study also uses market monthly return data (idx composite) and monthly returns of company shares obtained from www.finance.yahoo.com pages. this study employs 50 companies with the largest capitalization as of december 2020. the research sample using purposive sampling is as follows: criteria number companies that are listed on the idx until december 31, 2020 729 companies that are not included in the list of 50 companies with the largest capitalization according to the idx as of december 2020 (679) financial sector companies (12) companies with incomplete financial statements (2) financial statements are presented in currencies other than the rupiah (9) number of companies that can be used as a sample 27 number of observations 4 years total observation data 108 source: processed cost of equity is the dependent variable used in this study, while tax aggressiveness and sustainability disclosure are the independent variables. in addition, this study employs leverage, firm size and profitability as control variables. the measurement of the cost of equity in this study uses the capital assets pricing model (capm), which is a model that links the expected return of a risky asset with the risk of the related asset in equilibrium market conditions. the use of the capm model in this study follows research conducted by barvidi (2015) and nurjanati & rodoni (2015). the first step is to find the market rate of return (idx composite) with the following formula: rmit = (ihsg(t) − ihsg(t − 1)) ihsg(t − 1) where: ihsg(t) : monthly idx composite in t period ihsg(t-1) : monthly idx composite in t-1 period the next step is to find the stock return with the following formula: rit = (p(t) − p(t − 1)) p(t − 1) where: p(t) : monthly share price in t period p(t-1) : monthly share price in t-1 period next, perform a regression on the market rate of return and the rate of return on the company's shares used in the study to calculate the level of unsystematic risk or the level of volatility for each stock (rit = α +βrmit + εit). then the cost of equity is calculated by the capm model using the following formula: ri = rf + β1(rmi − rf) where: ri : cost of equity capital rf the risk-free rate of return for period t using the 10-year indonesian government bond yield (firmansyah et al., 2021; purwaka et al., 2022) β unsystematic risk for each company's stock rm the market rate of return the association between tax aggressiveness, sustainability disclosure and cost of equity table 1. the sample http://www.idnfinancial.com/ http://www.idnfinancials.com/ 71 ambr table 2. descriptive statistics the proxy for tax aggressiveness in this study uses the discretionary permanent differences (dtax) model referring to rachmawati & martani (2017) and vito et al. (2022) with a formula that has been adapted to accounting standards and tax policies in indonesia using the following model: permdiffit = α0 + α1 intangit + α2 δnolit + α3 lagpermit + εit where: permdiffit is calculated by total book-tax differences less temporary book-tax differences for firm i in year t (ptbiit (cteit / strit) (dteit / strit). ptbiit is pre-tax book income for firm i in year t. cteit is the current income tax expense of firm i in year t. strit is income tax rates in year t (25%; 22%). dteit is deferred tax expense for firm i in year t. intangit is goodwill and other intangible assets for firm i in year t. δnolit is changing in net operating loss carryforwards for firm i in year t. lagpermit is one-year lagged permdiff for firm i in year t. εit is the discretionary permanent difference (dtaxit) for the company i in year t. to control the firm size, all variables above are scaled by the average total assets in year t-1 and year t. tax aggressiveness is the residual value obtained after regressing the formula obtained annually. sustainability disclosure is assessed using the gri standards index, which has been effective in indonesia since 2017. the total index used in this study is 77 items referring to the gri standards. the formula used to calculate sustainability reporting is following prakosa et al. (2022), purwaka et al. (2022) and widyansyah et al. (2021) using the gri 2016 index with the following formula: srt = number of items disclosed to the company number of gri standards index disclosure items the profitability proxy uses a comparison of net income and total assets as firmansyah & irawan (2018), puspitasari et al. (2021) and yulianty et al. (2021). roa = net income total asset where: net income = the net profit of company i in year t. total aset = total assets of the company i in year t. the proxy used to calculate leverage in this study refers to the proxy that has been used by hatane et al. (2019) and muslim & widyastuti (2019)is as follows: lev = total debt total asset where: total debt = total debt of company i in year t. total aset = total assets of the company i in year t. in this study, the proxy used to assess firm size refers to research conducted by kurnia & arafat (2015), llukani (2013), and neifar & utz (2019) as follows: size = ln(total asset) hypothesis testing in this study uses linear regression analysis for panel data. the model for the regression equation in this study is as follows: coeit = β0 + β1dtaxit − β2srit + β3derit − β3roait − β4sizeit + εit result and discussion the descriptive statistics of this research variable in table 2 present the average (mean) and median values, which are the embodiment of the size of the data concentration, the maximum and minimum values, which represent the highest and lowest values, as well as the standard deviation which represents the distance of each data with the mean on average. var. mean median max. min. std. dev. n coe 0,0021 (0,0004) 0,0501 (0,0213) 0,0116 108 sr 0,3103 0,2792 0,7142 0,0909 0,1329 108 dtax (0.0000) (0.0045) 0.2854 (0.1508) 0.0465 108 lev 0,4258 0,3953 0,8755 0,0409 0,2126 108 roa 0,1030 0,0955 0,4666 (0,1073) 0,0912 108 size 31,112 30,997 33,495 29,119 1,039 108 source: processed furthermore, the fixed effect method is the fittest model employed in the regression analysis test of this research model. the summary of the test results is as follows: 72 var. coeff. t-stat prob. c 0.5184 2.8865 0.0025 dtax 0.0198 1.5057 0.0681 * sr -0.0731 -3.6504 0.0002 *** roa -0.0124 -0.5593 0.2888 lev -0.0030 -0.3441 0.3658 size -0.0157 -2.6896 0.0044 ** r2 0.4226 adj. r2 0.1871 f-stat. 1.7949 prob. (f-stat.) 0.0205 information: ***) affects the 1% significance level **) affects the 5% significance level *) affects the 10% significance level source: processed the association between tax aggressiveness and cost of equity the hypothesis testing result suggests that tax aggressiveness is positively associated with the cost of equity. this study harmonizes the results of tests conducted by dewiyanti & burhan (2020), febriyanto & firmansyah (2018), and yang & liu (2019). in the context of the cost of equity, tax aggressiveness is considered an action similar to tax avoidance. this result is different from masri et al. (2017). also, this study does not conform to ghelichli et al. (2017) and harsono & halim (2020). after performing descriptive statistical analysis on the research sample, the mean tax aggressiveness variable (dtax) is -0.0000. it illustrates that this study's average sample of companies practices low tax aggressiveness. based on the data that has been collected, the increase or decrease in tax aggressiveness practices carried out by companies varies each year. it illustrates that the level of aggressiveness carried out by the companies that are the sample of this study does not have a fixed target from year to year. tax aggressiveness is a tax planning activity to reduce the company's taxable income, illegally, legally or in between (a grey area) (lietz, 2013; suyanto & supramono, 2012). by doing this practice, the company can reduce its expenses on the company and provide a larger cash inflow. large cash inflows can benefit the company, and the large cash inflows indicate the company's ability to pay dividends in the future. in carrying out tax aggressiveness actions, management has certain personal motives such as bonuses, rent extraction actions and other personal motives that shareholders cannot detect. tax aggressiveness actions taken by management are closely related to asymmetric information because it does not necessarily benefit shareholders or investors. in addition, the company will face the risk of future tax audits and disputes. this condition causes the company's risk to increase in the view of shareholders or investors. by carrying out tax aggressiveness, companies are faced with various risks. investors consider that tax aggressiveness is an act that endangers the company in the future. investors expect a higher rate of return in companies that carry out tax aggressiveness as compensation for the risk they will bear. the association between sustainability disclosure on cost of equity the hypothesis testing result suggests that sustainability