author and co-author(s) information dear jema’s contributor(s), in order to ease and quicken our communication, please feel free to fill out this table. article title: what are the most important variables in determining airbnb unit prices in yogyakarta? no[endnoteref:1]: [1: jema article reference number (please leave it blank if unknown)] no status full name[endnoteref:2] [2: full name without any abbreviation and title (first name and family name) ] name +t[endnoteref:3] [3: name with academic and professional title or certification] position[endnoteref:4] [4: lecturer, researcher, student, practitioner, other (please specify)] telp[endnoteref:5] [5: handphone, home and office phone numbers] e-mail affiliation[endnoteref:6] [6: name of your organization affiliation (e.g., faculty of economics)] address 1[endnoteref:7] [7: home address (complete address + zip postal code) ] address 2[endnoteref:8] [8: complete address of your institution ] notes[endnoteref:9] [9: please specify your favorable communication type while necessary (sms, call, or wa) ] 1 main author andreas diga pratama putera andreas diga pratama putera, s.t., m.en. researcher 085729622080 aput932@aucklanduni.ac.nz department of chemical engineering, universitas gadjah mada jl tanjung no 69, sorosutan,umbulharjo, yogyakarta, 55162 jl grafika 2, yogyakarta, 55182 wa 2 co-author ahmed reza rafsanzani ahmed reza rafsanzani, s.si., m.eng. researcher +62 813-2645-3627 ahmed.reza.r@mail.ugm.ac.id department of electrical engineering and information technology , universitas gadjah mada kauman gm i/272 yogyakarta 55122 jl grafika 2, yogyakarta, 55182 wa dec 21st, 2020 andreas diga pratama putera, s.t., m.en. page 1 of 1 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 16 small medium entreprise's in east java are going to digital economy muhafidhah novie *) abstract the purpose of this study were 1) to identified the problem of umkm in implementing 60.000 umkm domain program, 2) to determine the regional government (east java) involvement in tackling each issues that comes while implementing 60.000 umkm domain program, and 3) to classified the priority case in implementing this program. researcher uses observation, interview, and focus group discussion (fgd) as her research methods. researcher used 150 east java umkm as her sample representative. the results of this study showed that the regional government (east java) was taking a crucial involvement in educating umkm to implement this program eventhought they only have limited mentor. researcher suggested that the government should collaborating with college in achieving their goals. keywords: umkm, online, domain 1. introduction 1.1 research background the global economy has begun with the introduction of the asian economic community (mea) which came into force on 31 december 2016. creating a stable, prosperous and highly competitive asean community is the goal of the mea. indonesia has a large population so that indonesia becomes a target market for foreign countries to market their products to indonesia. in fact the development of the digital era can not be avoided internet users in indonesia as much as 93.4 million people from 250 million population of indonesia, and predicted next year will rise to 100 to 110 million people. the potential of this large market should not be abandoned. the government's vision to make indonesia as the country with the greatest economic growth in 2020 should be realized. if not, then indonesia will be dominated by imported products. for example, china's msmes make indonesia a target market. this means if within 2 years msmes are not included in the online market will be displaced by products from china and other countries. east java ranks second as a producer of umkm products in indonesia. various efforts are made by the government to improve the ability of umkm actors, either improving product quality through training, management and marketing of umkm products. so that the products of smes east java able to survive and compete in the era of mea. the economic growth of east java can not be separated from the participation of umkm. umkm is one of the driving forces of economic growth in east java. gross regional domestic product (pdrb) of east java 2015 is about 1,690 trillion. cooperatives and smes accounted for almost 20%. by 2015 east java's labor force total is 20 million people, while those working 19 million people. of the 19 million people working in east java 11 million work in the msme sector. (jatim newsroom, 2016) thus the number of unemployed in east java can be reduced by the presence of smes. the government through the ministry of communications and informatics provides the program of one million indonesian domains free of charge to schools, boarding schools, villages, and umkm. domain is a unique name given to identify the address (ip address) of a computer server such as a web server or email server on the internet. the target in 2016 is 350,000 domains for four provinces. this one million id program, not just provide facilities to get a free online store, but includes the literature of computer informatics technology so that ict users can be more creative and productive. by using the domain or housting in the country is expected to save money, because msmes do not need to drive abroad for online store. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 17 east java to get 60,000 domains indonesia for free which is used by smes east java as capital for online business or penetrate a vast market without limit. this opportunity received a good reception from the perpetrators of smes, who continue to work hard to be able to compete and penetrate the broader market. the perpetrators of smes are fully aware of technological changes that can not be dammed. but the fact that happened in the field is constrained by the ability of smes in operating ict operators, as well as lack of facilities and infrastructure to access the internet. based on the description above it can be concluded the importance of research on the constraints of the program a million domains indonesia by limiting research only to smes east java, and how the east java government efforts to overcome them. 1.2 research problem based on these conditions show some of the problems identified in this study, namely the ability of ict of the perpetrators of smes that the majority is very low, so many actors of smes are not able to operate the domain, and the lack of facilities and infrastructure smes actors to access the internet so that a constraint for online based marketing. 1.3 research purpose by doing observation, data retrieval, as well as case study and literature, the authors do research with the objectives to be achieved as follows; 1. identify problems that occur in the implementation of the program a million domains at smes east java 2. knowing the efforts of the government of east java in overcoming the obstacles that occur in the implementation of a million domains indonesia at smes east java 3. determining the priority of settlement to deal with all the problems that occur in the implementation of a million domains indonesia at smes east java as for the benefit of this research is to give idea of thinking to problem faced by the perpetrator of umkm east java, so that implementation of umkm go to online can be done well, so that will able to penetrate wider market and umkm east java able to compete in digital era. 2. theoretical framework 2.1 theoretical framework 2.1.1 umkm according to law number 20 year 2008: umkm has the following criteria: 1. micro enterprises, ie productive businesses owned by individuals or business entities owned by individuals that meet the following criteria: • having a net worth of at most rp 50,000,000 (fifty million rupiah) excluding land and building of business premises • have annual sales of at most rp 3,000,000,000 (three hundred million rupiahs) 2. small-scale business, which is a stand-alone productive economic enterprise undertaken by an individual or a business entity which is not a subsidiary or non-owned subsidiary, is controlled or becomes a part of the direct or indirect business of a medium-sized or large-scale business that meets the criteria namely: • having net worth of more than rp50,000,000.00 (fifty million rupiah) up to a maximum of rp500,000,000.00 (five hundred million rupiah) excluding land and building of business premises; or • having annual sales of more than rp300,000,000.00 (three hundred million rupiahs) up to a maximum of rp2,500,000,000.00 (two billion five hundred million rupiah). 3. medium-sized enterprises, which are stand-alone productive economic enterprises, undertaken by individuals or business entities that are not subsidiaries or branches of a company owned, controlled, or become part directly or indirectly by small business or large business criteria: jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 18 • having net worth of more than rp500,000,000.00 (five hundred million copies) up to a maximum of rp10,000,000,000.00 (ten billion rupiah) excluding land and building of business premises; or • has annual sales of more than rp2,500,000,000.00 (two billion five hundred million rupiahs) up to a maximum of rp50,000,000,000.00 (fifty billion rupiahs). as according to the central bureau of statistics (bps) definition of smes is based on the quantity of labor. small business is a business that has a workforce of 5 people samapai to 19 people, while the medium business is a business that has a workforce of 20 people up to 99 people. according to the ministry of finance based on the decree of the minister of finance no. 316 / kmk 016/1994 dated june 27, 1994, small business as an individual / business entity having activities / business that has sales / turnover per year as high as rp. 600.000.000 or asset (asset) as high as rp.600.000.000 (excluding land and occupied buildings). for example firma, cv, pt, and cooperative in the form of business entities. while the example in the form of individuals, among others, craftsmen home industry, farmers, fishermen, merchants goods and services and others (http://infodanpengertian.blogspot.co.id/2015/04/pengertian-umkm-menurut-para-ahli. html) from various opinions above it can be concluded that the understanding of smes can be viewed from various angles, both in terms of wealth owned by the perpetrator, the amount of labor owned or in terms of sales / turnover of smes perpetrators. according to sri winarni (2006) in general, small businesses have characteristics such as the following: (1) usually in the form of individual business and not corporate legal entity, (2) legality aspect of weak business, (3) organizational structure is simple with division of work that is not (5) low and rare management quality with a business plan, (6) the main source of business capital is personal capital, (7) resources human (hr) is limited, (8) the owner has a strong inner bond with the company, so that all the obligations of the company is also the obligation of the owner. 2.1.2 online business online business consists of 2 words of business and online. business is a business or activity undertaken by groups and individuals, to earn profits by producing products and services to meet the needs of consumers. while the word online by kamus.web.id is an activity connected through a computer network that can be accessed through other computer networks. so it can be concluded that online business is an activity or activities conducted in the internet media to make money. just like a business activity in real life, online business that is run via the internet also has the same goal that is generating a profit. (https://ariefdar.wordpress.com/2013/01/29/understanding-online-business/). 2.1.3 domain in today's digital era, domains have become commonplace accessible to many people, whether through computer media or through mobile devices such as mobile phones. technological developments also require that the domain come to adjust, now hundreds of domain names can be found on the internet. the phenomenon now, the domain has adjusted to a country. for example, the indonesian country domain name has the suffix .id. domain name (english: domain name) is a unique name given to identify the name of a computer server such as a web server or email server on a computer or internet network. domain name serves to facilitate the user on the internet when accessing the server, but also used to remember the name of the server visited without having to know a row of complicated numbers known as ip addresses. this domain name is also known as a unity of a website such as "wikipedia.org" for example. domain names are sometimes referred to as urls, or website addresses. (https://en.wikipedia.org/wiki/nama_domain). basically, a domain is a unique name, used instead of an ip address. domains are also referred to as website addresses, such as "solozine.com" or google.com "and others. the domains have formatting letters (a, b, c and so on), numbers (1,2,3 and so on) and symbols () as the website url name.you can create a website address as you see fit, can use letters, numbers or symbols only. basically, domain function is to facilitate internet users in accessing a website and make it easier to remember the address of the website to be accessed rather than having to use a series of complicated numbers called ip https://ariefdar.wordpress.com/2013/01/29/understanding-online-business/ https://en.wikipedia.org/wiki/nama_domain jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 19 addresses. as for example you want to access google.co.id website, if you use ip address then you must access through a combination of numbers like 173.194.39.19, it will certainly make it difficult for internet users. therefore there is a domain to provide convenience for internet users. (http://www.solozine.com/2014/10/ domain.html). 3. research method research method in this research is qualitative method by using research sample as much as 150 perpetrator of umkm, which follow program of one million domains. everything comes from members of the association of smes east java. this research was conducted from july to september 2016. researcher digs information through direct observation, interview and focus group discussion (fgd), to the perpetrators of umkm. 4. research result and analysis in the 21st century, all sectors are experiencing integration with technological advances, the sector of east java smes face a serious marketing challenge. online-based marketing is becoming a growing trend among entrepreneurs. based on data from the association of smes east java, through interviews shows the level of awareness of the perpetrators of smes east java to expand its marketing network through online media is very large, but it is hampered by several obstacles. the biggest obstacle is the perpetrators of umkm can not operate the existing technology, and the lack of means and tools to access the online world. this fact requires the government to be more active in fostering and providing facilities and facilities to facilitate internet access. various efforts made by the government to solve the problems faced by the perpetrators of smes, the government through the office of communications and informatics east java province in cooperation with the department of cooperatives and smes provide guidance and assistance for the perpetrators of smes. among others, through the socialization in the form of training on the use of ict, and filling website at the office of kominfo east java, as well as providing guidance and escort for the perpetrators of smes to be able to use and manage the website, so it is expected 60,000 domain indonesia program for east java can be implemented in accordance with the goals and expectations, in example increasing sales of umkm products 3 to 4 times. in connection with the facilities and infrastructure of kominfo east java in cooperation with telkom to provide assistance facilities and infrastructure to some actors umkm in the form of laptop and internet package for 3 months, head of communications and information technology of east java province hope that the provision of facilities that can help the implementation of the program 1 million indonesian domain, and for those who do not get the facilities hopefully able to provide their own facilities and infrastructure, however the jiui will keep on guarding until the perpetrators of umkm able to operate the website independently. the website filling and maintenance training program is done in the office of kominfo java gradually for the owners of the active domain, while the assistance is done through the region counselor for several cities. with the assistance to facilitate the perpetrators of smes to learn a lot to the nearest area counselor. besides, it also uses social media as a means to communicate and consultation related to difficulties and obstacles in the implementation of domain usage. according to menkominfo that indonesia's economy is solid because there are smes. "continue to struggle and continue to strive for the economy of the sme sector ministry of communications and information technology will help and support in providing infrastructure facilities to aims to accelerate the digital economy activity of smes," he said. menkominfo emphasize to the perpetrators of smes about hosting, that is to sell products not just made (dot). id but also have to process the image. there are labels and also information and can be accessible at any time of the community or who want to buy. "one year hosting provided from the government is free and i am glad that the east java communications service office will create a datacentre. so, for east java after a year free hosting can be transferred to infocom east java," said rudiantara. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 20 5. research conclusion and recommendation 5.1. conclusion recognizing the evolving technological change and the business world demand to follow the growth of ict, forcing the government to improve the ability of umkm to be umkm based online so that smes east java remain sustainable, government through department of communications and informatics east java in cooperation with the department of cooperatives and smes continue to provide pengayoman to msmes through training, coaching and mentoring for smes east java able to use 1 million domain facilities provided with appropriate and set targets can be achieved. nevertheless the number of umkm players with companions is less significant so that the program becomes slow. 5.2. recommendation a. the need for government cooperation for the mentoring program for example with the nearest educational institution, so that the program can be done quickly, and the acceleration of telecommunication infrastructure reach. b. the need for active participation of the community, especially higher education to provide basic materials of ict to the perpetrators of umkm to help the implementation of the program 1 million domains. references http://infodanpengertian.blogspot.co.id/2015/04/pengertian-umkm-menurut-para-ahli.html https://id.wikipedia.org/wiki/nama_domain https://ariefdar.wordpress.com/2013/01/29/pengertian-bisnis-online/ http://www.solozine.com/2014/10/domain.html winarni, sri. 2006. strategi pengembangan usaha kecil melalui peningkatan aksesbilitas kredit perbankan. infokom. nomor 29 tahun xxii, 2006 *) muhafidhah novie, nahdhatul ulama university of sidoarjo http://infodanpengertian.blogspot.co.id/2015/04/pengertian-umkm-menurut-para-ahli.html https://id.wikipedia.org/wiki/nama_domain https://ariefdar.wordpress.com/2013/01/29/pengertian-bisnis-online/ http://www.solozine.com/2014/10/domain.html jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 27 financial market integration in asia: evidence from stock and bond market fauziah *) abstract financial integration especially in asian financial market has been a defining feature of the world economy and has become a central issue in international finance for the past decades. however, there is limited empirical studies on the integration of asian bond market. therefore, this study aims to examine the financial market integration in asia (stock and bond market). the sample of this study is the major of asian financial markets including japan, china, hong kong, singapore and south korea during january 2009 – december 2016. correlation, co-integration and causality tests used in this study to investigate the financial markets integrations. this study shows that both stock and bond returns are co-integrated and indicate as a common stochastic trends. stock market integration appears to be much stronger compared to the less developed. this result is very important for investors to assess potential gains from portfolio diversification, and for a financial policymaker to manage market policies effectively and handle contagion risks that might be caused by international shock transmissions. keywords: financial market integration, stock market, bond market 1. introduction 1.1 research background financial integration has been a defining feature of the world economy (belge and keil, 2016) and has become a central issue in international finance in the past decades (kim, moshirian, wu; 2006). there is no common definition of financial integration, but at least contain two meaning i.e. integration of financial markets and free movement of capital (chai & rhee, 2005). the financial market in the world increasingly integrated into line with the rapid development of information and communication technology, liberalization of cross-border capital flows, financial innovation and economic integration through international trade relations and the internationalization of production through foreign direct investment (fdi) (berben & jansen, 2005). financial integration helps countries allocate resources efficiently and diversify their income risks across border (yu, 2014). there are much literatures that examines financial integration. some studies focus on european financial integration (kim, moshirian, & wu, 2006; berben & jansen, 2005; buzelay, 2008; deltuvaite, 2015), others focus on american financial integration (pyun & jiyoun, 2016, volosovych, 2011), asian financial integration (perera & wickramanayake, 2012; rughoo & you, 2015; nguyen & elisabeta, 2016; didier, montanes, & schmukler, 2017), and other countries (balcilar, kutanc, & yay, 2017). picture 1 stock market growth jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 28 asian financial market is one of the biggest financial markets in the world. growing of asian financial markets in the last decade very rapidly, both stock market or bond market. even, on october 2016, international monetary fund (imf) report that asian stock market has been growing fastest in the world (international monetary fund world economic outlook, 2016). however, empirical studies on the integration of asian bond market are very limited even though bond market have experienced drastic growth in recent years and it is an important part of the financial market integration process in asia. therefore, researcher are interested in examined here. 1.2 research problem based on the above reasoning, researcher need to evaluate how is the financial market integrationin asia across two financial markets. 1.3 research purpose the purpose of this research is to evaluate financial market integration in asia across two financial markets i.e. stock market and bond market. the result of this research is very important for investors to assess potential gains from portfolio diversification, and for a financial policymaker to manage market policies effectively and handle contagion risks that might be caused by international shock transmissions 2. theoretical framework and hypotheses 2.1 theoretical framework 2.1.1 financial market integration financial markets are considered to be integrated when assets are priced by the same stochastic discount rate (flood & rose, 2004). more precisely, in international financial markets, if the assets with identical risks offer similar level of expected returns, then markets are said to be integrated. accordingly, if financial integration is complete, homogeneous assets should have the same price irrespective of the location of trading. this situation can be defined under the “law of one price”. however, in reality, assets do not have sufficiently similar characteristics and hence, it is required to take into account differences in systematic risk factors and other important characteristics (perera & wickramanayake, 2012). moreover, although complete integration is not observed frequently, some form of integration can be observed across financial markets through several measures and indicators. there exist three financial integration indicators, which can be used to measure the level of financial market integration i.e. price-based indicators, quantity-based indicators and regulatory and institutional measures (perera & wickramanayake, 2012). price-based indicator classified as direct measures of integration and also have a more clear-cut interpretation than others indicator (kleimeier & sander, 2000). hence, our study focused on this indicator that examine the comovement between asset prices (stock and bond). the empirical work of financial integration has grown with proposed different measurement framework on price-based indicator among which vector auto-regression (var) model (balcilar, kutanc, & yay, 2016), which aim to investigate the effect of contagion, and cointegration and error-correction models (perera & wickramanayake, 2012), which aim to assess the presence of long run equilibrium among cross-country financial variable. our study combines this measurement framework. 2.1.2 research hypotheses the hyphoteses in this study are: h1: there is a cointegration relationship (long-term balance) between the stock market and bond market in asia. h2: there is financial market integration in all of sample country in asia. h3: there is a causality relationship between the stock market and bond market in asia jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 29 3. research method 3.1 research design in order to examine the empirical implications of financial integration, we use time-series data of stock market and bond market in asia. the sample consists of five countries that have biggest financial market in asia, namely: japan, china, hong kong, singapura, and south korea. all of the data set in this study were retrieved from data stream database. correlation, co-integration and causality tests, which are widely used methods in empirical applications, were used in this study to investigate the integration in financial markets, both stock and bond market. under the co-integration analysis, the first step is to check if each series is integrated to the same order. this will be examined by employing the augmented dickey-fuller (adf) test to determine if each series has a unit root. the second step entails testing for cointegration to check if the stock and bond markets share a common long-run trend. this will be investigated at a multivariate level using var model in johansen fisher panel cointegration test. finally, the causality among the market would be examined by the pairwise granger causality test (20). granger causality tests help to deepen the understanding of integration between financial markets. all of the test running by eviews 7. 3.2 population and sample researcher used weekly data of each market and each country in the form of the stock index return and the long-term (10 years) government bond yield, covers period on january 2009 – december 2016. 4. research result and analysis the summary statistics of stock return and bond yield of all sample data displayed in below. as indicated in descriptive statistics of stock return presented in picture 1, distributions of weekly stock returns of all sample countries have positive means (0.158%). stock return distributions of data sample shown negatively skewed distributions (-0.171), which indicate a greater probability of high or positive returns compared to low/negative returns. the distribution of stock return report a kurtosis coefficient 4.918, indicating leptokurtic distributions with many extreme observations. the zero p-values of jarque-bera test statistic indicate that the stock return distributions do not approximate the normal distributions for any country. picture 2 descriptive statistic of stock return 0 100 200 300 400 -0.10 -0.05 0.00 0.05 0.10 series: stock_return sample 12/29/2008 12/19/2016 observations 2085 mean 0.001580 median 0.002700 maximum 0.120410 minimum -0.133200 std. dev. 0.026737 skewness -0.171320 kurtosis 4.918362 jarque-bera 329.9090 probability 0.000000 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 30 picture 3 descriptive statistic of bond yield according to descriptive statistics of bond yield presented in picture 2 bond yield of five sample countries has positive means (0.141). bond yield distribution is positively skewed (22.390), indicating the absence of high frequencies of higher returns (i.e. distributions are concentrated around low or negative returns). the zero p-values of jarque-bera test statistic of bond yield also indicate that the return distributions do not approximate the normal distributions. result of stock returns correlation between countries present in table 1. this table shown that all of the stock return each country indicate strong correlations with stock return of other country (correlation coefficients are significant according to the probability values of the covariance analysis) except stock return of china index market. this result represents that stock market all of country sample in asia is integrated except stock market of china. on the other hand, the result of bonds yield correlation between countries that are presented at table 2 shows that a strong correlation occurs only among japanese bond yields and singapore bond yields. table 1 results of stock returns correlation between countries sr_south korea sr_singapore sr_japan sr_hong kong sr_china sr_south korea 1.000000 0.559340 0.589328 0.700690 0.086276 sr_singapore 0.559340 1.000000 0.545346 0.650600 0.040092 sr_japan 0.589328 0.545346 1.000000 0.620081 0.085916 sr_hong kong 0.700690 0.650600 0.620081 1.000000 0.117600 sr_china 0.086276 0.040092 0.085916 0.117600 1.000000 note: sr is stock return table 2 result of yield bond correlation between countries by_south korea by_singapore by_japan by_hong kong by_china by_south korea 1.000000 0.384321 -0.078954 0.459478 0.150462 by_singapore 0.384321 1.000000 -0.055218 0.566072 0.080761 by_japan -0.078954 -0.055218 1.000000 -0.001118 0.010010 by_hong kong 0.459478 0.566072 -0.001118 1.000000 0.102530 by_china 0.150462 0.080761 0.010010 0.102530 1.000000 note: by is bond yield table 3 shows the results of adf unit root test of stock return and bond yield. from adffisher chi-square and adf-choi z-stat probability, indicate that stock return and bond yield are stationary at zero order, significant at 1% level. it means that each series is integrated to the same order. at the same time, an unrestricted var was estimated to find the lag length, for which schwaz information criteria (sic) was used. sic is minimized at level 6 and the residual serial correlation lagrange multiplier (lm) test confirms that there is no autocorrelation. therefore, lag 6 was selected as the optimal lag length. the result of cointegration test is presented on table.4. based on johansen fisher panel cointegration which testing with trace category statistic test and 0 200 400 600 800 1,000 1,200 -6 -4 -2 0 2 4 6 8 10 series: bond_yield sample 12/29/2008 12/19/2016 observations 2085 mean 0.001411 median -0.002200 maximum 11.12500 minimum -5.916700 std. dev. 0.291998 skewness 22.39028 kurtosis 1094.377 jarque-bera 1.04e+08 probability 0.000000 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 31 maximum eigenvalue statistic test in table 4, the probability value is 0.0000. these results indicate that the null hypothesis, which is stated there is no cointegration relationship between stock market and bond market is rejected and accepted the alternative hypothesis as the probability value is less than 0.01 (0.0000<0.01). these results prove that there is a cointegration relationship (long-term balance) between the stock market and bond market in asia with significance level at 1%. this means that there is a relationship of balance and similarity movement in the long term between the stock return and bond yield in asia. accordingly, these results convincingly suggest that stock and bond markets in the selected asian countries are co-integrated. in other words, it indicates that common stochastic trend in these stock and bond markets. it seems that these markets share a long-run stable relationship and can be viewed as one asset market. table 3 results of augmented dickey-fuller (adf) unit root test method stock return bond yield statistic prob.** statistic prob.** adf fisher chi-square 791.879 0.0000 636.136 0.0000 adf choi z-stat -27.5229 0.0000 -24.2278 0.0000 table 4 results of johansen fisher panel cointegration test hypothesized fisher stat.* fisher stat.* no. of ce(s) (from trace test) prob. (from max-eigen test) prob. none 92.10 0.0000 92.10 0.0000 at most 1 1317. 0.0000 1317. 0.0000 table 5 results of individual cross section of cointegration test cross section trace test prob.** max-eign test prob.** statistics statistics hypotheses of no cointegration japan 357.1143 0.0001 191.1775 0.0001 china 322.9758 0.0001 185.8828 0.0001 hong kong 307.3720 0.0001 174.8463 0.0001 singapore 302.9525 0.0001 166.8049 0.0001 south korea 307.4879 0.0001 159.7499 0.0001 hypotheses of at most 1 cointegration relationship japan 165.9368 0.0000 165.9368 0.0000 china 137.0930 0.0000 137.0930 0.0000 hong kong 132.5257 0.0000 132.5257 0.0000 singapura 136.1476 0.0000 136.1476 0.0000 south korea 147.7379 0.0000 147.7379 0.0000 table 5 present the result of individual cross section of cointegration. probability trace and maximum eigenvalue test statistic of johansen fisher panel cointegration test all country is 0.0001 on hypothesis of no cointegration and 0.0000 on hypothesis of at most 1 cointegration relationship. this result indicates that there is financial market integration in all of sample country in asia (japan, china, hong kong, singapore, and south korea). table 5. also shows that the null hypothesis which states stock return does not cause a change in the bond yield is also rejected and accept the alternative hypothesis. this proves that the stock return causes a change in the bond yield is significant at the 1% significance level. these results indicate that the variations that occur in the stock return will cause a variation in stock prices, and vice versa, variation that occurs in the bond yield will lead to variations in the stock return. if the bond yield decline, the more interested investors to invest in asian stock markets and the asian stock indexes will be increasing. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 32 table 6 results of pairwise granger causality tests null hypotheses: obs f-statistic prob. bond yield does not granger cause stock return 2055 1.82654 0.0902* stock return does not granger cause bond_yield 5.06391 4.e-05** null hypotheses: obs f-statistic prob. sr_hong_kong does not granger cause sr_china 415 2.11813 0.1216 sr_china does not granger cause sr_hong_kong 7.27665 0.0008*** sr_japan does not granger cause sr_china 415 2.33580 0.0980* sr_china does not granger cause sr_japan 1.57181 0.2089 sr_singapore does not granger cause sr_china 415 0.22432 0.7992 sr_china does not granger cause sr_singapore 6.27814 0.0021*** sr_south_korea does not granger cause sr_china 415 1.02115 0.3611 sr_china does not granger cause sr_south_korea 4.19256 0.0158** sr_japan does not granger cause sr_hong_kong 415 0.75099 0.4725 sr_hong_kong does not granger cause sr_japan 0.09915 0.9056 sr_singapore does not granger cause sr_hong_kong 415 2.50897 0.0826* sr_hong_kong does not granger cause sr_singapore 0.97850 0.3768 sr_south_korea does not granger cause sr_hong_kong 415 3.96932 0.0196** sr_hong_kong does not granger cause sr_south_korea 1.41677 0.2437 sr_singapore does not granger cause sr_japan 415 0.87091 0.4193 sr_japan does not granger cause sr_singapore 1.35939 0.2580 sr_south_korea does not granger cause sr_japan 415 2.20752 0.1113 sr_japan does not granger cause sr_south_korea 0.91437 0.4016 sr_south_korea does not granger cause sr_singapore 415 0.38085 0.6835 sr_singapore does not granger cause sr_south_korea 0.95028 0.3875 null hypotheses: obs f-statistic prob. by_singapore does not granger cause by_south_korea 415 1.92257 0.1475 by_south_korea does not granger cause by_singapore 1.13428 0.3227 by_japan does not granger cause by_south_korea 415 1.42516 0.2417 by_south_korea does not granger cause by_japan 3.56898 0.0291** by_hong_kong does not granger cause by_south_korea 415 0.37428 0.6880 by_south_korea does not granger cause by_hong_kong 5.35871 0.0050*** by_china does not granger cause by_south_korea 415 3.11456 0.0455 by_south_korea does not granger cause by_china 7.01206 0.0010*** by_japan does not granger cause by_singapore 415 0.40499 0.6673 by_singapore does not granger cause by_japan 0.75824 0.4691 by_hong_kong does not granger cause by_singapore 415 1.00794 0.3659 by_singapore does not granger cause by_hong_kong 1.25113 0.2873 by_china does not granger cause by_singapore 415 0.24212 0.7851 by_singapore does not granger cause by_china 0.91728 0.4004 by_hong_kong does not granger cause by_japan 415 0.66130 0.5167 by_japan does not granger cause by_hong_kong 1.95844 0.1424 by_china does not granger cause by_japan 415 0.07044 0.9320 by_japan does not granger cause by_china 0.07136 0.9311 by_china does not granger cause by_hong_kong 415 0.63241 0.5318 by_hong_kong does not granger cause by_china 2.45792 0.0869* note: * sig. at level 10% ** sig. at level 5% *** sig. at level 1% jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 33 the last test to examine the financial market integration in granger causality test. based on the table 6 can be seen that the null hypothesis states that bond yield does not cause a change in the stock return is rejected and accept the alternative hypothesis. thus, it is proved that bond yield causes a change in the stock return with a significance level of 10%. table 6 of pairwise granger causality tests with the second null hypothesis confirm that there is no integration between the sample countries in asia because the significant short-run dynamics or causality relationship of stock market (stock return) only exist in china-hong kong; japan-china; china-singapore; chinasouth korea; singapore-hong kong; south korea-hong kong. while, the result of granger causality tests between countries indicated that only four countries that integrated in a bond market in example south korea-japan; south korea-hong kong; south korea-china and hong kongchina. 5. research conclusion and limitation 5.1. conclusion this study result shows that both stock and bond returns are co-integrated, shows as common stochastic trends. stock market integration appears to be much stronger compared to the less developed. this result is very important for investors to assess potential gains from portfolio diversification. financial policy-maker also get benefit from this research in managing market policies effectively and in handle contagion risks that might be caused by international shock transmissions. 5.2. limitation the study relies on widely cited empirical methods. however, adopting alternative specifications and also allowing time variant factors while examining inter-linkages between stock and bond markets seem to be appropriate for the robustness of the results. in addition, the data used in this study is weekly data, it may has a different results when using daily data. references balcilar, m., kutanc, a. m., & yay, m. e. (2016). financial integration in small islands: the case of cyprus. international review of economics and finance, 47, 201–219. berben, r., & jansen, w.j. (2005). bond market and stock market integration in europe (no. 06). buzelay, a. (2008). european financial integration and global financial liberalization. journal of advances in management research, 5(1), 89-91. chai, h.-y. & rhee, y. (2005). financial integration and financial efficiency in east asia. paper presented at the claremont-kiep international conference, 20 june (2005). deltuvaitė, v. (2015). ceecs’ financial integration: global or regional? evidence from sovereign bond market. procedia economics and finance, 24, 192–197. didier, t., montanes, r. l., & schmukler, s. l. (2017). international financial integration of east asia and pacific. journal of the japanese and international economies. flood, r. p. & rose, a.k. (2004). “equity integration in times of crisis”, in claudio, b., hunter, w.c., kaufman, g. and tsatsaronis, k. (eds), market discipline: the evidence across countries and industries, mit press, cambridge, ma. kim, s.-j., moshirian, f. & wu, e. (2006). evolution of international stock and bond market integration: influence of the european monetary union. journal of banking & finance, 30(5). 1507-1534. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 34 kleimeier, s. & sander, h. (2000), regionalisation versus globalisation in european financial market integration: evidence from cointegration analysis. journal of banking & finance, 24(6). nguyen, t. d., & elisabeta, p. (2016). financial integration and diversification benefits: china and asean4 countries. managerial finance, 42(5). perera, a., & wickramanayake, j. (2012). financial integration in selected south asian countries. south asian journal of global business research, 1(2), 210-237. pyun, j. h., & jiyoun, a. (2016). capital and credit market integration and real economic contagion during the global financial crisis, journal of international money and finance. rughoo, a. & you, k. (2015). asian financial integration-global or regional-evidence from money and bond market. international review of financial analysis. volosovych, v. (2011). measuring financial maket integratoin over the long run-is there a ushape. journal of international money and finance, 30, 1535–1561. yu, c. (2014). evaluating international financial integration in a center-periphery economy. journal of international economics: 1-16. *) fauziah, university of malang, malang, indonesia (e-mail: fauziah@unisma.ac.id) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 54 change management in islam perspective hujjatullah fazlurrahman *) abstract this paper attempts to review the literature on the islamic values and change management, then presents the importance of its delineated dimensions. two main theories of islamic perspective and practices are discussed comprehensively based on the qur’an verses as the ultimate source in islamic thinking. the review includes the comparison between certain components’ implementations. this reveals that each of dimensions are clearly change management. it suggests that islamic emphasizes on commercial activities which denied the authors’ opinions on its’ teaching for not governing the materials aspect or success in change management. the islamic religion seeks to deliver the goodness to all mankind according to its rules and principles. the integrated system of the islamic worldview encompasses all aspects of both worldly and hereafter including the aspect of change management. researcher shows that change management in islam perspective consist of human, development and change. keywords: islamic values, islamic practice, change management 1. introduction 1.1 research background nothing is last forever in the world except for the change itself. this is the analogy of how world is always changing. the theory of change has actually been discovered by darwin with his evolutionary theory. darwin's statement is related to the theory of evolution "survival in the fittest", it relates to something that adaptable. darwin's statements concerning the word’s living things that can survive are those who can conform to the state of nature. in other words, darwin's theory is related to natural selection. this theory can be linked to change management and companies that cannot change with the existing conditions will fall. companies that can not adjust to the environment will lead to destruction. we can see some companies that are destroyed because they cannot adjust to market circumstances. examples of companies that were destroyed because they cannot adjust to the environment among others nokia, this company once became the king of mobile phone companies in the world. nokia phones are excellent in the hearts of consumers around the world. but since the existence of smart phones, nokia did not quickly catch market changes. the second example is blackberry which once became a pioneer of smart phones, but lost to compete with samsung and also lost in the market. samsung used to be scorned by sony but now samsung has left sony so far. another example recited in indonesia and still warm in our minds, how seven eleven minimarket must close and leave from indonesia because it cannot compete with other competitors. examples of those companies that destroyed because of changing can explain that changing is important which also means we are required to adapt to the environment or we will be crushed by the change. this is in line with darwin's theory of natural selection. after studying the case of company that fall because they cannot adapt with the environment and its relation with darwin's natural selection theory, the question then why we must change? 1.2 research problem based on the above reasoning, researcher need to investigate how change management concept in islam perspective. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 55 1.3 research purpose the purpose of this study is to advance the understanding of the change management concept in islam perspective. 2. theoretical framework 2.1 theoretical framework 2.1.1 change management characteristics of change according to kasali (2010), first, change are a sign of life. when we were a baby, we really needed the help of others. then after growing up we begin to reduce dependence on others. so as companies and products that have life cycles like living things that call born, grow, old and die. the life cycle of a product consist of introduction, growth, mature and decline. many companies entering the introduction phase and directly go to decline phase because they cannot be accepted by the market. the life cycle of products and companies is not much different; it is only different on stages which consist of business (start-up), growth, maturity, and decline. second, change gives hope. any change will give hope. we feel there is hope for a better direction in every change of state leaders. but basically, not every change gives convenient hope. if seen from the curve above, a company will grow and then fall down in the phase of maturity. therefore, they should make changes while they are developing. examples of company that did not make changes while developing was nokia, that did not directly respond to the existence of smart phone. picture 1 sigmoid curve every company to pay much by left far behind by competitors. companies that do not want to make changes feel comfortable with their situation now, this leaving the company stagnant and heading for destruction. thus, the company must immediately respond to the changing circumstances in order to keep up with the changes. according to kotter (2002), repulsion to change influence by the company which is first satisfied by the performance of the company. second, do not want to move or stop in place and protect themselves by do not want to receive input from others. it could be happen because they are panicking and fearful of change. third, pessimists because fear of change makes many companies do not make changes. research focuses on qualitative research that includes literature review. literature review is a book and article from scientific journals that have been identified through the review process repeatedly. the general objective of organizational change is adjusting to the environment or improvement of organizational performance. involving organizational changes that change product, technology, administrative and changes in human resources as theory suggests. (austin & claassen, 2008). the main changes are administrative (process) which refers on organizational structure and administrative processes (mainly occur at the level of management) and technical jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 56 (product), changes in the products, services, production or technological processes and work of the organization activities. the concept of metamorphosis and change can be described as below; 1. metamorphosis metamorphosis is the change in form or structure, transitional forms. metamorphosis is the change in form or structure, the tangible changes in the development. thus the metamorphosis can be interpreted as a real change in organizational and the absolute change of organizationa shape and can not return to previous forms. 2. change changes occur because of the emergence of pressures on organizations, individuals, or groups. so, he focused on the statement of "why", which is why can be individuals, groups, or organizational change. from there he had to track down how change can be managed and produce something. lewin concluded that the pressure forces (driving forces) will be faced with the reluctance (resistances) for change. changes that might occur by strengthening the "driving forces" it, or weaken "resistances to change". from there lewin describes the theory of the change process as a pattern of events that occurred from the beginning of a change until the end. one earliest theory of change process is a model-style field of lewin that suggested the process of change can be divided into three stages: unfreezing, changing and freezing. unfreezing is an awareness process for the need or the need for change. changing is a measures in the form of action, whether strengthening "driving forces" and weaken "resistances". while refreezing is an effort to bring back the organization to a new equilibrium (a new dynamic equilibrium).organizational change as cited by irawati a. kahar states that change is to choose a different action than ever done before. that differences result a change. one of fundamental change planning model that proposed by kurt lewin (senior dan fleming, 2006) with a three step procedure of change. according to lewin three steps of the procedure are: a. searching (unfreezing) this step usually involves efforts to make lower tensions in an organization to extent that there is at the present time. unfreezing sometimes achieved by providing information that shows the differences between the desired behavior by members of the organization and the actual behavior that run at the present time. b. action (movement) the second step is to take action that will change the social system of the original behavioral level to a new level of behavior. c. freezing (refreezing) the third step is trying to stabilize the organization at a new equilibrium level. this action is usually achieved through the use of the best mechanism, which encourages organization to new equilibrium. the mechanism that could helps, among others, may be the culture of the organization, organizational norms, policies, and organizational structure. table 1. definiton / concept of change management no author definiton / concept of change management 1. kasali (2010) sigmoid curve 2. senior & fleming (2006) unfreezing, move, and refreezing 3. tamilarasu (2012) is a structured approach to shifting/transitioning individuals, teams, and organizations from a current state to a desired future state 4. kotter (2002) changes in vision, systems, products and culture all have their roots in behavioral change. https://search.proquest.com/indexinglinkhandler/sng/au/tamilarasu,+v/$n?accountid=13771 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 57 table 2 management research in islam prespective no author tittle 1. rafiki & wahab (2014) islamic values and principles in the organization: a review of literature asian 2. branine & pollard (2010). human resource management with islamic management principles: a dialectic for a reverse diffusion in management 3. zangoueinezhad & moshabaki (2011) human resource management based on the index of islamic human development 4. rana & malik (2016). human resource management from an islamic perspective: a contemporary literature review 3. research method this research can be classified as qualitative research with literature review as the research tools. qualitative as generated from the broad answers to specific questions in interviews, or from responses to open-ended questions in a questionnaire, or through observation, or from already available information gathered from various sources (sekaran, 2003). while literature review in this research obtained from specifically books and book chapters, and the journal papers. 4. research result and analysis 4.1 change management in islam perspective in assessing change management in islamic perspective, it starts from human explanation. humans are the khalifah of the earth, so they are the actor of a change. then proceed with the development, because humans are creatures that develop from birth to death. religion doctrine also explains that we must become a better human being. the last stage is change, if we do not change, then we will be crushed by the change itself. 4.2 human the islamic context in this change management begins with the creation of man. man was created by allah swt as a perfect being. this is also evidenced by the theory that was discovered by darwin about natural selection. man is a creature created by allah swt who has the most adaptive of change. man can survive until now because adaptive to environment. different from the great and powerful dinosaurs, they cannot survive until today. development is all encompassing, beginning from the moral and spiritual development of man and manifested eventually into physical development. according to the qur’an, man’s basic qualification for being the representative of allah on earth is possession of knowledge. allah said (2:30-33) that and (mention, o muhammad), when your lord said to the angels, “indeed, i will make upon the earth a successive authority.” they said, “will you place upon it one who causes corruption therein and sheds blood, while we declare your praise and sanctify you?” allah said, “indeed, i know that which you don’t know.” and he taught adaam the name –all of them. then he showed them to the angels and said, “inform me of the names of these, if you are truthful.” they said, “exalted are you, we have no knowledge except what you have taught us. indeed, its you who is the knowing, the wise.” he said, “o adam, inform them of their names.” and when he had informed them of their names, he said, “did i not tell you that i know the unseen (aspects) of the heavens and the earth? and i know what you reveal and what you have concealed”. allah also said (39:9) that “…..are those who know equal to those who do not know? only they will remember (who are) people of understanding.” according to majid (2004), basic natural law of all is "change and development", because all of these things are allah's creation and developed by him in an incessant process. this statement explains that humans are created to keep develop and change. both of these things have become https://search.proquest.com/docview/754154499/ca1a5818ba2e4b68pq/1?accountid=13771 https://search.proquest.com/docview/754154499/ca1a5818ba2e4b68pq/1?accountid=13771 https://search.proquest.com/indexinglinkhandler/sng/au/abouzar+zangoueinezhad/$n?accountid=13771 https://search.proquest.com/indexinglinkhandler/sng/au/moshabaki,+asghar/$n?accountid=13771 https://search.proquest.com/indexinglinkhandler/sng/au/habib+rana,+muhammad/$n?accountid=13771 https://search.proquest.com/indexinglinkhandler/sng/au/shaukat+malik,+muhammad/$n?accountid=13771 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 58 human nature created by allah swt. besides, humans are created to always grow and grow in a better direction. 4.3 development al-mujadila 58:11 "o you who believed, when you are told, "space yourselves” in assemblies then make space, allah will make space for you. and when you are told, “arise” then arise, allah will raise those who have believed among you and those who were given knowledge, by degrees. and allah is acquinted with what you do.” the verse has given doctrine about capacity building. we are encouraged to increase the scientific and skill capacity that we have wherever we are. this is in accordance with the opinion of rafiki & wahab (2014) about the concept of self-development in the qur'an. rasulullah saw said: "demanding knowledge is an obligation for every muslim man and woman". allah gives the virtue and glory to those who are knowledgeable. hadith and verse of qur’an above shows that we are required to study science or in other words increase our knowledge capacity in order to develop to be better. "but those who believed and did righteous deedswe charge no soul except within its capacity. those are the companions of paradise, they will abide therein eternally" (al-a'raf: 42). in this verse we are asked to run the worship that is no longer a liability or burden but willingness or a need. this is also in line with what rafiki & wahab (2014) statement about the continuous improvement in the concept of qur'an. ali (2005) explained that performance appraisal in islam is based on normative instructions and the practice of the prophet muhammad as well as of his immediate following four caliphs. the normative realm is revealed in qur’anic instructions. according to ali (2005), the qur’an clarifies what one does is solely his or her responsibility and no one should be held responsible for the mistakes of others. employees are expected to have a moral duty to monitor their performance. 4.4 changes humanity and development are two very relevant things. in line with the characteristics of change, according to kasali (2010) that the nature of change is due to the omens life. therefore, after we discuss about development then we will discuss the nature of change in the qur'an and hadith. the first verse, qs al-anfal [8]: verse 53 said "that is because allah would not change a favor he had bestowed upon a people, until they change what is within themselves. and indeed allah is hearing and knowing." this verse explains blessing given by allah swt. if we do not change that blessing then allah will not change that blessing too. this corresponds to a sigmoid curve that explains if we do not change while the company developing, then we will reach the level of maturity. hence, the sigmoid curve suggests making changes while we develop. the problem of the above changes in accordance to the qur'an surah ar-rad verse 11, allah almighty says allah does not change the condition of a people until they change what is within themselves. and if allah wills hardship for a people there is no turning it back; and there is no protector for them but allah". this verse explains that if we change, we will be crushed by the change. in accordance with the sigmoid curve explaining that after the company develops then the next level is maturity. at this level, company must make changes (or jump to the second curve) otherwise it will lead to the gate of destruction. corresponding with the doctrine above that allah will not change people if they do not change themselves. just as the company, if the company does not want to change it will lead to the gate of destruction. "whoever has day (today) better than yesterday, than she/he has been lucky, whoever has day as same as yesterday, then she/he has suffer lost, and whoever has day worse than yesterday, then she/he belongs to the cursed". whoever has the same two days (today and yesterday) are equal then she/he has suffer lost, anyone whoever has day worse than yesterday then she/he classified as cursed." the origin of this hadith is unknown except in the dream of 'abd' aziz bin abi rawaad, he says "the prophet had will to me in a dream, with the added word at the end" (hr al-baihaqy), the possible additional content is "whoever has no additional in her/his day then he/she is in deprivation”. in the above hadith explained that rasulullah saw asked us to be better every day from time to time. it aims to improve our ability and capacity in life. in addition, to face a jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 59 changing world, we are required to improve ourselves every day. nothing lasts forever except the change its self, therefore we must improve ourselves every day, month and years so as not to be crushed by the change. table 1 change management in al qur’an no subject al-qur’an verses 1 humanism al qashash: 20, an-nas, 2. development al-mujadila 58:11, hadits 3. changes ar-rad ayat 11, al-anfal [8]: ayat 53 5. research conclusion and limitation 5.1. conclusion picture 2 change management in islam prespective change management in islam perspective consists of three phases which are human, development, and changes. this is in accordance with the existing sigmoid curve above. companies are required to make changes as the company develops. it corresponds to the qur'an and hadith. therefore, the change management conceptual is in accordance with the way of islam (islam perspective). 5.2. limitation this research is limited to contextual understanding of change management by integrating and intrepretating the change management theory with qur’an and hadith. references zangoueinezhad, a., & moshabaki, a. (2011). human resource management based on the index of islamic human development. international journal of social economics, 38(12), 962-972. ali, a. (2005). islamic perspectives on management and organization. cheltenham and northampton, ma : edward elgar. al-qur’an. https://search.proquest.com/indexinglinkhandler/sng/au/abouzar+zangoueinezhad/$n?accountid=13771 https://search.proquest.com/indexinglinkhandler/sng/au/moshabaki,+asghar/$n?accountid=13771 https://search.proquest.com/pubidlinkhandler/sng/pubtitle/international+journal+of+social+economics/$n/36647/pagepdf/902835745/fulltextpdf/1ad52ae5f3bc4386pq/1?accountid=13771 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 60 austin, m., & claassen, j. (2008). impact of organizational change on organizational culture: implications for introducing evidence-based practice, journal of evidence-based social work, 5(1/2), 321–359. branine, m., pollard, d. (2010). human resource management with islamic management principles: a dialectic for a reverse diffusion in management personel review. farnborough 39(6), 712-727. kasali, r. (2010). change!: manajemen perubahan dan manajemen harapan. jakarta: gramedia pustaka utama. kotter, j. p & cohen, d. s. (2002). the heart of change : real-life stories of how people change their organizations. boston: harvard business press. majid, n. (2003). islam doktrin dan peradaban: sebuah telaah kritis terhadap masalah keimanan, kemanusiaan dan kemodernan. jakarta: paramadina press. rafiki, & wahab. (2014). islamic values and principles in the organization: a review of literature asian, 10(9). rana, m. h., malik, m. s. (2016). human resource management from an islamic perspective: a contemporary literature review. international journal of islamic and middle eastern finance and management, 9(1), 109-124. sekaran, u. (2003). research method for business: a skill building approach, 4th edition, john wiley & sons agarwal, a., garg, s., & pareek, u. 2011. strengthening human resource practices in healthcare in india: the road ahead. journal indian academy of clinical medicine, 12(1), 39. senior, b., & fleming, j. (2006). organizational change, (3rd ed). new jersey: prentice hall. tamilarasu, v. (2012). change management, international journal of management prudence, 4(2), 26-31. *) hujjatullah fazlurrahman, state university of surabaya, surabaya, indonesia (e-mail: hujjatulahfazlurrahman@unesa.ac.id) https://search.proquest.com/docview/754154499/ca1a5818ba2e4b68pq/1?accountid=13771 https://search.proquest.com/indexinglinkhandler/sng/au/habib+rana,+muhammad/$n?accountid=13771 https://search.proquest.com/indexinglinkhandler/sng/au/shaukat+malik,+muhammad/$n?accountid=13771 https://search.proquest.com/pubidlinkhandler/sng/pubtitle/international+journal+of+islamic+and+middle+eastern+finance+and+management/$n/40285/docview/1823106548/fulltext/ca1a5818ba2e4b68pq/9?accountid=13771 https://search.proquest.com/pubidlinkhandler/sng/pubtitle/international+journal+of+islamic+and+middle+eastern+finance+and+management/$n/40285/docview/1823106548/fulltext/ca1a5818ba2e4b68pq/9?accountid=13771 https://search.proquest.com/indexingvolumeissuelinkhandler/40285/international+journal+of+islamic+and+middle+eastern+finance+and+management/02016y01y01$232016$3b++vol.+9+$281$29/9/1?accountid=13771 https://search.proquest.com/indexinglinkhandler/sng/au/tamilarasu,+v/$n?accountid=13771 https://search.proquest.com/pubidlinkhandler/sng/pubtitle/international+journal+of+management+prudence/$n/2030937/pagepdf/1490677206/fulltextpdf/28d3bb70dae349d4pq/2?accountid=13771 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 111 company value determinants study on manufacturing company listed in indonesia stock exchange oyong lisa *) abstract the purpose of this study to determine the effect of firm size, leverage, and profitability to the value of companies in manufacturing companies listed on the indonesia stock exchange (bei) partially or simultaneously. this research tested the hypothesis that there is influence of firm size, leverage, and profitability to the value of companies in manufacturing companies listed on the indonesia stock exchange (bei). the sampling technique used was purposive sampling. the research method used is multiple linear regression statistic method.the results showed that firm size variables have no effect on firm value, leverage has no effect on firm value, profitability has positive influence to firm value. while simultaneously there is influence of firm size, leverage, and profitability to firm value with coefficient of determination (adjusted r2) obtained equal to 0,28, indicating that 28% company value can be influenced by firm size, leverage, and profitability, while side 72% the value of the company is influenced by the variables that are not examined in this research. the limitations of this study is to examine the effect of firm size, leverage, and profitability on firm value. while other variables that affect the value of the company is expected to be examined by further researchers. keywords: firm size, leverage, profitability, corporate value 1. introduction 1.1 research background business entities are a gathering place of manpower, capital, natural resources and also entrepreneurship whose purpose is to earn the maximum profit. by maximizing profits, it can be ascertained that the company can maintain its survival and continue to grow so as to provide a profitable return for its owners in the welfare of the owners and also employees / workers who are in it. the value of a company is the perception of investors in funding a company with consideration of the value of time and money against companies that are often associated with stock prices. the higher the stock price, the higher the shareholder wealth, maximizing shareholder wealth also means that management must maximize the present value of expected return in the future. the size of a company is a symbol of a company's size. an established company will have easy access to the capital market to raise funds at a lower cost, while new and small companies will have many difficulties accessing the capital market. leverage is defined as an estimate of the risks inherent in a company. that is, the greater leverage indicates a greater investment risk as well. firms with low leverage have a lower leverage risk. with the high leverage ratio shows that the company is not solvable means total debt is greater than the total assets. because of leverage is a ratio that calculates the extent of the funds provided by creditors, and also as a ratio comparing the total debt to the total assets of a company, it is feared with high assets of debt that will increase investment risk, if the company can not pay its obligations on time. profitability is a company's ability to generate profit in the future and is an indicator of the success of the company's operations. the investors investing shares in the company is to get a return, consisting of yield and capital gains. this means that the higher the ability to earn profits, the greater the expected return of investors so as to make the company's value to be better. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 112 based on the description of the above background research aims to determine the effect of firm size on corporate value, leverage to the value of the company, profitability to the value of the company. 1.2 research problem research problem that proposed by researcher in this study is, is there any effect between firm size, leverage, and profitability toward the value of the company? 1.3 research purpose this research aims to examine the level of influence of independent variables (x) ie firm size, leverage and profitability to the dependent variable (y) is the value of the company. 2. theoretical framework and hyphotesis development 2.1 theoretical framework 2.1.1 agency theory agency theory explains the relationship between agent (management company) and principal (shareholder). the relationship will occur whenever someone (the owner) will employ another party (agent) to represent his interests. in all agency relationships, there is a possibility of conflict of interest between the owner and his agent called agency problem (daly, 2015; boshkoska, 2015). agency problems usually occur because of the parties who have more information (agents) than with other parties (principal). agents get more information because they deal directly with the company's operations. assuming the individual has an interest for himself, then with the existence of information asymmetry will encourage the agent to hide information that is not owned by the principal. 2.1.2 signaling theory this theory explains how a company should give a signal to users of financial statements about the condition of the company (jogiyanto, 2016). this signal is in the form of information about the condition of the company to the owner or other interested parties. signals can be made through the disclosure of accounting information such as financial statements, what reports have been done by management to realize the wishes of the owner, or even can be promotions and other information that states that the company is better than other companies. thus the management of any company that has go public must provide information to the investors so that they can know the state of the company and its prospects in the future. so in the decision to invest, investors can distinguish which companies have a good corporate value that will be profitable for investors. because good corporate value can be shown by increasing stock prices from time to time. 2.1.3 company value according to brigham and houston (2010) "corporate value is the primary goal of managerial decisions taking into account the risks and times associated with earnings forecasts for maximizing the price of the company's common stock". company value can be said to have a good value if the company's performance is also good. if the value of high shares can be said that the value of the company is also good. because the main purpose of the company is to increase the value of the company through increasing the prosperity of owners or shareholders. company value can be defined as the value of the company's wares describing investors' perceptions of the issuer. company value is also a benchmark company to know whether the company has reached its goal or not. which in this case by increasing the stock price in the capital market, because with the high stock price it can be concluded that the value of his company is also high. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 113 2.1.4 company size the size of the company describes the size of the company. the size of the company can be determined based on total sales, total assets, and average sales rate company size is one of the variables considered in determining the value of the firm (paramita, 2012). company size is a reflection of total assets owned by the company. the larger the size of the company, means that the company's assets are larger and the funds required by the company to maintain its operational activities even more. the size of a company is a symbol of a company's size. an established company will have easy access to the capital market to raise funds at a lower cost, while new and small companies will have many difficulties accessing the capital market. 2.1.5 leverage one important factor in the financing element is leverage. enekwe et al (2014) explains that leverage is a measure of how much firms use equity and debt to finance its assets. companies that do not have leverage means using their own capital 100%. decision to take a financial leverage need to be calculated. therofore, akbarian (2013) states that leverage ratios contribute in measuring the risk of using equity costs. according to hery (2015) "solvency ratio (leverage) is the ratio used to measure the extent to which the company's assets are financed with debt. this means how much debt burden borne by the company compared to its assets ".leverage is defined as an estimator of the inherent risk to a company. that is, the greater leverage indicates the risks of an increasingly large investment. companies with low leverage ratios have a lower leverage risk. with the high ratio of leverage indicates that the company is not solvable means total debt is greater than the total assets. 2.1.6 profitability profitability is the level of net profit that can be achieved by the company during the operation.according to anugerah, hutabarat, and faradilla (2010) profitability is the company's ability to generate profit over a certain period. when a company has a high level of profit, the company (management) considers it unnecessary to report things that may disrupt information about the company's financial success (jariah, 2016). conversely, when profitability levels are low, they expect report users to read "good news'' for the company, for example in the social sphere, and thus investors will continue to invest in the company. if the company's ability to generate profits increases, then the stock price will also increase. profitability can reflect the advantages of financial investment, meaning that profitability affects the value of the firm because of the growing internal resources. 2.2 hyphotesis based on the formulation of problems and objectives in this study, the hypothesis proposed as follows: h1: the size of the company has a significant effect on the value of the company in the manufacturing company listed on the indonesia stock exchange. h2: leverage has a significant effect on the value of the company in a manufacturing company listed on the indonesia stock exchange. h3: profitability significantly affects the value of the company in manufacturing companies listed on the indonesia stock exchange. 3. research method 3.1 research design researcher used an external data (secondary data) that obtained from the official website of the company that published at indonesia stock exchange (bei) indonesian capital market directory and idx website www.idx.co.id. 2013-2015 period. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 114 3.2 population and sample the population in this study is a manufacturing company listed on the indonesia stock exchange (bei) in the period 2013-2015. the total population in this study is 146 manufacturing companies. sample selection method in this study is determined by purposive sampling, ie the sample companies based on certain criteria tailored to the objectives and research problems. 3.3 research variables table 1 research variables variables definition company size (x1) a basic aspect that needs to be scrutinized in investment decisions. the larger the size of the company, the easier it is to access the information, in other words the company's likelihood of obtaining more funds than the company that has only the information that is classified as less. leverage (x2) the ratio used to measure the extent to which a company's assets are financed with debt. this means how much debt burden borne by the company compared to its assets. in a broad sense it is said that solvency ratio is used to measure the ability of a company to pay all its obligations, both short and long term if the company is dissolved. profitability (x3) the ability of a company to generate profit over a certain period that can be calculated based on sales, assets or capital sendiri.semakin profitability growth means the prospect of the company in the future assessed the better, meaning the value of the company will also be rated better in the eyes of investors. company value (y) the value of the company can be said to have a good value if the company's performance is also good. if the value of high shares can be said that the value of the company is also good. because the main purpose of the company is to increase the value of the company through increasing the prosperity of owners or shareholders. company value can be defined as the value of the company's wares describing investors' perceptions of the issuer. 3.4 research framework based on the explanation described above, it can be described the research model in the chart as follows: picture 1 research framework size company (x1) leverage (x2) profitability (x3) company value (y) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 115 3.5 type of data and sampling method data analysis techniques used in this study is multiple linear regression with the aim to examine the level of influence of independent variables (x) that consist of firm size, leverage and profitability to the dependent variable (y), the value of the company 4. research result and analysis 4.1. hypothesis testing t-test is done to know how big influence of independent variable to dependent variable partially. the benchmark used is to compare t arithmetic with t table. table 2 t-test model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 531351.178 221071.165 2.404 .017 company size 77717.864 34168.592 .152 2.275 .024 leverage 5132.904 1974.682 .173 2.599 .010 profitability 649.355 3014.760 .114 2.215 .030 a. dependent variable: value company source: spss data is processed a. the first hypothesis in this study is the size of the company positively affect the value of the company on manufacturing companies listed on the indonesia stock exchange. based on table 4.10 note that the coefficient of β firm size is positive value of 777717,864 and the value of t arithmetic> t table value is 2,275> 1,980, with significant 0,024 <0,05. this means that firm size positively affects the value of the company in manufacturing companies listed on the indonesia stock exchange. thus the first hypothesis (h1) is accepted. b. the second hypothesis in this research is leverage has a significant effect on the value of the company in manufacturing companies listed on the indonesia stock exchange. in table 4.10 note that the coefficient β firm size is positive value of 5132.904 and t count value> t table value is 2.599> 1,980, with significant 0.010 <0.05. this means that the leverage proxied by dar (x2) has an effect positive to the value of the company at a manufacturing company listed on the indonesia stock exchange. thus the second hypothesis (h2) is accepted. the third hypothesis in this study is the profitability has a significant effect on the value of companies in manufacturing companies listed on the indonesia stock exchange. in table 4.10 note that the coefficient β firm size is positive value of 649.355 and the value of t arithmetic> t value table that is 2,215> 1,980, with significant 0,030 <0,05. this means that the profitability proxied by roa (x3) has a positive effect on the value of the company in the manufacturing company listed on the indonesia stock exchange. thus the third hypothesis (h3) is accepted. 4.2. classic assumption test in regression analysis it is necessary to test the classical assumption aiming to know and test the feasibility of the regression model used in this research. there are 4 classical assumption test that has been done that is as follows: jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 116 table 3 multicolonierity test coefficients a model collinearity statistics tolerance vif 1 (constant) company size .967 1.034 leverage .678 1.475 profitability .677 1.477 source: spss data is processed multicollonearity test result shows tolerance value of firm size variable that is 0,967, for leverage that is 0,678 and for profitability that is 0,677 result show that tolerance value from independent variable is bigger than 0,10. meanwhile vif value of firm size is 1.034, leverage is 1.475 and profitability is 1.477 result is smaller than 10.00. so it can be concluded that regression model is free from multicolonierity problem. table 4 autocorrelation test model r r square adjusted r square std. error of the estimate durbinwatson 1 .213 a .045 .033 607125.323 1.981 a. predictors: (constant), profitability, leverage, firm size b. dependent variable: company value source: spss data is processed from autocorrelation test seen that durbin-watson value equal to 1,981 based on number of sample that is 225 (n) and number of independent variable 3 (k = 3), hence obtained table durbinwatson lower limit (dl) equal to 1,76086 and durbinwatson upper limit (du) of 1.79753. because du <dw <4-du or 1.79753 <1,981 <2.20247, it can be stated that there is no positive or negative autocorrelation in the regression equation in this study. so it can be concluded that the regression model that formed in this research is in autocorrelation free area. while the result of heteroedasticity test (table 4) shows that firm size, leverage, and profitability variable have sig value. 1,000 or greater than 0.05 so it can be concluded there is no indication of heterokedastisitas. table 5 heterocedasticity test coefficients a model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 1.65615 .300 .000 1.000 company size .000 .103 .000 .000 1.000 leverage .000 .060 .000 .000 1.000 profitability .000 .092 .000 .000 1.000 a. dependent variable: absut source: spss data is processed jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 117 table 6 normality test (one-sample kolmogorov-smirnov test) nilai perusahaan ukuran perusahaan leverage profitabilitas n 225 225 225 225 normal parameters a mean 36.14 36.03 36.17 36.16 std. deviation 20.115 20.168 20.246 20.082 most extreme differences absolute .053 .055 .056 .053 positive .047 .049 .043 .043 negative -.053 -.055 -.056 -.053 kolmogorov-smirnov z .796 .825 .844 .793 asymp. sig. (2-tailed) .551 .504 .474 .556 a. test distribution is normal. the result of normality test showed the result from kolmogrov-smirnovyaitu, for company value = 0,796, firm size = 0,825, leverage = 0,844, and profitability = 0,793 from result showed that kolmogrov-smirnov> 0,05 then population is normal distribution. 4.3. research discussion 4.3.1 the size of the company significantly affects the value of the company in manufacturing companies listed on the indonesia stock exchange discussion hypothesis size of the company significantly influence the value of companies in manufacturing companies listed on the indonesia stock exchange. tests on firm size variables indicate that these variables affect the value of the company. this proves that the larger the size of the company means that the assets owned by the company is getting bigger, thus the management more freely in using the existing assets in the company. in this case the company is able to achieve sales greater than variable costs and fixed costs so that the company gets the amount of income before tax. the larger the size of the company will also affect management decisions in deciding what funding will be used by the company so that funding decisions can optimize the value of the company. 4.3.2 leverage has a significant effect on the value of companies in manufacturing companies listed on the indonesia stock exchange discussion hypothesis leverage significant effect on the value of companies in manufacturing companies listed on the indonesia stock exchange. testing of leverage variables indicates that this variable affects firm value. this proves that the company uses its debt to finance its investment. by using the debt the company can optimize its operational activities to achieve sales targets that ultimately the company get a greater profit from its fixed expenses so that the owners of the company gain an increased profit. this shows that manufacturing companies that have low leverage ratios of the company can be interpreted solvable which means the total debt owned by the company is lower than the total assets. with low assets derived from debt that lead to low investment risk, because the company is able to pay off its obligations on time. 4.2.3 profitability significantly affects the value of companies in manufacturing companies listed on the indonesia stock exchange discussion the profitability hypothesis has a significant effect on the value of companies in manufacturing companies listed on the indonesia stock exchange. the test of profitability variables indicates that this variable affects firm value. this result also shows that the company is able to obtain a level of net profit when conducting its operations. thus the company (management) does not need to report things that may disturb information about source: spss data is processed jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 118 the success of corporate finance. by looking at the growth of profitability in a company, investors can see that there is a good prospect in the future which is considered better .. so, profitability becomes a very important consideration in investment decisions. thus profitability can reflect the advantages of financial investment, meaning that profitability affects the value of the company due to an increasingly large internal source. 5. research conclusion, limitation, and recommendation 5.1. conclusion based on the results of tests and analyzes that have been described previously, it can be concluded that the size of the company affects the value of the company in manufacturing companies listed on the indonesia stock exchange . in this period the company has a large company size so that the company can maximize its operational activities that impact on sales increase rather than variable costs and fixed costs. leverage affects the value of companies in manufacturing companies listed on the indonesia stock exchange in this period, the company uses debt to finance its investment by optimizing its operational activities to obtain high sales. so the company is able to pay off its short-term debt with increased sales. profitability affects the value of companies in manufacturing companies listed on the indonesia stock exchange in this period the company obtained a net profit while running its operations. by looking at the growth of profitability in a company gives a positive signal for investors who will invest, because investors see good prospects in the future that is rated better the impact on increasing the value of the company. 5.2. limitation the use of manufacturer company that listed in indonesian stock exchande (bei) may consider as the limitations in this research (can’t be generalized to other sectors). this research only uses three variables (company size, leverage, and profitability) to examine company value, therefore for future researchers who will conduct research on the same topic should use different variables and longer study period in order to obtain better research results. 5.3. recommendation with the limitations in the research, the researcher proposed the suggestions to companies should look at future prospects in terms of the current unstable level of profitability, especially in terms of firm size and leverage. with the results of this study investors should consider first before making an investment decision so that the variables of company size, leverage, and profitability can be used as one of the considerations in making investments. references akbarian, s. (2013). the investigation effect of financial leverage and environment risk on performance firms of listed companies in tehran stock exchange 8(3): 249–255. anugerah, r., hutabarat, r., and faradilla, w. (2010). pengaruh ukuran perusahaan, leverage dan profitabilitas terhadap pengungkapan tanggung jawab sosial perusahaan pada perusahaan manufaktur yang listing di bei. jurnal ekonomi, vol. 18 no. 1. 66-78. brigham, eugene f. and houston, joel f. (2010). fundamentals of financial management. boston : south-western college pub. boshkoska, meri. (2015). the agency problem: measures for its overcoming. international journal of business and management, vol. 10, no. 1; 2015. daly, hounaida. (2015). conflicts of interest in agency theory: a theoretical overview. global journal of human-social science: e economics vol 15 issue 1 version 1 year 2015. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 119 enekwe, chinedu innocent; agu, charles ikechukwu and eziedo kenneth nnagbogu. (2014). the effect of financial leverage on financial performance: evidence of quoted pharmaceutical companies in nigeria. iosr journal of economics and finance (iosr-jef) volume 5, issue 3 (sep.-oct. 2014), pp. 17-25. hery. (2015). analisis laporan keuangan : pendekatan rasio keuangan. yogyakarta : caps. ikatan akuntan indonesia. 2009. standar akuntansi indonesia. jakarta : salemba empat. jariah, ainun. (2016). tindakan perataan laba pada perusahaan jasa di indonesia dengan ukuran perusahaan, rasio profitabilitas, dan leverage sebagai variabel pembeda. jurnal penelitian ilmu ekonomi wiga, vol.6 no. 2: 100-110. jogiyanto. (2010). teori protofolio & analisis investasi. edisi ke 7. yogyakarta : bpee. lisa, oyong. (2011). analisis faktor-faktor yang mempengaruhi permintaan jasa audit eksternal pada koperasi di jawa timur. jurnal penelitian ilmu ekonomi wiga, vol. 3 no. 1: 20880944. paramita, ratna w.d. (2012). pengaruh firm size terhadap earnings response coeficient (erc) dengan voluntary disclousure sebagai variabel intervening: studi pada perusahaan manufaktur yang terdaftar di bursa efek indonesia”. jurnal penelitian ilmu ekonomi wiga, vol. 2 no. 1: 2088-0944. *) oyong lisa, stie widyagama lumajang jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 93 predicting financial statements corporate fraud: beneish m-score model hariri *) ayub wijayati sapta pradana **) sri luki widjajanti ***) abstract this research aims to detect fraudulent financial statements the financial statements of xyz, pt in the period 2010-2013. this research is a qualitative descriptive research. data collection techniques used are observation and documentation. data analysis techniques used are data reduction, data presentation and conclusion with beniesh m-score model. the results showed that the financial statements in the period 2010-2013 as a whole that beniesh m-score xyz, pt reached -3.94 in 2010, 0.70 in 2011, -3.32 in 2012 and -2.38 in 2013, the overall beniesh m-score reached above -2.22 except in 2011. beniesh m-score model indicates that the management has performed the practice of manipulating numbers on the financial statements conducted continuously in the period of 2010, 2012 and 2013. the authors suggest the regulation (tax office) and public accounting firms, namely that the regulators do a review/inspection directly on the company's assets that has been recorded in the financial statements and the external auditor who has been appointed to conduct an examination of the financial statements to be more independent and do detection of financial statements using ratio analysis. keywords: detection, fraudulent financial statements, beneish m-score model, practice of manipulation number 1. introduction 1.1 research background psak no. 1 (2009) that the purpose of presentation of financial statements is to provide useful information in the determination of economic decisions. the information provided should be reliable because it can affect the accuracy of the decisions taken by the report. the financial statements will lose their reliability if they are materially misstated. this is due to a significant difference in the condition of the company recorded in the financial statements that have been presented with the actual conditions. the cause of fraudulent financial reporting according to sarwoko, et al. (2001: 22), fraud in the financial statements may involve the following actions: 1) manipulation, counterfeiting, or alteration of accounting records or supporting documents that serve as a source of data for the presentation of financial statements. 2) representation in or omission from the financial statements, events, transactions, or significant information. 3) wrong misrepresentation of accounting principles relating to quantity, classification, manner of presentation or disclosure. financial report fraud is estimated to be about 10 percent of all types of cheating in the world of work. according to the association of certified fraud examiners (2011: 1,305) in the 2010 report of the nations on occupational fraud and abuse, cheating on the report comprised 4.8 percent of reported fraud, with an average loss of $ 4,100,000. however, it is important to note that losses due to fraudulent financial statements often measure lost market capitalization or shareholder value lost rather than a direct financial loss of the asset. as we have seen with such high-profile cheating scandals of enron and worldcom. it can also have a tremendous impact on the organization's shareholders. in indonesia, several cases that occurred in the manipulation of financial statements by management include the century bank, duta bank, lippo bank, gas negara pt, kimia farma pt, jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 94 case citra marga nusapala persada pt, merck, kai pt, and telkom pt, directly or indirectly lead to the accounting profession (adhikara, 2014). the number of accounting scandals that occurred is one reason for the analysis of financial statements to minimize fraud on the financial statements. companies always use the services of a public accountant to audit the company's financial statements, which are expected to limit the practice of fraudulent financial statements. one of the tools to predict the existence of fraud in the company's financial report is using beneish m-score model (mariana, 2012). 1.2 research problem based on the above reasoning, it is necessary and important to do research in order to provide evidence of the phenomenon. the problem is whether there are indications of acts of accounting fraud to the financial statements in xyz, pt? 1.3 research purpose thus, it is hoped that beneish m-score model can achieve the research objective, which is to provide empirical evidence about the possibility of fraud in the financial statements of xyz, pt. 2. theoretical framework and hyphotesis development 2.1 previous research studies roxas (2011) stated that by using beneish m-score 5 model can identify 62% company as manipulator, compared to m-score 8 variable that can identify 46% company as manipulator. mariana (2012) using data analysis method is done by fraud exposure rectangle, identification of fraud-inventory and cost of good sold, revenue and sales, overstatement asset, liabilities, inadequate fraud disclosure and beneish m-scoremodel as a tool to predict indication fraud. and the results of his research is as a whole of both objects of research proved to have an indication of fraud to the financial statements mainly due to the liability of the company is very large. omar et al. (2014) in a case study at mmhb, the results of an investigation using the beneish m-score model to identify whether there is potential fraud in the company's financial statements. a m-score higher than -2.22 means that mmhb has been manipulating on corporate earnings. then continued the investigation using the analysis of financial ratios for three consecutive years (2005, 2006 and 2007). operating efficiency in ratio analysis indicates that the company recorded a fictitious income of rm 198,727. therefore, the tools used in this investigation confirmed that management is involved in manipulating the company's financial statements. 2.2 theoretical framework 2.2.1 financial report fraud in the association of certified fraud examiners (2011) states that fraudulent financial statements are a deliberate error of a company's financial condition achieved through misstatement or omission over the disclosure of the number of figures in the financial statements to deceive the users of the financial statements. fraudulent financial statements can be defined as fraud committed by management in the form of material misstatements of financial statements that are detrimental to investors and creditors. this fraud can be financial or non-financial cheating (amrizal, 2009). indonesia financial minister sri mulyani indrawati said that many companies cheated by making double financial report, including companies that have become public companies. "the company cheated by making double financial statements, such as providing different financial statements for banks, bapepam (capital market supervisory agency), and tax office," said sri mulyani in his presentation in front of participants indonesia investor forum 1 in jakarta today (supriyanto, 2006). according to her, companies that do the fraud may have an interest to avoid taxes by submitting poor financial statements. in contrast, good financial statements are provided to banks for the benefit of obtaining quicker financing and to the authority of the capital market managing agency to be able to go public. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 95 according daniri and simatupang (2009). the misstatements in the financial statements may be caused by unintentional mistakes (errors), as well as intentional (fraud).presentation of false information or omission of information, both balances and notes, deliberate, and intended to trick users of financial statements, including fraud category. fraud in the financial statements can be classified as: (1) the deliberate misapplication of assets embezzlement of money received, theft of company assets, or payments for fictitious purchases; and (2) the deliberate misstatement by fraudulent financial reporting, which generally involves the manipulation, forgery, or alteration of the accounting records and supporting documents on which the financial statements are based; omission or misrepresentation of events, transactions, or other important information presented in the financial statements; and incorrect application of deliberate accounting principles related to balances, classifications, forms of presentation, or disclosures. it is not easy to detect fraud, but there are indicators that can be used as a basis for attention for further review (daniri and simatupang, 2009). 2.2.2 financial statements fraud of classification there are five classifications of fraudulent financial reporting schemes: fictitious income, time flaw, incorrect asset valuation, hidden obligations and expenses and incorrect disclosure (association of certified fraud examiners, 2011). 1. fictitious income fictitious revenue involves recording the sale of goods or services made but not occurring. fictitious sales most often involve fraudulent customers, but can also involve legitimate customers. 2. the time difference (including premature revenue recognition) fraudulent financial statements may also involve a time difference, which is the recording of income or expenses in an inappropriate period. this can be done to shift the revenue or expense between one period to the next, increasing or decreasing the desired profit. 3. incorrect asset valuation an improper asset valuation usually takes the form of one of the following classifications:  inventory assessment  accounts receivable  business combination  property is fixed 4. hidden liabilities and expenses minimize liabilities and expenses is one way to manipulate financial statements to make a company look more profitable than it really is.because the pre-tax income will increase by the amount of expenses or liabilities that are not recorded, the method of financial statement fraud can have a significant impact on reported earnings. 5. incorrect disclosure management has a duty to disclose all important information is right in the financial statements in the management discussion and analysis. in addition, the disclosed information should not be misleading. incorrect disclosure relates to fraudulent financial statements as follows:  negligence to liability  events after the balance sheet date  related party transactions  changes in accounting 2.2.3 red flags associated with financial report fraud some red flags show increased vulnerability to financial reporting (association of certified fraud examiners, 2011). and the more significant red flags are:  management is dominated by one person or small group (in business owner not managing) without any compensation control. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 96  the profitability or the expected trend level of investment analysts, institutional investors, significant creditors, or other external parties (especially overly aggressive or unrealistic expectations), including expectations made by management, such as announcing overoptimism over annual reports.  ineffective communication, implementation, support, or enforcement of entity values or ethical standards by management or communication of inappropriate values or ethical standards.  frequent negative cash flows from business activities or the inability to generate positive cash flow from operations when reporting revenue and profit growth.  rapid growth or unusual profitability, especially compared to other companies with the same industry.  significant, unusual, or highly complex transactions, especially at the end of a period that lead to difficult statements of "substance over form".  insignificant party-related transactions in business activities or with related entities are not audited or audited by other companies.  management's efforts to justify marginal accounting or not on the basis of materiality.  formal or informal restrictions on inappropriate auditors restrict access to information to people, or limit the ability of auditors to communicate effectively with those responsible for governance. 3. research method 3.1 research design xyz, pt was established in 1992 to support national transportation and to respond to the high demand for repair services and the capacity for making transportation equipment. the company started from 1996 until 2013 has carried out the repair of transportation equipment as much as 623 units. on average, repairs are 50 units per year. and the construction of new transportation equipment is approximately 3 units per year. this research uses secondary data, that is data obtained through search and examination of document studies contained in the place of research and that has to do with the problems studied. the data in this research is financial report of xyz, pt period of 2010-2013. in this research, data collection will be conducted by using two methods of collecting qualitative data, namely: direct observation or observation and documentation. 3.2 research variables the existing data will be analyzed using descriptive qualitative data analysis include: data reduction, data presentation and conclusion. beneish m-score model is a probabilistic model, so it will not detect fraud with 100% accuracy. beneish m-scoremodel has 8 variables (beneish et al, 2012), as follows: 1. days sales in receivables index (dsri): 2. gross margin index (gmi) 3. asset quality index (aqi) 4. sales growth index (sgi) 5. depreciation index (depi) 6. sales general and administrative expenses index (sgai) 7. leverage index (lvgi) 8. total accruals to total assets (tata) the beneish m-score model formula is as follows: m-score = -4.840 + 0.920 (dsri) + 0.528 (gmi) + 0.404 (aqi) + 0.892 (sgi) + 0.115 (depi) 0.172 (sgai) – 0.327 (lvgi) + 4.697 (tata) if m> -2.22, this indicates an indication of the company's manipulation. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 97 4. research result and analysis the following results presented data analysis in table 1 by using beneish m-score model to the financial statements of xyz, pt from the period of 2010-2013. table 1 m-score m-score 2010 2011 2012 2013 5 variable model -3,64 1,81 -3,97 -3,45 8 variable model -3,94 0,70 -3,32 -2,38 source: processed data table 1 shows that beneish m-score model xyz, pt reached -3.94 in 2010, 0.70 in 2011, -3.32 in 2012 and -2.38 in 2013. the results of the analysis indicate that there is an indication that xyz, pt has been fraudulently practicing the financial statements in 2010, 2012 and 2013. the results of this study support the results of research conducted roxas (2011) and omar et al. (2014). however, it does not support the results of his research mariana (2012). table 2 derived variables derived variables years 2010 2011 2012 2013 other l/t assets [ta-(ca+ppe)] -7408 21283 2766 -3409 3361 dsri 0,68 0,90 1,26 1,80 gmi 1,27 0,95 1,22 0,87 aqi -0,57 9,71 -0,94 -1,04 sgi 1,31 0,60 0,55 1,17 depi 1,06 0,74 0,96 1,14 sgai 0,71 1,35 0,89 1,04 tata -0,23 0,05 0,00 0,03 lvgi 0,82 0,99 1,08 1,09 source: processed data based on the analysis of financial statements from the period 2010-2013 to 8 variables listed in table 2, as follows: 1. days sales in receivables index xyz, pt which continues to increase in the year 2010 to 2013 is 0.68 to 0.90 to 1.26 and to 1.80. this is due to the year-to-year management of real balances, as recorded in appendix 2 and appendix 1, which lowers the sales balance by -35% with the outstanding balance of -85% in 2010, the balance of sales -20% with outstanding balance of -83 % in 2011, sales balance -11% with outstanding balance of -83% in 2012 and sales balance -15% with balance of receivables -92% in 2013.from these results indicate the existence of an indication of fraud over recognition of revenue and receivables as well as significant decline in profits and continue to be done in the last 4 years. this study supports the results of research conducted by roxas (2011) and mariana (2012). 2. gross margin index xyz, pt in 2010 and 2012 is greater than 1 that is 1.27 and 1.22, while in the year 2011 and 2013 there was a decrease in index of 0.95 and 0.87. management performs engineering by recognizing gross margin lower than real balance, as recorded in appendix 2 of -31% in 2010, -24% in 2011, -17% in 2012 and recognizing gross margin greater than 64% in 2013. from the results of the analysis shows that the gross margin of the company is experiencing an unstable situation, meaning there is a negative signal about the prospect of a company that has a positive relationship with the action of profit manipulation. this study supports the results of research conducted by roxas (2011) and mariana (2012). jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 98 3. asset quality index xyz, pt in 2010 to 2011 increased to greater than 1, ie -0.57 to 9.71. however, there is a decline in the index in 2012 and 2013, namely -0.94 and -1.04. management performs engineering by reducing the balance of current assets from real balances, as recorded in appendix 1 at -67% in 2010, -56% in 2011, -65% in 2012 and -71% in 2013. from analysis results show that management has the potential to increase its involvement in eliminating some cost transactions. eliminating some cost transactions done by management to make the company's assets look small and minimize the payment of fees, it is an indication related to profit manipulation. this study does not support the results of research conducted by roxas (2011) and mariana (2012). 4. sales growth index xyz, pt has decreased in 2010 to 2011 and to 2012 ie from 1.31 to 0.60 to 0.55. but there is a considerable increase in the year 2013 to reach 1.17. management does engineering by not recording all sales balances from real transactions (in appendix 2) of 35% in 2010, -20% in 2011, -11% in 2012 and -15% in 2013 (as in appendix 2). from the analysis results show that the management cheated the financial statements in the year due to declining financial position and increased capital needs so as to put pressure on managers to achieve profit objectives. this study supports the results of research conducted by roxas (2011) and mariana (2012). 5. depreciation index xyz, pt has decreased in 2010 to 2011, that is 1.06 to 0.74. this has not yet demonstrated the degree to which the depreciated asset is lower and the likelihood that management has revised upwards the estimated useful life of the asset or adopted a new method that lowers the asset's balance in the year. and the increase in 2011 to 2012 and to 2013 is 0.74 to 0.96 to 1.14. management performs engineering by recognizing the depreciation expense is lower than real, as in appendix 1 is -18% in 2010, -15% in 2011, -9% in 2012 and -5% in 2013. from the analysis show that the rate at which the asset is depreciated is less than the real and the likelihood that management has revised upwards the estimated useful life of the asset or adopted a new method that lowers the asset's balance in the year. this study shows the results of research conducted by roxas (2011) and mariana (2012). 6. general sales and administrative expenses index at xyz, pt has increased in 2010 to 2011, which is 0.71 to 1.35 but experienced the index decline in 2011 to 2012, which is 1.35 to 0.89 and increased in 2012 to 2013, which is 0.89 to 1, 04. management performed engineering at lower operating expenses by -4% in 2010, but in the following year recognizes operational expenses higher than real terms of 26% in 2011, 49% in 2012 and 28% in 2013 (as in appendix2). from the analysis results show that the cost incurred for the company's operations is greater than the real cost incurred in the year. and the increase in costs that occur indicates an increase in sales costs and can be interpreted to have a negative signal about the prospects of the company in the future. this study supports the results of research conducted by mariana (2012). however, the research does not support roxas (2011). 7. leverage index xyz, pt in the last four years has increased in 2010 to 2011 from 0.82 to 0.99 and reached more than 1 is 2012 and 2013 at 1.08 and 1.09. management did engineering by not recording all the total debt from the real report, as in appendix 1 in the difference -63% in 2010, -64% in 2011, -66% in 2012 and -70% in 2013. from the analysis shows the existence of profit manipulation to get the loan agreement from the company's creditors. this study supports the results of research conducted by mariana (2012). however, the research does not support roxas (2011). 8. total accruals to total assets at xyz, pt in 2010 to 2011, in -0.23 to 0.05 and also increased in 2012 to 2013, which is 0.00 to 0.03. it can be explained that there is a significant increase in the cash flow statement from operating activities for the period 2010 to 2013 (as in annex 1), is -110% to 46% to 47% and to 96%. this increase indicates a negative signal in which managers make discretionary accounting choices to change earnings. this study supports the results of research conducted by mariana (2012). however, the research does not support roxas (2011). jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 99 based on the results of financial ratio analysis using beneish m-score model to decry the fraudulent actions against the financial statements of xyz, pt stated that empirically the management has conducted accounting fraud practices against the financial statements in the period of 2010, 2012 and 2013, that overall beneish m-score modelreached above -2.22, this indicates an indication of companies manipulating the figures in the financial statements. while in 2011 beneish m-score model reached the number below -2.22, and showed no indication of manipulation of the figures in the financial statements because in the cash flow statement (appendix 3) in the period of 2010 the company made a mistake of recording (misstatement) on the accounting account and experienced a decrease (minus) on the net cash flows balance from (for) operating / business activities so as to affect the tata value. 5. research conclusion, limitation, and recommendation 5.1. conclusion the purpose of this research is to provide empirical evidence about the possibility of fraud in the financial statements, namely to detect the financial statements of xyz, pt period 2010-2013 by using beniesh m-score model. the results of this research indicate that beniesh m-score xyz, pt reached -3.94 in 2010, 0.70 in 2011, -3.32 in 2012 and -2.38 in 2013, overall beniesh m-score reached above -2.22 except in 2011. the result of this research can be concluded that the management of xyz, pt engages in the practice of manipulating numbers against financial statements conducted continuously in 2010, 2012 and 2013. 5.2. limitation as in qualitative research, this research has high subjectivity that can not be generalized. the case in the corporation under investigation and the suspicion of the informant is a limitation in this study. 5.3. recommendation from these conclusions can be submitted suggestions for the regulation (tax office) and public accounting firm, namely: for the regulators to review/direct examination of company assets that have been recorded in the financial statements and the external auditors who have been appointed to conduct an examination of the financial statements more independent and do the detection of financial statements by using ratio analysis. references adhikara, mf arrozi and septyanto, dihin. (2014). perilaku etis akuntan manajemen dalam penyusunan laporan keuangan. accessed from http://portal.kopertis3.or.id/bitstream/123456789/1979/1/perilaku%20etis%20akuntan%20m anajemen%20dalam%20penyusunan%20laporan%20keuangan.pdf. association of certified fraud examiners. (2011). fraud examiners manual, international edition. accessed on march 26, 2014 from http://www.acfe.com/uploadedfiles/shared_content/products/books_and_manuals/maintoc11 %20-%20final.pdf. beneish, m.d.; lee charles m.c.; nichols, d. craig. (2012). fraud detection and expected returns. accessed on may 7, 2014 from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1998387. daniri, mas achmad and simatupang, angela indriawati. (2009). rekayasa pelaporan keuangan: isu akuntansi atau governance. accessed on august 24, 2014 from http://kadinindonesia.or.id/enm/images/dokumen/kadin-167-3754-15042009.pdf. dewimayasari. (2013). creative accounting. accessed on march 10, 2014 from http://dewimayasari39.blogspot.com/2013/01/creative-accounting_11.html. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 100 mariana, lia (2012) analisis kecurangan laporan keuangan: studi kasus pada pt. bumi resources, tbk. dan pt. berau coal energy, tbk. accessed on march, 30, 2014 from http://thesis.binus.ac.id/doc/prosedur program/2012-/-00450-if prosedur program001.pdf. omar, normah; ridzuan, kunji koya; zuraidah, mohd sanusi, and shafie, nur aima. (2014). financial statement fraud: a case examination using beneish model and ratio analysis. international journal of trade, economics and financial, vol. 5, no. 2, april 2014. doi: 10.7763/ijtef.2014.v5.367. putra, yuniarti hidayah suyoso. (2012). praktik kecurangan akuntansi dalam perusahaan. accessed from.http://ejournal.uin-malang.ac.id. roxas, maria l. (2011). financial statement fraud detection using ratio and digital analysis. journal of leadership, accountability and ethics, vol.8 (4) 2011. sarwoko, imam, sensi, ludovicus, and bede, djoemarma. (2001). kumpulan materi kuliah praktek audit. salemba empat. jakarta. simanjuntak, a. (2008) kecurangan: pengertian dan pencegahan. acessed on march 24, 2014 from www.asei.co.id/internal/docs/asei-kecurangan.doc. supriyanto, agus. (2006). banyak perusahaan buat laporan keuangan ganda. accessed on march 24, 2014 from http://www.tempo.co/read/news/2006/07/31/05680947/banyak-perusahaanbuatlaporan-keuangan-ganda. wilopo. (2006). analisis faktor-faktor yang berpengaruh terhadap kecenderungan kecurangan akuntansi: studi pada perusahaan publik dan badan usaha milik negara di indonesia. simposium nasional akuntansi (sna) 9. padang, august, 23-26, 2006. *) hariri, university of islam malang **) ayub wijayati sapta pradana, university of islam malang ***) sri luki widjajanti, university of islam malang international conference on economics, business and social sciences (icebuss 2016) december 6-7, 2016, malang jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 131 the development of syari'ah cooperatives information system model ronny malavia mardani *) budi wahono **) abstract indonesian muslims have tremendous potential to be a pioneer and world islamic economic center. indonesia is the country with the largest muslim population in the world. indonesia has made policies that encourage the development of the islamic finance industry. classic problems that hinder the development of cooperative shari'ah limited knowledge of cooperative management in financial management. recognizing these circumstances, it would require a new technological innovation that the managers of cooperatives shari'ah that some of those who do not understand how to manage the financial well be understood and easy to apply. therefore, it is necessary to design the automated information system with the technology, so that businesses in the cooperative syari'ah able to easily prepare their own financial statements, without having to understand the concept of financial management. the purpose of this study is the description and design accountable models of shari'ah cooperative information systems. the method used in this study is a qualitative method that is by arranging the prototype model. results of design research model of this system, is able to develop a model of cooperative systems that facilitate cooperative shari'ah management preparing financial reports quickly and accurately, can help managers and members of cooperatives shari'ah to determine the growth koerasi quickly and can help managers to make decisions rapidly. keywords: cooperative shari'ah, management information systems jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 132 1. pendahuluan 1.1. latar belakang masalah saat ini kita menyadari bahwa sistem perekonomian barat ternyata tidak sesempurna dugaan kita sebelumnya. krisis keuangan di amerika serikat pada tahun 2008 yang dipicu oleh sistem keuangan yang sangat mengandalkan riba mengakibatkan kebangkrutan perusahaan-perusahaan besar yang tidak pernah dibayangkan sebelumnya. hingga kini dunia masih belum pulih dari dampak negatif krisis keuangan amerika serikat. di eropa, krisis surat utang di yunani telah merambat ke negara-negara eropa lainnya. hal ini semakin memperlihatkan bahwa ekonomi yang berbasis riba ternyata memiliki banyak kelemahan. berdasar kondisi pada perekonomian amerika serikat dan negara-negara di eropa tersebut, dipandang perlu pendekatan-pendekatan pembangunan ekonomi yang baru. pendekatan ekonomi islam merupakan alternatif yang amat menjanjikan. karena itu, tidaklah mengherankan bila kita melihat saat ini umat islam di seluruh dunia tengah membangun fondasi ekonomi syariah yang kuat. umat islam indonesia memiliki potensi yang amat besar untuk menjadi pelopor dan pusat ekonomi syariah dunia. indonesia adalah negara dengan jumlah penduduk muslim terbesar di dunia. indonesia sudah membuat kebijakan-kebijakan yang mendorong berkembangnya industri keuangan syariah. hasilnya pun sangat menjanjikan. hal ini bisa dilihat dari aset perbankan syariah secara keseluruhan (bank umum syari’ah, dan unit usaha syari’ah) selama 2011 mencatatkan pertumbuhan 49% dengan total asset rp149 triliun. aset tersebut sekitar 4% dari total aset perbankan nasional. mengingat aset industri keuangan syariah yang baru 4% dari aset perbankan nasional, ruang bagi industri keuangan syariah untuk berkembang masih terbuka lebar. untuk itu, perlu dikembangkan sistem keuangan mikro yang baik, utamanya yang berbasiskan islam. sistem keuangan mikro yang baik, yang didukung oleh jumlah penduduk muslim yang besar, akan membuat indonesia tumbuh menjadi pelopor di dunia dalam gerakan pemberantasan kemiskinan berbasis ajaran islam. kita harus memanfaatkan secara optimal potensi yang kita miliki ini. masalah klasik yang menghambat pengembangan koperasi syari’ah yaitu terbatasnya pengetahuan pengelola koperasi dalam pengelolaan keuangan berbasis syari’ah. padahal kemampuan dalam pengelolaan keuangan dengan berbasis syari’ah akan memungkinkan manajemen memperoleh data dan informasi keuangan secara cepat, tepat dan sistematis. fenomena yang terjadi adalah banyaknya koperasi syari’ah yang menghadapi kendala dalam jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 133 hal permodalan, penyebabnya adalah terbatasnya investor yang bersedia untuk menanamkan modalnya pada koperasi syari’ah. hal ini disebabkan ketidakmampuan koperasi syari’ah dalam menunjukkan bukti kinerja keuangan koperasi syari’ah dalam bentuk laporan keuangan. 2. tinjauan teori 2.1. koperasi syari’ah koperasi syari’ah secara teknis bisa dibilang sebagai koperasi yang prinsip kegiatan, tujuan dan kegiatan usahanya berdasarkan pada syariah islam yaitu al-quran dan assunnah. pengertian umum dari koperasi syari’ah adalah koperasi syariah adalah badan usaha koperasi yang menjalankan usahanya dengan prinsip-prinsip syari’ah. tujuan koperasi syari’ah adalah meningkatkan kesejahteraan anggota pada khususnya dan masyarakat pada umumnya serta turut membangun tatanan perekonomian yang berkeadilan sesuai dengan prinsip-prinsip islam. produk jasa lembaga keuangan berbasis syariah a. jasa untuk peminjam dana  mudharabah, adalah perjanjian antara penyedia modal dengan pengusaha. setiap keuntungan yang diraih akan dibagi menurut rasio tertentu yang disepakati. resiko kerugian ditanggung penuh oleh pihak bank kecuali kerugian yang diakibatkan oleh kesalahan pengelolaan, kelalaian dan penyimpangan pihak nasabah seperti penyelewengan, kecurangan dan penyalahgunaan.  musyarakah (joint venture), konsep ini diterapkan pada model partnership atau joint venture. keuntungan yang diraih akan dibagi dalam rasio yang disepakati sementara kerugian akan dibagi berdasarkan rasio ekuitas yang dimiliki masing-masing pihak.  murabahah, yakni penyaluran dana dalam bentuk jual beli. bank akan membelikan barang yang dibutuhkan pengguna jasa kemudian menjualnya kembali ke pengguna jasa dengan harga yang dinaikkan sesuai margin keuntungan yang ditetapkan bank. pengguna jasa dapat mengangsur barang tersebut.  takaful (asuransi islam) b. jasa untuk penyimpan dana  tabungan mudharabah  wadi’ah (jasa penitipan), adalah jasa penitipan dana dimana penitip dapat mengambil dana tersebut sewaktu-waktu. jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 134  deposito mudharabah, nasabah menyimpan dana di bank dalam kurun waktu yang tertentu. keuntungan dari investasi dana nasabah dilakukan dengan nisbah bagi hasil tertentu antara bank dan nasabah. 2.2. sistem informasi menurut laitch dan bavis menjelaskan bahwa sistem informasi adalah suatu sistem di dalam sebuah organisasi yang mempertemukan kebutuhan pengolahan transaksi harian, mendukung operasi, bersifat manajerial dan kegiatan strategi dari suatu organisasi dan menyediakan pihak luar tertentudengan laporan-laporan yang diperlukan (laitch, 2007:8). menggunakan pendekatan sistem untuk mengembangkan solusi sistem informasi dapat dipandang sebagai proses multilangkah yang disebut siklus pengembangan sistem informasi (information systems development cycle), yang juga dikenal sebagai siklus hidup pengembangan sistem (systems development life cycle-sdlc) yang mencakup langkahlangkah: a. tahap pertama: kenali masalah/kesempatan 1) investigasi sistem dalam tahap ini perlu dikenali permasalahan yang terjadi b. tahap kedua: kembangkan solusi sistem informasi 2) analisis sistem a) analisis kebutuhan informasi dari user, lingkungan organisasi dan sistem-sistem lain yang sedang berjalan. b) analisis aktivitas, sumber daya, dan produk system yang sedang berjalan. c) susun kebutuhan fungsional dari satu sistem yang mampu memenuhi kebutuhan user, yaitu : kebutuhan akan user interface, kebutuhan pengolahan, kebutuhan storage dan kebutuhan akan control 3) desain sistem a) buat spesifikasi perangkat keras, piranti lunak, tenaga manusia, jaringan dan sumber daya data, serta produk-produk informasi yang dapat memenuhi kebutuhan fungsional dari sistem yang diusulkan. jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 135 b) aktivitas yang dilakukan : a) desain „user interface’: layer, formulir, dan dialog; b) desain data: entity/object, atribut, relationship, kaidah integritas, dll dan c) desain proses: user services, application services, dan data services. c) desain output sistem antara lain : a) spesifikasi „user interface’; b) pesifikasi basisdata; c) spesifikasi piranti lunak; d) spesifikasi perangkat keras dan jaringan; e) spesifikasi personil c. tahap ketiga: terapkan solusi sistem informasi: 4) implementasi sistem aktivitas dalam tahap ini adalah pengadaan perangkat keras dan piranti lunak, uji sistem dan pelatihan pengguna, pengoperasian dan penggunanya serta konversi ke sistem baru 5) perawatan sistem lakukan proses review pasca implementasi untuk memantau, mengevaluasi dan memodifikasi sistem sesuai kebutuhan. dalam melakukan pemodelan sistem menggunakan flowchart dan data flow diagram (dfd). flowchart adalah bagan (chart) yang menunjukan aliran (flow) didalam program atau prosedur sistem secara logika, digunakan terutama sebagai alat bantu komunikasi dan dokumentasi. ada 5 macam flowchart, yaitu : flowchart sistem, flowchart dokumen, flowchart skematik, flowchart program dan flowchart proses.(kusrini,2007 : 80). 3. metode penelitian 3.1. desain penelitian dalam penelitian ini, design penelitian yang digunakan dimulai dengan melakukan pendeskripsian alur setiap transaksi dalam koperasi syari’ah. dari pendeskripsian ini investigasi sistem analisis sistem desain sistem implementasi sistem pemeliharaan sistem pahami masalah atau peluang kembangkan solusi sistem informasi implementasikan solusi sistem informasi gambar 1. siklus pengembangan sistem informasi jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 136 kemudian diikuti perancangan sistem informasi koperasi syari’ah berbasis teknologi yang dapat membantu pengelola koperasi syari’ah untuk menghasilkan laporan keuangan yang akuntabel. berdasarkan hasil perancangan (perencanaan) sistem dilanjutkan dengan desain sistem. selanjutnya adalah uji coba dan sistem evaluasi dilakukan setelah tahap desain sistem selesai dilakukan. proses penelitian tersebut merujuk pada pendapat susman (1983) dengan mengembangkan model sebagai berikut: 1) diagnosis problematika (identifikasi dan kodifikasi masalah), 2) rencana, tindakan, 3) pelaksanaan (pendampingan), 4) penyusunan indikator keberhasilan (pelatihan), 5) monitoring dan evaluasi, yang kesemua proses ini digunakan untuk mencapai target yang sudah digariskan. 3.2. lokasi penelitian penelitian ini dilakukan di kota malang jawa timur, dengan mengambil obyek penelitian pelaku bisnis koperasi syari’ah. hal ini disebabkan tumbuh pesatnya koperasi yang menerapkan sistem syari’ah di kota malang. 3.3. sumber dan jenis data sumber data adalah subyek dimana data dapat diperoleh. subyek dalam penelitian ini berjumlah dua pihak, diantaranya: (1) pengurus koperasi syari’ah; (2) karyawan bagian administrasi dan keuangan. jenis data yang digunakan dalam penelitian ini, terdiri dari 2 sumber yaitu: data primer (sumber data utama) adalah data yang diperoleh langsung dari sumbernya (subyek penelitian), diamati dan dicatat, yang untuk pertama kalinya dilakukan melalui observasi (pengamatan) dan wawancara. data skunder yaitu data yang tidak dilakukan secara langsung oleh peneliti, seperti buku, majalah ilmiah, arsip, dokumentasi pribadi dan resmi dan sebagainya. 3.4. teknik pengumpulan data adapun cara untuk mengumpulkan data, dilakukan dengan teknik sebagai berikut: pertama, untuk kategori data primer, peneliti melakukannya dengan cara wawancara atau melakukan tanya jawab secara langsung dengan responden/narasumber yang ada di lokasi penelitian seperti melakukan wawancara dengan pengurus dan karyawan koperasi, jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 137 melakukan observasi atau pengamatan terhadap obyek, dan dokumentasi (mengumpulkan data dengan cara mencari dan mengumpulkan melalui dokumen yang berhasil ditemukan), kedua, dokumentasi, yakni mempelajari atau menelaah dokumen seperti transaksi yang terjadi seperti simpan pinjam, setoran dan penarikan tabungan, setoran dan penarikan deposito dan pencatatan akuntansi. sedangkan untuk kategori data sekunder (library research), peneliti melakukannya dengan mencari data dari: 1). bahan primer, yang terdiri dari data usaha koperasi syari’ah. 2). bahan sekunder, yang terdiri dari hasil-hasil penelitian, hasil karya ilmiah. 3) bahan tersier, yaitu bahan-bahan yang memberikan informasi tentang bahan hukum primer dan bahan sekunder, seperti: landasan dan prinsip-prinsip jasa keuangan syari’ah, aturan pemerintah mengenai jasa keuangan, dan sebagainya. 3.5. analisis data analisis data merupakan bagian dalam melakukan penelitian. dalam penelitian kualitatif, analisis data yang telah ditemui sejak pertama peneliti datang ke lokasi penelitian, yang dilaksanakan secara intensif sejak awal pengumpulan data lapangan sampai akhir data terkumpul semua. berdasarkan uraian di atas, maka prosedur analisis data yang digunakan dalam penelitian ini sebagai berikut: 1) reduksi data reduksi data termasuk dalam kategori pekerjaan analisis data. data yang berupa catatan lapangan (field notes) sebagai bahan mentah, dirangkum, di ikhtisarkan atau diseleksi. 2) displai data hasil reduksi perlu “didisplai” secara tertentu untuk masing-masing problem dan dimengerti duduk persoalanya. displai data dapat membantu peneliti untuk melihat gambaran keseluruhan atau bagian-bagian tertentu dari hasil penelitian. 3) mengambil kesimpulan muara dari kesimpulan kegiatan analisis data kualitatif terletak pada deskripsi atau penuturan tentang apa yang dihasilkan, dapat dimengerti berkenaan dengan suatu problem yang diteliti. dari sinilah lahir kesimpulan atau permasalahan yang bobotnya tergolong komprehensif dan mendalam (deepth). setalah data dianalisis, tahap selanjutnya adalah perancangan dan desain sistem. metode pendekatan dan pengembangan sistem yang digunakan akan dikemukakan secara rinci sebagai berikut : jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 138 a. metode pendekatan sistem metode pendekatan sistem yang digunakan pada penelitian ini menggunakan metode terstuktur yaitu suatu proses untuk mengimplementasikan urutan langkah untuk menyelesaikan suatu masalah dalam bentuk program. pemrograman terstruktur adalah suatu proses mengimplementasikan urutan langkah untuk menyelesaikan suatu masalah dalam bentuk program. b. metode pengembangan sistem pengembangan sistem (systems development) dapat berarti menyusun suatu sistem yang baru untuk menggantikan sistem yang lama secara keseluruhan atau memperbaiki sistem yang ada. guna pencapaian tujuan dalam perancangan perangkat lunak sistem informasi koperasi syari’ah berbasis teknologi informasi, digunakan metode siklus hidup pengembangan perangkat lunak berupa prototype model. prototype model ini merupakan metode siklus hidup pengembangan perangkat lunak yang bertujuan mendapatkan kebutuhan yang jelas. adapun tahapan proses yang akan dilakukan adalah sebagai berikut : dokumentasi kebutuhan, membuat prototype dari kebutuhan tersebut, uji coba dan evaluasi terhadap prototype, dan membuat perangkat lunak akhir. dalam tahapan di atas, yang merupakan tahapan berupa prototype adalah tahapan nomor satu, kedua dan ketiga. pada ketiga tahapan tersebutlah akan terjadi siklus pengembangan perangkat lunak hingga hal-hal utama pada perangkat lunak tersebut selesai dibuat. 4. hasil penelitian 4.1. hasil penelitian berdasarkan data dari web dinas koperasi dan umkm kota malang (http://dinkop.malangkota.go.id), kuisioner disebarkan pada 46 koperasi syari’ah di wilayah kota malang. dari 46 kuisioner yang disebarkan, kuisioner diterima kembali sebanyak 29 kuisioner. berdasarkan hasil penyebaran kuisioner, dapat diketahui bahwa dari 29 koperasi syari‟ah yang ada, secara keseluruhan (100%) menawarkan produk tabungan mudharabah, 59% menawarkan produk tabungan haji, 48% menawarkan tabungan qurban, 100% menawarkan produk deposito, pembiayaan musyarakah, pembiayaan murabahah, pembiayaan mudharabah, 7% menawarkan pembiayaan qordhul hasan, dan hanya 7% yang menggunakan sistem berbasis teknologi informasi. jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 139 berdasarkan uraian diatas, tampak bahwa produk yang ditawarkan oleh koperasi syari‟ah antara lain : tabungan mudharabah, tabungan haji, tabungan qurban, deposito, pembiayaan musyarakah, pembiayaan murabahah, pembiayaan mudharabah, dan pembiayaan qordhul hasan. maka pengembangan sistem koperasi syari‟ah diutamakan dengan menyediakan fasilitas terkait produk tersebut. 4.2. kelemahan sistem yang sedang berjalan berdasarkan hasil analisis terhadap sistem yang berjalan. beberapa kelemahan dari sistem berjalan antara lain: 1) seluruh aktivitas koperasi masih dikerjakan secara manual, meskipun beberapa sudah menggunakan ms excel; 2) pengurus sulit menyusun laporan keuangan koperasi secara cepat dan akurat; 3) manajer sulit untuk mengambil keputusan secara cepat. berdasarkan hasil analasis awal tersebut dan tujuan penelitian ini dilakukan, maka perlu dilakukan perancangan model sistem informasi koperasi syari’ah yang akuntabel dan berbasis teknologi informasi. perancangan sistem informasi koperasi syari’ah ini dapat memberikan manfaat sebagai berikut: 1) pengurus koperasi syari’ah dapat melakukan transaksi secara efektif; 2) pengurus dapat menyusun laporan keuangan secara cepat dan akurat; 3) pengurus memiliki data anggota yang akurat; 4) manajer dapat mengetahui kondisi keuangan secara cepat; 5) manajer dapat mengambil keputusan secara cepat; 6) meningkatkan pelayanan kepada anggota koperasi; 6) meningkatkan kepercayaan anggota kepada koperasi 4.3. perancangan sistem 4.3.1. pengguna sistem sistem koperasi syari’ah ini didesain dengan 4 jenis pengguna (user) antara lain : administrator (manajer/wakil manajer), bagian tabungan, simpanan dan deposito, bagian pembiayaan, dan bagian accounting. administrator dapat mengakses semua modul atau menu yang tersedia pada sistem dan yang terpenting adalah menginput semua produk tabungan, deposito, pembiayaan serta menentukan hak akses bagi seluruh pengguna sistem. bagian tabungan, simpanan dan deposito dapat mengakses seluruh modul yang berhubungan dengan tabungan, simpanan dan deposito. bagian pembiayaan dapat mengakses seluruh modul yang berhubungan dengan pembiayaan. bagian accounting dapat mengakses seluruh modul yang berhubungan dengan accounting. jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 140 selanjutnya, pada tahapan perancangan sistem ini kegiatan yang dilakukan meliputi perancangan proses penggunaan sistem koperasi syari’ah melalui diagram aktivitas, perancangan database, perancangan input dan output, dan perancangan tampilan user interface (gui). 4.3.2. diagram aktivitas diagram aktivitas merupakan gambaran melalui flowchart setiap aktivitas dalam sistem informasi koperasi syari’ah. dalam rancangan sistem koperasi syari’ah ini terdapat 38 diagram aktivitas. berikut disajikan 7 diagram aktivitas utama yang dapat dirangkum dalam tabel 1 sebagai berikut : tabel 1. diagram aktivitas no nama aktivitas diagram keterangan 1 login aktivitas ini merupakan langkah pertama untuk dapat masuk pada system koperasi syari’ah yang dimulai dengan menginput username dan password, selanjutnya meng-klik tombol login 2 diagram aktivitas setup nomor perkiraan akuntansi setup nomor perkiraan akuntansi hanya bisa dilakukan oleh bagian akuntansi. aktivitas ini diperlukan untuk mensetting nomor perkiraan akuntansi untuk keperluan penyusunan laporan keuangan 3 diagram aktivitas pendaftaran anggota pendaftaran anggota hanya bisa dilakukan oleh administrator (admin). aktivitas ini dilakukan untuk mendaftar orang yang akan menjadi anggota koperasi. 4 diagram aktivitas pembukaan tabungan pembukaan tabungan hanya bisa dilakukan oleh admin tabungan. aktivitas ini dilakukan saat ada anggota koperasi syari’ah yang akan membuka tabungan jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 141 no nama aktivitas diagram keterangan 5 diagram aktivitas pembukaan deposito pembukaan deposito hanya bisa dilakukan oleh admin deposito. aktivitas ini dilakukan saat ada anggota koperasi syari’ah yang akan membuka deposito 6 diagram aktivitas pembukaan pembiayaan pembukaan pembiayaan hanya bisa dilakukan oleh admin pembiayaan. aktivitas ini dilakukan saat ada anggota koperasi syari’ah yang akan mengajukan pembiayaan. 7 diagram aktivitas jurnal umum jurnal umum hanya bisa dilakukan oleh bagian accounting. aktivitas ini dilakukan saat diperlukan input jurnal transaksi oleh bagian accounting 4.3.3. perancangan input/output sistem informasi koperasi syari’ah a. perancangan form perancangan form merupakan rencana desain bentuk input pada sistem yang dibagi menjadi 4 bagian yaitu form input untuk administrator, bagian tabungan, simpanan dan deposito, bagian pembiayaan dan bagian accounting. berikut diuraikan daftar perancangan form tersebut. 1. administrator (manajer/wakil manajer) form input yang disediakan untuk administrator (manajer/wakil manajer) terdiri dari 13 form yaitu form input pendaftaran anggota, produk tabungan, produk deposito, produk pembiayaan, produk simpanan, sifat pembiayaan, form penggunaan pembiayaan, golongan debitur pembiayaan, area, pekerjaan, sektor ekonomi, account officer dan otorisasi staff. berikut disajikan 2 contoh form input sebagaimana diuraikan diatas : jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 142 gambar 1 form input pendaftaran anggota 2. bagian tabungan, simpanan dan deposito form input yang disediakan untuk bagian tabungan, simpanan dan deposito terdiri dari 4 form yaitu form input pembukaan tabungan, form input transaksi tabungan, form input pembukaan deposito, dan form input transaksi deposito. berikut disajikan contoh form input sebagaimana disebutkan sebelumnya : gambar 2 form input transaksi deposito 3. bagian pembiayaan form input yang disediakan untuk bagian pembiayaan terdiri dari 3 form yaitu form input pembukaan pembiayaan, form input transaksi pembiayaan dan form input simulasi pembiayaan. berikut disajikan 2 contoh form input sebagaimana diuraikan diatas : gambar 3 form input pembukaan pembiayaan jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 143 4. bagian accounting form input yang disediakan untuk bagian accounting terdiri dari 4 form yaitu form input nomor perkiraan akuntansi, form input jurnal umum, form input proses posting dan form input proses akhir bulan. berikut disajikan 2 contoh form input sebagaimana diuraikan diatas : gambar 4 form input nomor perkiraan akuntansi b. perancangan laporan perancangan laporan merupakan perancangan bentuk output yang dibagi menjadi 4 bagian yaitu laporan untuk administrator, bagian tabungan, simpanan dan deposito, bagian pembiayaan dan bagian accounting. berikut ini adalah daftar perancangan laporan tersebut. 1. administrator (manajer/wakil manajer) desain laporan yang disediakan untuk administrator (manajer/wakil manajer) terdiri dari 1 laporan yaitu laporan daftar anggota. 2. bagian tabungan, simpanan dan deposito desain laporan yang disediakan untuk bagian tabungan, simpanan dan deposito terdiri dari 6 laporan yaitu laporan mutasi harian tabungan, laporan bagi hasil tabungan, laporan nominatif tabungan, laporan mutasi harian deposito, laporan deposito jatuh tempo, dan laporan nominatif deposito. 3. bagian pembiayaan desain laporan yang disediakan untuk bagian pembiayaan terdiri dari 4 laporan yaitu laporan mutasi harian pembiayaan, laporan angsuran nasabah, laporan nominatif pembiayaan, dan laporan daftar tagihan. 4. bagian accounting desain laporan yang disediakan untuk bagian accounting terdiri dari 6 laporan yaitu laporan jurnal mutasi transaksi, laporan buku besar, laporan neraca saldo, laporan laba rugi, laporan neraca dan laporan distribusi pendapatan. jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 144 c. perancangan database sistem informasi koperasi syari’ah tahap selanjutnya adalah merancang kebutuhan database. database pada sistem ini didesain terdiri dari 18 tabel, antara lain : tabel master nasabah, tabel master golongan nasabah, tabel master pengguna, tabel master produk syariah, tabel jadwal bagi hasil, tabel master tabungan, tabel mutasi tabungan, tabel master deposito, tabel mutasi deposito, tabel master pembiayaan, tabel mutasi pembiayaan, tabel jadwal angsuran, tabel realisasi angsuran, tabel master simpanan, tabel mutasi simpanan, tabel accounting, tabel head jurnal transaksi, tabel nomor perkiraan akuntansi dan tabel detail jurnal transaksi. berikut disajikan gambar relasi antar tabel dalam database koperasi syari’ah: gambar 16 tabel relation sistem koperasi syari’ah kebutuhan perangkat keras (hardware) perangkat keras yang mendukung sistem ini adalah sebuah unit komputer dengan spesifikasi minimal sebagai berikut: 1. server: spesifikasi server yang dibutuhkan dalam sistem ini adalah : processor minimal intel pentium iv, memory minimal 2 gb, harddisk minimal 300 gb dan ethernet 100 mbps upgrade to 1000 mbps 2. client: spesifikasi client yang dibutuhkan dalam sistem ini adalah processor : setara dengan intel pentium iv atau keatas, memory minimal 2 mb, harddisk minimal 80 gb dan network interface card transmisi data 10/100/1000 mbps jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 145 3. switch hub 10/100/1000 mbps kebutuhan perangkat lunak (software) spesifikasi sistem operasi dan perangkat lunak yang mendukung adalah sebagai berikut: 1. server: a. sistem operasi windows server 2008 b. database software: sql server 2000 2. client: a. microsoft windows xp professional version 2002 service pack 2 b. pdf creator c. microsoft office 2010 5. kesimpulan dan saran 5.1. simpulan berdasarkan uraian dan pembahasan pada bab-bab sebelumnya, maka dapat ditarik simpulan sebagai berikut: 1. perancangan model sistem pengembangan model sistem informasi koperasi syari’ah berbasis teknologi informasi dapat mempermudah pegurus koperasi menyusun laporan keuangan secara cepat dan akurat 2. model sistem pengembangan model sistem informasi koperasi syari’ah berbasis teknologi informasi ini dapat membantu manajer dan anggota koperasi syari’ah untuk mengetahui pertumbuhan koerasi dengan cepat. 3. model sistem informasi koperasi syari’ah berbasis teknologi informasi ini dapat membantu manajer untuk mengambil keputusan secara cepat. 4. model sistem pengembangan model sistem informasi koperasi syari’ah berbasis teknologi informasi ini dapat mambnatu pengurus koperasi untuk memberikan pelayanan terbaik kepada anggotanya 5.2. saran sistem yang dibangun masih memiliki beberapa kekurangan serta keterbatasan, maka dari itu ada beberapa hal yang perlu dikembangkan dari sistem tersebut agar menjadi lebih baik untuk selanjutnya, antara lain: 1) menggunakan barcode untuk input transaksi, 2) menggunakan printer khusus cetak tabungan, agar hasil cetak dapat lebih baik, 3) menggunakan jaringan wireless untuk setiap client dan 4) penambahan aplikasi cetak kartu anggota yang terintegrasi dengan barcode jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 146 daftar pustaka al fatta, hanif. 2007. analisis dan perancangan sistem informasi; untuk keunggulan bersaing perusahaan & organisasi modern. yogyakarta : andi. hafiarni, fanny. (2009). mudah membuat laporan keuangan dengan microsoft excel. cetakan pertama. jakarta: tangga pustaka hayashi, m. (2002). the role of subcontracting in sme development in indonesia: microlevel evidence from the metal working and machinery industry. journal of asian economics. v.13. pp. 1-26. hendrojogi, msc. 1997. koperasi: azas-azas, teori & praktek. jakarta : pt raja grafindo persada. hill, h. (2001). small and medium enterprise in indonesia: old policy challenges for the new administration. asian survey. v.41. pp. 248-270. imamah nurul, september 2008. “peranan business development service dalam pengembangan usaha kecil menengah di wedoro centre waru sidoarjo”. jurnal manajemen dan kewirausahaan. vol. 10, no.02. james a. o‟ brien, introduction to information system, edition 12, 2005 jusup, haryono, al. (2005). dasar-dasar akuntansi. jilid 1 dan 2. cetakan kelima. yogyakarta: badan penerbitan stie ykpn. kartasapoetra. 2003. koperasi indonesia. jakarta : pt bina adiaksara. kristanto, andri. 2003. perancangan sistem informasi dan aplikasinya. yogyakarta : gava media. kusrini dan kinoyo, a. 2007. tuntunan praktis ; membangun sistem informasi akutansi dengan visual basic & microsoft sql server. yogyakarta : andi. rahman, windy atmawardani dan lana sularto. 2011. analisis dan desain sistem informasi akuntansi pada usaha kecil dan menengah (studi kasus pada cv. smart teknologi indonesia). pesat (psikologi, sastra, arsitektur dan sipil). vol. 4. oktober. raymond mcleod, jr, management information systems, edition 6, 1995 tuban, mclean, etherbe, information technology for manajement, second edition, john wiley & sons.inc., new york, 1999. jurnal ilmiah bidang manajemen dan akuntansi (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 147 warsono, sony. (2010). akuntansi ternyata logis dan mudah. yogyakarta: asgard chapter. widiyanti dan sunindhia. 2003. koperasi dan perekonomian indonesia. jakarta : pt rineka cipta. http://id.shvoong.com/social-sciences/communication-media-studies/2236444-pengertianborland-delphi/#ixzz2m6kpyqtn *) ronny malavia m merupakan dosen fakultas ekonomi universitas islam malang **) budi wahono merupakan dosen fakultas ekonomi universitas islam malang http://id.shvoong.com/social-sciences/communication-media-studies/2236444-pengertian-borland-delphi/#ixzz2m6kpyqtn http://id.shvoong.com/social-sciences/communication-media-studies/2236444-pengertian-borland-delphi/#ixzz2m6kpyqtn jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 156-168 http://dx.doi.org/ 10.31106/jema.v17i2.6916, issn (online) 2597-4017 156 how social media marketing influences consumers’ purchase decision? a mediation analysis of brand awareness fajar ardiansyah 1 , endi sarwoko 2* 1 department of magister management, faculty of economics and business, universitas kanjuruhan malang, malang, indonesia 2 department of magister management, faculty of economics and business, universitas kanjuruhan malang, malang, indonesia *corresponding author(s) email: endiswk@unikama.ac.id abstract the important usage of social media as highly interactive platforms of communications is bound to change the way companies approach marketing. many previous studies conclude that social media has proven to be a key factor in creating brand awareness. thus, a higher level of awareness will affect consumers' decisions positively. however, few studies focus on the role of brand awareness as a mediation construct in affecting purchase decisions. therefore, this study aims to explore the mediation role of brand awareness on the relationship between social media marketing and purchase decisions. the study conducted is quantitative research based on a survey approach. purposive sampling and ordinary least square regression were used as sampling techniques and data analysis. the study revealed that social media marketing has a positive and significant influence on both brand awareness and purchase decisions. unfortunately, this study failed to prove the direct and indirect effect of brand awareness on purchase decisions. the nature of wetsuit (sportswear) that can be categorized as a high involvement product was considered as the main reason for the insignificancy effect of brand awareness on purchase decision and the mediation role of brand awareness. in the case of high involvement products, consumers tend to be rational so that they were required more time and effort to evaluate specific product performances and characteristics. keywords: social media; purchase decision; brand awareness; word of mouth; marketing jel code: m31, m37, l86 doi: 10.31106/jema.v17i2.6916 article history: received 2020/06/29 reviewed 2020/10/11 revised 2020/10/23 accepted 2020/11/17 licensed: cc-by mailto:endiswk@unikama.ac.id http://creativecommons.org/licenses/by/4.0/ how social media marketing influences consumers’ purchase decision? a mediation analysis of brand awareness by fajar ardiansyah, endi sarwoko 157 introduction social media thrived as a new era in marketing as companies can create more effective interactions with customers (gallaugher & ransbotham, 2010; kozinets et al., 2010). social media provides an advantage for companies to reach customers or communities and to develop relationships with customers (quinn, 2016). social media has changed the way brands are created, distributed, and consumed to develop a brand image from producers to customers (tsai & men, 2013). social media has changed the way consumers purchase (chen et al., 2017). several consumers even rely more on the information posted on their social media networks when they want to buy something hinz et al. (2014). the trend of promotional activities through social media is a huge change in the world of marketing. many firms used social media to spread out their promotional activities hutter et al. (2013), improving the level of brand awareness, influence purchase decision-making, and maintain engagement with customers (gallaugher & ransbotham, 2010; bernstein et al., 2013; hinz et al., 2014; godey et al., 2016). ahmad et al. (2018) added that many firms decide to spend more of their promotional budget on social media as the cost of social ads is relatively low in comparison to traditional methods. many previous studies conclude that social media has proven to be a key factor in creating brand awareness (goodrich & de mooij, 2014; prasad et al., 2017; enyioko & okwandu, 2019). thus, the higher level of awareness and the positive reviews of social media user interactions will affect consumers' decisions positively (malik et al., 2013; yogesh & yesha, 2014). however, few studies focus on the role of brand awareness as a mediation construct in affecting purchase decisions. an initial indication on the mediation role of brand awareness is proposed based on shabbir et al. (2010) study on the role of marketing campaigns on consumer purchase intention which has found that the relationship exists when there is brand awareness that plays as mediation. macdonald & sharp (2000) and huang & sarigöllü (2014) added that brand awareness will affect consumer decision making as many consumers use it as the basis for evaluation of purchase decisions. therefore, this study aims to explore the mediation role of brand awareness on the relationship between social media marketing and purchase decisions. this study was conducted in one of the biggest and experienced (more than 20 years) wetsuit (sportswear) manufacturer on the island of bali which relies on social media platforms to market and sell its products. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 156-168 http://dx.doi.org/ 10.31106/jema.v17i2.6916, issn (online) 2597-4017 158 literature review social media marketing yong & hassan (2019) defined social media marketing as a process that allows individuals to promote their product or services through online social channels and tap into a much larger community. the usage of social media marketing ranged from being not only in individual scope but also affecting the industry as a whole. therefore, social media marketing also can be defined as a firm's marketing efforts to encourage (potential) customers' interest toward the brand by using various internet marketing channels such as blogs, websites, social media, and others (magasic, 2016). jin et al., (2019) stated that social media marketing is built upon the idea of interaction between the brand and its consumers, to listen to their valuable feedback so they can improve the experience. they added that the usage of social media platforms (such as instagram) as one of the marketing tools can enable them to effectively and efficiently communicate the benefit of brands. the relationship of social media marketing, brand awareness, and purchase decision many previous studies show that social media marketing activities had a positive influence on the level of brand awareness as the nature of social media users easily share the content with their connected friends (bruhn et al., 2012; hutter et al., 2013; barreda et al., 2015; bilgin, 2018; seo & park, 2018). it also means that the more frequent the usage of social media, the higher level of brand awareness will be. other findings suggest that there is an aftereffect of social media marketing activities on brand quality, brand equity, and customer value (stojanovic et al., 2018). therefore, barreda et al. (2015) ended the argument by saying that social media activities have proved important in strengthening brand awareness. h1: social media marketing has a positive effect on brand awareness. the presence of social media is an alternative media to establish communication with customers. social media has become a platform where consumers interact with a brand (tsai & men, 2013), the interaction has a significant impact on consumer purchase decisions (elwalda & lu, 2016). the use of social media will help to increase purchase decisions (goodrich & de mooij, 2014), as social media will increase active user participation and will influence the behavior of consumers (seo & park, 2018), by changing the consumer decisionmaking process in purchasing (hudson & thal, 2013). communication on social media will how social media marketing influences consumers’ purchase decision? a mediation analysis of brand awareness by fajar ardiansyah, endi sarwoko 159 increase purchase intention (jalilvand & samiei, 2012) which leads to purchase decisions (prasad et al., 2017). h2: social media marketing has a positive effect on purchase decisions. the relationship of brand awareness and purchase decision several previous studies that focus on brand awareness show that there is a positive relationship between brand awareness and purchase decisions (khuong & tram, 2015; novansa & ali, 2017). jung & seock (2016), kumar & gupta (2016), and siali et al. (2019) stated that raising the level of brand awareness will enhance the likelihood to consider the brands when making purchase decisions. in a simple meaning, the higher the level of awareness on a specific brand, the higher the possibility of those brands to be purchase. h3: brand awareness has a positive effect on purchase decisions. the mediation role of brand awareness few studies focus on the role of brand awareness as a mediation construct in affecting purchase decisions. an initial indication on the mediation role of brand awareness is based on shabbir et al. (2010) study on the role of marketing campaigns on consumer purchase intention which has found that the relationship exists when there is brand awareness that plays as mediation. in line with the conclusion by shabbir et al. (2010), sharifi (2014) also confirmed the mediating role of brand awareness in affecting the relationship between the trilogy of emotion and future purchase intentions. macdonald & sharp (2000) and huang & sarigöllü (2014) added that brand awareness will affect consumer decision making as many consumers use it as the basis for evaluation of purchase decisions. h4: the effect of social media marketing on purchase decisions is affected by brand awareness. methods the study can be classified as explanatory research which used a survey (questionnaire) to collect data and test four proposed hypotheses (figure 1). purposive sampling and ordinary least square regression were used as sampling techniques and data analysis. this study was designed to focus on individuals who can be classified as social media active users (followers of the specific brand) and have the experience to buy specific brands/products on one of social media platforms. this study was conducted in one of the biggest and experienced (more than 20 years) wetsuit (sportswear) manufacturer on the island of bali (namely seagods) which relies on social media platforms to market and sell its products. instagram jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 156-168 http://dx.doi.org/ 10.31106/jema.v17i2.6916, issn (online) 2597-4017 160 was chosen as social media object not only because of its uniqueness and easy access feature (din et al., 2018) but also is considered as the most effective marketing tool concerning young aged consumers (djafarova & bowes, 2020). a questionnaire with five-point likert scales (ranged from 1 = strongly disagree to 5 = strongly agree) that consists of several items was distributed to 300 target respondents. after selecting all collected data by its sample criteria, the total respondent that involved and classified to be processed in this study is 100 respondents. figure 1. research framework . h1 h3 h4 h2 social media marketing purchase decision brand awareness table 1. questionnaire items variable code item reference social media marketing (smm) smm1 i often interact with other users when i’m accessing seagod 's instagram. kim & ko, (2012) smm2 i would like to share the information about seagods with my friends. smm3 seagods instagram is very trendy. smm4 the content that was posted on seagods instagram was very entertaining. smm5 seagods instagram offers a customized information search. brand awareness (ba) ba1 when i think of swimsuit sportswear, seagods comes to my mind. hutter et al. (2013) ba2 i can distinguish the difference between seagods model. purchase decision (pd) pd1 i use instagram to gain more information about a specific brand or product. prasad et al., (2017) pd2 it is important to me that i make the right choice of the product based on the information that i have. pd3 in making my selection of the product, the best alternative is chosen as the outcome of my choice. how social media marketing influences consumers’ purchase decision? a mediation analysis of brand awareness by fajar ardiansyah, endi sarwoko 161 in this study, social media marketing was measure by kim et al. (2009) dimension which consists of entertainment, interaction, trend, customization, and word of mouth. while brand awareness was measure by hutter et al., (2013) dimension that consists of easy to remember and easy to distinguish, purchase decisions were developed by using prasad et al. (2017) dimension. the details of variable measurement can be seen in table 1. thus, to continue to analyze the proposed hypotheses, the validity and reliability measurements of research instruments need to be done. the results of the validity and reliability testing in table 2 show that all instruments used in this study were valid and reliable. table 2. validity and reliability result variable/item pearson correlation criteria cronbach’s alpha criteria decision smm 0.886 > 0.600 reliable smm1 0.836 > 0.196 valid smm2 0.795 > 0.196 valid smm3 0.864 > 0.196 valid smm4 0.830 > 0.196 valid smm5 0.820 > 0.196 valid ba 0.823 > 0.600 reliable ba1 0.924 > 0.196 valid ba2 0.920 > 0.196 valid pd 0.816 > 0.600 reliable pd1 0.822 > 0.196 valid pd2 0.871 > 0.196 valid pd3 0.874 > 0.196 valid result and discussion the results of testing the causal relationship model between social media marketing, brand awareness, and purchase decision can be seen in table 3. this study was able to confirm the proposed hypotheses h1 and h2 which stated that there are a positive relationship and significant effect of social media marketing on brand awareness, and social media marketing on purchase decision as the value of t-tested was 17.086 and 3.860 (which is higher than the value of t-statistics 1.984) with significant value of 0.000 (which is lower than significances criteria of 0.05). it means that the more frequent the social media marketing activities held by companies, the higher the level of brand awareness and the possibility to jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 156-168 http://dx.doi.org/ 10.31106/jema.v17i2.6916, issn (online) 2597-4017 162 purchase will be. the result of this study proved the conclusion of hutter et al. (2013), tsimonis & dimitriadis (2014), ismail (2017), and barreda et al. (2015) that stated the use of social media has proven significantly can enhance brand awareness, increasing the number of sales, and influences the purchase decision-making. table 3. hypotheses testing hypotheses t-value t-table criteria sig. sig. criteria decision h1 smm -> ba 17.086 > 1.984 0.000 < 0.005 accepted h2 smm -> pd 3.860 > 1.984 0.000 < 0.005 accepted h3 ba -> pd 1.709 > 1.984 0.090 < 0.005 rejected unlike previous studies by novansa & ali (2017), hutter et al. (2013), jung & seock (2016), kumar & gupta (2016), and siali et al. (2019), this study failed to prove the relationship between brand awareness and purchase decision (h3) as the value of t-tested was 1.709 (which is lower than the value of t-statistics 1.984) with significant value of 0.090 (which is higher than significances criteria of 0.05). in the beginning, seagods social media (instagram) was built upon the idea to massively introduce the seagods brand to a broader market so consumers will remember the seagods brand and be able to distinguish the different types of seagods products. barreda et al. (2015) added that the use of social media can help brand generates word of mouth organically as social media itself that considered as online information-sharing activities, circulating information, is used to get to know products, brands, and services (di pietro et al., 2012). therefore, it can be concluded that due to the initial purpose of seagods instagram that more focus on the activity that can increase the level awareness of seagods brand, it is understandable that there is no significant relationship between brand awareness and purchase decision. table 4. the mediation role of brand awareness hypotheses effect bootse bootllci bootulci decision h4 smm -> ba -> pd 0.122 0.079 0.032 0.277 rejected the result of this study also was not able to confirm h4 which stated that the effect of social media marketing on purchase decisions is affected by brand awareness. hayes (2018) stated that when the upper and lower bounds of the 95% confidence interval do not contain zero, it can be concluded that the indirect effect was existed or significant. table 4 shows that there is no significant proof of the mediation role of brand awareness on the relationship how social media marketing influences consumers’ purchase decision? a mediation analysis of brand awareness by fajar ardiansyah, endi sarwoko 163 between social media marketing and purchase decision as zero is a possible value between a negative number of bootllci (-0.032) and a positive number of bootulci (0.277). the swimsuit is a type of sportswear and belongs to the category of high-involvement products (radder & huang, 2008). high involvement products will involve the subjective feelings of the customer, not only consumers will pay special attention, comparing product characteristics with several other brands before making a purchase decision (yousaf & malik, 2013), they also will evaluate the image of a product (oh & fiorito, 2002). this finding revealed that there is no guarantee that when consumers feel familiar with some brand or product, the possibility to made purchase decisions toward those specific brands or products will increasing automatically. the level of involvement plays a significant role in affecting consumers' decision to purchase (radder & huang, 2008). in the case of high involvement products, consumers tend to be rational so that they were required more time and effort to evaluate specific product performances and characteristics. conclusion and suggestion this study aims to explore the mediation role of brand awareness on the relationship between social media marketing and purchase decisions. the study revealed that social media marketing has a positive and significant influence on both brand awareness and purchase decision which means that the more frequent the social media marketing activities held by companies, the higher the level of brand awareness and the possibility to purchase will be. unfortunately, this study failed to prove the direct and indirect effect of brand awareness on purchase decisions. the nature of wetsuit (sportswear) that can be categorized as a high involvement product was considered as the main reason for the insignificancy effect of brand awareness on purchase decision and the mediation role of brand awareness. in the case of high involvement products, consumers tend to be rational so that they were required more time and effort to evaluate specific product performances and characteristics. also, the initial purpose of seagods instagram that was built for brand awareness purpose only considered as another factor that caused the insignificant relationship between brand awareness and purchase decision. this study only focused on the high involvement product category which is a swimsuit (sportswear), further analysis is needed by comparing the various level of involvement to gain an in-depth perspective. moreover, the dimension of brand equity used in this study was limited only to brand awareness. therefore, further study should be done by including a brand image, brand love, and brand loyalty as a developed model. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 156-168 http://dx.doi.org/ 10.31106/jema.v17i2.6916, issn (online) 2597-4017 164 references ahmad, s. z., ahmad, n., & abu bakar, a. r. 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(2013). evaluating the influences of religiosity and product involvement level on the consumers. journal of islamic marketing, 4(2), 163–186. https://doi.org/10.1108/17590831311329296 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 157 the effects of political events against abnormal return and total volume sharia shares activity that listed in jakarta islamic index (jii) rizka zulfikar *) prihatini ade mayvita **) abstract this research is an event study that aims to discover whether there is any empirical evidence of the stock changed to one of the political events in indonesia. this research used a political event namely jakarta governor election 2017 round ii, by using indicator value of abnormal return and trading volume activity sharia stocks in jakarta islamic index stock market. this political event was held on april 19, 2017. population and sample in this research are 30 sharia stocks in jii. the data used in this research are secondary data consists of daily stock prices, daily share trading volume, and daily stock prices index during the five days before, one day at the time of, and five days after the event. statistical tool used to test the hypothesis is t test and wilcoxon signed rank test. t test calculation results indicate that there are significant positive value of abnormal return at a few days around the event date, which means the market responds to this event as a good news. while the results of wilcoxon signed rank test prove that there are significant differences between the average abnormal return in the period before the time the event and in the period after the time event, but not significant in the period beforeafter the event. the results of wilcoxon signed rank test also shows that there are significant differences between the average trading volume activity in the period at the time of-after the event, but not significant in the period before-at the time event and before-after the event. keywords: sharia stock exchange, event studies, sharia shares, abnormal return, trading volume activity 1. introduction 1.1 research background the movement of economic sector in a country generally can not be separated from the political dynamics that occur in the country. similarly in indonesia, political events can cause changes in some components of the economy like the capital market and the stock exchange (samsul, 2015). many political events tend to get a response from market participants. this is because these political events can have a positive or negative impact on the conducive climate stability in which investors want to perform transactions in the capital market. political stability, followed by stability in economic conditions, will make investors feel safe to invest in capital market and stock exchange (widoatmodjo, 2009). one of the most significant political events in recent years was the event of dki jakarta’s regional head election at 2017 which attracts the attention of market participants, considering that jakarta is the capital of the country as well as the hub of the economic activity in indonesia. almost all tvs and media stations, both online and offline continually informed important developments and events during the 2017 election campaign. the emergence of new candidate pairs namely agus yudhoyono sylviana murni and anies baswedan sandiaga uno made the competition condition among candidates became more stringent and basuki tjahja purnama djarot saiful hidayat as petahana gave their best political promotions throughout the campaign. new leader emerging possibility made market participants put their special expectations on jakarta's economic progress at the hands of the new leaders. if the new leaders can bring positive changes to the jakarta’s economy through innovative strategies, policies and breakthroughs, so it is possible that positive changes can also contribute to the improvement of the indonesian economy, jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 158 because the development of economic activity in jakarta can be regarded as a benchmark measure or barometer for the economy of other regions in indonesia. the market reaction against information to reach a new equilibrium price is important. rapid and accurate market reaction to achieve a new equilibrium price that fully reflects the available information, such market conditions are called efficient markets (jogiyanto, 2015). the concept of efficient capital markets has become an interesting topic to be examined because it is a basic concept that can help in understanding how exactly the actual price mechanisms that occur in the market. in financial sector, efficient market concept is more emphasized on information aspect. the relationship between the securities price and information is the key to measure efficient markets (jogiyanto, 2015). according to samsul (2015) the information that may affect stock prices are as follows; cash dividend announcement, split announcement, right issue announcement, announcement of share/stock bonus or share/stock dividend, warning announcement, merger and acquisition plan, conflict of interest transaction plan, macro and micro macro variable change, international political event, djia stock index movement, nikkei 225 , hang seng., national political events, january effect, insider information, changes in economic cycle through leading indicator. research on the effect of an event on trading activity is performed through event study. according to jogiyanto (2015) event study is a study which is studying market reaction to an event whose information is published as an announcement such as financial report, annual report, stock announcement, international financial information, government regulation, political event, legal events, social events and so on that can affect the national economy. several previous studies have shown the influence of political events on the stock market in indonesia, as rahayu's (2007) research which examined the capital market reaction to the reshuffle event of united indonesia cabinet in 2005 and proved that the market reacted positively to the events, positive and significant abnormal return around the date of the cabinet reshuffle announcement. similarly to the results of research conducted by nurhaeni (2009) which shown that the 2009 legislative election events affect the changes in indonesia stock exchange (idx) when viewed from the side of trading activity. in other words, the indonesian capital market reacts to the 2009 legislative election which is seen from the difference in average abnormal return and the average trading volume activity before and after the 2009 legislative election. however, the research conducted by luhur (2010) stated different things, the result of the research shown that there is no difference of average abnormal return significantly before and after the presidential and vice presidential election on july 8, 2009 on lq-45 shares listed on bei. similarly, the average trading volume activity (tva) did not produce significant results before and after the presidential and vice presidential elections on 8 july 2009 on lq-45 shares listed on the idx. jakarta islamic index (jii) it self is a stock index made based on islamic sharia and was launched on july 3, 2000. jii is the result of cooperation between indonesia stock exchange and danareksa investment management (dim). the basic day used is january 2, 1995 with an index value of 100. jii consists of 30 shares selected from sharia-compliant stocks and evaluated every 6 months (indonesia stock exchange, 2016). jii index is expected to be a benchmark for the performance of sharia-based stocks and to further develop the syariah capital market. sharia stocks included in the jii index are selected shares that have high liquidity and market capitalization so as to illustrate the general reaction of sharia capital markets. 1.2 research problem 1. is there an average abnormal return of positive sharia shares around the date of dki jakarta’s regional head election at 2017 round ii? jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 159 2. is there a significant difference between the average abnormal return and the total volume of activity of sharia shares in the period before, during the event of dki jakarta’s regional head election at 2017 round ii and thereafter? 1.3 research purpose this study is an try to determine the effect of an event on an economic activity which consist of an abnormal return and total volume sharia shares during dki jakarta regional head election 2017. 2. theoretical framework and hyphotesis development 2.1 theoretical framework 2.1.1 abnormal return abnormal return is the margin between actual rate of return that occurs with rate of return expected by the investor. the existence of an abnormal return indicates that an announcement or event has an information content (jogiyanto, 2015). cornell and landsman (1989) in qiu (2014) look at how earnings surprises and earnings forecast changes can impact abnormal return. abnormal return used to measure the market reaction on information content announcement. when an announcement results abnormal return for investor means the announcement has a right information otherwise announcement who does not produce abnormal return means announcement it has no information content (simanjutak, 2017) 2.1.2 trading volume activity trading volume activity (tva) shows stock trading activity and reflects how active and liquid a stock is traded in the stock market. tva calculation is done by comparing the number of shares of the company being traded with the total number of shares/stocks beredar (sprading/circulating) among companies during the study period (yusuf et al 2009). 2.3 hyphotesis h1 : there is a significant positive reaction of sharia shares around event of dki jakarta’s regional head election at 2017 round ii. h2 : the average value of abnormal return of sharia shares before and during event of dki jakarta’s regional head election at 2017 round ii has a significant difference. h3 : the average value of abnormal return after and during event of dki jakarta’s regional head election at 2017 round ii has a significant difference. h4 : the average value of abnormal return before and after event of dki jakarta’s regional head election at 2017 round ii has a significant difference. h5 : the average value of tva before and during event of dki jakarta’s regional head election at 2017 round ii has a significant difference. h6 : the average value of tva before and after the elections of event of dki jakarta’s regional head election at 2017 round ii has a significant difference. h7 : the average value of abnormal return before and after event of dki jakarta’s regional head election at 2017 round ii has a significant difference. 3. research method 3.1 research design model used in this study is a market-adjusted model. market adjusted model is not necessarily use estimation periods to form its estimation models (jogiyanto, 2015). in this research, the observation period used is 11 days of stock that consists of : (a) 5 days of stock before event of dki jakarta’s regional head election at 2017 round ii on april 19, 2017; (b) 1 day event (event date); (c) 5 trading days after before the 2017 second regional head election of 2017 on april 19, 2017. the analytical method used in this research/study is quantitative analysis with compare means sample t test paired which running by spss 23 in testing homogeneity and normality. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 160 homogeneous and normal distributed data were tested with one side t test and paired sample t test while non homogeneous and non normal distributed data were then tested by non parametric method using kolmogrov-smirnov test and wilcoxon signed rank test. 3.2 population and sample in this research, researcher are uses all population or 30 sharia stocks as their research object. list of 30 shares/stocks included in the calculation of jakarta islamic index (jii) for the period of december 2016 may 2017 at indonesia stock exchange (idx) in accordance with the announcement of indonesia stock exchange no: peng-00917/ bei.opp/11-2016 dated november 29, 2016 are as follows : table 1 list of sharia stock at jii no code company no code company 1 aali astra agro lestari tbk 16 mika mitra keluarga karyasehat tbk 2 adhi adhi karya (persero) tbk 17 myrx hanson intenational tbk 3 adro adaro energy tbk 18 pgas perusahaan gas negara (persero) tbk 4 akra akr corporindo tbk 19 ptba tambang batubara bukit asam (persero) tbk 5 antm aneka tambang (persero) tbk 20 ptpp pp (persero) tbk 6 asii astra international tbk 21 pwon pakuwon jati tbk 7 bsde bumi serpong damai tbk 22 silo siloam international hospitals tbk 8 icbp indofood cbp sukses makmur tbk 23 smgr semen indonesia (persero) tbk 9 inco vale indonesia tbk 24 smra summarecon agung tbk 10 indf indofood sukses makmur tbk 25 ssms sawit sumbermas sarana tbk 11 intp indocement tunggal prakarsa tbk 26 tlkm telekomunikasi indonesia (persero) tbk 12 klbf kalbe farma tbk 27 untr united tractors tbk 13 lpkr lippo karawaci tbk 28 unvr unilever indonesia tbk 14 lppf matahari department store tbk 29 wika wijaya karya (persero) tbk 15 lsip pp london sumatra indonesia tbk 30 wskt waskita karya (persero) tbk source : idx (2016) 3.3 research variables 3.3.1 rate of return of individual stock ( ) 3.3.2 rate of return market ( ) 3.3.3 expected return jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 161 h1 : market respons h2 : before after h3 : before after h4 : before after h5 : before event h6 : after event h7 : before after average abnormal return (aar) total volume activity (tva) pilkada dki 2017 sharia stock (jakarta islamic index) 3.3.4 abnormal return (4) 3.3.5 average abnormal return aar = ∑ 3.3.6. trading volume activity 3.3.7 average trading volume activity ̅ ∑ (7) 3.4 research framework the research framework used is as follows: picture 1 research framework 3.5 type of data the type of data used in this study is secondary data in the form of time series data in the form of daily stock transactions, the volume of shares traded and the volume of shares outstanding. the data for this research are obtained from various sources including idx, yahoo finance and google finance, and jii. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 162 research periods t-5 t0 t +5 (19 apr ’17) picture 2 research periods 4. research result and analysis 4.1. normality and homogienity testing normality and homogeneity test shows that the distribution of data is not normal and not homogeneous which means the difference test will be done with wilcoxon signed rank test test (sig. > 0.05). the results of normality and homogeneity test can be seen in table 2 below. table 2 normality and homogienity testing data normality test (sig) homogienity test (sig) decision aar 0.037 0.001 abnormal, inhomogeneous tva 0.001 0.000 abnormal, inhomogeneous source : output spss (2017) 4.2. descriptive analysis and hypothesis testing 4.2.1 descriptive analysis table 3 aar period aar standard deviation before -0.001183 0.021 during -0.004839 0.009 after 0.002045 0.004 source : output spss (2017) based on the above table, it can be seen that the aar stock during the period before and during event of dki jakarta’s regional head election at 2017 round ii is negative and during the period after event the average abnormal return is positive. daily stock aar calculation during the study period can be seen in table 4 below: the daily aar stock calculation results during the study period indicate that the aar value is mostly positive. negative aar only occurs three times which are at t-1, t 0 and t + 5. the highest aar value occurs in the period of three days after the occurrence of (t +3) that is 0.0095, while the lowest aar value occurs at t 0 that is equal to -0.0067. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 163 table 4 the daily aar stock calculation period average aar standard deviation t -5 0.003954 0.015 t -4 0.001745 0.020 t -3 0.002133 0.002 t -2 0.003404 0.017 t -1 -0.017149 0.026 t 0 -0.004839 0.009 t +1 0.001822 0.013 t +2 0.004763 0.017 t +3 0.009520 0.032 t +4 0.000908 0.017 t +5 -0.006785 0.021 source : secondary data processed (2017) table 5 atva per period period average tva standard deviation before 0.001962 0.004 d-day 0.001929 0.003 after 0.002381 0.005 source : secondary data processed (2017) based on the above table, it can be seen that the average tva shares/stocks during the period before had decreased at the time of event of dki jakarta’s regional head election at 2017 round ii and experiencing rebound after the event. the daily calculation of tva shares/stocks daily during the study period can be seen in table 6 below: table 6 daily atva period average tva standard deviation t -5 0.001892 0.003 t -4 0.002472 0.005 t -3 0.001527 0.003 t -2 0.001849 0.003 t -1 0.002070 0.005 t 0 0.001929 0.003 t +1 0.001776 0.005 t +2 0.002524 0.005 t +3 0.003078 0.005 t +4 0.002433 0.005 t +5 0.002095 0.004 source : secondary data processed (2017) based on the data, it can be seen that the movement of tva values during the 11 day period of events is quite volatile. in periods of t 3, t 2 and t 1, tva values tend to increase but decrease again at 0 at the 0.001929 level. while in the period after the event, in the period t of + 1, t + 2 and t + 3, tva values tend to increase and reach the highest value at the level of 0.003078, then decrease again at t +4 and t +5 at the level of 0.002095. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 164 4.2.2 h1 testing table 7 h1 testing periods aar p-value decision t -5 0.003954 0.002 rejected h0*) t -4 0.001745 0.014 approved h0 t -3 0.002133 0.009 rejected h0*) t -2 0.003404 0.002 rejected h0*) t -1 -0.017149 0.022 rejected h0*) t 0 -0.004839 0.003 approved h0 t +1 0.001822 0.052 approved h0 t +2 0.004763 0.008 rejected h0*) t +3 0.009520 0.002 rejected h0*) t +4 0.000908 0.021 rejected h0*) t +5 0.003954 0.009 rejected h0*) source : secondary data processed (2017) hypothesis 1 was tested by t test and the following table 5 presents the results of t test one sample for 11 days of the event period. the basis of the conclusion is that if the p-value value of the test statistic t <0.05, then the hypothesis is rejected. from table 5 it can be explained that there is a significant positive abnormal return on the period of t-5, t-3, t-2, t + 2, t + 3, t + 4 and t +5. while the average abnormal return is negative significant in period of t-1. thus, h1 is accepted so it can be concluded that the emergence of aar which has a significant positive value around the date of the event shows that event of dki jakarta’s regional head election at 2017 round ii has information content that is responded as good news by market. while the emergence of aar is significant during the event of dki jakarta’s regional head election at 2017 round ii which assessed to have information content that responded as bad news by market. 4.2.3 h2, h3, h4 testing table 8 h2, h3, h4 testing periods aar p-value decision t -5 0.003954 0.002 rejected h0*) t -4 0.001745 0.014 approved h0 t -3 0.002133 0.009 rejected h0*) t -2 0.003404 0.002 rejected h0*) t -1 -0.017149 0.022 rejected h0*) t 0 -0.004839 0.003 approved h0 t +1 0.001822 0.052 approved h0 t +2 0.004763 0.008 rejected h0*) t +3 0.009520 0.002 rejected h0*) t +4 0.000908 0.021 rejected h0*) t +5 0.003954 0.009 rejected h0*) source : secondary data processed (2017) testing of hypothesis is done by comparing the aar 5 days before and during election of dki 2017 round ii (h2 test), during the event and after the event (h3 test) and comparing before event and after event (h4 test). to see the significance of aar differences between the study periods, wilcoxo test was conducted because the data is not normally distributed and not homogeneous. the basis of the conclusion is that if the p-value of the wilcoxon test statistic <0.05, then the hypothesis is rejected. wilcoxon signed ratings test results against aar are shown in table 8 below: jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 165 table 9 h2, h3, h4 testing hypothesis variable p-value decision 2 before 0.027 rejected h0 3 d day 0.079 accepted h0 4 after 0.178 accepted h0 source : secondary data processed (2017) there are significant differences in share/stock of aars in the period before and during the event of dki jakarta’s regional head election at 2017 round ii which is shown by p-value (0.0027 <0.005). however there is no significant aar difference for the period after the event and the period before after the event. 4.2.3 h5, h6, h7 testing testing against the hypothesis was performed by comparing tva 5 days before and during the event of dki jakarta’s regional head election at 2017 round ii (h5 test), during the event and after the event (test h6) and compare before event and after event (test h7). to see the significance of tva differences between the study periods, wilcoxon signed rank test was done as the data were not normally distributed and not homogeneous. when the p-value value of wilcoxon signed rank test statistic <0.05, then the hypothesis is rejected. wilcoxon signed rank test results on tva are shown in table 9 below: table 10 h5, h6, h7 testing (wilcoxon signed rank test results on tva) hypothesis variable p-value decision 5 before 0.992 accepted h0 6 d day 0.009 rejected h0 7 after 0.758 accepted h0 source : secondary data processed (2017) there is a significant difference of tva shares in the period after and during the event of dki jakarta’s regional head election at 2017 round ii which is shown with p-value (0.009 <0.05). however, there were no significant tva differences for the post-event period and for the pre-event period. 4.3. research discussion on t-1 case, aar is negative significant, this indicates that the period 1 day before the event of dki jakarta’s regional head election at 2017 round ii responded negatively by market participants. so that stock prices on the floor of the stock declined so that there is a tendency of investors to behave negatively because of worried about political changes. significant positive responses began to appear several days after the event on t + 2, t + 3, t + 4 and t +5 because at that time some institutions have given results through the quick count, where the pairs of anis baswedan sandiaga uno was superior to the pair of basuki tjahja purnama saiful djarotand also because the smooth and orderly running of elections leading to a controlled political and security situation to make market participants respond positively a few days after the event. however, in general it can be concluded that investors respond positively to this event, marked by the abnormal return that has a significant positive at t-1, t + 2, t + 3, t + 4 and t +5. so it can be said that the market participants welcomed the event of dki jakarta’s regional head election at 2017 round ii and also welcomed the victory of anies baswedan sandiaga uno, although the victory was still temporary because it was based on the quick count (quick count). market participants seem optimistic that the election of anis-sandiaga uno as the new governor for the next 5 years will be able to bring new changes, especially in the economic sector in jakarta which is actually the capital city of indonesian. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 166 there are significant differences in the average abnormal return of h2 hypothesis testing results in the period before the moment of events. in the period before the event, which was t-4, investors tend to be wait and see because of the uncertainty of political information in circulation. investors are faced with various informations from political experts, television media, and print media, where the information is different from one another, so that during the movement of abnormal return was still quite stable. the result of hypothesis testing of h3 in the period after the occurrence of the event did not show any significant difference in aar shares/stocks. this happens because average value of abnormal return is negatively low at time of t0, while the abnormal return in the period after the event tends to be dominated by a positive value. hypothesis 4 test results in the period before and after the event proves that there is no difference in average abnormal return of stock. this proves that there is no significant difference between aar share/stock in the period before and after the event of dki jakarta’s regional head election at 2017 round ii. these results indicate that market reaction to political events viewed from the abnormal return of stock, tends to be momentary and not prolonged. the results of hypothesis testing of 5, 6 and 7 indicate that there is no significant difference between tva before and during the event, as well as on the events and after the event of dki jakarta’s regional head election at 2017 round ii. significant tva differences occured precisely in the periods before and after the event. the difference in the average of trading volume activity during the period of observation before and after the event shows an increase of demand, it can be interpreted that the event of dki jakarta’s regional head election at 2017 round ii is considered as positive information, so that investors will buy shares in their expectation will get an abnormal return. the results of this study also indicate that the response of investors toward the stock market is so appreciative in the event of dki jakarta’s regional head election at 2017 and the capital market analysts have predicted before following the announcement elections results that put the couple of anis baswedan sandiaga uno as the elected governor. 5. research conclusion, limitation, and recommendation 5.1. conclusion based on the analysis of research results described above, it can be concluded that: 1. sharia stocks in jii responded to information from the event of dki jakarta’s regional head election at 2017 round ii as good news indicated by the emergence of significant positive reactions in period t-4, t-2, t +1, t + 2, and t +5. while, negative reaction is only significant in period of t 0 or during the event of dki jakarta’s regional head election at 2017 round ii. 2. there is no significant difference in aar in the period of after during before the event of dki jakarta’s regional head election at 2017 round ii. a significant difference of aar occurred in the period before and during the event of dki jakarta’s regional head election at 2017 round ii. 3. there is no average difference in tva significantly before and after the event of dki jakarta’s regional head election at 2017 round ii on sharia stocks registered in jii. significant average difference in tva was found in tva after and during the event of dki jakarta’s regional head election at 2017 round ii on the sharia stocks registered at jii. 4. the rise of political stability and market players' confidence in new leader who will lead dki for the next 5 years give positive response to sharia stocks registered in jii. 5.2. limitation the use of jakarta pilkada round ii 2017 cases as the research object need to be enlarged not only in specifics political event but also in social cultural issues (religion sentiment) and racial issues. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 167 5.3. recommendation the following are some suggestions that can be considered for the next research: 1. this research uses two indicators of market reaction measurement, which are abnormal return and stock trading volume activity. therefore, for the next research it is suggested to develop other market reaction measurement indicator besides using the two main variables, such as the frequency of stock trading and stock bid-ask spread to enrich the results of the research 2. capital market participants should keep a close look at non-economic information such as political events that can affect the markets. 3. information occurs in the stock exchange is not all valuable information, as a result, capital market participants must precisely sort out and analyze only relevant information for consideration in decision-making, so that investors are not in a hurry to sell and more rational in decision-making. 4. the object of research in this study is sharia stocks on the jii exchanges for the period of december 2016 may 2017. further research is expected to take all stocks listed on the stock exchange as their object of research. references hartono, j. (2008). teori portofolio dan analisis investasi, edisi 5. yogyakarta : penerbit bpfe. jogiyanto. (2015). teori portofolio dan analisisinvestasi, edisi 10. yogyakarta : penerbit bpfe. luhur, s. (2010). reaksi pasar modal indonesia seputar pemilihan umum 8 juli 2009 pada saham lq45. jurnal keuangan dan perbankan 14 (2) : 249 – 262. nurhaeni, n. (2009). dampak pemilihan umum legislatif indonesia tahun 2009 terhadap abnormal return dan aktivitas volume perdagangan saham di bei. tesis. program pasca sarjana manajemen. semarang : universitas diponegoro. qiu, luke. (2014). earnings announcement and abnormal return of s&p 500 companies. honors thesis, economics department, washington university accessed from https://economics.wustl.edu/files/economics/imce/luke_qiu_-_final.pdf rahayu, c, wahyu e. (2007). reaksi pasar modal terhadap pengumuman perombakan (reshuffle) terbatas kabinet indonesia bersatu (studi empiris pada perusahaan-perusahaan yang terdaftar di bursa efek jakarta). jurnal sinergi 9 (2) : 129-142. samsul, m. (2015). pasar modal dan manajemen portofolio, edisi 2. jakarta : penerbit erlangga. simanjutak, suhermanto. (2017). analisis perbandingan average abnormal return dan average trading volume activity sebelum dan sesudah peristiwa pilkada dki jakarta tahun 2017 (studi empiris pada perusahaan anggota indeks lq45 di bursa efek indonesia). departments of economics and business, lampung university. accessed from http://digilib.unila.ac.id/28327/3/3.%20skripsi%20full%20tanpa%20bab%20pemb ahasan.pdf yusuf, s. d, atim, d. and harry s. (2009). analisis reaksi investor terhadap pengumuman right issue di bursa efek jakarta. wacana 12 (4) : 792-814. widoatmodjo, s. (2009). pasar modal indonesia: pengantar dan studi kasus. yogyakarta : penerbit ghalia indonesia. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 168 http://www.idx.co.id/ http://www.finance.yahoo.co.id/ http://www.google.co.id/finance/ *) rizka zulfikar, university of islam kalimantan muhammad arsyad al-banjary banjarmasin **) prihatini ade mayvita, university of islam kalimantan muhammad arsyad al-banjary banjarmasin the relationship of perceived value, perceived risk, and level of trust towards green products of fast moving consumer goods purchase intention by rizka zulfikar, prihatini ade mayvita jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 85 the relationship of perceived value, perceived risk, and level of trust towards green products of fast moving consumer goods purchase intention rizka zulfikar *) prihatini ade mayvita **) abstract this study aims to investigate how the relation between the perceived value, perceived risk, level of trust and toward green products purchase intention. this study is a survey research using questionnaires as an instrument. population and sample used in this study is the community of banjarmasin and taken as many as 150 respondents using non-purposive sampling method. the study found that banjarmasin’s public tends to be more considered in its functional value indicators than other indicators such as social value, emotional value, and economic value. they also tend to be more considered at time risk indicators than other indicators such as the risk of physical and psychological risks. banjarmasin’s public tends to be more considered toward its benefits indicators than other indicators such as trust in the object, and trust in attributes. perceived value and perceived risk affect the level of public confidence but have no effect to the public purchase intention towards green products. the level of trust significantly influences the purchase intention towards green products. the relationship between the public purchase intention towards green products with the perceived value and perceived risk tends to be indirect and moderated by variable levels of trust. keywords: perceived value; perceived risk; level of trust; purchase intention; green products 1. introduction 1.1 research background the application of green economy as a form of global awareness about the importance of the environment towards the future has been intensively conducted. many countries have managed to improve the quality in every area without ignoring the environmen (unep, 2011). the green economy movement takes time and effort to be realized in the community, so it needs good cooperation between government, companies, society, and this has an impact on the company's tendency to be more concerned about environmental protection as their social responsibility (dwyer, 2009; lee, 2009). the growth of public awareness of the environment (waskito & witono, 2011) has also been taken advantage by many companies as the opportunity to work up their businesses (haden, oyler, & humphreys, 2009). in an era where the people are aware of their environmental sustainability, companies are beginning to pay more attention to green marketing in some industries, such as the information and electronics industry (chen, 2010). the expectations for green products are often hurt by the perception that the product is of low quality or does not really meet the promises mentioned in the promotion stating that their products are environmentally friendly. marketers should be aware that consumers are not only focused on the issue of environmentally friendly products, but they must also remember that consumers do not compromise on traditional product attributes, such as value, quality, price, and performance. to attract consumers, green products attributes should not be inferior to those non-green products (hsin & wen, 2008). the environmental friendliness of a product cannot guarantee an increase in sales, even in the green era. hsin & wen (2008) argued that companies need to develop products that have attributes instead of selling the environmental friendliness alone, the products need high-value http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 86 attributes to improve consumer purchase intentions. in addition, one of the key elements of a green marketing strategy is credibility. reducing consumers' perceived risk in consuming green products can help to lower customers skepticism and increase their trust. the biggest challenge in producing and developing green products is the ever-changing of the consumer preferences and perceptions that unfavorable to green products (singal, anuradha, & sanjay, 2013) because negative expectations will affect purchasing behavior (chen, 2008). so it is very important to explore information and knowledge about consumer attitudes toward green products or environmentally friendly products (chen & chai, 2010). research by waskito & witono (2011) found that consumers have a growing awareness level of environmentally friendly products, but not yet accompanied by the actions or decisions of purchasing green products. 1.2 research problem a) does the perceived value have a significant effect on the trust and purchase intention on green products in the fmcg sector? b) does the perceived risk have a significant effect on the trust and purchase intention on green products in the fmcg sector? c) does the trust in green products have a significant effect on the purchase intention of green products in the fmcg sector? 1.3 research purpose a) to understand the influence and model that explain the relationship between the product perceived value, perceived risk, and level of trust with green product buying behavior in the fmcg sector. b) to contribute to the research that encourages the development of green products through inputs and suggestions on strategies to increase the people's purchase intention and indirectly also participate in promoting the concept of green economy in society. c) as a reference for additional knowledge in the field of marketing management science and the green economy. 2. theoretical framework and hypotheses development 2.1 perceived value perceived value is a set of attributes associated with the perceptions of the value of a product to build a positive effect and increase purchase intentions (ashton, scott, solnet, & breakey, 2010). the previous research showed that perceived value positively affects consumers purchase intentions (gounaris, tzempelikos, & chatzipanagiotou, 2007). if consumers feel that the value of a product is high, they are more likely to buy the product (chen, 2008). 2.2 perceived risk perceived risk is the consumer's assessment of the likelihood of the negativity that will occur when purchasing the product (mowen & minor, 2002) reducing the perceived risk of the customer in green products may help to lower customer skepticism and increase their trust (hsin & wen, 2008). 2.3 trust the level of trust is the knowledge possessed by the consumers about their conclusion regarding the object, its attributes, and its benefits (mowen & minor, 2002). knowledge plays an http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 87 important role in the consumers' acceptance of green products because the consumers who know environmental issues and product benefits tend to prefer green products (kim & seock, 2009). another hand, increasing consumers' knowledge on environmental issues will increase consumers' preference for green products (shaikh & mustaghis, 2011) and increasing consumers' trust will also increase their purchase intention in green products (zulfikar & mayvita, 2017). 2.4 purchase intention purchasing intention is the prospect of the consumers to buy a product in the future (howard, 1990), and in deciding to buy green products, consumers not only consider environmental factors but also the product quality. various studies have shown that environmental attributes of green products still have little effect on consumer action and behavior compared to satisfaction factors (chang & fong, 2010). the researchers agreed that the consumer acceptance of green products tends more to the satisfaction factors and they favor the company activities that do not harm the environment. based on this fact, the companies need to develop products that have attributes that not only consist of environmental friendliness but also products with high values to improve consumer purchase intentions (leonidou, leonidou, & kvasova, 2010). 2.5 the relationships between perceived value and perceived risk toward trust and green product purchase intention from a study conducted by hamid, ghafoor, & shah (2012) that examined the attitude of the pakistani people to green products, in developing countries, the influence of public perception and attitudes toward environmentally friendly products is still low and has no significant effect on consumer behavior in buying green products. while the results of the research conducted by diyah & wijaya (2017) about the purchase intention of yogyakarta people to green products found that the community attitudes, healthy lifestyles, environmental orientation, and buying behavior have a significant influence on the purchase intention of the products. therefore, the hypotheses to be tested in this study are as follows; h1: variables of perceived value and perceived risk significantly affect the trust and purchase intention in green products h2: variable of trust significantly affect the purchase intention of green products. 3. research method 3.1 research design this research can be classified as quantitative survey research with questionnaire as the instrument of research. likert scale with the scale from strongly agree to strongly disagree with 5 alternative answers is used as the perception measurement. in sem analysis, test on the suitability of the model was conducted, in which the research model must meet the criteria of goodness of fit index. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 88 table 1 variabel, operational definition, and indicator variable operational definition indicator measurement note green perceived value (gpv) the value that the prospective consumers perceived about all the benefits that they will get when buying the product. (kotler & keller, 2010) 1) emotional value (pv1) 2) economical value (pv2) 3) functional value (pv3) social value (pv5) 4) social value (pv4) using interval scale 1-5, with an agreedisagree scale technique. endogenous/ observed variable/ construct/ latent green perceived risk (gr) the consumer's assessment of the likelihood of the negativity that will occur when purchasing the product. (mowen & minor, 2002) z 1) physical risk (gr1) 2) psychological risk (gr2) 3) time risk (gr3) using interval scale 1-5, with an agreedisagree scale technique. endogenous/ observed variable/ construct/ latent green trust (gt) the knowledge possessed by the consumers about their conclusion about the object, its attributes, and its benefits. (mowen & minor, 2002) 1) attribute trust (gt1) 2) object trust (gt2) 3) benefits trust (gt3) using interval scale 1-5, with an agreedisagree scale technique. exogenous/ unobserved variable/ manifest green purchase intention (gpi) the prospect of the consumers to buy a product in the future. (howard, 1990) 1) transactional (gpi1) 2) referential (gpi2) 3) preferential (gpi3) 4) explorative (gpi3) using interval scale 1-5, with an agreedisagree scale technique. exogenous/ unobserved variable/ manifest 3.2 population and sample the population in this study were banjarmasin people and this study used 150 samples with the minimum sample size was obtained by using slovin formula. according to banjarmasin central bureau of statistics, the population of banjarmasin up to 2016 has reached 675,440 people, with population proportion= 10% and the absolute error rate that can be tolerated is 5%, then the minimum sample size used in this research is as follows: n = 675.440 x (1,96)2 x 0.1 x 0.9 (675439)𝑥 (0.05)2+ (1,96)2 x 0.1 x 0.9 = 138 this study used 150 people as the samples and this amount had met the minimum requirements of the sample size. sampling is done by non-purposive sampling technique followed by editing data using microsoft excel. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 89 3.3 research framework picture 1 research framework 4. research result and analysis 4.1 descriptive analysis table 2 profile of respondent criteria total % criteria total % gender income (idr) male 79 0.53 < 1 million 39 0.26 female 71 0.47 1– 2,49 million 7 0.0467 age 2,5 – 4,9 million 32 0.2133 under 20 years old 49 0.3267 5– 9,9 million 43 0.2867 21 – 30 years old 17 0.1133 > 10 million 29 0.1933 31 – 40 years old 26 0.1733 education 41 50 years old 52 0.3467 elementary/middle/high 60 0.4 above 50 years old 6 0.04 diploma 5 0.0333 occupation bachelor 52 0.3467 unemployed 10 0.0667 master 29 0.1933 student 6 0.04 doctoral 4 0.0267 civil servant 18 0.12 private employee 62 0.4133 professional services 34 0.2267 entrepreneur 20 0.1333 source: primary data processed, 2017 this research consists of 4 variables, perceived value, perceived risk, trust and purchase intention in green product. the description of data presented include minimum, maximum, mean (m) and standard deviation (sd). trust perceived value perceived risk purchase intention http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 90 table 3 descriptive variable green variable n min. max. mean sd perceived value 150 20.00 39.00 28.62 4.35 perceived risk 150 6.00 29.00 19.73 4.41 trust 150 15.00 30.00 22. 33 3.77 purchase intention 150 20.00 40.00 31. 19 4.77 valid n 150 150 150 150 150 source: primary data processed, 2017 table 4 categorization of perceived value, perceived risk, trust and purchase intention variable high medium low f % f % f % perceived value 21 14.00 103 68.67 26 17.33 perceived risk 18 12.00 107 71.33 25 16.67 trust 16 10.67 106 70.67 28 18.67 purchase intention 29 19.33 101 67.33 20 13.33 source: primary data processed, 2017 based on table 5, it can be said that the majority of all variables observed are considered good enough by the banjarmasin people. table 5 descriptive of indicator category no indicator indicator categorize mi sdi low medium high 1 gpv1 7.04 1.45 17 114 19 2 gpv2 5.89 1.86 42 77 31 3 gpv3 8.05 1.78 30 77 43 4 gpv4 7.64 1.64 13 118 19 5 gr1 6.67 1.97 25 101 24 6 gr2 6.63 1.93 23 110 17 7 gr3 7.15 1.81 28 88 34 8 gt1 7.23 1.46 13 116 21 9 gt2 6.58 1.71 16 120 14 10 gt3 8.52 1.28 21 83 46 11 gpi1 7.61 1.33 30 88 32 12 gpi2 7.97 1.33 22 99 29 13 gpi3 7.18 1.55 17 105 28 14 gpi4 8.44 1.42 24 82 44 source: primary data processed, 2017 the table shows that the majority of respondents put all indicators into medium category, so it can be concluded that the indicators category on the variables of perceived value, perceived risk, the level of trust, and purchase intention to the green products studied are already good enough. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 91 table 6 compare means indicator indicator means indicator means perceived value trust emotional 7.04 object 7.23 economic 5.89 attribute 6.58 functional 8.05 usability 8.52 social 7.64 purchase intention perceived risk transactional 7.61 physical 6.67 reference 7.97 psychological 6.63 preference 7.18 time 7.15 explorative 8.44 source: primary data processed, 2017 based on the table, it can be described as follows: a) based on the mean result, the order of indicators of the perceived value that are considered to be more dominant by the respondents, from the highest are i) functional value ii) social value iii) emotional value and iv) economical value. based on the results of this research, it can be said that consumers tend to prioritize the functional values of green products compared to other indicators, and consumers still believe in the social and emotional values than the economic value of a product in establishing their perceptions. b) based on the mean result, the order of indicators of the perceived risk that are considered to be more dominant by the respondents, from the highest are 1) time risk, ii) physical risk, iii) psychological risk. therefore, it can be said that people tend to prioritize time efficiency or product availability than other risk considerations such as physical and psychological. c) based on the mean result, the order of indicators of the level of trust that are considered to be more dominant by the respondents, from the highest are i) the benefits trust, ii) the object trust, and iii) the attribute trust. based on the result of this research, it can be said that consumers still prefer the benefits of products than other indicators in establishing their trust in green products. even the trust in the product as the green product is preferred by consumers compared to product attribute indicators such as price, packaging, and appearance. d) based on the average (mean) result, the order of indicators of the purchase intention that are considered to be more dominant by the respondents, from the highest are explorative referential – transactional, and the last is preferential. based on this result, it can be said that people tend to take action to seek information about the product and then invite their friends to discuss positive things about the product before making the transaction to buy the product as the next step of the purchase intention. this is in line with the opinion of waskito and witono (2011) which stated that public awareness of green products is not automatically manifested in the act of buying products. 4.2 validity and reliability the validity of the instruments is determined by using the pearson correlation test on the basis of decision making. the variable is said to be valid if p < 0.05 means h0 is rejected and h1 is accepted. based on the validity test there are some statements that are considered invalid because of the sig. value. < 0.05, so it should be excluded from the questionnaire. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 92 table 7 validity test no item pearson correlation sig. (1-tailed) conclusion 1 perceived value_1 0.390 0.007 valid 2 perceived value_2 0.457 0.006 valid 3 perceived value_3 0.592 0.000 valid 4 perceived value_5 0.620 0.000 valid 5 perceived value_6 0.549 0.001 valid 6 perceived value_7 0.475 0.001 valid 7 perceived value_8 0.364 0.004 valid 8 perceived value_9 0.739 0.000 valid 9 perceived risk_1 0.441 0.007 valid 10 perceived risk_3 0.685 0.000 valid 11 perceived risk_4 0.612 0.000 valid 12 perceived risk_6 0.602 0.000 valid 13 perceived risk_8 0.673 0.000 valid 14 perceived risk_10 0.441 0.000 valid 15 trust_1 0.712 0.000 valid 16 trust_3 0.549 0.001 valid 17 trust_4 0.630 0.000 valid 18 trust_5 0.640 0.000 valid 19 trust_6 0.737 0.000 valid 20 trust_9 0.609 0.000 valid 21 purchase intention_1 0.670 0.000 valid 22 purchase intention_2 0.707 0.000 valid 23 purchase intention_3 0.570 0.000 valid 24 purchase intention_4 0.743 0.000 valid 25 purchase intention_6 0.643 0.000 valid 26 purchase intention_8 0.567 0.001 valid 27 purchase intention_9 0.661 0.000 valid 28 purchase intention_10 0.670 0.000 valid source: primary data processed, 2017 the reliability test refers to the reliability level of the instrument. reliability coefficient is obtained by looking at cronbach's alpha value, and test result can be seen in the following table: table 8 reliability test cronbach's alpha n of items 0.933 40 source: primary data processed, 2017 based on this result, it can be said that the questionnaire used in this study has very high reliability because the value of cronbach's alpha instrument is 0.933. 4.3 research analysis the result of the data analysis has produced sem model which can be seen in picture 2. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 93 picture 2 sem model based on the research model obtained, the comparison of research results based on the criteria of goodness of fit (gof) required for model suitability analysis is as follows: table 9 gof the goodness of fit (gof) index cut off value result decision chi-square low 50,080 low probability ≥ 0.05 0.510 good gfi ≥ 0.9 0.955 good agfi ≥ 0.9 0.907 good tli ≥ 0.95 1.002 good cfi ≥ 0.95 1.000 good cmin/df ≤ 2,00 0.982 good rmsea ≤ 0.080 0.000 good source: primary data processed, 2017 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 94 based on this result, it can be said that the research model has a good level of goodness of fit (gof). 4.4 research discussion after the research model met the gof criteria, the model can be used to perform hypothesis testing by observing the cr, and sig values of the variables studied based on the maximum likelihood estimates by looking at the regression weights table, which is said to have a significant effect when the cr value > 1.96 and probability value < 0.05. the test result of the effects of the variables tested based on the modified model is shown in the following table: table 10 regression weights-maximum likelihood estimates est p cr p conclusion trust <--perceived_value .225 .084 2.668 .000 accepted trust <--perceived_risk -.132 .103 2.287 .000 accepted purchase_intention <--trust .548 .139 3.937 .000 accepted purchase_intention <--gt3 .309 .067 4.605 .000 accepted purchase_intention <--perceived_value .019 .079 .236 .813 rejected purchase_intention <--perceived_risk .032 .108 .301 .764 rejected ***) p = > 0.05,cr > 1.96 source: primary data processed, 2017 based on table 10, the hypothesis test results can be described as follows: a. the perceived value variable has a significant effect on the level of trust due to the reason that the cr value (2,668) ≥ 1.96 and probability (.000) < 0.001. b. the perceived risk variable has a significant effect on the level of people’s trust due to the reason that cr value (2.287) ≥ 1.96 and probability (.000) < 0.001. c. the perceived value variable has no significant effect on the people's purchase intention due to the reason that the cr value (0.236) < 1.96 and probability (0.813) > 0.001. this result is different with the findings of gounaris, tzempelikos, & chatzipanagiotou (2007), chen (2008), and ashton, scott, solnet, & breakey (2010) who stated that perceived value positively affects consumer purchase intentions and perceived value can build a positive impact that will increase purchasing intentions. banjarmasin consumers still looking for functional value in rather than social, emotional, and economic. d. the perceived value variable has no significant effect on the people's purchase intention due to the reason that the cr value (0.301) < 1.96 and probability (0.764) > 0.001. this result is different with hsin & wen (2008) who stated that reducing the perceived risk of the customer in consuming green products can help to reduce customer scepticism and improve their trust but some researchers agreed that the consumers prefer the factors of satisfaction and company activities that do not harm the environment (leonidou, leonidou, & kvasova, 2010). e. the trust variable has a significant influence on the people's purchase intention due to the reason that the cr value (3,937) ≥ 1.96 and probability value < 0.001. this result supports the zulfikar & mayvita (2017) research which stated that the level of trust has a significant effect on people's purchase intention on green products. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 95 5. research conclusion and limitation 5.1 conclusion based on the results of data analysis and the findings of research facts, then some conclusions that can be taken are perceived value, perceived risk, level of trust, and purchase intention of the banjarmasin people to the majority of green products are quite good because the majority of the assessments were in the medium category. in determining the perceived value of green products, banjarmasin people tend to consider functional value indicator more than other indicators like social value, emotional value, and economical value. while in determining the perceived risk perceptions of green products, banjarmasin people tend to consider time risk indicator more than other indicators like physical risks, and psychological risks. in term of the trust of green products, banjarmasin people tend to consider benefits trust indicator more than other indicators like object trust and attribute trust. the perceived value and perceived risk variable affects the level of trust variable but does not affect the purchase intention of green products. the trust variable significantly affects the people's purchase intention on the green product. the relationship between purchase intention with perceived value and perceived risk tends to be indirect and moderated by level of trust variables. 5.2 limitation the research can be further developed by measuring the level of people's satisfaction on green products with sampling pattern by purposive sampling because it is assumed that the satisfaction factor is also a factor considered by the people in increasing their purchase intention. the development of green products needs to consider the priority and most-considered indicators in establishing the people's trust and purchase intention in green products. references ashton, a. s., scott, n., solnet, d., & breakey, n. (2010). hotel restaurant dining: the relationship between perceived value and intention to purchase. tourism and hospitality research, 10(3), 206-218. https://doi.org/10.1057/thr.2010.5. chang, n. j., & fong, c. m. (2010). green product quality, green corporate image, green customer satisfaction, and green customer loyalty. african journal of business management, 4(13), 2836. chen, y. s. (2008). the driver of green innovation and green image–green core competence. journal of business ethics, 81(3), 531-543. https://doi.org/10.1007/s10551-0079522-1. chen, y. s. (2010). the drivers of green brand equity: green brand image, green satisfaction, and green trust. journal of business ethics, 93(2), 307-319. https://doi.org/10.1007/s10551009-0223-9. chen, t. b., & chai, l. t. (2010). attitude towards the environment and green products: consumers' perspective. management science and engineering, 4(2), 27. https://doi.org/10.1002/sd.500. diyah, i. a., & wijaya, t. (2017). determinant factors of purchase intention on green product. jurnal aplikasi manajemen, 15(1), 54-62. http://dx.doi.org/10.18202/jam23026332.15.1.07. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 96 dwyer, r. j. (2009). “keen to be green” organizations: a focused rules approach to accountability. management decision, 47(7), 1200-1216. https://doi.org/10.1108/00251740910978377. gounaris, s. p., tzempelikos, n. a., & chatzipanagiotou, k. (2007). the relationships of customer-perceived value, satisfaction, loyalty, and behavioral intentions. journal of relationship marketing, 6(1), 63-87. https://doi.org/10.1300/j366v06n01_05. haden, s. s. p., oyler, j. d., & humphreys, j. h. (2009). historical, practical, and theoretical perspectives on green management: an exploratory analysis. management decision, 47(7), 1041-1055. https://doi.org/10.1108/00251740910978287. hamid, s. a. r., ghafoor, h. a., & shah, t. z. (2012). analysis of attitude towards green purchase: pakistan in context. international journal of business and social science, 3(6). howard, d. g. (1990). understanding how american consumers formulate their attitudes about foreign products. journal of international consumer marketing, 2(2), 7-24. https://doi.org/10.1300/j046v02n02_02. hsin, h. c., & wen, s. c. (2008). the impact of online store environment cues on purchase intention: trust and perceived risk as a mediator. online information review, 32(6), 818841. https://doi.org/10.1108/14684520810923953. kim, s., & seock, y. k. (2009). impacts of health and environmental consciousness on young female consumers attitude towards and purchase of natural beauty products. international journal of consumer studies, 33(6), 627-638. https://doi.org/10.1111/j.14706431.2009.00817.x. kotler, p., & keller, k. l. (2010). manajemen pemasaran. jakarta: penerbit erlangga. lee, k. h. (2009). why and how to adopt green management into business organizations? the case study of korean smes in manufacturing industry. management decision, 47(7), 1101-1121. https://doi.org/10.1108/00251740910978322. leonidou, l. c., leonidou, c. n., & kvasova, o. (2010). antecedents and outcomes of consumer environmentally friendly attitudes and behaviour. journal of marketing management, 26(1314), 1319-1344. https://doi.org/10.1080/0267257x.2010.523710. mowen, j., & minor, m. (2002). perilaku konsumen. edisi 5. jakarta: penerbit erlangga. shaikh, a. s., & mustaghis, u. r. (2011). consumer perceptions of green products: a survey of karachi. journal of independent studies and research – msse, 9(2), 16-29. singal, r., anuradha, g., & sanjay, s. (2013). green marketing: challenges and opportunities. international journal of innovations in engineering and technology (ijiet), 2(1), 470 – 474. unep. (2011). towards a green economy: pathways to sustainable development and poverty eradication a synthesis for policy makers. retrieved from http://www.unep.org/greeneconomy. waskito, j., & witono, b. (2011). pengembangan dan implementasi model strategi pemasaran berwawasan lingkungan: studi empiris pada masyarakat jogyakarta, solo, dan semarang (doctoral dissertation, lppm-ums). http://creativecommons.org/licenses/by/4.0/ http://www.unep.org/greeneconomy jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 97 zulfikar, r., & mayvita, p. a. (2017, december). tingkat kepercayaan dan minat beli masyarakat banjarmasin terhadap produk hijau berdasarkan segmentasi demografis. in proceeding of national conference on asbis, 2(1), 410-426. *) rizka zulfikar, department of management, islamic university of kalimantan muhammad arsyad al banjari banjarmasin, banjarmasin, indonesia (email : rizkazulfikar@gmail.com) **) prihatini ade mayvita, department of management, islamic university of kalimantan muhammad arsyad al banjari banjarmasin, banjarmasin, indonesia (email : ademayvita@gmail.com) http://creativecommons.org/licenses/by/4.0/ jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 144 analysis of syariah operational financial course learning elements to student fruitfulness siti aminah anwar *) junaidi **) abstract learning elements which consists of internships, practicum books, student activity, and mid-final exam can drive the level of success of students in taking the syariah financial operations course. the fact that there are 70% students who have less satisfactory score in syari'ah financial operations course need to be explained. therefore it is necessary to analyze which elements that can help and encourage the success level of students. the purpose of this study is (1) to justify the learning model of the syariah operational financial course (2) to analyze the factors affecting the success rate of students (3) to detect the constraints that faced by the learning model element of the syariah operational finance course as well as offer solutions in minimizing problematics. the population of this study is students who have taken the syari'ah financial operations courses (150-190 students or 90-95% of the population). in collecting data, researcher uses interview and questionary. researcher uses qualitative descriptive approach to answer the objectives (1) and (3). while the others research objective is answered through multiple regression. prominent analysis results can be used as a basis in revising future learning models. keywords: internships, practicum books, student activity, mid-final exam, student result 1. introduction 1.1 research background college students as generation of the nation's and as supporter of a dignified nation’s progress in the world’s development arena and as quality measure of human resources by the time they finish their education to become a scholar, they are expected to compete in the work field with creative innovation. this is closely related to the thing where the students get the final score or good learning outcomes. the fast growing of science brings great impact in all fields especially in modern companies. this progress is the main factor that make company’s owner increasing their employee skills so that companies can grow better. learning can be performed by students by attending lectures, group discussions, doing research, and reading books. all these things become the main activity of the academic community namely college students. college students are one component of the academic community who is seeking for knowledge; therefore reading should be their main agenda. all of student's main activities will become source of inspiration, source of knowledge and hone of student’s criticality, but not only in terms of teaching and learning activities, but can also shape the individual's personality with abilities in practice such as skill, accuracy, speed and honesty at work, among other is by doing internship or filed practice. internship is a form of application of materials materials that already obtained by each individual student in teaching and learning activities in work environment, in this case is done in university environment which took place in iqtishod syariah cooperative –faculty of economics, islamic university of malang. this internship activity represents the implementation result of courses that have been taken by them such as cooperative accounting, cooperative management, and courses that will be taken during syariah financial operational courses internship. internship is required for students during the education process for the syariah operational finance course. it is hope that the internship students can have a high responsibility towards themselves and others, able to master the emotions in living with the general environment and can jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 145 serve as a benchmark whether after they graduate, they will be able to go directly in the real world of work or not.this experience then became provision in performing a real career path, so later, in the completion of their studies students can become a professional workforce and ready to use and able to compete. this research is conducted considering there are still a lot of students who are afraid to make mistakes in making the financial statement either based on sak-etap or sak-ifrs. it is expected that by the existing of theory and practice in this course, students have the ability to add skill and become more good in being a teller, making financial statements that start from the activity of collecting transaction evidence journal – posting the ledger and auxiliary book financial report. whether by adding internship in the syariah operational finance course can gives better result on the student’s final score. is there any difference between theory and learning outcomes where in fact students still need the habit and work harder to get a good learning outcomes compared to other subjects whose judgment is based only on the middle semester examination and final semester examination. elements of learning which consists of internships, practicum books, students activeness, and examination (middle and final test) can encourage the student fruitfulness in this course. the fact that there is 70% of students who take syariah operational finance course still shows less satisfactory results make this research is so important. therefore, it is necessary to investigate and analyze in depth the component elements which can encourage the success of students. 1.2 research problem 1. how is the implementation of learning model on syariah operational finance course with elements of internships, practicum book, students activeness (presences and participation), and examination (middle and final test)? 2. how big is the influence of internships, practicum books, students activeness (presences and participation), examination (middle and final test) on the student fruitfulness? 3. what is the problems that arises when the implementation of learning process and innovation? how to minimize those problems?. 1.3 research purpose 1. to justify learning model of syariah operational finance course. 2. to analyze factors that affecting the student fruitfulness. 3. detecting obstacles that faced by the model element of learning of syariah finance operational and also offering the best solution in minimizing those problems. 1.4 research contribution this research can be categorized as "semi" applied research so that it can contribute on several levels as follows. from the aspect of institution, this research is expected to produce the form of information about the model and learning on the economic aspects. while in the aspect of student, this research is expected to give information and help student in order to change mindset which is to gain good learning result in knowledge not only based on theory and lecture, but also based on significant work experience. besides, after they graduate, they can compete in the work field and no longer awkward in technical training. 2. theoretical framework and hyphotesis development 2.1 theoretical framework 2.1.1 internships internships can be defined as students activities to add science and apply theoretical knowledge that has been obtained by applying it directly to the work world using computer technology. internships students must perform it, so that they will have high quality after graduated from college, so they can apply knowledge into the world of work. internships is defined as part of an integrated job training system under the guidance and supervision of lecturers and employees of jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 146 faculty of economics iqtishod cooperative of islamic university of malang, in order to master certain skills. in internship, we have the opportunity to apply all knowledge learned in college and learn the details of professional work standards. students can also gain insight into the industrial world and improve their skills and technical internships. internship is one of the courses that must be completed by every student as a way of preparing to become a ready to work proportional human resources. during the internship, students work as a workforce in the agency/company so that they will be able to absorb variety of real work experiences. the purpose of an internship in the syariah operational finance course are : 1. increasing ability to apply knowledge and skills owned. 2. increasing knowledge in work both in terms of scholarship and work experience. 3. increasing ability to communicate and socialize.encourage motivation of students who are interested in becoming a candidate for manpower and ready to work. internship implementation process in this research is performed at iqtishod cooperative economic faculty of islamic university of malang in accordance with the schedule that has been determined during the lecture period of syariah operational finance course. students are required to make a grouped internship report after they complete the internship. during the internship season, students can learn to become a teller, a customer service, financing section, accounting section by serving 1,525 saving customers and 900 financing customers and for students who pass this course will get a certificate from iqtishod cooperative economic faculty of islamic university of malang. picture 1 internships activities 2.1.2 practicum book practicum is a face-to-face teaching and learning activities between lecturers and students, emphasizing psychomotor, cognitive and affective aspects by using the equipment in the scheduled laboratory (upi quality assurance guide, 2006: 152). in the making of practical work, a cognitive aspect is emphasized so that the theory can be applied to concrete conditions or problems, and activities undertaken are emphasized on aspects of the practice. this aspect is widely applied in the learning process in college through applied approach which recommends that after students are given orientation (content of knowledge and method) it should be followed by practice, and feedback. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 147 picture 2 practicum activities 2.1.3 student activeness the meaning of active students is student who are involved continuously both physically and mentally in learning (hollingsworth & lewis, 2008: viii). active students are students who are physically, psychologically, intellectually and emotionally involved continuously in the learning process (yusmiati, 2010: 10). from this understanding it can be concluded that active student is students who is involved continuously both physically, mentally, intellectually and emotionally which formed the process of achieving the output/results of subject materials received. the activity of students in the learning process is not only the involvement in physical form such as sitting around, doing something, but also in the form of process of analysis, analogy, comparing, appreciation, all of which are students' involvement in psychic and emotion (sugandi, 2007: 75). picture 3 learning process 2.1.4 student activeness principles students activiveness in the learning process can be seen directly during learning time in which they will have courage to express their thoughts, feelings, desires, and willingness. in this kind of student dimension, students' creativity skills will eventually grow and develop (sugandi, 2007: 75-76). 2.1.5 student activeness dimension student’s activeness dimension in the learning process can be described as belows: 1. courage 2. participation 3. learning creativity 4. courtesy and 5. learning independence/learning materials. 2.1.6 examination (middle and final test) researches defined examination in this study as middle semester test and final semester test, which can implicated on the student result and the assessment of student learning outcomes. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 148 2.1.7 student outcomes/result all students who take the syariah operational finance course practicum must be aware to focus on achieving the targets charged to achieve good learning outcomes. according to sugihartono (2007: 74) learning is a process of behavioral change as a result of individual interaction with the environment in fulfilling the needs of his/her life. according to eko putro widoyoko (2009: 1), the results of learning is related to measurement, then there will be a judgment and evaluation using both test and non-test. evaluation is preceded by assessment, while assessment is preceded by measurement. in big indonesian dictionary (2005), achievement is the result achieved (from what has been done, performed, etc.). according to sardman a.m (2007: 46), achievement is a real ability namely the result of interaction between various factors that affect both from within and outside the individual in learning. it means that every one's business will produce an achievement. this learning achievement can be expressed in the form of values or letters or test results. student learning achievement can be known after the evaluation. the results of the evaluation can show the the student whether he/she is high and low achiever. assessment of learning outcomes is an assessment of the objectives of teaching to be achieved. learning outcomes that must be achieved by learners in one institution will include cognitive, affective, and psychomotor (skill). types of evaluation used are in the form of oral tests, written tests, and action tests. information of student learning outcomes can not only be obtained through the test alone but can be in the form of observation, checks, and others. the above measurements are very advantageous if used in the field and laboratory because assessment of learning results prioritizing skill performance. what have nature of skill is difficult to measured by the test and assessment of learning outcomes in higher education by using scale a, b, c, d, e. 2.3 hypotheses the proposed hypothesis for this research is : h1 : there is simultaneous influences between internships, practicum books, students activeness (presences and participation), examination (middle and final test) and student fruitfulness. h2 : there is partial influence between internships, practicum books, students activeness, examination (presences and participation), (middle and final test) and student fruitfulness. 3. research methods 3.1 research design this research uses explanatory research method. explanatory research according to (arikunto, 1997: 3) is a method using the same data, explaining the causal relationship between variables through testing. according to (umar, 1999: 36) explanatory research is a study that aims to analyze the relationships between one variable with other variables or how a variable affects other variables. this research is expected to generate profits and benefits by performing internship on syariah operational finance course that has an influence on good or bad results of accounting department – facult of economics, islamic university of malang students. beside expected learning outcomes, students can develop work experience skills as they compete for jobs that meet their expectations. the study wanted to show whether there is a match between the expectations and the reality that occurred about internships, liveliness, practical books, semester exam on learning outcomes. this research itself is done during the lecture of syariah operational finance course starts at the beginning of the lecture until the final assessment of semester test conducted in february 2017 until august 2017. 