disclosure is negatively associated with the cost of equity. the result of this study confirms the findings of dhaliwal et al. (2014), hmaittane et al. (2019), rinobel & laksito (2015), and zakia (2018) but differ from the results of research conducted by adiputra et al. (2017) and ariyani & nugrahanti (2013). based on the concept of asymmetric information, it is stated that managers have wider access to information about the company's internal information compared to stakeholders (ningsih & ariani, 2016). on the other hand, based on stakeholder theory, managers are agents assigned to handle the company to fulfill stakeholder benefits, and stakeholders have the same right to obtain information about the company's performance and prospects in the future (rokhlinasari, 2015). stakeholders need information because the information is an important element for stakeholders in the decision-making process. the more specific the information stakeholders can access, the higher the quality of decisions and strategies. meeting the needs of stakeholders for information about the company is important because the existence of the company requires support from stakeholders (rokhlinasari, 2015). to fulfill this, management needs to disclose information regarding financial and nonfinancial performance through sustainability reports. disclosure of sustainability is necessary so that stakeholders, the association between tax aggressiveness, sustainability disclosure and cost of equity table 3. the summary of the regression test results 73 ambr especially investors, know all forms of corporate responsibility towards society and the environment (sulistyawati & qadriatin, 2018). with complete information, investors can estimate the risks faced by the company so that the expec ted rate of return for stakeholders (especially investors) is lower. the descriptive statistics in this study of the mean sustainability disclosure variable (sr) of 0.3103 or 31.03%. it illustrates that the average sample of companies studied has disclosed information above 30% of the index recommended in the gri standards. this number indicates that the disclosure of the sustainability of the companies that are the sample of this s tudy has not been carried out optimally, with the highest disclosure of 0.71 42 from a maximum index of 1.0000. these results were obtained based on the gri standards index guidelines, and this study scored the index disclosure by giving a value of 1 if it made a disclosure and a value of 0 if it did not disclose. after the test, the greater the sustainability disclosure index presented by the company, the lower the cost of equity borne by the company. the cost of equity borne by the company is the rate of return that investors expect on the investment they provide to the company (barvidi, 2015). shareholders expect different return rates according to the risk level the company faces. the risk in question is that shareholders can read through information about the company through the investment statement, namely low risk-low and high risk-high returns. the higher the risk faced by the company, according to shareholders, the higher the expected rate of return investors on their investment in the company and vice versa (nurjanati & rodoni, 2015). disclosure of sustainability shows the company's transparency to stakeholders (prastiwi & walidah, 2020), not only from a financial perspective but also from an economic, environmental and social perspective (gunawan & melden, 2021). transparency of information by the company causes stakeholders (especially investors) to have more confidence in the company, and this trust illustrates the risk borne by the company according to shareholders to be lower. this condition is related to the decrease in the cost of equity if the company implements corporate sustainability well. conclusions this study concludes that tax aggressiveness increases the cost of equity. it is not in line with the wishes of stakeholders, especially investors, because it can pose a risk to th e company. sustainability disclosure decreases the cost of equity. sustainability activities carried out by the company can meet stakeholders' expectations to reduce the company's risk . that activities enhance stakeholders' beliefs related to the company’s transparency. this study has several limitations, the existence of certain criteria reducing the number of research samples. future research can use a longer period so that the results obtained can provide more comprehensive results and discussions. futu re research can use other company sectors or a sample of companies from other countries. this research indicates that the financ ial services authority needs to increase supervision and improve policies related to the disclosure of corporate sustainability and conduct monitoring for companies that apply the related sustainability concept. sustainability disclosures indirectly reduce the risks faced by the company so that the new policy can protect investors in the capital market . references adiputra, i. m. p., siregar, s. v., & wardhani, r. 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(2018). pengaruh pengungkapan corporate social responsibility terhadap biaya ekuitas modal (studi pada perusahaan yang menerbitkan sustainabiliy report yang listing di bei tahun 2014-2016). universitas sebelas maret. camel as a mathod used for assessing the performance 40 5 camel as a mathod used for assessing the performance gede putu agus jana susila 1* 1 ganesha university of education, singaraja, indonesia abstract as the role played by the village credit union hereinafter referred to as lembaga perkreditan desa (lpd) in the economic development of the rural society is important, the result of its performance in the form of the adequate financial statement should be presented to make people trust its existence. this present study is intended to identify how healthy the lpd units in gerokgak district, buleleng regency are using the camel method for the period 2015-2016. the aspects used to assess how healthy the lpd is are as follows: (1) capital with one ratio, namely car, (2) assets with two ratios, kap and cprr, (3) management, (4) earnings with two ratios, namely roa and bopo, and (5) liquidity with two ratios, namely liquid instrument and ldr. the lpd could fulfill the criterion of being healthy as the average camel credit value achieved was higher than 81 (the minimum limit of being healthy). based on the analysis of how healthy the lpd from 2015 to 2016 were, it can be concluded that: (1) the camel credit value achieved in 2015 was 86.48 points. (2) in 2016, the fact that the camel credit value achieved in 2016 was 88.72 points. keywords: camel, village credit union (lpd) 1. introduction bali is one of the provinces in indonesia which is well-known for its culture. what is unique in bali is the existence of the traditional village ‘desa pakraman’. the roles it play are not only limited to the social, cultural and religious roles but they also include its economic role. lpd is one of the credit unions which the traditional village has. it functions and is intended to contribute to the village economic development through the directed saving and the effective distribution of capital. its existence is regulated in the regional regulation ‘peraturan daerah’ number 3 of 2007. it is derived from the regional regulation of bali province number 3 of 2002 ‘peraturan daerah provinsi bali nomor 8 tahun 2002’. it underlines that lpd is the village-owned financial company which undertakes its business activities within the village and for the villagers. lpd is the original source of the traditional village’s income, as 20% of the benefit obtained is spent on what is needed for improving the traditional village’s empowerment. its existence in the traditional village has been able to improve its potentials; it has been able to help and alleviate the burden of the traditional village. in addition, it has also significantly contributed to those who are economically weak. in general, its function and goal have been supervised by the bali regional development bank. among the lpd units which have been established in bali, those which have been established at the traditional villages under gerokgak * corresponding author. email address: janos_undiksha@yahoo.com mailto:janos_undiksha@yahoo.com afebi management and business review (ambr) vol.02 no.01, june 2017 41 district are used as the subject of the present study. added together, there are 13 units spreading at every traditional village in gerokgak district. they are at banyupoh traditional village, gerokgak traditional village, musi traditional village, patas traditional village, pejarakan traditional village, pemuteran traditional village, pengulon traditional village, penyabangan traditional village, sanggalahit traditional village, sumberkima traditional village, tiga-tinga traditional village, tukad sumaga traditional village, and celukan bawang traditional village. as the role played by lpd in the economic development for the rural community is important, it needs to be supported with good bookkeeping and administration. it is necessary for it to present the result of its performance in the form of adequate financial statement to strengthen the people’s trust in it. the financial statement can give information to the stakeholders and show how healthy it is. in addition, it can also show the result it has achieved. the financial statement is made up of balance sheet, income statement, changes in capital statement, cash flow statement and report on transaction records (standar akuntansi keuangan, 2009). every lpd unit is obliged to report the result of what it has done and its development and liquidity every month, and how healthy it is every three months to the board of supervisors, the bali regional development bank, the supervisor of lpd in the regency level and the village’s leaders. in this way, the development of each unit of lpd can be identified. it is necessary to assess how healthy the lpd units in gerokgak district are. the reason is that they are trusted as the credit unions which can save the people’s money and distribute credits to people. it is necessary to maintain and assess how healthy they are as there has been a fact that some lpd units in buleleng regency have gone bankrupt. it is also intended to anticipate the economic impact if they are assessed not to be healthy. as well, if the lpd units in gerokgak district are assessed to be under the category of being healthy, it can strengthen the people’s trust in them. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013, the lpd’s soundness can be assessed using the camel (capital, asset, management, earning, liquidity) method. according to ramantha (2014), the lpd’s supervisor can assess how healthy a lpd unit is using the capital, asset, management, earning, and liquidity (camel) method. this concept is derived from the international banking regulation well-known as bank for international settlements (bis), which stands for capital, assets, management, earning and liquidity. the lpd’s capital can be assessed from the capital ratio of the risk-based productive asset. capital is one of the highly important things needed to anticipate the risk of loss, the protection of the customer funds and the bad credit risk. distributing funds to the villagers is the lpd’s main activity as it is at the same time the only source of the village’s income. the quality of its productive assets is used to measure how healthy it is in regard to the productive assets it has. the focus of the assessment of how healthy it is includes its capital, assets, profitability and the management of its liquidity. the qualitative criterion is given more emphasis. in this criterion, the cooperation it makes in the maintenance of liquidity is assessed. its ability to obtain earnings is considered important as through profit it can widen the scope of the service it provides to the villagers. how healthy it is can be seen from the side of its liquidity. the lpd’s management is required to pay attention to the condition of its capital, assets, and profitability. camel as a mathod used for assessing the performance 42 2. literature study the village credit union ‘lembaga perkrediatan desa’ initially, the ministry of foreign affairs of the republic of indonesia held a seminar on the rural credit in semarang city in february 1984. based on the decision made in the seminar, the bali provincial government established the first lpd unit as the pilot project. based on what is stated in the regional regulation number 2/1988 and number 8 of 2002 concerning lpd that the establishment of the lpd unit at every traditional village is intended to support the rural economic development by motivating the villagers to get more accustomed to saving, preparing credits for small-scale businesses, eliminating the forms of exploitation of credits, creating equal business opportunities in the village level, and increasing the level of monetization in the village level. based on the bali provincial regulation number 8 of 2002 article 5, several requirements should be met, namely the traditional village where an lpd unit will be established should have the written local regulations ’awig-awig’ regulating its socio-economic activities, and it is potentially enough to establish a financial statement. the permit of the establishment of an lpd unit should be recommended by the regent or mayor. then the decision is made by the governor. how lpd is supervised is different from how a micro financial institution controlled by the government is supervised. based on the governor’s decree number 344/1993 article 2 (the bali government, 1993), it is stated that the bali regional development bank ‘bank bpd bali’ has three functions, as far as the existence of lpd is concerned, as follows. 1) technically supervising lpd, which can be divided into passive supervision and active supervision; the active one is done by directly visiting the traditional village where it is established; 2) the bali regional development bank ‘bank bpd bali’ is supposed to manage the coordination with the other organizations involved in the process of lpd; 3) the bali regional development bank “bank bpd bali’ should prepare the quarterly evaluation report of the financial performance of and how healthy lpd is to the governor. as far as the organizational structure of lpd is concerned, it is part of what is referred to as ‘sekaa’ (traditional organization) in which head of lpd is responsible for its operation and head of the traditional village ‘bendesa’ is the main supervisor. the villagers are its members and structurally it is made up of different banjars (the neighborhood under the traditional village). the assessment of how healthy lpd is using the camel method. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013, the indicators used to assess how healthy an lpd is are : (1) capital, (2) asset, (3) management, (4) earning and (5) liquidity. 1) capital the assessment is made based on the capital which a bank has. capital adequacy ratio (car) is one of the methods used in which the capital is compared to the risk-weighted assets ‘aktiva tertimbang menurut risiko (atmr). car is the ratio which shows how risky the whole assets of a bank (credit, accompaniment, securities, claims to other banks). in this case, the assets which are funded from the bank’s capital and the funds obtained from the sources outside the bank such as the funds which come from society, loans, and so forth. in other afebi management and business review (ambr) vol.02 no.01, june 2017 43 words, car is the ratio of the bank’s performance used to measure whether the capital which the bank has is adequate enough to support the risky assets, for example, the loans provided. according to kasmir (2002: 185), the car ratio can be calculated using the following formula: total capital car = ---------------x 100% (1) atmr car indicates the ability of a bank to cover the decrease in its assets resulting from the risky ones. based on the stipulation issued by the bank of indonesia, the capital of a bank is made up of the core capital and complementary capital. it is also stipulated by the bank of indonesia that atmr can be calculated based on the value of each post of assets in the bank’s balance sheet multiplied by its risk value, and that it can also be calculated based on the value of each post of assets in the bank’s administration account multiplied by its risk value. 2) assets (productive asset) an asset is an item which can be tangible and intangible and has a source and can be economically significant (baridwan, 2004). it is a source controlled by a company resulting from any past event and can be economically significant in the future (hanafi, 2003). in the circular issued by the bank of indonesia (number 26/4/bppp) it is stated that: a) a productive asset is the investment of the funds of a bank in the form of credits, securities, the placement of funds in another bank and any accompaniment which is intended to obtain earnings. b) the classified productive asset is the one which has the potential of generating earnings or incurring losses for a bank. from what was described above it can be concluded that the productive asset refers to every tangible and intangible item and the source which a company has and can be significant and generate income in the future (taufik, 2012). the quality of the productive asset is assessed based on the classification of collectability which is made up of: (a) being smooth, (b) needing a particular attention, (d) being less smooth, (d) being doubtful and (e) being bad (suseno, 2003). a) being smooth 1) in time payment 2) good account development 3) no payment arrear and in accordance with the credit requirement b) needing a particular attention 1) there are payment arrears for the principal or interest for 90 days. 2) rarely experiencing overdraft c) less