3.2 research variables according sugiyono (2003: 33) independent variable is a variable that affects or which causes the change or occurrence of dependent (bound) variable. independent variable to measure the success of students in sharia finance operational course, among others : jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 149 1. internship 2. practicum books 3. student activeness (participation and presences) 4. examination (middle and final semester test) while dependent/bound variable according to arikunto (2000: 101) is a variable that is explained or influenced by independent variables. the dependent variable in this study is student learning outcomes. 3.3 research frameworks picture 4 research framework 3.4 type of data and sampling method data source that used in this research is primary data. primary data sources are data taken from the field through observation, interviews, and questionnaires. data collection techniques used in this study are through interviews, questionnaire instruments/questionnaires, while the data collection tools that used is observation, worksheet, middle test, final test. this research uses documentation as the method of data collections. initially, researcher collected data (in the form of copies of documents relating to the object under study) with direct records, before classified and analyzed the data. 4. research result and analysis 4.1. validity validity test is done to determine the eligibility of the items in a question list in defining a variable. variables used in this research are presences (x1), middle test (x2), final test (x3), practicum books (x4), participation (x5), internship (x6) and student result (y). while the validity criteria specified is if the value of pearson correlation (2-tailed) < α (0.05). based on the validity test, all instruments used in this study can be used to measure student value variables. presences (x1) mid test (x2) final test (x3) practicum book (x4) participation (x5) internships (x6) student result (y) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 150 table 1 validity test x1 x2 x3 x4 x5 x6 y x1 pearson correlation 1 .176 * .211 ** .521 ** .253 ** .256 ** .376 ** sig. (2-tailed) .019 .005 .000 .001 .001 .000 n 178 178 178 178 178 178 178 x2 pearson correlation .176 * 1 .267 ** .198 ** .106 .231 ** .699 ** sig. (2-tailed) .019 .000 .008 .157 .002 .000 n 178 178 178 178 178 178 178 x3 pearson correlation .211 ** .267 ** 1 .196 ** .382 ** .304 ** .855 ** sig. (2-tailed) .005 .000 .009 .000 .000 .000 n 178 178 178 178 178 178 178 x4 pearson correlation .521 ** .198 ** .196 ** 1 -.009 .204 ** .357 ** sig. (2-tailed) .000 .008 .009 .907 .006 .000 n 178 178 178 178 178 178 178 x5 pearson correlation .253 ** .106 .382 ** -.009 1 .167 * .395 ** sig. (2-tailed) .001 .157 .000 .907 .026 .000 n 178 178 178 178 178 178 178 x5 pearson correlation .256 ** .231 ** .304 ** .204 ** .167 * 1 .412 ** sig. (2-tailed) .001 .002 .000 .006 .026 .000 n 178 178 178 178 178 178 178 y pearson correlation .376 ** .699 ** .855 ** .357 ** .395 ** .412 ** 1 sig. (2-tailed) .000 .000 .000 .000 .000 .000 n 178 178 178 178 178 178 178 *. correlation is significant at the 0.05 level (2-tailed). **. correlation is significant at the 0.01 level (2-tailed). source : output spss 4.2. reliability reliability test is intended to determine the consistency of measuring instruments in use, where the measuring tool has consistent results when used many times at different times. an instrument is said to be reliable when cronbach's alpha is above 0.60. based on the results of reliability test, it can be said that all variables used in this study is reliable, it is due to coefficient cronbach's alpha of all variables value above 0.60. based on the results of analysis, it can be said that all instruments in this study reliable and feasible to use. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 151 table 2 reliability test cronbach's alpha n of items .712 7 source : output spss 4.4. classic assumption test 4.4.1 normality test normality test is a test used to determine whether the regression model, dependent variable, independent variable has a normal distribution or not. to know the normality of data used statistical method which is kolmogorof-smirnov asymp. sig. (2-tailed) against each variable. if the value kolmogorof-smirnov asymp. sig. (2-tailed)> of 0.05 then it can be said that the data is normally distributed. based on table 3 it shows the magnitude of kolmogorov smirnov of 1,229 with the significance level is 0.098, this figure is greater than 0.05, which means the regression model is normally distributed. table 3 normality test unstandardized residual n 178 normal parameters a mean 0 std. deviation 0.28309062 most extreme differences absolute 0.092 positive 0.092 negative -0.091 kolmogorov-smirnov z 1.229 asymp. sig. (2-tailed) 0.098 a. test distribution is normal. source : output spss 4.4.2 multicollinearity test multicollinearity indicates the presence of more than one perfect linear relationship. it is as stated by santoso (2003: 203) that the purpose of multicollinearity test is to test whether the regression model found the correlation between independent variables. if there is correlation, then there is called multicollinearity problem. detecting the presence of multicollinearity is from the amount of vif (variance inflating factor) and tolerance. if the tolerance value is more than 0.10 and vif less than 10 then there is no multicollinearity problem. the multicollinearity test results can be seen in the following table: jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 152 tabel 4 multicollinearity test model unstandardized coefficients standardized coefficients t sig. collinearity statistics b std. error beta tolerance vif 1 (constant) -1.227 .570 -2.152 .033 presences .109 .005 .082 23.907 .000 .649 1.541 mid test .300 .002 .474 161.487 .000 .887 1.127 final test .300 .001 .653 203.948 .000 .747 1.339 practicum book .100 .004 .081 24.093 .000 .677 1.478 participation .099 .005 .066 20.944 .000 .782 1.279 internships .107 .006 .056 18.646 .000 .849 1.178 a. dependent variable: student results source : output spss 4.4.3 heteroscedasticity test the heteroscedasticity test is to test whether in regression model there is a variance inequality of the residual from one observation to another. this study uses glejser test. how to do that is by regressing between independent variables with absolute residual value (absui). based on the result of heteroscedasticity test, it can be understood from the significance of each value variable all above 0.01 with presences (0.849), middle test (0.344), final test (0.342), practicum book (0.137), participation (0.297), internships (0.586). this means that there is no heterocedasticity where the independent variables have the same/homogeneous variant. tabel 5 heteroscedasticity test model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) .026 .272 .097 .923 presences .000 .002 -.018 -.191 .849 mid test .000 .001 -.076 -.950 .344 final test .001 .001 .083 .952 .342 practicum book .003 .002 .137 1.495 .137 participation .002 .002 .089 1.046 .297 internships -.001 .003 -.044 -.546 .586 a. dependent variable: absui source : output spss 4.4.4 autocorrelation test autocorrelation test in the regression analysis model used is by testing the correlation model with durbin watson (dw) method. based on table 6 durbin watson value of 1.973 with n = 178 and k = 6 obtained dl = 1.6857 and du = 1.8248. thus d arithmetic lies in the range 1.8248 <1.973 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 153 <1.8244 (du <d <4-du) which proves that the model accepts ho satisfies the assumption of autocorrelation. table 6 autocorrelation test durbin-watson 1.973 source : output spss 4.5. hypotheses testing 4.5.1 f-test f-test is used to know how big influence of independent variable to dependent variable simultaneously table 7. f-test a. predictors: (constant), internships, participation, practicum book, middle test, final test, presences b. dependent variable: student results source : output spss based on table 7, it shows that f-test is 2,174 with a significant level of 0.000. due to the significant level < α (0.05), it concluded that simultaneously, internships, participation, practicum book, middle test, final test, presences significantly has influence toward student result. 4.5.2 t-test partial test is a test conducted to find out how big the partial influence of each dependent variable. table 8 t-test model unstandardized coefficients standardized coef t sig. b std. error beta 1 (constant) -1.227 .570 -2.152 .033 presences .109 .005 .082 23.907 .000 mid test .300 .002 .474 161.487 .000 final test .300 .001 .653 203.948 .000 practicum book .100 .004 .081 24.093 .000 participation .099 .005 .066 20.944 .000 internships .107 .006 .056 18.646 .000 a. dependent variable: student result model sum of squares df mean square f sig. 1 regression 10818.826 6 1803.138 2.174e4 .000 a residual 14.185 171 .083 total 10833.011 177 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 154 based on the result of research, it can be stated that internships, participation, practicum book, middle test, final test, presences (sig.α = 0.05) partially have positive and significant effect on student result. 4.5. multiple regression analysis according to sugiyono (2014: 260) regression is used to predict how far changes in the value of the dependent variable, when the independent variable is changed or up-down. so the regression equation needs to be formulated in order to make these predictions. here the results of regression table that will be used as the basis for formulation of multiple linear regression equation in this study: table 9 multiple regression analysis model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) -1.227 .570 -2.152 .033 presences .109 .005 .082 23.907 .000 mid test .300 .002 .474 161.487 .000 final test .300 .001 .653 203.948 .000 practicum book .100 .004 .081 24.093 .000 participation .099 .005 .066 20.944 .000 internships .107 .006 .056 18.646 .000 a. dependent variable: student result source : output spss based on the table, the regression equation in this research are: y= -1.227+ .0109 presence + .300 middle test + .300 final test + .100 practicum book + .099 participation +.107 internship analysis of coefficient determination (r 2 ) is a partial determination coefficient to measure the impact of independent variables (x) on the dependent variable (y) separately. based on table 10, r square (r 2 ) is 0.999, this means that 99.9% of student outcomes/result can be explained by internships, participation, practicum book, middle test, final test, presences while the rest of 0.1% influenced by other variables outside of research. table 10 r square model r r square adjusted r square std. error of the estimate 1 .999 a .999 .999 .28801 a. predictors: (constant), internships, participation, practicum book, middle test, final test, presences b. dependent variable: student result source : output spss jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 155 5. research conclusion, limitation, and recommendation 5.1. conclusion the purpose of this study is to determine what is the factor that can affected the student fruitfulness and justify what is the learning model that is more suitable in learning syariah operational finance course. based on results of research and discussion in the previous chapter it can be obtained conclusion as follows: 1. simultaneously, presences, middle test, final test, practicum book, participation, and internships have significant effect toward the student's results. 2. partially, presences, middle test, final test, practicum book, participation, and internships have significant effect toward the student's results. 3. about 99.9% of student outcomes/result can be explained by internships, participation, practicum book, middle test, final test, presences. while the rest of 0.1% influenced by other variables outside of research 5.2. limitations and recommendation further research is expected to improve the limitations of this study by developing the following recommendations : 1. publishing the book of syariah operational finance course revised edition. 2. produce the information about learning model on economic aspect. according to the interviews and questionnaires data it shows that there students is already enthusiast with the learning model that has been applied such as lecture, question and answer, discussion/brainstorming, discussion so that students have competence in preparing financial statements 3. always provide information and motivation to assist students in order to change their mindset/thinking about student results which is to get good learning outcomes is not based only on the theoritecal knowledge, but also based on the work experiences. practical knowledge for colleger is important due to the reason that as they graduate, they will need more practical experiences to compete in the work field. 4. improve the internship system. student often feels that they only have a limited time to get involved dan advantages experiences in all internship activities. therefore, researchers recommend to give more internship opportunities outside the syariah operational finance course. references agus, dario. (2008). pengaruh motivasi berprestasi mahasiswa, persepsi kompetensi dosen, dan sikap mahasiswa terhadap hasil belajar mata kuliah manajemen sumberdaya manusia. bina widya volume 19 no.3. arikunto, suharsimi. (2002). prosedur penelitian suatu pendekatan praktek. jakarta : rineka cipta. arikunto, suharsimi. (2005). dasar-dasar evaluasi pendidikan : bumi aksara. arum, dyah nirmala. (2012). statistik deskriptif & regresi linier berganda dengan spss. semarang: universitas semarang press. malavia, roni. (2013). petunjuk praktik operasional spss. malang : bpfe unisma. naskawati, anggraini. (2002). hubungan status kepegawaian guru, kemampuan mengajar, dan disiplin kerja guru dengan prestasi belajar siswa sekolah lanjutan tingkat pertama negeri di kota mataram nusa tenggara barat. tesis. universitas negeri malang. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 156 panduan penjaminan mutu upi, 2006 priyatno, duwi. (2012). paham analisis statistik data dengan spss. yogyakarta : mediakom. riduwan. (2003). dasar-dasar statistika. bandung : alfabeta. sardiman, a.m. (2001). interaksi dan motivasi belajar mengajar. jakarta : rineka cipta sugiyono, 2006. metode penelitian pendidikan. pendekatan kuantitatif, kualitatif dan r&d. bandung : cv. alfabeta. susyanti, jeni; and anwar, siti aminah. (2016). operasional keuangan syari’ah. malang : bpfe unisma. riyani, yani. (2012). faktor-faktor yang mempengaruhi prestasi belajar mahasiswa polinema pontianak, issn vol.8 no.1. http://www.polsri.ac.id *) siti aminah anwar, university of islam malang **) junaidi, university of islam malang http://www.polsri.ac.id/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 121-134 http://dx.doi.org/10.31106/jema.v17i2.6686, issn (online) 2597-4017 121 knowledge sharing activities among public sector employees: evidence from indonesia metha djuwita supriatna 1* 1 department of apparatus human resources management, stia lan bandung polytechnic, bandung, indonesia *corresponding author(s) email: methadjuwita@gmail.com abstract knowledge sharing has an important role in the management of any organization. it can lead to increased knowledge creation, collaboration level, and level of innovation, which, in turn, increases organizational performances. however, few studies have empirically examined the effect of knowledge sharing activities on an individual's belief in a public sector organizational setting, especially in indonesia. this study was conducted to analyze the role of knowledge sharing in affecting the activities of creative self-efficacy within public organizations. this study used purposive sampling which designed to focus on employees who have positioned as a researcher in one of directorate of ministry of public works and housing of the republic of indonesia. the questionnaire used in this study was adapted from brockhus and yu instruments. the result of this study shows that there is a positive and significant effect of knowledge sharing activities on creative self-efficacy. the higher the level of knowledge sharing activities within the organization, the more it will encourage creative selfefficacy. the majority of the respondent in this study that classified as y generation (millenials) was the main reason of the differences between the conclusion of this study and previous ones who argues that knowledge sharing initiatives are more difficult to be implemented in public sector organization as many of public sector officers believe that the activities of knowledge sharing meant losing power and an extra work surface. keywords: creative self-efficacy; individual beliefs; knowledge sharing; millenial; public sector jel code: d23, d73, l22, l23 doi: 10.31106/jema.v17i2.6686 article history: received 2020/04/17 reviewed 2020/06/03 revised 2020/06/11 accepted 2020/11/03 licensed: cc-by mailto:methadjuwita@gmail.com http://creativecommons.org/licenses/by/4.0/ knowledge sharing activities among public sector employees: evidence from indonesia by metha djuwita supriatna 122 introduction the concept of knowledge management explains the importance of managing the knowledge properly in organizations knowing that knowledge is valued as an important intellectual asset for the organization. the knowledge that needs to be managed by the organization is tacit and explicit knowledge which comes from individual employees then utilized as organizational knowledge. awareness of the importance of knowledge as a strategic asset will motivate the organization, both public and private organizations, to improve their knowledge through management practices (ahbabi et al., 2017). the idea of practicing knowledge management is following the integrated knowledge management cycle developed by koenig (2011). the first phase in the knowledge management cycle is how captured the knowledge from individuals or groups within the organization. the next phase is to share the captured knowledge with individuals or groups in the organization (knowledge sharing). the final stage in this phase is to summarize the value and the effect of the shared knowledge to be applied in the organization. ibrahim & heng (2017) and tung (2018) added that a recent study found that knowledge sharing has an important role and tends to be the core of competence in knowledge management in achieving competitive advantage. knowledge sharing in organizations can be done either by individuals or groups. the practice of knowledge sharing in organizations is considered to be able to encourage innovation, organizational learning, and the development of the skills and abilities of individual employees, and ultimately can increase organizational productivity (islam et al., 2018). the culture in sharing knowledge within the organization is important in avoiding the loss of knowledge or the accumulation of knowledge in one employee (becker & zirpoli, 2017). knowledge loss can occur if the only employee who has certain knowledge leaves the organization. while the accumulation of knowledge occurs if there are employees who don’t want to share the knowledge, which can occur due to several things, such as the absence of rewards, or even don’t want other people to understand more than themselves. regarding the challenges in implementing knowledge sharing activities in different sector such as the private and public sector, amayah (2013) argues that knowledge sharing initiatives are more difficult to be implemented in public sector organizations. the fear of losing control/power (park & gabbard, 2018), the anxiety of losing promotion (donnelly, 2019), less incentive for efficiency, the complexity of organization goals (amayah, 2013), trust and leadership (seba et al., 2012; alsharo et al., 2017), bureaucratic culture (wulf & butel, 2016; hendryadi et al., 2019), and extra-works perception (yao et al., 2007; afshar jalili & salemipour, 2019) is the jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 121-134 http://dx.doi.org/10.31106/jema.v17i2.6686, issn (online) 2597-4017 123 several reasons of why public sector officers tend to resist to build a knowledge-sharing culture. besides that reason, an individual issue such as personality traits (agyemang et al., 2016; borges et al., 2019), motivational factors (andreeva & sergeeva, 2016; nguyen et al., 2019), creative self-efficacy (wu et al., 2012; teng et al., 2019) also considered to influences the adoption of knowledge sharing. puente-díaz (2016) added that not only that creativity has highly correlated with the level of innovation, creativity also play important role in helping an organization achieving the outcomes target. prior creative self-efficacy study has focused on the relationships between individual attributes and innovation behavior. however, few studies have empirically examined the effect of knowledge sharing activities in a public sector organizational setting on an individual's belief, especially in indonesia. therefore, this study aims to analyze the effect of the activities of knowledge sharing within public organizations towards creative self-efficacy. literature review creative self-efficacy in social cognitive theory, cabrera et al. (2006) argue that a person's behavior is governed extensively by the exercise of self-influence that is sustainable, or what is known as self-efficacy. hardaningtyas (2020) defined self-efficacy as individual beliefs and confidence in his/her ability to execute and finish the task. self-efficacy concerns a person's belief in his ability to control their level of function and all the experiences that affect their lives. in conclusion, self-efficacy is considered a more central and widespread mechanism of selfregulation (naotunna & zhou, 2018). furthermore, pradesa et al. (2019) added that the more confident employees about their ability to do a task, the more dedicated they become to their jobs. tierney & farmer (2011) then develops the concept of creative self-efficacy which is rooted in the concept of self-efficacy. creative self-efficacy relates to a series of results that provide benefits, including the development and implementation of ideas (newman et al., 2018). creative self-efficacy is based on employee confidence in solving problems in innovative ways. in the process of innovation, there are many obstacles to be handled, so psychological capital is needed to deal with uncertainty and failure (hu & zhao, 2016). creative self-efficacy has a role in innovation by increasing self-confidence, where someone considers their ability to complete the tasks and activities by this process (hsu et al., 2011). thus, confidence in the ability of creative thinking is the essence of creative performance which in turn allows the individual to face the challenge of effectively and efficiently knowledge sharing activities among public sector employees: evidence from indonesia by metha djuwita supriatna 124 (alotaibi, 2016). employees with high creative self-efficacy make them strong and persistent in achieving creative targets amidst the difficulties faced, even creative self-efficacy is found as a variable that can foster creativity (gong et al., 2009). knowledge sharing the concept of knowledge classifies knowledge into two categories, tacit and explicit. explicit knowledge is the knowledge that has been codified, documented. while tacit knowledge is the knowledge that is in the minds of humans, which will only be in someone's mind until someone else asks. between these two forms of knowledge, tacit knowledge is valued as more knowledge than explicit knowledge, and it is important to capture and serve as organizational knowledge. polanyi (1966) also believes that all knowledge is rooted in tacit knowledge. knowledge sharing is in the second stage of the knowledge management cycle which is between the capture and application of important knowledge. knowledge sharing involves the exchange of knowledge, experience, skills between employees through socialization, interaction, and training (ibrahim & heng, 2017). lin (2007) defined knowledge sharing as the efforts to transform individual knowledge within an organization to enhance business performances. furthermore, knowledge sharing is defined as a process of interaction/social activity, which allows members in the organization to acquire tacit and explicit knowledge with each other, so that there is a transfer of knowledge from the source of knowledge to the recipient of knowledge (koenig, 2011; malik & kanwal, 2018). as employees become increasingly involved in knowledge sharing, they will internalize a greater amount of knowledge (yu et al., 2013). knowledge sharing allows a variety of important things to happen, such as the creation of new knowledge (veer ramjeawon & rowley, 2017), work efficiency (ali & yusof, 2004; dwivedi et al., 2020), increasing the level of innovation (huang & li, 2009; markovic & bagherzadeh, 2018), and reduce unnecessary efforts (monica hu et al., 2009). the practice of sharing knowledge can avoid the occurrence of 'corporate amnesia', which is caused by the loss of knowledge possessed by the organization, for example, due to the release of people who have certain knowledge from the organization and have not had time to share it with others. bock et al. (2005) stated that there are several factors which are considered to encourage knowledge-sharing accordingly, (1) the existence of individual benefits, related to individual interests and getting personal interests, (2) the existence of group benefits, such as sharing behavior, relationships with others, and related to community interests, (3) the existence of organizational benefits, i.e. organization and increase jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 121-134 http://dx.doi.org/10.31106/jema.v17i2.6686, issn (online) 2597-4017 125 organizational commitment. furthermore, koenig (2011) added that management support, technology, and organizational culture has a significant impact on knowledge sharing. the relationship between knowledge sharing and creative self-efficacy although amayah (2013) argues that knowledge sharing initiatives are more difficult to be implemented in public sector organization due to several reasons such as the fear of losing control/power (park & gabbard, 2018), the anxiety of losing promotion (liebowitz & megbolugbe, 2003; donnelly, 2019), trust and leadership (seba et al., 2012; alsharo et al., 2017), bureaucratic culture (wulf & butel, 2016; hendryadi et al., 2019), and extra-works perception (yao et al., 2007; afshar jalili & salemipour, 2019). a previous study from hu & zhao (2016) has a clear conclusion that there was a significant link between knowledge sharing and creative self-efficacy. therefore, the hypotheses in this study are formulated as follows. h1: there is a significant relationship between knowledge sharing and creative selfefficacy within public sector organizations. methods the study design employed in this study was mainly descriptive. a survey-based methodology was employed through a five-point likert scale questionnaire to elicit the effect of knowledge sharing activities on creative self-efficacy. this study used purposive sampling which designed to focus on employees who have positioned as a researcher in one of the directorate of the ministry of public works and housing of the republic of indonesia, with total respondents were 94 researchers. figure 1. research framework . the fifteen instruments of brockhus et al. (2014) were used to measured creative selfefficacy. while to measure knowledge sharing, the six instruments of yu et al. (2013) were used in this study. table 1 shows detailed information about the item of this study. then, to check the validity and reliability of instruments, the value of the pearson correlation and cronbach’s alpha was employed as the parameter criterion. regression analysis was used in this study to test the effect of knowledge sharing activities on creative self-efficacy. table 2 shows the detailed information about validity and reliability results. the instrument item is declared valid and reliable when the counted value (pearson correlation and cronbach's knowledge sharing (ks) creative self-efficacy (cse) knowledge sharing activities among public sector employees: evidence from indonesia by metha djuwita supriatna 126 alpha) is more than 0.300 and 0.600. therefore, based on the description of table 2, it can be concluded that all item measured in this study is valid and reliable. table 1. variable and item variable code item reference creative self efficacy (cse) cse1 i am not afraid to express my ideas brockhus et al. (2014) cse2 i have a positive self-image cse3 i am confident that i could deal with unexpected events cse4 i feel very confident with my ability to compete with others to do the task cse5 i consider myself to be innovative cse6 i am a creative person cse7 i can solve problems efficiently cse8 i trust my creative abilities cse9 compared to my friends, my ideas are outstanding cse10 i proved that i can find at least one solution for any difficult situation cse11 i can handle tasks that require creative thinking cse12 i am good at proposing "out of the box" solutions cse13 i am confident i can develop creative ideas for almost any problem cse14 whenever difficulties come, i usually find several solutions cse15 i don’t consider myself as creative (r) knowledge sharing (ks) ks1 i often help my coworkers to communicate better yu et al. (2013) ks2 i often encourage colleagues to bring up good ideas and suggestions so it can enhance the overall service standards at work ks3 i often help colleagues with problem-solving ks4 i will take action to help whenever my colleagues face difficulty ks5 i will demonstrate how to do something when things are difficult to explain ks6 when i am preparing a document, i am willing to write down what i know for my colleagues to refer to jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 121-134 http://dx.doi.org/10.31106/jema.v17i2.6686, issn (online) 2597-4017 127 table 2. validity and reliability result variable/item pearson correlation criteria cronbach’s alpha criteria decision cse 0.926 > 0.600 reliable cse1 0.558 > 0.300 valid cse2 0.474 > 0.300 valid cse3 0.569 > 0.300 valid cse4 0.634 > 0.300 valid cse5 0.837 > 0.300 valid cse6 0.910 > 0.300 valid cse7 0.578 > 0.300 valid cse8 0.852 > 0.300 valid cse9 0.717 > 0.300 valid cse10 0.776 > 0.300 valid cse11 0.896 > 0.300 valid cse12 0.793 > 0.300 valid cse13 0.748 > 0.300 valid cse14 0.590 > 0.300 valid cse15 0.611 > 0.300 valid ks 0.860 > 0.600 reliable ks1 0.689 > 0.300 valid ks2 0.748 > 0.300 valid ks3 0.863 > 0.300 valid ks4 0.870 > 0.300 valid ks5 0.786 > 0.300 valid ks6 0.676 > 0.300 valid result and discussion the respondent in this study reflected the age of the general public sector in indonesia which mainly consist of x generation (born 1965-1979) were 29% and y generation/millennials (born 1980-2001) were 71%. while the majority of the respondent in knowledge sharing activities among public sector employees: evidence from indonesia by metha djuwita supriatna 128 this study can be described as male (71%) with most of them hold master degree education (83%). table 3. hypotheses testing hypotheses t-value t-table criteria sig. sig. criteria decision h1 ks -> cse 5.458 > 1.687 0.000 < 0.005 accepted an independent sample t-test was employed in this study to test the proposed hypotheses whether knowledge sharing influences creative self-efficacy. table 3 shows that the value of t-tested was 5.458 (which is higher than the value of t-statistics 1.687) with a significant value of 0.000 (which is lower than the significances criteria of 0.05). therefore, it can be concluded that h1 of this study was accepted, which means that there is a positive and significant relationship between knowledge sharing (ks) and creative self-efficacy (cse). the higher the level of knowledge sharing activities within the organization, the more it will encourage creative self-efficacy. this result of this study supports a previous study conducted by hu & zhao (2016) that stated that there was a significant effect between knowledge sharing and creative selfefficacy. the majority of the respondent in this study that classified as y generation (millenials) was the main reason of the differences between the conclusion of this study and previous ones who argues that knowledge sharing initiatives are more difficult to be implemented in public sector organization as many of public sector officers believe that the activities of knowledge sharing meant losing power and an extra work surface. mchenry & ash (2013) support the argument by stating that rather than x generation that likely to be more worried about competition, potential job loss, and the lack of incentives to share, y generation (millenials) are more adaptive to challenges and cultural differences, didn’t like to plan for long periods, multitasking, open-minded, needy for feedback, and easy to collaborate (bencsik et al., 2016). the nature of respondents in this study that classified as researchers also considered having an important role in affecting the knowledge sharing on creative self-efficacy. a qualified researcher should be open minded and have a willingness to share knowledge with their co-researcher to produce a better result of research. tang & kaufman (2017) and srikoon et al. (2018) added that the creativity of thinking (uniqueness) was one of the personal characteristics of researchers that can enhance self-perceived creativity and creative motivation. the level of creative self-efficacy can increase significantly by implementing jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 121-134 http://dx.doi.org/10.31106/jema.v17i2.6686, issn (online) 2597-4017 129 knowledge sharing. a previous study from jen et al. (2020) and hu et al. (2020) concluded that the activities of knowledge sharing like mentoring and collaboration prove significantly can enhance the level of creative confidence of employees. conclusion and suggestion unlike, the prior study that claims that knowledge sharing activities are rarely to be found in public sector organizations rather than in private sectors due to several reasons. the result of this study concluded the opposite. there is a positive and significant relationship between knowledge sharing (ks) and creative self-efficacy (cse) within a public organizational setting. the activities of knowledge sharing like mentoring and collaboration prove significantly affect the level of creative self-efficacy of public sector officers which means that the higher the level of knowledge sharing activities within the organization, the more it will encourage creative self-efficacy. the majority of the respondent in this study that classified as y generation (millennial) considered as the main reason of the differences between the conclusion of this study and previous ones who argues that there are many of public sector officers believes that the activities of knowledge sharing will cause them negative impact such as losing power, losing an opportunity, and an extra work surface. also, the respondent criterion of this study that classified as researchers affect the relationship of knowledge sharing toward creative self-efficacy as they have to be compelled to do knowledge sharing activities and collaborate with their co-researcher to produce the better result of research. references afshar jalili, y., & salemipour, f. 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(2013). a multilevel model for effects of social capital and knowledge sharing in knowledge-intensive work teams. international journal of information management, 33(5), 780–790. https://doi.org/10.1016/j.ijinfomgt.2013.05.005 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 135 influence of third-party funds, car, npf and fdr towards the return on assets of islamic banks in indonesia risma ayu kinanti *) purwohandoko **) abstract the purpose of this research is to analyze the influence of third party funds, capital adequacy ratio (car), non performing financing (npf) ,financing to deposit ratio (fdr) of return on assets (roa) during period of 2008-2013 syariah banks in indonesia. about 3 syariah banks in indonesia was taken as sample for this research. the data used for this research were obtained from the data of quarterly published financial report period 2008 up to 2013. the analysis technique used is linear regression that aims for estimating the relationships among variables. the results of f test showing that third party funds, car, npf and fdr simultaneously influential to roa. while the result of t-test showing third party and npf has significant positif effect to roa, car and fdr has a negative effect on roa syariah banks in indonesia keywords: roa, third party funds, car , npf, fdr 1. introduction 1.1 research background act number 21 of 2008 states that definition of bank is a business entity that collects funds from people in the form of savings and distributes it to the people community in the form of credit and or other forms in order to improve people's living standards. banking in indonesia consists of sharia and conventional banking. both have important role as intermediary in charge of collecting and also channeling funds to the people. in this matter, condition of banking can be seen from the performance achieved. syofyan (2003) in hutagalung (2013) states that profitability is the most appropriate indicator to measure bank performance. the measure of profitability used is the rate of return equity (roe) for company in general and return on assets (roa) in the banking industry. the ratio used to measure capital adequacy ratio in the banking sector that is used to calculate capital adequacy ratio (car). car is the ratio used to measure the adequacy of bank capital. car is calculated by comparing the modal sendiri (equity) with atmr bank. in sharia bank, decrease can be seen in the value of car in islamic banks in 2008 to 2009 amounted to 2.04% and fell back in 2011 to 2012 at 2.09% while in conventional banking tend to be stable. in 2008, car of sharia commercial banks amounted to 12.81% further in 2009 of 10.77% resulting in decline of 2.04%. in 2009 to 2010 rose 5.48% at 16.25%. this number is stable until 2011. the stable of car in 2010 to 2011 due to some of parent banks (bank induk) injected funds into sharia banks to fulfill capital adequacy ratio. in 2011 to 2012 back down 1.45%. then, only increased by 0.15% in 2013. analysis on sharia commercial banks shows that there is a decrease in car value in deposits (dpk) positions increased from the previous year. if seen from sharia commercial banks dpk rate in 2008 to 2009, an increase in dpk rate which is from 36.852 to rate of 52.271 has occured. if dpk rate rises then car rate should also rises, but not in the sector of sharia banks in 2008 to 2009 even in 2010 until now rise in dpk still continue even there is fluctuations in car rate on sharia banks. the increase in dpk rate is not in line with roa rate of sharia bank. if dpk rate rises, then roa rate increases. but roa in sharia bank tends to fluctuate. 1.2 research problem research problem that proposed by researcher in explaining those background can be described in two statements: 1. simultaneously, there is an effect between between third party funds, car, npf, and fdr towards roa islamic banks in indonesia jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 136 2. partially, there is an effect between between third party funds, car, npf, and fdr towards roa islamic banks in indonesia 1.3 research purpose this research aims to examines the relationship effect both simultaneously and partially between third party funds, car, npf, and fdr towards roa islamic banks in indonesia. 2. theoretical framework and hyphotesis development 2.1 previous research studies a different result of research proposed by sri, et al. (2013) that the dpk does not affect roa due to problem loans so that funds collected from third parties can not be maximally obtained by the bank. the urgency of car use in this study is indicated by variations results of several studies in relation to financial performance. widyanto (2012) states that if the value of car increases then there is a decrease in profits. eung (2013) stated that car statistically did not have a significant effect on roa because the banks that operate does not optimize the existing capital. this occurs due the regulations of the bank of indonesia that require car amounted to 8% for minimum that caused banks always try to keep car owned according to the existing provisions. related to npf variables, result of research submitted by sri, et al. (2013) states that npf has a positive effect on performance. if npf value is high, it shows that the value of loan disbursement by the bank is high too, so it affects the financial performance. if there is large number of problem loans, it tends to decrease profitability. different results shown by rafelia (2013) states that the npf has a negative effect on roa. however, the npf has a positive effect if performance is proxied with roe. number of credit or financing problem can affect npf. the urgency of fdr usage in this research is shown by riyadi and agung research variation (2014) stated that fdr has positive effect on roa. this happens because when the channeling of funds to the people is high, then the return will also high and will have an impact on earnings obtained by the banks, the results are in accordance with the theory of stewardship. stewardship theory can be understood in the channeling of banking institution financing. sharia banks as principal which entrust customers as stewards to manage funds ideally able to accommodate all the interests of all parties. while other researchers such as nurkhosidah (2013) in dewi (2010) suggest that fdr has a negative effect on roa. the results showed that fdr and ppap had no significant effect on roa. bopo and npf have a significant negative effect on sharia bank roa. the existence of phenomenon of gap and diversity of argument (research gap) is the reason for existing of influence research of third party funds (dpk), capital adequacy ratio (car), non performing financing (npf), financing to deposit ratio (fdr) over return on assets (roa) of sharia banks in indonesia during the periode of 2008-2013. the signal theory suggests about how a company should signal the users of financial statements. this signal is information about what has been done by management to realize the desire of the owner (jogiyanto, 2000: 39). the signal theory in this study is used to explain the effect of npf and car on roa. 2.2 theoretical framework 2.2.1 signal theory signal theory argued about how should a company give signals to users of financial statements. this signal in the form of information about what has been done by management to realize the wishes of the owner (jogiyanto, 2000). theory of the signal in this research is used to describe the influence of the npf, and car against roa. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 137 2.2.2 pecking order theory this theory proposed by donaldson in 1961. if it is assumed that company's goal is to minimize the total cost of funding then choose the instruments and capital structure of the company depending on the constraints faced. these costs include direct and indirect costs. the direct cost is a cost that requires the company to pay explicitly relating to the money used to arrange funding from the funder. this fee includes a number of special costs incurred for debt or equity compensation in the form of mark-up in murabaha, internal rate of return in ijarah, share profit and loss in mudlarabah and musharaka. this theory explains the relationship between fdr and roa 2.2.3 stewardship theory stewardship theory is a theory proposed by donaldson and davis. sharia banks that entrust clients as steward to manage funds that should be able to accommodate the interests between banks and customers whose base their services on behavior that is able to work together within the organization (riyadi and agung, 2014). this theory is related to the fund obtained then distributed by sharia banking financing products that related to roa value. 2.2.4 financial performance financial performance is the result achieved by bank in managing its resources owned to achieve its objectives. while ratio used is return on assets (roa). for management or other parties, high profitability is more important than a big profit. return on assets (roa) focuses the company's ability to gain earnings in operations. the higher roa of a bank, the greater the level of profit achieved by bank and the better bank's position in terms of asset use (hutagalung, 2013). a positive return on assets (roa) shows that from total assets used to operate, the company is able to provide profits for the company. in the other hand, negative return on assets indicates that from total assets used, companies suffer a loss (sulistyaningrum, 2013). munawir (2001) explains that profitability or rentability is used to measure the efficiency of capital use in a company by comparing profit with capital used in operation, therefore large profits do not guarantee or is not a measure that the company is rentable. 2.2.5 third-party funds (dpk) muljono (2006) in hutagalung (2013) defines third party funds as funds collected from these communities will be used for funding the real sector through lending. third party funds in sharia banking is giro justified by sharia which is giro demand based on mudharabah and wadi'ah principle, saving based on wadi'ah contract or investment fund based on mudharabah contract or other contract which is not contradictory to sharia principle which withdrawal by specific terms and conditions and can not be withdrawn by check and / or other tools equivalent to the instrument and deposits justified by sharia which is saving based on the principles of mudaraba and wadi'ah. 2.2.6 capital adequacy ratio (car) keovongvichith (2012) based on the international banking regulators (the basel committee for banking supervision), the minimum capital adequacy ratio (car) is 8 percent (in accordance with international banking regulatory minimum car is 8%. this ratio can be formulated: (bank capital/risk weighted assets) x 100%. islamic banking assets are divided over the assets funded by private equity and liabilities or debts (wadi'ah or qard) funded assets and account for the results i.e. mudharabah (mudharabah mutlaqah are recorded in the balance sheet and the mudharabah muqayyadah which is recorded in the administrative account). 2.2.7 non performing financing (npf) the dictionary of bank of indonesia shows that non performing financing (npf) is a problematic financing consists od non-performing clarification, doubtful. the amount of npf allowed in bank indonesia is 5%, if exceeding 5% will affect the rating of the bank health concerned that will reduce the value of score obtained. financing risk increases, loan interest will jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 138 increase as well. meanwhile, in the islamic economy the banking sector does not recognize the instrument of interest, the islamic financial system implements a system of profit and loss sharing that has set the rate of profit in advance. (sulistyaningrum, 2013). 2.2.8 financing to deposit ratio (fdr) financing to deposit ratio is a measuring instrument to measure financing volume so that this fdr ratio can show bank health in providing financing. the results of pramuka research (2010) in (sulistyaningrum, 2013) showed that fdr has significant and positive in the direction of profitability (roa) of sharia bank. that means, the higher this ratio indicates that the more optimal intermediary function run by islamic banks, thereby increasing profitability. 2.2.9 dpk, car, npf, fdr and roa according to purwohandoko et al. (2014) the definition of car is the ratio comparison between profit after tax with total assets used to measure the ability of companies in generating return on assets used in certain periods. widyanto (2012) states that if the value of car increases then there is a decrease in profits. eung (2013) stated thzt car statistically does not have a significant effect on roa because the banks that operate does not optimize the existing capital. so car is used to determine the ability of banks to generate profits. in signal theory it is explained that company will provide a signal so that users of financial statements can obtain a signal about the financial performance of the company itself. the ratio of non-performing financing (npf) is a non performing financing consisting of nonperforming clarification, doubtful. npf has a positive effect if performance is proxied with roe. lagre amount of credit or non-performing financing can affect the npf which will also affect the bank's roa itself. in accordance with the theory of signals by looking at the npf numbers of a bank, the users of financial statements will know the amount of financing that is smooth and not smooth so that users of financial statements will get a signal about the financial performance of the bank itself. the financing to deposit ratio is a measuring instrument to measure the volume of financing so that this fdr ratio can show the health of banks in providing its financing. riyadi and agung (2014) stated that fdr has a positive effect on roa. this happens because when the channeling of funds to the people is high, then it will get a high return too and will have an impact on the profits obtained by the bank. while other researcher, nurkhosidah (2013) in dewi (2010) suggests that fdr has a negative effect on roa.the results showed that fdr had no effect significantly to roa islamic banks. pecking order theory explains the companies tend to choose use the funds to conduct its internal funding. islamic banking use microsoft's internal funds in finance. the measurement of the volume of financing used numeric assessment of fdr. with the increase in numbers of the fdr will certainly happen increases the number roa. the existence of a health assessment of banking will provide convenience for the users of the services of banks and investors. 2.3 hyphotesis researcher proposed five hyphotesis in answering research problem : h1 : dpk, car, npf, fdr has an effect towards return on assets (roa) of syariah bank in indonesia during 2008-2013 periods simultaneously. h2 : third-party funds (dpk) has a positive effect towards the return on assets (roa) of syariah bank in indonesia during 2008-2013 periods. h3 : capital adequacy ratio (car) has a positive effect towards the return on assets (roa) of syariah bank in indonesia during 2008-2013 periods. h4 : non performing financing (npf) has a negative effect towards the return on assets (roa) of syariah bank in indonesia during 2008-2013 periods. h5 : financing to deposit ratio (fdr) has a positive effect towards the return on assets (roa) of syariah bank in indonesia during 2008-2013 periods. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 139 3. research method 3.1 research design type of this research is quantitative descriptive research. the methods used in this study was the quantitative approach to population is the generalization of the object/subject who has certain qualities and characteristics that are applied by researchers in order to learn and then drawn the conclusion (sugiyono, 2012). 3.2 population and sample the population in this research is the islamic bank is registered in the financial services authority as much as 12 companies. sampling is that part of the sum of the characteristics possessed by the population. sampling technique is used that is purposive sampling. as for the criteria used to select the sample that is included in the listed bank public bank syariah recorded in bank indonesia directorate during the research period, the bank is a bank registered in the public sharia financial services authority indonesia during the research period. has published financial statements beginning in 2008. required data is balance sheets report, profit/loss report, preparation report and calculation of the minimum capital ratio of finance of islamic banks that registered in the islamic bank ojk in 2008-2013. the year of 2013 was chosen as the end of the research because this research using the latest data. 3.3 research variables the dependent variables used in this study is the roa. meanwhile the independent variable used is the dpk, car, npf and fdr. return on assets (roa) ratio is a comparison between the profits after taxes (eat) with total assets that are used to measure the company's ability in generating return on assets to be used in a certain period. purwohandoko, et al (2014) measures the value of roa: third party funds are funds collected by the bank. in third-party funds islamic banks seen from the balance sheet report in example mudharabah, wadi'ah. yuliana (2009) stated that dpk can be measures by: tab. mudharabah + girowadi’ah + deposito mudharabah capital adequacy ratio car is a bank or is the ability of banks in the capital. according to muljono (1999) in hutagalung (2013) measures the car including: car= npf is the ratio between the total credit which is not smooth (npf) to the total financing. according to riyadi and akbar (2014) measure the npf: fdr is a measuring instrument used to measure the volume of financing so that the ratio of fdr this can show the health of banks in providing financing. according to riyadi and akbar (2014) measurement of fdr by way of: x 100% x 100 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 140 3.4 research framework picture 1 research framework 3.5 type of data and sampling method researcher uses purposive sampling as their sampling technique. the sample of this research populations is islamic (sharia) banks that listed in bank indonesia directorate during the research period methods of analysis used in this study is to conduct a quantitative analysis in the calculations using statistical methods that helped with statistical data processing program that is spss 18. the methods used are descriptive analysis, test the assumption of simultaneous significance tests, classic (f testing), test the significance of individual parameters (test statistic t). and the determination of the coefficient of r2. model testing performed by linear regression. regression equation used in this research can be formulated as follows: description: y = roa a = constant = coefficient of regression x 1 = dpk x 2 = car x 3 = npf x 4 = fdr e = factor bullies 4. research result and analysis 4.1. hypothesis testing as mentioned in data analysis above, the result of multiple regression can be described below table 1 multiple regression results variables b t sig dpk 5,605 0,000 car -0,141 0,001 npf 8,97 0,001 fdr 0,719 0,000 adjusted r square correlation coef (r) f test 0,290 0,548 0,000 dpk (x1) car (x2) npf (x3) fdr (x4) roa (y) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 141 based on table 1, we can concluded that dpk, car, npf, fdr statistically has a significant and simultaneously (f test siginifance value is below 0.05) effect towards return on assets (roa) of syariah bank in indonesia during 2008-2013 periods (h1 accepted). this research also support hyphotesis 2 and 4 (siginifance value is below 0.05) proposed that third-party funds (dpk) and financial deposit ration has a positive effect against the return on assets (roa) of syariah bank in indonesia during 2008-2013. unfortunately, this research failed to prove h3 and h4. 4.2. research discussion 4.2.1 influence third-party funds towards roa the test results shows that there are influences between variables of third party funds against roa public bank syariah indonesia in the period 2008-2013. the existence of the research results presented by rohaeni (2010) showed a positive influence among third-party funds (dpk) against the return on assets (roa). research tells us that the income from the credit channeling activities provide the most influence on the achievement of profit. the addition of a number of early financing of the numbers shall be – so that clients know the number of returns and have the right not to approve or even approve it. stewardship theory describes a situation where manager is not motivated by individual goals but aimed it more to the results for the organization's interest. this theory is understood in banking financing products. sharia banks that entrust clients as steward to manage funds that should be able to accommodate the interests of banks and customers whose base their services at behavior that is able to work together within the organization (riyadi and agung, 2014). this kind of accommodating the interests of banks with customers in sharia banks can be seen from the financing distributed to customers that always preceed by the agreement/contract. thus, calculation of financing return given will not be approved so as not to burden the customer. this certainly shows the role of sharia banks as steward to its customers. rohaeni (2010) shows a positive influence between third party fund (dpk) on return on assets (roa). the study explains that income from credit distributing activities gives the most influence to the achievement of profit. 4.2.2 the influence of the car against roa the value of car demonstrates the ability of banks to manage capital. in theory if the number car rise certainly demonstrates the ability of banks capable of managing its capital. but in channeling capital islamic banks that is used in the financing system for results makes his financing results sometimes smaller than channelling their funds. so if numbers car rise will reduce the profits of the bank. because capital is more used in covering the financing that is not smooth. widyanto (2012) stated that if the value of the car rise then occurs a decrease in profits. 4.2.3 the influence of non performing financing against roa the influence of the variable given by the npf against roa is positive. this happens because the average value of the npf bank syariah is 0.001%, still on the amount standrat of npf required by bank indonesia. therefore the increases npf does not result in a decrease in roa allowance because the value of productive assets (ppap) is still able to cover bad debt. banking profits can still increase with the npf is high because the source of interest earnings as fee based income relative high. pt bank syariah mandiri (bsm) noted the achievement of revenue-based fee (fee based income) year end 2011 rp 1.08 trillion, up 90.94% compared to achieve significant end 2010 worth rp 567billion (http://www.syariahmandiri.co.id/2012/04/fee-based-income). other research also suggested prasnanugraha (2007) do research analysis of the influence of ratio-financial ratio on performance of public banks in indonesia. npl figures shows positive signs that can be explained in that year even though the value remains high roa npl is also high. 4.2.4 the influence of financing to deposit ratio against roa if islamic banking less in obtaining financing, will certainly affect the numbers return earned. one of the reasons of the lack of financing issued i.e. lack of customer knowledge about islamic jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 142 banks make not enough clients perceive the system in islamic banking. while the research of nurkhosidah (2013) in the goddess (2010) suggests that fdr effect negatively to roa. the results showed that fdr had no effect significantly to roa islamic banks. so if the value of the fdr to rise but not smoothly financing figures are also rising, will certainly influence negatively to roa on sharia. 4.2.5 the influence of dpk, car, npf, fdr towards return on assets third party funds (dpk), car, non performing financing (npf) and financing to deposit ratio (fdr) together have an influence on return on assets (roa). the higher car achieved by a bank shows better bank performance because the bank is able to cover its decline in assets as a result of bank losses. if the car is below 8% then the bank has no opportunity to provide credit. if the bank no longer has the opportunity to distribute credit would greatly affect the bank's roa rate itself. beside car which also greatly affect the roa is ratio of npf which shows the ability of bank management in managing non-performing loans provided by banks. ability in managing nonperforming loans is very important because it is closely related to the return value obtained by the bank. besides npf the fdr ratio is also very important. the higher the fdr then the bank is able to channel its credit effectively which will certainly increase the bank's profit 5. research conclusion, limitation, and recommendation 5.1. conclusion based on the results of research and discussion, it can be concluded that the third party funds (dpk), capital adequacy ratio (car), non performing financing (npf) and financing to deposit ratio (fdr) all together have an influence on the return on assets (roa). in sharia commercial bank in indonesia in in the period of 2008-2013, third party fund has positive effect on roa of sharia commercial bank in indonesia in the period of 2008-2013, capital adequacy ratio (car) have negative effect on roa of sharia commercial bank in indonesia in the period of 2008-2013, non performing financing npf) positively influences on roa of bank syariah in indonesia in the period of 2008-2013, financing to deposit ratio (fdr) have negative effect on roa of sharia commercial bank in indonesia in the period of 2008-2013. banking companies are expected to penalize the financial ratios that can be a reference bank in order to be able to identify problems, conducting appropriate follow up improvements. if there is an increase in the dpk number but the npf also rises, it indicates the ineffectiveness of the loan issued by the bank. 5.2. limitation researchers are expected to conduct further research regarding a result of existing research on npf numbers that have a positive effect on roa. 5.3. recommendation it is expected that the next research will be continued in the coming period considering the rapid development of sharia banking. for investors with a long-term investment in banking, it is suggested to consider the ratios described earlier. viewing the amount of third party funds, we can see the value of dpk because the rise of dpk number will affect the amount of financing issued by sharia bank. next, look at the value of capital adequacy owned by car. in order for potential investors to know the number of non-current loans viewed from the npf numbers and the last fdr numbers used to know the volume of financing. by looking at these ratios, investors can certainly choose the right type of investment in sharia banking. references eng, tan sau. (2013). the effect of nim, operational efficiency ratio (bopo), ldr, npl & car toward roa of international and national public listed banks for the period of 2007 – 2011. jurnal dinamika manajemen, vol. 1, no.3, hal.1 , issn: 2338 – 123x. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 143 ghozali, imam. (2013). aplikasi analisis multivariate dengan program spss 21, edisi 7. semarang : badan penerbit universitas diponegoro. hasan, nurul ichsan. (2014). perbankan syariah. jakarta : referensi. hutagalung, esther, djumahir, kusuma. (2013). analisa rasio keuangan terhadap kinerja bank umum di indonesia. jurnal aplikasi manajemen (online), vol.11, no.1. hal.6-9 jogiyanto. (2000). teori portofolio dan analisis investasi edisi 2. yogyakarta : universitas gajah mada. keovongvichith, phetsathaphone. (2012). an analysis of the recent financial performance of the laotian banking sector during 2005-2010. international journal of economics and finance, vol. 4, no. 4; hal. 148 munawir. (2004). analisa laporan keuangan. yogyakarta : penerbit liberty. najmudin. (2011). manajemen keuangan dan aktualisasi syariah modern. yogyakarta : andi offset. purwohandoko. asandimitra, nadia. isbanah, yuyun. kautsar, achmad. (2014). dasar-dasar manajemen keuangan (teori, aplikasi dan kasus). surabaya : unesa university press. rafelia, tyas. (2013). pengaruh car, fdr, npf, dan bopo terhadap roe bank syariah mandiri periode desember 2008-agustus 2012. diponegoro journal of accounting (online), vol. 1, no.1, hal 1-9. republik indonesia. (2008). undang-undang no. 21 tahun 2008. riyadi,slamet. yulianto,agung. (2014). pengaruh pembiayaan bagi hasil,pembiayaan jual beli, financing to deposit ratio, dan non performing financing terhadap profitabilitas bank umum syariah di indonesia. acoounting analysis journal, vol. 3, no. 4, hal.6-9 issn 22526765. sri, anastasya, ratna anggraini, etty gurendrawati dan nur amalia hasanah. (2013). the influence of third-party funds, car, npf and roa against the financing of a general sharia-based bank in indonesia. the 2013 ibea, international conference on business, economics, and accounting (online). widyanto, eko adi. (2012). analisis tingkat kesehatan dan kinerja keuangan bank dengan menggunakan metode camel (studi kasus pada pt. bank mega syariah indonesia periode 2008-2010). jurnal eksis .vol.8, no.2, hal. 1-6. *) risma ayu kinanti, surabaya state university **) purwohandoko, surabaya state university jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 101 identification of business enterprises bumdes based on social and economic aspect (case study at bumdes ijen lestari tamansari village district of banyuwangi) moh. hudi setyobakti *) abstract law no. 6 of 2014 on villages, provides an important position for the village to play its role in development. the important role of the village is the local authority possessed by the village in managing its household. village economy is one of the important factors in assessing the success of village development. the village economic problems need to be solved by handling thoroughly, starting from the construction of infrastructure facilities, to developing the potential of the village to be optimized into opportunities for business opportunities that prosper the village community. village owned enterprises, here in after referred to as bumdes, become one of the important mandates contained in the village law. bumdes urgency is affirmed in permendesa number 4 of 2015. the context of bumdes establishment is expected to be the driving force of the village economy, meaning that the establishment of bumdes is not merely an orientation to the profit of the institution, but the more essence is the establishment of bumdes should be able to provide both economic and social benefits to villagers. the type of this research is descriptive qualitative, with the aim to identify and analyze the feasibility aspects of bumdes business in terms of social and economic aspects. the results showed that bumdesijen lestari tamansarivillage district of banyuwangi gave positive impacts economically and socially for the villagers like directly or indirectly. bumdes's main business sector engaged in tourism management has an impact for residents around ijen region, in the form of additional income from multiplayer tourism effects. the direct impact of bumdes employees' involvement in the management of activities and community involvement in bumdes businesses such as local food producers packed with bumdes and community-based homestay managers. keywords: bumdes, social aspect, economic aspect, banyuwangi 1. introduction 1.1 research background the birth of law no. 6 of 2014 on the village, here in after referred to as the village law, provides an important position for the village to be able to play its role in national development. the important role of the village is the local authority possessed by the village in managing its household. this strategic role is then translated in the form of implementation of village development starting from the process of planning, implementation and accountability activities. the village government is expected to be more observant in recognizing all the problems and potential concerning the development of the village. village economy is one of the important factors in assessing the success of village development. the village economic problem needs to be solved by handling thoroughly, starting from the construction of infrastructure facilities, to developing the potential of the village to be optimized into opportunities for business opportunities that prosper the village community. village owned enterprises, hereinafter referred to as bumdes, become one of the important mandates contained in the village law. bumdes's urgency is reinforced in the ministry-level technical regulations in this case implemented by the village ministry. through permendesa number 4 of 2015, re-affirmed about the importance of villages to build bumdes. the context of bumdes's establishment is expected to be the driving force of the village economy, meaning that the establishment of bumdes is not merely an orientation to profit institution, but the more essential is the establishment of bumdes should be able to provide benefits both economically and socially to the villagers. it is this factor that underlies the researcher's interest to research more about bumdes's review of social and economic aspects of society. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 102 1.2 research problem here is several research problem that proposed by researcher: 1. identify and analyze the feasibility aspects of bumdes's business in terms of social aspects. 2. identify and analyze the feasibility aspects of bumdes's business in terms of economic aspects. 1.3 research purpose this research aims to know and explain the feasibility aspects of bumdes's business in terms of social and economic aspects. 2. theoretical framework and hyphotesis development 2.1 theoretical framework 2.1.1 village development according to siagian (2003), provides understanding of development as "a business or series of growth and change business which is planned and done consciously by a nation, state and government, towards modernity in the framework of nation building". in essence development is a deliberate activity between the government and involves the participation of the community in the direction of modernity with the direction of planning. according to siagian (2003), "village development is the wholea series of efforts undertaken within the village environment with the aim of improving the living standards of rural communities and enhancing the welfare of the village ". based on this understanding, the development of the village is the development carried out in the lowest administrative area, namely the village and the village, the main characteristic of village development is the community participation in the development of the village or kelurahan either directly in the form of self-help or self-help. the development is divided into two, namely physical development and non-physical development 2.1.2 rural economic development khairuddin (2002: 29), states in general the component of the ideals of modern countries in the developed or developing world are the things that are essentially relative and difficult to imagine the achievement of an absolute "saturation point" which, once reached, does not may be upgraded such as: 1. social justice 2. equitable prosperity 3. the same treatment in the eyes of the law 4. happiness mental, spiritual, and material 5. happiness for all 6. peace, and security 2.1.3 bumdes permendesa number 4 of 2015, states that a village owned enterprise, hereinafter called bum desa, is a business entity which is wholly or partly owned by the village through direct participation derived from village wealth separated to manage assets, services and businesses other for the greatest prosperity of the village community. the establishment of bum desa is intended as an effort to accommodate the whole activities in the field of economy and / or public services managed by the village and / or inter-village cooperation (permendesa no 4, 2015, chapter 2 clause 2). the establishment of bumdes, oriented as a driver of the village economy. as an entity formed by the village government, bumdes is not solely aimed at achieving profit, but how bumdes can contribute in rural development, especially in the economic and social field. in essence bum village establishment aims (permendesa no 4 2015, chapter 2 chapter 3): 1. improve the village economy; 2. optimize village assets to be useful for village welfare; jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 103 3. improve community efforts in managing the economic potential of the village; 4. develop business cooperation plans between villages and / or with third parties; 5. creating market opportunities and networks that support citizen's public service needs; 6. open employment; 7. improve the welfare of the community through improvements in public services, growth and equity of the village economy; and 8. increase the income of the village community and the village's original income. 2.1.4 bumdes permendesa number 4 of 2015, states that a village owned enterprise, here in after called bum desa, is a business entity which is wholly or partly owned by the village through direct participation derived from village wealth separated to manage assets, services and businesses other for the greatest prosperity of the village community. 2.1.5 feasibility study according to cashmere and jakfar (2012), a business or business feasibility study is an activity that studies in depth about a business or business to be run, in order to determine whether or not the business is run. fahmi (2014), that business feasibility study is a science study that assesses the work of a business to be seen worthy or unfit to be implemented by placing qualitative and quantitative measures of size that are finally summarized in a recommendation. husnan and muhammad (2014), that the feasibility study of a business project is a study of whether or not a business project can be implemented successfully. assessing business feasibility or business, done by assessing several aspects, including; a. legal aspect with regard to the validity of the documents, the form of legal entity to the completeness of the operating permit permit. b. market and marketing aspect related to assess whether the entity that will invest in terms of marketing memeiliki expected market opportunities or not. c. financial aspect research in this aspect is done to assess what costs will be incurred and how much the costs will be incurred, the projected income and investment will return. d. technical aspects in connection with the location of the business, determining the design of the layout of the building machine and so on up to the possibility of further development. e. aspects of management related to the business manager, personnel, organizational structure and main tasks and functions. f. social and economic aspects research in this aspect, to see how big the impact caused if the project run. this influence is primarily on the broader economy as well as the social impact on society as a whole. g. aspect of environmental impact assessing how the impact of the project if run on the surrounding environment both land, water and air. (kasmir and jakfar, 2012) 2.1.6 social and economic aspects of feasibility study any business or business that is run will definitely give an impact, whether positive or negative. these impacts may apply internally or externally. internally is related to the entity concerned while the external concerns to the community. according to kasmir and jakfar (2012), an economic review is the extent to which business activities provide opportunities for both communities and governments to increase revenues or vice jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 104 versa. the social impact for society in general is the availability of facilities and infrastructure needed. however, the social aspect also assesses possible negative impacts, such as demographic changes, cultural changes, customs, public health, lifestyle changes and other social structures. outline the impact of economic aspects with the existence of a business or investment among others; a. can improve the household economy b. digging, regulating and using natural resource economies, through c. improving the local and regional government's economy d. regional development the social impact with the existence of business or investment among others; a. the existence of demographic changes, through the occurrence; b. cultural changes c. changes in public health based on the theoretical basis above can be concluded that, bumdes as an economic entity founded by the village government, is an economic entity that must meet the business feasibility aspects, management by utilizing local resources that exist with attention to social and economic aspects, so bumdes can contribute in a sustainable for village development in the village economic field that affects the welfare of rural communities. 3. research method 3.1 research design the type of research used in this study is descriptive qualitative. by describing the obtained data which then elaborated in the form of explanation, then the data obtained are analyzed qualitatively, in this case the research must be active and using yourself as an instrument, following the assumptions of culture as well as following the data in an effort to achieve imaginative insight into the social world informant. researchers are expected to be flexible and relational but still able to set distances. this research was conducted at bumdes ijen lestari desa tamansari district of banyuwangi district, with research object on identification of business feasibility of bumdes based on social and economic aspect. 3.2 population and sample the population in this study is the village in terms of a legal entity consisting of territory, community and village government involved directly or indirectly with the establishment and management of bumdes. samples were taken at random by taking participants from the village head, bumdes management, mitra bumdes, community groups, community leaders, and local communities and business actors in the village. then field observations are drawn at random based on information submitted in the interview process. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 105 3.3 research variables table 1 parameter of research variable parameter 1. social aspects 1. there is a demographic change 2. cultural changes 3. changes in public health 2. economic aspects 1. can improve the household economy 2. digging, regulating and using natural resource economies 3. improving the local and regional government's economy 4. regional development source: business feasibility study, cashmere and jakfar 2012 3.4 research framework to get expected result of research, hence research model developed is as follows: picture 1 research framework 3.5 type of data and sampling method this research using several ways or combine several techniques in collecting research data, includinh observation, documentation, and interview. observation technique is done by observation frankly or disguised, that is to say frankly the purpose of observation and or sometimes also disguised, that is not to be straight forward deliver to the data source. observations were made to obtain information on the management of bumdes such as problems that still occur, felt or observed either directly or indirectly by the resource person. observation is also done at the point of location by sampling based on information obtained by the researcher. this is an attempt to cross check information obtained from previous data collection steps. while, documentation techniques used in this research to study and document the rules that have, history of establishment and reporting existing. this research also uses semi-structured interview techniques to find the problem more openly, where the party who invited the interview was asked opinions and ideas ideas, (sugiyono, 2015, 73). interviews were conducted on key village stakeholders, ie village heads, bumdes managers, mitrabumdes, community groups, community leaders, and local communities as well as business actors in the villages with a view to exploring information on how the process of establishing bumdes, type of business bumdes, bumdes management, as well as social and economic impact for the village community. interviews were also conducted in groups with the focus group triangulation tabulation and data analysis research result recommendation initial observation interview observation documentation lanjutan jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 106 discussion approach or focus group discussions. this discussion involves the village administration, community representatives affected by bumdes and bumdes officials, with the aim of obtaining the full information based on information extracted from previous observations and interviews or deepening the information submitted by the resource persons. 4. research result and analysis data analysis in this research is done in the following stages; 1) placing information on different arrangement; 2) create a matrix or category and place the evidence in that category; 3) creating display data; 4) make tabulation of different events; 5) examine the complexity of the tabulation created; and 6) compile information in chronological order (miles and huberman, 1992 in kusuma and purnamasari; 2016). the initial stage of the process of analyzing the data is to create a database to store copies of the information provided by the participants (wahyuni, 2012). this research uses predecessors and successors as informants (kusuma and purnamasari, 2016). according to bryman and bell (2007) in chirico (2008), this research uses each data source and each participant as a tool to check each other. the use of two participants in each organization allows for comparison of the answers given by them. the use of other data sources (secondary data) allows further confirmation of the information provided by the participants (bryman and bell; 2007 in chirico, 2008 in kusuma and purnamasari; 2016). this research uses content analysis to answer research question. content analysis is defined as a research method for subjective interpretation of data content through a systematic classification process of coding and identification of themes or patterns (wahyuni, 2012). this method summarizes and classifies large amounts of data into categories that represent the same meaning (weber, 1990 in wahyuni, 2012 in kusuma and purnamasari, 2016). the analysis process in this research focuses on the analysis of bumdes feasibility identification based on social and economic aspects. the process of data analysis carried out with the following stages; a. develop an indicator matrix as the question material for participants b. gather information through interviews, documentation and observations c. make tabs and put the information on the same criteria d. testing the validity of data e. interpret data 4.1. validity validity of data in qualitative research includes test; credibility (internal validity), transferability (external validity), dependability (reliability) and sonfirmability (objectivity). (sugiyono, 2015). the validity of the data in this study using the approach of credibility and confirmability test. 4.2. credibility test of credibility is done to get truth value of information obtained by researcher. the credibility test approach is done by extension of observation and triangulation. extension of observation means the researcher returns to the field to do the naming, interview again with the source who ever met or new (sugiyono, 2015). triangulation in testing this credibility is interpreted as checking data from various sources in various ways and time. triangulation approach used is triangulation technique, that is to test data obtained to the same source with different technique, for example data obtained by interview, then checked with observation and documentation (sugiyono, 2015). 4.3. confirmability confirmability testing in qualitative research is aimed to test the objectivity of the research. research is said to be objective if the research results have been agreed by many people (sugiyono, 2015; 131). at the process level in the field, the research agreement process is conducted in focus jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 107 group discussion or focus group discussions. participants in the fgd are the parties who have become the research participants, so that obtained a complete and valid information. at the next level, the research was also tested by independent testers to test inputs, processes up to the results of the research. so get a joint agreement on the results of these studies. 4.4. research discussion bumdesa ijen lestari tamansari village licin district banyuwangi regency, officially established in 2015. initiation of establishment of bumdes started in 2014. the process of establishing bumdes ijen sustainably through process stages that are not instant, this is reflected from the time required takes up to one year. there are several stages to be undertaken, especially the process of licensing and the drafting of village regulations through consultation to the relevant authorities in this regard skpd. at the beginning of establishment, bumdes business activities based on ijen region tourism management, namely the retribution of tourism. starting from the tourism management activities then bumdes can develop new business units including rest area management, culinary, homestay and packing of local products in the form of coffee. until now, bumdes has developed the unit unit well and able to develop with indicators of growing business and add efforts of business units based on local wisdom, such as cooperation with local transport managers and water resources management planned for swimming pool bathing tour. the success of bumdes ijen lestari is also inseparable from the village government's evil in looking at opportunities and answering the challenges and accuracy in choosing a cadre that is used as a manager. according to the village chief of tamansari, stated that "a process that is not instant and through the correct procedure becomes a force for the continuity of bumdes ijen lestari plus precisely chooses a cadre of social entrepreneur spirit." 4.4.1 social aspects analysis analysis of social aspect in this research, to see how far bumdes ijen sustain give social impact especially to society around activity management area by bumdes. this is viewed from several parameters such as demographic changes, cultural changes, and impacts on public health. a. demographic changes establishment of bumdes ijen sustainable with business base on the management of ecotourism area, giving a positive impact on increasing labor force participation either directly or indirectly. direct involvement of local communities in the management both as direct administrators and employees has provided employment opportunities for local communities. bumdes business management indirectly also provides employment opportunities to local communities. tourism management requiring service improvement in the form of lodging for visitors is realized by bumdes by working with local people to make their homes homestay, meaning that there is job opportunity for residents to earn income from business management bumdes. the packing of coffee products also gives residents the opportunity to sell coffee at bumdes at a more adequate price. multiplyer lan effects include the emergence of business enterprises stalls that support citizens of tourism management. according to bambang as chairman of bumdes's board, "the establishment of homestay is able to provide employment opportunities of at least residents around the area of tamansari rest area, then packing coffee has provided an opportunity for farmers to sell to bumdes at a better price although not yet fully managed but gives hope population. involvement of the people as a manager among others as a board, employees provide income for them " b. cultural change activity base bumdes ijen lestari lies the power to maintain and strengthen the existence of natural resources and the value of local wisdom. tourism activity of ijen area, is actually an activity that has been going before before the establishment of bumdes ijen lestari. the birth of bumdes has its roots in pre-existing activities. bumdes further strengthens the management with the provision of tourism facilities and infrastructure, as well as strengthen jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 108 the regulation or management norms, such as the existence of village rules that regulate the retribution of the tour so it is not wild. the process of establishing bumdes with the stages of community involvement from the needs assessment process to the deliberation of village meetings, until the establishment of the output of village regulations on the establishment of bumdes, as well as the running of bumdes management, provided a positive perception of the villagers and positive support from the community. based on these conditions, the birth of bumdes strengthens the local culture of the village such as the value of local wisdom of the village such as the support of natural resource conservation and strengthening social capital of the community. this is reinforced by the statement of yansen pale, the village counselor on duty in the region, "the existence of bumdes is an asset born to preserve local culture, improve tourist access services and reinvigorate social capital of society, with concrete examples of community involvement in decision making". this statement is also reinforced by bambang as chairman of bumdes, "bumdes ijen lestari is very concerned about the value of cultural wisdom, until the smallest thing we noticed, such as how we look, how the guest service by providing drinks with trays, cups, teapots made from natural and nuanced local culture." c. changes in public health negative impact on the establishment of bumdes ijen lestari, can be said nil or not. because the base of bumdes activity is not on the manufacturing business that manages the production on a large scale. according to community perceptions of the existence of bumdes which actually strengthens the local potency of natural resources of the village, give impact to nature conservation. this means that the conservation of nature actually supports the sustainability of public health by making nature as a health lung. 4.4.2 economic aspects analysis analysis of economic aspect in this research, to see how far bumdes ijen sustainably give economic impact, especially to village government and society around bumdes management area. this is observed from several parameters such as improvement of household economy, regulation and utilization of natural resources economy, improvement of local government and regional government and regional development. a. improving the household economy tamansari village community is a community culture with the main base of activity and daily livelihoods majority are farmers and gardening. this means that the community has previously had its main activities. community involvement in bumdes's business activities, such as community-based homestay management, community coffee packaging, additional income for residents. thus there is a double income pattern from the role of farmers and the role of homestay owners as well as for people who sell coffee to bumdes. in addition to the activities of the village tourist base, also provide multiplyer effect to the community, where people can also open a supportive business such as warung warung. this is as expressed by one of the homestay owners "we are grateful for the establishment of bumdes ijen lestari, by having our homestay have additional income besides we are farming or gardening, the management of this homestay we cooperate with bumdes and of course must follow standard stipulation, hygiene, service and so on, also we have cooperation agreement in the form of management sharing." b. digging, managing and using the natural resource economy the main activities of bumdes based on nature tourism, it automatically encourages the managers of bumdes and the village government, how the natural attractions are still sustainable. so that the village government and bumdes are interested in ensuring the sustainability of the business. another consideration is, that the tourist area is partly located on the land area perhutani. related to this the village government and bumdes, initiate the management cooperation jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 109 with the perhutani party. then, to ensure that the management is environmentally oriented, the village government also initiates regulation, including the regulations on tourism retribution. this is as stated by the village head, "tourism management by bumdes has been shaded by the village regulations on retribution, so that from the retribution will be used as income for the village in carrying out the development such as supporting the tourism access including environmental conservation as well as the management of the land area our perhutani has also entered into an mou." c. improving the government economy both locally and regionally bumdes ijen lestari in accordance with existing village regulations, is an entity that is established and owned by the village in this case the village government as a legal subject. this means that the village government has included village capital to bumdes by majority. bumdes's obligation is to contribute to the village in the form of business results that are included in the village income and planned in the apbdesa. so far, bumdes has contributed revenue for the village and is used by the village government for rural development. not only on the side of the village revenue handover, bumdes also provides financial support for the activities of temporary activities organized by the village. this is in accordance with the information submitted by the village head and the bumdes management. according to bambang bumdes, bumdes said "bumdes in the second year has been able to contribute to the income of the village and used for village development, besides the village celebration event, bumdes also contributes financing activities." d. area development access to tourism along with infrastructure developed by bumdes, has opened the openness of the environment. these conditions have an impact on the equity of development, the openness of the social environment, the information so as to open the isolation of the territory and the horizon of the population. according to the local village head that since the management of bumdes, the villagers have become more understanding about the importance of preserving nature, so even the public service must keep themselves so that bad influence does not happen, since it is getting more open, but so far all still keep the customs and customs and local local culture. 5. research conclusion, limitation, and recommendation 5.1. conclusion the mandate of law no. 6 of 2014, that the village can form bumdes with a view to the prosperity of the village. bumdes formed with the purpose of social business, meaning bumdes not solely aimed at the aspect of profit or profit alone but also addressed in the framework of village development. the measure used to look at the impact is to look at the social and economic aspects, which are used in assessing the feasibility of the business. approach this research is qualitative by describing the results of field data collection. based on the research results found that bumdes ijen lestari desa tamansari district licin banyuwangi district, judged from the feasibility of business from social and economic aspects to give a positive impact for the community. this means that in accordance with the mandate of law number 6 of 2014 and its derivative regulation, the existence of bumdes ijen lestari has been in accordance with the purpose of its establishment. the key to the success of bumdes management is lie on the ability of village leadership to see opportunities and answer existing challenges and to run in accordance with existing regulations and the ability to choose the right person as a manager, with the base of social entrepreneurship spirit. another factor is that the sustainability of business activities is also based on activities and cultures that have been running in the community. 5.2. limitation the subjective prespective during this research may occur due to the effect of the researcher decision using interview and observation as their research instruments. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 110 5.3. recommendation taking into account the conclusion of the research result, bumdes business development needs to consider the value that has been developed in the community, so that bumdes foundation will be stronger and get support from citizen participation. bumdes remains to be managed professionally with a sound business management approach as well as transparent and responsible. professional management should be supported with good manipulation tools, both system and managerial capacity that need to be continuously upgraded. references alfan, syukran and tauran. (2015). jurnal penelitian dampak kegiatan badan usaha milik desa (bumdesa) bagi masyarakat desa bareng kecamatan sugihwaras kabupaten bojonegoro. accessed from http://ejournal.unesa.ac.id/article/18717/42/article.pdf. chirico, f. (2008). knowledge accumulation in family firms: evidence from four case studies. international small business journal, 26 : 433. kasmir and jakfar, (2012). studi kelayakan bisnis, edisi revisi. jakarta : prenadamedia group. khairuddin. (2002). sketsa kebijakan desentralisasi di indonesia format masa depan otonomi menuju kemandirian daerah. malang : averroes press. kusuma, gabriella hanny and purnamasari, nurul. (2016). jurnal penelitian bumdes: kewirausahaan sosial yang berkelanjutan, penabulu jakarta. accessed from http://jembatan tiga.com/wp-content/uploads/bumdes-kewirausahaan-sosial-yang-berkelanjutan.pdf. miles, m.b.and huberman, a.m.. (1992). analisis data kualitatif. jakarta: ui press. moleong, lexy .j. (2006). metode penelitian kualitatif edisi revisi. bandung : pt. remaja rosdakarya. nawawi, hadi. (2005). metodologi penelitian sosial. yogyakarta : gajahmada university pers. nurjanah, santi. (2013). jurnal penelitian studi kelayakan pengembangan bisnis pada pt dagang jaya jakarta, journal the winners, vol. 14 no. 1. acessed from on maret 2013, http://journal.binus.ac.id/index.php/winners/article/download/641/618. permendesa no. 4 year 2015 about developing village index. samadi; arrafiqurrahman; afrizal. (2013). jurnal penelitian peranan badan usaha milik desa (bumdes) dalam peningkatan ekonomi masyarakat (studi pada bumdes desa pekan tebih kecamatan kepenuhan hulu kabupaten rokan hulu). accessed from http://ejournal.upp.ac.id/index.php/fekon/article/view/378/384. siagian, sondang p. (2003). manajemen sumber daya manusia. jakarta : bumi aksara. sugiyono. (2015). memahami penelitian kualitatif. bandung : penerbit albeta. tama dantika ovi era and yanuardi. (2015). jurnal penelitian dampak badan usaha milik desa (bumdes) bagi kesejahteraan masyarakat di desa karangrejek kecamatan wonosari kabupaten gunung kidul. accessed from http://eprints.uny.ac.id/21714/9/9.ringkasan.pdf. undang-undang no. 6 year 2014 about village. wahyuni, s. (2012). qualitative research method: theory and practice (vol. 1). jakarta: penerbit salemba empat. *) moh. hudi setyobakti, stie widyagama lumajang http://jembatan/ http://e-journal.upp.ac.id/index.php/fekon/article/view/378/384 http://e-journal.upp.ac.id/index.php/fekon/article/view/378/384 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 61 enterprises performance through internal resource integration and market orientation based on competitive advantages purwohandoko *) abstract every company tries to achieve goals to gain profit and win the competition. to achieve this goal, the company must be able to demonstrate a competitive advantage. therefore, the company always strives to gain competitive advantage by identifying, managing and optimizing their internal resources in the form of tangible and intangible assets that have superior characteristics as the power of generating competitive advantage. the sustainable competitive advantage by empowering their internal company resources can be defined as research-based view (rbv). the importance of research based views is contradicting with market based view (mbv) which stated that the more market oriented the more superior their competitive position. by using qualitative research (literature review), this study aims to understand and investigate how to create company performances through both point of views which is internal resources integration and market orientation based on competitive advantages. keywords: resources, competitive strategy, competitive advantages 1. introduction 1.1 research background globalization has led to an increasingly complex level of competition. it requires companies to increase their competence in building a winning marketing strategy. companies that want to be written by our customers after their stay in the business world must always be responsive to the global market situation. every company tries to achieve goals to gain profit and win the competition. to achieve this goal, the company must be able to demonstrate a competitive advantage. as an organization, companies consist of several resources if they are managed properly, this will result in a competitive advantage. phenomenon that occurred in indonesia raises the question, why many companies go bankrupt when the market opportunity is open, why other companies can survive and even grow, and what factors make the company have sustainable competitive advantage? the corporate bankruptcy phenomenon, if related to relatively stable number of customers and increased product offerings, it will indirectly increase the level of competition between companies. they suggest that: first, a set of productive resources can be controlled among different companies, even in the same industry and second, the definition of a productive source is broader than the ricardian definition; and third, entrepreneurial additional productive resources to be considered by the company. barney (1991a) suggested that the company's competitive advantage lies in the availability of resources and features that have characteristics of difficult to imitate by other companies. every company may not operate the same resources, because even if resources are limited, they have different priorities in allocating and assessing the importance of generating competitive advantage. the sustainable competitive advantage, power resource that is more focused resources internal company resources reinforced by priem & butler (2001a) stating that companies should incorporate the concept of research-based view (rbv) or the perspectives of their resource firms to clarify the criteria for measurement, so it can contribute to improve the company's performance. the view of how to generate competitive advantage is controversy (hooley, et al.). the importance of competitive strategy, in conjunction with the company's ability to determine the right strategy in a variety of company decisions, will be able to produce an optimal competitive advantage priem & butler (2001b). each company will ultimately determine the form of approach or strategy to achieve the company's goals, resulting in return on investment will be removed, and the best strategy for the company will eventually be a distinctive construction that reflects its own situation so as to improve the company's performance. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 62 as in previous studies, such as studies by makinen (2000), matsuno & mentzer (2000), and matsuno, mentzer, & remtz (2005) that concluded that competitive strategies have a positive effect on company performance. 1.2 research problem based on the above reasoning, researcher need to investigate how to create company performances through internal resources integration and market orientation based on competitive advantages. 1.3 research purpose the purpose of this research is to studies literature about how to create company performances through internal resources integration and market orientation based on competitive advantages. 2. theoretical framework 2.1 theoretical framework 2.1.1 company resources resources can be defined as environmental elements which consist of human resources, natural resources, non-biological resources and human resources (uu no. 4 of 1982). thus, all sources whether human, material and real energy and can potentially be used to improve human well-being called resources. resources are divided into two categories: tangible and intangible. real resources consist of all physical items owned by the company, raw materials, and all equipment. meanwhile, intangible resources do not appear in raw material and balance sheet statements. examples of intangible resources are corporate culture, reputation, and internal control. therefore, it is very interesting to conduct research on the potential of resources that can enhance sustainable competitive advantage in the company. robert m. grant resources (1991) is classified into six major groups, namely: financial resources, physical resources, human resources, technological resources, reputation, and organizational resources. the main function of an approach-based resource to formulate a strategy is to maximize the rebate gradually. this is related to the opportunities that can be taken to make resource utilization more economical. the ability to maximize productivity is critical. to achieve this we need to strive for available resources to support larger volumes for businesses. the research-based view (rbv) theory is developed to generate competitive advantage that can be built of four sources, namely : (1) unique traditional study of competence (2) ricardian economics, economics (3) penrosian, and (4) antitrust economic impact assessment (barney & arikan, 2000). ). in 1959, barney & arikan (2000) published a book called the theory of corporate growth. the company sees it as a function of production (just like ricardian theory), but its development and contribution to rbv is, first, a set of productive sources that can be controlled by companies is different even in the same industry, second, a broader definition of source of the product of the ricardian definition only focus on some types of productive resources; third, the diversity of productive sources of the company is added to entrepreneurial resources. barney & arikan (2000) suggests that company is a collection of productive resources and economic value of resources. the ability of resources to be non replicable depends on how far the resources are protected by isolating mechanisms. competitive advantage can be realized if the company has implemented a holistic strategy and value creation compared to its competitors (barney, 1991b). that is, competitive advantage can still be easily and quickly imitated by competitors, so room (ac) resources are needed to prevent other companies. dollinger (1999) disclassified 6 sources which are able to create a sustainable competitive advantage, namely (1) physical (2) reputation, (3) organization, (4) finance, (5) intellectual/human, and (6) technology that made clear as below. hitt, et al., (1999) defines resources as inputs in the company's production processes, such as goods, employee, patent, financial and managerial skills, so in general resources includes a wide spectrum of individual, social and organizational phenomena. some experts provide jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 63 source characteristics, which have and produce competitive advantages, such as barney (1991b), having something of value, rare, imitated and irreplaceable. the characteristics of resources that produce competitive advantage provided by experts are different from each other, including: valuable, rare, unreplicable, unreplacebale, superior and durable. some opinions on the definition of these resources have the same principle, derived from the perspective of the importance of resources to produce sustainable competitive advantage so that internal sources are defined as one company of tangible assets, or dynamic capabilities, or core competencies, owned by the firm to produce values that are not easily imitated by other companies and used to determine and implement competitive strategies. picture 1 competitive internal resources purwohandoko (2010) stated that the company always strives to gain competitive advantage by identifying, managing and optimizing internal resources in the form of tangible and intangible assets that have superior characteristics as the power of generating competitive advantage. to be more precise, a company can identify, manage and optimize internal resources, strong internal resources results competitive advantage. each company has different resources, which impact on the difference efficiency and profit and heterogeneity resource, which can be optimized by the company, causing diversity gain. this is the determinant of every performance. the company's resources obtain at lower price, compared to current price, or competitor’s price. those are the company's competitive advantage because the same resources will produce the same benefits but at a cheaper cost, so the company becomes easier to sell products and get bigger profits. 2.1.2 strategy a competitive strategy is the thought that come up from michael e. porter to provide a deep understanding of the company's managers, about industry and competitors in running the company's activities. an explicit strategy of development through the planning process (craig & grant, 1999), or it may have been implicitly developed through the activities of various functional departments. strategy is a way of decision or action that requires top management and requires a lot of company resources to make it happen, so that, the future is strategy-oriented because it affects in the long term of organizational life, and it has multifunctional or multidivisional consequences (david, 2003). because the strategy has multidivisional consequences, analysis of internal and external factors faced by the company needs to be done so that the company does not make mistakes in the formulation of competitive strategy. porter (1980) defined competitive strategies into three types, namely cost leadership, differentiation and focus. the main purpose of cost leadership is to create a large market share, thereby increasing production capacity. differentiation strategies are strategies that produce unique products or provide different values to build customer brand loyalty, avoid customer price sensitivity and creating an entry barrier for competitors to make a profit. strategic competitive advantages competitive internal resources internal resources intangible assets tangible assets jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 64 focus is a strategy that focuses on a particular segment of competition by consumer type, product or geography. porter's generic concept of competitive strategy includes cost leadership, differentiation, and focus. in practice, there is no strategy implemented in the pure, but by integrating cost leadership and differentiation strategies. this strategy seeks to create uniqueness/differentiation but at low cost. or in other words, although the price is cheaper, the quality can be compared. low cost integration and strategy differentiation can be applied if there is variation from consumer desire, but they are also price sensitive (mitchell, 2004). to be successful in implementing this strategy, companies need resources, skills, and ability to increase cost (up-scale) of lower attribute product quality attributes in with than competitors. the emergence of this integration strategy shows that the company does not implement a pure basic strategy. that is, the tendency of basic strategy (low cost, differentiation, or focus) is still needed, but the company can also add attributes from other strategies. makinen & mentzer (2000); matsuno and mentzer (2000), matsuno, mentzer, & remtz, (2005); studies state that through the development of competitive strategies it can be explained how companies can use the potential of strategy (empowerment) to build strong resources for competitive advantage. twomey& drew (2000) said that a strategy based on internal resources as a unique source that is not easily duplicated can lead to a competitive advantage. purwohandoko (2010) added that the company always seeks to gain a competitive advantage by using the power of internal resources and responding to change market dynamics through market orientation and external environment and to formulate and implement appropriate competitive strategies to generate competitive advantage. the stronger the internal source and implementation of market orientation which are used as basis for formulating competitive strategies, the better implementation of competitive strategies in generating competitive advantage. picture 2 competitive strategy and competitive advantages 2.1.3 competitive advantages each company may not operate the same resources, because even if their resources are limited, they have different priorities in allocating and assessing the importance of the company's competitive advantage. not all involved is considered a competitor in competitive advantage of business environment, but only the potential competitors as well as those who have entered the competition as well as potential competitors in the business. the company will be glad to have a sustainable competitive advantage and does not get stimulus to review the advantages of its competitors (barney, 1991). sustainable competitive advantage does not have a time limit. it is different from instantaneous competitive advantage. so, a sustainable competitive advantage is an advantage that has a very long period of time (porter, 1996). competitive advantage is a strong unity between corporate excellence and organizational effectiveness adapt to environmental change. competitive advantage is a translation of fact which is the process of identifying, developing and placing a real advantage. all resources that support company's competitive advantage are often used as research, as the basis of the strategies implemented in company’s management (porter, 1996). basic unification of your competitive advantage capabilities and organizational resources are important determinants to become a relative position and better performance than competitors. the company's performance will in particular be the basis for building a source that has a competitive internal resources competitive strategy market oriented competitive advantages jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 65 advantage. competitive advantage will build skills for activities performance that are more than business opponents, or more effective than competitors, in other words, companies build competitive advantage when harnessing power for some activities more than their performance (kaplan & norton, 1996). the high-capacity increase of source code that results in low cost and increased value to customers is the advantage of position control. according to barney (1991b), there are three main sources of the company, namely: (1) source of physical capital (technology, building, equipment, location, and access to material), (2) human resources (training, experience, assessment, relationships, and individual tasks), capital resources (3) organization (structure, formal and informal planning, oversight, and coordination system, which is a group relationship with the company and the relationship between the company and the environment). aaker (1991) developed a theory of sustainable competitive advantage based on resources, so it complementing porter's (1980) theory of sustainable competitive advantage based on company's product market position. this approach assumes that the market portfolio of the market position taken by the company is reflected in the source portfolio power controlled by the company. contribute in the development of resource-based theories provided by wernerfelt. profile resources are the competition among companies that can encourage companies to gain competitive advantage through the implementation of competitive strategies. the competitive advantage of a company can be made through enhancement of company performance. kaplan & norton (2004) formulated the company's performance measurements derived from a balanced vision and strategy through four perspectives: (1) customers, business processes (2) internal, (3) learning and growth, and (4) finance. the balance in question is the balance in the various internal and external sizes, current size and size of future performance drivers, as well steps of outcome subjective and objective, so the company can use the scorecard as a strategic management system to manage long-term strategies (kaplan & norton, 1992). 2.1.4 the resources based view (rbv) rbv is a source of competitive advantage. in the view of rbv, the existence of corporate resources is a source of competitive advantage, because the present of company will build competence. in contrast, in a market-based view, market-oriented strategy will put the company in a superior competitive position. through a market-driven approach, companies can engage in effective market-oriented strategies. emphasis on one component in company’s resources becomes unrealistic and risky for the company's long-term viability. pursuing the fulfillment of consumer needs and wants, and reacting to competition is impossible to do if it is not supported by adequate resources. collis & mongomery (1998) promoted the need for attention that must be taken into account in formulating a strategy. the first is the external position. the company must be able to recognize the competitor in the industry through the strengths, weaknesses, opportunities, or threats, so that strategies can be formulated and implemented to build a competitive advantage in making profit. in the meantime, this is an internal alignment. strategy will clarify the position of t he product market, so the company must respond and coordinate in all management functions, ranging from r & d to marketing. the strategy is the energy in the growth of competing company's ability to be formulated from creative responses of internal and external changes. the company will gain a higher position in the market more quickly and appropriately in response to the dynamic changing needs of consumers and desire as well as its competitor movement, and make reconstruction of the market structure. 3. research method this research can be classified as qualitative research. this work is a literature study that can be applied to a business organization by applying an internal resource component which is the resources based view (rbv). the internal source being examined is tangible and intangible. the study does not use the sample because it is only a literature study. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 66 4. research result and analysis 4.1 potential impact the companies tend to have the advantage of rare inputs, raw materials that cannot be reproduced or limited in number, and need to apply production factors that require large capital requirements with complex characteristics, demanding highly competitive strategy accuracy. the development of competitive strategies, it can be explained how companies can use potential strategies (empowerment) to build strong resources for competitive advantage. twomey& drew (2000) suggested that strategies based on internal resources as unique and non-duplicable sources can produce competitive advantage. when companies understand how to use resources to apply competitive strategies that can be a source of competitive advantage, the application will be in line with the competitive strategy chosen by the company (barney & arikan, 2000). greer (2003) explains that human resources as one of the company's resources can generate contribution in creating strategy. michael porter also found that human resource management is key in creating competitive strategies. in some organizational development, human resources are the source of a competitive strategy (porter in greer, 2003). large-scale business enterprises tend to have stronger internal resources rather than company’s small scale business. they also have strong competitive advantages, tendency of choice and implementation of low cost competitive strategies. conversely, small-scale enterprises (small and medium scale), with limited internal resources, tend to choose and apply strategies to compete with strategies focus. for small-to medium scale companies, the choice of strategy is the focus of a more objective choice, because in order to compete with the cost of leadership strategy in the broader market, companies require mastery of economic requirements of scale and wide distribution of networks that are naturally difficult to meet because various internal resource constraints. the main objective of a competitive strategy is to gain a competitive advantage. a competitive advantage can be gained only if the firm can determine precisely the position itself in the context of industry competition. the most fundamental aspect of the selfdefining position is the assessment of the strengths and weaknesses of internal resources as they become critical of the core of competencies that differentiate companies and others. based on their owned core competencies, company can determine what strategies that should be used to compete in the market. this logic underlies the proposition that the stronger the internal source, the proper implementation of the company's competitive strategy. selection and implementation of competitive strategies, which include leadership cost, differentiation, focus or integration differentiation, is the company's position should be selected to obtain sustainable competitive advantage. in other words, to produce competitive advantage, not only the superior performance that should be improved, but also low cost competitive strategy should always be chosen in entering differentiation strategy as a differentiator of other companies, so companies tend to choose and implement competitive cost-competitive integration strategy. employees who built the professionalism of internal resources through the empowerment of skills, talents, and placement according to competence to increase productivity, discipline and employee satisfaction which is responsive and proactive to change market and company expectations, so hr professional investment is capable to run an efficiently and effectively internal business processes to generate value for customers that impact on cash inflows for companies. this is according to smith’s line (2007) there are at least three learning objectives and the growth of human resources, the development of qualified employees, upgrading systems, and improving internal communication. the development of employee quality has an impact on running supply chain capabilities that can produce efficient products for new market penetration and ultimately able to generate maximum profits. system improvements will increase service, so the company's reputation will be good customer’s mind and will reduce costs. improving internal communication will bring positive impact in the ease of product acceleration, so as to build a good relationship with customers. small and medium-sized businesses tend to be more effective if they choose competitive – focus strategy, which serving markets with sizes based on raw material processing capacity, jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 67 production processes, packaging, and distribution, as well as a focus on a particular community that has been cultivated. micro/small scale enterprises tend to be managed by one person with different preferences and limitations as well as the implementation of competitive strategies according to business scale and product pricing in the market. phenomenon in the field shows that products come from small and medium-sized enterprises, which brand has not been widely recognized, sold at a cheaper price than large-scale companies that have well-known brands of powerful and large companies that generally produced on a large scale efficiently. this fact illustrates that price used by small and medium scale companies serves as basis of competition wit h other stronger large-scale corporate brands. this phenomenon shows that small and medium-sized companies can sell their products at lower prices than large enterprise products, at least for two factors, namely (1) lower marketing costs and (2) setting lower profit margins. when company is able to apply the right competitive strategy, company is expected to gain a competitive advantage for itself to produce superior performance compared to its competitors. purwohandoko (2010) in his research, taking measurement of company’s performance with balanced scorecard approach, including customer perspective, financial perspective, internal process perspectives, learning and growth perspectives. proposition is formulated to make a stronger competitive advantage gained from the selection and implementation of corporate competitive strategy, better performance. dollinger (1999) stated that the company is a collection of heterogeneous sources or production factors, which can result in different financial performance. the importance of strategies to produce sustainable competitive advantage can be realized if the formulation and execution of strategies based on the strength of internal resources, therefore the strength of the company's internal resources will result in the performance of the company. barney (1991a) suggested that the company's competitive advantage lies in the 'privilege and the availability of resources which is difficult to replicate by other companies. when company is able to apply the right competitive strategy, company is expected to gain a competitive advantage for itself to produce superior performance compared to its competitors. purwohandoko (2010) is taking measurement of company’s performance with balanced scorecard, including customer perspective, financial perspective, internal process perspectives, learning and growth perspectives. proposition is formulated to make a stronger competitive advantage gained from the selection and implementation of corporate competitive strategy, better performance. the company is a collection of heterogeneous sources or production factors, which can result in different financial performance. the importance of strategies to produce sustainable competitive advantage can be realized if the formulation and execution of strategies based on the strength of internal resources, therefore the strength of the company's internal resources will result in the performance of the company. barney (1991a) and fahy & alan (1999) suggested that the company's competitive advantage lies in the 'privilege and availability of resources which is difficult to replicate by other companies so that one company has the same strategy in formulating and implementing a strategy based on resources from each company. besides, each company cannot operate the same resources as if the resources were limited. they have different priorities in allocating and assessing the importance of corporate performance. purwohandoko, (2010) in the study, explained that in east java, the selection and implementation of internal competitive strategies of the most dominant resource is the low cost dimension. this suggests that in general, the reputation of enterprise resources tends to be a source of corporate competitive advantage through the selection and implementation of low cost strategies. the meaning of the highest choice for low-cost strategy with internal resource variables reflects : resource (1) internally oriented exploitation gains competitive advantage from cost aspect, and (2) strategic focus tends to be applied by small-scale business scale, price competition based on the trade industry. internal resources in the form of a portfolio of physical resources, reputation, brand strength, technology, human resources, finance, and corporate organization are meaningless if they are not used as a basis for the implementation of competitive strategies. the competitive strategies that implemented by the company depend on the internal resources of that portfolio. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 68 4.2 managerial impact internal resources in the form of a portfolio of physical resources, reputation, brand strength, technology, human resources, finance, and corporate organizations are meaningless if they are not used as a basis for the implementation of competitive strategies. therefore, accuracy of competitive strategy choices and implemented by companies depends on the internal resources of the portfolio. small and medium-sized enterprises tend to use a focus strategy, the extent of their market is built from a particular society, so there is not much additional cost other than production and packaging costs arising from the limited number of realized based on internal resources. meanwhile, largescale companies tend to use cost leadership strategies because they tend to have better internal resource strength than smaller scales. however, as a result, in addition to production and packaging costs, there are many additional expenses for distribution and promotion to lucrative markets and distribution channels, to deliver products to end users. the right competitive strategy is the key to the success of the company. performance from the perspective of human resources is also important. companies often try to engages their employees by doing training, education, or other forms of empowerment to improve their competencies which is able to generate productivity, thereby customer satisfaction will increases. while at the same time the employee turn-over rate will decreases. human resources is a unique resource. thus, companies need to build a collective awareness of all human resources to achieve the vision, mission, and goals of all units/departments with the transformation of internal resources. therefore, to produce products based on the company's strategy, measuring the company's resources before setting the chosen strategy is critical to increasing competitive advantage. by measuring the capability of these resources, the company can optimize its core competencies. 5. research conclusion and limitation this research concluded that to produce the better competitive advantage should maintain the professionalism of their internal resources by empower the employee skills, talents, uses competence placement strategies, and the others. therefore, after the internal resources become satisfied with their current condition, they tend to get more customer values that impact on cash inflows for companies. this research also indicated that small and medium-sized enterprises tend to use a focus strategy as their competitive strategy, while, the large-scaled enterprises tend to use cost leadership strategies to have better internal resource strength than the others. 5.2. limitation nevertheless, this research has some limitation. this study only uses theory comparison as the research method. therefore, it can suggest, further research should be done in broader scale. references aaker, d. a. (1991). managing brand equity. new york: free press. barney, j. b. (1991a). firm resources and sustained competitive advantage. journal of management, 17(1), 99-120. barney, j. b. (1991b). the resource based view of strategy: origins, implication, and prospects. editor of special theory forum in journal of management, 17, 97-211. barney, j. b., & arikan, a. m. (2000). the resource-based view: origins and implication. journal of management, 124-188. craig, j. c., & grant, r. m. (1999). manajemen strategi: sumberdaya, perencanaan, efisiensi biaya, sasaran,terjemahan. jakarta: elex media komputindo. collis, d. j., & montgomery, c. a. (1998). corporate strategy: a resource-based approach, international editions. the synergy: mcgraw-hill/irwin. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 69 david, f. r. (2003). strategic management concept. ninth edition, new jersey: prentice hall. fahy, j., & alan, s. (1999). strategic marketing and the resource based view of the firm, academy of marketing science review (no. 10). retrieved from http://www.amsreview.org/articles/fahy10 -1999.pdf. greer, c. r. (2003). strategic human resource management, second edition . pearson custom publishing. kaplan, r. s. & norton, d. p. (1992). using the balanced score card-measure that drive performance, harvard business review. jan-feb, 71-79. kaplan, r. s. & norton, d. p. (1996). balanced scorecard. translating strategy into action. new york: harvard business school press. kaplan, r. s. & norton, d. p. (2004). strategy maps: converting intangible assets into tangible outcome. new york : harvard business school publishing corporation. makinen, h. (2000). product design as core competence in a design oriented industry, turku school of economics and business administration. matsuno, k., mentzer, j. t., & remtz, j. (2005). a conceptual and empirical comparison of three market orientation scales. journal of business research 58, 1-8. mitchell, r. c. (2004). strategy formulation. retrieved from http://www.csun.edut-hfmgt001/ formulation.doc porter, m. e. (1980). competitive strategy: techniques for analyzing industry and competitors. new york : the free press. porter, m. e. (1996). what is strategy?. harvard business review, november-december, 61-78. priem, r. l. & butler, j. e. (2001a). is the resource-based theory a useful perspective for strategic management research?. academy of management review, 26(1), 2240. priem, r. l., & butler, j. e. (2001b). tautology in the resource-based view and implications of externally determined resource value: further comments, academy of management review. 26(1), 57¬66. purwohandoko. (2010). integrasi sumberdaya internal dan orientasi pasar sebagai basis strategi bersaing pada perusahaan air minum dalam kemasan (amdk) di jawa timur. tesis. universitas brawijaya malang. smith, r. f. (2007). business process management and the balance scorecard, using processes as strategic drivers. new york: john wiley and sons, inc. twomey, d. f., & drew, l. h. (2000). from strategy to corporate outcome: aligning human resources management system with entrepreneurial intent . international journal of commerce and management, 10, 43-55. *) purwohandoko, state university of surabaya, surabaya, indonesia (e-mail: warogpurwo2008@yahoo.com) http://www.amsreview.org/articles/fahy10-1999.pdf jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 70 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 1 the role of employee motivation on the relationship between hrm practices and service quality in healthcare organization totok sasongko *) abstract the human resources management in the healthcare institution is essential to enable the delivery of efficient and effective medical services. this study conducted to investigate how hrm practices can enhance service quality and proposes an integrated framework in which perceived hrm practices are related to employee commitment, which in turn related to perceived service quality performance. five hrm practices was selected. a questionnaire was constructed. the quantitative methodology was applied to collect and analyze data. data was collected from 270 employees (including nurse and doctor) and bottom manager in dr. radjiman wediodiningrat in indonesia. the result shows that the selected hrm practices all significantly and meaningfully can predicted the employee motivation, in which feedback and recogniton was the most effective practices. the result also shows that employee motivation is an effective predictor of service quality performance. lastly, employee motivation has a role as mediator effect toward the relationship between hrm practice and service quality. this research suggests that hrm departement need to chooses human resources management practices properly that can increase employe motivation and their service quality performances. keywords: hrm practices, motivation, service quality, healthcare organization 1. introduction 1.1 research background human resources management (hrm) plays a vital role in the success of the health sector. it is essential to enable the delivery of efficient and effective medical services, to achieve patient satisfaction (mchugh, johnston, & mcclelland, 2007; elarabi & johari, 2014). empirical studies show that there is a relationship between hrm practices and aspects of service delivery to patients (clark, 1999; weech-maldonado, dreachslin, dansky, de souza, & gatto, 2002). therefore, it can suggest that to service sector, especially healthcare industry, the hrm practices are related to service quality. scholars have repeatedly called for better understanding of the relationship between hrm and aspects of service quality. those study has found that hrm practices are directly related to service quality performance (schneider & bowen, 1993; peccei & rosenthal, 2001; humphrey, ehrich, kelly, sandall, redfern, morgan, & guest, 2003), and others found that these relationships are mediated by employee behaviors, intention, and attitudes (delaney & huselid, 1996), such as trust (tzafrir & gur, 2007), commitment (dzansi & dzansi, 2010), satisfaction (ott & van dijk, 2005), and this study motivation. one of the biggest challenges for organizations, in particular for hr function is creating and maintaining a motivated employee workforce to increasing their performance at work. although the existing literature assert the importance of hrm practice to develop motivation, and further to develop high performance in productivity and quality level of customer services (amstrong 2008), empirical research which focuses on the incorporating hrm activites especially in healthcare institutions in order to improve employee motivation is rare. there is no agreement on which practice qualifies as an aspect of hrm (boselie, dietz, & boon, 2005). it is reasonable then to investigate and explore which one best of hrm practices in contibutes to increase employee motivation which in turn further influences their intention to provide best service to the patiens. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 2 1.2 research problem based on the above reasoning, researcher need to investigate whether certain hrm practices contribute to employee motivation and then to service quality performance. 1.3 research purpose the first objective of this study is to advance the understanding of the link between perception of hrm practices and perceived service quality by examining mediating role of employee motivation. this study motivated by the fact that despite the importance of hrm practices to improving service quality performance, few study have investigated the mediating role of employee motivation to the relationship between hrm practices and services quality, especially in indonesian context. the second objective is to answer question which hrm activities are most effective for increasing employee motivation. examining these activities in the healthcare sector in indonesia (in psychiatry hospital dr. radjiman wediodiningrat) is importance because it is under pressure to operate more efficiently and effectively. the way they implement their hrm practices may be as important determinant of employee attitudes (edgar & geare, 2005). the third objective is to examine does the increasing employee motivation will increase service quality performance. the results will enable managers to decide hrm activities in their hrm plans and how to deliver them most effectively. 2. theoretical framework and hyphoteses development 2.1 theoretical framework 2.1.1 human resources management practices in healthcare organization human resources management is defined as a strategic and coherent approach to the management of an organization most valued asset – the people working there (amstrong, 2008). human resources are the key for keeping the organization in the market so competitive. these human resources need to be managed effectively to achieve the required performance of the organization (cania, 2014). as a concept of managing people, hrm has many practices and activities should handles by departement of human resources. researchers have over the years proposed varied lists of hrm practices, and there is no agreement on which practice qualifies as an aspect of hrm (boselie, dietz, & boon, 2005). guest (1997) suggests seven practices, namely, selection, training, appraisal, rewards, job design, involvement and status and security. dessler (2016), suggest many activity practices in hr department, such as, analysis and design at work, recruitment and selection, training and development, performance management, compensation and benefits, employee relations, personnel policies, compliance with laws and support for the strategy. in their studies, tabiu & nura (2013) using six practices, namely, recruitment/selection, training/development, employee involvement, reward/remuneration, maintenance, and separation. in healthcare organization, management might seek to implement progressive hrm practices that encourage service oriented behavior and show concern for employees’ organizational and personal needs. tzafrir & gur (2007) suggest five dimensional practices of hrm in health care organization, namely: leadership and supervision; training; compensation; promotion and career development; and feedback and recognition. ott & van dijk (2005) recommend seven hrm activities for fulfill job satisfaction and client satisfaction, in hospital area: a personal development plan, additional job-related training during the past two years, job performance review during the past two years past two years, regular departmental meetings (at least monthly), a protocol in case of a labor-shortage. predictable work schedules, and a leadership style of the manager which is transparent and supportive. agarwal, garg, & pareek (2011) suggest several competencies needed for hrm in health services, including: rational recruitment procedures to meet the organizational goals, timeliness of the reward systems, transparent transfer policy, and effective support systems. all of that study study concluded that the management of human resources is of crucial importance in enabling the delivery of efficient and effective services. this study was choosing the hrm practices proposed by tzafrir & gur (2007). jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 3 besides these practices are consistent with the universalistic view (e.g. pfeffer, 1994), it is also valuable to enhancing employee motivation (tzafrir, 2006). 2.1.2 human resources management practices in healthcare organization hrm practices and employee motivation one of the biggest challenges for organizations, in particular for hr function is creating and maintaining a motivated employee workforce to increasing their performance at work. motivation is the inner drive that pushes individuals to act or perform. many scholars agree that motivation is the psychological process that causes the arousal, direction, intensity and persistence of behavior (locke & latham, 2004; pinder, 1998). as a process that arouses, energizes, directs, and sustains behavior and performance (luthans, 1998), motivation proposes varying set of factors influencing of it (harder, 2008). it is including a set of internal and external forces that initiate work-related behavior, and then determine its form, direction, intensity and duration (pinder, 1998), and directed behavior (nelson & quick, 2003), then determine the level of employee job performance. dessler (2016) proposes theory that human resource management will contribute to basic measures of an organization’s performance, such as quality, profitability, and customer satisfaction. decisions of hrm practice such as whom to hire, what to pay, what training to offer, and how to evaluate employee performance directly affect employees’ motivation and ability to provide goods and services that customers value. also amstorng’s (2008) proposes the theory that hrm practice will develop employee motivation, commitment and job engagement. thus, the first hypothesis is as follows: h1 a selected hrm practices (leadership, supervision, training, compensation, promotion, career development, feedback and recognition) will be related to employee motivation. 2.1.3 employee motivation and service quality in healthcare organization, employees as the most valued assets (amstrong, 2008), having level of service performance. this performance, fundamentally depend on many behavioral factors like employee motivation, satisfaction, commitment, trust and others, but the area of this study is focused only on employee motivation as this factor highly influence the performance of employees. this factor was chosen for two reasons. first, the strong and well-motivated medical profession is critical to the success of the healthcare reform, in the delivery of services to patients (mchugh, johnston, & mcclelland, 2007), and second, it is one of the best policies of managers to increase effectual job management amongst employees in organizations. getting highly motivated employees to do their best work even in strenuous circumstances, is one of the great challenges for services organization, including in the healthcare sector. thus, the second hypothesis is as follows: h2 employee motivation is positively related to perceived service quality. 2.1.4 alternative model as an addition, this research proposes that the relationship between hrm practices and service quality is partially mediated by employee motivation, which suggests a direct link between hrm practices and service quality. thus, the third hypothesis are: h3 the relationship between hrm practices and service quality is partially mediated by employee motivation 3. research method 3.1 research design this research can be classify as quantitave research with (survey) questionnaire as the research tools. a survey questionnaire comprising of demographic information and measures of the perception of hrm practices, motivation and services quality was used to elicit data from the present study. the data were analyzed using the statistical package for social sciences (spss) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 4 program. the descriptive statistics of respondents’ demographic profiles were tabulated. for testing the hypothesis, multiple regression analysis was carried out. steps for mediation of barron and kenny (1986) were employed, to test the hypothesized of mediating role of employee motivation. first, the independent variable (hrm practices) must be related to the mediator (employee motivation). second, the mediator must be related to the dependent variable (service quality). third, the independent variable must be related to the dependent variable. fourth, the independent variable must have no effect on the dependent variable for full mediation, or should become significantly smaller for partial mediation. 3.2 population and sample the research concentrated on the psychiatry hospital dr. radjiman wediodiningrat, indonesia. there were nine sub department, which employ about 836 employees and managers to provide services to patients. in order to adjust the proper respondent, sample selected were those who has been working for at least a year, and those who on the bottom level that serve patients directly (bottom manager, supervisor and nurse). to collect data, a random sampling technique was employed. it was a sampling method in which all members of a population group have an equal and independent chance of being selected. the researcher gives a letter of permission to the general manager of each sub department and ask for help to distribute a questionnaire to each service employee who work in sub department. the researcher was attached a cover letter to each survey that stressing the aspects of confidentiality and anonymity. every week in a month, the researcher, distributed reminders to general manager by telephone calls in order to improve the response rate. by the end of the process, from 500 questionnaires, 270 questionnaires (more than 50%) is processed to the next analysis. 3.3 research variables perception of hrm practices. the perceptions of human resource management practices were measured based on five dimension tzafrir & gur (2007) of hrm practices. items then collected from the extant literature and finally 15 items were generated. leadership and supervision, which encompass three items based on ott & van dijk (2005) related the way managers threat staff (e.g., “a leadership style of the manager which is transparent and supportive”). training which incorporates three items based on ott & van dijk (2005) related to the training that received by staff (e.g., “organization provides additional job-related training”). compensation, which integrate one item from tzafrir & gur (2007) related paid compensation system (i.e., “system by which organization has paid, motivate people to work especially hard”) and two items from agarwal, garg, & pareek (2011) related support system effectiveness of labour-shortage (e.g., the organization provides a protocol in case of a labour-shortage). promotion and career development which include one item from agarwal, garg, & pareek (2011) (i.e., “the organization provide timeliness of the reward systems”) and two items based on ott & van dijk (2005) related (e.g. “the organization provide performance review”) related to organizational preference to have reward system and performance review; and feedback and recognition, which integrate three items based on tzafrir & gur (2007) related to feedback and recognition from the organization and managers about the attention staff give to customer (e.g. “my manager recognise the attention i give to customer”). items were answered on a 5-point likert scale, with the score ranges from strongly disagree (1) to strongly agree (5). employee motivation. mawoli & babandako (2011) motivation determinant scale was adopted in this work. it was consisted of six items: “my achievement on the current job is satisfactory”; “i am given due recognition at work”; “the work itself is interesting and challenging”; “i am given due responsibilities at work to execute”; “my advancement (i.e. promotion) on the current job is satisfactory”; and “personal growth (i.e. skills acquired through training and development) on the current job is satisfactory.” respondent was requested to indicate their level agreement of the items on five-point agree-disagree scale. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 5 perceived service quality. a 22 item of servqual instrument for assessing perceived service quality was used in this study, but excludes any consideration of expectations. as suggested by by cronin & taylor (1994), the excludes is based on the premise that it is difficult to conceptualize expectations, so that expectations can be disregarded in service quality assessment. bowen (1990) suggests that measuring employee perception is an acceptable way for dealing with healthcare organizations that provide high contact, customized personal services. in the healthcare industries, the interaction between patients and healthcare service providers (employees) is an integral part of the service quality process (conway & willcocks 1997; benbassat & taragin 1998). employees, view as putting a strong emphasis on meeting customer needs and delivering excellence in service (pugh, dietz, wiley, & brooks, 2002). by existence, finding that there is a positive correlation between employees’ and customers’ perceptions of service quality (schneider & bowen 1993; johnson 1996), it is acceptable for measuring employee perception. items were answered on a five-point likert scale, with the score ranges from strongly disagree (1) to strongly agree (5). 3.4 research framework based on the explanation described above, it can be described the research model in the chart as follows: picture 1 research framework 4. research result and analysis 4.1 descriptive analysis there are three respondent characteristics in this study; gender, age, and education levels. the sample size is made up of a majority of females (n=155, 57.4%) over males (n=115, 42.6%). the main age level range is 31 to 40 years old (n=69, 25.6%), and the majority of respondents have a bachelor’s degree (n=167, 61.9%). 4.2 validity and reliability table 1 contains the results of factor analysis of 15 hrm practice items. the exploratory factor analysis was based on eigenvalue exceed 1 and factor loading exceed 0.5, with the test value of kaiser-meyer-olkin (kmo) 0.935 and p < 0.001, it suggests the use of factor analysis. in the end, 15 items of hrm practices were identified that had a factor loading exceed 0.5, and the five factors of hrm practices (leadership & supervision, training, compensation, promotion & career development, feedback & recognition) with eigenvalues bigger than 1 were extracted. the variance explained for hrm practices was 63.138%. hrm practices: 1. leadership and supervision; 2. training; 3. compensation; 4. promotion and career development; 5. feedback and recognition employee motivation service quality h1 h3* *additional path as a partial mediation model h2 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 6 table 1. result of exploratory factor analysis of hrm practices variables leadership & supervision training compensation promotion & career development feedback & recognition ls1 0.726 ls2 0.767 ls3 0.723 t1 0.831 t2 0.792 t3 0.821 c1 0.798 c2 0.753 c3 0.764 pc1 0.803 pc2 0.821 pc3 0.722 fr1 0.700 fr2 0.752 fr3 0.744 eigenvalue 2.235 4.038 3.053 2.543 3.855 variance explained (%) 8.979 19.896 10.655 8.733 15.875 note: cummulative variance explained 63.138% table 2 shows the means, standard deviations and reliability analysis, and also correlation among variables. the reliability of the measures was assessed using the inter-item consistency measure of cronbach’s alpha. the alpha scale for all the independent variables and dependent variable ranged from 0.784 to 0.922 and extended the minimum acceptable value of 0.7 (nunnally 1978). this reliable test is confirmed if the all items accepted. table 2. means, standard deviations, reliability, and correlations m sd α 1 2 3 4 5 6 7 leadership 3.024 0.737 0.843 1 training 3.170 0.707 0.794 0.591** 1 compensation 3.209 0.722 0.814 0.561** 0.501** 1 promotion 3.215 0.724 0.811 0.549** 0.542** 0.650** 1 feedback 3.550 0.662 0.832 0.348** 0.395** 0.353** 0.425** 1 motivation 3.368 0.651 0.784 0.455** 0.419** 0.411** 0.466** 0.558** 1 sq 3.208 0.387 0.922 0.478** 0.414** 0.520** 0.546** 0.324** 0.538** 1 ** p ≤ 0.01 (two tailed) 4.3 research analysis this regression test was conducted to test the hypothesis, by running three steps of analysis separately. first, analysis included all of hypothesized antecedent. second, analysis included the hypothesized consequence. third, verified the mediate relationship of ‘employee motivation’ between ‘hrm practices’ and ‘service quality’. table 3 summarizes this research findings. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 7 table 3. multiple regression analysis motivation service quality b t sig b t sig step 1 (h1) leadership 0.053** 2.782 0.006 0.029* 2.523 0.012 training 0.037** 2.891 0.003 0.027* 2.613 0.025 compensation 0.037** 2.876 0.003 0.037** 3.035 0.003 promotion 0.039* 1.988 0.050 0.048*** 3.857 0.000 feeback 0.131*** 7.416 0.000 0.022*** 2.112 0.027 f 36.893*** 31.354*** r2 0.411 0.373 step 2 (h2) motivation 0.319*** 10.447 0.000 f 109.146*** r2 0.289 step 3 (h3) leadership 0.019 1.679 0.094 training 0.004 0.339 0.735 compensation 0.034** 2.899 0.004 promotion 0.041** 3.391 0.001 feeback 0.014 1.264 0.207 motivation 0.200 5.619 0.000 f 34.415*** r2 0.440 *p ≤ 0.05, **p ≤ 0.01, ***p ≤ 0.001 each hypothesis was tested by examining coefficient significance. referring to table 3, the result shows all steps were in significant result. step one confirm that all five measures of hrm practice: ‘leadership & supervision’ (b = 0.053, p ≤ 0.01), ‘training’ (b = 0.037, p ≤ 0.01), ‘compensation’ (b = 0.037, p ≤ 0.01), ‘promotion & career development’ (b = 0.039, p ≤ 0.05), ‘feedback & recognition’ (b = 0.131, p ≤ 0.001), significantly and positively influenced ‘employee motivation’, thus supporting first hypothesis (h1). this finding, then give full empirical support to the relationship between ‘hrm practices’ and ‘employee motivation’. step two confirm the second hypothesis (h2) that ‘employee motivation’ significantly and positively influence ‘service quality’ (b = 0.319, p ≤ 0.001). thus, the second hypothesis (h2) was also supported. to prove the third hypothesis (h3) mediating role of employee motivation, condition for mediation of barron and kenny (1986) was employed. first, the independent variable (hrm practices) must be related to the mediator (employee motivation). second, the mediator must be related to the dependent variable (service quality). third, the independent variable must be associated with the dependent variable. fourth, the independent variable must have no consequence on the dependent variable for full mediation, or should become significantly smaller for partial mediation. the first and second conditions, both were already supported by h1 and h2. for the third condition, as seen in step 1 on table 3, the results showed that hrm practices (‘leadership & supervision’ (b = 0.029, p ≤ 0.01), ‘training’ (b = 0.027, p ≤ 0.05), ‘compensation’ (b = 0.037, p ≤ 0.01), ‘promotion & career development’ (b = 0.048, p ≤ 0.001), ‘feedback & recognition’ (b = 0.022, p ≤ 0.001)) positively jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 8 and significantly influence ‘service quality’. to analyze the final condition, when ‘employee motivation’ was added to the equation, as seen in step 3 on the table 3, the results showed that ‘leadership & supervision’ (b = 0.019, p > 0.05), ‘training’ (b = 0.027, p > 0.05), and ‘feedback & recognition’ (b = 0.022, p > 0.05), were no longer significant, while compensation (b = 0.034, p ≤ 0.01), and promotion & career development (b = 0.041, p ≤ 0.01) were still significant but its strength become smaller, thus the relationship between ‘hrm practices’ and ‘service quality’ was mediated by ‘employee motivation’. ‘compensation’, and ‘promotion & career development’ influence ‘service quality’ directly and indirectly through ‘employee motivation’ (partial mediation), though ‘leadership & supervision’, ‘training’, and ‘feedback & recognition’ only indirectly through ‘employee motivation’ (full mediation). 5. research conclusion and limitation 5.1. conclusion this research focused on examining the mediation effect of employee motivation on the relationship between employees’ perceptions of hrm practices and perceived service quality. coherent with our prediction, the result of the study demonstrated that employee motivation mediated the relationship between perception of hrm practices and perceived service quality. this finding then has made several implications to enrich the body of knowledge. first, this study found that all selected hrm practices (leadership & supervision, training, compensation, promotion & career development, feedback & recognition) had a substantial influence on employee motivation, where feedback & recognition were the most significant factors influencing employee motivation, followed by training, compensation, leadership & supervision. the weakest effect was promotion & career development. these empirical results indicated that the higher the employees’ perception of hrm efforts, the higher employee motivation will be. it is also suggested the importance role of various hrm practices in building employee motivation. empirical results showed that different hrm practices have different impact on employee motivation. second, this study also found that the positive perception of hrm practices were more potential to increase employee motivation, where in turn influence employee’s perception of service quality performance. the way management performs will contribute to increase or decrease their employee motivation, that will lead on employing service quality performance. third, this study could enrich the body of knowledge regarding antecedent and consequence of employee motivation in health care organization by providing empirical support for the mediating function of employee motivation in the relationship between hrm practices and service quality. it was built an integrated framework on the relationship between hrm practices, employee motivation and service quality. this work also contributes implication for human resource managers of healthcare organizations. it is very significant to identify hrm practices that foster employee motivation. as we found that employee motivation play prominent role as predictor of service quality performance, it is important to select hrm practice that increases employee motivation. 5.2. limitation nevertheless, this research has some limitation. first, motivation is invisible and internal construct (pinder, 1998). it’s difficult actually to see and measure it directly. this study expect that work motivation manifest itself in attitude (i.e satisfaction) as in equity theory, whereas for other theories (e.g. goal-setting) motivation manifest in behavior (e.g. enhanced performance when ability is constant). therefore, it can suggest for further research trying to measure motivation in behavioral point of persuasion (e.g. experimental research). second, the respondents in the survey are limited to the psychiatric healthcare organization. total healthcare in indonesia is 2.460 (http://sirs.buk.depkes.go.id/), the sample might be excessively small and too specific to be representative of the total healthcare, although the sample reasonably represents the characteristics of the population. however, we recommended for future surveys, to consider increasing the number of respondents from other healthcare to increase their representation. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 9 references agarwal, a., garg, s., & pareek, u. 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(2013). assessing the effects of human resource management (hrm) practices on employee job performance: a study of usmanu danfodiyo university sokoto. journal of business studies quarterly, 5(2). tzafrir, s. s. (2006). a universalistic perspective for explaining the relationship between hrm practices and firm performance at different points in time. journal of managerial psychology, 21(2), 109-130. tzafrir, s. s., & gur, a. b. (2007). hrm practices and perceived service quality: the role of trust as a mediator. research and practice in human resource management, 15(2), 1-20. weech-maldonado, r., dreachslin, j. l., dansky, k. h., de souza, g., & gatto, m. (2002). racial/ethnic diversity management and cultural competency: the case of pennsylvania hospitals. journal of healthcare management, 47, 111-126. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema 11 *) totok sasongko, department of management, university of tribhuwana tunggadewi, malang, indonesia (e-mail: totok95sasongko@yahoo.co.id) jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 21-35 http://dx.doi.org/ 10.31106/jema.v18i1.9235, issn (online) 2597-4017 21 how does the impact of the covid-19 pandemic on indonesia's islamic stock returns? isnaini nuzula agustin1* 1 department of management, faculty of economics, universitas internasional batam, batam, indonesia *corresponding author(s) email: isnaini.nuzula@uib.ac.id abstract the unprecedented covid-19 pandemic has ripped down the worldwide economies since the beginning of 2020. the stock market was one of the economic sectors that experienced depression and crashed during the pandemic. in this study, we mount an investigation on how indonesia's large-scale social restrictions (known as "psbb"), the announcement of the daily growth in total confirmed and death cases by covid-19 affect the dynamic of islamic stock returns in the jakarta islamic index. this study used panel regression to test the effect between variables with market-to-book ratio and market capitalization ruled as a control variable. this study concluded that the announcement of daily growth in total confirmed cases by covid-19 and the implementation of psbb has a negative effect on the deterioration of the islamic stock market's stability. therefore, the higher growth of the total confirmed cases by covid-19 and the tightening of the psbb that was announced and implemented by the government would impact on the volatility of market and shareholders returns negatively. interestingly, this study also found that there was a positive and significant relationship between the daily growth of death cases and stock return. furthermore, the sectors of consumer goods, mining, and trading counted as the most performed market during the pandemic crisis. keywords: covid-19; stock return; government; market-to-book ratio; market capitalization jel code: g01, g12, g15, g18, h51, i18, q54 doi: 10.31106/jema.v18i1.9235 article history: received 2020-12-12 reviewed 2021-01-02 revised 2021-02-02 accepted 2021-03-10 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ how does the impact of the covid-19 pandemic on indonesia’s islamic stock returns? by isnaini nuzula agustin 22 introduction the novel coronavirus (known as covid-19) case discovered for the first time in wuhan, china in december 2019 has quickly spread around the world. the covid-19 outbreak, then, has been labeled as a pandemic by world health organization (who) in early january 2020. chien et al. (2021) added that who has already counted 32,429,965 confirmed cases and 985,823 deaths by covid-19 in september 2020. however, the current covid-19 pandemic is not the first pandemic in history. since the 20th century, several pandemics have stricken several parts of the world, including h1n1 flu, sars, ebola, and so on. not only limited to healthiness issues, but the impact of these pandemics also caused several negative consequences for the economy and environment at the domestic, regional, and global levels. lalwani & meshram (2020) added that the panic situations related to covid-19 also have led to increased inefficiency in stock markets. he et al. (2020) stated that emergency events influenced the dynamical of investor psychology and behavior (as the inefficiently and inconsistency of public information related government policies during the crisis) which in turn affects stock price movements. for example, jiang et al. (2020) throughout their study found that the growth of daily cases of the h7n9 virus had a negative and significant effect on stock performance in china. thus, the ebola virus pandemic that occurred in 2014-2016 and started in africa had a significant effect on the dynamic stock price movements in the united states (ichev & marinč, 2018). akhtaruzzaman et al. (2020) also added that dynamic conditional correlations (dccs) between chinese and g7 financial and nonfinancial stock returns increased significantly during the covid–19 period. moreover, 14 sectors indexed by nifty50 in india drastically experienced negative stock returns after the who announcement. this decline turned into a positive return after the indian government announced the implementation of a lockdown (thomas et al. 2020). in the case of indonesia, the first covid-19 case was discovered on march 2, 2020. wijaya & andriani (2020) stated that the indonesian government has chosen not to use lockdown or quarantine strategy to tackle the spread of the covid-19 virus, as the impact of lockdown would have a serious effect on small communities in the informal sector who depend on daily income. alternatively, to respond to the state of emergency of public health issue, the government is imposing large-scale social restrictions which also known as pembatasan sosial berskala besar or "psbb". numerous studies have been conducted in various contexts to investigate the impact of covid-19 on the indonesian capital market. while a previous study from amanda (2021) found that the financial risks during the subjema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 21-35 http://dx.doi.org/ 10.31106/jema.v18i1.9235, issn (online) 2597-4017 23 prime mortgage crisis is slightly higher compared to the covid-19 pandemic as the rising of stock index volatility, exchange rate, and interest rate at that time, nugroho & robiyanto (2021) reported that gold return volatility affects jakarta composite index (jci) volatility positively and usd/idr volatility impact jci volatility negatively during the covid-19 pandemic. furthermore, devi et al. (2020), dilla et al. (2020), and liu et al. (2020) proved that the covid-19 pandemic caused abnormal market returns. the abnormal return occurred in the basic industry and chemical sector. they also added that based on the cumulative value of abnormal returns, the most optimistic sector during the covid-19 pandemic period is the consumer goods and mining industry sectors. this study aims to investigate the effect of covid-19 on the deterioration of the stock market's stability. islamic stock market chooses as an object of the study as there were limited studies that discuss covid-19 impacts on the islamic stock market performance especially in developing countries like indonesia. following the conclusion of aggarwal et al. (2020) and anh & gan (2020) which stated that there was a significant effect of the stringency of the lockdown period on stock performances, this study also aims to investigate the impact of the implementation of psbb on islamic stock market performances in indonesia. furthermore, by considering the firm-specific characteristics, this study includes market capitalization and daily market to book ratio as control variables to explain the stock market returns. literature review indonesia lockdown (large-scale social restriction) the covid-19 pandemic hurts economies in almost every country in the world, including indonesia. several government policies have been introduced with the public health and economic sector as a main priority to prevent the indonesian economic chain from breaking. the indonesian government has formed the covid-19 task force, an acceleration countermeasures group, to discuss various possible strategies to deal with the covid-19 pandemic. interestingly, the indonesian government has chosen not to use lockdown or quarantine terminologies to tackle the spread of covid-19. alternatively, to respond to the state of emergency in public health, the government is imposing large-scale social restrictions (psbb). while lockdown can be defined as home incarceration or mobility isolation, which required all, including those who were asymptomatic, to spend the next two weeks at home with allowance to do basic activities like buying food or medication, visiting medical facilities, or commuting to work (günther‐bel et al., 2021), a large-scale social restriction is how does the impact of the covid-19 pandemic on indonesia’s islamic stock returns? by isnaini nuzula agustin 24 the restriction the mobility of people and/or goods (only) within a certain area (suraya et al. 2020). the mobility restrictions that regulated by the indonesian government include; 1) the closure of schools and workplaces, except central government offices and businesses and transportation companies that serve essential public needs, 2) prohibitions on mass religious gatherings, 3) activities prohibitions in public places or facilities, 4) prohibitions on socialcultural activities, and 5) transportation restrictions, and 6) restrictions on other activities explicitly related to defense and security, but military and police operations are allowed. mishra, et al, (2020) examined the effect of government policies like lockdown policies, travel bans, and stimulus packages in g7 countries on the stock markets. they found that all those three policies on aggregate affected the dynamic of stock price movements in the g7 countries. aggarwal et al., (2020), huo & qiu (2020), yan et al. (2020), baig, et al. (2020), and eleftheriou & patsoulis (2020) added that the pandemic lockdown proved to have a significant effect on stock price and market return. h1: the implementation of psbb significantly affects stock return. the role of confirmed and death cases by covid-19 the fact that the covid-19 virus caused a big disruption on the global capital market performance was unarguable. baker et al. (2020) stated that the impact of the covid-19 pandemic on the capital market was much greater than the previous infectious disease outbreak. various studies have been conducted to see the impact of the covid-19 spread on the stock market performance around the world. al-awadhi et al. (2020) stated that both the growing number of daily confirmed and fatality cases had a negative and significant impact on stock returns on the hang sheng index and the shanghai stock exchange. albulescu (2020) defined the fatality cases ratio as the proportion of victims who die compared to the number of infected cases by covid-19. moreover, ashraf (2020) added that stock returns in 64 countries from january 22 to april 22, 2020, were more reactive as the exponential growth of the daily number of confirmed cases compared to death cases. günther‐bel et al. (2020) and he et al. (2020) added that during the pandemic the number of stock returns in the information technology, medicine manufacturing, consumer goods, and mining industry sectors performed better than others (dilla et al., 2020; al-awadhi et al., 2020). interestingly, asian countries experienced higher abnormal negative returns than other countries as negative investor sentiment becomes the mediation and main effect on the relationship between the covid-19 pandemic and stock market movements (liu et al., 2020). bissoondoyal-bheenick et al. (2020) argue that as compared to those who have never jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 21-35 http://dx.doi.org/ 10.31106/jema.v18i1.9235, issn (online) 2597-4017 25 experienced a similar pandemic like (sars), investors with previous experience react faster and better to covid-19. this is because the former group of investors is more concerned with similar risks encountered in the past, while the latter group tends to overlook certain risks. finally, bissoondoyal-bheenick et al. (2020), zaremba et al. (2020), al-awadhi et al. (2020) concluded that there were significant differences in stock market responses regarding the number of confirmed and death cases from covid-19. therefore, the proposed hypotheses of this study can be described as follows. h2: the daily growth in a total confirmed case by covid-19 significantly affects stock return. h3: the daily growth in total death cases by covid-19 significantly affects stock return. market to book ratio and market capitalization as control variables market to book value ratio (mtb) is also known as the price to book value. the increase or decrease in the company's mtb contains information that will cause investors to react as indicated by abnormal returns. a high mtb company indicates that the company can perform well in the sense of being able to increase profits, increase stock prices or produce successful products so that this will respond by investors positively (baker et al., 2020). ferri & jones (1979) stated that market capitalization is a scale to classify the company's size. large companies have relatively more remarkable growth than small companies so that the stock return of large companies is greater than those of small-scale companies. therefore, investors tend to choose large-scale companies to achieve optimal returns. following al-awadhi et al. (2020) and anh & gan (2020), this study included market to book ratio and market capitalization as control variables that reflect the firm characteristics. control variables are used in this study to perceive the effect of the independent variable on the dependent in the presence of confounding variables. methods this study can be classified as a quantitative study since it was using numerical data for decision-making. while indonesia islamic capital market was chosen as the object of this study due to the exponential growth both in the transaction volume and capitalization value of the islamic stock market in indonesia. jakarta islamic index (jii) was chosen because it was the first and most eligible islamic stock index in indonesia. the jii constituents only consist of the thirty most liquid islamic stocks listed on the indonesia stock exchange (idx). just like indonesia shariah stock index (issi), the review process of islamic stocks for jii how does the impact of the covid-19 pandemic on indonesia’s islamic stock returns? by isnaini nuzula agustin 26 constituents is conducted twice a year in may and november. thus, idx determines and selects islamic stocks which will be recommended on jii. the liquidity criteria used in selecting the islamic stocks which are constituents of jii are 1) islamic stocks have been listed for the last six months, 2) sixty stocks are selected based on the order of the highest average market capitalization for the past one year, and 3) out of the sixty stocks, thirty stocks are selected based on the highest average daily transaction value in the regular market. since the member of jii is being evaluated twice a year, this study decided to use all companies that were listed on jii during two periods from december 2019 to may 2020 and june 2020 to november 2020. there were approximately twenty-six companies listed on jii which were classified to be processed as data sample in this study. while the daily stock price of companies listed on jii (to evaluate stock return determination) was taken from www.yahoo.finance.com, the financial reports of jii companies were taken from www.idx.go.id. finally, the daily number of confirmed and death cases of covid-19 were taken from www.covid19.go.id as the indonesia government official publication for covid19 update. figure 1. research framework control variables stock return (re) market to book ratio (mtb) natural logarithm of market capitalization (lmcap) the daily growth of confirmed cases (act) the daily growth of death (dth) large scale social restrictions (psbb) following al-awadhi et al. (2020), anh & gan (2020), günther‐bel et al. (2020), and he et al. (2020) model, this study aimed to estimate the performances of stocks during the covid-19 crisis with large-scale social restrictions as dummy variables, while controlling for firm-specific characteristics. furthermore, we did not use classical event study methodologies since the peak of the event is not the start date and lasts for several days as alawadhi et al. (2020) methodology. this study used panel regression to reduce estimation bias, multicollinearity, heterogeneity and identifies time-varying between variables (bell & jones, 2015). the regression model in formula 1 shows the equation used to estimated stock return. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 21-35 http://dx.doi.org/ 10.31106/jema.v18i1.9235, issn (online) 2597-4017 27 rei,t = α0 + β1actt-1 + β2dtht-1 + β3psbbt-1 + βxxi,t-1 + εi,t (1) where is the return of stock j company on day t, based on the formula with is the stock price of i company on day t, and is the stock price of j company on day t-1. while actt-1 and dtht-1 is the daily growth in total confirmed case and the daily growth in total death case by covid-19, psbbt-1 is the implementation day of large-scale social restrictions which is equals to 1 if the day t-1 is psbb period in jakarta, otherwise 0. thus, xi,t-1 is a vector of firm-specific characteristics that includes natural logarithm of daily market capitalization and market to book value ratio of i company and is an error term. result and discussion figure 2. cumulative average daily return figure 3. daily confirmed cases by covid-19 how does the impact of the covid-19 pandemic on indonesia’s islamic stock returns? by isnaini nuzula agustin 28 figure 4. daily death cases by covid-19 figure 2 shows that the cumulative average daily return of jii was decline sharply until almost -35% after the initial case of covid-19 have been founded and announced by the indonesian government at beginning of march 2020. moreover, figures 3 and 4 show that from march 3 to october 3, 2020, there was an exponential growth of covid-19 active and death cases in indonesia as the increasing of tracing and testing activities. the comparison of figures 2, 3, and 4 suggest that cumulative returns are negatively related to both the daily growth of confirmed and death cases by covid-19. that market returns start to crawl up (although it remains volatile) as the daily growth of active and death confirmed cases by covid-19 start to decline. table 1. summary statistics re act dth lmcap mtb mean -0.000 1440.900 53.880 31.219 142.680 median 0.000 1109.500 48.500 31.018 1.986 standard deviation 0.046 1316.870 40.662 1.100 991.165 max 0.223 4634.000 160.000 33.570 5370.070 min -0.209 0.000 0.000 28.620 -2856.040 skewness -0.529 0.845 0.522 0.257 3.077 kurtosis 3.893 -0.433 -0.724 -0.684 13.916 table 1 shows the summary of descriptive statistics for all research variables toward companies listed on the jii from march 3 to october 8, 2020. the number of cross-section units (companies) was twenty-six, and the number of stock trading days in that period was one hundred forty-six days. thus, the total observation number was three thousand seven jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 21-35 http://dx.doi.org/ 10.31106/jema.v18i1.9235, issn (online) 2597-4017 29 hundred ninety-six data points. it can be seen that the maximum and minimum daily islamic stock return (re) during that period is 23.3% and -20.9%. thus, the highest growth in daily total confirmed (act) and death cases (dth) is 4634 and 160. table 2. correlation matrix re act dth lmcap mtb re 1 act 1.013 1 dth 0.030 0.903** 1 lmcap 0.022 0.049** 0.051** 1 mtb 0.007 0.024 0.022 -0.083* 1 table 2 indicates that while the dth had a positive and significant correlation with the act, act and dth had a positive but not significant correlation on islamic stock return. furthermore, the increases of act and dth had a positive and significant correlation with a market capitalization (lmcap). thus, the market to book ratio (mtb) had a negative correlation with lmcap. the results of this correlation analysis only show the closeness between variables, regardless of the direction of causality, the elements of the cross-section, and the time series. to find out the effect of the variables, a panel regression analysis was then carried out. table 3. panel regression variable coefficient t-value significant decision psbb -0.015 -8.136 0.002 h1 supported act -0.000 -3.040 0.000 h2 supported dth 0.000 2.636 0.000 h3 supported lmcap 0.326 2.967 0.000 mtb 0.149 3.836 0.039 the effect of the large-scale social restrictions (psbb) on the return of islamic stock shows the consistent result with the previous study by aggarwal et al. (2020), huo & qiu (2020), yan (2020), baig et al., (2020), and eleftheriou & patsoulis (2020) that found that there was a significant effect between lockdown and stock returns. the significant values of the relationship between psbb on the return of islamic stock were lower than 0.050 (0.002) which means that h1 is supported (table 3). this negative effect occurs as the economic loss due to the restriction the people's mobility (rahman, 2020; coccia, 2021) and the feelings of how does the impact of the covid-19 pandemic on indonesia’s islamic stock returns? by isnaini nuzula agustin 30 fear among investors on the stock market due to the novel covid-19 (al-qudah & houcine, 2020). table 4. panel regression with specific sector dummy variables 1 2 3 4 5 6 7 8 α0 -0.0278 -0.028 -0.028 -0.028 -0.028 -0.028 -0.028 -0.028 0.000 0.000 0.000 0.0000 0.000 0.000 0.000 0.000 lmcap 0.009 0.009 0.009 0.009 0.009 0.009 0.009 0.009 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 mtb 0.003 0.003 0.003 0.003 0.003 0.003 0.003 0.003 0.839 0.839 0.839 0.839 0.839 0.839 0.839 0.839 mining 0.002 0.000 basic industry -0.001 0.023 miscellaneous -0.026 0.002 consumer goods 0.001 0.000 property -0.001 0.531 infrastructure -0.002 0.000 finance 0.003 0.637 trading 0.002 0.000 the result of the panel data test (table 3) shows that the significant values of the relationship between the daily growth of covid-19 confirmed cases and stock return were lower than 0.050 (0.000) which means that h2 is supported. thus, the t-value and significant value of the relationship between the daily growth of death cases by covid-19 and stock jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 21-35 http://dx.doi.org/ 10.31106/jema.v18i1.9235, issn (online) 2597-4017 31 return which were 2.636 and 0.000 resulted in the acceptance of h3. although, this finding has similar results with al-awadhi et al. (2020), anh & gan (2020), rahman (2020), and he et al. (2020) that concluded that the stock performances have a negative correlation with the number of confirmed cases by covid-19 each day. the results of this study also indicate that investors tend to be more reactive to the announcement that’s related to the daily growth in total confirmed cases rather than to the growth in the number of deaths. mishra et al. (2020) argued that as more information related to covid-19 becomes available and the higher level of people understanding the prevention and the death caused by covid-19, the ramifications of the market will correct themselves. ashraf (2020) added that since death is a result of a confirmed case and occurs several days after infection diagnosis with covid-19, sophisticated stock market investors price in the expected negative effect of covd-19 early on from the increase in confirmed cases. market capitalization (lmcaps) and market to book value (mtb) also had a positive and significant effect on stock returns. the large value of market capitalization was generally one of the attractions of investors for long-term investment due to the potential for good company growth, apart from dividend distribution and relatively low-risk exposure (mahmud, 2019; al-awadhi et al., 2020). on other hand, the significance of mtb indicates that investors make mtb one of the factors considered in investing in the capital market. although there were companies that listed on jii experienced a negative book value during the study period, there are several sectors that had a resilient market price that boost the positivism of investor (xue & zhang, 2017). the results of the sector analysis (table 4) suggest that stock returns of basic industry, miscellaneous, and infrastructure sectors performed significantly worse than the market during the pandemic. in contrast, the sector of consumer goods, mining, and trading performed better than the market. these results are consistent with numerous studies by trisnowati & muditomo (2021) and dilla et al. (2020) that concluded the consumer goods sector is the most persistent and defensive sector during the covid-19 pandemic. conclusion and suggestion this study aims to investigate how indonesia's large-scale social restrictions (known as “psbb”), the announcement of the daily growth in total confirmed and death cases by the government affect the dynamic of islamic stock returns in the jakarta islamic index (jii). the result of this study concluded that the announcement of daily growth in total confirmed cases by covid-19 and the implementation of psbb has a negative effect on the deterioration of the islamic stock market's stability. therefore, the higher growth of the total confirmed cases how does the impact of the covid-19 pandemic on indonesia’s islamic stock returns? by isnaini nuzula agustin 32 by covid-19 and the tightening of the psbb that was announced and implemented by the government would impact on the volatility of market and shareholders returns negatively. interestingly, this study also found that there was a positive and significant relationship between the daily growth of death cases by covid-19 and stock return. investors tend to be more reactive to the announcement that’s related to the daily growth in total confirmed cases rather than to the growth in the number of deaths. notably, as the more information related to covid-19 becomes available, people are having more understanding about the prevention and the death caused by covid-19, thus, the ramifications of the market will correct itself. furthermore, the sector of consumer goods, mining, and trading performed better than the market. future studies should extend the period time of study (especially as the covid-19 pandemic isn't over yet) and explores indonesia's islamic stock index more comprehensively by analyzes it with the islamic financial market from various countries. references aggarwal, s., nawn, s., & dugar, a. 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(2020). infected markets: novel coronavirus, government interventions, and stock return volatility around the globe. finance research letters, 101597. https://doi.org/10.1016/j.frl.2020.101597 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 19-34 http://dx.doi.org/10.31106/jema.v17i1.5298, issn (online) 2597-4017 19 the influence of advertising appeals on viral advertising, brand awareness, and purchase intention: the moderator role of hedonic personality wisnu prajogo1*, edi purwanto 2 1 master of management program, stie ykpn school of business, yogyakarta, indonesia 2 master of management program, stie ykpn school of business, yogyakarta, indonesia *corresponding author(s) email: wisnuprajogo@gmail.com abstract viral advertising has become a trending topic nowadays. this study aims to examine the effect of advertising appeals on viral advertising, brand awareness, and purchase intentions with the hedonic personality playing as a moderating role. the use of hedonic personality itself to predict viral intentions, brand awareness, and purchase intentions have not been widely discussed by other researchers. this study can be classified as explanatory research with purposive sampling and partial least square as sampling techniques and data analysis. this study was designed to focus on individuals who can be classified as social media active users with a minimum age of 18 years old. the result shows that advertising appeals (humor and informative) have a positive and significant impact on viral intention and attitude toward advertisement. thus, the higher viral intention and the positive attitude toward advertisement will increase the possibility of purchase and the level of brand awareness. while hedonic personality was significantly proved moderates the relationship between viral intentions and brand awareness in this study. the nature of respondents in this study who mainly are at high level of hedonic personality make the moderation role of hedonic personality has no significant impact on the relationship of viral intentions on purchase intentions. therefore, the viral factor on hedonic consumers did not seem to correlate purchase intentions. keywords: advertising appeals; purchase intentions; brand awareness; hedonic personality; viral intentions; attitude toward advertising jel code: m31, m37 doi: 10.31106/jema.v17i1.5298 article history: received 2020-01-14 reviewed 2020-01-20 revised 2020-01-26 accepted 2020-01-28 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ the influence of advertising appeals on viral advertising, brand awareness, and purchase intention: the moderator role of hedonic personality by wisnu prajogo, edi purwanto 20 introduction traditional marketing has lately begun to be abandoned by marketers. rust & oliver (1994) predict that traditional marketing will die and begin to be abandoned. this death is caused by technological advances that produce new media and markets. the internet has a big impact on the world of advertising and business processes (krishnamurthy & singh, 2005). today's business model is also starting to change and develop along with the development of the internet. online marketing is a new face for today's business trends. before the internet came the marketers using television, newspapers, magazines, brochures, and word of mouth in introducing their products to the public (keller, 2013). social media has social power which influences public opinion widely due to the ease of accessing social media by using a cellphone which makes people can easily gain all the intended information. social media used by marketers to promote and communicate their products and services due to the reason for speediness, widely, and easily accessed (enyioko & okwandu, 2019). shareef et al. (2019) added that create buzz or word of mouth through social networks considered a robust alternative channel for continuous two-way interactivity nowadays. many marketers invest their resources to create a best-suited advertising content strategy that can relate to the targeted consumer so that content messages can generate buzz among the social community and goes viral by nature. moran et al. (2014) added that the message that generates by market or social by nature considered more believable and trustworthy than marketer-initiated messages. sharma & kaur (2018) who researched global advertising content to explore what factors made the viral content throughout the world, concluded that most of the global advertisements used transformational appeals with positive emotional content in the form of happiness, joy or gladness as the advertisement appeal strategy which then influence consumers intention to purchase and their viral intentions. the success of viral messages determined by entertainment, social needs, and consumer engagement (east et al., 2016). alrawi (2019) added that several attributes should be concerned by marketers when makes advertisements like information utility or practical value, humorous, and social value. based on that researchers want to discuss why an advertisement has become viral and can influence consumers buying behavior. researchers see a gap that has not been widely discussed by other researchers. the gap is the use of individual preferences like hedonic personality to predict viral intentions, brand awareness, and purchase intentions. nusair et al. (2017) added that hedonic personality is one of the fundamental factors in predicting the jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 19-34 http://dx.doi.org/10.31106/jema.v17i1.5298, issn (online) 2597-4017 21 willingness to share knowledge and switching cost then affect electronic word of mouth communication. therefore, the fact that there are limited studies that used individual preferences as a predictor of viral intentions, brand awareness, and purchase intentions need to be examined. this study aims to examine the effect of advertising appeals on viral advertising, brand awareness, and purchase intentions with the hedonic personality playing as a moderating role. literature review advertisement appeals the use of humor advertising appeals in advertising has been widely used by marketers in creating advertisements for a product. a study conducted by korgaonkar et al. (1997) found that the use of informative, sensuality, and humor advertisements can attract the attention of consumers. research, in general, shows the attraction that humor has a significant positive influence on consumer attention and recall, and there is potential for improved processing and understanding weinberger & gulas, (1992). nikolinakou & king (2018), petrescu et al. (2016), wu et al. (2018) added that humorous appeals positively associated with the willingness to share advertising. to sum up, primanto & dharmmesta (2019) concluded that the impact of humorous advertisement not only to entertain the consumers so they would perceive advertisement attitude positively but also influences on word of mouth intention especially since the most successful viral advertisements in the last decade are ad that contains humorous content (lance & guy, 2006). h1a: humor advertising has a positive effect on viral intentions. h1b: humor advertising has a positive effect on attitude toward advertising. although advertisement that used humor appeals are considered the most effective in influencing consumers, informative advertising also has the advantages of humorous type ad. consumers can be so involved in humor appeal that they may miss the main message or even brand from the ad. sung (2016) stressed that informative advertising shows positives attitudes toward advertising on satisfied consumers. informative advertising will trigger people to create a buzz because they feel there is a benefit in the ad. petrescu et al. (2016) concluded that not only has a positive effect on attitude towards advertising, informative advertising also influences viral intentions. h2a: informative advertising has a positive effect on viral intentions. h2b: informative advertising has a positive effect on attitude toward advertising. the influence of advertising appeals on viral advertising, brand awareness, and purchase intention: the moderator role of hedonic personality by wisnu prajogo, edi purwanto 22 viral intentions just like word of mouth, viral advertising is considered as a more efficient way to lead to competitive advantages. according to petrescu et al. (2016) the more often people continue advertising it will enable a person to buy the product. this desire to share is called viral intentions. kim & park (2016) defined viral intention as an individual intention to forward an ad. mahapatra & mishra (2017) defined viral as any positive or negative statement made by customers that spread out to large audiences via the internet. there is a positive influence between viral intentions and purchase intentions (kudeshia & kumar, 2017; nuseir, 2019). viral advertising is considered as a good strategy to increase brand awareness. severi et al. (2014), vinh et al. (2019) has examined the effect of viral (electronic word of mouth) intentions on brand awareness and the results suggest that viral intentions affect brand awareness. h3a: viral intentions has a positive effect on purchase intentions. h3b: viral intentions has a positive effect on brand awareness. attitude toward advertising attitude toward advertising has been defined as an individual predisposition (feelings and judgment) toward advertisement exposure (zarouali et al., 2019). while lee et al. (2016), sallam & algammash (2016) shows the robust relationship between attitude toward advertising and purchase intention. lancendorfer et al. (2008) indicated that not only influences purchase intentions, attitude toward the advertising also influences brand memorability. h4a: attitude toward advertising has a positive effect on purchase intentions. h4b: attitude toward advertising has a positive effect on brand awareness. brand awareness and purchase intentions while brand awareness is known as individual perceptual and attitudinal brand associations so they can recognize dan recall the brand easily. purchase intention can be described as the degree that an individual intends to buy a product (park & john, 2012). chung et al. (2016) added that purchase intention is post-behavior after evaluating the overall product attribute and the emotional reaction to take specific actions. the previous study from chakraborty (2019), das (2014), kuang chi et al. (2009), lee & shin (2010) concluded that there was a significant and positive relationship between brand awareness and purchase jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 19-34 http://dx.doi.org/10.31106/jema.v17i1.5298, issn (online) 2597-4017 23 intention. it means that the more aware consumers toward some brand, the highest the possibility they will purchase the product. h5: brand awareness has a positive effect on purchase intentions. the moderator role of hedonic personality individual who have a hedonic personality was more easily influenced by the persuasion of marketers. an individual with hedonic behavior tend to more emotionally in making purchases, they like to make spontaneous purchases. hedonic behavior is often associated with impulsive buying, the degree to which an individual tendency is convincingly to make an unintended, immediate, and unreflective purchases (sofi & nika, 2017). the study of the moderator role of hedonic personality has been discussed by authors. chang et al. (2011) kuikka & laukkanen (2012), overby & lee (2006) shows that the moderator effect of hedonic value affects the relationship between retail characteristics, brand equity, trust, value, satisfaction, preferences on positive emotional responses, loyalty brand attitude, behavioral brand loyalty, buying intentions. kim (2015) stressed that hedonic value is a crucial factor in predicting brand satisfaction and future purchase intention. sheng & teo (2012) sloot et al. (2005), wang et al. (2000) added that hedonic value plays an important role to create awareness and association brands in consumers' minds. h6a: hedonic personality moderates the relationship between viral intentions and purchase intentions. h6b: hedonic personality moderates the relationship between viral intentions and brand awareness. methods this study can be classified as explanatory research with purposive sampling as sampling techniques. this study was designed to focus on individuals who can be classified as social media active users with a minimum age of 18 years old. the while validity of the instrument was measured by confirmatory factor analysis. the reliability of the instrument in this study was measured with cronbach’s alpha. table 2 shows that all item measured in this study is valid and reliable. model fit indices are very important measures in managing data because fit indices show the suitability of the model with the data and explain the quality of the model under study. haribowo (2017) stated that average path coefficient (apc), average r-square (ars), average variance inflation factor (avif) was commonly used to measure the model fitness. the influence of advertising appeals on viral advertising, brand awareness, and purchase intention: the moderator role of hedonic personality by wisnu prajogo, edi purwanto 24 while the value of apc and ars that below 0.050 considered as good, the value of avif that below 5 considered as fitness. based on table 3, it can be concluded that the model of this study meets the criteria for the value of goodness of fit model, therefore the model can be processed into hypotheses testing stages. hypothesis testing is processed using partial least square by looking at the test results on the estimated value and the p-value. table 1. variable and item variable item reference informative advertisement (if) i think the video ad content really helped me chattopadhyay & basu (1990) i think the video ad content is informative i think the video ad is very useful humor advertisement (hm) the video ad contains humor lee & chen (2013) the video ad is funny i'm happy to see that video ad the message ad is funny these video ads are not boring viral intention (vi) i like the video ad and will share the video ad petrescu et al. (2016) i will share the video ad on my social media i might share the video advertisement on my social media i will tell my friends about the video ad if my friend is looking for a product as advertised, then i would recommend the video ad attitude (at) i think video ads are good mackenzie & lutz (1989) i like the video ad i think the video ad is good purchase intention (pi) i will buy or use the product being advertised mackenzie & lutz (1989) i may buy or use an advertised product i definitely buy or use the product being advertised brand awareness (ba) i am familiar the brand chang & chang (2014) i always remember the brand, when i see similar products hedonic personality (hi) for me shopping is a way to release stress babin et al. (1994) shopping gives me pleasure that i would not get from other activities jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 19-34 http://dx.doi.org/10.31106/jema.v17i1.5298, issn (online) 2597-4017 25 table 2. validity and reliability test variable/item factor loading criteria cronbach’s alpha criteria decision informative ads 0.896 > 0.600 reliable if1 0.917 > 0.500 valid if2 0.902 > 0.500 valid if3 0.909 > 0.500 valid humorous ads 0.916 > 0.600 reliable hm1 0.713 > 0.500 valid hm2 0.768 > 0.500 valid hm3 0.737 > 0.500 valid hm4 0.758 > 0.500 valid hm5 0.768 > 0.500 valid viral intentions 0.931 > 0.600 reliable vi1 0.844 > 0.500 valid vi2 0.870 > 0.500 valid vi3 0.846 > 0.500 valid vi4 0.688 > 0.500 valid vi5 0.678 > 0.500 valid attitude towards ad 0.925 > 0.600 reliable att1 0.871 > 0.500 valid att2 0.864 > 0.500 valid att3 0.882 > 0.500 valid purchase intention 0.899 > 0.600 reliable pi1 0.884 > 0.500 valid pi2 0.776 > 0.500 valid pi3 0.845 > 0.500 valid brand awareness 0.835 > 0.600 reliable ba1 0.927 > 0.500 valid ba2 0.927 > 0.500 valid hedonic personality 0.896 > 0.600 reliable h1 0.783 > 0.500 valid h2 0.792 > 0.500 valid the influence of advertising appeals on viral advertising, brand awareness, and purchase intention: the moderator role of hedonic personality by wisnu prajogo, edi purwanto 26 table 3. goodness-of-fit indexes index value criteria decision apc **** < 0.050 ideal ars **** < 0.050 ideal avif 1.521 < 5.000 ideal note: **** means that the probability test value was lower than 0.001 result and discussion table 4. hypotheses testing hypotheses estimation value p-value criteria decision h1a hm -> vi 0.360 **** < 0.050 h1a accepted h1b hm -> at 0.590 **** < 0.050 h1b accepted h2a if -> vi 0.410 **** < 0.050 h2a accepted h2b if -> at 0.320 **** < 0.050 h2b accepted h3a vi -> pi 0.290 **** < 0.050 h3a accepted h3b vi -> ba 0.290 **** < 0.050 h3b accepted h4a at -> pi 0.250 **** < 0.050 h4a accepted h4b at -> ba 0.280 **** < 0.050 h4b accepted h5 ba -> pi 0.380 **** < 0.050 h5 accepted h6a vi * hi -> pi 0.070 0.180 < 0.050 h6a rejected h6b vi * hi -> ba -0.200 **** < 0.050 h6b accepted note: **** means that the probability test value was lower than 0.010 this study proved all the direct relationship models of the proposed hypotheses. the probability value of that direct relationship was lower than 0.010 which means that h1a, h1b, h2a, h2b, h3a, h3b, h4a, h4b, h5 is accepted. this study support previous studies from weinberger & gulas, (1992). nikolinakou & king (2018), petrescu et al. (2016), primanto & dharmmesta (2019), wu et al. (2018) that claimed that humorous appeals not only to entertain the consumers so they would perceive advertisement attitude positively but also the willingness to share advertising. lance & guy (2006) added that the most successful viral advertisements in the last decade are ads that contain humorous content. the result of this study was consistent with previous studies conducted by petrescu et al. (2016), sung (2016) which states that informative advertising has a positive effect on attitude toward advertising and viral intentions. primanto & dharmmesta (2019) added that rather jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 19-34 http://dx.doi.org/10.31106/jema.v17i1.5298, issn (online) 2597-4017 27 than humor content, the use of informative appeals appears to be more effective for a highrisk product because consumers tend to be more engaged, involved, and requires extensive thought when evaluating a high-risk product. this study proved kudeshia & kumar (2017), nuseir (2019), severi et al. (2014), vinh et al. (2019) research that concluded there was a positive and significant relationship between viral intentions and purchase intentions, also viral intentions and brand awareness. petrescu et al. (2016) added that the more often people continue to share ads, it will enable a person to buy the product. these findings indices that consumer behavior will appear as buying interest when seeing a product with the advert being viral. he also added that viral advertising is considered a good strategy to increase brand awareness. the higher the number of people that shares an advertisement, the advert will become viral, and enhances the familiarity and memorability of the brand. this study also proved lancendorfer et al. (2008), lee et al. (2016), sallam & algammash (2016) that concluded there was a positive and significant relationship between attitude toward advertisement and purchase intentions, also an attitude toward advertisement and brand awareness. it means that the more positive consumers' feelings toward ads, the higher their possibility to purchase the brand/product. it also means that the more positive consumers' feelings toward ads, the higher the degree of their memorability and familiarity with the brand/product. following the findings in table 4 which shows that the proposed hypotheses of h5 is accepted. it means that the relationship between brand awareness on purchase intentions was positive and significant. this finding is in line with the findings of chakraborty (2019), das (2014), kuang chi et al. (2009), lee & shin (2010) that concluded that brand awareness can influence consumers to generate interest in buying, consumers will buy a product or brand that they have known before. finally, the moderation role of hedonic personality on the relationship between viral intentions and purchase intentions, also the relationship between viral intentions and brand awareness was proved partially. while the probability value of the moderation relationships between viral intentions and brand awareness was lower than 0.010 which means that h6b is accepted. the probability value of the moderation relationships between viral intentions and purchase intentions was higher than 0.010 (0.180) which means that h6a is rejected. our respondents can be classified as a high hedonic individual. an individual with a high level of hedonic personality will tend to see the brand first. for them, a brand is about pleasure and joy (pham et al., 2018). they only buy the brand if it can lift their social class. they are the influence of advertising appeals on viral advertising, brand awareness, and purchase intention: the moderator role of hedonic personality by wisnu prajogo, edi purwanto 28 purchasing a luxurious and exclusive experience (kapferer et al., 2014). therefore, the viral factor on hedonic consumers did not seem to correlate purchase intentions. conclusion and suggestion the result shows that advertising appeals (informative and humor) have a positive and significant impact on viral intention and attitude toward advertisement. thus, the higher viral intention and the positive attitude toward advertisement will increase the possibility of purchase and the level of brand awareness. while hedonic personality was significantly proved moderates the relationship between viral intentions and brand awareness. the nature of respondents in this study who mainly are at the high level of hedonic personality make the moderation role of hedonic personality has no significant impact on the relationship of viral intentions on purchase intentions. therefore, the viral factor on hedonic consumers did not seem to correlate purchase intentions. future research should consider another moderator factor such as age, gender, and others that may have an impact on purchase and viral intention. references al-rawi, a. 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(2019). the impact of regulatory focus on adolescents’ evaluation of targeted advertising on social networking sites. international journal of advertising, 38(2), 316–335. https://doi.org/10.1080/02650487.2017.1419416 . the influence of advertising appeals on viral advertising, brand awareness, and purchase intention: the moderator role of hedonic personality by wisnu prajogo, edi purwanto 34 appendix 1. pls result β=0.36 (p<0.01) β=0.32 (p<0.01) β=0.41 (p<0.01) β=0.59 (p<0.01) β=-0.07 (p<0.01) β=-0.2 (p<0.01) β=0.29 (p<0.01) β=0.25 (p<0.01) β=0.28 (p<0.01) β=0.38 (p<0.01) β=0.29 (p<0.01) r2=0.47 r2=0.66 r2=0.52 r2=0.29 hm at if vi hi ba pi jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 105-120 http://dx.doi.org/ 10.31106/jema.v17i2.6067, issn (online) 2597-4017 105 does managerial ability enhance earnings quality? the moderating role of corporate governance quality and ownership concentration fitri romadhon 1* , indra wijaya kusuma 2 1 department of accounting, faculty of economics and business, universitas internasional semen indonesia, gresik, indonesia 2 department of accounting, faculty of economics and business, universitas gadjah mada, yogyakarta, indonesia *corresponding author(s) email: fitri.romadhon@uisi.ac.id abstract earnings quality is information that can be determined by various factors, one of which is managerial ability. thus, management quality itself can have a positive or negative impact on earnings quality, depending on the factors that affect their relationships. this study was conducted to reexamine the effect of managerial ability on earnings quality by including corporate governance quality and ownership concentration as factors that are expected to be able to explain the inconsistencies in the results of previous studies. this study used the data of manufacturing companies listed on the indonesia stock exchange in 2010-2016 as study sample with total observations were 253. the analysis technique used for hypothesis testing was a multiple linear regression analysis. this study succeeds in proving the moderation role of governance quality in strengthening the relationship between managerial ability and earnings quality. however, the role of ownership concentration as moderator factors failed to prove in this study. interestingly, there is a negative effect between managerial ability and earnings quality. the opportunistic actions taken by managers who want to meet their performance targets was considered as the reason of the negative effect between managerial ability and earnings quality. keywords: managerial ability; earnings quality; ownership concentration; governance quality; agency theory jel code: m40, m41, g32, g34 doi: 10.31106/jema.v17i2.6067 article history: received 2020/02/03 reviewed 2020/06/03 revised 2020/06/11 accepted 2020/11/12 licensed: cc-by mailto:fitri.romadhon@uisi.ac.id http://creativecommons.org/licenses/by/4.0/ does managerial ability enhance earnings quality? the moderating role of corporate governance quality and ownership concentration by fitri romadhon, indra wijaya kusuma 106 introduction earnings quality is one of the important information regarding a company's financial performance that is relevant for certain decision-making (dechow et al., 2010). this statement is in line with the study of (harris et al., 2019) which proved that investors can also experience earning fixation, i.e. the tendency to be fixated on earnings information without considering other relevant information. studies on earnings quality have also experienced very significant growth during the last two decades, especially the ones regarding the definition, measurement, and determinants of earnings quality (dechow et al., 2010; defond, 2010; demerjian et al., 2013; dichev et al., 2013). while the majority of earning quality has focused on corporate characteristics, corporate governance, and audit quality (pomeroy & thornton, 2008; gul et al., 2009; dechow et al., 2010; bryan et al., 2013). dichev et al. (2013) identified the importance of the role of management in generating company earnings quality. numerous empirical studies have found that managerial ability has a positive effect on earnings quality as the more-able managers are believed to be more able to deal with the complexities of operational decision making, generate more sales revenue, and enhances firm performances (pan et al., 2015; bonsall et al., 2017; huang & sun, 2017). however, lobo & zhou (2001), shette et al. (2016), and prakoso & purwanto (2017) warned that greater earning management with the more opaque information environment may resulting in giving the managers opportunities to act opportunistically. murniati et al. (2019) stated that earning management behavior could not be considered as profit manipulation as long as the process was done by following accounting standards. the result of a previous study regarding the role of managers and earnings quality indicates a study gap between managerial ability and earnings quality and raises the possibility of other factors that can explain the relationship between managerial ability and earnings quality, such as the supervisory function of managers. good supervisory mechanisms, such as corporate governance quality, are expected to limit the opportunistic behavior of managers in carrying out their roles so that the quality of financial reports can improve (mersni & ben othman, 2016; marchini et al., 2018). apart from supervision carried out through the corporate governance mechanism, several other mechanisms are important to consider, one of which is a company's ownership concentration (garcía lara et al., 2009; bao & lewellyn, 2017; lassoued et al., 2018). jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 105-120 http://dx.doi.org/ 10.31106/jema.v17i2.6067, issn (online) 2597-4017 107 referring to the inconsistency of the effect of managerial ability and earnings quality and study that emphasizes the importance of supervisory mechanisms, which stated that an effective control system through representatives of the owners, the board of commissioners, and the audit committee can prevent agency conflicts that may arise when managers carry out their duties, it is important to re-examine whether differences in study results can be caused by other factors such as supervisory factors. besides, a study on governance as a supervisory mechanism is also important to review due to the phenomenon of corporate governance strengthening that is being intensified by regulators, particularly within the context of indonesia. therefore, this study was conducted to re-examine the effect of managerial ability on earnings quality by including corporate governance quality and ownership concentration as factors that are expected to be able to explain the inconsistencies in the results of previous studies. literature review agency theory agency theory is a theory that explains the agency relationship between one or more principal parties and other parties, namely agents who carry out a series of tasks that have the potential to create conflicts of interest (jensen & meckling, 1976). conflicts of interest between the principal and the agent can be caused by the role of the manager as an agent who has an incentive to obtain benefits and can harm the principal. to minimize these conflicts, the principal can supervise and provide incentives to agents (jensen & meckling, 1976). monitoring mechanisms for agents can be carried out in several ways, i.e. natural mechanisms, such as capital market pressures and corporate ownership structures, and institutional mechanisms, such as corporate governance (garcía lara et al., 2009). apart from corporate governance, efforts to reduce agency conflicts can also be carried out through supervision by the majority shareholder (shleifer & vishny, 1997). managerial ability and earnings quality bertrand & schoar (2003) concluded that managers have an important role in company performance. several studies have shown inconsistent results related to managerial ability and earnings quality, such as bolmiri et al. (2016) and demerjian et al. (2013) who concluded that more capable managers can produce higher earnings quality. while other studies such as those by djuitaningsih & rahman (2012) show different results, which does managerial ability enhance earnings quality? the moderating role of corporate governance quality and ownership concentration by fitri romadhon, indra wijaya kusuma 108 indicate that the more reputable managers are, the more competent they are to produce fewer earnings quality. ge et al. (2011) added that managerial ability has a positive influence on earnings quality since they can determine policies that will affect the company, such as policies in discretionary accruals. therefore, in addition to the positive influence, the negative impact of managerial ability can also occur when managers are motivated to meet performance expectations in various ways, including by managing earnings. based on the explanation of a manager's influence on earnings quality, which can be positive or negative, the first hypothesis can be drawn as follows. h1: managerial ability affects earnings quality. managerial ability, corporate governance quality, and earnings quality the inconsistency of the relationship between managerial ability and earnings quality, as stated in the previous section, means that a capable manager does not necessarily guarantee the success of the company's performance because other factors can trigger these two factors, one of which is the supervisory mechanism by corporate governance quality (garcía lara et al., 2009; mersni & ben othman, 2016; marchini et al., 2018). piot & janin (2007) concluded that the existence of an audit committee as part of corporate governance is proven to limit earnings management, something that may be done by managers. this study is in line with the research of cohen et al. (2014) and klein (2002) which explained that the existence of an audit committee with certain expertise and a more independent board structure can improve the quality of financial reporting or decrease earnings management. some of these studies indicate that corporate governance, apart from having a supervisory role, also serves as a complement and support that strengthens the role of managerial ability. this is in line with crossland & hambrick (2007) study which shows that manager discretion is also determined by environmental conditions or organizational factors such as governance. this statement can be interpreted that companies with capable managers will be able to generate earnings quality if supported by reinforcing factors. based on this explanation, a second alternative hypothesis can be formulated, i.e. that governance quality can strengthen the relationship between managerial ability and earnings quality. h2: corporate governance quality can strengthen the relationship between managerial ability and earnings quality. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 105-120 http://dx.doi.org/ 10.31106/jema.v17i2.6067, issn (online) 2597-4017 109 managerial ability, ownership concentration, and earnings quality conflicts of interest between agents and principals are expected to decrease in companies with concentrated ownership because it can facilitate more effective supervision and access to information (le breton-miller et al., 2015). the effect of ownership concentration can also be viewed from the alignment hypothesis, namely the ability to control shareholders to align their interests by monitoring and limiting opportunistic behavior, such as the manipulation of financial performance (fan & wong, 2002; huang & xue, 2016; bao & lewellyn, 2017; lassoued et al., 2018). another previous study by li et al., (2015) also confirms that ownership concentration has an important role in moderating the effectiveness of governance so that it can affect company performance. conclusions about the negative impact of concentrated ownership are not always proven, because it is necessary to pay attention to the context in which the company under study is located, the party who owns the majority of the shares, or the company's ownership structure. within the context of indonesia, several studies have shown that company ownership that is concentrated in certain parties has a positive effect on performance. one example is the research of susilawati & rakhman (2018) which concluded that companies whose majority shares are owned by the government can produce a financial performance that is equivalent to that of private companies. based on the descriptions of these various studies, it can be assumed that the effect of ownership concentration may be different if it refers to the characteristics of companies in indonesia, as managers can work more efficiently and produce more reliable financial information. h3: ownership concentration can strengthen the relationship between managerial ability and earnings quality. methods figure 1. research framework h1 h2 h3 managerial ability (ma) corporate governance (cg) ownership concentration (oc) earnings quality (eq) the design research of this study was a quantitative approach (empirical study) as the objective of this study which aims to test hypotheses based on theory, facts, and previous research through statistical procedures. this study was conducted to re-examine the effect of does managerial ability enhance earnings quality? the moderating role of corporate governance quality and ownership concentration by fitri romadhon, indra wijaya kusuma 110 managerial ability on earnings quality by including corporate governance quality and ownership concentration as factors that are expected to be able to explain the inconsistencies in the results of previous studies. the variables used in this study include three types of variables. first is the dependent variable, namely earnings quality, which is measured by using accrual quality following the modified research (dechow & dichev, 2002; mcnichols, 2002). second is the independent variable, namely managerial ability, which is measured based on the ma (managerial ability) score (demerjian et al., 2013). lastly is two moderating variables, namely corporate governance quality, which refers to the studies of bertrand & mullainathan (2003) and garcía lara et al., (2009) is measured based on the aggregate measurement index of the average of five components of governance, and ownership concentration, which is measured based on the percentage of shares owned by the largest shareholders (demsetz & lehn, 1985; sousa & galdi, 2016). also, this study used four control variables, including company size, book-tomarket equity ratio, sales growth, and leverage. the use of control variables was intended to control or complete the causal relationship between variables or ensure that the results of the study are not biased if they do not include several control variables. table 1. the definition of variables variable definition earnings quality accrual quality obtained from the error value in the equation below managerial ability ma score of dea software with output (sales) and input (total assets, number of workers, days cogs in inventory, days sales outstanding) corporate governance quality average of the five components of corporate governance (total audit committee, a total board of commissioners, frequency of board meetings, frequency of audit committee meetings, and audit quality), ownership concentration % of shares owned by the largest shareholder company size natural log of total assets book-to-market equity book value of equity / market value of equity sales growth (salest salest-1) / salest-1 leverage total debt / total equity the population of this study was manufacturing companies listed on the indonesia stock exchange. the sample used was selected through a purposive sampling technique. following are the sample selection criteria: 1) the manufacturing company was listed on the indonesia jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 105-120 http://dx.doi.org/ 10.31106/jema.v17i2.6067, issn (online) 2597-4017 111 stock exchange during 2011-2015, 2) there was a minimum of five companies in each manufacturing sub-industry, 3) the company published a complete annual report, and 4) the company had the necessary data and information and was related to the variables to be studied. 253 observations were obtained, covering 12 sub-industries. table 2. sample selection criteria of sample selection total manufacturing companies in the 5 year research period (2011-2015) 865 did not meet the minimum requirements for each sub-industry (288) did not publish an annual report (80) did not have complete data and information (239) total sample during the observation period 258 outlier (5) final total observations 253 the type of data used was secondary data obtained through several sources, namely the osiris database and company annual reports. the first statistical analysis performed was classical assumption tests and followed by hypothesis testing. the classical assumption test used consisted of a normality test, heteroscedasticity test, autocorrelation test, and multicollinearity test. in the independent variable testing, moderation was carried out on the dependent variable using multiple regression analysis with the ols method. this analysis served to test the effect of independent variables on the dependent variable, including examining the relationship between variables so that a model that was appropriate to the conditions faced by the researcher could be obtained. three regression models are used to answer the proposed hypotheses of this study. eqi,t = β0 + β1mai,t + β2sizei,t + β3bmi,t + β4sgi,t + β5levi,t + εi,t (1) eqi,t = β0 + β1mai,t + β2cgi,t + β3(mai,t * cgi,t ) + β4sizei,t + β5bmi,t + β6sgi,t + β7levi,t + εi,t (2) eqi,t = β0 + β1mai,t + β2oci,t + β3(mai,t * oci,t ) + β4sizei,t + β5bmi,t + β6sgi,t + β7levi,t + εi,t (3) annotation: eq : quality of accruals for company i in year t ma : managerial ability of company i in year t cg : corporate governance of company i in year t oc : ownership concentration of company i in year t does managerial ability enhance earnings quality? the moderating role of corporate governance quality and ownership concentration by fitri romadhon, indra wijaya kusuma 112 size : size of company i in year t bm : book-to-market equity ratio of company i in year t sg : sales growth ratio of company i in year t lev : leverage ratio of company i in year t to ensure the robustness of the research model, the model should pass all classical assumptions testing such as normality, heteroscedasticity, autocorrelation, and multicollinearity. table 3 shows that the model pass the autocorrelation assumption as the results of the durbin watson testing shows that the score of durbin watson was in the range of du < dw < d-du values. all three models were also distributed normally as it has a significant value that higher than 0.05 for the kolmogorov-smirnov test. table 3. autocorrelation and normality results autocorrelation / normality test model 1 model 2 model 3 criteria decision durbin watson du = 1.828 dw = 2.139 du = 1.841 dw = 2.088 du = 1.842 dw = 2.157 du< dw < 4-du pass kolmogrovsmirnov sig = 0.603 sig = 0.358 sig = 0.974 sig > 0.05 pass the glejser test results (table 4) show that none of the variables in this study was significantly influenced the dependent variable of residual absolute as it has a significant value that higher than 0.05. therefore, it can be concluded that the three regression models did not have heteroscedasticity symptoms. table 4. heteroscedasticity results variables model 1 model 2 model 3 coef. sig. coef. sig. coef. sig. ma -0.051 0.482 -0.094 0.257 -0.113 0.391 cg -0.049 0.131 macg -0.164 0.221 oc 0.057 0.533 maoc 0.169 0.592 size 0.004 0.427 0.007 0.162 0.003 0.509 bm 0.002 0.365 0.002 0.396 0.002 0.360 sg 0.071 0.229 0.069 0.228 0.094 0.109 lev 0.003 0.843 0.003 0.839 0.002 0.898 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 105-120 http://dx.doi.org/ 10.31106/jema.v17i2.6067, issn (online) 2597-4017 113 table 5 shows that each variable in the three models has a tolerance value > 0.5 and a vif value < 10. these results can be interpreted that there was no multicollinearity in the three regression models. table 5. multicollinearity results variables model 1 model 2 model 3 tolerance vif tolerance vif tolerance vif ma 0.942 1.062 0.692 1.444 0.287 3.487 cg 0.684 1.462 macg 0.523 1.911 oc 0.654 1.530 maoc 0.262 3.816 size 0.915 1.093 0.781 1.281 0.886 1.128 bm 0.903 1.107 0.813 1.123 0.894 1.118 sg 0.984 1.016 0.279 1.017 0.984 1.016 lev 0.916 1.092 0.988 1.108 0.911 1.097 result and discussion table 6. hypotheses testing model coefficient sig. decision ma -> eq -0.377 0.002 h1 accepted ma*cg -> eq 0.448 0.049 h2 accepted ma*oc -> eq 0.145 0.785 h3 rejected table 6 show that there are 2 of 3 hypotheses statement that can be accepted and has similar findings to the previous studies. this study support previous study by djuitaningsih & rahman (2012) which stated that there is a relationship between the ability of management and the quality of earning (h1) in a negative way which means that the more-able manager is, the more competent they are to produce fewer earnings quality, vice versa. the significant values of the relationship between managerial ability and earnings quality were lower than 0.050 (0.002) which means that h1 is accepted. table 7 shows that the mean score of managerial ability that is close to the value of 1 (0.794) means that the respondent in this study can be classified as high managerial ability. on the other side, the mean score of earnings quality that is far below the value of 1 (0.094) means that there is a low level of the does managerial ability enhance earnings quality? the moderating role of corporate governance quality and ownership concentration by fitri romadhon, indra wijaya kusuma 114 quality of earnings in this study. therefore, it can be concluded that the more proficient a manager is, the lower the accrual quality will be. table 7. descriptive statistics model mean std. deviation eq .0938 .1211 ma .7944 .25211 cg -.0023 .62102 oc .5018 .23362 size rp5,065,723,133 3.74958 bm .3192 7.73835 sg .0924 .29405 lev 1.0880 1.23333 the results of this study can also be explained using agency theory. managers may act opportunistically because they get more information than principals; managers have flexibility in choosing accounting methods as the flexibility of accounting standards allows managers to determine the method to be used from several alternatives. the negative influence of reputable managers on earnings quality also can be explained by the rent extraction hypothesis, which states that managers with more reputations are more likely to use their authority to manipulate earnings to maintain capital market perceptions (djuitaningsih & rahman, 2012; abbadi et al., 2016; setin & murwaningsari, 2018). crossland & hambrick (2007) argues that the size of the manager's influence depends on managerial discretion, which itself is determined by organizational factors, meaning that when managers are in an environment that lacks limiting authority, the negative effect on earnings quality can be increasingly strong. this study also proved mersni & ben othman (2016) and marchini et al. (2018) argument which stated that the corporate governance quality will enhance the relationship between managerial ability and the quality of earnings (h2). the significant values of the relationship between managerial ability and earnings quality with corporate governance play as moderators' role were slightly lower than 0.050 (0.049) which means that h2 is accepted. it suggested that the corporate governance quality can strengthen the relationship between managerial ability and earnings quality because the existence of corporate governance is expected to limit the opportunistic behavior of increasingly proficient managers. these results confirm that the inconsistency of previous research results can be caused by other jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 105-120 http://dx.doi.org/ 10.31106/jema.v17i2.6067, issn (online) 2597-4017 115 factors that can affect the relationship between managerial ability and earnings quality, one of which is the supervisory mechanism embodied in corporate governance quality. what is meant by the supervisory mechanism of corporate governance is that the board of commissioners functions to supervise managers, including in the case of asset misuse. the audit committee also plays a role in monitoring the effectiveness of internal control and the quality of financial reports, ensuring company compliance with regulations (man & wong, 2013). to ascertain whether the presence of the board of commissioners and the audit committee has been effective, the number of meetings is an appropriate indicator to assess the proficiency of the governance structure in controlling manager behavior. each component of corporate governance when combined as corporate governance quality is proven to play an important role in explaining the relationship between managerial ability and earnings quality. as explained by crossland & hambrick (2007) study that confirms that the influence of managers on companies depends on the authority they have, and this authority can be influenced by organizational factors, such as strong or weak corporate governance. the results of this study are also inseparable from the process of improving corporate governance quality in indonesia. besides, the corporate governance assessment report published by asian development bank (2014) states that several companies in indonesia recorded an increase in their scores, from 84.39 points in 2013 to 91.98 points in 2014. an example is a case that occurred at pt. garuda indonesia, where the board of commissioners carried out supervision by refusing to approve the earnings results recorded in the financial statements. this situation indicates that managers have the power to control financial reports with their authority to determine accounting methods, and this authority will be reduced or limited by the supervision of the commissioners who act as part of corporate governance. finally, unlike (li et al., 2015; huang & xue, 2016; bao & lewellyn, 2017; lassoued et al., 2018) whom all stated that ownership concentration can enhance the relationship between managerial ability and earnings quality, this study concluded the opposite. the role of ownership concentration as moderator factors between the relationship of managerial ability and earning quality failed to prove in this study. the significant values of the relationship between managerial ability and earnings quality with corporate governance as moderators were higher than 0.050 (0.785) which means that h3 is rejected. a possible explanation for this result is the lack of incentives for shareholders to actively supervise the managers, as stated by (jung & kwon, 2002) research that not all shareholders have an incentive to does managerial ability enhance earnings quality? the moderating role of corporate governance quality and ownership concentration by fitri romadhon, indra wijaya kusuma 116 supervise management. the reason could be because their skills are lacking, they are constrained by free-rider problems, or they control managers according to their interests. in the indonesian context, not all majority of shareholders have expertise in supervision or fully understand the technical conditions of the company. one example is pt. intikeramik alamsari industri, which is engaged in the building products industry, whose majority of shares were owned by pt. inti karya megah, which is an automotive company. apart from adequate representation of the parties involved in the corporate governance mechanism, the supervisory role of the owners is also limited to certain forums, such as the annual general meeting of shareholders (gms) or other meetings that are not regularly held. conclusion and suggestion this study was conducted to re-examine the effect of managerial ability on earnings quality by including corporate governance quality and ownership concentration as factors that are expected to be able to explain the inconsistencies in the results of previous studies. this study succeeds in proving the moderation role of governance quality in strengthening the relationship between managerial ability and earnings quality. however, the role of ownership concentration as a moderator factor failed to prove in this study. a possible explanation for this result is the lack of incentives for shareholders to actively supervise the managers. interestingly, there is a negative effect between managerial ability and earnings quality. the opportunistic actions by managers who want to meet their performance targets were considered as the main reason for these negative influences. the implication of this research for the company is that it can function as a consideration in manager performance assessment, especially in the managerial ability aspect, and as a consideration in choosing managers who are not only proficient but also able play a role in aligning organizational goals and maximizing the welfare of stakeholders. besides, this research can encourage regulators to evaluate the effectiveness of the implementation and formulation of corporate governance policies. among the limitations of this study is the measurement of the dea score for managerial ability was limited to the manufacturing industry and used inputs and outputs that were not following the measurements proposed by previous studies. also, the data obtained were limited and the measurement of governance only consisted of a few components. suggestions for future research are that they consider ethical factors in managers and use several measures of earnings quality, such as earnings persistence and earnings management, and samples from industries other than the manufacturing industry. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 105-120 http://dx.doi.org/ 10.31106/jema.v17i2.6067, issn (online) 2597-4017 117 references abbadi, s., hijazi, q., & al-rahahleh, a. 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(2018). the effect of ownership structure and investor protection to firm value: analyst following and as moderating variable. jurnal akuntansi dan investasi, 19(1), 64–75. https://doi.org/10.18196/jai.190192 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 88-104 http://dx.doi.org/10.31106/jema.v17i1.5539, issn (online) 2597-4017 88 an exploration of the youth’s perception toward social entrepreneurship development: evidence from bangladesh dewan mehrab ashrafi1, md atiqur rahman sarker2*, junaidah binti hashim3, ahasanul haque4, fatima kanis nayan5 1 school of business administration, east delta university, chittagong, bangladesh 2 department of business administration, kulliyyah of economics and management sciences, international islamic university malaysia, selangor, malaysia 3 department of business administration, kulliyyah of economics and management sciences, international islamic university malaysia, selangor, malaysia 4 department of business administration, kulliyyah of economics and management sciences, international islamic university malaysia, selangor, malaysia 5 school of business & economics, north south university, dhaka, bangladesh *corresponding author(s) email: sarker.limon@gmail.com abstract a plethora of researchers has dominantly kept their focal point on the concept of social entrepreneurship and its economic development and sustainable aspect, but very few studies have been carried out which solely emphasized the youth and social entrepreneurship in bangladesh. this study aims to explore the factors associated with the perception development of social entrepreneurship intention among business school graduates in bangladesh. primary data has been collected by using a structured questionnaire on 350 respondents and analyzed by using spearman correlation. this study revealed most of the young graduates chose to participate in social entrepreneurship since it allows them to be independent and help to fulfill their social spirit. they also perceived that social entrepreneurship as a respectable and noble career. interestingly, they also considered that job as risky and seems like take the advantage of other difficulties or poverty. they are also do not get family support to do social business because they perceived that social entrepreneurship is only for people who cannot get the desired job. keywords: social entrepreneurship; society perception; government obstacles; barrier; motivation jel code: m21, n85, o15, p21 doi: 10.31106/jema.v17i1.5539 article history: received 2020-01-26 reviewed 2020-02-20 revised 2020-03-05 accepted 2020-03-05 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ an exploration of the youth's perception toward social entrepreneurship development: evidence from bangladesh by dewan mehrab ashrafi, md atiqur rahman sarker, junaidah binti hashim, ahasanul haque, fatima kanis nayan 89 introduction the concept of social entrepreneurship has made tremendous breakthroughs worldwide. the prevalent concept of entrepreneurship, in the setting of business ventures, has been increasingly used for social problem solving set up (dees & anderson, 2003). when the grameen bank of bangladesh won the nobel prize for peace, it has been considered by many as a turning point in the global acknowledgment of social entrepreneurship (martin & osberg, 2007). entrepreneurship can prove to be an effective instrument for economic value creation and simultaneously, a means to deal with various social issues (tiwari et al., 2017). according to weaver (2018), social entrepreneurship facilitates social capacity building and argues that the capacity building approach leads to social value creation. a social entrepreneur is an individual who comes up with innovative solutions to society's most pressing and crucial social problems. maas & grieco (2017) hold the view that social entrepreneurship is an effective vehicle that not only drives but also tackles the societal problems innovatively. furthermore, lubberink et al. (2018) concurs with maas & grieco (2017) that social entrepreneurs come up with creative and innovative solutions to complicated and crucial societal problems. according to lubberink et al. (2018), the individuals who started these organizations wanted them to be financially self-sustaining while serving an environmental or social purpose. social entrepreneurs can apply patternbreaking thoughts to address important problems of society. according to haugh (2007), social entrepreneurship with the simultaneous pursuit of economic, societal, and environmental goals by enterprising ventures, has gradually found a spot along the world's stage as a human reaction to social and environmental problems. instead of personal and shareholder's wealth gain, the underlying cause of social entrepreneurship is to create social value, and that action is characterized by innovation, or the institution of something new rather than simply the return of existing enterprises or practices. according to mueller et al. (2015), the government acknowledges its problem-solving nature and stimulates social entrepreneurship due to its innovation. phillips et al. (2015) analyzed the literature to discover the association between social innovation and social entrepreneurship and concluded that both of them aim to quest after solving societal problems. it can be said that the key concepts of social entrepreneurship are innovation, market orientation, and systems change and, their prime objective is to create sustainable systems change. according to banodia & dubey (2017), it is spreading rapidly and catching the attention of the market, society, and government. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 88-104 http://dx.doi.org/10.31106/jema.v17i1.5539, issn (online) 2597-4017 90 according to catford (1998), social and economic entrepreneurs share identical visions and opportunities and the same power to convince and empower others to help them turn these visions into reality. however, the troubles of finding out efficacious and sustainable answers to myriad social problems are crucial, and solutions may necessitate many of the factors related to successful business innovation of the constellation of troubles linked to long-term impoverishment; such problems often require fundamental shifts in economic, social, and political systems (alvord et al., 2004). this study aims to elucidate the problems, prospects and the significant factors that motivate young graduates to engage in social entrepreneurship in bangladesh since the unemployment rate is increasing and the youth should take entrepreneurial initiatives for several social problems such as poverty due to natural calamities, deforestation, pollutions for unplanned industrialization, etc. particular attention has been given in this study to identify the issues that affect the perception of social entrepreneurship among young graduates in bangladesh. literature review sassmannshausen & volkmann (2018) mentioned that the discussion of social entrepreneurship is now progressed at a mature state due to its impacts and considers that earlier researches on social entrepreneurship mainly kept the conceptualization as well defined as the focal point. according to tiwari et al. (2017a), the roots of social entrepreneurship exist mainly in the evolution of the private sector. one of the growing discussions in the field of social entrepreneurship is how to define and differentiate a social enterprise from a profit-seeking enterprise (lubberink et al., 2018). social entrepreneurship generally refers to the phenomenon of applying business expertise and market-based skills in the non-profit sector such as when non-profit-making organizations buildup innovative approaches to bring in income (thompson, 2002). a social entrepreneur can be described as “someone who has created and led an organization, whether for-profit or not, that is aimed at catalyzing systematic social change through new ideas, products, services, methodologies and changes in attitude” (thompson, 2002). however, the academic field of social entrepreneurship is gaining prominence (lubberink et al., 2018). smith-hunter (2011) mentioned that the most important point of social entrepreneurship is social value creation. de bruin & lewis (2015) argued that the social entrepreneurship context is diverse as well as complex. according to tiwari et al. (2017b), social enterprises provide an ingenious idea towards providing commodities, services and earning opportunities to the economically weaker section of the society. they work in the community to help others and act as a change an exploration of the youth's perception toward social entrepreneurship development: evidence from bangladesh by dewan mehrab ashrafi, md atiqur rahman sarker, junaidah binti hashim, ahasanul haque, fatima kanis nayan 91 maker to create and sustain social value. baporikar (2017) opined that social entrepreneurs are like business entrepreneurs. they also gain profit but their core focus is on society by addressing societal needs by solving problems. social entrepreneurs can be views as non-profit executives who pay increased attention to market forces without losing their mission. thompson (2002) stated that social entrepreneurs might have the qualities and behaviors generally connected with business entrepreneurs, but they work in communities and are more concerned with caring and helping, than with getting money. the mission of social entrepreneurs is changing to help people’s lives solving social problems. however, waddock & steckler (2016) illustrated that only fifty percent of social entrepreneurs start to carry out their activity by having a clear vision. on the contrary, lubberink et al. (2018) also opined that social entrepreneurship is a political phenomenon and the goal should be adjusted to the social problem. nevertheless, they act as change agents in the social sector and adopt missions to create and sustain social value, employ in a process of continuous innovation, adaptation and act with courage without being defined by resources currently in hand. carvalho (2017) pinpointed that social entrepreneurship creates value for society through innovation and this innovation leads to human, social and territorial development. like business entrepreneurs, social entrepreneurs recognize and act upon opportunities to ameliorate systems, create solutions, and forge new approaches (seelos & mair, 2005). moreover, alvord et al. (2004) revealed that initiatives based on movement-building focused on external relationships and have used the political targets as leverage to get transformational effects not only on political but also cultural circumstances. they also depicted that, social entrepreneurship mobilizes as well as builds assets which make it possible to leverage smaller investments to develop sustainable changes. they also opined that social entrepreneurship has the potential and capacity to reach millions of people by creating social transformation and having high transformational effects might be possible by having collaboration with many organizational arrangements. however, in the study literature, social entrepreneurship is also a topic of debate. the idea of social entrepreneurship means different things to different people and researchers (dees & elias, 1998). some authors argue that it exists primarily in the non-profit sector to provide business expertise and market-based skills to help this sector become more efficient at delivering services (thompson, 2002), while others define social entrepreneurship more widely, stating that social entrepreneurship can occur within the public, private or not-forprofit sectors. in essence, it's a hybrid model that involves both for-profit and not-for-profit jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 88-104 http://dx.doi.org/10.31106/jema.v17i1.5539, issn (online) 2597-4017 92 activities. this idea suggests social entrepreneurship can take different forms, including innovative non-profit ventures and social purpose business ventures (dees & elias, 1998). however, some gaps are still existent (sassmannshausen & volkmann, 2018). it is critical to mention that, there is no unanimity about the definition of social entrepreneurship (choi & majumdar, 2014). however, newth & woods (2014) suggested that the establishment of the definition should be put forward to drive the entrepreneurial process and procedure that necessitates the development of opportunities and resource combination process. nevertheless, it can be said that although it has many challenges, it serves as a powerful force because social entrepreneurship provides opportunities for creating social value (baporikar, 2017). the prevalent concept of entrepreneurship, in the setting of business ventures, has been increasingly used for social problem-solving settings (dees & anderson, 2003). social entrepreneurs are the people who have an innovative solution for the various social problems present in the society which have been neglected by different agencies (banodia & dubey, 2017). the broad view of entrepreneurship presents the multidimensional nature of human beings (von jacobi et al., 2017). rather than personal, and shareholder's wealth gain, the underlying cause of social entrepreneurship is to create social value, and that action is characterized by innovation, or the institution of something new rather than simply the return of existing enterprises or practices. so, it can be deduced that the more the innovation will be, the more social entrepreneurship will advance (phillips et al., 2015). blok et al., (2015) suggested that stakeholder engagement is crucial and should be kept as a focal point for responsible innovation. smith-hunter (2011) mentioned that the most important point of social entrepreneurship is social value creation. according to thompson (2002), social entrepreneurs might have the behavior and qualities generally linked with business entrepreneurs, but they work in communities and are more focused on helping others than with getting money. the mission of social entrepreneurs is changing to help people's lives by solving social problems. nevertheless, they act as change agents in the social sector and adopt missions to create and sustain social value, employ in a process of continuous learning and move forward boldly without being defined by resources currently in hand. social entrepreneurship acts as a precursor to social transformation and it seeks to change the system of global capitalism (newey, 2018). von jacobi et al. (2017) hold the view that social entrepreneurship is a potential driver for turbulent and transformational social changes because of its capacity to solve the problems that institutional status quo neglects. an exploration of the youth's perception toward social entrepreneurship development: evidence from bangladesh by dewan mehrab ashrafi, md atiqur rahman sarker, junaidah binti hashim, ahasanul haque, fatima kanis nayan 93 like business entrepreneurs, social entrepreneurs identify and act upon opportunities to ameliorate systems, create solutions, and forge new approaches (seelos & mair, 2005). social entrepreneurs are unlike traditional ones in one essential point of view, which is the result of their activities. the success of traditional entrepreneurs is economic whereas social entrepreneurs might reach double success – economic and societal smith-hunter (2011). people develop their identities as individuals in the adolescence period when they start to explore broadening social relations, and interact independently with the wider community. the most leadership theorists believe that the skills crucial for effective leadership, including the ability to understand and communicate with others, are developed most deeply in adolescence and young adulthood. according to davis (2002), "engaging and involving young people in initiatives that they create not only makes them stakeholders of their immediate future but also their community's long-term well-being''. for being a social entrepreneur, youth is a perfect time for developing and acquiring the required essential skills of teamwork, empathy, and leadership. tiwari et al. (2017a) carried out a study with a sample of 230 university students in india to associate an individual's self-efficacy with the attitude towards becoming a social entrepreneur and intention to become social entrepreneurship and concluded that a person's self-efficacy is positively related to both attitude and intention of becoming social entrepreneurs. chandra & shang (2017) explained that the combination of social skills and social position motivates an individual to take social entrepreneurship as a career. important skill development programs including, public speaking, writing, planning, critical thinking, and group dynamics; youth social entrepreneurship also has strong potential to make a more involved and engaged citizen (davis, 2002). drayton (2006) argues "if young people do not grow up being powerful, causing change, and practicing, these three interlocked underlying skills, they will reach adulthood with a self-definition that does not include change-making and social skillset that largely precludes it. just as one must develop strong emotional foundations in the first three years of life or suffer for a lifetime, young people must master and practice these social skills and the high art of being powerful in and through society while they are young". an opportunity for showing leadership should be provided to young people, a chance to create something at a very young age to understand this is something they can do; they can contribute to solving the world's problems (davis, 2002). youth social entrepreneurship delivers an opportunity for young people to develop, practice and exercise leadership by bringing changes in their communities. according to a study published by the united nations children's fund, people who engaged themselves in jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 88-104 http://dx.doi.org/10.31106/jema.v17i1.5539, issn (online) 2597-4017 94 the community before age 14 tend to be involved more in the community as adults. the youth who have had these opportunities are significantly more likely to stay devoted and active community members. davis (2002) argued that if young people have the opportunity to learn by doing, they can be better equipped to positively impact their communities. social entrepreneurs are not only marked by their input in producing and creating value but also have a big social impact in vulnerable groups and communities (silva & poza, 2016). banodia & dubey (2017) explained that social enterprises today are directed by a strong social mission and have all the potential and possibilities to ensure public welfare on a wide and large scale. youth social entrepreneurship can be a dynamic and powerful strategy in recognizing that young people hold the capacity to address social problems. through youth social entrepreneurship, ideas and energy of young people can contribute to the community building as they work for bringing up a social change by applying their leadership skills. however, the networks, supports, and opportunities will also facilitate their development in the future. between the 1980s and 1990s, field building organizations emerged that concentrated solely on social entrepreneurship. public policy in various countries started to explore the possibilities of social entrepreneurship (dees & anderson, 2003). however, according to phillips et al. (2015), social entrepreneurship can act as a changing agent to solve myriad challenges of the society such as massive inequalities in education, high unemployment, housing, and the hiv pandemic, etc. literature reveals that social entrepreneurs play a vital role in fighting social and economic problems in society by enabling economic opportunities and battling impoverishment. social entrepreneurs are highly ambitious, solving social problems or effecting social change and they are committed to bringing a change in the society by being not only visionary but also a realist (banodia & dubey, 2017). according to martín & cuervo-arango (2016), promoting entrepreneurial attitude is of paramount importance and education is one of the pivotal factors that influence an individual to pursue their social entrepreneurship project. therefore, their good intentions overcome business realities. however, they have developed a model entitled "pyramid of catalysts for entrepreneurship" which helps to apprehend the system by which the educational process impacts the quality or quantity of social entrepreneurship. on the other hand, social entrepreneurs also strive to work for the welfare of society by taking a mission to create and sustain social value by recognizing and unrelentingly pursuing new opportunities to serve that mission and poverty rates (phillips et al., 2015) and alleviation of poverty cannot be ensured in a sustained way unless the poor people are empowered (baporikar, 2017). besides, social an exploration of the youth's perception toward social entrepreneurship development: evidence from bangladesh by dewan mehrab ashrafi, md atiqur rahman sarker, junaidah binti hashim, ahasanul haque, fatima kanis nayan 95 entrepreneurs can make important changes in the economy, and thus become agents of economic development and job and wealth creation that can ameliorate the welfare of the community (wiklund et al., 2011). according to sijabat (2015), lack of access to formal financial institutions is a big obstacle faced by the poor because most of them, engaging themselves with the informal sector. according to newth & woods (2014) the lack of interest of banks to provide loans to social entrepreneurs was identified as one of the major barriers which hinder the growth and development of social entrepreneurship. therefore, efforts to encourage business activity in the informal sector should be emphasized to expand access to financial resources (sijabat, 2015). grameen bank in bangladesh is a perfect embodiment of the creation and expansion of access to finance for the poor. it also plays an important role in poverty reduction in bangladesh by channeling loans to the destitute using schemes that are unlike those informal banking where loans are disbursed based on mutual trust, participation, accountability, and creativity instead of providing guarantee (pervez et al., 2013). grameen bank has a crucial role in combating poverty and also in encouraging various economic activities and social advancement in bangladesh. future social entrepreneurs in bangladesh has a bigger scope to come up with innovative and creative ideas to solve various challenges and problems of the society through their leadership skills to facilitate a change for a better tomorrow. social entrepreneurs use ideas and make groundbreaking solutions to overcome social problems (von jacobi et al., 2017). they utilize personal leadership skills and the capacity to solve problems that arise in particular communities or regions. according to banodia & dubey (2017), social entrepreneurs may or may not earn a profit, maybe voluntary and work for the empowerment of the weaker section of the society. in addition to that, social entrepreneurs create social values by exploiting innovation such as establish new activities or organizations (pervez et al., 2013). phillips et al. (2015) also suggested that the concept of social entrepreneurship can be advanced by focusing on social innovation. on the other hand, empowerment is a significant aspect of social entrepreneurship because social entrepreneurs have limited access to resources while addressing social problems (sijabat, 2015). besides, unemployment rates in bangladesh are similar to other low-income countries in south asia. however, among the younger age groups, unemployment tends to be concentrated. the income of daily wage labor is very low and poverty rates are higher. sijabat (2015) argued that skill mismatch is the poor's greatest barrier in finding jobs. so the best possible way to help the poor is to create jobs and integrate jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 88-104 http://dx.doi.org/10.31106/jema.v17i1.5539, issn (online) 2597-4017 96 the poor into available jobs outside the competitive labor market. martin & osberg (2007) stated that social entrepreneurs emerge due to impoverishment, marginalization, and exclusion in society and some individuals take the initiative of battling social problems by using business principles. social change in poor communities made by social entrepreneurs improves the quality of life, efficiency, and sustainability of social and economic growth (popoviciu & popoviciu, 2011). as there is a very thin line existent between the role responsibilities and moral responsibilities, according to stilgoe at al. (2013), a person needs to blur the lines between them. therefore, the scope of social entrepreneurship has greater scope in countries like bangladesh. the proposed hypotheses in this study can be described as follows. h1: there is a significant effect between motivation (the reason in choosing social entrepreneurship) and social entrepreneurship intention h2: there is a significant effect between society perceptions and social entrepreneurship intention h3: there is a significant effect between government obstacle and social entrepreneurship intention h4: there is a significant effect between barriers and social entrepreneurship intention methods this study has been conducted on young graduates in bangladesh both from public and private business schools or universities to understand their perception and tendency to become a social entrepreneurs. survey data had been collected between september 2019 and december 2019. in total, 350 young graduates from 20 business schools/universities in bangladesh did respond to the survey and all participants have been kept anonymous. in the first part, there were questions about the demographic profile of respondents with multiple choice questions about their gender, age, and qualification. there were also questions about if they did hear and understand the concept of social entrepreneurship and whether they wanted to have that career or not. however, there were also questions related to people's perception of social entrepreneurship, the motivational reasons choosing social entrepreneurship as their future career and the challenges also barrier associated with it. secondary data was collected from relevant international published journal articles. the constructs in this study were formulated by using measurement scales adopted from prior studies to support the best opinion of the respondents regarding the perception of social entrepreneurship. spearman correlation has been conducted to understand the relationship between motivational reasons, an exploration of the youth's perception toward social entrepreneurship development: evidence from bangladesh by dewan mehrab ashrafi, md atiqur rahman sarker, junaidah binti hashim, ahasanul haque, fatima kanis nayan 97 society perceptions, government obstacles, barriers, and social entrepreneurship intention among young business school graduates. shen et al. (2018) added that spearman correlation is a reliable analysis to solve the problem which concerns nominal data and sequential data. result and discussion our demographic profile shows that among 350 respondents, 54% were male respondents while 46% of them were female. however, 21% of the respondents (which females were the majority) have not heard about social entrepreneurship. therefore, it can be concluded that females have a lesser idea about the notion or conception of social entrepreneurship than males. interestingly, 46% of the respondent perceived that people tend to become social entrepreneurs because they cannot get their desired job, while the rest of the respondents believe that being a social entrepreneur is easier than finding a job. spearman’s correlation table 1 shows that there is a significant relationship between motivation and social entrepreneurship intention among young business school graduates in bangladesh. the probability value of this study was lower than 0.050 (0.000) which means h1 is accepted. this finding supports previous studies from caringal-go & hechanova (2018) who stated that motivation has a significant impact on social entrepreneurship. table 1 also shows that there is a significant relationship between social perception and social entrepreneurship intention among young business school graduates in bangladesh. the probability value of this study was lower than 0.050 (0.000) which means h2 is accepted. maas & grieco (2017) stated that factors such as risk and uncertainty, a respectable career affect entrepreneurial behavior. these findings can be explained by our perceptual questions regarding motivational factors and society perception to become a social entrepreneur which shows that about 51% of the respondents perceived social entrepreneurship as a respectable career since this activity provides an opportunity for an individual to be more independent and engage with the community by creating a job for others (social value purpose). contrarily, about 49% of the respondents (which females were about 30%) do not prefer to become social entrepreneurs in the future since it seems too risky, has a lot of uncertainty, and seems like take the advantage of others difficulties or poverty. there is a slightly different level of acceptance between young business school graduates who perceived social entrepreneurship as a respectable and noble career choice with the others who perceived social entrepreneurship as a risky career path. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 88-104 http://dx.doi.org/10.31106/jema.v17i1.5539, issn (online) 2597-4017 98 table 1. hypotheses testing model the correlation coefficient (r) criteria sig. value decision motivation -> social entrepreneurship intention 0.411 sig. value < 0.050 0.000 h1 accepted society perception -> social entrepreneurship intention 0.590 sig. value < 0.050 0.000 h2 accepted government obstacles -> social entrepreneurship intention 0.621 sig. value < 0.050 0.000 h3 accepted barriers -> social entrepreneurship intention 0.669 sig. value < 0.050 0.000 h4 accepted the result of spearman’s correlation (table 1) shows that there is a significant relationship between government obstacles, barriers, and social entrepreneurship intention. the probability value of this study was lower than 0.050 (0.000) which means h4, h5 is accepted. this finding support by martín & martín & cuervo-arango (2016) and mueller et al. (2015) who stated that factors like excessive official formalities, rigid procedures, excessive administrative hurdles and unreasonable delay to obtain governments assistance are major obstacles in determining the intention on social entrepreneurship among the youth generation. newey (2018) added that factors like difficulty in obtaining finance, government regulations, adequate business support, and tax regulations are perceived to be major barriers to social entrepreneurship. moreover, the nature of uncertainty of social business, the greater financial risk, the lack of family support and practical details about starting a business also perceived as influential factors in determining the perception of social entrepreneurship among young graduates. our perceptual questions regarding government obstacles and perceived barriers in doing social business show that about 44% of the respondents in this study agree with the statement that their family will not support and appreciate their decision an exploration of the youth's perception toward social entrepreneurship development: evidence from bangladesh by dewan mehrab ashrafi, md atiqur rahman sarker, junaidah binti hashim, ahasanul haque, fatima kanis nayan 99 to start a social business. however, 28% of the respondents are not sure about the procedure of starting a business. in addition to that, 60% of the respondents believe that social entrepreneurs have to go through excessive official formalities to get assistance for the startup business. furthermore, 52% of the respondents believe that procedures of getting government assistance are very rigid for social entrepreneurs while 43% of them believe that social entrepreneurs have to go through unreasonable due to lack of obtaining assistance from the government. therefore, it can be concluded that the lack of involvement of the government in educating and supporting social business in bangladesh affects young business school graduates (and their family) perception about social entrepreneurship development. conclusion and suggestion this study attempts to highlight the problems, prospects and motivating factors that encourage young business school graduates to engage in social entrepreneurship in bangladesh. our study revealed that the reason for choosing social entrepreneurship, government support obstacles, barriers or obstruction regarding entrepreneurship in general, and the way society perceives social entrepreneurship has a significant relationship on the perception of social entrepreneurship among young business school graduates in bangladesh. most of the respondents chose to participate in social entrepreneurship since it allows them to be independent while others believe that such activity can fulfill their social spirit by engaging with the community to create a job for others. they also perceived social entrepreneurship as a respectable and noble career in which they can also make money out of it. interestingly, although many young business school graduates perceived social entrepreneurship as a respectable and noble job, they also considered that job as a risky career, has a lot of uncertainty and seems like take the advantage of others difficulties or poverty. moreover, they do not get family support and appreciation to do social business due to the reason that people tend to become social entrepreneurs because they cannot get their desired job. finally, most of the respondents in this study do not possess a sound idea about the procedure of starting a social business. many respondents believe that social entrepreneurs have to go through unreasonable hurdles to obtain assistance from the government. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 88-104 http://dx.doi.org/10.31106/jema.v17i1.5539, issn (online) 2597-4017 100 however, this study is limited to the factors influencing the perceptions of young business graduates. it does not include the perceptions of university graduates from every faculty or even vocational and high school graduates. further comparative study of social entrepreneurship should extend the perspective in every young aged both from university, vocational, and high school graduates since this study found that there is slightly different of level acceptance between young business school graduates who perceived social entrepreneurship as a respectable and noble career choice with the others who perceived social entrepreneurship as a risky career path. further study should also measure the dominance between internal and external factors of young graduates in choosing social entrepreneurship as their career. references alvord, s. h., brown, l. d., & letts, c. w. 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(2011). the future of entrepreneurship research. entrepreneurship theory and practice, 35(1), 1–9. https://doi.org/10.1111/j.1540-6520.2010.00420.x jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 71 the development of accounting information system based on excel in helping cv. ladi collection preparing their financial statement putri wulanditya *) riski aprillianita **) abstract microenterprises in indonesia is showing increasing progress, especially the printing industry. this study wanted to know what is the description of printing business cycle, accounting records on financial transactions, calculation of production costs and operating income. research method used is study case at cv. ladi collection through field observation, interview, and documentation. data analysis technique used is qualitative descriptive. from study result in cv. ladi collection, there are 2 types of business namely screen printing and school badge production. accounting recording has been done but only limited to accounts receivable bookkeeping. many of cash receipts transactions from cash sales are derived from screen printing orders and expenditures were not stored and recorded. solution on production costs calculation for cv. ladi collection is using job order costing for screen printing service and job product costing for badge production. this research also produces excel design for accounting (efa), which consists of 7 sheets of the navigation sheet, beginning balance, journal, ledger, income statement, financial position statement, and depreciation. keywords: accounting recording, production cost, microenterprises 1. introduction 1.1 research background the development of sme sector in indonesia illustrates that there is great potential if it managed and developed properly and it will be able to realize a strong medium-scale enterprises (ilham & sudarno, 2013). rofiq (2015) revealed that indonesia’s small and medium micro units (smes) accounted for 99.98 percent of business units in indonesia, accounting for 57 percent of national gdp and more than 97 percent of domestic workforce absorption. it means that type of small and medium micro enterprises actually a group of businesses mainly owned by indonesia instead of large companies, especially the go public ones. msme in indonesia has diverse types. setyobudi (2007) categorized it into 4 groups: businesses engaged in (1) trading field such as newspaper/magazines agents, (2) agriculture sector including plantation, animal husbandry, and fishery, (3) industry sector such as food/beverage industry, mining, as well as craftsmen, (4) service areas, for example consultant services. in act number 20 of 2008, msme itself is classified based on the criteria of assets owned as well as amount/sales amount in one year. for a micro scale has a maximum asset of 50 million or a maximum asset of 300 million. while in small-scale, if assets or property owned by the business is between 50 million and 500 million with turnover amounted to 300 million to 2.5 billion. medium-scale businesses is businesses with assets amounted to 500 million to 10 billion with total sales in a year generate to 2.5 billion to 50 billion. the role o f smes is to set up their own business which is able to cope with the difficulty of finding a job and the impact of business downsizing done by big companies in indonesia. the emergence of products resulting from creative industries is increasing productivity to utilize the wealth of this country into something worth selling. one type of businesses that is growing very rapidly for the last few years is the utilization of information technology in the field of printing business. some companies compete with each other in term of providing printing cost and many of them give a very big discount to get huge number of print orders. printing business (printing industry) is mostly done by the beginner businessman whose goal is the same as other businessmen who want to get a profit. according to dewi (2014) this is due to the easy way or system in this printing business and the jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 72 low capital that needs to be issued. printing business is an independent business opportunity that gets the easiest printing order opportunity, so as its business diversification. start from cheap printing business, graphic design, computer embroidery, manual screen printing, digital screen printing, offset printing cost, digital printing, t-shirt of regional head election (pilkada), print and design of wedding invitation, paper store, colored stamp to sidewalk number plate business. printing industry include in manufacture types of business if viewed from its business process. in this printing business, there is row material processing in the form of ink, paper or other printing medium to go through coloring process, designing, until printing which result in many kind of end product. this type of business is similar to another such as service or trade which is built fixed profit and capable in maintaining its survival life. to achieve this purpose, many ways are conducted by company management to manage it. one of them is by always making the right decision. the right decision making is based on the right information, to gain the right information. the company management needs accounting as a tool that can help in the provision of information, especially financial information (latifa & utami, 2011). in its activity, a manufacturing company requires financial information, whether used for internal or external parties. the information is related to each other, for example in the financial statements which intended for external users where one of them is the profit/loss (income) statement, the company must calculate the production cost first. production cost is also the impact of cost implementation of methods used, whether the activity or traditional-based costing, full or variable costing, process or job order costing. in addition, the cost of production can also be used to set the selling price, because it can know the amount of costs required to produce goods to be sold. conditions of practice in field, msmes still have difficulty in preparing financial statements. owners of msmes do not have awareness about the importance of financial statements. rodhiyah (2013) suggested that it is needed for smes to grown habits of making simple financial records in accordance with the accounting system, so it can be used for accountability to all stakeholders. the habit can be started from storing evidence of financial transactions, such as a note/receipt for later recorded in a simple bookkeeping system or recording in manual. cv. ladi collection is a business engaged in the printing industry. the resulting product is a badge (a company/organization logo printed with embroidery method, usually affixed to school clothing and school uniforms), school children's beaks, and flags in various sizes. the business has been started since 2013 with mr. ladi as the owner. although relatively simple, this business has received orders from abroad customers from regional scale (surabaya) until national scale. several challenges that faced by mr. ladi in developing his business is human resources related issues, whether completing technical work or related to bookkeeping system. not only make products, cv. ladi collection also reselling various product. although, it has many business activity and diversification, cv ladi collection still has not arranged their accounting system automatically due to the reason their confusion about how to record transactions related to production cost for goods in which they produce, goods cost for goods they take from suppliers, and how to calculate profit/loss and identifying assets, debt, and equity. 1.2 research problem based on the description above, researcher proposed a research question as below: 1. how is the business cycle of cv. ladi collection? 2. how is the accounting records of financial transactions of cv. ladi collection? 3. what are the constraints faced in calculating production costs up to the preparation of the profit/loss financial statements? 4. how to produce a simple software based on excel for accounting that can be operated to help the preparation of financial statements of printing business? 1.3 research purpose the purpose of this study would like to describe the business cycle, accounting records, calculation constraints of hpp and profit/loss faced by cv. ladi collection in running printing jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 73 screen business, and play efa for the business. with this research, it is expected that similar printing business can adopt the calculation of production costs and profit/loss and overcome the constraints faced. standard setters (indonesian financial accounting standards board) is used to know the real condition of the constraints facing by small industry in curbing evident/note of transaction, not to mention the implementing of sak emkm which has now begun to take effect. 2. theoretical framework 2.1 previous research studies research by rachman (2016) who examines the calculation of production cost of screen printing has obtained result that there is difference in counting production cost recorded by company with the calculation using full costing method, because it does not include depreciation cost into factory overhead. the company should use the full costing method because it imposes all costs, both fixed and variable costs. ilham & sudarno (2013) conducted a study on smes engaged in the business of screen printing called "otakkanan production". the results revealed that owner of screen printing in determining production cost has not shown that production cost is reasonable, so it is not in accordance with commonly used accounting principles. because goods cost is not calculated based on the classification and collection of costs incurred but more likely to use management considerations in determining the cost included in the calculation of price. the study also uses case studies on smes studied by anjasari (2015). object research on donat madu cihanjuang existing in cimahi. in order donat madu to know their production cost more accurate and to support business development and easy to calculate production cost of donat madu, the owner would need an application that is expected to help owner of donut madu in calculating production cost and production cost report. the designed applications also handles master data management, production creation, unit cost calculation, production cost calculation, and production cost report, journal and ledger. 2.2 theoretical framework 2.2.1 msmes (micro, small, and medium entreprises) there are many kinds businesses run by msmes in indonesia. in general, setyobudi (2007) classified it into 4 groups: 1. trading sector including trading (news/magazine agent, dress shoes and others), retailers (oil, basic necessities, fruits, and others), export/import (local and international products), and the informal sector (the collection of used goods, street vendors and others). 2. agricultural sector including plantations (nurseries and orchards, vegetables and others), livestock (laying hens, cow's milk), and fisheries (land/sea such as shrimp ponds, fish ponds, and others). 3. industrial sector including food/beverage industry, mining, craftsmen, convection, printing and others. 4. services sector including consultant, workshop, restaurant, construction services, transportation services, telecommunication services, education services, and others. based on uu number 20 of 2008 regarding micro, small and medium enterprises, its described that the definition and criteria of msmes as follows: micro enterprises are productive businesses owned by individual and/or individual entities that meet the criteria of micro business maximum 50 million or turnover up to 300 million, small business is a stand-alone productive economic enterprise, conducted by an individual or business entity that is not a subsidiary or not a branch of a company owned, controlled, or becomes part directly or indirectly from a medium-sized or large-scale business that meets small business criteria with assets owned between 50 million to 500 million or 300 million to 2.5 billion turnover. medium business is a stand-alone productive economic enterprise, carried out by an individual or business entity which is not a subsidiary or a branch of a company owned, controlled , or be a good part of direct or indirectly with small or jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 74 large business with net worth of > 500 million – 10 billion or annual sales proceeds > 2.5 billion to – 50 billion. 2.2.2 accounting and financial reporting accounting can be defined as an information system that provides a report to the parties who have interests (stakeholders) on the results of performance and financial condition of the company. accounting is also often regarded as a business language, where business information is communicated to stakeholders through accounting reports (hery, 2008). harahap (2011) described accounting process as data processing since the occurrence of transactions, this transaction has valid evidence as the basis of transaction. then based on data or evidence, this transaction then input to data processing resulting in output in the form of financial statement information. accounting in the process of data processing uses flow, cycle or accounting process starting from the transaction until reporting stage. accounting cycle is the stages in recording business transactions to produce financial statements for an organization within a certain period (winwin, 2008). in a period, which can be in daily, monthly, and yearly always follow accounting cycle from the beginning to the final stage, then back to the initial stage. each type of company experiences the same accounting cycle. however, for this type of manufacturing, it is more complex than the types of services and trade. this is caused by process that is to convert raw materials into intermediate goods or finished goods in manufacturing. so it has 3 types of supplies namely raw materials, semi-finished/in process, and finished goods. by having more than 1 inventory, it will have an impact on the process of accounting recording. manufacturing does not need to have a large factory, as long as it produces its own goods, the business can already be classified as manufacturing. the specific of manufacturing business also lies in its financial statements, both for internal and external purposes. the process of preparing external financial statements cannot be separated from the results of internal financial statements. here are the steps in preparing the manufacturing financial statements: 1. cost of goods cost of goods is an important element for assessing the success of trading and manufacturing companies. yudha (2014) disclosed that cost of goods is closely related to indicators of corporate success, such as: gross sales, net income. cost of goods basically shows the cost of goods (services and goods) produced in a certain accounting period. this means that cost of goods is part of the basic price, the cost of goods sold in an accounting period. how to calculate cost of goods manufactured is as follows: cost of material xxx cost of labor xxx cost of factory overhead xxx total production cost xxx (+) initial inventory xxx (-) ending inventory (xxx) cost of goods manufactured xxx in a manufacturing business, cost of goods is the largest part of company's cost. if cost information for a job or process is available quickly, then management has a solid foundation for planning its activities. setiadi, saerang, & runtu (2014) disclosed that companies must be careful and detailed in making financial reports, especially related to cost of goods in order to avoid deviations and waste of costs in the production process. cost of goods information can be a starting point in determining the right selling price to the consumer in a sense that benefits the company and ensures the survival of the company. 2. income statement the income statement is almost the same as the trading business. however, trading businesses uses a purchase account or merchandise inventory, while manufacturing the account is replaced with inventory of finished goods. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 75 sales revenues xxx cost of goods manufactured xxx (+) initial inventory xxx (-) ending inventory (xxx) cost of sold (xxx) gross profit (bruto) xxx operating cost (xxx) income (netto) xxx 3. capital statement refer to sak etap (dsak, 2009) paragraph 3.12 of complete financial statements, that equity changes statement shows (i) all changes in equity, or (ii) changes in equity except changes arising from transactions with owners in their capacity as owners. equity change report for manufacturing is the same as type of service business or trade. initial capital/investment xxx (+) capital/investment deposit xxx profit year to date xxx (-) prive (xxx) loss year to date (xxx) ending capital/equity xxx 4. financial statement a balance sheet or financial statement is a description or condition at the end of the period concerning assets owned by a business, liabilities to be completed, as well as the amount of final capital obtained from the calculation in changes in equity statement. an example of a simple financial statement position/balance sheet is presented below: cash xxx account payable xxx account receivable xxx bank payable xxx equipment xxx total liability xxx machines xxx accumulated depreciation (xxx) car xxx accumulated depreciation (xxx) building xxx ending capital xxx accumulated depreciation (xxx) total asset xxx total liabilities + equity xxx 2.2.3 calculating cost cost calculation system can be done through two approaches, namely: the calculation of ordering cost (job order costing) and the calculation of costs based on the process (process costing). according to carter (2009) system of cost calculations by order, production costs are accumulated for each separate order (job). in contrast to a process-based costing system, where costs are accumulated for an operation or subdivision of a company such as a department. the two methods of calculating or calculating the order cost have some characteristics that must be considered before being used by the company. the differences in characteristics between job order costing with process costing, including: a. job order costing; cost is accumulated on the order, these cost calculations are suitable for use by companies that produce on the basis of customer orders in which the resulting products are heterogeneous in nature. examples of companies that use this system are printing companies, contractors, furniture, architect services, public accounting firms, doctors, and notaries. b. process costing; costs is accumulated on departments and products, these cost calculations are suitable for use by companies that produce on a mass/continuous basis in which the products jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 76 produced are homogeneous in nature. examples of some companies that use this system are automotive industry, paper industry, cigarette industry, steel industry, and cement industry. 2.2.4 accounting based on excel with excel spreadsheet, accounting work becomes easily solved with the help of table-shaped data presentation and linking data into a comprehensive program. mayes (2011) defined the term of spreadsheet as "a simple tool consisting of cells matrix that can store numbers, text, or formulas". spreadsheets that exist in microsoft excel, currently an analytical capability that can be designed for its own users. with an update on microsoft excel, users can perform tasks ranging from routine transactions to the preparation of financial statements. microsoft excel is software for automated data processing which includes basic calculations, the use of functions, graphics and data management. the main reason for most business in the world using microsoft excel as their basic accounting application is because this application is a user friendly in preparing financial report. it is helpful tools to solve the simplest and most complex administrative problems. for small-to medium-scale company, it is quite expensive to obtain accounting information systems, while with applications excel for accounting, it can be designed in low cost. it’s a user friendly with the level of accuracy that can be guaranteed (ahmar & tjahjono, 2011). previous research that conducted by triandi & stephanie (2010) produce accounting design of applications using microsoft excel as a management tool in preparing financial statements. microsoft excel is useful software due to the reason that this program is able to produce financial reports only by inputing daily journal. this application is so simple and suitable for small industries. 3. research method this research can be classified as case study research. according to yin (2008) case studies are used to explain comprehensively related to a person, a group, an organization, a program, or a society that is studied, examined, and discussed in depth. location of the research is at business place of cv. ladi collection resided in jl. bulak setro iii / 71, surabaya. data collection technique refers to research of lasena (2013) who performing field research. this research is conducting observations on companies that become the object of research and perform direct interviews and ask for specific explanation on the leadership of companies and employees authorized to obtain data in the form of information relevant to the study. methods of collection and type of data required are: a. direct interviews with owners and employees about business operations, financial transactions that typically occur within a month, recording of production activities, costs incurred, revenue earned, and how to prepare financial statements. b. observation is done by observing the business processes that occur in cv. ladi collection to obtain an overview of any activity related to costs and revenues, especially those that can be classified as financial transactions. c. documentation of data owned by cv. ladi collection or from suppliers or customers related to the accounting cycle or the process of preparing financial statements, such as notes, invoices, receipts, books/records of transactions, and others. the research stages are preceded by initial survey to determine the conditions or cases that occur in the business. then in the implementation stage, it will be surveyed with the techniques that mentioned earlier. after the required data have been obtained, then the descriptive qualitative method is performed. 4. research result and analysis 4.1 business cycle cv. ladi collection is a business that has expertises and focuses in the printing industry. the business runs in two types, services (by receiving screen printing order on t-shirts, bags, and other fabric materials) and manufacturing business (by producing school badge, and other scout flags and equipment). here's an explanation of each business: jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 77 a. screen printing services. the price is still subjective (depending on owner's consideration) or can also be determined based on the number of colors (@ rp2.000) with a minimum order of 40 pieces. this service is based on customers and salesman orders. customer or salesman usually brings material to be screened. mr. ladi and/or his wife then will determines the estimated cost of screen printing within days. print for school shirts, batik clothes, and event accessories is common order that obtained by mr. ladi. b. badge production. the price of goods is determined by type of goods such as badge, barong, or flag. they are not sold per pieces because the goods are small, so it sold per 10 pieces. production time is made in months before new school year. the purchase of materials starts in april and may. there are plenty of material stock in the warehouse, compared to its turn over. here is the production process of cv. ladi collection; 1. the process of screen printing finishing service. customers come bring materials and examples/design of screen printing. owners calculate prices based on its complexity, color, order quantity and film frames whether it is already exist or need to be made first. working process about 2-3 days and done by 2 people with their main duties is mixing color and finishing (dried, lifted, folded, iron, and packing). after that, the finished goods shipped to the customers. 2. production process (school equipment). the rolled clothes are screen printed according to desired design. after screen printed, there are 2 processes that should be done which consist of direct dineci (for example, squad banner/flag, badge of tut wuri handayani, etc.) and coated with hard clothes on the bottom by ironing. then packed per 10 pieces with plastic. besides these two processes related to production of screen printing, there are also assets or equipment called screen, a wooden shaped box with a variety of sizes. screen is a medium between designs printed on paper film and copied to the screen so that the paint is applied to the screen according to desired design. the finished screen should be cleaned. here is the screen cleaning process: 1. soaked the screen for 15 minutes with chlorine mixed with water. 2. then cleaned by brushing and spraying water. picture 2 cv. ladi collection business unit sales system in cv. ladi collection consists of 2 types, namely through freelance sale and retail shop. there also individual customers who comes directly to the shop to place the order. sales through the store usually made by phone. if the stock is ready, the product requested will be sent immediately. otherwise, if the stock is empty, it will be made first. there is no delivery charge in this process because the amount is not too much. there are 2 kinds of payment system that used by cv. ladi collection which is cash and credit payment methid. payment in cash usually performed by customer. while by credit payment usually done by sales and stores. payments are not based on jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 78 collectible notes but billed together with the delivery of goods or billing every day to the store. at certain times, sales or stores can also make payments with a large nominal by using transfer form but with a reverse date. 4.2 recording regular financial transactions that used by cv. ladi collection consists of raw material purchase, sale of finished goods, payment of expenses (salary, electricity, water), delivery of goods to the store, billing of accounts receivable, as well as depositing and withdrawing bank cash. there is no evidence for transactions stored. for example purchase evident of raw materials and complementary materials to suppliers, finished transactions evident are not stored. there is no receipt or invoice when the screen printing services completed. transactions proves stored by cv. ladi collection is derived from sales to sales. the transactions proves made in the form of sales invoices, consisting of 2 copies, white and red copies. this invoice is not given at the completion of the order, but kept by the owner until the receivables are paid off. when the salesman paid their receivables the white invoice is given to them. based on the interview with the owner, the reason this business habitual happens is due to the reason that salesman usually do not pay according its sales invoice, but according to his/her ability and their intention to pay. when it’s happens, the payment usually in big amount that use transfer (giro) form or transfer to the bank account. the listing of financial transactions for sales to the store is different with sales to salesman. the transaction proofs is made in the form of a record book of store receivables. each store has its own book. balance book records receivable when sending goods to the store and the balance is reduced if receiving money. the increasing amount of receivables can reach 1-2 million per week, but the payment made only around 100 thousand rupiah that given when employees come to the store to gain bills for every 2 days. the reason why it happens because there are so many competitors and it is so difficult to get customers. the existing stores and salesman that cooperated with cv. ladi collection is their customer who has long history doing business with them. trust more important than cash flow in which is expected by business owner, mr ladi and his wife. this business also cannot distinguish its business interests with personal or household interests. related to the electricity and water bill that still mix with mr ladi households needs because it is still in the same house or building. another example for their business complexity management is bank account. surprisingly, the cv. ladi collection bank account is united with the owner (mr. ladi) bank accounts. the action in taking money from his bank account can be biased not only for business purposes, but also for personal and household needs. based on cases study at cv. ladi collection, it can be described that the importance in implementing accounting system (recording financial transactions) in micro-enterprises level merely depend on the owner interest. the system should be concerned with recording incoming money than money out. the listing of transaction is more to sales on credit and to maintain business continuity. the number or nominal of the transaction and how often the transaction takes place is also a consideration in recording. 4.3 the constraint and solutions regarding income statement calculation based on interviews with the owner of cv. ladi collection, it can be concluded that there are two types of business that run by cv. ladi collection which is screen printing services and school badge production. however, when reviewed from both types of business, those are manufacturing. to produce a badge, it is clear there is a production process from raw materials in the form of hard clothes into semi-finished goods (hard fabric that has been screened and cut) or finished goods such as badges that have been dineci and packaged per 10 seeds in 1 plastic packaging. there is also the production process for screen printing, namely paint color mixing process, making screen process, screen printing process based on the number of colors, and the drying process. for screen printing services, cv. ladi collection does not provide material as a medium where attached to screen printing, such as t-shirts, cloth, bags, and others. customers bring their own materials requested to be screen printed. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 79 table 1 financial statement of cv. ladi collection may 2017 cash rp386.917.553 accoung receivables 16.789.500 raw material inventory rp.3.908.500 finished goods inventory rp127.650.000 supplies rp6.595.500 equipments rp24.060.200 car rp14.000.000 building rp5.000.000 total assets rp584.921.253 account payable 0 capital rp584.921.253 total liabilities & equity rp584.921.253 the balance of accounts receivable of cv. ladi collection consisting of (1) ud. h.husin & sons which is amounted to 3.400.000 rupiah, (2) toko perjuangan which is amounted to 7.897.500 rupiah, (3) amanah jaya which is amounted to 1.882.500 rupiah, and (4) husin 1 which is amounted to 3.609.500 rupiah. from the number of assets prespective, this bussines can be classified as the medium-scale businesses. however, when we look from the turnover prespective its still classified into micro business. the largest asset held on cash in the bank. this makes the cv. ladi collection does not really think about cash inflows and collection of receivables. the big bank cash may also mix with the owner's personal savings. mr. ladi also cannot calculate cash in hand for what business operations, because it is mixed with household needs. recording transactions that occur for the production process is less complete, making it very difficult to identify the costs incurred. mr. ladi as the owner and his employees, amounting to 5 people, never do the recording of each job or order from customers. they do not want to complicate with the record, it is important for work to be finished. it happens, because the average of human resource only consists of elementary and junior high graduate. there are also high school graduates, but their duties also as executors or the production helper. therefore, after reviewing cv. ladi collection problems in calculating the cost of production, it can be solved by (1) starting from the owner's discipline in the storage of financial transaction evidence. then, (2) implements a cost account system based on order (job order costing). carter (2009) disclosed that in order for the cost calculation to effective, orders must be individually identifiable. the details of an order can be recorded through a job cost sheet that can be in the form of print or computerized. the business can start by using an order card and note per product. the following are order note that can be used by the business. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 80 table 2 example of order note order note cv. ladi collection name material specs quantity order date start production (date) finished production (date) shipped/taken alone *) material : name qty price total labor : name qty wages total factory overhead : name qty cost total total production cost order card or product cost card if has been collected for one month, can be recorded to make production cost report. then add by total revenue so that an earnings report can be generated. for income, mr. ladi also has to start recording all revenues earned from screen printing services either in cash or unpaid by filling out the sales note already owned by cv. ladi collection. revenue derived from the sale of badges has been done so that the recording is not a problem and continued. an example of the calculation of production costs and profit for a single order is illustrated as follows. cv. ladi collection received orders of 380 seeds of sports t-shirts from mr. larso, following the calculations: table 3 income statement income statement cv. ladi collection material : karet putih 4 kg @rp37.000 148.000 karet warna 1,5 kg @rp37.000 55.000 obat warna 1 kg @rp109.000 109.000 total cost of material 312.000 wages of labor: 2 org @rp80.000 x 3 day 240.000 living cost: 2 org @rp75.000 x 3 day 225.000 cost of labor 465.000 factory overhead: electicity and water 25.000 cost of goods manufactured 802.000 income: 380 clothes @rp3.000 1.140.000 profit 338.000 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 81 4.4 designing excel for accounting purposes (excel for accounting/efa) excel for accounting (efa) is an application that use microsoft office programs in preparing financial statements. cv. ladi collection still not good in saving transaction evident and does not have complete record related to financial transaction of its business. however, this effort has potential to operate efa design because the owner has laptop, already have awareness and intention to maintain administration of bookkeeping orderly, and there are human resources (employees) who can operate computer. this research began to play with efa based on several field surveys at home of mr. ladi which is the owner of cv. ladi collection. the initial design of efa consists of 5 sheets, namely: navigation; beginning balance; journal; ledger; lr (profit and loss); lpk (financial position statement); and depreciation. phases of efa design on cv. ladi collection can be described as follows : 1. development of logic and function formula in accounting cycle picture 2 logical code 2. determining account code or chart of account picture 3 chart of account (coa) 3. testing of transaction input and formulas relation between sheets picture 4 journal sheet jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 82 picture 5 ledger efa designed which consists of 7 sheets, i.e. navigation sheet, journals sheets, general ledger sheets, profit/loss statement sheets, financial position statement sheets, and depreciation sheets. the main sheets are journal sheets, general ledger sheets, profit/loss statement sheets, and financial position statement sheets. the support sheet is a navigation sheet that contains instructions for users how to operate an efa application. while the depreciation sheet is also used as a supporting sheet that is useful to help calculate depreciation of fixed assets. the socket is provided because usually small business or msme less understood about the calculation of depreciation. picture 6 efa 5. research conclusion and limitation 5.1. conclusion the total assets that owned by cv. ladi collection accounted about 500 million with sales turnover of only 5-10 million monthly, therefore it is can be classified as a micro business. cv. ladi collection consists of two business unit namely screen printing services and badge production. screen printing services are obtained from freelance sales and personal order. while the production of badges (like tut wuri handayani batch, etc) sold to stores during the new academic year. a input beginning balance input transaction ledger p/l statement assets, liabilities, capital on financial statement jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 83 complete accounting record (mainly sales receivables and store receivables) is done by cv. ladi collection. unfortunately, cash sales transactions proofs and many expense transactions are not well kept. the constraints that faced by cv. ladi collection is the owner or employee does not understand about the essential of accounting report. however, the owner already has awareness about the importance of recording and storing transaction proofs. this research provides suggestions for cv. ladi collection to solve the constraints mentioned above by (1) starting from the owner’s disciplining in storage of financial transaction evidence. then, (2) apply the system of ordering cost calculation (job order costing). details of orders can be recorded through an order cost card (job cost sheet). the card can be completed by the employee when completing each job or order. this research also suggests to use excel for accounting (efa) to make input transaction, in order to facilitate mr. ladi or employees to record ther business transactions daily. by using efa, we will be able to know the profit/loss of business each month and financial position at the end of each period. efa that proposed in this study consists of 7 sheets which is navigation sheets, beginning balance sheet, journal sheet, general ledger, income statement sheet, financial statement sheet, and inventory card sheet. 5.2. limitation nevertheless, this research has some limitation. this study only uses cv. ladi collections as the research object. therefore, it can suggest, further research should be done in broader scale. references carter, w. k. 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(2014). analisis penentuan harga pokok produksi percetakan dengan menggunakan metode full costing pada cv. global sejahtera. retrieved from goo.gl/zpj5nj. *) putri wulanditya, stie perbanas, surabaya, indonesia (e-mail: putri@perbanas.ac.id) **) riski aprillianita, stie perbanas, surabaya, indonesia http://core.ac.uk/download/files/379/11737509.pdf http://economy.okezone.com/read/2016/01/14/320/1288073/strategi-ukm-hadapi-mea jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 135-155 http://dx.doi.org/10.31106/jema.v17i2.6683, issn (online) 2597-4017 135 consumer response to different advertising appeals: the role of brand value and the perceptual fit of an extended brand for high-involvement products rosa prafitri juniarti 1* , adi zakaria afiff 2 1 department of management, faculty of economics, universitas negeri surabaya, surabaya, indonesia 2 department of management, faculty of economics and business, universitas indonesia, depok, indonesia *corresponding author(s) email: rosajuniarti@unesa.ac.id abstract brand extension is a topic that has been widely discussed by academics and practitioners in various studies. unfortunately, there are only a few that address the role of product involvement, advertising appeals, and value dimensions in the extension acceptance as their main issue. therefore, this study aims to mixed three controlling factors which are product involvement, advertising appeals, and brand value dimensions in determining how consumers respond to the parent brand and extended brand. this study was designed to test the possible interaction in a 2x2x2 full-factorial between advertising appeals (informational vs. emotional), brand extension perceived fit (high vs. low), and value dimension (symbolic vs. functional) for high involvement products. this study confirmed that there were significant differences in the main effects for both consumers' evaluation toward brand extension and the parent brand in the case of a symbolic brand and the high fit of extensions. emotional appeals play important role in enhancing this degree because of the high level of its brand associations. as symbolic brand often referred as premium brand, the more positive the level of quality perception, the higher level of consumers' evaluation toward brand and brand loyalty will be. thus, the more loyal consumer to the parent brand, the more positive evaluations of the extension will be. keywords: advertising appeals; symbolic; functional; perceived fit; parent brand; brand extension; high-involvement product jel code: m31, m37 doi: 10.31106/jema.v17i2.6683 article history: received 2020/04/14 reviewed 2020/06/03 revised 2020/06/27 accepted 2020/11/12 licensed: cc-by mailto:rosajuniarti@unesa.ac.id http://creativecommons.org/licenses/by/4.0/ consumer response to different advertising appeals: the role of brand value and the perceptual fit of an extended brand for high-involvement products by rosa prafitri juniarti, adi zakaria afiff 136 introduction a famous brand name often influences consumers' purchasing decisions. brand extension is a topic that has been widely discussed by academics and practitioners in various studies. they examined the factors that influence the success of a brand extension, the types of brand extension that fit the parent brand (o’reilly et al., 2017; sharma & paudel, 2018; hadi & sandhu, 2020), the quality of the parent brand (aaker & keller, 1990; völckner & sattler, 2006; carter & curry, 2013; verhellen et al., 2016), the cultural differences in evaluating brand extension (henseler et al., 2010; kim & park, 2019), the transfer of assets from the parent brand to the brand extension (bhat & reddy, 2001; joshi & yadav, 2018), attitudes towards brand extension and self-constructiveness (boisvert & ashill, 2018; dedeoğlu, 2018; yuan et al., 2016). advertisements can improve consumer ratings of new products, including new products from established brands. several researchers have proven that advertisements can increase acceptance of extensions (dens & de pelsmacker, 2010b). extensions can enhance the essential characteristics of brand associations which can help consumers understand the features and benefits of brand extensions and fit. consumers will judge the appropriateness and consistency when the ad describes how the parent brand's attributes enhance the extension's ability to deliver (völckner & sattler, 2006). while many studies of brand extension exist in the world, only a few that address the role of product involvement, advertising appeals, and value dimensions in the extension acceptance as their main issue. discussions about those issues need to be carried out because consumers evaluate brands in different ways. they evaluate product categories with different engagement. likewise, the evaluation of brand extension, at high and low-level engagement, will also be different. the degree to which consumers engage with product categories influences how they evaluate extensions (dens & de pelsmacker, 2010a) and advertisements (kim et al., 2009). this shows the need to study brand extension for high-involvement products. furthermore, all brands have value dimensions, i.e. overall abstraction meaning that gives an identity to a brand. brand value dimensions place a product in consumers' minds and differentiate it in the same category. brand value dimensions can be a symbolic brand or functional brand which fulfills consumers’ symbolic and functional needs. functional brands meet immediate and practical needs and emphasize product performance against consumer functional or functional needs. symbolic brands fulfill symbolic needs such as selfjema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 135-155 http://dx.doi.org/10.31106/jema.v17i2.6683, issn (online) 2597-4017 137 expression and prestige. symbolic brands underline the social and hedonic aspects of products and features to embody the self-concept or self-image expression of consumers (gierl & huettl, 2010). brand concept consistency on the extension product is assessed by the readiness of the brand extension to hold a particular brand concept. it depends on consumer perception whether brand-concept associations (such as status, reliability) have relevant and/ or desired relationships with a certain product (kwon et al., 2016; mimouni chaabane & pez, 2017; bairrada et al., 2018; zhu et al., 2019). a brand with a more abstract concept is more elastic and can be extended to a lot of categories. on the other hand, brands with functional attributes are less elastic and will be more successful if the brand extension is more in line with the function of the brand (albrecht et al., 2013). however, as we mentioned above there is little research that uses the concept of the brand value dimension in evaluating the parent and extended brand’s attitude (monga & john, 2010). therefore, this study aims to mixed three controlling factors which are product involvement, advertising appeals, and brand value dimensions in determining how consumers respond to the parent brand and extended brand. literature review perceived parent brands quality rajagopal (2020) and sharma & paudel (2018) defined perceived brand quality as the perception or initial identification of the overall quality or superiority of a brand. perception of quality is one of the crucial factors which can drive product success and enhances business performance (yang, 2012; alavinasab et al., 2017). kim et al. (2014) stated that the role of brand quality becomes more important when companies tend to extend their product diversity. the use of original brand names (which is also known as parent brand) for product extensions proved to influence the consumers’ evaluation of extended brand (kwun & oh, 2007). the more positive consumer evaluation toward parent brand quality, the higher the acceptance of extended brand will be (o’reilly et al., 2017; hadi & sandhu, 2020). brand extension evaluation and perceptual fit brand extensions can be defined as the used of established brand names to introduce new product categories (yuan et al., 2016; dedeoğlu, 2018). boisvert & ashill (2018) added that brand extension is categorized in two dimensions which are a horizontal and vertical extension. while horizontal extension means using the parent brand name to introduce new products or services in different categories. vertical extension refers to launch a new product consumer response to different advertising appeals: the role of brand value and the perceptual fit of an extended brand for high-involvement products by rosa prafitri juniarti, adi zakaria afiff 138 or service in the same category but at a cheaper price and lower quality compared to the parent brand. the relationship of the parent brand and its extension has been studied by numerous researchers. thus, previous studies, in general, indicate that the perceptual of extension “fit” with parent brand has a positive effect on the evaluation of extended brands (carter & curry, 2013; verhellen et al., 2016). it means that the higher the level of fitness between the parent brand and the extension, the more positive consumers’ evaluation (attitude) toward brand extension will be. the perceptual fit itself can be defined as any association regarding parent brands, including categories, brand concepts, or brand-specific associations, which can connect with parent brands with brand extensions and form the basis of perceived fit. bottomley & holden (2001) emphasized that there are several factors in shaping consumer evaluations of brand extensions which are the quality of the parent brand, the fit between the parent brand and the extension category, and the interaction between the two. aaker & keller (1990) added that the degree of extension evaluation is due to the perception of the level of ease of use, situational involvement (barone, 2005), the dominance of the parent brand category (carter & curry, 2013), and competitor characteristics (milberg & sinn, 2008). symbolic and functional value dimension symbolic concepts generally used by consumers to fulfill their symbolic needs by expressing their value preferred (self-expression), social status image, ego-identification (self-enhancement) such as dominance, prestige, and uniqueness (kwon et al., 2016; chaabane & pez, 2017). symbolic needs itself are defined by salehzadeh et al. (2018) as the desire for products that meet internal needs for self-enhancement, role position, group membership, or identification of the ego. the use of symbolic terms refers to the image that was formed by marketers in brand management. whereas the functional of brand value refers to the perception of consumers of how well the brand will satisfy their utilitarian needs, such as the quality of the products, product performances, and the level of risk (albrecht et al., 2013). in a simple meaning, a functional brand is the perception of usefulness and competence of a brand/product that was designed by marketers to fulfill consumption needs. previous studies from albrecht et al. (2013) show that there is a positive and significant relationship between functional value and consumers' evaluation toward extensions. functional values were more heavily affect the level for both luxury and non-luxury brand extensions compared to the hedonic value. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 135-155 http://dx.doi.org/10.31106/jema.v17i2.6683, issn (online) 2597-4017 139 advertising appeals the effect of advertising appeals on consumer response was varied for each individual because of the different conditions of informational load, the perception of the level of involvement, age, and market pressure (rhee & jung, 2019). advertising appeals itself can be defined as the general tone and message strategies that marketers generally used to grab attention and to attract consumer willingness to buy (teichert et al., 2018). advertising execution strategies can be roughly divided into two dimensional which is informational and transformational/emotional appeals. in a simple meaning, informational advertising informs consumers clearly and logically by providing factual and relevant data ("the reason why") about the brand benefit (pashna et al., 2019) belch & belch (2013) added that informational advertising tends to be informative and advertisers generally use it to try to convince consumers that their products or services have certain attributes or provide certain benefits that meet consumer needs. prajogo & purwanto (2020) stated that due to the benefit that consumers obtain after exposed by informative advertising, they tend to create a buzz voluntarily. the more information that is given by new product extension advertising campaign, the further away the positioning of the extended brand from the parent brand will be as perceived fit between the parent brand and extensions will decrease and it will impact on the influence of attitude toward the parent brand on brand‐extension evaluation (nan, 2006). emotional appeals are aimed to evoke consumer feelings and emotions (dens & de pelsmacker, 2010b). positive emotional advertising provides strong brand signals and stimulates category-based processing. also, the absence of specific information from extensions in advertisements will cause the audience to only use existing cues such as brand names, perceived parent brand quality, and perceived fit to evaluate extensions (klink & smith, 2001; primanto & dharmmesta, 2019). hypotheses development a symbolic brand that shares prestige orientation and brand image to its brand extension shows the achievement of brand extension fit (bhat & reddy, 2001). in this context, prestige orientation and brand relate to parent brands and brand extensions (lye et al., 2001). the image fit influences consumers to believe that they can enjoy similar advantages from parent brands and brand extensions (eren-erdogmuş & büdeyri‐turan, 2012; ferguson et al., 2016; eren-erdogmus et al., 2018). hereafter, fit perception can be created even though the brand extension is very different from the product category of the parent brand. consumer response to different advertising appeals: the role of brand value and the perceptual fit of an extended brand for high-involvement products by rosa prafitri juniarti, adi zakaria afiff 140 on the other hand, the brand extension ad will enhance the brand image because it can communicate the established extension, increase positive brand association, and strengthen brand image (völckner & sattler, 2006). advertising execution strategy can be divided into informational and emotional advertisements (pashna et al., 2019; rhee & jung, 2019). the positive emotional advertisement gives a strong brand signal and stimulates category-based processing. moreover, the absence of specific information of extension in the advertisement causes audiences to use the existing cues, such as brand name, perceived parent brand quality and perceived fit to evaluate extension (klink & smith, 2001; kwun & oh, 2007; o’reilly et al., 2017; hadi & sandhu, 2020). the more audiences love an ad, the more they like the advertised product. meanwhile, the more information is given in the new extension communication, the more new characteristics from extension become prominent, and brand extension positioning is further from the parent brand (nan, 2006). an increase in the amount of product information reduces the effect of generic brand names and fit in particular, because information provides several reasons for the evaluation of products without the brand name itself (dens & de pelsmacker, 2010a). furthermore, consumers receive a brand fit better when the parent brand and brand extension have the same brand concept. companies can implement many communication strategies to increase perceived fit and ultimately increase brand acceptance among consumers. the low-fit perception can be overcome with an effective communication strategy that focuses on relationship associations that provide a clear relationship between the parent brand and brand extension (shokri & alavi, 2019; zhang et al., 2020). a high fit will indicate a positive evaluation of the parent brand (arikan et al., 2016; childs & jin, 2020). a successful brand extension will bring high confidence in the brand extension which is then transferred back to the parent brand (joshi & yadav, 2018). the feedback effect on brand extensions can differ due to the type of advertisement. if the introduction of brand extensions uses informational advertising, the new information will form new brand extension associations and influence associations to the parent brand. if a brand extension introduction implements emotional advertising, new information about the brand extension product will be limited. consumers will judge advertisements based on important signals that link the parent brand to the brand extension. in this case, attitudes towards brand extension have less influence on attitudes towards the parent brand because the ad shows attributes of the parent brand without meaningful information about the brand extension (nan, 2006; dens & de pelsmacker, 2010b). jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 135-155 http://dx.doi.org/10.31106/jema.v17i2.6683, issn (online) 2597-4017 141 h1: attitude toward brand extension and parent brand is higher for emotional than informational appeal in case of a symbolic brand and the high fit of extensions. h2: consumers’ evaluation of brand extension and parent brand will be more favorable for emotional than informational appeal when it is a symbolic brand and the low fit of extensions. h3: attitude toward brand extension and parent brand is higher for informational than emotional appeal in case of a functional brand and the high fit of extensions. h4: there is no difference in the level of attitude toward brand extension and parent brand for both emotional and informational appeal in case of a functional brand and the low fit of extensions. h5: consumers’ evaluations on brand extension and parent brand is higher for symbolic than functional concept under emotional appeals and the high fit of extension. h6: consumers’ evaluations on brand extension and parent brand is higher for functional than symbolic concept under informational appeals and the high fit of extension. methods this study was designed to test the possible interaction between advertising appeals (informational, emotional), brand extension perceived fit (high, low), and value dimension (symbolic, functional) for a high involvement product category. therefore, a 2 x 2 x 2 fullfactorial between-subject design was set up to examined the proposed hypotheses. real mobile phone brands namely apple (iphone) and nexian were used in this study to enhance ecological validity (lau & phau, 2007). camera and television were chosen as extension product focus in this study because of the strong beliefs that generally consumer has about its attribute (flores et al., 2014). this study used printed advertisements as an experimental stimulus. there are eight combinations of stimuli based on the experimental design (table 1). the detailed printed ad stimulus can be viewed in appendix 1a-h. table 1. experiment design symbolic functional high fit low fit high fit low fit emotional advertising µ1 µ2 µ3 µ4 informational advertising µ5 µ6 µ7 µ8 three pretests were employed to determine brands that were symbolic or functional in nature, to identify advertisement stimuli and brands extension perceived fit whether it’s consumer response to different advertising appeals: the role of brand value and the perceptual fit of an extended brand for high-involvement products by rosa prafitri juniarti, adi zakaria afiff 142 informational or emotional and high or low. through an online survey, 228 undergraduate students at the faculty of economics and business, universitas indonesia, were randomly participated in the experiment and divided across various treatments. table 2. independent t-test results between symbolic and functional brand symbolic (µ) functional (µ) apple 6.829 5.717 nexian 3.162 4.063 a first pretest was run to identify these brands whether it can be classified as symbolic or functional. a questionnaire with semantic differential scales that consists of several items was distributed to 228 target respondents. thus, the mean ratings of items symbolic and functional were compared using an independent sample t-test. table 2 shows that apple demonstrated much stronger association ratings than their functional feature with image related attributes such as prestige, status, and elegance. while nexian tends to be more functional focused (easy to use, lower prices, and multi-features). in addition, the result of the independent t-test shown in table 2 also shows that apple's brand is more superior compared to nexian. table 3. anova test results of perceived fit and brand product category perceived fit (µ) camera television apple 4.750 4.885 nexian 4.296 4.702 a second pretest was run to ensure that the stimuli extensions were a reasonable fit for parent brands. the extension of the high involvement product category chosen for apple and nexian was camera and television. the result of brand extension perceived fit compared means indicated that there are no differences in brand extension mean scores to those of respective parent brands. it means that both the selected extensions indicated a reasonably good fit with the parent brands. table 3 shows that the respondent of this study slightly perceived that television for both brands has a higher extension fit with the parent brands than the camera. finally, a third pretest was conducted to determine advertisement stimuli strategy whether it's informational or emotional. there is no difference in symbolic and functional jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 135-155 http://dx.doi.org/10.31106/jema.v17i2.6683, issn (online) 2597-4017 143 dimension mean scores of each advertisement stimuli both informational and emotional stimuli. table 4. questionnaire items variable code item reference attitude toward extended brand (aex) aex1 according to me, the extended brand (apple tv/apple camera/nexian tv/nexian camera) that’s being advertised is great. dwivedi et al., (2010) aex2 my attitude toward the extended brand (apple tv/apple camera/nexian tv/nexian camera) that’s being advertised is very positive. aex3 i like the extended brand (apple tv/apple camera/nexian tv/nexian camera) that’s being advertised. attitude toward parent brand (apb) apb1 according to me, the parent brand (apple/nexian) that’s being advertised is great. apb2 my attitude toward the parent brand (apple/nexian) that’s being advertised is very positive. apb3 i like the parent brand (apple/nexian) that’s being advertised. in order to test the proposed hypotheses (h1-h6), validity and reliability measurements of consumers’ evaluation (attitude) toward brand extension (aex) and their attitude toward parent brands (apb) were carried out for the basis of independent sample t-test analysis. the results of the validity and reliability testing in table 4 show that all instruments used in this study were valid and reliable. table 5. validity and reliability result variable/item pearson correlation criteria cronbach’s alpha criteria decision aex 0.903 > 0.600 reliable aex1 0.912 > 0.130 valid aex2 0.903 > 0. 130 valid aex3 0.881 > 0. 130 valid apb 0.953 > 0.600 reliable apb1 0.937 > 0. 130 valid apb2 0.955 > 0. 130 valid apb3 0.942 > 0. 130 valid consumer response to different advertising appeals: the role of brand value and the perceptual fit of an extended brand for high-involvement products by rosa prafitri juniarti, adi zakaria afiff 144 result and discussion table 6. independent sample t-test result hypotheses aext apb decision sig mean comparison sig mean comparison h1 µ1 > µ5 .000 µ1 (5.006) > µ5 (3.809) .000 µ1 (5.810) > µ5 (3.611) accepted h2 µ2 > µ6 .002 µ2 (5.932) > µ6 (5.025) .000 µ2 (6.488) > µ6 (4.580) accepted h3 µ7 > µ3 .038 µ7 (4.803) < µ3 (5.401) .000 µ7 (4.137) < µ3 (5.963) rejected h4 µ4 = µ8 .954 µ4 (5.655) > µ8 (5.638) .000 µ4 (6.517) > µ8 (4.787) rejected h5 µ1 > µ3 .188 µ1 (5.006) < µ3 (5.401) .613 µ1 (5.810) < µ3 (5.963) rejected h6 µ7 > µ5 .001 µ7 (4.803) > µ5 (3.809) .050 µ7 (4.137) > µ5 (3.611) accepted an independent sample t-test analysis for the 2 (informational vs. emotional advertising appeals) x 2 (high vs. low perceived fit between the parent brand and extensions) x 2 (symbolic vs. functional brand value) was conducted to test the hypotheses of the study. in general, there are only 2 of 6 hypotheses statement that can be accepted and has similar findings to the previous studies. this study was able to confirm h1 and h2, as there were significant differences in the main effects for both consumers’ evaluation toward brand extension and the parent brand. for the case of the symbolic brand and the high fit of extensions, consumers evaluate brand extensions and parent brand for emotional appeals is higher rather than informational appeal (aex; µ1 (5.006) > µ5 (3.809), p < 0.050 and apb; µ1 (5.810) > µ5 (3.611), p < 0.050). while for the case of a symbolic brand and the low fit of extensions, consumers evaluation of brand extensions and parent brand is higher for emotional rather than informational appeal (aex; µ2 (5.932) > µ6 (5.025), p < 0.050 and apb; µ2 (6.488) > µ6 (4.580), p < 0.050). this highlights that the combination of symbolic brand value and emotional appeals play important role in enhancing the degree of attitude toward brand extension and parent brand in the level of perceptual fit between parent and extended brand. audrin et al., (2017) stated that luxury brands that provide strong symbolic benefits to consumers may enhance the perception of quality, especially for materialist consumers. eren-erdogmuş & büdeyri‐turan (2012) and esmaeilpour (2015) added that there is a significant relationship between symbolic (personality congruence) and brand prestige and perceived quality. as prestige brand quality assumes quality, the more positive the level of quality perception, the higher level of consumers’ evaluation toward brand and brand loyalty will be. thus, the more loyal consumer to the parent brand, the more positive evaluations of the extension will be (liu et al., 2017). on the other hand, völckner & sattler jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 135-155 http://dx.doi.org/10.31106/jema.v17i2.6683, issn (online) 2597-4017 145 (2006) and figueiredo & eiriz (2020) add a new perspective by argues that the emotional use of prestige (symbolic) products is much more important than their functionality usage. emotional advertisement is more acceptable to introduce a symbolic brand because of the high level of its brand associations. the result of this study failed to prove the proposed hypotheses 3 which stated that attitude toward brand extension and parent brand is considerably higher for informational than emotional appeal in case of a functional brand and the high fit of extensions. table 5 shows that the degree of attitude toward parent brand and extension for the high fit product was higher when marketers use emotional appeals as an advertisement execution strategy especially in functional conditions (aex; µ7 (4.803) < µ3 (5.401), p < 0.050 and apb; µ7 (4.137) < µ3 (5.963), p < 0.050). h3 of this study was rejected as an unexpectedly emotional ad execution strategy has a significant contribution in defining the level of consumers' evaluation. matthes (2013) suggest that emotional appeals play a key role in shaping consumers’ brand attitude. emotional appeals are considered as the most effective strategy than informational appeals when the purpose of the advertising act was to persuade (teichert et al., 2018), to increase the level of information processing, to grab attention, and brand recall (dens & de pelsmacker, 2010b). whereas the proposed hypotheses of this study which stated that in the case of functionality brand, there is no significant difference of attitude toward brand extension and parent brand for the low fit product in the different advertisement appeals (h4) was rejected due to their insignificancy p-value (aex; µ4 (5.655) > µ8 (5.638), p > 0.050 and apb; µ4 (6.517) > µ8 (4.787), p < 0.050). this highlights that the low fit perceptions of brand extension for a functional brand will partially lead the degree of attitude toward parent brand and extension in each advertisement appeals groups. the result of this study also was not able to confirm h5 which stated that the level of consumers' evaluation toward parent brand and extension will be favorable when there are the high fit perceptions of brand extension for both symbolic and functional in the case of emotional advertising (aex; µ1 (5.006) < µ3 (5.401), p > 0.050 and apb; µ1 (5.810) < µ3 (5.963), p > 0.050). it means that there is no difference between symbolic and functional dimension mean scores in responding to emotional advertisement stimuli when the perceptual fit between brand extension and parent brand was high. participants in this study were tended to have the same score evaluations in regards to the design of the printed advertisement stimulus that used as the object of the experiment. finally, this study was confirmed h6 which stated that the level of consumers’ evaluation toward parent brand and extension is higher for a functional brand in case of the high fit consumer response to different advertising appeals: the role of brand value and the perceptual fit of an extended brand for high-involvement products by rosa prafitri juniarti, adi zakaria afiff 146 perceptions of brand extension in informational advertising (aex; µ7 (4.803) > µ5 (3.809), p < 0.050 and apb; µ7 (4.137) > µ5 (3.611), p < 0.050). this result of the study supports the conclusion of prajogo & purwanto (2020) and lye et al., (2001) who stated that due to the reason that perceived quality influences functional brands more than prestige (symbolic) brands, marketers tend to convince consumers that their products or services have offered better functional set advantages that will meet consumer needs by maximizing the use of informational advertising. dens & de pelsmacker (2010a) added that the use of camera and television as the extension was resulting in their dependence on informational appeals especially the nature of the product itself which can be classified as a high-involvement product category. conclusion and suggestion this study aims to mixed three controlling factors which is product involvement, advertising appeals, and brand value dimensions in determining how consumers respond to the parent brand and extended brand. the findings reveal that there were significant differences in the main effects for both consumers' evaluation toward brand extension and the parent brand in the case of the symbolic brand and the high fit of extensions. emotional appeals play important role in enhancing this degree because of the high level of its brand associations. as symbolic brand often referred as premium brand, the more positive the level of quality perception, the higher level of consumers' evaluation toward brand and brand loyalty will be. thus, the more loyal consumer to the parent brand, the more positive evaluations of the extension will be. the result of this study also proves there is no difference between symbolic and functional dimension mean scores in responding to emotional advertisement stimuli when the perceptual fit between brand extension and parent brand was high as participants in this study were tended to have the same score evaluations in regards the design of printed advertisement stimulus that used as the object of the experiment. finally, this study was able to confirm that the level of consumers' evaluation toward parent brand and extension is higher for the 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(2019). using self-congruence theory to explain the interaction effects of brand type and celebrity type on consumer attitude formation. journal of business research, 103, 301–309. https://doi.org/10.1016/j.jbusres.2019.01.055 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 135-155 http://dx.doi.org/10.31106/jema.v17i2.6683, issn (online) 2597-4017 153 appendix 1a. printed ad stimulus symbolic – low fit – emotional appendix 1b. printed ad stimulus functional – low fit – emotional appendix 1c. printed ad stimulus symbolic – low fit – informational consumer response to different advertising appeals: the role of brand value and the perceptual fit of an extended brand for high-involvement products by rosa prafitri juniarti, adi zakaria afiff 154 appendix 1d. printed ad stimulus functional – low fit – informational appendix 1e. printed ad stimulus symbolic – high fit – emotional appendix 1f. printed ad stimulus functional – high fit – emotional jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 135-155 http://dx.doi.org/10.31106/jema.v17i2.6683, issn (online) 2597-4017 155 appendix 1g. printed ad stimulus symbolic – high fit – informational appendix 1h. printed ad stimulus functional – high fit – informational jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 1 the role of customer relationship management in indonesia business erna andajani *) nurul badriyah **) abstract companies need to have tactics to win business competition. one way that can be used by the company is to recognize and understand the customer. companies that perform customer relationship management will be able to sustain its business. the existence of customers is the driving force of business enterprises in various industries. in business services, the customer can be as an actor and a very crucial business objects. this study aimed to clarify the concept of customer relationship management and serves some research management customer relations in indonesia. the study also describes the application of customer relationship management the company has done in indonesia. keywords: customer relationship management, customer, relationship. 1. introduction 1.1 research background in the era of business competition requires companies to change the orientation to customer oriented. the seriousness begins with a customer-oriented company to know and understand the customer. the process of understanding the customer is done through interaction with customers (relationship). companies that successfully build and maintain customer relationships can sustain its business. the existence of customers is the driving force of the company's business in various industries. in business, especially in services, the customer is a partner to create services and business objects very crusial. bitner, brown and meuter (2000) in mithas, krishnan, and fornell (2005) states still little research into the role and contribution of the implementation of customer relationship management (crm). this statement inspires researchers to renew the crm research in the 20th century. mithas, krishnan, and fornell (2005) states that the big companies in america that have successfully implemented crm and have an impact on customer satisfaction. mithas, krishnan, and fornell (2005) advised to test the effect of crm on customer satisfaction in the context of individual customers and business customers. consequences of the implementation of crm can improve the company's performance is interesting to peruse. based on the discourse, this study aims to clarify the concept of customer relationship management and serves some customer relationship management research in indonesia. the study also describes the application of customer relationship management has been done in indonesia. 1.2 research problem based on the above points of thought, the research problem is how the role of customer relationship management (crm) in indonesia business. 1.3 research purpose this research aims to know and examines the role of customer relationship management (crm) in indonesia business by using qualitative approach. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 2 2. theoretical framework 2.1 previous research studies table 1 crm research in indonesia no author and year methodology research object independent variable dependent variable result 1 adnin, lubis and widayanto (2013) quantitative. regression linier automotive repair customers in semarang crm (people, process and technology) customer loyalty crm has a significant effect toward customer loyalty 2 estiningsih and hariyanti (2013) quantitative. multiple linier regression linier pregnant women in malang crm (people, process and technology) customer loyalty crm has a significant effect toward customer loyalty 3 indah and devie (2013) quantitative. pls company service manager in surabaya crm (customer satisfaction and long term relationship) competitive advantage and company performance crm has a significant effect competitive advantage and company performance 4 ersi and semuel. (2014) quantitative. pls smes flour in east java crm (infrastructure it, human resources knowledge, business architecture) satisfaction and loyalty crm has a significant effect customer satisfaction. while at the same time, crm don’t effect on customer loyalty 5 ellynia and tjhin (2014) applied research whatsapp, wechat, line and kakao talk users in indonesia ecrm (user friendly, smartphones, operation system used and user interface) the most widely used application is the line jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 3 continue no author and year methodology research object independent variable dependent variable result 6 carissa, fauzi and kumadji (2014) applied research distro customers in malang proses crm (customer data collection, analysis, and implementation of crm program) level crm (strategic, operational and analytical) distro have implemented crm and some suggestions for improvement source: adnin, lubis and widayanto (2013); estiningsih and hariyanti (2013); indah and devie (2013); ersi and semuel (2014); ellynia and tjhin (2014); carissa, fauzi and kumadji (2014). 2.2 theoretical framework 2.2.1 customer relationship management (crm) buttle and maklan (2015) describes the meaning of the 'r' of crm stands for 'relationship'. a relationship is composed of a series of interactive episodes between dyadic parties over time. relationships can be meant as the company's relationship with the customer or the company's relationships with suppliers. understanding the concept of this relationship is easily understood and can be interpreted in a broader sense. the longer the relationship, the two sides better understand each other. in the process of relationship that gives rise to trust and commitment between the two parties. both of these factors lead to increasingly close relationship and deep. the concept of customer relationship management has been known since the early 1990s (buttle and maklan, 2015). during the development of the concept of customer relationship management have emerged various definitions of crm are summarized in table 1. the crm can be defined as the process of interaction between companies and customers. in the process of interaction is built and nurtured relationships with customers. the process of building and maintaining customer relationships are managed by firms for the benefit of long-term corporate profits. in the process of crm, companies identify, acquire and retain customers. the company seeks to create and deliver customer value. the company's aim that customers survive and lead to customer loyalty. today the crm process facilitated by information technology. it is integrated into the company help exercising effective enterprise crm. the main objective of crm to improve the long-term and profitable for the company through understanding of customer behavior better. on the other hand, the crm can be considered as the company's business strategy. companies have to change the orientation of companies from marketing to customer-centric. by understanding the needs and desires of customers better impact on customer satisfaction. this will provide benefits and income in the long term and sustainable. the concept of crm can be reviewed in three types, namely: strategy, operational and analytical (buttle and maklan, 2015). in the aspect of strategic state that crm is core customercentric business strategy that aims at winning and keeping profitable customers. company oriented thinking to create customer value and delivering better than competitors. type operational crm focuses predominantly on the automation of customer-facing process such selling, marketing and customer service. in operational crm companies often use a software application (marketing automation, sales force automation and service automation) are integrated. the use of crm application aims to enhance customer value and facilitate the company's work system. analytical crm is the process through which organization customer-related transform the data into actionable insight for either strategic or tactical purposes. analytical crm focus on acquiring customer data. the customer data is processed in a manner to increase the value of the customer and the company. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 4 based on table 1, it is interesting to study the concept of crm. many companies have implemented crm in business processes. in indonesia, crm research has also been done in the form of basic and applied research. crm is often associated with customer satisfaction and loyalty as a form of consequence. customer satisfaction is feeling happy or disappointed someone who is the result of a comparison of perceptions of product performance and expectations (kotler, 2010). customer satisfaction arises when a customer interacts with the company. in the context of a company engaged in the service of customer satisfaction occurs after the product is delivered services. satisfied customers tend to be loyal customers. customer loyalty is a form of customer behavior in the activity of purchasing goods or services over and over, buying products other products offered the same manufacturer and recommend goods or services to others consistently (tjiptono and chandra, 2011). companies that implement the crm can address the customer in the context of the customer (end-user) or supplier. the relationship between crm with customer satisfaction and loyalty can apply in the context of the customer (end-user) or supplier. buttle (2004) states that there are four conditions in the development and implementation of crm strategy at the company, among other things: leadership and corporate culture, information technology and data, human resources and business processes. coltman, devinney and midgley (2009) in ersi and samuel (2014) expressed the same thing that the it infrastructure, knowledge of hr and business architecture can support the company's crm. measurement of crm can be summed up in three main points namely processes, human resources and technology. the process includes the systems and procedures used to identify and establish a relationship with the customer. hr aspect explains the company's employees as a crm implementer. in the service business, employees determine the success of the business. technology used to help accelerate and optimize processes and employees in crm activity. technology is a tool supporting the complementary value-added crm and enterprise customers. table 2 definitions of crm no. definition of crm 1 crm is an information industry term for methodologies, software and usually internet capabilities that help an enterprise manage customer relationships in an organized way. 2 crm is the process of managing all aspects of interaction a company has with its customers, including prospecting, sales and service. crm applications attempt to provide insight into and improve the company/customer relationship by combining all these views of customer interaction into one picture. 3 crm is an integrated approach to identifying, acquiring and retaining customers. by enabling organizations to manage and coordinate customer interactions across multiple channels, departments, lines of business and geographies, crm helps organizations maximize the value of every customer interaction and drive superior corporate performance. 4 crm is an integrated information system that is used to plan, schedule and control the pre sales and post-sales activities in an organizations. crm embraces all aspects of dealing with prospects and customers, including the call center, sales force, marketing, technical support and field service. the primary goal of crm is to improve long-term growth and profitability through a better understanding of customer behavior. crm aims to provide more effective feedback and improved integration to better gouge the return on investment (roi) in these areas. 5 crm is business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behavior that satisfaction customers, and implementing customer-centric processes. source: buttle and maklan (2015) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 5 3. research method 3.1 research design descriptive research is used to analyze and present data that is qualitative. moleong (2000: 3) defined qualitative as "a procedure that produces descriptive data in the form of written or oral words and observable persons and actors". qualitative research used in this research to tell, interpret and describe data that writer get from observation, interview and documentation. this research uses observations and documentation of previous research about the implementation crm in indonesia business. 3.2 type of data the data obtained are secondary data. secondary data is data obtained not from respondents or resource persons directly. researcher uses observation (method of collecting data by deliberate and systematic study of social phenomena and natural phenomena by way of observation and recording) and documentation (method of collecting data by holding records from the archive that has to do with the problems studied by the author) as their data collection method. 4. research result and analysis 4.1. research discussion this study discusses the crm basic and applied research that has been done in indonesia. table 2 presents the crm research using quantitative methodology with multiple linear regression and sem as well as applied research. research of adnin, lubis and widayanto (2013), estiningsih and hariyanti (2013), ersi and samuel (2014) examined the effect of crm variable to variable customer loyalty and customer satisfaction. good customer relationship management have an impact on customer satisfaction. customer satisfaction affects customer loyalty. in the study adnin, lubis and widayanto (2013), estiningsih and hariyanti (2013) shows the influence crm directly into customer loyalty. when companies interact with customers and there is a relationship, it can be said to occur when customer satisfaction. companies engaged in the service has been duly perform crm. services products occurs when there is interaction between the customer and service provider companies. type operational crm focuses more on the way companies build relationships with customers. indah and devie (2013) examine the effect of crm on competitive advantage and performance of companies that provide significant results. in indah and devie (2013) uses the measurement of crm in the context of business to business. crm is measured through technology that supports crm, skills and abilities and attitudes of people who control the crm and the processes used by the company in accessing and interacting with customers to create new value and satisfaction. strategic crm objectives to build a crm company to create and deliver maximum customer value and better than the competition. companies can develop relationships with corporate customers (individual) or business customers (companies). in the context of relations mengelolaan business customers more emphasis on the sustainability of the company's strategic business. based on the table of previous research studies above its shws that the study of ellynia and tjhin (2014); carissa, fauzi and kumadji (2014) revealed crm applied research. while ellynia and tjhin (2014) examined the implementation of crm companies are using electronic crm (ecrm) on users whatsapp, wechat, line and kakao talk in indonesia. type crm used in ellynia and tjhin (2014) is an operational crm with a focus on customer touch points. customer touch points can have contact with customers through electronic media. wechat app, line and kakao talk can be used for enterprise mobility in a relationship with the customer. whatsapp application does not focus on establishing relationships with customers because this application prioritizes privacy of its users. carissa, fauzi and kumadji (2014) examined the implementation of crm to improve customer loyalty distributions in malang. this research is complex enough that begins by jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 6 telling the process of implementing crm distributions, identify and explain the impact and crm implementation obstacles. all of the process aims to increase customer loyalty. directions crm presented in carissa, fauzi and kumadji (2014) for the strategic crm. this is in accordance with one of the definitions of crm (buttle and maklan, 2015) that crm is a strategic business that maximizes profitability, revenue and customer satisfaction. when consumers are satisfied will lead to customer loyalty. carissa, fauzi and kumadji (2014) also discussed the analytic crm with an evaluation of the implementation of crm distributions. the results of the evaluation include: commitment to the implementation of crm should be understood by the whole structure of the company, the existence of a clear definition and objectives are structured from the implementation of crm, there needs to be engagement with customers, more focus on the business instead of the technology used during the operation, distributions should have a team that focuses on addressing customer and engage with customers appropriately targeted and effective. 5. research conclusion and recommendation 5.1. conclusion based on the discussion and description above it can be concluded that the concept of crm has been applied in many local companies in indonesia. the concept of crm is not limited in the context of individual customers but can be applied also for business customers. implementation of crm in local companies in indonesia can be seen from the perspective of strategic, operational and analytic. also found a consistent measurement of crm processes, human resources and technology to basic research. measurements crm on applied research more diverse depending on the purpose of research focus to solve the problems of practice. 5.2. recommendation this study contributes to expand the concept and application of the relevant researchers in local companies crm indonesia. in the real business practice of crm provide long-term benefits for companies that implement crm. limitations of this study to the discussion of crm research in 2013-2014 and amounted to 6 research. expected future studies can be developed to examine the foreign companies operating in indonesia with more diverse research objects. it may be advisable to do research that discuss other variables related to crm such as word-of-mouth, customer retention and customer experience. references adnin, rizqi janati. lubis, nawazirul dan widayanto. 2013. pengaruh customer relationship management terhadap loyalitas pelanggan pt. nasmoco pemuda semarang. diponegoro journal of social and politic of science tahun 2013, 1-8, available at http://ejournal-s1.undip.ac.id/index.php/ buttle, francis. 2004. customer relationship management concept and tools. bayumedia, malang buttle, francis dan maklan, stan. 2015. customer relationship management concept and technology 3 rd . routledge 711 third avenue, new york, ny 10017 dhingra, manish dan dhingra, vashali. 2013. determinants of electronic customer relationship management (e-crm) for customer satidfaction in banking sector in india. african journal of business management vol. 7 (10), 762-768. dyche j.2001. the crm handbook: a business guide to cusstomer relationship management. addisonwesley, boston, ma. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 7 ellynia dan tjhin, viany utami. 2014. penerapan customer relationship management (crm) pada aplikasi pengiriman pesan instan studi kasus: whatsapp, wechat, line, kakaotalk. ultima infosys vol.v no. 1 juni 2014, 20-26. ersi, dzikiryati yuni dan semuel, hatane. 2014. analysis crm, kepuasan pelanggan dan loyalitas produk ukm berbasis bahan baku terigu di jawa timur. jurnal manajemen pemasaran vol.8 no.1 april 2014:1-8. doi: 10.9744/pemasaran.8.1.1-8. estiningsih, agnes widayu dan hariyanti, tita. 2013. pengaruh customer relationship management terhadap loyalitas ibu hamil pada pelayanan persalinan (studi di rs hermina tangkubanprahu malang). jurnal aplikasi manajemen vol.11 nomor 2 juni 2013 indah, purnama dewi dan devie. 2013. analisa pengaruh customer relationship management terhadap keunggulan dan kinerja perusahaan. business accounting review vol.1 no 2. kotler, p. 2010. manajemen pemasaran di indonesia: analisis, perencanaan, implementasi dan pengendalian. salemba empat, jakarta. mithas, sunil. krishnan, m.s dan fornell, claes. 2005. why do customer relationship management applications affect customer satisfaction? journal of marketing vol. 69 (october 2005), 201-209. tjiptono, fandy and gregorius chandra. 2011. service , quality and satisfaction 3 rd . andy, yogyakarta. *) erna andajani, state university of surabaya **) nurul badriyah, islamic university of lamongan jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 21 model and characteristics of micro finance institutions based on sme women in batu city ike kusdyah rachmawati *) abstract the development of smes is largely determined by the existence of mfis that offer financing models are diverse. it can be said that mfis become a partner of smes in this regard as a financial services provider, through diverse financing models. but on the other hand the diversity of financing models offered by mfis have not been fully able to be utilized. this study used exploratory research, descriptive, experimental and applied research conducted in stages for the development of a comprehensive model of microfinance accommodative informants determined based on the information needs. using a descriptive and qualitative analysis of the mfi deliberately selected examples illustrate the following: (a) the existence of mfis is recognized community has a strategic role as an intermediary in economic activity that has not affordable public services of banking institutions / conventional banks; (b) service mfis have demonstrated success, but success can still be in business economics. skim mfi lending to businesses has not received the priority, it is characterized by a relatively small ceiling (budget allocation) to support farming, which is less than 10% of the total ceiling of mfis; (c) a critical factor in the development of the agricultural sector mfi lies in the institutional legality, capability management, seed capital support, the economic viability of farming, farm characteristics and technical assistance clients / service users mfis; (d) to initiate the growth and development of agricultural mfis needed guidance enhanced capabilities for hr candidates mfi managers, support the strengthening of capital and technical assistance to customers of credit users. keywords: financial institutions micro, small business micro 1. introduction 1.1 research background in order to accelerate the development of economic clusters cluster-based rural economic potential, the community empowerment board of east java province in 2006, has launched the economic development program region which is the program as the action of the formation of regional productive economy that emphasizes economic development based on local economic potential of rural (bapemas, 2007), as well as specially designed using the approach of productive economic region emphasis on utilization of local economic resources that focus on interrelationships and dependencies between actors in a network of production to services and innovation development efforts (eko aristanto, 2007). utilization and development potential of natural resources is absolutely necessary in the economic development of a region (carunia, 1997; abbas effendi, 2004). by paying attention to these conditions and characteristics of the activities that have a tendency to empower micro businesses at a local level, we need the presence of microfinance institutions that have value alignments to micro enterprises, to be able to help in addressing the issues of business (ie capital) and technical assistance business management (chotim, ee and handayani, ad (2003). by considering the conditions and characteristics of the activities that have a tendency to empower micro businesses at a local level, we need the presence of microfinance institutions that have value alignments to micro enterprises, to be able to help in addressing the issues of business (namely capital ) and technical assistance business management (chotim, ee and handayani, ad (2003). under these conditions, this study will examine and formulate a model of microfinance institutions accommodating in developing economic clusters based on local economic potential in east java province jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 22 1.2 research problem based on the above points of thought, researcher are interested to understand the constraint and the possibility of development of the micro finance. 1.3 research purpose the purpose of this study is: 1. analyze the constraints and barriers to underdevelopment in the presence of microfinance institutions based micro enterprises women of the districts in the kota batu. 2. analyze and anticipate the possibility of economic and social phenomena as the impact of the development of micro-financial agency and improve access layer based women's micro business districts in kota batu 3. formulate a development model of microfinance institutions accommodating in an effort to improve women based micro-enterprise districts in the city 2. theoretical framework 2.1 theoretical framework financial institutions in this paper is a financial institution for a group micro. growth of microfinance institutions in indonesia an estimated 30 percent in 2008. siu (2001) explains that the mfis are institutions that provide financial services to poor and low-income families (as well as their microscale business activities), enabling them to better manage their risks, achieve a consistent pattern of consumption, and develop its economic base. 2.1.1 womens empowerment program objectives according to rian nugroho (2008: 164), the goal of women's empowerment program are: a. improving women's ability to engage in development programs, as active participation (subject) in order to not only become the object pembagunan as happened during this time b. improving the ability of women in leadership, to improve the bargaining position and involvement in each development well as planners, implementers c. monitoring and evaluation of activities d. improving the ability of women to manage household scale enterprises, small industries and large industries to support the promotion of household needs, as well as to productive employment opportunities and independent e. enhancing the role and function of women's organizations at the local level as a forum for the empowerment of women in order to be actively involved in the development program in the region of residence 2.1.2 definition of sme smes are the picture of the morphology of the smes concerned seen from the aspect of business and entrepreneurial nature of the sme entrepreneurs. from the aspect of the business profiles of smes can be seen from its ability to create added value of products produced, the efficient use of capital, and profits. while aspects of the development of smes profile can be viewed on the ability to utilize waste materials, ability in employment and ability to contribute to the gross domestic product (gdp). in accordance with law number 20 /2008 on micro, small and medium enterprises (smes): a. micro is a productive enterprise belonging to individuals and / or entities that meet the criteria of individual businesses micro as stipulated in this law. b. small business is an economic enterprise productive stand-alone, conducted by an individual or business entity that is not a subsidiary or branch of the company is not owned, controlled, or be a part either directly or indirectly from medium or large businesses that meet small business criteria referred to in this act c. medium enterprises is a productive economic activities that stand alone, carried out by an individual or business entity that is not subsidiaries or branches of companies owned, controlled, or jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 23 be a part either directly or indirectly by the small business or large enterprise with the amount of wealth net or annual sales revenue as stipulated table 1 criteria for smes according to law no asset omzet (million) 1 micro max 50 > 500.000.000 2 small > 50 > 500 – 2.5 m 3 medium > 500 > 2.5 m – 50 m source : processed 2.1.3 characteristics small business according to the characteristics of small businesses (tambunan, 2002: 166) characteristics inherent advantages and disadvantages of smes is the sme itself. some of the advantages of the smes are as follows: 1. durability 2. solid works 3. special expertise 4. type of product 5. the linkage with other sectors 6. capital characteristics of small businesses by soeharto prawirokusumo (2010: 48-49). 1. small businesses are usually managed by their owners so-called owner-manager who usually acts as the leader who gives direction to some of the staff were not too many and not specialized to run the business. they called a management team that usually comes from family members, relatives or close friends. 2. small businesses usually only have a single product line is not diversification. the volume of business is relatively small. 3. responsible for decision making is usually held by a single person and less authorizing others. 4. the relationship between the management of the work is very close. 5. usually a business organization in the absence of functional specialization. 6. in reporting system also did not rise. 7. less has long term planning. 8. usually not go public. 9. more oriented to survival for an owner's equity of the profit maximum. 10. not dominant in the market 2.1.4 barriers experienced by smes in general the weaknesses of smes are reflected on the constraints faced by the business. constraints commonly experienced by smes is the lack of capital, difficulties in marketing and supply of raw materials, knowledge is minimal about the world of business, limited mastery of technology, quality of human resources (formal education) is low, financial management is not good, not the division of tasks clearly, and often rely on family members as unpaid workers (tambunan, 2002: 169). 1. there is no synergy synergy between government, banks, and state-owned enterprises with financing schemes uniform and control the rhythm that the development of smes can run well, not sporadic, and no overlap between the existing program 2. the issue of technology and product innovation. these problems become a classic problem msme entrepreneurs. impact, the smes often confusion when dealing with product expansion of factories larger and well-established. "if there is no technological approach and growth of a culture of innovation, smes will sooner or later die. at least smes will be difficult to develop large and jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 24 forever so players medioker medium alias. in fact, sme-sme dealing with big business very sensitive technology and innovation, making it more efficient and more able to follow the changes in the market 3. market research. during this time, smes barely supported by adequate market research related promotional model, market opportunities, competitors, substitutes and complementary to the products of young entrepreneurs, consumer tastes, market trends and other external factors. these conditions make the business expansion of smes is very limited. without the support of market research, it is difficult for entrepreneurs to be able to know what the market needs. "together governments and business world, the future involvement of universities should be intensified to conduct market research. it took a kind of market intelligence. 4. inefficiency. smes do not have an optimum level of efficiency because it is not able to create economies of scale. productivity level total (tpt) large businesses are solid capital reached 170 times tpt small businesses. while mid-sized businesses have three times tpt small businesses. it shows how smes are just great in terms of employment and the number of business units, but in terms of scale and value of their business with large companies is far less capital intensive. tpt itself is a way of measuring business performance by calculating the value added per job opportunities are created. 2.1.5 the principle of the mfi there are seven (7) principles to be used as a reference when buildingmfi agriculture, namely: 1. meet the principles of necessity, means that mfis need to be cultivated on the farm only potential locations where farmers need support facilitation of capital, and there has been no financial services institutions in that location. thus the mfi will provide greater benefits for local communities. 2. be flexible, in the sense that fostered mfis should be adapted to local conditions and culture. 3. participatory. growing mfis should involve farmers in the local environment, so in addition to accommodate the aspirations of farmers, built participatory development will be able to build a sense of caring and ownership as well as the process through working together. 4. accommodating. in this case the mfi should prioritize the fulfillment of customers' needs. requirements for access to mfis compiled so as to open up the widest opportunity for address the needs of farmers with the minimum requirements completeness owned by farmers. 5. reinforcement. that is, although the establishment and development of mfis providing farm capital, but not to create dependency but should m principle the latter is sustainability. the emphasis is on the ability of organizations sustainability of mfis to continue running, even if there is no intervention agencies or government officials and private sector support. mfis should be oriented towards the seven functional able to enhance the institutional capacity building of farmer groups. 6. partnership. in this case the formation and development of mfis conducted involving the various stakeholders (stakeholders), as a provider of production, figures farming communities, businesses, universities, and sectoral institutions involved in each activity greater improvement degrees of social welfare of all members of the farming communit 2.1.6 stages formation of mfis to get the operationalization of mfis can conducted through at least six stages: 1. assessment location and mapping needs. the location meets the criteria required by local authorities, cooperative, easy to reach, and support high success; 2. selection phase feasibility farmer groups; 3. phase socialization of mfis; 4. start / formation organization of mfis; 5. phase operationalization / implementation mfis. at this stage mfis began marketing 6. to the farming communities around the region; 7. the final phase is the development of mfis jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 25 2.1.7 model mfis services to microfinance is not new, and still present in the lower and medium communities. in this section we will present several models of mfis and various types of services provided to micro enterprises or low-income communities. mfi is used for the type of institutions offering microfinance services that are not fully in the formal regulation of the banking sector. various models of microfinance institutions as follows: 1. poverty-focused development banks ie forms bank with the professional staff and have access to the administrative decision independent of its funds lent to individuals or a group of affluent societies is limited. 2. village banks that loan funds are provided by an external agency for local community-based organizations, which can be legally registered or not. function and overall banking transactions managed by those organizations that make up the team supervision and approval of the loan. 3. thrift and credit co-operatives (tccs) and credit unions (cus) is a membership organization registered formally regulated by government regulations. an organization formed by a group of people who have a common bond (eg living in the same community or working in the same company) agreed to save money together and lend at a low interest rate, or use it for purposes or projects shared. 4. intermediary ngo programmes which facilitate relationships among low-income groups in micro enterprises or low-income communities with the formal financial system. they do delivery, assistance for filing, training, technical assistance, and guarantee for financial service providers reduce costs and risks of the target beneficiaries of the poor. some examples of cases of successful microfinance model is as follows: 1. the grameen bank is an example of successful experience that begins with informal loan to a group of poor people. it started to help people who do not own land in bangladesh to get a loan. this program has been successful as these communities are cohesive (they both follow the landless) and was formed based on the principle of volunteerism. 2. non government organization (ngo). ngo approach is also classified as informal and tend to adapt the model of grameen principle. these models are usually formed based on gender or sectoral, such as women's societies, farmers' groups, trade unions, etc. for example, in ghana and gambia, most successful micro-credit program is managed by financial associations of women. 3. esusu is a revolving loan scheme in nigeria and spread to most of the state-negafa in west africa as informal micro-credit program. the group was formed to run the scheme rolling voluntary. group members contributed money to the number of fixed time periods are regular. in each of these periods, a member of the group collects all contributions from all members. each member will get a turn obtain funding contributions until the cycle is complete, and then can begin again. 2.1.8 mfis model-based community model microfinance institutions have the primary task of lending to smallor low-income people and the environment familiar with the funding agency. practically speaking, microfinance institutions provide financial services to the business trust on the basis of repayments. with this view shows that financial institutions based kumunitas as a form of financial services to the micro enterprises with loan formula standards for micro-enterprises. maskur (2005) describes a variety of additional services to microenterprises mfi successfully executed in bangladesh. research results research and development agency of east java province in 2005 shows a model of feeder point with the features without collateral and low interest rate, small loans as a funding option that interested smes. the results of the research community-based microfinance institutions are lending institutions that formula micro enterprises in the group's trust with a large pattern as a reference loan repayment installments. the results showed microfinance institutions provide community-based requirements developed with the following basic conditions: jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 26 1. trust 2. loans formula group responsibility 3. without collateral 4. micro entrepreneur known microfinance institutions 5. great refund as a loan basis (activity ratio) 6. micro known surroundings the results also show that micro businesses are still dealing with high informal financial institutions and the number of micro-enterprises are able to build real sector, micro-enterprises can be developed with high flexibility and loans granted by the formula group responsibility. for the government of indonesia and bank indonesia to draft microenterprise sector loans not formally program, provided that: 1. formal microfinance institutions need to side with micro 2. the business loans with no collateral and liability scheme 3. channelling funds to micro loans short term 4. financial institutions developed micro surrounding neighborhood known model-based women's microfinance institutions the model of women's microfinance institutions characteristic : 1. growing up serving micro enterprises 2. independent and free in the community; 3. very close to the community surrounding environment 4. have procedures borrowing without collateral; 5. funding productive business community about the mfi's 3. research method 3.1 research design this study is a combination of exploratory research, descriptive, experimental and applied research conducted in stages for the development of a comprehensive model of microfinance accommodative bebasis integrated micro business women in the district of kota batu. this study aims to develop a model of microfinance institutions based akamodatif women's micro-enterprises in the district of kota batu. the choice of location kota batu is a city that has a local economic development program and a microfinance institution that is currently developing in line with the vision again kota batu as an industrial city and tourism. the design of this study are as follows: in this study, the "output" generated is characteristic and various obstacles / barriers to microfinance institutions that have been in batu who focus on microenterprise development, the potential of micro enterprises and the development model of microfinance institutions accommodating based women's micro-enterprises. 3.2 population and sample the population of this research is the institute of microfinance and microenterprise women in batu. the sample of this research is that districts junrejo 3 subdistrict, district and sub-district bumiaji stone. the details of this sample are as follow jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 27 table 2 research sample no information district bumiaji batu junrejo 1 mfis 5 5 5 2 micro business 10 10 10 3 cooperation office 1 4 micro business women 10 10 10 5 mfi expert opinion 5 3.3 type of data and sampling method methods of data collection are interviews with micro businesses and focus group discussions with the management of microfinance institutions, as well as observations about the carrying capacity of the economic potential of the sub-district. while data microfinance institutions who have been there done documentation from the office of rural community empowerment in the area of research is secondary data. descriptive analysis is used in order to describe the characteristics of a model financial institution that has existed in the district of sample areas. the sampling technique was conducted using purposive sampling (cochran, 1991) to get a sample that can be represented. the study sample unit is a microfinance institution that has existed in the sub-districts, districts micro enterprises and informal community leaders who are concerned about the economic development districts identify the characteristics description questions used for microfinance institutions. 1. condition of micro (kum) 2. institutional society 3. embryo institutional microfinance 4. form and management of institutional microfinance 5. potential business marketing 6. the need for infrastructure economic infrastructure 4. research result and analysis 4.1. descriptive of mfi’s characteristics 4.1.1 year of establishment of mfis year of establishment mfis in kota batu in general is still very new categorized, given kota batu itself a new town by the regional growth areas, specifically the year 2001. although the displacement of malang has been made since the 17th of october 2001. this makes the slow development of institutions that work together to batu compared to malang and malang. so that on average mfi in batu time of its establishment over 2005 table 3 year of establishment of mfis no name of mfis establisment 1 wukirsari 2010 2 bagas bagus 2011 3 matahari 2011 4 sekawan 2012 5 alamanda i 2009 source: department of cooperatives and smes batu 2014 (processed) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 28 4.1.2 board and board of education mfis the number of administrators for each mfi vary, for mfis wukirsari consists of three office bearers and the level of undergraduate education, for mfi sun consists of five office bearers and the level of high school education, while mfi other mfi alamanda, bagas nice and sekawan consists of one person with classification high school education. table 4 board and board of education mfis no mfis board education official 1 wukirsari 3 s1 2 bagas bagus 1 smu 3 matahari 5 smu 4 sekawan 1 smu 5 alamanda i 1 smu source: department of cooperatives and smes batu 2014 (processed) 4.1.3 initial capital formation mfis the structure of initial capital used each mfi very varied it tergantuk of aspects to be programmed, wide range of programs and the number of population density of an area. providing capital also depends on the institute that houses a program such as p2kp mfi (under the auspices of infrastructure and public works), pnpm (under the auspices of the minister of the interior) and some mfis using nongovernmental capital and assisted pemerindah area. table 5. initial capital formation mfis no mfis initial capital 1 wukirsari rp. 2.952.783 2 bagas bagus rp. 2.849.963 3 matahari rp. 5.000.000 4 sekawan rp 8.000.000 5 alamanda i rp. 2.400.000 source: dinas koperasi dan umkm kota batu 2014 (processed) 4.1.4 legal aspect mfis in general, the entire existing mfis do with the process of establishing a systematic and have a legal establishment of mfis whether it is done with an implementation team, a village or regulation made through notarial deed, not all mfis have ad / art clear unless the mfi under the auspices p2kp. furthermore, all mfis in the village and village banabungi waonu have an organizational structure and division of tasks for the mfi is still a limited number of officials and administrators that there are often double all activities.furthermore, all mfis have a stamp to be used as a formal legality of the transaction, whereas for the service of all mfis do not have a special room so the room there is everything to follow the house caretaker mfi and service time varies each day. 4.1.5 aspects of administration and organization structure mfis judging from the administrative aspects such as daily cash books, list of members, reports installment loans and card loans, loan disbursement list, report card loans and deposits as well as the complete financial statements are available at all mfis. so also from the aspect of organizational instruments such as sk-setting board, ad / art, the minutes of deliberation, the attendance list deliberation, proposals, proposal disbursement of funds, promissory note loans, letters of agreement, receipt equity, receipts realization of funds, account books banks, book customer lists, register of board, daily cash book, daily cash log book, cash book entry, cash book came out, the book of savings and customer lending books available in full in all mfis. . jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 29 4.1.6 aspects of development and partnership mfis judging from the aspects of the management of mfi activities, all mfis have (sop) standard operating procedures are clear. even in bagas good mfi borrowers do a feasibility analysis through business feasibility. feasibility will be evaluated by the board to obtain loan funding priorities. from the aspect of the management of other activities such as the rules on deposits and loans, the loan agreement to the borrower, billing on a regular basis, guidance to the customers, and accountability to the management of mfi forum are all available. meanwhile, if the review of the management of any mfi which mfis have rules of business management respectively. for mfis wukirsari use guarantees a personal guarantee (joint responsibility) and buildings (because no certificate of land / area kepulawan). in addition a guarantee of jewelry and valuables. each mfi sets an interval of relatively equal payments of less than 3 days, but if the funds are already available then the disbursement process will be faster given the funds used the turnover of funds to micro entrepreneurs who already pay. 4.1.7 aspects of business performance mfis basically the presence of microfinance institutions in the community, is expected to be the agency support group economic activities of small / micro which normally generate economic activity on a small scale, did not have a legal entity, does not have a system of administration and bookkeeping. the facts show that there is a general tendency in which the presence of microfinance institutions with good performance will have an impact on the improvement of the economic activity carried on by microenterprises. therefore, usually microfinance institutions have special characters corresponding to their constituents, such as: 1). consisting of some form of financial services, particularly savings and loan, 2). directed to serve low-income communities, and 3). using the system as well as a simple procedure. as an institution, the microfinance institutions should strive to show the failure by good business performance in order to maintain public confidence in the pegelolaan funds. basically, microfinance institutions in the financial services it does a relatively very short and simple. for an interval of processing loans to prospective borrowers generally done in less than 3 days (on the basis of the members know the schedule of repayment and credit togethers and loan application. 4.1.8 needs economic infrastructure support business support mfis the development of microfinance institutions is needed in both areas, but there are many obstacles in the development of microfinance. some of the constraints of the development of micro-finance institutions are managerial skills possessed relatively low mfi board and limited capital for mfis, as well as many npls in mfis. the conditions certainly can not be resolved properly due caretaker figure who does not understand the problems of the management of micro-finance institutions well. the condition is exacerbated by the escort role is very minimal and less active. in order to develop microfinance institutions, hence the need for supporting infrastructure for the development of mfis is needed. mfi support infrastructure development that is required is 1) local .pendamping who have managerial skills to develop mfis so it does not only depend on the government program funding. 2). government facilitation to access additional capital for mfis. 3). structured and ongoing coaching of offices or banks that are committed to the development of mfis. 4.2. research discussion administratively, kota batu is divided into three districts, and 24 villages, an area of 202.30 km2 (78.11 sq mi). the economic potential of the potential for development is in the sector of agriculture, livestock and tourism, while plantation crops include apples, strowberry, and oranges. in the tourism sector include history attraction, retail travel, educational travel, to the natural area. judging from the status of enterprises smes, approximately 80% is a private company. sales turnover of about 30% of respondents under 5.000.000juta per month, meaning that smes in batu more as micro-enterprises. therefore, an alternative that can be offered to encourage capital resources of smes is more directed at increasing services microfinance institutions. the average number of workers per unit of effort of about three people. despite low labor education level yet large enough power smes. total initial capital of jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 30 sme respondents in the range between rp 2 million 8 million sourced from its own capital. this is a positive indication in terms of financial management. on this basis, in order to encourage capital smes in batu required the microfinance institutions can really bridge the needs of micro businesses in particular on capital. the existence of mfis is very helpful in aspects of capital for micro entrepreneurs local in disadvantaged areas, but not all micro-entrepreneurs there can enjoy the services provided because the funds are very limited, so it takes a queue in loans, on the other hand there are many micro-entrepreneurs who do not take advantage of the presence of of local mfis with the reason they do not know that there mfis provide credit for smes, complicated procedures, no collateral and limited knowledge, is not interested in applying for a loan, do not ever apply for credit. in a study conducted eko aristanto (2007) on the institutional role of microfinance community based on the program economic development zone in east java, the sample is bkad (cooperation agency, an inter-village) and micro-enterprises in 2007, there is a strategic role in the institutional bkad the , the results showed that the presence of local institutions that have a role in providing capital for micro-enterprises in rural areas is needed. this is due to the limited access of rural micro-enterprises to formal financial institutions. besides, the attitude powelessnes on microwhen faced with the administrative process with formal financial institutions. this is similar chotim research findings, e.e. and handayani, a.d (2003) states that microfinance or microfinance, especially the informal sector, to grow roots along with the development of society. since the days before independence, microfinance become an alternative for low-income groups to meet their funding needs. at that time, the microfinance grow and thrive in a wide range of variants suitable community needs. basically the presence of microfinance institutions that have value alignments to micro businesses, is expected to help in addressing the issues of business (ie capital) and business management besides, the strategic value inherent in the function of microfinance institutions is certainly required to always keep their activities properly, as indicated by the good performance. according to patrik. l. romano (1989) followed deden (2004) performance measurement (performance) is one of the processes in management control systems by comparing and evaluating the plans made and the results achieved, analyze deviations and make improvements. but if there are internal problems in microfinance institutions can result in a lower effective service on micro. besides, the number of units of micro-finance institutions and lending procedures are relatively adaptive also influential in effective service jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 31 table 6 various potential key characteristics on sample survey regions. characteristics . bumiaji batu junrejo characteristics livestock, agriculture, trade livestock, agriculture, farm livestock, agriculture, farm trade the main economy infrastucture teritory adequate adequate adequate accescibility low capacity irigation, low capacity the main issues economy low capacity to pprocess agriculte products low capacity to process local sources local local resouces and limited network (farm/agriculter ) no representatif market business field mfis agricullture trade dan livestock dan processing of livestock agriculture product, trade livestock sembako technology (tradisional) tradisional (tradisional) management family (askripsi) family(askripsi) familiy(askripsi) source of capital credit mfis formal dan informal informal credit informal credit (bpr,koperasi, upk, bkmn) (lkm, mini lkm coremap) (informal money lender) subsisten peternakan (resource based) pertanian (resource based) serta economic orientation serta subsisten subsisten (minimizing risk) (minimizing risk) (minimizing risk) products characteristic non standard quality non standard quality non standard quality seasonal seasonal seasonal pattern social relationship komunal komunal komunal jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 32 by looking at various potentials and constraints of the existing table the main characteristics of the area, basically every region has had excellent potential and the potential of micro-enterprises. with ownership of this potential, it is to optimize the economic potential of an area locally owned, required many good efforts that include economic policy, as well as micro-economic empowerment in the region is absolutely necessary. marketing and export orientation is a key factor in the development of the local economy, this condition is possible due to domestic market conditions are inadequate. in developing local investment, local governments must make improvements in economic policy, as much as possible to reduce high-cost economy. it is necessary for conducive policies spur the growth of your business and the incentives that encourage the influx of investors from outside the region. but in this investment policy, the local government must be careful so that investment does not disturb the economic and social conditions and culture, while on the other hand the resulting profits should be mutually beneficial investor community. 4.2.1 operational design prototype development microfinance institutions accommodating (community based on subdistrict and village levels) in kota batu the most important indicator in determining the success of community empowerment is the growing process of the structural changes that occur naturally. the process of structural changes naturally occur when the ability to increase local capacity significantly with an adequate increase in social welfare sustainable characterized by a progressive accumulation of capital the local level. due to the increase and the creation of local economic activities are increasingly varied able to encourage increased demanders of money. so the money management institutions to be important in determining the occurrence of local creativity to work the local economic activities. for the presence of micro-finance institutions at the district and village levels play a role as a financial institution that can hold and manage funds rolling in the community or can be referred to as socio-economic institutions revolving fund mechanism. expertise of local communities in resource management including capital resources in the region is the measure of success of the financial institutional system of rural communities. the success can be measured from productive economic activity is increasing. the success of mfis in financial institutional system of rural communities can be seen from the increase in capital accumulation through accumulated savings and revolving funds to the people who do not enjoy access to capital resources. in the next stage of development, strengthening the role of mfis is directed at strengthening the institutional function of socio-economic communities to implement development activities that are owned and executed by the local community. at first mfi can be either economic financing institutions for local people who consciously driven managed and preserved by the people without any bureaucratic interference. the government's role is limited to providing a climate conducive to the development of wisdom and mfis through the regulations that protect and give freedom sought for local communities. the ranks of the local bureaucracy (among others especially village government representatives and districts) need to provide "space" for the community to control the driving space mfis them, as well as memandirikan mfis them as financial institutions are characterized by: set / desired and owned by the community, managed by community, including its own set of system prevailing in society mfi in accordance with the aspirations and msyawarah-consensus among community members, is informal (not bound to the legal regulations of certain formal, but still follow the kaedah corresponding legal regulations existing formal) and can be utilized by all parties as well as lucrative of all parties at a later stage mfis can develop into intermediaries (intermediarry institution) that became a bridge between the community (in the container group) with the bank institutions. in the initial status of these institutions still need to be maintained as a non-bank financial institutions and in terms of legality remains informal community-owned institution (owned jointly by the public). in carrying out roles according to their capacity and status as it is expected that the mfi mampun run a good financial administration so as to provide accurate information, complete and up to date about the financial condition of a local community in a rural area or district. which in turn will be monitored the development of local economic and financial conditions in a region and a specific area. mfi can be interpreted also as a forum for the community to revive socioeconomic activities, jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 33 namely through the implementation of development stats directed, coordinated and relies on community development in districts and villages. stabilization of mfis is expected to strengthen the ability of planning, implementation, monitoring, financing, maintenance and development of various inputs (input) and output (output) of the development programs that reach out to the community. these include institutional strengthening, human resources (both officers and the community), facilities and infrastructure, as well as productive economic activities of society conditions in the field indicate the presence of micro-finance institutions in whatever form seems to be needed. it appears from the statement of the small entrepreneurs in some regions surveys tend to experience problems in managing the business of which is the business capital. on the other hand the reality shows that entrepreneurs are also difficulties and limitations in accessing credit from formal institutions. this happens due to various constraints, among others: a. location of rural micro entrepreneurs on average so far of dri formal institutions. b. the business activities are still small, so the additional funds required is not too big. c. administrative management of the work still has not been managed well, so it does not meet the standard bookkeeping diisyarakatan formal institutions. d. limitations on ownership of assets that can be formally used as security (collateral) microfinance institutions be an institution that is very strategic for the economic development of the people. due to the presence of mfis in the midst of micro-entrepreneurs who are currently still so nimin presence felt, both in terms of quality and quantity standpoint. conceptually the activities of financial institutions always leads to the existence of institutional self embryos. institutional independence, not only in activities but also in human resources. the presence of micro-finance institutions which can be managed well, also touch social cohesion among members of social groups was based on the confidence (trust). close relations among members of the group and also the leadership of the successful, bringing them to help each other, share each other so that there is a reciprocal process. this is the basis for the existence of social capital in the community and at the same as the initial capital of financial institutions mikro. in order to realize the goals of local economic development is needed framework design community empowerment as a support for local economic development can be seen in the following picture: picture 1 mfi community based jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 34 5. research conclusion, limitation, and recommendation retrieved exploration samples thoroughly to get all the information on a selected sample of the object of microfinance institutions in batu, a map of potential mfi kota batu, as well as the characteristics of the mfi (year established, number of board of education and board of mfis, initial capital formation mfi, aspect mfi legal and administrative aspects as well as organizational instrument mfi) but it is also seen aspects of development, and partnership aspects manaemen mfis. retrieved design prototype model microfinance institutions to evaluate and seek feedback on the mfi accommodative in order to increase women's micro-enterprises based in the district of kota batu. retrieved models community based microfinance institutions in kota batu, where this model as an embryo to determine the model of microfinance institutions based on the empowerment perenpuan. where this model needs to be disseminated are planned to be implemented in phase 2 (year 2 implementation). the shape of this activity is to find a good model (accommodating) in developing the existing mfis in batu by offering an alternative model created. references abdullah, maskur. 2005. lilitan masalah usaha mikro kecil, menengah (umkm) dan kontroversi kebijakan. medan: bitra indonesia. chotim, e.e dan handayani, a.d, lembaga keuangan mikro dalam sejarah, jurnal analisis sosial, volume 6, nomor 3 desember 2001. carunia,1997, pengembangan potensi ekonomi dan pemberdayaan ekonomi rakyat di biak numfor, irian jaya, analisis csis tahun xxvi, jakarta, csis cochran, g., william (1991), teknik penarikan sampel (terjemahan), jilid iii, ui-press, jakarta. deden, 2004, analisis strategis bisnis dan pengukran kinerja perusahaan menggunakan metode balanced scorecard, tesis program magister bisnis dan administrasi, sekolah bisnis manajemen, institut teknologi bandung eko aristanto,2007, evaluasi dampak sosial ekonomi program pengembangan kawasan di propinsi jawa timur, universitas merdeka malang, lppm longenecker, justin g, carlos w.j. & william petty. 2001. kewirausahaan : manajemen usaha kecil. jakarta: penerbit salemba empat. rian nugraha . 2008. pengantar kebijakan publik. raja grafindo persada.jakarta suharto, edi. (2010) membangun masyarakat memberdayakan rakyat. refika aditama, bandung tambunan, tulus, t.h. 2002. usaha kecil dan menengah di indonesia beberapa isu penting. jakarta :pt salemba empat. undang-undang no. 9 tahun 1995 tentang usaha kecil. peraturan pemerintah no. 44 tahun 1997 tentang kemitraan. instruksi presiden no. 10 tahun 1999 tentang pemberdayaan usaha menengah. peraturan pemerintah no. 32 tahun 19998 tentang pembinaan dan pengembangan usaha kecil. keppres ri no. 127 tahun 2001 tentang bidang/ jenis usaha yang disadangkan untuk usaha kecil dan bidang/ jenis usaha yang terbuka untuk usaha menengah atau besar dengan syarat kemitraan. perda no. 10 tahun 2002 tentang retribusi izin usaha industri, perdagangan, gudang/ ruang dan tanda daftar perusahaan (tdp), dinas perindustrian dan perdagangan kota medan *) ike kusdyah rachmawati, stie asia malang jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 35 the role of recording and reporting process of basic accounting in small medium entreprises of omah duren surabaya lucya erlinda sonia *) stefanie gianto **) abstract financial management is a problem that is quite difficult for small and medium enterprises (smes) in indonesia. the lack of awareness and knowledge of smes owner regarding the accounting process considered as the root causes of their financial management difficulties. based on that, researcher aims to help one of smes in surabaya which is omah duren surabaya, in order to know about the process of recording and reporting a sme, then find a way to improve it in a diligent way. researcher uses interviews, observations and documents sheets to analyze and knowhow omah duren business process. the information that gained from omah duren owner and transaction data, as well as direct observation in recording and reporting activities is one of researcher data sources. researcher concluded that omah duren sme’s still not performing the simple accounting process in accordance with generally accepted. therefore, researcher provide a recommendations in helping them in recording and reporting their financial effectively and efficiently. this research will also discuss the role of recording and reporting that is generally accepted for smes. keywords: sme, accounting, financial statement 1. introduction 1.1 research background the booster of a country's economic development can start from the small and medium enterprises (smes) in the country itself. sme is a term that refers to a type of small business that has a net worth of 50 million excluding land and building places of business. small scale of economics activity with the small business activity (presidential decree no. 99 of 1998). people who open store with one or more people, creative and craft, industrial processing and manufacturing industries, as well as small to medium-scale factories also entered in the class of msme according to uu no. 20 of 2008. table 1 msme classification business net worth (idr) sales (idr) number (unit) micro 50 million 300 million 3.385.851 small >50 500 million >300 million 2,5 billion 283.022 medium >500 million 10 billion >2,5 billion 50 billion 26.322 big >10 billion >50 billion according to urata (2000), the position of smes is divided into five, namely: a. main players in economic activities in various sectors. b. the largest provider of smes employment is the largest business in a nation, it is likely that smes need a lot of manpower in running their business. c. players are important in the development of regional economic activities and community empowerment. d. creator of new markets and innovation. inevitably, an innovation also emerges from small and medium-scale businesses, because of the high competition of similar businesses. to start new businesses, smes owners will strive to bring up something new with limited resources. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 36 e. contributing in maintaining payments balance through its contribution in exporting goods. this can happen if the smes are already able to export abroad or go-international. indonesian finance minister, sri mulyani indrawati said micro, small and medium enterprises (msmes) are the backbone of indonesia’s economy (primadhtya, 2016). according to bps data, the number of msmes in indonesia is 57.9 million units or 99.99 percent from total number of national business actors. msmes contribute to employment of 96.99 percent. the mses employs consists of over 107.6 million of indonesians and contributes 60.6 percent of indonesia's gdp. (suroto, 2016). sme growth also occurs in the capital of east java province, surabaya. smes in surabaya has grown by more than 300 percent. currently, surabaya already has around 3,000 smes from total smes in 2010 of 92 smes (afrianto, 2016). this cannot be separated from the role of surabaya’s mayor, tri rismaharini, who encourages surabaya people to be an entrepreneur (chandra, 2016). by doing that, it is expected that surabaya’s economy will be better and unemployment rate can be declined. from 110 million indonesia people, about 107 million people are included in the structure of micro, small and medium enterprises or msmes. this means that the portion of people working as msme reaches about 97.3 percent (marta, 2016). the development of sme’s become serious concern from various sectors, business owners to local governments. sme’s faced various problems that can hinder a business development like capital limited, low quality of resources and marketing promotion (pamungkas, 2015). in addition, most of business owners also had limited business knowledge so they faced difficulties in adapting technology and financial management. the problem of financial management becomes a complicated issue, as most smes owners have limited knowledge of accounting, so they do not know how to manage their finances. as a result, most small entrepreneurs (msmes) in indonesia do not organize and use accounting information in their business management (pinasti, 2007). the american institute of certified public accounting (aicpa) in harahap (2003) defined that accounting as the art of recording, classifying and summarizing with certain ways of monetary measure, transactions, and events that are generally financial in nature include interpreting the results. this recording and reporting activity can generate accounting information, which is used by smes owners to evaluate business performance and become the basis of decision making in various matters related to their business. the inability of smes in managing their finances is very influential on the progress of his business. the worse is accounting becomes something that is ignored, because for most sme owners, accounting is difficult to understand. as in the research ediraras (2010), some smes have not done accounting caused by several things, namely; 1). some people assume because the business they run is a family business and not so big then they just think that the accounting is so important. 2). because of the lack of knowledge and competencies of someone related to accounting. 3). fund used for business often mixed with own funds, or directly used to buy goods without having time to do accounting first. 4). accounting is too complicated, also because the time is already preoccupied for the job, so it is very difficult to set aside time to compile the accounting. 5).there are no fix income. 1.2 research problem based on the reason above, researchers interested to examine how the recording and reporting activity in omah duren and how to apply a simple recording and reporting process that can be done by omah duren. 1.3 research purpose researcher tries to give explanation by evaluating and developing theories related to the role of recording and reporting of basic accounting in omah duren surabaya. this research has an applied research benefit because researcher provides recommendations regarding the recording and reporting system of omah duren issues. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 37 2. theoretical framework 2.1 theoretical framework 2.1.1 smes according to uu no 20, 2008, small and medium enterprises (smes) can be defined as a business which has rp. 50 million until rp10 billion of net worth, excluding land and business building, or has rp. 300 million until rp 50 billion of annual sales. those net worth amount should be accountable to the business interested parties. business owners always prevent its business declining, therefor the role of recording and reporting is very important in showing stakeholder about their economy activities and “the real business situations” (warren, reeve, duchac, suhardianto, kalanjati, jusuf, & djakman, 2014). 2.1.2 accounting accounting is an information system that generates reports to interested parties about the economic activity and conditions of a business (warren, reeve, duchac, suhardianto, kalanjati, jusuf, & djakman, 2014). transaction becomes the beginning of every accounting process information system begins. according to warren, reeve, duchac, suhardianto, kalanjati, jusuf, & djakman (2014), business transaction is an event or economic condition that directly changes the company's financial condition or the outcome of its operations. transactions in a business activity will be recorded and reported in the financial statements. the financial reporting activities usually includes financial statements which consist of balance sheet (financial position statement), income statement, cash flow statement, changes in euity statement report and notes on financial report (ikatan akuntan indonesia, 2009). according to the financial accounting standards board, financial statements aims to provide information about the financial position, its business performance, and financial position statement of a company that gives consideration in making economic decisions. financial statements users consist of capital market stakeholders, product/service markets, government, and internal company. in addition, a business also needs to pay attention to the expenses on its production activities, especially the cost of manufactured sales. according to the indonesian institute of accountants, the cost of manufactured sales consist of direct material, wages and indirect production costs, processing in the calculation of beginning and ending balance of manufacturing process. it may be reported in the cost of manufactured goods report (mulyadi, 2010) to show the use of fees in specific period. 3. research method this research is developed based on two research question which is main research question and mini research question. therefore, in order to answer main research question, researcher chooses an interviews, document analysis, and direct observation as the research methods. researcher uses interview to obtain the answer about the role and the impact of recording and reporting in omah duren surabaya. table 2 details of interview position participants hours criteria topic of interviews owner 1 5 7 owner current practices of omah duren accounting process in addition, researcher also analyzes the accounts that can be used in the recording and reporting process of omah duren. according sugiyono (2012) document study is a complement of the use of observation methods and interviews in qualitative research. the credibility of this qualitative research results will be higher if researcher uses document analysis. furthermore, researchers also used observation methods to observe the production site and recording process of smes omah duren, so it can help explain the process of recording and reporting done.. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 38 observation is a systematic observation and recording of elements that appear in a symptom on the object of research (nawawi & martini, 1992) table 3 document list. document types hours transaction receipt proofs 7 journal, books, article 13 omah duren social media and question answer sessions through whatsapp channel 7 total 27 table 4 details of observation location hours criteria topics production house 1-3 udur-udur production location accounting cycles 4. research result and analysis 4.1 omah duren surabaya profile omah duren surabaya business started in 2014 by mrs. trisna as the owner of omah duren. as suggested by the name, omah duren sells products from processed durian, which is durian juice with the product name of udur-udur. at that time, mrs. trisna started her business by renting a booth at manyar, surabaya, using a cart to sell her product. the owner sells her product in manyar area, surabaya with various menu variants, namely duren juice, duren soup, kelapa muda duren, ketan duren and grilled sausage. in 2015, omah duren no longer do personal selling, but chose to market their products to several outlets of lapis kukus pahlawan in surabaya and sidoarjo and also entrusted to sentra smes merr and sentra smes siola. not only offline sales, but omah duren began to expand to online sales. through the existing social media, buyers do not have to come to the outlet, but can directly order to the seller. until 2017, omah duren continues to increase sales through exhibition and promotion activities through social media. the increasing on sales impact on omah duren’s income. within a month, omah duren earned an average gross sales of 16 million rupiah to 26 million rupiah, or approximately 312 million rupiah per year, excluding online orders. picture 1 udur-udur omah duren surabaya 4.2 pricing the selling price of product is determined at the beginning of business long time ago and surprisingly that price is still used until now. the profit is come from the price of durian. here are jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 39 the results of interviews with omah duren owner about the profits of sales: "the profits is fluctuative, the main ingredient price is up and down, especially the price of durian. the other expenses are relatively stable, its increasing but not too much. for example, durian meat price is rp. 55.000, now it is rp. 100.000, the normal price is at rp. 65.000 for a kilo." but unfortunately, durian fruit is not always exists every month, so the durian price will rise more during november to january, and the price will rise again during may to june. the price of durian is very influential on the profits of durian processing products selling of omah duren. like stated by the owner of omah duren,: "so the profit is in durian meat. when the price is normal, i can get enough profit, but if not in season (durian), the price of durian will rise, so i will get less profit. so, i don’t have to get much profit as long as i still get enough. if (durian price) rp. 65-70.000, the profit can be 100%, but if the price of durian rising (rp. 100.000,-), the profit can be below 50%, but its still profit. thus, if the price is rp. 130.000, i still get 20% profit. that's the highest price of durian. so the price of the product is fixed when the durian is more expensive." tabel 5 profit comparison based on durian price profit (%) price durian (per kilo) expenses profit 120% rp15.000 rp55.000 xxx rp8.181 100% rp15.000 rp65.000 xxx rp7.500 50% rp15.000 rp100.000 xxx rp5.000 20% rp15.000 rp130.000 xxx rp2.500 4.3 production process after the order is taken, the owner is ready to make the production process. production process of udur-udur starts from the purchase of raw materials to suppliers and to stalls. raw materials consist of durian fruit meat, milk, sugar, drinking water and bubble. for durian and bubble as raw materials are ordered by the owner from different suppliers, and ordered a few days before the production process, usually ordered on sunday. owner buy milk, sugar and water when the stock is began limited at a nearby store. in addition preparing the raw materials, the owner also purchased bottles at a subscription store. each week, the owner buys about 140 units of 250ml packaging bottle and 104 units of 500ml packaging bottles. picture 2 omah duren production places jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 40 picture 3 omah duren production process the owner also performs sticker printing for packaging bottles. each week, the owner prints stickers of 21 sheets of a3 sticker paper in the printing press. out of 21 pieces, it is then divided into 14 sheets for the size of 500 ml, and 7 sheets for the size of 250 ml. after preparing the material, the owner performs the blending process of durian fruit, sugar, milk, drinking water until it becomes durian juice. blending process is using two blender machines. the finished juice is ready to be inserted into the bottle of various sizes. then, additional bubble into the lite bottle before the durian juice is poured. the bottle that already filled with durian juice is closed, then juice left on the edge of the bottle is cleaned. after cleaning process, all the bottles of udur-udur are placed into the freezer. udur-udur requires special conditions for storage to last long, in example stored in the freezer for two months last. this also causes the owner to buy a freezer as a place of product display in several outlets and centers of smes. 4.4 omah duren surabaya accounting process basically, the owner feels that the accounting has an important role, because it will gives her a reference to see the profits derived from the capital. "the benefit of recording is to find out how many percent of our capital that become the profit of the business is.." because of the importance of recording to the owner of omah duren, every month the owners record the income and expenditure from recapture of proofs on the purchase of raw materials, equipment production, and product sales. 4.4.1 transaction recording process it is a important that every financial transaction must be accompanied by receipts. these receipt is one of accountability sources as a proofs that those specific transaction has been done. there are some transaction proofs that used as the basis for recording by omah duren while conducting its operational activities. receipt for printing of packaging sticker, notes on purchasing including the purchase of raw materials (durian meat and bubble). jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 41 picture 4 receipt for packaging striker in addition to raw materials, the purchase of packaging bottles should also get a purchase note, but sometimes the owner did not get it. receipt evident for merchandise delivery, this evident is obtained from the delivery of merchandise to outlets and day care of smes center, because while delivery of goods, omah duren does not immediately get cash money. picture 5 durian receipt notes picture 6 merchandise delivery notes proof jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 42 receipt on refueling the gas usually obtained when refueling in pertamina station. bank transfer evident are included funds receipt on product sales and credit card installment payments. the proceeds from the sale of products are obtained from offline and online transactions to omah duren. triple note is a note provided by omah duren for direct purchases and online purchases. direct purchase means the buyers who order directly to the owner in large quantities. the first sheet (white color) will be given to the consumer, while the other two (red and green) are archived by the owner. not all occurrence transactions get transaction evident, for example the purchase of raw materials in the form of drinking water, sugar, and milk because the owner bought them in a shop near the house, then she do not get any evidence such as a note or receipt. thus, the owner will keep a record even if there is no proof of the transaction, as raw material prices remain stable, making it easier for the owner to calculate the expenses incurred on the item. from the evidence of the transaction, omah duren classifies it into accounts which will then be recorded and reported. the accounts that can be seen as follows : a. cash account cash is a deposit in bank, bank account used is the owner’s account bank of bca as the main account and bank mandiri if necessary. because sales transactions not always use cash, it will be withdrawn when the owner makes a purchase for the production process. b. raw material expense raw material expense is the burden of purchasing durian meat, milk, drinking water, bubble, and sugar. c. administrative expenses administrative expenses are purchase of triple note and sticker printing. d. other expenses transport costs are classified by owner as other expenses, as she/he considers transportation expenses exclude the production costs. “transportation does not use bon-bon, the calculation is included with others such as for gasoline and others. it means taken from the global.” in addition, the transportation is not devoted to the delivery of goods to consumers, but private property. transportation expenses include in the purchasing of fuel (bbm) for motorcycles and cars. e. prive prive is the amount of cash from the operational results taken by the owner for his personal use. prive taken amounted to total profit from the sale, and considered as salary for the owner as an exchange for production employees. from the classification of existing accounts, the accounts are grouped into income and expenses. "i make it simple and easy, so all income transactions made into one, expenditure made into one, income and expenditure, that’s all." the income and expenditure are separated into two parts in a basic journal, in which the entry column is on the left as a debit and expenditure on the right as a credit. the income column contains an account that adds cash, which is recorded as cash. the revenue usually comes from sales. expenditure column that contain cash-out accounts such as raw material costs, administrative costs, other fees, and prizes. 4.4.2 recording and reporting process recording and reporting performed by omah duren begins with the collection of evidence related to transactions that occurred. certificate of transaction evidence is unified when the owner performs the recording. the transaction recording is done in a manual book by the owner. but unfortunately, sometimes the purchase notes are not stored well, so sometimes folded, even when the owner doing the recording required notes is lost. so, the recording process is done based on the amount remembered by owner. records are made using the cooperative bookkeeping system, where the income and expenditures are totaled, then the difference will be used as capital for the next jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 43 month, she said "bookkeeping only for in and out of income expenditure and credit disbursement. and then total balance, below is cash for the beginning of the month, zero again, such in cooperative bookkeeping." transactions recorded are transactions for a month from the recapitulation of transactions evident and transactions without evidence. accounting method applied is cash basis, i.e. where receipts are recorded when cash is received and expenditures are recorded when cash is incurred, i.e. when payment of fees. the owner will record the cash receipts when the cash is actually received, that is, when the buyer transfers funds on the purchase of merchandise to the owner's bank account through the evident of transfer given to the owner. funds are transferred every two weeks, meaning that the funds transferred are the total of two transactions for a month. expenditures will be recorded on cash disbursements, in example when cash is actually issued, when the owner buys raw materials, packing bottles, until paying for expenses such as administrative expenses, and other expenses. transportation expenses, such as petroleum fuel are included in other expense accounts. for the owner of omah duren, recording is performed only to analyze whether the expenditure does not exceed the capital, in order to see profit earned in a month. like the owner's statement as follows: "the benefit of recording is to find out profit of our business and what percentage from our capital.” 4.5 the challenges and solutions in implementing basic accounting process in omah duren surabaya recording and reporting of smes omah duren is still inadequate, so it still faces various problems that arise. adequate according to big indonesian dictionary (kbbi) is to meet (requirement, desire), sufficient. in this case, it is adequate to meet the standards, such as psak. the owner makes insufficient recording system implemented in omah duren, this is due to the lack of knowledge about the correct and generally accepted accounting system. beside the lack of accounting knowledge, other obstacles faced are the views on the complexity of the accounting system that must be recorded both in terms of revenue and expenditure in detail, which are still unacceptable. the recording and reporting that have been applied impacts on the rise of some problems like : a. the accuracy in planning annual/monthly budgeting omah duren has a monthly budgeting indirectly (it can be seen from the owner's record). the recording made turn into a reference to see the profits derived from the capital issued by the owner, she said "the benefit of recordings is to find out the profits of the business, how much the percentage of our capital." bussines owners made a budgeting in order to maintain their production cost and gained more revenue. although, this effort is good, but is not enough, because the owner does not take the net profit into account, which means there are nonoperational expenses that have not been taken into account in reducing revenue, there is possibility that income could not cover fixed costs. researcher added that the owner needs to make an inventories budgeting too. inventories consist of raw materials, bottles packaging, and finished products should always be monitored at all times, in order to avoid excess inventory and calculated the storage capacity. b. the calculation of production cost the calculation of production cost is counted once at the beginning of selling price. at that time, the calculation of the cost production and selling price is done on a merely basis. the calculation of selling price of the product is based on the raw material plus the mark up with not all expenses that affecting production process is included in the calculation. from the grouping of accounts conducted by omah duren, through observation and interviews results, researcher founded that there are an expenses that are not recorded such as the installment of fixed assets, interests of fixed assets, utility expenses, such as water and electricity expenses, depreciation expenses for machinery and vehicles. there are expenses is still not recognized jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 44 as expense, for example, the water and electricity expenses. because the production place also the owner home, it will be difficult to determine how much operational (cost of production) expenses should be paid, especially on the use of blenders and freezers. the effort in separating between the operational and non-operational activities is quite inconvenient for the owner. therefore, this expense is not included in the calculation of expenditures and cost of goods sold. there are several ways that can be done by the owner to solve the problem like providing his own assumptions about electricity and water used. for example, the use of electricity in a month is 2/10 of a few kwh, then the owner just multiply the result at a price per kwh. this classification of costs is determined on the basis of the objectives to be achieved (mulyadi, 2010). this report can be used to calculate the expense that should be borne by omah duren in a month. so it can be estimated how much the expense of the specific responsibility in a month. the benefits of making/calculating cost of production by mulyadi (2010) is to determine the selling price of the product, monitor the realization of cost production, calculate the periodic profit and loss, and determine the cost of raw materials, and finished product inventories that presented in the balance sheet. in the balance sheet, the owner must present the cost of raw materials inventory and the price of the finished product at the balance sheet date. c. there is no inventory calculation inventories such as raw materials, finished products and packaging bottles have not been applied in inventory calculations like the calculation the beginning of inventory and ending inventory both raw materials, packaging bottles and finished goods. omah duren added their raw materials and packaging inventory based on the owner predictions, if the inventory stock is reducing, the owner will immediately order or buy it. therefore researcher said that its better for the owner to use inventory card as a helper to recap the inventory, so he/she does not have to make any more estimation. picture 8 is an example of inventory card that can be applied at omah duren. although the owner has applied this inventory card, do regularly control process is important. periodically re-check can reduce human errors from writing numbers/dates. this re-check activities will be more efficient by using a inventory card, as there is a possibility that the owner forgets about the amount of its inventory due to the lack of inventory recording. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 45 omah duren cost of goods manufactured scheduled for the month ending january, 31, 2017 purchases and costs materials beginning inventory xxx purchases : raw materials xxx purchase return (xxx) total materials xxx ending inventory xxx total used materials xxx packages initial purchase xxx purchases : packages xxx purchase return (xxx) total packages xxx ending packages xxx total used packages xxx labor wages xxx total labor expenses xxx cost of production water and electricity (xxx) depreciation-building (xxx) depreciation –freezer (xxx) depreciation –blender (xxx) depreciation -cup sealer (xxx) total cost of production (xxx) total cost xxx finished goods beginning of finished goods inventory xxx processed of finished goods xxx finished goods xxx total finished goods xxx cost of goods manufactured xxx picture 7 cost of goods manufactured jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 46 omah duren inventory card product name product code no date detail of information input output amount signature picture 8 inventory card d. inappropriate account coding omah duren has a lack account classification because there are some accounts that have not been entered. so, before creating financial statements, it is necessary to identify accounts used to accommodate transactions that occur on related accounts. these accounts are grouped into five parts, (1) for assets, (2) for liabilities/debt, (3) for equity, (4) for income and (5) for expenses. picture 9 is an example of accounts classification for omah duren. each business has different accounts classification. the advantages in using accounts coding are as follows. 1. the accounts classification can become more organized and systematic. 2. the control of corporate transactions process become effectively. 3. facilitating the subsequent data processing resulting in financial statements and in accordance with the need for control. 4. analyzing of company's financial situation becomes more organized and systematic. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 47 code account name code account name 1 asset 3 equity 1.1 curent asset 3.1 owner equity 1.1.1 cash 3.2 prive 1.1.1.1 cahs in bank 3.3 retain earning 1.1.1.1.1 bank bca 1.1.1.1.2 bank mandiri 4 revenue 1.1.1.2 cash on hand 4.1 sale of premium 250ml 1.1.2 account receivable 4.2 sale of premium 500ml 1.1.3 inventory 4.3 sale of lite 250ml 1.1.3.1 raw material 4.4 sale of lite 500ml 1.1.3.2 finished goods 4.5 other revenue 1.1.3.3 bottle 1.2 non-current asset 5 expense 1.2.1 land 5.1 cost of merchandise sold 1.2.2 building 5.1.1 cost of merchandise sold 1.2.2.1 building 5.1.2 sales return 1.2.2.2 acc depreciation-building 5.1.3 sales discount 1.2.3 equipment 5.2 operational expense 1.2.3.1 freezer 5.2.1 salary expense 1.2.3.2 acc depreciation -freezer 5.2.2 utilities expense 1.2.3.3 blender 5.2.3 office supplies expense 1.2.3.4 acc depreciation -blender 5.2.4 delivery expense 1.2.3.5 cup sealer 5.2.5 marketing expense 1.2.3.6 acc depreciation -cup sealer 5.2.6 depreciation of building exp 1.2.4 vehicle 5.2.7 depreciation of freezer exp 1.2.4.1 car 5.2.8 depreciation of blender exp 1.2.4.2 acc depreciation –car 5.2.9 depreciation of cup sealer exp 1.2.4.3 motor cycle 5.2.10 depreciation of car 1.2.4.4 acc depreciation –motor cycle 5.2.11 depreciation of motor cycle 5.2.12 other expense 2 liabilities 5.3 non-operational expense 2.1 current liabilities 5.3.1 installment 2.1.1 notes payable 5.3.2 bank administration 2.1.2 account payable 2.1.3 other account payable 2.2 non-current liability 2.1.1 long term notes payable picture 9 account code jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 48 omah duren financial position statement for the month ending december, 31, 2017 asset liabilities 1.1 current asset 2.1 current liabilities 1.1.1 cash 2.1.1 notes payable xxx 1.1.1.1 cash in bank 2.1.2 account payable xxx 1.1.1.1.1 bank bca xxx 2.1.3 other account payable xxx 1.1.1.1.2 bank mandiri xxx total current liabilities xxx 1.1.1.2 cash on hand xxx 1.1.2 account receivable xxx 2.2 non current liabilities 1.1.3 inventory 2.1.1 long term notes payable xxx 1.1.3.1 raw material xxx total non current liabilities xxx 1.1.3.2 finished goods xxx total liabilities xxx 1.1.3.3 bottle xxx total current asset xxx equity 3.1 owner equity xxx 1.2 non-current asset 3.2 prive xxx 1.2.1 land xxx 3.3 retained earning xxx 1.2.2 building total equity xxx 1.2.2.1 building xxx 1.2.2.2 acc depreciation-building xxx 1.2.3 equipment 1.2.3.1 freezer xxx 1.2.3.2 acc depreciation-freezer xxx 1.2.3.3 blender xxx 1.2.3.4 acc depreciation -blender xxx 1.2.3.5 cup sealer xxx 1.2.3.6 acc depreciation-cup sealer xxx 1.2.4 vehicle 1.2.4.1 car xxx 1.2.4.2 acc depreciation –car xxx 1.2.4.3 motorcyle xxx 1.2.4.4 acc depreciation motorcycle xxx total non-current asset xxx total asset xxx total liabilities and equity xxx picture 8 statement of financial position jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 49 omah duren income statement for the month ending december, 31, 2017 income statement 4.1 sales of premium 250ml xxx 4.2 sales of premium 500ml xxx 4.3 sales of lite 250ml xxx 4.4 sales of lite 500ml xxx 5.1.2 sales return (xxx) 5.1.3 sales discount (xxx) net sales xxx 5.1.1 cost of manufactured sold (xxx) gross profit xxx 5.2 operational expense 5.2.1 salary expense (xxx) 5.2.2 utilities expense (xxx) 5.2.3 office supplies expense (xxx) 5.2.4 delivery expense (xxx) 5.2.5 marketing expense (xxx) 5.2.6 depreciation of building exp (xxx) 5.2.7 depreciation of freezer exp (xxx) 5.2.8 depreciation of blender exp (xxx) 5.2.9 depreciation of cup sealer exp (xxx) 5.2.10 depreciation of car (xxx) 5.2.11 depreciation of motor cycle (xxx) total operational exp (xxx) operational revenue xxx other revenue and expense 4.5 other revenue xxx 5.3 non operational expense 5.3.1 installment (xxx) 5.3.2 bank administration (xxx) 5.4 other expenses (xxx) total expenses (xxx) total other revenue and expenses xxx net income xxx picture 9 income statement jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 50 picture 9 describes revenues that received by the company during a certain period as well as the costs that incurred to obtain the revenue (harahap, 2006). this report provide an information of net income/loss that earned in a specific period and used to measure business sales performance. omah duren statement of changes in equity for the month ending december, 31, 2017 trisna’s equity, dec, 1, 2017 xxx investment (monthly) xxx net income in december xxx xxx prive (xxx) changes in equity xxx trisna’s equity, dec, 31 2017 xxx picture 10 change equity statement picture 10 serves as a means of information on net assets (assets liabilities) in a certain period of change in the composition of equity/capital of business owners. end capital of the period will be the initial capital for the next period. omah duren cash flow statement for the month ending december, 31, 2017 cash flow from operating activities cash receiot from consumer xxx cash paid for operating cost (xxx) cash paid to creditors (xxx) net cash used in operating act xxx cash flow from investing activities fixed asset received xxx purchase of fixed asset (xxx) short term investment received xxx short term reinvesting (xxx) net cash used in investing act xxx cash flow from financing activities owner investment received xxx prive (xxx) adding of debt bank xxx payment of debt bank (xxx) net cash used in financing act xxx cash and cash equivalent at dec, 31 2017 xxx picture 11 cash flow statement jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 51 picture 11 shows cash receipts and disbursements during a certain period. this report is useful in evaluating cash flows that is arising from operating, investing and financing activities per period and as an information in knowing the ability of company paying their debts and generating cash. financial reports have interrelationships one with another. from the four reports above, it can be described as follows. a. net income in the income statement will be net income in equity changes statement in december. b. trisna's capital of december 31, 2017 in equity changes statement will be balance of owners' equity changes statement of financial position. c. total increase in cash and cash balances of december 31, 2017 in the cash flow statement will be the cash balance at the bank (bca) in the financial position statement. 4.6 the role of recording and reporting of basic accounting implementation in omah duren surabaya recording and reporting system provides a role in measuring revenue and operating expenses through cash receipts and cash expenditures. recording and reporting by omah duren is limited due to the owners need to analyze receipts and expenditures, therefore she designed they own accounting system only based on her interest. omah duren needs to make changes to get an adequate system in recording and reporting their business activity. researcher recommends to omah duren to extent their accounting system capability, so they can obtain more accounting information (rather than just expenditures and income information). even each company has an uncertain position to get all the benefits of accounting due to the different perspectives of the financial statements presented, but in general, the role of accounting at least can help business owner knows their profit and losts, determining the selling price, and as an input in making consideration of purchasing, business development, human resources extension, fixed asset extension, and getting financing from bank. 5. research conclusion and limitation 5.1. conclusion based on the case study, recording and reporting of sme of omah duren is still inadequate, so it still faces various problems arising from the perception of the owner as the recording system maker in omah duren. the problem faced by omah duren is the inaccurate of annual/monthly budget planning, not having an appropriate cost of goods manufactured calculation, still not doing inventory calculations, inappropriate account classification, and doesn’t have financial statements. therefore, it is better for the owner of omah duren to calculate their cost of production by making the report of cost of gooed manufactured, inventory card, performing an adequate account classification, making general financial statements such as financial position statement, income statement, changes in equity statement, and cash flow statement. the proper recording and reporting process can be bases for the business in knowing the advantages or disadvantages, the bases for determining the selling price of the product, as an input in making decision for purchasing some inventory, business development, human resources extent and additional of fixed business assets, and facilitate the application of financing to the bank. through this research, it is expected to provide benefits for omah duren in creating adequate records to provide benefits for the continuity of smes business in the future. this research also expected to solve recording and reporting issues that exist in omah duren. researcher also hope that this paper is useful for academics and general readers, in order to be used as a reference for writing in the future learning about the application of accounting on smes, as well as increases the knowledge about the role of basic accounting toward smes existence. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 52 5.2. limitation this study only focused in omah duren surabaya as the research object. therefore, researcher recommended for future study to consider the type of smes business in extending the role of basic accounting in any type of smes business. references afrianto, d. 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(2016). usaha mikro indonesia makin mengenaskan. retrieved from http://www.berita9.com/pojok/usaha-mikro-indonesia-mengenaskan.html. undang-undang no. 20 tahun 2008 tentang usaha mikro, kecil, dan menengah. warren, c. s., reeve, j. m., duchac, j. e., suhardianto, n., kalanjati, d. s., jusuf, a. a., & djakman, c. d. (2014). accounting indonesia adaption 25th edition. jakarta: salemba empat. *) fauziah, university of surabaya, surabaya, indonesia (e-mail: lucyaerlinda@gmail.com) *) fauziah, university of surabaya, surabaya, indonesia (e-mail: stefanie.gianto@gmail.com) http://www.berita9.com/pojok/usaha-mikro-indonesia-mengenaskan.html jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 188-206 http://dx.doi.org/10.31106/ jema.v17i2.9044, issn (online) 2597-4017 188 investigating the success of an e-auction system initiatives among public servants: validation of an integrated is success model agus bandiyono 1* , abdul hamid hudalil muttaqin 2 1 department of taxation, polytechnic of state finance stan, tangerang selatan, indonesia 2 directorate general of state assets management, ministry of finance of indonesia, jakarta, indonesia *corresponding author(s) email: agusbandiyono@pknstan.ac.id abstract the implementation of an information system (is) in public sector organizations was a crucial issue that needs to be addressed periodically. this study was conducted to examine the satisfaction factors of an e-auction system adoption behavior by using the integrated is model of delon, mclean, and seddon. the usage of seven dimensions of the integrated is model such as compatibility, the quality of a system, information, and service, perceived usefulness, and ease of use, to evaluate users satisfaction among public servants are still rare. this study was designed to focus on officials auctioneer that have experiences in using the e-auction systems. the structured questionnaire with a five-point likert scale and regression was chosen as the data collection and analysis method. this study found that there were only two of six variables (information quality and compatibility) that significantly prove as predictors of user satisfaction. interestingly, our findings also found that there was no correlation between perceived ease of use and usefulness. poor interface design, lack of technical support, and the usage of an e-auction system that is classified as "order by mandate" were the primary concern that causes the insignificant relationship between variables. therefore, to boost the satisfaction levels, further is developers should pay more attention to improving information quality that is compatible with user needs. keywords: accounting; system quality; information quality; service quality; usefulness; ease of use; compatibility; satisfaction jel code: d23, m41, o30 doi: 10.31106/jema.v17i2.9044 article history: received 2020/10/29 reviewed 2020/11/15 revised 2020/12/13 accepted 2020/12/30 licensed: cc-by mailto:agusbandiyono@pknstan.ac.id http://creativecommons.org/licenses/by/4.0/ investigating the success of an e-auction system initiatives among public servants: validation of an integrated is success model by agus bandiyono, abdul hamid hudalil muttaqin 189 introduction the nature of accounting practices has evolved greatly over the years as the rapid change and development of information systems. information and communication technology (ict) allows the creation of tools for digitally organizing, transmitting, storing, and acting on information in new ways. with governance and public administration reform in the new public management spirit, ict has driven many innovations in the public sector, particularly e-procurement and e-auction (svidronova & mikus, 2015). today, the development of information technology has grown quite rapidly. one of its applications is used in the world of commerce, enabling goods to be auctioned or sold online easily and efficiently (bandiyono & indrianto, 2019). the web-based online auction system is a web-based program that was created to make it easier for us to auction or buy and sell goods (abi bakri, 2013). the auction implementation in indonesia is controlled and operated by the ministry of finance through the directorate general of state assets (djkn). implementation of all forms of an auction is carried out through the state wealth service office and auction (kpknl) as well as auction house, which is limited to non-voluntary execution auction and pre-auction implementation (presidential regulation no. 28 of 2015). a change of paradigm has emerged from offline auctions to online auctions (p. lin et al., 2018). the usage of an online auction system was crucial for not only efficient purposes but also nation strategic goal. santoso & bourpanus (2019) stated that by switching to electronic services, the government can save public money in developing unnecessary infrastructure projects. an online auction service called e-auction has been introduced by the directorate general of state assets (djkn) in 2014. an e-auction with internet auction application (ali) makes auctions easier (accessible anywhere and anytime), more efficient (no need for transportation and accommodation costs), faster (bids are accepted in seconds), and secured (buyer's auction is given paper auction). to participate in the auction, participants are expected to deposit a certain amount of security deposit and are required to pay it off after being selected as the auction winner. e-auction participants are given the ability to bid on multiple auctions (multiple closed bids) and know each "real-time" bid amount without any intervention from any party, something that may occur in a traditional auction. after six years of implementation, it is important to evaluate the implementation of eauctions to ensure that the djkn e-auctions have been carried out properly. although, there is no ultimate measurement of information system (is) success, there are three theoretical frameworks that mostly used in the area of is (rana et al., 2015). the first is success model jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 188-206 http://dx.doi.org/10.31106/ jema.v17i2.9044, issn (online) 2597-4017 190 was introduced by delone & mclean (1992) who initiated to development is success model by using six factors namely system quality, information quality, user satisfaction, use, individual impact, and organizational impact as dependable measurement. seddon (1997) introduced the new prescribed model of delone & mclean (1992) by added perceived usefulness as another factor that affects information system adoption. later in the year 2003, after an extensive review of their original model, delone & mclean (2003) proposed the extended is success model by incorporated 'service quality' and (accounting) net benefits as a substitute for individual and organizational impact construct. the proposed is success model of this study is based on delone & mclean (1992), delone & mclean (2003), and seddon (1997) model with some adaptation due to certain rational facts. for example, 'behavioral intention' and 'usage intention' constructs were excluded from the proposed model as this study is focused on actual users of the systems. on the other hand, 'service quality' is added as a new construct in the proposed model. rana et al. (2015) explains that service quality has a crucial role in enhances the success level of is implementation as the expanded responsibility of is departments and the significance of is in recent decades. besides, constructs such as perceived ease of use and compatibility were also considered acceptable to be included in the model as they represent the contemplation of users' beliefs about the system's use. literature review the relationship of system quality, perceived usefulness, and perceived ease of use system quality can be defined as the degree to which the desired functionalities and performance characteristics of an information system can best address customer needs, with much ease and as minimal problems encountered as possible (saha, nath, & salehi‐sangari, 2012; samsurijal, 2019). the relationship between system quality, perceived usefulness, and perceived ease of use has been explored by researchers in various studies. kim, lee, & law (2008) and al-fraihat et al. (2020) stated that one of the significant factors that drivers perceived usefulness was system quality. handayani et al. (2017), aldosari et al. (2018), and verma et al. (2018) added that there is a positive correlation between system quality and perceived ease of use. the more positive user perceptions about system quality, the higher the usefulness and ease of use perception. h1: system quality has a positive and significant effect on perceived usefulness h2: system quality has a positive and significant effect on perceived ease of use investigating the success of an e-auction system initiatives among public servants: validation of an integrated is success model by agus bandiyono, abdul hamid hudalil muttaqin 191 the relationship of information quality, perceived usefulness, and perceived ease of use pinem et al. (2020) defined information quality as users' perception and assessment of overall information quality provided by the system. zaied, (2012) divided the information quality criteria into six dimensions which are completeness, understandability, security, availability, and accuracy. a study from almutairi & subramanian (2005), hajiheydari & ashkani (2018), and kang & namkung (2019) shows that there is a positive relationship between information quality, perceived usefulness, and perceived ease of use. the more understandable, complete, secure, and accurate information provided by the system, the more positive users perceived the information. h3: information quality has a positive and significant effect on perceived usefulness h4: information quality has a positive and significant effect on perceived ease of use the relationship of service quality and perceived usefulness service quality has a crucial role in enhances the success level of is implementation as the expanded responsibility of it departments and the significance of is in recent decades. while namin (2017) defined it as the difference in users perception between actual and expectation performances, lowry & wilson (2016) and sasongko (2018) defined it as the degree of reliability, responsiveness, empathy, assurances, and tangibles to which is departments provides service to users that meet their expectations. a study from landrum & prybutok (2004) concluded that service quality is an important variable in the success that affects both usefulness and satisfaction with responsiveness and reliability classified as the most important rating. therefore, it can be concluded that there is a positive relationship between service quality and perceived usefulness. h5: service quality has a positive and significant effect on perceived usefulness the relationship of perceived ease of use and perceived usefulness the positive relationship of perceived ease of use and usefulness is one of the wellknown and established correlational approaches that are commonly used in evaluating the is success model. lin et al. (2017) and sun et al. (2020) described perceived ease of use as the degree to which a person believes about easiness (free of mental and physical effort) to use a particular system. also, perceived of usefulness is the extent of which individual beliefs that using a particular system will improve/enhance their performance (mun, khalid, & nadarajah, 2017; lee et al. 2018; rauschnabel & ro, 2016). the more easy to use and useful a system, the higher users willingness to apply that particular system. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 188-206 http://dx.doi.org/10.31106/ jema.v17i2.9044, issn (online) 2597-4017 192 h6: perceived ease of use has a positive and significant effect on perceived usefulness the relationship of system quality, information quality, service quality, and compatibility handayani et al. (2017) and alghazi et al. (2020) defined compatibility as the extent to which a system is perceived as being consistent in maintaining existing value, needs, and performing their required functions. in simple meaning, rahman et al. (2020) described compatibility as the positive interaction (innovation fit) between users and the application. prior studies from alzahrani, al-karaghouli, & weerakkody (2017) and aldholay et al. (2018) suggest that the greater the overall quality that consist of system quality, information quality, and service quality of newer technologies, the more likely that these will enhances desires and lifestyles of their users. h7a: system quality has a positive and significant effect on compatibility h7b: information quality has a positive and significant effect on compatibility h7c: service quality has a positive and significant effect on compatibility the relationship of system quality, information quality, service quality, perceived usefulness, perceived ease of use, compatibility and user satisfaction user satisfaction is another well-known is success model constructs that widely used over decades. while nwankpa & roumani (2014) and montesdioca & maçada (2015) referred to user satisfaction as the degree to which users confident and believes that a system meets their needs. navimipour & soltani (2016) defined user satisfaction as the sum of positive and negative user (subjective) experiences to a particular information system. a previous study from aldholay et al. (2018) established a meaningful relationship between overall quality and user satisfaction with regards to online learning students in yemeni. moreover, the specific correlation of each quality dimensional namely system quality, information quality, and service quality on user satisfactions scientifically proved by song et al. (2017), lien, cao, & zhou (2017), aldholay et al. (2018), chen & chang (2018), sebetci, (2018), and koh & kan (2020). finally, prior studies of lin & wang (2012), liaw & huang (2013), aldholay et al. (2018), and sebetci (2018) that there is a positive relationship between compatibility, perceived usefulness, and ease of use and user satisfaction. therefore, the proposed hypotheses of this study can be described as follows. h8: system quality has a positive and significant effect on user satisfaction h9: information quality has a positive and significant effect on user satisfaction investigating the success of an e-auction system initiatives among public servants: validation of an integrated is success model by agus bandiyono, abdul hamid hudalil muttaqin 193 h10: service quality has a positive and significant effect on user satisfaction h11: perceived usefulness has a positive and significant effect on user satisfaction h12: perceived ease of use has a positive and significant effect on user satisfaction h13: compatibility of use has a positive and significant effect on user satisfaction methods figure 1. research framework h1 h2 h12 h3 h6 h8 h4 h11 h9 h5 h13 h10 h7 a,b,c information quality (infq) user satisfaction (ust) service quality (servq) system quality (sysq) perceived usefulness (pu) perceived ease of use (peou) compatibility (comp) the proposed integrated is success model used in this study can be seen in figure 1. to examine the success of the e-auction system that is developed by the directorate general of state assets management (djkn), ministry of finance of indonesia, the researchers contemplated survey as an appropriate research method. büyüköztürk et al. (2010) and samsurijal (2019) defined survey method as an explanatory survey that aims to explain the relationship between variables and to identify the perceptions or characteristics of targeted population or samples. the structured questionnaire with five-point likert (where 1 denotes 'strongly disagree' and 5 denotes 'strongly agree') was used in this study to measure the proposed model. purposive sampling was chosen as a sampling technique with the auction officials of directorate of auction djkn that have experiences in using e-auction systems were the selected criterion of a respondent to this study. a total of 700 questionnaires were distributed through each administrator with more than 200 valid samples were used for analysis in this study. also, the researchers adopted all of the measures from prior literature. table 1 shows a detailed description of each questionnaire item. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 188-206 http://dx.doi.org/10.31106/ jema.v17i2.9044, issn (online) 2597-4017 194 table 1. questionnaire items variables code item reference system quality (sysq) sysq1 i would find the e-auction system to be easy to use. rana et al. (2015) sysq2 i would find the e-auction system to be easy to learn. sysq3 e-auction system would be user friendly. information quality (infq) infq1 information provided by the e-auction system would be reliable. lin et al. (2011), lin & wang (2012), rana et al. (2015) infq2 information provided by the e-auction system would be accurate. infq3 information provided by the e-auction system would be understandable. infq4 e-auction system would provide sufficient information. infq5 through the e-auction system, i would get up-to-date information. service quality (servq) servq1 e-auction system would provide dependable services. lin et al. (2011), rana et al. (2015) servq2 e-auction system would provide services at the time it promises. servq3 e-auction system would enable interactive communication. servq4 e-auction system would provide service as promised. servq5 e-auction system keeping users informed. perceived usefulness (pu) pu1 using the e-auction system in my job increases my productivity. chau & hu (2002), hung et al. (2012) pu2 using the e-auction system enables me to accomplish tasks more quickly. pu3 overall, i find the e-auction system useful in my job. perceived ease of use (peou) peou1 i find it easy to get the e-auction system to do what i want them to do. chau & hu (2002), hung et al. (2012) peou2 learning to work with an e-auction system is easy for me. peou3 it would be easy for me to become skillful at using the e-auction system. compatibility (comp) comp1 e-auction system is compatible with my need. ifinedo (2012), zhang, li, & sun (2014) comp2 e-auction system is compatible with my job description. user satisfaction (ust) ust1 overall, i'm satisfied with the e-auction system. sun et al. (2008), wang (2008) ust2 e-auction system has met my expectations. ust3 e-auction system is really enjoyable. investigating the success of an e-auction system initiatives among public servants: validation of an integrated is success model by agus bandiyono, abdul hamid hudalil muttaqin 195 table 2. validity and reliability result variable/item pearson correlation criteria cronbach’s alpha criteria decision sysq 0.876 > 0.600 reliable sysq1 0.915 > 0.131 valid sysq2 0.915 > 0.131 valid sysq3 0.856 > 0.131 valid infq 0.866 > 0.600 reliable infq1 0.852 > 0.131 valid infq2 0.730 > 0.131 valid infq3 0.839 > 0.131 valid infq4 0.846 > 0.131 valid infq5 0.842 > 0.131 valid servq 0.871 > 0.600 reliable servq1 0.868 > 0.131 valid servq2 0.835 > 0.131 valid servq3 0.796 > 0.131 valid servq4 0.748 > 0.131 valid servq5 0.850 > 0.131 valid pu 0.843 > 0.600 reliable pu1 0.900 > 0.131 valid pu2 0.826 > 0.131 valid pu3 0.894 > 0.131 valid peou 0.739 > 0.600 reliable peou1 0.783 > 0.131 valid peou2 0.791 > 0.131 valid peou3 0.870 > 0.131 valid comp 0.752 > 0.600 reliable comp1 0.899 > 0.131 valid comp2 0.892 > 0.131 valid ust 0.851 > 0.600 reliable ust1 0.866 > 0.131 valid ust2 0.870 > 0.131 valid ust3 0.898 > 0.131 valid jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 188-206 http://dx.doi.org/10.31106/ jema.v17i2.9044, issn (online) 2597-4017 196 the results of the validity and reliability testing in table 2 show that all instruments used in this study were valid and reliable as the value of pearson correlation (r-value) and cronbach’s alpha was higher than 0.131 and 0.600. therefore, all instruments in this study can be used to analyze the proposed hypotheses. result and discussion figure 2. results of regression analysis 0.033 r square = 0.695 0.199 0.243 adj. r square = 0.618 adj. r square = 0.779 0.408 0.324 0.212 adj. r square = 0.589 0.451 0.214 service quality (servq) compatibility (comp) system quality (sysq) perceived usefulness (pu) information quality (infq) perceived ease of use (peou) user satisfaction (ust) table 3. regression coefficients on perceived usefulness variables coeff. (β) t-value sig. sig. criteria decision sysq 0.320 2.170 0.033 < 0.050 h1 accepted infq 0.586 5.615 0.000 < 0.050 h3 accepted servq -0.159 -1.444 0.153 < 0.050 h5 rejected peou -0.077 -0.606 0.546 < 0.050 h6 rejected table 4. average score comparison of overall quality items items average items average items average sysq1 4.084 infq1 4.120 servq1 4.120 sysq2 4.072 infq2 3.964 servq2 4.036 sysq3 3.824 infq3 4.096 servq3 3.831 infq4 3.964 servq4 4.120 infq5 4.024 servq5 4.096 investigating the success of an e-auction system initiatives among public servants: validation of an integrated is success model by agus bandiyono, abdul hamid hudalil muttaqin 197 table 5. regression coefficients on perceived ease of use variables coeff. (β) t-value sig. sig. criteria decision sysq 0.199 3.646 0.008 < 0.050 h2 accepted infq 0.408 2.734 0.000 < 0.050 h4 accepted table 6. regression coefficients on compatibility variables coeff. (β) t-value sig. sig. criteria decision sysq 0.212 2.143 0.035 < 0.050 h7a accepted infq 0.009 0.129 0.898 < 0.050 h7b rejected servq 0.214 2.763 0.007 < 0.050 h7c accepted table 7. regression coefficients on user satisfaction variables coeff. (β) t-value sig. sig. criteria decision sysq 0.153 1.238 0.220 < 0.050 h8 rejected infq 0.324 3.258 0.002 < 0.050 h9 accepted servq -0.008 -0.090 0.928 < 0.050 h10 rejected pu 0.012 0.127 0.899 < 0.050 h11 rejected peou 0.069 0.650 0.518 < 0.050 h12 rejected comp 0.451 3.408 0.001 < 0.050 h13 accepted the is success model of this study was constructed by combining delone & mclean (1992), delone & mclean (2003), and seddon (1997) model with some adaptation due to the certain rational facts. a total of six independent variables namely system quality, information quality, service quality, perceived usefulness, perceived ease of use, and compatibility were used to measures the success (satisfaction) of e-auction implementation in directorate of auction, djkn. a regression analysis was performed on system quality, information quality, service quality, and perceived ease of use with perceived usefulness as the dependent variable. the model examined an adjusted r 2 of 0.695 (figure 2). the result of this study did not find sufficient evidence to support the positive relationship between service quality and perceived usefulness. the value of t-tested between variables as shown in table 3 was -0.159 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 188-206 http://dx.doi.org/10.31106/ jema.v17i2.9044, issn (online) 2597-4017 198 and -0.077 with a significant value of 0.153 and 0.546 (which is higher than significances criteria of 0.050), therefore h5, h6 is rejected. the majority of the respondent in this study does not feel any sufficient support from related departments whenever they are required to use an e-auction system regularly. therefore, it does affect their perceived evaluation of the e-auction system advantages. on the other hand, sheppard & vibert (2019) argued that the insignificance relationship of perceived ease of use and usefulness should be seen as an indication that these model may need to be revised as the rapid change of users’ perceptions and behavior and current development practices. users can still be able to perform the tasks for which a system is built, even if it is difficult to use, but with a system that is simple to use, they would be more effective, efficient, and pleased. finally, the result of this study support prior finding by almutairi & subramanian (2005), handayani et al. (2017), hajiheydari & ashkani (2018), aldosari et al. (2018), verma et al. (2018), and kang & namkung (2019) that stated there was a positive relationship between system and information quality on perceived usefulness. the value of t-tested between variables as shown in table 3 was 0.320 and 0.586 with a significant value of 0.003 and 0.000 (which is lower than significances criteria of 0.050), therefore h1, h3 is acceptable. it means that the more positive users' evaluation of the e-auction system and service quality, the more useful the e-auction system is perceived. a second regression analysis was run on system quality and information quality with perceived ease of use as the dependent variable. the model exhibited an adjusted r 2 of 0.618 (figure 2). all two variables were significant predictors of perceived ease of use. the value of t-tested between variables as shown in table 5 was 3.646 and 2.734 with a significant value of 0.008 and 0.000 (which is lower than significances criteria of 0.050), therefore h2, h4 is acceptable. this study supports previous studies by almutairi & subramanian (2005), handayani et al. (2017), hajiheydari & ashkani (2018), aldosari, al-mansour, aldosari, & alanazi (2018), verma et al. (2018), and kang & namkung (2019) that concluded that there was a positive and significant relationship of system quality, information quality, and perceived ease of use. the more positive users’ evaluation of the e-auction system and service quality, the more ease of use the e-auction system is perceived. a third regression analysis was applied on system quality, information quality, service quality with compatibility as the dependent variable. the model exhibited an adjusted r 2 of 0.589 (figure 2). table 6 of the hypotheses testing shows that this study was only able to confirm h7a and h7c, as there were significant effects of system quality and service quality on compatibility (β = 0.212, 0.214; t = 0.035, 0.007; p < 0.050). this study supports prior investigating the success of an e-auction system initiatives among public servants: validation of an integrated is success model by agus bandiyono, abdul hamid hudalil muttaqin 199 literature by aldholay et al. (2018) and sebetci (2018) which concluded that system quality and service quality has a positive effect on compatibility. the higher the quality of system and service offered, the more compatible the interaction of system and users will be. thus, unlike previous studies by aldholay et al. (2018) and sebetci (2018) that found that information quality was a significant predictor of compatibility, the result of this study concluded the opposite. eppler (2006) stated that there are five issues of compatibility hinder for information quality improvements in e-government initiatives which is an existing resource (such as staff, budget, available time), rules, skills, infrastructure, and reference points (such as official benchmarks or standards of the required attitudes of public servants). based on open survey questions, the unattractive dashboard, the missing of the "auction acta” feature, lack of support and socialization from is developers, and instability of internet network was mentioned as an issue that respondent faced regularly. it can be concluded that the issue of resources and infrastructure were considered as the most important factors that make the insignificant relationship between information quality and compatibility. the last regression analysis was applied to all six variables using user satisfaction as the dependent variable. there are 4 of 6 variables were failed to prove the proposed hypotheses. the model exhibited an adjusted r 2 of 0.779 (figure 2). table 7 shows that information quality and compatibility meaningfully predicts user satisfaction, therefore h9, h13 is acceptable (β = 0.324, 0.451; t = 3.258, 3.408; p < 0.050). this study supports previous studies by song et al. (2017), lien, cao, & zhou (2017), aldholay et al. (2018), chen & chang (2018), sebetci, (2018), and koh & kan (2020) that found that information quality and compatibility has a positive effect on user satisfaction. it means that the more compatible, reliable, accurate, understandable, sufficient, and up-to-date information provided by the system, the more satisfied users will be. meanwhile, system quality, service quality, perceived usefulness, perceived ease of use, and compatibility failed to predicts user satisfaction in this study, therefore it can be concluded that h8, h10, h11, h12 is rejected (β = 0.153, -0.008, 0.012, 0.069; t = 1.238, -0.090, 0.127, 0.650; p > 0.050). table 4 shows the comparison of system quality and service quality average score which is described that respondent of this study has not valued the question of "e-auction system would be user friendly” and “e-auction system would enable interactive communication” as high as others questions. these same symptoms with a prior study by mulhanga & lima (2017), which is poor interface design and lack of technical support were considered as the primary barriers that deter the successful implementation of is. furthermore, normelindasari & solichin (2020), added that whenever user experienced system failure, it would decrease their level of jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 188-206 http://dx.doi.org/10.31106/ jema.v17i2.9044, issn (online) 2597-4017 200 satisfaction simultaneously. lastly, the insignificant effect of perceived usefulness and ease of use on satisfaction may due to the finite alternatives e-auction system that available for the official member of directorate auction, djkn. therefore, it makes perceived usefulness and ease of use have not become the key belief that influences their attitude in using the particular is (sumaedi et al., 2016). moreover, the usage of an e-auction system among the official member of directorate auction, djkn, was considered as mandatory acted that obligated by government and organization policies. conclusion and suggestion the purpose of this study was to examine the satisfaction factors of public servants used the e-auction system that is developed by the directorate general of state assets management (djkn), ministry of finance of indonesia. this study found that there were only two of six variables that significantly prove as predictors of user satisfaction of eauction system which is information quality and compatibility. it means that the system designers should pay more attention to designing information quality that compatible with user needs to boost the level of satisfaction. other constructs such as system quality, service quality, perceived usefulness, and perceived ease of use failed to prove their significant relationship to user satisfaction. researchers argued that the poor interface design and lack of technical support were the primary concern that is considered as the reason for the insignificant hypotheses result. moreover, the usage of an e-auction system that is classified as "order by mandate" makes perceived usefulness and ease of use have not become the key belief that influence their attitude. interestingly, this study did not find sufficient evidence to support the relationship between perceived ease of use. it seems that users can still be able to perform the tasks for which an e-auction system is built, even if it is difficult to use, but with a system that is simple to use, they would be more effective, efficient, and pleased. finally, the issue of resources and infrastructure were considered as the most important factors that make the insignificant relationship between information quality and compatibility in this study. future studies should extend their theoretical scope and target respondents (the bidder) in a broader way to gain a better perspective. the usage of technology task fit and perceived usefulness with the modification role of perceived ease of use (as a moderator in between) may considered as the extension construct of future study. as in public sectors, is initiatives were a mandatory approach, then the investigation of the is success model should focus on the real impact of is implementation (such as net benefit) rather than user perception. investigating the success of an e-auction system initiatives among public servants: validation of an integrated is success model by agus bandiyono, abdul hamid hudalil muttaqin 201 references abi bakri, r. 