smooth 1) the payment arrear for the principle or interest ranges from 90 to 120 days. 2) overdrafts are frequently made in order to cover any operating losses and the shortage of the cash flow. d) being questionable 1) there are payment arrears for the principal and interest which exceed from 120 days to 180 days. camel as a mathod used for assessing the performance 44 2) overdrafts are permanently made in order to cover the operating losses and the shortage of the cash flow. e) being bad 1) the payment arrears for the principal and or interest exceed 180 days. based on the bali governor’s regulation dated 7 march 2003 number 11 of 2013, the quality of productive asset is based on the following principles: a) the ratio of the quality of the productive asset ‘rasio kualitas aktiva produktif (kap)’. it is intended to assess the quality of the productive assets, namely the percentage of the comparison of the classified productive assets to the total productive assets as presented in the following formula: the classified productive assets kap = ----------------------------------------------x 100% (2) the productive assets b) the reserve undecided loan ratio ‘rasio cadangan pinjaman ragu-ragu (cprr)’. it is intended to assess whether cprr is adequately prepared, namely the percentage of the comparison of the formed cprr to the obligatorily-formed cprr, as presented in the following formula. the formed cprr cprr = ----------------------------------------------x 100% (3) the obligatorily-formed cprr 3) management the management aspect can be assessed through the components of the general management and the risk management (riyadi, 2000). based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013 concerning the way of assessing how healthy an lpd is, the management can be assessed from two aspects as follows. a) the general management, namely the assessment of the aspects of the general management which include the assessment of the strategy or target, structure, system and leadership. b) the risk management, namely the assessment of the risk management which includes liquidity, the risk of the loans provided, the operating risk, legal risk, and the risk of the owner and management. from what was described above, it can be concluded that management refers to an ability which the bank has to manage the aspects of the general management and risk management based on the commitment already made. kristina (2013) states that there are two formulas which can be used to assess the management factors. they are: a. the general management the general management = the assessment of the strategy + structure + system + leadership b. the risk management = the assessment of the liquidity risk + credit risk + operating risk + legal risk + the risk of the ownership 4) earning earning refers to the ability of a company to obtain profit through all the resources it has such as sales, cash, assets, capital (hararap, 2004: 219). it is the afebi management and business review (ambr) vol.02 no.01, june 2017 45 ability of a bank to increase the profit it can obtain every period of time. it is used to measure the level of efficiency and profitability obtained by the bank (kashmir, 2004: 49). it shows the comparison between profit and the asset or capital which generates profit (riyanti, 2002). from what was defined above it can be concluded that earning is the ability of a company to generate profit from a number of capitals during a certain period of time. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013 concerning the way of assessing how healthy an lpd unit is, earning can be measured using two ratios; they are: a) return on assets (roa), the ratio of profit before tax to the average asset. roa is calculated using the following formula: the current profit roa = -------------------------------x 100% (4) the average asset b) the ratio of the operating expenses to the earning expenses ‘rasio biaya operasional dan biaya pendapatan (bopo)’ is the ratio of the operating expenses to the operating earnings. bopo is calculated using the following formula. operating expenses bopo = ---------------------------------x 100% (5) operating earnings 5) liquidity liquidity is the ability of a company to pay immediately for its liabilities (riyanto, 2001: 25). it shows the company’s ability to fulfill its short term liabilities to the creditor (darminto and rifka, 2002: 10). from what was defined above, it can be concluded that liquidity refers to the ability of a company to pay for its shortterm liabilities which should be immediately fulfilled. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013 concerning the way of assessing how healthy an lpd unit is, the liquidity aspect can be assessed using two ratios; they are: a) ratio of liquid instrument it is intended to assess the ability of an lpd unit to pay for its current liabilities, namely the percentage of the comparison between the liquid instruments to the current liabilities. the liquid instrument is calculated using the following formula: cash + among the bank’s assets liquid instruments = ------------------------------------------------x 100% (6) bank’s liabilities b) loan to deposit ratio (ldr) it is intended to assess the ratio loans provided to the funds received. the funds received are made up of: 1) deposits and the society’s savings 2) loans from banks and other financial institutions 3) core capital camel as a mathod used for assessing the performance 46 4) the capital obtained from loans/deposits based on the bali governor’s regulation dated on 7 march 2013 number 11 of 2013, ldr is calculated using the following formula. loans provided ldr = ---------------------------x 100% (7) funds received 3. research methodology research design this present study is a descriptive quantitative one in which the financial statements are analyzed before they are tabulated in order to know whether the lpd units are under the category of being healthy or not healthy. the descriptive study describes a variable or a phenomenon as it is. the time dimension used is time series and the study was carried out in a cross sectional manner. the aspects used to assess the level of the soundness of the lpd units are as follows: (1) the capital with car ratio, (2) the assets with two ratios, namely kap and cprr, (3) management, (4) earnings with two ratios; they are roa, and bopo, and (5) liquidity with two ratios; they are the liquid instrument and ldr. subject and object of the study the subject of the study includes all the lpd units in gerokgak district, buleleng regency. the object of the study is how healthy the lpd units in gerokgak district are and includes the capital, asset, management, earnings and liquidity aspects. data type and source the data used in this present study are (1) the quantitative data and (2) qualitative data. 1) quantitative data quantitative data are the data which are in the form of numbers (sugiyono, 2008: 12). in this present study the quantitative data used are the financial statements of all the lpd units in gerokgak district in 2015 and 2016. 2) qualitative data the qualitative data refer to the data which are in the forms of words, sentences, schemes and pictures (sugiyono, 2008: 12). in this present study the qualitative data are on the management aspect. the data sources used in this present study are (1) the primary data, and (2) the secondary data. 1) the primary data are the data obtained from the primary source, which, in this study, were obtained through structured interviews in which the interviewees were heads of all the lpd units in gerokgak village. the data are in the form of the answers to the questions related to the general management aspect and risk management aspect. 2) the secondary data are the data directly obtained from mediating media (indriantoro and supomo, 2013: 147). in this present study the secondary data were obtained from the financial statements of the all the lpd units in gerokgak district and are related to the capital, asset, earnings, and liquidity aspects. afebi management and business review (ambr) vol.02 no.01, june 2017 47 technique of analyzing data the descriptive quantitative technique, namely the camel method was used to analyze the data in the present study. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013, how healthy an lpd is can be measured by assessing each variable. the result of the study should be determined in order to know whether the lpd units can be categorized as being healthy or not. the final result of the study can be used to identify whether the lpd units are healthy or not. the components of camel can be grouped into the predicate with the following criteria. 1) capital analysis according to eka (2012), capital is a highly important aspect for a bank to develop its business. it is used to identify the risk of loss so that the funds saved as the savings by the owners and loans provided to the consumers can be protected. the more expenses are spent on the business undertaken the more decrease will take place in the capital which a company has. the percentage of the comparison of the lpd’s capital to the risk-weighted assets should be known in order to be able to assess whether the lpd’s capital is adequate or not. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013 concerning the way of assessing whether an lpd unit is healthy or not, the capital ratio which it has should be identified using the following formula. lpd’s capital capital adequacy ratio (car) = --------------------------------x 100% (8) risk-weighted assets the credit values of car: 1) the 12% ratio of the capital adequacy is valued 81. 2) the 0% or negative ratio of the capital adequacy is valued 0. 3) 1 to 100 is added to every 0.1% rise from the 12% capital adequacy fulfillment. 4) every 0.1% fall in 12% capital adequacy fulfillment is subtracted by 1 to 0. the credit value of the capital adequacy ratio (car) can be identified using the following formula: car ratio 12 car value = 81+ --------------------- (9) 0.1 2) productive assets according to siamat (1995), the productive assets refer to all the investments in rupiah and foreign currencies which are intended to generate earnings based on their functions. the productive assets can be assessed from two components; they are the productive asset quality ‘kualitas aktiva produktif (kap)’ and reserve undecided loans ratio ‘rasio cadangan pinjaman ragu-ragu (cprr). a) the productive asset quality ratio ‘rasio kualitas aktiva produktif (kap) based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013, the percentage of the comparison of the classified productive assets to the total productive assets can be used to assess the productive asset quality as presented in the following formula. the classified productive assets the kap ratio = -----------------------------------------------x 100% (10) the productive assets camel as a mathod used for assessing the performance 48 the values of the component credit or the productive asset quality (kap) factor are as follows: 1) 20% or more result of ratio is valued 0. 2) every 0.15% decrease starting from 20% is valued from 1 to 100 the value of the component credit or the productive asset quality factor ‘faktor kualitas aktiva produktif (kap) is presented in the following formula. 20 – ratio the kap value = ------------------ (11) 0.15 b) the reserve undecided loan ratio ‘cadangan pinjaman ragu-ragu (cprr) based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013 the whether cprr is adequately prepared or not can be assessed from the percentage of the comparison of the formed cprr to the obligatorilyformed cprr. the following formula can be used to identify the lpd’s cprr ratio. the formed cprr cprr ratio = ------------------------------------------x 100% (12) the obligatorily –formed cprr the values of the component credit or the factor of the prepared reserve undecided loan ‘cadangan pinjaman ragu-ragu (cprr)’ are as follows. 1) the 0 ratio is valued 0. 2) every 1% increase starting from 0 to 100 is valued 1. the value of the component credit or the factor of cprr is presented in the following formula. cppr value = cprr ratio x 1 (13) 3) management according to martono (2002), management can be seen from the quality of someone who knows what to do to educate his/her employees to settle any problem. in a management, what is assessed includes the capital management, the asset management, the general management, the rentability management, and the liquidity management. the general management aspect and risk management aspect should be assessed in order to be able to measure how healthy the lpd units are. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013 concerning how to assess how healthy an lpd is, the lpd’s management should be assessed based on the questions and answers related to the general management and risk management. the assessment of the general management focuses on (a) the strategy/target, (b) the organizational structure, (c) the system, and (d) the leadership. the assessment of the risk management focuses on the following components: (a) the liquidity risk, (b) the credit risk, (c) the operating risk, (d) the legal risk, and (e) the risk of ownership. the credit value was calculated based on the results of the answers to the questions consisting of 25 questions related to management; each question was valued from 1 to 4. criterion (0) = not or not at all intending to fulfill it; (1) not intending but having planned to fulfill it; (2) having been fulfilled but most not yet fulfilled; (3) having been fulfilled, but a few have not been; (4) having been fully fulfilled. the value of management credit was obtained by adding up the values provided to each question/question related to afebi management and business review (ambr) vol.02 no.01, june 2017 49 management; the maximum value was 100. its contribution to the lpd’s soundness was determined 10% or the value x 10%. 4) earning according to eka (2012), earning refers to the attempt made by a bank to generate profit. a bank is stated to be healthy if its rentability keeps improving. earning can be assessed from two components; they are the return on asset (roa) ratio and the operating expenses resulting from the operating earning ‘biaya operasional terhadap pendapatan operasional (bopo)’. a) return on asset (roa) based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013, the lpd’s ability to generate earning from the average assets it has can be assessed using the following formula. the earning currently earned roa = ---------------------------------------x 100% (14) total asset the values of the credit component or roa factor are as follows. 1) 0 or negative ratio is valued 0. 2) every 0.025% increase from 0 is valued from 1 to 100. the value of the component credit or roa factor is presented using the following formula. ratio the roa value = ------------- (15) 0.025 b) the operating expenditure resulting from the operating earning ‘biaya operasional terhadap pendapatan operasional (bopo)’. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013, how efficient an lpd when it buys things or the percentage of the comparison of the operating expenses to the operating earning can be assessed as presented in the following formula. the operating expenses bopo ratio = ------------------------------------x 100% (16) the operating earning the values of the credit component or bopo factor are as follows. 1) 100% or higher ratio is valued 0. 2) every 0.25% decrease from 100% is valued from 1 to 100. the value of the bopo component credit is presented using the following formula. 100 – ratio bopo ratio = ------------------ (17) 0.25 5) liquidity according to eka (2012), liquidity refers to the ability to pay for liabilities that should be immediately paid for. the assessment of liquidity is made up of two components; they are liquid instrument ratio and the ratio of the loans provided to the funds received (ldr). a) liquid instrument ratio based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013, the lpd’s ability to fulfill its current liabilities, namely the percentage camel as a mathod used for assessing the performance 50 of the comparison of the liquid instruments to the current liabilities can be assessed using the following formula. cash + aba the liquid instrument ratio = ----------------------x 100% (18) current liabilities the liquid instruments are made up of cash and the funds placed at lpd (the inter-bank assets) in the forms of clearing accounts and savings. the interbank assets in the forms of fixed deposits at the bank or other financial institutions to which a particular attention is paid are not taken into account. the current liabilities include the immediate liabilities (including payment for installments/loans provided by a bank or another financial institution), savings and fixed deposits. the value of the component credit or the liquid instrument factor is as follows. 1) the ratio 0 is valued 0 and every 0.05% increase from 0 starting from 1 to 100 is added. the value of the component credit of the liquid instrument is presented using the following formula. ratio the value of the liquid instrument = ------------------ (19) 0.05 b) loan to deposit ratio (ldr) it is intended to assess the ratio of the loans provided to the funds received. the funds received are made up of. 1) the society’s fixed deposits and savings. 2) the loans provided by another bank or financial institution. 3) the core capital. 4) the borrowed/deposited capital. based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013, ldr is calculated using the following formula. the loans provided ldr ratio = -----------------------x 100% (20) the funds received the values of the component credit or the ldr factor are as follows. 1) the credit value of 115% or more ratio is 0. 2) for every 1% increase from the 115% ratio, starting from 4 to 100 is added to the credit value. 