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(2014). relationship between consumer innovativeness and internet banking acceptance. in 2014 international conference on management science & engineering 21th annual conference proceedings (pp. 308–314). ieee. https://doi.org/10.1109/icmse.2014.6930245 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 12 the effect of social capital and organizational commitment toward lecturer performance with islamic work ethics as a moderating role pardiman *) abstract the number of private islamic higher educations (ptis) in indonesia today amounted to 631 institutions. this condition has a tremendous potential in order to build the civilization of the indonesian nation as aspired by islam which is to be a nation that baldatun thoyyibatun wa rabbun ghaffur, a nation with a peace, the savety, and prosperity. the purpose of this study is to examine the impact of islamic work ethic as moderating role on the influence of social capital and organizational commitment to the performance of lecturers. researcher is using random sampling technique. the data collected from 236 respondents in ptis that classified as “a” accredited by banpt. researcher analyzes the data collected by using warlppls 5.0. this research concluded that the social capital and organizational commitment has a positive effect on lecturer’s performance, islamic work ethics reinforces these influences. however, the decision of researcher in choosing only “a” accredited ptis as his research object make this study can’t be generalize. keywords: social capital, organizational commitment, lecturer performance, islamic work ethics 1. introduction 1.1 research background individual performance has become a research topic favourite by many scientists or researchers, given that performance is a measure of organization or company success. this is not too much because the accumulation of individual performance will shape the performance of the organization or company, so the better the individual performance, the better the performance of the organization (dessler 2009). research that examines the factors that influencing individual performance has been exposed to many variables, both intrinsic factors such as civic behavior or organizational citizenship behavior (memari, mahdieh, & marnani, 2013; cho & johanson, 2008; harwiki, 2016), organizational commitment (khan, ziauddin, & ramay, 2010; hayati & caniago 2012; jaramillo, mulki, & marshall, 2005; meyer, paunonen, gellatly, goffin, & jackson, 1989), work ethics (imam, abbasi, & muneer, 2013; abbasi, mir, & hussain, 2012; bozkurt, bayram, furnham, & dawes, 2010) as well as employee extrinsic factors such as: award (güngör, 2011), leadership (chen, eberly, chiang, farh, & cheng, 2014; wong & laschinger, 2013; walumbwa, mayer, wang, wang, workman, & christensen, 2011; huey yiing & zaman bin ahmad 2009; de araújo & lopes 2014; braun, peus, weisweiler, & frey, 2013) and some more other studies. however, if we viewed from research subjects, the majority of individual performance studies involving company employees which have profit oriented as research subjects. this means that for research subjects stating in non profit oriented organizations, especially lecturers at higher education institutions in private islamic higher education (ptis), has not been done. the number of ptis in indonesia today amounted to 631 institutions, 53% are in java, and the rest are spread in some provinces in indonesia. in general, ptis in indonesia is affiliated with religious organizations, such as nahdlatul ulama (nu), muhammadiyah, or other religious organizations. the condition is a tremendous potential in order to build the civilization of the indonesian nation as aspired by islam to be a nation that baldatun thoyyibatun wa rabbun ghaffur, a nation whose people love the savety, peace, and prosperity which of course is the dream of all humanity (hasan 2015). university in indonesia as an institution that carries the mandate to educate and produce graduates who are able to develop self-competence, mindset, attitude and act patterns that reflect themselves as intelligent jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 13 individuals, have noble character and possess the necessary skills for themselves, society, nation and state (act no. 20 2003), then its success is strongly influenced by the performance of the educators. while in the context of ptis, hasan (2015) said that one of the goals of islamic higher education (pti) is to produce graduates who have the intellectual and spiritual ability so as to build society and able to orient all their activities for the purpose of worshiping allah swt. this is in accordance with the basic doctrine of the purpose of human creation as described in qs. dzariyat verse 56 which means "and i did not create jinn and human except to worship me". to achieve the goals of pti, educator (lecturer) is required to understand and able to apply islamic behavior in work, especially in the learning process to the learners, which later in the formulation of this research called the work ethic of islam. besides, how an organization is able to generate and sustain the performance of its members in the long term, bourdieu (2011) said that "it is important for every individual to have social capital to facilitate the achievement of performance as it has been charged to him". while other experts also said that the commitment of an employee to the institution is also a factor that must be owned by every member of the organization, because commitment to the organization is believed to be a driver for individuals to be serious in working so as to meet the performance targets charged to her/him. (meyer, stanley, herscovitch, & topolnytsky, 2002; yousef, 2001). 1.2 research problem based on the above reasoning, researcher need to investigate the effect of islamic work ethics moderation on social capital, organizational commitment, and lecturer performance. 1.3 research purpose this research purpose is to understand and explore the effect of islamic work ethics moderation on social capital, organizational commitment, and lecturer performance. 2. theoretical framework and hyphoteses development 2.1 theoretical framework 2.1.1 islamic work ethics the work ethic is basic belief in which a person should perform work by applying fundamental values and that everyone should do so in the best possible way, regardless the reward (stackhouse, 1995). meanwhile, cherrington (1980) defines the work ethic as a cultural norm that makes a person trustworthy and responsible for a job that she/he does, based on a belief that the work has an intrinsic value to his personality. from the description, it can be concluded that the work ethic is the beliefs or fundamental principles that serve as a guideline for a person in doing work activities. working in islam occupies a very noble position. islam highly appreciates the people who work. even islam believes that when a person feels exhausted after going home to work, then allah swt forgive her/his sins right that moment. ibn abbas ra said which means: "i heard the prophet muhammad saw said, those who feel fatigue in the afternoon, because of work done by both hands, then her/his sins are forgiven by allah swt on that afternoon." (narrated by imam tabrani, in al-mu'jam al-ausath vii / 289.). in another hadith, it is said that by working allah will remove the sins of man that cannot be removed with the reward of prayer, fasting, pilgrimage and umroh. from abu hurairah ra said that rasulullah saw said that "among the sins there is a sin that cannot be forgiven with prayer, fasting, hajj and also umrah." the companion asked, "what can erase it, o messenger of allah?" he replied, "the spirit in seeking rizki (work)". (hr thabrani, in al-mu'jam al-ausath i / 38). meanwhile, working in the view of islam is a very noble act, because by working muslims are considered to have maintained their dignity and human dignity (suprayogo, 2012). thus islam gives a very high appreciation for those who want to try hard to work in earnings money (income). therefore islam categorizes work as worship, as commanded by allah swt in (surat at taubah 105) which means "and say, do (as you will), for allah will see your deeds and (so will) his messenger and the believers. and you will be returned to jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 14 the knower of the unseen and the witnessed, and he will inform you of what you used to do." the ethics of work in the islamic context, based on islamic teachings derived from the qur'an and alhadith (ali & al-owaihan, 2008; kamaluddin & manan, 2010; owoyemi, 2012) as described above. basically, islamic work ethics giving guidance to every muslim in her/his life, especially related to work. some dimensions related to islamic work ethics provide guidance nature of intentions (motivation) in work, choosing work, behavior in work, and attitude in receiving the work result; (commentary of the qur’an thematic, 2010). in this study, indicators used to analyze the ethics of islamic work include the intention (motivation) in work, sincere in working, can be trusted, trustworthiness (towards the work result and left it to god), istiqomah (consistent in work, consistent between beliefs of heart, oral, and action), itqon (professional in work), and qonaah (always felt enough). 2.1.2 organizational commitment mowday, porter, & steers (2013) defines organizational commitment as the power of individual identification within an organization through a strong desire to become a member of the best organization by involving oneself wholeheartedly and pursue work, which is based on acceptance of organizational values and goals. so, it can be concluded that organizational commitment is an attitude of ownership, involvement, responsibility, high employee loyalty to the organization. curtis & wright (2001) describe the dimensions of organizational commitment into three elements, namely: (1) the desire to maintain membership in the organization; (2) confidence and acceptance of the organization's values and objectives; and (3) willingness to work hard as part of the organization. in general, zurnali (2010) said that research related to employees with strong affective commitment will remain with the organization because they want to stay tied and loyal both emotionally and psychologically to the organization. while employees are said to have a strong commitment continuance because they feel they must (because they have to) live with the organization and remain part of the organization on the basis of consideration of profit and loss. and employees are said to have a strong normative commitment because they feel they have to live together because of the reflection of responsibility feeling to remain part of the organization. meyer & allen (1991), meyer, stanley, herscovitch, & topolnytsky (2002) states that organizational commitment as a "good" psychological state, characterizes the relationship of the affected organization to influence what the employee continues to be with the organization. "it can be identified through three components: (1) affective commitment, ie, one's emotional involvement in the organization (2) continuance commitment, which is a person's perceptions of costs and risks by leaving the organization today. which means, there are two aspects on the organization continuous commitment, ie: involves personal sacrifice if leaving the organization and the absence of alternatives available to the person, with indicators, by taking into account the benefits of staying in the organization and the disadvantages of leaving the organization. 3) normative commitment: a moral dimension based on responsible feelings, with indicators such as the willingness to work and responsibility to advance the organization. measurement of organizational commitment in this study is based on indicators developed by (mowday, steers, & porter, 1979), namely (1) the desire to maintain membership in the organization; (2) conformity with organizational values and objectives; and (3) seriousness in work. 2.1.3 social capital the definition of social capital put forward by experts is strongly influenced by the object/subject in her/his research. this affects the diverse understanding of the concept of social capital. putnam (1993) states that social capital as a characteristic that exists in a social organization or society such as trust, applicable norm and networks owned, so she/he concludes that in order to become a strong organization, the organization must build trust, create mutually agreed and shared norms, and build a broad network. meanwhile, lin (2008) said that social capital is a diverse range of resources within the social network, accessible and transferable by both parties within the jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 15 organization through ties in social networks. social capital is transmitted through cultural mechanisms such as religion, tradition, or historical habits (fukuyama 2001). social capital is needed to create a kind of moral community that can not be obtained as in the case of human capital forms. the acquisition of social capital requires the habitualization of the moral norms of a community and in its context as well as the adoption of virtues. dasgupta & serageldin (2001) believe social capital is something that refers to the institutional dimension, the relationships created, and the norms that shape the quality and quantity of social relationships in society. social capital is not just a row of the number of institutions or groups that underpinning social life, but with a broader spectrum. that is as a glue or social glue that keep the unity of group members together. some references to values and elements that constitute the spirit of social capital include : participatory attitudes, mutual attitudes, mutual giving and receiving, trusting each other trusting and reinforced by the values and norms that support it. another element that plays an important role is the willingness of society to continuously proactive both in maintaining value, forming cooperation network and with the making of new creations and ideas. this is the true identity of social capital. individual social capital study conducted by bourdieu (2011), which states that social capital as the total number of resources owned by individuals/groups as a result of networking. the emphasis of social capital in the concept focuses on one's relationships with others, the orientation for the achievement of individual goals and the power of social capital lies in the control of each individual. discussion of social capital in the educational context, mohammad (2012) said that the wider social network of an educator, the higher opportunity to exchange knowledge, technology, expertise, and other benefits, and the higher opportunity to improve performance. in addition, educator that has more network is easier to get support from co-workers than those who do not have networks, and has better performing chances. in this study social capital is meant to be the individual social capital, characterized by networking in and out of the organization (network), trustworthiness (trust), and the similarity of vision, mission, and goals (share goal). 2.1.4 performance koopmans, bernaards, hildebrandt, schaufeli, de vet henrica, & van der beek (2011) defines individual performance as recording results obtained from functions of a particular job or activity over a period of time. according to behavioral approach in management, performance is the quantity or quality of something produced or services provided by a person doing the work (luthans, 2010). while mathis & jackson (2006) state that performance is basically what employees do or not do. factors that affect performance by mathis & jackson (2006): a. effectiveness and efficiency. when a certain goal is finally achieved, we may say that the activity is effective but if the consequences of the activity that are not sought to assess the importance of the results achieved so as to result in satisfaction although effectively is called inefficient. conversely, if the consequences are sought is not important or trivial then the activity is efficient. b. authority. authority is the nature of a communication or command in a formal organization that belongs to an organization member to other members to perform a work activity in accordance with its contribution. the order says what is allowed and what not allowed in the organization. c. discipline. discipline is obedient to applicable laws and regulations. thus, employee’s discipline is the activity of the employeke concerned in respecting employment agreement with the organization where she/he works. d. initiative. the initiative is related to the power of thought and creativity in shaping the idea to plan something related to organizational goals. while what is related to employee performance indicators such as stated by robbins (2006), there are six indicators to measure the performance of employee individually, namely: 1. quality. quality of work is measured by employee perceptions over the qualit y of work produced as well as the perfection of tasks to the skills and abilities of employees. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 16 2. quantity. represents amount generated and expressed in terms of number of units, number of completed activity cycles. 3. timeliness. represents activity level completed at the beginning of stated time, viewed from the point of coordination with the output and maximizing the time available for other activities. 4. effectiveness. represents the level of organizational resources usage (energy, money, technology, raw materials) maximized with intention to increase the yield of each unit in the use of resources. 5. independence. represents the level of employee which later will be able to perform her/his work function as work commitment. it is also a level where employees have a working commitment with the agency and responsibility of employees to the office. in the context of lecturer profession, performance is measured by taking into account the lecturer's workload and evaluation of ‘tridharma’ higher education implementation, including: 1. education and teaching activities. 2. research activities. 3. community service activities. 4. supporting activities. 2.1.5 the relationships between social capital and performance technological progress as one of the globalization era characteristics requires a lecturer to further strengthen individual social capital in order to facilitate the exchange of information so that it is expected to improve its performance. the relation between social capital and performance are based on the theory of social resources, which represents a form of social support for individuals to solve the problems they are facing (purba, yulianto, widyanti, esa, 2007). as lin (2008) noted, in social networks there are various social resources (information, support, trust) that can benefit all members of the network for social support. thus, a lecturer will get social support to improve his performance, if she/he is able to access the existing resources in his social network, then it will become social capital for the individual (mohammad, 2012). several studies have shown that individual social capital has a positive effect on performance (ferdinand, 2005; abbasi, hossain, & wigand, 2011; seibert, kraimer, & liden, 2001). based on the results of the research, the first hypothesis is arranged as follows: h1 : individual social capital affects performance 2.1.6 the relationships between organizational commitment and performance someone who has an organizational commitment can be seen from his seriousness in working as an effort to give maximum contribution for the development of the organization. the sincerity in working is a manifestation of the person's acceptance and conformity to the vision, mission and objectives set by the organization and her/his desire to remain a member of the organization (mowday, porter, & steers, 2013). thus, the higher a person's commitment to the organization in which he is joined in, the higher her/his performance is. several previous studies have shown that organizational commitment contributes positively to one's performance (becker, billings, eveleth, & gilbert, 1996; khan, ziauddin, & ramay, 2010; de araújo & lopes 2014). thus hypothesis 2 is structured as follows: h2 : organizational commitment has a positive effect on lecturer performance. 2.1.7 islamic work ethics as moderating role the influence of social capital influence and organizational commitment to lecturer performance will be more effective and stronger influence if supported by ethical behavior owned by lecturer. ethical behavior as the guiding principles in work will have a positive effect on the establishment of a comfortable working atmosphere, because each work is based on good moral principles. ethical behavior will create an atmosphere of togetherness that brings cohesiveness to jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 17 members of the organization so that harmonization of relationships between individuals involved in the organization will be occured. a comfortable working atmosphere and togetherness will enhance cooperation between individuals, resulting in increased employee productivity. in this study, the ethical behavior is the ethical work of islam. thus the third and fourth hypotheses are structured as follows: h3 : islamic work ethics reinforces the influence of social capital on the performance of lecturers h4 : islamic work ethics reinforces the influence of organizational commitment to lecturer performance 3. research method 3.1 research design this research can be classify as quantitave research with descriptive and (survey) questionnaire as the research tools. a survey questionnaire comprising of demographic information and measures of the research variables. while descriptive analysis is used to give researcher a broader insight related respondent profile based on the answers of statements in the questionnaire. data analysis in this study done by using warppls 5. 3.2 population and sample the population in this study is lecturers of islamic private universities (ptis) in indonesia who have an a institution accreditation, with the criteria of permanent lecturer of foundation/association or lecturer of civil servant (pns) attributed to the ptis, and has the lowest functional position as expert assistant. with these criteria, number of population in this study amounted to 1711 lecturers. by using slovin formula at 7.5% error, 162 samples of people are obtained. a total of 600 questionnaires were distributed in random sampling and returned as many as 254 copies. of these, 236 copies fulfilled the requirements. 3.3 research variables islamic work ethics is measured on the basis of intention (motivation) in work, choosing work, behavior in work, and attitude in receiving the work; (thematic qur’an commentary, 2010). in this study the indicators used to analyze the ethics of islamic work include the intention (motivation) in work, sincere in work, trustworthy, surrender towards the work (left it to god), istiqomah (consistent in work, consistent between beliefs of the heart, oral, and action), itqon (professional in work), and qonaah (always felt enough). measurement scale using scale 1-5 likert, (1 for answers strongly disagree, 5 answers to strongly agree). organizational commitment is measured by indicators developed (mowday, steers, & porter, 1979), in which organizational commitment is characterized by acceptance of organizational goals, sincerity in trying for the sake of organization, and the desire to stay in organization. measurement scale using scale 1-5 likert, (1 strongly disagree, 5 strongly agree). social capital is measured based on indicators developed by lin (2008), including networking, relationships based on mutual trust, and the existence of the same goal /share goal between individuals in one lecturer community. measurement scale using scale 1-5 likert, (1 for answer strongly disagree, 5 answers to strongly agree). performance is measured by indonesian government regulations related to lecturers workload (act no. 12 2012), known as tri dharma principle which is consist of education performance (teaching aspects), research performance, community service performance, and other supporting performance. this variables is measures by using 1 and 0 gutman scale, (1 for yes answer, 0 for no answer). in questionnaire validity test with guttman scale, reproducibility and scalability coefficient test developed by dunnrankin, knezek, wallace, & zhang, (2014) is used which stipulates that reproducibility coefficient value should be > 0.90 and scalability coefficient value should be > 0.6. based on the test, reproducibility coefficient of performance questionnaire in this study amounted to 0.912 and scalability coefficient amounted to 0.761. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 18 3.4 research framework picture 1 research framework 4. research result and analysis 4.1 descriptive analysis table 1 respondent characteristics respondent characteristic total percentage age < 40 87 37% 40 – 60 144 61% > 60 5 2% level of education magister 179 76% doctoral 57 24% work experiences (year) 3 – 10 76 32% 11 – 20 70 30% 21-30 85 36% > 30 5 2% lecturer level associate lecture 92 39% assistant professor 64 27% associate professor 78 33% professor 2 1% social capital organizational commitment lecturer performances islamic work ethics jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 19 4.2 validity and reliability outer model is used to measure reliability and validity of formative indicators of latent variable. while reflective indicators is measured by loading factor, composite reliability, avarage variance extracted, and discriminant validity. table 2 loading factor variable indicator loading factor type of indicator p value social capital ms-1 0.792 reflect <0.001 ms-2 0.857 reflect <0.001 ms-3 0.868 reflect <0.001 organizational commitment ko-1 0.838 reflect <0.001 ko-2 0.890 reflect <0.001 ko-3 0.330 reflect <0.001 islamic work ethics eki-1 0.552 reflect <0.001 eki-2 0.758 reflect <0.001 eki-3 0.410 reflect <0.001 eki-4 0.799 reflect <0.001 eki-5 0.773 reflect <0.001 eki-6 0.553 reflect <0.001 eki-7 0.585 reflect <0.001 variables with formative indicators can be seen as reliable variable if p-value <0.05 and vif <3.3 (kock, 2015). as for the internal consistency reliability shown by the composite reliability values of each variable are capital social variable is 0.877, organizational commitment variable is 0.752, islamic work ethic variable is 0.828 and performance variable is 0.829. variables meet the criteria of composite reliability if the value is more than 0.7. (hair, 2010). furthermore, average variance extracted (ave) is used to know how far the research indicator is able to explain variable. the recommended values is ave > 0.50; (fornell & larcker, 1981). based on the analysis, it can be conclude that the ave of the four variables are meet the prescribed prerequisites because the value is more than 0.59, 0.705 for social capital variable, 0,534 for organizational commitment variable, 0,519 for islamic work ethic variable and 0.551 for lecturer’s performance variable. for reflective indicators, there is one more criteria which is discriminant validity (the square root of ave of each construct must be greater than the correlation between constructs in the model) that must be meets to see if the construct are reliabile or valid of the construct. table 3 correlations among l. vs. with sq. rts. of aves variable social capital organizational commitment islamic work ethics lecturer performance social capital 0.840 0.501 0.506 0.363 organizational commitment 0.501 0.731 0.491 0.496 islamic work ethics 0.506 0.491 0.647 0.412 lecturer performance 0.363 0.496 0.412 0.742 based on table 3, it can be concluded that all constructs with reflective indicators have met the criteria of discriminant validity. the construct validity and reliability with formative indicators, determined by the indicator of weights and vif value. the terms are p-value <0,05 and vif <3.3; (kock, 2015). jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 20 table 4 weight indicators variable indicator weight indicator type of indicator p value vif lecturer performance kd-1 0.343 formative <0.001 1.823 kd-2 0.289 formative <0.001 1.153 kd-3 0.351 formative <0.001 1.725 kd-4 0.360 formative <0.001 1.419 4.3 research analysis evaluation of structural model (inner model) is used to predict the relationship between latent variables by looking at how much variance can be explained and to know the significance of pvalue. some items that need attention include the r-square of each endogenous latent variable to find out the predictive power of the structural model. the stone-geisher test to test predictive relevance, and the goodness of fit (gof) is to measure the strength of the model as a whole. based on the result, we can see that the model has a good fit because the p-value for average path coefficient (apc) is 0.321, average r-squared (ars) is 0.273, and average adjusted r-squared (aars) is 0.257. average block of vif (avif) and average full collinearity of vif (afvif) that produced in this research is more than 3.3. therefore, it can be concluded that there is no multicollinearity between indicators and latent variables. the value of tenenhaus gof (gof) is 0.272 (> 0.25) which means that the model has moderate strength. sympson's paradox ratio (spr), r-squared contribution ratio (rscr), statistical suppression ratio (ssr), and nonlinear bivariate causality direction ratio (nlbcdr) generated above all conditions. this indicates that there is no causality problem in the model and iteration for this model is done 7 times. picture 2 before moderation jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 21 picture 3 after moderation picture 2 is the result of data analysis before including islamic work ethic variable as a moderation variable. picture 2 shows that the percentage of variance (r2) in the endogenous latent variable is 6%. social capital has a positive influence on lecturers performance with path coefficient amounted to β = 0,16 and probability pof<0,001. otherwise, organizational commitment has a positive effect on lecturer performance with β = 0.17 and probability p of <0.001. picture 3 is the analysis result after inserted islamic work ethic as a moderation variable. its increased the percentage of variance r2 to 11%. table 5 path coefficients variable modsos komorg kindos etik-ki etik-ki etik-ki modsos komorg kindos 0.268 0.233 0.278 0.106 etik-ki etik-ki etik-ki table 6 p values variable modsos komorg kindos etik-ki etik-ki etik-ki modsos komorg kindos <0.001 <0.001 0.030 0.026 etik-ki etik-ki etik-ki the result of path analysis and probability value (p) after inserted of islamic work ethic as moderation variable can be seen in table 5 and 6. based on the data, it can be seen that social capital have positive effect on lecturer performance (β = 0,268; p <0,001). hence, hypothesis 1 which states islamic work ethic has a positive influence on lecturer performance, is acceptable. this research also concluded that organizational commitment has an effect the performance of lecturers (β = 0.233, p <0.001), therefore hypothesis 2 is also stated accepted. the results also shows that jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 22 islamic work ethics moderate the influence of social capital on lecturer performance (β = 0,278; p = 0,030). islamic work ethics also moderates the influence of organizational commitment on lecturer performance (β = 0.106; p = 0.026). thus hypotheses 3 and 4 is acceptable. the result of data analysis shows that the overall hypothesis developed in this study is accepted. the social capital has a positive and significant impact on the lecturer's performance. in line with previous studies, at the individual social capital level characterized by mutual trust, the broad of network and the existence of same goal/share goal in respondent's environment has significantly improved its performance. it also provides information regarding social support theory, respondents get social support from their social networks because they have the ability to access all the resources (information, support, and trust) that exist within the network. organizational commitment has a positive and significant impact on lecturer performance. it provides information about how important the present of common goal between individual lecturers and the institutions objectives, so that each lecturer motivated to work hard in realizing the tridharma of higher education, devoting all potential she/he has to achieving the organization's goals and continuously arising the desire to remain survives as a member of the institution. the islamic work ethic moderates the influence of social capital and organizational commitment to the performance of lecturers. the research findings show that ethical behavior such as sincere, trustworthiness, can be trust (amanah), istiqomah, itqon, and qonaah based on the intention of work which only intended to worship allah swt, has a positive impact for the strengthening of lecturer’s social capital through the strengthening of trust and network (network) and attitude of lecturer's commitment to the institution so that it impact on individual performance. it means that ethical behavior developed based on religious beliefs as well as the islamic work ethic becomes appropriate if it is used as working principles which are used as work guidelines, especially in ptis environment. 5. research conclusion and limitation 5.1. conclusion based on data analysis results, it can be concluded that social capital and organizational commitment has a positive and significant impact on the performance of lecturers, as well as islamic work ethic that strengthen the influence of social capital and organizational commitment to lecturer performance. theoretically, the results of this study strengthen and expand the results of previous research. while on a practical level, the results of this study can be used as a basis of policy to encourage lecturers to strengthen their commitment for their institutions and strengthen social capital to gain social support through the development and strengthening of ethical behavior among lecturers based on religious (islam) beliefs in order to improve its performance. the establishment of an ethical institution that oversees the performance behavior should be established to ensure the implementation of ethical behavior among the lecturers. 5.2. limitation this research only uses three variables (social capital, organizational commitment, and the moderating role of islamic work ethics) to examine the performance of lecturer, therefore for future researchers who will conduct research on the same topic should use different variables. to strengthen the generalization of the research results in the responden group (ptis lecturers' environment), a broader scope of research, including ptis which has b and c accreditation, and even unaccredited ptis need to be conducted. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 15 no. 1 (2018) http://riset.unisma.ac.id/index.php/jema (p-issn : 1693-7864, e-issn : 2597-4071) 23 references abbasi, a., hossain, l., & wigand, r. 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(2010). learning organization, competency, organizational commitment, dan customer orientation: knowledge worker-kerangka riset manajemen sumberdaya manusia di masa depan. bandung: penerbit unpad press. *) pardiman, university of islam malang, malang, indonesia (e-mail: pardiman@unisma.ac.id) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 120 the role of accountants in implementation corporate social responsibility at hospital dr. h. moh. anwar sumenep district syahril *) isnani yuli andini **) abstract internal accountants has critical leverage to encourage hospitals to be involved in activities such as social or corporate social responsibility.this study aims to examines the role of internal accountants in the implementating of corporate social responsibility at rsud moh. anwar sumenep district. research uses descriptive (qualitative) approach to interpret and describe data that obtained from observation, interview and documentation. this research concludes that rsud moh. anwar sumenep district does not have a clear standard about corporate social responsibility. its only depends on the willingness of the organization, not an obligation to disclose in hospital financial statements. internal accountant who is in charge of performing systematic and objective analysis and assessment on the operation and control of company's activities is needed to encourage companies to carry out social responsibility. researcher suggest that governments needs to increases their concern toward this issues whether in the form of programs, policies, regulations or awards of the social environment. keywords: internal accountant, corporate social responsibility, hospital 1. introduction 1.1 research background the philosophy of shifting organizational management of business entities undergoing a shift from classical management to modern management in particular in some industrialized countries like america and europe has given birth to a new orientation of corporate responsibility. the classical management view of corporate responsibility that is oriented only to capital owners and creditors by achieving maximum profitability has shifted with the concept of modern management, where the company's orientation in achieving maximum profit needs to be linked to corporate social responsibility towards a balance between the demands of the owners of the company, the need employees, suppliers, the environment and the general public, because according to the view of modern management companies in running operations must interact with the social environment and economic resources used by the company all come from the social environment where the company is located. therefore the company as a business organization must be able to respond to what is demanded by its social environment, so that business entities and social entities can interact and communicate for the common good. along with the development of management concepts, accountants also discussed how these social responsibility issues can be adapted within the scope of accounting (hines 1988) in maksum, (1991), so that the main purpose of financial reporting to provide information to shareholders and creditors is to participate also shifts towards the tendency that the need for reporting that is from outside the organization company (externality) in order to provide information to some groups of outsiders interested in the company. based on the above description can be understood that the basic idea underlying the need for developed social accounting (social accounting), in general is a demand for expansion of corporate responsibility. specifically the task of the internal accountant is to identify, measure, classify and report information that can help managers run the planning, controlling and decision-making process. changes that occur in the company's external environment that affect the process of planning, controlling and decision-making is also the information that must be submitted to the manager's internal accountant. in addition according to martin (1991), as quoted by gray et.al. (1993: 41) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 121 companies that seriously respond to environmental issues not only embed slogans free of pollution but also internalize in the accounting system. so the company knows the financial position after running environmental activities. in this case, very few companies have awareness of environmental issues or who have environmentally friendly technology and internalize it in the accounting system, even if there is still in the context of conventional accounting is disclosure. and also here the role of internal accountant is as information delivery. internal accountants can convey information about the benefits a company can earn if the company is willing to respond to these environmental problems, even though short-term costs will arise. but it will bring future results such as support for products and a healthy environment for employees. in addition, cost information is also more accurate, because it includes the sacrifices made by the community due to the impact of the company's product activities. in this case, the company has a moral responsibility to fix it, (gray: 1994) in syahril (2012). corporate social responsibility (csr) is a program that implements corporate social responsibility to the broader community that is the stakeholders, where the corporate social responsibility should be environmentally voluntary (valunteer) by the company not as a liability. therefore, the company as a whole that comes from the environment in the end consumed by the environment not only has economic responsibility but also must carry out operational activities that will berintekrasi directly or indirectly with the environment such as corporate social responsibility (csr) which is the business world principle to continue to act ethically, to walk legally for economic improvement, with which to improve the quality of life of the wider community, to improve the quality of life of employees and their families. there is a belief that the sustainability of the company will be guaranteed if the company takes into account other related dimensions, such as the dimensions of economic development, social development, and environmental protection that are closely related in order to achieve sustainable development. thus, three (3) dimensions are called triple battom line (3p) concept, namely: profit (economy), people (social), plannet (environment) into a unity, so that sustainable development in csr implementation becomes the main role of community development community development) in the form of community empowerment and then developed to achieve good success from the company's stakeholders (stakeholders) also become very important along with the paradigm shift that says that csr is not only seen as a cost center but also as a profit center center) in the future. from that context, the profitability of the company is a company's own challenge, because the company must also pay attention to people and the surrounding environment. this means that the implementation of csr in the company has an important position. first: in some multinational, national, and state-owned companies, csr has become an independent department / division that is organizational structure directly responsible to the director. second: csr regulations are also growing, ranging from the law of limited liability company (pt), investment law, decree of the minister of bumn, micro, small and medium enterprise act, iso 26000. with the enforcement of the law and regulation, the position of csr as one of the obligations of the company is getting stronger by having a position on the rule or legal basis. the hospital is an institution business world who deal directly with the public interest, so far has been running csr programs or social responsibility to the community. this activity is conducted to encourage the growth of health, economic development, social development, and environmental protection that is very closely related in order to achieve sustainable development. 1.2 research problem based on the above points of thought, the authors are interested to conduct further research on the role of accountants in the implementation of csr and on which side the accountant role is required therefore the problems raised above are: how the role of internal accountants in the implementation of corporate social responsibility in rsud moh. anwar sumenep district? jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 122 1.3 research purpose this research aims to know and examines the role of internal accountants in the implementation of corporate social responsibility in rsud moh. anwar sumenep district. 2. theoretical framework and hyphotesis development 2.1 previous research studies in a study conducted by syahril (2017) entitled "the role of accountants in the implementation of social accounting in the company" concluded that the internal auditor is an internal accountant who is in charge of performing systematic and objective analysis and assessment of the operation and control of the activities of the company. internal audits conducted by internal auditors are an independent appraisal function. the role of internal accountants in the implementation of social accounting in the company is needed to encourage companies to carry out social responsibility where the corporate social responsibility will be able to create a condition of social stability of the social environment of a business entity. the social responsibility of the abc hospital does not have clear standards, so the implementation of the hospital's social responsibilities depends only on the willingness of the organization, and is not an obligation to disclose to the hospital's financial statements. nevertheless the abc hospital still has a social awareness of the surrounding social environment. this can be seen from the activities carried out by the hospital such as destruction of waste, social service, education and health of employees and donations for social activities of the community. this social aspect is presented in conjunction with the hospital's annual report. 2.2 theoretical framework 2.2.1 types of accountants according to munawir (1999: 22) in syahril (2017) there are four kinds of accountants whose differences bardasarkan position or function of the accountant, namely: a. public accountant or auditor (external auditor), an independent accountant who generally has a public accounting firm and provides a variety of services in the areas of accounting, auditing and management. b. internal auditors or often also called management accountants, is an accountant who becomes an employee in an organization or a private company or government that in a broad sense helps management in improving the efficiency of the company's operations. c. government accountant is an accountant who becomes an employee of the government, especially those in charge in the field of auditing, for example an accountant working on bpkp or bpk. d. educators accountant who function to provide education in the field of accounting, both private and domestic. in this study the authors will focus on the role of internal accountants on the implementation of csr in the hospital. 2.2.2 internal accountant and its role internal auditor referred to in this study is internal auditor is often also called management accountant, namely accountant who is entitled to perform the function of assessment for the company to examine and evaluate the activities of the company with emphasis on the purpose of helping management to carry out their duties properly. internal auditing activities aim to assist all levels of management so that these responsibilities can be implemented effectively (hartadi, 1991: 36). for this purpose, internal auditing presents analyzes, assessments, suggestions, guidance, and information relating to activities that have been reviewed, studied, and assessed. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 123 the internal auditor is tasked with performing a valuation function for the company, to examine and evaluate the company's activities by emphasizing the purpose of assisting management to do its job well. 2.2.3 definition of the code of ethics of indonesian accountants broadly speaking the code of ethics of accountant indonesia is the norm of behavior that governs the relationship between the accountant and his client, between the accountant with colleagues, and between the profession and the community. accountant ethics code can be interpreted as a system of moral principles and implementation of rules that provide guidance to accountants in dealing with clients, communities, and colleagues and as a tool to give assurance to users of accountant services about the quality of services provided (hartadi, 1991:20). 2.2.4 professional ethics of accountants professional ethics accountants are norms and principles accepted by a particular group as a basis of behavior and aims to protect the interests of members and interests of the community who use the services of the profession. the current iai code of ethics is the iai code of ethics passed in the congress i9 viii of 1998. the code of ethics consists of four parts, namely: principles of ethics. the ethics principle provides the basic framework for the ethical rules governing the implementation of professional member services. the ethical principle endorsed by the congress for all members which is the basis of professional ethics behavior consists of eight principles, namely; a. profession responsibility b. general leadership c. integrity d. objectivity e. competence and professional prudence f. confidentiality g. professional behavior h. technical standards prior to 1998, the iai only had a code of ethics that binds all its members. the rules that apply in the code of ethics are formulated and approved by the iai congress which includes all members of the iai regardless of membership of the member compartment concerned. however, after 1998, all members have their own ethical rules. thus the iai code of ethics has four rules of compartment ethics, namely: a. the ethics rules of the public accountants compartment (kap) b. the ethics rules of the educator accountant compartment (kapd) c. the ethics rules of the management accountant/intern compartment (kam) d. the ethics rules of the public sector accountant compartment (kasp) interpretation of ethical rules interpretation of the code of ethics is an interpretation issued by the board of the compartment after observing the responses of members and other interested parties as a blend of ethical rules, without being intended to limit the environment and application. questions and answers questions and answers provide an explanation of each member's question about the ethical rules and their interpretations. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 124 internal accountant in response to social environment issues to explain his/her tasks management requires complete information. internal accountant is one of the experts who participate in providing information to the management and also advice on various stages of organizational activities. with the public demand for the company to care about environmental issues, then in the planning phase of the company must think about the negative impacts caused by a product for the environment, classification can be by simplifying the design of the product so it costs less and by itself will reduce product costs. accountants need to do an analysis to see whether or not there is a decrease in waste generated after the design adjustment. performance reports prepared by internal accountants will help managers to decide whether the implementation will be forwarded or replaced with new methods or simply stopped. accountants also have not manganalisa application of other methods in terms of costs and impacts that may arise. thus the manager gets a clear picture of each alternative and can make the right decision. adam et.al (1997) stating that by emphasizing environmental issues on different accounting jobs, we can see more clearly how internal accountants influence the company's actions in dealing with social environment issues. in helping organizations to be more sensitive to the social environment the role of internal accountants in general can be grouped into five stages, namely: a. modify the existing accounting system to identify expenditure areas related to the environment separately. b. identify and if possible improve the negative elements of the environment in the existing accounting system. c. the accounting system should become more forward-looking, and should raise awareness of potential issues arising from the rapidly changing environmental agenda. d. changing the external reporting function, accountants not only deal with the reporting of financial and financial estimates, but also other non-financial aspects. e. establish new information and accounting systems by performing various innovations although it should involve more complex performance assessments, to build a sustainability accounting. the general role of internal accountants is no longer just to record and calculate financial transactions, internal accountants must be able to inform new topics that are relevant to management tasks before that, the internal accountant must understand the environmental issues associated with the company and begin to take the initiative in efforts to reduce the impact negative from the production process that run so far. for example by inserting a large aspect of the small waste generated as one of the criteria penilain performance of production work. thus, the internal auditor must master the aspect of the scope and environment of the company that should be concerned, not just related to accounting and financial procedures. production, development, sales, and marketing. this is closely related to the task assigned to the internal auditor is to examine and assess the overall activities of the company, which also means the impact on the environment around the company. 2.3 social accounting 2.3.1 definition of social accounting according to belkaoui (2000: 339) "social accounting is a process of sorting, measuring and disclosing the powerful influence of exchanges between companies and their social environment. where social accounting is an expression of corporate social responsibility ". based on some of the description above, basically the definition given by accounting experts on social accounting has the same characteristics, namely social accounting is closely related to the problem: a. assessment of the social impact of the activities of the business entity b. measure the activity c. report corporate social responsibility jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 125 d. internal and external information systems on the assessment of the company's resources and its socio-economic impact. 2.3.2 purpose of social accounting one of the most important in the development of social accounting is to formulate its objectives. by formulating clear objectives then in the next stage can be developed other concepts that are useful for achieving these goals. according to belkaoui (2000: 339), "the purpose of social accounting is to measure and disclose precisely all costs and benefits to society generated by activities related to the production of the company, more precisely the purpose of internalizing social costs and social benefits. in order to determine the relevant and perfect results which are social benefits". 2.3.3 accounting for social accountability the concept of social responsibility accounting has raised some problems in defining it, not just about the users of the information, but also about their purpose in receiving information. the concept of corporate social responsibility assumes that there has been a theory related to the social role of business enterprises in today's modern era. these theories not only explain the public interest in relation to the operations of a business entity in society, but also will seek to monitor and influence the behavior of the company in accordance with the determination of existing values (ramanathan, 2011). despite the differences in terms and definitions given above but essentially the definitions of social responsibility accounting have the same characteristics as revealed by hendriksen (2000: 18), namely: a. assess the social impact of corporate activities. b. measuring the effectiveness of corporate programs that are social. c. reporting to how far the company fulfills social responsibility. d. present internal and external information that allows a thorough assessment of the company's resources and their economic and social impacts. 2.4 corporate social responsibility (csr) regarding the change of corporate social responsibility paradigm, better known as corporate social responsibility (csr). it used to mean the csr, or other terms such as community development (cd). partnership program, community development program, as a burden or risk expense, because it does not generate reciprocity to corporate profits. while the company is increasingly realizing that csr is no longer a burden, it is part of social capital, where the sustainability of a company is not only determined by profit, but also the carrying capacity of the planet (natural environment), and people (rahmatullah et al, 2011: 2). jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 126 sustainable development must be supported by a balanced commitment between economic, social and environmental. the form of corporate responsibility to shareholders, ie profit. the responsibility of the company to maintain environmental capability in supporting the sustainability of life for the next generation. the presence of the company should provide benefits to stakeholders and the community. picture 1 the integration of triple bottom line 3p (nurdizal m. rachman, et al (2011) there are several definitions of csr. one of the most interesting is made by the circumstances of the indonesian csr study, ie the earnest efforts of the business entity to minimize negative impacts and maximize the positive impact of its operations on all stakeholders in the economic, social and environmental realms in order to achieve sustainable development goals. implicitly, the definition means inviting the company to earnestly in an effort to benefit its present presence for mankind today. minimizing negative impacts is part of providing future benefits (nurdizal m. rachman et al, 2011: 15). according to wbsc in rahmatullah et al (2011: 5) csr is a business commitment to contribute to sustainable economic development, working with company employees, employee families, and local (local) communities, society as a whole, in order to improve the quality of life. while csr is in the design of iso 26000 set about csr according to nurdizal m. rachman et al (2011: 37) states that corporate social responsibility is a form of corporate social concern that is currently an important aspect in order to improve company performance, in addition to quality issues (iso 9000 ) and environment (iso 14000). so it can be concluded that the definition of corporate social responsibility (csr) is a program that implements corporate social responsibility to the community. law corporate social responsibility (csr) in law ri no. 40 of 2007 article 74 paragraph 1 concerning limited liability company states that "the company which carries out its business activities in the field of and/or related natural resources, shall carry out the social and environmental responsibility". the limited liability company law does not specify how much the company should pay and the sanctions for those who violate it. government regulation mandated by law no. 40 has not been published yet (rahmatullah et al, 2011: 18). another regulation that requires csr is ri law no. 25 year 2007 regarding investment, both domestic and foreign investment. in article 15 (b) states that "every investment is obliged to carry out social responsibility". the sanctions against business entities or individuals that violate the regulations are regulated in article 34 in the form of administrative sanctions and other sanctions, including: (a) written warning; (b) restrictions on business activities; (c) freezing of business activities and/or investment facilities; or (d) revocation of business activities and / or investment facilities. while the obligations of csr based on the ri law no. 20 year 2008 article 21 concerning micro, small and medium enterprises: state-owned enterprises may provide financing from the allowance for annual profits allocated to micro and small enterprises in the form of loans, grants, grants and other financing. economic profit environ mental planet social people jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 127 3. research method 3.1 research design descriptive research is used to analyze and present data that is qualitative. while the qualitative approach put forward by bogdan and tylor as quoted by moleong (2000: 3), is "a procedure that produces descriptive data in the form of written or oral words and observable persons and actors". so descriptive research with qualitative approach of this writer use to tell, interpret and describe data that writer get from observation, interview and documentation. this research was conducted in rsud. moh. anwar sumenep district, time of study conducted 1 year schedule attached. rsud. moh. anwar sumenep district, researchers here want to know how the role of internal accountants in the implementation of corporate social responsibility in hospitals. moh. anwar sumenep district. with the increasing awareness of entrepreneurs to the environment then the company which in this case is the hospital needs information about the social environment and usually in the company there is a section that handles about accounting problems called internal accountants who provide information about the problems associated with the company here is a matter of the social environment. internal accountants have a very big role to encourage companies to get involved in activities that show concern for social environment issues. 3.2 population and sample the number of informants was determined using the snowball sampling technique. according to sugiyono (2008), snowball sampling is a sampling technique that was initially chosen by randomly using non-probability method which then selected respondents were asked to provide information about other respondents to obtain additional respondents. the longer the group of respondents is getting bigger, like a snowball that if rolling the longer the greater. key informants selected are internal accountant, head of administration, head of finance sub division, head of sub division and planning and leadership in rsud. moh. anwar sumenep district, then forwarded to other informants recommended by key informants and informants that by researchers considered directly related in the process of this research. 3.3 research framework picture 3 research framework 3.5 type of data and sampling method the data obtained are primary data. primary data is data obtained directly from respondents or resource persons. according sugiyono (2008), the primary data is data directly obtained from the first data source at the study site or research object. in this study, the primary data obtained by direct interviews with the informants are internal accountant, head of administration, head of sub-head of finance, head of sub division and planning and leadership at the hospital in sumenep district. researcher uses observation, interview, and documentation as their data collection method. implementation corporate social responsbility a c c o u n t a n t rsud moh anwar sumenep jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 128 a. observation observation method according to moleong (2011) is "collecting data by deliberate and systematic study of social phenomena and natural phenomena by way of observation and recording". this observation method, the author uses to obtain data about the role of internal accountants in the implementation of corporate social responsibility in hospitals. moh. anwar sumenep district. b. interview the method of interview according to moleong (2011) "is the collection of data through a conversation, oral questioning between two or more people who sit facing physically and directed at a particular problem". this method the authors use to obtain data about the role of internal accountants in the implementation of corporate social responsibility in hospitals. moh. anwar sumenep district. c. documentation documents by guba and lincoln as quoted by moleong (2011: 161), are any written material or film. so the documentation is a method of collecting data by holding records from the archive that has to do with the problems studied by the author. this study uses descriptive qualitative analysis method where this method by recording and pengagendaan information from the selected informants, as well as documenting, then describing the data, so that obtained a description of a phenomenon about the role of accountant in the implementation of corporate social responsibility in rsud. moh. anwar sumenep district.patton's data analysis as cited by moleong (2011: 103) is "the procedure of arranging the order of data, organizing in a pattern, category and data description unit" is an interactive model analysis with three procedures: a. data reduction data reduction is intended as a selection process, focusing on simplification, abstraction and transformation of coarse data arising from written records in the field. b. presentation of data presentation of data intended as a set of arranged information that provides the possibility of conclusion and taking action. c. drawing conclusions the conclusion is an activity of the complete configuration during the study. 4. research result and analysis 4.1. research discussion 4.1.1 implementation of corporate social responsibility rsud moh. anwar sumenep district corporate social responsibility in two hospitals in sumenep regency is conducted directly by the organization or work unit under public relations division or public relations, but at rsud h. moh. anwar sumenep district csr program is managed/concentrated in the information and evaluation division which has the formation of customer care care (ipp) also known as public complaints most organizations or work units in indonesia run corporate social responsibility in cooperation with other partners, such as ngos, universities or consultancy agencies. several organizations or work units are also joined in a consortium to jointly run corporate social responsibility. some companies even run similar activities of corporate social responsibility, although the team and its programs are not clearly flagged corporate social responsibility (suharto, 2008: 109). at the beginning of its development, the most common form of corporate social responsibility is the provision of assistance to local organizations and the poor. “corporate social responsibility activities conducted by rsud dr. h. moh. anwar sumenep is now starting to vary, tailored to the needs of local communities based on existing needs jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 129 such as: starting from the hospital waste treatment that care about the environment. cooperation with several universities. health protection for employees and customers. increased employee hr. grant of scholarship. relief aid to humanity. development of community-based social protection schemes. hospital interaction or involvement with the community”. the above is revealed from interviews with key informants (ipp section) on december 6, 2016 and compiled with information & evaluation section on december 10, 2016 stating that: “it is true that corporate social responsibility activities conducted by rsud dr. h. moh. anwar sumenep is now beginning to vary, tailored to the needs of the local community based on the need, the average management through the field of information & evaluation that has installation care customer/complaints community”. further statements are expressed by external informants which in this case is the society within the hospital who confirmed the statement, after all the authors tell the informant suggested that: “engagement or interaction between rsud dr. h. moh. anwar sumenep with the community is very good because the hospital is always concerned with public health proved by the socialization about the danger of disease in the community and mass circumcision conducted by rs every year is very helpful for the less fortunate, and the improvement of service quality”. from several corporate social responsibility programs that have been done by rsud. moh. anwar of sumenep district above reflects that the implementation of corporate social responsibility at the hospital, where the corporate social responsibility program as a good idea for sustainable development, the hospital is no longer faced with the responsibility that is based on single bottom line that is corporate value value) that is reflected in its financial condition (financial only) but must stand on the triple bottom lines, where the bottom lines in addition to financial are also social and environmental. because the financial condition alone is not enough to guarantee the value of the organization or work unit to grow sustainable. based on world bank standards on corporate social responsibility (csr) covering several key components: a. environmental protection b. working guarantee c. human rights d. interaction and corporate engagement with the community e. business standard f. markets g. economic development and business entity h. health protection i. leadership and education j. humanitarian disaster relief for organizations or work units that attempt to build a positive image, then the ten components must be sought fulfillment. from result of evaluation and existing data hence can be concluded that rsud. moh. anwar of sumenep district can not be said 100% to implement the implementation standards of corporate social responsibility in terms of implementation theory of corporate social responsibility according to world bank standard with the basis of responsibility based on single bottom line theory. this is because rsud. moh. anwar sumenep district has not fully done some of the categories of world bank standards or the absence of sectors dedicated to corporate social responsibility. rsud moh. anwar sumenep district as a public company, in addition to having the duty and responsibility of the business to provide health services for the community, also has corporate social responsibility or corporate social responsibility to the general public to help empower the jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 130 community in various fields, such as economic, social, education, environment, religion, and others. in pyramid theory about corporate social responsibility can be seen based on four level which is one unity. if according to the theory of pyramid rsud. moh. anwar sumenep district can be said to have done corporate social responsibility activities well because all responsibilities of the hospital in general have been met: a. philanthropic responsibility the hospital has class c, and is the main referral hospital for public and private health service facilities in sumenep district, both in the mainland and in the archipelago of sumenep district. b. legal responsibility rsud moh. anwar sumenep district is already legal entity and the only sumenep district government owned hospital c. ethical responsibility ethical responsibility conducted by rsud moh. anwar sumenep district has done quite well. in terms of service and also the relationship with the community in this case the implementation of corporate social responsibility hospital is said to have fulfilled the pyramid theory about the standard implementation of corporate social responsibility. d. economic responsibility in this economic responsibility rsud moh. anwar sumenep district has clearly been qualified. because in this economic responsibility hospital in sumenep not only do the service to the community but also profit to finance its operational activities. in connection with the demands and needs of corporate social responsibility which is one of the obligations that must be implemented by organizations or work units to grow sustainable. keep in mind the development of a country is not only the responsibility of government and industry alone, but every human being plays a role to realize social welfare and management of the quality of life of the community. organizations or work units play a role to promote healthy economic growth by considering also environmental factors. now the organization or work unit is no longer just paying attention to the financial records of the organization or single bottom line, but has covered the financial, social, and environmental aspects of the so-called (triple bottom line) synergy of these three elements is the key to the concept of sustainable development . we have mentioned earlier that the concept of social responsibility has been known since the early 1970, which is generally interpreted as a collection of policies and practices related to stakeholders, values, legal compliance, public awards, the environment, and the world commitment of the organization or work unit to contribute to sustainable development corporate social responsibility is not only a creative activity of the company and not limited to the fulfillment of the rule of law alone. many organizations or work units do not want to run corporate social responsibility programs because they see it as a cost center only. corporate social responsibility does not yield financial results in the short term. however, corporate social responsibility will provide both direct and indirect results on the organization's finances or work units in the future. investors also want their investments and public confidence in the organization or work unit has a good image in the eyes of the general public. thus, if the organization or work unit in this case rsud moh. anwar of sumenep district conducting corporate social responsibility programs is expected to be a sustainable development, so that the hospital will run well. therefore, the hospital's corporate social responsibility program must be implemented periodically. in the course of corporate social responsibility rsud moh. anwar sumenep district many problems that they faced, like corporate social responsibility program has not been well socialized in the community, the absence of clear rules in the implementation of corporate social responsibility in the hospital, the absence of sectors that specifically handle the csr (corporate social responsibility). jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 131 when analyzed the above problems that are not socialized with the good corporate social responsibility program conducted by sumenep hospital in the community. this causes the corporate social responsibility program has not rolled as it should, given that the general public does not understand what is the corporate social responsibility program. what can he do? how to collaborate with organizational procedures or work units. to answer the questions of the general public, it is necessary to explain the success of corporate social responsibility program in print media, or electronic media and give examples of success of corporate social responsibility program that has been implemented. corporate social responsibility organizations or work units generate their own interpretation, this can be seen from each organization or work unit that has corporate social responsibility program. please note the most important program of corporate social responsibility is the rule that requires the program must be sustainable. conducting a sustainable corporate social responsibility program will have a positive impact and greater benefits both to the company it self in the form of corporate image and related stakeholders. 4.1.2 role of internal accountants in implementation of corporate social responsibility rsud moh. anwar sumenep district corporate social responsibility is a matter of life and death of the company. as in countries where the level of awareness of the strategic significance of environmental conservation is very high, where environmental regulations are enforced and very tight, so many industries are threatened with bankruptcy due to demands for compensation from various parties such as government, community, suppliers, customers and even employees . therefore, the company is required to care for the social environment and carry out corporate social responsibility every period. the need for the development of corporate social responsibility is still relevant to create a condition of social stability of the social environment of a business entity, so it takes the awareness and sensitivity of a business entity to the problems or social activities that contribute to the creation of corporate social responsibility. thus social disclosure in the company's annual report should not be voluntary disclosure but may be mandatory disclosure. this is where the role of the organization and the profession of accountants are required to respond to the rapid development of the business environment in indonesia. in an interview with the internal accountants rsud moh. anwar sumenep district. “we are in charge of performing an assessment function for the company, to examine and evaluate the activities of a company whether social or non-social by emphasizing the purpose of assisting management to carry out its duties properly and for that responsibility to be carried out effectively and to present analyzes, assessments -evaluations, suggestions, guidance, and information relating to activities that have been reviewed, studied, and assessed”. this is revealed and explained in detail by key informants (internal accountants) in rsud sumenep district on december 20, 2016. after being confirmed on december 23, 2016 with the finance and public relations department of the internal accountant suggested and assessed the corporate social responsibility activities undertaken by the company how the activities should be continuously carried out so as to have a positive impact and greater benefits both to the company itself that is in the form of corporate image and related stakeholders and to the surrounding community. public expectations of accountants evolved from only the information needs of the company's financial aspects, widening in the social environment. internal accountants are expected not only to show the level of corporate health and predictions in the future. but also should be able to provide an overview of awareness of the social environment with corporate social responsibility that is poured in social activities. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 132 this indicates that internal auditing is an internal auditor, must be dynamic and have an orientation or view now and the future. because he is an independent appraiser, the internal auditor must be completely free, both in his attitude and judgments. besides that he should be able and responsive to the measures (measures) to be used in his judgment. the success and efficiency level of an activity should be based on a comparison of the measures and achievements. the measure used not only consists of budget, cost standards, and quality standards, but on the basis of free considerations, other usable measures may be used. internal auditor assigned to conduct the assessment functions for the company, to inspect and evaluate the activities of the company with an emphasis on the goal of helping the management to do their job properly in addition to the accountant intern has the responsibility to report all the findings obtained in carrying out their duties to the director as leader company or hospital. internal accountants as parties who play a role in the provision of information must participate in the process of management decision-making. because the internal auditor is a party that intersect with social accountability activities of the company (corporate social responsibility) to better understand the strategic value of social activities and is supported by its duty to support management decisions. internal accountants can introduce and formalize to senior management the importance of incorporating and analyzing social aspects. or the activities of corporate social responsibility. internal auditing activities aim to assist all levels of management in order that these responsibilities can be effectively implemented. internal auditing presents analyzes, assessments, suggestions, guidance, and information relating to corporate social responsibility activities that have been reviewed, studied, and assessed. so the internal accountant has a conclusion that must be reported to the director to be a material consideration in determining the policy of further social activities. the role of internal accountants in the implementation of social activities is needed for corporate social responsibility rsud moh. anwar sumenep district. because the involvement of internal accountants is very big influence on the process of decision-making let alone about matters relating to social problems or corporate social responsibility. 5. research conclusion, limitation, and recommendation 5.1. conclusion based on the discussion and description of the role of accountants in the implementation of corporate social responsibility in rsud moh. anwar sumenep district. which has been presented in the previous chapters can be deduced as follows: a. internal auditor is an internal accountant who is in charge of performing systematic and objective analysis and assessment on the operation and control of company's activities. internal audits conducted by internal auditors are an independent appraisal function. the role of the internal accountant in the implementation of corporate social responsibility in rsud moh. anwar sumenep district is needed to encourage companies to carry out social responsibility where the corporate social responsibility will be able to create a condition of social stability of the social environment of a business entity. b. corporate social responsibility at rsud moh. anwar sumenep district does not have a clear standard, so the implementation of social responsibility hospital only depends on the willingness of the organization, and is not an obligation to disclose in hospital financial statements. nevertheless the rsud moh. anwar sumenep district already has social awareness to the surrounding social environment. this can be seen from the activities carried out by the hospital such as destruction of waste, social service, education and health of employees and donations for social activities of the community. this social aspect is presented in conjunction with the hospital's annual report. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 2 (2017) http://riset.unisma.ac.id/index.php/jema 133 5.2. limitation quality research is heavily dependent on the individual skills of the researcher and more easily get personal biases and idiosyncrasies. also, this research only focuses on specific district hospital in explaining the role of internal accountant toward corporate social responsibility, therefore the result of this research can’t be generalized. 5.3. recommendation as one of the topics that require more attention from accounting experts as well as from other practitioners. following suggestions: a. should the business world or business people both profit oriented and non profit oriented is more proactive in order to maintain harmony of relationships between companies and the surrounding environment, so that long-term impact, especially for the survival of the company is guaranteed. b. corporate social responsibility activities rsud moh. anwar sumenep district should continue to be cultivated in a maximum and sustainable so as to provide a positive impact and greater benefits both to the company itself in the form of corporate image and stakeholders related and to the surrounding community. c. there needs to be a pressure and stimulus from the government, whether in the form of programs, policies, regulations or awards or awards of the social environment, so that the business world will increase awareness and awareness of the social environment. d. requires special field or section to handle all corporate social responsibility activities in rsud moh. anwar sumenep district, so the activities can be focused. references adam, carol a.; hill, wan ying; roberts, clare b. 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(2011). panduan lengkap perencanaan csr. jakarta : penebar swadaya swadaya cetakan 1. rahmatullah and trianita kurniawati. (2011). panduan praktis pengelolaan csr. yogyakarta : samudra biru. syahril. (2017). peranan akuntan dalam pelaksanaan akuntansi sosial di perusahaan. proseding universitas wiraraja sumenep. jurnal bisnis dan akuntansi vol. 7, no. 1. accessed from http://ejournal.wiraraja.ac.id/index.php/feb/article/view/344/302. suharto, edi. (2008). corporate social responsibility. bandung : alfabeta. sugiyono. (2008). metode penelitian kuantitatif kualitatif dan r&d. bandung : alfabeta. sukardi, david. (2009). manajemen strategi. yogyakarta : graha ilmu. wibisono, yusuf. (2004). analisis sosioligis terhadap implementasi csr pada masyarakat indonesia. jakarta : pt bumi aksara. undang-undang no. 40 tahun 2007. undang-undang no. 25 tahun 2007. undang-undang no. 20 tahun 2008. *) syahril, wirajaya university **) isnaini yuli andini, wirajaya university the truth behind the decision of consumers in buying counterfeit cosmetics product: a qualitative phenomenological research by risca kurnia sari, achmad soediro, fatchur rochman jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 108 the truth behind the decision of consumers in buying counterfeit cosmetics product: a qualitative phenomenological research risca kurnia sari *) achmad soediro **) fatchur rochman ***) abstract research conducted is a type of qualitative phenomenological research that reveal and understand the meaning behind the phenomenon of the actions of individuals who perform various actions on the basis of their own perceptions as well as aspects of the background of the action. the number of informants in this study are six people. sampling method of this study used purposive sampling with snowball sampling method. the findings shows that well recognized or reputable brand considered to be one of the reasons consumers choose to buy stimulation of brand pond’s. marketing stimuli such as advertising on television, the product that suits consumer needs in affordable price can stimulate consumers buying decision. low price of pond’s counterfeit product is the main considerations in encouraging buying decision. high consumer loyalty toward original pond’s brand made them decide to buy counterfeit pond’s without considering the authenticity and its side effect on consumer health. reference groups that dominate consumer minds in buying the counterfeit pond’s product are workmate and store employees where the product is sold. motivation in seeking new products and the high level of trust toward unilever brand (pond’s) encourages consumers to buy counterfeit pond’s. private sources (office colleagues) and commercial (tv advertisement) considered as main information sources for a consumer in buying pond’s and counterfeit pond’s counterfeit. keywords: consumer behavior; cosmetics; counterfeit product 1. introduction 1.1 research background the cosmetics industry in indonesia is currently undergoing rapid growth. cosmetics have been an essential part of a woman's daily routine. the data from the international cosmetics club shows that indonesia's imports of cosmetic products reach rp. 4 billion up to rp. 10 billion each month. in fact, in 2006, cosmetics imports reached rp 1 trillion throughout the year. meanwhile, in the local market, according to the indonesian cosmetics association (petosmi), the cosmetic sales turnover of a big cosmetics company can reach up to rp. 40 billion in one month. this shows that cosmetics use in indonesia is very popular. over time, cosmetics become a primary need for most women. this provides the cosmetics industry in indonesia an opportunity to bring a lot of new products, which then results in fairly tight market competition. this competition is not only among original and legal cosmetics products counterfeit and unlicensed beauty products also start to flood the market. huge profit is the main reason why some manufacturers produce counterfeit cosmetics. hidayat & mizerski (2005) present several supporting reasons for why counterfeit make-up products are made, which is shown in table 1. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 109 table 1 reasons for counterfeit product reason of counterfeit counterfeit products can be sold much cheaper than the originals, which generate a huge profit for the manufacturers. the rapid deployment and development of technology throughout the world has given bigger access to all levels of society and inspired counterfeiters to mass-produce counterfeit products that they make very identical to the originals. the business risk is very low because the production and overhead cost are very cheap, far cheaper than the production cost of original goods as the quality of the raw material is often below standard. in addition, the investment costs are small and no research and development costs are needed. the market potential is huge because consumers with lower middle income cannot afford the original products. in addition, a weak legal infrastructure also triggered an interest in producing counterfeit goods. it is not easy to compete with products that have been so popular among consumers. through forgery, the manufacturers can ride the popularity of the original products and market their goods easily. source: hidayat & mizerski (2005) this research focuses on the purchase and use of counterfeit products of pond’s brand that are widely circulated especially in the city of malang, east java. the researcher's interest in consumer behavior in purchasing counterfeit products of pond’s brand in the city was driven by the existing phenomenon. 1.2 research problem a) how do consumers buy and use counterfeit pond’s products? b) why do consumers buy and use counterfeit pond’s products? c) what is the consumers' behavior in responding to counterfeit pond’s products? 1.3 research purpose the purpose of a study is to discover, develop, and prove knowledge, therefore, the purposes of this study can be described as below; a) to find out how the consumers buy and use counterfeit pond’s products. b) to explore the underlying causes of why consumers buy and use counterfeit pond’s products. c) to find out consumers' behavior in responding to pond’s counterfeit products. 2. theoretical framework 2.1 counterfeiting counterfeiting is an act of making a product by copying or imitating the physical appearance of an original product to mislead consumers that it is the product of another party. products that violate trademarks, copyright infringement, and packaging, label, and brand regulations are part of counterfeiting (tommy, 2012). tommy (2012) also disclosed several consumer classifications related to such products, namely: a) deceptive counterfeiting, for example, when fraud is done unbeknownst to the consumer with the aim to deceive and even lie to them by stating that the goods are genuine. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 110 b) non-deceptive counterfeiting, for example, when the products being sold are acknowledged as counterfeit, and the information is given to consumers who have the intention to make a purchase. the phenomenon of counterfeit products of pond’s cosmetic brand is more appropriately classified into non-deceptive counterfeiting as counterfeit products are completely different from the product variants that are officially produced by pt unilever indonesia tbk. consumers supposedly know that the products are not original or officially manufactured by the company. a previous qualitative study conducted by purnamawati (2009) under the title female road sweepers behavior toward whitening cosmetics in medan city in 2009 found that most of the female road sweepers in medan thought beauty is strongly defined by light or fair skin tone. the physical and social environments, sources of information and references, and possible situations lead the female workers' behavior toward using skin whitening products. however, some of the women no longer use the whitening cosmetics for fear of having side effects, which allows for awareness campaign of cosmetic safety among women. that study was not entirely identical with the topic that will be discussed in this research, because the 2009 study focused more on the design of behavioral change model against whitening cosmetics, where the researcher revealed changes in the behavior of health belief model rosenstock. the similarity with this research is that both examine the behavior of consumers who use whitening beauty products that contain ingredients that are harmful to the skin and overall health. the phenomenon of the increasing counterfeiting business is indeed related to consumer behavior in making decisions to fulfill their needs for goods and services (kotler & armstrong, 2008). 2.2 consumer behavior the american marketing association defines consumer behavior as a dynamic interaction of influences and awareness, behavior, and the environment in which humans exchange aspects of their lives. in other words, consumer behavior includes thoughts and feelings experienced by humans and actions taken during the consumption process (peter & olson, 2005). consumer behavior focuses on activities related to individual consumption. consumer behavior is also related to the reasons and pressures that affect the choice, purchase, use, and disposal of goods and services to satisfy personal needs and wishes (hanna & wozniak, 2001). 2.3 consumer attitude behavior is an expression of a person's feelings that reflect his or her likes or dislike of an object. because one's behavior is the result of a psychological process, it can not be observed directly, but it must be inferred from what is said and done (tommy, 2012). empirical studies have addressed the economic, quality, legal, or ethical factors that shape and influence the behavior of consumers (ang, cheng, lim, & tambyah, 2001; tommy, 2012). usually, the choice of price also reflects a consumer's behavior toward the demand of counterfeit goods. the reason for this demand shifts from time to time. initially, the motive in buying pirated products is financial constraints, but then it shifts towards a more positive outlook on those products. this means that the purchase of counterfeit products is not monopolized by consumers with low financial status. instead, it has shifted to a wider group of consumers, including those with strong financial capabilities. that is why campaigns for piracy eradication that urge consumers to stay away from counterfeit products are becoming increasingly less effective there is now a positive outlook toward those counterfeit products. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 111 3. research method 3.1 research design a qualitative phenomenological research design is chosen to describe consumers' experiences, especially in malang, when buying and using counterfeit pond’s products. phenomenological research is classified as a study of micro-sociology which reveals the understanding of the meaning and/or reflection of meaning at the micro level and is one of the field studies with participatory observation strategies. qualitative research is a rich type of research in terms of people, place, and conversation descriptions, which is not easily handled using statistical procedures (bogdan & biklen, 2003). the purpose of the phenomenological research design is to describe what the informants experience regarding a phenomenon (creswell, 2007), particularly the experiences related to the phenomenon of the counterfeits pond’s products purchase in malang. 3.2 research informants data collected in this study used the informants eligibility test form (screening form), demographic questionnaire, first interview schedule and second interview schedule. to elicit accuracy, the final summary of the first interview was presented to each of the informants during their second interview. each informant was asked whether the summary of their experience was consistent with the purchase (use) of the counterfeit products of pond’s brand's and whether there were any other descriptions of their experience being omitted or lacking in summary. the sample determination in qualitative research is not based on statistical calculations. the selected sample serves to provide maximum information, not to be generalized (sugiyono, 2011). purposive sampling was used to select informants in this study. using criterion sampling one form of purposive sampling certain informants were chosen to provide information that may not have been obtained from other informants (maxwell, 2005). criterion sampling requires that informants be selected based on the phenomena they experience during the study (creswell, 2007). this study used the snowball sampling method, which was conducted in chains by requesting information from the people who have been contacted before (poerwandari, 2001). at first, researchers asked some shop owners who sold counterfeit pond’s products about prospective subjects that could be used as informants in this study. required informants were those who had experience as buyers and users of counterfeit pond’s cosmetic products and were able to reveal a comprehensive description of their experience (burkholder, 2009). table 2 research informants no. informant age ethnicity last education marital status occupation 1. sulistina (inf1) 45 javanese primary school married factory worker 2. suhermin (inf2) 34 javanese primary school married factory worker 3. anisa (inf3) 38 javanese primary school married housewive 4. nursiyah (inf4) 45 javanese secondary school married factory worker 5. tina (inf5) 39 javanese primary school married office girl 6. diah w (inf6) 34 javanese high school single parent administrative staff source: primary data processed, 2018 the number of the informant in this research was 6 informants. the selected informants were those who filled out letters of willingness to participate and conduct interviews recorded 2 times. informants who met the quantity and variation requirements were determined by saturations. saturation is used when informants tend to provide redundant information instead of new information (nieswiadomy, 2002). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 112 3.3 research framework picture 1 research framework 4. research result and analysis table 3 narrative description of counterfeit pond’s products information and related themes no. informant narrative description related theme 1. sulistina (inf1) mrs. sulistina first knew counterfeit pond’s products from a friend at her workplace. that friend was a seller of cosmetic products and she offered mrs. sulistina to try the (counterfeit) pond’s make up. reference group (social factor) 2. suhermin (inf2) bu suhermin first got to know pond’s products through the advertisement on television. she also knew a friend who used them and gave satisfactory reviews. advertisement (marketing stimuli) reference group (social factor) 3. anisa (inf3) mrs. anisa first found out about pond’s powder from the owner of asri shop. reference group (social factor) 4. nursiyah (inf4) nursiyah said she first saw pond’s products at a shop that displayed a set of the brand's powder, lipstick, eye shadow, and blush-on which she thought had interesting colors. reference group (social factor) product (marketing stimuli) 5. tina (inf5) mrs. tina claimed that she first knew about the counterfeit pond’s lipstick from asri shop that displayed the item in its window at that time. reference group (social factor) 6. diah widyastuti (inf6) mbak diah claimed she first knew about pond’s beauty products (unilever) through tv advertisement. she then began to know about (counterfeit) twc pond’s from mj shop, where she used to buy pond’s items from unilever. advertisement (marketing stimuli) reference group (social factor) source: primary data processed, 2018 informants that had experience as buyers and users of counterfeit pond’s cosmetic products interview http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 113 table 4 narrative description of the reasons behind the purchase and use of counterfeit pond’s cosmetics no. informant narrative description related theme 1. sulistina (inf1) mrs. sulistina admitted she bought and tried to use pond’s cosmetic products out of curiosity. (alternative evaluation) based on encouragement or intuition 2. suhermin (inf2) mrs. suhermin bought and used pond’s products after seeing the advertisements on tv and hearing about the testimony of a friend who first used the brand. mrs. suhermin also inquired further about pond’s at the shop that sold its products. because she was interested and needed a moisturizer, she decided to buy pond’s age miracle (unilever). personal sources (fellow experience) commercial sources (advertisement) reference group (social factors) 3. anisa (inf3) mrs. anisa was interested in buying and using pond’s products mainly after seeing the advertisement for the brand's moisturizer, age miracle on tv. advertisement (marketing stimuli) 4. nursiyah (inf4) mrs. nursiyah admitted to buying and using pond’s because he wanted to switch from viva and try new beauty products. (alternative evaluation) based on encouragement or intuition 5. tina (inf5) mrs. tina said that the reason she bought and used pond’s products. she thought that it was the brand of cosmetics that would help make her face clean and wrinkle-free pretty quickly. moreover, a friend of hers who was a pond’s user testified that it was a good product with an affordable price. motivation (psychological factor) reference group (social factor) price (marketing stimuli) 6. diah widyastuti (inf6) diah was interested in buying and using pond’s cosmetics after seeing the brand's advertisement on television. advertisement (marketing stimuli) source: primary data processed, 2018 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 114 table 5 narrative description of the reasons behind the purchase and use of counterfeit pond’s cosmetics no. informant narrative description related theme 1. sulistina (inf1) mrs. sulistina bought and used counterfeit pond’s upon the recommendation of one of her friends who was selling the brand's beauty products. reference group (social factor) 2. suhermin (inf2) mrs. suhermin admitted that she used counterfeit pond’s powder because she had been using pond’s original moisturizer from unilever. she thought that both items did not have that much difference and were issued by pt unilever indonesia tbk. belief (psychological factor) 3. anisa (inf3) mrs. anisa assumed that by using (counterfeit) pond’s powder would help her have better skin as proved by a friend of hers. she also got the recommendation from the store that sold the product. reference group (social factor) 4. nursiyah (inf4) mrs. nursiyah purchased counterfeit pond’s makeup because she was interested in the compact packaging that consisted of powder, blush on, eye shadow, mascara, and lipstick. she thought this package was convenient to carry around. people's recommendations had a small part in her decision to use the products because she relied more on her intuition when buying beauty products. product (marketing stimuli) (alternative evaluation) based on encouragement or intuition 5. tina (inf5) mrs. tina's preferred pond’s products because the brand was famous for its quality. the low price was another reason why she purchased them. brand choice (buyer's response) price (marketing stimuli) 6. diah widyastuti (inf6) positive brand image connected to pond’s was the reason why mbak diah purchased and used its products. another reason for her was the low price. brand choice (buyer's response) price (marketing stimuli) source: primary data processed, 2018 4.1 comparison of findings with existing studies this study aims to find out how consumers buy and use counterfeit pond’s products, explore the underlying causes of why consumers buy and use counterfeit pond’s products, and identify consumers' behavior regarding the distribution of counterfeit pond’s products. as a note, http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 115 this study does not aim to produce generalized results outside the experience of this research's informants (samples). it is also important to compare their experiences in buying and using the counterfeit pond’s products with consumers' behavior when buying and using other types of counterfeit products. positioning all research findings together with current research literature will increase the value of a qualitative study. some of the main themes that emerged in this study are consistent with the previous research literature on consumers' behavior. 4.2 how they buy and uses counterfeit pond’s? based on the results of interviews with the six informants, it is known that users of counterfeit pond’s products are women of productive age, which is between 34-45 years old. some of them are factory workers, office girls, and administrative staff in a company in malang with average monthly income ranging from rp. 400.000 up to rp. 1,000,000. all of them also have their own family. the levels of education of those informants vary, from primary school to high school. according to morissan (2012) consumers can be grouped according to the level of education they have. the level of education usually determines their income and social status. education also determines one's intellectual level. although not always, someone's level of education is usually associated with their type of work. in this study, the informants have jobs (factory workers, administrative staff) that are in accordance with their level of education and intellect, hence affecting their choice of the beauty products they buy and use. age also has a role in a consumer's decision-making process when buying products. customers within the age of 35-50 are in their years of peak income (kotler & armstrong, 2008). this explains why the informants tend to make their own decisions, even when buying and using counterfeit products. this is reinforced by the statement of tommy (2012) which says that age greatly affects a consumer's decision in purchasing goods or services. surely a child who has not worked will not make an excessive purchase. likewise, someone who already has a job or better income is likely to make bigger purchase. jobs also influence consumers' buying behavior. in this study, some informants have jobs that would not make it possible for them to buy expensive products, considering that their average incomes range between rp. 400,000 and rp. 1,000,000 per month. someone who earns better income is certainly more likely to make a more expensive purchase. low inco me also encourages consumers to buy and use counterfeit products. these consumers saw the purchase of counterfeit goods as being less risky. they generally had lower incomes and were less valueconscious than those who did not buy counterfeit goods. the fact that counterfeit cosmetics can cause health problems is not a concern for the consumers who prefer cheap counterfeit pond’s beauty products. 4.2.1 information search of counterfeit pond’s information search by a consumer is the process when a consumer starts to look for information about a product or service. they may just need to pay more attention or actively search for information. this information enhances the consumer's knowledge and awareness of the available brand (kotler & armstrong, 2008). from the results of the interviews with six informants, it is known that they start to get to know about counterfeit pond’s products from several sources, including: a) personal sources (fellows’ experience) essentially, the search of information involving colleagues is not much different from the reference group as a social factor that affects consumers' behavior in purchasing products. in the process of information search, there are two things that usually appear: information susceptibility and normative susceptibility (bearden, netemeyer, & teel, 1989; wang, zhang, zang, & ouyang, http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 116 2005). information vulnerability occurs when a purchase decision is taken based on an expert's opinion (ang, cheng, lim, & tambyah, 2001; wang, zhang, zang, & ouyang, 2005). opinions from others must be very useful for a consumer who has very limited knowledge about a product. friends who have previously used pond’s, either genuine or counterfeit, can provide an expert's opinion for the informants. for example, there were informants who knew about the existence of counterfeit pond’s from a friend who had been wearing pond’s cosmetics (either original or counterfeit) and testified that the results were satisfactory and without any side effects. this encouraged the informants to buy and use pond’s cosmetics. meanwhile, another informant first knew about counterfeit pond’s products from one of their colleagues who was selling them and offered them personally. that informant was willing to try because she was interested and trust ed their colleague's offer, without trying to find out about the pros and cons or the consequences of using the new products. normative susceptibility itself concerns purchase decisions which are based on wishes to impress others (ang, cheng, lim, & tambyah, 2001; wang, zhang, zang, & ouyang, 2005; penz & stöttinger, 2005). from the interviews with the informants, one informant did use pond’s moisturizer hoping to remove the wrinkles on her face and look better to others. b) commercial sources (ads) as described on models of consumers' behavior toward marketing stimulus in the form of advertisement, the process of the purchase decision is strongly influenced by advertisements which are an important tool used by marketers to attract consumers. in the stage of information search, advertisements are used by informants to find information on a product, which in this case is of pond’s brand. therefore, in creating ads, there are five basic factors, known as five ms, to consider (kotler & keller, 2006). the five m's of advertising is as follows: mission: what are the advertising objectives? money: how much can be spent? message: what message can be sent? media: what media should be used? measurement: how should the results be evaluated? the more information they obtain, the higher the awareness and knowledge that the consumers gain about the features of the available brands. this is proved by the results of a previous qualitative study conducted by purnamawati (2009) entitled female road sweepers behavior toward whitening cosmetics in medan city. the study showed that most of the female road sweepers in medan thought beauty was strongly defined by light or fair skin tone. the physical and social environments, sources of information and references, and possible situations lead the female worker's behavior toward using skin whitening products. however, some of the women no longer use the whitening cosmetics for fear of having side effects, which allows for awareness campaign of cosmetic safety among women. this study showed that the source of information such as peer experiences and advertisements also encourage consumers to buy and use a product. c) alternative evaluation (based on encouragement or intuition) this is the stage whereby the consumers assess and rank option brand focused around the information they have (kotler & armstrong, 2008). how consumers evaluate the alternatives depends on individual consumer and particular buying situation. in some cases, a consumer uses careful calculations and logical thinking. at other times, the same consumer does very little evaluation or even no evaluation at all. instead, they make a purchase based on encouragement and intuition. this happens to inf 4 (informant 4) who decided to buy and use pond’s products based on her thoughts. inf 1 (informant 1) shares the same experience which she was trying new things, which in this case were counterfeit pond’s cosmetics, without considering the safety of the http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 117 products. this is reinforced by the theory of novelty search, which describes a consumer's curiosity to look for variants and other choices (hawkins, coney, & best, 1980; wang, zhang, zang, & ouyang, 2005). consumers with a tendency to try new products are likely to have a positive attitude toward counterfeit products. 4.2.2 where they buy counterfeit pond’s? the interviews with the informants provide information about where they usually buy pond’s products. this is related to store patronage (selection of where to get the product). buying behavior is based on a consumer's choice and where they will carry out the purchase. for example, is the location of pond’s products seller one of the factors that influence the consumer's purchase decision? the informant's answers indicate that the location of the place where they buy the products is an important factor, it is near their workplace. this is very reasonable because it means they can save time and parking fees. 4.3 why they buy and uses counterfeit pond’s? consumers' purchase decisions are strongly influenced by cultural, social, personal, and psychological characteristics. interviews with six informants in several themes related to factors that influence the consumers' behavior in purchasing counterfeit cosmetic products of pond’s in malang. the dominant factors that affect their behavior in this study are the social factor (reference group) and psychological factor (motivation and belief). the discussion of each of these factors is as follows: a) social factors (reference group) consumers' behavior is influenced by social factors. several examples of these social factors are small groups, families, and the role and social status of consumers. a person's behavior is influenced by many small groups. the definition of a group is two or more people who are related to a common goal (tommy, 2012). social factors refer to the effect that a person has on other individual consumers (ang, cheng, lim, & tambyah, 2001). in this study, the reference group, which was friends of the informants, had influenced the informants to follow their behavior in buying and using pond’s cosmetic. such reference group motive is also described by the journals of phau, prendesgast, and cheung (2001), and field (2000) which show that the purchase of counterfeit products is supported by references from family, friends, and the fact that the product's quality is increasing. thus, reference groups can encourage consumers to buy a product. b) psychological factors o motivation furthermore, one's purchasing choices are influenced by five major psychological factors: motivation, perception, learning, and beliefs and attitudes. the interviews with the informants resulted in the theme of the psychological factor of motivation, where the reason behind the informants' decision to buy the products was to make their facial skin look better. this psychological need arises from the need for recognition, respect, or belonging. a need becomes a motive when it reaches a strong level of intensity. a motive is a need with high pressure that encourages a person to seek satisfaction of that need (kotler & armstrong, 2008). o belief belief and attitude affect consumers' buying behavior. belief is a descriptive thought that someone has about something. it can be based on real knowledge, opinion, or faith, and can carry emotional content or not (kotler & armstrong, 2008). the belief of the informants in this study on pond’s products makes them prefer to keep buying and using those products although they know that they are not legal and potentially harmful to the skin. every individual has an attitude toward http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 118 religion, politics, clothes, music, food, and almost everything else. attitude reflects a relatively consistent evaluation, feeling, and tendency of a person towards an object or idea. attitude puts people into a frame of mind to like or dislike something, to move toward or move away from something. attitude is a difficult thing to change. a person's attitude has a pattern, and to change one's attitude requires a complicated adjustment in many ways (kotler & armstrong, 2008). this is evident in the attitude of inf 1 and inf 4 as they do not want to switch brands even though the cosmetics they used can harm the health and skin. this shows that belief and loyalty of consumers to a brand/product can make them ignore the negative sides of that product. o marketing stimuli marketing stimuli consist of four p's: product, price, place, and promotion. other stimuli include strengths and key factors in buyers' environment: economics, technology, politics, and culture. this study only found 3 marketing stimuli regarding models of consumers' behavior toward purchasing pond’s: promotion, product, and price. inf 6 claimed to be interested in pond’s cosmetics after seeing the ads on television. in this case, one marketing stimulus has succeeded in attracting inf 6 to make pond’s purchase. meanwhile, a product is anything that can be offered to a market to satisfy people's needs or wants. marketed products include something that can be seen or have a physical form, such as goods, people, places, property, organization, and something that can not be seen or do not have a physical forms such as services, experiences, activities, information, and ideas. a product can also refer to anything that can be offered to the market to be purchased, used or consumed, and can satisfy what the consumers want or need (amir, 2005). some informants in this study considered counterfeit pond’s products as concise and fit with their needs. they also believed that the usage met their expectations. that was why they bought it. due to good packaging and display, consumers no longer pay attention to the safety of the products they use. from a consumer perspective, the price is about what is given or sacrificed in an effort to obtain a product. he also distinguishes prices into objective prices (actual prices of a product) and perceived prices and concluded that his research has found that consumers do not always remember the actual price of a product, but they see the price in their opinion and to them, the price is only categorized as cheap or expensive. as stated by inf 4, if the price is below rp50000, then it is cheap for her. that price can be a marketing stimulus is also supported by the journal of bloch, bush, & campbell (1993), which states that the reason why some people buy counterfeit products is that of low financial status (purchasing power). o buyers' response inf 5's response to pond’s product purchase was based on her assumption that pond’s was a good brand. this is also reinforced by tommy (2012) thesis about the influence of social and personal factors against consumers' attitudes and intention to buy counterfeit fashion items in denpasar city and badung regency. his research found that social and personal factors have a positive and significant influence on consumers' attitude and intention. and ultimately, consumers' attitude has a positive and significant impact on their buying intention. interviews with inf 1 and 4 also show that loyalty to the pond’s brand (both the originals and counterfeits) make the informants ignore the legality and security of the products they use. customer loyalty is often aimed at a particular object, such as a brand, product, service, or store. in general, the brand is often used as the object of customers' loyalty. brand loyalty reflects customers' loyalty to a particular brand. several previous studies have shown that customers' satisfaction is the starting point for customer loyalty. this is confirmed in this study, in which informants become loyal to the pond’s brand after feeling satisfied with its products. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 119 4.4 experiences in using counterfeit pond’s from informant perspective the results of interviews with six informants in this study showed that none of them have a bad experience with counterfeit pond’s products. this is possible because the side effects of counterfeit cosmetics usually emerge after long-term use. this is in accordance with the statement quoted by national agency of drug and food control (bpom) and pt unilever indonesia tbk that cosmetic products that contain harmful substances can damage the health of facial skin, although the time span needed for this to happen may vary with each user. the same finding is also presented in the journal of widana (2007) which states that the harmful effect on skin health after the use of harmful dyes is skin irritation. long-term exposure to a large amount of these substances can cause skin cancer. other possibilities can also be due to the different resistance of each person's skin against harmful substances. it was possible that the 6 informants in this study have a high resistance against the harmful substances in counterfeit pond’s products (not medically proven). 4.5 how they respond after they know an information about counterfeit pond’s? all informants in this study initially claimed to have never heard of government's appeal on television about the existence of bpom's leaflets which prohibit the use of some cosmetic products containing harmful substances. this ignorance makes them buy and use counterfeit pond’s cosmetics without any feelings of doubt or fear at all. after the researcher informed them an indepth interview about the existence of illegal pond’s products that contain harmful substances, some of the informants decided to stop using the products immediately, reciting health concerns. they prefer to stop using the products or switch to legal cosmetics. however, some other informants insisted that they would still wear the counterfeit cosmetics regardless of the consequences of its use. these informants are categorized into the type of consumers who are willing to participate in buying counterfeit goods despite knowing that it is illegal activities. cheap prices are often the reason why some consumers keep buying counterfeit products even though they are aware of the health risks (tommy, 2012). bpom has issued a warning number: kh.00.01.43.2503 as of 11 june 2009 concerning cosmetics containing dangerous material or materials prohibited, in which there is an appeal to the public to not buy/use cosmetics containing harmful or prohibited substances due to health concerns. the interviews conducted in this study reveal that some informants still choose to use harmful cosmetics like counterfeit pond’s. loyalty to the pond’s brand is the reason why some informants ignore the warnings and appeals from the the government (bpom) and pt unilever indonesia tbk as the official holder of pond’s brand. however, there is another important factor that contributes to consumers still buying and using counterfeit products: the lack of law enforcement and socialization of the dangers of using counterfeit cosmetic products. this is supported by the journal of lai & zaichkowsky (1999) which mentions that experts are also aware of the strong influence of the environment toward counterfeit product purchase, such as inconsistent public policies, uncertainty of law enforcement, and the lack of transparent political and economic policy. 4.6 research proportion p1 well recognized and reputable brand considered to be one of the reasons consumers choose to buy stimulation of brand pond’s. p2 marketing stimuli such as advertising on television, the product that suits consumer needs in affordable price can stimulate consumers buying decision p3 low price of pond’s counterfeit product is the main considerations in encouraging buying decision. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 120 p4 high consumer loyalty toward original pond’s brand made them decide to buy counterfeit pond’s without considering the authenticity and its side effect on consumer health. p5 reference group that dominate consumer minds in buying counterfeit pond’s product are workmate and store employees where the product is sold p6 motivation in seeking new products and the high level of trust toward unilever brand (pond’s) encourages consumers to buy counterfeit pond’s p7 private sources (office colleagues) and commercial (tv advertisement) considered as main information sources for consumer in buying pond’s and counterfeit pond’s counterfeit. 5. research conclusion and limitation 5.1 conclusion consumers are attracted to pond’s products by the marketing stimuli, including promotion, products, and prices. social factors (reference groups) and psychological factors (motivation and belief) are what encourage consumers to purchase counterfeit pond’s products. the notion that pond’s is a well-known and reputable brand makes them think that its counterfeit versions are as good as as the originals. finally, the absence of complaints or consequences caused by the use of counterfeit pond’s as well as the lack of socialization of appeals and warnings from bpom and related agencies fail to prevent some of the informants from using counterfeit pond’s products. 5.2 limitation this study certainly has some limitations. the purpose of this study is to explore the reasons why consumers buy and use fake pond’s products in malang. all informants are female, as shown by willingness document. this is understandable because the majority of cosmetic users are women, although it does not rule out that there are also men who use cosmetics. thus, the possible experience and reason of men in buying and using pond’s products that may be relatively different are not known. informants' cautions in sharing their experiences of buying and using counterfeit products became another limitation to this research. they fear that engaging in the topic of this research will force them to face the law, and they feel that they know nothing about the laws and the appeal to not use counterfeit products. after a long period of conversation with the researcher, they began to open up and share more about their experience in buying and using fake pond’s products, but there was still possibility that they failed to provide complete transparency regarding their experience. therefore, some important information may be lost or not disclosed. further research is expected to be able to provide more insight into the behavior of consumers regarding the use of counterfeit products through the standpoints of income levels, education levels, and genders. references amir, t. 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(2005). purchasing pirated software: an initial exaniation of chinese consumers. journal of consumer marketing, 22(6), 340-51. https://doi.org/10.1108/07363760510623939. widana, g. a. b, & yuningrat, n. w. (2007). analisis bahan pewarna berbahaya pada sediaan kosmetika di wilayah kecamatan buleleng kabupaten buleleng. jurusan analis kimia, fakultas mipa undiksha. jurnal penelitian dan pengembangan sains & humaniora, 1(1), 26-36. *) risca kurnia sari, department of agribusiness, agriculture institute, malang, indonesia (email : risca.kc@gmail.com) **) achmad soediro, department of accounting, sriwijaya university, palembang, indonesia (email : achmadsudiro@yahoo.com) ***) fatchur rochman, department of management, brawijaya university, malang, indonesia (email : fatchur@ub.ac.id) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 1-20 http://dx.doi.org/ 10.31106/jema.v18i1.9311, issn (online) 2597-4017 1 it governance and it application orchestration capability role on organization performance during the covid-19 pandemic: an intervening of business-it alignment afrizal tahar1*, hafiez sofyani2, detra putri kunimasari3 1 department of accounting, faculty of economics and business, universitas muhammadiyah yogyakarta, bantul, indonesia 2 department of accounting, faculty of economics and business, universitas muhammadiyah yogyakarta, bantul, indonesia 3 department of accounting, faculty of economics and business, universitas muhammadiyah yogyakarta, bantul, indonesia *corresponding author(s) email : afrizal@umy.ac.id abstract the covid-19 pandemic has evolved into a multi-faceted global crisis with massive challenges for any organization around the world. with lockdowns and other social distancing protocols implemented in countries worldwide, economic activities and social interactions become increasingly reliant on technology. this study aimed to examine the intervention role of business-it alignment on the influence of it governance (itg) and it application orchestration capability (it-aoc) on organization performances. the educational sector was chosen as an object of study as this sector will experience a decade of radical technology-driven change due to covid-19's stimulus and there were limited it-aoc studies that used this sector as a research object. this study use a survey method and purposive sampling with a total classified sample of 55 higher education institutions (heis) and 110 respondents involved represent the samples. data analysis was conducted using a variance-based structural equation modeling (vb-sem) approach of partial least square (pls) technique. the results suggest that both itg and it-aoc have a positive effect on organization performances. moreover, this study proved that businessit alignment can intervene the influence of itg and itaoc on organization performances. keywords: it governance; it orchestration capability; strategic alignment; performances; education sector; covid-19 jel code: d33, g30, l26, o33 doi: 10.31106/jema.v18i1.9311 article history: received 2020/12/28 reviewed 2021/01/31 revised 2021/03/06 accepted 2021/03/13 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ it governance and it application orchestration capability role on organization performance during the covid-19 pandemic: an intervening of business-it alignment by afrizal tahar, hafiez sofyani, detra putri kunimasari 2 introduction the novel coronavirus disease (covid-19), which was first reported in wuhan, china, at the end of december 2019, has spread rapidly worldwide, putting billions of people into lockdown. the coronavirus outbreak has been declared a pandemic by the world health organization (who). the covid-19's spread had a significant effect on several sectors, including the educational sector. abidah et al. (2020) added that many countries, including indonesia, have implemented policies that dismissing all educational activities such as seminars, conferences, athletics, and other activities due to rising concern about the current covid-19 pandemic. with all government policies and protocols to reduce the spread of the covid-19, teaching and learning (t&l) activities are becoming increasingly reliant on technology. at higher education institutions (heis), the way of t&l has been drastically reformed from primarily face-to-face or blended learning to a remote virtual classroom due to the situation of covid-19. these challenging situations become more complicated than it seems as not all heis around the world have had a proper technology infrastructure, support system, and experiences in conducting online learning (means et al., 2014). furthermore, dodd (2020) added that with the ubiquity of the covid-19, australian heis have depleted a huge amount of financial resources as their international student revenues have been undermined. not only affected on t&l delivery methods and business model. the impact of covid-19 has also been experienced by universities, business schools, and academicians with workload intensification to adjust the new balance between teaching and research to maintain its quality performance (brammer & clark, 2020). therefore, any such rapid and radical change and measures need to be managed to ensure and maintain the business model's relevancy and quality performance of heis. weill & ross (2004), kitsios (2017), queiroz et al. (2018), oehlhorn et al. (2020) proposed information technology (it) governance, it application orchestration capability (it-aoc), and business-it alignment as a critical predictor of organization performance especially during the crisis period. de haes & van grembergen (2005) defined it governance as the organizational capacity exercised by the board, executive, and the management to control the formulation and implementation of strategies. the issue of it governance arises from the huge it investments made by organizations that have not directly affected the expected results (ali & green, 2005). with effective it governance, the effectiveness of it investment to contribute to the superior competitive advantages (lunardi et al., 2014; sofyani et al., 2020) and performances (lazic, 2011; liang et al., 2011) remain manageable. furthermore, queiroz et jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 1-20 http://dx.doi.org/ 10.31106/jema.v18i1.9311, issn (online) 2597-4017 3 al. (2018) stated that it-aoc could positively affect better organizational performance. it was also reported that companies with it-aoc capabilities develop and update a portfolio of it applications used to support various organizational operational processes. finally, seman & salim (2013) concluded that business-it alignment is an important aspect that improves organizational performance as the more aligned the investment of it with a business purpose, the easiest of organization members to achieve their target performance. nowadays, studies related to organization performance determinants, particularly in the educational sector during pandemic covid-19, are still scarce. therefore, this study aims to examine the effect of it governance and it-aoc on organization performances and test the role of business-it alignment as intervening. the framework of this study is a development queiroz et al., (2018) model, which examines the impact of it-aoc with the agility process on companies' performance in america, australia, and germany. they concluded that itaoc affects process agility and improves organizational performance. furthermore, they suggest further study to develop it-aoc measures with other issues such as application ownership, governance, and control. therefore, this study adds it governance variables and the intervening role of the business-it alignment variable. the educational sector (hei) was chosen as an object of study as this sector will experience a decade of radical technologydriven change due to covid-19's stimulus and there were limited studies that used this sector in it governance and it-aoc studies. literature review performance quality baker & crompton (2000) defined performance quality as a conceptual measurement of a provider's output, whereas a level of satisfaction of product outcome. performance quality also indicates the perceived superiority and excellence of the product's performance compared with other alternatives (mugge & schoormans, 2012). parker (2020) added that performance is often declared as quality, although in fact, a term of quality is more represents a code for quantity, speed, growth, cost management, and profits. for the higher education sector, each performance (key performance index-kpi) measurement is often reported on each hei website as a strategy for attracting and maintaining stakeholder support. parker (2020) stated that hei kpis pervasiveness scorecard (which ranged from 35 until 41 kpi's) needs to be monitored periodically. he added that reputation, learning and teaching, research performance, community engagement, market share, student numbers, hei status rankings, number of publications, facilities expenditure, and capital fundraising are general examples it governance and it application orchestration capability role on organization performance during the covid-19 pandemic: an intervening of business-it alignment by afrizal tahar, hafiez sofyani, detra putri kunimasari 4 of heis invasiveness kpis. kurniasih et al. (2018) also highlighted that many indicators could be used to define heis quality. it's challenging to have the same meaning regarding the standard of quality. for example, 4icu rankings that choose web traffic as the base of a ranking system, qs world that focused on academic and institution reputation, the ratio of international students, the number of citations, the academic ranking of world universities (arwu) use six indicators including the number of staffs and alumni who won the nobel prizes and fields medals, the number of citations in thomson reuters, the number of articles published in reputable journals as ranking parameters, and the last is, webometrics which is normalized variables into a ratio of 1:1 before combining between activity/presence and visibility/impact of the indicator group, and several other ratings. in the case of indonesia, the national accreditation board for higher education (ban pt) launched nine standards of accreditation which consist of the assessment of vision, mission, objectives, strategic implementation, the quality of general and financial management, the quality of student activities, the quality of human resources, t&l activities, research, community services, and publications (hill & wie, 2012; ulum, 2019). it governance it governance plays a significant role in creating value to assist organizations in achieving competitive advantages. according to the resource-based view (rbv) theory, a competitive advantage is achieved by creating valuable, rare, inimitable, and irreplaceable resources (barney, 2000). it governance itself was defined by de haes & van grembergen, (2009) as "the organizational resource to control the formulation and implementation of the it strategy and ensure that the organization uses appropriate it resources to serve business strategy." symosns (2005) added the definition by stated that it governance is "the process of making decisions about it investments – how decisions are made, which makes the decisions, who is responsible, and how to measure and monitor the results of decisions." it governance includes strategies, policies, responsibilities, structures, and processes for using information technology in an organization (fernández & llorens, 2009; bandiyono & muttaqin, 2020). ali & green (2009) and aasi & rusu (2017) added that it governance in a public organization had led the organization to focus on it governance outcome of effective use of it for growth. it governance could be classified into four dimensions which are it strategy risk, value delivery, risk management, and performance measurement (sirisomboonsuk, et al, 2018). turel et al. (2019), bianchi et al, (2017), and sirisomboonsuk jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 1-20 http://dx.doi.org/ 10.31106/jema.v18i1.9311, issn (online) 2597-4017 5 et al. (2018) found that it governance could increase financial performances (such as roa, roe, and profit margins) and organizational performance. h1: it governance has a positive effect on organization performance. it application orchestration capability (it-aoc) it capability is rooted in the idea of dynamic capability. sambamurthy & zmud (2000) and rai et al. (2012) define it capabilities as the combination of it-based assets, functionalities, and routines used to make a unique source of competitive advantage. queiroz et al. (2018) broaden the it capability concept into it orchestration capability (it-aoc). thus, he conceptualized it-aoc as an organization's ability to renew the it application portfolio through a process of development, purchase, and replacement. bharadwaj (2000) added that to achieve optimal performance, organizations should have the ability to update the applications used to support business processes and mobilize and deploy it-based resources. a firm with it-aoc possesses the ability to develop it application portfolios (either incremental or discontinuous) internally. therefore, due to the complex mechanism, it-aoc reflects the organization's ownership of valuable, rare, inimitable, and nonsubstitutable resources proposed by barney (2000) in resource-based view (rbv) theory. previous studies by ray et al. (2014), setia et al. (2013), arora & rahman (2017), papadopoulos et al. (2017) show that it capabilities have a positive effect on business performance. h2: it-aoc has a positive effect on organization performance. the importance of business-it alignment it strategic alignment can be defined as the extent to which the priorities and objectives of the it strategy are aligned or converges with the priorities and objectives of business strategy such as reducing cost and increasing revenue (oh & pinsonneault, 2007; sabherwal & chan, 2001). in every organization, the alignment or synchronization of business objectives and it initiatives portfolio becomes crucial to realize as it can optimize the dynamic of business goals and processes (primasari, 2020; ullah & lai, 2013). gerow, et al. (2014) classified that alignment into two categories which are intellectual alignment and operational alignment. while intellectual alignment deals with the alignment of business knowledge and strategic plans (what the organization intends to do), operational alignment reflects the alignment of operational infrastructure and processes strategy (tallon et al., 2016). reich & benbasat (2000) and gutierrez et al. (2009) added that the critical success it governance and it application orchestration capability role on organization performance during the covid-19 pandemic: an intervening of business-it alignment by afrizal tahar, hafiez sofyani, detra putri kunimasari 6 factor that will implement it initiatives success is related to the level of trust it departments have to promote partnerships between business and it managers. moreover, chan & reich (2007) and tallon & pinsonneault (2011) stated that the alignment of business strategy and it initiatives positively affects organizational performance. h3: business-it alignment has a positive effect on organization performance. the intervening role of business-it alignment is a critical factor in ensuring it initiatives' successful implementation in numerous studies. ping-ju wu et al. (2015) concluded that the it governance effect on organizational performance is fully interverned by strategic alignment. sirisomboonsuk et al. (2018) added that the harmony of it governance and project governance is positively associated with project performances which means that it governance will impact excellence performance, especially when strategic alignment is realized. moreover, chan & reich (2007), sabherwal & chan (2001), and wade & hulland (2004) added that it capabilities can create the characteristics of valuable, rare, inimitable, and non-substitutable, have a positive effect on business alignment and organizational performance. h4a: it governance affects organization performance by positively facilitating business-it alignment. h4b: it–aoc affects organization performance by positively facilitating business-it alignment. methods this study used a survey method with quantitative hypothesis testing and was conducted in central java with a total population of 264 heis. central java was chosen as the study location because it is one of the provinces with decent educational facilities and proper quality. there were five heis that have a accreditation by the national accreditation board for higher education (ban pt); thus, 84 have b accreditation, 49 have c accreditation, respectively, and the rest of 126 heis have not been accredited. furthermore, the sample was selected using a convenience random sampling technique because all heis in central java have the same opportunity to be sampled. the respondents were selected using a purposive method, such as people with knowledge of it implementation and hei performance. the survey data collection was conducted a five-point likert scale questionnaire from september 15th until october 21st, 2020. data analysis was performed using a variance-based structural equation modeling (vb-sem) approach of partial least square (pls) technique. to ensure a high rate of return, questionnaires were distributed in person and online. due to the jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 1-20 http://dx.doi.org/ 10.31106/jema.v18i1.9311, issn (online) 2597-4017 7 considerable distance between heis and the ongoing covid-19 pandemic situations, the number of heis that can be processed is only 68 with a total of 193 copies of the questionnaire have been distributed to rectors, vice-rectors, deans, vice-deans, and head of departments. the questionnaires returned were 110 from 55 heis or 80.88% (55/68 heis), and the online distribution did not receive any response. even though the response rate is high, this sample size is not ideal when referring to krejcie & morgan, (1970) guidance. however, these numbers and percentages are acceptable when compared to similar surveys with organizations as analysis units. this study has response rates in the 10-20% range of the minimum sample required (fowler jr., 2013) which is higher than that achieved by alach (2017) who only measured 57 (12%) out of 471 heis in new zealand, and bobe & kober (2018) who only had a response rate of 28.3%, with 56 usable questionnaires. therefore, the comparison of those previous studies showed that the response rate of this study is acceptable. figure 1. research framework h1 h4a h3 h4b h2 it-aoc itg bia op note: itg = it governance; it-aoc = it application orchestration capability; bia = business-it alignment; op = organization performance in this study, it governance was measured using three items proposed by ali & green (2009) and aasi & rusu (2017). while it-aoc was designed using three-items of queiroz et al. (2018), the five-item business-it alignment was adapted from gutierrez et al. (2009). the measurement of organizational (hei) performances was conducted by following the nine standards of the national accreditation board for higher education (ban pt), such as the assessment of vision, mission, objectives, strategic implementation, the quality of general and financial management, student activities, human resources, t&l activities, research, it governance and it application orchestration capability role on organization performance during the covid-19 pandemic: an intervening of business-it alignment by afrizal tahar, hafiez sofyani, detra putri kunimasari 8 community services, and publications. all constructs were measured using a five-point likert where 1 denotes 'strongly disagree' and 5 denotes 'strongly agree'. table 1. questionnaire items variables code item reference itg the current individual it governance within my organization's… ali & green, (2009), aasi & rusu (2017) itg1 has a positive impact on the overall effectiveness of the organization itg2 has value aid on the overall effectiveness of the organization. itg3 are essential to accomplish the success of the organization. it-aoc relative to major competitors, my organization's can quickly... queiroz et al. (2018) it-aoc1 develop it applications internally. it-aoc2 purchase valuable it applications from suppliers. it-aoc3 discontinue less-valuable it applications bia bia1 understanding of business strategies by the it department. gutierrez et al. (2009) bia2 understanding of it capabilities by the organization executives. bia3 knowledge sharing between organizational levels from strategic to operational. bia4 conducting regular meetings to discuss it priorities, requirements, and implementation. bia5 creating a flexible communication environment to discuss business and it strategies. op op1 our t&l activities are effective hill & wie (2012), queiroz et al. (2018), ulum (2019) op2 our online t&l activities running smoothly during the covid-19 pandemic op3 our mentorship program is running as scheduled. op4 our journal publications (sinta) increases. op5 our journal publications (scopus/wos) increases. op6 our community service is running effectively op7 our academic service is effective op8 our academic service is reliable op9 our performances are in-line with our objectives jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 1-20 http://dx.doi.org/ 10.31106/jema.v18i1.9311, issn (online) 2597-4017 9 before the proposed hypotheses were tested, the validity (convergent and discriminant test) and reliability (cronbach's alpha and composite test) measurements need to be done. table 2 shows the result of the outer loading and ave test. table 2. outer loading and ave result variable/indicator outer loading ave itg 0.773 itg1 0.888 itg2 0.922 itg3 0.824 itaoc na** it-aoc1 0.937 it-aoc2 0.335* it-aoc3 0.849 bia 0.686 bia 1 0.828 bia 2 0.817 bia 3 0.852 bia 4 0.787 bia 5 0.843 bia 6 0.849 bia 7 0.819 op 0.667 op1 0.843 op2 0.849 op3 0.877 op4 0.594 op5 0.391* op6 0.881 op7 0.917 op8 0.927 op9 0.907 *) removed from the model; **) pls did not calculate ave scores because it-aoc is a formative construct it governance and it application orchestration capability role on organization performance during the covid-19 pandemic: an intervening of business-it alignment by afrizal tahar, hafiez sofyani, detra putri kunimasari 10 based on table 2, it-aoc2 needs to be removed from the model as the value of the loading score was less than 0.700 (ketchen, 2013). table 2 also shows that all variables with reflective constructs are valid as the value of ave was higher than 0.500. thus, the validity measurement of the formative construct which is it-aoc conducted by using the significance of the outer weight as presented in table 3. table 3. formative construct validity test result (it-aoc) indicator outer weight vif t-statistics p-values it-aoc1 2.695 0.002* 1,719 it-aoc2 0.562 0.287 1,047 it-aoc3 1.685 0.046** 1,699 *) significant at alpha 0.01; **) significant at alpha 0.05 table 3 shows that the outer weight value of it-aoc2 indicator was not significant. according to hair et al. (2013), if the item shows insignificant p-values, the researchers need to look at the outer loading value. if the outer loading score was higher than 0.700 means that the item can be preserved. in table 2, the outer loading column shows that the it-aoc 2 item is lower than 0.700 (0.335) so that the item must be deleted while the other two items are retained. additionally, the vif scores of all it-aoc indicators are less than 5. this indicates that there is no multicollinearity indication among indicators (ketchen, 2013). furthermore, the discriminant validity test consists of two types of calculations: looking at the ave root in the fornell larcker table on the path algorithm and listening to the crossloading table. table 4 shows the ave root value of each construct is greater than the correlation value between variables. thus the discriminant validity has been fulfilled (ketchen, 2013). table 4. discriminant validity test result (fornell-larcker) variable op it-aoc bia itg op 0.856 it-aoc 0.396 na* bia 0.449 0.266 0.828 itg 0.409 0.200 0.330 0.879 *) the score was not calculated by pls because it-aoc is a formative construct jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 1-20 http://dx.doi.org/ 10.31106/jema.v18i1.9311, issn (online) 2597-4017 11 to test the reliability of variables, hair et al. (2013) argued that the rules of thumb to measure reliability are cronbach's alpha must be higher than 0.600 and composite reliability must be greater than 0.700. the reliability was tested to measure the consistency of the study construct. table 5 shows that all variables in this study are reliable as the value of cronbach's alpha and composite reliability was higher than 0.600 and 0.700. table 5. reliability test results variables cronbach's alpha composite reliability itg 0.855 0.911 it-aoc na* na* bia 0.924 0.939 op 0.945 0.956 *) the score was not calculated by pls because it-aoc is a formative construct since the nature of survey data is classified as self-reporting, podsakoff et al. (2003) argue that there was a potential for common method variance (cmv). cmv occurred when there was a condition where respondents try to give only positive or normative answers (chang et al., 2010). tehseen et al. (2017) added that this bias arose when one factor emerged from the factor analysis or one common factor accounted for most of the covariance between measures i.e. more than 50%. harman's single-factor method results showed a total variance of 75.53%, and the first factor did not account for the majority of the variance (only 40.93%). these results confirmed that common-method bias was not a likely threat in this study. result and discussion the majority of respondents in this study (table 6) were head of a department (43.636%) followed by the rector-vice rector (40%), and dean-vice dean (16.363%). it is noted that about 66.363% of our respondents have master degree as their educational background followed by doctoral (21.818%), and bachelor (11.818%). moreover, most of the heis in this study were classified with b grades (69.09%) by the national accreditation board for higher education (ban pt) which means that the majority of heis in this study can be classified in a good level of heis performance. finally, in term of heis type, the number of private heis participation (87.273%) overcome the number of public heis participation (12.727%). it governance and it application orchestration capability role on organization performance during the covid-19 pandemic: an intervening of business-it alignment by afrizal tahar, hafiez sofyani, detra putri kunimasari 12 table 6. demographic profile demographic profile (hei/sample) percentage (%) demographic profile (respondent/unit sampling) percentage (%) accreditation : structural position : a 5.454 rector-vice rector 40 b 69.090 dean-vice dean 16.363 c 23.636 head of department 43.636 type : educational background : private 87.273 bachelor 11.818 public 12.727 master 66.363 doctoral 21.818 number of hei 55 number of respondents 110 table 7. descriptive statistics variable n minimum maximum mean std. deviation itg 110 2.700 5 4.285 .6525 it-aoc 110 2 5 3.579 .7360 bia 110 2.900 5 4.114 .5995 table 8. hypotheses testing relationships original sample t-value p-value decision itg → op 0.259 2.357 0.009* h1 supported it-aoc → op 0.267 2.375 0.009* h2 supported bia → op 0.293 2.676 0.004* h3 supported itg → bia → op 0.085 1.753 0.040** h4a supported it-aoc → bia → op 0.061 1.360 0.087*** h4b supported *) significant at alpha 0.01; **) significant at alpha 0.05; ***) significant at alpha 0.10 the descriptive statistics of table 7 shows that our respondents evaluate the implementation of itg and it-aoc in their heis on the below scale of 3. according to alach (2017), while the score of 1 of questionnaire distribution indicates very poor implementation, the score of 5 of questionnaire distribution was classified as very good implementation. therefore, the minimum value of questionnaire distribution in table 7, which is still below 3, shows that there is a heis stakeholder in this study that experiences the ineffective process of itg, the vulnerable orchestration of it-aoc, and the inefficiency jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 1-20 http://dx.doi.org/ 10.31106/jema.v18i1.9311, issn (online) 2597-4017 13 of bia. moreover, the it-aoc mean score that is amounted to 3.579 means that there is an issue of it-aoc actualization in the most of observed heis in this study. table 8 of the hypotheses testing result revealed that all proposed hypotheses in this study are supported as the p-value of each construct relationship (0.009, 0.009, 0.004, 0.040, 0.087) are smaller than 0.010, 0.050, and 0.100. this study support previous studies by ray et al. (2014), setia et al. (2013), papadopoulos et al. (2017), arora & rahman (2017), bianchi et al. (2017), sirisomboonsuk et al. (2018), and turel et al. (2019) that stated there are positive relationship between it governance and it application orchestration capabilities on organizational performance. therefore, it can be concluded that the more effective it governance and the more capable and faster the organization to update their it portfolio internally, the higher the organization performance, in this case, hei. although means et al. (2014) and dodd (2020) argue that many heis have had no proper technology infrastructure due to their financial issues, the challenges of the covid-19 pandemic was enforcing the hei management to adjust their technology capabilities quickly. the result of descriptive statistical data in table 5 shows that the most of respondents in this study are having a positive evaluation in the implementation of it governance and business-it alignment in their hei. however, it should be noted that the implementation of it-aoc is still not optimal. shenoy et al. (2020) stated there was a huge resistance in the teaching fraternity to adapt with technology, but due to the recent covid-19 pandemic situation, broad and hasty adoption of commercial digital learning solutions cannot be avoided. many heis have adapted technology and started taking virtual classes (learning) by using zoom, google hangouts, skype meet up, google classrooms, learning management systems (lms), youtube, etc. using those "ready to use" digital learning solutions, the internal (both executive and operational) evaluation about their it capabilities also increases exponentially. apart from t&l activities, improvements in it governance and updating it portfolios are also aimed at research, publication, and community service activities. as we found in the field, the direction of research policy began to focus on secondary data, data analysis with more up-to-date software applications, and community service lecturers who shifted to the use of video media and teleconferencing. workshops, seminars, and conferences that aim to improve publication qualities and quantities are also carried out through teleconferences. additionally, it updates in terms of governance and portfolio also penetrate student administration services such as tuition payments, etc. to be more adaptive. this study also supports chan & reich (2007) and tallon & pinsonneault (2011) conclusion that stated there is a positive relationship between business-it alignment and it governance and it application orchestration capability role on organization performance during the covid-19 pandemic: an intervening of business-it alignment by afrizal tahar, hafiez sofyani, detra putri kunimasari 14 organizational performance, which means that the more synchronize organization objective with it strategy, the higher level performances will be achieved. furthermore, this study also proved the role of business-it alignment in intervention the effect of it governance and it application orchestration capabilities on organizational performance as the conclusion of the previous study by ping-ju wu et al. (2015), sirisomboonsuk et al. (2018), turel et al. (2019), chan & reich (2007), sabherwal & chan (2001), and wade & hulland (2004). we argue that the level of effectiveness of it governance and it-aoc were increases during pandemic situations as this unprecedented situation has obligated heis stakeholder to conduct businessit alignment activities frequently in order to maintain or even enhances the performances of heis. it can be concluded that heis that have attention to legitimacy and their main stakeholders should adopt it that is aligned with their business processes. kahli & grover (2008) contend that business-it alignment is one of intervening factors that are considered essential and critical for creating a value chain. from this finding, it can be concluded that's to improve heis performance, the alignment between heis objective and it portfolio needs to be accomplished at the first time by creating a regular meeting, sharing knowledge culture, and building freedom of speech environment. this finding successfully advanced the existing it-aoc model by queiroz et al. (2018) by significantly proves the intervening role of business-it alignment and it governances in affecting organization performances. the results also confirm the rbv theory and intend to broaden the discussion of it-aoc concept in the educational sector (hei) as previous related studies only covered manufacturing sectors. conclusion and suggestion this study aims to examine and analyze the effect of it governance and it-aoc, business-it alignment on organization (higher education institutions) performances with business-it alignment role as an intervening variable. this study indicates that it governance, it-aoc, and it business alignment positively affect higher education institutions' (hei) performances in different levels of significances. moreover, this study proved that business-it alignment can intervene the influence of itg and it-aoc on hei performances. these findings suggest that in order to enhances hei performances subsequently, it is crucial for hei management to implements it governance effectively, improves it-aoc, and strive to achieves business-it alignment. although this study contributes to it governance, it-aoc, and business-it alignment literature regarding their role on educational sector performances during the covid-19 jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 1-20 http://dx.doi.org/ 10.31106/jema.v18i1.9311, issn (online) 2597-4017 15 pandemic, this study has several limitations that need to be addressed. first, this study was only conducted in hei that’s located in central java with a minimal sample. therefore, this study's results are not strong enough to be generalized to a broader context, for example, indonesia. further studies should be conducted at heis in other areas. furthermore, this study only uses a survey as their research method, therefore, how it governance, it-aoc, and it business alignment affect organization performance is not described in detail and in-depth. to address this limitation, further studies need to explore the same topic with a case study approach to discover more prosperous and profound insight. references aasi, p., & rusu, l. 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(2004). it governance: how top performers manage it decision rights for superior results. 269. retrieved from http://books.google.com/books?id=xi5kdr21qtac&pgis=1 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 169-187 http://dx.doi.org/10.31106/jema.v17i2.5533, issn (online) 2597-4017 169 does work commitment mediates the effect of islamic work ethic on performance and turnover intention? miswanto1*, rois arifin2, dwi murniyati3 1 master of management program, stie ykpn school of business, yogyakarta, indonesia 2 department of management, faculty of economics and business, universitas islam malang, malang, indonesia 3 master of management program, stie ykpn school of business, yogyakarta, indonesia *corresponding author(s) email: miswanto.ykpn@gmail.com abstract islam is a comprehensive religion that covers not only the ritual worship aspect but also ethics and acts of business. the field of islamic work ethics has been studied by many researchers in different study settings. however, the important role of islamic work ethics has been underexplored in work commitment studies. therefore, this study aims to examine the direct and indirect effect of islamic work ethics in affecting employees work performance and turnover intention through work commitment. this study used the quantitative method as their main research design. purposive sampling was applied as a sampling technique with a five-point likert scale of the structured questionnaire as a measurement scale and data gathering method. the bootstrap method used to test the proposed hypotheses. this study concluded that islamic work ethic positively affects work commitment, thus work commitment positively affects work performance. this study also found that there was an insignificant effect of islamic work ethic on work performance and turnover intention, and work commitment on turnover intention. fundamentally, the mediation role of work commitment failed to prove in this study as there were only significant indirect effects between islamic work ethic and work performance. in other words, the higher individual beliefs on islamic value, the more committed employee to do their job. thus, the more committed and enthusiastic employees on their job, the higher their work performance will be. keywords: islamic work ethic; work commitment; turnover intention; work performance; religiosity jel code: m12, m54, j24, j63 doi: 10.31106/jema.v17i2.5533 article history: received 2020/01/24 reviewed 2020/03/30 revised 2020/10/14 accepted 2020/11/26 licensed: cc-by mailto:miswanto.ykpn@gmail.com http://creativecommons.org/licenses/by/4.0/ does work commitment mediates the effect of islamic work ethic on performance and turnover intention? by miswanto, rois arifin, dwi murniyati 170 introduction islam is a comprehensive religion that covers not only the ritual worship aspect but also ethics and acts of business. despite the negativity of islamophobia stigma and massive prejudice that claimed islam as an inferior also violent-prone religion, the awareness and desire in implementing islamic values in each aspect of life is getting bigger and stronger among muslims around the world. zahrah et al. (2016) added that it is an obligation to muslims to be proactive (not being lazy or being such a parasite) in providing positive contribution (good deeds) to humanity. islam always inspires its believers to behave ethically anywhere at any time. furthermore, compared to other work ethic endorsements like protestant and judaism work ethics, islamic perspectives are considered more suitable in explaining ethics because of its comprehensiveness, moderate, and realism (al-aidaros & mohd shamsudin, 2013; bin salahudin et al., 2016). islamic work ethics is a set of moral principles that differentiates what is right from wrong that actualized as part of worship and the fulfillment of religious obligation as muslim. islamic work ethics has become a topic of interest of researchers in recent decades. the field of islamic work ethics has been studied by many researchers in different study settings. studies on islamic work ethic were first carried out by ali (1988) who constructed the initial scale of islamic work ethic. beekun (1997) broaden the study of islamic work ethic by linking that within an organizational context. yousef (2001) continues to explore the study by extending the role of islamic work ethic as a moderator relationship of organizational commitment on job satisfaction. thus, ali & al‐kazemi (2007) and khalil & abu‐saad (2009) strengthen the concept by adding loyalty and individualism as expected outcome behavior from islamic work ethic. furthermore, the studies of islamic work ethic focus on the relationship that variable between organizational behavior like organizational citizenship and collaboration (murtaza et al., 2016; tufail, et al. 2017), organizational justice (fesharaki & sehhat, 2018), job outcomes or performance (hayati & caniago, 2012; mohammad et al., 2018; rawwas et al., 2018; taufail et al., 2018; douri et al., 2020), leadership (de clercq et al., 2018; patel et al., 2019) and individual behavior like innovation (mahfoudh et al., 2016; javed et al., 2017), motivation (gheitani et al., 2019), professionalism (kamarudin & kassim, 2020), job stress (ud din & farooq, 2017), and turnover intention (caniago & mustoko, 2020). however, the important role of islamic work ethics (or ethics in general) has been underexplored in work commitment studies. work commitment is different from organizational commitment. while work commitment is known as psychological and jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 169-187 http://dx.doi.org/10.31106/jema.v17i2.5533, issn (online) 2597-4017 171 emotional linkages between employee and their job (ramamurthi et al., 2016), organizational commitment is an employee strong beliefs toward specific organization goals and values so that they will give the best effort to maintain their membership in an organization (al zefeiti & mohamad, 2017). this study aims to fill the gap in the scholarly literature by using islamic work ethic and work commitment as an initial and mediation construct as few studies focus on the mediation role of work commitment in affecting the relationship of islamic work ethics on work performance and turnover intention. therefore, for instance, it can be concluded that the objective of this study was to examine the direct and indirect effect of islamic work ethics in affecting employees’ work performance and turnover intention through work commitment. literature review islamic work ethic, work commitment, work performance, and turnover intention in islam, the term of ethics often refers to akhlaq which is considered as the outcome of individual beliefs about several religious values that is reflected in all spheres of life (sehhat et al., 2015). the religious value in the islamic perspective can be divided into several aspects including al-khayr (goodness), al-birr (righteousness), al-qist (equity), al-‘adl (justice), al-haq (truth), al-ma’ruf (known), and at-taqwa (piety). on the other hand, the word of work in islam has a noble and sincere meaning (pardiman, 2018). ibrahim & kamri (2013) stated that muslims often view their work activity as an integral part of worship. they envision his work not only for material and physical pleasure purposes but also for engagement (at-ta’awun), worship (al-ibadah), humanity (al-ihsan), responsibilities (alamanah), self-dignity (hifz al-muru’ah), and as part of reliance towards god (at-tawakal) purpose. work is a necessary ingredient for serving self and society (abbasi, 2015). ali (1988) stressed that the value of work in the islam perspective is derived from the accompanying intentions rather than from the result of works. the quran dictates that “say, undoubtedly my prayers, my sacrifice, my living, and my dying are all for allah, the lord of the creation (6:162).” although the intention is fundamental, islam also encourages individuals to give their best effort and highly praises those who strive to live (yousef, 2001). the messenger of allah, the prophet mohammed, peace and blessings be upon him, said that “don’t be persistent in begging. by allah, if one of you asks me for something and i give it to him unwillingly, then there is no blessing in what i have given him (shahih muslim: 1038)." he also encourages the believers to give their best effort in everything they do, working hard then reliance on god on the result of their work. "if you were to rely upon allah does work commitment mediates the effect of islamic work ethic on performance and turnover intention? by miswanto, rois arifin, dwi murniyati 172 with the reliance. he is due, you would be given provision like the birds; they go out hungry in the morning and come back with full bellies in the evening (sunan ibn majah: 4164).” therefore, el garah et al. (2012) concluded that islamic work ethic can be defined as the set of moral principles based on the quran, the sayings and practice of prophet mohammed that help an individual (muslim) to distinguish between right and wrong behavior. ibrahim & kamri (2013) added that islamic work ethic is a positive action with good intentions to get allah's blessing and to benefit society and oneself. the field of islamic work ethics has been studied by many researchers in different study settings. however, the important role of islamic work ethics (or ethics in general) has been underrepresented in work commitment studies. allah describes the characteristics of individuals who believe islamic value as a trusted person who will keep all the promise and commitment wholeheartedly as he mentions in the quran in chapter 23, verse 8, “and those who are faithfully true to their trusts (which either god or society or an individual place in their charge) and their pledges (between them and god or other persons or society).” an initial study from harinoto et al. (2017) proves that islamic work ethic has a positive and significant effect on work commitment. therefore, the first hypothesis of this study can be described as follows. h1: there is a positive relationship between islamic work ethic and work commitment. several previous studies that focus on islamic work ethic also found that there is a significant relationship between islamic work ethic, work performance, and turnover intention. while hayati & caniago (2012), taufail et al. (2018), douri et al. (2020) conclude that there is a positive relationship between islamic work ethic and work performance (which means that the higher individual beliefs on islamic value, the higher their performance will be). ud din & farooq (2017) and caniago & mustoko (2020) found the opposite relationship of islamic work ethic on turnover intention. generally, an individual who has higher beliefs on islamic value tend to be more grateful for what they have and patience for what is happened as they know that the good and bad things that occur in their life are just the way of god to test their beliefs. he mentions in the quran in chapter 2, verse 155-157, "and we will surely test you with something of fear and hunger and a loss of wealth and lives and fruits, but give good tidings to the patient. who, when disaster strikes them, say, "indeed we belong to allah, and indeed to him, we will return. those are the ones upon whom are blessings from their lord and mercy. and it is those who are the [rightly] guided.” besides, the prophet mohammed, peace and blessings are upon him, encourages the believer to be optimistic in their life. he said that "wondrous is the affair of a believer, as it is good for him jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 169-187 http://dx.doi.org/10.31106/jema.v17i2.5533, issn (online) 2597-4017 173 in every matter; this is not the case for anyone but a believer. if he experiences a pleasure, he thanks allah and it is good for him. if he experiences harm, he shows patience and it is good for him (shahih muslim: 2999).” therefore, it can be concluded that the higher individual beliefs on islamic values, the more grateful and patient they will be. thus, the less likely they intend to leave their job or organization. h2: there is a positive relationship between islamic work ethic and work performance. h3: there is a negative relationship between islamic work ethic and turnover intention. work commitment, work performance, and turnover intention work commitment is known as psychological and emotional linkages between employee and their job (ramamurthi et al., 2016). van steenbergen & ellemers (2009) added the definition of work commitment as the degree of individual active feeling to exert their effort at work because of emotional attachment and enthusiast about the content of his or her work. there is a five universal construct of morrow (1993) that is generally used by researchers to gain a better understanding of work commitment which is work ethic endorsement, career commitment, continuance organizational commitment, affective organizational commitment, and job involvement. while kim et al. (2020) and poulose & dhal (2020) define career commitment by the degree of motivation and psychological attachment to execute a series of the task toward one’s profession, job involvement known as the degree to which a person identifies psychologically with his work (purba et al., 2020). for instance, tang & vandenberghe (2020) also describe continuance and affective organizational commitment by the need to remain as an organization member due to the cost associated with leaving and employees' emotional attachment to participate within the organization. on the other hand, work performance defined by al-hawary & alajmi (2017) and fogaça et al. (2018) as required employee knowledge skills, abilities, competencies, and behaviors to successfully perform tasks and meet managerial expectations by using resources available at work. in the islamic perspective, performance is often defined by behavior rather than results as the results are the wisdom of god. he mentions in the quran in chapter 51, verse 58, “surely, it is allah alone who is the great sustainer, the lord of immense power, the almighty.” basu et al. (2017) and johari & yahya (2016) explained that several dimensions can be considered as work performance construct which is dependability, knowledge of work, leadership qualities, quality of work, innovative, initiative, integrity, relationship, proactive, teamwork, discipline, the ability to manage, task and contextual performance. studies from ajayi et al. (2017), rahiman & kodikal (2017) and martini et al. does work commitment mediates the effect of islamic work ethic on performance and turnover intention? by miswanto, rois arifin, dwi murniyati 174 (2020) shows that there was a positive relationship between work commitment and work performance (which means that the more commitment and enthusiast employee when executing their task, the higher the work performance will be). h4: work commitment has a positive relationship with work performance. turnover intention is an employees’ likelihood (thought or plan) to leave the existing job or organization (fong & mahfar, 2013). numerous previous studies that focus on the effect of work commitment and turnover intention show that there was a clear negative correlation between these variables. the more committed employee on their job, the less likely they intend to leave their job or organization. h5: work commitment has a negative relationship with turnover intention. the mediation role of work commitment few studies focus on the role of work commitment as a mediation construct in affecting the relationship of islamic work ethics on work performance and turnover intention. an initial indication of these relationships was proposed by harinoto et al. (2017) study which has found that work commitment effectively mediates the effect of islamic work ethics on employee performance. nasution & rafiki (2019) added that one of the work commitment constructs which is organizational commitment proves significantly mediate the relationship between islamic work ethic and job satisfaction. thus, the higher level of satisfaction of the employee, the higher the degree of an employee to stay with their existing job will be. azeez et al. (2016) strengthen that work commitment also proved to have a direct effect on turnover intention even without the mediation role of job satisfaction. therefore, the sixth and seventh hypotheses of this study can be described as follows. h6: the effect of islamic work ethic on work performance is affected by work commitment. h7: the effect of islamic work ethic on turnover intention is affected by work commitment. methods this study used the quantitative method as their main research design. purposive sampling was applied as a sampling technique and distributed to employees in one of the biggest steakhouse chains in indonesia, waroeng steak & shake, through a structured questionnaire with a five-point likert as measurement scale. waroeng steak & shake considered as the best suitable object of study for islamic work ethic research because of the jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 169-187 http://dx.doi.org/10.31106/jema.v17i2.5533, issn (online) 2597-4017 175 commitment of the owner in implementing islamic values in their business management process. moreover, ar rahmah (2017) classifies waroeng steak & shake business management process in the good category as their vision, mission, production, distribution, the process of recruitment, and the promotional career has already follow islamic values. the criteria sample of this study consist of employee that has more than a year of service period. the total respondent that classified to be processed in this study is 108 respondents. the detailed abstraction of the relationship between variables can be seen in figure 1. figure 1. research framework h3 h5 h7 h1 h6 h2 h4 turnover intention (ti) work performance (wp) islamic work ethic (iwe) work commitment (wc) in this study, the islamic work ethic was measure by yousef (2001) and ali & al‐kazemi (2007) dimension which consists of effort, competition, transparency, responsible conduct, hard work, trade honesty and justice, equity and fair wealth distribution in society, encouragement to skills and technological development, dedication to work, work as an obligation, and creative work result. an example of islamic work ethic items that adopted in this study was “as an expression of my gratitude to god blessings, i always give my best effort whenever i work”, “i do whatever i believe in at work, as long as it's not against god will”, “i am dedicated to my work because i know that god always sees", and "for me, work is the actualization of worship”. while work commitment was measure by using 7 indicators of utami & bonussyeani (2009) in example “i’m emotionally attached with my current work”, “i feel a sense of belonging to my current workplace”, and “whenever there were tasks that addressed to me, i'm enthusiastically working on it", work performance was measured by 9 dimensions of wartono (2017). an example of islamic work ethic items adopted in this study was “i was able to overcome any obstacles that happen in my work”, “i meets the expected job demands”, and “indeed, i'm rarely making any mistakes”. finally, this study used the reverse of utami & bonussyeani (2009) dimensions to measures turnover intention like “i am currently happy with my job because it matches with my personality and nature”, “i feel excited doing my current job and intend to stay doing this job”, and “i'm happy with my current job as this job offers more satisfying salary or facilities.” does work commitment mediates the effect of islamic work ethic on performance and turnover intention? by miswanto, rois arifin, dwi murniyati 176 table 1. validity and reliability result variable/item pearson correlation criteria cronbach’s alpha criteria decision iwe 0.885 > 0.600 reliable iwe1 0.686 > 0.196 valid iwe2 0.781 > 0.196 valid iwe3 0.774 > 0.196 valid iwe4 0.633 > 0.196 valid iwe5 0.672 > 0.196 valid iwe6 0.621 > 0.196 valid iwe7 0.625 > 0.196 valid iwe8 0.721 > 0.196 valid iwe9 0.666 > 0.196 valid iwe10 0.633 > 0.196 valid iwe11 0.798 > 0.196 valid wc 0.768 > 0.600 reliable wc1 0.719 > 0.196 valid wc2 0.729 > 0.196 valid wc3 0.725 > 0.196 valid wc4 0.694 > 0.196 valid wc5 0.746 > 0.196 valid wc6 0.307 > 0.196 valid wc7 0.793 > 0.196 valid wp 0.806 > 0.600 reliable wp1 0.519 > 0.196 valid wp2 0.798 > 0.196 valid wp3 0.790 > 0.196 valid wp4 0.718 > 0.196 valid wp5 0.675 > 0.196 valid wp6 0.476 > 0.196 valid wp7 0.594 > 0.196 valid wp8 0.568 > 0.196 valid wp9 0.545 > 0.196 valid jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 169-187 http://dx.doi.org/10.31106/jema.v17i2.5533, issn (online) 2597-4017 177 table 1 continued. ti 0.842 > 0.600 reliable ti1 0.593 > 0.196 valid ti2 0.737 > 0.196 valid ti3 0.774 > 0.196 valid ti4 0.704 > 0.196 valid ti5 0.709 > 0.196 valid ti6 0.816 > 0.196 valid ti7 0.725 > 0.196 valid the bootstrap method which was developed by preacher & hayes (2008) used to test the proposed hypotheses. hadi et al. (2016) stated that the usage of preacher & hayes bootstrapping (resampling) technique to test the potential direct and indirect effect between variables has an advantage over sobel’s test as this test does not rely on assumptions of normality and suitable for small sample size. finally, to process the data into the proposed hypotheses testing, the validity and reliability measurements of research instruments need to be done. the results of the validity and reliability testing in table 1 show that all instruments used in this study were valid and reliable. result and discussion table 2. demographic profile classification description percentages (%) gender male 94 female 6 year of birth 1965-1979 (generation x) 5 1980-2001 (generation y) 94 > 2002 (generation z) 1 educational background junior high school 11 senior high school 75 diploma 5 bachelor 9 the demographic profile (table 2) shows that the majority of the respondent in this study were male who can be classified as y generation (born 1980-2001) and having high school degree as the last educational background. the characteristics of the majority does work commitment mediates the effect of islamic work ethic on performance and turnover intention? by miswanto, rois arifin, dwi murniyati 178 respondent in this study that can be categorized as millennials (y generation) indicates that they are adaptive, confidence, high self-esteem, assertiveness, achievement-focused, techsavvy, high expectations for advancements opportunities within their careers, and dedicated (smith & nichols, 2015). therefore, millennials characteristics and the level of education of the majority of the respondent in this study that only holds senior high school degree may affect the relationship between variables in this study. table 3. hypotheses testing hypotheses t-value t-table criteria sig. sig. criteria decision h1 iwe -> wc 8.621 > 1.984 0.000 < 0.005 accepted h2 iwe -> wp 0.705 > 1.984 0.483 < 0.005 rejected h3 iwe -> ti -1.436 > 1.984 0.155 < 0.005 rejected h4 wc -> wp 3.558 > 1.984 0.001 < 0.005 accepted h5 wc -> ti -1.064 > 1.984 0.290 < 0.005 rejected table 3 of the hypotheses testing shows that this study was only able to confirm h1 and h4, as there were significant effects of islamic work ethic on work commitment, thus work commitment on work performance. the value of t-tested between variables was 8.621 and 3.558 (which is lower than the value of t-statistics 1.984) with a significant value of 0.000 and 0.001 (which is higher than significances criteria of 0.05). this study supports previous studies by sappe et al. (2016), rahiman & kodikal (2017) ajayi et al. (2017) harinoto et al. (2017), martini et al. (2020) that found islamic work ethic has a positive effect on work commitment, thus work commitment has a positive effect on work performance. it also supports the arguments that the higher individual beliefs on islamic values, the more committed employee in executing their task. thus, the more committed and enthusiastic employees on their job, the higher their work performance will be. the result of this study also was not able to confirm h2 and h3 which stated that there is a positive relationship of islamic work ethic on work performance and turnover intention as the value of t-tested was 0.705 and -1.436 (which is lower than the value of t-statistics 1.984) with significant value of 0.483 and 0.155 (which is higher than significances criteria of 0.05). this study failed to support numerous previous studies by hayati & caniago (2012), ud din & farooq (2017), taufail et al. (2018), douri et al. (2020) and caniago & mustoko (2020). by definition, an islamic work ethic can be described as individual beliefs/views about several religious values. while work performances were complex employees’ behaviors to jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 169-187 http://dx.doi.org/10.31106/jema.v17i2.5533, issn (online) 2597-4017 179 successfully perform tasks and meet managerial expectations. therefore, it is understandable that there is no correlation between islamic work ethic and work performances as there's a big difference between simply believing, having faith, and taking real action. individually don't always behave like their beliefs. the big differences between the score of islamic work ethic means (4.382) compared to the score of work performance means (2.965) in this study proved that arguments. also, the natures of the majority of the respondent in this study that only hold senior high school degree affected the level of their job performance as the lower the level of education the more likely an individual is to have a poor level of knowledge, competencies, and skills (tammaru & leetmaa, 2007; nilsagård & lohse, 2010; van deursen et al., 2015; mikolajczak & van bellegem, 2017; jafari-sadeghi et al., 2019; cincera et al., 2020). employees might believe that they always give their best effort in executing every task as an expression of their gratitude to god's blessings but still they often make many mistakes so that their work result is below expectation. they also might see that work is the actualization of the worship but still they were unable to overcome any obstacle that happens in their work. it has therefore been suggested employees need to enhance their commitment to islamic values by improving their competencies and skills to meet that job demand. he mentions in the quran in chapter 58, verse 11, “allah will raise those who believe among you and those who were given knowledge, by many degrees. and allah is all-aware of what you do.” also, the prophet mohammed, peace and blessings be upon him, said that “seeking knowledge is an obligation upon every muslim (sunan ibn majah: 224).” regarding the relationship of islamic work ethics on turnover intention, the majority of the respondent in this study that categorized as the millenials was considered as the main reason for the insignificant effect between variables. ivanovic & ivancevic (2019) stated that compared to the previous generation, the level of the turnover intention of the millenials was the largest. siahaan & gatari (2020) even mentioned that the highest turnover in companies is found in the millennials generation. the result of this study also provides an insight of the overall muslim behavior in the workplace that although there were employees' who are having higher belief in islamic values, whenever there are any offers that provide better salaries and facilities, challenge, and personality fits, they will rationally consider it. resignation is not prohibited in islam as long as it does not violate the prior agreement of each other. he mentions in the quran in chapter 62, verse 10, “and when the prayer is ended, then disperse in the land and seek of allah’s bounty, and remember allah much, that ye may prosper.” also, the prophet mohammed, peace and blessings be upon him, stressed does work commitment mediates the effect of islamic work ethic on performance and turnover intention? by miswanto, rois arifin, dwi murniyati 180 that “conciliation between muslims is permissible except the conciliation which makes lawful unlawful and unlawful lawful (sunan abi dawud: 3594).” this study also failed to prove the conclusion of azeez et al. (2016) and hardaningtyas (2020) studies that stated work commitment has a negative relationship on turnover intention. the value of t-tested between variables was lower than the value of t-statistics (-1.064 < 1.984) with a significant value of 0.290, which is higher than significances criteria of 0.05, thus, h5 was rejected. also, the low mean score of work commitment (2.509) compared to the score of turnover intention means (1.305) caused the insignificancy relationship between variables. cincera et al. (2020) added that the lower the level of educational background, the higher the willingness to move to a new profession or organization. table 4. the mediation role of work commitment hypotheses effect bootse bootllci bootulci decision h6 iwe -> wc -> wp 0.095 0.093 0.278 0.901 rejected h7 iwe -> wc -> ti 0.327 0.110 0.136 0.572 rejected* *) h7 was rejected due to the mediation rule by wong (2015) hayes (2018) stated that when the upper and lower bounds of the 95% confidence interval do not contain zero, it means that the indirect effect between variables was existed or significant. wong (2015) added that the mediation effect has failed to prove whenever the direct effect between variables is not significant. although this study successfully proves the significant effect of islamic work ethic on work commitment, and work commitment on work performance, the mediation testing result as presented in table 4 show that there was no significant proof of the mediation role of work commitment in affecting the relationship between islamic work ethic and work performance as the value of bootllci (-0.278) and bootulci (0.901) of h6 contain zero. therefore, this finding only revealed that there was an indirect effect between islamic work ethic and work performance. on the other hand, although the value of bootllci (0.136) and bootulci (0.572) of h7 doesn’t contain zero, the hypotheses decision was still rejected because there were no significant prove on the direct relationship between islamic work ethic and work commitment, also work commitment and turnover intention. conclusion and suggestion this study aims to examine the direct and indirect effect of islamic work ethics in affecting employees’ work performance and turnover intention through work commitment. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(2) 2020, 169-187 http://dx.doi.org/10.31106/jema.v17i2.5533, issn (online) 2597-4017 181 this study found that islamic work ethic positively affects work commitment, thus work commitment has a positive effect on work performance. in other words, the higher individual beliefs on islamic values, the more committed and enthusiastic employees on their job that ended in the higher work performance result. unlike the previous study which concluded that there is a positive relationship between islamic work ethic on work performance and turnover intention, and work commitment negatively affects turnover intention, this study concluded the opposite. the natures of the majority of the respondent in this study that only hold senior high school degree and categorized as the y generation (millenials) was considered as the main reason of the insignificant effect between variables. finally, the mediation role of work commitment failed to prove in this study. this study only found that there was an indirect effect between islamic work ethic and work performance. future studies should extend their theoretical scope and sample characteristics in a broader way to gain a better perspective. the usage of organizational behavior issues (like organizational citizenship and collaboration, organizational justice, job outcomes, leadership) and individual issues (like innovation, motivation, professionalism) may be considered as the extension construct of future study. references abbasi, t. f. 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(2016). the relationship between islamic religiosity, islamic work ethics and job performance. in the european proceedings of social & behavioral sciences (pp. 710–716). jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 35 market discipline mechanism: a quantitative approach (the study of islamic banking in indonesia 2011-2014) ayub wijayati sapta pradana *) hariri **) junaidi ***) abstract transparency of information are the main requirement of market discipline mechanism which is described by an adequate disclosure. through the quantitative approach, the customer will attract an investment funds (giro, savings, deposits) if the bank takes a high risk action based on information that disclosed on financial statements. in a theoretical view, islamic banks with the principle of profit-loss sharing (pls) have a higher risk than conventional banks with a fixed rate of interest, so that customers of islamic banks should have a higher sensitivity than conventional bank customers. the next question, whether the customers of islamic banks would react to the disclosure of financial statements through changes in the number of funds invested? this research aimed to examine the effect of the level of disclosure of financial statements to changes in the number of third party funds in indonesia islamic banking on the period 2011-2014. data were analyzed using a regression model. the study states that the level of disclosure of financial statements significant positive effect on changes in the number of third-party funds were indicates that there is a mechanism of market discipline on islamic banks in indonesia. however, this result must to be strengthened by data of risk disclosure and ability to absorb information from customers, analysis of determinants were affecting customers behavior, then as well as the comparison test with conventional commercial banks. keywords: market discipline, the level of disclosure, third party funds, islamic bank 1. introduction 1.1 research background good description of the growth and development of islamic banking (ib) in indonesia (bank indonesia, 2014) have to be accompanied by the implementation of good corporate governance for islamic banking which transparency is the main pillar (bank indonesia regulation number 11/33 / pbi / 2009). another words, transparency is an absolute necessity in the world of banking in particular and general economic. but the reality today illustrates the opposite, which is visible from some of large accounting scandals in the world, such as enron (in 2001), worldcom (in 2002), and recently lehman brothers (in 2008) then have contribution to subprime mortgage usa 2008 may causes by a lack of disclosure or over-understatement information by the company (shehata, 2014). simillar to the situation in the world, transparency in indonesia also remained at a low level. in auditing and reporting area, indonesia has 74th out of 148 countries (the global competitiveness report 2013-2014). the results of pricewaterhouse and coopers survey of investors in asia also shows that indonesia has a low rank in transparency, disclosure standards and practices and the application of auditing, compared to other asian countries and australia (fcgi 2004 in nuryaman, 2008). those facts force indonesia to increase transparency (disclosure level) of financial statements as well as the implementation of auditing standards and effective reporting. in islamic banking, the issue of transparency is also a major concern of customers and other interested parties (nurhayati and wasilah, 2013). lahrech et.al (2014) explains that transparency in islamic banks with the terms of profit sharing distribution and placement of funds in customer deposits (investment account-holders) are not sufficient. arifin et.al (2005) describes a perceptional by empirical research on issues of transparency and market discipline in islamic banks from 14 countries showed that jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 36 transparency and disclosure of risks are unoptimal. some of these phenomena, raises critical questions about the transparency (disclosure level) as well as the role of accounting which produce high quality of financial information on islamic banks. transparency in this study specifically refers to the level of disclosure in the financial statements. hidayat and abdulrahman (2014) examined the level of disclosure of the annual report on the fifth islamic bank in bahrain period in 2010 shows that that the islamic bank has a high level of compliance to the aaoifi standards. al-sawalqa (2014) also did research on the level of compliance with corporate governance mechanism in the aspects of transparency and disclosure as well as comprehensive voluntary disclosure on 13 banks in jordan listed in the amman stock exchange (ase) in 2012, the results showed that mandatory disclosure of islamic banks is very high, but it is not accompanied with the same level of voluntary disclosure. several studies in middle eastern countries are taking the level of compliance of banks as the object of study, but the standards used such as aaoifi standards and corporate governance mechanis just referring to generally sector. while in this study, has been using special accounting standards for financial statement disclosure of islamic banking. in addition, high levels of islamic bank disclosure of research results from abdulrahman hidayat (2014) and al-sawalqa (2014) has not specially explain on bank risk aspect, thus contradict research from lahrech et.al (2014) and arifin et.al (2005 ). recently, research on the level of disclosure of financial statements in indonesia both mandatory and voluntary disclosure (gray, et.al, 1995) have not been focused on the banking sector but in other sectors, namely: financing about to 79.56% (oktaviani and martani, 2006), manufacturing 64.75% (primastuti and achmad, 2012), property and real estate about to 57.24% 77.45% (agustina, 2012; permata, 2013), about to 30.85% of government 37.92% (subkhan and luthfiyati 2011; suhardjanto and yulianingtyas, 2011), and other sectors ranged from 34.32% to 58.87% (nuryaman 2008; hardiningsih 2008; hapsoro, 2009; wardani, 2012; baskaraningrum and merkusiwati, 2013). an adequate disclosure of financial statements make customers get information about the performance and risks of banks (hosono, 2005; stephanou, 2010; febrian and herwany, 2011). customers will respond by withdraw deposits (quantitative approach) or set a high interest (price approach) in a bank that has a high risk, it is referred to as market discipline mechanism (levi-yeyati et.al, 2004; hosono, 2005; febrian and herwany, 2011). islamic banks with the principle of sharing will give the consequences of risk acceptable result customers are higher than conventional banks (hasan, 2013), so it indicate that customers sensitivity on islamic banks is higher than conventional bank customers (hasan and tandelilin, 2012). however, whether customers of islamic banks with no fixed acceptance will react to the information were disclosed in the financial statements by attracting deposits? based on those explanation, in market discipline mechanism frame with a quantitative approach, this study tries to formulate a relationship between the level of disclosure of financial statements with changes in the number of third-party funds (giro, saving, deposits) in islamic banks. 1.2 research problem the research problem is whether customers of islamic banks with no fixed acceptance will react to the information were disclosed in the financial statements by attracting deposits? 1.3 research purpose this research aims to know and examines customers of islamic banks with no fixed acceptance will react to the information were disclosed in the financial statements by attracting deposits. 2. theoretical framework 2.1 theoretical framework 2.1.1 sharia enterprise theory theory of sharia within the scope of corporate accounting will initially be directed to the concept of vertical accountability and continuing through the implementation of the concept of horizontal accountability (triyuwono, 2006: 340-341). the concept of vertical accountability explains that god as jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 37 the ultimate principal assigns human (agents) to spread the grace and welfare (in the form of economic, social, spiritual, political and so on) to another human being (stakeholders) and nature (natural environment) (triyuwono and roekhudin, 2000: 157-164 in triyuwono, 2006: 340). furthermore, the human task must be applied in life so the agent (management) should be responsible to society (stakeholders) and nature (universe), is called horizontal accountability (triyuwono and roekhudin, 2000: 157-164 in triyuwono, 2006: 341 ). company has an obligation as a responsible agent vertically to god and horizontally to stakeholders and nature through the disclosure and presentation of corporate information in a fair, transparent, full disclosure, and not favoring one particular group. in other words, all parties get access to information about the company's decision-making. 2.1.2 stakeholders theory stakeholder theory described that group of people or individuals can influence the company's activities or may be affected by the activities of the company, either directly affect the company (primary stakeholders) such as the owner-shareholder-investors, managers and employees, customers or clients, local communities and other business partners, and indirectly affect the company (secondary stakeholders) such as government, civil organizations, social groups, media and academia, as well as business competitors (freeman, 1984). these linkages will lead to consequences that companies need to implement responsibilities to stakeholders and to implement good corporate governance (gcg), which is expected to meet the interest of stakeholders (deegan, 2000). transparency as a major pillar of good corporate governance can be realized by relevant and adequate disclosure for stakeholders (arifin et.al, 2005; hosono, 2005; stephanou, 2010; febrian and herwany, 2011). disclosure is a form of corporate responsibility to the stakeholder to reduce asymmetry information between the two sides (deegan, 2004: 267), so it can be support the process of rational economic decision. with the disclosure of stakeholders can minimize losses due to errors in economic decisions. 2.1.3 market discipline theory basel committee on banking supervision (2001) determined the three pillars of efforts to improve health and safety (safety and soundness) of banks in the financial system, namely; 1) market discipline, 2) minimum capital standards, 3) regulatory process for the regulator. market discipline is one of the pillars of the three elements that complement each other in order to realize the banking world a healthy and safe. stephanou (2010) defines market discipline as a mechanism which market participants can monitor and discipline the behavior of excessive risk-taking by banks. this is in line with the arguments put forward by levi-yeyati et.al (2004), hosono (2005), as well as febrian and herwany (2011). disclosure of information (transparency) is the first aspect in the framework of market discipline (stephanou, 2010; hasan, 2013). by the disclosure, market participants can process the information, and oversight of the bank so that there will be market discipline mechanism. halamainen et.al (2003, 2005) and hasan (2013) also added that transparency should be present in effective market discipline. the principle of revenue sharing on islamic banks that do not give fixed revenue will give impact in the risk acceptance for customers is higher than conventional bank (hasan, 2013). the results of empirical research by hasan and tandelilin (2012) uses the data of annual financial reports from 120 conventional and islamic banks 2005-2009 were indicate that market discipline by depositors of islamic banks is more powerful than depositors of conventional banks. reaction depositors in islamic banks are stronger because they are facet to the higher risk acceptance as a consequence of the principle of profit and loss sharing (hasan and tandelilin, 2012; hasan, 2013). levi-yeyati et.al (2004) states that the reaction of depositors on the bank's risk can be seen through two types of approach; 1) a quantitative approach (withdraw deposits), and 2) price approach (set interest rates or for a high yield). especially for this study is more relevant to look at the reaction of the market (market power) using a quantitative approach that can be observed on the fluctuations of changes in the number of third party funds in period of research. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 38 3. research method 3.1 research design descriptive research is used to analyze and present data that is quantitative research. levels of disclosure (y) as the independent variable is measured by an index referred to the disclosure from wallace, et.al (1994) as well as a combination mandatory disclosure and voluntary disclosure. item of mandatory disclosure made by papsi 2003 (attachment 1), while the voluntary items (attachment 2) refers to the instruments developed by al-baluchi (2006) which was adapted the items already included in papsi 2003 was not put back in the item voluntary disclosure. changes in the number of third party funds (z) as the dependent variable is measured by the difference between third party fund current period (t) with third party funds the previous period (t-1) in the form of the natural logarithm (levy-yeyati, 2004; hasan and tandelilin 2012 ) . the third party funds of islamic banks in this study refers to the dsn mui fatwa no. 1-3 th 2000 which consist of giro, savings, deposits of mudharabah. table 1 research variables and indicator variable variable indicator scale level of disclosure (y) disclosure index (di) the number of disclosure items disclosed by the company (mandatory and voluntary disclosure) in the financial statements. (wallace, et.al, 1994) n : the number of mandatory and voluntary disclosure items disclosed k : the number of mandatory and voluntary disclosure items are set to be revealed ratios changes of third party funds (z) ∆ third party funds (δdpk) changes (increase or decrease) the number of public deposits in the form of giro, savings and deposits mudharabah from current period against the previous period. (levy-yeyati, 2004; hasan and tandelilin, 2012) ln δ third-party funds (dpk) = ln (dpk(t) dpk (t-1)) ratios 3.2 population and sample unit of analysis are islamic banks (bus) in indonesia (attachment 3). population (sekaran, 2003: 59) in this study was the annual financial statements of bus in indonesia with the consistency of data acquisition during the study period of 2011-2014 then obtain 11 bus. the sampling technique used is saturated sampling that all members of the population were used as a sample of 44 annual financial statements (sugiyono, 2011: 68), so the data is combination of cross-sectional data and time-series data. this type of data is secondary data obtained from official official website bus in indonesia by means of documentation and then analyzed one by one in order to obtain the relevant data. 3.3 data analysis data analysis method used was simple linear regression model (simple regression) testing of hypothesis on the causal model or ordinary least square (ols) can be applied to the analysis of the model separately, the variable y affects z, but z does not affect y thus showing unilateral causal dependence. previous first tested the normality and classical assumption (heteroscedasticity and autocorrelation). the research model as follows: jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 39 where: z = change of third party funds β0 = constant (intercept) β = coefficient of regression y = level of financial statements e = error the hypothesis is: h0: β ≤ 0, meaning that the level of disclosure of financial statements no significant positive effect on δ third party funds. ha: β> 0, meaning that the level of disclosure of financial statements δ significant positive effect on third-party funds. testing of hypothesis partially (t test) test using the right side, with the following criteria: ho can not be rejected if t ≤ t table or sig> 0.05, ho can be rejected if t> t table or sig <0.05 4. research result and analysis 4.1. descriptive the general picture that are in the highest level of disclosure of bank syariah mandiri and bank indonesia muammalat by 71%, while maybank syariah was lower by 56% (appendix 4). the average index of mandatory disclosure of bank muammalat highest in 71%, while bank mega syariah recorded the lowest value of 46% (appendix 5). bank syariah mandiri has the highest level of voluntary disclosure of which is equal to 80%, while maybank syariah re-recorded with the lowest value of 63% (appendix 6). changes in the number of third party funds (dpk) is the highest in the bank syariah mandiri with an average δdpk amounted to 9.15 trillion rupiah, while the lowest was maybank syariah δdpk with an average of 0.21 trillion rupiah (appendix 7). results descriptive statistics of the variables are as follows: table 2 results of descriptive statistics n minimum maximum mean std. deviation y (di) 44 54,13 72,39 62,4490 4,62644 z (lndpk) 44 22,33 30,24 27,5588 1,59568 valid n (listwise) 44 source: data were processed using spss ver 20 variable rate of disclosure or disclosure index (y) shows that the lowest value is 54,13, namely maybank syariah in 2011, while the highest value is 72.39, bank muamalat indonesia in 2013, and the average value is 62.4490. standard deviation of 4.62644 so if it happens deviation is no more than 4.62644 or 4.62644. variable ln dpk (z) shows that the lowest value is 22.33 which is maybank syariah in 2011, while the highest value is 30.24, bank syariah mandiri in 2011 and the average value is 27.5588. standard deviation of 1.59568, which means if there is deviation is the average then no more than 1.59568 or -1.59568. normality of the data was tested with kolmogorov-smirnov test showed the results of the p-value (sig) = 0.911 greater than 0.05, which means that the distribution of the data has to meet the assumptions of normality (attachment 8). while the residual value of the estimated regression results also have to meet the assumption of normal distribution as indicated by the spread of data around a diagonal line on the graph-normal probability plots (appendix 9). the pattern of the spread of residual regression equations on a graph scetter plot shows that the points do not form a particular pattern and dots spread z = β0 + βy + e jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 40 above and below the number 0 (zero) on the y axis, the model is homoskedastik or not there is a problem of heteroscedasticity (appendix 10). autocorrelation test is indicated by the value of durbin watson of dw = 1.691 (appendix 11) which is in the area hesitation (appendix 12), so it is necessary to continue with the test run test to determine the randomness of the error value regression model and obtained sig run test 0.996> 0 , 05 which means that the value of residual random or it can be concluded there is no autocorrelation problem for the regression model used (appendix 13). 4.2. research discussion table 3 coefficient y to z model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 4,683 1,796 2,607 ,014 y_hat(unstandardized predicted value) ,366 ,029 ,917 12,761 ,000 a. dependent variable: z (lndpk) source: data were processed using spss ver 20 from the table above can be the result of a simple linear regression equation for the effect of the level of disclosure to δdpk is y = 4.683 + 0.366 constants obtained from the equation (intercept) of 4.683 which means δdpk without the influence of any factor is equal to 4.683. the regression coefficient disclosure level (y) is positive, amounting to 0.366, which means if the disclosure level of 1%, then δdpk will increased by 0.366%. so the higher the level of disclosure will be followed by a rise of δdpk. to determine whether there is a direct influence on the level of disclosure δdpk, t test analysis carried out by setting a confidence interval of 95% or α = 5%. table 4 tabel coefficient (t test) model unstandardized coefficients standardized coefficients t s sig. b std. error beta 1 (constant) , ,683 1,796 2 ,607 , 014 y_hat(unstandardized predicted value) , 366 ,029 ,917 1 2,761 , 000 a. dependent variable: z (lndpk) source: data were processed using spss ver 20 this study examined the correctness of the return market discipline described by stephanou (2010) related customer response (δdpk) on the level of disclosure. according to stephanou (2010) transparency of company information which is indicated by the level of disclosure is the main condition the market discipline mechanism, it is in line with that expressed by arifin et.al (2005), hosono (2005), febrian and herwany (2011), as well as strengthened with the opinion of halamainen et.al (2003, 2005) and hasan (2013) which mentions transparency as a condition of effective market discipline mechanism. lachrech et.al (2014) adds that the increase in transparency will lead to improved governance of investment fund clients by islamic banks and avoid the practice of allocation of benefits that are not in favor of the customer. market participants will absorb the information that disclosed from bank primarily related to performance and risk, and will give the same response using quantitative approach to attract deposits if high risk or otherwise low performance (levy-yeyati et.al, 2004) are illustrated through. respon changes jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 41 has been describe by increase or decrease the number of third-party funds (δdpk). a quantitative approach is more often used in research because it can be directly observed by fluctuations of dpk and demonstrate the market power of customers. hasan and tandelilin (2012) using the change in the number of deposits (the dependent variable) as a proxy for market discipline in t period to the financial risks of banks as a variable independent in t-1 period to detect market discipline islamic banks and conventional banks in indonesia before and after the global crisis. the results showed a stronger market discipline in the past before the crisis (2005-2007) than during the crisis and its aftermath (2008-2009). similar disclosed by taswan (2011), which examines market discipline as a control banking risks found that there is a mechanism of market discipline in indonesia either when deposit guarantee implicit or explicit, so that it can be concluded that the decision of depositors purely influenced because of the bank's risk is high and not due to the guarantee scheme. in the context of empirical studies of islamic banking, this research also supported by hasan and tandelilin (2012) which states that the practice of market discipline in islamic banks are stronger than conventional banks. this is in line with empirical research perceptional arifin et.al (2005), which outlines the level of risk disclosure islamic banks should be higher than conventional banks, as well as reinforced with theoretical arguments of hasan (2013) which explains that risk acceptable result is greater islamic bank customers rather than risk an acceptable result of conventional bank customers related to the concept of profit sharing (profit loss sharing) as the main principles of sharia bank operations with the consequences of not fixed receiving income. this study therefore indicates the market discipline mechanism occurs in the bus in indonesia during 2011-2014. the mechanism shown through significant positive effect on the level of disclosure to the market response in the form of δdpk which means that the higher the level of disclosure of the higher δdpk. other studies on market discipline is also done by jatna (2007) and valensi (2005) however showed different results. research carried out in some groups of conventional commercial bank in indonesia, jatna (2007) concluded that there has been no effectiveness in market discipline. this is due to the low understanding of the financial statements of banks and limited access to information about performance of individual banks. valensi (2005) test for the presence of market discipline by depositors and fellow bank (peer-banks) in indonesia with a bank classifies on the basis of ownership relationship with power center commercial (commercial power centres cpc). the results showed that the discipline of the market in indonesia is still weak because it tends to occur only on the banks of non-cpc. this study concluded that the mechanism of market discipline less effective for developing countries. differences in the results of this study with jatna (2007) and valensi (2005) may be due to differences in the study period, the research object in the form of islamic banks as well as the different guarantee schemes. table 5 model summary square adjusted r square std. error of the estimate ,840 ,835 ,64831 a. predictors: (constant), y_hat(unstandardized predicted value) b. dependent variable: z (lndpk) source: data were processed using spss ver 20 coefficient of determination can be seen in the value of adjusted r square (r2) of 0.835 means δdpk (z) can be explained by the independent variable level of disclosure (y) amounted to 83.5%. the remaining 16.5% (100% 83.5%) is explained by other causes beyond the model. the level of disclosure could reasonably explain δdpk but there are other factors that affect δdpk. there are several other factors that can influence the pattern of market discipline in this case δdpk, one of which is data regarding disclosure of bank risk to the public. arifin et.al (2005) in his study mentioned that the level of risk disclosure islamic banks is still low and does not depict the actual bank jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 42 risks. lachrech et.al (2014) describes the importance of islamic banking standards enforcement transparency. in this case the role of islamic banking regulatory standards that papsi need more emphasis on the disclosure of risks. so that the material can be further study, whether the standard of disclosure contained in papsi 2003 also recently papsi 2013 has been described the condition of the real risk of islamic banks? basic information is also a determining factor of market discipline, in this view the client's ability to absorb and analyze information that is then used as the basis for decision making. hasan, et.al (2012) discovered the phenomenon that the actions of depositors is more influenced rumors and central bank support directly interpreted as an indication of financial difficulties at the bank. errors in receipt of this information can lead to errors in decision making. therefore, absorption and analytical power of customer information needs to be observed further. the critical question that will appear, if the customer can actually take advantage of the performance and risk information has been disclosed by the bank? or whether the customer actually has to read financial statements of banks and fundamental analysis as a basis for decision making? analysis of factors that affect the sensitivity of the customers also need to be an object in next research. some studies say that deposit insurance can affect the sensitivity of the customer as well as the impact on the market the disciplinary mechanism paper mentioned that besides recommending sufficient level of disclosure, hosono (2005) sees need a limitation of deposit protection to increase market discipline. febrian and herwany (2011) also questioned the sensitivity depositors against bank risk in emerging countries to which it deposits insured by the government or other agency concerned. just feeling safe, depositors in indonesia tendency to be indifferent to the risks of islamic banks and conventional banks for deposits are insured or guaranteed (febrian and herwany, 2011). in other words, deposit insurance can affect the sensitivity of deposan. although in the context of islamic banks no fixed return or high risk -yield, the depositors sensitivity will be less if there is a high level of guarantee deposits. this is in line with the opinion of levy-yeyati et.al (2004) that the notion of market discipline in developing economies need to take into account the systemic risk that linearly with the level of the deposit guarantee. in turkey, the revision insurance policy to which it all banks are under the same deposit insurance company, so there is no double element in the guarantee system (aysan, et.al, 2015). other factors such as the level of stability islamic banks also affect the behavior of customers and market discipline scheme (gamaginta and rokhim, 2010). exploratory factor analysis is performed by abduh (2011) in detecting the risk of withdrawal of deposits by customers using the approach to quality islamic banking services with five dimensi. test of comparison market discipline mechanisms between islamic banks and conventional banks also need to be studied further, to see the consistency of the results hasan and tandelilin (2012) regarding the scheme stronger market discipline on islamic banking. 5. research conclusion, limitation, and recommendation 5.1. conclusion the level of disclosure (mandatory and voluntary disclosure) were highest at bank syariah mandiri and bank indonesia muammalat by 71%, while maybank syariah is the lowest at 56%. changes in the number of third party funds (δdpk) were highest at bank syariah mandiri with an average δdpk amounted to 9.15 trillion rupiah, while the lowest was maybank syariah δdpk with an average of 0.21 trillion rupiah. then from the regression analysis results disclosure level significant positive effect on δdpk, this suggests that the market (customers) to respond the information on the performance and risks of the company through changes in total deposits. in other words happen mechanism of market discipline on islamic banking in indonesia in 2011-2014. contribution of this study is to show the overview of level of disclosure sharia banking in indonesia which has not been done by previous research. the results of this study could be a matter of evaluation for islamic banking in order to improve transparency which is provide relevant information to stakeholders for decision making. for the regulator can be input in the formulation of standards (papsi) related to the relevance of disclosure risk. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 43 5.2. limitation limitations of this study is data sharia banking in indonesia is still limited to 11 banks, and this research has not touched the other factors that affect both the market discipline mechanism potentially as control variables, intervening and moderating. 5.3. recommendation this study still needs to be strengthened by the data disclosure 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discipline in indonesia 1980–1999. thesis for the doctor of philosophy of department of accounting and finance faculty of business and economics monash university. australia. wallace, r.s. olusegun; kamal naser dan araceli mora. 1994. the relationship between the comprehensiveness of corporate annual reports and firm characteristics in spain, accounting and bussiness research, vol. 25, no. 97, pp. 41-53. wardani, rr. puruwita. 2012. faktor-faktor yang mempengaruhi luas pengungkapan sukarela. jurnal akuntansi dan keuangan, vol.14, no.1, mei 2012, pp. 1-15. *) ayub wijayati sapta pradana, university islam of malang **) hariri, university islam of malang ***) junaidi, university islam of malang http://ejournal-s1.undip.ac.id/index.php/accounting http://ejournal-s1.undip.ac.id/index.php/accounting http://journal.unnes.ac.id/index.php/jda jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 47 i. appendix appendix 1 items of mandatory disclosure no. items of informations ∑ 1. chapter ii – financial statement of islamic bank 34 2. chapter iii – assets 127 3. chapter iv – liability 39 4. chapter v – investment 6 5. chapter vi – equity 14 6. chapter vii – income statements 8 7. chapter viii – cash flows 14 8. chapter ix – changes of equity statements 1 9. chapter x – changes of restricted fund statements (mudharabah muqayyadah) 7 10. chapter xi – source and use of zis funds statement (zakat, infaq, shadaqah) 6 11. chapter xii – source and use of qardh funds (qardhul hasan) 3 12. bagian xiii – notes to financial statements 110 amount items of mandatory disclosure 369 source: papsi 2003 appendix 2 items of voluntary dsiclosure no. items of information jumlah item 1. general information of company 15 2. reporting 4 3. information of financial statements 17 4. information of notes to financial statements 35 amount items of voluntary disclosure 71 source: al-baluchi (2006) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 48 appendix 3 unit of analysis of islamic banks in indonesia no. name of islamic banks 1 bank syariah mandiri 2 bank mega syariah 3 bank bni syariah 4 bank bri syariah 5 bank muamalat indonesia 6 bank bjb syariah 7 bank panin syariah 8 bank bukopin syariah 9 bank victoria syariah 10 bank bca syariah 11 bank maybank syariah 12 bank btpn syariah source: otoritas jasa keuangan (2015) appendix 4 graph of islamic banks disclosure index 2011-2014 source: data is processed from islamic banks annual report 0% 10% 20% 30% 40% 50% 60% 70% 80% disclosure index 2011 2012 2013 2014 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 49 appendix 5 graph of islamic banks mandatory disclosure index 2011-2014 source: data is processed from islamic banks annual report appendix 6 graph of islamic banks voluntary disclosure index 2011-2014 source: data is processed from islamic banks annual report 0% 10% 20% 30% 40% 50% 60% 70% 80% mandatory disclosure index 2011 2012 2013 2014 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% voluntary disclosure index 2011 2012 2013 2014 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 50 appendix 7 graph of changes in the number of third party funds 2011-2014 source: data is processed from islamic banks annual report appendix 8 normality test results one-sample kolmogorov-smirnov test unstandardized residual n 33 normal parameters a,b mean 0e-7 std. deviation 2,33737320 most extreme differences absolute ,098 positive ,082 negative -,098 kolmogorov-smirnov z ,562 asymp. sig. (2-tailed) ,911 a. test distribution is normal. b. calculated from data. criteria: sig. > α → data is normally distributed sig. < α → data is abnormally distributed source: data processed using spss ver 20 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 t ri ly u n r p changes in the number of third party funds δ dpk 1 δ dpk 2 δ dpk 3 δ dpk 4 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 51 appendix 9 normality test chart normal p plot source: data processed using spss ver 20 appendix 10 graph of heteroscedasticity results source: data processed using spss ver 20 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 52 appendix 11 autocorrelation results – durbin watson model summary b model r r square adjusted r square std. error of the estimate change statistics durbin watso n r square change f change df1 df2 sig. f chan ge 1 ,863 a ,745 ,708 2,49876 ,745 20,424 4 28 ,000 1,691 a. predictors: (constant), x4 (fdr), x1 (ln aset), x2 (der), x3 (roa) b. dependent variable: y (di) source: data processed using spss ver 20 appendix 12 results of autocorrelation decission h0 diterima ( tidak ada autokorelasi) h0 ditolak autokorelasi (+) h0 ditolak autokorelasi (-) raguragu raguragu du = 1,730 dl = 1,193 4du = 2,270 4dl = 2,807 1,691 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 53 appendix 13 autocorrelation results – run test runs test unstandardized residual test value a ,22743 cases < test value 16 cases >= test value 17 total cases 33 number of runs 18 z ,005 asymp. sig. (2-tailed) ,996 a. median source: data processed using spss ver 20 effect of social media marketing on the conversion rate of deposit money banks in nigeria by newman c. enyioko, gabriel a. okwandu jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 1 effect of social media marketing on the conversion rate of deposit money banks in nigeria newman c. enyioko *) gabriel a. okwandu **) abstract the study examined the effect of social media marketing on the conversion rate of deposit money banks in nigeria. blog, facebook, twitter, and linkedin were used as the dimensions of social media marketing. the study revealed a gap from the literature that social media marketing and organizational efficiency of banks in nigeria has not been extebsively studied in nigeria. the study used the conversion rate as a dependent variable. the study adopted descriptive and inferential statistical tools to analyze the data and test the hypotheses. a questionnaire was used to elicit information from the respondents. the population of the study consisted of all the 22 banks approved by cbn. the study sampled 159 respondents from 22 banks in nigeria and validly used 133 respondents representing 83.65% response rate for data analysis. the study found that banks use a blog, facebook, twitter, and linkedin to conduct their marketing activities for brand promotion and persuasion of customers to patronize them. the study revealed that blog has a positive but insignificant effect on conversion rate. the study discovered that facebook has a positive and significant effect on conversion rate. the study revealed that twitter has a positive and significant effect on conversion rate. the study found that linkedin has a positive and insignificant effect on conversion rate. the study concludes that as banks use blogs, facebook, twitter, and linkedin to create awareness about their products and services on the internet. the study recommends that bank managers should use blog, facebook, twitter, and linkedin by encouraging all the bank staff to participate in social media marketing which in turn covers more ground for the enhancement of conversion rate leading to the conversion rate of banks. keywords: social media marketing; blog; facebook; twitter; linkedin; conversion rate; marketing performance 1. introduction 1.1 research background social media marketing is defined by elena (2016) as a new erarevolutionizing tool that allows communication between individuals, companies and different groups from all around the world to share and interactively exchanges information and ideas to attract customers to patronize their companies. social media marketing platforms such as facebook, instagram, twitter, linkedin, and blog have offered the opportunity for clients to discuss their online programmes, projects, reviews, recommendations and agree or disagree regarding different aspects of products or customer services. with the opportunities offered, social media marketing has had a major impact on how companies communicate with their distributors and customers, thus the traditional marketing may not have all these elements to cater for the customers’ needs and wants (rapp, beitelspacher, grewal, & hughes, 2013; kumar & salo, 2018). twitter, linkedin, blog, facebook, google+ and various other web traffic have hundreds of millions of active users engaging in marketing activities through their platforms. social media have importance for general web clients as well as businesses. social media allude to the methods for http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 2 communications among individuals in which they make, share, as well as trade data and thoughts in virtual networks and systems (järvinen & karjaluoto, 2015). several studies have shown that banks’ use of social media can lead to great advantages, such as, strengthening relationship with customers and creating awareness. however, there are still challenges that decrease the incitement to adopt social media as a marketing strategy. fisher (2009) and mccann & barlow (2015), all agree that the major challenge is the lack of well-developed key performance indicators to measure the effects of the activities. 1.2 research problem a) to what extent does the blog affect conversion rate of banks? b) to what extent does facebook affect conversion rate of banks? c) to what extent does twitter affect conversion rate of banks? d) to what extent does linkedin affect conversion rate of banks? 1.3 research purpose this study aims to determine the extent to which blog affects conversion rate of banks, to investigate the extent to which facebook affects conversion rate of banks, to find out the extent to which twitter affects conversion rate of banks and to explore the extent to which linkedin affects conversion rate of banks. 2. theoretical framework and hypotheses development 2.1 social penetration theory the social penetration theory focuses on how human exchange results in relationships (altman & taylor, 1973). it focuses more on the individual and small group levels while the social exchange theory explains behavior at aggregated and or organizational levels. social exchange theory postulates that people form close relationships through self-disclosure. it notes that one must disclose himself by continuously exposing his inner self through such information as gender, clothing preferences, ethnicity and slowly the relationship progress to the level o f sharing inner feelings and goals, followed by sharing of one's feelings, ambitions, and belief (altman, vinsel, & brown, 1981). in social media marketing, different layers of information can be separated by marketers through designing social networks. there might also be ways to determine the levels of relationships from the mode and frequencies of communication, which could be tracked online easily through web traffic. gaudin (2010) notes that a recent privacy lawsuit against facebook highlighted the importance following the laid down rules of social penetration. 2.2 social media marketing there is no precise or inclusive definition of social media marketing because of the dynamic nature of social media marketing today as different definitions of social media marketing have been developed by different scholars. nevertheless, social media marketing is a new observable fact of traditional marketing which allows marketers to speed up their communication with their customers. social media marketing is also seen by (ryan, 2014) as an interaction between the marketers and their consumers through a two-sided digital platform. social media marketing also pertains to the use of technology-based marketing tools to promote fast and efficient communication and delivery to product users. it is well known that social media marketing has technology as its bottom-line to enables easy communication with the customers, as well as facilitates ‘the interaction’ phase of marketing. for nwokah & aeenee (2017), social media http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 3 marketing is the use of internet marketing channels like blogs, twitter, mobile phones, etc., to reach customer satisfaction. social media marketing is carried out on social media which is seen as internet and mobilebased social networking platform built on the foundations of webs that allow users to exchange information, interact, and socialize with others, as well as share opinions and content. it also deals with the building of networks and encouragement of user participation, engagement and content creation (chaffey & smith, 2013; charlesworth, 2014). currently, social media constitutes as one of the most significant toolkits obtainable in digital marketing communications. bax, meyer, & wilkins (2013) state that today, many businesses have made social media central to their marketing activities. social media tools are used by businesses to achieve marketing objectives, communicate their new products, present their offers and sales, building customer loyalty and providing real-time customer service. some major benefits of social media marketing are that it helps the marketers to measure and know the level the customers perceive and experience brand equity (kanovska & tomaskova, 2012), help to continuously take on new customers while keeping the existing ones (hoban & bucklin, 2015). also, hoban & bucklin (2015) note that the effectiveness of social media marketing is mainly determined by communication occurrence and communication content. it also reduces the roles of agents drastically since organizations can market directly to the consumers' social media. in their investigation of the mix of new media with more traditional techniques, batra & keller (2016) called attention to that incorporation of advertising interchanges which is critical for effective promotion exercises in the light of mechanical advances of social media, very moving media designs, and holding firm on a customer who has separated consideration. further, batra & keller (2016) opine that "social media marketing, specifically, offers gigantic potential benefits through their more noteworthy adaptability and accuracy, yet they likewise make more prominent business challenges". online life advertising increases customer expansion, creates faithful fans, gives commercial center knowledge, and produces/ showcases leads. social media are utilized by b2b companies in different ways such as monitoring and listening platform of what the customers are commenting about the company’s products and services, provision of support to customers through answering questions and providing informatio n. ashley & tuten (2015) state that social media is used to execute specifically targeted campaigns and engage customers on social media platforms, with the aim of achieving overall business and marketing objectives. 