3) if the value ≤ 94.74%, the value is automatically maximum. the ldr component credit value is presented using the following formula. the ldr value = (115ratio) x 4 (21) how healthy an lpd is can be basically assessed using the qualitative approach to the five components which affect its condition and development as a financial institution. the five components are as follows (1) the capital, (2) the productive asset quality, (3) the management, (4) the earning, and (5) the liquidity. such factors have several components which are valued in order to be able to determine the lpd’s soundness as can be seen in table 1 below. afebi management and business review (ambr) vol.02 no.01, june 2017 51 table 1 the assessment of the lpd’s soundness. the assessed factors components values 1) capital capital adequacy ratio (car) percentage of comparison of the lpd’s capital to riskweighted assets 25% 2) the productive asset quality a) the productive asset quality ‘kualitas aktiva produktif (kap)’ b) reserve undecided loans ‘cadangan pinjaman ragu-ragu’ the percentage of the comparison of the classified productive assets to the total assets the percentage of the comparison of the formed cprr to the obligatorilyformed cprr 25% 10% 3) the management made up of 25 questions related to management, each is valued between 0 until 4 10% 4) earning a) roa b) bopo the percentage of the comparison of earning to the total assets the percentage of the comparison of costs to income 10% 10% 5) liquidity a) liquid instruments b) ldr the percentage of the comparison of the liquid instruments to current liabilities the percentage of the comparison of liabilities to fund received 5% 5% source: based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013 concerning the way of assessing how healthy an lpd is. the stages through which the lpd’s soundness is assessed are as follows. 1) checking the validity of the lpd’s financial statement and information on its management. 2) calculating the ratio of each factor or component assessed. 3) calculating the credit value of each factor or component based on the criteria or indicators of assessment. 4) calculating the value of the contribution of each component based on the value used to determine whether lpd is healthy or not. 5) calculating the value of soundness by adding up the value of the contribution of all the components determining whether lpd is healthy or not. the value of soundness is used to determine the criteria that it should fulfill in order to be under the category of being healthy. the criteria are determined using the following values. camel as a mathod used for assessing the performance 52 table 2 the criteria determining that lpd is healthy are presented in the following table. total values of being healthy criteria 81 – 100 being healthy 66 <81 being healthy enough 51 <66 being less healthy 0 <51 being unhealthy source: based on the bali governor’s regulation dated 7 march 2013 number 11 of 2013 concerning the way of assessing whether an lpd is healthy or not. 4. results and discussion the camel analysis is the technique used to identify the level of the soundness of all the lpd units in gerogak district. camel analysis includes the analysis of capital, asset, management, earning, and liquidity. in this case, the study of capital, asset, earning and liquidity was used as the realization of the financial statements for the last two years, namely from 2015 to 2016. the management aspect was assessed through structured interviews in which the general management aspect and the risk management aspect were assessed. the camel analysis was used to analyze how healthy the lpd units in gerokgak district were from 2015 to 2016. 1. capital based on the result of the study already carried out, it can be stated that among the 13 lpd units in gerokgak district, eight underwent a rise in their car. they were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at musi, the lpd unit at pemuteran, the lpd unit at pengulon, the lpd unit at sanggalangit, the lpd unit at sumberkima, and the lpd unit at tukad sumaga. the capital they had and their stability in preparing the minimum capital which could minimize the funds used contributed to their improved car. the lpd units which underwent a decrease in their car were the lpd unit at gerokgak, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at penyabangan, and the one at tinga-tinga. the decrease resulted from the attempt to extend their businesses and the increased financing, causing the percentage of the capital they had to go down. the increased car caused the component credit value to increase. this was undergone by the lpd unit at banyu poh, the lpd unit at celukan bawan, the lpd unit at musi, the lpd unit at pemuteran, the lpd unit at pengulon, the lpd unit at sanggalangit, the lpd unit at sumberkima, and the lpd unit at tukad sumaga. those which underwent the fall in the component credit value were the lpd unit at gerokgak, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at penyabangan, and the lpd unit at tinga-tinga. the rise and fall in the component credit value highly contribute to whether an lpd is healthy or not. among the 13 lpd units, the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, and the one at tukad sumaga fulfilled the criterion of being healthy from 2015 to 2016. the one which was under the category of being healthy enough from 2015 to 2016 was lpd sumberkima. those which were under the category of being unhealthy from 2015 to 2016 were the lpd unit at pemuteran and the one at tinga-tinga. afebi management and business review (ambr) vol.02 no.01, june 2017 53 2. assets in regard to the productive assets, there were two components which were assessed; they were the productive asset quality ratio ‘rasio kualitas aktiva produktif (kap) and the reserve undecided loans ‘rasio cadangan pinjaman ragu-ragu (cprr). a. the productive asset quality ratio (kap) from the result showing the level of the soundness of all the lpd units in gerokgak district, buleleng regency from the asset aspect using the kap ratio, it can be explained that among the 13 lpd units, nine were getting better in regard to their kap ratio. they were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pemuteran, the lpd unit at penyabangan, the lpd unit at pengulon, the lpd unit at sanggalangit and the lpd unit at tukad sumaga. the increase in the kap ratio resulted from the productive assets which were adjusted to the productive asset management. those of which the kap ratio went down were the lpd unit at gerokgak, the lpd at musi, the lpd at sumberkima, and the lpd unit at tingatinga. the decrease in the kap ratio resulted from a condition in which the total productive assets rose higher than the total classified productive assets. the rise in the kap ratio caused the component credit value to go down. the lpd units of which the component credit value went down were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pemuteran, the lpd unit at penyabangan, the lpd unit at pengulon, the lpd unit at sanggalangit and the lpd unit at tukad sumaga. the lpd units of which the component credit value rose were the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at sumberkima, and the lpd unit at tinga-tinga. the rise and fall in the component credit value strongly determine whether an lpd is healthy or not. the lpd units which were categorized as being healthy from 2015 to 2016 were the lpd unit at celukan bawang, the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pemuteran, the lpd unit at pengulon, the lpd unit at sumberkima, the lpd unit at tinga-tinga and the lpd unit at tukad sumberkima. the lpd unit which was categorized as being healthy enough from 2015 to 2016 was the lpd unit at sumberkima. the ones which were categorized as being not healthy were the lpd unit at pemuteran and the lpd unit at tinga-tinga. b. the reserve undecided loan “rasio cadangan pinjaman ragu-ragu (cprr)” cprr is used to assess the adequacy of cprr availability, namely the percentage of the comparison of the formed cprr to the obligatorily-formed cprr. from the result showing the level of the soundness of all the lpd units in gerogak district, buleleng regency, it can be explained that among the 13 units, 9 underwent a rise in the cprr ratio; they were the lpd unit at celukan bawang, the lpd unit at musi, the lpd unit at musi, the lpd unit at patas, the lpd unit at pemuteran, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at sumberkima, and the lpd unit at tingatinga. those which underwent a rise in the cprr ratio were the lpd unit at banyu poh, the lpd unit at gerokgak, the lpd unit at pejarakan, and the lpd unit at tukad sumaga. those which underwent a drop in the cprr ratio were the lpd unit at banyu poh, the lpd unit at gerokgak, the lpd unit at tukad sumaga. camel as a mathod used for assessing the performance 54 the rise in the cprr ratio caused the component credit value to go up. those which underwent an increase in the component credit value were the lpd unit at celukan bawang, the lpd unit at musi, the lpd unit at patas, the lpd unit at pemuteran, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at sumberkima, and the one at tinga-tinga. those who underwent a fall in the component credit value were the lpd unit at banyu poh, the lpd unit at gerokgak, the lpd unit at pejarakan, and the lpd unit at tukad sumaga. the increase and fall in the component credit value strongly determines whether an lpd is healthy or not. the lpd units which were categorized as being healthy from 2015 to 2016 were the lpd unit at musi, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pemuteran, the lpd unit at sanggalangit, the lpd unit at sumberkima, the lpd unit at tinga-tinga and the lpd unit at tukad sumaga. in 2015 the lpd unit at celukan bawang was under the category of being less healthy; however, in 2016 it was under the category of being healthy. those which were under the category of being not healthy from 2015 to 2016 were the lpd unit at banyu poh, the lpd unit at pengulon, and the lpd unit at penyabangan. c. management the assessment of the general management aspect and the risk management aspect was used to measure whether an lpd is healthy or not. in this present study, the management aspect was assessed using the structured interview in which the interviewees were heads of all the lpd units in gerokgak district, buleleng regency. from the result showing the level of the soundness of the lpd units in gerokgak district, buleleng regency, it can be explained that among the 13 lpd units, there was not any change in value in regard to the general management aspect and the risk management aspect from 2015 to 2016. the cause was that there had not been any change in management. from 2015 to 2016 the management aspect of all the units was under the category of being healthy, as the total value of the general management and risk management was under the category of being healthy, namely 81 points. d. earning there were two ratios which were used to assess the level of the soundness of the lpd units. they were return on asset (roa) ratio and bopo ratio. a. return on asset (roa) ratio the result showing the level of the soundness of all the lpd units in gerokgak district, buleleng regency, using the roa ratio can be explained as follows. among the 13 lpd units in gerokgak district, buleleng regency, 8 underwent an increase in the roa ratio. they were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at musi, the lpd unit at patas, the lpd unit at pemuteran, the lpd unit at pengulon, the lpd unit at sanggalangit, and the lpd unit at tinga-tinga. the increase in the roa ratio resulted from the fact that the average productive assets and the operating earnings were distributed based on the profit-sharing principle of which the percentage was higher than the increase in the operating earnings. the lpd units which underwent a fall in the roa ratio were the lpd unit at gerokgak, the lpd unit at pejarakan, the lpd unit at penyabangan, the lpd unit at sumberkima, and the lpd unit at tukad sumaga. the decrease in the roa ratio resulted from the fact that the operating earnings earned were lower than the increase in the average productive assets. the rise in the roa ratio caused the component credit value to increase. the lpd units which afebi management and business review (ambr) vol.02 no.01, june 2017 55 underwent an increase in the component credit value were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at musi, the lpd unit at patas, the lpd unit at pemuteran, the lpd unit at pengulon, the lpd unit at sanggalangit, and the lpd unit at tinga-tinga. those which underwent a fall in the component credit value were the lpd unit at gerokgak, the lpd unit at pejarakan, the lpd unit at penyabangan, the lpd unit at sumberkima, and the lpd unit at tukad sumaga. the rice and fall in the component credit value strongly determines whether an lpd is healthy or not. the lpd units which were under the category of being healthy from 2015 to 2016 were the lpd unit at celukan bawang, the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pemuteran, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at tinga-tinga and the lpd unit at tukad sumaga. the lpd unit which was under the category of being healthy in 2015 was the one at sumberkima. the ones which were under the category of being less healthy in 2016 were the lpd unit at banyu poh and the lpd unit at sumberkima. the one which was under the category of being healthy enough from 2015 to 2016 was the lpd unit at pengulon. and the one which was under the category of being not healthy in 2015 was the lpd unit at banyu poh. b. the operating expenses of the operating earnings ‘biaya operasional terhadap pendapatan operasional (bopo)’ the result showing the level of the soundness of all the lpd units in gerokgak district, buleleng regency using the bopo ratio can be explained as follows. among the 13 lpd units in gerokgak district, nine underwent an increase in the bopo ratio. they were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at sumberkima, and the lpd unit at tukad sumaga. the increase in the bopo ratio resulted from the fact the operating expenses were higher than the operating earnings. the lpd units which underwent a decrease in the bopo ratio were the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at pemuteran, and the lpd unit at tinga-tinga. the decrease in the bopo ratio resulted from the increase in the operating expenses which were higher than the operating expenses. the rise in the bopo ratio caused the component credit value to decrease. the lpd units which underwent an increase in the component credit value were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at sumberkima, and the lpd unit at tukad sumaga. the lpd units which underwent a dip in the component credit value were the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at pemuteran, and the lpd unit at tinga-tinga. the fall and rise in the component credit value strongly determines whether an lpd is healthy or not. the lpd units which were under the category of being healthy from 2015 to 2016 were the lpd unit celukan bawang, the lpd unit at gerokgak, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at tinga-tinga and the lpd unit at tukad sumaga. the one which was under the category of being less healthy from 2015 to 2016 was the lpd unit at pemuteran. the one which was under the category of being less healthy in 2016 was the lpd unit at musi. the one which was under the category of being healthy enough from 2015 to 2016 was camel as a mathod used for assessing the performance 56 the lpd unit at sumberkima, the one which was under the category of being not healthy in 2015 was the lpd unit at musi, and the one which was under the category of being not healthy from 2015 to 2016 was the lpd unit at banyu poh. e. liquidity from the liquidity aspect there were two ratios which were used to measure how healthy the lpd units in gerokgak district were. they were the liquid instrument ratio and the loan to deposit ratio (ldr); each can be explained as follows. a. the liquid instrument ratio from the result showing the level of the soundness of the lpd units in gerokgak district, buleleng regency, using the liquid instrument ratio, it can be explained as follows. among the 13 lpd units in gerokgak district, the ones at sumberkima and tukad sumaga showed an increase in the liquid instrument ratio, resulting from the fact that the liquid instruments used in their current liabilities went up. the ones showing a decrease in the liquid instruments were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at gerokgak, the lpd unit at pemuteran, and the one at tinga-tinga, resulting from the fact that the liquid instruments used to pay off the short-term savings went down if compared to their ability to guarantee their current liabilities using the liquid instruments they had. the rise in the liquid instrument ratio caused the component credit value to go up. the lpd units which underwent an increase in the component credit value included the lpd unit at musi, the lpd unit at sumberkima, and the one at tukad sumaga. the ones which underwent a fall in the component credit value included the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at gerokgak, the lpd unit at pemuteran, and the one at tinga-tinga. the rise and fall in the component credit value strongly determine whether an lpd is healthy or not. viewed from the earning aspect in general and the liquid ratio instrument in particular, the lpd units in gerokgak district were under the category of being healthy from 2015 to 2016 as their component credit value was 100 points, meaning that they reached the maximum limit to be categorized as being healthy. b. ldr ldr is used to assess the ratio of the loans provided to the funds received. the result showing the level of the soundness of the lpd units in gerokgak district, buleleng regency using ldr can be explained as follows. among the 13 lpd units in gerokgak district, 11 underwent an increase in ldr. they were the lpd unit at banyu poh, the lpd unit at celukan bawang, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at gerokgak, the lpd unit at pemuteran, the lpd unit at tinga-tinga and the one at tukad sumaga, resulting from the loans distributed to the society exceeded the increase in the amount of the funds received. the lpd units which underwent a fall in ldr were the lpd unit at musi and the one at lpd sumberkima, resulting from the fact that the increase in the formed liquidity was smaller than it should have been. the increase in ldr caused the component credit value to go down. the lpd units which underwent the rise in the component credit value included the lpd unit at banyu poh, the afebi management and business review (ambr) vol.02 no.01, june 2017 57 lpd unit at celukan bawang, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at gerokgak, the lpd unit at pemuteran, and the ones at ting-tinga and tukad sumaga. the ones which underwent a fall in the component credit value included the lpd unit at sumberkima and the one at sumberkima. the fall and rise in the component credit value strongly determines whether an lpd is healthy or not. viewed from ldr, the lpd units in gerokgak district were under the category of being healthy from 2015 to 2016, as their component credit value was 100 points, meaning that they reached the maximum value of being under the category of being healthy. 5. discussion the technique used to analyze the level of the soundness of all the lpd units in gerokgak district, buleleng regency was camel, which includes capital, asset, management, earning, and liquidity. in this case, the financial statements for the last two years, namely 2015 and 2016, were assessed from the capital, asset, earning, and liquidity aspects. the management aspect was assessed through the general management aspect and risk management aspect and the information needed for this was obtained through the structured interview. the result of the study is in accordance with the result of the study carried out by mei (2015), in which it was stated that the camel analysis was used to assess the level of the soundness of an lpd. the camel aspects which were used to analyze the level of the soundness of all the lpd units in gerokgak district from 2015 to 2016 can be explained as follows. from the capital aspect, it could be identified that among 13 lpd units spreading in gerokgak district, eight were under the category of being healthy from 2015 to 2016. they were the lpd unit at banyu poh, the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at patas, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, and the one at tukad sumaga, as the final credit value they achieved from the capital aspect reached the maximum value, ranging from 81 to 100, fulfilling the criterion of being healthy. the car shown by all the lpd units in gerokgak district, buleleng regency, fulfilled the criterion of being healthy. the result of the study supports the result of the study conducted by mei budiyani (2015), in which it was found that almost all the capital aspects fulfilled the criterion of being healthy. from the asset aspect especially the kap ratio, 10 among 13 the lpd units spreading in gerokgak district in 2016 were under the criterion of being healthy. they were the lpd unit at celukan bawang, the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pemuteran, the lpd unit at sanggalangit, the lpd unit at sumberkima, the lpd unit at tinga-tinga, and the one at tukad sumaga, resulting from the fact that the kap ratio obtained fulfilled the criterion being healthy, namely ranging from 81 to 100. almost all the asset aspects showed that the lpd units spreading in gerokgak district, buleleng regency, fulfilled the criterion of being healthy. the cprr ratio showed that among the 13 lpd units spreading in gerokgak district, 7 fulfilled the criterion of being healthy from 2015 to 2016. they were the lpd unit at musi, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pemuteran, the lpd unit at sanggalangit, the lpd unit at sumberkima, the camel as a mathod used for assessing the performance 58 lpd unit at tinga-tinga, and the one at tukad sumaga, resulting from the fact that the final credit value, if viewed from the kap ratio and cprr ratio, they achieved ranged from 81 to 100 points, meaning that they reached the maximum value to fulfill the criterion of being healthy. from the cprr ratio, all the lpd units in gerokgrak district, buleleng regency, were under the criterion of being healthy. the result of the study supports the result of the study conducted by komang mei budiyani (2015). from the general management aspect and risk management aspect, all the lpd units spreading in gerokgak district were under the category of being healthy from 2015 to 2016, resulting from the fact that they achieved the maximum value, ranging from 81 to 100 points. the result of the study supports the result of the study performed by luh putu kristina wati (2013). in the earning aspect, there were two ratios assessed; they were the roa ratio and bopo ratio. from the roa ratio produced by the 13 lpd units in gerokgak district from 2015 to 2016, 9 were under the criterion of being healthy; they were the lpd unit at celukan bawang, the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at tinga-tinga, and the lpd unit at tukad sumaga, as the roa ratio they produced ranged from 81 to 100 points, indicating that they were under the criterion of being healthy. from the bopo ratio produced by the 13 lpd units spreading in gerokgak district from 2015 to 2016, 9 were under the criterion of being healthy; they were the lpd unit at celukan bawang, the lpd unit at gerokgak, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at penyabangan, the lpd unit at sanggalangit, the lpd unit at tinga-tinga, and the one at tukad sumaga as the final credit value they produced from the roa and bopo ratios ranged from 81 to 100 points, indicating that they were under the category of being healthy. most the earning aspects, namely the roa and bopo ratios, showed that all the lpd units spreading in gerokgak district were under the criterion of being healthy. the result of the present study supports the result of the study carried out by komang mei budiyani (2015). from the liquidity aspect, there were two ratios assessed; they were the liquid instrument ratio and ldr, which showed that all the lpd units spreading in gerokgak district were under the criterion of being healthy from 2015 to 2016, as their credit value remained 5, meaning that their component credit value reached the maximum value, namely 100 points. from the ldr produced by the 13 lpd units spreading in gerokgak district from 2015 to 2016, it could be stated that they were all under the category of being healthy, as their credit value remained 5, meaning that their component credit value reached the maximum value, namely 100 points. the result of the study supports the result of the study carried out by komang mei budiyani (2005). viewed from the final credit value, the lpd units which were under the criterion of being healthy from 2015 to 2016 were the lpd unit at gerokgak, the lpd unit at musi, the lpd unit at patas, the lpd unit at pejarakan, the lpd unit at pengulon, the lpd unit at sanggalangit, the lpd unit at sumberkima, the lpd unit at tinga-tinga, and the one at tukad sumaga. those who were under the criterion of being healthy enough from 2015 to 2016 were the lpd unit at pemuteran and the one at penyabangan. the one which was under the criterion of being healthy enough in 2015 was the lpd unit at celukan bawang, and the one afebi management and business review (ambr) vol.02 no.01, june 2017 59 which was under the criterion of being healthy enough in 2016 was the lpd unit at banyu poh. the one which was under categorized as being less healthy in 2015 was the lpd unit at banyu poh. the result of the present study supports the result of the study carried out by komang mei budiyani (2015). she also employed the camel analysis to identify which lpd units were healthy in 2015 and 2016. 6. conclusions based on the analysis of the level of the soundness of all the lpd units in gerokgak district, buleleng regency from 2015 to 2016, several conclusions can be drawn as follows. 1) in 2015 the lpd units spreading in gerokgak district, buleleng regency were under the criterion of being healthy as the average camel credit value they obtained was higher than 81 (the maximum limit of being healthy), as indicated by the camel credit value in 2015, namely 86.48 points. 2) in 2016 they were also under the criterion of being healthy as the average camel credit value obtained was higher than 81 (the maximum limit of being healthy), as indicated by the camel credit value in 2016, namely 88.72 points. references anggraeni, o. 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