2.3 social media marketing and banking sector in nigeria today's banking organizations should expand their distribution channels via mobile, internet, and social media networks. applications as web-based communication channels have continued to spread mass information to customers. for technological disruptions and increased product complexity, employees' relationships with customers have considerably declined, affecting customer perceptions and attitudes related to their bank. banks could alleviate customer abrasion and dormancy by creating alternative distribution channels whenever personal interactions are relevant. also, banks should get their customers involved in their marketing campaigns to improve the brand and achieve competitive advantages. leveraging the human touch has proved to be a vital means of improving overall banking experience (dedu & nițescu, 2014). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 4 2.4 conversion rate most often, the conversion rate is utilized as a key performance index (kpi) to appraise the effectiveness and efficiency of e-commerce sites. naturally, all site managers and owners want to know, "how their conversion rates compare?" (mccann & barlow, 2015). the conversion rate is used in this work to measure the efficiency of the surveyed banks. ling-yee (2011) says that when benchmarking conversion rate, the belief is that its importance is explained to marketing managers so that they could go beyond headline conversion rates to segment conversion by different types of visitors on the internet. mehmet & clarke (2016) have indicated in their study that the conversion rate should be used to measure the performance of a marketing organization that is engaged in both b2b and b2c marketing activities. they maintain that conversion rate should be calculated thus: conversion rate = total number of sales / number of leads x 100. elena (2016) says that conversion rate strategy is a rational continuation of the connection strategy, as a social media marketing organization continues its practical and receptive communication efforts aimed toward the target audience. in social brand sites, a social media marketing organization seek to utilize quality, relevance, high frequency and response rate of conversations as key strategic factors to gain trust and earn credibility. järvinen & karjaluoto (2015) argue that trust and credibility is a factor of the ability of the brand to accurately and timely response to questions/ inquiries, as well as swap information in a meaningful way. consequently, affective trust is based on a shared emotional relationship. given what trust is to social media, the researcher sought and determined the extent to which trust mediated between social media marketing and conversion rate of banks. the understanding gotten from the review of relevant literature in this study has provided the footing for the operationalization of the conceptual framework of social media marketing and conversion rate of banks moderated by a trust. 2.5 blog and conversion rate blog marketing has been studied over the last 10-15 years because of its tremendous potential for global business enhancement (guay, 2015). much literature exists, for example, in the usage of web 2.0 and blog marketing platforms in the electronic word of mouth advertising and blog marketing (halim, 2010). halim (2010), as well as murdough (2009), have further studied the use of blog marketing instruments or platforms for global buying and selling activities. the relationship between blog marketing and conversion rate have been discussed and debated in trade publications, corporate and consumer blogs, and a host of professional publications over the last ten years (murdough, 2009). from this body of work (and much more like it), blog marketing and conversion rate have been viewed as a vital requirement for authenticating the success of social media marketing and management programmes. 2.6 facebook and conversion rate the idea of social marketing has enhanced the significance of marketing by investigating the connections among facebook customers (morgan, 2014). customers have either utilized facebook to get to a brand or social network or have participated in a network where they can generally check for deals, discharges and sales leads that pertain to them. agostino & sidorova (2016), contend that digital customers have a feeling of proprietorship among the social media networks, and they at times deny organizations to attack their own particular space simply for the expansion in conversion rate. without a doubt, lilien (2016) posits that customers esteem security and dread long-range informal communication destinations which affect chosen companions through conversion rate. then again, kumar & salo (2018) in their examination revealed that the people who partake in long-range casual correspondence are more http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 5 genuine brave individuals than the people who just all over appreciate individual to individual correspondence to assemble conversion rates, deriving that individuals thought about the insurance concerns and approved of the related threats. 2.7 twitter and conversion rate social media offers businesses a great platform for improving their brand awareness, boosting their engagement, and getting more traffic, among other benefits. but some of the more overlooked uses of twitter for marketing are traffic, lead nurturing and boosting of conversion rates. twitter, in the experience of agnihotri, dingus, hu, & krush (2016), is one of the best platforms for reaching conversion rate. elliot (2015) insists that before starting to optimize twitter for conversions, they need to be tracked. appreciatively, elliot (2015) elucidates thattwitter makes this easier with the ‘conversion tracking' tool. sen (2015) pieces of advice that setting conversion rate up involves going to the twitter marketing account, clicking on tools at the top of the dashboard, and then selecting ‘conversion tracking. the marketer will need to add a website tag to the site for tracking, much like a google analytics tag. once that is on the site and tied to the twitter account, twitter will start to track conversions done through its platform. twitter also lets marketers create conversion groups to track different portions of the sales funnel. 2.8 linkedin and conversion rate the one-stop shop for everything a sophisticated marketer needs to know about getting the most value from linkedin for themselves and their company is the determination of the conversion rate. basak & calisir (2014) assert that linkedin is not an instruction manual, but more of a strategic guide full of interviews and tips from marketing thought leaders combined with expert insights from the linkedin marketing solutions’ team on how to market to who matters. conklin (2015) argues that linkedin is getting ready to take marketing to the next level and discovering the vast opportunities that await the organization. also, florenthal (2015) reveals that the linkedin marketing platforms increase awareness, engage the audience, generate quality leads, and ultimately drive revenue with products that impact every stage of the conversion rate funnel. this study evaluated the effect of social media marketing strategies on the conversion rate of deposit money banks in nigeria. in carrying out the study, four dimensions of social media marketing strategies (independent variables or predictor variables) namely; blog, facebook, twitter, and linkedin were examined. these dimensions were adopted in line with the works of agostino & sidorova (2016); nwokah & gladson-nwokah (2015); nwokah & irimagha (2017) and cavazza (2018). also, the conversion rate of banks served as the key dependent or criterion variable under which a measure of conversion rate was appraised. the imperative of the usage of these elements to measure conversion rate of banks has become obvious as could be seen from the conceptual framework of the study“social media marketing and conversion rate of deposit money banks.” h1: blog has a significant effect on the conversion rate of banks h2: facebook has a significant effect on the conversion rate of banks. h3: twitter has a significant effect on the conversion rate of banks. h4: linkedin has a significant effect on the conversion rate of banks. 3. research method 3.1 research design the research design that was adopted for this study is a survey approach. this method emphasizes quantitative analysis whereby data is collected through questionnaire, interviews, or http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 6 from existing documents. based on the information from cbn, statistical bulletin, 2017, there are 22 deposit money banks in nigeria. regression analysis was used to test the extent of the effect of individual and collective variable(s) on the other. also, regression analysis was used to test the hypotheses formulated in the study. all these analyses were computed through the use of statistical package for social sciences (spss) ibm spss statistics 22 version. the model of this study is as below: y = bo +b1x1+b2x2+b3x3+ b4x4+e -----------{for testing h1, h2, h3, h4} cr = f (b, f, t, l) where cr = conversion rate, b = blog, f = facebook, t = twitter, l = linkedin table 1 research questionnaire variable questionnaire blog to what extent does your bank use blog to conduct marketing activities? to what extent are staff in your bank very skillful in blog marketing? to what extent does your bank introduce any product or service in the blog? facebook to what extent does passing marketing information on facebook lead to the achievement of the expected marketing results in your bank? to what extent does your bank give rooms for staff to suggest new ways or approach for meeting customers satisfactorily on facebook? to what extent does the attraction of customers in facebook become everybody’s business in your bank? twitter to what extent does the quality of interaction between your staff and customers affect brands in twitter that directly influence purchase decision? to what extent are there opportunities to develop the staff on the use of twitter to attract customers to your bank? to what extent do you bank provide staff with twitter-based facilities to encourage marketing activities? linkedin to what extent does your bank provide linkedin facilities for engaging in marketing activities that satisfy your customers? to what extent does your bank offer linkedin facilities for on line marketing activities that give profits to your organization? to what extent does your bank recognize that linkedin provides a customer with numerous product/service options? conversion rate to what extent does social media marketing boost rate conversion of your bank? to what extent are you involved in important marketing activities that improve the conversion rate of your bank? to what extent is conversion rate often used as a key performance index (kpi) to review the effectiveness and efficiency in your bank? source: survey data, 2019 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 7 3.2 population and sample therefore, the population of the study is 22 deposit money banks in nigeria as at 2017 with the senior staff strength of 270 staff (nbs & cbn statistical bulletins, 2017). therefore, the specific population of the study based on the senior staff strength is 270. relying on krejcie & morgan (1970) sample size determination/measurement, the study selected 159 respondents. copies of the questionnaire were retrieved through established email contacts of the banks by the help of monkey survey. a total number of 159 copies of the questionnaire were distributed to the respondents from 22 deposit money banks in nigeria. a total of 139 copies of the questionnaire were retrieved from them. after editing the retrieved copies of the questionnaire, the copies found useful were 133. the 133 (83.65% response rate) copies of the questionnaire were considered as valid and suitable for data analysis in this study. the sampling technique used in this study was the simple random technique.the sample elements of the study were drawn from the branch managers/accountants, operations managers/supervisors, customer service officers, e-marketing managers/officers and business development manager. 3.3 research framework picture 1 conceptual framework of the effect of social media marketing on conversion rate of deposit money banks in nigeria 4. research result and analysis 4.1 descriptive analysis 4.1.1 blog as a dimension of social media marketing table 2 gives the detailed analysis on how to blog as a dimension of social media marketing has been examined to determine its effect on organizational efficiency of banks and to show its descriptive statistical outcome based on the questions deposed. table 2 shows that five question items represent a dimension in the 5-point scale. the data revealed that with the mean and standard deviation scores of 3.9474±1.0023, the respondents agreed that to a large extent blog offers veritable opportunities to optimize social media marketing efficiency (conversion rate, web traffic, and customer engagement) in banks. this is followed by the mean and standard deviation scores of 3.8496±1.0480, implying that to a large extent banks use the blog to conduct their marketing activities and this elicits organizational efficiency of banks. the data also revealed that to a large extent banks introduce any product or service in their blog; the mean and standard deviation scores social media marketing conversion rate of banks blog facebook twitter linkedin conversion rate http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 8 of 3.8271±1.0262 confirm statistically the respondents' agreement that bank introduces any product or service in the blog. with the mean and standard deviation scores of 3.7744±0.91797 the respondents indicated that to a large extent banks' staff are very skillful in blog marketing and that helps the banks to be efficient in their operations. finally, the data in table 2 revealed that with the mean and standard deviation scores of 3.6992±1.1077, the respondents agreed that to large extent customers talk good about banks’ willingness to use the best blog instruments/facilities for marketing activities. table 2 blog as a dimension of social media marketing question items mean standard deviation 1 to what extent does your bank use blog to conduct marketing activities? 3.8496 1.0480 2 to what extent are staff in your bank very skillful in blog marketing? 3.7744 0.91797 3 to what extent does blog offer veritable opportunities to optimize social media marketing efficiency (conversion rate, web traffic, and customer engagement) in your bank? 3.9474 1.0023 4 to what extent does your bank introduce any product or service in the blog? 3.8271 1.0262 5 to what extent do customers talk good about your bank’s willingness to use the best blog instruments/facilities for marketing activities? 3.6992 1.1077 source: survey data, 2019, and ibm spss statistics 22 window output keys: vlge = very large extent, lge = large extent, mde= moderate extent, lwe = low extent, vlwe: very low extent, s.d: standard deviation. 4.1.2 facebook as a dimension of social media marketing as shown in table 3 above, the responses of the respondents have indicated the mean and standard deviation scores of 3.7820±1.06841, showing that the respondents collectively agreed that to a large extent bank give rooms for staff to suggest new ways or approach for giving potential and actual customers satisfactory information on facebook. also, with the mean and standard deviation scores of 3.6992±1.10086, it is quite obvious that the respondents indicated on the aggregate that to a large extent passing marketing information on facebook leads to the achievement of the expected marketing results in banks. as to the extent to which the attraction of customers on facebook becomes everybody's business in banks, the mean and standard deviation scores of 3.6316±1.06936 indicate aggregately that attraction of customers on facebook becomes everybody's business in banks. the data additionally revealed that to a large extent facebook offers veritable opportunities to optimize social media marketing efficiency (conversion rate, web traffic, and customer engagement) in banks; this is shown by mean and standard deviation scores of 3.5188±1.16516. finally, the mean and standard deviation scores of 3.3910±1.34747 indicate that the respondents agreed moderately that quality of interaction between bank staff and customers affect brands on facebook that directly influence purchase decision in banks. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 9 table 3 facebook as a dimension of social media marketing question items mean standard deviation 1 to what extent does facebook offer veritable opportunities to optimize social media marketing efficiency (conversion rate, web traffic, and customer engagement) in your bank? 3.5188 1.16516 2 to what extent does the quality of interaction between your staff and customers affect brands on facebook that directly influence purchase decision in your bank? 3.3910 1.34747 3 to what extent does passing marketing information on facebook lead to the achievement of the expected marketing results in your bank? 3.6992 1.10086 4 to what extent does your bank give rooms for staff to suggest new ways or approach for giving potential and actual customers satisfaction information on facebook? 3.7820 1.06841 5 to what extent does the attraction of customers on facebook become everybody's business in your bank? 3.6316 1.06936 source: survey data, 2019, and ibm spss statistics 22 window output keys: vlge = very large extent, lge = large extent, mde= moderate extent, lwe = low extent, vlwe: very low extent, s.d: standard deviation. 4.1.3 twitter as a dimension of social media marketing table 4 twitter as a dimension of social media marketing no question items mean standard deviation 1 to what extent does the quality of interaction between your staff and customers affect brands in twitter that directly influence purchase decision? 3.7895 1.13520 2 to what extent does your bank's twitter offer veritable opportunities to optimize bank's efficiency (conversion rate, web traffic, customer engagement)? 3.4962 1.14564 3 to what extent are there opportunities to develop the staff on the use of twitter to attract customers to your bank? 3.3008 1.36507 4 to what extent does your bank provide staff with twitter-based facilities to encourage marketing activities? 3.6015 1.16085 5 to what extent does your bank usually optimize customer attraction through the use of twitter? 3.4211 1.23221 source: survey data, 2019, and ibm spss statistics 22 window output keys: vlge = very large extent, lge = large extent, mde= moderate extent, lwe = low extent, vlwe: very low extent, s.d: standard deviation. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 10 table 4 shows that the mean and standard deviation scores of 3.7895±1.13520 as indicated by the respondents implying that to a large extent the quality of interaction between bank staff and customers affect brands in twitter that directly influences the purchase decision. also, the mean and standard deviation scores of 3.6015±1.16085 imply that the respondents were favorable to the large extent option that banks provide staff with twitter-based facilities to encourage marketing activities. this kind of disposition is in support of the fact that banks are extensively using twitter to attract customers for patronage. the data revealed that the mean and standard deviation scores of 3.4962±1.14564 as indicated by the respondents confirm moderately that bank's twitter offers veritable opportunities to optimize bank's efficiency (conversion rate, web traffic, customer engagement). the mean and standard deviation scores of 3.4211±1.23221 depict moderate agreement by the respondents regarding the extent to which banks usually optimize customer attraction through the use of twitter. the respondents were inclined to the moderate extent option as revealed in the mean and standard deviation scores of 3.3008±1.36507 indicating that the presence of opportunities to develop the staff on the use of twitter to attract customers to banks is of moderate use. 4.1.4 linkedin as a dimension of social media marketing table 5 linkedin as a dimension of social media marketing no question items mean standard deviation 1 to what extent does your bank provide linkedin facilities for engaging in marketing activities that satisfy your customers? 3.7970 1.05715 2 to what extent does your bank offer linkedin facilities for online marketing activities that give profits to your organization? 2.2782 1.24531 3 to what extent does your bank recognize that linkedin provides the customer with numerous product/service options? 3.3985 1.31966 4 to what extent does the quality of interaction between your staff and customers affect your brands in linkedin that directly influence purchase decision in the bank? 3.6917 1.10220 5 to what extent does your bank's linkedin offer veritable opportunities to optimize bank's efficiency (conversion rate, web traffic, and customer engagement). 3.2030 1.22326 source: survey data, 2019, and ibm spss statistics 22 window output keys: vlge = very large extent, lge = large extent, mde= moderate extent, lwe = low extent, vlwe: very low extent, s.d: standard deviation. table 5 revealed the mean and standard deviation scores of 3.7970±1.05715 indicating that to a large extent banks provide linkedin facilities for engaging in marketing act ivities that satisfy their customers. also, the mean and standard deviation scores of 3.6917±1.10220 signpost the fact that to a large extent the quality of interaction between bank staff and customers affect the brands in linkedin that directly influence purchase decision in the bank. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 11 the data as indicated by the respondents have revealed the mean and standard deviation scores of 2.2782±1.24531 implying that to a low extent banks offer linkedin facilities for online marketing activities that give profits to their organizations. also, the mean and standard deviation scores of 3.3985±1.31966 indicate moderate extent banks recognize that linkedin provides the customers with numerous products/services. table 5 shows that the mean and standard deviation scores of 3.2030±1.22326 indicating that to a moderate extent the bank's linkedin offers veritable opportunities to optimize bank's efficiency (conversion rate, web traffic, and customer engagement. 4.1.5 conversion rate as a measure of organisational efficiency of banks table 6 shows the descriptive statistical results on conversion rate which is measured with five question items on the 5-point scale. the response distribution as shown by the results is indicative that the conversion rate will enhance organizational efficiency of banks. table 6 conversion rate as a measure of organisational efficiency of banks no question items mean standard deviation 1 to what extent does social media marketing boost rate conversion of your bank? 3.7744 1.01217 2 to what extent are you involved in important marketing activities that improve the conversion rate of your bank? 3.9624 1.85213 3 to what extent does your bank consider the opinion of others before making an important decision that affects the conversion rate of the bank? 3.8195 1.16667 4 to what extent do senior marketing staff discuss issues concerning the increase of conversion rate in your bank 3.9098 0.90837 5 to what extent is conversion rate often used as a key performance index (kpi) to review the effectiveness and efficiency in your bank? 3.6992 1.04436 source: survey data, 2019, and ibm spss statistics 22 window output keys: vlge = very large extent, lge = large extent, mde= moderate extent, lwe = low extent, vlwe: very low extent, s.d: standard deviation. table 6 shows the mean and standard deviation scores of 3.9624±1.85213 indicating that the consensus opinion of the respondent is that to a large extent bank staff are involved in important marketing activities that improve the conversion rate of their banks. also, the mean and standard deviation scores of 3.9098±0.90837 imply that to a large extent senior marketing staff discusses issues concerning the increase of conversion rate in banks. the statistical result of 3.8195±1.16667 (mean and standard deviation scores) show that to a large extent banks consider the opinion of others before making an important decision that affects the conversion rate of their organization. table 6 also reveals the mean and standard deviation scores of 3.7744±1.01217 implying that the respondents agreed that to a large extent social media marketing is boosted by rate conversion of banks. finally, the mean and standard deviation scores of 3.6992±1.04436 show that the respondents agreed that to a large extent conversion rate is often used as a key performance index (kpi) to review the effectiveness and efficiency of banks. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 12 4.2 validity and reliability data refinement is practically done to ensure rationality in the study and the need to show the reliability of the instrument in terms of the measurement of the concepts and constructs investigated in the study. to achieve this, reliability has been ascertained relying on cronbach alpha using the nunnally & bernstein's (1994) threshold, alpha values for the examined constructs and items are as follows: table 7 test of reliability construct no of items alpha(α) blog 5 0.861 facebook 5 0.771 twitter 5 0.857 linkedin 5 0.740 conversion rate 5 0.722 web traffic 5 0.877 customer engagement 5 0.796 trust 5 0. 790 total 6.414 mean reliability 6.414 ÷ 8 0.80175 source: survey data, 2019, and ibm spss statistics 22 window output from the alpha outcomes in table 7, the instrument is a dependable one and identified with the topic of the study. the information gathering instrument was tried for unwavering quality utilizing cronbach's alpha is within the acknowledged scope of 0.70 or more as the overall reliability test of the instrument is 0.80175. validity test was additionally done, utilizing specialists proficient in the subject matter under investigation, experts and supervisors' endorsement to determine that the instruments were significant and measured what they were designed to measure. the predictors and the criterion variables were found to be dependable as a construct have alpha values above the nunnally threshold of 0.7 (akujuru & enyioko, 2018). 4.3 research analysis the study has sought to determine the extent of the relationship between social media marketing and conversion rate of banks. as a result, five research questions and thirteen hypotheses were raised to that effect. the next step of the study analysis tested the outcomes of the examined dimensions and measures of the variables in terms of relationship. therefore, this section tested and interpreted the hypotheses formulated in this study. the data in table 1 have been used to test hypotheses one, two, three and four in this study http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 13 table 8 results of social media marketing (smm) and conversion rate (cr) variable unstandardized coeff. standardized coef. t sig. decision b std error beta (constant) 2.127 0.185 11.495 0.000 blog (h1) 0.030 0.081 0.049 0.373 0.710 insignificant facebook (h2) 0.224 0.063 0.431 3.570 0.001 significant twitter (h3) 0.220 0.084 0.294 2.621 0.010 significant linkedin (h4) 0.028 0.080 0.033 0.349 0.728 insignificant source: survey data, 2019, and ibm spss statistics 22 window output therefore the multiple regression equation models based on table above can be described as ; y1 = bo +b1x1+b2x2+b3x3+ b4x4+e -------------(1) {for testing h1, h2, h3, h4} y1(conversion rate) = 2.127 + 0.030blog +0.224face +0.220twit +0.028link +e t = (0.373) (3.570) (2.621) (0.349) table of results of social media marketing (smm) and conversion rate above also shows the results of the test of hypothesized statements h1, h2, h3, and h4. the result of hypothesis 1 tested, show positive and insignificant effect of blog on conversion rate with tvalue outcome of 0.374 with p-value (sig.) 0.710 > 0.05, meaning that blog has a positive effect which is not significant on conversion rate, indicating that hypothesis 1 (h1) has been rejected which means “blog has no significant effect on conversion rate of banks”. the result of hypothesis 2 (h2) revealed a strong positive and significant effect of facebook on conversion rate with tvalue outcome of t = 3.570 with the p-value (sig.) 0.001<0.05. by this result, it can be concluded that the hypothesis 2 (h2) has been accepted which means "facebook has a significant effect on the conversion rate of banks". with respect to hypothesis 3 (h3), the result in table 1 revealed strong positive and significant effect of twitter on conversion rate with t-value outcome of 2.621 with p-value (sig.) 0.010<0.05, therefore, the hypothesis 3 (h3) has been accepted which means "twitter has a significant effect on the conversion rate of banks”. in the case of linkedin and conversion rate which is hypothesis 4 (h4), the result of the hypothesis 4 (h4) tested, show positive and insignificant effect of linkedin on conversion rate with tvalue outcome of 0.349 with p-value (sig.) 0.728 > 0.05, denoting that linkedin has a positive effect which is not significant on conversion rate. therefore, the hypothesis 4 (h4) has been rejected, “linkedin has positive but no significant effect on conversion rate of banks”. from the inferential statistical analysis so far, it can be stated that: a. blog as a dimension of social media marketing has a positive and insignificant effect on conversion rate which is a measure of the conversion rate of banks. this simply means that blog as a marketing instrument influences conversion rate positively, but the effect is not significant as one of the key performance indicators for measuring efficiency in social media marketing. b. facebook as a dimension of social media marketing has a strong positive and significant effect on conversion rate. this simply means that facebook as a social media marketing strategy positively influences conversion rate which is a measure of the conversion rate of banks and it contributes to the success of marketing performance. c. twitter as a dimension of social media marketing has a strong positive and significant effect on conversion rate as a measure of the conversion rate of banks. this simply means that twitter http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 14 contributes positively to conversion rate and it is a measure of the conversion rate of banks in social media marketing. d. linkedin as a dimension of social media marketing has a positive and insignificant effect on conversion rate which is a measure of the conversion rate of banks. this simply means that linkedin as a marketing instrument influences conversion rate positively but the effect is not significant as one of the key performance indicators for measuring efficiency in social media marketing. table 9 summary of the results on test of the research hypotheses research hypotheses tvalue prob. value (sig.) result decision a blog has a significant effect on the conversion rate of banks (h1) 0.37 0.710 positive, insignificant effect reject facebook has a significant effect on the conversion rate of banks (h2) 3.57 0.001 positive, significant effect accept twitter has a significant effect conversion rate of banks (h3) 2.62 0.010 positive, significant effect accept linkedin has a significant effect on the conversion rate of banks (h4) 0.35 0.728 positive, insignificant effect reject source: survey data, 2019, and ibm spss statistics 22 window output one of the study’s regression assumptions is that the residuals (prediction errors) are normally distributed. the histogram in picture 2 reveals that this holds for the results of the data as the residuals for testing the effect of social media marketing conversion rate of banks were normally distributed. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 15 picture 2 normality plots 4.4 research discussion the findings of this study were drawn from the analyses of the results in the previous chapter. in this chapter, the study discusses the findings to conclude appropriately. however, the study interprets and discusses the findings in five compartments according to the basic dimensions of the study's predictor variables against the criterion variables and the moderator variable. 4.4.1 effect of blog on the conversion rate of banks the findings linked to the effect of the blog on the conversion rate of banks revealed that banks use the blog to conduct their marketing activities and that this elicits conversion rate of banks. a critical appraisal of the finding reveals that the blog has a positive but insignificant effect on conversion rate. in all, the blog has a strong positive and significant effect on the conversion rate of banks. the full import of this finding is that banks use blog software that provides a variety of social features, including comments, blogrolls, trackbacks, and subscriptions that make it possible for the conversion rate of the banks to be improved (bernoff, 2009). in asserting this position, agnihotri, dingus, hu & krush (2016) insist that blog now largely falls under the remit of internal marketing so there is little disbelief that the intended audience and overall objectives differ little from traditional marketing. the study also found that banks introduce any products or services of interest in the blog and customers talk good about banks' willingness to use the best blog instruments/facilities for their marketing activities geared at engaging customers to patronize their products and services. the study, therefore, concludes that: as banks use blogs to create awareness about their products and services on the internet their conversion rates may be insignificant but are positively boosted. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 16 4.4.2 effect of facebook on the conversion rate of banks the study found a positive and significant effect of facebook on the conversion rate of banks and this points to the fact that facebook is one of the biggest channels in the social media to enhance conversion rates of banks that are digitally vibrant. a diagnostic examination of the findings reveals that the effect of facebook on conversion rate is positive and significant . to support this assertion nwokah & gladson-nwokah (2017) contend that facebook as a dimension for social network site is one of the best platforms to mobilize an online community to banks brand and products. nwokah & aeenee (2017) also found that a strong and significant relationship exists between facebook as a dimension of social networks and customer engagement as a dimension of customer acquisitions facebook is considered as the most popular and widely used network among other social media networks. in america, 30% of perusing time is represented by facebook while it is only 11% for good and youtube together. its massive number of users encourage business firms to use it to reach their target customers. thus 92% of companies worldwide currently use facebook as a marketing tool (nwokah, 2018). therefore, having a presence on facebook makes brands discoverable and connected (pinto & yagnik, 2017). this study agrees with the above submissions as it is revealed that banks' use of facebook for marketing has become massive and resourceful. the study, therefore, concludes that: as banks customize the use of facebook to publicize their products and services digitally, their conversion rates are boosted in a significant and positive manner. 4.4.3 effect of twitter on the conversion rate of banks the result about the effect of twitter on a conversion rate of banks points to the fact that twitter provides prospects and customers with a medium of getting information about the bank’s products and services. a critical evaluation of the finding reveals that the effect of twitter on conversion rate is positive and significant. in line with this, nwokah & gladson-nwokah (2015) insist that there is a very strong and significant relationship between twitter as a dimension of social networks and customer engagement as a dimension of customer acquisitions. this study has revealed positive indications which are significant between twitter and conversion rate of banks (conversion rate, web traffic, and customer engagement). corroborating on this nwokah & aeenee (2017) contend that twitter plays important role in social media marketing as it significantly affects business models online. nwokah & aeenee (2017) conclude that twitter is a channel that encourages a product in actual transactions and attracts customers for the achievement of marketing objectives this study is of the view that engaging in social media channels with a particular interest in twitting is key to extending the banks' reach. this is because it is important for organizations to be able to reach their customers through social media activities as demand for this is continually rising. enyioko (2018) assert that twitting enables companies to manage social media in a highly regulated environment while enabling consumers to reap the full benefits of being linked to the bank on web traffic that customers can access. 4.4.4 effect of linkedin on the conversion rate of banks the finding of the study relating to the effect of linkedin on the conversion rate of banks is positive but insignificantly inclined. critical examination of the findings reveals that linkedin has a positive but insignificant effect on conversion rate. nwokah (2018) portrays the vital employment of linkedin in building connections, understanding prospects, handpicking particular prospects, pulling in prospects to a specific brand, and tuning in to customers. the banking sector, as http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 17 represented by the surveyed banks, appears far more focused on leveraging linkedin as a tool than the other sectors. as the research on the effect of the linkedin on the conversion rate of banks shows, banks are including visual reminders of conversion rate, web traffic intensity and customer engagement outcomes on their websites more often. the study, therefore, concludes that: as banks use of linkedin to advertise their products and services digitally, their conversion rates are enhanced positively, but the output is not significant. social media marketing is a recent phenomenon; it has proven to be a very effective and efficient tool and should be viewed as a major actor in creating awareness. bank managers should use a blog to their advantage by encouraging bank staff and not just the marketing department to participate in social media marketing which in turn covers more ground for the enhancement of conversion rate, web traffic and customer engagement leading to the conversion rate of banks.twitter can also be a good platform for building goodwill and improving corporate image, the study recommends that banks engage consumers in friendly competitions, hosted on their twitter pages and also take part in self-promotion by uploading photos of events i.e., charity events, products, and services. banks should update their knowledge with respect to social media marketing and the opportunities provided by digital measurement solutions so as to be able to assess the effectiveness and efficiency of social media marketing. naturally, the social media platforms should be linked with the firm’s customer relationship management system so as to form a complete picture of organizational efficiency of banks. 5. research conclusion and limitation 5.1 conclusion social media marketing is a powerful tool for engaging new audiences, building a brand identity, and strengthening customer contacts. it can impact on the growth of banks and other businesses when developed with care, your content will transform your marketing team into a customer acquisition engine. based on the findings of the study, the conclusion of the study is as banks use blogs to create awareness about their products and services on the internet their conversion rates may be insignificant but is positively boosted. as banks customize the use of facebook to publicize their products and services digitally, their conversion rates are boosted in a significant and positive manner. as banks engage in twitting to create awareness and persuade customers to purchase their products and services their conversion rates are positively and significantly boosted. this means that twitter is strong in producing conversion rate which is a measure of the conversion rate of banks. as banks use linkedin to advertise their products and services digitally, their conversion rates are enhanced positively, but the output is not significant. therefore, bank managers should use a blog to their advantage by encouraging bank staff and not just the marketing department to participate in social media marketing which in turn covers more ground for the enhancement of conversion rate, web traffic and customer engagement leading to the conversion rate of banks. twitter can also be a good platform for building goodwill and improving corporate image, the study recommends that banks engage consumers in friendly competitions, hosted on their twitter pages and also take part in self-promotion by uploading photos of events i.e., charity events, products, and services. also, banks should update their knowledge with respect to social media marketing and the opportunities provided by digital measurement solutions so as to be able to assess the effectiveness and efficiency of social media marketing. naturally, the social media platforms should be linked with the firm’s customer relationship management system so as to form a complete picture of organizational efficiency of banks. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 18 5.2 limitation like any other academic research, this work was without limitations. time and cost posed many challenges as well as hoarding of data by the respondents. this work considered the entire banks in nigeria, but the limitations imposed by time 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(2015). six metrics every business should be tracking. retrieved from http://blog.loginradius.com/metrics-every-businessshould-track. http://creativecommons.org/licenses/by/4.0/ http://money.usnews.com/money/blogs/outside-voices-careers/2014/09/17/dont-believe-these-8-job-search-myths http://money.usnews.com/money/blogs/outside-voices-careers/2014/09/17/dont-believe-these-8-job-search-myths http://blog.loginradius.com/metrics-every-businessshould-track jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 21 *) newman c. enyioko, department of marketing, rivers state university, port harcourt, nigeria (email: newmanenyioko@yahoo.com) **) gabriel a. okwandu, department of marketing, rivers state university, port harcourt, nigeria (email: gokwandu@yahoo.com) http://creativecommons.org/licenses/by/4.0/ integrated reporting and corporate performance: empirical evidence of the iirc framework adoption by muhammad wildan affan jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 181 integrated reporting and corporate performance: empirical evidence of the iirc framework adoption muhammad wildan affan *) abstract sustainability and transparency issues are becoming trending in the nature of corporate reporting. stakeholders are accused to bring together all financial and nonfinancial metrics into one integrated report. the purpose of this study is to determine the effect of integrated reporting toward corporate performance. integrated reporting measurement uses the construct adopted from iirc. the research sample in this study is basic and chemical industry sector that listed in the indonesia stock exchange in 2017. the reason in choosing those industries as a research subject is because the basic and chemical industry sector is recorded as a high growth industry sector in 2017. this study uses a linear regression as an analysis tool. this study concluded that integrated reporting has significant effect toward corporate performance. keywords: integrated reporting; corporate performance; iirc; financial information; nonfinancial information 1. introduction 1.1 research background industrial development which has reached industry 4.0, forces business actors to accelerate the production flow by using technological advancements. the use of technology that requires large costs which have an impact on the demand for quality financial statements produced by companies. it is characterized by low information asymmetry between agents as parties who have information and principals as parties who need information. good quality of financial statements will affect investment efficiency (lambert, leuz, & verrecchia, 2007). therefore, investment efficiency can eliminate the impact of industrial developments that require high costs. furthermore, information asymmetry can be minimized by delivering information both in terms of financial and non-financial. since the lehman brother bankruptcy in 2008 triggered the global economic crisis, information users need information that presents the overall picture of the company in terms of both financial and non-financial aspects in an integrated manner in order to increase the value of the company both short and long term. this is reinforced by (fanani, 2009) who stated that financial information and non-financial information could not be separated in terms of business decision making by investors. this information problem was responded to by the iirc by developing a new reporting model in 2011 named integrated reporting. the ir framework aims to provide a link between organizational strategy, governance, financial performance and csr in the company's economic activities to help capital providers to find out how companies shape short, medium and long term values that are very useful for decision making (soyka, 2013). currently, the ir framework is not a mandatory reporting framework for companies of various countries, due to regional differences that greatly influence the decision to use irs in disclosing company activities (rivera-arrubla, zorio-grima, & garcía-benau, 2017). companies in indonesia are still conducting a report with the ir, but only in terms of voluntary, but the mean reporting done has reached 50% of the required elements (kustiani, 2017). this voluntary disclosure aims to account for the manager's activities towards shareholders, which will have an impact on the sustainability of the company itself by increasing shareholder trust. apart from the http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 182 statement above, there are questions about the benefits of integrated reporting for companies and stakeholders. 1.2 research problem based on the research background, the problem of this study is does integrated integrated reporting framework has an impact toward corporate performance? 1.3 research purpose this study aims to find out how the impact of the company's voluntary efforts in disclosing financial statements using an integrated reporting framework on company performance. 2. theoretical framework and hypotheses development 2.1 the effect of integrated reporting toward corporate performance it is the manager's responsibility to expanse the presentation of company information from time to time to fulfill the need of stakeholders of relevant information in decision making. to this decade, the international integrated reporting council has produced a framework called integrated reporting to answer all information needs that can describe short-term and long-term corporate sustainability. based on agency theory, managers and shareholders will act in accordance with their interests. the actions taken by managers are more directed towards moral hazard actions due to the information asymmetry possessed. (scott, 2015) stated that information asymmetry is the difference in information obtained by each party that is concerned with a business transaction. for this reason, managers must make disclosures that can eliminate information asymmetry (verrecchia, 2001). the integrated reporting element consists of several elements that must be fulfilled to give an idea of the extent of the information disclosure provided. where these elements are presented in an integrated manner to be able to minimize information asymmetry between managers and stakeholders and are a response to the desire for transparency reporting to build public trust (krzus, 2011) furthermore, integrated reporting that conducts disclosures by combining financial and nonfinancial elements of the company can reduce agency problems and information asymmetry by encouraging managers to make decisions by prioritizing stakeholder strategies (martinez, 2016). the materiality contained in ir disclosure changes managers' perceptions of the power of stakeholders (mitchell, agle, & wood, 1997). this loss of agency and asymmetry problems causes managers to focus on increasing future cash flows (kramer & porter, 2011) declining levels of information asymmetry and manager's perceptions as a result of disclosure of financial statements with the integrated reporting framework increase stakeholder confidence in predicting the future value of companies. stakeholder trust can be in the form of investment and cooperation (sejati & prastiwi, 2015). increased investment and cooperation indirectly will increase company profits, which can be said as an increase in company performance. therefore, the hypothesis proposed in this study is; h1: integrated reporting disclosure has a positive effect on corporate performance. 3. research method 3.1 research design the corporate performance in this study was proxied by the level of profitability. corporate profitability can be measured by the company's ability to obtain profits based on assets owned. this research was measured profitability with return on assets, which is the ratio of after-tax income to overall assets. the size used to calculate return on assets was: http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 183 return on asset (roa) = net income after tax total asset x 100 % meanwhile, the integrated reporting in this study defined as the level of disclosure of financial statements that meet the elements of integrated reporting. measurement of integrated reporting elements was based on 55 questions/constructs adopted from the criteria of the international integrated reporting council (iirc). each question is measured using a dummy scale by giving a value of 1 if the financial statements answer or there are elements in accordance with the question/construct and a value of 0 if the financial statements do not answer, or there are no elements in accordance with the question/construct. the results of the dummy scale were calculated by summing the values obtained and divided by the number of questions/constructs available to determine the value of integrated reporting. integrated reporting index = ∑ 𝑥𝑖 𝑁 1 𝑖−𝑛 3.2 population and sample the population of this study was all basic and chemical industry companies listed on the indonesia stock exchange (idx) as of december 31, 2017. this is based on the fact that basic and chemistry industry sector recorded high growth in 2017. the sampling technique was done by purposive sampling with the criteria for companies that have made an initial public offering (ipo) in 2017 and have presented annual reports. this study only used secondary data from idx to measure integrated reporting and corporate performance, therefore, the validity and reliability test is not needed in this study. 3.3 research framework integrated reporting (ir) h1 corporate performance (roa) picture 1 research framework 4. research result and analysis 4.1 descriptive analysis table 1 descriptive data variables n minimum maximum mean integrated reporting 58 0,35 0,93 0,5878 corporate performance (roa) 58 -0,19 .0,22 0,0220 source: primary data processed, 2018 table 1 shows that the integrated reporting variables have a minimum value of 0,35 and a maximum value of 0,93, with an average value of 0,59. this indicates that the level of disclosure of integrated reporting elements that consist of financial and non-financial metrics is quite high, although there is no obligation to disclosure it from government regulation. furthermore, a corporate performance which measured by return on assets (roa) shows that roa has a minimum value of -0,19 and a maximum value of 0,22 with an average value of 0,02. this indicates that there is corporate that experience losses so that the ratio of profits to assets owned is quite low. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 184 4.2 validity and reliability this study only used secondary data from idx to investigate the effect of integrated reporting on corporate performance, therefore, the validity and reliability test is not needed in this study. 4.3 research analysis in order to get the best-fit regression equation, the data analysis must fulfill the following classic assumptions: a. multicollinearity based on the vif calculation results, it can be seen that the variables of entrepreneurial behavior, organizational innovation, and organizational competence have a vif value < 5, thus it can be concluded that the regression model does not have a multicollinearity problem.. b. autocorrelation based on the calculation results, it can be seen that the value of the durbin-watson test is 1,994 so that it is greater than 1,480 (du) and smaller than 1,689 (4-du). it means there is no autocorrelation in the regression model. c. heteroscedasticity based on the scatterplot test result, it shows that scattered points without patterns (random) both below and above the number 0 on the y-axis. therefore, it concluded that there are no symptoms of heteroscedastiscity from this regression model. d. normality based on the results of the kolmogorov smirnov test (kst), the significance value of the variable is 0,200 (>0,05). this shows that the variable of integrated reporting and corporate performance are normally distributed. tabel 2 regression result variable regression coefficient ttest sig. decision integrated reporting ir (x) -0,036 2,118 0,039 significant constant 0,020 r 0,272 r square 0,074 adjusted r square 0,058 ftest 4,485 sig. f 0,039 n 58 f table 3,161 t table 1,671 dependent variable corporate performance roa (y) source: primary data processed, 2018 table 2 shows the regression model formed as follows roa = -0,036 + 0,099 ir table 2 also shows that the integrated reporting variable had a significance effect toward corporate performance because it has probability value that below 0,05 (0,039) with a t-count is greater than ttable (2,118> 1,671). this result is reinforced by martinez (2016) that integrated reporting is positively related to market value and estimated future cash flows. this relationship is inseparable http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 185 from the performance carried out by managers due to changes in managers' perceptions in carrying out business strategies that refer to increasing shareholder value. so the more companies are willing to adopt the integrated reporting framework, the more improved company performance will be. 4.4 research discussion the results of the regression analysis in this study indicate that integrated reporting has a positive effect toward company performance. this result support musleh alsartawi (2018) and churet & eccles (2014) argument that states there is a positive association between online financial disclosure and firm performance. hastuti (2005) added that the more information provided by a private company in their integrated report, the better corporate performance will get. but singletongreen & hodgkinson (2013) guided that to some extent the effort to disclosure financial and narrative reporting will overlap with the problems of financial reporting itself. this is because, to a significantly greater extent than for financial reporting, there are often multiple authorities able to impose non-financial disclosure requirements in reporting to shareholders. 5. research conclusion and limitation 5.1 conclusion this study aimed to determine the effect of integrated reporting disclosure on company performance in basic and chemical industry sectors in 2017. the results showed that the distribution of integrated reporting disclosure data conducted by sample companies was quite high even though there were no regulations that required disclosure. this is inseparable from the manager's awareness of the impact of information asymmetry that can reduce stakeholder trust. furthermore, the hypothesis test found a positive effect of integrated reporting toward corporate performance. the breadth of material expressed in the integrated reporting framework makes a strong relationship between stakeholders and managers resulting in the ability to read the opportunities and risks of each strategy taken, which will then automatically have an impact on the corporate's performance. 5.2 limitation the limitation of this study is the use of an integrated reporting framework that is not fully adopted, resulting in a low influence of integrated reporting on corporate performance. therefore, further research is needed to investigate the effect of integrated reporting on financial performance in corporate that have fully adopted the integrated reporting framework. references churet, c., & eccles, r. g. (2014). integrated reporting, quality of management, and financial performance. journal of applied corporate finance, 26(1), 56-64. https://doi.org/10.1111/jacf.12054. fanani, z. (2009). kualitas pelaporan keuangan: berbagai faktor penentu dan konsekuensi ekonomis. jurnal akuntansi dan keuangan indonesia, 6(1), 20-45. http://dx.doi.org/10.21002/jaki.2009.02. hastuti, t. d. (2005). hubungan antara good corporate governance dan struktur kepemilikan dengan kinerja keuangan (studi kasus pada perusahaan yang listing di bursa efek jakarta). simposium nasional akuntansi, 8, 238-247. kramer, m. r., & porter, m. (2011). creating shared value. harvard business review, 89(1/2), 6277. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 186 krzus, m. p. (2011). integrated reporting: if not now, when. zeitschrift für internationale rechnungslegung, 6, 271-276. kustiani, n. a. (2017). penerapan elemen-elemen integrated reporting pada perusahaan yang terdaftar di bursa efek indonesia. info artha, 3, 44-61. lambert, r., leuz, c., & verrecchia, r. e. (2007). accounting information, disclosure, and the cost of capital. journal of accounting research, 45(2), 385-420. https://doi.org/10.1111/j.1475679x.2007.00238.x. martinez, c. (2016). effects of integrated reporting on the firm's value: evidence from voluntary adopters of the iirc's framework. available at ssrn 2876145. mitchell, r. k., agle, b. r., & wood, d. j. (1997). toward a theory of stakeholder identification and salience: defining the principle of who and what really counts. academy of management review, 22(4), 853-886. https://doi.org/10.5465/amr.1997.9711022105. musleh alsartawi, a. (2018). online financial disclosure and firms’ performance: evidence from the gulf cooperation council countries. world journal of entrepreneurship, management and sustainable development, 14(2), 178-190. https://doi.org/10.1108/wjemsd-11-2017-0082. rivera-arrubla, y. a., zorio-grima, a., & garcía-benau, m. a. (2017). integrated reports: disclosure level and explanatory factors. social responsibility journal, 13(1), 155-176. https://doi.org/10.1108/srj-02-2016-0033. scott, w. r. (2015). financial accounting theory. toronto: pearson prentice hall. sejati, b. p., & prastiwi, a. (2015). pengaruh pengungkapan sustainability report terhadap kinerja dan nilai perusahaan. diponegoro journal of accounting, 195-206. singleton-green, b., & hodgkinson, r. (2013). financial reporting disclosures: market and regulatory failures. information for better markets series. http://dx.doi.org/10.2139/ssrn.2366877. soyka, p. a. (2013). the international integrated reporting council (iirc) integrated reporting framework: toward better sustainability reporting and (way) beyond. environmental quality management, 23(2), 1-14. https://doi.org/10.1002/tqem.21357. verrecchia, r. e. (2001). essays on disclosure. journal of accounting and economics, 32(1-3), 97180. https://doi.org/10.1016/s0165-4101(01)00025-8. *) muhammad wildan affan, department of accounting, muhammadiyah university of malang, malang, indonesia (email: wildan@umm.ac.id) http://creativecommons.org/licenses/by/4.0/ why is tax knowledge and tax understanding important? by jeni susyanti, noor shodiq askandar jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 187 why is tax knowledge and tax understanding important? jeni susyanti *) noor shodiq askandar **) abstract micro, small, and medium (msmes) business play a crucial role in the economy of indonesia. unfortunately, there is low-income tax receipt from msme sectors. this study examined the effect of taxation knowledge and understanding toward tax compliance among msmes owners, exclusively culinary business owners. the quantitative method was used in analyzing the data collected. the sample size for the research was 50, with all msme owners responded through the questionnaire distributed. this study concluded that there is a positive effect between taxation knowledge and level of understanding toward tax compliance. it means that an increase in tax knowledge and tax understanding level can lead to an increase of tax compliance level. although this study succeeded to prove the effect between variables, the results of secondary data indicate that many msme owners are still confused in implementing tax regulations, pp23/2018. keywords: tax compliance; tax knowledge; level of understanding; msme 1. introduction 1.1 research background taxation is the primary source of income for a state. the tax collection target that amounted idr 1.42 quadrillion in 2018 made the government make various tax regulations that will affect positively and negatively to multiple economy sectors, including msmes sector. msmes itself play a crucial role in the economy of indonesia. they are expected to be a backbone of the government income through regional taxes and levies. msmes that run either by individuals or entities have an obligation to pay taxes in indonesia. in addition to their duties as self-assessment, taxpayers are also obliged to cut and collect taxes (susyanti & dahlan, 2016). unfortunately, the increasing number of msmes entrepreneurs did not affect the tax contribution (susyanti, 2014). there are several factors that influences tax compliance including referral groups, the probability of audit, tax knowledge, and the perception of equity and fairness (inasius, 2018), tax education (kwok & yip, 2018; aladejebi, 2018), political factors, such as lack of transparency due to weak news media, sociological, cultural factors, such as weak national identity (bessley & persson, 2014), level of understanding (adiasa, 2013; agustiningsih & isroah, 2016), lack of adequate knowledges (fallan, 1999; omagor & mubiru, 2008; manual & xin, 2016; newman, charity, & ongayi, 2018). susyanti (2014) argues that the lack of tax knowledge and understanding of msmes owners is the main detention in fulfilling tax obligations. therefore, it is necessary. therefore, there is a need to continually grow public awareness and compliance of taxpayers to fulfill tax obligations in accordance with applicable regulations. 1.2 research problem a) how is the effect of taxation knowledge and taxation understanding on tax compliance simultaneously? b) how is the effect of taxation knowledge and taxation understanding on tax compliance partially? http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 188 1.3 research purpose the purpose of the study was to understand and analyze the effect of taxation knowledge and taxation understanding on tax compliance both simultaneously and partially. 2. theoretical framework and hypotheses development 2.1 the effect between tax knowledge and tax compliance tax knowledge, in a simple term, can be defined as the taxpayer ability to understand the tax laws and regulations (ayuba, saad, & arifin, 2016). pratama (2018) added that tax knowledge is a level of knowledge of basic tax concept that consists of tax rules and financial knowledge that needs to be understood by taxpayers in order to fulfill their tax obligations (pratama, 2018). gore & wong (1998) divided tax knowledge into categories, procedural knowledge (knowing how) and declarative knowledge (knowing that). previous research from fallan (1999), omagor & mubiru, (2008), manual & xin (2016), newman, charity, & ongayi (2018) concluded that there is a relationship between tax knowledge and tax compliance, an increase of tax knowledge level can lead to the increase of tax compliance level. 2.2 the effect between tax understanding and tax compliance sulistiani, & jayanto (2016) defined tax understanding as to the understanding or knowledge possessed by the taxpayer related to taxation. satria (2017) added that tax understanding is the perception of taxpayer toward their knowledge about taxation. tax understanding is the level of knowledge and ability of taxpayers concerning the enactment and the implementing regulations of the tax law both in content and administration. previous research from adiasa (2013), agustiningsih & isroah (2016) concluded there is a relationship between tax understanding and tax compliances. thus, the higher tax understanding can lead to higher compliance. therefore, the hypothesis proposed in this study is; h1: tax knowledge and tax understanding have a partial significant effect toward tax compliance. h2: tax knowledge and tax understanding have a simultaneous significant effect toward tax compliance. 3. research method 3.1 research design this study can be classified as quantitative descriptive research. the primary data collection technique was done by giving questionnaires to respondents. while the secondary data collection technique was done through recording, documents related to the business profile and the types of activities. based on the questionnaire feedback, it can be determined (measured) the frequency distribution for each variable, so that it can be known whether the intention to comply tax is good (indicated by high score) or poor (indicated by low scores). tarigan (2012) determined the formula as follows; (highest score lowest score) (5 – 1) range =                                   =            = 0,8 number of answer categories 5 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 189 table 1 respondent perception levels mean range of respondent's answer scores respondent's perception level 1,00 – 1,80 very bad 1,81 – 2,60 bad 2,61 – 3,40 good enough 3,41 – 4,20 good 4,21 – 5,00 very good source: tarigan (2012) 3.2 population and sample the population in this study is the msme owners in malang, east java, indonesia, exclusively culinary industry. the reason in choosing culinary industry and malang as a research subject is because those subjects are recorded strong growth and contribute quite significantly to the total income of the tourism sector and the creative economy last year. all population or 50 culinary owners in malang participate in this study. 3.3 research framework picture 1 research framework 4. research result and analysis 4.1 descriptive analysis the culinary owners who have a thematic culinary service business were 54% while culinary owners that have their owned unique product was 46%. female is the majority of the respondent in this study (52%) with most of the culinary business were driven by young people. according to rachmawati (2017), the business is categorized as a micro business if it has a maximum total revenue of idr 500 million. while the small business has total revenue between idr 500 million 2.5 billion, the medium business has total revenue beyond idr 2.5 billion. table 2 described that the majority of the respondent in this study got maximum idr 1.000.000.000 for total revenue, it means that this sector has the potential to become a powerful force to encourage total income of the tourism sector and the creative economy shortly. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 190 table 2 culinary business total revenue no total revenue total owner percentage 1 < idr 500.000.000 16 32% 2 idr 500.000.001-1.000.000.000 10 20% 3 idr 1.000.000.001-1.500.000.000 7 14% 4 idr 1.500.000.001-2.000.000.000 8 16% 5 idr 2.000.000.001-2.500.000.000 5 10% 6 idr 2.500.000.000 and above 4 8% total 50 100% source: primary data processed, 2018 based on table 3, it was found that the respondent has a good enough perception (3,24) to the procedures in paying taxes. uniquely, the respondent has a poor perception (2,16) about the function and benefits of tax identification number (npwp). table 3 mean score of taxation knowledge no questionaire mean decision 1 i know the general understanding of taxes, npwp, wpop, corporate wp, entrepreneurs, and spt. 3,00 good enough 2 i know how the procedure for paying taxes. 3,24 good enough 3 i know the function and benefits of the tax identification number. 2,16 bad 4 i know the tax collection, the basis of tax collection and may or not the taxpayer pay it in installments. 3,18 good enough 5 i know the basic of accountancy and recording, which must be done by taxpayers in general. 3,12 good enough source: primary data processed, 2018 meanwhile, table 4 shows that the respondent had good enough perceptions of all questionnaire item in tax understanding. they know what is the general provisions of taxation, tax deposits, and tax reporting about. they also know how to fill and calculating tax. table 4 mean score of tax understanding no questionaire mean decision 1 i understand the general provisions of taxation. 3,10 good enough 2 i understand how to fill spt. 3,22 good enough 3 i understand the calculation of tax. 3,24 good enough 4 i understand tax deposits. 3,28 good enough 5 i understand tax reporting. 3,24 good enough source: primary data processed, 2018 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 191 a result from table 5 indicates that they do not agree with the questionnaire item that states that they registered tax identification number voluntary, and they recorded financial business regularly and consistently. table 5 mean score of tax compliance no questionaire mean decision 1 i registered the npwp voluntarily. 2,32 bad 2 i record the financial business regularly and correctly. 2,70 bad 3 i fill out, count, and report tax notification letters honestly, completely, and correctly in accordance with applicable rules. 3,32 good enough 4 i pay taxes voluntarily according to the rules and on time. 3,18 good enough 5 i consciously carry out enforcement of taxation sanctions. 2,96 bad source: primary data processed, 2018 4.2 validity and reliability the validity test of the questionnaire was conducted in order to determine the validity of the questionnaire. all constructs of the question in this study can be categorized as a valid and reliable because of they significant in 0,05 (r-value > r-table) and greater than 0,60 for cronbach alpha rule. 4.3 research analysis the best-fit regression model should fulfill the following classic assumptions, including: a. multicollinearity based on table 6, it can be seen that all variables have tolerance > 0,10 and vif value < 10, thus it can be concluded that the regression model does not have a multicollinearity problem. table 6 multicollinearity test results variable collinearity statistics tolerance vif tax knowledge 0,949 1,053 tax understanding 0,956 1,046 source: primary data processed, 2018 b. autocorrelation the result of the durbin watson test is 1,905, which is greater than -2 and smaller than +2, it means there is no autocorrelation in the regression model. c. heteroscedasticity the result of the park test shows that there is no significant result between tax knowledge, tax understanding, and its unstandardized residual (lnui2). therefore, it concluded that there are no symptoms of heteroscedastiscity from this regression model. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 192 d. normality based on the results of the kolmogorov smirnov test (kst), the significance value of the variable is 0,524, which is greater than > 0,05. it means that the regression model is normally distributed. tabel 2 regression result variable regression coefficient ttest sig. decision tax knowledge (x1) 0,959 2,158 0,000 significant tax understanding (x2) 0,054 0,49 0,027 significant constant 1,597 r 0,954 r square 0,910 adjusted r square 0,907 ftest 23,89 sig. f 0,00 n 50 f table 3,20 t table 1,67 dependent variable tax compliance (y) source: primary data processed, 2018 based on the regression results, the tax knowledge and tax understanding have a partially significant effect on tax compliance because of their significant value that below 0,05 (0,000 and 0,027). this study also concludes that tax knowledge and tax understanding has a significant simultaneous effect on tax compliance because they're a significance value below 0,05 (0,00). the results of this analysis were strengthened by obtaining the value of the adjusted r square (r2) of 0,907 or 90,7%. it means that tax knowledge and tax understanding can explain 90,7% of tax compliance. while the remaining 9,3% was influenced by other variables that are not included in this model. 4.4 research discussion the problem of tax compliance is as old as taxes themselves, especially in developing countries like indonesia (besley & persson, 2014). the result of this study supports previous research conclusion which states that there is the relationship between tax knowledge, tax understanding, and tax compliance both partially and simultaneously (fallan, 1999; omagor & mubiru, 2008; newman, charity, & ongayi, 2018; kwok & yip, 2018; aladejebi, 2018). there is no difference perception between male and female in perceived the importance of tax knowledge and understanding. surprisingly, although the majority of the respondent in this study has a relatively positive perception about the importance of tax knowledge and understanding item questionnaire, they have low responses in perceiving tax compliance. susyanti (2014) argues that many msmes owners are still confused in implementing tax regulations; pp-23/2018, they only know the tax knowledge and tax understanding in general or average way. therefore, it is suggested that tax education should begin in the early stages of level eduction such as school (palil, akir, & http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 193 ahmad, 2013). hopefully, if the employees had adequate tax knowledge, there would minimalize the unintentional non-compliances. 5. research conclusion and limitation 5.1 conclusion the result of this study is not difference with another previous study. this study concluded that there is an effect of tax knowledge and tax understanding toward tax compliance, both partially and simultaneously. it means that to enhance the level of tax compliance, stakeholder should increase the knowledge and the level of understanding of the taxpayer. interestingly, although this study succeeded to prove the effect between variables, the results of secondary data indicate that many msme owners are still confused in implementing tax regulations, pp-23/2018. 5.2 limitation the limitation of this study is that the data collection used is only questionnaires based. it means that this research only covered the perceptions of respondents and did not describe the actual situation of respondents. this study also used a limited sample, so the results cannot be generalized. future research should be done in another type of business and variables. references adiasa, n. (2013). pengaruh pemahaman peraturan pajak terhadap kepatuhan wajib pajak dengan moderating preferensi risiko. accounting analysis journal, 2(3). https://doi.org/10.15294/aaj.v2i3.2848. agustiningsih, w., & isroah, i. (2016). pengaruh penerapan e-filing, tingkat pemahaman perpajakan dan kesadaran wajib pajak terhadap kepatuhan wajib pajak di kpp pratama yogyakarta. nominal, barometer riset akuntansi dan manajemen, 5(2). http://dx.doi.org/10.21831/nominal.v5i2.11729. aladejebi, o. (2018). measuring tax compliance among small and medium enterprises in nigeria. international journal of accounting and taxation, 6(2), 29-40. https://doi.org/10.15640/ijat.v6n2a4. ayuba, a., saad, n., & arifin, z. z. (2016). perceived service orientation, economic factors, psychological factors and tax compliance: evidence from nigerian smes. malaysian management journal, 20, 41-57. besley, t., & persson, t. (2014). why do developing countries tax so little?. journal of economic perspectives, 28(4), 99-120. https://doi.org/10.1257/jep.28.4.99. fallan, l. (1999). gender, exposure to tax knowledge, and attitudes towards taxation; an experimental approach. journal of business ethics, 18(2), 173-184. https://doi.org/10.1023/a:1005711905297. gore, r., & wong, o. w. b. (1998). the acquisition and transfer of tax skills. the journal of american taxation association, 20(2), 117-126. inasius, f. (2019). factors influencing sme tax compliance: evidence from indonesia. international journal of public administration, 42(5), 367-379. https://doi.org/10.1080/01900692.2018.1464578. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 194 kwok, b. y. s., & yip, r. w. y. (2018). is tax education good or evil for boosting tax compliance? evidence from hong kong. asian economic journal, 32(4), 359-386. https://doi.org/10.1111/asej.12163. manual, v., & xin, a. z. (2016). impact of tax knowledge, tax compliance cost, tax deterrent tax measures towards tax compliance behavior: a survey on self-employed taxpayers in west malaysia. electronic journal of business and management, 1(1), 56-70. newman, w., charity, m., & ongayi, w. (2018). literature review on the impact of tax knowledge on tax compliance among small medium enterprises in a developing country. international journal of entrepreneurship. retrieved from https://www.abacademies.org/articles/literature-review-on-the-impact-of-tax-knowledge-ontax-compliance-among-small-medium-enterprises-in-a-developing-country-7571.html. omagor, c., & mubiru, m. (2008). entrepreneurship: an integrated approach. kampala: basic business books. palil, m. r., akir, m. r., & ahmad, w. f. (2013). the perception of tax payers on tax knowledge and tax education with level of tax compliance: a study the influences of religiosity. asean journal of economics, management and accounting, 1(1), 118-129. pratama, a. (2018). individual taxpayer characteristics and taxpayer knowledge: exploratory survey on individual taxpayers in bandung city, indonesia. review of integrative business and economics research, 7, 338-349. rachmawati, i. k. (2017). model and characteristics of micro finance institutions based on sme women in batu city. jema: jurnal ilmiah bidang akuntansi dan manajemen, 14(01), 21-34. http://dx.doi.org/10.31106/jema.v14i01.214. satria, h. (2017). pengaruh pemahaman pajak, ketentuan perpajakan dan transparansi dalam pajak terhadap kepatuhan wajib pajak badan perusahaan jasa konsultan konstruksi di kota tanjungpinang. annisbah: jurnal ekonomi syariah, 4(1), 129-146. sulistiani, i., & jayanto, p. y. (2016). factors affecting individual tax payers attitude to do tax evasion (empirical study on apparatus/public official in purbalingga district). accounting analysis journal, 5(4), 352-359. susyanti j. (2014). problems identification of creative economy business actors of tourism sector in malang city in effort to meet tax obligations. international journal of business and management invention (ijbmi), 3(11), 13-19. susyanti, j., & dahlan, a. (2016). perpajakan untuk akademisi dan praktisi. malang: penerbit: empat dua media. *) jeni susyanti, department of management, university of islam malang, malang, indonesia (email: jenysusyanti@unisma.ac.id) **) noor shodiq askandar, department of accounting, university of islam malang, malang, indonesia (email: noorshodiqaskandar@unisma.ac.id) http://creativecommons.org/licenses/by/4.0/ celebrity physical attractiveness effect on consumer buying behavior by rizwan khalid, tehreem yasmeen jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 173 celebrity physical attractiveness effect on consumer buying behavior rizwan khalid *) tehreem yasmeen **) abstract nowadays, the use of celebrity as brand endorsements is increasing. celebrity is considered to be the fastest and safest way for a brand to develop an association and a bond in consumer minds. this study aimed to analyze the impact of a celebrity physical attractiveness on consumer buying behavior. this study only focuses on the buying intention of mobile phone product. data was gathered from college (both private and public) undergraduate by questionnaires with an individual's age between 17 to 30 years as the target respondent. the reason in selecting those students with specific age is because they are the target consumer of the specific product that has been chosen as the research object. the researcher used simple random sampling as a sampling technique with 376 respondents and regression analysis is used to model the relationship between variable. this study concluded that there is a positive impact between the physical appearance of celebrity to purchase intention. there are a no different perception from gender, ages, institution type, and education background point of view regarding the attractiveness of celebrity physical and their intention to buy. keywords: celebrity endorsement; physical attractiveness; purchase intention 1. introduction 1.1 research background today advertisements have made the world more vibrant and hectic through various communication of marketing. it is difficult to get consumer attention. in pakistan, since the market of mobile phone is increasing, there are many brands used an advertisement to compete in capturing consumer attention. there are different approaches used for mobile phone advertisement, but celebrity endorsement is one of the most effective approaches (nabel, 2014). celebrity endorsement can bring their fans into consumers, or even convert them into the customers of the advertised product or brand. partnering with the right celebrity will help the brand generate interest and intended responses like building the trust and relationship (pandey, 2011). celebrity endorsed commercials can cause more positive attitude (gan, 2006), persuasive (gaied & rached, 2010), likeability, and purchase (parmar & patel, 2015) while unfamiliar celebrity endorsement had a little impact in persuading consumer make a to purchase (mccormick, 2016). advertisers use celebrities to build and relate the brand or product image with the celebrity’s lifestyle. the use of celebrity as a marketing gimmick in advertising program become popular nowadays in pakistan (ghani & kakakhel, 2011). in this study, researcher only focuses on physical attractiveness attribute of celebrity endorsement since attractive endorser is more effective in influencing purchase intention in high involvement product (phau & lum, 2000). 1.2 research problem based on the research background, the problem statement in this study is; what is the effect of the physical attractiveness of celebrity endorsement toward the buying behavior (purchase intention) of students for mobile phone brands? http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 174 1.3 research purpose the purpose of this study is to examine the effect of celebrity physical attractiveness toward buying behavior (purchase intention). this influence has not been completely investigated in earlier research in a similar circumstance, and this study investigates it empirically. also, this study is conducted in the field of mobile phone segments, so the result of this research will help to judge how much effective the use of physical attractiveness celebrity in the mobile phone industry. 2. theoretical framework and hypotheses development 2.1 celebrity endorsement the concept of celebrity endorsement is not a new one companies are using this concept from hundreds of years, and still, this idea is working. according to andrews & shimp (2017) nearly 25% commercials are of celebrity endorsement and in south asian countries such as pakistan and india advertisements depends on celebrity endorsement for effective influence and to generate heavy sales (anjum, dhanda, & nagra, 2012). a lot of advancement is coming in this new world of advertising so to create a visible or evident communication and to capture the diverting attention of viewers celebrity's glamour, and appeal is prerequisites (rafique & zafar, 2012). celebrities don't mean the film stars only they could be from different fields like singers, sportsman, doctors, barristers, etc. with well-known generous personalities. they all can build and sustain a strong communication between the customers and brand to get a superior brand positioning in the customer eyes (jamil & rameez ul hassan, 2014). it is obvious that celebrity endorsement builds evident influence on the mind of the customer, but to what degree is uncertain or it may be positive or negative. when we discuss advertisement of mobile phone, the celebrities endorsed commercials are capturing more customer attention as compared to a new or unrecognized face. to promote any advertisement, the main part is attractiveness because of these celebrities are endorsed and favored to get full glamour appearance and to get high audience viewership. now you can see a lot of local brands are endorsed by foreign or indian celebrities who directly affect the factor that is attraction or celebrity appeal. but it may also deviate the viewer attention from the brand the celebrities are promoting because the viewers only remember the celebrities face instead of the name of the product. it creates a negative impression on the customer's attitude (pandey, 2011). the companies are positioning their mobile phone brands with well recognized and widely acceptable celebrities to develop a high level of trust in customers. it is founded that trustable personalities are more favored in this perspective. the customers viewed the celebrities as the family member and when they watch them promoting a specific brand and committing about that brand customers want to get it and experience that brand because of their supposed family member commitment. certified celebrities such as famous doctors, engineers, designers, economists, and barristers are supposed to most preferable for developing a relationship in between brand and celebrity because there is less risk involved due to their experience and profession (mccracken, 1989). amid most recent ten years it was seen that prime time promotions are contained up of celebrities based advertisement around 65 %. but now it is observed that for the broadcast of mobile phones, 85% of advertisers are using celebrity endorsement (schiffman, kanuk, & hansen, 2008). in pakistan, the first established mobile manufacturing brand was motorola that initially invested in advertising except for celebrity endorsement. then, nokia similarly advertises its brand with no celebrity endorsement. after this, the third brand was sony ericson that was come into the market in 2003 without the concept of celebrity endorsement. the initial brand ambassador of mobile phone brand was iman ali and shan which endorse blackberry and after it other brands marketers also start using celebrities in their advertisements (schiffman, kanuk, & hansen, 2008). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 175 celebrities are defined as popular personalities; rising film stars sports heros and trending tv actors, which can become a reference group for the viewers (schiffman, kanuk, & hansen, 2008). in order to create some significance, mindset, and behavior of the viewers, the celebrities can serve as a reference that why they are known as the reference group. a reference group also provide suggestion to customers in their buying behavior (schiffman, kanuk, & hansen, 2008). because celebrity endorsement is beneficial for the market, two theories are explained one is effectiveness of celebrity endorsement by ohanian (1990) estimation scale and other is the congruity of celebrities and item under the hypothesis of meaning transfer procedure of mccracken (1989). joseph (1982) viewed this research with a new angle not only personality traits, but he also investigated how much change can be made on the opinion, evaluation of product and other effective factors due to the personality of attractive endorsers. he finds out endorsers who are considered by consumers more attractive will create a big influence on products which are endorsed. according to kahle & homer (1985), likeability and attractiveness of a celebrity can change the attitudes of consumers towards the advertisements in a positive way and also for the product. consumers also had high purchase intentions for the advertised product. on the other hand, baker & churchill (1977) found an evaluation of product can be done positively by using attractive endorser, but attractiveness is not too much effective in the case of developing strong purchase intentions. moreover, caballero, lumpkin, & madden (1989) state that by using attractive endorsers, there is no cause on the effectiveness of advertising. in advertisements for mobile phone, new or unknown faces are used less as compared to the celebrity-based advertisements. behind the story of any commercial attractiveness is become the major building block in order to make the product presentation more glamorous. now many attractive foreign celebrities are endorsed for different local brands but few times instead of building the image of the brand the foreign celebrities get more attention and put a negative impression on the buying behavior of customer (pandey, 2011). 2.2 the effect of celebrity physical attractiveness toward purchase intention an attractive and decent appearance is the usual concept that influences viewers to get something (reingen & kernan, 1993). marketers use visual elements to capture the market and create a positive buying behavior in customers (clow, james, kranenburg, & berry 2006). a lot of previous research works find that physical outlook of a celebrity was an important and talkable element (baker & churchill, 1977; joseph 1982; kahle & homer, 1985; winham & hampl, 2008). physical appearance is important because people are influenced by endorsed celebrities looks and style and can influence their buying behavior. as famous indian people like bollywood stars uncovered (versatile by katrina) themselves by utilizing sensual looks and consideration catching dresses in ads which grows more enthusiasm towards inverse sexual category and such appearance makes them more alluring and less demanding to review. then again, pakistan celebrities are having their particular significance and embraced inside social restrictions and religious points of confinement. in advertisements for mobile phone, new or unknown faces are used less as compared to the celebrity-based advertisements., behind the story of any commercial attractiveness is become the major building block in order to make the product presentation more glamorous. now many attractive foreign celebrities are endorsed for different local brands but few times instead of building the image of the brand the foreign celebrities get more attention and put a negative impression on the buying behavior of customer (pandey, 2011). when we talk about celebrity endorsement, both the celebrity and brand are having a group of information knots that are stored in the mind of the consumers (till, 1998). these association http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 176 groups also include consumers intention regarding both brand and endorsers (till & busler, 2000). research demonstrates consumer shape a stereotype about people who are physically kahle & homer (1985) likeability and attractiveness of a celebrity can change the attitudes of consumers towards the advertisements in a positive way and also for the product. consumers also had high purchase intentions for the advertised product. on the other hand, baker & churchill (1977) found the evaluation of product can be done positively by using attractive endorser, but attractiveness is not too much effective in the case of developing strong purchase intentions. moreover, caballero, lumpkin, & madden (1989) states that by using attractive endorsers, there is no cause on the effectiveness of advertising. in advertisements for mobile phone, new or unknown faces are used less as compared to the celebrity-based advertisements. behind the story of any commercial attractiveness is become the major building block to make the product presentation more glamorous. now many attractive foreign celebrities are endorsed for different local brands but few times instead of building the image of a brand the foreign celebrities get more attention and put a negative impression on the buying behavior of customer (pandey, 2011). therefore, the hypothesis proposed in this study is; h1: the physical attractiveness of celebrity have a significant effect on consumer buying behavior. 3. research method 3.1 research design this research is basic and quantitative. so, the data will be collected with the help of a questionnaire to find out the perception of respondent toward the celebrity physical attractiveness and their intention to purchase. this research used regression to analyze the effect of physical attractiveness toward buying behavior. 3.2 population and sample data was gathered from college understudies by questionnaires with an individual's age between 17 to 30 years as the target respondent. the reason in selecting those students with specific age is because they are the target consumer of the specific product that has been chosen as the research object researcher used simple random sampling as sampling technique. total population in this study is 16868 (consist of 14459 multan public institutes students and 2409 multan private institutes). therefore, the suitable sample size for 16868 total population is 376 (krejcie & morgan, 1970). 3.3 research framework picture 1 research framework celebrity physical attractiveness buying behavior http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 177 4. research result and analysis 4.1 descriptive analysis the information of respondent profile was gathered from the respondents of the public institutions is composed up of 63 %, and they are 237 in number while the number of respondents of the private institute is 139 which make 37 % out of 100 %. the majority of respondent in this research are 2125 years old, male, and bachelor student. table 1 respondent profile category total percentages (%) sex male 207 55,1 female 169 44,9 age 16 – 20 years old 112 29,8 21 – 25 years old 192 51,1 > 25 years old 72 19,1 institution public 237 63 private 139 37 education bachelor 224 59,6 master 124 33 mphill 28 7,4 source: primary data processed, 2018 4.2 validity and reliability table 2 pearson correlation no item pearson correlation sig. (1-tailed) decision 1 physicatt. 0,533 0,000 valid 2 buybhv 0,533 0,000 valid source: primary data processed, 2018 table 2 explains that due to the r-value (0,533) > r –table (0,101), it can conclude that all item questionnaire proposed in this study is valid. there was no need to delete any item as all the values of alpha for each variable is more than 0,60. 4.3 research analysis table 3 shows that the model has r² = 0,623; this means that 62,3% of the variation in buying behavior is explained by independent variables (physical attractiveness). the significance level is 0,000 that is less than 0,05. therefore, the null hypothesis will reject and alternative hypothesis will accept that is buying behavior is positively associated with celebrity physical attractiveness. this likewise implies the connection be tween's dependent variable and independent factors are measurable impressively, and the regression model is relevant. the applicable regression model involves that every single autonomous variable is clarifying that there is a positive and noteworthy association with buying behavior (dependent variable). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 178 the regression coefficient for physical attractiveness β² = 0,012 that means one unit increase in physical attractiveness boost 0,012 percent buying behavior of students if other variables remain constant. the t-test value is 0,255, which is positive and significant at 0,019 means that there is a significant effect of the physical attractiveness of celebrity toward their buying behavior. table 3 regression result variable regression coefficient ttest sig. decision physical attractiveness (x) 0,013 0,225 0,019 significant constant 0,501 5,508 0,000 significant r 0,789 r square 0,623 ftest 153,165 sig. f 0,000 n 376 dependent variable buying behavior (purchase intention) source: primary data processed, 2018 4.4 research discussion there were a lot of studies within the discipline of the credibility of the movie star in the marketing. consequences of the investigate transfer to writing in numerous viewpoints. in the first place, famous people endorsement is fundamental for the gatherings to catch the consideration in their buyers because the groups of onlookers are spurred by utilizing the celebs in eagerness to purchase. we affirmed that the validity of the endorser is numbered to watcher/respondent/purchaser/client to search for a chose item. this believability now not just influences the psyche of buyers to purchase the item yet furthermore to expand a worthwhile verbal in regards to the logo being empowered with the guide of the over the top validity whiz. even though the literature reflects the desirable effect of celebrity endorsement in many areas, this study furthermore indicates that this relationship of celebrity endorsement also affects the student's behavior of buying in multan region. this study not only fills the research gap but also improves the understanding to realize the relation of celebrity endorsement and buying behavior of students in broad-spectrum. majority of time viewer is engaged by the physical attractiveness of the celebrities, influenced by the credibility of the endorsers and also with their expertise. in addition, if the persona of the celebrity is matching with that of the product, customers assume and believe such congruency extra optimistically. our review adds to the literature in the viewpoint specified previously. on account of administrative suggestions, the organizations which utilize limited time methodologies, especially celebrity endorsement must be cautious while choosing superstar for sustain because our review demonstrates that credibility of endorser’s matters a lot for buyers. on the condition that celebrity is well known however not credible, then it won't influence customers' ability to purchase the endorsed product. the promotional strategy of the organization should be designed by looking at the target market and product being advertising, keeping in view the credibility factor. 5. research conclusion and limitation 5.1 conclusion this study is an initial step to show the impact of physical attractiveness of celebrities on buying behavior (purchase intentions). our results show that the physical appearance of a celebrity http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 179 has an impact on consumer purchase intentions. there are a no different perception from gender, ages, institution type, and education background point of view regarding the attractiveness of celebrity physical and their intention to buy. 5.2 limitation this study has limitations; it only investigates within the scope of universities in multan city. therefore, the result in this study cannot be generalized to represent all the students of punjab province or pakistani perspective. references andrews, j. c., & shimp, t. a. 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(2000). effects of “physical attractiveness” in the evaluation of print advertisements. asia pacific journal of marketing and logistics, 12(4), 41-59. https://doi.org/10.1108/13555850010764668. rafique, m., & zafar, q. u. a. (2012). impact of celebrity advertisement on customers’ brand perception and purchase intention. asian journal of business and management sciences, 1(11), 53-67. reingen, p. h., & kernan, j. b. (1993). social perception and interpersonal influence: some consequences of the physical attractiveness stereotype in a personal selling setting. journal of consumer psychology, 2(1), 25-38. https://doi.org/10.1016/s1057-7408(08)80073-3. schiffman, l. g., kanuk, l. l., & hansen, h. (2008). consumer behaviour: a european outlook. harlow: pearson education limited. till, b. d. (1998). using celebrity endorsers effectively: lessons from associative learning. journal of product & brand management, 7(5), 400-409. https://doi.org/10.1108/10610429810237718. till, b. d., & busler, m. (2000). the match-up hypothesis: physical attractiveness, expertise, and the role of fit on brand attitude, purchase intent and brand beliefs. journal of advertising, 29(3), 1-13. https://doi.org/10.1080/00913367.2000.10673613. *) rizwan khalid, department of management science, comsats university islamabad, vehari, pakistan (email: rizwan3532@gmail.com) **) tehreem yasmeen, department of management science, comsats university islamabad, vehari, pakistan (email: tehreemyasmeen@gmail.com) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 78-87 http://dx.doi.org/10.31106/jema.v17i1.3609, issn (online) 2597-4017 78 does capital intensity, inventory intensity, firm size, firm risk, and political connections affect tax aggressiveness? sugeng1*, eko prasetyo2, badrus zaman3 1 department of accounting, faculty of economics, universitas nusantara pgri kediri, kediri, indonesia 2 department of accounting, faculty of economics and business, universitas kahuripan kediri, kediri, indonesia 3 department of accounting, faculty of economics, universitas nusantara pgri kediri, kediri, indonesia *corresponding author(s) email: sugengprismakat@gmail.com abstract tax aggressiveness is one of a critical issue in the world of taxation. many companies do tax planning to minimize their tax abilities. this study aims to examine how capital intensity, inventory intensity, firm size, firm risk, and political connections, relate to the tax aggressiveness of manufacturing listed companies in indonesia, an emerging economy of southeast asia. this study combined the tax aggressiveness factor from different perspectives into one model. this study used purposive sampling with manufacturing companies listed in indonesia stock exchange during 2015-2017 and experienced a consecutive profit as the main criteria. panel data regression used as a data analysis technique. the result shows that there is a significant effect between capital intensity, political connection, and tax aggressiveness. the relationship between inventory intensity, firm size, firm risk, and tax aggressiveness failed to prove in this study. this result is consistent across several measures of tax aggressiveness. keywords: capital intensity; inventory intensity; firm size; firm risk; political connection; tax aggressiveness jel code: h26 doi: 10.31106/jema.v17i1.3609 article history: received 2019-07-24 reviewed 2019-11-30 revised 2019-12-25 accepted 2020-01-28 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ does capital intensity, inventory intensity, firm size, firm risk, and political connections affect tax aggressiveness? by sugeng, eko prasetyo, badrus zaman 79 introduction although, tax is one of the important sources for the country to finance their expenditures (both for expenditure routine and development expenditure). the fact that the ratio of indonesia tax revenue which is below the standards of asean countries indicates that there is some gap that needs to be explored (subadriyah & aliyah, 2018). carolina et al. (2014) argued that for companies, tax is a burden that can reduce the company’s net income. companies tend to be aggressive in taxation and looking for ways to reduce their burden through various tax planning treatment both legally (tax avoidance) or even illegal. several factors can influence the tax aggressiveness of companies. dunbar et al. (2010) argue that capital intensity (company investment in fixed asset) correlates with overall tax planning opportunities. richardson et al. (2016) added that capital intensity is positively associated with tax aggressiveness due to the accelerated depreciation charges based on a fixed asset. thus, inventory-intensive firms should be negatively associated with tax aggressiveness which means the larger the inventory level of companies, the smaller the tax avoidance intention (stickney & mcgee, 1982). on the other hand, lanis & richardson, (2012), sari & tjen (2016), and devi et al. (2018) concluded that firm size is positively and significantly affect tax aggressiveness which means that the larger the size of the firm the more aggressive the tax policy. guenther et al. (2017) add firm risk as a determinant of corporate tax aggressiveness and tax avoidance. he concluded that there is a positive correlation between firm risk, tax aggressiveness, and tax avoidance. kim & zhang (2016), abdul wahab et al. (2017), and ying et al. (2017) included political connections as another predictor of tax aggressiveness. they concluded that politically connected firms would be more aggressive in their tax policy rather than nonpolitical connected firms. briefly, there are five factors at least that can enhance the tax aggressiveness intention of the company namely capital intensity, inventory intensity, firm size, risk, and political connections. interestingly, there are 3 of the five factors mentioned above still debatable since there is another research that concluded differently. for inventory intensity in an example, research from savitri & rahmawati (2017) found that the inventory intensity per se does not influence tax aggressiveness which is contradictory with stickney & mcgee (1982) and nurfauzi & firmansyah (2018) conclusion. recent research from rusydi (2013) and ann & manurung (2019), also show the different conclusion. while rusydi (2013) concluded that firm size has no influence on tax aggressiveness, ann & manurung (2019) stated that firm jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 78-87 http://dx.doi.org/10.31106/jema.v17i1.3609, issn (online) 2597-4017 80 size has a negative and significant effect on tax aggressiveness. therefore, the fact that there is a different conclusion of the effect of inventory intensity, firm size, firm risk on tax aggressiveness needs to be explored. this research aims to analyze capital intensity, inventory intensity, firm size, firm risk, and political connections on tax aggressiveness of listed manufacturing companies in the indonesia stock exchange (2015-2017). this study chose the manufacturing sector since it has the greatest contribution compared with other sectors. literature review capital intensity lubatkin & chatterjee (1994) stated that capital intensity is often considered as representative of firm operating leverage. nugraha & mulyani (2019) defined capital intensity as the amount of fixed asset investment activities carried out by companies. (stickney & mcgee, 1982) added that capital intensity can be measured as gross plant assets/total assets, net plan asset/total asset, depreciation and amortization expense/number of employees, gross plan assets/number of employees. the formula used in this research is; 𝑪𝑎𝑝𝑖𝑡𝑎𝑙 𝐼𝑛𝑡𝑒𝑛𝑠𝑖𝑡𝑦 = 𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 (1) dunbar et al. (2010) and richardson et al. (2016) concluded that capital intensity has a positive relationship with tax aggressiveness. h1: there is a significant relationship between capital intensity and tax aggressiveness. inventory intensity inventory intensity considered one of the most crucial firm-specific characteristics that can influences tax aggressiveness. devi et al. (2018) defined inventory intensity as the level of investment that occupied by the company on its inventory. stickney & mcgee (1982) and nurfauzi & firmansyah (2018) concluded that there is a negative correlation between inventory intensity and tax aggressiveness. the larger the inventory level of companies, the smaller the tax avoidance intention. inventory intensity in this study is measured as inventory divided by total assets (richardson & lanis, 2007). h2: there is a significant relationship between inventory intensity and tax aggressiveness. 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐼𝑛𝑡𝑒𝑛𝑠𝑖𝑡𝑦 = 𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 (2) does capital intensity, inventory intensity, firm size, firm risk, and political connections affect tax aggressiveness? by sugeng, eko prasetyo, badrus zaman 81 firm size the size of a company can affect taxes in several ways which are tax aggressiveness by nature and tax reduction by using political advantage. (kim & im, 2017) added that based on the theory of cost it can be concluded that the larger t e size and profit of companies, the higher possibilities of companies doing tax aggressiveness by nature. while based on political theory, the larger size of companies means the higher political advantage so that it can carry out tax planning to reduce taxes that must be paid to the state using existing gaps. dunbar et al. (2010) and allen et al. (2016) measured firm size as the natural logarithm of the firm total asset. firm size = ln(total assets) (3) lanis & richardson (2012), sari & tjen (2016), devi et al. (2018) stated that firm size is positively and significantly affect tax aggressiveness which means the larger firms are, the more they will undertake an action to minimize their tax (halioui et al. 2016). h3: there is a significant relationship between firm size and tax aggressiveness. firm risk paligorova & santos (2017) defined firm risk as to the volatility of earnings which can be measured by the standard deviation formula. the greater the deviation of earnings in the company, the greater the risk of the company. the formula used to measure firm risk is; 𝑅𝑖𝑠𝑘 = √∑ (𝐸 − 1/𝑇 ∑ 𝐸)2/(𝑇 − 1)𝑇𝑇−1 𝑇 𝑇−1 (4) research from guenther et al. (2017) and chang et al. (2015) concluded that the firm risks affect tax aggressiveness behavior. therefore, the proposed hypothesis of this research is, h4: there is a significant relationship between firm risk and tax aggressiveness political connection the political connection is a dilemma that plagues its capital market. political connection classified by bliss & gul (2012) into three definitions which is the percentage of direct government equity ownership; the percentage of equity owned by ‘‘institutional’’ investors, firms that have informal ties with powerful politicians. ying (2011), wu et al. (2012), kim & zhang (2016), abdul wahab et al. (2017), ying et al. (2017) added that in the term of tax aggressiveness, politically connected firms would be more aggressive in its tax policy rather than non-political connected firms. in this study, the political connections used dummy jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 78-87 http://dx.doi.org/10.31106/jema.v17i1.3609, issn (online) 2597-4017 82 variables as a proxy. it will be given a value of 1 if there is ownership by the government in the company vice versa. h5: there is a significant relationship between political connection and tax aggressiveness. tax aggressiveness abdul wahab et al. (2017) defined tax aggressiveness as the downward management of taxable income through tax-planning activities. the primary goal of this tax activities is to reduce the tax bill of the companies. the terminology of tax avoidance and tax aggressiveness have been used interchangeably. lietz (2013) prefers to classified tax aggressiveness as part of tax avoidance despite their legal, illegal, or gray-scaled behavior. lanis & richardson (2012) argued that proxies that are most commonly used to measure the aggressiveness of the tax are etr. the formula used is; 𝐸𝑇𝑅 = 𝑇𝑜𝑡𝑎𝑙 𝑇𝑎𝑥 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐵𝑒𝑓𝑜𝑟𝑒 𝑇𝑎𝑥 (5) methods figure 1. research framework the design used in this study was quantitative with panel data regression used as a data analysis technique. the research was designed to focus on manufacturing companies listed in indonesia stock exchange (idx) for 2015-2017 periods, publish their financial report publicly, experienced a consecutive profit, and share their dividend. there are 37 manufacturing companies for the 2015-2017 periods observed in this study. this study has a conceptual framework as seen in figure 1. the model should pass all classical assumption testing like normality, multicollinearity, autocorrelation, and heteroscedasticity. data is normally distributed if the significance value of kolmogorov-smirnov (ks) is larger than 0.050. meanwhile, to pass the multicollinearity test, the value of tolerance and vif should h2 h1 h3 h5 h4 capital intensity inventory intensity firm size corporate risk political connections tax aggressiveness does capital intensity, inventory intensity, firm size, firm risk, and political connections affect tax aggressiveness? by sugeng, eko prasetyo, badrus zaman 83 be higher than 0.400 and lower than 10. detection of autocorrelation can be done with the durbin-watson test which means that if the value of durbin-watson (dw) was lower than 1 or greater than 3 indicate autocorrelation. for the heteroscedasticity test, there is an indication of homoscedasticity if the probability value of the glejser test results is lower than 0.050. based on table 1, it can be concluded that the model passes all classical assumption test. table 1. normality, multicollinearity, autocorrelation, and heteroscedasticity test model test statistical criteria statistical value autocorrelation durbin watson 1.000 < dw < 3.000 1.795 multicollinearity tolerance > 0.400 0.903; 0.892; 0.289; 0.281; 0.882 vif < 10.000 1.107; 1.121; 3.458; 3.559; 1.134 heteroscedasticity prob. value > 0.050 0.055; 0.730; 0.066; 0.436; 0.182 normality sig. value of 1-ks > 0.050 0.150 result and discussion table 2. hypothesis testing model t value sig. decision capital intensity -> tax aggressiveness 7.921 0.000 h1 accepted inventory intensity -> tax aggressiveness 1.695 0.093 h2 rejected firm size -> tax aggressiveness 0.450 0.654 h3 rejected firm risk -> tax aggressiveness -1.719 0.089 h4 rejected political connection -> tax aggressiveness 1.316 0.019 h5 accepted this study supports previous studies by dunbar et al. (2010) and richardson et al. (2016) that stated there was a significant relationship between capital intensity on tax aggressiveness. the significant values of that relationship (0.000) were lower than 0.050 which means that h1 is accepted. (sonia & suparmun, 2019) added that the company which has high capital intensity tend to do tax avoidance practice legally since the fixed assets can reduce their tax bill by the depreciation. thus, the depreciation can reduce the company’s profit directly while doing tax calculation. this study also concluded that political connection has a significant relationship on tax aggressiveness. the significant values of that relationship (0.019) were lower than 0.050 which means that h5 is accepted. adhikari et al. (2006) added that company with politically connected tend to do tax planning aggressively than nonjema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 78-87 http://dx.doi.org/10.31106/jema.v17i1.3609, issn (online) 2597-4017 84 politically connected company since they have a better information regarding tax regulations and enforcement, lower political cost, lower transparency (kim & zhang, 2016), incentives, enforce tax legislations, and freedom to overlap policies to gain more tax benefit. unfortunately, this study failed to prove the proposed hypothesis which stated that there is a significant partial relationship between inventory intensity, firm size, firm risk, and tax aggressiveness. the significant values of that relationship (0.093; 0.654; 0.089) were higher than 0.050 which means that h2, h3, h4 are rejected. nurhayati et al. (2019) argued that inventory as part of the investment is not the best-suited strategy to minimize tax burden since companies which have a higher level of inventory perceived as worse market position due to their low level of inventory. richardson & lanis (2007) added that companies that can be classified into big size company categories have limited action to do tax planning due to the high surveillance level of government, financial analyst, and media. their big size visibility causes them to become easy targets of the tax regulator. therefore, it is too risky for them to do tax planning especially when they experienced a consecutive profit. firmansyah & muliana (2018) added that tax avoidance could enhance the firm risk for several reasons like the uncertainty of future tax payments and serve as bad leading indicators of firm risk. conclusion and suggestion our study has provided empirical evidence on tax aggressiveness behavior in indonesia. we have managed to expose the effect of capital intensity, inventory intensity, firm size, firm risk, and political connections on tax aggressiveness. using a sample of manufacturing listed companies in indonesia covering the period from 2015 to 2017, we find that there is a significant effect between capital intensity, political connection, and tax aggressiveness. it means that the higher the capital intensity and politically connected, the higher the tendencies of a company to do tax planning aggressively. however, we have no evidence to prove our proposed hypothesis regarding the effect of inventory intensity, firm size, firm risk on tax aggressiveness. the previous study claimed that inventory as part of the investment is not the best-suited strategy to minimize the tax burden. as the bigger the size of the company, the higher the risk of a company to do tax planning due to the high surveillance level of government. further research should focus on the different industries and explore the external and internal factors of tax aggressiveness. references abdul wahab, e. a., ariff, a. m., madah marzuki, m., & mohd sanusi, z. 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(2011). ownership structure, board characteristics and tax aggressiveness. search. https://doi.org/10.1523/jneurosci.3318-15.2016 the effect locus of control and organizational culture toward employee performance with organizational commitments as intervening variable by sitti rizki mulyani, marta widian sari, vivi nila sari, winda tawakalni jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 147 the effect locus of control and organizational culture toward employee performance with organizational commitments as intervening variable sitti rizki mulyani *) marta widian sari **) vivi nila sari ***) winda tawakalni ****) abstract this study aims to examine the influence of locus of control and organizational culture toward employee performance with organizational commitment as an intervening variable. the use of organizational commitment as a predictor in evaluating employee performances makes this research different from all other research. the source of data from this study was obtained from primary data by distributing questionnaires with sample size target is 141 employees. the analytical method used in this study is multiple regression analysis and path analysis. the results of this study indicate that there is a direct relationship between locus of control and organizational culture toward organizational commitment and employee performance. also, there is an indirect effect between locus of control and organizational culture toward employee performance with organizational commitment as an intervening variable. keywords: locus of control; organizational culture; organizational commitment; employee performance 1. introduction 1.1 research background every organization is required to be able to optimally manage its human resources. employees are the main assets of the organization and have a strategic role in the organization, as thinkers, planners, and controllers of organizational activities. the vast development of the era has an impact on increasingly cut-throat economic competition. organizations are required to continue to grow. therefore, organizations need talent that can work professionally in accordance with the quality of their expertise. quality human resources are one of the strengths owned by an organization to achieve organizational goals through the performance of the employees in the organization. the success of an organization in achieving its goals is strongly influenced by human resources as the driving force of various resources within an organization. in understanding the importance of human resources, organizations need to manage and empower employees so that productivity and performance of employees increases. performance is a result of work achieved by a person in carrying out his/her duties assigned to him based on skills, experience, and sincerity. there are several factors that influence employee performance like organizational resource, work engagement (salanova, agut, & peiró, 2005), organizational commitment (chen & francesco, 2003; joo, & bennett iii, 2018; verburg, nienaber, searle, weibel, den hartog, & rupp, 2018; chen, tsui, & farh, 2002), recognition, reward (wickramasinghe, & sajeevani, 2018, gilbert, & kelloway, 2018), culture (øgaard, larsen, & marnburg , 2005; munafis, djamil, & walujadi, 2018; ozcelik, & barsade, 2018; suharto, & nusantoro, 2018), and locus of control (howell, & avolio, 1993, chen, & silverthorne, 2008, http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 148 khushk, 2019). this research only focuses on three factors in predicting employee performance, which is organizational culture, locus of control, and organizational commitment due to the reason that only those factors that matter in researchers object of research. the use of organizational commitment as a predictor in evaluating employee performances makes this research different from all other research. 1.2 research problem based on the background of the problem described above, the writer can formulate the problems in the research: a) how is the direct effect of locus of control and organizational culture toward organizational commitment? b) how is the direct effect of locus of control and organizational culture toward employee performance? c) how is the indirect effect of locus of control and organizational culture toward employee performance with organizational commitment as an intervening variable? 1.3 research purpose the purpose of this study can be described as follows: a) to know and understand the direct effect of locus of control and organizational culture toward organizational commitment. b) to know and understand the direct effect of locus of control and organizational culture toward employee performance. c) to know and understand the indirect effect of locus of control and organizational culture toward employee performance with organizational commitment as an intervening variable. 2. theoretical framework and hypotheses development 2.1 locus of control locus of control is a person's perspective on an event whether a person feels he/she can or cannot control the events that occur to him/her (amalini, al musadieq, & afrianty, 2016). locus of control can be divided into two characteristics which are an internal locus of control and external locus of control. while internal locus of control is the belief that someone can control events and consequences that affect a person's life. an external locus of control tends to concede important results in their lives to the causes in the environment. they wait for the external situation to come in his/her favor. wahyuni, taufik, & ratnawati (2016) added that individual with an external locus of control beliefs that failures experienced by individuals is due to unluckiness, far-reaching planning of futile work, events experienced in life that are determined by people in power, individuals success due to fate. contradictory, individual with internal locus of control beliefs that everything is achieved by individuals by the results of their efforts, being leaders because of their abilities, individuals success due to hard work, everything obtained by individuals not based on luck, individuals ability to determine events in life, individuals life determined by actions, failures experienced by individuals due to their own actions. therefore, an employee with an internal locus of control characteristic has more work spirit and successful career than the others (saputra, 2014). similiarly, chen, & silverthorne (2008) states that individuals with a higher internal locus of control tend to have higher levels of job performance and satisfaction. khushk (2019) added that in term of the locus of control effect toward organizational commitment, an employee with an internal locus of control beliefs that organizational commitment plays a crucial role in employee http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 149 performance while an employee with external locus control tend to ignore the importance of organizational commitment to their work achievement. 2.2 organizational culture dai, chan, & yee (2018) defines organizational culture as organizational culture is unique characteristics that reflect an organization's goals and values, including assumptions, beliefs, norms, and ideas. kangas, kaptein, huhtala, lämsä, pihlajasaari, & feldt (2018) added that organizational culture is the ethical quality of a work environment, incorporating the experiences, presumptions, and expectations of the organization's members. marliana (2015) concluded that organizational culture is an organizational value system adopted by members of the organization, which influences the way of working and behaving from the members of the organization. culture is defined as the way of life of people inherited from generation to generation through various learning processes to create a certain life that best fits the environment. culture is a pattern of shared basic assumptions that groups learn through solving problems of external adaptation and internal integration. research from øgaard, larsen, & marnburg (2005) concluded that there is relationship between culture and organizational commitment. jufnidar & ma'arif (2018) also added that culture also has a positive effect toward employee performance, commitment, and job satisfaction. 2.3 organizational commitment mowday, steers, & porter (1979) defines organizational commitment as the strong desire of the individual to become a member of an organization by involving themselves wholeheartedly to accomplished organization goals. while khushk (2019) defines organizational commitment as employee involvement and membership in an organization. chen & francesco (2003) classified organizational citizen commitment behavior into three categories, namely affective commitment, normative commitment, and continuance commitment. pardiman (2018) argues that when an individual has a common goal with organization, they motivated to work hard to realize an organizational goal. therefore, the higher motivation of employee the more good performance achieved (yeh, & hong, 2012). .2.4 employee performance according to melayu sp hasibuan in mulyadi (2015), performance (achievement) is a result of work achieved by a person in carrying out his/her duties assigned to him/her based on the skills, experience, and sincerity. while karakas (2010) define employee performance as individuals work achievement after exerting effort on the job though compassionate other colleagues. nurcahyani & adnyani (2016) added that employee performance is the employee work result in term of quantity and quality for the job assigned to them. budiono (2016) stated that the indicators of employee performance are the ability to cooperate, quality of work, technical capability, initiative, enthusiasm, endurance, the quantity of work therefore, the hypotheses proposed in this study are; h1: the locus of control and organizational culture has directly affect organizational commitment. h2: the locus of control and organizational culture has directly affect employee performance. h3: the locus of control and organizational culture have an indirect influence toward employee performance with organizational commitment as an intervening variable. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 150 3. research method 3.1 research design this study can be classified as quantitative explanatory research. the data used in this study were primary data conducted by questionnaire survey. to investigate the relationship of variable, this research uses regression and path analysis with the help of spss software and sobel calculator to measure the direct and indirect effect. 3.2 population and sample the population in this study is all 218 employees of one crumb rubber factory in west sumatera, indonesia. the reason in choosing one of the rubber companies in indonesia as research object is due to the reason that those company has not operated their production effectively and efficiently. this study used the slovin formula to determine the sample size that obtained 141 employees. the simple random sampling used as a sampling technique 3.3 research framework h2 h1 h3 h1 h2 picture 1 research framework 4. research result and analysis 4.1 descriptive analysis table 1 profile of respondent information total percentage (%) sex male 115 81,6 female 26 18,4 age < 20 – 29 years old 40 28,4 30 – 39 years old 69 48,9 > 40 years old 32 22,7 level of education high school 105 74,5 diploma 17 12 bachelor 19 13,5 source: primary data processed, 2019 organizational culture (x2) organizational commitment (z) employee performance (y) locus of control (x1) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 151 majority of the respondent in this study is male with a range of ages between 30-39 years old and the high school graduated. there is no different respond between respondents regarding their commitment and performance from gender (sex), distribution of ages, and level of education point of view. profile of respondents in the study is presented in table 1. 4.2 validity and reliability table 2 validity result variable item r-test r-statistic 5% decision n = 141 df (n-2) 139 locus of control (x1) 1 0,621 0,165 valid 2 0,706 0,165 valid 3 0,636 0,165 valid 4 0,899 0,165 valid 5 0,556 0,165 valid 6 0,899 0,165 valid 7 0,728 0,165 valid 8 0,573 0,165 valid 9 0,899 0,165 valid 10 0,899 0,165 valid organizational culture (x2) 1 0,709 0,165 valid 2 0,926 0,165 valid 3 0,969 0,165 valid 4 0,883 0,165 valid 5 0,524 0,165 valid 6 0,709 0,165 valid 7 0,926 0,165 valid 8 0,969 0,165 valid 9 0,883 0,165 valid 10 0,524 0,165 valid organizational commitment (z) 1 0,918 0,165 valid 2 0,921 0,165 valid 3 0,986 0,165 valid 4 0,957 0,165 valid 5 0,661 0,165 valid 6 0,831 0,165 valid 7 0,918 0,165 valid 8 0,921 0,165 valid 9 0,986 0,165 valid 10 0,957 0,165 valid http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 152 variable item r-test r-statistic 5% decision n = 141 df (n-2) 139 employee performance (y) 1 0,637 0,165 valid 2 0,671 0,165 valid 3 0,434 0,165 valid 4 0,533 0,165 valid 5 0,671 0,165 valid 6 0,831 0,165 valid 7 0,831 0,165 valid 8 0,755 0,165 valid 9 0,811 0,165 valid 10 0,831 0,165 valid 11 0,755 0,165 valid 12 0,759 0,165 valid 13 0,831 0,165 valid 14 0,755 0,165 valid 15 0,759 0,165 valid source: primary data processed, 2019 table 3 reliability result variable n=141 rule of thumb decision item cronbach alpha locus of control 10 0,920 0,5 reliable organizational culture 10 0,953 0,5 reliable employee performance 15 0,944 0,5 reliable organizational commitment 10 0,979 0,5 reliable source: primary data processed, 2019 based on both tables, it can be concluded that all items and variables in this research are valid and reliable. 4.3 research analysis a good regression model must have no symptoms of heteroskedasticity, autocorrelation, multicollinearity, and normal distribution. the classical assumption testing can be seen below. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 153 a. normality test from the table 4, the normality test shows asymp. sig (2-tailed) is higher than 0,05, which is 0,107. this means that the data is normally distributed so that it is appropriate to be used for multiple regression analysis. table 4 one-sample kolmogorov-smirnov test description unstandardized residual n 141 normal parametersa,b mean ,0000000 std. deviation 5,27990228 most extreme differences absolute 0,102 positive 0,059 negative -0,102 kolmogorov-smirnov z 1,211 asymp. sig. (2-tailed) 0,107 source: primary data processed, 2019 b. multicollinearity test from the table 5, it can be seen that all tolerance values > 0,10 and the vif value <10, it means that there are no symptoms of multicollinearity between independent variables. thus it can be concluded that the regression equation used as a prediction in this study is free from classical assumptions. table 5 multicollinearity test model collinearity statistics tolerance vif 1 (constant) organizational culture 0,885 1,130 employee performance 0,976 1,025 organizational commitment 0,867 1,153 source: primary data processed, 2019 c. heteroscedasticity test from picture 2 it can be seen that there is no heteroscedasticity in the regression model because there is no clear pattern and the points spread above and below the number 0 on the y-axis. so that it can be said that the heteroscedasticity test is fulfilled. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 154 picture 2 scatterplot (primary data processed, 2019) d. autocorrelation test table 6 autocorrelation test r r square adjusted r square std. error of the estimate durbin-watson 0,828a 0,685 0,678 5,337 2,226 source: primary data processed, 2019 from the table 6, it can be seen that the d-w value obtained is 2,226. the number is close between -2 to + 2. this means that the regression model does not have an autocorrelation problem. table 7 regression model 1 result model unstandardized coefficients standardized coefficients t sig. b std. error beta (constant) 18,702 5,265 3,552 0,001 locus of control 0,433 0,102 0,336 4,240 0,000 organizational culture 0,163 0,089 0,146 1,843 0,067 source: primary data processed, 2019 the regression test shows that the significance value between locus of control and organizational commitment is below 0,05. so it can be concluded that locus of control has a significant effect on organizational commitment. meanwhile, the significance value between organizational culture and organizational commitment is above 0,05; it indicates that organizational culture does not have a significant effect on organizational commitment. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 155 table 8 regression model 2 result model unstandardized coefficients standardized coefficients t sig. b std. error beta (constant) 18,530 2,892 6,408 0,000 locus of control 0,671 0,057 0,599 11,755 0,000 organizational culture 0,115 0,047 0,118 2,435 0,016 organizational commitment 0,334 0,045 0,384 7,468 0,000 source: primary data processed, 2019 based on the results of the regression test, it is shown that the significance value between locus of control, organizational culture, organizational commitment with the employee performance is below 0,05. so that it can be concluded that locus of control, organizational culture, and organizational commitment has a significant effect on employee performance. table 9 sobel test variable sobel test score p-value x1-z-y 6,278,458 0,000 x2-z-y 2,323,795 0,020 source: primary data processed, 2019 based on the results of the sobel test, it can be concluded that there is an indirect effect between locus of control and organizational culture on employee performance through organizational commitment as the intervening variable (a significance value below 0,05). 4.4 research discussion h2 h1 h3 h2 picture 3 research result this research result support previous research from saputra (2014), chen, & silverthorne (2008), pardiman (2018), yeh, & hong (2012) that states there is direct effect between locus of control and employee performances and organizational commitment (khushk, 2019). this research also supports jufnidar, & ma'arif (2018) argument that states culture has a positive effect toward employee performance. unfortunately, this research failed to prove øgaard, larsen, & marnburg (2005) argument that states there is a relationship between culture and organizational commitment. organizational culture (x2) organizational commitment (z) employee performance (y) locus of control (x1) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 156 this result indicates that employee prefers to do a job in freedom way than being compelled to do it rigidly so while organizational try to build and maintain strong culture, they also need to be flexible. sunarsih & mashithoh (2016) argues that the insignificant relationship between organizational culture and commitment indicates that the company culture is not adaptive to growth and development within an organization. finally, this study also succeeded in proving that there is an indirect influence between locus of control and organizational culture toward employee performance with organizational commitment as an intervening variable. 5. research conclusion and limitation 5.1 conclusion based on the results of the hypotheses tests that have been done, it can be concluded that locus of control has a positive and significant direct effect toward organizational commitment. locus of control, organizational culture, and organizational commitment partially also have a positive and significant direct effect toward employees of performance. this study also succeeded in proving that there is an indirect influence between locus of control and organizational culture on employee performance through the intervening of organizational commitment. unfortunately, this research failed to prove the relationship between organizational culture and commitment. this result indicates that employee prefers to do a job in freedom way than being compelled to do it rigidly. 5.2 limitation due to time constraints, the researcher had limited time in developing this research. for the next researcher, it is expected to further develop the results of this study and include relevant variables related to organizational commitment and employee performance in the hope that the results of the research to be more accurate and have far greater benefits so that the company can improve and develop human resources in the future years. references amalini, h. f., al musadieq, m., & afrianty, t. w. 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(2018). the role of organizational control systems in employees’ organizational trust and performance outcomes. group & organization management, 43(2), 179-206. https://doi.org/10.1177%2f1059601117725191. wahyuni, e. s., taufik, t., & ratnawati, v. (2016). pengaruh budaya organisasi, locus of control, stres kerja terhadap kinerja aparat pemerintah daerah dan kepuasan kerja sebagai variabel intervening (studi empiris pada pemerintah kabupaten bengkalis). jurnal manajemen, 20(2), 189-206. http://dx.doi.org/10.24912/jm.v20i2.43. wickramasinghe, m. d. n., & sajeevani, t. l. (2018). the impact of rewards on retention of operational level employees in three apparel sector companies in export processing zone in biyagama, sri lanka. human resource management journal, 6(2). https://doi.org/10.31357/hrmj.v6i2.3587.g2843. yeh, h., & hong, d. (2012). the mediating effect of organizational commitment on leadership type and job performance. the journal of human resource and adult learning, 8(2), 50. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 159 *) sitti rizki mulyani, department of management, university of putra indonesia yptk, padang, indonesia (email: sittirizkimulyani@upiyptk.ac.id) **) marta widian sari, department of management, university of putra indonesia yptk, padang, indonesia (email: martawidiansari@upiyptk.ac.id) ***) vivi nila sari, department of management, university of putra indonesia yptk, padang, indonesia (email: vivinilasari@upiyptk.ac.id) ****) winda tawakalni, department of management, university of putra indonesia yptk, padang, indonesia (email: winda.tawakalni040610@gmail.com) http://creativecommons.org/licenses/by/4.0/ developing sustainable corporate social responsibility based on islamic perspective by noor shodiq askandar, junaidi, masyhuri machfudz jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 155 developing sustainable corporate social responsibility based on islamic perspective noor shodiq askandar *) junaidi **) masyhuri machfudz ***) abstract corporate social responsibility (csr) issues are constantly evolving nowadays since social and ethical issues have received public attention and high regulatory pressure regarding this issue. malang regency has implemented the csr since long time ago. every company in malang regency has obligated to implement csr program. the potential of csr in malang regency itself is very big when viewed from the total number of companies that reaches 1,350 companies both in small and large scale. there are also 76 sugar factories in indonesia and most of them are located in east java, including kebon agung which located in malang regency. this study can be classified as narrative qualitative research with kebon agung as a research objective. this study used formal interviews, and participant observation as data collected method. this study concluded that economic motives considered as the most appealing csr program from both the company and the csr target group perspective. economic development is impossible without a good education. education is indispensable to economic development. the financial business incentives of csr program should follow by providing good education, training, and mentoring in purpose to achieve its effectiveness. to get the better knowledge, the education, training, and mentoring program should collaborate with the regulator, academicians, and professional. keywords: corporate social responsibility; csr; sustainable; islam; kebon agung 1. introduction 1.1 research background corporate social responsibility (csr) is the government programs regulated by law that should be supported. malang regency has implemented the csr since long time ago. every company in malang regency has obligated to implement csr program. the potential of csr in malang regency itself is very big when viewed from the total number of companies that reaches 1,350 companies both in small and large scale. there are also 76 sugar factories in indonesia, and most of them are located in east java, including kebon agung which located in malang regency. currently, the kebon agung csr program can be defined in two agenda which is the physical and economic development program. for the physical related program, kebon agung provides nutrition for children under five years old, scholarship, and staple food. in addition to these programs, there is also non-routine assistance provided, such as waterways improvements, construction of village gates, road repairs, youth group development funding, and the commemoration of independence funding. for the related economic program, kebon agung builds 68 kiosks, giving a capital loan to kebon agung area micro small medium entreprises, and giving financial incentives stimuli to farmers that located near kebon agung area. interestingly, the most prominent impact that people feel related in improving their quality of life is a capital lending program. a lot of people admitted that this program has directly affected in grows their own business and adds their consumption level. while at the same time, the perceived http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 156 impact of other programs is beneficial, but some of them are only perceived in the relevant field, it does not directly affect the welfare conditions of life. this research aims to revitalize the previous csr program by providing a new smart model of csr that relevant for both kebon agung business challenges and csr target group. 1.2 research problem a) what is the proposed of new smart csr model based on islam perspective that relevant for both kebon agung business challenges and csr target group? b) how the proposed of new smart csr model based on islam perspective that relevant for both kebon agung business challenges and csr target group works? 1.3 research purpose the purpose of this research is to discover and develop new smart csr model that relevant for both kebon agung business challenges and csr target group based on islam perspective. this research also aims to find out how the proposed of new smart csr model based on islam perspective that relevant for both kebon agung business challenges and csr target group works. 2. theoretical framework 2.1 the emergence of csr csr issues are constantly evolving nowadays since social and ethical issues have received public attention and high regulatory pressure regarding this issue. on the other hand, in company perspective it can be a difficult because csr is no more than the paradox, it is almost impossible in improving environmental and social issue while at the same time accomplishing financial goals. therefore, it is important that managers should be given an authority to set other goals than financials (epstein, buhovac, & yuthas, 2010). in general, carroll (1979) defined csr as a construct that "….encompasses the economic, legal, ethical, and discretionary expectations that society has of an organization at a given point in time." there are several previous research and theory regarding csr like social contract theory, stakeholder theory, legitimacy theory, and instrumental theory. the differences between those theory can be shown in table 1 : table 1 theory differentiation theory definition social contract business should act responsibly manner not only because of its commercial interest but also implicit social expectation. stakeholder csr is an obligation to stakeholders figures prominently in the decision making of managers. legitimacy csr is a response to the environmental pressures involving social, economic, and political. instrumental business may choose to support some social program due to the reason that those act may enhance their reputation, competitive advantages or other strategic reason that linear with shareholder interest. source: epstein, buhovac, & yuthas (2010) there is a four-part dimension of csr which is economic responsibility, legal responsibility, ethical responsibility, and discretionary responsibility (carroll, 1979). economic responsibility is the basic foundation of the dimension while discretionary responsibilit y as the top of dimension. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 157 2.2 csr on islamic perspective the concept of benevolence or ihsan which means an act (kindness) that benefit another person, environment, and society from whom the act proceeds without any obligation (volunteer act) except acquiring allah pleasure, somewhat similar to csr concepts that proposed by western culture (mir, hassan, & hassan, 2016). although other researchers argued that the concept of csr from the islamic perspective is broader and comprehensive because its derived from al-quran and sunnah (hassan, 2016). bakar & yusof (2015) added that the objective of csr in the islamic perspective is to achieve social justice and to obtain barakah in this life and hereafter. alamer, salamon, qureshi, & rasli (2015) stated that csr program should focus on four program which is social activities (charity), environmental, human resources empowerment and development, and financial or investment supports. for social activities aspects like charity, allah stated that “o you who believe! spend of the good things which you have (legally) earned…….and do not aim at that which is bad to spend from it…” (al-baqarah verse 267), also “o you who believe! do not render in vain your charity by reminders of your generosity or by injury, like him who spends his wealth to be seen of men…." (al-baqarah verse 264). for environmental aspects, allah stated that “and don’t corrupt on earth after its reformation, and pray for him with fear and hope. god’s mercy is near to the doers of good” (al-a’raf verse 56). for human resources empowerment and development aspects, allah stated “o you who believe! eat no up your property among yourself unjustly, but let there be among you trade by mutual consent…” and “…god elevates those among you who believe, and those given knowledge many steps. god is aware of what you do” (al-mujadilah verse 11). lastly, for investment aspects, allah stated that “…it is we who have allocated their livelihood in this life, and we elevated some of them in rank above others, that some of them would take others in service..” (az-zukhruf verse 32) and “….so that it may not circulate solely between the wealthy among you” (al-hasyr verse 7). dusuki (2008) proposed the five level of corporate social responsibility continuum, as bellows : table 2 the five level of corporate social responsibility continuum level description level 1: irresponsible companies at this level become irresponsible and even breaches the minimum moral standards required by law like dumping toxic waste, fraud, financial statement dressing, false advertising, violating employees, etc. level 2: minimalist companies at this level just focused on fulfilling the minimal requirement that regulated by law. level 3: apathetic companies at this level operate within the ambit of law, and there is no strategic effort when developing csr activities, less engagement. level 4: tactical companies at this level fulfill their social responsibility in various csr activities which they perceive can give benefit to the firm in the long run, good publicity, and enhances companies reputation. level 5: taqwa companies at this level have a belief that they should be socially responsible to others regardless of the financial consequences, positive or negative source: dusuki (2008) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 158 3. research method 3.1 research design a qualitative narrative research design is chosen to describe csr activities at kebon agung. qualitative research is a rich type of research regarding people, place, and conversation descriptions, which is not easily handled using statistical procedures (bogdan & biklen 2003). while the narrative is "the objectification of thought as the externalized thought is apprehended in its form of oral reporting" (muylaert, sarubbi jr., gallo, neto, & reis, 2014). the researcher also used the case study as an instrument of the qualitative narrative research. greenhalgh, russel, & swinglehurst (2005) added that the case study itself involves detailed reflexive fieldwork leading to rich authentic description. therefore, this methods requires an in-depth investigation of an organization or teams like a formal interview, focus groups, and participant observation. 3.2 research informants data collected in this study used the formal interview and participant observation. the number of the informant in this research was 4 informants. the selected informants from agricultural and non-agricultural sectors were those who filled out letters of willingness to participate. informants who met the quantity and variation requirements were determined by saturations. saturation is used when informants tend to provide redundant information instead of new information (nieswiadomy, 2002). 3.3 research framework picture 1 research framework 4. research result and analysis currently, the kebon agung csr program can be defined in two agenda which is a physical and economic development program. for the physical related program, kebon agung provides nutrition for children under five years old, scholarship, and staple food. in addition to these programs, there is also non-routine assistance provided, such as waterways improvements, construction of village gates, road repairs, youth group development funding, and the commemoration of independence funding. for the related economic program, kebon agung builds more than 60 kiosks, giving a capital loan to kebon agung area micro small medium entreprises and giving financial incentives stimuli to farmers that located near kebon agung area. however, research from askandar (2017) shows that 67-70 percent of csr activities was ineffective and has no impact on communities welfare. based on the observation, it can be seen that there is a gap between the older generation and the young generation in term of their agricultural interest. young generation prefers to leave their villages or hometown to pursue their career rather than stay in their villages and ended as a farmer. several informants also said that they are considered to sell their land to cover their son educational cost, building a new house, and for saving reason. this behavior finally ended in the foster father paradox that makes them difficult to reach an independence stage. the migration ambition from young people in the near community of kebon agung can be considered as a threat for the future business of kebon agung. if the condition and mindset remain still, kebon agung may lose both human capital and raw material supply in the near future. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 159 therefore, csr program should focus only on human empowerment/development and financial support as alamer, salamon, qureshi, & rasli (2015) recommendation. it also considered as legitimacy act from the company point of view. the new csr program should develop through education, training, and mentoring activity with agricultural long-term profitability, households income management, and accounting as the main topic. in term of financial support recommendation, financial incentives model should be considered as one of an alternative solution. based on the observation, it can be seen that there is positive response regarding financial incentive stimulus idea from the farmers near kebon agung area. incentives should divide when farmers accomplished the target like cassava production in specific criteria/kg and cassava flour innovation to minimalize the risk. meanwhile, another target group of this research which is a non-agricultural group that consists of creative economy actors stated that they are very satisfied with the csr activity (financial support) that arranged by the company. they feel helped by the incentives which have no interest so they can give the money back by the ability and the condition of the business. they think that the program shows that the company is trying to improve the local community through its actions in ways that are visible. unfortunately, there is only about 25% of local business partner that can be categorized as a sustainable program. while another 75% unfortunately classified as a failed partnership because has no impact in improving the local business and social welfare sustainable. islam prohibits poverty as it is close to disbelieve. economic sustainability in islam means “economics performances that continually generates satisfaction of the spiritual need and the nonmaterial need of people” (sarkawi, abdullah, & dalih, 2016). allmendinger & leibfried (2003) stated that there is a strong relationship between education and training toward local economic development. kotaskova, prochazka, smutka, maitah, kuzmenko, kopecka, & honig (2018), ozturk (2001) and chinese philosophy which stated "give a man a fish and he will eat for a day. teach a man to fish and he will eat for the lifetime" also support allmendinger & leibfried (2003) research result. more than that, education is not only has a positive relationship to economic development but also toward their income (psacharopoulos, 1992) and productivity (deraniyagala, 1995). quran also said that “…god elevates those among you who believe, and those given knowledge many steps. god is aware of what you do” (al-mujadilah verse 11). based on the observation, many of failed partnership happens because the local business has lack education in business management. they tend to use most of the csr financial support not to develop their own business but for households consumption purpose. it's more complicated because their financial business mixed with their financial family. therefore, the new csr program should develop through education, training, and mentoring activity. the topics should offer in various topics due to the reason that many of them have lack education in accounting management (can't differentiate between business and households operational income), marketing management (packaging and branding), and leadership management. 4.1 research proportion therefore, the research proportion proposed in this study are; p1 economic motives considered as the most appealing csr program from both the company and the csr target group perspective p2 economic development is impossible without a good education. education is indispensable to economic development. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 160 p3 the financial business incentives of csr program should follow by providing good education, training, and mentoring in purpose to achieve its effectiveness. 5. research conclusion and limitation 5.1. conclusion there is a gap between the older generation and the young generation in term of their agricultural interest. the young generation prefers to leave their villages or hometown to pursue their career rather than stay in their villages and ended as a farmer. economic motives considered as the most appealing csr program from both the company and the csr target group perspective economic development is impossible without good education. education is indispensable to economic development. the financial business incentives of csr program should follow by providing good education, training, and mentoring in purpose to achieve its effectiveness. the education, training, and mentoring program should collaborate with regulators, academicians, and professional. 5.2. limitation this study only focused on kebon agung sugar factory as the research object. therefore, researchers recommend the future study to use other company at malang regency to get better knowledge about the best sustainable model of csr. references alamer, a. r. a., salamon, h. b., qureshi, m. i., & rasli, a. m. (2015). how do we measure corporate social responsibility of islamic banks through their business process and oriented outcomes? international journal of economics and financial issues, 5(special issue), 190-197. allmendinger, j., & leibfied, s. (2003). education and the welfare state: the four worlds of competence production. journal of european social policy, 13(1), 63-81. askandar, n. s. (2017). model pendampingan umkm dalam rangka pemanfaatan csr. malang: lembaga penelitian dan pengabdian universitas islam malang. bakar, f. a., & yusof, m. a. md. (2015). islamic concept god corporate social responsibility (csr) from the perspective of csr players at bank islam malaysia berhad. international conference on accounting studies (icas), 120-127. bogdan, r. c. & biklen, s.k. (2003). qualitative research for education: an introduction to theory and methods, fourth edition. needham height, ma: allyn & bacon. carroll, a. b. (1979). a three-dimensional conceptual model of a definitional construct. academy of management review 4(4), 497-505. deraniyagala, s. (1995). technical change and efficiency in sri lanka’s manufacturing industry. oxford: d. phill. dusuki, a. w. (2008). what does islam say about corporate social responsibility? review of islamic economic, 12(12), 5-28. epstein, m. j., buhovac, a. r., & yuthas, k. (2010). implementing sustainability: the role of leadership and organizational culture. strategic finance for grant, 41-47. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 161 greenhalgh, t., russel, j., & swinglehurst, d. (2005). narrative methods in quality improvement research. qual saf health care, 14, 443-449. https://doi.org/10.1136/qshc.2005.014712. kotaskova, y. k., prochazka, p., smutka, l., maitah, m., kuzmenko, e., kopecka, m., & honig, v. (2018). the impact of education on economic growth: the case of india. acta universitatis agriculturae et silviculturae mendelianae brunensis, 66(1). https://doi.org/10.11118/actaun201866010253. mir, u. r., hassan, s. m., & hassan, s. s. (2016). islamic perspective of corporate responsibility. al adwa 46(31), 77-90. muylaert, c. j., sarubbi jr., v., gallo, p. r., neto, m. l. r., & reis, a. o. a. (2014). narrative interviews: an important resource in qualitative research. rev esc enferm usp 48 (esp 2), 184-189. nieswiadomy, r. m. (2002). foundation of nursing research, fourth edition. upper saddle river, nj: prentice hall. ozturk, i. (2001). the role of education in economic development: a theoretical perspective. journal of rural development and administration, xxxiii(1), 39-47. psacharopoulos, g. (1994). return to investment in education: aglobal update. world development, 22(9). sarkawi, a. a., abdullah, a., & dalih, n. md. (2016). the concept of sustainability from the islamic perspectives. international journal of business, economics, and law, 9(5), 112-116. *) noor shodiq askandar, department of accounting, university of islam malang, malang, indonesia (email: nsaskandar@unisma.ac.id) **) junaidi, department of accounting, university of islam malang, malang, indonesia (email: junaide_fe@unisma.ac.id) ***) masyhuri machfudz, department of agriculture, university of islam malang, malang, indonesia (email: mmachfudz@unisma.ac.id) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 67-77 http://dx.doi.org/10.31106/jema.v17i1.4951, issn (online) 2597-4017 67 job satisfaction and turnover intention among public sector nurses: is workload and burnout the issue? lenny dwinijanti1, m. f. arrozi adhikara2*, rokiah kusumapradja3 1 pps mars, universitas esa unggul, jakarta, indonesia 2 department of accounting, faculty of economics and business, universitas esa unggul, jakarta, indonesia 3 pps mars, universitas esa unggul, jakarta, indonesia *corresponding author(s) email: arrozi@esaunggul.ac.id abstract the growing rate of nurse turnover is unavoidable and inevitable. nursing considered one of the most stressful occupations in the health industry. unfortunately, there are limited studies published in indonesia that explain this phenomenon among clinical nurses. this study aims to describe the nurse job satisfaction and turnover intention at public hospitals from workloads and burnout perspective. the design used in this study was quantitative with the survey approach. the data were collected by using simple random sampling from the hospital (cluster b) nurses with the total participant was 190 nurses. the result of this study shows that workload and burnout affect job satisfaction directly. the mediator role of job satisfaction in the effect of workload and burnout on turnover intention is significantly proved. interestingly, this study failed to prove the effect of workload on turnover intention which means that although many nurses experienced a heavy workload, the majority of nurses in this study feel that the workloads are still reachable or even low due to their young aged. they tend to keep the job since it’s difficult to find any other opportunities. they will intend to leave their job only if they experienced a greater level of burnout and disenchantment. keywords: workload; burnout; job satisfaction; turnover intention; healthcare jel code: j28, j29 doi: 10.31106/jema.v17i1.4951 article history: received 2019-11-29 reviewed 2019-12-08 revised 2019-12-25 accepted 2020-01-28 licensed: cc-by mailto:arrozi@esaunggul.ac.id http://creativecommons.org/licenses/by/4.0/ job satisfaction and turnover intention among public sector nurses: is workload and burnout the issue? by lenny dwinijanti, m. f. arrozi adhikara, rokiah kusumapradja 68 introduction nurse turnover becoming a global issue in the healthcare industry. the growing rate of nurse turnover across the world is undeniable high, ranged from 13-37% (roche et al., 2015). a similar finding was also reported by (dewanto & wardhani, 2018) who found that there are 13-35% of the nurse turnover rate in indonesia. kovner et al. (2014) added that about 17.5% of new nurses tend to leave their job after gained a year of experience. the need to understand the nurse turnover contributors remains essential especially since the costs associated with nurse turnover are significantly higher. several factors can influence nurse turnover. seo et al. (2004), sveinsdóttir et al. (2006), zeytinoglu et al. (2007) stated that workload is one of the crucial factors that can affect job satisfaction. yin & yang (2002) added that work stress due to heavy workload considered one of the most frequent reasons for nurses to leave their job. therefore, it can be concluded that the heavy workload perceived by nurses, the lower the job satisfaction will be. thus, the lower the job satisfaction resulting in the greater the nurse's intention to leave (utami & bonussyeani, 2009) burnout also considered a significant predictive aspect for job satisfaction (kalliath & morris, 2002; oliveira et al., 2018). chen et al. (2013) describe burnout through various dimensions like long working hours and mental depression, the evaluation assessment system, hospital culture, patient relationships, and the environment. piko (2006), weng et al. (2011), khamisa et al. (2016). stated that there is a negative relationship between burnout and job satisfaction which means that the higher the level of burnout will lead to the less satisfaction. also, a greater level of burnout will lead to a high turnover intention (scanlan & still, 2013). in other words, a higher level of burnout associated with lower job satisfaction and high turnover intention. job satisfaction and turnover intention among healthcare nurses is an extraordinarily important issue that healthcare management needs to deal with. not only it will affect the turnover cost including separation costs, temporary replacement costs, recruitment costs, and induction costs (hayes et al., 2012), but it also will reduce patient satisfaction (de simone et al., 2018). while the majority of prior related studies have mainly focused on exploring the dimension of satisfaction and turnover intention from various perspectives, there are limited studies published in indonesia that explain this phenomenon among clinical nurses. accordingly, the purpose of this study is to describe the relationship between workloads, burnout, satisfaction, and turnover intention at indonesia public hospitals. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 67-77 http://dx.doi.org/10.31106/jema.v17i1.4951, issn (online) 2597-4017 69 literature review turnover intention long & thean (2011) and dysvik & kuvaas (2010) defined turnover intention as an employee consciousness and deliberate wilfulness to leaving the organization permanently soon. turnover intention is the final stage in the decision-making process before individual leaves the organization (bothma & roodt, 2013; adhikara et al., 2017). scanlan et al. (2010) classified turnover intention predictor into two conceptualization model which is the internal and external push/pull factors. scanlan & still (2013) added that internal pull is job-related factors that encourage individuals to stay while internal push is job-related factors that encourage individuals to leave the organization. external pull can be described as various factors that attract a person to another job while external push is non job-related factors that can encourage a person to leave a position such as individual commitment (pardiman, 2018) . workload the workload can be described as a degree to which work role demands are excessive (seo et al., 2004). yuyu zhang & kumada (2017) added that there are three ways of measurements of mental workload, which is self-reported, performance, and physiological measures. in the present study, we use self-reported measures in which individuals respond to a question set that summarizes the influences of many factors after a task is completed. research from seo et al. (2004), sveinsdóttir et al. (2006), zeytinoglu et al. (2007) concluded that there is a significant relationship between workload and job satisfaction also workload and turnover intention (yin & yang, 2002). h1a: there is a significant relationship between workload and job satisfaction. h1b: there is a significant relationship between workload and turnover intention. burnout schaufeli & greenglass (2001) defined burnout as psychological syndrome of depersonalization, emotional and mental exhaustion that can occur among individuals for long term involvement in a work situation that very demanding. burnout is more prevalent among nurses than other health professionals (mchugh et al., 2011). research from piko (2006), weng et al. (2011), scanlan & still (2013), khamisa et al. (2016) concluded that there is a relationship between burnout, job satisfaction, and turnover intention. the higher the level of burnout the lower the job satisfaction and the high the turnover intention will be. h2a: there is a significant relationship between burnout and job satisfaction. job satisfaction and turnover intention among public sector nurses: is workload and burnout the issue? by lenny dwinijanti, m. f. arrozi adhikara, rokiah kusumapradja 70 h2b: there is a significant relationship between burnout and turnover intention. job satisfaction job satisfaction has been defined in many ways. amponsah-tawiah et al. (2016) defined job satisfaction as an employee's feelings and thoughts about the overall aspect of the job. job satisfaction also referred to the collection of feelings and beliefs that employees have about their assigned tasks or job experience (rezaiean et al., 2010). job satisfaction playing an important role in health care service. ylitörmänen et al. (2019) added that job satisfaction in nursing can be classified into three attributes which are an interpersonal relationship, autonomy, and patient care. unfortunately, job satisfaction among health care is lower compared to other organizations. moreover, low levels of nurse job satisfaction are related to high turnover (murray, 2002). h3: there is a significant relationship between job satisfaction and turnover intention. research from (yimin zhang & feng, 2011) has been conceptualized the relationship between burnout, job satisfaction, and turnover intention. job satisfaction has a negative relationship on turnover intention but positively related to burnout syndrome subscales. (richardson & lanis, 2007) indicated that there is a relationship between heavy workload, job satisfaction, and turnover intention. h4a: there is a significant relationship between workload and turnover intention with job satisfaction as a mediation role. h4b: there is a significant relationship between burnout and turnover intention with job satisfaction as a mediation role. methods this research can be classified as quantitative research with the survey questionnaire used as the data collection strategy. the questionnaires assessed workload, burnout, turnover intention, and job satisfaction playing as mediating roles. a cross-sectional survey was carried out by using simple random sampling from the hospital (cluster b) nurses in jakarta, indonesia, with total participants were 190 nurses. for data analyses, correlational statistical procedures with mediation variables were applied for generating plausible and explanations for relationships between variables. measurements of all the items were achieved by using a 5-point likert scale (ranging from 1="strongly disagree" to 5="strongly agree"). jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 67-77 http://dx.doi.org/10.31106/jema.v17i1.4951, issn (online) 2597-4017 71 based on our literature review, we build the research model to visualize the effect of workload and burnout to turnover intention with job satisfaction as a mediation role. the visualization of the research model can be described as follows. figure 1. research framework kaiser-meyer-olkin (kmo) and cronbach alpha used to test the validity and reliability of each instrument. while path analysis used to test the hypotheses of the study. (ji et al., 2015) stated that the value of kmo should higher than 0.500 and p should lower than 0.050 and the minimum acceptance rule of cronbach alpha value is that α of 0.600-0.700 (ursachi et al., 2015). table 1 shows that all items measured in this study were valid and reliable. table 1. validity and reliability testing variable kaiser-meyer-olkin cronbach alpha workload 0.662 0.771 burnout 0.669 0.747 job satisfaction 0.664 0.854 turnover intention 0.773 0.853 result and discussion table 2. direct effect testing model b standard error sig. decision workload -> job satisfaction 0.409 0.104 0.000 h1a accepted burnout -> job satisfaction 0.285 0.097 0.004 h2a accepted workload -> turnover intention 0.205 0.116 0.082 h1b rejected burnout -> turnover intention 0.238 0.109 0.031 h2b accepted job satisfaction -> turnover intention 3.313 0.099 0.002 h3 accepted this study supports previous studies by seo et al. (2004), sveinsdóttir et al. (2006), piko (2006), zeytinoglu et al. (2007), weng et al. (2011), scanlan & still (2013), khamisa et al. h1b h1a h3 h2a h4a,b h2b workload turnover intentionjob satisfaction burnout job satisfaction and turnover intention among public sector nurses: is workload and burnout the issue? by lenny dwinijanti, m. f. arrozi adhikara, rokiah kusumapradja 72 (2016) that stated there was significant relationship between workload, burnout, and job satisfaction also burnout on turnover intention. the significant values of those relationships (0.000, 0.004, 0.031) were lower than 0.050 which means that h1a, h2a, h2b are accepted. interestingly, unlike the previous studies which claim that there is a negative correlation between workload, burnout on job satisfaction and turnover intention which means that the higher the level of workload and burnout perceived by nurses the lower the level of satisfaction, this study found the opposite. nurses who have worked two years or less with age under 30 years have the largest total proportion in this study. bunce & sisa (2002) concluded that at the same relative workloads, a young individual tends to rate their workloads level lower than older individuals. therefore, it's clear that although the level of workloads in this study classified in a high level, the majority of respondent feels that the workloads are still reachable or even low due to their young aged and perhaps to their lack of awareness of task demands (dommes, 2019). lavigne et al., 2012) added that an individual with a harmonious passion for works would lead to low levels of burnout. it means that although from an outside perspective the level of burnout can be defined as the highest, the majority of the respondent in this study feels the opposite. they are enjoying work as a nurse, commit to doing the tasks passionately, and don't feel any burnout feelings. they will intend to leave their job only if they experienced a greater level of burnout and disenchantment. this study also proved that there was a significant relationship between job satisfaction and turnover intention (h2b) due to the significant values of the job satisfaction and turnover intention relationship (0.002) were lower than 0.050. unfortunately, this study failed to prove the proposed hypothesis that stated there was a significant relationship between workload and turnover intention. the significant values of the workload and turnover intention relationship (0.082) were higher than 0.050 which means that h1b is rejected. the nurse respondent in this study respondent feels that the workloads are still reachable or even low. therefore, they found no reason why they should leave their job. table 3. indirect effect testing model sobel sig. decision workload -> job satisfaction -> turnover intention 3.906 0.000 h4a accepted burnout -> job satisfaction -> turnover intention 2.927 0.003 h4b accepted table 3 shows that the role of job satisfaction as a mediator relationship between workload, burnout, and turnover intention was significantly proved. the significant value of jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 67-77 http://dx.doi.org/10.31106/jema.v17i1.4951, issn (online) 2597-4017 73 the sobel test which lower than 0.050 means that h4a, h4b are accepted. this finding supports previous research from zeytinoglu et al. (2007) and yimin zhang & feng (2011) that concluded there was a significant relationship between workload, burnout, and turnover intention with job satisfaction as a mediation role. conclusion and suggestion the result of this study shows that workload and burnout affect job satisfaction directly. the mediator role of job satisfaction in the effect of workload and burnout on turnover intention is significantly proved. interestingly, this study failed to prove the effect of workload on turnover intention which means that although from an outside perspective the level of workload and burnout can be defined as the highest, the majority of the respondent in this study feels the opposite. they are enjoying work as a nurse, feels that the workloads are still reachable or even low, commit to doing the tasks passionately, and don't feel any burnout feelings. they found no reason why they should leave their job especially since it’s difficult to find any other opportunities. they will intend to leave their job only if they experienced the greater level of burnout and disenchantment. further research should focus on the exploration of the maximum point level of workload and burnout to determine the likelihood of job satisfaction and turnover intention behavior. references adhikara, a., maslichah, & diana, n. 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(2017). relationship between workload and mindwandering in simulated driving. plos one, 12(5). https://doi.org/10.1371/journal.pone.0176962 is it true that transformational leadership style can shape employees motivation and performance? by hafid kholidi hadi jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 123 is it true that transformational leadership style can shape employees motivation and performance? hafid kholidi hadi *) abstract today the world is experiencing very rapid progress in all aspects of life. along with these advances, strong human resources with good the quality are increasingly needed to face the rapid and continuous change. limited liability company (perseroan terbatas/pt) is a profit-oriented business entity. pt. berau karya indah is a new pt in raw material processing industry which is trying to develop production in the manufacturing sector. this study can be categorized into a causality study because this study aims to discuss and analyze the influence of transformational leadership style on employees performance and motivation in pt. berau karya indah surabaya. the data analysis in this study used structural equation modeling (sem). the population used in this study is all 340 employees of the company. sample size in this study included 172 respondents who were selected using random sampling technique. the result of this research indicates that transformational leadership style has a significant influence on employee performance and transformational leadership has a significant impact on employees work motivation. keywords: transformational leadership; performance; motivation 1. introduction 1.1 research background within a company no matter how sophisticated the technology of machinery and equipment that it has and uses, human resources remain an important factor in the success of an organization, both large-scale, and small-scale organizations. every company has a structure that indicates indicating a line of responsibility used to create maximum performance. in this modern era, where the flow of information and science and technology progress have developed so rapidly, a company has to face the reality that some aspects of the organization require changes and developments. and since these changes and developments are inevitable, the company's leader has an important role in responding to both. a leader must thoroughly understand the employee's behavior and have the capability to encourage the employees to perform the tasks according to their responsibility. soane, butler, & stanton (2015) suggest that the transformational leadership style has a positive impact on employee performance. this statement is similar to ugwu, enwereuzor, & orji (2016), that transformational leadership provides positive predictions in role performance. transformational leadership has a significant influence on work motivation, and work motivation has a positive effect on employees performance (syaifuddin, 2016). studies by pongpearchan (2016) show that transformational leadership and high-performance work system have a positive and significant influence on work motivation. 1.2 research problem a) does a transformational leadership style that includes charisma, inspiration, intellectual stimulation, and simultaneous individualized attention have a significant effect on employee performance and motivation in pt. berau karya indah? b) which are the dominant influence on employees performance and motivation in pt. berau karya indah? http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 124 1.3 research purpose the objectives of this research are to analyze the significant influence of transformational leadership variables -that includes charisma, inspiration, intellectual stimulation, and simultaneous individualized attentionon employee performance and motivation, and to analyze the dominant influence of the transformational leadership variables on employees performance and motivation in pt. berau karya indah. 2. theoretical framework and hyphoteses development 2.1 transformational leadership yukl (2005) state that leadership is the ability of an individual to influence, to motivate, and make others able to contribute to the effectiveness and success of the organization. another suggestion that an organization requires a leader is expressed by gibson (1993). he said that the most influential people in the group might be called leaders. leaders are important in a variety of organizational environments. actually, organizations will become less efficient without leaders. leadership style changes over time because a leader must be able to anticipate the future life of the organization or company. in this yukl (2005) states, transformational leadership and transactional leadership are different, but not an equally exclusive process. transformational leadership further enhances the follower's motivation and performance compared to transactional leadership. as stated by burns (1978), transformational leadership calls on the moral values of followers in their efforts to raise their awareness of ethical issues and to mobilize their energies and resources to reform institutions. basically, leadership behaviors can be categorized based on their orientation: task-oriented leadership behaviors and relationship-oriented leadership behaviors. transactional leadership style, which focuses more on the relationship of leader and subordinates without any effort to create changes for the subordinates, is task-oriented leadership behavior. while the transformational leadership style, in which a leader focuses on achieving changes in the values of beliefs, attitudes, behaviors, emotions and the subordinates needs of better change in the future, is relationshiporiented leadership behavior (yukl, 2005). the difference is that transactional leaders use rewards as a control mechanism for exchanging relationships that are explicitly established to externally motivate followers, while transformational leaders use rewards as a component of a system designed to increase followers commitment and to motivate followers (liu, 2007). according to ranupandojo & husnan (1995) style of leadership is as a pattern of behavior designed to integrate organizational goals with the individual goal to achieve a certain goal. it is in this leadership style that a person is chosen as a leader or manager because it is closely related to the objectives of the company to be achieved, the types of activities to be led, the characteristics of the labor, the business motives, and others. the ideal style of leadership uses all the available styles to the best of it. this means that situations may determine the style model that can be used. an effective leader should pay attention to the people, employees, production and strive to create a climate of job satisfaction and achievement of work that can produce the best quality. 2.2 motivation work motivation plays a very important role in determining the success of employees in carrying out the tasks assigned to them. as stated by anoraga (2006), the motivation of work is something that raises the spirit or the drive to work. robbins (1998) argues that human beings are always in a state of continuity. if a need is met, it is immediately replaced by other needs. maslow expressed the hierarchy of employees needs as follows: http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 125 physiological needs, an example of the need for food, drinks, physical protection, breathing, and sex. about this need, a leader has to provide decent salaries to employees. the need for a sense of security, an example of the need for protection from threats and the dangers of the work environment. about this need, a leader has to provide health benefits, accident insurance, housing, and pension funds. social needs, an example of the need to be accepted in the workgroup, to interact, to love and be loved. about this need, a leader has to accept the existence of employees as members of the working group and create a good interaction work and a harmonious working relationship. the need for self-esteem, an example of the need to be respected and appreciated by others. concerning this need, a leader should not arbitrarily treat employees because they need to be respected and rewarded for their work performance. needs of self-actualization, an example of the need to develop self-potential, put forward ideas, and provide judgment, criticism, and achievement. to these need, a leader has to provide opportunities for the employees so that they can actualize themselves well and reasonably in the company. 2.3 performance according to siagian (1995), performance is the behavior that is exposed by individuals or groups. regarding behavior, a person personality often manifests itself in the form of attitudes, ways of thinking, and how to act and the things that affect the personality of an organizational person reflected in the behavior that will affect the performance. 2.4 the influence of transformational leadership on motivation and performance according to yukl (2005), transformational leadership further enhances the follower's motivation and performance. the same is expressed by mujiasih & hadi (2003), that the practice of a transformational leadership style is capable of bringing about changes that have an impact on subordinates motivation, or changes that enable subordinates to increase their motivation to make extra efforts in achieving a performance beyond expected. a study conducted by vigoda & gadot (2006) also concludes that transformational leadership has a positive relationship with performance. this is in line with a study conducted by zareen, razzaq, & mujtaba (2015) that states the transformational leadership style has a positive impact on subordinates motivation. similarly, leadership styles control interpersonal, reward and punishments that shape employee behavior, motivation, and attitudes, which impact organizational performance (puni, ofei, & okoe, 2014). leaders who practice the quality of idealized influences, intellectual stimulation, inspirational motivation, and individual considerations, become successful in engaging their subordinates in making extra efforts (balyer, 2012). therefore, the hypotheses of this study are: h1: transformational leadership affects employees performance. h2: transformational leadership affects employees work motivation. 3. research method 3.1 research design this study can be categorized into a causality study because its purpose is to obtain evidence of the causal relationship of research variables (maholtra, 2005), which is to determine the effect of transformational leadership style on employees performance and motivation. the data analysis in this study used structural equation modeling (sem) which was operated through the program analysis of moment structure (amos) 16.0. sem analysis is aimed to obtain a structural model. the model obtained can be used to predict or prove the models. besides, sem can also be used to http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 126 see the magnitude of the influence, either directly or indirectly, or the effect of the total independent variable (exogenous variable) on the dependent variable (endogen) (sugiyono, 2009). analysis of moment structure (amos) is one of the programs used to process multidimensional and tiered research models. as a model of structural equations, amos has often been used in strategic management research ferdinand (2005) found that the appropriate sample size was between 100200 participants. the independent variable in this study is the transformational leadership style. transformational leadership calls for the moral values of followers in their efforts to raise their awareness of ethical issues and to mobilize their energy and resources to reform institutions. there are four components of the behavior of transformational leaders: charisma, inspiration, intellectual stimulation, and individualized attention. the dependent variables in this study are performance and work motivation. gomes (2003) stated that, performance is the result of work done by a person or group within a certain time. performance variables are measured using the following indicators: a) quantity of work defined as the amount of work contained within a certain period of time. b) quality of work defined as the quality of work achieved under the terms of conformity and readiness. c) job knowledge defined as knowledge of work and skills d) creativeness defined as the originality of emerging ideas and actions to solve the existing problems e) cooperative defined as willingness to cooperate with others (fellow members of the organization) f) dependability, in example awareness and credibility in terms of attendance and work completion. g) initiative, in example the spirit to perform new tasks and in enlarging responsibilities. h) personal qualities, ie personality, leadership, hospitality and personal integrity. meanwhile, the assessment of work motivation in this study is based on maslows opinion that says that employees motivation is determined by the following five factors: a) physiological needs (salary, worship time, workplace comfort) b) needs of security (the existence of jamsostek (social and employment security), pensions, job risk protection, corporate stability) c) social needs (employees feel like they are part of a family, the company organizes activities that involve all employees, employees help out each other) d) needs of self-esteem (awards for education, awards for work experience, awards for nonacademic ability, gender equality in employment, equality of workloads) e) needs of self-actualization (employees creativity, achievement awards and career development are provided, employees are involved in solving problems, giving confidence to employees in completing the work). 3.2 population and sample the population used in this study was the employees of pt. berau karya indah surabaya that consisted of 340 people (264 males and 76 females). the sample was also pt. berau karya indah surabaya employees, who were 172 people in total. this sample was taken using a simple random sampling technique. the sample members were selected randomly from the population regardless of the strata within the population. the total number will be randomly divided, consisting of employees of production, hrd & ga (general affair), finance & acc (accounting), and export divisions. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 127 3.3 research framework picture 1 research framework 4. research result and analysis 4.1 descriptive analysis table 1 distribution of respondent (sex) variable category frequency percentages sex male 140 81,4% female 32 18,6% source: primary data processed, 2018 table 2 distribution of respondent (education level) variable category frequency percentages education level senior high school (sma/slta) 143 83,1% diploma 23 13,4% s1 (bachelors degree) 6 3,5% source: primary data processed, 2018 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 128 table 3 distribution of respondent (work duration) variable category frequency percentages work duration < 1 year 35 20,3% 1-2 year 122 70,9% 2-3 year 15 8,7% source: primary data processed, 2018 based on the table of respondent characteristics, it can be concluded that: 81.4% of the employees at pt. berau karya indah are male (140 people) and 18.6% are female (32 people). the majority of employees at pt. berau karya indah are high school graduates (143 people / 83.1%), followed by diploma graduates (23 people / 13.4%), and s1 / bachelors degree graduates (6 / 3.5%). the majority of employees in pt. berau karya indah has worked for the company for 1-2 years, where as many as 122 people (70.9%) have worked for 1-2 years, 35 people (20.3%) have worked for less than 1 year, and 15 people (8.7%) have worked for 2-3 years. 4.2 validity and reliability validity test was done through convergent validity, where an indicator is said to have convergent validity if it has standardized regression weight value of > 0.50 and has a gfi value of 1 or close to it. while a dimension or variable is said to be reliable if it has a reliability construct value of 0.7. table 4 convergent validity and reliability construct test indicator validity test construct status estimate p status reliability x1 0,988 fix valid 0.716 reliable x2 0,992 fix valid x3 0,993 fix valid x4 0,986 fix valid x5 0,997 fix valid x6 0,994 fix valid 0,728 reliable x7 0,994 fix valid x8 0,997 fix valid x9 0,992 fix valid 0,686 reliable x10 0,995 fix valid x11 0,997 fix valid x12 0,987 fix valid 0,731 reliable x13 0,995 fix valid x14 0,998 fix valid source: primary data processed, 2018 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 129 table 5 convergent validity and reliability construct of employee performance test indicator validity test construct reliability status estimate p reliability y1.1 0,995 fix valid 0,717 reliable y1.2 0,992 fix valid y1.3 0,987 fix valid y1.4 0,990 fix valid y1.5 0,988 fix valid y1.6 0,981 fix valid y1.7 0,995 fix valid y1.8 0,995 fix valid source: primary data processed, 2018 table 6 convergent validity and reliability construct of employee motivation test indicator validity test construct status estimate p status reliability y2.1 0,996 fix valid 0,717 reliable y2.2 0,993 fix valid y2.3 0,990 fix valid y2.4 0,995 fix valid y2.5 0,994 fix valid y2.6 0,993 fix valid y2.7 0,977 fix valid y2.8 0,995 fix valid y2.9 0,995 fix valid y2.10 0,994 fix valid y2.11 0,994 fix valid y2.12 0,992 fix valid y2.13 0,981 fix valid y2.14 0,993 fix valid y2.15 0,996 fix valid y2.16 0,981 fix valid y2.17 0,998 fix valid source: primary data processed, 2018 based on the table, it is known that: a) all items of questions on the dimensions of charisma, inspiration, intellectual, and attention have the value of standardized regression weight greater than 0.5, and the value of construct reliability greater than 0.5. thus the question items that shape the dimensions of the inspirational, intellectual, and attention charisma are valid and reliable. b) all question items on the performance dimension have standardized regression weight value greater than 0.5, and construct reliability value of 0.717. thus the question items that make up the performance dimension are valid and reliable. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 130 c) all items of questions on the physiological, security, social, reward, and self-actualization dimensions have standardized regression weight greater than 0.5, and construct reliability value greater than 0.5. thus the question items that form the physiological, security, social, reward, and self-actualization dimensions are valid and reliable. 4.3 research analysis table 7 gof godness of fit index cut off value result decision probability  0,05 0,089 good chi-square/df.  2,00 2,120 marginal gfi  0,90 0,956 good tli  0,95 0,936 marginal cfi  0,95 0,967 good rmsea  0,08 0,065 good agfi  0,90 0.921 good source: primary data processed, 2018 based on the results of the fit model, it is known that there is 2 models in marginal and good enough category, and 5 models are in a good category. therefore, the conclusion of this research model is good and data analysis can be continued to the hypothesis discussion stage. 4.4 research discussion table 8 regression weight and standardized regression structural model est se cr p conclusion performance <--transform_lead .997 .001 179.046 .000 accepted motivation <--transform_lead .999 .002 259.321 .000 accepted ***) p = > 0.05 and cr > 1.96 source: primary data processed, 2018 this study is related to the discussion and findings of studies that have been done by other researchers before, including research by gyanchandani (2017), which states that transformational leadership impacts positively on team performance. the results reveal that transformational leaders make employees work in a more creative way that in turn makes the environment creative as well. jiang, zhao, & ni (2017) also found that employees sustainable performance is influenced by transformational leadership. the study was conducted in the construction industry. caillier (2014) revealed that transformational leadership and public service motivation (psm) have a direct and positive effect on employee evaluations. he also revealed that the mission reinforces a positive relationship between transformational leadership and performance. however, psm does not have the same effect on the relationship between leadership and transformational performance. this research is different if done on objects like the manufacturing industry, where divisions are interrelated so that the business process can run on schedule. from the four dimensions of transformational leadership variables, the charisma dimension has a higher value compared to other dimensions. this indicates that company leaders charisma make employees feel comfortable when working around them. leaders in pt. berau karya indah has an obligation company culture to lead http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 131 by example. leaders also give mentoring to increases employees motivation. this finding supports the research conducted by pongpearchan (2016) which shows that transformational leadership and high-performance work systems have a significant positive impact on work motivation. and caillier (2014) reveals that transformational leadership and psm have a direct, positive effect on employee evaluations. ahmad, abbas, latif, & rasheed (2014) concluded that there is a significant relationship between transformational leadership and employees motivation. 5. research conclusion and limitation 5.1 conclusion transformational leadership style has proven to improve employees performance in pt. berau karya indah surabaya. this is because the four dimensions that form the transformational leadership variables are applied through coordination in the completion of work. charisma is the dominant transformational leadership dimension in this research. leaders in pt. berau karya indah has an obligation company culture to lead by example. personalized charisma, intellectual, inspirations, and attention (mentoring) also proved in increasing employees motivation at this research. 5.2 limitation this study has its limitations, it only looked at the leadership style in one company. the next researcher is expected to conduct research that studies the characteristics of different leadership styles in several categories of companies to provide better generalization. that way, the best leadership style can be revealed to improve employees performance and motivation. references ahmad, f., abbas, t., latif, s., & rasheed, a. 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(2015). impact of transactional, transformational and laissez-faire leadership styles on motivation: a quantitative study of banking employees http://creativecommons.org/licenses/by/4.0/ http://dx.doi.org/10.5539/ijms.v6n1p177 jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 133 in pakistan. public organization review, 15(4), 531–549. https://doi.org/10.1007/s11115014-0287-6. *) hafid kholidi hadi, department of management, state university of surabaya, surabaya indonesia (email : hafidhadi@unesa.ac.id) http://creativecommons.org/licenses/by/4.0/ mailto:hafidhadi@unesa.ac.id the effect of entrepreneurial behavior and organizational innovation on msmes performance by oyong lisa jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 160 the effect of entrepreneurial behavior and organizational innovation on msmes performance oyong lisa *) abstract performance is a reflection of the organization's ability to manage and allocate its resources. this study aims to analyze the influence of entrepreneurial behavior and organizational innovation simultaneously and partially on the performance of msmes organization in lumajang regency, as well as to analyze the dominant variable affecting organizational performance. the sample in this research is 40 msmes with questionnaire as the data collection method. the analysis technique used in this research is multiple regression analysis. the result of the analysis shows that entrepreneurship behavior and organizational innovation influence simultaneously and partially influence organizational performance. organizational innovation has a dominant influence on organizational performance. keywords: entrepreneurship behavior; organizational innovation; organizational performance; msme 1. introduction 1.1 research background organizational performance is a very important end of all organizational activities because it can be used to evaluate the level of ability and the success of the work process carried out by the organization whether it is in line with expectations or not. performance is a reflection of the organization's ability to manage and allocate its resources. micro, small and medium enterprises (msmes) are believed to provide support in development and economic growth in a country, not only in developing countries but also in developed countries. the micro, small and medium enterprises sector is one form of an alternative strategy to support economic development in the long run in which they run several programs such as community empowerment and poverty reduction programs based on the empowerment of msmes through job creation carried out both by the central government and regional governments. the facts show that the employment opportunities created by msmes are bigger than those of large business groups. msmes have a significant influence on the number of business unit growth and the availability of jobs but have several problems like the slow growth of the msmes economy to contribute to the value of the gross domestic product, investment, and especially the value of total exports. this makes umkm the spearhead of national economic growth expected to be able to compete in the global era, especially entering the era of asean economic integration as a stable and prosperous economic region. competition in business is natural and will face many challenges in winning a business competition, one of which is by entrepreneurial behavior. fadiati (2011), stated that entrepreneurial behavior is the result of a work that relies on concepts and theories, not because of the nature of one's personality or based on intuition. so according to this theory, entrepreneurship can be learned and mastered systematically and planned. the results of the study by adinoto (2010) stated that entrepreneurial behavior does not affect performance. according to sumantri (2011), entrepreneurial behavior patterns are reflected in entrepreneurial behavior and abilities. this can be seen in the entrepreneurial behavior of msme entrepreneurs, including personalities that can be http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 161 seen and observed in terms of creativity, self-discipline, self-confidence, courage to face risks, strong drive and willingness, relationships that can be seen from indicators of interpersonal communication and relationships, entrepreneurial leadership and management, marketing which can be seen from the ability to determine products and prices, inventory, and promotions. expertise in managing is manifested in the form of goal setting, planning, scheduling, and personal arrangements. in addition to entrepreneurial behavior, organizational innovation also affects organizational performance. the research results of suryo (2010) and sartika (2015) proved that organizational innovation influences organizational performance. msmes innovate on products, processes, and procedures as well as improve the qualifications of their employees who have adequate knowledge with the technology used, good skills and communication so that they are responsive to macroeconomic changes, process technology changes and market tastes that continue to occur, also, they can always be anticipatory if led by a visionary leader who is able to encourage employees to always develop themselves to be in harmony with the demands of their work. 1.2 research problem a) do entrepreneurial behavior and organizational innovation partially affect organizational performance? b) do entrepreneurial behavior and organizational innovation simultaneously affect organizational performance? 1.3 research purpose this study aims to analyze the simultaneously or partially effect of entrepreneurial behavior and organizational innovation on msmes organizational performance in lumajang. 2. theoretical framework and hypotheses development 2.1 entrepreneurial behavior entrepreneurship is a process of applying creativity and innovation in solving problems and finding opportunities to improve life (zimmerer, scarborough, & wilson, 2008). robbins (2003) added that entrepreneurship is a process to pursue opportunities to meet needs and wants through innovation. borg & meredith (1983) defined entrepreneurial behavior as the behavior of people who can see and assess business opportunities, gather the resources needed to take advantage and take appropriate actions to ensure success. entrepreneurial behavior is very important in entrepreneurship. someone who has an entrepreneurial mindset will take various actions related to entrepreneurship passionately (septiana, kantun, & sedyati, 2017). rante (2011), iskandar (2017), ekaputri, sudarwanto, & marlena (2018) concluded that there is a positive relationship between entrepreneurial behavior and business performance. 2.2 organizational innovation organizational innovation is a solution to real problems faced every day. the process that requires everyone, without exception, to participate (widjajanti, 2014). the concept of innovation in organizations has a long history and different understanding, especially based on competition and the company's strategy in competing. in general, innovation is defined as a way of organization to improve its competitiveness. many indicators show that the lack of innovation can cause an organization to lag behind the competition or even go out of business. the term innovation was first used by schumpeter in 1934, as a creation, implementation, and new combination. new combinations can refer to new products, services, work processes, markets, policies, and systems. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 162 according to schumpeter, innovation consists of introducing new products, introducing new processes, opening new markets, developing new sources of supply for raw materials or other inputs and changes in industrial organizations. according to schumann (1994), innovation is the way an organization implements new ideas and creative concepts as a basis for competitive advantage in anticipating and fulfilling consumer needs. according to chen & huang (2008), innovation is related to the introduction of new combinations of essential production factors into the production system. innovation is a terminology to explain how an organization creates value by developing new knowledge and using existing knowledge in new ways. furthermore, tan & nasurdin (2011) defined organizational innovation as the ability to create new ideas or concept and to create new behaviors for organizations; this consists of innovation in products, innovation in processes and innovation in administration (procedures). innovation management is the management of all processes of innovation, research and development, in the broad sense, r & d management can be interpreted as innovation management when it comes to invention processes and innovation processes. according to schumann (1994), innovation can be seen from two dimensions; they are the nature and how much change is made. the dimension of nature can be classified into three categories: a) product innovation is all that relates to functions that can be given to customers (internal and external) or forms that function. product innovation involves the way things interact with things. b) process innovation is anything that involves the way a product is developed, produced, and prepared, for example, improving the manufacturing process and distribution system. innovation process involves the interaction of people with things. c) innovation procedures are anything that involves any way in which products and processes are integrated into the operations of an organization — for example, improvement marketing methods and administrative methods. procedure innovation involves the way people interact with people. the results of the research by mustikowati & tysari (2014) states that innovation influences the performance of the company. the results of this study are in line with sartika (2015), which stated that innovation influences organizational performance. 2.3 organizational performance organizational performance is the level of achievement of the organization in carrying out its activities in a certain period (usually in one year). performance is a reflection of whether the organization or company has succeeded or not in its business venture (triatmanto, 2011). performance is a process used by leaders to determine whether an employee does the work according to his/her duties and responsibilities or not so that the steps used to represent performance are chosen based on the state of the organization being observed (puryantini, arfati, & tjahjadi, 2017). performance is a description of the success or failure of the organization in carrying out its main duties and functions to realize the goals, objectives, vision, and mission. in other words, performance is an achievement that can be achieved by an organization in a certain period. organizational performance is important according to robbins & coulter (2005) because it will produce good asset management (tangible assets and intangible assets), increase the ability to provide customer value, create a good company reputation, and improve the size of organizational knowledge. companies need to carry out performance evaluations that focus on inadequate employee skills and potential so that they can be developed and improved to achieve high organizational performance. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 163 based on the three conceptual frameworks described, it can be concluded that the hypotheses in this study are: h1: entrepreneurial behavior and organizational innovation simultaneously affect organizational performance. h2: entrepreneurial behavior and organizational innovation partially affect organizational performance. 3. research method 3.1 research design this study classified as quantitative research due to the aim of the research is to investigate the effect of entrepreneurial behavior and organizational innovation on msme organizational performance in lumajang was obtained by using a survey method, by using a questionnaire as the main instrument with likert scale. the data analysis technique used in the study was multiple linear regression analysis. the following equation can be seen below: y = a + b1x1 + b2x2 + e description: y = organization performance a = constant b1,2 = coefficient x1 = entrepreneurial behavior x2 = organizational innovation table 1 variable and indicator no variable definition indicator 1 entrepreneur behavior (borg & meredith, 1983) the behavior of people who can see and assess business opportunities, gather the resources needed to take advantage and take appropriate actions to ensure success. confidence, task and result oriented, risk taker, leadership, originality, and visionary. 2 organizational innovation (schumann, 1994) the way an organization implements new ideas and creative concepts as a basis for competitive advantage in anticipating and fulfilling consumer needs. product innovation, process innovation, and procedure innovation 3 organizational performance (triatmanto, 2011) a reflection of whether the organization or company has succeeded or not in its business venture. financial performance and marketing performance 3.2 population and sample the population was the msme entrepreneurs in lumajang who have siup (business permit from the government) which is amounted to 196. the reason in choosing lumajang as research object is because there are many msme in lumajang that not operating in an effective and efficient way. according to arikunto (2010) for the population that higher than 100 respondent, the sample http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 164 size should amount 10-20% from the total population. therefore, the number of samples in the study was 39.2 (or 40 msmes). the sampling technique used in this research was simple random sampling. 3.3 research framework picture 1 research framework 4. research result and analysis 4.1 descriptive analysis characteristics of respondents in the study are presented in the following table. table 2 characteristics of respondents category frequency percentage (%) age 20 – 30 years old 8 20,0 31 – 40 years old 13 32,5 40 – 50 years old l 19 47,5 sex male 28 70,0 female 12 30,0 business ages 1 – 5 years 7 17,5 5,1 – 10 years 16 40,0 more than 10 years 17 42,5 source: primary data processed, 2019 based on table 2, it can be seen that the majority category in this study is 40 50 years old with 19 respondents (47,%), male with 28 respondents (70%) and have a duration of business more than 10 years with 17 respondents (42,5%). 4.2 validity and reliability measuring the validity of this instrument was done by pearson product moment correlation between the scores of the items with the scale score. overall, the results of testing the validity of each variable are presented in the following table. entrepreneur behavior organizational innovation organizational performance h1 h2 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 165 table 3 validity result variable indicator item r-value r critical probabilty description entrepreneurial behavior confidence x1.1.1 0,603 0,312 0,000 valid x1.1.2 0,823 0,312 0,000 valid task and result oriented x1.2.1 0,728 0,312 0,000 valid x1.2.2 0,818 0,312 0,000 valid risk taker x1.3.1 0,735 0,312 0,000 valid x1.3.2 0,759 0,312 0,000 valid leadership x1.4.1 0,707 0,312 0,000 valid x1.4.2 0,776 0,312 0,000 valid originality x1.5.1 0,823 0,312 0,000 valid x1.5.2 0,745 0,312 0,000 valid visionary x1.6.1 0,617 0,312 0,000 valid x1.6.2 0,749 0,312 0,000 valid organizational innovation product innovation x2.1.1 0,770 0,312 0,000 valid x2.1.2 0,690 0,312 0,000 valid process innovation x2.2.1 0,612 0,312 0,000 valid x2.2.2 0,473 0,312 0,002 valid procedure innovation x2.3.1 0,573 0,312 0,000 valid x2.3.2 0,675 0,312 0,000 valid organizational performance financial performance y1.1.1 0,560 0,312 0,000 valid y1.1.2 0,755 0,312 0,000 valid marketing performance y1.2.1 0,533 0,312 0,000 valid y1.2.2 0,804 0,312 0,000 valid source: primary data processed, 2019 table 3 shows that all of the questionnaire item has coefficient r value greater than r critical and probability value smaller than  = 5%, it means that the instruments used are valid and can be used to measure variables of entrepreneurial behavior, organizational innovation, and organizational performance. table 4 reliability result variable alpha cronbach description entrepreneurial behavior 0,924 reliable organizational innovation 0,701 reliable organizational performance 0,690 reliable source: primary data processed, 2019 the reliability test results presented in table 4 shows that each reliability coefficient value was greater than 0,6 so that the instruments used have a high chance of being answered consistently by the respondents. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 166 4.3 research analysis in order to obtain an unbiased and efficient estimator value from a multiple regression equation, the data analysis must fulfill the following classic assumptions: a. multicollinearity a regression model is free from multicollinearity if the vif (variance inflat ion factors) value of each independent variable is less than 10, and the tolerance value is more than 0,10. table 5 multicollinearity test results variable collinearity statistics tolerance vif entrepreneurial behavior 0,560 1,786 organizational innovation 0,560 1,786 source: primary data processed, 2019 based on the vif calculation results, it can be seen that the variables of entrepreneurial behavior, organizational innovation, and organizational competence have a vif value < 10 and tolerance > 0,10, thus it can be concluded that the regression model does not have a multicollinearity problem. b. autocorrelation to determine the presence or absence of autocorrelation symptoms in the regression analysis model used was by testing the serial correlation model with the durbin-watson (dw) method. conventionally it can be said that a regression equation is said to have fulfilled the assumption that there is no autocorrelation if the value of the durbin-watson test is between the du and (4-du). the du value in the durbin-watson table is 1,60. based on the calculation results, it can be seen that the value of the durbin-watson test is 1,712 so that it is greater than 1,60 (du) and smaller than 2,40 (4-du). it means there is no autocorrelation in the regression model. c. heteroscedasticity heteroscedasticity means that there are unequal residual variations for all observations, or there is a presence of greater residual variations in the number of observations that are getting bigger. testing for symptoms of heteroscedasticity was using the park test as presented in the following table. table 6 park test result model t sig. (constant) ,491 0,626 ln entrepreneurial behavior -1,427 0,162 ln organizational innovation 1,159 0,254 source: primary data processed, 2019 based on the table above, the t value of the variable entrepreneurial behavior (lnx1) is -1,427 which is smaller than the t table value of 2,021, or the significance value is 0,162, which is greater than  = 0,05, and the value of the calculated variable t-test of organizational innovation (lnx2) is 1,159, which is smaller than t table value of 2,021, or the significance value is 0,254, which is greater than  = 0,05. thus there are no symptoms of heteroscedasticity. d. normality data assumption has been normally distributed is one of the important assumptions in conducting research with regression. this test aimed to test whether, in the regression model, the independent and dependent variables are normally distributed or not. the results of the normality http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 167 test were obtained through the kolmogorov smirnov test (kst) calculation presented in the following table. table 7 one k-s results description entrepreneurial behavior organizational innovation organizational performance n 40 40 40 kolmogorov-smirnov z 0,886 0,895 0,842 asymp. sig. (2-tailed) 0,441 0,407 0,478 source: primary data processed, 2019 based on the results of the kolmogorov smirnov test (kst), the significance asymp value of entrepreneurial behavior, organizational innovation, and organizational performance variable are 0.866, 0,895, 0,842 with a significance value of 0,441, 0,407, 0,478 which is greater than the standardized significant value of 0,05. this shows that the variables of entrepreneurial behavior, organizational innovation, and organizational performance are normally distributed. 4.4 research discussion table 8 multiple linear regression result variable regression coefficient t-test sig. description entrepreneurial behavior (x1) 0,414 4,094 0,000 significant organizational innovation (x2) 0,651 5,911 0,000 significant constant -0,209 r 0,895 r square 0,802 adjusted r square 0,791 f-test 74,847 sig. f 0,000 n 40 f table 3,26 t table 2,021 dependent variable organizational performance (y) source: primary data processed, 2019 from the results of the multiple regression calculation above, it can be seen that the value of the determination coefficient (r square) is 0,802. this means that entrepreneurial behavior (x1) and organizational innovation (x2) can simultaneously contribute to organizational performance by 80.2%, while the remaining 19,8% is caused by other variables not included in this study. meanwhile, the results of the hypothesis test in this study can be seen as follows: a) h1 testing to test the first hypothesis which states that entrepreneurial behavior and organizational innovation simultaneously affect organizational performance was to use the f test. the results of the calculation of multiple regression analysis with spss obtained f-test of 74,847, ftable on  = 5%, df1 = 3, and df2 = 37 of 3,26; it means ftest > ftable (74,847 > 3,26) while the probability value is http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 168 smaller than  = 0,05 (0,000 < 0,05), then ho is rejected and ha is accepted, which means that the independent variable: entrepreneurial behavior and organizational innovation simultaneously have a significant effect on organizational performance. thus the first hypothesis is statistically tested. b) h2 testing to test the second hypothesis which states entrepreneurial behavior and organizational innovation partially affect the performance of the organization was by using the t-test. t-test is used to test whether each independent variables of entrepreneurial behavior and organizational innovation partially have a significant effect on organizational performance, by comparing between t-test with t-table. the each t-test dan t-table value of the independent variable is as follows: table 9 comparison of t-test and t-table  = 5% variable t-test t-table sig. description entrepreneurial behavior (x1) 4,094 2,021 0,000 significant organizational innovation (x2) 5,911 2,021 0,000 significant source: primary data processed, 2019 the results of the entrepreneurial behavior regression analysis obtained a value of t-test = 4,094 while the value of t-table = 2,021 so that t-test > t-table or significance value 0,000 < 0,05 so ho is rejected or ha is accepted, and it is proven that entrepreneurial behavior variable (x1) has a significant effect on organizational performance (y). meanwhile, the results of the organizational innovation regression analysis obtained the value of t-test = 5.911 while the value of t-table = 2,021 so that t-test > t-table or significance value 0,000 < 0,05 so ho is rejected or ha is accepted, and it is proven that organizational innovation variable (x2) has a significant effect on organizational performance . therefore, based on the results of the t-test, it can be proven that entrepreneurial behavior and organizational innovation partially have a significant effect on organizational performance. thus the second hypothesis is statistically accepted. 4.4.1 the effect of entrepreneurial behavior and organizational innovation on organizational performance entrepreneurial behavior and organizational innovation simultaneously affect organizational performance. this shows that better entrepreneurial behavior and supported by organizational innovation can improve organizational performance. entrepreneurial behavior is formed by selfconfidence, task and results-oriented, risk takers, leadership, originality and future-oriented, with the greatest contribution to leadership reflected in the work environment being able t o get along with others. this is in accordance with the finding by borg & meredith (1983) which stated that entrepreneurial behavior is the behavior of people who have the ability to see and assess business opportunities, gather the resources needed to take advantage and take appropriate actions to ensure success. organizational innovation is formed from product innovation, process innovation, and procedure innovation. the biggest contribution to the formation of organizational innovation is process innovation reflected by improving quality in the process. in operational activities, companies must be able to simplify the work process in order to obtain efficiency or make a completely new process by leaving the old operating process or make the improvement of existing processes in achieving the work results of the organization. process innovations include significant implementations in productions and delivery methods, including techniques, tools, and software. according to tan & nasurdin (2011), organizational innovation is the ability to create new ideas or concept and to create new behaviors for organizations; this consists of innovation in products, innovation in processes and innovation in administration (procedures). umkm practitioners who http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 169 have high entrepreneurial and innovative behavior are one of the keys to entrepreneurship. every person is equipped with talent or entrepreneurial spirit in varying degrees of capability. if the entrepreneurial spirit or talent have a good platform, the development and progress will produce the expected results. this is supported by respondents who were mostly 40-50 years old, male and have had more than ten years of business, so that they can produce high innovative behaviors especially to make the best decisions that have an impact on improving organizational performance. 4.4.2 the effect of entrepreneurial behavior on organizational performance entrepreneurial behavior has a significant effect on organizational performance. entrepreneurial behavior described by the originality in which reflected in work performed in accordance with the experience, meaning that it is done creatively, innovatively, and flexible, with great knowledge, so that it can improve the performance, which is shown in financially where the managed msmes were experiencing increased business profits. to win the competition, an entrepreneur must have high creativity. the creative power should be based on advanced thinking, full of new ideas that are different from the products that have been available in the market. creative ideas generally cannot be limited by space, form, or time. it is often the genius ideas that provide breakthroughs in the initial business world based on creative ideas that seem impossible. however, good ideas, if not implemented in everyday life, will only become a dream. genius ideas generally require high innovation power from the entrepreneur concerned. high creativity still requires a touch of innovation to sell well in the market. the innovation needed is the ability of entrepreneurs to add use value/benefit to a product and maintain product quality by paying attention to "market-oriented" or what is being sold in the market. with the increase in the use value or benefits of a product, the selling power of the product increases in the eyes of consumers because there is an increase in economic value for the product for consumers. the results of this study are consistent with the research conducted and rajabi, brashear-alejandro, & chelariu (2018), which stated that entrepreneurial behavior affects performance. the results of this study also support rante (2011) that entrepreneurial behavior affects business performance. iskandar (2017) found that entrepreneurship affects business performance. furthermore, the results of the study by ekaputri, sudarwanto, & marlena (2018) found that entrepreneurial behavior affects company performance. however, the results of adinoto (2010) stated that entrepreneurial behavior does not affect performance. 4.4.3 the effect of organizational innovation on organizational performance organizational innovation has a significant effect on organizational performance. organizational innovation is an effort to maintain the existence of the organization and improve organizational progress. with organizational innovation, an organization is expected to be able to respond to the complexity of the environment and the dynamics of changes in the environment, especially in the cut-throat competition and to create sources for competitive advantage. this can be achieved through product innovation, process innovation, and procedure innovation. according to tan & nasurdin (2011), organizational innovation is the ability to create new ideas or concept and to create new behaviors for organizations, this consists of innovation in products, innovation in processes and innovation in administration (procedures). the product innovation can be realized from new product innovations with the technically different specifications and functions from those already available; the renewal of the product leads to improved customer use and satisfaction; product development now uses different components and materials than before; there is a decrease in the production costs, components, and materials of the current product and there is an increase in the quality of production in terms of the components and materials of the product. process http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 170 innovation can be realized by reducing the activities of distribution that do not have added value for the company, reducing variable costs and increasing the speed of delivery in terms of logistics processes, reducing process steps so that production costs become lower, it is important for companies to choose the right location to get low-cost production factors locally and globally, and to optimize the energy so that the production process is at the highest efficiency. procedural innovations can be realized in the improvement of the administration system, so the procedures to be faster and more efficient, a decrease in the intensity of interaction between a person and another person to make the administration process run faster, new distribution channels are made, so that product delivery to markets become faster without reducing quality, new marketing policy is also created to make administrative requirements to be easier and faster with openness/transparency. it will encourage employees to work better in the administration/work of the company. the indicator of organizational innovation that most influences organizational performance is procedure innovation. procedure innovation involves how products and processes are integrated into the operations of an organization. the better the application of organizational investment can improve organizational performance in terms of marketing performance and financial performance. the results of this study support the research result by suryo (2010) and sartika (2015), which stated that organizational innovation affects organizational performance. the results of this study also support mustikowati & tysari (20114) who found that innovation affects company performance. the results of this study are also in line with sartika (2015) who stated that innovation affects organizational performance. 5. research conclusion and limitation 5.1 conclusion the results of the analysis showed that entrepreneurial behavior and organizational innovation affect organizational performance, which means that the better entrepreneurial behavior supported by organizational innovation can improve organizational performance. entrepreneurial behavior partially affects organizational performance, which means that an entrepreneur who has entrepreneurial behavior believes that planning, organizing, mobilizing, and controlling and supported by creativity, innovation, and risk-taking can improve organizational performance. organizational innovation partially affects organizational performance and is a variable that has a greater impact to organizational performance, which means that msmes capable of innovating in terms of product innovation, process innovation, and procedure innovation can improve organizational performance. 5.2 limitation the conception of organizational performance that are affected by entrepreneurial behavior and organizational innovation still requires a broader study both in the subject and the object to be accepted as the standard model. references adinoto, a. 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(2011). peningkatan kinerja organisasi melalui pemberdayaan sumber daya manusia, dan perubahan organisasi (studi pada industri jasa di jawa timur). jurnal aplikasi manajemen, 9(2), 434-443. retrieved from https://jurnaljam.ub.ac.id/index.php/jam/article/view/236. widjajanti, k. (2014). pengembangan inovasi organisasi berbasis human capital, sharing knowledge dan pembelajaran organisasional. jurnal ekonomi & bisnis, 15(2), 86-101. zimmerer, t. w., scarborough, n. m., & wilson, d. (2008). essentials of entrepreneurship and small business management. semarang: pt salemba empat. *) oyong lisa, department of accounting, gajayana university, malang, indonesia (email: oyonglisa12@yahoo.com) http://creativecommons.org/licenses/by/4.0/ the differences of taxpayer compliance before and after tax amnesty stimulus by subadriyah and siti aliyah jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 98 the differences of taxpayer compliance before and after tax amnesty stimulus subadriyah *) siti aliyah **) abstract tax amnesty is a type of remission program for taxpayers where they are freed from their tax obligations but, in exchange for the tax liability forgiveness, have to pay a redemption amount of money and disclose incomplete or unreported income in their previous tax periods, without having to face theadministrative penalty or tax prosecution. the short-term purpose of tax amnesty is to increase the country's income in large quantities in a short time. in the long-term, this program is intended to form a wider database so that the government can increase the number of taxpayers and level of tax compliance. this study aims to determine the differences in taxpayer compliance during the periods before (pre-test) and after (pro-test) the indonesian tax amnesty program which ended on march 31, 2017. the population was taken from the total data of taxpayers registered in kpp pratama jepara. the sample for this research includes 100 respondents based on slovin's formula calculation. the sampling was done using purposive sampling, and the type of data used was primary data collected via questionnaire distribution. the method used for the data analysis was a paired sample t-test. the results showed that the taxpayer compliance between the pretest and protest of tax amnesty program changed. this difference indicates an increase in taxpayer compliance, although still very low. keywords: tax amnesty; taxpayer compliance 1. introduction 1.1 research background in indonesia, tax continues to top the state's largest source of income. until 2016, the tax still accounted for more than 75% of the state's revenues. however, the ratio of tax revenue in indonesia is currently in the range of 13.2% (2015) and 14.2% (2016). this ratio is still below the standards of asean countries and the organization on economic cooperation and development. for comparison, the ratios of tax revenues in other countries are germany 36.7%, south korea 24.3%, uk 32.9%, united states 25.4%, mexico 19.7%, japan 34.6%, and china 19.4%. moreover, the level of taxpayer compliance in indonesia is quite apprehensive and continues to decline; in 2011 it reached 97.2% but fell to 91.6% in 2014, and again declined to only 82% in 2015. level of tax compliance depends on the awareness of taxpayers in paying their taxes on time. in indonesia, this awareness is still low, both in reporting tax returns and paying taxes. this condition naturally inhibits maximum state income. this sometimes happens due to taxpayers' lack of knowledge in carrying out their obligations instead of a deliberate evasion (suyanto, intansari, & endahjati, 2016). the lack of understanding that makes taxpayers fail to report their incomes and pay taxes can be categorized as passive tax evasion (ayu & hastuti, 2009). taxpayers who already know and meet the provisions of the tax laws have no difficulty in performing their obligations. individual employee taxpayers typically obtain tax id numbers (npwp) as a requirement before joining a company. therefore they have to make tax reporting. meanwhile, some corporate taxpayers may fail to pay their taxes because they obtain their npwps via credit application (azwar & mulyawan, 2017). based on the data on pajak.go.id, indonesia's http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 99 working population by 2015 consisted of 120.8 million people. however, the number of individual taxpayers (wp op) who submitted their annual tax returns (spt) was only 10,269,162 wp ops, consisting of 837,228 non-employee wp ops and 9,431,934 employee wp ops. this indicates that the compliance level of wp ops (seen from the submission of spt) was only 40.75% (nonemployee wp ops) and 63.22% (employee wp ops). what was more unfortunate was out of the total number of wp ops who submitted their spts, only 794,418 wp ops paid their taxes (pajak, 2016). this condition indicates that the potential of taxation in indonesia is still very high, but not yet implemented optimally. to that end, the optimization of tax revenues needs to be done by the government for the sake of national development sustainability. through the directorate general of taxation (djp), the government continues to seek new breakthroughs to increase the tax revenue. one of the steps taken by the djp in 2016 was the implementation of tax amnesty policy through laws regulation no. 11 of 2016. the amount of potential income that passes from the tax system is one factor that encourages many countries to implement a tax amnesty program to increase tax revenue without having to generate new tax burden. furthermore, tax amnesty can withdraw funds in a short time from the redemption paid by amnesty participants, thus it is expected to encourage national development. all taxpayers, both individual and corporate, may participate in the tax amnesty program, provided that they are not within the process of investigation and has obtained a p-21 (notification that the result of the investigation is complete) in the judicial process, or are serving a criminal penalty in tax. taxpayers participating in this program will be exempt from any form of penalty when reporting assets that have not been reported in the past. the taxpayers will be subjected to: a) a 2% tax rate when delivering a statement within the first month up to the end of the third month (july 01-september 30, 2016) of their onshore assets or offshore assets that will be transferred to indonesia, and 4% tax rate if the assets are not transferred to indonesia; b) a 3% tax rate when delivering a statement within the fourth month up to the end of december 2016 (october 01 december 31, 2016), of their onshore assets or offshore assets that will be transferred to indonesia, and 6% tax rate if the assets are not transferred to indonesia; and c) a 5% tax rate when delivering a statement within january 1, 2017 to march 31, 2017, of their onshore assets or offshore assets that will be transferred to indonesia, and 10% if the assets are not transferred to indonesia (tax amnesty law). the redemption payment from the tax amnesty program proved to be a major contribution to the achievement of 2016 tax revenues. of the total realization of tax receipts amounting to rp1,105.97 trillion, the amount of the tax revenues from the amnesty during the 2nd period (until december 31, 2016) contributed rp103.04 trillion (dwijugiasteadi, 2016). until the 3rd (final) period, the revenue achievement was only 81.8% of the targeted earnings (ismi, 2017). however, compared to the tax amnesties in other countries, the achievement of indonesia's amnesty that year was considered as one of the most successful. with a ratio of 0.83% of gdp, indonesia's performance far surpassed other countries that were also running amnesty programs at that time. in terms of disclosure of property, indonesia was also far superior compared to italy (rp59 trillion), australia (rp8 trillion), chile (rp20 trillion), and spain (rp18 trillion) (pajak, 2016). however, the success of amnesty cannot be measured only by the achievements of the disclosure of property and redemption payments. the long-term goal of the tax amnesty is the expansion of a more valid, comprehensive, and integrated database (dwijugiasteadi, 2016). the program is expected to increase taxpayer compliance and tax revenue through on-going supervision (andreoni, 1991). tax amnesty will succeed in improving taxpayer compliance in the future through socialization and tax-aware campaigns in adequate media (santoso & setiawan, 2009). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 100 although in a federal state amnesties do not affect earnings significantly, they can be used as a tool to improve the taxation system (lerman, 1986). empirically, based on data from the united states between 1981 and 2011, it was found that amnesty programs were followed with the hope of obtaining forgiveness as well as future ease, thereby increasing taxpayer compliance (bayer, oberhofer, & winner, 2015). in addition, taxpayer compliance during tax amnesty periods is expected to increase, because with the remission program, the government managed to expand the taxpayer's database (fatmala & ardini, 2017). a research done in bantul regency in the special region of yogyakarta showed the positive effect of tax amnesty on taxpayer compliance (rahayu, 2017). this policy also positively affected the taxpayer compliance among the members of islamic microfinance institution bmt (baitul mal wat-tamwil) in pati residency, central java (husnurrosyidah & nuraini, 2016). a tax amnesty study on individual taxpayers in kpp pratama jakarta kembangan also showed a positive and significant effect (huslin & ngadiman, 2015), so did the researches in kpp pratama of east denpasar (wirawan & noviari, 2017), kpp pratama of manado (rorong, kalangi, & runtu, 2017), kpp pratama of surabaya tegalsari (sari, 2017). all previous studies have shown a positive and significant effect. however, those studies were conducted when the tax amnesty program was still ongoing. therefore, it was deemed necessary to carry out a research on taxpayer compliance before and after the tax amnesty program in kpp pratama of jepara. based on law no. 11 of 2016, the amnesty program was conducted from july 1, 2016, to march 31, 2017. it is important to study the condition after the implementation of the program to find out whether the tax amnesty policy is able to affect taxpayer compliance. this study will be conducted in the working area of kpp pratama of jepara, central java, involving individual and corporate taxpayers. jepara regency became the research choice because it is a small town that is not passed by the pantura roads but has become a productive area with various home productions. due to lack of socialization and information, it is very likely that the residents of jepara are not well educated and informed about taxation. one research in 2012 showed that only 57% of the people in jepara were aware that every taxpayer had an account representative (ar) when performing their tax obligations (subadriyah, 2013). 1.2 research problem a) how does taxpayer compliance before and after tax amnesty stimuly? 1.3 research purpose to find out and examine the effect of tax amnesty program implementation in increasing taxpayer compliance. 2. theoretical framework and hypotheses development 2.1 taxes and functions tax is one source of financing needed by the state to run the government. this tax collection has long existed in the past the taxation was done through tribute collection based on the rules made by the kings/rulers without involving the taxpayers, unlike today where the rules are made both by the government and the people through their representatives (wardoyo & subiyakto, 2016). taxes are the contribution of the people to the state treasury under the law (which can be enforced) in the absence of returned services (contra) which can be directly demonstrated and used to pay public expenditures (resmi, 2014). based on the definition and function of tax in indonesia, it indicates that the taxpayers can not directly benefit from taxes they pay to the state. this naturally makes people reluctant to perform their tax obligations. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 101 2.2 tax amnesty according to the indonesian tax amnesty law of 2016, tax amnesty is the elimination of payable taxes, which shall not be subject to any administrative sanction or criminal sanction, through asset disclosure and redemption payment. the purpose of tax amnesty is to increase the state's revenue and economic growth, as well as awareness and compliance among the people who have tax obligations. taxpayers, both individuals, and corporates, who report and bring home their assets to indonesia will not be penalized but only required to pay a certain amount of redemption money defined by the government. for taxpayers who do not participate in the tax amnesty program but are found to possess unreported net assets, those assets are treated as income upon discovery and will be subject to taxes and administrative penalty in accordance with tax regulations (rahayu, 2017). 2.3 taxpayer compliance taxpayer compliance is the fulfillment of tax obligations voluntarily undertaken by taxpayers in order to contribute to the development of the state (suyanto, intansari, & endahjati, 2016). it is a condition when taxpayers meet all of their tax obligations and use their taxation rights. furthermore, tax compliance is divided into two: 1) formal compliance and 2) material compliance. the formal tax compliance is the compliance regulated in accordance with the provisions in the tax law, for example having a taxpayer identification number (npwp) for those who already have income, reporting periodic or annual tax return before the deadline, and paying off the tax debt in accordance with the stipulated deadline. meanwhile, the material tax compliance is a condition when the taxpayers substantively complied with all the provisions of taxation materials according t o the contents of tax laws (hutasoit, 2017). 2.4. the effect of tax amnesty toward taxpayer compliance bayer, oberhofer, & winner (2015) revealed that based on data from the united states from 1981 to 2011, tax amnesty programs were followed with the hope of obtaining forgiveness as well as convenience in the future. the program is expected to increase taxpayer compliance and tax revenue through on-going supervision (andreoni, 1991). tax amnesty will succeed in improving taxpayer compliance in the future through socialization and tax-aware campaigns inadequate media (santoso & setiawan, 2009). a research done in bantul regency in the special region of yogyakarta showed the positive effect of tax amnesty on taxpayer compliance (rahayu, 2017). this policy also positively affected the taxpayer compliance among the members of islamic microfinance institution bmt (baitul mal wat-tamwil) in pati residency, central java (husnurrosyidah & nuraini, 2016). a tax amnesty study on individual taxpayers in kpp pratama jakarta kembangan also showed a positive and significant effect (huslin & ngadiman, 2015), so did the researches in kpp pratama of east denpasar (wirawan & noviari, 2017), kpp pratama of manado (rorong, kalangi, & runtu, 2017), kpp pratama of surabaya tegalsari (sari, 2017). based on the above results, the hypotheses in this study are: h1: tax amnesty has a positive effect on taxpayer compliance before and after the program ends. 3. research method 3.1 research design this is quantitative research that will analyze the difference of influence of tax amnesty policy toward taxpayer compliance and tax implementation before and after-tax amnesty program ends. primary data was used in this study, which was obtained from a first party. the method of data collection was by distributing questionnaires to respondents using likert scale measurement. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 102 the questionnaires consisted of questions or statements related to taxpayer compliance after the implementation of the tax amnesty program. the method of analysis used to prove the effect of tax amnesty on taxpayer compliance in jepara before and after the tax amnesty ended was t-test analysis. the t-test method was paired sample t-test. the variables compared were taxpayer compliances before and after the tax amnesty. to make decisions, the data analysis was compared to table t. the selected significant value was 5% (0.05). 3.2 population dan sample the population in this study were all individual and corporate taxpayers in the region of jepara regency, which included 52,512 people. the entire population was then narrowed down by calculating the sample size using the slovin's formula, which resulted in a sample of 100 respondents. samples were taken using purposive sampling technique. the selected sample was taxpayers who have already had tax id numbers (npwp) and joined this tax amnesty program. 3.3 research framework the variables in this study consist of an independent variable and dependent variable. the independent variable is the tax amnesty. tax amnesty is the eliminat ion of payable taxes, which shall not be subject to any administrative sanction or criminal sanction, through asset disclosure and redemption payment. while the dependent variable is taxpayer compliance. tax compliance is a condition when the taxpayers meet all of their tax obligations and use their taxation rights. tax compliance is classified into two: 1) formal tax compliance and 2) material tax compliance (hutasoit, 2017). picture 1 research framework 4. research result and analysis 4.1 descriptive analysis the data of respondents' profiles in this study were described by demographic characteristics, including sex, age, occupation, education level and average monthly income (table 1). the table shows that the number of male respondents is 6% higher than female respondents. this shows that the difference of npwp ownership between men and women is not too big. tax reforms have enabled working women to obtain tax id numbers (npwp). the age of the participating respondents varies, and there is no age group that dominates significantly. most respondents were in the productive age group of 25 to 35 (38%), while 36% of them were aged 35 to 45. of the 100 respondents, some of them were under the age of 25 (22 and 23). this shows that there is active paired t-test before tax amnesty taxpayer compliance (y) after tax amnesty result tax amnesty (x) taxpayer compliance (y) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 103 participation from the community in fulfilling their obligation as good citizens by registering to get npwps, although the number was very small (2%). furthermore, based on the tax amnesty participation criteria, this table indicates that even those under the age of 25 were quite enthusiastic in complying with the existing tax regulations, as evidenced by their participation in the tax amnesty program (table 2). table 1 distribution of respondent characteristics (sex) sex count percentage male 53 53% female 47 47% source: primary data processed, 2018 table 2 distribution of respondent characteristics (age) ages count percentage <25 years old 2 2% 25-35 years old 38 38% 35-45 years old 36 36% 45-55 years old 16 16% >55 years old 8 8% source: primary data processed, 2018 meanwhile, based on the statistics of respondents' jobs (table 3), most respondents in this study are private sector employees (42%), with the majority working in textile factories, which are part of foreign investment (pma) in jepara. with the increasing number of pmas recently established in jepara, the number of taxpayers registered in the local kpp pratama will increase too. this is because the pmas require their employees to have npwps. the occupation ofthe second place of the list is entrepreneurs, which is 30%. the rest of the list (23%) includes doctors, nurses, grocery-shop owners, food stalls owners, and savings and loan cooperatives (ksp). there were 12 ksps that joined the tax amnesty program. cooperatives founded before 2012 are not required to have npwps. therefore they welcomed this tax amnesty program as it reduced the amount of tax they did not pay in the past. in addition, this amnesty policy became an initial step for ksps to report their tax obligations regularly. the level of education of the respondents in this study was dominated by high school and its equivalents (40%). based on the data of job type, it can be seen that most of the respondents were private sector employees who worked in foreign invest ment (pma) companies that were mostly textile factories. high level of education is not a requirement to work in such factories, hence the high number of high school graduates. the next most popular levels of education were s1 (bachelor's degree), diploma and s2 (master's degree), which was owned by only 5 people. most of the respondents earned an average monthly income of less than rp. 4.5 million (table 5). this was in line with the type of work they did, which was in the factories. however, the factory rules still require their employees to have npwp. this is against the regulation of npwp ownership obligations as stated in the regulation of the director general of taxation no. per-16 / pj / 2016, pmk no. 101 / pmk.010 / 2016 and pmk no. 102 / pmk.010 / 2016 that the non-taxable income (ptkp) for individual taxpayer is idr 54,000,000 a year or idr 4,500,000 a month. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 104 table 3 distribution of respondent characteristics (occupation) occupation count percentage private employee 42 42% civil servant 5 5% entrepreneur 30 30% others 23 23% source: primary data processed, 2018 table 4 distribution of respondent characteristics (education level) education level count percentage senior high school 40 40% diploma 24 24% bachelor degree 31 31% master degree 5 5% source: primary data processed, 2018 table 5 distribution of respondent characteristics (income) income (idr) count percentage < 4.500.000 62 82% 4.500.000-9.000.000 38 18% source: primary data processed, 2018 overall, the respondents who have filled out the questionnaires were mostly individual taxpayers. only 20% of the respondents were corporate taxpayers, most of whom were furniture entrepreneurs in jepara and savings and credit cooperatives (ksp). 4.2 validity and reliability the validity test of the questionnaire was conducted in order to determine the validity of the questionnaire. all constructs of the question in this study can categorized as a valid and reliable because they significant in 0.05 (r-value > r-table) and greater than 0.60 for crobach alpha rule. 4.3 research analysis before performing a t-test, the data were first tested using kolmogrov-smirnov nonparametric normality test (k-s) to determine whether or not the data before and after the tax amnesty program were normally distributed. in a normal test, if the sig value is < α, then the data is not normally distributed, but if the sig value is > α, then the data's distribution is considered normal, with the value of α = 0,05 (5%). based on normality test table, it can be seen that the data before and after the tax amnesty program had a normal distribution with significance value higher than 0.05. this meant that the next test, which was a t-test, could be performed on the collected data. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 105 tabel 6 normality result variables sig. conclusion before (pre-test) tax amnesty 0.072 normal after (pro-test) tax amnesty 0.057 normal source: primary data processed, 2018 4.4 research discussion table 7 paired sample t-test result variables mean sig conclusion before (pre-test) tax amnesty 55,2000 0.006 significant after (pro-test) tax amnesty 56,0100 source: primary data processed, 2018 the following is the summary of test results conducted to determine whether or not there is a difference of taxpayer compliance between before and after the tax amnesty program. based on the t-test table, it is known that the average value before the resulting amnesty tax had increased, with the significance value being 0.006 (<0.05). this result indicates a significant difference between before and after tax amnesty, meaning that the program had a positive effect on taxpayer compliance before and after it ended. the pretest average value before tax amnesty was 55.2000 and the pro-test average value after tax amnesty was 56.0100. this shows that there was an increasing value between the two periods, which was 0.81 (56.0100 55.2000). this difference is still considered very low, which means that the long-term goal of the amnesty tax to gain more valid, comprehensive, and integrated database extension has not been achieved. this was despite the asset disclosure in indonesian being far superior compared to other countries who have implemented the same program, such as italy (rp59 trillion), australia (rp8 trillion), chile (rp20 trillion), and spain (rp18 trillion) (pajak, 2016). tax amnesty is one of the programs to improve taxpayer compliance. when the taxpayers receive tax forgiveness, it is expected that their compliance in the future will increase. implementation of this tax amnesty will have a positive impact on increasing the state's revenues and economic growth. with the increasing awareness and compliance of tax among the citizens, the long-term goal of tax amnesty, which is to expand the taxpayer database, will be achieved. taxpayers who have never been part of the tax administration system will join the program and become part of the system. this will prevent taxpayers from avoiding their obligations in paying as well as reporting taxes, hence the increase of compliance. knowing that tax amnesty program is a good opportunity that does not come regularly, taxpayers who have never reported their assets before will be encouraged to make use of it because they will get tax deductions. tax amnesty is an opportunity for certain groups of taxpayers to pay a certain amount of redemption money for the tax liability from previous years. however, the results of this study show that the increase in taxpayer compliance was very little from before-tax amnesty, which was 0.81. the success of a tax amnesty program in improving taxpayer compliance and increasing tax revenues strongly depends on various factors, especially ongoing supervision (andreoni, 1991), socialization and tax-awareness campaigns through adequate media coverage (santoso & setiawan, 2009). in 2018, one year after the implementation of a tax amnesty policy, the indonesian directorate general of taxes is still investigating taxpayers who do not take advantage of this program. this shows that closer supervision to the tax amnesty program and participants is still required, although at least the http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 106 amnesty program managed to improve the taxpayer database which could be used by the state to increase the future state revenue (fatmala & ardini, 2017). 5. research conclusion and limitation 5.1 conclusion based on the above discussion, it can be concluded that the tax amnesty has a positive effect on taxpayer compliance, both in the pre-test and pro-test periods after the end of the program. the significance value of less than 0.05 and an increase in the average value before the tax amnesty mean that taxpayers who participated in the program have higher a compliance. and those who have never reported their assets will become tax-conscious thanks to the tax amnesty that worked as a stimulus. 5.2 limitation this study was conducted only in jepara regency, especially involving taxpayers registered at kpp pratama jepara, where the majority of those who filled the questionnaires were individual taxpayers, which became one of the limitations of this study. references andreoni, j. 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(2013). pengaruh moderasi tax morale terhadap hubungan variabel sosio demografi dan tax avoidance pajak penghasilan di kpp pratama jepara. jurnal dinamika eko, 10(2), 194-203. suyanto, intansari, p. p. l. a., & endahjati, s. (2016). tax amnesty. jurnal akuntansi fakultas ekonomi universitas sarjanawiyata tamansiswa, 4(2), 9–22. https://doi.org/10.24964/ja.v4i2.217. wardoyo, t. h., & subiyakto, a. (2016). taxation: pengantar perpajakan indonesia. tangerang selatan: taxsys. wirawan, i. b. a. p., & noviari, n. (2017). pengaruh penerapan kebijakan tax amnesty dan sanksi perpajakan terhadap kepatuhan wajib pajak orang pribadi. e-jurnal akuntansi universitas udayana, 21(3), 2165–2194. https://doi.org/https://doi.org/10.24843/eja.2017.v21.i03.p17 *) subadriyah, department of accounting, university of islam nahdlatul ulama, jepara, indonesia (email : subadriyah@unisnu.ac.id) **) siti aliyah, department of accounting, university of islam nahdlatul ulama, jepara, indonesia (email : staliyah10@gmail.com) http://creativecommons.org/licenses/by/4.0/ mediating role of affective commitment in the effect of ethical work climate on felt obligation among public officers by hafid aditya pradesa, joni dawud, muhamad nur affandi jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 133 mediating role of affective commitment in the effect of ethical work climate on felt obligation among public officers hafid aditya pradesa *) joni dawud **) muhamad nur affandi ***) abstract social exchange theory (set) which explains the terms of the exchange agreement under the psychological contract assumes that what was promised is a key point in explaining individual responses at work. it was climate and support which will be argued as antecedents of individuals' attitudes and behaviors. along with organizational support, ethical work climate was mostly examined only in relationship with intent-to leave. the purpose of this study was to determine felt obligation as the attitudinal outcome of ethical work climate, perceived organizational support, and affective commitment in terms of social exchange mechanism. this study is explanatory research based on primary data with a survey as the data gathered method. the result shows that one of five hypotheses rejected in this study. furthermore, ethical work climate and perceived organizational support could affect felt obligation through affective commitment as mediation. our findings are discussed below by considering the implications and limitations of this study. keywords: ethical work climate; perceived organizational support; affective commitment; felt obligation 1. introduction 1.1 research background public organizations serve the role of providing public services, creating and implementing public policy. as a vital role in indonesia development, change in public service has been underway for the past 20 years to improve government human resource systems. public sector ethic goes to the heart of what public employees should do to fulfill their responsibilities as public officers. every public officer serves within public sector organizations and endeavors to further the missions of his respective organizations. functional missions such as safety and economic security were advanced by these officers. this would lead to highlight the achievements and tribulations of public officers who were empowered by their organizations to execute important duties. erakovich & wyman (2015) added that public organizations would be seen as a collective of individuals operating organization within a boundary that defines insiders and outsiders. furthermore, public employees could operate within an integrated system and interrelated activities to accomplish a specific policy purpose while also reflecting on values of social equity, democracy, and responsiveness. thus, the movement of public administration toward self-accountability suggests a need to consider internal organizational controls. this paper would serve as a healthy offset to the contemporary perspective of public officers in indonesia as overpaid sluggards, sloths, and slackers. based on a key question argued by erakovich & wyman (2015) that: why do people in public organizations do things that they would never do by themselves? they believed that the organization is a place where people could work and are encouraged to socialization with other individuals and self-actualize through their motivation. otherwise, it might be caused by a great http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 134 sense of emotional attachment among individuals that will bring them to do the duty or job given by government authority. as a paternalistic model still exist in the indonesian public organization, it is urgently needed to avoid poor image (overpaid sluggards, sloths, etc.) of public officers in indonesia by building great deal of sense of emotional attachment to the job (i.e. obligation, engagement) and organization (i.e. commitment), not only to the supervisors or leaders. this would be a great response among officers to foster their job performance that will positively contribute to organizational performance. it is not true when a public officer feels obligated only when the duties and personal intention collide with each other because the nature of this sense of obligation is natural to every person (neblett, 1976). coyle‐shapiro, morrow, & kessler (2006) have demonstrated before; exchange can be linked to additional variance in individual obligation and fulfillment of obligation toward their organization. this implies the importance of felt obligation among public officers as a single outcome that must be enhanced by a public organization. the main theoretical concept used in elaborating the individual felt an obligation in organizations is social exchange theory (set). this theory shows the classical assumption of "do ut des”, that is, about the expression of the pattern that "i give something to you so that you also give something to me". the leading theoretical experts include psychologists such as blau (1964) and gouldner (1960). this exchange pattern exists and is embedded in the form of relationships between humans, both macro (group) and micro (interpersonal). felt obligation can be examined and enhanced through organizational support (aselage & eisenberger, 2003), so that for ethical climate and affective commitment. therefore, public officers will tend to have a different ethical climate perception with a different ethical orientation. by exploring ethical climate in the realm of government organizations, it will assist policymakers in understanding the nature of ethical conduct in their organizational setting and how these conditions might affect the implementation of public policy (rasmussen, malloy, & agarwal, 2003), and also individuals’ attitude and behavior. social exchange theory also explains about the terms of the exchange agreement under the psychological contract which assumes that the ability to deliver what was promised is a key point in explaining individual responses at work (kasekende, munene, ntayi, & ahiauzu, 2015). previous researchers (such as huang, you, & tsai, 2012; tsai & huang, 2008; treviño, butterfield, & mccabe, 1998) obtain relevant empirical evidence to the issues on how ethical climate will lead to a higher form of commitment. in the context of this present study, it consists of a survey of public officers to address the relationships between ethical climate and perceived organizational support on affective commitment and felt obligation. as previously stated, empirical research has considered the importance of organizational climate and support, which will be argued as antecedents of individuals' attitudes and behaviors. similar with organizational support, ethical work climate was examined mostly in relationship with turnover intention (treviño, butterfield, & mccabe, 1998; schwepker jr., 2001; filipova, 2011; abou hashish, 2017), but still do not offer much insight into the theoretical underpinnings for examined felt obligation as attitudinal outcome in the social exchange perspective. in this article, we seek to address some of these challenges by examining the conceptual framework in public organization. 1.2 research problem the social exchange theory (set) suggested that perceived organizational support and affective commitment can prompt felt obligation. social exchanges include assumptions of shared obligation and relationship in which participants perceive responsibilities to each other. public organizations could utilize social exchange mechanism to manage their officers effectively. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 135 a) what is the relationship between perception of ethical work climate, perceived organizational support, and their affective commitment and felt obligation among public officers? b) how do nurses perceived ethical work climate, perceived organizational support, affective commitment, and felt an obligation in their public organization? 1.3 research purpose the purpose of this study is to determine felt obligation as the attitudinal outcome of ethical work climate, perceived organizational support and affective commitment in terms of social exchange mechanism. focusing on ethical climate and organizational support is critical and complementary to individual attitudes in the organization. thus, no previous study in the literature has investigated the effects of ethical work climate on individuals feeling about their obligation in an organization. in this study, we believe that there is a strong relationship between ethical work climate and perceived organizational support toward felt obligation both directly and indirectly through affective commitment. 2. theoretical framework and hypotheses development 2.1 the relationship between ethical work climate and perceived organizational support toward affective commitment the organizational ethical climate is the shared behavior that directs organizational member ethical actions and decisions (agarwal & malloy, 1999; key 1999). these cumulative collections of shared practices are believed as observable and could affect public officers in the decisionmaking processes. types of organizational ethical climates may influence types of ethical conflicts that arise and the process by which they are resolved. ethical determinants and the level of ethical analysis can range from the individual to the broadest of social systems. the ethical climate is defined by victor & cullen (1987) as "the shared behaviors of what is ethically correct and how ethical issues should be handled." levels of ethical determinant refer to kohlberg's theory of moral development and consist of egoistic, utilitarian, and principled levels. schwepker jr. (2001) believed that ethical climate could affect work-related outcomes, in which commitment is recognized as an important one. this synthesis is enforced by cullen, parboteeah, & victor (2003) that prove an important relationship between ethical context (ethical climate dimension) with organizational commitment. furthermore, sharma & dar (2016) noted that commitment could be described by the affective commitment as the main component of the three elements. in this case, previous literature suggests that ethical climate can affect organizational commitment and specifically affective commitment. the apparent tendency to exaggerate individual affective commitment also does not seem surprising in behavioral research. individuals who perceived a strong perception of three ethical climate dimensions (rules and codes, service, caring) will develop an emotional attachment to their team (dharmanegara, pradesa, tanjung, & harijanto, 2016). what is learned by acquiring knowledge about the effect of ethical work climate and level of perceived organizational support (pos) and factors amenable for change in the work environment could help organizational leaders to deal effectively within dysfunctional behaviors and make a difference in enhancing individuals' dedication and loyalty to their organization. the ethical climate is believed to have more significant impact on individuals feeling toward their job and organization. therefore, the first hypothesis proposed in this study is; h1: ethical work climate will have a positive and significant effect on public officers affective commitment. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 136 pos is defined as individuals’ belief that organization values their contributions and well being (rhoades & eisenberger, 2002; eisenberger, fasolo, & davis-lamastro, 1990; eisenberger, huntington, hutchison, & sowa, 1986). as it is consistent with social exchange theory (cropanzano & mitchell, 2005), it has been argued that there are significant existing relationships between pos and employee commitment (rhoades & eisenberger, 2002). furthermore, affective commitment (ac) denotes an emotional attachment to an organization, and it implies a vital position based on the fundamental meaning of commitment (sharma & dhar, 2016). many previous researchers have examined that commitment, which shows the focal point is affective commitment. essentially, it is considered to be the most reliable predictor which results in employee retention (allen & meyer, 1996). strong empirical results have shown the great relationship between perceived organizational support and affective commitment (rhoades & eisenberger, 2002 aselage & eisenberger, 2003). based on previous empirical support, the next hypothesis proposed is; h2 perceived organizational support would have a positive and significant effect on public officers' affective commitment. 2.2 the relationship between ethical work climate, perceived organizational support, and affective commitment toward felt obligation felt obligation is an individual prescriptive belief regarding whether they should care about the organization well-being and should help to reach organizational goals or not (aselage & eisenberger, 2003). this implies that individual differences make employees react differently to perceived organization obligations and fulfillment of obligation and also contribute differently to the organization relationships with their employees (ladebo, 2006). in perceived organizational support (pos), there is a norm of reciprocity for outcomes which leads to a felt obligation to help organization, as well as the expectation that performance improvements are on behalf of the organization (e.g., arshadi, 2011). thus, felt obligation had been found positively arising from pos, and subsequently felt obligation is associated with affective commitment (aselage & eisenberger, 2003). coyle‐shapiro, morrow, & kessler (2006) reinforced this empirical linkage (pos – felt obligation) on two different samples, i.e., contractors and clients. this empirical result suggested correlating felt obligation with antecedents such as organizational support and affective commitment. other previous researchers such as ladebo (2006) and shih & chen (2011) examined felt obligation that is not built based on the perspective of social exchange theory. rasmussen, malloy, & agarwal (2003) explored the concept of potential ethical climate by adding a useful dimension to our understanding of the complex relations between policy designers in government and policy implementers in the non-profit sector. a positive or strong ethical climate in an organization a necessary antecedent for behavioral and attitudinal outcomes is accepted, in which to a limited extent that would empirically be proven by researchers studying organizations (victor & cullen, 1988). previous scholars also have examined the relationship of felt obligation and affective commitment (aselage & eisenberger, 2003; coyle‐shapiro, morrow, & kessler, 2006; lew, 2009; yew, 2011). usually, the affective commitment would be examined as an outcome of felt obligation. because of the high correlation identified in previous empirical result among that two variables (felt obligation – affective commitment), we argue that based on the norm of reciprocity, affective commitment could be determinant of felt obligation. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 137 accordingly, the following hypotheses are proposed; h3: ethical work climate will have a positive and significant effect on public officers felt obligation. h4: perceived organizational support will have a positive and significant effect on public officers felt obligation. h5: affective commitment will have a positive and significant effect on public officers felt obligation. 3. research method 3.1 research design the study is explanatory research based on primary data, with a cross-sectional design that was used to survey public officers. the questionnaires were distributed by the researcher to officers who agreed to participate in the study. there are four main constructs measured in this study, i.e., ethical work climate, perceived organizational support, affective commitment, and felt an obligation. each of the measures we used was adapted from scales that originally appeared in previous studies. confirmatory factor analysis (cfa) employed in this study to operate our variables, and to confirm latent constructs from responses to the survey questions. to confirm the total, direct, and indirect effects, a structural equation model (sem; i.e., a measurement model with a path model) using the smartpls was employed to test the interrelationships between variables, and to assess the relative strength of each variable, and it utilized to test the research hypotheses. results of simulation studies have shown that pls analysis is appropriate when the sample size is small and is recommended in the early stage of theoretical development (chin & newsted, 1999). the aim is to have a better understanding of the complex relationships between ethical work climate, perceived organizational support, and affective commitment and felt an obligation. ethical climate questionnaire (ecq), which developed by victor & cullen (1988) was used to measure public officers’ perceptions of ec in their public organization. it consisted of five ec dimensions: instrumental, caring, independence, professional law and code, and rules. responses were measured on a 5-point likert scale ranging from "5" (completely true), to "1" (completely false). the higher mean of an ecq dimension reflects a higher level of public officers' perception of it. survey of perceived organizational support (pos) developed by eisenberger, huntington, hutchison, & sowa (1986) is a 6-item scale used to measure public officers’ perception of whether the organization appreciated their contributions and whether have treated them favorably or unfavorably in differing circumstances. responses were measured on a 5-point likert scale ranging from “5” (strongly agree), to “1” (strongly disagree). high mean indicates high organizational support perceived by public officers. survey of affective commitment adopted from allen & meyer (1990). an adapted 5-item scale used to measure public officers' perception of affective personal state and emotional attachment to their organization. responses were measured on a 5-point likert scale ranging from "5" (strongly agree), to "1" (strongly disagree). high mean indicates public officers feel the high affective commitment. survey of felt obligation developed by aselage & eisenberger (2003), in which adopted in this study to generate a 5-item scale used to measure public officers’ perception of needs to reciprocate in some kind of attitudinal or behavioral form as they have valuing treatment from the http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 138 organization. responses were measured on a 5-point likert scale ranging from "5" (strongly agree), to "1" (strongly disagree). high mean indicates a high obligation that is felt by public officers. 3.2 population and sample all respondents are working at the government agency at the provincial level and willing to participate in the study. convenience sampling used in this study that in the time about 42 officers were taken as a respondent in this study. the respondents of this study were public officers employed by the west java province, a regional government organization. the west java provincial government should develop and implement resourceful techniques to remain effective while managing human resources. the nonprofit organization could make decisions that meet the perceived needs of the clientele yet do so without strictly adhering to governmental policy. 3.3 research framework above all, this study is guided by the conceptual framework developed by filipova (2007, 2011) and enforced by abou hashish (2017) which proposed and examined the relationship between certain organizational variables (i.e. ethical work climate and pos) and mediating variable (i.e. employees' commitment) and a dependent variable (i.e. turnover intention). dependent variable that examined in this study was felt an obligation as an outcome of ethical work climate, pos, and affective commitment. picture 1 research framework 4. research result and analysis 4.1 descriptive analysis a majority of the respondents were male (69,0%), from the 25–35-year-old age group (50,0%), have a diploma level education (35,7%). only 9,5 % among them are youngest age officers, and 31,0 % hold a master degree as their educational background. characteristics of respondents in the study are presented in the following table. affective commitment felt obligation ethical work climate pos h3 h1 h4 h5 h2 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 139 table 1 characteristics of respondents variable demographics frequency valid percentage (%) gender male 29 69,0 female 13 31,0 age > 25 years old 4 9,5 25 35 years old 21 50,0 35 45 years old 12 28,6 > 45 years old 5 11,9 educational background diploma degree 15 35,7 bachelor degree 14 33,3 master degree 13 31,0 source: primary data processed, 2018 4.2 validity and reliability a confirmatory factor analysis (cfa) used to confirm latent constructs from the relevant survey questions. it also used for each of the latent variables to examine the validity of the measures. standardized factor loadings are presented in table 3. all of the factor loadings statistically are significant (p 0,001), with greater than the recommended loading value of 0,5 (fornell & bookstein, 1982). by examining loading factors, findings reveal that ethical work climate was mainly manifested by service, while pos manifested by organization values officers' contribution, an affective commitment was primarily manifested by a strong sense of belonging of organization and felt obligation was primarily manifested by the personal obligation to ensure highquality product produced. confirmatory factor analysis results show statistical evidence (as reported in table 3) that each component construct of ethical work climate, perceived organizational support, affective commitment, and felt obligation are fits the data well. the fit statistics were within generally accepted ranges, indicating that our research model with affective commitment as a higher-order reflective construct (highest average of standardized factor loading compared with other variables). descriptive statistics for these independent variables, as well as the intervening and dependent variables in the structural model, are presented in table 3. caring is the highest mean of ethical work climate, while organization values officers’ contribution is the highest mean of perceived organizational support. affective commitment is more represented by the perception of working in a unit or team has a great deal of personal meaning among public officers. personal obligation to ensure high-quality product produced and owe to give 100 percent energy represent the highest mean of felt obligation. table 3 shows descriptive statistics, scale reliability, and zero-order correlations between the variables. to test discriminant validity, the value of ave in each factor was compared with and must exceed the squared correlations between that factor and all other factors. the means, standard deviations and correlations are also shown in table 3. the alpha reliabilities ranged from 0,855 to 0,931; these are all good reliability criteria and acceptable. table 3 also present the correlations between the latent variables, with major correlations were highly statistically significant (p < .001). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 140 table 3 mean, standard deviation and factor loading mean sd standardized factor loadings ethical work climate caring 3,93 0,894 0,676 instrumental 3,81 0,634 0,710 independence 3,71 0,918 0,841 service 3,71 1,043 0,867 rules and codes 3,45 1,109 0,863 perceived organizational support the organization cares about my opinions 3,43 1,039 0,901 the organization takes pride in accomplishments 3,52 1,042 0,907 the organization values my contribution 3,76 1,144 0,920 organization appreciate any extra effort 3,71 1,019 0,862 organization care about the problem 3,62 1,188 0,872 the organization cares about the well-being 3,60 0,767 0,705 affective commitment working in a unit or team has a great deal of personal meaning 3,69 0,869 0,828 feel a strong sense of belonging of organization 3,45 0,861 0,946 proud to tell others about working for an organization 3,67 1,028 0,861 feel emotionally attached to an organization 3,64 1,144 0,902 feel caring about organization entirely 3,43 1,172 0,885 felt obligation feel personal obligation to help to achieve organizational goals 3,43 1,063 0,859 feel personal obligation to ensure high-quality product produced 3,52 1,110 0,940 feel obligation to take time from the personal schedule 3,45 1,131 0,920 feel obligation to serve and satisfy others 3,50 0,862 0,761 feeling owe to give 100 percent energy 3,52 1,018 0,831 source: primary data processed, 2018 all the correlations among the variables in table 3 were statistically significant and ranging from 0,80 to 0,89. interestingly, the correlation results indicate the strongest relationship between ethical work climate and felt an obligation. ethical work climate was positively related to pos (r = 0,800, p = 0,01), affective commitment (r = 0,862, p = 0,01), and affective commitment (r = 0,899, p = 0,01). pos was positively related to affective commitment (r = 0,888, p = 0,01), and felt obligation (r = 0,865, p = 0,01). also, the affective commitment was found to be positively related to the felt obligation (r = 0,891, p =0,01). in order to verify the reliability of each variable, internal consistency analysis was performed (as seen in table 3). the cronbach's α for all constructs was over 0,6, which validates the reliability of the tool. composite reliability for all constructs was over 0,8, which validates high internal consistency among construct. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 141 table 3 descriptive statistic, intercorrelations and pls quality criteria 1 2 3 4 1. ethical work climate (0,855) 2. perceived organizational support 0,800** (0,931) 3. affective commitment 0,862** 0,888** (,930) 4. felt obligation 0,899** 0,865** 0,891** (0,914) mean 3,724 3,607 3,576 3,486 standard deviation 0,9196 1,0331 1,0148 1,1036 ave 0,632 0,747 0,783 0,748 composite reliability 0,895 0,946 0,947 0,936 notes: **p , 0,01; *p , 0,05; cronbach’s alphas for each scale are italicised and shown in the diagonal. source: primary data processed, 2018 4.3 research analysis a structural equation modeling with partial least square-based was estimated with four constructs: ethical work climate, perceived organizational support, affective commitment, and felt an obligation. picture 2 result of path analysis the results indicated that the h1and h2 was supported, the public officers’ perceptions of ethical work climate had a significant positive relationship with affective commitment (0,332, p<0,01)and there was a significant and positive relationship between perceived organizational support (0,589, p<0,01). there was no empirical evidence of a significant relationship between ethical work climate and felt an obligation, h3 (β = -0,084, p>0,05). while the path in a linear model of pos towards felt obligation (h4) has a different result. a relatively moderate and positive effect was established between pos and felt obligation (β =0,405, p<0,01). finding reveals higher pos will significantly increase public officers’ felt obligation. in testing h5, an affective commitment was associated with the felt obligation. the affective commitment had a significant positive effect on felt obligation (β =0,605, p<0,01). therefore, the results provide support for h5. it is clear from the diagram (picture 2) that the effects in this affective commitment felt obligation ethical work climate pos β2= 0,589 (sign) β3 = -0,084(ns) β1 = 0,332 (sign) β4 = 0,405 (sign) β5 = 0,605 (sign) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 142 relationship (affective commitment – felt obligation) are the greatest effect compared with another in the model. this means affective commitment has the most important role in increasing public officers' felt obligation. it is important to consider the mediating role of affective commitment on the relationship between ethical work climate and pos toward felt obligation. affective commitment as the main component of organizational commitment would have an important role in fostering the effect of ethical climate and perceived organizational support. a) mediating effect of affective commitment on the effect of ethical work climate on the felt obligation the calculation result shown beta coefficient of ethical work climate on felt obligation through affective commitment: β1 x β5 = 0,332 x 0,605 = 0,200, the direct effect of ethical work climate to the felt obligation (β3) found was not significant. it can be concluded that affective commitment plays an important mediating role on the effect of ethical work climate on felt obligation. b) mediating effect of affective commitment on the effect of perceived organizational support on the felt obligation the calculation result shown beta coefficient of pos on felt obligation through affective commitment : β2 x β5 = 0,589 x 0,605 = 0,356. a direct effect of pos to the felt obligation (β3) found was 0,405. it confirmed that affective commitment would play a partial mediating role in the effect of pos on felt obligation. 4.4 research discussion while it has been generally assumed that nonprofitorganizations would make better partners for government because they are less likely to behave in an opportunistic manner, the results of this research indicate that leader in governments would be wise to exercise caution in their arrangements with the nonprofit sector especially in managing public officers. ethical climate, in contrast, has been found to have only a weak or even sometimes a negative relationship with a specific attitudinal outcome such felt obligation. an understanding of ethical climate difference might well prove significant in dealing with social exchange mechanism, but it could not directly build felt obligation among public officers. this study is one of a growing number to explore this interplay in terms of the conceptual framework advanced here. however, it is one of the very few to look at these concepts outside of the typical setting—specifically, in one of the province in indonesia. the findings support one obvious general conclusion, not necessarily a surprising one—namely, that west java provincial government officers do differ in interesting ways from public officers in western cultures. this is demonstrated in particular by the strong effect of ethical climate as a predictor of affective commitment. the low and negative relationship between ethical work climate and felt obligation is also interesting and quite unusual. findings also show that in every relationship among variables are consistent with previous research. as stated earlier, ethical work climate (mcmanus & subramaniam, 2014; tsai & huang, 2008; schwepker jr., 2001) and perceived organizational support (lew, 2009; yew, 2011) are important antecedents of affective commitment. but the main point is that finding also shows that for affective commitment in social exchange perspective, perceived organizational support is the most important predictor to building commitment (eisenberger, fasolo, & davis-lamastro, 1990). however, recent studies show that ethical work climate, where not every positive work climate necessarily fosters felt obligation among public officers to the organization. this seems to be an important consideration for the public officers examined here. however, research findings from west java provincial government officers have shown that for the average http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 143 officers, it is not enough to simply have a good climate in their organization and feel that they are supported by the organization; the terms of building emotional attachment are equally or even more important. it also seems that leader among public organization must concern and build more obligation among their public officers in the future. 5. research conclusion and limitation 5.1. conclusion the result of this study concluded that there is a positive significant correlation between public officer perception of overall ethical work climate and each of pos, affective commitment, as well as officers' felt obligation. however, the strongest relationship between ethical work climate and felt obligation shows contrary to its linear effect. no important and meaningful direct effect found in the relationship between ethical climate and felt obligation. also, officers perceived a moderate ethical work climate, organizational support, affective commitment, as well as a felt obligation at their public organization. public organization's administrator should emphasize organizational strategies for the provision of caring and supportive work climate to increase individual emotional attachment to the organization. policies, policy processes, and institutional codes are recommended to raise the quality of ethical problem solving throughout the organization. for example, the administrator could establish a recognition/reward programs which considered an important strategy for increasing individuals feeling to be supported. the results of this study contribute to the theoretical understanding of the role of ethical work climate and perceived organizational support in contributing greater affective commitment and felt obligation among the public officers. the fact that ewc could not influence felt obligation directly, employees' affective commitment could play a perfect mediating role in the relationship between ewc toward felt obligation. one plausible explanation of this finding was that in social exchange context, people must feel emotionally attached before they could feel their obligation towards the organization. another practical implication when comparing with ethical work climate, perceived organizational support has more powerful influence on individual attitudes (felt obligation), which in the long run will stimulate productive behaviors that contribute to organizational success. 5.2. limitation the current study used a cross-sectional design; also, it is relied on self-reporting measures, in which these mention limitations. another limitation is relatively small sampling that truly not enough for generalization of findings. future studies need to be replicated in a greater and bigger sampling for more generalization. therefore, it would be recommended in a longitudinal design so that more appropriate to explore the causal relationship between predictive and criterion variables. suggestion for future research is to understand how felt obligation is formed and determined. there is a particular need for further research investigating the role played by felt obligation and another component of attitudinal mechanism (i.e., normative commitment). although both constructs may be different in the same phenomenon, empirical findings are needed to demonstrate their impact on individual organizational attitudes and behavioral mechanisms. is felt obligation more abstract than commitment? are there more ideas in every construct that are not disclosed in the definition? it is interesting to explore the distinctiveness between the two constructs (felt obligation and normative commitment) within the framework of the same research model, with the established research model that is based on social exchange or psychological contracts perspective. another suggestion indicates the need for further examination about the ethical work climate dimension in the relationship with other attitudinal or behavioral outcomes. from this perspective, officers' levels of http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 144 ethical climate can be a valuable basis for a public organization to enhance an understanding of their need for achievement to fulfill the obligation to society. references abou hashish, e. a. 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(1987). a theory and measure of ethical climate in organizations. research in corporate social performance and policy, 9(1), 51-71. victor, b., & cullen, j. b. (1988). the organizational bases of ethical work climates. administrative science quarterly, 101-125. https:// doi.org/10.2307/2392857. yew, l. t. (2011). understanding the antecedents of affective organizational commitment and turnover intention of academics in malaysia: the organizational support theory perspectives. african journal of business management, 5(7), 2551-2562. https://doi.org/10.5897/ajbm10.284. *) hafid aditya pradesa, department of public sector business administration, stia lan, bandung, indonesia (email: hafidap85@gmail.com) **) joni dawud, department of public development administration, stia lan, bandung, indonesia (email: jonidawud@yahoo.com) ***) muhamad nur affandi, department of public development administration, stia lan, bandung, indonesia (email: m.n.afandi@gmail.com) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 35-50 http://dx.doi.org/10.31106/jema.v17i1.3612, issn (online) 2597-4017 35 does broad gender diversity affect corporate social responsibility disclosures? jean stevany matitaputty1, arthik davianti 2* 1 department of accounting, faculty of economics and business, universitas kristen satya wacana, salatiga, indonesia 2 department of accounting, faculty of economics and business, universitas kristen satya wacana, salatiga, indonesia *corresponding author(s) email: arthik.davianti@uksw.edu abstract nowadays, corporate social responsibility (csr) disclosures becoming a business world issue. many public listed companies are voluntarily disclosing their csr information. this study aims to examine the relationship between gender diversity and csr disclosures in basic and chemical manufacturing companies listed on the indonesian stock exchange during 2014 to 2016 periods. the analysis method used in this research was a mixedmethod, a combination of quantitative and qualitative analysis techniques. the quantitative analysis implemented in the study by utilizing the spearman correlation. further, qualitative analysis was based on content analysis. the results of this study showed that there is a lack of gender diversity amongst board members since the number of women on the boards in basic and chemical manufacturing companies still being a minority. therefore, the relationship between gender diversity as measured by the level of female on the company board and csr disclosures were insignificant. keywords: gender; diversity; corporate social responsibility; disclosing; board member jel code: d22, j16 doi: 10.31106/jema.v17i1.3612 article history: received 2019-07-24 reviewed 2019-12-25 revised 2020-01-17 accepted 2020-01-28 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ does broad gender diversity affect corporate social responsibility disclosures? by jean stevany matitaputty, arthik davianti 36 introduction the role of top-level management is crucial in implementing good corporate governance. every policy and judgment took by the board of commissioners, and the board of directors will have an effect on the strategies carried out by the company. one of the things that need to be considered in top-level management is related to their heterogeneity of various perspectives. a heterogeneous group mostly has a better ability to give better access to the external environment and bringing more solutions in solving problems (bernardi & threadgill, 2011; carter et al., 2010). harjoto et al. (2015) added that heterogeneity could increase the board’s ability to know the need and interests of various groups as reflected in the disclosure of corporate social responsibility (csr). the disclosure of crs is a form of corporate responsibility toward society. more transparent disclosure of csr will increase societies’ trust index because through the disclosure a company can increase the financial performance which will affect to economic performance, environment, and society (ibrahim & hanefah, 2016) the heterogeneity position of top management and the disclosure of crs became an urgent issue, especially for a public company. regulators insist companies improve the diversity in the meeting room, and simultaneously, stakeholders, and societies insist companies be more responsible socially (harjoto et al., 2015). therefore, companies do not only aim to obtain profit, but it must also follow the regulation set by regulators and fulfill the responsibility to the stakeholders (ibrahim & hanefah, 2016). one of the emerging issues about corporate governance is the gender diversity issue. it is due that gender diversity in the top management position can give more knowledge for the company and increasing broader professional relationship than before (bernardi & threadgill, 2011). even more, gender diversity is regarded as one of the considerable aspects of a company in recent years. it’s begun from the presence of females in the accounting profession and opportunity for a female professional to have a role in the top management of a company (haynes, 2017). it shows that a company is not only executing business activity to earn a profit, but it also considering social issues in both gender diversity issues in the top management and fulfilling corporate social responsibility to the surrounding. moreover, (darmadi, 2011) added that the average percentage of females on the board of 383 a public company listed in the indonesian stock exchange (idx), is 11,2 %. it indicates that although the number is similar to australia and the united kingdom, the female representation in the board of public firms listed in idx is still at a low level. jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 35-50 http://dx.doi.org/10.31106/jema.v17i1.3612, issn (online) 2597-4017 37 the previous study shows the correlation of gender diversity and csr disclosure which indicates that the existence of females is highly correlated with the company's responsibility (bernardi & threadgill, 2011), gender diversity has impacts when it is linked with the proportion of female existence (dienes & velte, 2016). next, the proportion of csr has a positive correlation toward gender diversity in the company boards (hoang et al., 2018). the diversity of company boards has a positive correlation to csr power. however, it has a negative correlation with csr problems (harjoto et al., 2015). moreover, female directors have positive and significant impacts on csr disclosure implementation (ibrahim & hanefah, 2016), then the presence of female directors correlates with higher csr report (rao & tilt, 2016). based on the phenomenon mentioned above, the purpose of this study is to examine the relationship between gender and csr disclosures. this study used mixed methods to describe the formulation of gender diversity in csr disclosure practices in indonesia public listed companies. literature review gender diversity the increasing number of female who was pursuing careers affects the number of female representation in top management level. the percentages of female directors in the united states of america and the united kingdom are estimated at 12-15%. the trends are not much different in asian countries, where about 5% of board directors in china and india are female (pande & ford, 2012). while darmadi (2011) added that there is about 11,2% of the female board in indonesia public companies. this trend reflects an increased awareness of the female importance role (gender diversity) in making a strategic decision. females are considered to have a cognitive feeling that makes them more focused on harmony, socially and environmentally (hurst et al., 1989; larrieta-rubín de celis et al., 2017). they are also considered to be tough individuals due to the prior career challenges that must to overcome before holding board seats (krishnan & park, 2005). reguera-alvarado et al. (2017) added that the increasing number of female on the board position produces higher economic results and the quality of earnings (srinidhi et al., 2011; hili & affess, 2012), enhances the monitoring of directors and shareholder (garcía lara et al., 2017), and corporate board effectiveness (pucheta-martínez et al., 2016; huang et al., 2019). diversity in top management positions is considered as a combination of attributes, characteristics, and expertise that varies and is contributed by everyone to the decisiondoes broad gender diversity affect corporate social responsibility disclosures? by jean stevany matitaputty, arthik davianti 38 making process (ibrahim & hanefah, 2016). campbell & mínguez-vera (2008) added that the greater gender diversity the more creative and innovative companies will be. ntim & soobaroyen (2013) and perryman et al. (2016) defined gender diversity as the proportion of female representation in top management level. while jia & zhang (2013) defined gender diversity as the number of female directors. we are using the following equation to measures gender diversity. (1) corporate social responsibility (csr) disclosure csr is a company's commitment to improving the welfare of the community through business practices and contribution to company resources (cortado et al., 2016). yani et al. (2019) added that csr is the obligation of companies to the community as the impact of their production activities. donate to charities, make an environmentally-friendly product, and collaborate with the local community are several activities that usually used by companies when implementing their csr program (mccarthy et al., 2017). a study conducted by askandar et al. (2018), it was found that economic motive is considered as the most appealing program from both companies and societies. csr disclosure in the annual report becomes part of social responsibility accounting, which is carried out to provide information for all stakeholders (santoso et al., 2017) . in indonesia, csr disclosure has become an important matter for stakeholders. this is supported by several laws that are closely related to csr activities carried out by the company such as limited liability company law no.40 of 2007 article 74 subsection 1 which states that "the company which carries out its business activities in the field and / or is related to natural resources are required to carry out social and environmental responsibility." then, article 66 subsection 2 (c) states that "the annual report must contain at least a report on the implementation of social and environmental responsibility". nunez & nunez (2019) stated that companies are likely used the global reporting initiative framework as the fundamental phase in arranging csr activities and reports. fuente et al. (2017) added an argument that gri itself is currently the most widely accepted csr framework that used to improve the quality of csr and sustainability reports so that they reach a level of equivalent to financial statements. gri with 77 indicator standards represents the best practice for reporting publicly on a range of economic, environmental, and social to measured csr index. 𝐺𝑒𝑛𝑑𝑒𝑟 𝐷𝑖𝑣𝑒𝑟𝑠𝑖𝑡𝑦 = 𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐹𝑒𝑚𝑎𝑙𝑒 𝑅𝑒𝑝𝑟𝑒𝑠𝑒𝑛𝑡𝑎𝑡𝑖𝑣𝑒 𝑖𝑛 𝐵𝑜𝑎𝑟𝑑 𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐵𝑜𝑎𝑟𝑑 𝑀𝑒𝑚𝑏𝑒𝑟 x100 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 35-50 http://dx.doi.org/10.31106/jema.v17i1.3612, issn (online) 2597-4017 39 (2) the relationship between gender diversity and corporate social responsibility (csr) disclosure gender diversity is interpreted in a simple form in various studies. diversity is much demonstrated by the presence of women in key positions in the corporation, as stated by bernardi & threadgill (2011), who found that companies that have a female presence on board of companies have a relationship with corporate social responsibility. this is because women who sit onboard positions sponsor or create organizations that benefit the surrounding community through donation programs. dienes & velte (2016) also prove that companies with a higher proportion of women on the supervisory board position have a higher csr reporting intensity compared to men. harjoto et al. (2015) also stated that gender diversity, as measured by the presence of women in the position of the board of directors, could improve csr performance and reduce csr problems. this is because women's boards of directors have a collaborative leadership style that can bring dynamic benefits to society. after all, women's boards of directors are more focused on listening to innovations from the community and supporting social activities in the community. furthermore, hoang et al. (2018) and katmon et al. (2019) found that the presence of women on company boards tends to demand more csr information before making investment decisions. thus, it can be concluded that gender diversity, as measured by the presence of women on the board, has a relationship with csr disclosure; accordingly, the hypotheses for quantitative approaches in this study are formulated as follows. h1: there is a significant relationship between gender diversity and csr disclosure. methods this study can be classified as conclusive causal research because this study aims to investigate the effect of gender diversity on csr disclosures. purposive sampling chose as the sampling technique. the criteria used in this study are basic and chemical manufacturing companies from 2014 to 2016 periods, that published their complete version of the annual report, and contains information about the variables studied. this study chose the basic and chemical manufacturing companies because this industry has significant market growth and contributes to air pollution and environmental damage generated by the waste in the company's production activities (affan, 2019). this study uses secondary data, namely the 𝐶𝑆𝑅 𝐼𝑛𝑑𝑒𝑥 = 𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐶𝑆𝑅 𝐷𝑖𝑠𝑐𝑙𝑜𝑠𝑢𝑟𝑒𝑠 𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐶𝑆𝑅 𝐷𝑖𝑠𝑐𝑙𝑜𝑠𝑢𝑟𝑒𝑠 𝐵𝑎𝑠𝑒𝑑 𝐺𝑅𝐼 𝐺4 𝑥 100 does broad gender diversity affect corporate social responsibility disclosures? by jean stevany matitaputty, arthik davianti 40 annual report of the basic and chemical manufacturing industry obtained from the official website of the indonesia stock exchange (idx). in total, the number of basic and chemical manufacturing companies ranged from 2014 to 2016 were 66 companies included 14 companies that had an incomplete or unpublished annual report. therefore, the total sample that met the requirement was 52 companies. this study implemented a mixed-method to examine the relationship between gender diversity on csr disclosures. (tack et al., 2018) added that the use of a mixed-method approach that combines qualitative and quantitative approaches provides a better understanding of research problems regarding the relationship between gender diversity and csr disclosure. spearman’s correlation is used to determine the relationship between gender diversity and disclosure of csr. moreover, the study utilized content analysis to analyze qualitative data. content analysis is a technique for making conclusions objectively and systematically by identifying specific characteristics of information (graneheim et al., 2017). content analysis is also a systematic analysis technique used to categorize words into categories of contents or content of meanings that use specific codes (bengtsson, 2016). in using content analysis, the qualitative analysis in this study has the stages of analyzing the disclosure points, in the form of a checklist, which is related to gender diversity, and then analyze the extent of disclosure of these points. result and discussion spearman’s correlation table 1. hypotheses testing model the correlation coefficient (r) criteria sig. value decision gender diversity -> csr disclosures -0.048 sig. value < 0.050 0.737 h1 rejected table 1 shows that the spearman’s correlation coefficient between the variables of gender diversity and csr disclosure is -0,048 with a significance value of 0.737 (greater than 0.050). it means that the proposed hypotheses stated that there is a significant relationship between gender diversity and csr disclosure is rejected. this result is different from previous studies which stated that the presence of gender as measured by the presence of women in the position of the company board has a relationship with corporate social responsibility (bernardi & threadgill, 2011), and gender diversity has a relationship with the jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 35-50 http://dx.doi.org/10.31106/jema.v17i1.3612, issn (online) 2597-4017 41 intensity of csr disclosure (dienes & velte, 2016). the absence of a relationship between gender diversity and csr disclosure is due to the number of women on the board's ranks in basic and chemical manufacturing companies still being a minority. this is indicated by the average value of gender diversity in 2014 to 2016 of 11.32 percent. the value of 11.32 percent was obtained through the calculation of the number of female councils in the positions of the board of directors, the board of commissioners, the audit committee, and compared to the total overall board of companies averaged for 52 basic and chemical manufacturing companies. harjoto et al. (2015) stated that women's board representative is more focused on social issues in the community so that it will support more social activities of the community and demand more information relating to the disclosure of csr in making investment decisions (hoang et al., 2018; katmon et al., 2019). therefore, the presence of fewer women in board positions can lead to lower csr disclosures. content analysis wijaya karya beton inc. (wton) and champion pacific indonesia inc. (igar), which has a very high level of gender diversity, are compared to show that not all companies with very high levels of gender diversity have a very high intensity of csr disclosure. this study used the global reporting initiatives (gri), which contains 77 marked as a basic standard in evaluating csr disclosures of those companies. these standards are organized into three series, gri 200 (economic issues), gri 300 (environmental issues), and gri 400 (social issues) gri 201-1 about direct economic value generated and distributed of wton can be reported as follows. in 2016, the company carried out csr activities in the social and community fields including education, empowerment of surrounding communities, distribution of zakat, employment of local labor, enhancement of social facilities and infrastructure, construction of religious facilities, and other forms of donations. its total costs reached rp. 700,434,720. (wton annual report2016, p. 318) gri 201-2 standards provide guidelines about financial implications, and other risks and opportunities caused by climate change of wton were reported as follows. weather changing is one of the challenges in the property business including wton. in 2015 there was a long dry season with very dry conditions and a rainy season with high intensity but in a shorter period. the dry season conditions are favorable weather for wton because the construction of the project can be done smoothly and is not blocked by rain. thus, the planning of project work is not interrupted. wton does broad gender diversity affect corporate social responsibility disclosures? by jean stevany matitaputty, arthik davianti 42 notes there are no financial implications due to climate change. however, if the drought conditions continue to be extreme in the future, the danger of dust and dehydration will threaten. (wton annual report 2015, p. 23) gri 201-3 about defined benefit plan obligations and other retirement plans of wton was reported as follows. wton has provided a pension program through the old-age insurance program (jht). the allocation fees of jht bpjs employment divided into two parts which are 3.7% x (1 fixed pay) is borne by the company and 2.0% x (fixed pay) is borne by employees. during 2015, there were 8 employees were retired and wton recorded pension fund expenditure of rp. 5.9 billion or 1.92% paid out of the total pension fund managed by the wton ppmp pension fund which was worth rp. 306.94 billion. (wton annual report 2015, p. 27) the standards gri 203 regarding infrastructure investment and services also supported the significant indirect economic impact of wton, as presented in the following quote. the company is investing in infrastructure in the form of road compaction in the environment around the factory, road loading in the village of nambo, and road compacting and others around the factory within a radius of ± 8-10 km. (wton annual report 2016, p. 314) wton has compiled a csr program through the implementation of activities that refer to iso 26,000 policy. those programs include activities to improve religious facilities and infrastructures, system training of occupational safety and health management (smk3), waste or used materials utilization activities, social assistance programs and educational programs in the form of low-cost markets, internal and external scholarships, wika beton goes to campus program, sponsorship and industry visits to factories of wika concrete, and natural disaster relief and activities that support csr sustainability. (wton annual report 2016, p. 312) on the other hand, igar also discloses its csr activities that can be classified as gri 200 in its annual report. gri 201-1 and 201-3 of igar were reported as follows. in 2016, the company disbursed idr 439 million allocated for the realization of the company's social responsibility program. (igar annual report 2016, p. 73) the group recognizes liabilities for the shortfall between post-employment benefits under the labor law and the defined benefits available in the pension plan. the group provides defined benefits without funding for employees that meet the requirements under the manpower act. (igar annual report 2016, p. 47) jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 35-50 http://dx.doi.org/10.31106/jema.v17i1.3612, issn (online) 2597-4017 43 then for gri 203-1 and 203-2 implementation, igar claim with the following argument. the company carries out the construction of social facilities and infrastructure in the form of activities to repair houses around the damaged environment. (igar annual report 2014, p. 62) the company makes a real contribution to the community by carrying out various social activities such as maintaining cleanliness around the environment, the company repairs the damaged houses around company, provides treatment for the sick people in the community, provides opportunities for students to be able to have professionals work experience by providing internship programs, fogging to eliminate mosquito larvae with potential diseases, distributing basic needs for household needs, conducting "healthy walking together" activities that are followed by management teams, employees, and communities around the company's operations, donating sacrificial animals during the eid al-adha. (igar annual report 2014, p. 62) wton also has disclosures relating to gri 300 about the environment. the contents of the disclosure disclosed by wton are about energy, water, emissions, effluents, and waste. meanwhile, igar did not make any disclosures related to gri 300. the following are disclosures that made by wton to meet gri 301-1 (material used by weight or volume), 302-1 (energy consumption within the organization), 302-4 (reduction of energy consumption), 305-1 (direct ghg emissions), 305-7 (nox, sox, and other significant air emissions), 306-2 (waste by type and disposal method), 306-4 (transport of hazardous waste) requirement. one of the monitoring of water usage in the project was carried out in the construction of the elevated package 101-102 mrt project. the source of water is groundwater, but wton has not been able to record the total volume of water taken. intake of groundwater is done by drilling land (artesian) and partly using water from palyja. water management in this project is more efficient because it is equipped with a mini wtp (water treatment plan) system. (wton annual report 2015, p. 39) direct energy consumption during 2015 was in the form of electricity consumption at the head office, amounting to 1,212,380 kwh meters. (wton annual report 2015, p. 40) initiative: providing understanding and increasing awareness of all employees towards energy savings, affixing an appealing sticker to turn off all energy sources after they are used. challenge: energy savings have not noted yet. (wton annual report 2015, p. 40) does broad gender diversity affect corporate social responsibility disclosures? by jean stevany matitaputty, arthik davianti 44 every year, wton's construction projects affect the production of greenhouse gas emissions (ghg). some ghg sources recorded by wton include electricity, fuel consumption, refrigeration, vehicles and diesel. wton has not assessed the overall emissions footprint given that each project is in a different place. other sources of emissions from project activities are always measured and reported to the central office. for example, petrolab services (independent evaluator) measures air every month in the elevated package mrt project 101-102. emissions assessed in the air are so2, co, no2, pb, o3, hc, co2. in general, overall results are still below the standard limits. as for the measurement of co2, air quality has almost reached the tolerance limit due to exhaust gases from vehicles passing through the project area. (wton annual report 2015, p. 50) waste is managed by providing three types of landfills: hazardous and toxic (b3), organic and inorganic waste. transportation of hazardous waste uses special trucks managed by a third party, namely sun nur logam jaya, which has obtained a permit from the minister of transportation no. aj.309 / 16/018 / dp / 2011/32150003. (wton annual report 2015, p. 25) the contents of csr disclosures related to gri 400 disclosed by wton about occupational health and safety, local communities, and customer health and safety. following, an example of disclosure relating to occupational health and safety, in gri 403-1 (occupational health and health service management), 403-2 (hazard identification, risk assessment, incident investigation), 403-3 (occupational health and services), 403-4 (worker participation, consultation, and communication on occupational health and safety). in 2015 there were 27 management representatives and 390 union representatives for health and safety. (wton annual report 2015, p. 28). in 2015 there were 164 minor accidents, and 42 medium employees. meanwhile, accidents at the major and fatal levels were 0 employees. (wton annual report 2015, p. 29) the risk assessment conducted by the she department has identified 14 categories of high-risk work, such as working at high altitude, working with heavy equipment, working in extreme weather, working in confined spaces.control: the safety and health check (mcu) handbook before, during and after work has been developed. (wton annual report 2015, p. 28) wton has a safety, health & environment management system (ehs) based on several guidelines, namely, 2003 (ohsas 18001: 1999), 2007 (ohsas 18001: 2007), 2009 (iso 14001: 2004), 2015 (smk3 pp) 50 th 2012). (wton annual report 2015, p. 27) jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 35-50 http://dx.doi.org/10.31106/jema.v17i1.3612, issn (online) 2597-4017 45 when it is compared with wton, igar also made several disclosures related to gri 400. the contents of the disclosures owned by igar are related to training and education topics and the local community. the following is an example of disclosure on the training and education topics disclosed by igar, at gri 404-1 (average hours of training per year per employee) and 404-2 (the program for upgrading employee skills and transition assistance programs). social and community development, including: 1) the employment of local labor; 2) community empowerment around issuers or public companies, among others through the use of raw materials produced by the community or providing education (igar annual report 2016, p. 98). the company reports on average training hours based on the type of training material provided such as public speaking and presentation training materials (20 hours/year), developing service mindset (44 hours/year), microsoft office basic computers (144 hours/year), seminars iso users club (8 hours/year), and various other training programs disclosed in the employee training table. (igar annual report 2014, p. 29) throughout 2014, the company carried out various hr competency improvement programs in the form of training and development. the hr development carried out is more focused on developing managerial skills, soft skills and technical skills of the employees with the total cost of the company up to rp381 million. (igar annual report 2014, p. 28) based on the findings of the content analysis, it provided a more precise picture that the level of gender diversity in the board position of the company board has no relationship with the level of csr disclosure. although igar has a very high level of gender diversity compared to others, the intensity of csr disclosure is very low. while igar only revealed 7 of the 77 gri indicators from 2014 to 2016. wton only disclosed 17 indicators from 77 gri indicators from 2014 to 2016. this disclosure is arguably deficient when seen from the total number of indicators. this finding is consistent with previous quantitative analysis, which concluded that there is no significant relationship between gender diversity and csr disclosure. (hsu & cheng, 2012) also found similar findings that there is no relationship between female directors and a willingness to engage in csr practices. in conclusion, the proposition of this study described below. p1: there is a no different level of csr disclosures between companies that have high and low gender diversity. the representative of female in board member does not increase the csr disclosures act. does broad gender diversity affect corporate social responsibility disclosures? by jean stevany matitaputty, arthik davianti 46 conclusion and suggestion based on the results of the quantitative analysis conducted in this study, it can be concluded that gender diversity in the board of the company has no relationship with the level of csr disclosure in basic and chemical manufacturing companies. this quantitative result, supported by the results of a qualitative analysis providing a clearer picture, which shows that not all companies that have a very high level of gender diversity on the board of the company have a much better csr disclosure. conversely, most companies, despite having very high levels of gender diversity on the board of the companies, turned out to have very low csr disclosures. the constraint of this study is those gender measurements used are directly related to gender and are not related to the attitudes or behavior of the company board. future research can be developed by using more precise measurements in measuring gender associated with the attitudes and behaviors of company boards. references affan, m. w. 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(2019). does broad gender diversity affect corporate social responsibility disclosures? by jean stevany matitaputty, arthik davianti 50 influence of industry type, profitability and size on corporate social responsibility reports isomorphism stage in indonesia. international research journal of management, it and social sciences, 6(4), 17–30. https://doi.org/10.21744/irjmis.v6n4.649 jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,236 -246 http://dx.doi.org/10.31106/jema.v18i2.12530, issn (online) 2597-4017 236 the accounting information system impact on micro, small, medium-sized enterprises performances in bengkulu fachruzzaman1*, rini indriani2, pratana puspa mediastuty3, vika fitranita4, adista anbarani putri zaman5 1 department of accounting, faculty of economics and business, universitas bengkulu, bengkulu, indonesia 2 department of accounting, faculty of economics and business, universitas bengkulu, bengkulu, indonesia 3 department of accounting, faculty of economics and business, universitas bengkulu, bengkulu, indonesia 4 department of accounting, faculty of economics and business, universitas bengkulu, bengkulu, indonesia 5 accouning staff, klynveld peat marwick goerdeler (kpmg), jakarta, indonesia *corresponding author(s) email: herufeb76@gmail.com abstract the role of accounting information system (ais) incorporating to firms' daily operations and management remains indisputable. this paper aims to study the effect of ais on micro, small, medium-sized enterprises' (msmes) financial performance. a total of 522 datasets were gathered from structured questionnaires that were distributed to msme owners in bengkulu province. partial least squares regression (pls) was used to build a model for predicting and evaluating the structural model of the study. similar to the previous study, the result of the study revealed that although the majority of respondents were not implemented ais properly, they have perceived that ais has a positive effect on micro, small, and medium enterprises' performances. moreover, it has also been found that the positive perception of accounting information usages is influenced by accounting resources and the application of basic accounting. keywords: accounting; information system; performances; micro, small, and medium enterprises (msmes); entrepreneurship jel code: m160 doi: 10.31106/jema.v18i2.12530 article history: received 2021-07-08 reviewed 2021-07-30 revised 2021-08-02 accepted 2021-08-19 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ the accounting information system impact on micro, small, medium-sized enterprises performances in bengkulu by fachruzzaman, rini indriani, pratana puspa mediastuty, vika fitranita, adista anbarani putri zaman 237 introduction globalization increases competition, push the management team to improve business efficiency by making better judgments on business decisions, including micro, small, and medium enterprises (msmes). msmes have an important role in a country's economy (subagyo et al., 2020; sohilauw et al., 2020). based on data from the indonesian state minister for cooperatives small and medium enterprises (2020), there are more than 55.2 million units of msmes that can employ around 101.7 million people. even so, it does not always run smoothly; there are many obstacles, both internal and external, which must be faced by msme actors. based on the ministry of finance data, the internal factor becomes the main problem in msmes. approximately 60-70% of msmes have not had access to get finance from bank financing due to low accountability. the management has not been able to separate money for household expenses and business operations. wulanditya & aprillianita (2018) mention that many cash receipts and disbursements transactions are not recorded. previously, fatoki (2012) found that most micro-enterprises were not involved in financial planning and control, financial analysis, and investment appraisal; and most micro companies do not apply ais. it impacts on cost and product prices which will certainly affect their performance. the identical finding is shown by marriott & marriott (2000) in their study which found that information systems, especially ais, were underutilized by small companies. likewise, the research results by ernawati et al. (2016) show that the application of information systems in msmes is very low. juita (2016) found that many msmes actors have not or do not record and manage their financial information periodically or separately from their personal/family finances. however, most business actors understand that ais plays an important role in evaluating the performance of msmes. competition increases pressure, particularly on the management team, to improve business efficiency by making better decisions. high-quality information for decision-making requires relevant and reliable information at the right time at a reasonable cost. ismail et al. (2012) mentioned that real-time data and reports provide considerable assistance to make the right decisions. moreover, the study by kharuddin et al. (2010) revealed that smes that adopt ais show a significant increase in performance compared to those that do not. according to maseko & manyani (2011), accounting systems provide a source of information for owners and managers of small businesses operating in any industry to use in measuring financial performance. small business accounting practices must provide the complete and relevant jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,236 -246 http://dx.doi.org/10.31106/jema.v18i2.12530, issn (online) 2597-4017 238 financial information needed to improve economic decisions made by entrepreneurs. several researchers in indonesia provide empirical evidence that accounting information contributes to the success of msmes (prastika & purnomo, 2014; christian & rita, 2016; nurissalmah et al., 2021). this study aims to re-investigate the effect of accounting information systems on company performance in micro, small and medium enterprises. literature review accounting information system accounting is defined as an information system because it processes data and information as input and produces output in the form of communication from accounting which can be used by (stakeholders), both internal and external, to determine financial activities and performance (warren et al., 2017). furthermore, romney & steinbart (2012) define ais as collecting, recording, storing, and processing data to produce information for decision-makers. these systems include people, procedures and instructions, data, software, information technology infrastructure, internal controls, and security measures. then they are classified that there are six components of ais which is people who use the system; procedures and instructions used to collect, process, and store data; data regarding the organization and its business activities; software used to process data; information technology infrastructure, including computers, peripheral devices, and communication network devices used in the ais; internal controls and security measures that store ais data. performances performance is the result of work that can be achieved by a person or group of people in the organization, according to the authority and responsibility of each to achieve organizational goals. performance is a series of management activities that provide an overview of the extent to which the results have been achieved in carrying out their duties and responsibilities in public accountability, both in the form of successes and failures that have occurred (rahmanto et al., 2018). according to permana (2017), performance is the periodic determination of the organization's operational effectiveness, its part of the organization, and its employees based on predetermined goals, standards, and criteria. so, performance is an accomplishment achieved by an organization or entity in a certain accounting period measured by comparison with various standards. performance reflects the organization's ability to manage and allocate its resources (lisa, 2019). many factors affect the performance of small companies, including the influence of internal and external factors the accounting information system impact on micro, small, medium-sized enterprises performances in bengkulu by fachruzzaman, rini indriani, pratana puspa mediastuty, vika fitranita, adista anbarani putri zaman 239 (wang & wong, 2004). success depends on the ability to manage these two factors through analysis of environmental factors and the formation and implementation of business strategies. the internal challenges for msmes, especially in their development, include broad aspects in improving the quality of human resources, management capabilities, organization and technology, entrepreneurial competence, wider access to capital, transparent market information, other production input factors, and a healthy business climate that supports innovation, entrepreneurship, and business practices as well as fair competition. the performance of msmes can be seen from the creation of job opportunities that reflect the success or failure of a business. thus, the greater the employment level, the greater the role of msmes in tackling the unemployment problem. similarly with productivity, by increasing the workforce used, productivity is also increased. the contribution to gross domestic product (gdp) can occur if msmes can contribute to the national economy both in domestic and foreign sales (exports). msmes are categorized as successful if the income consistently increases, increased sales influence it. an increase in sales also directly affects the performance of msmes. accounting information system and msmes performance the success of a business is highly dependent on the existence of good ais. without such a system, it would be very difficult for a company to assess business performance, identify balance sheet reports from customers and suppliers, and predict an organization's future performance. this is in line with the opinion of weygandt et al. (2009) which states that the success of any business will ultimately depend on the numbers generated by accounting information systems. they explained that stakeholders would rely on these numbers to make decisions and that managers would use them to evaluate organizational performance. this is valid for everyone, regardless of whether they specialize in marketing, production, management, or information technology. accounting and financial reports are tools for communicating figures in a corporation, as they go on to say. they emphasize that if a person somehow doesn't know how to read financial statements, they will be unaware of his company's business. maseko & manyani (2011) and christian & rita (2016) mention that accounting information can contribute to the success of sme business. prastika & purnomo (2014); indralesmana & suaryana (2014); budiarto et al. (2015); nurissalmah et al. (2021) prove that jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,236 -246 http://dx.doi.org/10.31106/jema.v18i2.12530, issn (online) 2597-4017 240 the accounting information system has a positive effect on the performance of msmes. so that the formulation of the hypothesis in this study is as follows. h1: the usage of ais has a positive effect on msmes performances. methods table 1. item measurements variables code items ais resources (o1)* o11 the familiarity of msmes with the accounting process. o12 do you use an accountant (accounting graduate) for financial records? ais applied (o2)* o21 there is a separation of the financial records of the entity (business) with the owner (business entity). o22 do smes prepare financial reports? ais usages (x) x11 when purchasing raw materials or merchandise, i always see the stock report of the item in the system. x12 when a transaction occurs on the sale of merchandise/services, i always record it in the sales record or book in the system. x13 when collecting accounts receivable, i always record it in the accounts receivable and cash receipts book in the system. x14 when paying employees, i always see employee performance records or reports in the system. x15 when paying debts, i always look at the company's debt records in the system. x16 in determining the selling price of merchandise/services, i always look at the system record of the production price/purchase price of goods plus profits and other costs. performances (y) y11 business activities are run according to the work plan as the record of the system. y12 work errors often occur, causing repetition after implementing ais. y13 there is sales growth. y14 there is a decrease in fixed costs after the usage of ais. y15 i can anticipate the fluctuating demand precisely due to the usage of ais. y16 timeliness guarantee to customers. y17 product conformity with the specifications offered. note: *) the list of questions besides of causational item studied the accounting information system impact on micro, small, medium-sized enterprises performances in bengkulu by fachruzzaman, rini indriani, pratana puspa mediastuty, vika fitranita, adista anbarani putri zaman 241 this study utilized a quantitative approach. research data in the form of primary data obtained through surveys by using the five-point likert scale questionnaires to msmes and business owners in bengkulu city of indonesia from six regions (regency) namely rejang lebong, kepahiang, bengkulu tengah, bengkulu city, north bengkulu, and kaur. referring to hair et al. (2010) regarding the sample size in multivariate research, the number of representative samples taken for sem is at least ten times the number of items. thus, the sample that must be taken is up to 130 samples. a total of 522 msmes and business actors are participated and classified as respondents of the study. this number of samples considered has been met the requirement for further analysis. moreover, the variables observed in this study were classified into independent and dependent variables. the independent variable is the usage of the accounting information system while the dependent variable is the performance of msmes. the data analysis was carried out using descriptive analysis and inferential analysis. based on the primary data obtained, the frequency distribution of each solution is grouped according to the indicators and answer items. as for inferential analysis, they are starting with testing the validity and reliability, then testing the normality of the data, then doing partial least squares analysis assisted by data processing software with hypothesis testing at the level of significance (p-value) = 5%. in this study, the measurement of the usage of accounting information systems was developed from fatoki (2012) while the msme's performance measurement was modified from christian & rita (2016) and aribawa (2016). table 1 presents the questionnaire items. table 2. loading factors indices loading statistics x11 0.789 x12 0.847 x13 0.867 x14 0.763 x15 0.839 x16 0.779 y13 0.778 y15 0.780 y16 0.690 y17 0.683 jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,236 -246 http://dx.doi.org/10.31106/jema.v18i2.12530, issn (online) 2597-4017 242 table 2 shows that the loading factor of the measuring indicator has a value of > 0.5 (except for y11, y12, and y14), which means that the construct has met the convergent validity test because the loading factor is > 0.5. table 2 also shows that the performance construct can be explained by the usage of the accounting information system (ais) construct by 11.40%. it is in the weak category because the r-square value of 0.114 is lower than 0.33. result and discussion table 3. msmes and business actors profiles questions answers amount total the familiarity of msmes with the accounting process. familiar 225 522 not familiar 297 do you use an accountant (accounting graduate) for financial records? yes 71 522 no 451 there is a separation of the financial records of the entity (business) with the owner (business entity). separated 88 522 not separated 434 do smes prepare financial reports? yes 136 522 no 386 table 4. hypotheses testing relationship t-statistics p-value decision ais usages (x) -> performances (y) 8.059 0.000 h1 accepted table 3 shows that there are only a small number of msmes that are implement the accounting system, starting with the number of respondents who stated that 43% of respondents knew to account and/or recording, and those who made financial reports were 25%, and those who applied the principles of business entities (principles that separate between the owner and the entity (business entity) concerning the transaction) by 17%. only 14% of msmes use accountants in making financial reports, and the results of unstructured interviews with several respondents are related to loan needs and/or related taxes. thus, table 4 indicates that the relationship between the usage of accounting information systems and msmes performance is positive with  values 0.000. it indicates that although the majority of respondents were not implemented ais properly, they have perceived that ais has a positive effect on micro, small, and medium enterprises' performances. moreover, it has the accounting information system impact on micro, small, medium-sized enterprises performances in bengkulu by fachruzzaman, rini indriani, pratana puspa mediastuty, vika fitranita, adista anbarani putri zaman 243 also been found that the positive perception of accounting information usages is influenced by accounting resources and the application of basic accounting. msme actors evaluate their business performance and decisions making generally only based on the amount of money spent and money coming in, and tend not to collect, record, and store financial transaction documents that are useful for their business decisions. some msmes do not have records related to transactions if there are general records concerning accounts receivable, payable, cash in, and cash out. the same thing was conveyed in the study of maseko & manyani (2011) and kharuddin et al. (2010). msmes generally do not utilize the accounting information used to assess the financial performance of msmes, and because they generally do not make financial reports so that the preparation of msme financial reports follows the rules of the financial accounting standards for micro, small, and medium enterprises tends not to exist. a small proportion of msmes employ qualified accounting staff; this may be because the respondents in this study are generally in the micro and even ultra-micro category, and no msmes are auditing their financial statements at a registered/accredited auditor office. the preference of msme actors is that managing with an accounting information system tends to be unnecessary or that adding jobs is not value-added because the scale of the business is categorized as micro. however, the results of this study empirically affect the accounting information system on company performance in micro, small and medium enterprises. these results are in line with research conducted by prastika & purnomo (2014) and nurissalmah et al. (2021). furthermore, referring to the six components presented by romney & steinbart (2012), the accounting information system model in this study reveals three components; people (ais resources), procedures (ais applied), and data (ais usages). these three components simultaneously affect the performance of msmes. conclusion and suggestion the result of the study revealed that although the majority of respondents were not implemented ais properly, they have perceived that ais has a positive effect on micro, small and medium enterprises' financial performances. moreover, it has also been found that the positive perception of accounting information usages is influenced by accounting resources and the application of basic accounting. this study has limitations on the inability to access more in-depth information regarding financial management applied by msme actors. get respondents who want to fill out a questionnaire, let alone provide information. so that in this jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,236 -246 http://dx.doi.org/10.31106/jema.v18i2.12530, issn (online) 2597-4017 244 study, questionnaires were distributed through people who were close to the research team, which implies that the distribution of the questionnaires was not evenly distributed in all areas of the city/regency districts in bengkulu province. in this regard, it is advisable to conduct research with a qualitative approach and collaborate with related agencies/offices. the theoretical implication of this research is to provide empirical evidence about the relationship between accounting information systems and performance, which is a subfield of accounting information systems studies. in practical terms, it is hoped that the results of this study are related to policies related to strengthening msmes, especially in bengkulu city. the government, through its institutions, seeks to foster msmes, specifically the government accounting system through the bank of indonesia has made an application that is applied to msmes, but mostly this information is not yet known by msme actors. so, it is better if there is assistance in collaboration with universities specifically for the accounting study program carried out in connection with an internship in the independent campus curriculum. acknowledgment the authors would like to thank the faculty of economics and business, universitas bengkulu, bengkulu, indonesia, for providing financial support in this research and for respondents who filled out the questionnaire so that this research can be completed properly. references aribawa, d. 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(2018). the development of accounting information system based on excel in helping cv. ladi collection preparing their financial statement. jema: jurnal ilmiah bidang akuntansi dan manajemen, 15(01), 71. https://doi.org/10.31106/jema.v15i01.778 financial accounting standards for micro, small & medium entities (sak emkm) implementation and factors that affect it by nur diana jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 134 financial accounting standards for micro, small & medium entities (sak emkm) implementation and factors that affect it nur diana *) abstract the low understanding of accounting and financial accounting standards is a fundamental problem for micro, small & medium enterprises (msmes) in indonesia. this makes it difficult to prepare and manage financial statements. the presence of the financial accounting standards for non-publicly-accountable entities (sak-etap) on january 1, 2011, is expected to accommodate small and medium enterprises in making easy, transparent and accountable financial statements. but in fact, many msmes that have not been able to apply sak etap properly because it is considered to be too complex and not by the financial reporting needs of msmes. on january 1, 2018, sak emkm was enacted as a standard that could help about 57.9 million msme entrepreneurs in indonesia in properly preparing their financial statements without having to get caught up in the complexity of it. sak emkm is a much simpler financial accounting standard than sak etap. this study aims to provide empirical evidence on the perception of msme business actors regarding the importance of financial bookkeeping and reporting for their business and the factors that affect the level of understanding of msme’s related to sak emkm. the sample of research was msmes business actors in malang raya with purposive sampling method with the total of 225 respondents. the results showed that company size, educational background, and level of education affect the msme business entrepreneurs' perception of the importance of financial bookkeeping and reporting. while the level of understanding of msme business entrepreneurs of sak emkm is affected by the level of information on sak emkm, educational background and education level of the msme business actors. keywords: sak emkm; educational background; level of education; business size; msme’s business entrepreneurs perceptions; financial statements 1. introduction 1.1 research background financial management is one of the fundamental problems in the development of small and medium enterprises. many small and medium-sized businesses think that financial management is easy and simple. in fact, financial management in smes requires good accounting skills by small and medium business entrepreneurs. some weaknesses in the preparation of financial statements due to low understanding of accounting and financial accounting standards and the low education of smes in addition to the absence of regulations that require the preparation of financial statements. msmes objected to the same sak with large enterprises in the preparation of financial statements. benefits of the preparation of financial statements are much more perceived by large enterprises while smes have to spend a greater cost than to feel the benefits of the preparation of financial statements (wahdini, 2006). this resulted in the constraints of msmes in obtaining access to capital provided by financial institutions due to the tight financial reporting requirements (cahyati, mulyanti, & setyawasih, 2011). the financial statements should be prepared by the applicable financial accounting standards in indonesia for msmes seeking to obtain credit in a financial institution. baas & schrooten (2006) stated that the banks as credit distributors of msmes need accounting information related to smes business to disburse the credit. however, most http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 135 msmes do not bookkeep to report their business in accordance with the reporting format required by msme credit channelers. if msmes do not make financial reports by standard accounting rules, credit distributors will find it difficult to assess the business performance of the msmes concerned. the sme bookkeeping system tends to be simple and ignores the standard financial administration rules. financial statements by financial accounting standards will assist in both quantitative and qualitative business development efforts. the financial statements are also used to determine the company's business development, financial position, capital structure and profit (revenue) of a company. financial accounting standards for nonpublicly-accountable entities (sak-etap) was effective as of january 1, 2011. this standard was published with the aim of facilitating its users in applying accounting principles that are still not suitable by using common sak. saketap is expected to accommodate small and medium-sized enterprises in making easy, transparent and accountable financial statements, so there is no need to prepare financial statements using the applicable general gaap (damarjati, 2007). however, the implementation of this standard is still facing many obstacles such as sak etap is too complex. besides, there is no supervision from the parties concerned to msmes financial reports, especially from the government, related institutions, and regulators. to bridge this issue on january 1, 2018, sak emkm has been effective to encourage and facilitate the needs of micro, small and medium enterprise (msme) entrepreneurs. sak emkm is issued to assist msme in indonesia which currently amounts to 57 million and contributes to indonesia's economic growth up to 60%. most of these msmes are small business actors who have business prospects but do not have good access to funding sources, especially in banking. the msme reporting framework is expected to assist the entity in transitioning from cash-based financial reporting to financial reporting on the accrual basis. therefore, this is in line with article 29 paragraph 1 of act no. 1 of 2013 on micro finance institutions that require micro finance institutions to conduct and maintain records and/or financial bookkeeping in accordance with the applicable financial accounting standards. efforts have been made to socialize and improve the understanding of msme business actors to sak emkm to facilitate them in preparing financial statements. there are several factors that affect the level of information and socialization received by msme entrepreneurs, the size of the business, the establishment of the company, the background of msme business actors, and the level education of msme (rudiantoro & veronica, 2011). malang raya is an area consisting of malang city, malang regency, and batu city as a city of commerce, industry, and tourism that has a lot of superior sme products like ceramics industry centers, furniture, food; tempe chips and fruit chips. currently, malang raya has approximately 200 thousand smes and has employed 250 thousand workers. based on this, malang raya is a potential area in sme development so it is very reasonable if the office of cooperatives and smes stated if the government will provide access to credit and bring together smes, cooperatives, and banks to overcome capital difficulties. this makes smes in malang are in need of accounting information in making business decisions. this research responds to issues concerning the factors that affect the perception of smes entrepreneurs regarding the importance of financial reporting for their business and the factors that affect the level of understanding of sme business actors related to the implementation of the micro, small and medium enterprise financial accounting standards. 1.2 research problem based on the above reasoning, the researcher needs to investigate empirical evidence about the level of understanding of msmes related to sak emkm by msme business entrepreneur. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 136 1.3 research purpose the purpose of this study is to provide empirical evidence on perceptions about the level of understanding of msmes related to sak emkm by msme business entrepreneur. 2. theoretical framework and hypotheses development 2.1 the importance of sak emkm tambunan (2012) states that the problems that are often faced by smes are about the limitations of working capital and investment, difficulties in marketing, distribution and procurement of raw materials and other inputs, limited access to information about market opportunities and others, the limitations of workers with high expertise and technological capabilities, high transportation and energy costs; communication limitations, high costs due to complex administrative and bureaucratic procedures, especially in the processing of business licenses, and uncertainty due to unclear or uncertain regulations and economic policies. from those various limitations faced by msmes, the biggest problem is about the limitations of capital. some msmes do not obtain bank loans or other institutions because their business is not feasible to be funded, less able to meet the requirements in administration, or do not have assets that can be used as collateral. therefore, to improve the quality of financial statements made by msme entrepreneurs, the appropriate standards are required, then to overcome the financial accounting standards board (dewan standar akuntansi keuangan, 2009) legalized the financial accounting standards for non-publicly-accountable entities in 2009. sak etap will be effective starting january 1, 2011. according to sak etap (2009: 1) financial accounting standards for nonpublicly-accountable entities (sak etap) are intended for the use of entities without public accountability. entities without public accountability are entities that 1) have no significant public accountability and 2) issuing general purpose financial statements for external users. examples of external users are owners who are not directly involved in business management, creditors, and credit rating agencies. however, in its implementation, sak etap faces several obstacles such as the complexity of preparing financial statements based on sak etap and weak competence of msmes human resources in preparing financial statements (sari & setyawan (2011). lutfiaazahra (2015) and adiya et al. (2015) also proved that sak etap is not understood by the perpetrators of smes who tend to use simple financial statements in the form of income transactions and expenditures and to prepare the income statement and cash flow statements alone. also, sak etap is too complex and not in accordance with msme financial reporting requirements. no supervision from the parties have an interest in msmes financial reports, especially from the government, related institutions and regulators also become an obstacle why sak etap is difficult to be applied for msme. the weakness of sak etap is finally responded by dsak-iai by launching financial accounting standards for micro, small & medium entities (sak emkm) that effective on january 1, 2018. sak emkm is a fairly simple standard and does not complicate users in making financial statements. by preparing financial statements in accordance with predetermined standards, the management of the company will be able to easily determine the company policy in the future, can obtain the loan from third parties (banks and other financial institutions), etc. most of these msmes are small business actors who have business prospects but do not have good access to funding sources, especially in banking. the msme reporting framework is expected to assist the entity in transitioning from cash-based financial reporting to financial reporting on the accrual basis. so that this is in line with article 29 paragraph 1 of act no. 1 of 2013 on micro finance institutions that require micro finance institutions to conduct and maintain records and/or financial bookkeeping in accordance with the applicable financial accounting standards. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 137 2.2 educational background the research on the perception of msme entrepreneurs regarding the implementation of financial statement information has been done by pinasti (2007) which concluded that the implementation and use of accounting information were proven empirically in experimental research to have an effect on small entrepreneurs’ perception of accounting information. the result of the discriminant analysis in the research shows that the effect of organizing and the use of accounting information is greater than the effect of individual characteristic differences on the subject perception of the research on accounting information. at this time there are still many smes that do the recording just by identifying the amount of money received and the amount of money spent, the number of goods purchased and sold, as well as recording the number of accounts receivable and debt. the records conducted by msmes still do not use the right format in making financial statements (jati, bala, & otnil, 2004). this is because msmes still do not provide information about financial statements for their business. the ability and expertise of the owner are determined by the level of formal education pursued, if the level of formal education undertaken by the business owner is low then the use of accounting information system will be more simple than the business owner who pursued higher education (solovida, 2003). likewise with research conducted by fitriyah (2006) on the analysis of factors that affect the use of accounting information by the enterprises in sidoarjo district which resulted that the use of high accounting information is conducted by entrepreneurs who have a high knowledge of accounting. research conducted by rudiantoro & veronica (2011) resulted that the perception of entrepreneurs variables related to the importance of financial bookkeeping and reporting for business correlated most strongly with business size, while the variables that have the significant correlation is the length of the company operates, educational background, and last education level. h1 : the educational background of entrepreneurs has a significant effect on the msme entrepreneurs’ understanding of sak emkm. 2.3 level of educational budhijono & kristyowati (2005) conducted a study on accounting information systems at small businesses located in salatiga city. the result of the study was that educational background has a positive and significant effect on the use of accounting information system in small business, which means if the business actor has a higher education then the use of accounting information system has increased. these result supported by dewi, yuniarta, & wahyuni (2017) and wandini & budiasih (2017) that stated the implementation of sak etap depend on the msme level of educational and socialization h2 : the education level of entrepreneurs has a significant effect on the msme entrepreneurs’ understanding of sak emkm. 2.4 level of information and socialization wahyuningsih & widayanti (2014) states that there is a positive and significant correlation between level of information and socialization and the understanding of sak etap. those result supported by dewi, yuniarta, & wahyuni (2017) that stated the implementation of sak etap depend on the msme level of educational and socialization. the higher level education and socialization of sak etap the higher probability msme in implementing sak etap. h3 : the provision of information and socialization of sak emkm has a significant effect on the msme entrepreneurs’ understanding of sak emkm. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 138 3. research method 3.1 research design this study used a correlational approach to managers and owners of smes to see the factors that affect the understanding of msme enterprises related to the implementation of financial accounting standards micro, small and medium enterprises in malang raya. the primary data source used collection methods through questionnaires. the types of research data were subject data of managers and owners of msme expressing opinions.. the object of analysis was the individual in example manager or owner of msmes. as for hypothesis testing, a model of regression equation was used as expressed in the mathematical equation as follows : y = a + b1 x1 + b2x2 +b3x3 + e where y = the msme entrepreneurs’ understanding of sak emkm a = constants bi,b2..bn = regression coefficient x1 = the entrepreneurs’ last level of education x2 = educational background of the entrepreneurs x3 = level of information and socialization of sak emkm e = standard error estimation table 1 variable definition variable definition level of education the last educational strata that had been taken by the respondents include graduates of sma/smk, s1, and s2 to give an idea of how the perception of entrepreneurs on the importance of financial bookkeeping and reporting for business. educational background the field of education that has been taken by entrepreneurs covering the areas of accounting, management, economics, or other. level of information and socialization of sak emkm the knowledge of msme entrepreneurs regarding sak emkm, the source of information related to sak emkm, and the socialization form ever obtained by msme entrepreneurs related to sak emkm. the measurement of this variable used a likert scale of 4 points, that is point 1 shows the respondent never get the information and point 4 indicates the respondent often get the information about sak emkm. level of sak emkm understanding the understanding of entrepreneurs is assessed through the extent to which msme entrepreneurs understand sak emkm and the differences that entrepreneurs know between psak and sak emkm. the measurement of this variable used a likert scale of 4 points, in which point 1 shows not understand and point 4 shows very understand. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 139 3.2 population and sample the population of this research was the manager and owner of msmes in malang raya which covers malang city, malang regency, and batu city. the amount of sample in estimation using maximum likelihood (ml) is 100-200. the respondents were the manager or owner of msme. the sampling technique was purposive sampling method. the sample in this study was the companies located in the area of malang raya with criteria based on msme classification according to law of the republic of indonesia number 20 year 2008.1) criteria for micro-scale enterprise is as follows: having a net worth of at most rp 50.000.000,00 (fifty million rupiah) excludes land and building of the business and has annual sales of at most rp 300,000,000.00 (three hundred million rupiah). 2). the criteria for the small-scale enterprise is as follows: a. has a net worth of more than rp 50,000,000.00 (fifty million rupiahs) up to a maximum of rp 500,000,000.00 (five hundred million rupiahs) excluding land and building of the business. b.has annual sales of more than rp 300,000,000.00 (three hundred million rupiahs) up to a maximum of rp 2,500,000,000.00 (two billion five hundred million rupiahs). 3) medium-scale enterprise criteria are as follows: a. has a net worth of more than rp 500,000,000.00 (five hundred million rupiahs) up to a maximum of rp 10,000,000,000.00 (ten billion rupiahs) excluding land and building of the business, has 2 or more permanent employees, 4) owned by indonesian citizen 5) independent, not affiliated with medium-large business, 6) may be a legal entity, may not. 7). produces superior product in malang raya (malang city, malang regency, and batu city). the respondents criteria are as follows: 1) have a position as manager/owner of smes (micro, small and medium enterprises), 2) understand and use financial statements such as balance sheet, profit, and loss, budget, cash flow etc. 3). have access to other banks/financial institutions. 3.3 research framework picture 1 research framework 4. research result and analysis 4.1 descriptive analysis the demographics of respondent in this research are msme owners in malang raya (malang city, malang regency, and batu city) with the majority of them are undergraduate (38%), accounting degree (53%), and choose firma/cv/ud as the form of their business entity (53%),. level of education h1 educational background h2 msme understanding about sak emkm h3 level of information and socialization of sak emkm http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 140 about 39% of respondent are in the handicraft industry, with manpower capacity about 21-50 people (25%). interestingly, the msme owner in this research also acted as their business manager (62%). the majority respondent of this research also actively participated in various accounting training to escalate their accounting knowledge (54%). 4.2 validity dan reliability reliability testing was using cronbach alpha with results between 0.682 to 0.734 which has a value above 0.60, so it is concluded that research variables are reliable. while the validity test was using analytical factor with the value of kaiser msa between 0.608 to 0.7213 which are above 0.50 so the research variables were concluded as valid. reliability and validity test results in the research variables are shown in table 3. table 2 validity and reliability test variable cronbach alpha kaiser msa level of information and socialization of sak emkm 0.734 0.643 the msme entrepreneurs understanding of sak emkm 0.683 0.721 source: primary data processed, 2018 4.3 research analysis classic assumption tests include normality, autocorrelation, heteroscedasticity, and multicollinearity test. the test results show that : a) in the autocorrelation test obtained durbin watson value in table 4 for d = 1.986, while from durbin watson table with durbin watson rule table then d is located in range du <d < 4-du (1770<1.986<2.230) with the decision to accept h1 stating that there is no positive/negative correlation, or in other words that this model is free from autocorrelation problems. b) in heteroscedasticity test with golfeld & quandt method with the formula as follows: f counted = mean square residual klp ii/mean square residual klp i = 16.271/18.825 = 0.864, while f table = 1.882078. so that f counted < f table, it can be concluded that this model has fulfilled the heteroscedasticity assumption. c) the regression model is free from multicollinearity problems when it has vif < 10 and a tolerance value above 0.05. from the test results in table 1 above obtained vif each independent variable < 10 and tolerance values above 0.05 then in the regression there are no symptoms of multicollinearity. d) regression model also passes the normality test due to the reason that asym k-s sig. value is more than 0.05 (0.312). 4.4 research discussion the simultaneous test shows that there is a significant effect between independent variables to the dependent variable with the value of f test = 6.643 with significant f = 0.000, so the level of significance is lower than  = 0.05. this shows that in general (cumulative) the variations of educational background, educational level, and level of information and socialization of sak emkm can predict 76.4% of the msme entrepreneurs understanding toward sak emkm. it also means that 23.6% of the msme entrepreneurs understanding toward sak emkm is affected by other variables. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 141 table 3 regression analysis independent variables unstandardized coefficients t sig collinearity statistics ß std. error tolerance vif (constant) educational background educational level level of information and socialization of sak emkm 1.109 0.332 0.195 0.316 0.250 0.047 0.089 0.142 4.329 2.712 2.817 7.294 0.000 0.014 0.009 0.000 0.242 0.315 0.543 2.333 4.4472 3.162 f test sig f durbin-watson r2 adj r2 asym k-s sig 6.643 0.000 1.838 0.785 0.764 0.312 sig = 0.000 source: primary data processed, 2018 meanwhile, a partial test is conducted to find out whether the independent variables used in the research model are individually able to explain the dependent variable. a. the educational background of sme entrepreneurs on the entrepreneurs understanding of sak emkm. it can be seen that the value of educational background variable count has a t-test value of 2.712 with probability value (sig) equal to 0.014<0.05 then h1 is accepted, it means partially, the educational background has a significant positive effect toward the msme entrepreneurs understanding of sak emkm. these result support rudiantoro & veronica (2011) argument that states educational background is one of the biggest factors that help msme in implementing their financial reporting based on sak etap. b. the education level of sme entrepreneurs on the entrepreneurs’ understanding of sak emkm. it can be seen that the value of t-values of the educational level has a t-test value of 2.817 with probability value (sig) 0.009<0.05 then h1 is accepted, it means partially, the level of education has a significant positive effect toward the msme entrepreneurs’understanding of sak emkm. c. level of information and socialization of sak emkm on the entrepreneurs’ understanding of sak emkm. it can be seen that the t-value of information and socialization level of sak emkm has a t-test value of 7.294 with a probability value (sig) of 0.000<0.05 then h1 is accepted, it means that partially, the level of information and socialization sak emkm has a significant positive effect on the msme entrepreneurs understanding of sak emkm. these result support the previous research from dewi, yuniarta, & wahyuni (2017) that stated the implementation of sak etap depend on the msme level of educational and socialization. therefore, the higher level education and socialization of sak etap the higher probability msme in implementing sak etap. 5. research conclusion and limitation 5.1 conclusion the purpose of this study is to provide empirical evidence on the effect of the educational background, educational level, and level of information and socialization of sak eemkm toward http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 142 the level of the msme entrepreneurs understanding of sak emkm. the respondents were the manager or owner of msmes in malang raya that consists of malang city, malang regency, and batu city. this research concluded that there is a significant positive correlation between educational level, educational background, and level of information and socialization of sak emkm to the level of msme entrepreneurs understanding of sak emkm. 5.2 limitation this research has some limitations that are the data collection in this research were from perception of respondents submitted through questionnaire instrument which may affect the validity of the research results because the perceptions of respondents did not necessarily reflect the real situation, but it may be different if the questionnaire were followed by direct interviews by the researchers. the number of samples in this research also limited to msmes in malang area. thus, tthe purpose of research in the field of behavioral accounting is to explain the phenomenon of behavior that occurred or the possibility of occurrence, but the researchers admit that it is very difficult to predict the behavior of the human/respondents with the high level of certainty. references baas, t., & schrooten, m. (2006). relationship banking and smes: a theoretical analysis. small business economic, 27(2-3), 127-137. https://doi.org/10.1007/s11187-006-0018-7. budhijono, f., & kristyowati. (2005). sistem informasi akuntansi pada usaha kecil. akuntabilitas, 5(1), 47-60. cahyati, a. d., mulyanti, k. & setyawasih, r. (2011). pemahaman dan kesiapan ukm dalam implementasi sak etap : survey pada ukm di bekasi. jurnal jrak, 2(2), 19–27. damarjati, r. a. (2007). exposure draft standar akuntansi keuangan untuk usaha mikro, kecil dan menengah (umkm) serta analisa perbandingannya dengan psak. retrieved from lib.ui.ac.id/file?file=pdf/metadata-126426.pdf. dewan standar akuntansi keuangan. (2009). standar akuntansi keuangan entitas tanpa akuntabilitas publik. jakarta: ikatan akuntan indonesia. dewan standar akuntansi keuangan. (2016). standar akuntansi keuangan entitas mikro, kecil, dan menengah ( sak emkm ). jakarta: ikatan akuntan indonesia. dewi, n. a. p. u., yuniarta, g. a., & wahyuni, m. a. (2017). pengaruh sosialisasi sak etap, tingkat pendidikan pemilik, dan persepsi pelaku ukm terhadap penggunaan sak etap pada ukm di kecamatan buleleng. jurnal ilmiah mahasiswa akuntansi s1 undiksha, 7(1). fitriyah, h. (2006). analisis faktor–faktor yang mempengaruhi penggunaan informasi akuntansi pada usaha menengah kabupaten sidoarjo. program pascasarjana universitas airlangga. surabaya. jati, h., bala, b., & otnil, n. (2004). menumbuhkan kebiasaan usaha kecil menyusun laporan keuangan. jurnal bisnis dan usahawan, ii(8), 210 – 218. lutfiaazahra, a. (2015). implementasi standar akuntansi keuangan entitas tanpa akuntabilitas publik (sak etap) pada umkm pengrajin batik di kampoeng batik laweyan surakarta. national conference on economics education and business, 215. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 143 pinasti, m. (2007). pengaruh penyelenggaraan dan penggunaan informasi akuntansi terhadap persepsi pengusaha kecil atas informasi akuntansi: suatu riset eksperimen. jurnal riset akuntansi indonesia, 10(3). http://doi.org/10.33312/ijar.180. rudiantoro, r. s., & veronica, s. (2011). kualitas laporan keuangan umkm serta prospek implementasi sak etap. jurnal akuntansi dan keuangan indonesia, 9(1). http://dx.doi.org/10.21002/jaki.2012.01. sari, r. n., & setyawan, a.b. (2011). persepsi pemilik dan pengetahuan akuntansi pelaku usaha kecil dan menengah atas penggunaan informasi akuntansi, retrieved from http://arisbudi.staff.gunadarma.ac.id/publications/files/1836/persepsi+dan+pengetahuan+aku ntansi+ukm_ria.pdf . solovida, g. t. (2003). analisis faktor-faktor yang mempengaruhi penyiapan dan penggunaan informasi akuntansi pada perusahaan kecil dan menengah di jawa tengah (doctoral dissertation, program pascasarjana universitas diponegoro). tambunan, t. (2012). usaha mikro kecil dan menengah di indonesia, isu-isu penting. jakarta: lp3es. undang-undang republik indonesia nomor 20 tahun 2008 tentang usaha mikro, kecil, dan menengah. wahdini, s. (2006). persepsi akuntan terhadap overload standar akuntansi keuangan (sak) bagi usaha kecil dan menengah. simposium nasional akuntansi ix, 24-25. wahyuningsih, e. m, & widayanti, r. (2014). pengaruh sosialisasi, tingkat pemahaman, motivasi, kepribadian terhadap penerapan sak etap di kampung batik laweyan solo. jurnal paradigma, 12(2), 179-187. wandini, n. w. z. p., & budiasih, i. g. a. n. (2017). pengaruh tingkat pendidikan, pengalaman, pemanfaatan teknologi informasi akuntansi pada penerapan sak etap. e-jurnal akuntansi universitas udayana, 21, 2108-2133. https://doi.org/10.24843/eja.2017.v21.i03.p15. *) nur diana, department of accounting, university of islam malang, malang, indonesia (email : nurdiana2016@unisma.ac.id) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 80-95 http://dx.doi.org/10.31106/jema.v18i1.10208, issn (online) 2597-4017 80 disentangling the role of income level on premium brand perceived quality, awareness, association, and loyalty: a comparative study within thailand and indonesia komm pechinthorn 1 , nico irawan 2* , kyawt shinn thant zin 3 , sineenat suasungnern 4 , jirangrug samarkjarn 5 , rahmawati 6* 1-5 international business management, international college, rajamangala university of technology krungthep, bangkok, thailand 6 department of management, faculty of economics and business, university of islam malang, malang, indonesia *corresponding author(s) email: nico.i@mail.rmutk.ac.th, rahmawati@unisma.ac.id abstract the level of income is one of the specific consumer conditions that susceptible to influence their brand decision-making. unfortunately, studies on the influence of income mainly focused on price without considering the relationship between brand and consumers. this study aims to examine how brand perceived quality, awareness, association, and loyalty related to the level of income in emerging countries like thailand and indonesia. premium and high-class coffee chain brands choose as the object of this study as the exponential growth of the coffee culture in both countries. a total of 283 respondents have completed an online questionnaire and verified it to be processed into the analysis of variance (anova) and lsd post hoc test for multiple comparison statistical analysis. the result of this study shows that although high-income and low-income consumers in thailand tend to have the same perceived quality toward the premium coffee brand, in general, there is a significant difference in the mean of brand perceived quality, awareness, and association between various consumers income level in thailand. interestingly, this study found that there is no significant difference in the mean of premium coffee brand perceived quality, awareness, association, and loyalty within the group of income levels in indonesia. this indicates that indonesians tend to ignore how much money they have in their pocket when it comes to coffee as the coffee culture becoming a new habit and lifestyle. keywords: brand awareness; brand associations; brand loyalty; perceived quality; income jel code: m31, m16, p46 doi: 10.31106/jema.v18i1.10208 article history: received 2021-02-13 reviewed 2021-03-15 revised 2021-04-05 accepted 2021-04-29 licensed: cc-by mailto:nico.i@mail.rmutk.ac.th mailto:rahmawati@unisma.ac.id http://creativecommons.org/licenses/by/4.0/ disentangling the role of income level on premium brand perceived quality, awareness, association, and loyalty: a comparative study within thailand and indonesia by komm pechinthorn, nico irawan, kyawt shinn thant zin, sineenat suasungnern, jirangrug samarkjarn, rahmawati 81 introduction a brand is considered as one of the indefinite intangible assets of firms that represent the engagement of particular firms with their consumers in terms of emotional, social, and economic benefits. by building superior brand equity, it allows companies to compete not only on prices alone but also in various feature offers. gonzález-mansilla et al. (2019) classified four dimensions of brand equity by combining perspective and behavioral dimensions such as brand awareness, brand associations, the degree of loyalty, and perceived quality. aaker (1996), foroudi (2019), tran et al. (2019) and ahmed et al. (2017) defined brand awareness as the salience of the brand in the minds of consumers, so they can distinguish, recognize, or recall the specific brand among many others brand of a certain product category at the moment. besides, bari et al. (2021) and sharma et al. (2020) defined brand association as a certain memory about persons, symbols, colors that are attached to a brand that get triggered the moment of consumers interact with that particular brand. while brand loyalty is a consumer's positive attitude, commitment, and consistency to repurchase a particular brand out of the set of alternative brands (laksamana, 2018; saritas & penez, 2017; wahyuni & fitriani, 2017), perceived quality can be defined as customers assessment and judgment regarding overall differences between product performance perception and expectation (marakanon & panjakajornsak, 2017; stylidis et al., 2020) . there are many previous consumer-based studies related to the development construct of brand equity (algharabat et al., 2020; foroudi et al., 2018; keller & brexendorf, 2019; stojanovic et al., 2018). however, studies on the possible differences of brand awareness and association evaluation, the degree of loyalty, and perceived quality among various demographic profiles such as the level of income and nationality were limited. the usage of consumer income level on brand equity studies mainly focused on price without considering the relationship between brand and consumers. some studies only used income as a moderator of the framework model to understand the construct of brand equity (ahn et al., 2018; stokburger-sauer & teichmann, 2013). therefore, this study aims to examine how brand perceived quality, awareness, association, and loyalty related to the level of income in emerging countries like thailand and indonesia. while thailand and indonesia choose as the focus of this study as both countries share similar cultures and experience the dramatical growth of 'consuming class' due to the rapid urbanization and the fast-growing elderly segment and heavy pockets of young population, premium and high-class coffee chains brand jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 80-95 http://dx.doi.org/10.31106/jema.v18i1.10208, issn (online) 2597-4017 82 choose as the object of this study as the growing of the coffee culture in both countries that were driven by the young population. generally, consumers are expected to spend more when their income rises and tend to still buy their favorite product even thoughts the price increases. following wu et al. (2015) who found that premium and high-class coffee brand consumers in taiwan and uk perceived that expensiveness is associates with premium quality in the case of starbucks, this study also aims to extend and conduct comparative research of consumer evaluation related the equity of premium coffee chains brand from different countries perspective. literature review the level of income and perceived quality gallarza et al. (2011) define perceived value as it plays a role in epistemology marketing as a discipline; value associated with many constructs in the marketing discipline; value construct. perceived quality varies amongst subjects, as each individual has its criteria for quality (aaker, 1996). experiences with a brand and, consequently, perceived quality, are the assessments of all interactions with both product/service and the brand. consumers' judgment of quality is usually not "rational", and is based on superficial associations, including appearance, color, taste, or functionality (baalbaki & guzmán, 2016). according to beneke & carter (2015), brand image and packaging attract attention and present cues and information about the product that aid consumer choice, which then results in a positive influence on the perceived quality. a similar issue was revealed in tasci (2018) brand equity model applied to multiple destination brands with single-item measures. because of the high level of correlation between image and quality, she eliminated the quality component to stabilize the brand equity model fit in path analysis. yu et al. (2018) stated that the range of income level is also considered a significant factor in influencing consumers to buy medium or premium brands. moreover, huaman-ramirez & merunka (2019) stated that while highincome consumers tend to behave selfishly and ignored to have special trust with a particular brand except for the quality considerations (chen & green, 2011), lower and medium consumers believe that brand trust that consists of brand credibility and quality will create the cognitive path that can form an emotional bond. h1: there is a difference in the mean of brand perceived quality between the various income level of thailand and indonesia consumers. disentangling the role of income level on premium brand perceived quality, awareness, association, and loyalty: a comparative study within thailand and indonesia by komm pechinthorn, nico irawan, kyawt shinn thant zin, sineenat suasungnern, jirangrug samarkjarn, rahmawati 83 the level of income and brand awareness aaker (1996), foroudi (2019), tran et al. (2019) and ahmed et al. (2017) defined brand awareness as the salience of the brand in the minds of consumers, so they can distinguish, recognize, or recall the specific brand among many others brand of a certain product category at the moment. whenever a customer is ready to buy a right or service, the first brand name that clicks in his mind shows higher brand awareness. brand awareness can increase by developing and promoting a brand name that means something to customers (świtała et al., 2018; ardiansyah & sarwoko, 2020). while high-income consumers have a specialization to recognized and distinguish all the features of a luxury brand, low-income consumers have greater price sensitivity toward the premium brand (maría rosa‐díaz, 2004). although hatch & schultz (2010) and sheth (2011) argue that the recent of low-income consumers more aware of quality, however the differences in living standards between low and high-income continue to persist and impedes them to purchase those brands (arunachalam et al., 2020). h2: there is a difference in the mean of brand awareness between the various income level of thailand and indonesia consumers. the level of income and brand association brand association is any aspects that consumers can bear in mind from brands in terms of non-physical characteristics of the product, uniqueness, product innovation, market position, and reputation foroudi et al. (2018). it is related to information in the customer’s mind about the brand, either positive or negative, linked to the node of the brain memory (hossien emari, 2012). moreover, mohd yusof et al. (2021) and valentini et al. (2018) defined brand association as anything that information stored in customer’s mind about the brand that can enhance consumer intention to buy because it is related to many things such as consumer's needs, brand attributes, and the consumer market target. tasci (2021), for example, recognized the similarities between associations and image concepts and used them interchangeably. slama & tashchian (1985) has found that the middle-income group tends to be involved and associate with brands that lead to the purchase decisions. furthermore, abdellah-kilani & zorai (2019) and sari et al. (2018) added that low educated and income consumers tend to have fewer opportunities to know perceived that foreign brand has a better performance compared to the hand-made and local products. h3: there is a difference in the mean of brand association between the various income level of thailand and indonesia consumers. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 80-95 http://dx.doi.org/10.31106/jema.v18i1.10208, issn (online) 2597-4017 84 the level of income and brand loyalty laksamana (2018) saritas & penez (2017) and wahyuni & fitriani (2017) defined brand loyalty as a consumer's positive attitude, commitment, and consistency to repurchase a particular brand out of the set of an alternative brand. han et al. (2018) revealed that brand loyalty is an important strategy that should be executed by firms in fierce business competition. brand loyalty will lead to product purchases. costa filho et al. (2021) stated that low-income consumers' patterns of loyalty are influenced by factors such as perceived differentiation, perceived risk, contextual usage, the proportion of the category expenditure to household income, and hedonic versus functional. they also classified low-income consumers as brand-conscious consumers who are willing to pay a premium for quality, however, their tight budget impedes them to purchase those brands. chiguvi & guruwo (2017) shankar & jebarajakirthy (2019), whaley et al. (2019) added that while high-income earners tend to continue their loyalty to a particular brand based on the evaluation of product attributes, low-income earners tend to be more price-sensitive. h4: there is a difference in the mean of brand loyalty between the various income level of thailand and indonesia consumers. methods this study aims to extend and conduct comparative research on how premium coffee chains brand (such as starbucks) perceived quality, awareness, association, and loyalty related to the level of income in emerging countries like thailand and indonesia. while thailand and indonesia choose as the focus of this study as both countries share similar cultures and experience the dramatical growth of 'consuming class' due to the rapid urbanization and the fast-growing elderly segment and heavy pockets of young population, premium and high-class coffee chains brand choose as the object of this study as the growing of the coffee culture in both countries that were driven by the young population. this study considers only generation y (born between 1980 and 1995) and z (born between 1996 and 2012) who already had monthly income and had purchased coffee in one of the premium coffee chains that were established in both countries. a homogenous purposive sampling method was employed as a sampling strategy of the study. the level of income was divided into three economic groups such as low, middle, and high-income consumers in this study. thailand consumers who have a monthly income that is less than 7,500 thai baht are classified as low-income customers in this study. moreover, the monthly income ranges of middle and high-income consumers in thailand are 7,500 15,000 disentangling the role of income level on premium brand perceived quality, awareness, association, and loyalty: a comparative study within thailand and indonesia by komm pechinthorn, nico irawan, kyawt shinn thant zin, sineenat suasungnern, jirangrug samarkjarn, rahmawati 85 thai baht and more than 15,000 thai baht. for indonesians, consumers who have a monthly income that is less than idr 1,000,000 are considered as low-income consumers. furthermore, a consumer that has idr 1,000,000 – 3,000,000 or more than idr 3,000,000 of monthly income can be classified as middle and high-income consumers. while perceived quality and brand awareness was measured with five and six items developed by yoo & donthu (2002), the degree of loyalty toward a particular brand and brand association was measured with five items developed by aaker (1996) and ding & tseng (2015). this study reported high-reliability coefficients of four dimensions of brand equity, 0.862, 0.887, 0.920, 0.962. all of items were measured by using a five-point likert scale (1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, and 5 = strongly agree). a total of 358 questionnaires were distributed in both countries with about 338 respondents completed the survey. of the respondents, 55 respondents were marked as 'never' purchased coffee in premium chains brands like starbucks. as a result, 283 respondents were included in the data analysis using comparative one way anova analysis to compare the mean of perceived quality, awareness, association, and loyalty also lsd test that was used to analyze the data to determine the significant level at 0.050 (esser & vliegenthart, 2017). result and discussion thailand table 1 shows that f-test scores of perceived quality are 9.692 at a significant level of 0.000. thus, brand awareness and the brand association have f-test of 18.305 and 33.509 at a significant level of 0.000 and 0.000. therefore, it can be concluded that three of four variables of this study support the conclusion of the previous study by abdellah-kilani & zorai (2019), arunachalam, et al. (2020), chen & green (2011), huaman-ramirez & merunka (2019), sheth (2011) that stated there is a difference in the mean of brand perceived quality, brand awareness, and brand associations between the various income level of thailand consumers. however, the score of the f-test of brand loyalty that only shows 2.996 (which is the lowest of compared to others variables) at a significant level of 0.057 failed to proves the difference mean of brand loyalty between the various income level of thailand consumers. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 80-95 http://dx.doi.org/10.31106/jema.v18i1.10208, issn (online) 2597-4017 86 table 1. one-way anova hypotheses testing for thailand consumers dependent variables (between groups) f significant decision perceived quality 18.305 0.000 supported brand awareness 9.692 0.000 supported brand association 33.509 0.000 supported brand loyalty 2.996 0.057 not supported table 2. lsd post hoc multiple comparison test for thailand consumers dependent variable income level mean difference significant perceived quality low middle -0.517 * 0.000 high -0.067 0.615 middle low 0.517 * 0.000 high 0.450 * 0.004 high low 0.067 0.615 middle -0.450 * 0.004 brand awareness low middle -0.362 * 0.002 high 0.526 * 0.000 middle low 0.362 * 0.002 high 0.887 * 0.000 high low -0.526 * 0.000 middle -0.887 * 0.000 brand association low middle 0.240 * 0.039 high -0.894 * 0.000 middle low -0.240 * 0.039 high -1.133 * 0.000 high low 0.893 * 0.000 middle 1.133 * 0.000 brand loyalty low middle -0.267 * 0.018 high -0.107 0.379 middle low 0.266 * 0.018 high 0.158 0.264 high low 0.108 0.379 middle -0.158 0.264 *. the mean difference is significant at the 0.05 level. disentangling the role of income level on premium brand perceived quality, awareness, association, and loyalty: a comparative study within thailand and indonesia by komm pechinthorn, nico irawan, kyawt shinn thant zin, sineenat suasungnern, jirangrug samarkjarn, rahmawati 87 table 3. one-way anova hypotheses testing for indonesia consumers dependent variables (between groups) f significant decision perceived quality 0.463 0.630 not supported brand awareness 0.666 0.516 not supported brand association 0.308 0.736 not supported brand loyalty 0.351 0.705 not supported to uncover the specific differences between three groups or more, the lsd post hoc test is calculated after the anova test. table 2 shows that in terms of quality there are no differences perceptual between low and high-income consumers. the mean differences between these groups are 0.067 at a significant level higher than 0.050 (0.615). sheth (2011) argue that low-income consumers are aware of particular branded products and their quality. low-income consumers also can be known as brand-conscious consumers who are willing to pay a premium for quality, however, their tight budget impedes them to purchase quality brands (costa filho et al., 2021). the result of this study also implies that when a consumer thinks about the coffee they will think about premium chains of coffee brands and easily recall the particular premium brand (starbucks). a consumer with a low income had greater brand awareness about the price than high-income levels as the income levels decrease consumer knowledge is more reluctant and become more price-sensitive (maría rosa‐díaz, 2004). shahid et al. (2017) suggest brand awareness is the ability of a consumer to recognize and recall a brand in different situations. when consumers have a situation with changing income levels, for sure, they will also think about brands that can satisfy them. starbucks was introduced by providing premium coffee in the consumer's mind so that with serving premium coffee consumer assumes that there is a high quality of coffee and taste. huamanramirez & merunka (2019) stated that while high-income consumers tend to behave selfishly and ignored to have special trust with a particular brand except for the quality considerations (chen & green, 2011), lower and medium consumers believe that brand trust consists of brand credibility and quality will create a cognitive path that can form an emotional bond. therefore, it implicated on the thailand consumers perception among various income levels related to premium coffee chains brands, the association with starbucks may be emotional when coffee lover thinks about coffee. they will trust with starbucks could provide the best product and services. however, if it is related to income levels tends to be different. the jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 80-95 http://dx.doi.org/10.31106/jema.v18i1.10208, issn (online) 2597-4017 88 middle-income group tends to be involved and associate with brands that lead to the purchase decisions (slama & tashchian, 1985). interestingly, this study also found that there are no differences in the mean of brand loyalty evaluation among various income levels of thailand consumers. no matter how much money they have in their pockets, it can’t influence their loyalty to the particular brand. this finding is different from research conducted by masuda & kushiro (2018) found that among the four conventional brand equity dimensions, which are awareness, loyalty, perceived quality, and brand associations, loyalty has the most significant effect on consumers' willingness to pay the price premium for private labels. in recent years, the coffee scene has exploded across the country and become intertwined with the everyday way of life. there are many brands of coffee are existing in thailand, and thailand consumers whether they are classified as low, middle, and high income still drink coffee as it represents their new values and lifestyles. indonesia the anova test was carried out to determine whether there is a different mean of perceived quality, awareness, association, and loyalty between income level groups. table 3 shows that there is no difference in the mean of all variables of perceived quality, brand awareness, association, and loyalty between various income levels of indonesian consumers. the value of the f-test of perceived quality, brand awareness, association, and loyalty is 0.463, 0.666, 0.308, and 0.351 with a significant level that is higher than 0.050 of (0.630, 0.516, 0.736, 0.705). therefore, it can be concluded that the four dimensions of brand equity are not different among various income levels of indonesian consumers. this result has shown that brand equity evaluations among various income levels of indonesians are not different means that even though they are having low, middle, or high income, they will have a positive evaluation on premium coffee chains brand (like starbucks). this is an interesting finding from the comparative research between thailand and indonesia related to premium brand equity. while thailand consumers are very concerned about how much their income and what kind of product they should buy (chanwitkan & intuluck, 2020; udomkit & mathews, 2015). indonesia consumers are the opposite, they tend to ignore how much money they have in their pocket when it comes to coffee as the coffee culture becoming new habit and lifestyles. vaux halliday & astafyeva (2014) added that the millennial generation has more desire to visit a place of preference as it must incur a sense of social interaction of being seen by others and shows their self-esteem actualization. for a young consumer in indonesia that represented in this study going to premium coffee chains disentangling the role of income level on premium brand perceived quality, awareness, association, and loyalty: a comparative study within thailand and indonesia by komm pechinthorn, nico irawan, kyawt shinn thant zin, sineenat suasungnern, jirangrug samarkjarn, rahmawati 89 brand like starbucks is a prestige that can be stopped by financial situation. susanty & kenny (2015) stated that global brands (like starbucks) provide enhanced self-presentation benefits because global brands carry more prestige in developing markets. this research also similar to yulianti & deliana (2018) factors affecting consumer purchasing decisions in bandung, indonesia will be the taste of coffee, not by income level with the increase in income than the purchase of coffee will be better quality not on the number of copies purchased and consumers prefer coffee with a famous brand because it looks prestige. finally, based on the finding of this comparative study between indonesia and thailand regarding premium brand equity, we can take the lesson that is the differences in income levels especially for the young generation can influence how they perceived the largest global brand like starbucks. starbucks has been embedded brand equity in their consumer. they are easy to recognize and be able to distinguish particular premium, global, and high-class coffee chain brands (like starbucks) from other café brands. conclusion and suggestion brand equity is generally accepted as a critical success factor to different companies and service providers from their competitors. this research aims to examine how brand perceived quality, awareness, association, and loyalty related to the level of income in emerging countries like thailand and indonesia. the result of this study shows that although highincome and low-income consumers in thailand tend to have the same perceived quality toward the premium coffee brand, in general, there is a significant difference in the mean of brand perceived quality, awareness, and association between various consumers income level in thailand. however, the result of the study of thailand perspectives also found that there is no difference in the mean of the degree of loyalty toward a particular premium brand among various income levels. it shows that while high-income earners tend to continue their loyalty to a particular brand based on the evaluation of product attributes, low-income earners tend to be more price-sensitive. on the other hand, surprisingly, this study found that there is no significant difference in the mean of premium coffee brand perceived quality, awareness, association, and loyalty within the group of income level in indonesia. it means that indonesians tend to ignore how much money they have in their pocket when it comes to coffee as the coffee culture becoming a new habit and lifestyle. this study has several limitations. first, the respondents of the current study are generation y (born between 1980 and 1995) and z (born between 1996 and 2012) who jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 80-95 http://dx.doi.org/10.31106/jema.v18i1.10208, issn (online) 2597-4017 90 already had monthly income and had purchased coffee in one of the premium coffee chains established in thailand and indonesia with a limited sample. therefore, the results of the study may not be generalized to other premium brand categories and not comprehensively represent all the population from both countries. further research, should attempt to examine brand equity across many global brands and categories from other geographical areas. the last is each country has its own culture so consumer behavior tends to be different. second, the different education levels of respondents also may be implicated in their evaluation of each brand equity dimension. future studies should also consider other demographic profiles as one critical point of view of particular brand equity dimensions. references aaker, d. a. 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(2018). gaya hidup kaitannya dengan keputusan konsumen dalam membeli minuman kopi. jurnal agrisep, 17(1), 39–50. https://doi.org/10.31186/jagrisep.17.1.39-50 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 51-66 http://dx.doi.org/10.31106/jema.v17i1.5050, issn (online) 2597-4017 51 understanding online shopping adoption: the unified theory of acceptance and the use of technology with perceived risk in millennial consumers context rian piarna1*, ferdi fathurohman2, nunu nugraha3 1 department of information management, subang state polytechnic, subang, indonesia 2 department of agroindustry, subang state polytechnic, subang, indonesia 3 department of information management, subang state polytechnic, subang, indonesia *corresponding author(s) email: piarna@polsub.ac.id abstract online shopping is growing so rapidly and has attracted millennials in various way. unfortunately, the discussion regarding the adoption of online shopping in millennial consumers’ context with perceived risk application was still limited. therefore, the purpose of this study was to investigate the effect of performance expectancy, expectation efforts, social influence, facilitation conditions, hedonic motivation, price value, habits, and perceived risks on behavioral intentions and use behavior. this study also discusses the effect of perceived risks on financial risk, performance risk, and privacy risk. this study can be classified as explanatory research with purposive sampling and partial least square as sampling techniques and data analysis. this study was designed to focus on individuals who can be classified as an online shopper with a range of age of 18-35 years old. the results show that the millennial generation is influenced by the social environment and habits in shaping their behavioral intention. millennial consumers are also proving very concerned about their perceived risk of financial, performance, and privacy issues when doing online shopping. interestingly, six of the factors studied (performance expectancy, effort expectancy, facilitating conditions, hedonic motivation, price value, and perceived risk) do not have any influence on the intention to use online commerce technology. keywords: utaut 2; perceived risk; online shopping; adoption; behavioral intention; use behavior jel code: m31, m37 doi: 10.31106/jema.v17i1.5050 article history: received 2020-01-13 reviewed 2020-01-18 revised 2020-01-21 accepted 2020-01-28 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ understanding online shopping adoption: the unified theory of acceptance and the use of technology in millennial consumers context and perceived risk application by rian piarna, ferdi fathurohman, nunu nugraha 52 introduction the availability of the internet on computers and mobile devices is increasing the growth of e-commerce markets throughout the world. consumers can more easily access various products from several vendors at any time by shopping online (hurtado et al., 2019). today's internet users in indonesia are mostly carried out by millennials. millennial consumers are an important issue in the development of the digital world and social media is a communication space for this generation (khechine et al., 2020). this condition underlies the selection of millennial consumers as the object of this research in adopting e-commerce using the unified theory of acceptance method and use of technology in consumer context (utaut2). utaut2 is the development of the utaut model concept (venkatesh et al., 2012). utaut2 illustrates how consumers adapt to technology. millennial consumers also concerned about risk perception in deciding whether they should purchase online or not (wang & herrando, 2019). lestari (2019) and amrullah & priyono (2018) even added that perceived risks have a positive effect on attitudes and intentions to adopt e-commerce. previous research has provided limited understanding regarding the adoption of online shopping in millennial consumers’ context with perceived risk application. therefore, the purpose of this study was to investigate the effect of performance expectancy, expectation efforts, social influence, facilitation conditions, hedonic motivation, price value, habits, and perceived risks on behavioral intentions and use behavior. this study also discusses the effect of perceived risks on financial risk, performance risk, and privacy risk. literature review unified theory of acceptance and use of technology (utaut) utaut has been widely used models to predict behavioral intention. celik (2016) stated that the utaut model proved a robust and valid model in the online shopping context which means that the model can be used to explain the degree of purchase intention and actual purchase. cimperman et al. (2016) defined utaut as “a measure of the strength of one’s intention to perform a specified behavior.” the utaut model argues that an individual adoption on new technology mainly influenced by four factors which is performance expectancy (pe), effort expectancy (ee), social influence (si), and facilitating conditions (fc). most studied about utaut was focus only on a subset of the model (venkatesh et al., 2012) and not have utilized moderators like age, experience, and gender because it may not be any variation in the moderator for the adoption (dwivedi et al., 2019). jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 51-66 http://dx.doi.org/10.31106/jema.v17i1.5050, issn (online) 2597-4017 53 madigan et al, (2016) defined performance expectancy (pe) as the degree of individual belief that using technology (internet) will help him or her to attain gains in their shopping activities. consumers perceived that using the internet for shopping will provide benefits and help them saving time, money, effort, and gain service effectiveness (venkatesh et al., 2012). effort expectancy (ee) defined as the level of convenience associated with internet usage (liu et al., 2018). it means that if consumers found that the use of the internet for online shopping is easy and does not require any effort, the possibility of online shopping adoption will be higher. previous studies from venkatesh et al. (2012), kabra et al. (2017), jewer (2018) found that there is a significant relationship between performance expectancy and effort expectancy on behavioral intention. therefore, the proposed hypotheses in this study can be described as follow. h1: performance expectancy (pe) significantly affect behavioral intention (bi) h2: effort expectancy (ee) significantly affect behavioral intention (bi) venkatesh et al. (2012) defined social influence (si) as the effect of environmental factors such as the opinions of relatives, friends, and superiors on user behavior with subjective norms. (tarhini et al., 2016) added that social influences may refer to the social pressure from the external environment which may affect their perceptions and behaviors of engaging in specific actions. therefore, when they perceived online shopping positively, it can encourage consumers to adopt the use of the internet for online shopping. (venkatesh et al., 2003) has been defined facilitating conditions (fc) as “the degree to which an individual believes that an organizational and technical infrastructure exists to support the use of the system” including knowledge, capabilities, and consumer resources (venkatesh et al., 2012). if internet infrastructure and knowledge that needed in using the internet available, also there is support from social for using the internet, the intended behavior to adopt the internet for online shopping will be increased. previous studies from venkatesh et al. (2003), diño & de guzman (2015) concluded that there is a significant relationship between social influences and facilitating conditions on behavioral intention. facilitating conditions also prove significantly affects actual usage behavior (zuiderwijk et al., 2015). h3: social influence (si) significantly affect behavioral intention (bi) h4a: facilitating condition (fc) significantly affect behavioral intention (bi) h4b: facilitating condition (fc) significantly affect use behavior (ub) behavioral intention (bi) reflects the extent to which customers are likely to use technology (venkatesh et al., 2012). behavior intention is the most powerful determining factor in individual behavior towards technology acceptance (alalwan et al., 2018). understanding online shopping adoption: the unified theory of acceptance and the use of technology in millennial consumers context and perceived risk application by rian piarna, ferdi fathurohman, nunu nugraha 54 h5: behavioral intention (bi) significantly affect use behavior (ub) hedonic motivation, price value, and habit venkatesh et al. (2012) and tak & panwar (2017) stated that to be more adaptive to consumer use framework, the original utaut model has been extended to utaut 2 which added three new constructs namely hedonic motivation, price value, and habit. while hedonic motivation (hm) defined as s the “fun or pleasure derived from using a technology” by (venkatesh et al., 2012). price value (pv) and habit (h) can be defined as “consumers' cognitive tradeoff between the perceived benefits of the applications and the monetary cost for using them” and s “the extent to which people tend to perform behaviors automatically because of learning” (herrero et al., 2017). previous studies from (alalwan et al., 2017), (herrero et al., 2017), and (wong et al., 2020) found that behavioral intention was significantly influenced by hedonic motivation, price value, and habit. not only influences behavioral intentions, (gupta & dogra, 2017) also found the significant contribution of habit on actual usage behavior. h6: hedonic motivation (hm) significantly affect behavioral intention (bi) h7: price value (pv) significantly affect behavioral intention (bi) h8a: habit (h) significantly affect behavioral intention (bi) h8b: habit (h) significantly affect use behavior (ub) perceived risk farivar et al. (2018) defined perceived risk as users’ beliefs about potential negative consequences or the uncertainty of outcome or consequences (buehler & maas, 2018) of an online transaction with a specific website. featherman & pavlou (2003) added that perceived risk plays an important role as an inhibitor online purchase decision. a study from (indiani et al., 2015) and (zulfikar & mayvita, 2018) even concluded that perceived risk has a stronger impact on an actual purchase than trust. perceived risk itself can be divided into three categories namely financial risk, performance risk, and privacy risk. while financial risk (fr) is a potential monetary loss that will be experienced by consumers when shopping online (salam et al., 2003). han & kim (2017) defined performance risk (pfmr) as the risk caused by electronic services (shopping websites) whose performance does not meet consumer expectations. warkentin et al. (2002) added that privacy risk (pvr) can be defined as the expected losses control of their personal information that caused by their online shopping activities or identity theft (han & kim, 2017). these three risks that are felt by consumers are jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 51-66 http://dx.doi.org/10.31106/jema.v17i1.5050, issn (online) 2597-4017 55 second-order factors that influence the intention to use the internet to shop online. thus, the lower degree of perceived risk will impact the higher possibility of the adoption of online shopping (choi et al., 2013; tingchi liu et al., 2013). h9a: there is a significant influence of perceived risk (pr) on financial risk (fr) h9b: there is a significant influence of perceived risk (pr) on performance risk (pfmr) h9c: there is a significant influence of perceived risk (pr) on privacy risk (pvr) h10: there is a significant influence of perceived risk (pr) on behavioral intention (bi) methods figure 1. research framework this study can be classified as explanatory research. purposive sampling and partial least square used as sampling techniques and data analysis. this study was designed to focus on individuals who can be classified as an online shopper with a range of age of 18-35 years old. the rules for taking a minimum number of samples in pls-sem are two conditions; the first is based on ten times the number of formative indicators and secondly, it is based on ten performance expectancy effort expectancy social influence facilitating conditions hedonic motivation price value habit behavioral intention h3 h4a h6 h7 h8a h4b h8b h2 h1 perceived risk h9a h9b h9c h10 h5 performance risk financial risk privacy risk use behavior understanding online shopping adoption: the unified theory of acceptance and the use of technology in millennial consumers context and perceived risk application by rian piarna, ferdi fathurohman, nunu nugraha 56 times the number of lines (paths) connecting each latent variable in the study (helm, 2005). therefore, the number of collected samples in this study were 150 samples. table 1. validity and reliability test variable outer loadings composite reliability ave variable outer loadings composite reliability ave pe1 0.827 0.875 0.700 pr1 0.791 0.911 0.596 pe2 0.826 pr2 0.878 pe3 0.857 pr3 0.910 ee1 0.892 0.941 0.841 pfmr1 0.828 0.892 0.734 ee2 0.930 pfmr2 0.856 ee3 0.928 pfmr3 0.885 si1 0.851 0.915 0.782 fr1 0.832 0.815 0.688 si2 0.911 fr2 0.826 si3 0.890 pvr1 0.899 0.934 0.826 fc1 0.839 0.899 0.748 pvr2 0.945 fc2 0.893 pvr3 0.881 fc3 0.862 bi1 0.807 0.908 0.711 hm1 0.936 0.940 0.840 bi2 0.863 hm2 0.909 bi3 0.877 hm3 0.904 bi4 0.824 pv1 0.902 0.916 0.784 ub1 0.896 0.925 0.805 pv2 0.869 ub2 0.886 pv3 0.885 ub3 0.909 h1 0.874 0.928 0.812 h2 0.917 h3 0.912 this study used venkatesh et al. (2012) and featherman & pavlou (2003) items to measures each latent variable (appendix 1a, 1b). model measurements are used to evaluate data in determining the validity and reliability of data. the construct relationship with each indicator of this study is a reflective measurement model. in the measurement of reflective models, there are two tests of validity, namely convergent validity testing and discriminant validity testing (primanto, 2019). test of convergent validity in the evaluation of the jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 51-66 http://dx.doi.org/10.31106/jema.v17i1.5050, issn (online) 2597-4017 57 measurement model is obtained through the factor loading (outer loadings), composite reliability that should greater than 0.700, and the minimum value of average variance extracted (ave) parameter that should reach 0.500. table 1 shows that the model is valid and reliable due to the value of outer loading and composite reliability that greater than 0.70 with the result of ave is above the existing standard. result and discussion table 2. partial least square result correlation p-value t-value t-statistic result decision pe -> bi 0.971 0.036 1.976 t-value < t-statistic h1 rejected ee -> bi 0.317 1.004 1.976 t-value < t-statistic h2 rejected si -> bi 0.043 2.045 1.976 t-value > t-statistic h3 accepted fc -> bi 0.332 0.974 1.976 t-value < t-statistic h4a rejected fc-> ub 0.034 2.141 1.976 t-value > t-statistic h4b accepted bi -> ub 0.000 5.157 1.976 t-value > t-statistic h5 accepted hm -> bi 0.377 0.886 1.976 t-value < t-statistic h6 rejected pv -> bi 0.078 1.773 1.976 t-value < t-statistic h7 rejected h -> bi 0.000 8.626 1.976 t-value > t-statistic h8a accepted h-> ub 0.018 2.388 1.976 t-value > t-statistic h8b accepted pr -> fr 0.000 29.167 1.976 t-value > t-statistic h9a accepted pr -> pfmr 0.000 18.672 1.976 t-value > t-statistic h9b accepted pr -> pvr 0.000 61.547 1.976 t-value > t-statistic h9c accepted pr -> bi 0.146 1.460 1.976 t-value < t-statistic h10 rejected this study proved the direct relationship of the proposed hypotheses of h3, h4b, h5, h8a, h8b, h9a, h9b, h9c. the t-value of that direct relationship was greater than t-statistic which means that all the proposed hypotheses mentioned above were accepted. this study supports a part of the conclusion of previous studies from venkatesh et al. (2003), venkatesh et al. (2012), diño & de guzman (2015), kabra et al. (2017), jewer (2018) who stated there is a significant relationship between social influences, and behavioral intention (adopting online shopping). this study also successfully prove gupta & dogra (2017) and alalwan et al. (2018) argument that stated that there is a significant relationship between habit, behavioral intention, and use behavior. similar to the result of kim & zhang (2016), choi et al. (2013) and tingchi liu et al. (2013) study, financial risk, performance risk, and privacy risk understanding online shopping adoption: the unified theory of acceptance and the use of technology in millennial consumers context and perceived risk application by rian piarna, ferdi fathurohman, nunu nugraha 58 significantly proved to affect perceived risk in this study. our study revealed that respondents in this study were largely influenced by the endorsement of their peer group (family and friend) in deciding whether they should try online shopping or not. they also have all technology and human resources (like mobile devices, internet, know-how to utilize the internet, also supportive peer groups) which make them more confident to make an actual purchase (not only limited on behavioral intention) through the online channel. the majority of respondents in this study also can be classified as tech-savvy, a technology geek that familiar with the use of the internet and always up-to-date with the technology they use (narasuman et al., 2011). therefore, as the usage of the internet become a habit on the millennial generation, it appears that habit will automatically guide future behavior in using the internet to purchase products. ouellette & wood (1998) concluded that there is a significant direct effect between past behavior and intention on future behavior. millennial customers also prove very concerned about their perceived risk of financial, performance, and privacy issues when doing online shopping in this study. meanwhile, this study failed to prove the direct relationship of the proposed hypotheses of h1, h2, h4a, h6, h7, h10. the t-value of that direct relationship was lower than t-statistic which means that all the proposed hypotheses mentioned above were rejected. although this study failed to supports the conclusion of previous studies from venkatesh et al. (2003), venkatesh et al. (2012), diño & de guzman (2015), kabra et al. (2017), jewer (2018), the result of this study is similar with siddique (2012), jambulingam (2013), sahu & singh (2017), herrero et al. (2017), somba et al. (2018) finding which concluded that performance expectancy, effort expectancy, facilitating conditions, hedonic motivations, and price value had no significant effect on behavioral intention. nowadays, millennial believes that the internet is easy to access and provide a better experience. thus, completing an online transaction is no longer becoming an issue in online commerce (yu & chen, 2018). as a result of that, performance expectancy, effort expectancy, and facilitating conditions is no longer a determining factor that would influence behavioral intention as it used to. this study also concluded that the adoption and the use of technology (online commerce) were not influenced by hedonic motivation and price value. pham et al. (2018) and kapferer et al. (2014) argue that an individual with hedonic personality will tend to see the pleasure, joyfulness, luxurious, and exclusive experiences that brand offers first. they are not looking for a new technology of online shopping that affordable only, they are looking for technology that can give them pleasures, exclusivity, and enhances their satisfaction. octaviani & jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 51-66 http://dx.doi.org/10.31106/jema.v17i1.5050, issn (online) 2597-4017 59 gunawan (2018) and octarina et al. (2019) added that the high level of risk perceptions that consumers feel does not affect the intention of consumers to buy a product online which means that perceived risk had no significant effect on behavioral intention. (primanto et al. (2018) argues that the good reputation of the online marketplace is enough to make consumer believes in making a purchase decision. therefore, consumers perceived risk will be lower when the marketplace vendor is more well-know. conclusion and suggestion the results of this study indicate that the millennial generation is influenced by the social environment and habits in shaping their behavioral intention. it means that respondents in this study were largely influenced by the endorsement of their peer group (family and friend) and as the usage of the internet becomes a habit on the millennial generation, it appears that habit will automatically guide future behavior in using the internet to purchase products. millennial consumers are also proving very concerned about their perceived risk of financial, performance, and privacy issues when doing online shopping. they also believe that the internet is easy to access and provide a better experience. therefore, performance expectancy, effort expectancy, and facilitating conditions are no longer a determining factor that would influence behavioral intention as it used to. regarding the absence effect of hedonic motivation, price value, perceived risk on the adoption and the use of online commerce technology it indicates that they are looking for online commerce technology that can give them measurement, exclusivity, and enhances their satisfaction not just affordable. they also believe that the well-known reputation of an online marketplace is enough to make them purchasing through online channels. references alalwan, a. a., dwivedi, y. k., & rana, n. p. 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(2018). the relationship of perceived value, perceived risk, and level of trust towards green products of fast moving consumer goods purchase intention. jema: jurnal ilmiah bidang akuntansi dan manajemen, 15(2), 85-97. https://doi.org/10.31106/jema.v15i2.838 jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 51-66 http://dx.doi.org/10.31106/jema.v17i1.5050, issn (online) 2597-4017 65 appendix 1a. questionnaire items variable code item performance expectancy pe1 using internet for online shopping useful in my daily life. pe2 using the internet to shop online helps me buy products faster pe3 using the internet to shop online increases my productivity effort expectancy ee1 online shopping is easy to learn ee2 the interaction process of online shopping is easy to understand ee3 it is easy for me to use the internet to online shopping social influence si1 my best friend recommended to me to shop via internet/online si2 my neighbourhood recommended to me to shop via internet/online. si3 my peers recommended to me to shop via internet/online facilitating condition fc1 i do have resources which required to online shopping fc2 i have enough knowledge to use the internet in online shopping fc3 i have a friend or group who is willing to help with online shopping hedonic motivation hm1 using the internet for shopping gives me pleasure hm2 using the internet for shopping really entertained me hm3 i enjoy shopping using the internet price value pv1 i think the cost in using the internet for online shopping is affordable pv2 i think the cost in using the internet for online shopping is reasonable pv3 the costs i incurred to use the internet in shopping are comparable with the benefits that i get habit h1 using the internet to shop online has become a habit for me h2 using the internet to shop online has become a necessity for me h3 if i want a product, i will use the internet for online shopping perceived risk pr1 using internet for shopping is potential fraud. pr2 using internet for shopping is financial risk. pr3 i think using internet for shopping puts my privacy at risk. performance risk pfmr1 there would be possibility of system errors when shopping online pfmr2 the security system of shopping websites still has weaknesses pfmr3 instability of internet performance could damage my online shopping experience understanding online shopping adoption: the unified theory of acceptance and the use of technology in millennial consumers context and perceived risk application by rian piarna, ferdi fathurohman, nunu nugraha 66 appendix 1b. questionnaire items variable code item financial risk fr1 using the internet to online shopping, is potentially fraudulent fr2 using the internet to online shopping, results in financial losses privacy risk pvr1 it would be risky to give personal information to shopping website pvr2 personal identity could be inappropriately used by shopping website pvr3 there would be high potential for privacy loss when shopping online behavioural intention bi1 i intended to use the internet for shopping in the near future bi2 i want to use the internet in shopping activities regularly bi3 i wish to online shopping in my daily life bi4 i plan to continue to use the internet to shop continuously use behaviour ub1 i often use the internet to online shopping ub2 whenever i want to shop, i used the internet to online shopping ub3 i always use the internet to online shopping anywhere social commerce adoption in sme’s by zakky zamrudi, teguh wicaksono jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 144 social commerce adoption in sme’s zakky zamrudi *) teguh wicaksono **) abstract small and medium enterprises (sme’s) has gradually become an economic backbone for several developing country including indonesia. in several studies, it was assumed that sme's was a sign of self-sufficiency concept. in the economic strike, sme's could sustain the price of several staple goods that are related to society livelihoods such as food and attire. south kalimantan province was well known for its authentic fabric namely sasirangan produced by local sme's spread all around the area. sme's are nowadays are inseparable from it particularly that related to social media to promote their product. the use of it infrastructure and platform were usually centered in the large city mainly in the capital of province such as banjarmasin. as an alternative, the use of social media could be employed to empower sme's at county area. this study was aimed to understand the attitude of county area sme's on the use of social media for commerce purposes. the sample involved in this study was 45 sasirangan sme’s on 5 off-capital counties at south kalimantan province. these works use pls-sem due to the nature of research was explore the interaction amongst the variable (exploratory factor analysis). the finding shows that in general, sme's entrepreneur has a great willingness to use their social media for commerce purposes. a further discussion of research finding and research limitation will be further discussed in the end of paper. keywords: social commerce; sme’s; social media; adoption 1. introduction 1.1 research background small medium enterprises (sme’s) has known for decades for their contribution in establishing a self-sufficient based economic system (sonia & gianto, 2018). in indonesia ,most of sme's arise from local-based product varies from food to wear products. those products were repackage considering the today's customer preference, thus where the turnover happened (salavou, baltas, & lioukas, 2004). sasirangan has become the local fabric produced originated from banjarese ancestor. the deep philosophy contained start from the production to the pride of wearing it. the banjarese pride towards sasirangan was deeply ingrained. today’s sasirangan products are not only the traditional sasirangan fabric but also varies from book-cover to modern tshirt contain sasirangan motif. the most sasirangan industry was located in the capital city of banjarmasin, south kalimantan province. these facts were related to the available infrastructure in near banjarmasin that provide ease of access both for information seeking or transportation necessity (farida & zakky, 2017; sasongko, 2018). yet, the off-capital industry (sasirangan) still has a great potential to be developed if they are supported by sufficient infrastructure (gaffar, singh, & thomas, 2011). based on the data by trade service council the population of off-capital sasirangan industry is as follow: http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 145 table 1 sasirangan sme’s population no city/regency micro medium population percentages 1 banjarmasin 49 5 54 55,1% 2 martapura 23 0 23 23,5% 3 banjarbaru 9 0 9 9,2% 4 pelaihari 5 0 5 5,1% 5 amuntai 7 0 7 7,1% count 93 5 98 100% source: trade service council, 2016 the rise of technology has brought many benefits for any type of entreprise including sme's. at the early stage, it infrastructure was a bit pricey for sme's until the idea of social media arises from its popularity in 2007 (hajli, 2013). the rise of social media popularity has brought the new ways of doing business by engaging more with people on social networking sites (sns) platform (kim & park, 2013). social commerce ideas were brought a simpler way of doing electronic commerce and reducing the cost of infrastructure maintenance while increasing the market just on a fingertip. based on this background this research is trying to investigate the factor that may create the potential adoption of social commerce on off-capital (county) sme'sis 1.2 research problem based on the argument stated on research background above, this study was aimed to investigates the underlying factor in adopting social commerce on sme’s owner, particularly on sasirangan sme’s. 1.3 research purpose to better understand the research problem formulated above, this research has several objectives to keep the research problem on the track. the first objective in this study was to investigate the user perception towards social commerce as an alternative of electronic commerce to widely socialize and market their products, and analyzing a factor behind it at the same time. second objective as to better understand the factor that could mediate the factor in adopting social commerce. in the end, this works will give a recommendation related to the underlying factor in implementing social commerce in sme's owner as an alternative to high-cost and complicated standalone electronic commerce systems. 2. theoretical framework and hypotheses development 2.1 intention to use social commerce understanding the user intention towards behavior has been used for a long time to understand the antecedent of actual behavior. digging up the intention towards behavior could create such an understanding of the user preference on a particular behavior. the result may end with revealing factors that affect the intention to use (hajli, 2014). understanding the antecedence of intention to use social commerce could create a rich consideration for future decision making on how would be developed. this research is going to find out the greatest factor that may affect the social commerce use on sme's. the theory was developed by using the framework from a unified theory of acceptance and use of technology. the variables included in this study was the facilitating condition, entrepreneurial expectation, and attitude towards social commerce. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 146 2.2 facilitating condition facilitating condition has defined as the supporting environment including available systems that consist of hardware such as computer and smart device, internet connection and available platform that supports the use of systems (laudon & laudon, 2016). in prior studies, facilitating condition can increase user knowledge about particular issues. the good infrastructure is proven to support the user understanding on social commerce use to support business process particularly that related to customer relationship cheaper alternative (hamzat & mabawonku, 2018; rosyati, janie, & nugroho, 2016). h1: facilitating condition have a positive effect on entrepreneurial expectation the increase of users knowledge about social commerce through social media has found it could increase the user perception against social commerce (li & ku, 2018). the change of social commerce perception could also change the user attitude on social commerce for the ease of their businesses (laudon & laudon, 2012). so it was expected that the change of facilitating condition could increase the user experience with the social media thus changes users attitude towards social commerce (hamzat & mabawonku, 2018). h2: facilitating condition have a positive effect on attitude towards social commerce facilitating condition could also affect the user intention to use social commerce. the great infrastructure is able to increase the intention to use social commerce since people social networking are getting wider by removing space barriers (baloglu, 2000). h3: facilitating condition have a positive effect on intention to use social commerce 2.3 entrepreneurial expectation the entrepreneurial expectation was developed by using performance expectancy theory borrowed from theories. the performance expectancy was defined as the ones hope of any certain benefit that would happen if they use particular systems (laudon & laudon, 2016). the entrepreneurial expectation was defined as the expectation of the sme’s owner on business performance, by using social commerce (abu, 2016; abu, jabar, & yunus, 2015; hakim & nurkamid, 2017). h4: entrepreneurial expectation has a positive effect on attitude towards social commerce. 2.4 attitude towards social commerce user attitude on social commerce was defined as the actual user perception on the use of social media for commerce use. user attitude towards social commerce can affect the intention for actual use of social media for commerce purposes. there are several h5: attitude towards smart meter have a positive effect on intention to use social commerce 3. research method 3.1 research design this research can be categorized as explanatory research due to the reason that this research aims to explain the interaction amongst the proposed variable being researched. the research was done in three months from march to april 2018 in four areas which consist of 44 sample. the research objective was to give an insight of social media framework particularly that related to social commerce in areas in indonesia. the data used in this study was a primary data collected by using the questionnaire as a research instrument. the questionnaire was developed by using 7 scale http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 147 semantic differential. the aim of using semantic differential was to reduce the led-answer by giving a vast area of choices for respondent (ahmad & laroche, 2017). to better understand the operationalization of the proposed construct, table 1 below shows the construct breakdown. table 2 constructs construct/ sources code item questionnaire entrepreneurial expectation (abu, 2016; abu, jabar, & yunus, 2015; hakim & nurkamid, 2017) ee1 social commerce was easy to understood for business ee2 it seems the operationalization of s-commerce is easy for my business on a daily basis ee3 it seems the operationalization of social media for commerce implementation is easy to learn and quite enjoyable facilitating condition (hakim & nurkamid, 2017; khristianto, kalnadi, & lestari, 2017) fc1 i have facilities to run s-commerce (computer, laptop, smartphone, internet access) fc2 i know how to operate technology equipment such as computer and smart device (gadget) fc4 if i met difficulties, i could ask everyone since social commerce was a social media based systems attitude towards s-commerce (gaffar, singh, & thomas, 2011; hakim & nurkamid, 2017) att1 using s-commerce sounds a great ideas att2 i think i would use s-commerce att3 using s-commerce was a total fun intention to use s-commerce (gaffar, singh, & thomas, 2011; thomas, singh, & gaffar, 2013) bi1 i planned to start my own business page soon bi2 i planned to use social media frequently to make myself get used to it. bi3 i planned to keep using social media as one of my business activity 3.2 population and sample this research was aimed to explore the particular sasirangan sme's in adopting social commerce as an alternative for a complicated and resourceful information system for small business, particularly on county area. thus the population was sasirangan sme’s for 100 entrepreneurs all around the province. the sample was drawn by using a purposive sample taken in this research resulting 44 sasirangan entrepresneur on 4 county area outside the capital city. 3.3 research framework based on the research variables and hypothesis emphasize above the proposed research framework for this study was depicted in picture 1. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 148 enrepreneurial expectation facilitating condition attitude towards social commerce intention to use social commerce h4 h2 h3 h5 h1 picture 1 research framework 4. research result and analysis 4.1. descriptive analysis majority of respondent in this survey has a positive response with the item questionnaire in each construct. this means that they are agree that social commerce is perceived as easy and enjoyable technology. they also agree that they already have all facilities/infrastructure like gadget, internet access, laptop to implement social commerce. therefore, the majority respondents of this research has a positive attitude toward social commerce and planned to use the technology (social media) in their daily business activity. 4.2 validity and reliability in pls-sem modeling, there is two type of validity assessment namely discriminant and convergent validity. convergent validity evaluated by average variance extracted, which the cut off value was determined for more than 5.00 (gefen, straub, gefen, & straub, 2005; jalilvand, samiei, dini, & yaghoubi manzari, 2012). based on table 3 above all of the variable was meet the cut-off value. discriminant validity was evaluated through fornell-larcker criteria that was evaluated based on square roots of ave which shows on table 3 by bold-diagonal value. the fornell-larcker criteria was stated that the square root of ave should be higher than off-diagonal value on discriminant validity (hair, gabriel, & patel, 2014; hair, ringle, & sarstedt, 2013). based on the table 3 above the value of diagonal value was larger than the off-diagonal value. thus the variable has met the cut-off criteria. assessing reliability in pls-sem was done on construct reliability which evaluated through composite reliability and cronbach’s alpha (α) which the recommended value for composite reliability was higher than 0.70, and for cronbach’s alpha was higher than 0.68 (fornell & bookstein, 1982; hair, ringle, & sarstedt, 2011; hair, gabriel, & patel, 2014). based on table 3 above the value of both indicators has met the cut off value. thus the model might be further analyzed. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 149 table 3 model evaluation composite reliability ave α variable peou pu att itb 0.888 0.725 0.81 ee 0.851 0.879 0.709 0.792 fc 0.502 0.842 0.840 0.638 0.715 att 0.413 0.605 0.798 0.930 0.815 0.886 itsc 0.605 0.409 0.461 0.903 source: primary data processed, 2018 4.3. research analysis there are typically three results in path modeling tart from direct effect, indirect effect (mediating test) and total effect. table 4. below summarize pls-sem model assessment output, while picture 2 illustrate the path model loading and t-test. table 4 pls-sem model assesment hypothesis direct indirect total path t supported path t supported path t supported fc → ee 0.605 8.278 yes 0.605 8.28 yes fc → att 0.173 1.473 no 0.240 2.843 yes 0.413 4.45 yes fc → itsc 0.254 2.575 yes 0.206 3.486 yes 0.461 5.05 yes ee → att 0.398 3.377 yes 0.398 3.38 yes ee → itsc 0.199 2.782 yes 0.199 2.78 yes att → itsc 0.500 6.328 yes 0.500 6.33 yes source: primary data processed, 2018 based on table 4, the finding for direct effect indicates that all hypothesis are positively has a significant effect except for h2 which is the effect of facilitating condition on attitude towards social commerce. anyway, the largest direct effect was shown by h1 which is the effect of facilitating condition on entrepreneurial expectation. an indirect effect in this study consist of three indirect paths. from table 4 above it was shown that all mediated interaction shows a significant indirect effect. however, the largest effect on indirect effect was shown by facilitating condition on intention to use social commerce. total effect in this research sums up the indirect and direct effect for the path loading and t-test. from table 4 above it can be concluded that from the whole total effect the largest effect was shown by the effect of facilitating condition on entrepreneurial expectation. the illustration of the hypothesis results both for factor loading ant significance test can be seen in picture 2. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 150 enrepreneurial expectation facilitating condition attitude towards social commerce intention to use social commerce 0.398 (3.377)* 0.173 (1.473) 0.254 (2.575)* 0.500 (6.328)*0.605 (8.278)* picture 2 pls path output 4.4. research discussion the use of social media today was widely expanded for commercial use and thus resulting in a new stream on market and marketing research against the user. the other side of understanding the social media users that are commonly exploring the customer side, the needs on understanding the vendor (producers/seller) is a kind of game changer rationale for business including sme's. keep in touch with the techno-update has become an important aspects such as social media. the social media behemoth topics have brought the new streams of commerce as the derivative of electronic commerce namely social commerce (hajli, 2013). this study was aimed to understand the vendor user’s behavior against the social commerce. the proposed model was developed by the help of several theories such as theory acceptance model, theory of planned behavior, and unified theory of acceptance and the use of technology for better understanding in analyzing user behavior (khristianto, kalnadi, & lestari, 2017; rizky, kusdi, & yusri, 2017; zamrudi, suyadi, & abdillah, 2017). the proposed model was consist of facilitating condition, entrepreneurial expectation, attitude towards social commerce and intention to use social commerce. the finding on hypothesis testing above indicates h1, which is the effect of facilitating condition can support the performance expectancy which in this works stated as entrepreneurial expectancy. this finding was currently lack of support, yet the finding on one studies has verified that the use of technology was perceived to enable the business to run better (devaraj, krajewski, & wei, 2007). the finding that summarizes the hypothesis testing above indicates that the only nonsignificance hypothesis testing was showed by h2 that is the effect of facilitating condition on attitude towards social commerce. attitude towards social commerce was intended to measure the degree of current social commerce ideas was valued by the sme’s owner. the non-significance results could happen due to lack of motivation and education related to social commerce use, thus the great facilitating condition couldn't stand alone in supporting to use the technology platform (kim & park, 2013; sheikh, islam, rana, hameed, & saeed, 2017; wang & zhang, 2012). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 15 no. 2 (2018) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 151 however, one of the factor that able to affects the user's attitude was the entrepreneurial expectation that measures the intrinsic motivation of using a particular information system (hakim & nurkamid, 2017; samuel, ernest, & awuah, 2013). h3 shows that the effect of facilitating condition was positively able to affect the intention to use social commerce. this finding was similar to recent studies that the better infrastructure available around business environment would be able to increase the intention to use particular information systems (devaraj, krajewski, & wei, 2007; hakim & nurkamid, 2017). the results of h4 was shows a high contribution from entrepreneurial expectation to attitude towards social commerce. this finding was supporting current theories that the higher the intrinsic motivation could create a positive attitude (abu, 2016; hakim & nurkamid, 2017). the last direct effect was the h5 that is the effect of attitude towards social commerce on intention to use social commerce. the sme's owner valuation on current social commerce performance will create the positive intention to use a particular information system. thus the higher the valuation of users on social commerce will result in higher intention in using social commerce (li & ku, 2018; thomas, singh, & gaffar, 2013). on the indirect effect results, the notable finding was the indirect effect of facilitating condition to attitude towards social commerce mediated by entrepreneurial expectation. the finding sums up that the great technological infrastructure will create such motivation to increase the business performance, thus resulting in greater knowledge about social commerce. the more sme's owner curious and educated in social commerce will create a higher ability to appraise the social commerce, resulting in a positive attitude toward social commerce. 5. research conclusion and limitation 5.1. conclusion social commerce was a new stream in social media and commerce due to the rise of social media popularity in decades. understanding the user behavior was currently an important aspect to find out most notable topics to define right strategies for enterprises including sme’s. this study tries to find out the pattern of social commerce adoption model for sme’s. the finding indicates that the higher factor in the proposed model was the effect of facilitating condition on entrepreneurial expectation which means that the better infrastructure available near businesses will make the information search easier resulting in a higher knowledge that can create a high entrepreneurial expectation. the intention to use social commerce was highly affected attitude towards social commerce by sme's owner, which measures the user’s ability to evaluate social commerce performance. the finding was supporting the current finding that the better the attitude towards social commerce will resulting in a higher intention to use social commerce. 5.2. limitation after all, this research still has a limitation such as the lack of several theories related to social media and social commerce. the second limitation was the amount of sme owners in the area of sasirangan on county area. suggestion for future research was to increase the amount of sample for a better degree of results generalization. an additional variable that wasn't included in this research also able to encourage future research to create better understanding on factors influencing the social commerce adoption. references abu, f. b. 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(2018). the role of recording and reporting process of basic accounting in small medium enterprises of omah duren surabaya. jema: jurnal ilmiah bidang akuntansi dan manajemen, 15(1), 35-53. http://dx.doi.org/10.31106/jema.v15i01.780. thomas, t. d., singh, l., & gaffar, k. (2013). the utility of the utaut model in explaining mobile learning adoption in higher education in guyana. international journal of education and development using information and communication technology (ijedict), 9, 71–85. retrieved from https://files.eric.ed.gov/fulltext/ej1071379.pdf. wang, c., & zhang, p. (2012). the evolution of social commerce: the people, management, technology, and information dimensions, 31(5), 105–127. retrieved from http://aisel.aisnet.org/cais. zamrudi, z., suyadi, i., & abdillah, y. (2017). the effect of social commerce construct and brand image on consumer trust and purchase intention. profit (jurnal administrasi bisnis), 10(1), 1–13. https://doi.org/10.9876/10.9876/vol1issn1978-743x. acknowledgement this study was conducted under the cooperation between the islamic university of kalimantan in the supervision of community service and research bureau (lppm-uniska) and directorate of research and community service (drpm-dikti) financing years of 2017. the research team was conveying great gratitude to the director general of higher education (dirjen-dikti), who was supporting this research in their program in 2018. *) zakky zamrudi, department of management, islamic university of kalimantan muhammad arsyad al banjari banjarmasin, banjarmasin, indonesia (email: zakky@uniska-bjm.ac.id) **) teguh wicaksono, islamic department of management, university of kalimantan muhammad arsyad al banjari banjarmasin, banjarmasin, indonesia (email: teguh_uniska@yahoo.com) http://creativecommons.org/licenses/by/4.0/ the effect of attribute framing and justification on capital budgeting decisions by ianna umma, rr. sri handayani jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 117 the effect of attribute framing and justification on capital budgeting decisions ianna umma *) rr. sri handayani **) abstract this study aims to analyze the effect of the attribute framing and justification on decision making through the capital budgeting process. this study also aims to examine the effect of justification as moderation on the effect of attribute framing on capital budgeting decisions. the capital budgeting decision in this study is a decision toward the proposed capital budgeting project in the form of approving or rejecting the proposed project. this study uses a quasi-experimental research design with the data taken is primary data. the quasi-experimental research was designed 2 x 2 between subjects which was conducted to 83 financial students in the magister of management, diponegoro university. data analysis techniques used in this study were one-way anova and two-way anova. the results of the study shows that attribute framing and justification can influence decision making through the capital budgeting process. in particular, the information that is positively presented has an impact in the higher approval of a proposed capital budgeting project. this research also concluded that justification could not reduce the effect of the attribute framing on capital budgeting decisions. this shows that belief revision theoryfoundation approach cannot explain the phenomenon of this study keywords: capital budgeting; attribute framing; justification 1. introduction 1.1 research background capital budgeting is very important and crucial in the financial management area as well as a challenge for management in maintaining and increasing company value (rossi, 2014; mayori & van der poll, 2012). in the capital budgeting decision-making process, management must determine the amount of company resource allocation appropriately into the most profitable investment projects that can affect the long-term company performance and can increase shareholder value (hornung, luther, & schuster, 2016; peterson & fabozzi, 2002), and also must be able to significantly influence stock returns (durnev, morck, & yeung, 2004). thus, decision making concerning capital budgeting is not easy. amna (2015) added that the failure rate of innovation projects before being deployed to the market was 26.5%. amna (2015) also mentioned the causes of the failure of the project include organizational rigidity, financial pitfalls, competency issues, vague decision makers, and others. thus, capital budgeting project failure can be caused by managerial behavior (kerler, allport, & fleming, 2012) like inconsistency and irrational. this is in accordance with the prospect theory, which explains that a person does not always think rationally in making decisions. as a result, there is a tendency to ignore the other alternative components offered, so that the person will focus only on differentiating these components or referred to as framing. (kahneman & tversky, 1979; kahneman & tversky, 1981). one form of framing that is used as the focus of this study is the attribute framing. attribute framing is the coding, labeling, or presentation of attributes of information, objects, or circumstances both positively and negatively. differences in the positive and negative cognitive representations of an attribute can cause the evaluation dimensions needed by the subject to be http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 118 different in the positive and negative aspects, effectively changing the value of the subjective scale. in addition, the positive labeling of an attribute leads to encoding information that tends to generate beneficial associations in memory (levin & gaeth, 1988; levin, johnson, russo, & deldin, 1985; levin, schneider, & gaeth, 1998). this is consistent with previous empirical studies that found that information that is positively coded has a tendency to positive evaluation or higher approval (alewine, allport, & shen, 2016; hannah & cafferty, 2006; kuvaas & selart, 2004; levin, schneider, & gaeth, 1998). thus, it can be assumed that the decision to approve a capital budgeting project is higher when the information attributes are in the form of information that is presented positively. another focus in this study is the provision of justification. based on the accountability theory, giving justification encourages a person to process more complex information (tetlock, 1983a; tetlock, 1983b). people who are asked to justify their views will be more vigilant in processing information by carrying out more difficult cognitive tasks and to think more carefully and reduce the use of intuition in decision making (cvetkovich, 1978; janis & mann, 1977). thus it can be assumed that when participants are asked to make a justification memo, participants will process the information on the proposed capital budgeting project more carefully and cautiously. this prudent behavior will lead to the possibility of evaluating the proposed capital budgeting project for approval. justification will increase a manager's ability in reflection, critical analysis, and sensitivity so as to cause conservatism in seeing investment opportunities (lerner & tetlock, 1999). justification can influence capital budgeting decisions in causing the managers to be more conservative and do not easily approve the capital budgeting project (kerler, allport, & fleming, 2012). justification in this study was also tested as moderation on the effect of attribute framing on decision making in capital budgeting. the justification in this study does not only act as an independent variable, but the researcher also tries to test the justification as a moderating variable on the effect of the attribute framing on capital budgeting decisions. according to the explanation of belief revision theory, a person will change his old beliefs when acquiring new information that has justification or reason for that information (doyle, 1992; tennant, 2008; gardenfors, 2003). so, the participants will change the initial assessment of the proposed capital budgeting project when they are asked to give a reason for the assessment that has been done and try to find and make an argument for the reason requested. besides, justification also makes a person more careful, more alert, and more cautious in processing information and more sensitive to impression management (cvetkovich, 1978; janis & mann, 1977; tetlock, 1983a; tetlock, 1983b). deeper and more careful thinking tends to avoid someone from mistakes (leboeuf & shafir, 2003). giving justification can reduce bias (lerner & tetlock, 1999). thus, the researcher assumed that there is a change in participants' assessment who will tend to reject larger capital budgeting project proposals when presented negatively. 1.2 research problem differences in the positive and negative cognitive representations of an attribute can cause the dimensions evaluation. in addition, the positive labeling of an attribute leads to generate beneficial associations in memory (levin & gaeth, 1988; levin, johnson, russo, & deldin, 1985; levin, schneider, & gaeth, 1998). therefore, it can be assumed that the attribute framing which positively presented tends to result in a higher approval decision on the proposed capital budgeting project. this is consistent with previous studies which found that the positive oerceotion about one of the proposed capital budgeting can leads to positive evaluation (levin, schneider, & gaeth, 1998; http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 119 kuvaas & selart, 2004; hannah & cafferty, 2006; allport, brozovsky, & kerler, 2010; kerler, allport, & fleming, 2012; kerler, fleming, & allport, 2014; alewin, allport, and shen, 2016). another focus of this research is the provision of justification. based on the accountability theory, justification will encourage someone to process more complex information carefully. justification is also able to increase the conservatism of managers in seeing investment opportunities (janis & mann, 1977; cvetkovich, 1978; tetlock, 1983a; tetlock, 1983b; lerner & tetlock 1999). the conservatism behavior in looking at investment opportunities makes researchers assumed that when participants are asked to justify, the possibility of approval of the proposed capital budgeting project will be lower. interestingly, previous studies found that this kind of justification only had limited support for framing effects and some even found that this justification could not moderate the effect of framing (takemura, 1994; leboeuf & shafir, 2003; kerler, fleming, & allport, 2014). this shows that there is unclear empirical evidence, thus encouraging researchers to retest the justification as a variable that is thought to be able to reduce the effect of the attribute framing on capital budgeting decisions. these problems can be formulated in the form of research questions are: a) what is the effect of the attribute framing on capital budgeting decisions? b) what is the effect of justification on capital budgeting decisions? c) what is the effect of justification as the moderation of the attribute framing effect on capital budgeting decisions? 1.3 research purpose a) to analyze and strengthen the empirical evidence of the effect of attribute framing on capital budgeting decisions. b) to analyze and strengthen the empirical evidence of the effect of justification on capital budgeting decisions. c) to analyze and strengthen the evidence of the justification as the moderation of the attribute framing effect on capital budgeting decisions. 2. theoretical framework and hypotheses development 2.1 the relationship between atributte framing and capital budgeting decision this prospect theory is the result of criticism from kahneman & tversky (1979) on the expected utility theory, which states that every decision maker will always think rationally in making decisions. while in fact, decision makers often violate the axioms of the expected utility theory. a person who is faced with risky possibilities in decision making will show two main trends (kahneman & tversky, 1979; kahneman & tversky, 1982).the first trend is the certainty effect, which is an individual tendency to weigh on results that are only possible compared to the results obtained with certainty. the tendency in question is when faced with choices that involve sure gains, that individual will behave in risk aversion, and vice versa. the second trend is the isolation effect, which is the tendency of an individual in the matter of having to decide between to discard or ignore alternative components offered by all prospects being considered. as a result, the focus of the decision maker will only be on the components that distinguish it. this approach can cause inconsistent preferences because the presentation of different alternative components can create different preferences. attribute framing is useful to increase the understanding of the descriptive power of information that can influence the decision-making process. differences in the positive and negative cognitive representations of an attribute can cause the evaluation dimensions needed by the subject http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 120 to be different in the positive and negative aspects, thus effectively changing the value of the subjective scale (levin, schneider, & gaeth, 1998). attribute framing occurs because there is some information that is relatively encoded to its descriptive valence/strength (levin & gaeth, 1988). further explained that the positive labeling of an attribute leads to encoding information that tends to generate beneficial associations in memory. thus, this will lead to a greater tendency towards choice, judgment, or positive decision making or acceptance towards information or objects or events that are presented positively. the presentation of a different attribute (positive and negative) can cause differences in a person's evaluation of these attributes. an attribute of information that is positively encoded will lead to tendencies to generate beneficial associations in memory. so, managers who are faced with specific information regarding capital budgeting projects that are presented positively tend to produce higher positive ratings. this is consistent with findings that indicate that the attributes of information that are presented positively have a higher positive rating of approval or acceptance than negative information attributes (alewine, allport, & shen, 2016; allport, brozovsky, & kerler, 2010 ; gamliel & peer, 2010; kerler, allport, & fleming, 2012; kuvaas & selart, 2004; levin & gaeth, 1988). the information attributes that are positively framed are preferred by consumers compared to information attributes that are negatively framed (levin & gaeth, 1988). positive attribute framing leads to the evaluations that are more preferred compared to negative framing (levin, schneider, & gaeth, 1998). in the field of accounting, it has the same findings in the form of higher evaluation results (alewine, allport, & shen, 2016); approval of a higher capital budgeting project assessment (kerler, allport, & fleming, 2012); and more investment gained (allport, brozovsky, & kerler, 2010). therefore, the first hypothesis proposed in this study is; h1: the information attributes that are presented positively will result in a higher capital budgeting project approval. 2.2 the relationship between justification and capital budgeting decision justification in this study is a recommendation to support decisions taken. as explained in accountability theory, by giving justification for the actions taken, a person will feel responsible for his actions. therefore, the person will process more complex information to justify to get a positive assessment (tetlock, 1983a; tetlock, 1983b). with justification, someone will be more careful and more cautious in processing information, and that person will reduce the use of intuition in decision making (cvetkovich, 1978; janis & mann, 1977) accountability theory explains the perceived need to justify a person's behavior to others, causing someone to reconsider and feel responsible for the process by which decisions and judgments have been reached (vance, lowry, & dennis eggett, 2015). this concept of accountability arises based on previous studies that have been summarized (tetlock, 1983a; tetlock, 1983b) these results show that humans often make choices or make decisions based on simple heuristics, or even practical rules and intuition (bazerman & moore, 2012). humans often avoid mental procedures that require attention, concentration, or continuous computing power and base their decisions or choices on business principles that seem to be ineffective in guiding human decision making (tetlock, 1983a; tetlock, 1983b) as has been explained by accountability theory, a person will feel responsible for decisions made through justification, which encourages that person to process more complex information. this is in accordance with previous research which explained that justification encourages a person to be more vigilant and careful in processing information and reduce the use of intuition in making http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 121 decisions (cvetkovich, 1978; janis & mann, 1977). even with justification, one can get positive consequences like reducing punishments or getting luxurious rewards and can also reduce bias in an assessment and encourage conservatism towards investment opportunities. (kerler, allport, & fleming, 2012; lerner & tetlock, 1999). accountability, in terms of terminology, states that people who are expected to justify their views will process information more carefully tend to do more difficult tasks (janis & mann, 1977). the implementation of more difficult tasks to justify one's views is a characteristic of making a high-quality decision (janis & mann, 1977). this accountability can lead one to a more analyst and less intuitive way of thinking (cvetkovich, 1978). so, based on this accountability theory, someone (especially a decision maker) will feel responsible for the decisions taken so that he/she will pay more attention to more complex information processing in a more cautious manner. h2: providing the necessary justification will result in a lower amount of the capital budgeting project approval. 2.3 the relationship between attribute framing, justification, and capital budgeting decision belief revision theory breaks down one's beliefs about information when new information is entered into the belief system. there are two approaches in this theory. the first is the foundation approach. this approach states that a rational person derives his/her beliefs from justification or reasons for that belief. more specifically, a person will hold his trust if and only if it has a satisfying reason. the second approach is the coherence approach. this approach to coherence is contrary to the foundation approach. this approach explains that someone will maintain that origin (pedigree) is not a problem for rational beliefs. this approach also explains that the person will hold onto his beliefs as long as they are consistent with the others' beliefs (alkulaib, al-jassar, & al-saad, 2016; doyle, 1992; gardenfors, 2003). based on belief revision theory, new information can change one's old beliefs into new beliefs (alkulaib, al-jassar, & al-saad, 2016; doyle, 1992; gardenfors, 2003). the new information referred to in this study is the provision of this justification memo. so, the participants were informed that they would review information about the capital budgeting project and then provide an assessment of the project. in the justification group, participants were also informed that participants would be asked to provide reasons for the assessment that had been made. this second information is new information for participants so that participants will try to find or make an argument in order to give the reasons requested. in addition, the presence of new information in the form of requests for reasons for the assessment that has been made can change the confidence of participants who initially approved to the capital budgeting project to reject the project or even vice versa. thus, the provision of memo justification is expected to be able to change the assessment or decision on the information framing as explained in belief revision theory that new information can be believed if it has justification or reason for that information. this shows that one's beliefs can change with new information. so, when the participant was told to make a memo of justification as a reason for the assessment that had been made, the participant would change his/her initial assessment of the capital budgeting project and tried to find and make an argument in order to give the reason requested. giving justification encourages someone to process more complex information (tetlock, 1983a; tetlock, 1983b). lerner & tetlock (1999) add that justifying can reduce bias resulting from (a) lack of critical attention to the assessment process, and (b) failure to use relevant signals. deeper http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 122 and more careful thinking tends to avoid mistakes. based on these explanations (leboeuf & shafir, 2003), the hypothesis is formulated below: h3: giving justification will result in a lower assessment of capital budgeting project when the information attribute is framed negatively. 3. research method 3.1 research design the study design was a quasi-experimental study with 2 x 2 factorial, 2 (positive attribute framing and negative attribute framing) x 2 (justified and not justified) between subject. the data analysis technique used to test the hypothesis of this study was anova. the anova used was one-way anova to test hypotheses 1 and 2 and two-way anova to test hypothesis 3. in addition to anova, this study also used the ancova test to test demographic variables. the instrument of this study was developed from the researches by kerler, fleming, & allport (2014) and allport, brozovsky, & kerler (2010), which consisted of three main parts: 1. identity and general questions this section contains an identity form that must be filled out by participants consisting of name, age, study program, and gender. in this section, there are also general questions that participants must answer. common questions that are asked to participants relate to the work experience of the participants and the work experience of participants in relation to capital budgeting. 2. general information and financial information this section contained general information about the case of a company that was considering an investment project. it was also stated that this project required an initial investment of rp 5 billion with an estimated rp 3 billion net cash flow generated per year with an interest rate of 11%. this general information also explained the participant's role as a manager who would provide a final assessment of the proposed capital budgeting project. in addition to general information, there was also financial information about the feasibility of investment project proposals that were presented positively (failure rate) and negatively (failure rate), as shown in table 3. 3. assessment and justification memo the last part of this research instrument was the assessment column to be filled by the participants after they analyzed the information that has been presented by selecting between scales 1, definitely reject, to scale 9, definitely approve. this section also contained a memo of justification prepared for the group that was asked to make a justification as the reason for the assessment carried out. 3.2 population and sample this study used 83 financial students in the magister of management, diponegoro university as a surrogate of financial manager. liyanarachchi dan milne (2005) argued that there are proves that students can represent professional or financial managers prespective in making investment decisions. the participants then formed into four groups, group 1 (positive attribute framing), group 2 (positive attribute framing and justification), group 3 (negative attribute framing) and group 4 (negative attribute framing and justification). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 123 3.3 research framework picture 1 research framework 4. research result and analysis 4.1 descriptive analysis the demographics of the study participants are shown in table 1. table 1 participants demographics information total percentage (%) sex male 40 48,2 female 43 51,8 age 20 – 26 years old 63 75,9 27 – 33 years old 6 7,2 34 – 40 years old 7 8,4 41 – 47 years old 7 8,4 work status have worked 61 73,5 have not worked 22 26,5 investment project proponent team have been in the team 11 13,3 have not been in the team 72 86,7 decision-making team for investment projects have been in the team 11 13,3 have not been in the team 72 86,7 current job related to capital budgeting yes 7 8,4 no 76 91,6 source: primary data processed, 2018 the details of groups that had been formed in carrying out research with the quasiexperimental design are shown in table 2. attribute framing (positive/negative) capital budgeting decision (approved/rejected) justification (yes/no) h2 h1 h3 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 124 table 2 experimental groups no. group n percentage (%) 1 group 1 (positive attribute framing) 21 25,3 2 group 2 (positive attribute framing and justification) 22 26,5 3 group 3 (negative attribute framing) 24 28,9 4 group 4 (negative attribute framing and justification) 16 19,3 total 83 100 source: primary data processed, 2018 table 3 financial information net present value expected value rp 11 billion success rate 49% failure rate 51% payback period expected value 5 years success rate 48% failure rate 52% accounting rate of return expected value 25% success rate 53% failure rate 47% source: allport, brozovsky, & kerler (2010) 4.2 manipulation check this semi-experimental study also tested manipulation checks. the manipulation check test used was a pilot test. the pilot test was carried out before the actual research was conducted on 12 participants included in the population. the results of the manipulation checks test performed are summarized in table 4. table 4 descriptive statistics information n decision theoretical mean std. deviation max. min. mean positive attribute framing 6 8 6 7,00 5 0,89 negative attribute framing 6 6 2 4,00 5 1,41 total n 12 justified 6 7 2 4,67 5 1,97 not justified 6 8 4 6,33 5 1,63 total n 12 source: primary data processed, 2018 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 125 table 4 shows that the mean value of positive attribute framing decision was higher than the negative attribute framing (7,00 > 4,00) with the details that all participants in the positive af group chose to approve the proposed capital budgeting project (on a scale of 5). in the negative af group, 1 participant chose to approve (on a scale of 5) to the proposed capital budgeting project, 1 participant chose neutral (scale 5), and 4 participants chose to reject (under a scale of 5) the proposed capital budgeting project. the difference in the mean value of this decision means that the tendency of participants to choose to approve the proposed capital budgeting project is higher. table 4 also provides information that the category of justified has a lower mean value of the decision than the mean value of the decision in the category of not justified (4,67 < 6,33) with the details that 3 participants in the justified group chose to approve (above a scale of 5) the proposed capital budgeting project and 3 participants chose to reject (under a scale of 5) the proposed capital budgeting project. the group in not justified category consisted of 4 participants chose to approve (above the scale of 5) the proposed capital budgeting project and 1 participant chose to reject (under the scale of 5) the proposed capital budgeting project and 1 participant chose neutral on the proposed capital budgeting project. the difference in the mean value of the decisions indicates that the decisions taken by participants tend to reject when asked to provide justification. 4.3 homogeneity and normality test the first test was the assumptions of the anova test. there were two types of assumption tests carried out, first, homogeneity test. this test was to find out whether the research dat a were homogeneous or not. the second assumption test was the normality test. table 5 test of homogeneity and 1–sample k-s test attribute framing justification decision levene statistic 2,14 0,47 sig. 0,15 0,50 kolmogorov-smirnov z 3,18 3,30 1,54 sig. 0,00 0,00 0,02 source: primary data processed, 2018 table 5 shows that the attribute framing and justification each have a significance value of 0,15 and 0,50, both of these values exceed the value of 0,05, meaning that both the attribute framing and justification have the same variance. so, it is concluded that the assumption of variance homogeneity is fulfilled. table 5 also shows that the significance value of 1-sample k-s for each variable. if the significance value obtained exceeds 0,05, then the data is normally distributed. based on the results in table 5, the significance value of the decision variable as the dependent variable is 0,02 and the significance value of the attribute framing and justification as independent variables are 0,00 and 0,00 respectively. this shows that the three variables are not normally distributed. however, according to ghozali (2011), it was suggested that despite normality deviations, anova is still robust. thus both the attribute framing hypothesis and the justification hypothesis can be tested. 4.4 research analysis the study hypotheses used different statistical tools. h1 and h2 were tested using one-way anova because they tested one categorical independent variable on one dependent variable. while h3 uses the two-way anova test because this hypothesis tests the interaction effect http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 126 between attribute framing with justification as moderation. h1 and h2 test used a one-way anova statistical tool with the results obtained below in table 6 and table 7. tabel 6 tests of between-subjects effects and descriptive statistics tests of between-subjects effects source f sig. adjusted r square attribute framing 21,11 0,00 0,20 descriptive statistics attribute framing mean std. deviation n positive atributte framing 5,63 1,31 43 negative atributte framing 4,18 1,57 40 total 4,93 1,61 83 source: primary data processed, 2018 table 7 tests of between-subjects effects and descriptive statistics tests of between-subjects effects source f sig. adjusted r square justification 4,57 0,04 0,04 descriptive statistics justification mean std. deviation n justified 4,53 1,41 38 unjustified 5,27 1,70 45 total 4,93 1,61 83 source: primary data processed, 2018 table 6 shows that the significance value of the attribute framing is 0,000, this value is less than 0,05, meaning that the attribute framing has a significant effect on capital budgeting decision making. then from the adjusted r square value shows that 0,20 (20%) of the variability of decision making through the capital budgeting process can be explained by the variability of the attribute framing. from table 6, it also shows that the positive attribute framing has a larger decision mean of 5,63 compared to the negative attribute framing with a mean decision value of 4,18. the conclusion that can be obtained from the difference in the mean value of this decision is that the participants' tendency to approve the proposed capital budgeting project is higher when the information attribute is presented positively. therefore, h1 is accepted. the significance value of the justification variable in table 7 is less than 0,05, which is 0,04, so it can be concluded that the justification has a significant effect on decision making through the capital budgeting process. then the adjusted r square value for the justification variable shows that justification variability can only explain the variability of decision making through a capital budgeting process of 4% (0,04) and the rest is affected by other variances that are not studied here. the mean value in table 7 shows that the decision means value for the category of not justified is higher, which is 5,27, compared to the mean value of the decision for the justified category, which is 4,53. the conclusion obtained based on this difference is that participants tend to reject the proposed capital budgeting project when they are asked to justify. this indicates that the approved decision for the capital budgeting project obtained is lower when the managers asked to make a memo of justification. therefore, h2 is accepted. two-way anova statistical tool was also used in this study to test h3. this h3 test was intended to determine the effect of justification as the moderation of the interaction between http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 127 attribute framing and decision making through capital budgeting. this test is commonly called the interaction effect test. below is the results of the tests obtained. picture 2 profile plots (primary data processed, 2018) based on picture 2, there are two parallel lines, or it shows the absence of lines that intersects each other. it means that in this study, there is no interaction between the attribute framing and justification. therefore, it is necessary to see the significance value of the interaction between attribute framing and justification to ensure that there is no interaction between the two. tabel 8 tests of between-subjects effects source type iii sum of squares df mean square f sig. attribute framing 49,48 1 49,48 26,48 0,00 justification 17,03 1 17,03 9,12 0,00 attribute framing* justification 3,18 1 3,18 1,70 0,20 r squared = 0,302 (adjusted r square = 0,28) source: primary data processed, 2018 table 8 explains that there is no interaction between attribute framing and justification. this can be seen from the significance value of the two interactions that exceeds 0,05, which is 0,20, it means that the interaction between attribute framing and justification does not have a statistically significant effect on decision making through capital budgeting process with 28% variability of decision making through capital budgeting process can be explained by the interaction relationship between the variability of attribute framing and the variability of justification. therefore, it can be concluded that h3 is rejected. notes : green line : unjustified blue line : justified http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 128 4.5 research discussion 4.5.1 the effect of attribute framing on capital budgeting decisions based on the test results, it was found that h1 is accepted. this shows that humans do not always think rationally in making decisions. humans will tend to focus only on the components of the comparison to simplify existing alternatives. this causes inconsistency in one's preferences when information is presented differently. this is in line with the prospect theory described by kahneman & tversky (1979) that humans have tendencies to inconsistent preferences when facing the same information with different representations. this tendency can be seen from higher approved proposal ratings when the information attributes are presented positively compared to those presented negatively. it also shows that humans will think positively when facing positive information. thus, when a person is asked to judge based on the information presented positively, the possibility of a positive assessment will be greater. so, it can be concluded that the participant will give a higher level of approval when reviewing the capital budgeting project information presented positively. this is in line with levin & gaeth (1988) explanation that positive labeling of an attribute leads to encoding information that tends to generate beneficial associations in memory. the results of this study are also in accordance with the findings of previous research stating that the attributes of information presented or framed positively result in a greater positive assessment (gamliel & peer, 2010; kuvaas & selart, 2004; levin & gaeth, 1988). even the research in the field of accounting that tests the attribute framing also had a similar finding, assessments in the form of acceptance, approval, or desire to invest higher are more dominant when the information is presented positively compared to information presented negatively. (alewine, allport, & shen, 2016; allport, brozovsky, & kerler, 2010; kerler, allport, & fleming, 2012; kerler, fleming, & allport, 2014). 4.5.2 the effect of justification on capital budgeting decisions based on the test results of the study, it was found that h2 is accepted. the acceptance of this hypothesis indicates that when someone is asked to provide justification or reason for the judgment or decision taken, the person will consider more carefully and cautiously in making an assessment or making a decision. thus, a person will be more responsible for the judgment or decision was taken. when asked to give a reason, a person will process more complex information to provide the reason. this result is in line with the accountability theory described (tetlock, 1983a; tetlock, 1983b). this theory explains that justification makes one feel responsible for the decisions taken so that it encourages more complex information processing. even previous empirical evidence suggests similar things; justification encourages one to be more careful and vigilant in processing information and reduce the use of intuition in decision making (cvetkovich, 1978; janis & mann, 1977). in addition, it was also found that in justification, one can get positive consequences like reducing punishments or getting luxurious rewards and can also reduce bias in an assessment and encourage conservatism towards investment opportunities (kerler, fleming, & allport, 2014; lerner & tetlock, 1999). 4.5.3 the effect of justification on the interaction between attribute framing and capital budgeting decisions based on the results of the test, it was found that h3 is rejected. this shows that participants hold on to their beliefs even though new information is entered into the participant's belief system so that the effect of the attribute framing remains. this shows that belief revision theoryfoundation approach cannot explain the phenomenon of this study. however, this is in accordance with belief revision theory coherence approach that explains that a person tends to maintain consistency in a http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 129 revised epistemic state and make minimal changes from the old conditions which ensure adequate overall coherence (doyle, 1992; gardenfors, 2003). so, participants will tend to maintain their decisions when facing similar cases or events in accordance with participants' beliefs both through their experiences and through understood theories. the inability of this justification in reducing the effect of attribute framing on capital budgeting decision making can be caused by the diversity of participants' work experience in the field of capital budgeting. thus, participant work experience in the field of capital budgeting has a significant influence on capital budgeting decision making. this is consistent with the research of juliusson, karlsson, & garling (2005), which explained that a person's past experiences could influence future retrieval. sagi and friedland (2007) also explained that when a person gets a positive result from a decision, the person tends to decide the same way when faced with the same situation. likewise, people tend to avoid mistakes when, in the past, they get negative results in the same situation. based on the results of the h3 test, it was also obtained that the attribute framing has a strong influence on decision making through the capital budgeting process, either justified or not justified. this finding is in line with previous finding stating that justification only has limited support and there is even some research showed that justification could not moderate framing effects (takemura, 1994; leboeuf & shafir, 2003; kerler, fleming, & allport, 2014). this was explained by kahneman & tversky (1982) that people are often not aware of the effects of framing, once they are made aware, they still cannot determine decisions objectively. this explains the fact that framing has a strong influence on decision making, even though participants improve their thinking. as with kahneman & tversky (1982), in explaining the justification reasons, they are not able to moderate the influence of framing, leboeuf & shafir (2003) explained that people understand that losing two-thirds of the threatened group was the same as saving a third of the group. but when there is no basic representation of this, each framing triggers its series of interesting impulses. so, without an explicit presentation, the effects of framing tend to remain the same among careful thinkers. 5. research conclusion and limitation 5.1 conclusion conclusions obtained from the results of tests conducted is that the attribute framing and justification can influence decision making through the capital budgeting process. in particular, the information that is positively presented has an impact in the higher approval of a proposed capital budgeting project. this research also concluded that justification could not to reduce the effect of the attribute framing on capital budgeting decisions. this shows that belief revision theory foundation approach cannot explain the phenomenon of this study. however, this is in accordance with belief revision theory coherence approach that explains that a person tends to maintain consistency in a revised epistemic state and make minimal changes from the old conditions which ensure adequate overall coherence. this study also contributes to the practitioners by testing two general factors of capital budgeting processes that can have an impact on decision making, which is the attribute framing and justification. based on empirical evidence that the researcher obtained, it is expected that managers need to understand how to present information, especially the information on a potential project that can have a significant influence on the decision-making process. managers are also expected to understand that justification causes conservatism that can lead to rejection of potentially successful projects. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 2 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 130 5.2 limitation like any other studies, this study also has limitations. the limitation of this study is the many varieties of participants who have experience in the field of capital budgeting so that the decisions taken are only based on the theories obtained and understood. another limitation is the lack of justification influence in reducing the effect of the attribute framing on capital budgeting decisions. finally, future research is expected to be able to look for other factors that can reduce the effect of the attribute framing on capital budgeting decisions. references alewine, h. c., allport, c. d., & shen, w.-c. m. 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(2015). increasing accountability through user interface design artifacts: a new approach to addressing the problem of access-policy violations. management information systems quarterly, 39(2), 345–366. *) iana umma, department of accounting, diponegoro university, semarang, indonesia (email: ummachan14@gmail.com) **) rr. sri handayani, department of accounting, diponegoro university, semarang, indonesia (email: rrsrihandayani@live.undip.ac.id) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 1-18 http://dx.doi.org/10.31106/jema.v17i1.4989, issn (online) 2597-4017 1 personal resources and turnover intention among privatesector employees: does work engagement still matter? ratna tri hardaningtyas1* 1 department of management, faculty of economics and business, universitas islam malang, malang, indonesia *corresponding author(s) email: ratnatyas@unisma.ac.id abstract work engagement has emerged as a core element of talent management to acquire and retain high-performing employees in the labor market and a potential bright spot for business success. due to the aforementioned positive influences and benefits of improving employees' work engagement, many organizations put more effort towards enhancing and maintaining levels of work engagement as their top priority for an effective human resource system. this study aimed to investigate the mediating effects of employees' work engagement in the relationships between their personal resources (self-efficacy, organizationalbased self-esteem, and optimism) and turnover intention. a total of 119 survey responses collected by convenience sampling and analyzed by using structural equation modeling (sem). this study concluded that there is a positive relationship between self-efficacy, organizationalbased self-esteem, optimism, and work engagement. the mediation role of work engagement in the relationship between self-efficacy, organizational-based self-esteem, optimism, and turnover intention proves significantly in this study. interestingly, this study found that there is a positive relationship of self-efficacy on turnover intention which means that the higher level of self-efficacy does not indicate the lower turnover intention. employees with a high level of self-efficacy believe that they are giving too much to their organization therefore, they eventually negotiated more for higher salaries while at the same time seeing more alternative jobs/organizations offers in case they are not appreciated enough for what they do for organizations. keywords: work engagement; self-efficacy; organizational-based self-esteem; optimism; turnover intention jel code: j28, j29 doi: 10.31106/jema.v17i1.4989 article history: received 2019-12-16 reviewed 2019-12-25 revised 2020-01-12 accepted 2020-01-28 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ personal resources and turnover intention among private-sector employees: does work engagement still matter? by ratna tri hardaningtyas 2 introduction according to saks (2006) and wollard & shuck (2011), to bring about better change among employees in a company, work engagement has been heralded as an important factor because it has become a new concept that is constantly developing. this common regard starts with the idea that employees will have a higher enthusiasm for their work when they are in a positive mindset. therefore, individual and organizational productivity in the company will increase. researchers have pointed out that work engagement gives rise to various positive results in the organization, such as better work quality, innovation, and commitment to the organization among employees and higher profits for the company (bakker & bal, 2010; hakanen et al., 2006; xanthopoulou et al., 2009; zhang & bartol, 2010). other researchers add that work engagement also impedes employees' absence, workrelated stress, and turnover intention (saks, 2006; schaufeli & bakker, 2004; schaufeli et al., 2009; wefald et al., 2011). in addition to such attempts in hrd approaches, bakker & demerouti (2008) presented, as the research framework, the job require-resources (jd-r) model of work engagement. they maintained that either separately or simultaneously, job and personal resources influence work engagement positively, resulting in better success in terms of work quality, innovation, and turnover intention. according to bakker et al. (2014), the incorporation of work engagement is typically classified by psychologists into two perspectives which are job resources as a situational variable and personal resources as an individual variable. xanthopoulou et al. (2007) revealed that based on the jd-r work-engagement model, job resources include the physical, social and organizational components of work in pursuing work objectives and promoting personal growth. whereas personal resources are elements of self-assessment or positive self-assessment which traditionally relates to endurance and indicates certain employees' concept of their ability to manage and affect their workplace positively (bakker & demerouti, 2008; hobfoll et al., 2003; xanthopoulou et al., 2007). according to xanthopoulou et al. (2007), although job and personal resources are both important indicators of work engagement, most surveys tend to concentrate on the correlation between job resources and work engagement. xanthopoulou et al. (2007) stated in this aspect that individuals with personal resources are assured in their strengths and capabilities, and are hopeful of their prospects. therefore, they will explore or identify other dimensions of their surroundings that lead to the confrontation of objectives and, hence, to the advancement of work engagement. this is required to explain how resources relate to work engagement and jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 1-18 http://dx.doi.org/10.31106/jema.v17i1.4989, issn (online) 2597-4017 3 to show detailed consequences for hr experts. further scientific research is needed to address the personal resources' effects on work engagement and effective organizational outputs. additionally, for a company to be able to keep successful talent management, turnover intention as a part of work engagement is a critical concern in connection with maintaining human capital (carmeli & weisberg, 2006; hughes & rog, 2008). carmeli & weisberg (2006) defined turnover intention as an individual's intention to voluntarily quit his or her position in a company soon. according to mobley et al. (1979), the direct cause of turnover action is perceived as turnover intention. in this way, an individual's turnover intention is a strong indicator of his or her subsequent actions (carmeli & weisberg, 2006; shuck et al., 2011) and the best possible predictor of the real turnover (egan et al., 2004). while saks (2006) and schaufeli & bakker (2004) have explored employment resource relationships as a situational aspect, work engagement, and turnover intention, only a few studies have been done to examine the significant relationships among those elements given the significance of personal factors in deciding to resign. besides, from the viewpoint of hr experts in the indonesian private industry, which is marked by limited job protection and high job instability, the personal resources and degree of work engagement of every worker can be important turnover indicators. a lot of current work has indicated how recent studies undervalue the effect of individual variance on work agreement. undoubtedly, formerly undisclosed characteristics of personal resources may shed considerable light on employees' differences in work engagement. from this viewpoint, this research examines personal resources that are common among employees such as self-efficacy, organizational based self-esteem (obse), and optimism that is critical to job-related psychological health (hobfoll, 2002; xanthopoulou et al., 2007, 2009). literature review to incorporate the direct causal link between personal resources, work engagement, and turnover intention, this study adopted the conservation of resources (cor) theory of hobfoll's (1989) which was also used in other research on work engagement such as halbesleben (2010) and weigl et al. (2010) as its theoretical framework. according to cor theory, workers should employ their creative energy through the creation and retention of resources; that way they can preserve their engagement. notably, the world economy has undergone a slowdown of growth following the 2008 economic crisis. because of intense job performance demands and the danger of being terminated by employers, workers have personal resources and turnover intention among private-sector employees: does work engagement still matter? by ratna tri hardaningtyas 4 continually alienated from their jobs; in the end, this condition may lead to unwanted individual and organizational effects. cor theory has gained further recognition in such stressful working environments as a buffering tool for obtaining, retaining and sustaining employee resources to cope with stress and improve psychological health. cor theory maintains that employees are spending their resources to offset potential resource shortages; thus, they are constantly seeking to maintain an acceptable amount of resources to avoid the loss of current resources. if not, profound psychological effects arise when the resources expended do not surpass the advantages predicted. the presence of weak resources encourages workers to get spiral which enhances patterns that facilitate constructive mutual relationships between different kinds of work demands. alternatively, according to salanova et al. (2010), it is more likely that individuals who fall short of such resources will be vulnerable to more energy loss and less resource development. a constructive mutual relationship may occur in which work engagement and personal resources depend on each other. furthermore, by using their self-efficacy, obse, and optimism, individuals with personal resources are more able to invest in their work overtime. motivated workers tend to be more empowered by optimizing the beneficial effect of their current resources and more quickly creating a gain spiral for new resources to be added. in comparison, when personal resources disappear or when expended resources don't meet the anticipated amount of performance, employees are frequently alienated in their work. nevertheless, as hobfoll (2002) concluded, the impact of a gain spiral seems to provide a moderate effect on the degree of engagement, whereas a loss spiral tends to worsen the process of resource loss more strongly and faster. it is important to analyze how personal resources such as self-efficacy, organizational self-esteem, and optimism help alleviate negative effects of job demands by generating immediate relief and maintaining work energy to reduce overall the risk of talent loss triggered by turnover intention. hence, based on a robust theoretical basis, our research hypothesizes that this segment provides a thorough analysis of the current literature on each research variable and the important relationships between them. work engagement schaufeli et al. (2002) defined work engagement as “a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption.” vigor means an eagerness and commitment to participate with high energy levels in one's career, along with jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 1-18 http://dx.doi.org/10.31106/jema.v17i1.4989, issn (online) 2597-4017 5 endurance and patience in overcoming challenges while at work. dedication is marked by seeking true intent in one's profession and feeling a sense of value, love, inspiration, respect, and motivation. absorption means full concentration and involvement in one's career as if time is moving quickly and it is hard to be unemployed (schaufeli & bakker, 2010). committed individuals are typically considered to be feeling positive emotions. therefore, committed workers are typically enthusiastic, self-assured, and positive; these constructive work strategies are directly related to good work quality— the abundance of accomplishments increases employability. this mutual enhancing interaction is more likely to engage workers deeply in their roles and can minimize or erase work exhaustion (kim et al., 2013; saks, 2006). also, dedicated workers who express their confidence and enthusiasm and demonstrate constructive attitudes to their colleagues cultivate a favorable organizational environment that has a direct effect on lower turnover intentions (demerouti & cropanzano, 2010). self-efficacy, organizational-based self-esteem, and optimism of personal resources according to milam et al. (2019), self-efficacy refers to the understanding or beliefs of individuals about their ability to execute and finish their overall task. furthermore, picton et al. (2018) and pradesa et al. (2019) stated that the more confidence the workers have in their abilities to do a task, the more dedicated and emotionally invested they become to their jobs and company. meanwhile, lin et al. (2018) described organization-based self-esteem (obse) as the level to which individuals believe in their importance, competencies, capacity, and significant position as part of an organization. individuals with higher organization-based self-esteem usually find themselves important to their organizations, making them more dedicated to their work and have more desire to carry out their work well within the company (mauno et al., 2007). scheier et al. (2001) defined optimism as the inclination to assume that one will achieve positive results in life in general. optimists are more likely to assign positive outcomes to the self than pessimists while trying to link negative outcomes to external causes. these three personal resource elements make workers eagerly involved, remain embedded in their work, and function with higher energy levels. this positive dynamic has been confirmed by empirical literature (choi & kang, 2012; luthans & peterson, 2002; mauno et al., 2007; xanthopoulou et al., 2007, 2009). the above arguments offer the following theories. the discussions above suggest the following hypotheses. h1a: self-efficacy has a positive effect on work engagement. h1b: organizational-based self-esteem (obse) has a positive effect on work engagement. personal resources and turnover intention among private-sector employees: does work engagement still matter? by ratna tri hardaningtyas 6 h1c: optimism has a positive effect on work engagement. furthermore, personal resources such as self-efficacy, obse, and optimism could minimize turnover intention. strong negative associations between a personal resource variable and turnover intention have been revealed by past empirical evidence (bowling et al., 2010). luthans et al. (2006) established a negative correlation between self-efficacy and turnover intention. bowling et al. (2010) added that meta-analytic research published in the organizational-based-self-esteem literature also found that obse has a negative association with turnover intention. similarly, tuten & neidermeyer (2004) presented evidence to indicate that optimism is correlated weakly with turnover intention. with this scientific proof, this research suggests that the perception of working conditions by workers is affected by personal resources. according to bowling et al. (2010), employees with a higher level of personal resources will consider any work situation as a chance to try to reform their workplace. this research thus indicates that a higher degree of self-efficacy, organizationalbased self-esteem, and optimism means less chance of turnover intention. therefore, this study suggests that a higher level of self-efficacy, organizational-based self-esteem, and optimism is related to a lower level of turnover intention. h2a: self-efficacy has a negative effect on turnover intention. h2b: organizational-based self-esteem (obse) has a negative effect on turnover intention. h2c: optimism has a negative effect on turnover intention. turnover intention the high rate of turnover intention among employees is widely understood as a damaging characteristic to be prevented in the work environment. morrell et al. (2001) and schyns et al. (2007) stated that despite a lot of literature on turnover, there is no widely recognized explanation of why workers want to leave corporations. however, schyns et al., (2007) and winterton (2004) maintained that it is closely linked to low work fulfillment, productivity and recruitment, and retention costs, along with the potential loss or lack of specific/implicit expertise and competencies of existing workers due to the real high turnover. according to the meta-analysis report by halbesleben (2010), there is a clear negative correlation between work engagement and turnover intention. in the asian frameworks, a few observational studies (agarwal et al., 2012; bhatnagar, 2012; kim, 2017) have found a substantially negative impact of work engagement on turnover intention. committed staff is, therefore, according to halbesleben & wheeler (2008), less likely to leave their positions because they are more closely identified with their work and can appreciate and secure their jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 1-18 http://dx.doi.org/10.31106/jema.v17i1.4989, issn (online) 2597-4017 7 roles and personal resources in their working environment. as such, previous literature suggested that those employees with high work engagement are more likely to have less turnover intention, which suggests the following hypothesis. h3: work engagement negatively influences their turnover intention. individuals with a higher degree of self-efficacy, organizational-based self-esteem, and optimism can gain a greater level of work engagement that contributes to less turnover intention in their organizations. personal resources like self-efficacy, organizational-based self-esteem, and optimism have a minimal impact as a form of individual factors on turnover intention. they can serve as psychological pillars that enhance work engagement, which in turn contribute to accrued capital in a supportive workplace. this approach can be an effective opportunity to remain with the current company and workers may be unwilling to give up the advantages of preserved resources that are entirely worthless outside their company. for that reason, it is more apparent that work engagement mediates the negative correlation between personal resources such as self-efficacy, organizational-based selfesteem, and optimism and turnover intention. all things considered, work engagement can be believed to mediate the relationships between self-efficacy, organizational self-esteem, motivation, and turnover intention; this is partially confirmed by empirical research by kim et al. (2013) and shahpouri et al. (2016). the discussions above suggest the following hypotheses: h4a: self-efficacy that is mediated by work engagement affects employees' turnover intention. h4b: organizational-based self-esteem (obse) that is mediated by work engagement affects employees’ turnover intention. h4c: optimism that is mediated by work engagement affects employees’ turnover intention. methods due to the reason of limited accessibility to employees in organizations, this study used a convenience sampling as a sampling technique approach. through the sampling process, 171 responses were collected. after removing 52 incomplete responses, a total of 119 cases were used in this study. structural equation modeling (sem) with descriptive statistics and a common method bias test used as data analysis. to evaluate the overall model fit of the structural model, this study employed the satorra-bentler (sb) scaled chi-square for robust ml estimation to handle the non-normality of data (kline, 2011), the comparative fit index personal resources and turnover intention among private-sector employees: does work engagement still matter? by ratna tri hardaningtyas 8 (cfi), the non-normed fit index (nnfi, also known as the tucker-lewis index-tli), the standardized root mean square residual (srmr), and the root mean square error of approximation (rmsea) with kline (2011) cutoff criteria (cfi > 0.950, nnfi > 0.950, srmr < 0.080; rmsea < 0.080). besides, to check for any improper solutions of the model, individual parameter estimates and their estimated standard errors were examined (lei & wu, 2007). figure 1. research framework in this study, self-efficacy was measured using schwarzer & jerusalem (1995) 10-item measurement ("i can always manage to solve difficult problems if i try hard enough", "if someone opposes me, i can find the means and ways to get what i want", "it is easy for me to stick to my aims and accomplish my goals", "i am confident that i could deal efficiently with unexpected events", "thanks to my resourcefulness, i know how to handle unforeseen situations", "i can solve most problems if i invest the necessary effort", "i can remain calm when facing difficulties because i can rely on my coping abilities", "when i am confronted with a problem, i can usually find several solutions", "if i am in trouble, i can usually think of a solution", "i can usually handle whatever comes my way"). organizational-based selfesteem was measured using 10 items developed by pierce & gardner (2004) which is “i count around here”, “i am taken seriously”, “i am important”, “i am trusted”, “there is faith in me”, “i can make a difference”, “i am valuable”, “i am helpful”, “i am efficient”, “i am cooperative”. the scheier et al. (1994) of optimism items used as measurement of optimism variable ("in uncertain times, i usually expect the best", "if something can go wrong for me, it will", "i am always optimistic about my future", "i hardly ever expect things to go my h3 h1 a,b,c h2 a,b,c h4 a,b,c self-efficacy (se) organizational based self esteem (obse) work engagement (we) turnover intention (ti) optimism (op) jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 1-18 http://dx.doi.org/10.31106/jema.v17i1.4989, issn (online) 2597-4017 9 way", "i rarely count on good things happening to me", "overall, i expect more good things to happen to me than bad"). work engagement was assessed by using nine criteria of schaufeli et al. (2002) with specific items as follows "i feel strong and vigorous to do my job", "when i do my job, i feel like i am bursting with energy", "when i do my job, i feel mentally strong", "i find my job challenging", "i am proud of my job", "i find my job to be full of meaning and purpose", "when i do my job, i forget everything else around me", "time flies when i do my job", "i feel happy when i do my job intensively". while the turnover intention was measured using (colarelli, 1982) guidance (“i frequently think of quitting”, "i am planning to search a new job in the near future", "if i have my own way, i will be working for another organization"). briefly, the proposed hypothesis model in this study can be seen in figure 1. result and discussion as a preliminary analysis, reliability, and correlation matrix were examined, both internal consistencies using cronbach’s alpha and bivariate correlations among latent variables were calculated as shown in table 1. the results indicate that all measures in this research had an acceptable level of reliability since the value of α ranged from 0.713 to 0.944. furthermore, since all bivariate correlations were less than 0.850, the pearson correlation indicated no multicollinearity issue (lei & wu, 2007). table 1. reliabilities and correlations among latent variables variable mean standard deviation α bivariate correlation se obse op we ti se 3.010 0.394 0.896 1 obse 3.680 0.526 0.914 0.525 1 op 3.810 0.574 0.787 0.489 0.450 1 we 5.010 0.980 0.944 0.472 0.488 0.482 1 ti 2.170 0.793 0.713 -0.156 -0.306 -0.333 -0.366 1 assessment of model fit given that the measurement model and the full model were equivalent, to avoid the repetition, the model fit of the full model was assessed. the overall fit statistics of the proposed model are shown in table 2. according to the results, the sb scaled chi-square of the model was statistically significant, χ2 (655) = 1686.692, p< .001, indicating that the personal resources and turnover intention among private-sector employees: does work engagement still matter? by ratna tri hardaningtyas 10 exact-fit hypothesis was rejected. other fit statistics, however, were acceptable (cfi = 0.978 [> 0.950], nnfi = 0.976 [> 0.950]; srmr = 0.053 [< 0.080]; and rmsea = 0.054 [< 0.080]). based on the results of the overall fit, we concluded that the model adequately fit the data. table 2. overall model fit sb scaled chi-square (df) cfi nnfi rmsea srmr proposed model χ2 (655) = 1686.692, p < .001 0.978 0.976 0.053 0.051 hypothesis testing table 3. direct effect testing direct effect t-value t-table criteria decision se -> we 2.860 1.962 t-value > t-table h1a accepted obse -> we 4.280 1.962 t-value > t-table h1b accepted op -> we 4.991 1.962 t-value > t-table h1c accepted se -> ti 3.011 -1.962 t-value > t-table h2a rejected obse -> ti -2.230 -1.962 t-value > t-table h2b accepted op -> ti -3.810 -1.962 t-value > t-table h2c accepted we -> ti -3.460 -1.962 t-value > t-table h3 accepted based on the results from the assessment of the model fit, all proposed hypotheses were tested. the results of the proposed model indicated that the direct effect of se on we, obse on we, and op on we were all statistically and positively significant. the t-value of proposed hypothesis 1 were higher than t-table (2.860 > 1.962, 4.280 > 1.962, 4.991 > 1.962). thus, hypotheses 1a, 1b, and 1c were all accepted. this study support previous research by choi & kang (2012), luthans & peterson (2002), mauno et al. (2007), xanthopoulou et al. (2007, 2009) that concluded that personal resources were positive affects work engagement. the higher the level of self-efficacy, organizational-based self-esteem, and optimism, the more engaged employees on work or organization. table 3 also revealed that although the direct effect of obse on ti, op on ti were all statistically and negatively significant, this study failed to prove the direct effect of se on ti. while the t-value of proposed hypothesis 2b,c were higher than t-table (-2.230 > -1.962, 3.810 > -1.962), the t-value of proposed hypothesis 2a were higher than t-table but in the jema: jurnal ilmiah bidang akuntansi dan manajemen, 17(1) 2020, 1-18 http://dx.doi.org/10.31106/jema.v17i1.4989, issn (online) 2597-4017 11 opposite direction (3.011 > -1.962). therefore, hypotheses 2b and 2c were accepted, but hypothesis 2a was rejected. judeh & abou-moghli (2019) argued that individual with a high level of self-efficacy usually perceived their job role differently and tend to take the initiative's action to demonstrate their skill set of competencies. as a result of these choices, high self-efficacy employees might believe that they are giving too much to their organization and hope that their hard work positively affects their outcome expectations (chang et al., 2018). therefore, they eventually negotiated more for higher salaries while at the same time seeing more alternative jobs/organizations offers in case they need to leave the organizations. it might be conceivable that if employees have high levels of self-efficacy, they are more likely to be engaged in their work. however, it does not indicate that these employees would have lower turnover intentions. the results of the proposed model also showed that the direct impact of we on ti was statistically and negatively significant. the t-value of proposed hypothesis 3 were higher than t-table (-3.460 > -1.962). thus, hypothesis 3 was supported. this study support previous research by halbesleben (2010), agarwal et al., (2012), bhatnagar, (2012), kim (2017) that stated that there is a negative association between work engagement and turnover intention which means that the more engaged employees the less likely their intent to quit. table 4. indirect effect testing indirect effect confidence interval decision lower upper se -> we -> ti -0.095 -0.002 h4a accepted obse -> we -> ti -0.105 -0.019 h4b accepted op -> we -> ti -0.137 -0.028 h4c accepted according to preacher & hayes (2008), bootstrapping is the most powerful method for testing mediation effects under most sample conditions which assumes that the normal distribution assumption of variables is not fulfilled. ryu et al. (2009) added that if the confidence interval level does not contain zero then the mediation effect is significant. the results presented in table 4 show that work engagement played significant mediating roles in the relationship between se and ti, obse and ti, op and ti. the confidence interval value of all mediation models in this study does not contain zero, therefore h4a, h4b, h4c were accepted. kim et al. (2013) and shahpouri et al. (2016) stated that employees who have a higher level of self-efficacy, organizational-based self-esteem, and optimism may feel a personal resources and turnover intention among private-sector employees: does work engagement still matter? by ratna tri hardaningtyas 12 stronger sense of work engagement that leads them to possess less turnover intention in their organization. these personal resources also could be shaped the motivational foundations that strengthen work engagement, in turn leading to accumulated resources in a positive work environment. conclusion and suggestion this study concluded that there is a positive relationship between personal resources (self-efficacy, organizational-based self-esteem, and optimism) and work engagement. the mediation role of work engagement in the relationship between self-efficacy, organizationalbased self-esteem, optimism, and turnover intention proves significantly in this study. interestingly, this study found that there is a positive relationship of self-efficacy on turnover intention which means that the higher level of self-efficacy does not indicate the lower turnover intention. employees with a high level of self-efficacy believe that they are giving too much to their organization therefore, they eventually negotiated more for higher salaries while at the same time seeing more alternative jobs/organizations offers in case they are not appreciated enough for what they do for organizations. further research should investigate another perspective of personal resources and its influences on work engagement and turnover intention. the degree of self-efficacy should also consider by researchers as one of the predictors of employee turnover intention. references agarwal, u. a., datta, s., blake‐beard, s., & bhargava, s. 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(2010). linking empowering leadership and employee creativity: the influence of psychological empowerment, intrinsic motivation, and creative process engagement. academy of management journal, 53(1), 107–128. https://doi.org/10.5465/amj.2010.48037118 jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 97-117 http://dx.doi.org/10.31106/jema.v19i1.17985, issn (online) 2597-4017 97 how does audit committee moderate the relationship between audit firm size, industry specialization, and the cost of equity capital? a comparison of the ohlson and capital asset pricing model emayanti christina hutabarat1*, taufiq arifin2, afsheen abrar3 1 department of accounting, faculty of economics and business, universitas sebelas maret, surakarta, indonesia 2 department of accounting, faculty of economics and business, universitas sebelas maret, surakarta, indonesia 3 department of business administration, faculty of management science, national university of modern languages, islamabad, pakistan *corresponding author(s) email: emayantichristina@student.uns.ac.id abstract the purpose of this study is to examine the moderation effect of the audit committee on the linkages between audit firm size, industry specialization, and the cost of equity capital with firm size and financial leverage as a control variable. this study is one of few that compared the accuracy of ohlson and capital asset pricing model in explaining the cost of equity capital and the moderation role of the audit committee. a sample of 123 manufacturing firm-year observations was drawn from indonesian-listed companies for five years period (20162020). the results show that while the audit committees significantly moderate the negative relationship between firm size on the cost of equity capital, there is no significant evidence of the moderation role of the audit committee on the relationship between industry specialization and the cost of equity capital using the capital asset pricing model. on the contrary, the moderation role of the audit committees on the effect of industry specialization toward the cost of equity capital under ohlson was supported in the study. further, it found that the ohlson has a better performance than the capital asset pricing model in explaining the cost of equity capital as the ohlson measurement expressed the role of earnings per share which represent a more real rate of return. keywords: audit committee; audit firm size; auditor industry specialization; cost of equity capital; ohlson; capital asset pricing model jel code: k0, g30, m40, m41, m42 doi: 10.31106/jema.v19i1.17985 article history: received 2022-03-07 reviewed 2022-03-23 revised 2022-04-17 accepted 2022-04-30 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ how does audit committee moderate the relationship between audit firm size, industry specialization, and the cost of equity capital? … by emayanti christina hutabarat, taufiq arifin, afsheen abrar 98 introduction the agency problem between managers and investors is a fundamental issue arising due to information asymmetry, in which managers as agents always have more than principals, namely the shareholders (nwidobie, 2013). differences in interests between these parties further increase information asymmetry, one of which is in the form of a financial statement, as it provides accounting information describing a company's financial condition. hence, the higher the information asymmetry, the higher the risk investors will encounter. hajiha & sobhani (2012) explain that the level of information risk will affect the rate of return on investment. in other words, high risk in financial statements makes investors doubt the information and subsequently expect a higher rate of return. as a result, the cost of equity capital to be provided by the company will increase. a high-quality audit must be conducted to reduce the financial statements' uncertainty and eliminate the risk in a company's financial information. it is intended to improve the reliability of the company's financial reporting, eliminate information risk, and ultimately decrease the returns demanded by investors (krishnan & zhang, 2019). thus, if the audit is not carried out, investors will likely doubt the information presented in the financial statements. according to arens (2012), auditing collects and evaluates evidence on measurable information from economic entities. in this regard, investors expect the companies they invest in to be audited by auditors with the best competence and expertise. based on ahmad et al. (2014), auditors have mechanisms to detect information distortion, improve information quality to reduce investment risk, and facilitate optimal decisionmaking. companies audited by high-quality auditors tend to gain investor confidence in the information presented in the financial statements. orazalin et al. (2019) define a high-quality audit as financial statements audited by the big four-affiliated firms. hence, financial statements must provide reliable information for users to determine the type of economic decision to make. a high-quality audit performed by competent auditors will theoretically and empirically lead to lower corporate risk, information asymmetry, and capital cost. the issues of information asymmetry, its impact on financial structures, and the role of auditors are relevant for developing countries, particularly those with poor transparency and disclosure quality (claessens & yurtoglu, 2013). therefore, a qualified audit is necessary to fulfill the demands of companies and investors. defond & zhang (2014) argue that high audit quality adds value to market participants, ensuring that the existing financial statements reflect the jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 97-117 http://dx.doi.org/10.31106/jema.v19i1.17985, issn (online) 2597-4017 99 firm's underlying economy. correspondingly, if the quality of the audit has been met, agency problems can be prevented, given that it is associated with the supervision and control of company management (huu nguyen & thuy doan, 2020). thus, auditors are proven to resolve issues by playing their role as a monitor. the effectiveness of the audit supervisory role is further reflected in the client's cost of equity capital. audit quality impacts the cost of equity capital by influencing users' decision-making regarding financial statements, which later reduces the required cost (basiruddin et al., 2014). the present study intended to investigate the impact of audit quality engaging audit firm size and industry specialization on the cost of equity capital (soesetio et al., 2021; sugeng et al., 2020). persakis & iatridis (2015) examined the impact of earnings management, audit quality, and financial crisis on the cost of capital in 18 developed countries classified into three groups according to the level of investor protection. their findings reported that the cost of equity correlated negatively with the companies audited by the big four auditors across all clusters, regardless of investor protection level. houqe et al. (2017) further confirmed that hiring higher-quality auditors could reduce the cost of equity capital in the chinese and indian markets. the audit committee's involvement as a moderating variable made the present investigation different from the previous studies. it was employed because the effectiveness of its supervisory function could significantly affect the audit quality. appuhami (2018) discovered that audit committee characteristics such as size, frequency of meetings, and independence correlated significantly and negatively with the cost of equity capital. in addition, this research was conducted in indonesia, a country with a lower legal environment and investor protection than the countries where the previous studies were conducted. persakis & iatridis (2015) corroborated that higher audit quality implied a higher earnings rate in countries with high investor protection. this analysis focused on audit quality, engaging the proxies consisting of audit firm size and industry specialization. literature review agency theory recognizes auditing as one of the vital monitoring mechanisms for resolving conflicts of interest and reducing costs. thus, agency problems must involve audit quality. vargas-hernández et al. (2018) consider that agency theory emerges when the owner (principal) begins to delegate managerial functions or decision-making to other individuals (agents). agency problems can increase the risk when shareholders cannot properly monitor managers due to information asymmetry. tran (2014) also emphasized that the corporate how does audit committee moderate the relationship between audit firm size, industry specialization, and the cost of equity capital? … by emayanti christina hutabarat, taufiq arifin, afsheen abrar 100 governance mechanisms applied by german companies allowed them to reduce agency costs. based on the nature of risk aversion, rational investors would demand a risk premium to bear agency risks that would likely increase the cost of equity. in this case, a high-quality audit was required through a more significant role of the audit committee to reduce the cost. setiawan & daljono (2014) examined the impact of audit quality on the cost of equity capital in manufacturing companies listed on the indonesia stock exchange. the findings revealed that audited companies that engaged audit firms affiliated with the big four had a lower cost of equity capital. this result was supported by ningsih & ariani (2016), who discovered that audit quality harmed the cost of equity capital. anchored in the description above, there was a correlation between the quality of the company's audit and the cost of equity capital. coffie et al. (2018) investigated the impact of audit quality on the cost of capital supported by the lending credibility theory to determine the extent to which audit quality reduced the cost of improving business finances in ghana, involving a total sample of 40 companies in the 2008-2013 period. data analysis employed panel regression, which was then measured using three equation models: cost of debt, cost of equity, and cost of capital (wacc). the results confirmed that audit quality had a negative coefficient with all three variables of the cost of capital, indicating that the high-quality audit provided more credible and reliable information and increased the company's reported earnings, ultimately reducing the cost of capital. cost of equity capital the cost of equity capital is the rate of return that investors demand from the company. they certainly expect the company to provide factual information regarding the existing conditions. otherwise, there will be risks for which management is responsible for offering them returns. brigham & daves (2018) state that the cost of capital is what a company must incur to obtain funds from debt, preferred stock, common stock, or retained earnings to fund an investment or company's operations. the cost of equity capital can be affected by several factors, including earnings quality and information asymmetry. the present study measured the cost of equity capital by employing two models: the ohlson and the capital asset pricing model (capm). the ohlson portrays a residual income model used to estimate the cost of equity capital proposed by edward bell ohlson. it involves a discount rate that investors use to assess future cash flows. it also uses estimated earnings per share. meanwhile, the capital asset pricing model (capm) is a model describing the jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 97-117 http://dx.doi.org/10.31106/jema.v19i1.17985, issn (online) 2597-4017 101 correlation between market risk and the demanded rate of return (brigham & daves., 2018). capm determines the price of risky securities and the expected return on those assets. the risk premium can be calculated based on the value of the market's expected return (rm) minus the risk-free rate (rf). this model incorporates a market beta so that returns can be maximized at a certain level of risk. inconsistencies in previous research findings made this topic still relevant to be studied. hajiha & sobhani (2012) discovered that audit quality could reduce the cost of equity capital. however, those results were in contrast to suparno & kiswara (2013), who found that auditor industry specialization had a positive impact on the cost of equity capital. on the other hand, susanto & siregar (2012) concluded that auditor tenure positively affected the cost of equity capital. therefore, it could be interpreted that several previous studies had administered various procedures to measure audit quality. in addition, the present research was also distinct in the form of the discussion regarding the impact of audit quality on the cost of equity capital using two measurement models, namely the ohlson model (1995) and the capital asset pricing model (capm) according to brigham & daves (2018). to the best of the researcher's knowledge, no study engaged two models to measure the cost of equity capital. audit firm size and cost of equity capital companies that conduct audits are undoubtedly concerned about the audit firm size. management and investors expect the best audit quality to make economic decisions. in this context, audit firm size is a corporate governance mechanism to protect investors' rights and detect fraud committed by company management (gaaya et al., 2017). investors are more confident in the quality of information on companies audited by the big four audit firms, so the demanded risk premium can be low and eventually reduce the cost of equity capital (alzoubi, 2018). in indonesia, audit firms affiliated with the big four are considered large companies and can provide good audit quality. the audit firm size plays a role in determining the quality of a company's financial statements. large audit firms are reliable for making accurate and reliable audits to maintain client trust (panjaitan & chariri, 2014). besides, they can provide higher-quality audit services than smaller ones (rezaei & shabani, 2014). cano rodríguez & sánchez alegría (2012) concluded that private companies being audited by the big four auditors managed to achieve lower costs of debt, implying that the shift from non-big four to the big four auditors led to fewer earnings management. iatridis (2012) further revealed that companies audited by high-quality auditors with institutional how does audit committee moderate the relationship between audit firm size, industry specialization, and the cost of equity capital? … by emayanti christina hutabarat, taufiq arifin, afsheen abrar 102 differences significantly affected the costs of agency and company equity. it was reinforced by the findings of mali & lim (2021), in which companies audited by the big four auditors gained a lower risk perception from investors, making them require a lower cost of capital. thus, the first hypothesis of this study was as follows: h1: the size of the audit firm within the big four companies had an impact on the cost of equity capital for both the ohlson model and the capital asset pricing model. industry specialization and cost of equity capital minutti (2013) concluded that industry specialization could improve audit quality. sun dan liu (2013) also stated that auditor industry specialization positively affected the quality of a company's accounting. this notion was reinforced by bills et al. (2014), who examined and assessed the impact of auditor specialization in industry, independence, and methods used to detect fraud in 50 companies registered in indonesia. the findings indicated that the auditor industry specialization and its independence had a significant impact on the application of audit methods in detecting fraud and improving audit quality. jayaraman et al. (2014) revealed that audit specialists could provide a higher-quality audit. they were proven to have a more comprehensive knowledge of the audited company with a particular type of business. if investors perceived a higher audit quality by employing industry-specialist auditors, lower information risk was associated with higher accrual-based earnings and lower cost of equity capital. previous research findings have also corroborated that industry specialist auditors could lower the cost of equity capital. gaver & utke (2019) proved that auditors who had just obtained a specialist designation demonstrated a level of audit quality similar to nonspecialist auditors and generally lower than experienced specialists. in this regard, a decrease in risk could reduce a company's cost of equity capital. in other words, auditors with the same industry specialization increased their knowledge and expertise in auditing clients, subsequently improving their quality. auditor industry specialization refers to an auditor's industry-specific knowledge and expertise from extensive audits in any industry (krishnan et al., 2013). improving audit quality through industry specialization could reduce the cost of equity capital. krishnan et al. (2013) disclosed a significant negative correlation between auditor industry specialization and the firm's cost of capital. the more specialized the auditor in a particular industry, the lower the cost of capital demanded by financiers and lenders. based on these arguments, the second hypothesis of the present research was as follows: jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 97-117 http://dx.doi.org/10.31106/jema.v19i1.17985, issn (online) 2597-4017 103 h2: industry specialization had an impact on the cost of equity capital for both the ohlson model and the capital asset pricing model. audit firm size, audit committee, and cost of equity capital inconsistent findings made this issue undoubtedly worthy of research. hence, researchers must employ the audit committee as a moderating variable, referring to research by ulhaq et al. (2021) on the audit committee's role in the correlation between audit quality and the cost of equity. therefore, it plays a critical role in improving the audit quality of a company. the audit committee consists of financial and accounting experts and members with executive backgrounds and industry expertise (choi et al., 2020). pham et al. (2012) discovered that companies with better board and audit committee independence incurred lower costs of equity in australia. in addition, dao et al. (2013) found that the cost of equity capital was lower in enterprises employing more experienced audit committee members in the united states, thereby reducing the cost of equity capital. the audit committee is responsible for governance oversight of the financial reporting process and the authority to recruit, compensate, and remove independent auditors. an audit committee that implements a good supervisory function will reduce agency costs. reduction of agency costs indicates that the information asymmetry contained becomes smaller as a result of reducing the cost of equity capital. therefore, the researcher examines the role of the audit committee in moderating the correlation between audit firm size and the cost of equity capital. therefore, researchers examined the audit committee's role in moderating the correlation between audit firm size and the cost of equity capital. based on the explanations above, the third hypothesis of this research was as follows: h3: audit committee moderated the relationship between audit firm size and the cost of equity capital for both the ohlson model and capital asset pricing model. industry specialization, audit committee, and cost of equity capital in this investigation, researchers examined the audit committee that moderated the impact of industry specialization on the cost of equity capital. appuhami (2018) found that a sufficiently equipped audit committee signified the credibility of an effective monitoring process, thereby reducing the cost of equity capital in australia. according to li et al. (2012), the audit firm size represents the resources and powers to effectively carry out monitoring and reporting responsibilities. furthermore, khemakhem & naciri (2015) revealed that companies with independent boards and audit committees required lower costs of equity in how does audit committee moderate the relationship between audit firm size, industry specialization, and the cost of equity capital? … by emayanti christina hutabarat, taufiq arifin, afsheen abrar 104 european countries. therefore, researchers considered incorporating the audit committee as a moderating variable in the present research. moreover, basiruddin et al. (2014) claimed that industry specialization harmed the ex-ante cost of equity. h4: audit committee moderated the relationship between industry specialization and the cost of equity capital for both the ohlson model and the capital asset pricing model. methods the study population comprises all companies listed on the indonesia stock exchange (idx) for the financial years 2016 to 2020, with a total of 769 firms. after eliminating nonmanufacture firms and selecting only manufacturing firms that have audited financial statements and annual reports publicly available, a total of 168 firms remained. we then delete manufacturing firm observations that do not disclose information regarding their share prices, debt, assets, and equity properly. a total sample of 123 manufacturing firm-year left for the final sample. table 1 describes the sample selection procedure of the study. for the comparative measurement of the cost of equity capital model which is the ohlson and capital asset pricing model, we are using two linear regression models. the first model that is used to investigate the association between audit firm size, industry specialization, the moderation role of the audit committee, and cost of equity capital using the ohlson model can be described as in equation 1. thus, the second model in the study that is used to explain the relationship between audit firm size, industry specialization, the moderation role of the audit committee, and cost of equity capital using the capital asset pricing model can be seen in equation 2. table 1. selection procedure for the final sample selection procedure amount companies listed on the idx (indonesia stock exchange) during the 20162020 periods. 769 manufacturing companies listed on the idx (indonesia stock exchange) during the 2016-2020 periods. 171 companies that have not issued financial statements on december 31. (3) companies that have not disclosed information regarding debts, assets, etc. (15) companies that have not disclosed information of complete share price data. (30) number of sample(s) 123 jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 97-117 http://dx.doi.org/10.31106/jema.v19i1.17985, issn (online) 2597-4017 105 table 2. variable measurement variable measurement audit firm size (afz) denoted 1 if the firm is audited by a big four auditor, 0 otherwise industry specialization (ais) (no. audit firm clients / no. issuers) x100% audit committee (acm) (no. audit committee / no. board of commissioners) x 100% firm size (fsz) ln (total assets) leverage (lev) total debt / total assets cost of equity capital ohlson (coec_ohl) r = (bt + xt+1 – pt) / pt where: r = cost of equity capital bt = book value per share period t pt = share price period t xt+1 = earnings per share period t+1 cost of equity capital capm (coec_capm) r = rrf + b (rpm) where: r = cost of equity capital rrf = risk-free rate of return rpm = market risk premium b = beta coefficient of stock coec_capm = α + β1afz + β2ais + β3acm + β4afz*acm + β5ais*acm + β6fsz + β7lev + e (1) coec_capm = α + β1afz + β2ais + β3acm + β4afz*acm + β5ais*acm + β6fsz + β7lev + ei (2) where: α = constant coec_ohl = cost of equity capital of ohlson β1,2,3,4,5,6,7 = coefficient coec_capm = cost of equity capital of capm afz = audit firm size ais = industry specialization acm = audit committee fsz = firm size lev = leverage ei = standard error how does audit committee moderate the relationship between audit firm size, industry specialization, and the cost of equity capital? … by emayanti christina hutabarat, taufiq arifin, afsheen abrar 106 we follow prior literature and use two models to capture the cost of equity capital which is the ohlson model (1995) and the capital asset pricing model (capm) by brigham & daves (2018). the ohlson model depicts firm value as a linear function of the book value of equity and the present value of future expected abnormal earnings. although the model allows for imperfect product markets for a limited period, it assumes perfect capital markets. firm value can be re-expressed as a linear function of equity book value, net income, dividends, and other information under additional assumptions of linear information dynamics. ohlson (1995) explains that the two extreme scenarios emerging from constraining assumptions regarding the durability of abnormal earnings are balance sheet-based and earnings-based valuation models. wonglimpiyarat (2018) and vendrame et al. (2018) added that capm is an intriguing financial model for estimating the return on investments. the model is frequently applied to determining what the fair price of stocks should be, with the required rate of return depending on factors including market risk premium, stock volatility (beta), and compensation for the time value of money. the required rate of return would be lower for companies that invest in low-risk assets since shareholders would expect it. however, while investing in riskier assets, the shareholders would demand a greater needed rate of return. in addition, while an audit firm’s industry specialization is measured based on the percentage of audit firm clients in an industry to the total number of companies in that industry, audit committee and firm size is determined by the percentage of an audit committee member to the number of board of commissioners (al-janadi et al., 2016; aljaaidi, 2013) and coded 1 if the firm is audited by a big four auditor, 0 otherwise (shan & troshani, 2019; sawan & alsaqqa, 2013). the bigger audit committee and audit firm size are expected to lead to better monitoring practices and higher earning quality since the committee will have much more expertise and greater ability to detect and monitor the financial reporting process, which leads to less earning management practice and higher earning quality. further, this study employs the natural logarithm of total assets and the ratio of long-term debt to total assets to examine firm size and leverage (shan & troshani, 2019; dong et al., 2016). the bigger firm size will result to poor earning quality due to the business and operation complexity (razani & xia, 2017). table 2 shows the measurement of each variable. table 3 displays the descriptive statistics of the processed data. it shows that the dependent variable, coec_ohl, had a mean score of -0.677 with a standard deviation of 6.420. the maximum value of coec_ohl was 18.260, and the minimum was -57.020. on jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 97-117 http://dx.doi.org/10.31106/jema.v19i1.17985, issn (online) 2597-4017 107 the other hand, another dependent variable, coec_capm, obtained a mean score of 0.034 with a standard deviation of 0.069. the maximum value of coec_capm was 0.160, while the minimum was -0.950. the moderating variable, afz*acm, had a mean score of 0.292 with a standard deviation of 0.421. the maximum value of afz*acm was 2, and the minimum was 0. meanwhile, the moderating variable of ais*acm had a mean score of 0.493 with a standard deviation of 0.486. the maximum value of ais*acm was 2, and the minimum was 0. the control variable of lev had a mean score of 0.560 with a standard deviation of 0.578. the maximum value of lev was 5.170, and the minimum was 0. meanwhile, the following control variable, fsz, had a mean score of 12.066 with a standard deviation of 0.766. the maximum value of fsz was 14.230, and the minimum was 9.030. in addition, researchers conducted an additional test to determine the impact of the year 2020 on this study but found no significant differences in the results of descriptive statistics. result and discussion this study conducted a classical assumption test consisting of the tests of normality, heteroskedasticity, autocorrelation, and multicollinearity. based on the results, having met the criteria for each test, it could be interpreted that all classical assumption tests had been carried out well to continue this research. researchers also completed three types of hypothesis testing, namely simultaneous testing (f-test), partial testing (t-test), and coefficient of determination (r2) testing. table 4 presents the f-test results of the dependent variables of coec_ohl and coec_capm. the industry specialization variable measured using the dummy variable was referred to as spec. the results of the f-test on the dependent variable of coec_ohl showed a significance value of 0.000 < 0.05, indicating that the independent, control and moderating variables had a simultaneous impact on the dependent variable. furthermore, the results of the f-test on the dependent variable of coec_capm also obtained a significance value of 0.020 < 0.05, suggesting that the independent, control and moderating variables also had an impact on the dependent variable simultaneously. therefore, researchers concluded that the f-test had been well performed for the regression model. based on table 4, the r2 testing carried out involving the dependent variable of coec_ohl obtained an r2 value of 0.712, by which the independent variables consisting of audit firm size and industry specialization could explain 71.2% of the dependent variable, namely the cost of equity capital, while other variables explained the rest. furthermore, on the dependent variable of coec_capm, the value of r2 was 0.045, implying that the how does audit committee moderate the relationship between audit firm size, industry specialization, and the cost of equity capital? … by emayanti christina hutabarat, taufiq arifin, afsheen abrar 108 independent variables consisting of audit firm size and industry specialization could only explain 4.5% of the dependent variable in the form of the cost of equity capital, while other variables explained the rest. table 3. descriptive statistics variable n mean std. dev. minimum maximum afz 615 0.395 0.490 0 1 ais 615 0.607 0.489 0 1 acm 615 0.827 0.363 0 2 coec_ohl 615 -0.677 6.420 -57.020 18.260 coec_capm 615 0.034 0.069 -0.950 0.160 fsz 615 12.066 0.766 9.030 14.230 lev 615 0.560 0.578 0 5.170 afz*acm 615 0.292 0.421 0 2 ais*acm 615 0.493 0.486 0 2 table 4. hypothesis testing variables coec_ohl decision coec_capm decision coefficient sig. coefficient sig. afz -2.513 0.002 h1 accepted 0.034 0.034 h1 accepted ais -9.464 0.003 h2 accepted 0.010 0.871 h2 rejected afz*acm 1.273 0.156 h3 rejected -0.051 0.004 h3 accepted ais*acm 12.709 0.000 h4 accepted 0.023 0.716 h4 rejected acm -3.843 0.000 -9.003 0.850 fsz 1.244 0.000 -0.003 0.425 lev -9.756 0.000 0.000 0.980 f (anova) 0.000 0.020 adj. r2 0.712 0.045 the results of the t-test on the dependent variable of coec_ohl showed that the afz variable obtained a t-score significance value of 0.002 < 0.05, indicating that h1 was accepted. thus, it could be concluded that the audit firm size affiliated with the big four had a negative impact on the cost of equity capital. it was because the auditors involved in carrying out procedures were more competent and credible, so the information obtained was jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 97-117 http://dx.doi.org/10.31106/jema.v19i1.17985, issn (online) 2597-4017 109 reliable and able to improve audit quality. therefore, investors could estimate the information risk on the company, leading to a decrease in the cost of equity capital. meanwhile, the ais variable obtained a t-score value of 0.003 < 0.05, suggesting that h2 was accepted. with a significance value of 0.15, the moderating variable of acm weakened the correlation between afz and coec_ohl. therefore, h3 was rejected because the obtained value was 0.156 > 0.05. it confirmed that the emergence of the audit committee on the audit firm size further weakened the correlation between audit firm size and the coec_ohl. afterward, the t-test results showed that the moderating variable of the audit committee strengthened the correlation between ais and coec_ohl with a significance value of 0.000 < 0.05, indicating that h4 was accepted. according to the explanations above, researchers interpreted that the audit committee could not moderate the negative correlation between audit firm size and the cost of equity capital. besides, the audit committee also moderated the negative correlation between industry specialization and the cost of equity capital when the ohlson model was applied. furthermore, the t-test on the dependent variable of coec_capm demonstrated that the afz variable obtained a t-score of 0.034 < 0.05, indicating that h1 was accepted. thus, it could be concluded that the audit firm size affiliated with the big four harmed the cost of equity capital. meanwhile, the ais variable obtained a t-score of 0.871 > 0.05, suggesting that h2 was rejected. it also implied that industry specialization did not hurt the cost of equity capital. subsequently, the moderating variable of the audit committee strengthened the correlation between afz and coec_capm because the significance value of 0.004 < 0.05 indicated that h3 was accepted. furthermore, the results of the t-test on the dependent variable of coec_capm confirmed that the moderating variable of the audit committee strengthened the correlation between ais and coec_capm, but h4 was rejected due to the significant value of 0.716 > 0.05. based on the tests being carried out, the regression analysis results corroborated that the audit firm size had a negative impact on the cost of equity capital using the ohlson and capm models. it was consistent with an investigation by vincent & borja (2015), which proved that large audit firms offered a lower cost of equity. however, industry specialization only hurt the cost of equity capital under the ohlson model and had no impact on the capm. therefore, researchers concluded that industry specialization was very sensitive to the cost of equity capital. in some conditions, it could not describe the measure of audit quality and ultimately affected the study results. these findings were in line with previous research by krishnan et al. (2013), in which they found a significant negative correlation between auditor how does audit committee moderate the relationship between audit firm size, industry specialization, and the cost of equity capital? … by emayanti christina hutabarat, taufiq arifin, afsheen abrar 110 industry specialization and the firm's cost of capital. in addition, researchers interpreted the approach and characteristics used for the ohlson model and the capital asset pricing model (capm) in measuring the cost of equity capital. in the context of this study, the findings were affected by the ohlson model in measuring the cost of equity capital using the perspective of the share price and earnings per share as an indicator, resulting in a more real rate of return. meanwhile, the capm model assessed the cost of equity capital using stock beta with the perspective of market sensitivity. stock beta is an unstable measure, making it unable to reflect the volatility of the firm's real rate of return, in line with research by fama et al. (1992). this is reinforced by research kumar & kumar (2012) that stated ohlson model has greater predictive power and higher accuracy (neophytou et al., 2004). furthermore, elton (1999) emphasized that the market beta alone was insufficient to explain the expected returns. rossi (2016) expressed the opinion of academics that the capm is inadequate to use due to its inability to explain the risk-return trade-off. then reinforced by fernandez (2015) considers the assumptions and conclusions of the capm unrealistic. therefore, the capm model is unreliable and is aligned with the result of the study. then mcnulty et al. (2002) find three central shortcomings of capm, namely, the validity of beta, the reliance on historical data, and the indifference of the holding period. although this study showed better results when using the ohlson model than the capm. however, this study can only explain the results and characteristics of each model, so it cannot be concluded that one model is superior to the other. then, the cost of equity capital as measured by any model has the nature of estimation or approximation. botosan and plumlee (2002) stated forecasts to calculate the expected cost of equity capital. therefore, researchers cannot accurately determine the value of the cost of equity capital. conclusion and suggestion the conclusion that could be drawn from this study was that the audit firm size harmed the cost of equity capital in the ohlson and capm models. meanwhile, industry specialization harmed the cost of equity capital in the ohlson model but not in the capm model. afterward, the audit committee did not moderate the negative correlation between audit firm size and the cost of equity capital in the ohlson model but moderated it in the capm model. furthermore, the audit committee moderated the negative correlation between audit firm size and the cost of equity capital in the capm model. however, it did not moderate the negative correlation between industry specialization and the cost of equity capital. anchored on the present research findings, researchers argued that a more significant jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 97-117 http://dx.doi.org/10.31106/jema.v19i1.17985, issn (online) 2597-4017 111 number of audit committees was expected to promote a better supervisory function yet did not lead to a lower cost of equity capital. based on the description above, it could be interpreted that the attributes being engaged to measure the audit quality were very sensitive to the results obtained, which could affect the cost of equity capital. likewise, each independent variable moderated by the audit committee had weaknesses. this research had several limitations, making its findings unable to be generalized to all companies, including the study only employed manufacturing companies as research samples, they had different characteristics that could affect research results, and only considered the information contained in financial statements and annual reports. in addition, the study only engaged two proxies to measure audit quality, so future studies were expected to consider other relevant proxies. lastly, the study only involved the audit committee as a moderating variable, which undoubtedly had limitations on the significance of its correlation with independent and dependent variables. in subsequent investigations, other moderating variables were expected to be incorporated in determining the correlation between variables. references ahmad, k. p., allah, h. z. r., vahid, m., & saeede, b. 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(2018). challenges and dynamics of fintech crowd funding: an innovation system approach. journal of high technology management research, 29(1), 98–108. https://doi.org/10.1016/j.hitech.2018.04.009 hajiha, z., & sobhani, n. (2012). the investigation of effect of industry specialist auditor on cost of equity capital and interest rate on debt capital in firms listed in tehran stock exchange. journal of management accounting and auditing knowledge, 1(1391), 3546. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 61-79 http://dx.doi.org/10.31106/jema.v18i1.10356, issn (online) 2597-4017 61 the mediation role of financial literation in ensuring msmes sustainability: an organizational characteristics perspective arik prasetya 1 , kusdi rahardjo 2 , mukhammad kholid mawardi 3 , raden rustam hidayat 4 , yudha prakasa 5* 1 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia 2 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia 3 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia 4 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia 5 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia *corresponding author(s) email: y.prakasa87@ub.ac.id abstract the micro, small, and medium enterprise (msmes) sector has been recognized as an essential contributor to the economic development of indonesia. however, the sustainability of msmes in indonesia is still relatively low compared to the rest of asean countries with similar levels of economic growth. this study aims to extend previous studies on the relationship between msmes characteristics and their sustainability by specifically including financial literation as a mediation role. this study used proportional random sampling as a sampling technique. a total of 191 msmes ownermanagers questionnaire data were processed by using partial least square analysis. this study confirmed the positive influence of msmes characteristics on financial literacy and financial literacy on the sustainability of msmes. moreover, financial literation proves to be a significant mediator of msmes sustainability. this study suggests that msmes owner-managers need to be financially literate as it can enable them to make a good financial decision that can ensure their business sustainability. keywords: msme; sustainability; financial literacy; organization characteristics; entrepreneurs jel code: d23, g53, l26, m14 doi: 10.31106/jema.v18i1.10356 article history: received 2021-02-07 reviewed 2021-02-25 revised 2021-03-14 accepted 2021-03-29 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ the mediation role of financial literation in ensuring msmes sustainability: an organizational characteristics perspective by arik prasetya, kusdi rahardjo, mukhammad kholid mawardi, raden rustam hidayat, yudha prakasa 62 introduction the role of msmes in the economic growth of a country is widely known and utilized to improve the national economy in many countries including indonesia. currently, the data shows that smes in indonesia grows significantly up to 97.2% and contribute to gdp for 57.8% (wignaraja, 2015), while small business contributes up to 45% of total employment and 33% of national income in developing countries (kumar, 2017). the contribution of smes is also supported by the growth of production in small and micro industries from 2017 to 2019 with an annual percentage of 4.74%, 5.66%, and 5.80% (kumar, 2017). however, the competitiveness of smes in indonesia is relatively low compared to other asean countries such as singapore, malaysia, and thailand. bongomin et al. (2017) added that the lack of access to formal and non-formal financial services is one of the biggest obstacles for smes to be competitive and grow. along with that, other issues such as human resource capacity and capability, ownership, marketing, technology adoption, and other problems related to business management also become the reason why indonesia’s smes are difficult to compete (abor & quartey, 2010) and maintain their business sustainability in the future. as many msmes are a force to reconfigure their business process to remain to sustain in a complex and competitive world, the terms of sustainability have become a common topic to discuss in measuring business performances. although, it has been a controversial topic since it has multiple interpretations, salimath & jones (2011) generalized the measurement and interpretation of this concept that is dependent on the aims and interests of the researchers. yusoff et al. (2019) argued that the sustainability of the business is accomplished when an organization can enable the balance of economic and social aspects while keeping environmental sustainability. fitria & rahman (2018) added that “the sustainability of msmes is also seen by the ability of its return on investment, complaints from consumers, income sustainability and the increasing number of customers. it shows how a business can survive and continue to develop during the ongoing business competition.” therefore, the ability to manage finances and expand financial access is highly demanded to achieve the desired goal of msmes sustainability. financial literacy has been identified as an important source of knowledge for financial decision making (ye & kulathunga, 2019) which can guide business stakeholders to make financial decisions and use financial product options (bongomin et al., 2017). financial literacy can also ensure the financial sustainability of individuals, families, companies, and jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 61-79 http://dx.doi.org/10.31106/jema.v18i1.10356, issn (online) 2597-4017 63 the national economy (swiecka et al., 2020). meanwhile, lusardi & tufano (2015) stated that financial literacy helps business stakeholders gain adequate financial knowledge, skills, and capabilities in preparing a business financial strategy. as a consequence, business stakeholders should be more effective and efficient in planning, implementing, and supervising the implementation of their business finances. several previous studies by widayanti et al. (2017), hapsoro & iswara (2019), ye & kulathunga (2019) shows that the role of financial literacy also influences business sustainability. furthermore, the crucial role of the organization as a business driver should also be considered especially in terms of its capability to manage the business and implement its knowledge and skills properly. successful organizations realize that their attention must be directed to the knowledge management process in which consists of the creation, conversion, dissemination, and contribution of knowledge, as well as the methods of storing, selecting, processing, using, and assessing knowledge to excel their performance (abualoush et al., 2018). concerning originality, this study is immensely scattered compared to other studies because it examines the indirect relationship of organizational characteristics to msmes sustainability where financial literacy is used as a mediating variable. furthermore, it uses the object of the leading msmes sector which consists of 5 types of business sectors. it also uses objects across the msme sector so that this study expands the generalization of the previous study's findings. literature review sustainability in the msmes sector sustainability is a controversial issue because it means different things to a different study. there is no standard definition of sustainability, especially in the corporate context. therefore, the measurement and interpretation of these constructs depend on the aims and interests of the researchers. salimath & jones (2011) said that "there is no consensus on a unified definition of sustainability. furthermore, the measurement and interpretation of this construct appear to be idiosyncratic to specific aims or research interest." in a simple word, sustainability is no more than a static word, the ability to continue unchanged. the concept of sustainability is also often linked with the sustainable development framework. aras & crowther (2008) stated that the terms of sustainability and sustainable development in various points of view are synonymous. dejoy et al. (2010) added that "[...] while corporate sustainability recognizes that company growth and profitability is important, it also requires companies to pursue community goals, particularly those the mediation role of financial literation in ensuring msmes sustainability: an organizational characteristics perspective by arik prasetya, kusdi rahardjo, mukhammad kholid mawardi, raden rustam hidayat, yudha prakasa 64 related to sustainable development environmental protection, economic development, social justice, and equality." the literature on sustainability emphasizes the need for systematic thinking to conserve natural resources, eliminate poverty, promote equality, reduce population growth and improve quality of life (velazquez et al., 2011). aras & crowther (2008) categorized four dimensions of sustainability that are needed to be recognized and analyzed, namely social influence (which is defined as a measure of the impact of the community on the company in terms of social contracts and stakeholder influence), environmental impact (which is defined as a measure of the impact of company actions on the geophysical environment), organizational culture (the interaction and relationship between the company and its internal stakeholders), and financial (which is measures an adequate return on the level of risk taken). on the other hand, yusoff et al. (2019) and asif et al. (2011) stated that sustainability also can be interpreted as adopting a business strategy and activities that meet the needs of the company and stakeholders while protecting, maintaining, and enhancing human and natural resources needed in the future. however, the quantitative measurement of corporate sustainability remains debatable. the objectives of measuring sustainability also vary depending on researchers' interests. one of the most frequently used approaches in measuring corporate sustainability is the triple bottom line approach. faupel & schwach (2011) stated that "the objective of a sustainability measurement is assessing the contribution of an entity (eg, company) to sustainability comprising all three dimensions: environmental, social, and economic." while environment sustainability measurement focus in measures the impact of business process on natural resources (such as air, water, and waste emissions), social and economic sustainability measurement focus in measures the implementation of corporate governance, motivation, incentives, safety, health, human resource development, human rights, ethical behavior, and the maintenance or improvement of a company's success such as technology, innovation, knowledge management, purchasing, and sustainability. several previous studies from eniola & entebang (2017), klewitz (2017), ye & kulathunga (2019) indicate that the term of firm sustainability has a similar meaning with smes sustainability in general. ye & kulathunga (2019) explained the eight metrics of smes sustainability that consist of a reduction in operating costs, an increase in the rate of profit growth and market share, customer satisfaction, speed of customer order confirmation, speed of response to market demand, reduction of product or service delivery cycle times, profit as a percentage of sales and returns on investment (roi). in addition, schwab et al. (2019), jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 61-79 http://dx.doi.org/10.31106/jema.v18i1.10356, issn (online) 2597-4017 65 amusawi et al. (2019) evaluate business sustainability by using a financial approach such as the comparison between income earned and operating expense, credit limit level, and the liquidity level of the company. the financial attitude and behavior of msmes ownermanager play a critical role to ensure their business sustainability. rai et al. (2019) strengthened that financial attitude and behavior have a strong association with financial literacy, especially in working women. unfortunately, studies from dai et al. (2021) and kostini & raharja (2020) related to this topic find the opposites. many of indonesia's msmes owner-manager has not proper financial planning for the future due to their lack of financial literacy. many of them do not have a standardized financial statement and prefer to use individual funding as their main business capital. organizational characteristics organizational characteristics are characteristics of the management model adopted by the organization through its structure or strategy (magnier‐watanabe & senoo, 2008). gold et al. (2001) stated that there are three main infrastructures capabilities in the organization that can maximize their social impact which consists of technology, structural, and cultural. while technology infrastructure capabilities represent the technology-related sources that can enhance the organization's operational capability and strength the level of competitiveness of the organization (liu et al., 2016; irfan et al., 2019), structural and cultural infrastructure capabilities are defined by gold et al. (2001), adobor et al. (2019), mesfin et al. (2020), and baskaran (2018) as an organizational hierarchy that used as the formal allocation of activities and resources among people” and a set of values, belief, norms and trust mechanism that distinguishes one organization from another. structural and cultural infrastructures are identified as important elements in determining successful knowledge management initiatives (urinov, 2020; santoro & gopalakrishnan, 2000; intezari et al., 2017). moreover, allen et al. (2017) stated that culture, climate, leadership, power, participation, and communication are other characteristics that can differ in any type of organization. for example, most msmes have a flat hierarchy with centralized authority (which is the business owner who is also the manager), fast results-oriented, flexible, unified, and fluid culture due to their simple organizational structure (siegel et al., 2019). concerning organizational resources, the knowledge possessed by individuals who are part of the organization becoming crucial as it cannot be shared efficiently without having adequate competence, relevant to realizing the competencies needed to share knowledge (gaál et al., 2013). furthermore, adomako et al. (2016) classified "financial literacy as a part the mediation role of financial literation in ensuring msmes sustainability: an organizational characteristics perspective by arik prasetya, kusdi rahardjo, mukhammad kholid mawardi, raden rustam hidayat, yudha prakasa 66 of internal firm capability that can complement access to finance to achieve superior growth outcomes." organizations that are rapidly using new technologies to create collaborative work and knowledge-sharing culture can uplift their organizational performance in an efficient way (kulathunga et al., 2020). besides, brown et al. (2017) added that cultural differences prove to be significant financial literacy predictors between students with different languages and socio-economic backgrounds. therefore, the proposed hypotheses can be described as follows. h1: there is a positive relationship between msmes characteristics and financial literacy. financial literacy financial literacy has become a critical determinant in organizational decision-making and strategic objectives for long-term financial planning (allgood & walstad, 2013; lusardi & mitchell, 2014). financial literacy can be interpreted as the ability of an individual to maximize their potential knowledge and skills to make appropriate financial decisions. it includes the ability to discern financial choices (savings, investments, debt, insurance, asset accumulation, loans, and pension) and to use basic financial knowledge combining with comprehensive skill sets, communication, and networks to achieve desirable objectives (margaretha & pambudhi, 2015; lusardi & mitchell, 2014). stadler et al. (2013) found that financially literate managers could produce better financial strategic (investment) decisions and know how to respond to any dynamic case competently and rapidly. moreover, eniola & entebang (2017) added that there is a positive influence of msmes owner-manager financial knowledge, financial awareness, and financial attitudes in changing financial literacy on the improvement of company performance. several previous studies from ambarwati & zuraida (2020), ye & kulathunga (2019), hapsoro & iswara (2019) found that there were positive associations of financial literacy to msmes sustainability. the more financially literate msmes owners and managers, the higher the possibility of sustainability msmes will be. furthermore, a study from makhloufi et al. (2018) also found that to creating a knowledge-sharing culture, msmes sustainability can also be influenced by organizational characteristics. the implementation of a knowledgesharing culture will encourage companies to be more competitive and have good business continuity. besides, financial literacy is the perception of how to obtain financial knowledge and apply financial knowledge that is owned in running a business. companies acquire and apply knowledge influenced by the organizational structure that supports the search and jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 61-79 http://dx.doi.org/10.31106/jema.v18i1.10356, issn (online) 2597-4017 67 creation of knowledge (robbins, 2003). furthermore, organizational culture characteristics also play a role in creating a knowledge exchange climate (cameron et al., 2014). knowledge sharing culture will encourage companies to be competitive and have good business continuity. for smes, knowledge about financial literacy is proven to improve business sustainability (ye & kulathunga, 2019). while the antecedent factor of increasing organizational knowledge, including financial literacy, is the organizational characteristics of smes regarding structure, culture, and technology (robbins, 2003; cameron et al., 2014; hatch, 1993). the mediation role of financial literacy on the sustainability of msme businesses is proven to be influential as illustrated by the research of bongomin et al. (2017). although it does not explicitly describe business sustainability, it refers to business growth which is also a measure of the sustainability of msme businesses yanti et al. (2018). this is relevant to robbin's (2003) argument that stated organizational knowledge including financial literacy, can improve organizational performance and sustainability if it is strengthened by good organizational characteristics. h2: there is a positive relationship between financial literacy and msmes sustainability. h3: there is a positive relationship between msmes characteristics and msmes sustainability with financial literacy play a mediator role. methods this study can be classified as exploratory research with a quantitative approach. the data used is primary data which is collected directly through the distribution of a survey questionnaire with five-point of likert as a measurement scale. the questionnaire contains the perceptions of msmes owners-managers on organizational characteristics, financial literacy, and business sustainability. in this study, organizational characteristics measurements were adapted from that has robbins (2003) and cameron et al. (2014) indicators including technical, structural, and cultural assessment instruments. while financial literacy is measured by the scale developed by oseifuah et al. (2018) and hussain et al. (2018), msmes sustainability measurement was derived from bourlakis et al. (2014). figure 1. research framework h3 h1 h2 msmes sustainability (su) organizational characteristics (oc) financial literacy (fil) the mediation role of financial literation in ensuring msmes sustainability: an organizational characteristics perspective by arik prasetya, kusdi rahardjo, mukhammad kholid mawardi, raden rustam hidayat, yudha prakasa 68 table 1. research instruments variables code item organizational characteristics (oc) oc1 organizational structure can support knowledge creation. oc2 the organizational structure encourages employees to do knowledge sharing oc3 having preferences regarding knowledge to create competitiveness oc4 having preferences regarding value knowledge exchange within organizations oc5 having preferences regarding value knowledge exchange between organizations oc6 having preferences in providing knowledge-based solutions oc7 technology in organizations supports interactions between members oc8 technology in the organization supports the creation of new knowledge oc9 technology in organizations supports collaboration/cooperation in running a business financial literacy (fil) fil1 having financial knowledge from government agencies training fil2 having financial knowledge from private agencies training fil3 participate in financial management training organized by government agencies fil4 participate in financial management training organized by other than government agencies fil5 there is a separation of business finance and personal finance fil6 there is a separation of duties between the financial registrar and the business finance holder fil7 there is a record of cash receipts and cash disbursements fil8 there are financial reports of my business msmes sustainability (su) su1 i’m able to manage finances appropriately and adequately su2 i’m able to divide and use finances under the budget item su3 i’m able to receive orders from consumers in large quantities su4 i’m able to receive customized/specialized orders su5 i’m able to design and develop new products using the latest technology su6 i’m able to distribute products in fast time su7 i’m having the definitive program to improve employee competence su8 i’m having the definitive policies in maintaining and improving the quality of products/services su9 i’m having good relationships with suppliers and consumers su10 i always pay attention to employee welfare su11 i always comply with applicable government regulations jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 61-79 http://dx.doi.org/10.31106/jema.v18i1.10356, issn (online) 2597-4017 69 table 2. reliability, convergent validity, and average variance extracted (ave) construct/ items cronbach’s alpha ave composite reliability loading factor oc 0.891 0.535 0.912 oc1 0.955 oc2 0.955 oc3 0.845 oc4 0.871 oc5 0.872 oc6 0.834 oc7 0.942 oc8 0.917 oc9 0.935 fil 0.873 0.532 0.900 fil1 0.769 fil2 0.779 fil3 0.862 fil4 0.872 fil5 0.899 fil6 0.843 fil7 0.920 fil8 0.922 su 0.857 0.520 0.886 su1 0.939 su2 0.927 su3 0.701 su4 0.871 su5 0.830 su6 0.810 su7 0.668 su8 0.871 su9 0.872 su10 0.819 su11 0.748 the mediation role of financial literation in ensuring msmes sustainability: an organizational characteristics perspective by arik prasetya, kusdi rahardjo, mukhammad kholid mawardi, raden rustam hidayat, yudha prakasa 70 table 3. discriminant validity constructs oc fil su organizational characteristics (oc) 0.732 financial literacy (fil) 0.261 0.730 msmes sustainability (su) 0.486 0.547 0.648 the sampling method applied in this study is the sector-based proportional random sampling technique. proportional random sampling is one of the sampling technique that used "when members or elements that are not homogeneous and stratified proportionately". the five leading sectors use in this study are food and beverage, fashion, application, animated design, and craft in malang, indonesia. malang was chosen as the object of study due to the reason that this city was established as one of the 10 creative cities in indonesia and the fact of huge economic contribution of msmes (khouroh et al., 2020). moreover, the criterion of msmes used as the initial selection of respondents is msmes that have employees of 99 with the maximum total asset of idr 10 billion. a total sample of 191 msmes ownersmanagers was obtained and used to examine the associations between organizational characteristics, financial literacy, and business sustainability by using partial least square (pls). pls is a variant based on structural equation analysis that can evaluate both measurement and structural models at the same time (mardijuwono & subianto, 2018). pls analysis has two main results which are the inner and outer model. while the inner model refers to the connection of the latent variables in a structural model or path matrix format ajibola et al. (2018), the outer model is represented by the value of construct validity and reliability. hair jr et al. (2016) added that models can be classified as valid and reliable when the value of an outer factor is 0.500, the value of composite reliability and ave value of each construct that is greater than 0.700 and 0.500, the result of cronbachs' alpha test that exceeds 0.700, and the result of discriminant validity of each construct that is greater than the correlation value of the construct with the other constructs within a model. the results of the validity and reliability testing can be seen in tables 2 and 3. result and discussion the description of the majority of respondents in table 4 shows that 61% of the respondents are male with junior high school backgrounds. above 50% of respondents in this study are classified as experienced businessmen/women with the majority of them choose jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 61-79 http://dx.doi.org/10.31106/jema.v18i1.10356, issn (online) 2597-4017 71 culinary as their business focus. unfortunately, there are 55% of respondents have not been registered and have not a legal entity. this nature of condition limited their access to government facilities related to increasing financial literacy and inclusion. table 5 shows that all the proposed hypotheses in this study are supported as the p-value of each proposed hypothesis was lower than 0.050 (0.000, 0.000, 0.001). this study confirmed the positive influence of msmes characteristics on financial literacy and financial literacy on the sustainability of msmes. it means that the bigger technology investment and the more flexible the structure of msmes in accommodating knowledge-sharing culture, the higher the financial literacy will be. this study supports the conclusion of previous studies by zaridis & mousiolis (2014) and eniola & entebang (2017). the result of this study also supports drexler et al. (2014), widayanti et al. (2017), and swiecka et al. (2020) conclusion that stated that the more financially literate of msmes owner-managers, the higher the probability of msmes to sustain. although it does not directly affect the sustainability of msme businesses, both financial literacy and the sustainability of smes are two things that need to go hand in hand to improve msmes' performance. table 4. demographic profile demographic profile percentage demographic profile percentage gender : duration of business : male 61% 1-7 7% female 39% 8-15 41% educational level : 16-23 31% elementary school 8% 24-31 13% junior high school 49% 32-39 3% senior high school 19% 40-47 2% diploma 5% 48-56 2% bachelor 18% >57 1% master 1% business status : business sector : non-registered 55% culinary 67% company registration certificate 10% craft 17% limited partnership 7% fashion 9% private company 27% technology 4% art – photography design 3% the mediation role of financial literation in ensuring msmes sustainability: an organizational characteristics perspective by arik prasetya, kusdi rahardjo, mukhammad kholid mawardi, raden rustam hidayat, yudha prakasa 72 table 5. hypotheses testing hypotheses estimates se t p decision h1 oc -> fil 0.261 0.065 4.010 0.000 supported h2 fil -> su 0.547 0.061 8.974 0.000 supported h3 oc -> fil -> su 0.143 0.041 3.263 0.001 supported margaretha & pambudhi (2015), lusardi & mitchell (2014), and stadler et al. (2013) added that financially literate managers could produce better financial strategic (investment) decision and know how to respond to any dynamic case competently and rapidly. moreover, eniola & entebang (2017) added that there is a positive influence of msmes owner-manager financial knowledge, financial awareness, and financial attitudes in changing financial literacy on the improvement of company performance and sustainability. moreover, the nature of the majority of respondents in this study that can be classified as millennials (y generation) indicates that they are adaptive, confident, high self-esteem, assertiveness, achievement-focused, and tech-savvy (miswanto et al., 2020) affects flexibility, fluidity, and efficiency of organizational characteristics. several cases were found by bhushan (2013) and krishna et al. (2010) related to the msmes owner-manager who are having lack basic financial knowledge, they will experience difficulties in financial management, use of credit, and financial plans so that it will affect their business continuity, financial consumption practices, and business flexibility. the leading sectors of msmes in malang, indonesia have realized that their financial knowledge has assisted them to implement financial management practices to maintain efficiency, help their business to be flexible in their production capacity. this action reflects that msmes owner-manager has sufficient financial literacy to access financial services to maintain the sustainability of their businesses. moreover, financial literation proves to be a significant mediator of msmes sustainability in this study. this result is supporting the study conducted by makhloufi et al. (2018) which states that the infrastructure owned by msmes to improve sustainability is reflected in the presence of supporting technology. the ownership of an adequate technology will benefit the organization in enhancing transaction speed, close communication, effective information, and ease of updating transactions and business re-engineering. the technological context in this study is one of the characteristics of the leading sector of msmes in malang in conducting production, marketing, and distribution activities. this study also strengthens jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 61-79 http://dx.doi.org/10.31106/jema.v18i1.10356, issn (online) 2597-4017 73 the suggestion that msmes owner-managers need to be financially literate as it can enable them to make good financial decisions and access external financial support that can ensure their business sustainability especially in light of the recent dynamic situations. conclusion and suggestion the result of this study reveals that there are positive associations of msmes characteristics on financial literacy and financial literacy on the sustainability of msmes. financial literation proves to be a significant mediator of msmes sustainability in this study. these results reflect that improving msmes sustainability and financial literacy requires sufficient organizational characteristics and infrastructure. once they get financially literate, it could enable them to produces better financial strategic (investment) decisions and know how to respond to any dynamic case in competent and rapid manner. thus, it will affect their business performances and sustainability. several limitations in this study are this study is a short-time explanatory study, therefore, the results of this study do not describe an object in the long term. future researchers should conduct in a longer period to deepen this study results. the object of this study that only focuses on msmes that are established in malang, indonesia is cannot be generalized to other cities in indonesia. future studies should choose a wider location to expand the generalization of the results. finally, the result of this study that proved the significant mediation role of financial literacy needed to expand into the various context of the study. references abor, j., & quartey, p. 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(2014). entrepreneurship and sme’s organizational structure. elements of a successful business. procedia-social and behavioral sciences, 148, 463–467. jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 60-76 http://dx.doi.org/10.31106/jema.v19i1.11116, issn (online) 2597-4017 60 dividend policy, ownership structure and corporate governance: an empirical analysis of indonesian firms ronny malavia mardani1* 1 department of management, faculty of economics and business, university of islam malang, indonesia *corresponding author(s) email: ronnymalavia_fe@unisma.ac.id abstract one of the essential aspects of corporate policy is the decision on dividend payments as this dividend policy affects the value of the company. this study aims to determine whether there is a possible association between dividend policy, ownership structure, and corporate governance of indonesian financial firms. this study offers empirical evidence on the relationship between variables in the context of indonesia, which is a frontier market. the sample includes financial firms listed on the indonesia stock exchange during the period between 2011 and 2017. data analysis techniques were performed by using ordinary least square regression. based on the result of 242 observed data analyses, it was found that while managerial ownership has no significant but positive effect on the dividend payout ratio, institutional ownership has significant and negative effects on dividend policy for sample firms. this positive relationship reflects that increasing the percentage of managerial ownership at one particular point, will make managers think that there is no longer any benefit in increasing dividend payout. moreover, the total number of directors has a significant negative effect on dividend payout and the percentages of an independent members of directors have a positive but not significant effect on dividend policy. this result reflects that the independent board has an essential role in directing management to protect stakeholders' interest in the company. the study also reclaimed that dividend policy is positively and significantly influenced by profitability but inversely proportional to capital structure. keywords: dividend policy; ownership; corporate governance; independent board jel code: m41, m42, g3, g32, g35 doi: 10.31106/jema.v19i1.11116 article history: received 2021-06-03 reviewed 2021-09-14 revised 2022-04-18 accepted 2022-04-26 licensed: cc-by mailto:ronnymalavia_fe@unisma.ac.id http://creativecommons.org/licenses/by/4.0/ dividend policy, ownership structure and corporate governance: an empirical analysis of indonesian firms by ronny malavia mardani 61 introduction corporate finance is a subject that primarily addresses three fundamental issues that have generated debate for the last few decades which is financing, investment, and dividendrelated decisions. although the decision to pay dividends is one of the critical components of a company's success, barros et al. (2020) and dewasiri et al. (2019) claimed that there is no consensus on what factors determine dividend payout policy. dividends may be defined as a fraction of a company’s profit, paid by the company to its shareholders in proportion to their own as a reward for investing in the past. the term "the dividend policy" itself refers to the firm's payout strategy that management use to determine the frequency and magnitude of cash distributions to shareholders over time (roy, 2015). a dividend policy could influence all of its stakeholders and the sustainable growth of the company. for example, a low dividend payment may make shareholders disgruntled, but a huge dividend payment could hinder the business to continue to grow (juhandi et al., 2013; san martin-reyna & duranencalada, 2015). the dividend policy is a sensitive subject to cover. on the one hand, the dividends are viewed as the control mechanism of the directive, therefore it can be used to mitigate any agency-related issues that may arise in the future. on the other hand, the big shareholders may restrain dividend payouts and trigger agency conflicts by using their majority ownership to acquire resources for their advantage at the expense of the minority (khan et al., 2022; romadhon & kusuma, 2020; san martin-reyna & duran-encalada, 2015; trihermanto & nainggolan, 2018). the agency conflict between majority and minority shareholders has commonly happened in emerging markets (setiawan & kee phua, 2013). therefore, the issue of good corporate governance mechanism implementation and ownership structure to decide dividend policy and to protect minority interests is widely discussed these days. previous studies found that there is a clear association between dividend payment and ownership structure such as abbadi et al. (2020) that revealed a significant positive correlation between institutional ownership and dividend yield, whereas foreign ownership is correlated to a low incidence of dividend payments, there's also no evidence to suggest that family ownership or state ownership affects dividend yield in jordan listed firms, and hasan et al. (2021) that concluded that government and institutional ownerships have a significant but negative effect on dividend payouts, whereas family and public ownerships have a significant but positive effect in bangladesh. moreover, egri et al. (2004) found that the relationship between corporate governance and dividend payouts is limited depending on the mechanism of jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 60-76 http://dx.doi.org/10.31106/jema.v19i1.11116, issn (online) 2597-4017 62 protection both from the firm level and country level for investors. baker et al. (2020), pahi & yadav (2019), and romadhon & kusuma (2020) added that the implementation of a good corporate governance system is covetable to prevent managers and/or majority shareholders' opportunistic behavior and strengthening the ability of managerial to enhances corporate earning quality. few studies investigate the effect of corporate governance and ownership structure on dividend policy based on local context, especially in an individual emerging country like indonesia. for example, setiawan & kee phua (2013) examined the relationship between corporate governance and dividend policy during the post-monetary crisis period in indonesia, imamah et al. (2019) investigated whether corporate governance, shariah law, and growth opportunities affect dividend policy in indonesia context, basri (2019), duygun et al. (2018), and moin et al. (2020) studied whether financial leverage, profitability, the growth of assets, and corporate ownership structure affect dividend policy of the indonesian companies. however, most of the studies mentioned above have taken the dividend policy determinant of indonesian firms separately. this study aims to examine, empirically, the relationship between dividend policy, corporate governance (with the proxy of board size and independent board), ownership structure (with the proxy of managerial and institutional ownership), profitability, and capital structure of the indonesian companies into a single framework. literature review dividend policy and ownership structure the dividend policy is the firm’s management strategy to decide whether to distribute profits to shareholders as dividends or to keep them in reserve to fund new investments. the company always seeks an optimal dividend policy by balancing current dividends and ensuring sustainable growth to enhance corporate value (meissner & brigham, 2001). egri et al. (2004) and sawicki (2009) added that while in the us the debate over dividend policy has focused particularly on the reason why firms pay amounts of dividends, given that the tax disadvantage of dividends looks to be enormous, renneboog & trojanowski (2011) stated the discussion of the choice of the payout channel is considered as the most topic to discuss in europe (dividend, repurchases, combination). in asia, the discussion of dividend policy is mainly concerned with the role of the ownership structure, as family owners control the greater part of firms (carney & child, 2013; claessens et al., 2000). similarly, the proportion of family firms accounted for more than half of firms in indonesia with the majority of them dividend policy, ownership structure and corporate governance: an empirical analysis of indonesian firms by ronny malavia mardani 63 tending to pay lower dividends and engage in expropriation to minority shareholders (as they favor controlling their resources for themselves) compared to state-holding firms, foreign firms, and similar type companies in western europe (faccio et al., 2001; setiawan et al., 2016). high ownership concentration, state involvement, and political connectedness of dividend policy regulation are just a few of indonesia's agency problem distinctive characteristics. previous studies from bokpin (2011), lin et al. (2017), mardani et al. (2018), al-najjar & kilincarslan (2016), and roy (2015) found that there is the relationship between the type of ownership (state and/or non-state, family and/or non-family, foreign and/or domestic investors, managerial and/or institutional), the proportion of shareholders ownership and dividend payout from various country of study. the study focuses on managerial and institutional ownership as the proxy of the type of ownership as the nature of the relationship between managerial and/or institutional ownership and dividends payout ratio may be more complex than previously assumed, and it also varies dramatically between enterprises with varying amounts of debt/financial limitations (florackis et al., 2015). therefore, in view of these, the proposed hypotheses can be seen below. h1: managerial ownership is positively related to dividend policy in indonesia. h2: institutional ownership is negatively related to dividend policy in indonesia. dividend policy and corporate governance in today’s business world, there are frequently conflicts of interest between insiders and outsiders, and those insiders that have more control of resources may utilize those against the interests of outside investors. for instance, insiders may plunder from companies, pay themselves excessive compensation, or make non-profitable investments (imamah et al., 2019). a novel approach to evaluating the agency's argument for dividend policy is to analyze the relationship between dividend policy and corporate governance (cg) compliances. corporate governance itself can be described as the system, policies, and procedures adopted by firms to manage businesses and protect shareholders' interests. while good corporate governance proved to be a critical success in organizational performance to pay higher dividends (jiraporn et al., 2016; pahi & yadav, 2019), poor governance policies with concentrated ownership, low financial transparency, and low board effectiveness often increase the probability of individual default risk, thus, exaggerate the domino effect of credit defaults (ruwani fernando et al., 2021). previous studies from five south east asian countries namely indonesia, malaysia, thailand, hong kong, and singapore show that there jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 60-76 http://dx.doi.org/10.31106/jema.v19i1.11116, issn (online) 2597-4017 64 is an inverse relationship between corporate governance and dividend payout policy (baker et al., 2020; benjamin & mat zain, 2015; sawicki, 2009; setiawan & kee phua, 2013). contradictory, bokpin (2011), in his research on the ghana stock exchange, found that corporate governance attributes such as board size and independent board composition had a positive effect on dividend performance. consistent with bokpin’s findings, abor & fiador (2013), al-najjar & kilincarslan (2016), matitaputty & davianti (2020), setiawan & kee phua (2013) found a positive influence of board size on dividend policy. also, the role of independent directors on the board proved significantly influence dividend payment as confirmed by adjaoud & ben-amar, (2010), roy, (2015), thompson & adasi manu (2021), and udin et al. (2017). in view of these, neither developed countries nor emerging or developing countries have reached a consensus on how corporate governance and dividend policy are related. according to baker et al. (2020), these inconsistent findings may occur due to the different settings and methodologies. therefore, the study aims to clarify the relationship between corporate governance and dividend policy in the indonesian context by using bokpin’s attributes. h3: there is a positive relationship between board size and dividend policy in indonesia. h4: there is a positive relationship between the independent board and dividend policy in indonesia. the determinant of profitability and capital structure on dividend policy the relationship between profitability and dividend policy begins with the findings of lintner (1956). profitability is one of the primary determinants of dividend payments. tekin & polat (2021) added that companies with a good level of profitability tend to increase their dividend to attract and signal their future profitability to their investors. in previous studies, most researchers found that profitability was positively related to dividend policy. amidu & abor (2006), kumar (2003), and mehar (2005) are among those who obtained evidence that profitability is positively related to dividend payout in their research. consistent with previous studies, recent studies by roy (2015) and setiawan & kee phua (2013) also obtained evidence of a positive relationship between profitability and dividend policy. h5: there is a positive relationship between profitability and dividend policy in indonesia. however, profitability is not a single factor that can affect the decision-making of dividend payout. there are two theories considered by companies in making a financial decision which are the trade-off theory and the pecking order theory. hang et al. (2018) argued that firm size and profitability will affect capital structure negatively under the dividend policy, ownership structure and corporate governance: an empirical analysis of indonesian firms by ronny malavia mardani 65 pecking order hypothesis, but favorably under the trade-off theory. according to the pecking order idea, profitable businesses tend to use their internal resources for funding, such as earnings rather than loans, when they require capital. as a result, the company's debt ratio will decrease as profitability increases. kaźmierska-jóźwiak (2015) also has a similar argument, the usage of the pecking order theory in formulating firm financial sources often ended with a negative relationship between profitability and leverage. more profitable firms acquire sufficient earnings and are better able to hold onto their earnings, which would pay fewer dividends. therefore, the proposed hypotheses of the study are formulated as below. h6: capital structure is negatively related to dividend policy in indonesia. methods the sample consisted of a financial firm on indonesia stock exchange (idx) that announced dividend payments. the sample period of the study is from 2011 to 2017. the financial firm selected as the study sample is a recommendation of a previous study by setiawan & kee phua (2013). a total of 97 financial firms that listed in idx in the period 2011 to 2017. thus, out of 97 companies about 42 financial firms were dropped due to the lack of information (missing) on dividend payment reports. we also exclude the companies from empirical models that did not have continuous data on dividend payout ratio, the board profiles, and other control variables. the total firm-year observations of the study are 242 with ordinary least square regression (ols) analysis used to model and assess the hypotheses, and then robustness analyses are performed. the dependent variable in the study is dividend policy measured by the proxy variable of dividend payout ratio (dpr). the dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company (chen et al., 2013; li, 2016). it is the percentage of earnings paid to shareholders in dividends. the dividend payout ratio indicates how much money a company is returning to shareholders versus how much it is keeping on hand to reinvest in growth, pay off debt, or add to cash reserves (retained earnings). furthermore, managerial ownership, institutional ownership, the board size, and independent board were selected as independent variables of the study controlled by profitability and capital structure. managerial ownership often sees as the proxy of managerial power to gain more rent visâ-vis institutional investors (janakiraman et al., 2010). while managerial ownership can be measured by the percentages of the number of ordinary shares owned by managers (executive directors on the board of directors) with the number of shares outstanding (oktavian & jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 60-76 http://dx.doi.org/10.31106/jema.v19i1.11116, issn (online) 2597-4017 66 ahmar, 2019; shan et al., 2019), institutional ownership is the proportion of shares owned by institutions such as banks, insurance companies, investment firms, mutual and pension funds, and others, over the number of shares outstanding (ali & hashmi, 2018; oktavian & ahmar, 2019). on the other hand, board size and independent board are defined as the total number of directors on the board and the proportion of independent directors on the board following roy's (2015) study. the control variables of profitability and capital structure were measured by using the proxy of return on equity known as roa (the ratio between net income and total asset) and debt-equity ratio known as der (the ratio between total liabilities and shareholder’s equity) following barros et al. (2021), elbannan (2020), ngo et al. (2020), and roy (2015) studies. lastly, to examine the association between ownership, corporate governance, profitability, and capital structure dividend, we employ the regression model as shown in the following model 1. dprit = + 1mngit + 2intit + 3bszit + 4idbit + 5roait + 6derit + (1) where: dprit : dividend payout ratio of firms in the year of ; mngit : financial capital of firms in the year of ; intit : financial constraints of firms in the year of ; bszit : board size of firms in the year of ; idbit : the number of an independent board of firms in the year of ; roait : return on asset of firms in the year of ; derit : debt to equity ratio of firms in the year of ; : constant; : coefficient; : residual error. result and discussion in table 1, descriptive statistics were presented. among 242 sample studies, the institutional type of ownership is higher than managerial ownership. the proportion of institutional ownership within our financial firm samples of study is in the range of 0 to 97.3 percent with an average of 47.1 percent compared to managerial ownership which has 0 to 48 percent and an average of 2.8 percent. moreover, our sample study tends to have a smaller board size with an average of 14 and a range of 7 to 25. the proportion of independent dividend policy, ownership structure and corporate governance: an empirical analysis of indonesian firms by ronny malavia mardani 67 directors on board in the study is in the range of 0.100 to 0.330 percent with an average of 19.8 percent. the number of independent directors on the board was far below the best practices of idx as it is required to have a minimum of 30% of independent directors in the board composition. therefore, based on the descriptive explanation of board size and independent board that represents corporate governance indices, it can be concluded that that the corporate governance of the financial firms in our study is still relatively weak, which needs to be a concern for the sampled financial companies in this study. lastly, the descriptive result of table 1 shows that roa is in the range of -0.060 to 0.210 with an average of 0.045, which indicates that the average financial firm's profitability is meager. on the other hand, der is in the range of 0.010 to 13.240 with an average of 4.606, which shows that the financial firm has very different characteristics from other field companies (more rely on debt financing). table 1. descriptive statistics variables minimum maximum mean std. deviation mng 0.000 0.480 0.028 0.102 int 0.000 0.973 0.471 0.359 bsz 7.000 25.000 14.260 5.166 idb 0.100 0.330 0.198 0.061 roa -0.060 0.210 0.045 0.047 der 0.010 13.240 4.606 3.107 table 2. correlation matrix variables mng int bsz idb roa der dpr mng 1 int -.263** 1 bsz -.225** -.044 1 idb -.074 .048 .007 1 roa .118 -.044 -.327** .117 1 der -.153* -.089 .515** -.115 -.447** 1 dpr .103 -.119 -.249** .030 .207** -.256** 1 *) correlation is significant at the 0.05 level **) correlation is significant at the 0.01 level jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 60-76 http://dx.doi.org/10.31106/jema.v19i1.11116, issn (online) 2597-4017 68 based on table 2 of the correlation matrix, the results show that managerial ownership has a significant negative correlation with both institutional ownership, the board size, and capital structure (proxied by debt-equity ratio). while the negative correlation between managerial and institutional ownership implying that the substitute correlation between variables, the other negative correlation indicates that companies tend to use smaller boards and decrease their level of leverage when managerial and/or institutional shares increases. the size of the board positively correlated with an independent board and capital structure, signifying that the smaller board of the object study tends to have a smaller proportion of independent board and amount of debt, and vice versa. contradictory, board size is negatively correlated with profitability (proxied by roa) and dividend payout, indicating that the greater the size of the board will reduce the company's profitability and ability to pay dividends. table 2 also shows that the number of independent directors on boards is negatively correlated with profitability and amount of debt but correlated positively with dividend payouts. the majority of financial firms listed in the idx stock market are small and/or medium-sized firms suggesting that it could be difficult for these businesses to set up genuinely independent boards. koerniadi & rad (2014) added that the presence of independent directors on the board is negatively related to firm value when they are in the majority of the board, such characteristics where the theory of stewardship is likely to hold. moreover, profitability is negatively related to the capital structure but positively associated with dividend payout, signifying that a greater amount of profitability will cause a decreasing level of debt and higher dividend payment. furthermore, capital structure has a negative correlation with dividend payout, which indicates that the higher the level of leverage the company has, the lower its ability to pay dividends. table 3. regression results model coefficient t-statistics decision mng -> dpr 0,002 0,013 h1 rejected int -> dpr -0,071 -2,107* h2 accepted bsz -> dpr -0,005 -2,013* h3 rejected idb -> dpr 0,032 0,171 h4 accepted roa -> dpr 0,328 1,180 h5 accepted der -> dpr -0,009 -1,985* h6 accepted *) significant at 5 percent dividend policy, ownership structure and corporate governance: an empirical analysis of indonesian firms by ronny malavia mardani 69 furthermore, to check the standard assumptions, several additional tests were run. the jarque-bera test assured the normality of the distribution of the residuals. the p-value of the jarque-bera test result obtained is 0.224 which is higher than 0.05, therefore it can be concluded that the sample data is normally distributed. we also tested multicollinearity issues within variables by using correlation coefficient and variance inflation factor (vif). in general, a vif above 4 or tolerance below 0.25 denotes the possibility of multicollinearity (groebner et al., 2011). in this study, the vif of all independent variables is in the range of 1.053 to 1.657, which confirms our conclusion that there is no multicollinearity. finally, to examine whether the regression model has heteroscedasticity and/or autocorrelation issues, the white's test and the breusch-godfrey serial correlation lm were performed. the result of both test statistics is 0.320 and 0.115 for a 99.5% confidence level, therefore it can be concluded that there are no heteroscedasticity and autocorrelation issues within the model. table 3 shows that managerial ownership and board size have no significant and positive effect on dividend payouts. these findings thus rejected the proposed hypotheses 1 and 3. the financial firm's ownership characteristics listed in the indonesia stock exchange are very different from other sectors, such as manufacturing, which are often used as research objects by previous researchers. there are only 4 out of 55 financial firms that are used as the sample of the study used managerial ownership in their share ownership structure. these different characteristic make the results of this study differs from previous studies, especially related to share ownership by managers. allam (2018) and rostami (2022) added that the more managerial ownership structure in the company, the higher the power to control resources and self-desire to gain more personal benefit and deceive shareholder interest. moreover. the insignificant effect of board size in the study suggests that a small board may not be able to carry out the expected governance responsibilities (nazar, 2021; roy, 2015; sapuan et al., 2021), and often resulted in a higher amount of dividend payment (qureshi et al., 2018). institutional ownership has a significant and negative impact on dividend payout, which indicates that an increase in the percentage of institutional ownership will reduce the interest of companies to distribute dividends. these results are consistent with the findings of alnajjar & kilincarslan (2016), amidu & abor (2006), kumar (2003), mardani et al. (2018), and roy (2015). therefore, the proposed hypothesis 2 which states that institutional ownership is negatively related to dividend payout can be accepted. the following results show that board independence is positively associated with dividend payout, but not in a significant way. the result of the study supports bokpin's (2011) and roy's (2015) findings on the direction of the relationship between the independent directors on the board and jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 60-76 http://dx.doi.org/10.31106/jema.v19i1.11116, issn (online) 2597-4017 70 dividend payout. this result reflects that the independent board has an essential role in directing management to protect various stakeholders in the company. thus, hypothesis 4 in the study states that the independent board is positively related to dividend payout is acceptable. furthermore, while profitability (proxied by roa) has no significant and positive effect on dividend payout, capital structure (proxied by der) has a significant and negative impact on dividend payout, therefore the proposed hypotheses 5 and 6 can be accepted. this means that although there is an insignificant effect of profitability on dividend payout, the positive correlation between variables signifies that firms that is experiences greater profitability will pay dividends highly (amidu & abor, 2006; kumar, 2003; mehar, 2005; roy, 2015; setiawan & kee phua, 2013). the result also suggests that the higher the amount of debt will decrease the payment of dividends (bokpin, 2011; hang et al., 2018; kaźmierska-jóźwiak, 2015; roy, 2015). conclusion and suggestion the difference in the company's characteristics used as a research sample significantly affects the study results. in this study, a financial firm is used as an object of research. based on the result of 242 observed data analyses for seven years, it was found that while managerial ownership has no significant but positive effect on the dividend payout ratio, institutional ownership has a significant and negative effect on dividend policy. the positive relationship between managerial ownership and dividend policy reflects that the higher the proportion of managerial ownership within the company will cause a higher self-desire to gain more personal benefit and deceive shareholder interest that may end with the thinking that there is no longer any benefit in increasing dividend payout. moreover, the total number of directors has a significant negative effect on dividend payout and the percentages of an independent members of directors have a positive but not significant effect on dividend policy. this insignificant result of board independence reflects that the independent board has an essential role in directing management to protect stakeholders' interest in the company. the study also reclaimed that dividend policy is positively and significantly influenced by profitability but inversely proportional to capital structure. one of the limitations of the study is the low number of financial companies in the managerial ownership structure, implicated in the result of the study that can’t be generalized. on the other hand, it has been described previously that the implementation of corporate governance in financial companies is in the weak category. in order to overcome this constraint, it is recommended that in future studies, corporate governance be measured using dividend policy, ownership structure and corporate governance: an empirical analysis of indonesian firms by ronny malavia mardani 71 the corporate governance index (cgi). it is hoped that a more detailed picture of the ownership structure, shareholder roles, and responsibilities of the board of commissioners will be obtained. references abbadi, s. s., abuaddous, m. y., bataineh, h. t., & muttairi, a. e. 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(2017). the effects of ownership structure on likelihood of financial distress: an empirical evidence. corporate governance: the international journal of business in society, 17(4), 589–612. https://doi.org/10.1108/cg-03-2016-0067 jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 77-96 http://dx.doi.org/10.31106/jema.v19i1.11218, issn (online) 2597-4017 77 perceived price, etrust, esatisfaction, and online repurchase intention: a study of young online consumer behavior khalikussabir1, abdul waris2*, budi wahono3 1 department of management, faculty of economics and business, university of islam malang, malang, indonesia 2 department of business administration, state polytechnic of malang, malang, indonesia 3 department of management, faculty of economics and business, university of islam malang, malang, indonesia *corresponding author(s) email: waris_sip@polinema.ac.id abstract the online marketplace industry in indonesia is growing rapidly, becoming an important contributor to indonesia's economy. however, the massive discount price strategy and the dearth of face-to-face interaction in the online marketplace make it harder for any online retailer to build a stronger relationship with their consumers to retain them. our study offers several contributions and new insights to the marketing literature as few studies have addressed this issue by analyzing it with perceived electronic trust, satisfaction, and repurchase intention into a single framework. this study aims to describe and extend previous studies on the effect of perceived price and trust on repurchase intention by specifically including satisfaction in the middle of associated constructs. this study uses purposive sampling as a sampling technique and a five-point likert scale survey as a data collection method. a total of 387 valid data were collected and then analyzed by pls-sem to test the proposed model. the results of this study strengthen the previous claims that there is a positive partial effect between perceived price, trust, and satisfaction on repurchase intention in the online marketplace. also, the level of customer satisfaction proved to be a significant construct in forming the association between perceived price, trust, and repurchase intention in the study. keywords: repurchase intention; price; satisfaction; perceived trust; online marketplace jel code: m13, m31 doi: 10.31106/jema.v19i1.11218 article history: received 2021-06-17 reviewed 2021-08-12 revised 2021-12-22 accepted 2022-02-18 licensed: cc-by mailto:waris_sip@polinema.ac.id http://creativecommons.org/licenses/by/4.0/ perceived price, etrust, esatisfaction, and repurchase intention: a study of young online consumer behavior by khalikussabir, abdul waris, budi wahono 78 introduction the development of technology and information has changed the way of human life from time to time as the conventional way of life of humans over time is now starting to turn into all-digital because due to its convenience. based on the indonesian internet service providers association (apjii) survey results in 2021-2022, there were 210.03 million internet users in the country (an increase of 6.78 percent) compared to the previous period which was 196.7 million people. thus, making the internet penetration rate in indonesia up to 77.02 percent. the continuous growth of internet users illustrates the popularity of this technology, which also has drastically disrupted the business competition landscape (ariwibowo & nugroho, 2013; tse, 2013). however, online businesses may be more susceptible to unfavorable customer perceptions than traditional ones because of the absence of personal interaction, the inability to see the real product before purchasing it, physical distance, and the retailer's credibility (davari et al., 2016; faqih, 2016). retaining customers who easily switch to other online stores is also one of the online retailers' big issues (jain et al., 2017). sullivan & kim (2018) indicates that generating loyal customer in online marketplaces is way more difficult than offline, losing them can cost five more times and effort (hung et al., 2019). reichheld et al. (2000) claimed that, depending on the industry, when the percentage of loyal customers loses by around 5 percent, the profitability of e-markets will also lose by 30 to 80 percent. the understanding of consumer adoption/purchase behaviors has been the main focus of research on online buying behavior, but recently, post-adoption/repurchase behaviors have received greater attention (wu, 2013), specifically, “repurchase behaviors emphasize the understanding of customer satisfaction and trust” (chiu et al., 2013; hung et al., 2019). although much research has concentrated on either satisfaction or trust, few have looked at the connections between price, trust, satisfaction, and repurchase intention in a single framework. furthermore, the majority of this examined satisfaction from a broad viewpoint when it should be measured independently for transaction-based and experience-based satisfaction because customers may take into account various factors when assessing their degree of satisfaction during the two different processes (huang & dubinsky, 2014; liang et al., 2018). kim et al. (2012) added that the synergy effect of perceived price and trust needs more attention. this is a crucial strategic decision for online retailers since they must choose between competing on pricing and customer trust. given that cost has traditionally been seen as a significant determinant of consumer choice and since customers can easily compare costs among online retailers and choose less expensive alternatives, they may want to think about jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 77-96 http://dx.doi.org/10.31106/jema.v19i1.11218, issn (online) 2597-4017 79 implementing price-focused competition tactics. as an alternative, they can think about implementing trust-oriented tactics in light of the argument put forth by advocates of trust. to address this gap in the literature, we integrated kim et al. (2012) and liang et al. (2018) study to explain how consumers’ perceptions of price and electronic trust are generated as they interact with a particular online retailer in the marketplace. specifically, we investigate the effect of perceived price and trust on repurchase intention by specifically including satisfaction. our study offers several contributions and new insights into the marketing literature as few studies have addressed this issue by analyzing it into a single framework. second, by focusing on trust belief instead of behavioral, our study strengthens the trust formation in satisfaction and online customer purchase intention. this paper is structured as follows; the next section reviews the most recent studies on perceived price and electronic trust, satisfaction, and the association model used in the study to predict online repurchase intention. next, the methodology, results, and hypotheses testing are then presented. the limitation, theoretical, and managerial implications of the study are discussed in the paper's conclusion, along with recommendations for future research. literature review perceived price, etrust, and customer satisfaction kim et al. (2012) declared that the impact of price and trust in the context of online shopping is inevitable. prices are a major influence on consumer purchase decisions and are crucial in fostering loyalty (park & joyner armstrong, 2019; valvi & west, 2013). according to büyükdağ et al. (2020) and alwi et al. (2017), the term "perceived price" refers to the price as encoded/perceived by customers for goods or services that is meaningful to them. (baddeley, 2010)added that from the consumer's perspective, the perceived price was more important than the objective (actual price offered by the current seller) price. zielke (2010) found that price images can be conceptualized within two dimensions, namely price level image and price value image. graciola et al. (2018) explain that while the price value image considers both the store's qualities and the quality of the product, the price level image solely considers the price paid for the same good or service. in terms of online shopping behavior, consumers often compare objective prices with reference prices and then encode the outcomes as either higher or lower than their references. these consequences affect how customers perceive prices, which in turn affects how they make buying decisions (kim et al., 2012). thus, the right pricing formulas may enhance customer satisfaction toward particular brands and/or retailers (capponi et al., 2021; griva, 2022; helfi et al., 2019). perceived price, etrust, esatisfaction, and repurchase intention: a study of young online consumer behavior by khalikussabir, abdul waris, budi wahono 80 h1: the more suitable price with customer preferences, the higher the level of customer satisfaction toward a particular online retailer. the concept of trust was developed by psychologists in the 1950s and since then has evolved to several disciplines, including marketing (morgan & hunt, 1994) which ultimately enables the cooperative aspect of consumer economic behavior. the nature of this construct and its meaning have been continuously developed and reconceptualized especially with the emergence of information and communication technology. numerous scholars have provided a novel perspective to discuss in the online context (i.e. etrust). the conception of etrust focuses on two elements: risk and the referent of etrust, which is congruent with offline context trust studies. in an online environment, trust plays a critical role in determining whether online sellers will have potentially undesirable or unexpected behaviors. the gradual interaction between sellers and buyers is the basis upon which trust is built. trust can be conceptualized both as a belief and behavior. wang et al. (2015) added that while the former view defines trust as a positive expectation gained from particular attributes (expertise, reliability, and honesty), the latter views trust as a consumer's willingness to entrust their belief to the other party. this study follows wang et al. (2015) by excluding the behavioral perspective from etrust conceptualization and views etrust as a positive belief of consumers on a particular online retailer with gefen (2002) dimensions namely integrity, ability, and benevolence. following kim et al. (2012), kim et al. (2011), weedige et al. (2019), perceived etrust is defined as a consumer’s subjective belief that an online retailer will fulfill its contractual obligations in the study. further, while integrity in this study refers to customer perceptions that a particular online retailer will fulfill, the ability is the degree to which hotel websites are considered as having the knowledge, skills, and abilities required to carry out their job responsibilities effectively (wang et al., 2015; ye et al., 2014). benevolence, however, is the genuine concern, which is focused on an emotional evaluation by the customer of the goodwill associated with the objectives of caring attention (dimoka, 2010). prior studies from aldas-manzano et al. (2011), fang et al. (2014), wu (2013), and kim & han (2009) found that there is a positive relationship between perceived etrust and the level of satisfaction. h2: the higher the perceived level of electronic trust, the higher the level of customer satisfaction toward a particular online retailer. jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 77-96 http://dx.doi.org/10.31106/jema.v19i1.11218, issn (online) 2597-4017 81 perceived price, etrust, customer satisfaction, and repurchase intention while repurchase intention is defined as the customers' intention to do future purchases from a particular retailer (javed & wu, 2020; liang et al., 2018; razak et al., 2014), online repurchase intention can be defined as the likelihood that a consumer will continue to purchase a product from the same online seller or that they would acquire goods or services from the same seller which they have previously experienced the benefits and quality (javed & wu, 2020; liang et al., 2018; trivedi & yadav, 2020). repeat purchase is viewed as both necessary and critical for online retailer success because of the high cost of gaining new customers and the economic value of loyal customers. according to zhang et al. (2018) and li et al. (2021), customer retention has emerged to be a primary concern for electronic commerce businesses as acquiring new customers and commencing transactions with them cost five times more than retaining the existing ones. antwi (2021) and shin et al. (2013) even added that the lack of face-to-face interaction with customers makes it harder for online retailers to retain and grow their existing buyers. in the present study, many researchers and educators have conducted a study on what factor influences a customer's intention to do repeat purchases from the same online retailer. a prior study has found a positive relationship between perceived price, electronic trust with the online retailer, satisfaction, and customer repurchase intention. the most common and reliable promotional tactic, both online and offline, is a discount-based promotion (graciola et al., 2018; liu & chou, 2015; yerasani et al., 2019). shows that price promotion affects repurchase intention positively. customers are more price-sensitive, especially when making purchases online, as a result of the low cost of a search and the simplicity of direct price comparison. they frequently base their decisions on the best product deal or the cheapest offer because they may easily transfer from one merchant to another. price greatly affects how people think and act when shopping online, according to earlier studies (jia et al., 2018; lee & charles, 2021; liu & chou, 2015). further, previous studies have primarily examined only buyer relationships when investigating potential determinants of consumer repurchase intention, suggesting satisfaction and trust as two crucial factors (fang et al., 2014; javed & wu, 2020; sullivan & kim, 2018). the reciprocity argument can be used to support the relationship between perceived trust and repurchase intention. when online sellers behave in a way that cultivates consumer perceived trust, perceived website risk is likely diminished, allowing customers to confidently predict the sellers' future behavior. a higher perceived level of trust, therefore, is associated with more interaction with an online seller since it perceived price, etrust, esatisfaction, and repurchase intention: a study of young online consumer behavior by khalikussabir, abdul waris, budi wahono 82 lessens the fear of being scammed and utilized. the same context also can be used to describe the relationship between satisfaction and repurchase intention. customer satisfaction is used to evaluate the product that has been consumed, a positive purchase experience is more likely enhance customers to recommend it to others and do repeat purchases in the future. an excellent customer relationship necessitates a high level of e-satisfaction as this encourages customer trust and repurchase intent (javed & wu, 2020; majeed et al., 2022). the overall role of customer satisfaction mentioned in several prior studies in the context of repurchase intention such as farizan et al. (2019), gil & jacob (2018), goel et al. (2022), trivedi & yadav (2020). the concept of customer satisfaction in an online business, also known as e-satisfaction, often refers to the "contentment of a consumer concerning his or her prior purchasing experiences, in particular, e-retailer” trivedi yadav (2020). successful ecommerce relies heavily on retaining its most committed customers. according to several studies, e-trust and e-satisfaction are taken as critical components of e-loyalty, which directly influence the desire to repurchase (chang et al., 2009). aldas-manzano et al. (2011) underlined that it is obvious that satisfaction is likely to result in stronger loyalty when customers have a higher level of trust in the e-business since customers who don't trust an ebusiness won't be loyal to it even if they are generally satisfied with the e-business. in this study, the relations between the factors influencing repurchase intention (i.e. pricing and trust) are correlated by e-satisfaction. a total of the association of constructs and the respective hypotheses in the study can be seen in figure 1. h3: the more suitable price with customer preferences, the more it impacts customer repurchase intention toward a particular online retailer. h4: the higher the perceived level of electronic trust, the higher the possibility of customer repurchase intention toward a particular online retailer. h5: the higher the level of customer satisfaction, the higher the desirability of customer repurchase intention toward a particular online retailer. methods this research can be classified as explanatory research with a quantitative approach. the research hypotheses were put to the test using survey methods. this methodology was chosen because it enables the results to be more generalizable. to target online shoppers, an online survey consisting of 30 close-ended questions was given to people who are classified as postgraduate students, undergraduate students, and lecturers across various university (within the age range of 18 to 40 years old) in malang, indonesia. academicians (students and jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 77-96 http://dx.doi.org/10.31106/jema.v19i1.11218, issn (online) 2597-4017 83 lecturers) at universities in malang, indonesia were chosen, because they, or people in their social networks, were presumably active and frequent users of online marketplaces, techsavvy, or known as digital natives (piarna et al., 2020). each question was graded using a likert scale with a maximum score of 5, with 1 being "very low" and 5 being "very high." all of the measures adopted for this research were taken from the existing literature on repurchase intention. this study used items of gefen (2002), graciola et al. (2018), kim et al. (2012), sullivan & kim (2018), trivedi & yadav (2020) to measure perceived price (pp) and etrust (et) constructs. items for satisfaction or esatisfaction (es) was adopted from lai et al. (2014), trivedi & yadav (2020). lastly, measurement items for online repurchase intention (ri) were taken from graciola et al. (2018), hasan (2021), javed & wu (2020), and kim et al. (2012). the detailed narration of each item can be shown in table 1. snowball sampling was selected as a sampling technique to obtain responses from hidden respondents. to operationalize snowball, first, six universities in malang, indonesia were selected to gather the data. then, through social media, we reached out to fifty students from each university and handed out the survey to them. the questionnaire was also distributed to the peer group by them. based on the presumption that students will have a large concentration of social media contacts from their particular universities, representatives from every university were reached for snowballing. a total of 788 potential respondents received the survey link, and 420 responses were received (a response rate of 53%). out of 420, 33 responses were eliminated due to incomplete information. finally, a total of 387 responses were accepted and processed for empirical analysis. smartpls software was applied to assess and validate a reflective measurement model. figure 1. research framework perceived price (pp) perceived etrust (et) satisfaction (es) repurchase intention (ri) perceived price, etrust, esatisfaction, and repurchase intention: a study of young online consumer behavior by khalikussabir, abdul waris, budi wahono 84 table 1. measurement instrument factors items item perceived price (pp) pp1 i will probably save more money buying at online marketplace pp2 the price of an online marketplace is lower compared to others pp3 it may be possible to get a better discount from online marketplace pp4 this online marketplace often offers seasonal discount pp5 this online marketplace offers a reasonable price pp6 this online marketplace offers an acceptable price perceived etrust (et) et1 this online marketplace is capable of doing its job et2 this online marketplace keeps its promises and commitments et3 this online marketplace care about its customers et4 this online marketplace fulfills its job et5 this online marketplace is trustworthy et6 this online marketplace is honest satisfaction (es) es1 i am happy by buying from an online marketplace es2 i am satisfied by buying from an online marketplace es3 i did the right thing by buying from an online marketplace es4 if i had to purchase again, i will buy from an online marketplace es5 i am satisfied with the way they handle inquiries and complains es6 i am happy with the way they managed their services es7 i am satisfied with the overall buying experience es8 in general, online marketplace provided a satisfactory experience repurchase intention (ri) ri1 i would intend to repurchase from the same online marketplace ri2 my willingness to repurchase from the same online marketplace is high ri3 i do most of my shopping in this online marketplace ri4 i plan to do most of my future shopping in this online marketplace ri5 if i go shopping today, i will go to this online marketplace again ri6 when i go shopping, this online marketplace is my first choice ri7 there is a strong likelihood that i will continue purchasing products from this online marketplace ri8 if i could, i would like to continue using this site to purchase ri9 when i go shopping, i consider this online marketplace first jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 77-96 http://dx.doi.org/10.31106/jema.v19i1.11218, issn (online) 2597-4017 85 table 2. result of the measurement model factors items loadings α cr ave perceived price (pp) pp1 0.766 0.915 0.629 0.931 pp2 0.823 pp3 0.857 pp4 0.722 pp5 0.762 pp6 0.716 perceived etrust (et) et1 0.820 0.920 0.676 0.936 et2 0.800 et3 0.822 et4 0.841 et5 0.753 et6 0.896 satisfaction (es) es1 0.753 0.867 0.602 0.900 es2 0.800 es3 0.797 es4 0.840 es5 0.814 es6 0.829 es7 0.744 es8 0.764 repurchase intention (ri) ri1 0.817 0.944 0.694 0.953 ri2 0.800 ri3 0.861 ri4 0.873 ri5 0.882 ri6 0.899 ri7 0.782 ri8 0.858 ri9 0.708 perceived price, etrust, esatisfaction, and repurchase intention: a study of young online consumer behavior by khalikussabir, abdul waris, budi wahono 86 table 3. inter-construct correlations and the square root of ave estimates factors pp et es ri pp 0.776 et 0.721 0.822 es 0.700 0.859 0.793 ri 0.690 0.750 0.760 0.833 table 2 shows the internal consistency reliability, convergent, and discriminant validity of each item. according to hair et al. (2013), internal consistency reliability was tested by using cronbach’s alpha (α > 0.60) and composite reliability (cr values within the range of 0.70 to 0.90 can be considered satisfactory) parameters. while malhotra (2012) explained convergent validity by loadings value (should be higher than 0.70) and average variance extracted (ave > 0.50) parameters, discriminant validity index values were employed by comparing ave and the square roots of ave of each construct. based on table 2, it can be concluded that overall composite reliability (cr) test results were between 0.900 and 0.953, suggesting acceptable reliability. all constructs also showed satisfactory convergent validity as factor loadings ranged from 0.708 to 0.899 and most ave values were larger than 0.5 (varies from 0.603 to 0.694). lastly, table 3 shows that all of the ave square roots were higher than the corresponding inter-construct correlations, indicating satisfactory discriminant validity. result and discussion the description of the majority of respondents in table 4 shows that 68 percent of the respondent in the study is female with above 58 percent of them aged between 18 22 years (also known as the z generation). this shows that the majority of online marketplaces in indonesia can be segmented as the youth generation with digital natives, self-driven characteristics, fashionista, and cashless (hinduan et al., 2020). further, most of the respondents in the current study are online shopaholics (about 53 percent of them made more than five online purchases within a month). the results of the analysis and testing of the data that has been carried out can be seen that the more suitable price with customer preferences, the higher the level of customer satisfaction toward a particular online retailer. the high level of customer satisfaction on the online marketplace makes customers feel more comfortable in spending when compared to shopping at conventional stores. online customers that are spoiled by many discount’s promo jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 77-96 http://dx.doi.org/10.31106/jema.v19i1.11218, issn (online) 2597-4017 87 table 4. demographic profile respondents profile total percentage (%) gender male 124 32 female 263 68 age (years old) 18 – 22 225 58 23 – 40 162 42 online purchase (within a month) 1 – 2 35 9 3 – 4 147 38 above 5 205 53 table 5. summary of hypotheses results hypothesis supported? h1: the more suitable price with customer preferences, the higher the level of customer satisfaction toward particular online retailers. yes (+) h2: the higher the perceived level of electronic trust, the higher the level of customer satisfaction toward a particular online retailer. yes (+) h3: the more suitable price with customer preferences, the more it impacts customer repurchase intention toward a particular online retailer. yes (+) h4: the higher the perceived level of electronic trust, the higher the possibility of customer repurchase intention toward a particular online retailer. yes (+) h5: the higher the level of customer satisfaction, the higher the desirability of customer repurchase intention toward a particular online retailer. yes (+) tend to continue making purchases at particular online retailers. this finding is consistent with previous research stated the right pricing formulas may enhance customer satisfaction perceived price, etrust, esatisfaction, and repurchase intention: a study of young online consumer behavior by khalikussabir, abdul waris, budi wahono 88 toward particular brands or retailer (capponi et al., 2021; griva, 2022; helfi et al., 2019). these consequences affect how customers perceive prices, which in turn affects how they make buying decisions (kim et al., 2012). this shows that the perceived price policy implemented by particular online retailers makes the level of customer satisfaction even higher the results of the second test show that the higher the perceived level of electronic trust, the higher the level of customer satisfaction toward a particular online retailer, the high level of customer satisfaction in this study is also inseparable from the high level of electronic trust felt by customers because particular online retailers have a high commitment high to always keep promises to its customers and also always provide honest information regarding the services and facilities offered to provide a satisfying experience to customers who make purchases at particular online retailers. this finding is consistent with previous research stated found that there is a positive relationship between perceived etrust and the level of satisfaction (aldas-manzano et al, 2011; fang et al, 2014; wu, 2013; kim & han, 2009), as well as views etrust as a positive belief of consumers on a particular online retailer (wang et al, 2015). this shows that the high commitment made by online retailers to always maintain a positive etrust will increase customer satisfaction even higher. in addition, the more suitable price is to customer preferences, the more it impacts customer repurchase intention toward a particular online retailer, the high customer repurchase intention for particular online retailers is inseparable from the strategies carried out by online retailers who often offer product prices that are relatively cheap at low prices. the intensity of giving discounts is fairly frequent so with this strategic approach, customers who initially have no intention of making purchases are motivated to make purchases again at particular online retailers. according to earlier studies from jia et al. (2018), lee & charles (2021), liu & chou (2015), price greatly affects how people think and act when shopping online, the most common and reliable promotional tactic is the discount-based promotion (graciola et al., 2018; liu & chou, 2015; yerasani et al., 2019). the perceived price policy implemented by online retailers can be a driving force for customers to make repurchases at online retailers. while the results of the fourth test show that, the higher the perceived level of electronic trust, the higher the possibility of customer repurchase intention toward a particular online retailer, the results of the data analysis show that if the level of perceived electronic trust felt by a customer increases, the probability of a customer's repurchase intention towards particular online retailers will also experience an increase, the increase in electronic trust felt jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 77-96 http://dx.doi.org/10.31106/jema.v19i1.11218, issn (online) 2597-4017 89 by customers is inseparable from the efforts made by particular online retailers to always place consumer trust as one of the main pillars in running their business and always provide a quick response to all complaints submitted by customers so that customers consider this online market first when they want to shop. according to earlier studies from (javed & wu, 2020; majeed et al., 2022), an excellent customer relationship necessitates a high level of esatisfaction as this encourages customer trust and repurchase intent. successful online retailers rely heavily on retaining their most committed customers, and high commitment results from a good trust, if this can be maintained and increased then the intention to repurchase will continue to increase. the higher the level of customer satisfaction, the higher the customer's desire to repurchase a particular online retailer, in this study it can be seen that the level of customer satisfaction proves to be a significant construct in forming the relationship between perceived price, trust, and repurchase intention in this study. the level of repurchase intention only occurs when the customer is satisfied with their service in terms of maintaining a low price image and the positive trust given, the customer is satisfied with the way the online retailer handles and manages the questions and complaints submitted and the online market also provides a satisfactory experience for the customer as a whole, so the customer plans to do most of his future shopping on this online marketplace and makes online marketplace his first choice. according to several studies, e-trust and e-satisfaction are taken as critical components in e-loyalty, which directly influence the desire to repurchase (chang et al., 2009), that satisfaction is likely to result in stronger loyalty when customers have a higher level of trust in the e-business (aldas-manzano et al, 2011). potential determinants of consumer repurchase intention, suggest satisfaction and trust as two crucial factors (fang et al., 2014; javed & wu, 2020; sullivan & kim, 2018). the level of repurchase intention will increase only when customers are satisfied with the service they experience when they make transactions in particular online marketplaces. conclusion and suggestion the results of this study strengthen the previous claims that there is a positive partial effect between perceived price, etrust, and satisfaction on repurchase intention in an online marketplace. these results reflect that the increase in repurchase intention and satisfaction require a positive perceived price evaluation (mainly on low price image) and etrust that is always maintained by the online marketplace. once consumers are satisfied with what they get when they make transactions in a particular online marketplace, they can continue perceived price, etrust, esatisfaction, and repurchase intention: a study of young online consumer behavior by khalikussabir, abdul waris, budi wahono 90 repurchasing intentions. the current study also found that the level of customer satisfaction proved to be a significant construct in forming the association between perceived price, trust, and repurchase intention in the study. it means that the level of repurchase intention only happened when customers are satisfied with their services regarding retaining a low-price image and positive trust. apart from its contribution, this study also has several limitations, including that this study limited price items by mainly focusing on its low prices image and the definition of trust by using only the belief perspective. therefore, the results of this study cannot be generalized. future studies should conduct research over a longer period by including another dimension of price and trustworthiness to deepen the results of this study. references aldas-manzano, j., ruiz-mafe, c., sanz-blas, s., & lassala-navarré, c. 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(2010). how price image dimensions influence shopping intentions for different store formats. european journal of marketing, 44(6), 748–770. https://doi.org/10.1108/03090561011032702 the triangle of knowledge sharing, e-marketing capability, marketing performance by lia nirawati, rangga restu prayogo jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 22 the triangle of knowledge sharing, e-marketing capability, marketing performance lia nirawati *) rangga restu prayogo **) abstract today's marketing activities have employed information technology to overcome the challenges of marketing sustainability in getting more resources and meeting greater expectations for building lasting relationships with customers. the ability in e-marketing represents business organizations competence in the use of the internet and other information technology to be able to facilitate effective and efficient interactions with customers. one of the marketing developments is e-marketing capability. information technology helps business organizations to be able to carry out online marketing capabilities. various organizational capabilities in managing electronic-based marketing are based on knowledge sharing by business organizations to improve marketing performance. the purpose of this research is to see the extent of knowledge sharing and emarketing capability effect on marketing performance. this research used explanatory with a quantitative approach. the respondents are the students who have products that are marketed in business incubators. the questionnaire was given to 101 respondents with a sampling technique of purposive sampling. the results of the study show that knowledge sharing cannot influence emarketing capability, knowledge sharing can influence marketing performance, and e-marketing capability cannot influence marketing performance. keywords: knowledge sharing; e-marketing capability; marketing performance; business incubation 1. introduction 1.1 research background several studies describe that business organizations can increase sales and activities to customers through information technology into marketing practices by business organizations to encourage effective interaction with customers (prayogo & kusumawardhani, 2016; salo, 2017). assimilation of information technology in marketing activities is referred to as e-marketing. emarketing activities include a series of technological activities that allow interactions that are often used in the business-to-business (b2b) industry including customer management relationships that use software, sales force automation, e-commerce websites, and extranets (personal websites provided for customers) (trainor, rapp, beitelspacher, & schillewaert, 2011). the ability in emarketing represents business organizations competence in the use of the internet and other information technology to be able to facilitate effective and efficient interactions with customers. this interaction provides customers with simultaneous access to business organization resources and information (chuang, 2016). the result of the studies (yu, ramanathan, & nath, 2017) explains that e-marketing technology goes beyond internet-based advertising and communication that include technology to support several functions of marketing including customer relationship management, sales activities, customer support, marketing research, and marketing planning. e-marketing has the potential to create value in various ways. first, by providing connections that are close to business organization processes, e-marketing provides customers with direct access to business organization http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 23 resources. for example, the customers can easily conduct business interaction with the business organization because the company provides customized support extranets for their customers. typically, this extranet enables customers to access relevant support, product documentation, and electronic communication (monim & west, 2010). in this case, the customer becomes very integrated with the product development of business organizations with a much larger cycle in the customer-company information section. this extranet technology not only provides customers with direct information to business organization resources, but it also provides vast information about customers based on product demand and use for product management purpose. this form of information sharing plays an important role in developing and maintaining customer relations or often referred to as e-marketing capability (najafi-tavani, sharifi, & najafi-tavani, 2016). emarketing capability is the integration process of a business organization in collecting and using the knowledge and skills to manage internal resources and directly adapt to the external environment through information technology (tang, fu, & xie, 2015). some research results explain that emarketing capability can be influenced by knowledge sharing in business organizations. another result of the study (tang, fu, & xie, 2015) explains that knowledge is a source of organizations that create value and innovation. every business organization needs knowledge as a source that must be learned and shared for all existing business organizations (ahmed, kristal, & pagell, 2014). knowledge sharing is related to learning organization so that every organization that implements emarketing capability must know to run extranet as a communication tool for customers in creating innovative products. the results of the study (chari, balabanis, robson, & slater, 2017) also explain that knowledge sharing has a positive and significant effect on e-marketing capability in companies in the uk. the results of the study (ritala, olander, michailova, & husted, 2015) explain that knowledge sharing can also have a positive influence on marketing performance in creating innovative products that improve marketing performance. e-marketing capability as an electronic-based marketing capability has a positive impact on marketing performance run by business organizations, e-marketing capability based on information technology can help marketing performance in effective and efficient marketing and sales activities. the results of the study indicate that e-marketing capability has a positive and significant impact on the sustainability of marketing performance results (efrat, gilboa, & yonatany, 2017). thus, dynamic marketing can be overcome by knowledge sharing and e-marketing capabilities (cacciolatti & lee, 2016). 1.2 research problem a) does a knowledge sharing that includes tacit and explicit knowledge have a significant effect on e-marketing capability and marketing performance? b) does an e-marketing capability have a significant effect on marketing performance? 1.3 research purpose the purpose of this study was to determine the effect of knowledge sharing and e-marketing performance on marketing performance in incubation business at the university of pembangunan nasional "veteran" east java. 2. theoretical framework and hypotheses development 2.1 the relationship between knowledge sharing and e-marketing capability knowledge sharing has received much attention in the literature as a form of knowledge management because it is directly related to the performance of business organizations (cunningham, seaman, & mcguire, 2016). knowledge sharing is also an integral component of knowledge management that helps to transform individual knowledge into organizational http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 24 knowledge and improves organizational performance (wang, sharma, & cao, 2016). in the model of knowledge sharing, (takeuchi, 2006) proposes the knowledge sharing model as socialization, externalization, combination, and internalization that are determined to perform functions and processes to create explicit knowledge sharing. on the one hand, knowledge sharing as organizational knowledge becomes an individual or organizational knowledge with the process of internalization and socialization. furthermore, knowledge sharing can be given to individuals and organizations based on externalization and combination processes. the practice of knowledge sharing throughout business organizations is very important to do and become valuable as an organizational heritage, to learn new things, to help solve problems, to create good competencies and to create new situations for business organizations. one of the advantages of knowledge sharing is to form a marketing capability using information technology (e-marketing capability) for business organizations. e-marketing capability is the integration process of a business organization in collecting and using the knowledge and skills to manage internal resources and directly adapt to the external environment through information technology, including internet (tang, fu, & xie, 2015). e-marketing capability is the ability to use inputs and resources, such as financial and customer loyalty resources, to efficiently produce the desired sales. e-marketing capability aims to produce a positive influence on the economic value that business organizations make through increasing market demand (ahmed, kristal, & pagell, 2014). furthermore, e-marketing capability is an integrative process, where a business organization uses tangible or intangible resources to understand complexly about consumer needs, create products that are different from competitors and achieve superior brand equity in using available information technology (yeşil, koska, & büyükbeşe, 2013). some research results have found that knowledge sharing can have an influence on business organizations in their ability to innovate. in the study (hu, horng, & sun, 2009) states that the existence of knowledge sharing activities provided by small and medium entrepreneurs can increase the ability in implementing e-marketing for every business organization facing business competition. research (hu, horng, & sun, 2009), states that business organizations need knowledge sharing to manage organizations to respond quickly to the current market situation. therefore, based on the existing literature and theory, the hypothesis that can be taken is: h1: knowledge sharing has a positive effect on the e-marketing capability 2.2 the relationship between knowledge sharing and marketing performance knowledge sharing has received much attention in the literature as a form of knowledge management because it is directly related to the performance of business organizations (cunningham, seaman, & mcguire, 2016). knowledge sharing serves as a means for an organization to gain knowledge and lead to changes in organizational behavior and performance. through effective knowledge sharing and learning, business organizations can improve their behavior, improve the ability to innovate, and can perform organizational efficiency to achieve marketing performance (tang, fu, & xie, 2015). business organizations carry out a superior strategy to increase profits and create good value. to see whether a business organization can conduct effective and efficient marketing directly to customers is through marketing performance. marketing performance is a measurement that evaluates the activities carried out by business organizations through the overall marketing process of a business organization (wang & kim, 2017). marketing performance is a concept used to measure and assess the extent of market performance that has been achieved by a product in a business organization through marketing activities (wu, 2015). some studies state that knowledge sharing affects marketing performance http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 25 due to providing knowledge to business organizations in marketing development to produce significant marketing performance (tang, fu, & xie, 2015). therefore, based on the existing literature and theory, the hypothesis that can be taken is: h2: knowledge sharing has a positive effect on marketing performance 2.3 the relationship between e-marketing capability and marketing performance the ability of a business organization in using e-marketing can provide good image and maintain consumer loyalty as a collective assessment that becomes an evaluation of companies to become innovative companies (foroudi, jin, gupta, melewar, & foroudi, 2016). business organizations that have e-marketing capabilities, in general, are defined as an organizational strategy that is open to new ideas and new ways to meet customer needs (efrat, gilboa, & yonatany, 2017). innovative ways will have a positive impact on business organizations to improve marketing performance. e-marketing capability provides a solution for business organizations to add value to the company and help marketing to increase profits in using information technology. marketing performance is a factor that is used to measure the impact of marketing activities directed to produce marketing performance such as sales volume and sales growth rate as an indicator of the success of the ability to carry out marketing strategies (najafi-tavani, sharifi, & najafi-tavani, 2016). some studies state that e-marketing capability can influence marketing performance with new things that attract consumers (efrat, gilboa, & yonatany, 2017). therefore, based on the existing literature and theory, the hypothesis that can be taken is: h3: e-marketing capability has a positive effect on marketing performance 3. research method 3.1 research design this research is explanatory research which aims to determine the relationship between research variables which consist of knowledge sharing, e-marketing capability, and marketing performance. the study was conducted at the business incubator, business administration, faculty of social and political sciences, upn "veteran" east java, with research subjects being business people registered in business incubators, business administration, faculty of social and political sciences, upn "veteran" east java. the reason for choosing the object of research at the business incubators, business administration, faculty of social and political sciences, upn "veteran" east java was because the incubator was a platform for students who would start and run a business on campus. this research was conducted in june 2018-july 2018 with the consideration that students were attending training in business incubators. meanwhile, the research analysis tool used was pls sem (partial least squared structural equation model) with a seven levels likert scale, the seven levels of preference ranges from strongly disagree (1) to strongly agree (7). the selection of sem as an analytical tool is because this study analyzes the relationship and influence of each variable. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 26 table 1 research variable and indicator variable definition indicator source knowledge sharing knowledge sharing is also an integral component of knowledge management that helps transform individual knowledge into organizational knowledge and improves organizational performance explore ideas based on consumer suggestions, discuss with consumers in creating new product and receive criticism and suggestions from consumers. ( wang, sharma, & cao, 2016) e-marketing capability e-marketing capability is the integration process of a business organization in collecting and using the knowledge and skills to manage internal resources and directly adapt to the external environment through information technology, including internet always develop new products with innovation, always perfect existing products with innovations, always able to respond well to market changes and be able to maintain profitability during market changes that occur. (tang, fu, & xie, 2015) marketing performance marketing performance is a measurement that evaluates the activities carried out by business organizations through the overall marketing process of a business organization the value of our product sales have increased in the past one year, the number of sales of our products has increased in the past one year, profitability has increased in the past one year, and the volume of sales in the unit has increased in the past one year. ( wang & kim, 2017) 3.2 population and sample the population in this study are all students who have their own business. as the sampling technique used in the study was to use purposive sampling with the criteria of respondents determined are students who have businesses and also have become suppliers in business incubators, faculty of social and political sciences, upn "veteran" east java. the total number of respondents who are willing to be observed is 100; this number is considered to be sufficient because it has represented a population of 400 people. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 27 3.3 research framework picture 1 research framework this study employs three main variables; knowledge sharing, e-marketing capability, and marketing performance as seen in the table below. 4. research result and analysis 4.1 descriptive analysis characteristics of respondents in the study are presented in the following table. table 2 characteristics of respondents category frequency percentage sex male 69 69% female 31 31% age 15 – 20 years old 43 43% 20 – 25 years old 57 57%. duration of business 1 year 55 55% > 1 year 45 45% source: primary data processed, 2018 the results of this study indicate that respondents with male sex were 69% and female sex were 31%. the categories of respondents aged 15 years old 20 years old were 43% and categories of age 20 years 25 years were 57%. duration of business owned by students in one year is 55 or 55%, and 45 people or 45% of respondents have opened their business for longer than a year. statement/item testing is adapted from the instrument used in the study. knowledge sharing variables are adapted from research (wang & wang, 2012) about the knowledge sharing the dimension of tacit knowledge and explicit knowledge. the variable e-marketing capability testing is by the dimensions of innovation capability and responsive capability (lai & lin, 2012). knowledge sharing e-marketing capability marketing performance tacit knowledge explicit knowledge h1 h2 h3 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 28 furthermore, to test the variable marketing performance, it is adapted from the study ( najafitavani, sharifi, & najafi-tavani, 2016) that states the dimensions are divided into sales volume and sales growth rate. 4.2 validity and reliability tables 3, 4, and 5 show that the overall loading factor value on each indicator item has met the criteria of above 0.50. variance extracted shows the number of variances of the indicators extracted by the formed variables developed. a high variance extracted value indicates that the indicators have represented well the formalized variables developed. table 3 shows that the variance extracted have a good ave value in all constructs, because it meets the cut-off value requirements of equal to or above 0.50. reliability is one indicator of convergent validity. based on table 3,4,and 5, it can be seen that the composite reliability value for each variable is > 0.7, and the value of cronbach alpha in each variable is > 0.5. so it can be concluded that the data used in this study is reliable. table 3 descriptive statistics, indicator loadings, critical ratios, cronbach’s alpha, and ave of knowledge sharing questionnaire item code factor loading construct reliability cronbach alpha ave explore ideas based on consumer advice ks2 0.852 0.729 0.623 0.610 discuss with consumers in creating new product ks6 0.582 receive criticism and suggestions from consumers. ks7 0.614 source: primary data processed, 2018 table 4 descriptive statistics, indicator loadings, critical ratios, cronbach’s alpha, and ave of e-marketing capability questionnaire item code factor loading construct reliability cronbach alpha ave we always develop new products with innovation mc1 0.918 0.893 0.650 0.792 we always perfect existing products with innovations mc2 0.925 we always able to respond well to market changes mc3 0.841 we can maintain profitability during market changes that occur. mc4 0.572 source: primary data processed, 2018 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 29 table 5 descriptive statistics, indicator loadings, critical ratios, cronbach’s alpha, and ave of marketing performance questionnaire item code factor loading construct reliability cronbach alpha ave the value of our product sales have increased in the past year mp1 0.675 0.802 0.755 0.802 the number of sales of our products has increased in the past year mp2 0.836 profitability has increased in the past year mp3 0.711 the volume of sales in the unit has increased in the past year. mp4 0.644 source: primary data processed, 2018 discriminant validity is a test to see the variable construct is valid or not. table 6 shows that the value of discriminant validity > 0.6 so that the overall construct is valid. tabel 6 discriminant validity variable knowledge sharing e-marketing capability marketing performance knowledge sharing 0.687 e-marketing capability 0,780 marketing performance 0.912 source: primary data processed, 2018 4.3 research analysis hypothesis testing is done by using data processing software, smartpls, which can be seen in picture 2 below. picture 2 pls-sem result http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 30 based on picture 2, it is known that the highest coefficient value for the knowledge sharing variable is ks2, it is equal to 0.852 which indicates that ks2 has the strongest correlation among the other indicators, the lowest value is ks6 with 0.582. the variable e-marketing capability is mc1 with 0.925 which shows the strongest correlation among other indicators; the lowest value is mc4 with 0.572. the highest value marketing performance variable is mp2 with 0.836 which shows that for kp4, it has the strongest correlation among the other indicators, the lowest value is in mp4 with 0.644. 4.4 research discussion table 7 path coefficients (mean, stdev, t-values) original sample (o) sample mean (m) std deviation (stdev) t statistics (|o/stdev|) p values decision knowledge sharing → e-marketing capability -0.213 -0.233 0.126 1.697 0.090 h1 rejected knowledge sharing → marketing performance 0.770 0.774 0.048 15.90 0.000 h2 accepted e-marketing capability → marketing performance -0.136 -0.137 0.069 1.960 0,048 h3 rejected source: primary data processed, 2018 based on the results the first hypothesis test it is known that the significance value of t is obtained at 0,000 < 0,090, meaning that the first hypothesis is rejected with a statistical t value of 1,697 < t table (1973). so, there is no positive and significant influence between knowledge sharing on e-marketing capability, the higher the ks it is not necessary to have a positive impact on e-marketing capability. knowledge sharing is an activity that leads to changes and developments in science including the development of innovative products that can provide satisfaction to consumers. the more frequent knowledge is sharing by business organizations including business incubators, it will have a positive impact on the ability of students to create innovative products. however, the results of this study show that the knowledge shared through a training process does not have a good impact on online marketing skills; intense training is needed so that it has a positive influence. the results of this study are not in line with previous research conducted by ( hu, horng, & sun, 2009). the results of the second hypothesis test show that the significance value of t is obtained at 0,000 < 0,000, meaning that the second hypothesis is accepted with at value of statistics of 15.90 > t table (1973). so, there is a positive and significant influence of knowledge sharing on marketing performance; a higher knowledge sharing will increase marketing performance. if a business organization including a business unit owned by students gets a discussion forum in the concept of knowledge sharing it will help students to market their product in various marketing concepts and marketing strategies today to improve marketing performance that directs the profitability of the organization. the results of this study support or are consistent with the previous study conducted http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 31 by (tang, fu, & xie, 2015) which states that knowledge sharing affects marketing performance due to providing knowledge to business units in marketing development to produce significant marketing performance (tang, fu, & xie, 2015). the results of the third hypothesis test show that the significance value of t obtained is 0,000 < 0,048, meaning that the third hypothesis is rejected with a statistical t value of 1,970 < t table (1973). so, there is no positive effect between e-marketing capability on marketing performance. the more innovative and responsive products are by market demand, it will have an impact on demand so that purchases occur and it can be said that marketing performance is running well, but the results show that it does not influence marketing performance. the results of this study prove empirically that there is no e-marketing capability influence in marketing performance (mp). the results of this study are not in line with the results of previous studies conducted by ( najafi-tavani, sharifi, & najafi-tavani, 2016). 5. research conclusion and limitation 5.1 conclusion this research was conducted to determine the relationship between knowledge sharing and emarketing capability to marketing performance. first, the results of the study show that knowledge sharing does not have a positive and significant effect on e-marketing capability. knowledge sharing as a process to provide information through a business seminar forum and business training to plant ideas to students so as to produce innovative products and quickly respond to market changes and market demand, but the results of the study show that e-marketing capability as a variety of marketing capabilities information technology cannot be influenced by knowledge sharing because the knowledge provided is not on target so that it impedes online marketing. second, knowledge sharing has a positive and significant effect on marketing performance. knowledge sharing provides information on how to produce products by market developments and market demand so that sales increase, the increasing sales proves that marketing performance is successful when knowledge sharing plays a role. third, e-marketing capability as the ability of business units to introduce products to create good value has an impact on marketing performance. if e-marketing capability in a business unit is good, then marketing performance is also good. however, the e-marketing capability in this research cannot affect marketing performance. this is because the business units in the business incubator cannot meet market demand and keep up with market developments so that marketing performance is less effective in product development. 5.2 limitation this study has its limitations; it only focused on knowledge sharing, e-marketing capability, marketing performance. the further researcher is expected to conduct research that studies the characteristics consumer to provide better generalization. references ahmed, m. u., kristal, m. m., & pagell, m. 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(2017). environmental pressures and performance: an analysis of the roles of environmental innovation strategy and marketing capability. technological forecasting and social change, 117, 160–169, https://doi.org/10.1016/j.techfore.2016.12.005. *) lia nirawati, department of business administration, university of pembangunan nasional veteran, surabaya, indonesia (email: lianirawati@gmail.com) **) rangga restu prayogo, department of business administration, university of pembangunan nasional veteran, surabaya, indonesia (email: ranggarestuprayogo@gmail.com) http://creativecommons.org/licenses/by/4.0/ how product attributes affect consumer decision to purchase a premium scooter matic? by yudi helfi, fatihatul akbar, dinda mutiara pratiwi, fakhri mujahid maolani jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 93 how product attributes affect consumer decision to purchase a premium scooter matic? yudi helfi *) fatihatul akbar **) dinda mutiara pratiwi ***) fakhri mujahid maolani ****) abstract the automotive industry is one of the industries with the largest growth rate in indonesia. the motorcycle is chosen as the most favorite means of transportation due to their superiority in affordability, maintenance costs, fuel costs and effectiveness of travel time. among companies that compete fiercely for this market niche are pt. astra honda and pt. yamaha indonesia motor manufacturing. both of them recently launched a new variant in the premium automatic scooter segment namely yamaha nmax 155 cc and honda pcx 150 cc. although honda dominates the scooter market segment in general, the aisi data in the early semester of 2018 shows that the achievement of sales of honda pcx is far behind their closest competitor, yamaha nmax in the range of 2:8. so that it becomes interesting for the researchers to know the perceptions of quality, features, style, and design of honda pcx's attributes on consumer decisions in purchasing related products. respondents involved in this study were 60 members of the hpci (kapursuci) community in karawang, purwakarta, subang and cikarang using non-probability sampling techniques, which is accidental sampling on filling each questionnaire. the results of this study conclude that there is a positive influence between product attributes possessed by honda pcx (quality, features, and product design) on the purchasing decisions. keywords: product attributes; purchasing decisions; product quality; product features; product style; product design 1. introduction 1.1 research background indonesia is one of the countries in asia that has significant growth in the automotive sector with a prediction of total sales of around 2.3 million vehicles by 2019. motorcycles are the favorite transportation mode used by the community due to the superiority in terms of affordability, fuel costs, the effectiveness of travel time, comfort and ability to break through traffic jams on the highway (setiawan, 2013). in addition, the increasing number of motorized vehicle ownership is also caused by the ease of purchasing requirements (low down payment and installment) and limited public transportation. data from the indonesian motorcycle industry association (aisi) in 2018 showed that although honda was still the leader of the scooter motorcycle market in indonesia, honda recorded a decline in market share of around 3-4% at the beginning of 2018. this is what made honda recently launched a new variant to the automatic premium category named honda pcx 150 cc. this automatic motorcycle by honda does look different in general; the design is deliberately made bigger and wider to give a more sporty and stylish impression, supported by a variety of solid color choices in the motorcycle body. (fransiska & seminari, 2018). honda pcx 150 cc has also been equipped with esp technology (enhanced smart power), acg starter, and is equipped with http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 94 advanced features, including idling stop system, combined brake system (cbs), pgm-fi, antitheft alarm, automatic side stand, magnetic ignition, and cellphone charger. the iss feature in the honda pcx 150 cc is claimed by honda to be a superior feature that is not yet available in other premium scooters. honda pcx 150 cc also has the advantage value for money because it has more complete features but with an affordable price. it is hoped that the offer of comprehensive product attributes can restore honda's dominance in the scooter market segment. evaluating product attributes is one of the most important stages for consumers before making a purchase decision. product attributes and purchasing decisions are a relationship that affects each other. therefore, based on the description of the background presented, the author is interested in conducting research entitled how product attributes affect consumer decision to purchase an automotive product? 1.2 research problem based on the research background, the formulation of the problem of this study is how the product attributes that consist of quality, features, and style and design effect on the purchase decision of premium automatic scooter, honda pcx 150 cc? 1.3 research purpose based on the formulation of the problem, the authors formulated several objectives of the study to find out how the product attributes that consist of quality, features, and style and design affect on the purchase decision of premium automatic scooter, honda pcx 150 cc. 2. theoretical framework and hypotheses development there are several previous studies that are used as references in this study (see table 1). table 1 previous research no conceptual variable relationship result source 1 the influence of product attributes, product quality, and promotions on the purchases of honda brand cars in medan product attributes, product quality, partial and simultaneous promotion have a significant effect on purchasing decisions aditi & hermansyur (2018) 2 predicting the consumers purchase intention of durable goods: an attribute –level analysis camera attribute like sensor, display, image stabilization pursue the consumer attention bag, tiwari, & chan (2017) 3 effect of product attributes on custom-made brand shoe purchase decisions (study on indonesian custom-made trademarks) product attributes have a positive effect on purchasing decisions by 48.5%, pradana & reventiary (2016) 4 the effect of product attributes on purchase decisions (study of kawasaki-bajaj pulsar 200 ns in bandar lampung) product features and product design have a significant effect on purchasing decisions. while the product brand and product quality have no significant effect on purchasing decisions siregar (2016) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 95 no conceptual variable relationship result source 5 analysis of the effect of price, product quality, and design on the purchasing decisions of automatic scooter type honda motorcycle price and product design affect the purchasing decisions of automatic scooter type honda motorcycle. while the product quality has no partial effect on purchasing decisions. martini (2015) 6 analysis of the effect of product attributes on decisions of purchasing suzuki satria fu 150 cc motorcycle in malang partially, the product quality variable is the only variable that is proven to influence purchasing decisions anggipura & yuniarinto (2013) 2.1 product attributes product attributes are the benefits that it will offer. these benefits are communicated and delivered by product attributes such as quality, features and style and design (kotler & armstrong, 2014). a) product quality is the ability of a product to provide performance in accordance with its function. product quality is also defined as the characteristics of a product or service that is able to satisfy customer needs by determining the function of a product of good quality. (tjiptono & chandra, 2016) product quality has eight dimensions as follows: performance, features, reliability, serviceability, conformance to specifications, durability, estethica, and perceived quality. b) product features are competitive means to differentiate company products from competing products. (putra & seminari, 2014) mentions that feature dimensions or indicators consist of a diversity of features, features according to expectations, and feature excellence. according to (dewi & jatra, 2012) dimensions or indicators of product features consist of feature completeness, feature need, feature attraction and ease of use. c) product design is a concept that is bigger than the style. (kotler & armstrong, 2014) state the dimensions of product design consist of shape, features, quality, durability, reliability, easy to improve, and style. 2.2 purchase decision purchasing decisions are a process where consumers recognize the problem, find information about a particular product or brand and evaluate how well each of these alternatives can solve the problem, which then leads to purchasing decisions, according to (tjiptono, 2014). a) choice of consumer products, which is the decision to buy a product or use the money for other purposes. in this case, the company must focus its attention on people who are interested in buying a product and the alternatives they are considering. b) choice of brands, in which the consumers must make decisions about the brand name that will be purchased, each brand has its own differences, in this case, the company must know how consumers choose a brand. c) choice of the distributor, the consumer must make a decision about which distributor to visit. every consumer has different terms in determining the distributor, it can be due to the factor of location, low prices, complete inventory, convenience in shopping, the width of the place and others. d) time of purchase, the consumer's decisions in the choice of time of purchase can vary, for example, there are those who buy every day, once a week, once every two weeks and so http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 96 forth. e) amount of purchases, the consumers can make decisions about how many products will be spent at a time. purchases made may be more than one. companies must prepare the number of products according to different desires. f) payment methods, the consumers can make decisions about the method of payment that will be made in using products or services based on the research framework and paradigm that researchers have made based on references, the researchers formulated the following hypothesis: h1: there is a positive effect between product attributes on purchasing decisions. 3. research method 3.1 research design the research method is a scientific way to obtain data with specific purposes and uses (sugiyono, 2017). the type of research used in this study was quantitative. this study used descriptive verification method that describes the influence of two or more different variables in accordance with the facts, the descriptive verification method is used to test product attributes on purchasing decisions. the data needed is data that is in accordance with the problems that exist and are in accordance with the objectives of the study, so that the influence between the variables examined through hypothesis testing can be found. the researchers conducted data analysis using smartpls 3.0 software. pls (partial least square) was chosen by researchers on the grounds that this data analysis method is based on the assumption that the sample does not have to be large (less than 100) to be analyzed and has residual distribution. 3.2 population and sample the population taken in this study was the consumers of the hpci (honda pcx club indonesia) community kapursuci (karawang, purwakarta, subang, and cikarang) of 150 members. it consisted of karawang chapter: 70 members, cikarang chapter: 40 members, purwakarta chapter: 30 members, and subang chapter: 10 members. the number of samples is determined based on the calculation of the solvin formula with an error tolerance level of 10%, with 60 respondents. the sample collection method used in this study is non-probability sampling (accidental sampling). non probability sampling is a sampling technique that does not provide the same opportunity for each population member to be selected as the sample. accidental sampling is a technique for determining samples based on coincidence, that is, anyone who accidentally meets with a researcher can be used as a sample if he or she is deemed suitable as a data source (sugiyono, 2017). 𝑛 = 𝑁 1 + 𝑁 (𝑒)2 notes : n = number of samples n = number of populations e = presentage of error tolerance level of 10% so the calculation of the solvin formulation in this study is as follows http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 97 𝑛 = 150 1 + 150 (0,1)2 𝑛 = 60 people 3.3 research framework picture 1 research framework the item statement in this study can be seen in table 2. table 2 construct, variable, and indicator construct variable indicator product attributes (kotler & armstrong, 2014) quality durability compliance with specifications excellence serviceability feature feature completeness feature diversity feature as expected ease of use design display color shape purchase decision (tjiptono, 2014) product choices the desire to buy a product products as expected product excellence brand choices brand image brand popularity reputation http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 98 supplier choices location price stock convenience time of purchase needs discount certain time purchase quantity needs desire income payment method complete features ease of making payments speed 4. research result and analysis 4.1 descriptive analysis table 3 respondent profile no description percentage (%) no description percentage (%) 1 gender 3 income male female 88.3 11.7 idr < 3 millions idr 3-5 millions 18.3 41.7 2 occupation idr > 5 millions 40 student employee/entrepreneur others 3.3 80 16.7 source: primary data processed, 2018 based on table 3, it can be seen that the majority of respondents in this study are males who have a profession as private employees/self-employed with income of idr 3 to 5 million/month. 4.2 validity and reliability validity test is intended to determine the validity of the questionnaire items used in data collection. the results of r count then compared with the value of r table with a significance coefficient (α) at the level of 5% or 0.05. the value of r table for the significance of 0.05 with n = 60 and the testing for two directions is 0.2542. so the statement is valid if the calculated r-value ≥ 0.2542. the results of the calculation of validity in table 3 show that all items in the statement can be categorized as valid. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 99 table 3 validity test result variabel item r value r table decision variable x (product attributes) statement 1 0,531 0,2542 valid statement 2 0,601 0,2542 valid statement 3 0,539 0,2542 valid statement 4 0,628 0,2542 valid statement 5 0,466 0,2542 valid statement 6 0,599 0,2542 valid statement 7 0,608 0,2542 valid statement 8 0,623 0,2542 valid statement 9 0,620 0,2542 valid statement 10 0,458 0,2542 valid statement 11 0,594 0,2542 valid variable y (purchase decision) statement 12 0,530 0,2542 valid statement 13 0,526 0,2542 valid statement 14 0,574 0,2542 valid statement 15 0,445 0,2542 valid statement 16 0,625 0,2542 valid statement 17 0,565 0,2542 valid statement 18 0,605 0,2542 valid statement 19 0,643 0,2542 valid statement 20 0,698 0,2542 valid statement 21 0,652 0,2542 valid statement 22 0,703 0,2542 valid statement 23 0,619 0,2542 valid statement 24 0,656 0,2542 valid statement 25 0,426 0,2542 valid statement 26 0,414 0,2542 valid statement 27 0,638 0,2542 valid statement 28 0,677 0,2542 valid statement 29 0,794 0,2542 valid statement 30 0,602 0,2542 valid source: primary data processed, 2018 furthermore, the test of the measurement model (inner model) also needed to be done to assess the validity and reliability of the model carried out with convergent validity, composite variables and average variance extracted (ave). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 100 picture 2 outer model (primary data processed, 2018) ghozali (2014) states that the indicator is declared valid if it has a convergent validity value of 0.7 while the outer loading value that can still be tolerated is up to 0.5. based on picture 2, it can be seen that all indicators have a value of > 0.5 so it can be said that all indicators are valid. after testing the outer loading, then the construct reliability test was also conducted by measuring two criteria, reliability composite and cronbach's alpha from the indicator block that measures the construct. the following are the reliability composite test results and cronbach alpha from smartpls 3.0: table 4 reliability test variable cronbach's alpha composite reliability rule of thumb decision (x) product attributes 0,786 0,822 0,60 reliable (y) purchase decision 0,896 0,868 0,60 reliable source: primary data processed, 2018 based on the results in the table above it can be concluded that all constructs have cronbach's alpha value > 0.6 and composite reliability value > 0.7 so that it can be seen that the construct has good reliability. 4.3 research analysis to find out whether the hypothesis is accepted or rejected, p-value was used at a significance of 5% or 0.05. if the p-value is < 0.05, then h0 is rejected, meaning there is an influence between the two variables studied. conversely, if p-value > 0.05 then h0 is accepted, meaning that there is no influence between the two variables studied. the following are the results of the structural model evaluation obtained from smart-pls 3.0 bootstrapping report. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 101 table 5 shows that the p-values obtained in this study are < 0.05, which means that h0 is rejected or in other words, it can be concluded that there is an influence between the observed product attributes on the purchasing decisions of 47.8%. table 5 bootstrapping report smart-pls 3.0 test p values (x) product attributes -> (y) purchase decision 0,000 source: primary data processed, 2018 table 6 r-square result r square (y) purchase decision 0,478 source: primary data processed, 2018 4.4. research discussion table 7 product attributes dimension no dimension total scores ideal total scores percentage 1 product quality 1009 1200 84% 2 product features 1002 1200 84% 3 product design 771 900 86% product attributes 2782 3300 84% source: primary data processed, 2018 based on tables 7 and 8, it can be seen that overall, the majority of respondents in this study have positive perceptions towards the offer of product attributes. furthermore, the product choice dimension has the highest total score. therefore, based on the explanation, it can be concluded that product design is the dominant factor or dimension that is most considered by respondents in evaluating product attributes. meanwhile, the choice of products (the desire to buy products, product as expected, product excellence) becomes the dominant factor or dimension in the purchasing decisions on honda pcx products that were used as the object of this study. the majority of respondents responded positively to the proposed purchase decision; this indicates that the creation of a purchasing decision on honda pcx is only a matter of time. moreover, the results of statistical tests show that there is a positive and significant influence between product attributes and the purchasing decisions of honda pcx premium automatic scooters with r-square value of 47.8%. the results of this study reinforce the results of previous studies, including aditi & hermansyur (2018), bag, tiwari, & chan (2017), pradana & reventiary (2016), siregar (2016), martini (2015), anggipura & yuniarinto (2013) which state that there are positive influences between product attributes and purchasing decisions. the more positive the assessment of a product attributes, the greater the chance of a purchasing decisions. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 102 table 8 purchase decision dimension no dimension total scores ideal total scores percentage 1 product choices 760 900 84% 2 brand choices 805 1200 67% 3 supplier choices 926 1200 77% 4 time of purchase 605 900 67% 5 purchase quantity 742 900 82% 6 payment method 740 900 82% purchase decision 4578 5700 80% source: primary data processed, 2018 5. research conclusion and limitation 5.1 conclusion product attribute variables were measured through the product quality dimension, product feature dimension, and product design dimension. the product design dimension has the highest average score which means that product attribute variables can be described through the design of the product offered. purchasing decision variables are measured through product choice dimension, brand choice dimension, supplier choice dimension, time of purchase dimension, purchase quantity dimension, and payment method dimension. product choices dimension has the highest total score and time of purchase dimension has the lowest score which means that the purchasing decision variable can be described through the product choice dimension. there is a positive influence between product attributes and purchasing decisions with points of 47.8% and the remaining 52.2% is explained by other variables outside the research. 5.2 limitation this study has its limitations, it only looked at the product attribute in one conceptual. the next researcher is expected to conduct research that studies the characteristics of attribute in several categories of companies to provide better generalization. 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(2018). pengaruh atribut produk, kualitas produk dan promosi, terhadap keputusan pembelian mobil merek honda di kota medan, jurnal ilmiah manajemen dan bisnis, 19(1), 64–72. https://doi.org/10.30596/jimb.v19i1.1743. anggipura, e. a., & yuniarinto, a. (2013). analisis pengaruh atribut produk terhadap keputusan pembelian motor suzuki satria fu 150 cc di kota malang. jurnal ilmiah mahasiswa feb, 1(1). retrieved from https://jimfeb.ub.ac.id/index.php/jimfeb/article/view/165. bag, s., tiwari, m. k., & chan, f. t. s. (2017). predicting the consumers purchase intention of durable goods: an attribute–level analysis. journal of business research, 94, 408-419. https://doi.org/10.1016/j.jbusres.2017.11.031. dewi, n. l. g. d. n., & jatra, m. (2012). pengaruh atribut produk terhadap keputusan pembelian handphone di kota denpasar, e-jurnal manajemen universitas udayana, 2(2), 248–261. retrieved from https://ojs.unud.ac.id/index.php/manajemen/article/view/4359. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 103 fransiska, p. a., & seminari, n. k. (2018). peran citra merek dalam memediasi pengaruh daya tarik iklan terhadap niat beli honda pcx 150, e-jurnal manajemen universitas udayana, 7(7), 3797–3826. https://doi.org/10.24843/ejmunud.2018.v07.i07.p13. ghozali, i. (2014). structural equation modeling, metode alternatif dengan partial least square (pls) (4th ed.). semarang: badan penerbit universitas diponegoro kotler, p., & armstrong, g. (2014). principle of marketing (15 th). new jersey: pearson prentice hall. martini, t. (2015). analisis pengaruh harga, kualitas produk, dan desain terhadap keputusan pembelian kendaraan bermotor merek honda jenis skutermatic. jurnal penelitian, 9(1), 113131. https://doi.org/10.21043/jupe.v9i1.854. pradana, m., & reventiary, a. (2016). pengaruh atribut produk terhadap keputusan pembelian sepatu merek customade (studi di merek dagang customade indonesia), jurnal manajemen 6(1), 1–10. https://doi.org/10.26460/jm.v6i1.196. putra, p. a. w., & seminari, n. k. (2014). pengaruh fitur, layanan pelengkap dan garansi terhadap keputusan pembelian handphone (studi kasus pada mahasiswa s1 fakultas ekonomi dan bisnis universitas udayana denpasar), e-journal manajemen universitas udayana, 2349–2362. retrieved from https://ojs.unud.ac.id/index.php/manajemen/article/view/8665. setiawan, f. h. a. (2013). hubungan antara tingkat ketertarikan pada elemen-elemen iklan televisi dengan brand knowledge (studi eksplanatif hubungan antara tingkat ketertarikan pada elemen-elemen iklan televisi yamaha mio j versi “1000% joyful” dengan pengetahuan merek. universitas atma jaya yogyakarta. siregar, a. d. (2016). pengaruh atribut produk terhadap keputusan pembelian (studi pada konsumen produk kawasaki-bajaj pulsar 200 ns di kota bandar lampung). universitas lampung. retrieved from http://digilib.unila.ac.id/23333. sugiyono, p. d. (2017). metode penelitian pendidikan pendekatan kuantitatif, kualitatif dan r&d. bandung: alfabeta. tjiptono, f. (2014). pemasaran jasa-prinsip, penerapan, dan penelitian. yogyakarta: andi offset. tjiptono, f., & chandra, g. (2016). service, quality, dan satisfaction (4th ed.). yogyakarta: andi offset. *) yudi helfi, department of management, university of singaperbangsa, karawang, indonesia (email: yudi.helfi@fe.unsika.ac.id) **) fatihatul akbar, department of management, university of singaperbangsa, karawang, indonesia (email: fatihatul.akbar16147@student.unsika.ac.id) ***) dinda mutiara pratiwi, department of management, university of singaperbangsa, karawang, indonesia (email: dinda.mutiara16112@student.unsika.ac.id) ****) fakhri mujahid maolani, department of management, university of singaperbangsa, karawang, indonesia (email: fakhri.mujahid16144@student.unsika.ac.id) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 41-59 http://dx.doi.org/10.31106/jema.v19i1.13901, issn (online) 2597-4017 41 determinants of transfer pricing aggressiveness and the mediation role of tax burdens: evidence from indonesia febriyadi tri hadmoko1, ferry irawan2* 1 department of accounting, polytechnic of state finance stan, tangerang selatan, indonesia 2 department of accounting, polytechnic of state finance stan, tangerang selatan, indonesia *corresponding author(s) email: ferry.irawan@pknstan.ac.id abstract transfer pricing aggressiveness is influenced by various factors, including the complexity of operations, foreign direct investment, and tax haven utilization. this study was conducted to re-examine the factors that affect the transfer pricing aggressiveness by including the tax burden as a mediating variable which is expected to explain the inconsistency of the results of previous studies. this study uses data from manufacturing companies listed on the indonesian stock exchange from 2016 to 2020 with a total observation of 350. the analysis technique uses panel data regression with fixed effect model and random effect model approaches. the results of the study show that the complexity of operations and tax haven utilization has a positive effect on transfer pricing aggressiveness. however, foreign direct investment does not affect transfer pricing aggressiveness. further analyses indicate the tax variable partially mediates the effect of complexity operation and tax haven utilization on transfer pricing aggressiveness. in addition, the tax variable only has an indirect effect of foreign direct investment on transfer pricing aggressiveness. this means that foreign direct investment is used as a vehicle for transfer pricing. keywords: transfer pricing aggressiveness; complexity; foreign direct investment; tax haven; taxation jel code: f12, f23, h21, h26, l12, l51 doi: 10.31106/jema.v19i1.13901 article history: received 2021-11-19 reviewed 2022-03-22 revised 2022-04-07 accepted 2022-04-18 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ mediation of tax burden in complexity operation, foreign direct investment, and tax haven utilization to transfer pricing aggressiveness by febriyadi tri hadmoko, ferry irawan 42 introduction transfer pricing in business as usual is the price charged between divisions in a company (mowen et al., 2015). however, the problem is that from a tax point of view, transfer pricing schemes are practices carried out by multinational companies to transfer their profits from countries with high tax rates to countries with low tax rates (rugman & eden, 2017). as a result, transfer pricing practices can reduce potential tax revenues (nguyen et al., 2019). figure 1. target and realization of tax revenue in indonesia source: processed from national public procurement agency the failure to achieve revenue realization could be caused by profit shifting cases including, the alleged transfer pricing scheme carried out by pt ae tbk. with its subsidiary in singapore. according to the global witness report (2019) describes that pt. ae conducts coal sales transactions to its subsidiary in singapore, namely coaltrade services international at a price of inexpensive. then coaltrade services resells the coal at a high price to an independent party. with this scheme, international global witness indicates there is potential for tax payments of us$ 125 million lower than they should be to the government of indonesia (global witness, 2019). transfer pricing generally occurs in inter-company transactions. so, the mechanism for determining the price of transactions between companies (intra-firm trade) is determined by the company itself so that it does not go through a fair market price mechanism (quint & rudsinske, 2020). meanwhile, one-third of global trade is carried out using inter-company transactions (antras, 2003). therefore, there is a very high possibility of potential loss of tax revenue from transfer pricing activities, so it is important to know what factors affect transfer pricing aggressiveness. jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 41-59 http://dx.doi.org/10.31106/jema.v19i1.13901, issn (online) 2597-4017 43 one of the factors that influence transfer pricing aggressiveness is operation complexity. one indication of the level of complexity of operations is indicated by the number of owners in subsidiaries (liana et al., 2020). tests carried out by researchers include dinca & fitriana (2019), liana et al. (2020), rezky & fachrizal (2018), and richardson et al. (2013) show that multinational influences transfer pricing decisions. there are limited studies that used business or operation complexity due to the forces of internalization on the effect of transfer pricing aggressiveness (soesetio et al., 2021). therefore, this topic needs to be re-examined within indonesian cases. another factor that influences transfer pricing aggressiveness is foreign direct investment. indonesia enjoys the second largest foreign direct investment inflow in asean. based on the asean statistical yearbook 2020, indonesia enjoyed an fdi inflow of us$23,943 million (asean, 2020). the inflow of funds through foreign direct investment can be useful in moving the indonesian economy. on the other hand, fdi is used by multinational companies to generate global trade with intercompany transactions. previous studies conducted by choi et al. (2017) stated that transfer pricing can be used as a vehicle to shift profits from high-tax countries to low-tax countries. therefore, the area of the relationship between fdi and transfer pricing aggressiveness becomes an opportunity for future research. the factor that influences transfer pricing aggressiveness is tax haven utilization. multinational corporations can take advantage of tax haven countries to reallocate taxable income to low-tax jurisdictions and reduce domestic taxes on foreign income (desai et al., 2006). the tests using tax haven utilization and transfer pricing aggressiveness have been carried out by taylor et al. (2015) showing that tax haven utility has a positive effect on transfer pricing aggressiveness. domestic research by waworuntu & hadisaputra (2016) could not prove the existence of a relationship between the use of tax haven countries and the aggressiveness of transfer pricing. the lack of research and the inconsistency of research results linking the use of tax haven countries with transfer pricing aggressiveness provide opportunities for further research. the tax burden is one of the reasons for multinational companies to practice transfer pricing (desai et al., 2006). the difference in the tax burden between the two tax jurisdictions is borne by multinational companies in one ownership, encouraging companies to conduct transfer pricing to reduce the tax burden (rugman & eden, 2017). several previous studies have tested the relationship between the tax burden and transfer pricing, but there are still research gaps, research by lo et al. (2010), abbas & eksandy (2020), jafri & mustikasari mediation of tax burden in complexity operation, foreign direct investment, and tax haven utilization to transfer pricing aggressiveness by febriyadi tri hadmoko, ferry irawan 44 (2018), mulyani et al. (2020), susanti & firmansyah (2018), yulia et al. (2019) shows that taxes have a significant effect on transfer pricing, but research by ainiyah (2019), mispiyanti (2015), saifudin & putri (2018) shows that tax does not affect transfer pricing. therefore, there is an opportunity to research the tax burden factor on transfer pricing. the role of the tax burden in other study shows that multinational company has a significant effect on the tax burden (puspita et al., 2018), foreign direct investment affects the tax burden (park et al., 2016), and tax haven utilization has a significant effect on tax burden (utami et al., 2021). therefore, the tax burden can mediate between independent variables to the dependent variable proposed in the study. given the threat of transfer pricing practices that can become a potential loss for state revenue by transferring profits or profits so it is necessary to research to determine the factors that affect the aggressiveness of transfer pricing. thus, the directorate general of taxes, indonesia, as the policyholder can take steps to anticipate the aggressive behavior of transfer pricing in multinational companies. literature review transfer pricing aggressiveness according to jensen & meckling (1976), agency theory is defined as a cooperation contract between the principal and the agent. the principal gives authority to the agent to carry out activities that are beneficial to the principal. the principal as the owner of capital has an interest in getting a return on his investment while the agent has an interest in getting a return through bonuses or work incentives. this difference in interests is called the agency problem. shareholders will assess management in terms of its ability to generate maximum profits so that the bonuses obtained are also large. as a result, all means will be taken by management to produce financial statements that are "profitable" or "beautify" financial statements. this condition is exacerbated by the difference in the information received by each party or is referred to as asymmetric information. this difference in information is used to beautify financial statements by using a series of accounting policies, one of which is transfer pricing. transfer pricing is a sensitive topic in business and the global economy as the activity of transfer pricing by many multinational corporates may have an impact to reduce a country’s tax revenue by exploiting regulatory gaps and moving earnings to nations with lower tax rates. transfer pricing is referred to inter-company pricing arrangements linked to transactions between associated business entities (holtzman & nagel, 2014). transfer pricing jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 41-59 http://dx.doi.org/10.31106/jema.v19i1.13901, issn (online) 2597-4017 45 is a method of tax avoidance and evasion in general. while tax evasion can be defined as the reduction of explicit taxes paid by firms by disobeying taxation rules, tax avoidance is a transaction method that aims to reduce tax liability by exploiting tax loopholes in a country without violating any taxation rules (hope et al., 2013; lanis & richardson, 2013; sugeng, prasetyo, & zaman, 2020). recent studies from hiemann & reichelstein (2012) and amidu, coffie, & acquah (2019) stated that although they can leverage operating performance by doing tax avoidance, managers refuse to engage in tax avoidance activities because of the conflict of interest that occurs between managers and shareholders. they only engage in avoidance activities when they stand to receive some personal benefit from doing so. therefore, the assumption of the agency theory that is underlying humans as self-interested characters who are behaving rationally to maximize their private gains is supported. the complexity of business operations based on agency theory, managers as agents have interests that are different from the interests of the principal so the differences in decision making, especially in corporate strategy. the complexity of the company's operations is determined by the location and number of subsidiaries as well as product diversification and market share. the more ownership of the subsidiary, the more complex the company's operations (liana et al., 2020). this study uses a multinational approach as an indicator of complexity. this research is reinforced by richardson et al. (2013) who prove that multinational factor has a positive influence on transfer pricing decisions by taking advantage of differences in tax policies between countries. this research is strengthened by rezky & fachrizal (2018) who states that multinationality is related to transfer pricing aggressiveness. in addition, dinca & fitriana (2019) argue that the multinationality of companies in indonesia affects transfer pricing aggressiveness to reduce group company taxes by placing subsidiaries in low tax jurisdictions. h1: operation complexity has a positive effect on transfer pricing aggressiveness foreign direct investment a study from choi et al. (2017) concludes that multinational companies tend to practice transfer pricing with the initial step through a series of foreign direct investments in the destination country. this study considers the results of research by de mooij & liu (2020) that is examining the relationship between transfer pricing regulation on real investment in mediation of tax burden in complexity operation, foreign direct investment, and tax haven utilization to transfer pricing aggressiveness by febriyadi tri hadmoko, ferry irawan 46 multinational companies and shows that the transfer pricing regulation causes a decrease in investment in multinational companies. h2: foreign direct investment has a negative effect on transfer pricing aggressiveness tax haven utilization according to agency theory, managers as agents and stakeholders as principals have different interests so they are behind the differences in decision making, especially accounting and reporting policies. one of the studies conducted by taylor et al. (2015) on 286 us multinational companies in the period 2006-2012 showed the use of tax haven countries. however, research conducted in indonesia by waworuntu & hadisaputra (2016) shows there is no relationship between transfer pricing aggressiveness and tax haven utilization. the inconsistent results of these studies provide opportunities for further research on the relationship between tax haven utilization and transfer pricing aggressiveness. h3: tax haven utilization has a positive effect on transfer pricing aggressiveness tax burden a study from lo et al. (2010) shows that taxes affect transfer pricing manipulation. domestic research by abbas & eksandy (2020) who researched the effect of the effective tax rate, tunneling incentive, and exchange rate resulted in the conclusion that the tax burden proxied by the earning-tax rate and the exchange rate had a positive effect on transfer pricing aggressiveness. similar results were also carried out in a study by jafri & mustikasari (2018), mulyani et al. (2020), and yulia et al. (2019) showed that taxes affect transfer pricing aggressiveness. h4: taxes has a positive effect on transfer pricing aggressiveness the mediation role of tax burden on transfer pricing aggressiveness according to positive accounting theory, one of the hypotheses that explain agents' deviant behavior is the political cost hypothesis that declares management as an agent has opportunistic behavior that deviates by reducing the costs given to the government, one of which is reducing the tax burden. liana et al. (2020) describe that the opportunity for multinational companies to use several tax policies in several countries through their subsidiaries can influence transfer pricing decisions. multinational companies with several companies in various countries tend to use transfer pricing schemes to reduce or delay tax obligations (dharmapala, 2008). research by puspita et al. (2018) shows that multinationality affects taxes. in addition, several works of literature are proxied by the effective tax rate or jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 41-59 http://dx.doi.org/10.31106/jema.v19i1.13901, issn (online) 2597-4017 47 effective tax rate affects transfer pricing (abbas & eksandy, 2020; mulyani et al., 2020; yulia et al., 2019). h5: taxes mediates the effect of operation complexity on transfer pricing aggressiveness moreover, research conducted by choi et al. (2017) concluded that multinational companies carry out a series of funding through investments in destination countries to generate trade. due to the difference in rates between countries, multinational companies tend to apply transfer pricing schemes for reasons of reducing the tax burden. h6: taxes mediates the effect of foreign direct investment on transfer pricing aggressiveness finally, several studies have tested the effect of tax haven utilization on taxes. research by utami et al. (2021) shows that tax haven utilization affects taxes. thus, sianipar et al. (2020) reinforced the model and found that the use of tax havens has a significant effect on tax avoidance as proxied by the effective tax rate. h7: taxes mediates the effect of tax haven utilization on transfer pricing aggressiveness control variables the control variable is a variable that is made constant or fixed so that the influence of the independent variable on the dependent variable is not influenced by other factors outside the study (sugiyono, 2015). the control variables are treated the same in the multiple linear regression equation but are not included in the research hypothesis. the control variables in this study consist of three variables, namely firm size (dinca & fitriana, 2019; rego, 2003; taylor et al., 2015), tunneling incentive (johnson et al., 2000; susanti & firmansyah, 2018), profitability (jacob, 1996; taylor et al., 2015), and leverage (taylor et al., 2015) methods this study uses quantitative methods using statistical equations to determine the significance of the effect of the independent variable on the dependent variable. this research starts by making research designs, making research instruments, collecting data, processing and analyzing data, to making reports on research results. the data analysis technique uses descriptive data analysis and inferential data analysis (sugiyono, 2015). this study uses the manufacturing sector as the object population the study because it has a dominant number of companies (199) compared to other sectors. the population is then selected based on the specified criteria to obtain a research sample such as companies should have complete annual financial reports, should have transactions with foreign related parties, mediation of tax burden in complexity operation, foreign direct investment, and tax haven utilization to transfer pricing aggressiveness by febriyadi tri hadmoko, ferry irawan 48 and should have complete financial statement value data for the period 2016 to 2020. the result of the sample selection that matches the predetermined criteria is 70 manufacturing companies. to summarize, there are 350 (70 manufacturing companies x 5 years) companyyear data are obtained for the study. figure 2. research framework. control (size, tun, profit, lev) transfer pricing aggressiveness (tpa) tax burden (tax) operation complexity (complex) foreign direct investment (fdi) tax haven utilization (thav) this study uses four types of variables. first, the dependent variable, namely transfer pricing aggressiveness, which measured by the total score method of eight indicators taken from the information in the notes of the financial statements (richardson et al., 2013). second, independent variables, namely operation complexity, foreign direct investment, and tax haven utilizations. while operation complexity is measured by the multinationality approach by dividing sales of foreign-related parties by total sales (liana et al., 2020), foreign direct investment is measured by the ratio of gross investment expenditures of tangible assets compared to the initial value of tangible assets (de mooij & liu, 2020). furthermore, tax haven utilization is measured by (dichotomy) dummy in this study (ramadhan & kustiani, 2017), which means that if the company has transactions with related parties domiciled in a tax haven country, the value is one, and the value is zero if vice versa. third, mediating variable, namely tax burden which is measured by effective tax rate namely total current tax expense divided by total profit before tax. lastly, the control variables were also used in this study by including three variables which are firm size, tunneling incentive, profitability, and leverage. the detailed research framework can be seen in figure 2. jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 41-59 http://dx.doi.org/10.31106/jema.v19i1.13901, issn (online) 2597-4017 49 table 1. research instruments variables measurement dependent variable: transfer pricing aggressiveness the total score of eight indicators taken from the information in the notes of the financial statements independent variables: operation complexity the index sum score of 7 richardson criteria’s foreign direct investment : book value of tangible fixed assets in year t : book value of tangible fixed assets in year t-1 : depreciation value in year t tax haven utilization 1 denotes the company that conducts transactions with related parties domiciled in tax haven countries. 0 denotes the company that does not conduct transactions with related parties domiciled in tax haven countries mediation variable: tax burden control variables: firm size ln(total asset) tunneling incentive profitability leverage this study uses model 1 to analyze hypotheses one to four. tpait = α + β1itcomplexit + β2itfdiit + β3itthavit + β4itsizeit + β5ittunit + β6itprofitit + β7levit + ε (1) models 2 and 3 to analyze hypotheses five to seven. taxit = α + β1itcomplexit + β2itfdiit + β3itthavit + β4itsizeit + β5ittunit + β6itprofitit + β7levit + ε (2) tpait = α + β1itcomplexit + β2itfdiit + β3itthavit + γtaxit + β4itsizeit + β5ittunit + β6itprofitit + β7levit + ε (3) mediation of tax burden in complexity operation, foreign direct investment, and tax haven utilization to transfer pricing aggressiveness by febriyadi tri hadmoko, ferry irawan 50 descriptions tpa : transfer pricing aggressiveness complex : operation complexity fdi : foreign direct investment thav : tax haven utilization tax : tax burden size : firm size tun : tunneling incentive profit : profitability lev : leverage α,β,γ : constants ε : error table 2. regression model selection model model 1 model 2 model 3 chow test fem fem fem langrange multiplier test rem rem rem hausman test rem fem rem selected model rem fem rem *) fem is fixed effect model, rem is random effect model table 3. normality test model jarque-bera probability decision model 1 0.361 normally distributed model 2 0.002 not normally distributed model 3 0.381 normally distributed before analyzing the results of model regression, the chow test, lagrange multiplier test, and hausman test were conducted to select the best regression model and the classical assumption test to obtain an estimated value that meets the blue (best linear unbiased estimator) criteria (ghozali, 2016). table 2 of the regression selection model, tables 3 and 4 of normality and multicollinearity shows the detailed result of the classical assumption test. table 2 shows that models 1 and 3 of regression are rem. while rem estimation is done using the gls (generalized least square) method so that the estimation method has jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 41-59 http://dx.doi.org/10.31106/jema.v19i1.13901, issn (online) 2597-4017 51 overcome heteroscedasticity disorders (gujarati & porter, 2009), regression model 2 selected in the study are fem, fem model estimates using ols (ordinary least square) so that heteroscedasticity testing is carried out following breusch-pagan lm criteria. since the breusch-pagan lm testing result is having probability values that are lower than 0.05, it can be inferred that the panel data regression model does exist. thus, table 3 shows that although there is anomaly data, it is still acceptable as the central limit theorem (clt) theory declared that research with a large enough sample size or a sample of more than 30 will have normally distributed data (hill et al, 2011). this study uses observational sample data of 350 so that the residual data meets the classical assumption of a normally distributed. table 4. multicollinearity test variables coefficient variance uncentered vif centered vif complex 0.019 1.208 1.036 fdi 0.002 1.208 1.050 thav 0.000 1.140 1.029 tax 0.001 1.335 1.057 size 6.58e-05 294.430 1.057 tun 0.016 1.246 1.078 profit 0.010 1.308 1.070 lev 0.057 298.368 na table 5. descriptive statistics variable observation mean median std. deviation max min tpa 350 0.418 0.428 0.149 0.857 0.143 complex 350 0.064 0.003 0.139 1.000 0.000 fdi 350 0.157 0.104 0.357 4.376 -0.999 thav 350 0.277 0.000 0.448 1.000 0.000 tax 350 0.127 0.235 1.338 8.995 -16.148 size 350 29.077 28.758 1.527 33.494 25.640 tun 350 0.051 0.014 0.464 0.000 0.078 profit 350 0.076 0.053 0.126 0.709 -0.412 lev 350 0.153 0.097 0.144 1.043 0.000 mediation of tax burden in complexity operation, foreign direct investment, and tax haven utilization to transfer pricing aggressiveness by febriyadi tri hadmoko, ferry irawan 52 result and discussion the first statistical analysis in this study uses the analysis of the mean, median, maximum value, minimum value, and standard deviation for each research variable. in addition, this study conducts data winsorizing to overcome the data outliers. based on the results of descriptive statistics (table 5), it is found that the mean tpa is 0.418, which means that the average enterprise has carried out transfer pricing activities according to the transfer pricing indicator. while the complex variable shows that most companies in this study have regular business operations as the documented mean score of complex variables in the study placed in the normal area, the minimum score of the fdi variable shows that some companies have negative values (-0.999) which indicates that the company tends to reduce direct investment. the variable of the use of tax haven is measured by dichotomy. if there is a company that has a relationship with related parties in a tax haven country, it will be worth one while zero otherwise. the tax haven country in this study refers to the tax haven country index issued by the tax justice network. the index can be accessed at https://cthi.taxjustice.net/en/. the tax haven utilization variable (thav) show that there are 94 observation or about 26.87% of the total sample companies do relationship with related parties domiciled in tax haven countries. besides that, the tax expense variable (tax) shows that the average sample of research firms tends to reduce the overall corporate tax burden. a partial significance test (t-test) is useful to determine whether each independent variable (partial) has a significant effect on the dependent variable. partial significance testing is done by comparing the probability level (p-value) of each independent variable to the degree of significance. the degree of significance is 5% (α=0.05). based on the results of the partial test (t-test), complex has a positive effect on the aggressiveness of transfer pricing. these results indicate that the more companies conduct transactions with related parties, the higher the level of complexity of the operations carried out. thus, the higher the level of operating complexity can increase the company's aggressiveness in conducting transfer pricing. while fdi does not affect the aggressiveness of transfer pricing which indicates that funding conditions through foreign direct investment do not affect changes in the transfer pricing scheme efforts carried out by the company, thav has a positive effect on the transfer pricing aggressiveness. these results prove that the level of aggressiveness of transfer pricing is directly proportional to the level of utilization of tax haven countries. implicitly, companies with a high degree of transfer pricing aggressiveness tend to transact with related parties in tax haven countries. on the other hand, companies with low transfer jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 41-59 http://dx.doi.org/10.31106/jema.v19i1.13901, issn (online) 2597-4017 53 pricing aggressiveness tend not to transact with related parties in tax haven countries. table 6 also shows that tax has a positive effect on the aggressiveness of transfer pricing which indicates that the increase in the level of the tax burden is directly proportional to the increase in the level of aggressiveness of transfer pricing, and vice versa. compared with previous studies, this study cannot prove that the reduction in the tax burden can be caused by the high level of aggressiveness of transfer pricing. therefore, the tax burden factor has a significant influence on the aggressiveness of transfer pricing. another factor suspected of driving the aggressiveness of transfer pricing is the absence of formal documents as a source of information on the selection and application of transfer pricing methods. a total of 92.57% of sample companies do not disclose information on documents using the transfer pricing method. information on the use of transfer price methods such as comparable uncontrolled price (cup), resale price method (rpm), cost plus method (cpm), and transaction net margin method (tnmm). based on the fifth hypothesis testing using the approach of baron & kenny, (1986), it shows that the tax burden partially mediates the effect of operating complexity on transfer pricing aggressiveness. in addition, the test results prove that the increase in operating complexity has an indirect effect on the aggressiveness of transfer pricing. the tax burden factor acts as a mediator of these indirect effects. table 6. hypotheses testing direct effect relationship estimation t-statistics probability value decision complex → tap + 3.146 0.000 h1 accepted fdi → tap -0.100 0.460 h2 rejected thav → tap + 4.015 0.000 h3 accepted tax → tap + 2.342 0.010 h4 accepted table 7. hypotheses testing indirect effect model t-statistics probability value decision complex → tax → tap 1.880 0.060 h5 rejected fdi → tax → tap 2.023 0.043 h6 accepted thav → tax → tap 2.003 0.062 h7 rejected mediation of tax burden in complexity operation, foreign direct investment, and tax haven utilization to transfer pricing aggressiveness by febriyadi tri hadmoko, ferry irawan 54 the expansion effort of companies into various countries with the aims of profitability will intersect with different tax jurisdictions and increase their operational complexity. in addition, the policies of several tax jurisdictions are certainly different, creating a gap between the tax jurisdictions of one country and another. this gap can be exploited by multinational companies to carry out transfer pricing schemes so that it can result in profitshifting. multinational companies can shift profits from countries with high tax rates to countries with low tax rates. as a result, the global tax burden falls below the prevailing tax rate. it is proven in this study that the average sample of companies has a current effective tax rate of 12.74%, far below the generally accepted tax rate in indonesia, which is 25%. the results of testing the sixth hypothesis using the baron & kenny, (1986) approach show that the tax burden does not mediate the effect of foreign direct investment on the aggressiveness of transfer pricing. however, the test results prove that the increase in foreign direct investment has an indirect effect on the aggressiveness of transfer pricing. so, the existence of the tax burden variable has an indirect effect on the effect of fdi on the tpa even though the tax burden is not a mediator. the results of this study are in line with research conducted by choi et al., (2017). choi et al., (2017) analyze whether the existence of taxes can lead to manipulation of transfer pricing for multinational companies. the results of the analysis state that funding through foreign direct investment induced by differences in tax rates between countries can motivate companies to carry out internal transfer pricing. this means that the existence of a tax burden due to differences in tax rates can be a supporting factor for transfer pricing. based on the seventh hypothesis testing, shows that the tax burden partially mediates the effect of tax haven utilization on the aggressiveness of transfer pricing. these results use the approach of baron & kenny, (1986) as a hypothesis testing step. in addition, the test results prove that tax haven utilization has an indirect effect on transfer pricing aggressiveness. the indirect influence is through the tax burden mediator. the results of this study are similar to the results of research conducted by taylor et al., (2015). the study concludes that the use of subsidiaries in tax haven countries is used for transfer pricing aggressiveness. in addition, according to (slemrod & wilson, 2009), the existence of a tax haven country will facilitate multinational companies to perform income shifting. moreover, following the basic concept of transfer pricing schemes, companies can move their operating profits from high-tax countries to low-tax countries (rugman & eden, 2017). the profit shift can be done by manipulating the cost of goods sold so that it has an impact on gross profit. not only that, but profit shifts can also be made by utilizing jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 41-59 http://dx.doi.org/10.31106/jema.v19i1.13901, issn (online) 2597-4017 55 transactions between related parties, such as intra-group service transactions, intangible property transactions, interest transactions, and stock transactions. if this activity is carried out by utilizing state tax haven facilities, then the company can have the motivation to do transfer pricing to shift profits (income shifting). conclusion and suggestion the results of the study show that the complexity of operations as proxied by multinationality has a positive effect on transfer pricing aggressiveness, in addition, tax haven utilization and tax have a positive effect on transfer pricing aggressiveness. however, foreign direct investment does not affect transfer pricing aggressiveness. as a result, there is no trade-off between fresh funds from investments and the erosion of the tax base. meanwhile, the results of further research indicate that the tax variable partially mediates the effect of complexity operation and tax haven utilization on transfer pricing aggressiveness. however, the tax variable does not mediate the effect of foreign direct investment on transfer pricing aggressiveness, but the tax variable only has an indirect effect. this means that foreign direct investment is used as a vehicle for transfer pricing. this study has several limitations, first, research results can be different, if different in using the period of research data and or samples of the company sector and or research methods. therefore, researchers can produce different conclusions. second, this research cannot use private companies because there is no access to financial statement data. third, the assessment of the transfer pricing aggressiveness index score may not be able to provide a complete picture of the transfer pricing activities carried out by the company. further studies should be using samples other than manufacturing sector companies so that it can be implied in other idx sectors by using qualitative research methods or even mixed methods as it allows the research results to be more comprehensive and 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(2019). the influence of tax, foreign ownership and company size on the application of transfer pricing in manufacturing companies listed on idx during 2013-2017. international journal of economics and financial issues, 9(3), 175–181. https://doi.org/10.32479/ijefi.7640 jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 1-21 http://dx.doi.org/10.31106/jema.v19i1.13809, issn (online) 2597-4017 1 city citizenship behavior among residents: investigating the role of emotional experience in event tourism and brand attitude andriani kusumawati1*, karisma sri rahayu2 1 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia 2 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia *corresponding author(s) email: andriani_kusuma@ub.ac.id abstract along with the development of place branding theory, the role of the residents was widely reviewed and considered only as one of the target groups of place branding. stakeholder involvement in the development of city branding is important because it will support its success. however, in reality, citizens or residents are a group that gains less attention in the city’s branding strategies and practices. therefore, this research was developed under the umbrella of branding theory by further analyzing the influence of city brand attitude on city citizenship behavior (ccb) triggered by emotional experiences in tourism events. this explanatory quantitative approach was carried out through a survey by using a questionnaire. a simple random sample was chosen as the sampling method in this study. data from 323 residents in malang raya was collected and analyzed using partial least square (pls). this study empirically demonstrates that emotional experience in event tourism is likely to stimulate city brand attitude and that subsequent city citizenship behavior among residents is probable. this result allows for understanding a substantial contribution of emotional experience in enhancing positive city brand attitude, finally highlighting the importance of internal stakeholders and their citizenship behavior in the destination branding process. keywords: city citizenship behavior; emotional experiences; city brand attitude; tourism; residents jel code: m31, z31, z33 doi: 10.31106/jema.v19i1.13809 article history: received 2021-11-08 reviewed 2022-01-12 revised 2022-03-14 accepted 2022-03-31 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ city citizenship behavior among residents: investigating the role of emotional experience in event tourism and brand attitude by andriani kusumawati, karisma sri rahayu 2 introduction creative event marketing strategies have been developed to convey different consumer brands in different product categories, from beverages to toys to city brands. in addition, event marketing strategies are successfully used in retailers, non-profit, inter-company environments, and in-house marketing to employees and other corporate stakeholders. event marketing is defined as interactive communication of brand value by presenting event marketing as a 3d branded hyper-reality where consumers are actively involved at the attitude level that leads to emotional attachment to the brand (konecnik ruzzier & petek, 2012). however, event marketing requires to synchronize between all the stakeholders and the brand to generate impactful events and interact with their target market (martínez-sala & campillo-alhama, 2021). the main objective is to increase the brand perception of the city because when this happens, the attitude toward the city’s brand also increases (merrilees et al., 2012). in this case, the motivation for consumers to voluntarily participate a special event is to convey the city’s brand message, which is worth further investigation. since the concept of the event, marketing has been recognized as a communication strategy of marketing based on the whole experience, and therefore customer motivation could be explained by using the conceptual development model of whelan & wohlfeil (2006) and konecnik ruzzier & petek (2012) which defines customer voluntary behavior as promotional activities, cooperation, and participation. while mandl & hogreve (2020) identified the type of customer citizenship behavior as positive word-of-mouth, suggestions for improving service, customer supervision, assessment, action, utilization, and participation in organizational activities. based on the classification used, customer behavior can positively affect business. along with the development of place branding theory throughout the last years, the occupants’ role was extensively re-questioned. earlier, kotler & gertner (2002) considered the population only as one of the target groups for place branding. later, kalandides et al. (2012), braun et al. (2013), and zenker & beckmann (2013) argue that in the place marketing process, occupants should be considered as involved participants because they perform positively further than their usual behaviors represented as city ambassadors when engaged in activities of city marketing. the involvement of the population can be arranged in a different form based on the involvement level including the strategic communication used (zenker & seigis, 2012). therefore, in this study, city citizenship behavior is described as the jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 1-21 http://dx.doi.org/10.31106/jema.v19i1.13809, issn (online) 2597-4017 3 community dynamic participation carried out during the process of utilization by consumers throughout the service produced (minkiewicz et al., 2014). this study examines the extent to which emotional experiences follow events and their impact on city brand attitudes and the behavior of their city residents. however, citizens are an underestimated group of branding strategies and practices and are often considered “necessary evils” (kalandides et al., 2012). moreover, the main focus of place branding activities is to attract foreign tourists and investors and present a consistent image of the place in the media, as the basis of the residents’ attitude toward destination branding is not generally understood (wassler et al., 2019). therefore, the purpose of this study is to analyze the role of citizens in landmark management, especially concerning urban event tourism in malang raya. this study describes the concept of participatory place branding and the interdisciplinary nature of civic participation to promote the city’s brand through tourism events. this research related to city brand attitude and city citizenship behavior seeks to fill the gap in the scientific literature on city branding, by combining the issue of emotional experience in tourism events and city branding. this research’s main contribution is to the literature on interaction and experience by discussing specifically the influence of emotional experience as a significant driver of city brand attitude to actively participate in the behavior of city residents (ccb). this is also the contribution of the literature due to the lack of studies related to city brand attitude and city citizenship behavior (ccb) in the urban tourism sector. literature review city branding some researchers are increasingly applying brands to countries, cities, and places (anholt, 2013; eshuis & edwards, 2013; kavaratzis & kalandides, 2015; kavaratzis, 2019; sandbach, 2022; steenkamp, 2021), given the strong global competition so that they must maintain the industry and attract tourists (styvén et al., 2020). a brand can be regarded as an identity attached to a product or service. brands are also used in the world of tourism to give an identity to an area so that it has its characteristics with the term city branding. according to moilanen (2015), city branding is the management of the image of a destination through strategic innovation and coordination of economic, social, commercial, cultural, and government regulations. a place brand is defined as a marketing activity that promotes a positive image of the destination and influences the decision of the consumer’s visit (maziashvili & kowalik, 2021). city branding is the process of making it easy for city city citizenship behavior among residents: investigating the role of emotional experience in event tourism and brand attitude by andriani kusumawati, karisma sri rahayu 4 owners to introduce their city to the target market (investors, tourists, talents, events) using positioning phrases, slogans, symbols, exhibitions, and more. as a result, competition between cities for tourists has intensified (kusumawati & supriono, 2020). due to this phenomenon, more and more cities are investing in city branding. research report on the nordic innovation center in oslo, urban image: urban branding as a built capability of the nordic urban region (jansson & power, 2006), states that commonly used branding strategies usually have two purposes: (1) a city is a material property of a place such as a building or an event, (2) intangible assets such as stories, slogans, and logos. with this, the city wants to stand out from the competition and attract tourists. in this context, riza (2015) analyzes city marketing to the city’s iconic events. in addition, urban studies were conducted in the same context, taking into account the relevance of destination brands that can be used to attract tourists and businesses (merrilees et al., 2009). relationship between emotional experience in event tourism and city brand attitude literature reviews have found that there are several factors associated with a positive attitude towards city brands among residents of a particular location. in this sense, some researchers have chosen to create event experiences at strategic points in the city, leading to a positive perception of their location (dolles & söderman, 2010; pitt et al., 2010). in other words, an event tourism positive experience (as an experiential marketing tool) increases particular city brand attitudes (kavaratzis, 2008). this is related to experiential marketing (understood through the event) in terms of emotional factors, suggesting that urban branding strategies that evoke emotional connections can strengthen location connections (casais & poço, 2021) which means the consumption results from the experience of involvement in the event. in this regard, nufer (2015) event marketing is primarily used to make the target group emotional about the brand. consumers ultimately act to achieve an emotional bond with the brand, showing active involvement at the level. therefore, experience-based marketing through the event is distinct from pure sponsorship. likewise, le & dong (2017) emphasize consideration for citizens as the key to a comfortable experience at the destination, thereby gaining greater recognition not only from residents themselves (city brands) but also from tourists and visitors, for example. in the same context, other studies have shown that city brand development can be based on the number and nature of cultural activities, entertainment, and nightlife, urban atmosphere, commerce, and event developer goals (zenker et al., 2009). the relationship between the jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 1-21 http://dx.doi.org/10.31106/jema.v19i1.13809, issn (online) 2597-4017 5 event and the brand was also approached in terms of image transfer from the event to the advertising/sponsor brand (küster et al., 2009). in addition, another study chakraborti & roy (2013) showed an important relationship between emotional experience at the event and attitudes towards the city’s brand, and based on this the hypothesis was established. h1: emotional experiences in tourism events influences city brand attitudes. relationship between city brand attitude and city citizenship behavior research by braun et al. (2013) has aroused great interest in the so-called role of urban dwellers. braun et al. (2013) proposed that other than being passive clients of the metropolis, citizens can play three critical energetic roles in shaping the metropolis’ brand, particularly: (1) an incorporated a part of a place’s brand: nearby humans are a critical characteristic of any place. their interactions form the social surroundings of the metropolis; (2) ambassadors for a place’s brand: citizens can ship dependable data and favored messages approximately their metropolis to ability site visitors or (word-of-mouth): (3) citizen: residents actively take part withinside the decision-making procedure and contribute to the metropolis via agreement, support, and assistance. this paper emphasizes the role of the population as citizens. some researchers also study the antecedents of citizenship behavior. previous city marketing literature studying urban dwellers explained many results like attitudes, satisfaction (insch & florek, 2008; zenker et al., 2009) brand attitudes toward the city (merrilees et al., 2012), engagement (insch & florek, 2008), loyalty (florek, 2011), intention to visit (merrilees et al., 2009), and attractiveness (darchen & tremblay, 2010; de noni et al., 2014). based on this role, residents as citizens have similar antecedents, in this case, the attitude to the city brand (city brand attitude) resulting from the emotional experience of tourism events. from the positive feelings of residents with high values, they are trying to maintain and improve the profits of the city where they live by conducting civic activities (cheng et al., 2016). this leads to the following second hypothesis: h2: city brand attitude influences city citizenship behavior. relationship between emotional experience in event tourism and city citizenship behavior citizenship is the active role of citizens in their positive influence on the city, braun et al. (2013) believe this role is one of the most neglected roles in place branding. according to braun et al. (2013), citizen behavior involves participation in civic activities and city citizenship behavior among residents: investigating the role of emotional experience in event tourism and brand attitude by andriani kusumawati, karisma sri rahayu 6 contributions to the decision-making process. this positive behavior is similar to organizational citizenship behavior (ocb) in management. previous literature conceptualized ocb as an innovative and voluntary action that promotes the effective functioning of an organization, but it is not required or seen in a collaborative or formal reward system (organ, 1988; podsakoff et al., 2003; juniarti & afiff, 2020). ocb is voluntary but useful and necessary for the company (nadiri & tanova, 2010). improving the earliest five components of ocb from organ (1988), podsakoff et al. (2003) describe seven components of ocb, namely: helpful behavior, sportsmanship, organizational loyalty, organizational compliance, individual initiative, civic virtue, and self-development. then, burmann & zeplin (2005) identify brand citizenship behavior (bcb), with a focus on externally targeted behaviors that energize brands. in 2009, they limited the seven components to three bcb components, namely: willingness to help, brand enthusiasm, and willingness to develop themselves (burmann et al., 2009). in addition, various dimensions and articles were assigned (bartikowski & walsh, 2011; bove et al., 2009; yi et al., 2011). for example, bove et al. (2009) have defined three elements: providing feedback to the organization, supporting other customers, and recommending family/relatives and friends. taking ocb and bcb into account, current research describes city citizenship behavior as the behavior of citizens that contributes to the city by attending events that can help others and being involved in the development of the city through the event. as a form of marketing communication strategy, the effectiveness of event marketing depends heavily on the motivation of consumers to participate voluntarily. instead, this essential motivation is determined by the extent to which at least one aspect of the event marketing strategy corresponds to the individual consumer’s tendency to engage. stylidis et al. (2014) previously argued that several different aspects of engagement play an important role in the appeal of event marketing to individuals, but it has not been investigated further. the current study seeks to develop this idea further by identifying the influence of emotional experiences on tourism events on residents’ willingness to actively participate in city citizenship behavior and proposing a conceptual model, which is currently being investigated further. based on these thoughts, the third hypothesis of this study was determined: h3: emotional experiences in tourism events influences city citizenship behavior. jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 1-21 http://dx.doi.org/10.31106/jema.v19i1.13809, issn (online) 2597-4017 7 relationship between emotional experience in event tourism and city citizenship behavior through city brand attitude this study sought to determine the level of emotional experience in events organized by a particular city to produce a pleasurable sensation that satisfies participants’ desires (kao et al., 2007) and subsequently increases brand attitudes among members (merrilees et al., 2009). this association has earlier occurred and is indicated in the research of dolles & söderman (2010), which emphasizes citizen contribution in the experience of an event such as the 2006 world cup in germany as a basis of city acknowledgment and acknowledgment of their city as a brand. in particular, the research by dolles & söderman (2010) emphasizes that emotional involvements in events increase the value of national brands. this experience can be translated to conducting a study of the uniqueness of a city brand. the essential motivation for marketing a particular event is determined by the consumer`s contextual involvement in that event. second, the involvement in specific event marketing is determined by the tendency of consumer involvement in at least one of four different aspects: that is, event marketing, event objects, event content, and social interaction of events. when event marketing has a direct or indirect relationship with personal leisure benefits. in other words, the closer the relationship between the event marketing strategy and the consumer’s leisure interests, the stronger the contextual involvement in a particular event marketing strategy and the special subject of attending the event to tourists. event marketing involvement refers to consumer interest in the emotional experiences in general event marketing and marketing communications (gómez-suárez & yagüe, 2021). thus, the proposed fourth hypothesis can be explained as follows. h4: emotional experiences in tourism events influences city citizenship behavior through city brand attitude as a mediator. methods this study employed exploratory research with a quantitative approach. the population involved in this study were residents of malang raya to assess brand attitudes in the area. these residents are believed to have an emotional relationship with the city and considered broader about their region as a whole including the aspects of economic, government, sociocultural, and infrastructure. simple random sampling was used to determine the number of research samples. primary data was collected directly through a survey by distributing questionnaires. a total of 341 data was collected in this study, but 323 were eligible to be analyzed. city citizenship behavior among residents: investigating the role of emotional experience in event tourism and brand attitude by andriani kusumawati, karisma sri rahayu 8 table 1. research instruments variable code item emotional experience (ee) ee1 tourism events provide entertainment ee2 the tourism event is good ee3 i am very contented with the environment around tourism events ee4 i am very contented to have watched the event city brand attitude (cba) cba1 i am proud to live in malang cba2 compared to other cities, life in malang is generally good cba3 i prefer to live in malang than anywhere else cba4 malang people have a good character at the national level city citizenship behavior (ccb) ccb1 ready to attend events even though it is not required to help with city tourism ccb2 i will attend as well as give opinions that can improve city tourism events ccb3 saying positive things about tourism events to others ccb4 encourage friends and relatives to visit city tourism events ccb5 if i have any useful ideas on how to improve the quality of tourism events, i will let the organizers know the questionnaire was created using a 5-point likert scale from 1 (very disagree) to 5 (very agree). the questionnaire consists of several questions related to the local residents’ perceptions of emotional experience, city brand attitude, and city citizenship behavior. in this study, emotional experience was measured by using several items adapted from the research of kao et al. (2007) which is reused to measure real experiences in tourism events. in terms of city brand attitudes, the items were modified from the earlier scale on brand attitude and amended to the city setting as utilized by merrilees et al. (2009) in their research. while items to measure ccb were obtained from studies conducted by nadiri & tanova (2010), shafiee et al. (2020) as well as those developed from bartikowski & walsh (2011) and yi & gong (2013). moreover, figure 1 shows the framework of this study. in table 4, the respondent’s demographic profile was explored and reported as descriptive statistics. frequency analysis indicated that the number of males (48.5%) and females respondents (51.5%) was almost equal. the age of majority respondents was between 27-36 years old (30.3%) and followed by respondents ages were between 37-46 years old jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 1-21 http://dx.doi.org/10.31106/jema.v19i1.13809, issn (online) 2597-4017 9 (27.6%). the population surveyed in this study included permanent residents of malang raya who must have been born in malang or lived there for at least five years. therefore, for the aims of this analysis, it was assumed that the inhabitants of malang raya were easily identifiable and were largely accustomed to local culture, event tourism, and ultimately the city’s brand. based on their area of residency, the number of respondents who have resided in malang city is 41.2% of the sample. there are 34.0% of respondents have resided in batu city, and the rest about 24.8% have resided in malang regency. figure 1. research framework h1 h2 h4 h3 emotional experience city citizenship behavior city brand attitude result and discussion table 2. demographic profiles demographic profile percentages demographic profile percentages age area of residency 17-26 20.4% malang city 41.2% 27-36 30.3% malang regency 24.8% 37-46 27.6% batu city 34.0% 47-56 21.7% gender male 48.5% female 51.5% city citizenship behavior among residents: investigating the role of emotional experience in event tourism and brand attitude by andriani kusumawati, karisma sri rahayu 10 partial least squares (pls) were used to test the research hypothesis while simultaneously evaluating both the measurement and structural models. pls analysis reveals two main results, including an inner model and an outer model. the inner model refers to the connection of latent variables in the form of a structural model or path matrix, and the outer model is represented by the validity and reliability values of the configuration. following the recommendations of hair et al. (2019), this study can classify the model as valid and reliable because the higher outer factor values of 0.500, the composite reliability value, and the ave value of each configuration are higher than 0.500 and 0.700, cronbach’s alpha test score is above 0.700, and the discriminant validity score for each configuration is higher than the correlation with the other configurations in the model. the validity and reliability results of the study are shown in tables 3 and 4. table 3. validity and reliability result variable/ item cronbach’s alpha ave composite reliability loading factor decision ee 0.72 0.53 0.82 reliable ee1 0.69 valid ee2 0.70 valid ee3 0.76 valid ee4 0.76 valid cba 0.90 0.78 0.93 reliable cba1 0.92 valid cba2 0.88 valid cba3 0.86 valid cba4 0.86 valid ccb 0.93 0.80 0.95 reliable ccb1 0.68 valid ccb2 0.96 valid ccb3 0.91 valid ccb4 0.93 valid ccb5 0.95 valid jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 1-21 http://dx.doi.org/10.31106/jema.v19i1.13809, issn (online) 2597-4017 11 table 4. discriminant validity construct ee cba ccb emotional experience (ee) 0.88 city brand attitude (cba) 0.80 0.89 city citizenship behavior (ccb) 0.77 0.70 0.73 table 5. hypotheses testing hypotheses estimates se t p decision h1 ee → cba 0.77 0.02 46.08 0.00 supported h2 cba → ccb 0.64 0.05 12.59 0.00 supported h3 ee → ccb 0.20 0.07 3.03 0.00 supported h4 ee → cba → ccb 0.50 0.04 11.03 0.00 supported furthermore, table 5 shows that all the hypotheses proposed in this study are supported because the value of each proposed hypothesis is less than 0.050 (0.000). this study confirmed the significant influence of emotional experience on city brand attitude and city brand attitude on the city citizenship behavior. this means that the higher the level of residents’ emotional experience through event tourism, and the more positive the attitudes in favor of the city’s brand image, the better the resident behavior of the city citizens. this results confirms the conclusion of preceding findings by marin-aguilar & vila-lópez (2014) and gómez-suárez & yagüe (2021). this study’s results also proved the conclusion of sthapit et al. (2019) who indicated that the more positive emotional experience felt, the better city citizenship behavior to expose as part of several activities voluntarily and as a form of reciprocity such as recommending destinations to friends and relatives. although it does not directly affect the city citizenship behavior, both emotional experience and city brand attitude are two things that should take into account to drive city citizenship behavior. as suggested by this research hypothesis, emotional experience and brand attitudes are important precursors to resident civil behavior. this study empirically demonstrated these important relationships. the path coefficient showed that brand attitudes are a more powerful direct predictor of city citizenship behavior (standardized path coefficient = 0.64) than emotional experience (standardized path coefficient = 0.20). in addition, we found that the emotional experience of event tourism has a strong influence on brand attitudes (standardized path coefficient = 0.77). city citizenship behavior among residents: investigating the role of emotional experience in event tourism and brand attitude by andriani kusumawati, karisma sri rahayu 12 these results covered a series of direct and indirect effects resulting from a positive assessment of events organized by various sensory stimuli. the event changed the experience of the inhabitants and influenced both their stance as a city brand and the behavior of their citizens. taken together, the interrelated influences have increased the likelihood of recommending the city to others through the voluntary actions of the inhabitants. this result supports a consensus on the importance of comprehensive experience in business tourism and business events (abulibdeh & zaidan, 2017; ahn et al., 2016; alananzeh et al., 2019; choo et al., 2016; falk & hagsten, 2018; skinner, 2017). this analysis reveals how experiential events create great experiences and foster a strong relationship with the attitude of the city brand, thereby strengthening customer civic behavior and promoting the city brand. the available literature shows that the attitudes of the inhabitants make an important contribution to the behavior of urban citizens. in particular, positive brand-related behavior, namely the citizen behavior of customers’ residents has been identified as a potentially costeffective and efficient method of brand promotion (prajogo & purwanto, 2020; maziashvili & kowalik, 2021). therefore, the results of this study also confirm that ignoring residents in the role of city advertiser has a clear negative impact on destination marketing (braun et al., 2013; zenker et al., 2017). based on these results, it can be concluded that this study has made progress in implementing experiential marketing through emotional experiences in local event tourism and especially in promoting the city, which can improve people’s brand attitude. therefore, and based on the findings, this study suggests that the city’s destination management needs to continuously gain citizen’s support for the development and implementation of the city brand, as this is more likely to turn people into valuable marketing assets that lead to positive citizenship behavior. the findings further validate the theoretical foundations of the relationship between consumers and brands. in this regard, consumers develop valuable and lasting relationships with a particular brand (mcmanus et al., 2022) which then influence consumer behavioral intentions (keller, 2012). in particular, this study broadens the reach of the consumer brand literature by incorporating brand attitudes into the pre-existing relationship between emotional experience and behavior of urban citizens. this current study also has some implications for practice. by viewing emotional experience as a way to measure residents’ attitudes towards a brand, marketers can drive internal customer responses more holistically, making events more relevant, and more impactful, and thus facilitate emotional and behavioral outcomes (mainolfi & marino, 2020). jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 1-21 http://dx.doi.org/10.31106/jema.v19i1.13809, issn (online) 2597-4017 13 the results of this study link the literature on citizenship behavior to residents in the context of tourism, enabling and suggesting the further application of the literature in a city branding context. building this relationship with stakeholders and establishing a brand presence is important for brands at any destination and can impact the branding activities of the city (kavaratzis et al., 2015; magnoni et al., 2021). meanwhile, this study suggests the important role and participation of residents in tourism development in each destination (zenker & erfgen, 2014) this is not limited to the direct support of the population for sustainable tourism (lee, 2013; strzelecka et al., 2021), but instead to maintain a place for its development. it emphasizes the importance of residents as internal stakeholders (taecharungroj, 2016). in addition, local governments can exceptionally encourage citizens’ participation in various public policies. as a result, the branding of the place is much more comprehensive and creative than it is today (paganoni, 2012), and more legitimate in terms of stakeholders (including residents and citizens). conclusion and suggestion this finding explains the dynamic nature of stakeholders’ involvement throughout the city branding development and implementation process. the findings further confirm that the higher the stakeholders’ involvement in the development of the brand, the more likely they will participate in the implementation stage. in conclusion, this research provides insight into the theory of place marketing by examining the perceptions of the residents to assess the local community’s role in the development of tourism destinations and city branding. therefore, destination managers, developers, businesses, and local governments need to understand the factors that influence residents’ perception and their support. overall, the findings also indicate that the determinant of residents’ engagement with their city citizenship behavior is not mutually exclusive. indeed, several of the identified factors might perform as either determinants or obstacles of involvement, depending on their situation. the relationship is considered a focal point of interest in customer participation that could engage a customer’s voluntary and discretionary helpful behaviors. this result also has practically suggested that city brand marketers can expect an increase in residents’ interactive engagement with their voluntary behavior through a positive brand attitude by organizing event tourism that produces a pleasant emotional experience. the results of the study also offer local governments and city brand managers suggestions concerning how to sustain and develop interactions with residents. city citizenship behavior among residents: investigating the role of emotional experience in event tourism and brand attitude by andriani kusumawati, karisma sri rahayu 14 finally, this research has some limitations and may pave the way for future research. this study is related to a developed study of malang raya, indonesian residents, and suggests that caution should be exercised in generalizing the results. results can vary in other regions, as residents’ behavior may differ depending on the general attitudes of people towards cultural, national, or local government measures. in this sense, further investigation of this study in other areas may enhance the validity of both management contributions and results. of particular interest is the analysis of perceptions and brand attitudes through interdisciplinary lens analysis. for future research, it may be helpful to put together research from different standpoints and offer the reader a larger and more comprehensive view of the analytical objects. acknowledgment (if any) the authors would like to thank the faculty of administrative science, universitas brawijaya for the funding of this research under the scheme of the professor and doctoral research grant. references abulibdeh, a., & zaidan, e. 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yuli.soesetio.fe@um.ac.id abstract small and medium-sized enterprises (smes) are increasingly considering international expansion as one of the sustainable growth strategic options. this study aims to reveal how the effect of internationalization as a moderator of smes size, age, and other financial determinants toward investment opportunity set of smes that listed on the indonesia stock exchange (idx) from 2006 to 2020. market to book asset ratio used as a proxy of investment opportunity set of smes. this study is one of the most important in the context of indonesian smes as there were limited previous studies that have explored the internationalization factor. a total of 102 smes companies with 156 data observations were studied. a moderation regression analysis was used to test whether the determinants of the investment opportunity set were statistically significant. surprisingly, the study found that the degree of internationalization has a moderating effect that weakens the relationship between smes age and size on investment opportunities set (market value ratio). keywords: internationalization; gross national product; inflation; investment opportunity set; market to book asset ratio jel code: f14, f17, g21, g28, o57 doi: 10.31106/jema.v18i2.10393 article history: received 2021-03-05 reviewed 2021-05-31 revised 2021-07-29 accepted 2021-08-29 licensed: cc-by mailto:yuli.soesetio.fe@um.ac.id http://creativecommons.org/licenses/by/4.0/ does internationalization moderate the effect of smes size, age, and other financial determinants on investment opportunities set? evidence from indonesia by yuli soesetio, dyah arini rudhiningtyas, sudarmiatin, imam mukhlis 165 introduction the experiences of the world crises in 1998 and 2008 provided insight to the business world and the government that only smes were able to survive the most until the crisis ended. the resilience of smes when facing crises and dynamics of business competition requires a strong and innovative entrepreneurial spirit. many studies have found that innovative entrepreneurs can turn weaknesses into strengths and limitations into opportunities to open new markets, maintain and increase demand for products or services produced to make a significant contribution to people's welfare (crudu, 2019). it is undeniable that the existence of smes in developed and developing countries is the backbone of the country's economy. this can be seen in the number of business units that are reaching more than 90% compared to large-scale business units. however, their contribution to gross domestic product still does not dominate the range of 56% in european countries, in developing countries up to 40% while specifically in indonesia only 57% to 60% (adhityo dinutistomo & wibisono lubis, 2021). when compared to other asean countries, the competitiveness of indonesian smes is relatively low. one of the reasons for the weak position of competitiveness and the growth of smes is the lack of access to formal financial services and literation (prasetya et al., 2021). when the company was founded, investment was the next crucial topic of decision and consideration for all entrepreneurs (zhou, 2013). investment decisions are an important choice towards business growth and expansion as well as an indicator of new business performance (guariglia & liu, 2014). the right investment choices will create new opportunities that are useful to increase the value of the company in the future (soeindra et al., 2016). the category of companies with high growth is companies that can increase investment activities. this is reflected in the statement of financial position and cash flow statement which continues to increase in value quickly and briefly (mason & merton, 2019). the investment opportunity set (ios) is the opportunity and growth of the company's investment on the results of the company's operational activities so that the ios indicator becomes a very important measure when determining how the company will grow and be valuable in the future. therefore, how investors assess a company is affected by ios (kallapur & trombley, 2001). based on the literature review and previous research that discusses the ios determinants of smes companies are still very limited. kusumawati & anhar (2019) found that ios is jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,164-186 http://dx.doi.org/10.31106/jema.v18i2.10393, issn (online) 2597-4017 166 determined by microeconomic variables such as profitability and liquidity. in manufacturing companies in indonesia, leverage and company size have a significant effect on ios, while profitability has no significant effect on ios. meanwhile, for manufacturing companies in malaysia, macroeconomic variables, such as inflation and economic growth, have a significant effect on ios (adiputra & affandi, 2018). next, we add the components of age and size of smes as moderating variables on the relationship between the degree of internationalization and ios. this is intended to analyze how the impact of internationalization carried out by smes listed on idx in creating investment opportunities in the future. in addition, the results of various previous studies such as, ilaboya & ohiokha (2016) and papadopoulos & martín martín (2010) concluded that size and company age are the components that most consistently affect the company's performance as well as the results of the learning curve in company management. more interesting, research on ios related to how the impact of internationalization on ios on smes is still very limited in number, even though the government is currently encouraging companies to export. internationalization requires the development of knowledge, experience, and other capabilities to dominate the target international market share but is full of uncertainties and constraints related to culture, environment, and regulations of the destination country (hill, 2007). this condition is one of the obstacles to the company's growth opportunities. therefore, a domestic market-seeking internationalization approach is needed to access intangible assets abroad, which will develop the company's specific advantages in the domestic market (boehe, 2016). intangible investment is better than physical investment (peters & taylor, 2017). the internationalization efforts carried out by the company aim to improve the company's performance through sales expansion in new areas and it is hoped that new market shares will be created. however, the success of internationalization carried out by the company is an important matter for further research considering that there are elements of the process of learning business practices, government regulations in the country of origin and internationalization destination countries to the introduction of the culture of the people of the destination country. this requires business experience as measured by the company age and requires adequate financial support as measured by the company size (daszkiewicz & wach, 2012; jean & kim, 2020). efforts to reveal the impact of internationalization in a more in-depth study are expected to be able to reveal how the role of company age and company size can affect the relationship of internationalization to the creation of ios. thus, the contribution of this research becomes does internationalization moderate the effect of smes size, age, and other financial determinants on investment opportunities set? evidence from indonesia by yuli soesetio, dyah arini rudhiningtyas, sudarmiatin, imam mukhlis 167 a consideration for companies, especially sme scale, to create investment opportunities through internationalization efforts. based on the explanation that has been explained, the objectives of this study are to determine: (1) the effect of microeconomic variables, (profitability, liquidity, company size, degree of internationalization, leverage, and company age) on ios; (2) the effect of macroeconomic variables, (gdp growth and inflation rate) on ios; (3) the role of age and company size in moderating the relationship between internationalization and ios. the remainder of this paper is organized as follows. section 2 reviews the literature and develops hypotheses. section 3 describes the data and methodology. section 4 presents the empirical results and explains the empirical results and section 5 concludes the article. literature review investment opportunity set mason & merton (2019) stated that a company with high growth is a company that increases investment activities, which is reflected in the statement of financial position on the asset side. the investment opportunity set (ios) is a collection of various investment choice opportunities currently owned by companies, so the investment opportunities set indicator is a very important measure when determining how the company will grow in the future. therefore, how investors assess a company is affected by investment opportunities set (kallapur & trombley, 2001). using an investor's point of view, the market value to book value is a form of appraisal of investment in a company. myers (1977) divides the market value of the company into two parts, the value of assets currently held and the value of investment opportunities that depend on future discretionary investments. examples of discretionary investments include investments in new projects, expenditures on advertising, marketing, product development, and r&d, and maintenance expenses on plant and equipment, and expenses on raw materials. the right investment choice will increase the value of the company in the future (soeindra et al., 2016). investment is a form of sacrifice by individuals or institutions in the hope that it will provide greater returns in the future. chandra (2017) describes the investment as a sacrifice either in the form of money or other resources in the present for future benefits. investment decisions arise because of the investment options or opportunities available. investment opportunity set (ios) or investment opportunities are investment options available to jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,164-186 http://dx.doi.org/10.31106/jema.v18i2.10393, issn (online) 2597-4017 168 individuals and institutions. handriani & irianti (2016) concluded that first, investment opportunities set is an investment decision by the company to provide positive growth and the second investment opportunities set is the company's ability to determine the type of investment to be made. profitability and investment opportunity set profitability shows the company's ability to generate profits. higher profitability allows firms to maintain their existence in the industry that has been selected. high profitability provides a positive signal regarding the company's future growth (nika & mahaputra, 2012). profitability is a ratio that describes the company's fundamental performance in terms of the efficiency and effectiveness of the company's operations in generating profits (kusumawati & anhar, 2019). diaz & hindro (2017) explained that the higher the profitability, the higher the amount of intern funds from the retained earnings are for investment purposes. beuse et al. (2020) and lee et al. (2018) found that profitability has a positive effect on investment opportunities set. h1: profitability has a positive effect on the investment opportunity set. liquidity and investment opportunity set the liquidity ratio used in this study is measured using the current ratio (cr). the liquidity ratio describes the company's ability to generate cash and manage the company's working capital to maintain the company's operational continuity and fulfill its short-term obligations to creditors (kusumawati & anhar, 2019). the greater the cr value owned by the company, the greater the value of current assets owned by the company or the greater the idle fund. the greater the idle fund owned by the company may indicate that the company has not been able to allocate funds owned by the company for investment purposes (dhole et al., 2019). therefore, the greater the liquidity of firms, the smaller the future growth of that firms. h2: liquidity has a negative effect on the investment opportunity set. leverage and investment opportunity set a company with higher leverage will endanger the company because the company will fall into the extreme leverage category. the use of debt that is too high will cause financial risks such as high-interest payments and result in losses (bapat, 2020; trussel & patrick, 2018). however, on the other hand, the use of large debt and supported by good utilization does internationalization moderate the effect of smes size, age, and other financial determinants on investment opportunities set? evidence from indonesia by yuli soesetio, dyah arini rudhiningtyas, sudarmiatin, imam mukhlis 169 will provide a positive value for the company's future growth. research conducted by adiputra & affandi (2018) found that the solvency that is measured by debt-to-equity ratio has a positive influence with the investment opportunities set. smes are trying to increase the scale of their companies to be bigger than before by relying on debt. the policy to increase debt can increase the company's investment opportunities, which is converted into an increase in the scale of sales and assets. so, the use of good leverage will increase the company's investment opportunities. h3: leverage has a positive effect on the investment opportunity set. gdp growth and investment opportunity set gross national product (hereinafter, gdp) measures the overall strength of a country's economy and is an indicator of economic prosperity. large changes in gdp (ie gdp growth) signal the strength of a country's economy and therefore become an indicator for companies to make investment decisions. a positive trend in gdp growth will create a favorable climate for investment. francis et al. (2013) also confirms that a higher gdp increases financial market growth and consequently provides better investment opportunities. adiputra & affandi (2018) found that economic growth (i.e. real gdp growth) has a positive effect on investment opportunities set (i.e. price on book value). countries with lower economic growth are assumed to have poor economic prospects and as a result, companies in these countries trade at lower prices for book value. therefore, gdp annual growth is expected to have a positive impact on investment opportunities set. h4: gdp annual growth has a positive effect on the investment opportunity set. inflation and investment opportunity set an unexpected increase in inflation will affect the company's wages and cost of goods sold (cogs), the total asset value, and the market price of the company's products. unpredictable inflation creates uncertainty about the future economic situation. this situation reduces the company's motivation to develop its economic activities. corporate investment is highly dependent on changes in the inflation rate because the inflation rate determines the nominal interest rate and consequently affects the cost of capital for company investment. a high inflation rate will increase interest rates which in turn will reduce investment. as mentioned above, lakonishok et al. (1994) and adiputra & affandi (2018) states that lower economic growth, as indicated by higher inflation, results in a lower ios (i.e. price against jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,164-186 http://dx.doi.org/10.31106/jema.v18i2.10393, issn (online) 2597-4017 170 book value). this argument is supported by tandelilin (2010) which shows that the market value of a firm is affected by the cost of capital is a constant dividend growth model. therefore, an unanticipated increase in inflation will result in a higher cost of capital, and given the ceteris paribus of other variables, the market price, as well as the price to book value, will decrease. thus, the inflation rate has a negative effect on the investment opportunity set. h5: inflation rate has a negative effect on the investment opportunity set. size and investment opportunity set firms that have a larger size usually have larger assets that can be used for investing, and make it easier for the company to compete and dominate the market. the larger size and the more established companies, the higher the investment opportunity. dhanaraj & beamish (2003) states that the larger company has a greater amount of resources and the availability of more management resources. bloodgood et al. (1996) also explained that larger firms can hire more skilled managers than smaller firms. lee et al. (2018) revealed that skilled managers can understand industry trends better, predict product demand more accurately, and invest more at a better value. chen et al. (2011) stated that the value of the firm can be increased by managers by making economic and investment decisions. therefore, larger companies have a greater capacity to fund their growth opportunities than smaller companies. however, it needs to be underlined, smes are not as efficient as large companies in generating profit from sales or company revenue. increasing the scale of the company, namely the process of changing the category of companies from small to medium to large or medium to large has the impact of reducing the investment opportunities that the company has. ding et al. (2013) reveal that investment is important for small businesses because it affects their ability to survive and grow. increases and changes in the scale of the company that is getting bigger are followed by an increase in company assets or sales, but it is also always followed by an increase in debt which is characteristic of fast-growing companies so that this addition requires a significant amount of time in adjusting the cash realization from the company's sales so that in the medium and long period it affects company profits, especially if it is not accompanied by cost management optimally. the increase in assets dominated by debt financing and not being matched by a significant increase in sales by small and medium scale companies have an impact on reducing investment opportunities. h6: company size has a negative effect on the investment opportunity set. does internationalization moderate the effect of smes size, age, and other financial determinants on investment opportunities set? evidence from indonesia by yuli soesetio, dyah arini rudhiningtyas, sudarmiatin, imam mukhlis 171 age and investment opportunity set company age is a key factor in shaping company performance (coad, 2018). the age of the company shows its ability to continue running its business and shows the level of the learning curve or company experience (belitski & desai, 2021). the age of the company also prevents potential bias towards companies that are newly diversified in the international market area (chan kim et al., 1989). previous studies have shown that company age has a positive correlation with company growth or investment opportunities (heshmati, 2001). in addition, companies that have been established for a long time tend to increase public trust in the company, thereby increasing growth opportunities. h7: company age has a positive effect on the investment opportunity set. internationalization and investment opportunity set internationalization is an important entrepreneurial strategy for promoting the long-term growth and viability of smes (alayo et al., 2019). however, behind this important strategy, some challenges must be faced by companies if they decide to undertake internationalization. sapienza et al. (2006) argued that firms that have entered the international market need to adapt to the environment of the country where the company is expanding its market. singla & george (2013) also supports this opinion and argues that internationalization causes additional costs to learn about foreign cultures and markets, and when companies first start in foreign markets it may be more difficult to form a good image. however, by conducting internationalization, smes can obtain intangible assets that cannot be obtained by smes that are only domestically oriented. boehe (2016) develops a frame of mind called domestic market-seeking internationalization (the internationalization efforts of firms to gain superior global intangible assets and get specific advantages in the domestic market). peters & taylor (2017) found that firms that focus on intangible investment are better than companies that only focus on physical investment. h8: the degree of internationalization has a positive effect on the investment opportunity set. internationalization, age, size, and investment opportunity set smes with an export objective provides added value for some investors. investors consider smes with an export orientation having more intangible assets which are experiences that cannot be obtained by others that are only oriented towards the domestic market. internalization of smes has generally been viewed as an incremental business jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,164-186 http://dx.doi.org/10.31106/jema.v18i2.10393, issn (online) 2597-4017 172 process. moreover, papadopoulos & martín (2010) mentioned that internationalization helps companies not only take advantage of opportunities in new markets but will also help to fight global competition. entering a foreign market is also considered as an attractive growth strategy and a way to increase the chances of business survival (hilmersson, 2014). however, despite having promising growth from the global market, ironically, smes are more likely to be subject to business failure within a few years (franco & haase, 2010; sandberg et al., 2019; sui & baum, 2014). esteve-pérez & mañez-castillejo (2008) and williams (2014) added that the probability of export success depends on firms size, larger firms tend to have higher survival prospects compared with smes. furthermore, in terms of firm age or experiences, studies from figueira-de-lemos et al. (2011) and sandberg et al. (2019) who found that firms that have more domestic and developed market experiences to be beneficial for smes ' survival. therefore, we argue that while smes that are only oriented to the domestic market tend to find it more difficult to compete with global competitors, smes with an export objective will tend to take longer to develop and scale up their business. h9: the degree of internationalization negatively moderates the relationship between the investment opportunity set and company size. h10: the degree of internationalization negatively moderates the relationship between the investment opportunity set and company age. methods the selection of smes as samples of this study aims to illustrate how the components of the company affect the creation of their investment opportunities after being listed on indonesia stock exchange (idx) in the short and long term, which have been overlooked by the observations of academics and researchers. the data was collected from idx and the indonesia capital market institute, central bank of indonesia, and national agency of statistics from 2006 to 2020. the sample obtained was based on the purposive sampling technique. table 1 describes the summary of smes' sample selection throughout the study. this study uses 8 independent variables that are expected to determine investment opportunity set (mba), namely profitability (roe), liquidity (cr), leverage (dar), company size (size), company age (age), gdp growth (gdp), inflation rate (inf), and the degree of internationalization (ests). while figure 1 shows the framework of the study, table 2 describes the operationalization of each variable. does internationalization moderate the effect of smes size, age, and other financial determinants on investment opportunities set? evidence from indonesia by yuli soesetio, dyah arini rudhiningtyas, sudarmiatin, imam mukhlis 173 table 1. smes sample selection step selection criteria amount 1 companies that conducted ipos between 2006 and 2020. 2 companies whose ipos prospectus is inaccessible. (8) 3 companies that are not classified as small and medium-sized enterprises at the time of ipo based on financial services authority (ojk) regulation between 2006 and 2020. (309) total number of companies 102 4 the total number of companies (102) with accessible financial statements during the period of 2006-2020. 366 5 the number of observations that were upgraded to become large companies based on financiv.al services authority (ojk) regulation. (210) total number observations 156 table 2. research instruments variables measurement dependent variable: investment opportunity set: market to book asset (mba) the ratio of the market value of equity plus total debt on total assets, where the market value of equity is obtained from the number of shares outstanding multiplied by the share price. independent variables: profitability (roe) the ratio of net profit earned by the company annually on the total equity of the company in the same year. liquidity (cr) the ratio of current assets to its current liabilities. leverage (dar) the ratio of total debt on total assets. internationalization (ests) the ratio of export sales to total sales in the same year. control variables: company size (size) ln of the total assets owned by the company. company age (age) ln of company age (year of research – the year the company was founded). gross national product (gdp) retrieved from national agency of statistics. inflation (inf) retrieved from central bank of indonesia. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,164-186 http://dx.doi.org/10.31106/jema.v18i2.10393, issn (online) 2597-4017 174 figure 1. research framework roe cr dar gdp inf size age h4 h2 h3 h5 h6 h1 h7 h10 h9 ests h8 mba furthermore, to test the proposed hypothesis of the study, regression analysis of panel data was used. before determining which models to utilize, the precise estimation modeling step is required for panel data regression. the common effect (ce) model, fixed effect (fe) model, and random effect (re) model are among the data-processing techniques available in the data panel. ahmad & prasetyo (2018) stated that the chow and the hausman test were carried out to determine the best model with criteria that if the p-value of the chow test were higher than 0.05, then there is a common effect (ce) model. moreover, if the p-value of the hausman test were higher than 0.05, then there is a random effect (re) model. otherwise, the fixed effect (fe) model. following is a regression model to the study. mba = α + β1roa + β2cr + β3der + β4size + β5age + β6gdp + β7inf + ε (1) mba = α + β1roa + β2cr + β3der + β4size + β5age + β6gdp + β7inf + β8ests + ε (2) mba = α + β1roa + β2cr + β3der + β4size + β5age + β6gdp + β7inf+ β8ests + β9estsage + β10estssize + ε (3) result and discussion based on the results of descriptive statistics, it is found that the mean mba is 2.84, which means that the average enterprise has good investment opportunities. the average roe is 0.02 or 2 percent, indicating that companies have a lack of efficiency when using their equity to generate profits. ests has an average value of 0.05, which means that the average of export sales on a total number of sales is 5 percent. therefore, on average, small and medium-sized enterprises have not made many export sales and still depend on domestic sales for their main income. furthermore, the average leverage (dar) is 30 percent, meaning that the company's external funding source of 30 percent comes from long-term debt. as for macroeconomic variables, the annual change in gdp (gdp) has an average value of 0.05 or does internationalization moderate the effect of smes size, age, and other financial determinants on investment opportunities set? evidence from indonesia by yuli soesetio, dyah arini rudhiningtyas, sudarmiatin, imam mukhlis 175 5.0 percent and an average inflation rate (inf) of 0.04 or 4 percent. in general, the indonesian government maintains the inflation rate below 10 percent. table 3. descriptive statistics variable observation mean median std. deviation min max mba 156 2.84 1.32 5.01 0.19 40.52 roe 156 0.02 0.03 0.35 -2.90 2.47 cr 156 56.27 2.80 264.20 0.05 2726.45 dar 156 0.30 0.28 0.23 0.01 1.25 size 156 25.66 25.78 0.47 24.17 26.24 age 156 2.57 2.71 0.72 0.69 3.89 gdp 156 0.05 0.05 0.02 -0.02 0.06 inf 156 0.04 0.03 0.02 0.02 0.11 ests 156 0.05 0.00 0.20 0.00 1.05 estage 156 0.11 0.00 0.43 0.00 2.62 estssize 156 1.35 0.00 5.25 0.00 26.89 table 4. the chow and hausman probability test model chow husman conclusion model 1 0.00 0.08 fixed effect model 2 0.00 0.19 random effect model 3 0.00 0.00 fixed effect table 4 shows that the random effect (re) model is the best statistical model used for model 2 as the significance of the probability value is higher than 0.05 for the chow and hausman test. besides, model 1 and 3 show that the fixed effect (fe) model is the best estimation model due to the results of the significance of the probability value that is lower than 0.05 for the chow and hausman test. moreover, table 5 of regression output found that the microeconomic variable, namely profitability (roe) has a significant positive effect on investment opportunities (ios). the liquidity variable (cr) has a significant negative effect on investment opportunities in all three model models. interestingly, the variable degree of internationalization (ests) as measured by dividing export sales by total sales has no jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,164-186 http://dx.doi.org/10.31106/jema.v18i2.10393, issn (online) 2597-4017 176 significant effect on the investment opportunities set. however, we found a positive correlation of the degree of internationalization on investment opportunities after adding moderator variables in the fixed effect model in the third model model. table 5. regression output model 1 model 2 model 3 ols fe re ols fe re ols fe re variables mba mba mba mba mba mba mba mba mba roe 1.76 1.80 1.80 1.80 1.79 1.80 2.03 1.72 1.80 (0.81) (0.60) (0.99) (0.90) (0.62) (1.03) (0.87) (0.68) (1.01) cr -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) dar -1.05 3.10 1.20 -1.57 3.03 0.92 -1.42 3.21 1.43 (2.32) (1.61) (2.19) (2.39) (1.69) (2.25) (2.36) (1.92) (2.16) size -1.33 -3.73 -2.01 -1.44 -3.59 -2.04 -1.24 -2.94 -1.80 (0.65) (1.43) (0.79) (0.67) (1.38) (0.81) (0.67) (1.25) (0.84) age -0.20 4.34 0.43 0.06 4.09 0.51 0.38 3.20 0.85 (0.73) (1.81) (0.83) (0.62) (1.62) (0.82) (0.62) (1.36) (0.83) gdp 19.83 19.63 7.41 15.08 18.54 5.98 13.21 16.76 5.23 (14.41) (10.49) (6.51) (13.07) (9.48) (6.31) (11.77) (8.52) (5.16) inf -35.90 2.42 -10.97 -29.79 1.78 -10.23 -29.78 0.40 -5.73 (10.81) (3.59) (4.70) (9.72) (3.57) (4.41) (9.78) (3.43) (3.63) ests 5.71 27.14 3.58 175.67 5012.31 803.13 (3.96) (27.05) (3.049) (420.78) (575.16) (765.0) estage -5.79 -17.68 40.65 (8.36) (7.22) (4.79) estssize -6.15 -198.86 -31.35 (16.72) (22.36) (29.91) constant 38.48 85.55 53.51 40.31 81.17 53.96 34.54 76.25 46.68 (16.69) (33.00) (20.15) (17.09) (32.18) (20.47) (17.20) (29.65) (20.55) obs. 156 156 156 156 156 156 156 156 156 r-sq. 0.06 0.11 0.11 0.11 0.15 0.55 does internationalization moderate the effect of smes size, age, and other financial determinants on investment opportunities set? evidence from indonesia by yuli soesetio, dyah arini rudhiningtyas, sudarmiatin, imam mukhlis 177 in terms of profitability, these results support previous research conducted by kusumawati & anhar (2019) and lee et al. (2018). this result also supports the cash flow theory where investment depends on cash flow or internal funding, namely retained earnings and depreciation. retained earnings are the most important source of funding for company growth (thirumalaisamy, 2013). the greater the level of profitability, the greater the possibility of retained earnings for investment purposes (kusumawati & anhar, 2019). thus, the greater the company's liquidity value, the smaller the company's investment opportunities. these results support the cash flow theory that only companies that can manage their working capital optimally (by reducing idle funds) are able to finance and invest. the high level of liquidity can be caused by an excessive amount of current assets, this shows that the greater the idle funds in the company. too many idle funds indicate that the company is not or has not been able to utilize the funds it has to invest. although leverage does not affect investment opportunities set based on the best estimation model of the second model, in the first and last models which become comprehensive models, it turns out that debt policy affects investment opportunities in smes. these results indicates that smes are trying to enhances their business scale by relying on debt (garcía padrón et al., 2005; soleman, 2008). this result also supports the pecking order theory, where when a small enterprise seeks to scale up their business quickly, the additional funds besides their accumulative of retained earnings are needed. they need funds that are greater than debt (myers & majluf, 1984). the policy of increasing debt can briefly increase business capital which is then used to increase the scale of sales and assets. when smes has obtained capital, management will allocate the funds obtained in investments, both current assets and fixed assets (yuniningsih et al., 2019). the ests variable which describes individual export-oriented companies does not have a significant effect on investment opportunities set as the second model. however, the role of exports on investment opportunities set dynamics in smes is moderated by age and company size as in model 3. the role of exports has a significant positive impact on the dynamics of creating investment opportunities and company welfare (wernstedt et al., 2006). small and medium-sized companies that are also export-oriented are not always better able to create investment opportunities set than companies that only sell domestically, but companies that are export-oriented and supported by strong and large domination of the domestic market will increase the formation of investment opportunities and company value (singla & george, 2013). jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,164-186 http://dx.doi.org/10.31106/jema.v18i2.10393, issn (online) 2597-4017 178 another interesting thing from the results of this study is that the relationship between smes internationalization efforts and investment opportunities weakened by their age and size. this finding contradicts the results of previous studies that found companies that have been established for a long time tend to have an abundant resources and experience from domestic businesses so that they become capital for efforts to create investment opportunities through internationalization (claver et al., 2008; fernández & nieto, 2006). in addition, the degree of risk aversion to entering foreign markets can be reduced by longer-established firms (singla & george, 2013). unfortunately, smes are always identified with their position in the introduction or early growth stages of the company's life cycle in which characterized by unstable cash flow, negative profits and huge amount of debt. under these conditions, the increasing age of sme-scale companies has not been able to finance market expansion through internationalization to create investment opportunities set for sme companies. this occurs due to the increasing age of sme-scale companies, the allocation of the use of the generated cash flows is focused first on paying various fixed costs for debt, employee salaries, as well as operational costs for developing and expanding the domestic market to maintain the stability of the company's long-term viability. in addition, the management mentality, as well as the owner of smes in indonesia, quickly feels satisfied and satisfied with the performance of the business they have (revindo et al., 2019). in addition to the problem of mastering a foreign language, the increasing age of the company does not encourage the formation of networks and knowledge consistently and sustainably to support the creation of investment opportunities through internationalization. thus, when smes grow older and internationalization efforts were forced without proper preparation from the intangible and tangible assets as well as at the same time efforts to control the domestic, will reduces their investment opportunities. this is also due to an increase in the number and allocation of resources needed for efforts to dominate the domestic market while at the same time serving the international market share which is relatively new and full of uncertainty. furthermore, this increases the risk of failure due to the weak foundation for generating cash flows from the domestic market to finance internationalization as well as the higher level of debt (amin et al., 2020; bilkey & tesar, 1977). in addition to the age of the company, increasing assets also reduces the creation of investment opportunities set through efforts to internationalize smes. although investment in the form of fixed assets is important for small and medium-sized businesses because it affects their ability to survive and grow, networking, entrepreneurial mentality, and other intangible assets owned by the management and owners are very important. and influence the does internationalization moderate the effect of smes size, age, and other financial determinants on investment opportunities set? evidence from indonesia by yuli soesetio, dyah arini rudhiningtyas, sudarmiatin, imam mukhlis 179 creation of investment opportunities especially through internationalization (al‐hyari et al., 2012; ding et al., 2013). as with sme-scale companies in general, the allocation of company performance achievements in the form of additional assets is also used to fulfill personal needs due to poor bookkeeping, there is no very clear separation between personal needs and wealth and the company so that the addition of assets weakens the creation of investment opportunities through internationalization efforts (al‐hyari et al., 2012; revindo et al., 2019). the increase in the number and allocation of resources should be accompanied by a strong entrepreneurial mentality by smes owners and managers as well as extensive and deep networking in business relationships needed for efforts to dominate the domestic market while serving the international market share which is relatively new and full of uncertainty. furthermore, this increases the risk of failure due to the lack of a strong foundation for generating cash flows from the domestic market to finance internationalization as well as higher levels of debt to stimulate rapid investment growth (amin et al., 2020; bilkey & tesar, 1977). mastery of the domestic market should remain a top priority as the company ages and size increases because it is relatively more familiar with the environment of the country of origin, which is easy, cheap, and quickly controlled compared to the export destination country (daszkiewicz & wach, 2012). in addition, the long duration of time to own intangible assets in the form of social capital by achieving an efficient, reliable, and longlasting network with partners in export destination countries is another obstacle to the creation of investment opportunities set (coviello, 2006; prashantham & birkinshaw, 2008). these results also support the stage model theory and social capital theory where the company must initially operate and control business in the domestic market and then, after achieving a stable position, gradually expand its international activities through several stages (daszkiewicz & wach, 2012; prashantham & birkinshaw, 2008). thus, the results of testing the effect of age and firm size in moderating the relationship between the degree of internationalization of the company and the investment opportunities of the company in the third model with the best estimation approach (fe) proves that age and company size has weakening the relationship between the degree of internationalization and investment opportunities set in smes. it may occurs as since its establishment until now smes has only received assistance in the form of funding and accents, but have not touched on assistance in promotion, business management, as well as continuous and comprehensive technical and managerial assistance from the government including unresolved difficulties jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,164-186 http://dx.doi.org/10.31106/jema.v18i2.10393, issn (online) 2597-4017 180 regarding tariff and non-tariff barriers, information and resource barriers, distribution, the business environment in the host country, procedural barriers, and foreign customer and competitor barriers. finally, the majority of smes owner and manager do not understand and have no experience about global business model landscape also affect on their creativity in maximizing the potential of internationalization and its investment opportunities (revindo et al., 2019). conclusion and suggestion the purpose of this study was to examine the effect of microeconomic indices (such as profitability, liquidity, liability, internationalization, smes age, and size) and macroeconomic variables (like national economic growth-gdp and inflations) on the company's investment opportunity set (market value ratio). the results show that the microeconomic indices, namely profitability, liability, internationalization, and smes age have a positive effect on the investment opportunity set, while liquidity and smes size have a negative effect on the investment opportunity set. thus, macroeconomic variables, namely economic growth, have a positive effect on the investment opportunity set while inflation has a negative effect on the investment opportunity set. surprisingly, the study also found that the degree of internationalization has a moderating effect that weakens the relationship between smes' age and size toward investment opportunities. this finding implies that smes that are getting bigger and internationalized tend to have smaller investment opportunities due to the use of their limited resources to pursue their internationalization sustainability. smes that are export-oriented are not always more valuable than companies that only carry out domestic sales, but firms that are export-oriented and supported by strong and large domination of the domestic market will enlarge the scale and value of the company. this study has several limitations. first, the usage of the investment opportunity set measurement and the degree of internalization that is only limited to market value ratio and export sales ratio. second, this study has focused only on indonesian smes as objects of the study. therefore, the result of the study may not represent the overall conditions of smes that have internationalization purposes. future studies should extend their object studies by covering smes around the world and adding proxy variables that can indicate the degree of internationalization or multidimensional measurement indexes. references adhityo dinutistomo, i., & wibisono lubis, a. 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(2013). political connections and entrepreneurial investment: evidence from china’s transition economy. journal of business venturing, 28(2), 299–315. https://doi.org/10.1016/j.jbusvent.2012.05.004 jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 36 technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism khuzaini1, zakky zamrudi2* 1 postgraduate program, universitas islam kalimantan muhammad arsyad al banjari banjarmasin, banjarmasin, indonesia 2 department of management, faculty of economics, universitas islam kalimantan muhammad arsyad al banjari banjarmasin, banjarmasin, indonesia *corresponding author(s) email: zakky@uniska-bjm.ac.id abstract the covid-19 pandemic is profoundly affecting the way of consumer buying. firms are therefore challenged to be more reliant on technology as many consumers have turned into protection mode and do anything remotely. while the usage of technology has offered flexibility and simplicity, it has also exacerbated the technostress issue. this study was conducted to understand and examine technology usability and presenteeism that influence technostress during the covid-19 pandemic situations. a five-point likert scale questionnaire survey was used to evaluate the perceptions of technology characteristics and techno-stress among marketing employees. a total of 262 respondents that classified as marketing employees that are experienced “working from home” during the pandemic, were collected and analyzed by using covariance based structural equation modeling (cb-sem). the results suggest that technology usability has positive influences on techno-complexity and techno-insecurity. moreover, the negative influences of presenteeism on technooverload and techno-insecurity were also proved in this study. interestingly, marketing employees do not see their hyper-connectivity with technology implemented by the company impact their workloads and worries as they consider the current radical changes only temporary and will only last during the pandemic. keywords: technostress; techno-invasion; technooverload; techno-complexity; technoinsecurity; usefulness; covid-19 jel code: m10, m12, c12 doi: 10.31106/jema.v18i1.10050 article history: received 2021-02-03 reviewed 2021-03-08 revised 2021-03-16 accepted 2021-03-31 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism by khuzaini, zakky zamrudi 37 introduction the outbreak of the covid-19 pandemic has hit the development of the global economy and produced a huge crisis to the survival of firms worldwide. although the current covid19 pandemic is not the first pandemic that has arisen globally, it is the first time that such a pandemic has had a global effect in a just few short weeks after world health organization (who) pandemic announcements (brem et al., 2021). as a consequence, the implementation of lockdown and social distancing mandates by governments resulted in massive changes in consumer behavior as they have turned into protection mode, having more self-awareness (health concerns), and do anything remotely. firms are therefore challenged to be relevant with this natural disruption and relied on the usages of technology to survive. with the outbreak of the covid-19 pandemic, working from home has become a new mandatory habit as part of the public health responsibility. raghuram et al. (2019) argue that the usage of technology or computer-mediated work (cmw) is expected to ease the process of information sharing among employees. rupietta & beckmann (2018) and zainuddin & isa (2019) added that working from home also could impact the increase of intrinsic motivation and information sharing activities. while the usage of technology has offered productivity, efficiency, and flexibility, it has also exacerbated technostress problems in the workplace. prior studies related to this phenomenon confirmed that technostress could become a significant factor in personal health problem, job dissatisfaction, work inefficiency, and ineffectiveness (boonjing & chanvarasuth, 2017; durucu & bayraktar, 2020; hung et al., 2015; mahboob, 2016; tarafdar et al., 2007; zulfany et al., 2019), unwillingness to extend the use of technology (fuglseth & sørebø, 2014), the loss of career promotion (cooper & kurland, 2002; van steenbergen et al., 2018) and customer dissatisfaction (christ-brendemühl & schaarschmidt, 2020). moreover, tarafdar et al. (2014) added that there is a potential conflict that could lead to stress due to the use of technology (technostress) among salespeople as many of them would rather spend time interact with consumers than in front of the computer screen (geiger & turley, 2006; rangarajan et al., 2005). gschwandtner (2011) argued that the shifts in time spent priority of salespeople from selling to use of technology could affect into lost sales. technostress terminology was initially introduced in the medical field by brod (1982), who defined it as the situation of overall stress in which experienced by an individual due to their inability to adapt to the new trend of technology in a healthy manner (tarafdar et al., 2014). technostress can be divided into four categories which consist of techno-invasion, jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 38 techno-overload, techno-complexity, techno-insecurity, and techno-uncertainty (tarafdar et al., 2007). since then, many scholars have extended the critical aspects of technostress in a different point of view for example. ayyagari et al. (2011) identified five aspects of technostress which is work overload, role ambiguity, invasion of privacy, work-home conflict, and job insecurity. followed by stich et al. (2017), wang et al. (2020), and zhang et al. (2016) that used attitude toward technology, workload, work complexity, digital literacy, user involvement, person-organization misfit, person-people misfit, and persontechnology enhanced learning (tel) misfit as a multidimensional aspect that affecting the level of tecnostressors. technostress has become a crucial issue especially in the crises like covid-19 in which most people using technology to interact and continue their job responsibilities. the previous study related to the topic of technostress has occurred mostly during the “normal conditions”. therefore, it is essential to examine the potential stress caused by technology especially as the longitudinal study during the “normal conditions” (even before the covid-19 pandemic) that’s indicated a contradictory result (ter hoeven et al., 2016; van steenbergen et al., 2018). moreover, several recent studies confirmed the significant role of technology characteristics as the predictors of techcnostress. ayyagari et al. (2011) stated that technology characteristics such as usability (usefulness, complexity, and reliability), intrusiveness (presenteeism, anonymity), and dynamism (pace of change) have a significant influence on technostress level. they also concluded that while work overload and role ambiguity found to be the two most dominant techostressors, intrusiveness characteristics were confirmed as the dominant predictors of techostress. interestingly, although their study confirmed the significant contribution of usability in the level of technology adoption, verkijika (2019) stated that in general, the association between usability and technology adoption is quite questionable as several studies found different results either not strong enough or nonsignificant. furthermore, zhao et al. (2020) added that presenteeism also can be classified as one of tehcnostress creators. with the presence of technology, employees are connected to their job even during their off-job time (hyper-connectivity). these situations therefore often viewed as significant obstacles to their personal growth and career promotion. this study aims to understand and examine the effect of technology usability and the presence of technology on techno-stress dimensions (such as techno-complexity, invasion, overload, and insecurity). this study advances the emerging of technostress discourse by including the role of hyper-connectivity as one of the technostress predictors during the covid-19 pandemic situations technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism by khuzaini, zakky zamrudi 39 literature review technostress in the workplace the crucial role of technology usages in escalating the performance of a business is unavoidable. dhomane & mathew (2021) even added that the covid-19 pandemic crisis has fast-tracked the growth of technology usages like never before especially as the dependency of most people on technology to interact and continue their job responsibilities. even though the usage of technology has offered productivity, efficiency, and flexibility, it is also surrounded by the difficulties to adapt to technological resources that were designed by the company. this paradoxical issue is known as (workplace) technostress which was first coined in the medical field by (brod, 1982). while chandra et al. (2019) defined workplace stress as a default response of employee regarding the onset pressure condition which is the misfit between job demand and the ability to meet those demands, technostress is the stress that suffered by employees due to the inability to cope up with technology (khan et al., 2013; nisafani et al., 2020; yu et al., 2017). prior study related to technostress in the workplace shows the association of technostress on organization performances, productivity, satisfaction, career development, health and wellness, attitude toward technology, and job security (atanasoff & venable, 2017; boonjing & chanvarasuth, 2017; christ-brendemühl & schaarschmidt, 2020; durucu & bayraktar, 2020; fuglseth & sørebø, 2014; hung et al., 2015; mahboob, 2016; tarafdar et al., 2011; zulfany et al., 2019). moreover, in the case of sales professionals, technology use is often seen as an additional stressor that could decrease their overall performance in the sales role (tarafdar et al., 2014). although most sales professionals have confidence in their technology self-efficacy, they will reject any initiatives of technology project due to their unwillingness to adopt that particular technology (speier & venkatesh, 2002). a study from ahearne & rapp (2010), confirmed that the usages of technology by sales employees could increase their stress level, job dissatisfaction, absenteeism, and voluntary turnover. followed by chonko et al. (2002) that found that “there is a strong positive association between time spent with customers and probability of making quota, indicating a conflict between building relationships with customers, and expected use of is that might prevent face-to-face interaction with them.” technostress can be measured by several dimension which is techno-invasion, technooverload, techno-complexity, techno-insecurity, and techno-uncertainty (ibrahim et al., 2019; marchiori et al., 2018; tarafdar et al., 2007), work overload, role ambiguity, invasion of jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 40 privacy, work-home conflict, and job insecurity (ayyagari et al., 2011), attitude toward technology, workload, work complexity, digital literacy, user involvement, personorganization misfit, person-people misfit, and person-technology enhanced learning (tel) misfit (stich et al., 2017; wang et al., 2020; zhang et al., 2016). this study used the fivedimensional technostress proposed by tarafdar et al. (2007). alam (2016) and califf & brooks (2020) identified techno-complexity as the degree where employees are required to spend their valuable resources (time, money, etc.) to get better understandings and acquires new skills of a particular technology as a result of its complexity. while sareen (2019) and tarafdar et al. (2019) defined techno-invasion as a situation in which the users feel the need to be constantly connected with technology even though during non-work time. gaudioso et al. (2017); and saka et al. (2020) described techno-overload as a situation in which the users feel that they are forced and requested to work more and faster as a result of technology adoption. techno-insecurity, on the other hand, is the stress caused by the perceptions that the use of particular technology and its nature of constantly upgrading can threaten them in losing jobs (güğerçin, 2020; zainun et al., 2020). they are afraid that “others may know more about new technologies than they do” (stich et al., 2017). finally, techno-uncertainty can be described as the unsettled feeling caused by constant changes, upgrades, and the usages of new integration technology that creates ambiguous work requirements and expectations (güğerçin, 2020; li & wang, 2020). technology usability and technostress nowadays, the role of employee’s perceptions on technology usages becoming critical as it can determine their performance directly especially during the covid-19 pandemic. attitudes, experiences, and feel that they have had on information systems, therefore, constitute their technology characteristics perceptions and the level of technology adoption. ayyagari et al. (2011) defined technology characteristics as an employee’s overall assessment toward particular attributes or features of technology. one of the dimensions commonly used by scholars in measuring technology characteristics is usability. usability is representing the scale of "how well users can use the functionality provided by a particular system or technology” (nisafani et al., 2020). ayyagari et al. (2011) identified three dimensions of usability that consist of usefulness, complexity, and reliability. also, pal & vanijja (2020) divided the usability factors into perceived usefulness and ease to use. while perceived usefulness can be described as the degree to which employees' think that using particular technology would improve their performance (balog, 2010; bandiyono & muttaqin, 2020; technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism by khuzaini, zakky zamrudi 41 delone & mclean, 2003; jiang et al., 2012), ying et al. (2021) defined easily of use and reliability as the extent to which attributes and features of a specific technology is enjoyable, free of effort, and dependable. verkijika (2019) added that although most previous studies confirmed the significant contribution of usability in the level of technology adoption, the association between usability and technology adoption is quite questionable as several recent studies from chen et al. (2018) and moorthy et al. (2019) found different results of usability contribution on technology adoption which is either not strong enough or non-significant. previous studies from agogo & hess (2015), ayyagari et al. (2011), sellberg & susi (2014), and tarafdar et al. (2019) confirmed that usability issues of technology influence the perception of technostress. the more difficult technology usages perceived by employees, the higher the level of stress that is felt by them. in terms of usability dimensional, foster (2010) explained that “the relationship between complexity and usefulness can be captured by a ushaped curve." although his study was conducted in the psychological field, it is common to understand that the more complex technology provided by the company often refers to the lack of usefulness. for example, the software may offer a feature set that useful for employees in order to enhance their productivity (nisafani et al., 2020). however, at the same time, it also contains hidden and complex functionalities that need to be memories and or operates in detail. oppositely, hole (2016) argues that in the ict (information & computer technology) field, the complexity of ict is due primarily to the huge interactions and communications between stakeholders for both operational, managerial, and executive-level and combination of several computer systems within the organization. therefore, it can offer depth and/or usefulness functionalities to its users. furthermore, kim et al. (2015) and oh et al. (2019) stated that perceived usefulness has positive influences on users continues use behavior. considering that the need for connectedness as a description of techno-invasion, it is expected that the more positive evaluation toward the specific technology, the more users are to foresee technology connectedness. perceived usefulness also proved as negative predictors of techno-overload, ayyagari et al. (2011) stated that the abilities of employees to do work faster and effectively are enhanced whenever they find the technologies that are designed by the company are useful, thereby it will reduce their work overload perceptions. finally, since technology's usefulness could lead to the trust of a particular technology. therefore, the more useful and sophisticated technology that was designed by the company will result in negative technoinsecurity (tarafdar et al., 2007, 2019) especially “since users who feel insecure typically have little trust in the new technology” (nugroho & fajar, 2017). jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 42 h1a: technology usability will be associated with techno-complexity. h1b: technology usability will be associated with techno-invasion. h1c: technology usability will be associated with techno-overload. h1d: technology usability will be associated with techno-insecurity. technology presenteeism and technostress kinman (2019) defined presenteeism as situations in which people continue to work despite difficult conditions (illness). several studies found that due to the nature of presenteeism that can be categorized as “invisible behavior”, the incidence and cost of presenteeism is considerably higher than absenteeism. knani (2013) added that the costs of presenteeism are underestimated as they are difficult to assess but at the same time impacted in many aspects within the organization such as productivity, service performance, and others. on the other hand, in the case of technology, presenteeism can be described as the degree of hyper-connectivity in which particular technology enables users to be accessible in any situation (fredette et al., 2012; issa & bahli, 2018). rainbow & steege (2017) added that “presenteeism is a complex behavior that can stem from a variety of antecedents, and lead to cost, performance, and productivity loss for companies.” furthermore, due to their hyper-connectedness with technology designed by companies, employees have to handle the heavy workload that needs to be accomplished in a short time. this situation therefore often ended on their frustration and exhaustion toward technology. ayyagari et al. (2011) added that technology presences will cause fragmentations of job tasks due to the increasing amount of communication between an individual that often leads to irresolution tasks. “they perceived a higher job demand because of the increased technology complexity” (knani, 2013). with the covid-19 pandemic that is not over yet, the high level of employee reliance on technology obligates them to be constantly available even though they are not in good conditions (sickness) or in time with their families. a study by xiao & mou (2019), found that presenteeism has a positive influence on privacy invasion and invasion of life. presenteeism could also manifest in the perception of work overload, as hyperconnectivity is often implied on work faster and longer (ayyagari et al., 2011). during working from home, the duration of work is not controllable resulted in increasing task exposure with the expectations of faster turnaround times (valk & hannon, 2017). cooper et al. (2001) stated that hyper-connectivity is perceived as stressors and work overload that is experienced by an individual due to the connectedness with technology. presenteeism technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism by khuzaini, zakky zamrudi 43 however may worsen during the implementation of new technologies which is often followed by an increased perceived workload and reluctance to adopt (knani, 2013). finally, the presence of technology also has brought a super anxious situation amongst employees. knani (2013) explained that employees who have been with the company for several years feel more frustration due to the mistreatment, the lack of support and recognition from their companies. they sense that the more they are connected with technology, the more they are realized that their job is in jeopardy (díaz et al., 2018). h2a: technology presenteeism will be associated with techno-complexity. h2b: technology presenteeism will be associated with techno-invasion. h2c: technology presenteeism will be associated with techno-overload. h2d: technology presenteeism will be associated with techno-insecurity. methods this study can be categorized as quantitative and exploratory research as employees' evaluation of specific instruments was represented by numerical data and the objective of this study that wants to investigate and describe the problem that has not been determined. purposive sampling was chosen as a sampling technique of the study. a survey questionnaire with a five-point of likert scale was distributed to marketing employees that classified as indonesia marketing association (ima) active members and have been experienced “working from home” during pandemics situations. marketing employee was chosen as the object of this study because of the huge impact of covid-19 to this particular job as the widespread of lockdown and social distancing protocols (he & harris, 2020). ima is also set as a source of marketing employee list as this association is the one of credible marketing associations that have a huge number of indonesian marketing professionals. the sample size of this study is calculated by using prior study guidance from machin et al. (2009). a total of 300 employees sent their evaluation about technology usability, presenteeism, and technostress. however, after preliminary analysis of replies, 38 questionnaires that were filled out incompletely need to be withdrawn. thus, there are 262 (which represents 87.33% response rates) valid questionnaires that were classified to be processed into the goodness of fit model testing, reliability and (convergent and discriminant) validity testing, and covariance based structural equation modeling (cb-sem) analysis. cb-sem has seen a drastic increase in attention and utilization over the last decade (astrachan et al., 2014). hair et al. (2014) added that cb-sem aims to “reproduces the covariance matrix (i.e., minimizing the difference between the observed and estimated jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 44 covariance matrix) without focusing on explained variance”. cb-sem should be passed and followed all the criterion of the goodness of fit models such as absolute fit (which consist of chi-square, root mean square error approximation-rmsea, goodness fit index-gfi) and incremental fit evaluation (which consist of adjusted good of fit-agfi, comparative fit index-cfi, tucker lewis index-tli, the degrees of freedom). to be classified as a good fit model, hair et al. (2014) declared that the (cut-off) score of chi-square should be as small as possible with rmsea score that is lower than 0.080, gfi and agfi score that is higher than 0.900, the degree of freedom (cmin/df) value that is lower than ≤ 2.00, tli and cfi score that is higher than 0.950. in this study, the construct was adjusted from several previous studies. while the technology usability and presenteeism were adapted from ayyagari et al. (2011), tarafdar et al. (2014) items, technostress creator factors which consist of techno-complexity, technoinvasion, techno-overload, techno-insecurity, and techno-uncertainty was measured by ma & turel (2019) and marchiori et al. (2018) instruments. however, we opted to remove technouncertainty from the model due to the reason that all questionnaire items from this stressor are invalid during the pre-test with 200 respondents. murray (2006) stated that avoiding invalid instruments is the right thing to do in the nature of research as invalid instruments produce a biased and troublesome instrumental variable estimator which may be much more biased if the omitted variables are correlated with the existing explanators. figure 1 and table 1 show the research framework and the detailed information of the research instrument. figure 1. research framework h1a h1c h1b h2c h2a h1d h2b h2d techno-overload (tol) techno-insecurity (tis) technology usability (tus) presenteeism (pr) techno-complexity (tcx) techno-invasion (tin) technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism by khuzaini, zakky zamrudi 45 table 1. research instruments variable code item technology usability (tus) tus1 the use of technology makes me finish my tasks more quickly tus2 the use of technology increase the quality of my work tus3 the use of technology makes my job easier to finish tus4 the use of technology enhances my effectiveness on the job. presenteeism (pr) pre1 the use of technology enables me to be in touch with others. pre2 the use of icts enables me to work from a distance technocomplexity (tcx) tcx1 i do not know enough about technology to address my work satisfactorily tcx2 i need a long time to understand and use new technologies tcx3 i don't have enough time to learn more and catch up with technology tcx4 i think the newcomers of this organization know more about technology than i do tcx5 i often find understanding and using new technologies to be very complex techno-invasion (tin) tin1 i have less time with my family due to the technology used at work tin2 i am in contact with work even during vacation because of the technology used at work tin3 i have to sacrifice my vacation time and weekends to keep myself up-to-date with new technologies tin4 i feel that the technology used at work invading my personal life techno-overload (tol) tol1 i am forced to work faster because of the technology used at work tol2 i am forced to work more because of the technology used at work tol3 i am forced to work with very tight schedules because of the technology used at work tol4 i was forced to change habit my working time to adapt to new technologies tol5 i have a larger workload due to increased technological complexity technoinsecurity (tis) tis1 i feel a constant threat to my job security due to new technologies. tis2 i am threatened by coworkers with newer technology skills. tis3 i don't share my knowledge with my coworkers for fear of being replaced. tis4 i feel there is a lack of knowledge sharing among coworkers for fear of being replaced. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 46 table 2. the goodness-of-fit (gof) model criteria output cut-off criteria decision chi-square 2.314 smaller accepted rmsea 0.000 ≤ 0.08 accepted gfi 0.955 ≥ 0.90 accepted agfi 0.915 ≥ 0.90 accepted cmin/df 0.632 ≤ 2.00 accepted tli 0.908 ≥ 0.95 accepted cfi 0.978 ≥ 0.95 accepted table 2 indicates that indices can be considered acceptable as all the criteria index of gof were met in this study. the results of gof test show that the value of chi-square is 2.314 with rmsea of 0.000 (< 0.080), gfi and agfi value of 0.915 (> 0.900), the degree of freedom (cmin/df) value of 0.632 (< 2.000), tli and cfi score of 0.908 and 0.978 (> 0.950). thus, the measurement model of construct and reliability, convergent and discriminant validity was evaluated by using hair et al. (2014) guidance. table 4 shows that the cronbach's alpha of the six constructs is above the accepted value of 0.700 (ranged from 0.801 to 0.853) which means that technology usability, presenteeism, techno-complexity, techno-invasion, techno-overload, and techno-insecurity had sufficient reliability. furthermore, this study had adequate convergent validity as the constructs of composite reliability and the average variance extracted (ave) score exceeds the accepted value of 0.700 and 0.500. while, the composite reliability of all constructs was between 0.811 to 0.886, each construct's ave ranging from 0.503 to 0.673. finally, discriminant validity was measure by using the square roots of the ave for each construct that must be higher than on other constructs. table 3 shows the discriminant validity was met in this study. table 3. discriminant validity constructs tus pre tcx tin tol tis technology usability (tus) 0.892 presenteeism (pre) 0.221 0.830 techno-complexity (tcx) 0.067 0.268 0.738 techno-invasion (tin) 0.384 0.220 0.188 0.738 techno-overload (tol) 0.480 0.442 0.118 0.393 0.808 techno-insecurity (tis) 0.519 0.369 0.077 0.336 0.618 0.812 technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism by khuzaini, zakky zamrudi 47 table 4. reliability, convergent validity, and average variance extracted (ave) construct/ items loading factor cronbach’s alpha ave composite reliability tus 0.817 0.532 0.886 tus1 0.786 tus2 0.833 tus3 0.781 tus4 0.792 pre 0.801 0.643 0.805 pre1 0.793 pre2 0.838 tcx 0.813 0.673 0.815 tcx1 0.795 tcx2 0.780 tcx3 0.819 tcx4 0.795 tcx5 0.886 tin 0.809 0.503 0.811 tin1 0.714 tin2 0.751 tin3 0.754 tin4 0.814 tol 0.856 0.544 0.822 tol1 0.712 tol2 0.754 tol3 0.735 tol4 0.835 tol5 0.811 tis 0.853 0.593 0.817 tis1 0.745 tis2 0.803 tis3 0.819 tis4 0.712 jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 48 result and discussion table 5. demographic profiles demographic variables frequency percentages (%) gender male 157 55 female 105 45 age 21 – 25 42 16 26 – 30 61 23 31 – 35 48 19 36 – 40 35 14 41 – 45 29 11 46 – 50 25 10 > 50 22 7 education senior high school 76 29 diploma 73 28 bachelor 82 31 master 31 12 technology usage duration 1 – 3 hours 78 30 4 – 6 hours 113 43 7 – 9 hours 60 23 > 9 hours 11 4 work experience 1 – 4 years 97 37 4 – 7 years 82 31 7 – 10 years 42 16 11 – 14 years 26 10 > 14 years 15 6 table 5 of demographic profiles shows that most of the 262 respondents in this study are male (55%) and 45% are female. in addition, there was a predominance of respondents with ages ranging between 26-30 years (23%) and who have a bachelor's degree (31%). the majority of them also classified that they are new in their recent companies (1-4 years of service) and have accessed technology for about 4-6 hours each day for work purposes (37%). to summarize, most of the respondents in this study are in productive age with the level of technology usages in work that is still considered as normal and reasonable when compared to their daily working hours. technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism by khuzaini, zakky zamrudi 49 table 6. hypotheses testing hypotheses estimates se cr p decision h1a tus -> tcx 0.410 0.085 4.846 *** supported h1b tus -> tin 0.132 0.070 1.888 0.079 not supported h1c tus -> tol 0.132 0.069 1.910 0.076 not supported h1d tus -> tis 0.182 0.068 2.594 0.013 supported h2a pre -> tcx -0.300 0.160 -1.876 0.081 not supported h2b pre -> tin -0.155 0.132 -1.178 0.273 not supported h2c pre -> tol -0.355 0.131 -2.720 0.011 supported h2d pre -> tis -0.333 0.128 -2.598 0.016 supported table 6 shows the effect of technology usability (tus) and presenteeism (pre) on the techno-stress dimension such as techno-complexity (tcx), techno-invasion (tin), technooverload (tol), techno-insecurity (tis). as shown in previous studies, the cut-off value for hypothesis testing is in the range between the critical ratio t-value > 1.96 or <-1.96 at the 0.05 significant level (arbuckle, 2010; hair et al., 2019). the result of hypotheses testing in table 6 shows that the technology usability shows a significant effect on techno-complexity of 0.410 (cr = 4.846) and techno insecurity of 0.182 (cr = 2.594), while the effect on techno-invasion shows 0.132 (cr = 1.888) and techno-overload of 0.042 (cr = 1.910) which indicates insignificant effect. however, the greatest influence is shown by the influence of technology usability on the complexity of the technology. thus, it can be concluded that the use of technology by marketing employees can increase their level of anxiety and worries about being irrelevant and jobless due to the complexity of technology that was implemented by the company. especially as geiger & turley (2006) and rangarajan et al. (2005) argued that marketing people would rather spend most of their time interacting with consumers than in front of a computer screen. the development of technology is used to simplify work and shorten the time of tasks completion of both the operational and managerial levels (the impact of these technological developments can be seen in the availability of application that supports with nature "working from home” during the covid-19 pandemic). the findings of this study indicate a positive and significant relationship between technology usability and technology complexity. this study supports the finding of hole (2016) that stated that useful systems and information technology require more complicated relationship and cross-departmental collaboration. the lack of non-virtual meetings, face-to-face meetings, to discuss a job can bring it into a more jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 50 complex situation and time-consuming (ayyagari et al., 2011). during a pandemic situation, it is difficult to conduct face-to-face meetings among the employees. therefore, the accessibility of a proper technology or application can make works becoming easier. a work that previously was only done in the office, it is currently can be done at home during the quarantine period. hole (2016) and srivastava et al. (2015) added that the resulting cumulative work complexity can be reduced when technology is considered capable to support job achievement. in the second dimension of technological characteristics, the presence of technology (presenteeism) shows a negative effect on all techno-stress dimensions. the effect of presenteeism on techno-complexity shows an effect of -0.300 (cr = -1.876), and the effect of presenteeism on the invasion of technology shows an effect of -0.155 (cr = -1.178) which shows an insignificant effect. the effect of presenteeism on techno-overload and technoinsecurity shows the probability value of -0.355 (cr = -2.720) and -0.333, cr = -2.598) which indicates a significant effect. therefore, it can be concluded that presenteeism can significantly reduce techno-overload and techno-insecurity. the result of this study contradicts the conclusion of galluch et al. (2015), which stated the hyper-connectivity will cause massive job demands that often ended in an overload of work. the nature of respondent in this study that only uses technology for about 4-6 hours each day for work purposes is still considered as normal and reasonable when compared to their daily working hours (8-9 hours). during the pandemic situation, the implementation of lockdown and social distancing mandates by governments caused the massive adjustment of marketing programs. marketing automation becoming companies' focus in recent days. thus, it will ease the burden of the target performance of each marketing employee. ayyagari et al. (2011) added that the presence of technology could increase work effectiveness and efficiencies that resulted in work-life balance (chandra et al., 2019). it is hoped that the use of technology does not only create a balance between the numbers of jobs but also work rhythm (agogo & hess, 2015). interestingly, this study found the negative effect of technology presenteeism on technoinsecurity. many marketing employees still believed that physical meeting remains important and cannot be replaced with technology (gschwandtner, 2011; tarafdar et al., 2014). the challenges that have arisen due to the pandemic (such as lockdowns, social distancing, and application of various health protocols), have affected the ways companies run their marketing campaign from conventional marketing to technology-based marketing. however, the reliance of many marketing programs on technology does not make marketing employees technostress among marketing employee during the covid-19 pandemic: exploring the role of technology usability and presenteeism by khuzaini, zakky zamrudi 51 feel threatened by technology. they consider the current radical changes only temporary and will last during the pandemic. the results of this study indicate that they will only feel insecure when this technology can provide significant benefits to the company. interestingly, marketing employees do not see their connectivity with technology impact on massive workloads (even it has reduced their working hours from 8 hours to 4-6 hours per day during the pandemic). it indicates that the presence of technology has provided tangible benefits to companies. thus, if this condition is not anticipated properly, the technology-based marketing will cause major disruption to many marketeers after the pandemic. the presence of technology is expected to provide an effective alternative for workers during a pandemic and to enable them to work from home. table 6 shows the insignificant effect of technology's usability on techno-invasion and techno-overload and technology's presenteeism on techno-complexity and techno-invasion. this result indicate that technoinvasion and techno-overload are generally not shared by all members. there may be internal communication that reduces techno-overload such as communication support and an increase in the technological capacity of the company (pflügner & maier, 2019). companies can provide frequent and effective training programs to improve the technical skills of employees to reduce employee anxiety (fuglseth & sørebø, 2014). a working environment that supports both physical and non-physical environments is considered important to reduce technological insecurity because adequate support from colleagues and supervisors is proven to reduce technological insecurity when employees feel unsafe (goetz & boehm, 2020). also, califf & brooks (2020) stated that the interaction duration with technology will cause different levels of understanding and literacy between an employee that will affect a different level of stress. the higher technology connectivity, the higher the level of stress will be. from the demographic profile, it is known that the use of technology of 4-6 hours is considered sufficient when compared to office regular working hours of 8-9 hours a day. thus, the study indicates a non-significant effect due to lack of time learning on the benefit of using technology in the marketing department. another factor creates such condition is due to demands in certain product particularly on electronics and mobile devices increases as people is working and learning from home, resulting in lower workloads of marketing employee. conclusion and suggestion this study aims to investigate the associations of technology usability and presenteeism on technostress dimensions such as techno-complexity, techno-overload, techno-invasion, and techno-insecurity. the result of this study concluded that technology usability has jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(1) 2021, 36-60 http://dx.doi.org/10.31106/jema.v18i1.10050, issn (online) 2597-4017 52 positive influences on techno-complexity and techno-insecurity. while at the same time, the negative influences of technology presenteeism (hyper-connectivity) on techno-overload and techno-insecurity were also proved in this study. the majority of the respondent in this study that uses technology in the normal range (4-6 hours) and the focus of their companies to implement marketing automation during the covid-19 pandemic situations were considered as the main reason for the negativity effect between technology presenteeism (hyperconnectivity) on techno-overload and techno-insecurity. the multi-challenges that have arisen due to the pandemic (such as lockdowns, social distancing, and application of various health protocols), have affected the changes in the company's marketing strategy from conventional marketing to technology-based marketing. however, the reliance of many marketing programs on technology does not make marketing employees feel threatened by technology. they consider the current radical changes only temporary and will only last during the pandemic. the results of this study also indicate that they will only feel insecure when this technology can provide significant benefits to the company. interestingly, marketing employees do not see their connectivity with technology impact on excess workloads (even it has reduced their working hours from 8 hours to 4-6 hours per day during the pandemic). it indicates that the presence of technology has provided tangible benefits to companies. thus, if this condition is not anticipated properly, the technology-based marketing will cause major disruption to many marketeers after the pandemic. future studies are encouraged to include individual technology capabilities as one of the technology characteristic measurements since the level of technical characteristics can differ between individuals. to 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development of the institute for community empowerment, like (1) as a means of community participation in planning and implementing development; (2) cultivating understanding and appreciation and awareness of the pancasila; (3) digging, harness, potential and mobilize self-help mutual aid societies to develop; (4) as a means of communication between the government and the community and between citizens themselves; (5) improving the knowledge and skills of the community; (6) to foster and mobilize the potential of the youth in development; (7) fostering cooperation between institutions in society for development; (8) implementation of other tasks in order to help the village government to build resilience established. keywords: role of the institute of community and rural development 1. introduction 1.1 research background society is a group of people in a particular area. humans have an instinct to stay together and get together with each other. in the development of emerging social groups that were born and formed by institute. social institutions play a role in the life of a social group. civil society is a system of specific norms that organize a course of action that is patterned to meet human needs in a common life, where the community organizations must have a system of norms that govern the actions and the actions regular aims to meet human needs. based on law no. 6 of article 23 of 2014 explained that local governments are given the authority to regulate and manage the household affairs, in other words that the local government has the authority to take care of their own governmental affairs and public interests at its own initiative based on the aspirations of the people in the system the unitary state of the republic of indonesia. implementation of regional autonomy is part of the ideals of reform to make government oriented to political decentralization. basically regional autonomy aims to realize welfare community with the aspirations and needs of society as well, are expected through aspiration and community participation in the planning through monitoring will be easier to develop local resources optimally to support its welfare state realized through regional autonomy. while the function and role of empowerment public agencies as a partner of government is planting and fertilizing a sense of unity and cohesion of rural communities / villages. coordination of development planning. as a means of public participation in the planning, implementation and control of construction. explore and exploit the potential and mobilize self-help mutual aid societies for development, as a medium of communication between the community and the government and among the people themselves, empower and mobilize the potential of the youth development, encourage, establishing and empowering the role of women in the welfare of the family, build cooperation among agencies in the community in order to improve people's economic development to improve their lives. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 9 development plans villages need for synergy or cooperation between the institute for community empowerment with the head of the village. it is hoped that development plan that produced by each other can suit with the needs and capabilities of the village, therefore it will increases the welfare of rural communities level. 1.2 research problem based on the research background, researcher are interested in studying the function and the role of the institute for community empowerment in developing rural area in lamongan 2015. 1.3 research purpose this research aims to know and examines the function and the role of the institute for community empowerment in developing rural area in lamongan 2015. 2. theoretical framework 2.1 theoretical framework 2.1.1 position and privileges institute for community empowerment in development in the village in village governance system institute for community empowerment is a container that is formed on the initiative of the community as partners with government, sub-district, and urban village in accommodating and realizing the aspirations and needs of the people in the field of development. position institute for community empowerment is the community institutions that are local and organisationally independent and based in the village. forming community institutions whose names are institute for community empowerment. institute for community empowerment formed to continue the already established previously and make adjustments from existing ones according to the needs and socio-cultural community of village in planning development based on consultation, mobilize and increase community participation in the implementation of development, grow develop dynamic condition of society in improving the resilience of national micro governance, privileges institute for community empowerment in development in rural system in the village administration is plan development by consensus, stir and increased public participation in the implementation of development, and cultivate dynamic condition of society and enhances national security by the micro government. 2.1.2 the institute for community empowerment in performing its functions and its role in development in the village to run the function and role of the institute for community empowerment, it needs community participation in planning and implementing development, cultivating the understanding and awareness of pancasila, digging, harness potential, and mobilize self-help mutual aid societies to develop, communication between the government and the community and between each citizens, improving the knowledge and skills of the community, to foster and mobilize the potential of the youth development, fostering cooperation between institutions in society for development, also implementing any tasks in order to help the village government build their resilience. 2.1.3 the obstacles that arises in implementing community empowerment as for the obstacles that arise in the implementation of the function and role of community empowerment in this study are the absence of implementation of a good management system, transparency issues, and nepotism culture. 2.1.4 the level of community participation in providing support and success in empowering the community in the realization of development goals, then all the natural potential to be explored, developed, and used well. similarly, the potential of the human form of the numerous population should be improved so that their knowledge and skills, be able to explore, develop and exploit the natural potential to the jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 10 maximum, and the implementation of development programs reached. plans and development programs as a form of implementation of government was created and implemented in the districts, both implemented by the central government through agencies. 3. research method researchers uses descriptive research with qualitative analysis method with literature study and field studies as the data collection techniques. qualitative analysis uses by researcher in this research to describe and explain data that have been obtained and further elaborated in the form of an actual explanation. in general, there are three phases that used by researcher to run this research like data collection, data reduction (withdrawal or verification), data presentation and conclusion. 4. research result and analysis 4.1. research discussion in planning the development of consensus-based the institute for community empowerment needed in their aspirations and support of the community in terms of its residents and village officials for the implementation of development can be done well. things that can be done so that the aspirations and the support of the public can walk is the first to provide clear information to the public about the real conditions of rural development. the latter being honest and avoid corruption, it is useful to provide a sense of trust and secure with existing conditions. the third good planning, systematic and sustainable. stir and increased public participation in the implementation of development is the way in which provide motivation and encouragement to the community. cultivate the dynamic condition of society and improving resilience in the institute for community empowerment dynamic conditions would certainly be possible. it can provide resilience in the village so that society becomes more advanced. the existence of good container in order to boost the development of the village so that the aspirations of the people can be well and also the support of the village government to accept the aspirations of the people will be easier to plan and implement development. instill understanding and awareness of the appreciation and practice of pancasila is as basic a village under construction. comprehension their good and appreciation of pancasila to have the building has direction and purpose. since the village can not be separated from the republic of indonesia as a unitary state and sustainable development. explore, exploit, self-potential and move people to build their mutual cooperation are largely determine potential eye pencarihanya the institute for community empowerment is farmers, however not sertamerta they become farmers, villagers can improve their earnings with the institute for community empowerment is to recognize, harness, potential and self stir mutual cooperation. for example, farmers raising chickens or cows. as a means of communication between the government and the community and between citizens themselves, their bridge between the government and the villagers made the measure of the success of building the village the institute for community empowerment, because of a lack of cooperation from both sides so it's hard to development will be impossible. the institute for community empowerment as a container or a representative of the people in the village. improving knowledge and skills of their people in the village the institute for community empowerment can be a means of knowledge and improve skills in village communities the institute for community empowerment this is not out of the participation of the institute for community empowerment board itself. if the the institute for community empowerment society included a stake in building the village. but the opposite would apply if only certain people then it is not possible knowledge and these skills can not be properly channeled to the community. nurture and mobilize the potential of the youth in development should be done the institute for community empowerment and the village government is shaking the potential of local youth as future generations. due to the the institute for community empowerment youth who participate directly could jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 11 boost rural development. many are given support and opportunities can make the youth more creative and innovative. however this should not be separated from government supervision and motivation. fostering their cooperation between institutions in society to development can be done by way of a coordinated inter-agency cooperation and coordinated in accordance with the vision and mission village. the more support inter-agency coordinated the development program held the institute for community empowerment and the government, it can be done well. implementation of other tasks in order to help the village government to build resilience are well established, by way of giving information and knowledge about the latest developments and government the institute for community empowerment the support of all the residents and village government could be established increase resistance. and also can perform other policies that support development. as for the obstacles that arise in the implementation of the function and role of community empowerment in this study are a. the absence of implementation of a good management system pjm implemented every year, but the management is carried out. an organization to grow and maintain its existence needed a good performance and no-nonsense either from the board or from members of the the institute for community empowerment itself. to support those in need efforts to increase knowledge and skills through the provision of training and guidance in order the institute for community empowerment can understand his ability that need to develop, meaning a capacity assessment of the performance capabilities of an organization that carried out jointly by the board and the members are very necessary as one personal mirror an organization, which results into a foothold to strengthen and develop skills in the pursuit of its goals. b. lacking openness in information. information becomes valuable of an organization, especially the institute for community empowerment because with good information and delivery of information in accordance with reality to make something worthwhile. with good information and correct the the institute for community empowerment policy can be implemented well too, so it's not their problem within the village community in the development process. the good information is appropriate, good, it is understood, the source can be accountable. c. their sectoral political element in the stewardship/nepotism this is the problem many the institute for community empowerment is not independent in the sole discretion of sectoral politics because there are elements in the management / nepotism, the number of cases that occur together with the management board the institute for community empowerment village. the institute for community empowerment board because the case in favor of the election of village headman and other. however this is not necessarily be a bad thing in the village administration or the institute for community empowerment because if runing accordance with the interests of the villagers it will run very well. d. the institute for community empowerment in the village we studied seem still not optimally perform its role in channeling the aspirations of rural communities in rural development. the members / officials the institute for community empowerment sparse dialogue with the public so that the aspirations of their people can not know "(informant: kalipang village residents, kebonagung, adirejo and sidokumpul). e. results of an open study with informants also revealed that the the institute for community empowerment in villages in the region of 10 districts in lamongan district is working on the preparation of village development plans, but not optimal. the following statements from informants who had in research. "each participatory village development plan compiled in forums / meetings held to that performed by the institute for community empowerment and involves all elements related to both the village government, bpd officials, community leaders and villagers who are considered to be involved. however, it must be recognized that this function is not optimal because it can be implemented by the institute for community empowerment employed several constraints such as limited human resources jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 12 and lack of operational funds" (informant: chairman of the village the institute for community empowerment sugio, kebonagung, adirejo and sidokumpul). in realizing the objectives of development programs at each institution requires a managerial pattern in development management, managerial pattern is intended that the development benefits and other government programs can be felt and enjoyed by society. one thing that is needed is the awareness and active participation of the entire community in supporting the successful implementation of development programs. it also calls for government policy to direct and guide the community to jointly implement development programs. community participation is the main capital in an effort to achieve the goals of government programs throughout the territory of the republic of indonesia. success in achieving the goals of the development program is not based solely on the ability of government officials, but also with regard to efforts to achieve capacity and safety of the community to participate in the implementation of development programs. their participation will be able to compensate costs and the ability of government in achieving the implementation of the development program. based on the above, a variety of things sought by the institute for community empowerment namely: the provision of assistance to support the community activities, the formulation of policies that can give people an opportunity to participate in the implementation of development programs. giving creativity, and motivation for the growth of community participation in the implementation of development programs. in reality, not all members of society to participate, for various reasons. this is realized due to several factors that influence. here is necessary to reassure the public about participation in development, namely the communication between village government by the people or vice versa. such a situation would change the attitude and actions of society which then becomes support to participate. this shows just how big a role the government to improve community participation in order to achieve maximum implementation of development programs. as a means of public participation in the village has been in the form of institutions such as the institute for community empowerment and the well-being of community empowerment institution. through this agency, the community is expected to help speed up or streamline development in the district and national development in generally. increased community participation in development, in addition to the expected attention in the aspect of justice and equitable development and results of development should also oriented to the interests of the community that really correspond with what is needed and felt by them. similarly, the development in the village every year the institute for community empowerment pjm implemented in the district kedungpring: sidomlangean village, village tlanak; subdistrict sugio: jubellor village, village gondanglor; subdistrict sukodadi: village sukodadi; lamongan district: desa tanjung, desa made; district of karangbinangun: karangbinangun village, mayong village; the district kembangbahu: pelang village, district mantup, kedungsoko village, village sukosari; subdistrict deket: village tukkerto; subdistrict sambeng: village ardirejo; subdistrict tripe: kebonagung village. however, the management is carried out, it appears from year to year has increased, especially the construction of public facilities such as roads, bridges, posts kamling, places of worship, educational facilities and so forth. the entirety of the four discussion that resulted from the research cited above suggests that the performance of the functions of the institute for community empowerment in rural development in 10 districts of sample locations turned out of five key functions the institute for community empowerment studied was only four functions that have been quite effective, but also have not been up that function village plans, functions implement plans / programs of rural development, the function of moving the participation, non-governmental functions in rural development and function of accommodating the aspirations of the people. but for the aspirations of the functions can be implemented, but the community has been less than effective. the overall results of this study can give an idea of the effectiveness of the implementation of the role and functions of the lpm in rural development in general. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 13 5. research conclusion and recommendation 5.1. conclusion based on the description and discussion of the issues that have been raised previously, the author gives the following conclusion: a. privileges institute for community empowerment in developing rural system in the village administration is plan development by consensus, stir and increased public participation in the implementation of development, cultivate dynamic condition of society and improving the resilience of the national in micro government. b. to run the function and role in the development of the institute for community empowerment must comply with the rules villages and villages that have been made. however, there are some good functions to implemented in order to boost the development, community participation in planning and implementing development, cultivating the understanding and awareness of pancasila, digging, harness potential, and mobilize self-help mutual aid societies to develop, communication between the government and the community and between each citizens, improving the knowledge and skills of the community, to foster and mobilize the potential of the youth development, fostering cooperation between institutions; also implementing any tasks in order to help the village government build their resilience. c. as for the obstacles that arise in the implementation of the function and role of community empowerment in this study are the absence of implementation of a good management system, transparency issues, and nepotism culture. the sum of the four discussion that resulted from the research cited above suggests that the performance of the functions of the institute for community empowerment in rural development in the ten districts location of the samples turned out of five key functions the institute for community empowerment studied apparently only four functions that have been quite effective, but also not maximized the function village plans, functions implement plans / programs of rural development, the function of moving the participation, non-governmental functions in rural development and function of accommodating the aspirations of the people. but for the aspirations of the functions can be implemented, but the community has been less than effective. the overall results of this study can give an idea of the effectiveness of the implementation of the role and functions of the the institute for community empowerment in rural development in the district in general. d. in the realization of development goals, then all the natural potential to be explored, developed, and used well. similarly, the potential of the human form of the numerous population should be improved so that their knowledge and skills, be able to explore, develop and exploit the natural potential to the maximum, and the implementation of development programs reached. their level of community participation in providing support and empower success in high society to improve development. 5.2. recommendation once we conclude the analysis, researchers will try to put forward suggestions for appropriate uses in this study, namely: a. for village community, existence of openness in information. information becomes valuable of an organization, especially the institute for community empowerment because with good information and delivery of information in accordance with reality to make something worthwhile. so that the information should be conveyed properly, through the government continued to the village board meeting the institute for community empowerment. b. for the institute for community empowerment, eliminating the sectoral political element in the stewardship/nepotism many institute for community empowerment is not independent in the sole discretion of sectoral politics because there are elements in the management/nepotism. looking ahead, the institute for community empowerment board should be selected from those who have the jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 14 ability in the management of rural development, as well as have the will, awareness and a deep commitment to community empowerment. c. for the government, to improve the effectiveness of the institute for community empowerment function in rural development, the quality of human resources the institute for community empowerment officials should be enhanced through training in management development undertaken agency/team coaches or academics. to improve the effectiveness of the performance in rural development, the institute for community empowerment must be able to establish a good cooperation and harmony with the village authorities and the bpd. by adjusting the pjm at each village so the village government programs and the institute for community empowerment can work together / in line. references arief, s. 1993. economic research methods. lpfe-ui, jakarta. bappeda.jatimprov. http://bappeda.jatimprov.go.id/. profile of east java province. 03-april-2012. boediono. 1985. the theory of economic growth. bpfe, yogyakarta daryanto, arief and hafizrianda, yundy. 2010. analysis input-output and the social accounting matrix for local economic development. ipb press, bogor. office of population of east java province. 2010. population and employment in east java province hasan, m.iqbal. 2002. principal materials research methodology and application. jakarta hoover, edgar m. 1974. an introduction to regional economy, second edition. new york: alfred a. knopf mangiri, k. 2000. integrated planning autonomous region economic development (input-output model approach). publisher's central bureau of statistics, 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development plan 2005-2025. law no. 12 of 2008 regarding the second amendment to law number 32 year 2004 2008 local government. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 15 widodo. 2006. development planning: computer applications (regional autonomy). upp stim ykpn, yogyakarta. wijono, wiloejo w. 2001. uncovering the sources of the indonesian economy in five years. paper intern bappeki, yogyakarta. *) abid muhtarom, islamic university of lamongan **) rizal nur irawan, islamic university of lamongan jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 22-40 http://dx.doi.org/10.31106/jema.v19i1.15036, issn (online) 2597-4017 22 determinants of sme’s performance: the role of knowledge management, market orientation, and product innovation wisnu panggah setiyono1*, mohammad iqbal2, rizal alfisyahr3, alshaf pebrianggara4, mukhammad shofyan5 1 department of management, faculty of business, law and social science, universitas muhammadiyah sidoarjo, sidoarjo, indonesia 2 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia 3 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia 4 department of management, faculty of business, law and social science, universitas muhammadiyah sidoarjo, sidoarjo, indonesia 5 department of business administration, faculty of administrative science, universitas brawijaya, malang, indonesia *corresponding author(s) email: wisnu.setiyono@umsida.ac.id abstract the role of knowledge management (km) in the existence of small medium enterprises (sme’s) has been an important aspect of entrepreneurship. however, to perform an sme may not merely rely on its knowledge but also on other aspects such as market orientation and product innovation. this study aims to contribute to the entrepreneurship literature in the context of emerging economies. this study can be classified as quantitative research by nature as the use of a survey to gather respondent data. about 211 samples of smes of the furniture cluster in east java were obtained in this study. thus, understanding that the focus on market orientation and innovation in smes has not fruitfully been exposed and explored enough in the context of emerging economies such as indonesia. the result of this study indicated that km is not a direct predictor of sme performance. this is an indication that the supremacy creation of sme performance could not depend heavily on km but rather, other driving forces such as market orientation (mo) and product innovation (innov) are much more powerful drivers in crafting sme performances. keywords: knowledge management; market orientation; product innovation; performances; sme jel code: i25, i30, l26, m13 doi: 10.31106/jema.v19i1.15036 article history: received 2022-01-31 reviewed 2022-02-28 revised 2022-03-06 accepted 2022-03-30 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ determinants of sme’s performance: the role of knowledge management, market orientation, and product innovation by wisnu panggah setiyono, mohammad iqbal, rizal alfisyahr, alshaf pebrianggara, mukhammad shofyan 23 introduction in some regions, southeast asian economic growth slowed from 5.3% in 2017 to 5.1% in 2018 and 4.4% in 2019 due to global trade friction and global economic uncertainty. increasing demand. in 2020, the new coronavirus disease (covid19) caused great turmoil in the global, regional and domestic economies. the southeast asian economy is expected to shrink by 2.7% in 2020. in southeast asia, msme contributed an average of 41.1% to gross domestic product (gdp) between 2010 and 2019. msme's contribution to 12 gdp increased moderately (cagr of 2.3%). indonesian msme contributed a relatively high 61.1% to gdp in 2018 and grew at a total annual growth rate of 14.2% between 2010 and 2018. thirteen msme’s from brunei, malaysia, thailand, and singapore contributed 35% to 45%. when. the country's gdp (annual average growth rate of 2.8% to 9.1%). in indonesia, thailand, and malaysia, the ratio of msme's gdp to gdp is gradually increasing over time. it decreased in singapore but generally increased in brunei. in us $ and indonesian dollars, msme’s registered us $ 592 billion in 2018, followed by thailand (the us $ 216 billion), singapore (the us $ 149 billion), and malaysia (the us $ 126 billion). knowledge management is mentioned in the literature as the formalization and access to experience, knowledge, and expertise that enables superior performance, drives innovation, and creates new skills to acquire customer value (majid, bagram, & khan, 2012). knowledge management has a significant role in motivating individuals and firms to leverage their strategic orientation due to its nature as an important resource for any type of organization (iqbal et al., 2020). knowledge build-up is crucial for any type of firm as it allows a certain threshold to be achieved via entrepreneurial activities. also, knowledge management encourages firms to set up their own goals and realize the growth and survival of a business in the long run. nonetheless, knowledge management may not be the only driver to create supremacy of performance, but rather, other supporting drivers such as market orientation may be well seen as an effort to become competitive in the marketplace. moreover, market orientation as a means of developing strategically oriented firms is one of the key prescriptions that must be able to be developed. market orientation as it is now defined is the setting of strategic consumer goals and building an organization focused on customer service, providing the basis of inward competition, and providing services that meet consumer expectations to win a competition (tuominen et al., 2022). moreover, market orientation employs customer focus as the basis for jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 22-40 http://dx.doi.org/10.31106/jema.v19i1.15036, issn (online) 2597-4017 24 determining the firm's strategic positioning in the market. other than that, innovation could also be another detrimental factor that enhances sme's performance. in the context of indonesia as an emerging market, innovation in sme’s has not fruitfully been exposed and explored enough since this area of study is still relatively in its infancy despite it representing the majority of total firms in operation at present (sofyan, 2019). as highlighted by fagerberg et al. (2013) suggested that an economy with a high level of innovation tends to boost its level of productivity and income compared to those that are lacking. it is important to note that innovation-growth dyads are a significantly important aspect of a firm that unfolds within an innovative ecosystem. and due to those reasons, the important drivers of strategic orientation such as market orientation and innovation are important to be looked at in the context of small and medium enterprises (sme’s). it is important to note that sme’s are a vital booster of growth for many economies and their contribution has been noted for several reasons: (a) important for rural economic development; (b) source of regional employment; and, (c) interactive place for entrepreneurship and business skill development (t. tambunan, 2019). nonetheless, they are vulnerable to constraints such as access to financial institutions (i.e., bank loans) as well as market access (t. tambunan, 2019). in the indonesian context, sme’s contribution to productivity growth has increased from 57.84% to 60.34% over the last five years, as reflected in gdp. indicators of contribution to gross domestic product (gdp) formation and labor absorption have increased, but small and medium-sized enterprise (sme) sector access to the supply chain has increased. world production remains limited. therefore, this study focuses on sme’s in the east java furniture group. this is one of the major drivers of the indonesian economy, especially because sme’s in east java account for up to 54.98% of the total gdpr generated (subagyo et al., 2020; agustina et al., 2021). literature review the knowledge management imperative the era of the knowledge economy began in the twentieth century when the global industries had started a revolution to create a stable, superior, competitive, and information technology-based business climate. due to those conditions, knowledge management strategies became a primary tool for organizations to achieve their goals to become competitive (zaied & zaied, 2012). further, as an important thrust to obtain competitive advantage and improve performance alongside organization capabilities, knowledge management is utilized in the quest to improve process performance as well as the primary organizational threshold (zaied, determinants of sme’s performance: the role of knowledge management, market orientation, and product innovation by wisnu panggah setiyono, mohammad iqbal, rizal alfisyahr, alshaf pebrianggara, mukhammad shofyan 25 2012). nonetheless, knowledge management could not have existed as a sole ingredient of success for every organization, but rather, the presence of substantial orientation towards a particular market is also a key factor. thus, the concept of market orientation might be useful in the process of achieving a desired organizational outcome via information processing, market knowledge as well as industrial foresight (al badi, 2019; supriatna, 2020). as noted by webster et al. (2018), a high level of market orientation is an indication that an organizational ability to achieve a certain performance threshold is present. following these contentions, there is a relationship between the development of knowledge and market orientation. as such, hult & jr (2001) found that the effective integration of knowledge management with market orientation is an ability that functions as a strategic source for organizations. h1: knowledge management positively influences market orientation the contention that knowledge management determines economic benefits for organizations in ways for which accelerated innovation exists and minimizes fault timelines and cycles (ullah et al., 2021), had triggered other studies to prove that knowledge management has a direct effect on the overall organizational performance (marqués & garrigos-simon, 2006). while manufacturing remains the basis of development, globalization is changing the notion of competitiveness in developed countries, moving standardized manufacturing activities away from knowledge-based services (christopherson et al., 2008). the world is transitioning from the natural resource-based industrial era to the year of knowledge-based skill-based education, research and development. knowledge drives innovation and is an important source of employment and economic growth in the global economy (gulbranson & audretsch, 2008). knowledge helps innovation and is a vital supply of employment and financial increase withinside the international economy. treating know-how because the organization`s maximum vital effective asset is a principal component of society withinside the twenty-first century, other than conventional belongings inclusive of guide labor, capital, and technology. in the past, the principal price became the mass manufacturing of products and the assessment of their importance. today, the principal region is occupied by manufacturers of bodily precious ideas, information, virtual codes, innovations, creativity, and services (dickel & moura, 2016). the current meaning of competitiveness includes not only the technical performance and efficiency of a company or product but also the ability to develop systematic processes to jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 22-40 http://dx.doi.org/10.31106/jema.v19i1.15036, issn (online) 2597-4017 26 identify opportunities. overcome new technical and organizational obstacles through the creation and application of knowledge. innovation management aims to integrate mechanisms and tools, as well as methods and organizational forms. this enables organizations to innovate based on internal and external knowledge (canongia et al., 2004). this study assumes that knowledge management is a factor that underpins the performance of sme’s and is, therefore, a hypothesis related to this study: h2: knowledge management positively affects sme’s performance as gharakhani & mousakhani (2012) companies with high knowledge production and management skills claim to have much higher innovation skills. this shows that knowledge management is an important element of innovation development (andreeva & kianto, 2012). according to darroch (2005), for innovation to occur few attributes of knowledge within firms: (a) internal and external forces; (b) free flow of knowledge; and (c) responsiveness and agility must be able to be obtained. in organizations, knowledge management is considered an essential prerequisite for innovation in addition, knowledge management encourages participation in innovation by creating new ideas and incorporating them into the organization's knowledge capital more specifically, the acquisition of externally generated knowledge gives individuals the opportunity to develop new knowledge and improve their ability to transform existing knowledge into new knowledge (c.-j. chen & huang, 2009). therefore, the newly acquired knowledge effectively contributes to maximizing the stock of available knowledge and reducing uncertainty. as a result, the newly acquired knowledge provides an environment that leads to opportunities for innovative improvement and innovative thinking (dahiyat & alzu’bi, 2012). several empirical studies have investigated the impact of knowledge management processes on product and process innovation (kör & maden, 2013). it has been found that the turkish knowledge management process has a significant positive impact on innovation, which drives innovation in the organization (bocquet et al., 2017). experience shows that while process innovation in luxembourg is related to workplace organizations, product innovation is strongly influenced by knowledge management (donate & sanchez de pablo, 2014). using a sample from a spanish technology company, we found that knowledge management significantly controls the impact of knowledge-based leadership on product innovation (andreeva & kianto, 2011). based on a sample of 221 companies in finland, russia, and china, it was concluded that the knowledge management process has a positive impact on innovation (lundvall & nielsen, 2007). organizational practices related to learning and knowledge have been found to have a positive impact on danish organizational innovation determinants of sme’s performance: the role of knowledge management, market orientation, and product innovation by wisnu panggah setiyono, mohammad iqbal, rizal alfisyahr, alshaf pebrianggara, mukhammad shofyan 27 and dynamic performance (bandeh nezhad et al., 2012). we provide empirical evidence from malaysian manufacturers about the impact of knowledge management practices on innovation. the study found that knowledge management practices such as knowledge sharing, knowledge translation, and knowledge storage have a positive impact on product and process innovation: h3: knowledge management positively influences product innovation the relationship of market orientation on sme’s performance market orientation claims to be a corporate culture that can effectively and efficiently initiate strategic actions aimed at creating value for customers (amin et al., 2016). this means that market orientation is the benchmark for companies that see consumers as valuable people. based on the resource-based model, companies with market-centric advantages are better placed to better understand customer needs and wants, and the capabilities of the competitors (hult & jr, 2001). in addition, mo is defined as a set of activities, processes, and behaviors that result from the implementation of a marketing concept and consists of three key components: (1) intelligence generation, (2) intelligence dissemination, and (3) responsiveness (amin et al., 2016; chao, 2014). it is important to be market-oriented, as sme’s are dependent on a particular environment and culture. it's not just focused on the inside of the enterprise, it's a lot of places found in the enterprise network (maaodhah et al., 2021). some studies argue that market orientation is an important prerequisite for a company's performance (maaodhah et al., 2021), and hence this study posits that h4: market orientation positively affects sme’s performance the relationship of product innovation on sme’s performance the paradigm of innovation as introduced by j. chen et al. (2018) we claim that product innovation is the introduction of a brand new product or a new quality product to a customer who is new to it. the pioneering view of j. chen et al. (2018) and dabic et al. (2017) endorses that product innovation is a key determinant in each enterprise to boom a firm`s marketplace share. according to kotsemir & abroskin (2013), innovation is an interactive outcome that results from the generation, development, and implementation of a series of new ideas. in addition, this process will later be transformed into a wide range of innovations: (a) products or services, (b) process technologies, (c) organizational structures, and, (4) managerial approaches (azar & rian, 2014). jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 22-40 http://dx.doi.org/10.31106/jema.v19i1.15036, issn (online) 2597-4017 28 product innovation is one type of innovation that companies are particularly dependent on, with a particular focus on the manufacturing industry and the core of manufacturing tangible products. continuing to innovate products is critical to the survival and performance of a company. as innovation capabilities increase, businesses can survive in the dynamics of the environment (azar & ciabuschi, 2017; ferdilan et al., 2021). thus, innovation is an important thrust of a firm's competitiveness that enhances performance (azar & rian, 2014). following contention made in previous studies, this study posits that: h5: product innovation positively affects sme’s performance mediating role of market orientation and product innovation the mediating role of market orientation in this study was developed following previous research (ghahroudi et al., 2019). chao (2014) suggested that market orientation is a missing link in the knowledge management chain that is capable of turning knowledge management into performance. moreover, these arguments indicate that market orientation can enhance knowledge management in the quest for achieving performance, and therefore, the hypothesis relevant to this study is: h6: market orientation positively mediates the relationship between knowledge management and sme’s performance also, the role of product innovation as mediation had been derived from previous research (astuti et al., 2020; prasetya et al., 2021). while market orientation is a key determinant to leveraging sme's performance, product innovation can also be another determinant that bridges the extent to which knowledge management's ability to intensify sme's performance. it is believed that knowledge management can be a thrust of sme's performance together with the role of strong product innovation. h7: product innovation positively mediates the relationship between knowledge management and sme’s performance methods this survey uses a quantitative approach using statistical analysis as a survey tool. statistical techniques are used in the form of descriptive and inference statistics. pls-sem was used as an inference statistical analysis tool. it is a powerful statistical tool because it can be applied to any data scale, does not require many assumptions, and allows you to see relationships that are not yet solidly grounded. in addition, it provides a more robust estimate of the structural model compared to cbsem, especially if the assumptions are violated (hair determinants of sme’s performance: the role of knowledge management, market orientation, and product innovation by wisnu panggah setiyono, mohammad iqbal, rizal alfisyahr, alshaf pebrianggara, mukhammad shofyan 29 et al., 2014). not handiest that pls may be used to expand or assemble hypotheses, it additionally has capabilities to expect complicated situations, in addition to functions that facilitate multivariate information analysis; in comparison to the preceding sem primarily based totally on theoretical proof with parametric assumptions that should be met (hair et al., 2014). table 1. construct measurements constructs item mean standard deviation outer loading composite reliability ave knowledge management (km) km 1 4.643 0.775 0.868 0.961 0.530 km 2 4.471 0.776 0.817 km 3 4.419 0.796 0.762 km 4 4.438 0.755 0.775 km 5 4.357 0.757 0.753 km 6 4.305 0.782 0.715 km 7 4.324 0.743 0.683 km 8 4.081 0.950 0.558 km 9 4.405 0.732 0.719 km 10 4.386 0.816 0.689 km 11 4.324 0.889 0.574 km 12 4.505 0.719 0.798 km 13 4.448 0.756 0.811 km 14 4.505 0.788 0.776 km 15 4.400 0.757 0.778 km 16 4.229 0.865 0.614 km 17 4.314 0.734 0.734 km 18 4.314 0.778 0.737 km 19 4.300 0.868 0.606 km 20 4.343 0.766 0.700 km 21 4.381 0.791 0.706 km 22 4.367 0.795 0.750 jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 22-40 http://dx.doi.org/10.31106/jema.v19i1.15036, issn (online) 2597-4017 30 table 1 continue constructs item mean standard deviation outer loading composite reliability ave market orientation (mo) mo 1 4.238 0.845 0.739 0.904 0.545 mo 2 4.386 0.816 0.792 mo 3 4.424 0.785 0.824 mo 4 4.148 0.937 0.660 mo 5 4.357 0.787 0.826 mo 6 4.062 0.900 0.555 mo 7 4.329 0.751 0.763 mo 8 4.376 0.797 0.708 product innovation (innov) innov 1 4.462 0.698 0.832 0.848 0.651 innov 2 4.581 0.644 0.792 innov 3 4.481 0.678 0.795 sme’s performance (p) p 1 4.081 0.930 0.704 0.849 0.585 p 2 4.205 0.769 0.770 p 3 4.181 0.772 0.808 p 4 4.229 0.734 0.774 the construct employed in this study adopts the use of established scales formed and derived from: (1) twenty-two items of km from hussinki et al. (2017); (2) eight items of mo from kolar & eržen (2006) work; (3) a three-item of product innovation from ramadani et al. (2018); and (4) a four-item of sme’s performance derived from hanaysha (2020). these established scales were used based on their strength in addition to their internal and external validity of the concepts involved in previous studies. a simple random sampling technique was employed by utilizing the population from a homogeneous group of furniture clusters in the east java province of indonesia. according to sekaran & bougie (2009), simple random sampling is best employed when the group being observed represent homogenous characteristic and the availability of a sample frame is present. in this study, the representation of sme owners in the furniture cluster can be considered relevant to such guidelines (sekaran & bougie, 2009) due to the similar characteristics that they possess. data collection was carried out through a survey and the number of responses collected was 211 sme’s of the furniture cluster in east java province of indonesia. determinants of sme’s performance: the role of knowledge management, market orientation, and product innovation by wisnu panggah setiyono, mohammad iqbal, rizal alfisyahr, alshaf pebrianggara, mukhammad shofyan 31 moreover, the convergent validity of each construct determined by the composite reliability measure showed strong results because most of the constructs exceeded the value of 0.70 (table 1). all constructs have high composite reliability values: 0.961 (km); 0.904 (mo); 0.848 (product innovation); and 0.849 (sme’s performance). furthermore, each item measured using a five-point interval scale obtained an average value: x̄ = 4.47 (km), x̄ = 4.29 (mo), x̄ = 4.51 (innov), and x̄ = 4.17 (p). the outer loading values in most of the variables showed very satisfactory results based on values above 0.7 and within the range of 0.5 to 0.6 were considered acceptable (khidzir, ismail, & abdullah, 2018; taber, 2018). finally, the mean extracted variance (ave) is a measure of commonality for each latent variable. ab hamid et al. (2017) argues that an adequate result of all variant exhibit value should be greater than 0.50 each. thus, the measurement of the construct of this study can be considered robust result and discussion table 2. demographic profiles demographic profiles freq. percentages (%) gender male 157 78.11 female 54 21.89 age < 30 36 21 10.45 37 43 35 17.41 44 50 49 24.38 51 57 59 29.35 > 58 37 18.41 sme's length of business operation < 5 years 4 1.99 5 – 10 years 8 3.98 11 – 20 years 56 27.86 > 20 years 133 66.17 number of employees 5 – 10 136 67.66 11 – 15 36 17.91 > 16 29 12.94 sme’s revenue (idr) < 250 million 32 15.92 250 million 999 million 110 54.73 1 billion – 2 billion 34 16.92 > 2 billion 25 12.44 jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 22-40 http://dx.doi.org/10.31106/jema.v19i1.15036, issn (online) 2597-4017 32 the results of the demographic analysis (table 2) show that most of the respondents in this study were male, ranging from 44 to 50 years old (24.38%) and 51 to 57 years (29.35%). furthermore, most sme owners have operated their business for more than 20 years (66.17%) with the number of workers ranging from 1 to 5 workers (67.66%) as well as having a sales turnover of idr 250 million idr 999 million. the demography characteristics were similar that those of in previous studies, particularly in the indonesian sme context (sofyan, 2019; subagyo et al., 2020; t. t. h. tambunan, 2021). table 3. hypotheses testing hypotheses direct effect (ß) indirect effect (ß) t-score probability decision h1 km → mo 0.91 25.08 0.00*** accepted h2 km → p 0.09 0.41 0.68 rejected h3 km → innov 0.72 6.45 0.00*** accepted h4 mo → p 0.22 1.68 0.09* accepted h5 inno → p 0.44 2.38 0.02** accepted h6 km → mo → p 0.21 1.68 0.09* accepted h7 km → innov → p 0.31 2.41 0.02** accepted n = 211 = p (0.48); innov (0.51); mo (0.83) sig at p-value<0.01***, p-value<0.05**, p-value<0.1* the seven hypotheses proposed in this study were analyzed and tested using pls model following henseler et al. (2016) guidance. the results of the analysis show that the proposed model can predict sme's performance, product innovation, and market orientation as the rsquare value amounted to: 0.476, 0.514, and 0.829 respectively. table 3 shows that most of the hypotheses of the study were supported (h1, h3, h4, h5, h6, h7) as the p-value of each hypothesis was lower than the critical value of 0.05 and 0.10 (0.00, 0.00, 0.09, 0.02, 0.09, 0.02). this study shows that km positively affects mo (ß=0.91) and product innovation (ß=0.72), it is assumed that the stronger km possessed by sme owners, the more market orientation is further needed to become competitive. similarly, a stronger km also will boost product innovation, as the main thrust in the quest for competitive advantage (zaied, 2012). this finding is consistent with previous studies that posit that km can create organizational creativity (lee & choi, 2003), leading km practices to significantly influence sme's determinants of sme’s performance: the role of knowledge management, market orientation, and product innovation by wisnu panggah setiyono, mohammad iqbal, rizal alfisyahr, alshaf pebrianggara, mukhammad shofyan 33 performance (marqués & garrigos-simon, 2006). in the context of this study, the sme’s can adopt km practices that nurture mo as well as their product innovation that assists them to create products relevant to their customers. with shifts in market tastes and preferences, this study is also consistent with previous studies that measured the influence of km on mo (casablancas-segura, 2013). also, km has been able to increase product innovation which is an important element in the sustainability of a business, these results indicate that the km process is measured by knowledge creation, knowledge accumulation, knowledge sharing, and knowledge utilization (teo & bhattacherjee, 2013) which had been able to demonstrate the innovation ability of furniture sme’s to innovate their products. other than that argument (wahyuni & sara, 2020) implicitly suggests and acknowledges that km drives economic impact in an indirect interaction, this explains why the relationship between km and sme’s performance had no significance since sme’s performance is indicated by how much revenue and costs are involved (hanaysha, 2020). hence, it is necessary to develop and employ the sme's performance indicators other than financial performance. figure 1. outer model structural output the results of the analysis also show that mo has a positive and significant relationship to sme performance (ß=0.225). this finding is linear with the results of previous studies (rita & huruta, 2020). it is an indication that mo acts as a thrust to boost sme's performance. 0.91 0.22 0.09 0.72 0.44 knowledge management (km) market orientation (mo) smes performance (p) product innovation (innov) jema: jurnal ilmiah bidang akuntansi dan manajemen, 19(1) 2022, 22-40 http://dx.doi.org/10.31106/jema.v19i1.15036, issn (online) 2597-4017 34 concerning product innovation, the result indicates that the ability of smes to carry out product adaptation processes is increasing in line with an increased sme's performance. this is consistent with the results shown in previous research (azar & ciabuschi, 2017). the role of mo and product innovation as parameters in this study was used to determine if these two variables could play a role in mediating the relationship between knowledge management and organizational performance. therefore, this result shows that mo and product innovation are the strategic impetus to bridge km to achieve the performance of certain sme’s. findings are in line with previous studies (azari et al., 2015; benner & tushman, 2003; solikahan & mohammad, 2019), although it contradicts the results of a few previous research (ghahroudi et al., 2019). this shows that the results of the study are inconsistent between cultures and are worth further development in the mo and innov context. conclusion and suggestion this study provides an empirical study to determine the impact of knowledge management, market orientation, product innovation, and indoor sme performance in east java, indonesia. the results show that while km has a partial impact on market orientation and product innovation, product innovation acts as a complete intermediary in the relationship between knowledge management and sme performance. in addition, km does not directly impact sme performance but must be leveraged through market orientation and product innovation. the study also focuses on the growing needs of market-oriented sme’s, even though sme’s are generally competing for product models that are the result of product innovation. it provides the implications and tools for planners to develop ongoing business practices for sme’s. therefore, the government must be able to provide continuous provision and support to strengthen knowledge as an important aspect of entrepreneurship. in addition, scholars need to focus on investigating determinants of km and other progenitor cells that may not have been investigated in this study. determinants such as learning motivation and entrepreneurial activity and market-oriented precursors such as innovative abilities can also be used for further research in entrepreneurship research, especially in emerging markets. despite the findings and discussions, this study is not without its limitations. this study focuses only on specific clusters of small businesses such as furniture, and the characteristics are assumed to be uniform. to expand the literature on entrepreneurship in emerging markets, future research will dig deeper into other small business clusters such as apparel, food processing, and other related small industry clusters, with consistent results. determinants of sme’s performance: the role of knowledge management, market orientation, and product innovation by wisnu panggah setiyono, mohammad iqbal, rizal alfisyahr, alshaf pebrianggara, mukhammad shofyan 35 references ab hamid, m. r., sami, w., & mohmad sidek, m. h. 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(2012). the role of knowledge management in enhancing organizational performance. i.j. information engineering and electronic business, 4, 27–35. https://doi.org/10.5815/ijieeb.2012.05.04 does green economy video really work? the effectiveness of using video content marketing in forming msmes perception and behavior to implement green economy by rizka zulfikar, prihatini ade mayvita jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 34 does green economy video really work? the effectiveness of using video content marketing in forming msmes perception and behavior to implement green economy rizka zulfikar *) prihatini ade mayvita**) abstract this study aims to assess the effectiveness of the use of video content marketing in performing smes perceptions and behavior in implementing the concept of a green economy. the expected results of this research will make the using of video marketing content can be used as a material consideration for use in socialization and guidance to smes about the concept of green economy. this study was conducted in south kalimantan province with the population, and the sample was smes in south kalimantan province as much as 164 respondents. researcher use purposive sampling as research method with one group pretest-posttest as research design. the data was collected using interviews and questionnaires. data analysis technique are descriptive statistics, and wilcoxon sign rank test. this study found that there is an average difference of perception and behavior of respondents about green economy before and after treatment with the video content marketing. keywords: perception; behavior; green economy; msme; video content marketing 1. introduction 1.1 research background green economy or environmentally friendly is a business activity that always strives to minimize damage to the environment, such as pollution through the waste produced, and the disruption of the balance of ecosystems and the environment of the communities around the business area. the existence of environmentally friendly businesses is expected to increase the security and sustainability of the ecosystem balance in the future (bank indonesia, 2012). msmes (micro small and medium enterprises) are one of the economic actors who have such a large role in the national economy. when umkm actors are irresponsible and do not know the concept of green economy, the waste produced can disrupt the environment (zulfikar & mayvita, 2018). this is very unfortunate that understanding the green economy concept is still very far from their daily business activities. their orientation is only on how the business continues to run and profit can be maximized. there are various challenges related to the adoption of concepts and understanding of a green economy; one of the challenges comes from msme owners regarding their understanding and willingness to implement this concept. creativity and innovation are needed to enable better information transfer process that can lead to positive perceptions and behavior for msmes to implement green economy. the bank indonesia report (2015) states that most msmes that currently exist still do not make the environmentally friendly as things that need special attention. this is caused by several factors such as (a) lack of knowledge of environmental sustainability, (b) weak management aspects, (c) technical aspects that do not support, and (d) the unavailability of financing sources to create an environmentally friendly business. therefore, the phasing of the environmentally friendly criteria implementation by msme conditions is needed. for that reason, the implementation of http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 35 socialization and education is very necessary to raise consumer awareness to utilize environmentally friendly products. while the reason why smes have not implemented a green economy in their businesses is because of the lack of knowledge of concepts and benefits and the high application costs that have caused the green economy not to be carried out by them, likewise, the lack of support from the government and related agencies has led to the green economy concept not being implemented by smes (noviardy & mellita, 2014). to increase the level of knowledge and awareness, msmes must be supported to obtain information and technology that can help them in implementing green economy. the process of transferring information on the green economy concept can employ video content marketing media which is currently widely used in marketing activities to increase sales and shape consumer image. this media contains elements of education, information, and entertainment so that it can provide added value and is often used as a learning tool to improve audience understanding (short, 2017). media video content marketing will provide positive implications for audience attitudes both from aspects of cognition, affection, and also behavioral (silaen, 2015; alksne, 2016; hidayati, 2017). the educational and information elements in the content are received and well perceived by the audience. various elements of education, information, entertainment, and absorbed beliefs stimulate the attitude of the audience to be more interested in the content (silaen, 2015; hong & yang, 2018). delivering information with attractive visual designs will be able to cause audience attention so that it will form a distinct image of a concept that can be an opportunity for the use of video content marketing in the process of transferring information on the green economy concept to msmes. this research is then conducted to analyze the effectiveness of the use of video content marketing media as an alternative medium for information transfer to facilitate msmes in their understanding of the green economy concept which is then expected to form better perceptions and behaviors to implement green economy. it is expected that the results of this study can later be considered as an increase in the effectiveness of the dissemination of the green economy concept. 1.2 research problem a) are there differences in perceptions and behavior of msmes before and after watching video content of green marketing? 1.3 research purpose the purpose of this study is to obtain empirical evidence about the effectiveness of using video content marketing in shaping perceptions and behavior of msmes to implement green economy and the role of the treatment in the form of video content marketing in influencing msmes' perceptions and behavior. 2. theoretical framework and hypotheses development 2.1 green economy msmes are not ready to conduct environmentally friendly business activities with constraints like lack of knowledge and awareness of environmentally friendly, limited technical capabilities, limited aspects of capital and weak aspects of management (bank indonesia, 2012). the main disadvantage of msmes is the limited access to capital, technology, and knowledge (kruja, 2013). government support in the provision of technology and information is very influential in encouraging msmes to implement the green economy concept (sriyono, 2014) and the implementation of green economy must be implemented as soon as possible because it has a major http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 36 influence on the environment and humanity (fauzia, 2016). to increase knowledge and awareness of environmentally friendly, the technology transfer process is a fast way for smes to be able to implement environmentally friendly technologies. msmes must be supported to obtain information and technology that can help them in implementing green economy. 2.2 video content marketing one technological process that can be used to improve understanding is to use video content marketing media, because video content marketing has a positive influence for audience attitudes in the aspects of cognition, affection, and also behavior (silaen, 2015). the educational and information elements in the content are accepted and well perceived by the audience. various elements of education, information, entertainment, and absorbed beliefs stimulate the audience to be more interested in the content (silaen, 2015). video media dominates the entry channel of information through the eyes and ears and can improve human memory that comes from what is seen and heard. messages delivered through video media can also affect emotions and can achieve targeted results faster than other media (dwyer, 2011). video-based learning media that is oriented in problem-solving will have a positive influence on learning activities (agustina, 2012) and the use of interactive video media provides more effective results than other learning media because it increases interest and arouses the audience's appeal to the material (izzudin, masugino, & suharmanto, 2013). video content marketing media is a medium that can attract the attention of audiences because it provides the content the audience needs, it does not present the information about the product too much because audience involvement is the key to successful content marketing (diamond, 2015). the ultimate goal of a video content marketing is to evoke a response from the expected audience, which are the emergence of knowledge of content (cognitive), the emergence feelings towards objects from the content (affection) and the emergence of behavior (behavioral) (mandloys digital marketing, 2013). 2.3 the effectiveness of digital media in forming perception and behavior some researchers state that the use of digital media tends to be more effective than other media to improve understanding and change audience perceptions, attitudes and behavior (olofintoye & akanle, 2011; candarli & yuksel, 2012; suduc, bîzoi, gorghiu, & gorghiu, 2012; bal-gezegin, 2014; petan, petan, & vasiu, 2014; stanczyk, de vries, candel, muris, & bolman, 2015). as stated by kay (2012) which states that there are significant changes in perceptions and behavior of respondents to continue to preserve the environment after getting digital media treatment such as video podcasts. so it can be said that digital media has a positive influence on the formation of audience perceptions and behavior. video media is able to capture 94% of the entrance channels of messages or information into the human's mind through the eyes and ears and is able to make people, in general, remember 50% of what they see and hear from program shows. also, messages delivered through video media can invoke strong emotions and achieve fast results than other media (dwyer, 2011; alksne, 2016; wang & antonenko, 2017). video-based learning media that are problem-solving oriented have a positive influence on learning activities (agustina, 2012; hund & getrich, 2015; laaser & toloza, 2017; hong & yang, 2018) and the use of interactive video media provides more effective results than other learning media because it increases interest and arouses the audience's appeal to the material (izzudin, masugino, & suharmanto, 2013; hund & getrich, 2015; costley & lange, 2017; tackett, slinn, marshall, gaglani, waldman, & desai, 2018). the hypotheses in this study was formed on the basis of the research results by olofintoye & akanle, 2011; kay, 2012; candarli & yuksel, 2012; suduc, bîzoi, gorghiu, & gorghiu, 2012; balhttp://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 37 gezegin, 2014; petan, petan, & vasiu, 2014; stanczyk, de vries, candel, muris, & bolman, 2015, who found that the use of digital media can provide a change in audience perceptions and behavior and can be seen from the difference in audience perceptions and behavior before and after being treated with video content marketing. based on this, the hypotheses that will be used in this study are as follows: h1: there are differences in the average perception of msmes in implementing green economy before and after being treated with video content marketing h2: there are differences in the average behavior of msmes in implementing green economy before and after being treated with video content marketing 3. research method 3.1 research design the study is pre experimental research that uses video media as a treatment for transferring information on the green economy concept in socialization activities. the design of this study is based on "one group pretest-posttest design." in this design, before the sample is given the treatment, the initial questionnaire is given first to determine the knowledge, understanding, perception, and behavior of the samples, and the final questionnaire aims to determine knowledge, perception, and behavior of the sample after receiving treatment. this study uses data analysis techniques in the form of (1) quantitative descriptive analysis, (2) test the validity and reliability of the instrument and (3) wilcoxon sign rank test. 3.2 population and sample the population and sample in this study are msmes in the province of south kalimantan, and the sampling technique using the slovin formula as follows: n = n.z21−∝/2.p.(1−p) (𝑁−1)𝑑2+ z21−∝/2.p.(1−p) in which : n = minimum number of samples z = normal distribution standard value (table z) with α = 0.05 p = the proportion of samples in the population d = error rate allowed (absolute error) n = population based on data obtained from the department of cooperatives and smes in south kalimantan province, that until 2017 the number of msmes throughout the province of south kalimantan was 375,000 msmes, with a population proportion of = 20% and an absolute level of error of 5%, the minimum sample used in this study is: n = 375.000 x (1,96)2 x 0.10 x 0.90 (374.999)𝑥 (0.05)2+ (1,96)2 x 010 x 0.90 = 138 sample this study used 164 msmes as the respondents to fulfill the minimum number of sample required. the sampling method was done by purposive-sampling technique, and the data was then edited using microsoft excel. the material of video content marketing contains elements in the form of education (black economy and its impact on the environment, green economy concept and sustainable development), information (government policy and incentives for environmentally http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 38 friendly msmes, as well as entertainment (story board animation along with dubbing sound that explains the video flow). the technique of making video content marketing was using the sparkol video subscribe whiteboard animation version 2.3.0 3.3 research framework picture 1 research framework where, treatment = the use of video content marketing as a medium for transferring information about the green economy to respondents. pre_perception = respondents' perceptions before getting treatment using video content marketing. pre_behavior = respondent's behavior before getting treatment using video content marketing post_perception = respondents' perception after getting treatment using content marketing video. post_behavior = respondent's behavior after getting treatment using video content marketing. 4. research result and analysis 4.1 descriptive analysis table 1 shows the characteristics of respondents' knowledge level about the green economy: table 1 respondents knowledge level about green economy no knowledge high moderate low 1 the concept of green economy 9.8% 79.9% 10.4% 2 the concept of sustainable development 4.9% 80.5% 14.6% 3 application of a green economy 10.4% 79.9% 9.8% source: primary data processed, 2018 descriptive analysis of the respondents' perceptions and behavioral variables (pre-test) was carried out based on the level of perceptions and behavior of respondents before being treated. determination of trend categories from each variable is based on the category according to hadi (2002) and is described in three groups of categories: high, moderate, and low. the categorization h2 h1 pre_perception pre_behavior post_perception post_behavior video treatment http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 39 is based on respondents' assessment (x) compared to the mean (m) and standard deviation (sd) of these variables with the following conditions: a) high = x ≥ m + sd b) moderate = m sd > x ≥ m + s c) low = m – s > x where, x = respondents' assessment of indicators observed m = mean value of overall respondents' rating sd = the overall standard deviation of respondents' ratings based on the results of the pre-test before being given treatment, the level of perception and behavior of respondents categorized in the following table: table 2 respondents perception of green economy (pre-test) no perception high moderate low 1 the cost of implementing green economy (perc_1) 12.7% 83.9% 3.4% 2 use of technology (perc_2) 19.2% 76.0% 4.8% 3 benefits for business (perc_3) 24.1% 72.3% 3.6% 4 ease of application (perc_4) 18.7% 76.1% 5.2% 5 government support (perc_5) 16.3% 79.6% 4.1% source: primary data processed, 2018 table 3 respondents behavior in implementing the green economy (pre-test) no behavior high moderate low 1 a desire to apply (bhv_1) 22.1% 71.0% 6.9% 2 a desire to find information (bhv_2) 26.0% 64.6% 9.4% 3 a desire to encourage others (bhv_3) 24.2% 66.0% 9.9% 4 desire inform (bhv_4) 15.6% 76.3% 8.1% 5 a desire to make a business that is environmentally friendly (bhv_5) 32.5% 57.8% 9.6% source: primary data processed, 2018 based on the results in table 3, it is seen that msmes in the province of south kalimantan already had a good level of knowledge, perception, and behavior about the green economy concept, in which the results of categorization of the assessment are mostly in the moderate category. based on the results of the post-test after being given treatment, the level of perception and behavior of respondents is categorized in the following table: table 4 level of respondent's perception of green economy (post-test) no perception high moderate low 1 the cost of implementing green economy (perc_1) 56.4% 43.3% 0.3% 2 use of technology (perc_2) 65.1% 33.6% 1.3% 3 benefits for business (perc_3) 66.3% 33.0% 0.7% 4 ease of application (perc_4) 58.2% 40.6% 1.2% 5 government support (perc_5) 56.5% 41.7% 1.8% source: primary data processed, 2018 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 40 table 5 respondents' behavior in implementing the green economy (post-test) no behavior high moderate low 1 a desire to apply (bhv_1) 63.2% 35.6% 1.3% 2 a desire to find information (bhv_2) 68.4% 29.4% 2.2% 3 a desire to encourage others (bhv_3) 67.1% 31.8% 1.1% 4 desire inform (bhv_4) 66.3% 31.5% 2.1% 5 a desire to make a business that is environmentally friendly (bhv_5) 72.3% 25.4% 2.3% source: primary data processed, 2018 based on the results in table 5, it can be seen that the knowledge, perceptions, and behavior of msmes in south kalimantan province have increased due to the treatment in the form of video content marketing, where the results of the assessment of the respondents after being treated were mostly in the high category. the effectiveness of green economy campaign videos in providing an understanding of the green economy concepts have been categorized in the following table: table 6 effectiveness of videos on green economy campaigns no description high moderate low 1 helps to understand the concept of a green economy 54.3% 42.7% 3.0% 2 helps to understand the application of a green economy 56.1% 39.6% 4.3% 3 helps to explain government policies 64.0% 29.3% 6.7% 4 motivates the application of green economy in the business environment 68.3% 26.8% 4.9% 5 motivates to invite others to implement a green economy 51.8% 40.2% 7.9% source: primary data processed, 2018 based on the table above, it can be seen that msmes in the province of south kalimantan have assumed that the green economy campaign video is quite effective in providing information and understanding of the green economy, while the dominant level of assessment is in the high category. 4.2 validity and reliability table 7 validity test no item pearson correlation sig. (1-tailed) decision 1 perc_1 0.812 0.000 valid 2 perc_2 0.885 0.000 valid 3 perc_3 0.580 0.000 valid 4 perc_4 0.825 0.000 valid 5 perc_5 0.883 0.000 valid 6 bhv_1 0.993 0.000 valid 7 bhv_2 0.940 0.000 valid 8 bhv_3 0.794 0.000 valid 9 bhv_4 0.850 0.000 valid 10 bhv_5 0.930 0.000 valid source: primary data processed, 2018 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 41 the results of the validity of statement items can be seen in table 7. the reliability was tested using the value of cronbach's alpha that if the test results were above 0.60, then it can be concluded that all items are reliable. table 8 reliability test cronbach's alpha n of items 0.960 10 source: primary data processed, 2018 based on this result, it can be said that the questionnaire used in this study has very high reliability because the value of cronbach's alpha instrument is 0.960. 4.3 research analysis hypotheses testing 1 and 2 were performed to see whether there are differences in respondents' perceptions and behavior towards the video content marketing treatment using the wilcoxon sign rank test and the test results are presented in the table below: table 9 wilcoxon sign rank test pre_perception post_perception pre_behavior post_behavior z -12.143b -11.266c asymp. sig. (2-tailed) .000 .000 a. wilcoxon signed ranks test b. based on positive ranks. c. based on negative ranks. based on the table above, the results of the analysis can be conveyed as follows: • it can be seen that the significance value of pre-post perception is <0.05, which means that there are significant differences in the perceptions and behavior of respondents before and after being treated with content marketing videos, so h1 is accepted. • it can be seen that the significance value of pre-post behavior is <0.05, which means that there are significant differences in the behavior of respondents before and after being treated with content marketing videos, so h2 is accepted. 4.4 research discussion from the results of the research hypotheses test, it is found that there are differences in the mean of perception and behavior before and after given treatment with video content marketing. this is in line with the findings of dwyer (2011), agustina (2012), izzudin, masugino, & suharmanto (2013, silaen (2015), which states that video media can influence the emotions of a strong audience, it can also achieve faster results than any other media and can provide positive implications for audience attitudes both from aspects of cognition, affection, and behavioral. this is also supported by the opinions of olofintoye & akanle (2011); kay (2012); candarli & yuksel (2012); suduc, bîzoi, gorghiu, & gorghiu (2012); izzudin, masugino, & suharmanto (2013), balgezegin, (2014); petan, petan, & vasiu (2014); stanzyk et al (2015) and diamond (2015). the use of video is able to provide changes in the mean of perception and behavior of msmes in implementing the green economy concept because the video media can capture 94% of the entry channel of information through the eyes and ears and can improve human memory that comes from what is seen and heard. messages delivered through video media can also affect emotions and can achieve targeted results faster than other media (dwyer, 2011; alksne, 2016; wang & antonenko, http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 42 2017). video-based learning media that is oriented in problem-solving will have a positive influence on learning activities (agustina, 2012; hund & getrich, 2015; laaser & toloza, 2017; hong & yang, 2018) and the use of interactive video media provides more effective results than other learning media because it increases interest and arouses the audience's appeal to the material (izzudin, masugino, & suharmanto, 2013; hund & getrich, 2015; costley & lange, 2017; tackett, slinn, marshall, gaglani, waldman, & desai, 2018). so that the use of video content marketing can be considered as a medium for transferring information about the green economy. 5. research conclusion and limitation 5.1 conclusion based on the results of data analysis and the findings of research facts, then some conclusions that can be taken are as follows: a) there are differences in the mean between the pre and post perception of respondents after being given the treatment of video content marketing. b) there are differences in the mean between the pre and post behavior of respondents after being given the treatment of video content marketing. c) msmes in the province of south kalimantan have assumed that the green economy campaign video is quite effective in providing information and understanding of the green economy 5.2 limitation based on the identification of problems, this study only examines the effectiveness of using video content marketing to invoke the perceptions and behavior of msmes. this study does not examine the influence of the elements in video content marketing such as education, information, and entertainment elements. by knowing the effectiveness of the use of video content marketing in green economy socialization, it can be a consideration for relevant parties to arrange further socialization strategies. references agustina, a. 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(2018). the relationship of perceived value, perceived risk, and level of trust towards green products of fast moving consumer goods purchase intention. jema: jurnal ilmiah bidang akuntansi dan manajemen, 15(2), 1-14. http://dx.doi.org/10.31106/jema.v15i2.838. acknowledgement this study was conducted under the cooperation between the islamic university of kalimantan in the supervision of community service and research bureau (lppm-uniska) and directorate of research and community service (drpm-dikti) financing years of 2018. the research team was conveying great gratitude to the director general of higher education (dirjen-dikti), who was supporting this research in their program in 2018. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 45 *) rizka zulfikar, department of management, islamic university of kalimantan muhammad arsyad al banjari banjarmasin, banjarmasin, indonesia (email : rizkazulfikar@gmail.com) **) prihatini ade mayvita, department of management, islamic university of kalimantan muhammad arsyad al banjari banjarmasin, banjarmasin, indonesia (email : ademayvita@gmail.com) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 187 entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic iin agustina1*, mohd na’eim bin ajis2*, hafid aditya pradesa3* 1 school of administrative science bandung, bandung, indonesia 2 college of law, government and international studies, universiti utara malaysia, changlun, malaysia 3 polytechnic of stia lan bandung, bandung, indonesia *corresponding author(s) email: iin.agustina@stiabandung.ac.id, naeim@uum.edu.my, hafid.aditya@poltek.stialanbandung.ac.id abstract the small-sized creative business in the tourism sector has been suffering risks of bankruptcy since the outbreak of coronavirus disease (covid-19). drawing on the basic theory of reasoned action, this study aims to investigate entrepreneur risk perceptions affect their risktaking behavior. this study only focuses on the determinants of risk-taking, with regards to the perspective from an entrepreneurial lens in perceiving business, product, and profit risk during the covid-19 pandemic. a quantitative approach using a structured questionnaire survey was utilized to attain the study objective. the dataset consists of 177 valid responses by the owner of the small-sized creative business of indonesia’s tourism sector (mainly in handicraft and fashion categories). correlation analysis and partial least square (pls) modeling were employed to examine the causal relationship between constructs. our empirical findings revealed that while entrepreneurs' perceived risk on business and product aspects was the most significant aspect that could affect their risk-taking behavior, entrepreneurs' perceived risk on profit aspects have an insignificant influence on their risk-taking behavior. it implies that the higher the level of business and product insecurity perceptions (as long as it can generate profitability and ensure business sustainability), the higher the level of risk-taking of entrepreneurs. keywords: covid-19; tourism; perceived risk; risktaking; entrepreneurship; smes jel code: l26, m13 doi: 10.31106/jema.v18i2.12563 article history: received 2021-08-04 reviewed 2021-08-30 revised 2021-09-09 accepted 2021-10-10 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic by iin agustina, mohd na’eim bin ajis, hafid aditya pradesa 188 introduction since early 2020, the rise of the pandemic outbreak has had a tremendous impact on whole countries. pandemic situations have been recognized as unavoidable situations which affect many aspects of life. lockdown, quarantine, and isolation as a result of the incessant escalation of the pandemic caused people to feel anxious, and consider themselves to be at risk of covid-19 (yıldırım & güler, 2020). the deepening multiple pandemic effects in many countries has resulted in a general trend of increasingly restrictive policies toward many aspects of society (agustin, 2021; tahar et al., 2021). it brings an increasing understanding of risk, as evidenced by several recent studies reviewing the perceived risk of covid-19 that is experienced by people in several regions of the world (dryhurst et al., 2020; huynh, 2020). entrepreneurship is identical to risk-taking behavior. for many entrepreneurs, risk-taking goes hand in hand with business growth. in some cases, risk-taking is often related to entrepreneurial motives (nathasia & rodhiah, 2020; wijaya et al., 2015). the entrepreneurs’ behavior in taking a risk often refers to their perception of risk. weber et al. (2002) strengthen the argument by stating that the perception of the risk posed by each risky behavior. several studies have analyzed the relationship between perception and behavior which have shown that a risky behavior has the potency to encourage individuals involved in such behavior (soane et al., 2010; weber et al., 2002). this study uses the reasoned action theory, as an elaboration results of planned behavior theory, which argues that people's perceptions and/or attitudes towards certain behaviors drive their behavioral intentions and ultimately shape their behavior (ajzen, 1991). it is crucial to understand the role of entrepreneur subjectivity in perceiving risk so that it can be future guidance to understand the reason behind their risk-taking or avoidance behavior (dislich et al., 2010). the subjective perception and relative optimism of entrepreneurs are closely related to the basis of judgmental decision-making and entrepreneur characteristics (cheung et al., 2013). risk perception and risk-taking have been developed as the basis of individual personality (mishra et al., 2010; soane et al., 2010). thus, the level of exposure to knowledge involving risk will affect the appropriate risk estimation of an individual (riddel, 2009). an individual can predict risk better by having more information. some people who have more information tend to experience more ambiguity than people who have less knowledge of risk information. this is the way people construct their perceptions of risk and the possibility of jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 189 different perceptions of risk. even an individual in the same situation is likely to have different views about the sources of risk and how each source relates to the level of risk assessment (joo et al., 2021). there are numerous previous studies investigated the impact of risk perception on risk-taking behavior across multiple individual levels and a variety of contexts (bohm & harris, 2010; cheung et al., 2013; christman et al., 2007; dionne et al., 2007; kummeneje & rundmo, 2020; laurence kern et al., 2014; reniers et al., 2016). for example, reniers et al. (2016) investigated the relationship between these two variables by relating age and gender to determine personal characteristics, while some authors investigated risk scenarios from the perspective of (smes) experts and drivers (bohm & harris, 2010), cyclists (kummeneje & rundmo, 2020), and tourists (chew & jahari, 2014; floyd et al., 2004). joo et al. (2021) have investigated risk perception from a resident's perspective, emphasizing that tourism research to date has failed to acknowledge the importance of perceived risk in the interaction between tourists and tourism as a whole. in the current study, a researcher has endeavored to fill a gap in the literature on risk perception and acknowledges its effect on risk-taking. a large body of previous research has shown that risk perception is considered a subjective psychological construct that is influenced by emotional, cognitive, and social (kasperson et al., 1988; loewenstein et al., 2001; slovic et al., 2004; slovic & peters, 2006). however, there hasn't even been a previous study exploring this relationship directly in the context of entrepreneurship and crises. this study, undertaken from the entrepreneurs' perspective, is addressed to provide empirical evidence on how entrepreneurs from popular tourism cities in indonesia perceived risk during the covid-19 pandemic. the situational context of the pandemic could provide value-added to empirically explore phenomena in the field regarding risk perception and risktaking. by framing the concepts in the two theoretical frameworks, focusing on both theory of reasoned action and theory of entrepreneurship, it is believed that risk-taking for entrepreneurs during this pandemic could be influenced by the extended risk perceived by entrepreneurs. literature review covid-19, tourism, and entrepreneurship studies related to the tourism crisis have been a hotly debated topic since the covid-19 pandemic. this is because the tourism sector is seen to be highly affected as a result of this pandemic which has never been faced by this sector before (zhao & xu, 2020). history has also shown that the threat of disease has a link to long-term and short-term crises in the entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic by iin agustina, mohd na’eim bin ajis, hafid aditya pradesa 190 tourism and hospitality sectors. in 2003, the sars epidemic had hit china and it greatly affected the tourism sector in china (karim et al., 2020). meanwhile, in 2014-2015, the ebola virus outbreak has hit african countries, especially guinea, liberia, and sierra leone. it has caused these countries to experience severe economic downturns including the tourism sector. in sierra leone, due to the ebola virus, all flights have been canceled (kongoley, 2015). thus, many stakeholders in the tourism and hospitality sector used sustainable strategies in reducing the impact of this covid-19 pandemic (le & phi, 2021). this action is important because it can maintain business viability for hotel owners, travel agencies, and other business actors (handicrafts, fashion, food, and beverages), especially in the tourism sector. for example, in the hotel industry, several hotel operators have implemented two forms of strategy: service transformation and hibernation. in the aspect of service transformation, the hotel has collaborated with government agencies in providing accommodation services when the government introduced 14 days of quarantine to certain parties such as quarantine for people who have just returned or arrived from abroad. meanwhile, the hibernation strategy used by the hotel is to reduce operational costs such as offering early termination, temporary cessation of operations, etc. (davidson & wang, 2011). on the other hand, forming a strategy for small business owners (smes) is more difficult due to limited resources and unstable supply chains. therefore, this pandemic has made smes experienced a significant decline since it depends on tourism activities. smes are known to be much more vulnerable (more fragile) during a crisis than large companies (bartz & winkler, 2016). therefore, they are not ready to carry out business sustainability. as mentioned by kato & charoenrat (2018) that amid the current pandemic, many smes have stopped operating because most of them do not have experience in preparing for business sustainability, including building organizational resilience during the crisis. most of the parties in the tourism and hospitality sector affected by the covid-19 pandemic have implemented various sustainable strategies to keep their businesses sustainable and to avoid the increasing number of unemployed people. however, the termination of employment, payroll deductions, and unpaid leave are unavoidable by most employers in both sectors because the impact of this pandemic is extremely large, unprecedented, and takes a very long time to recover. the covid-19 pandemic had led to a significant step in rethinking the global volume model for tourism (gössling et al., 2020), to the interrelated risks posed in global travel. while previous studies have highlighted the jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 191 dynamic impact of the pandemic on the tourism sector and its recovery (lapointe, 2020; nepal, 2020; sigala, 2020), everyone is aware that this crisis has brought so many changes in every area of life, and entrepreneurship is no exception (liñán & jaén, 2020; ratten, 2020b, 2020a). therefore, one should expect a dramatic reduction under this perspective, especially in the number of entrepreneurial projects undertaken in some tourism areas. perceived risk actions and understandings of risk, similar to any other experiential phenomenon, are informed by culturally and socially structured conceptions and evaluations of the circumstances in this world, what it is like, what it should or should not be (boholm, 1998). the task of defining risk has long been fraught with controversy and confusion, current studies in psychology and management generally define risk as a condition in which the consequences of a decision and the probabilities associated with those consequences are known as entity or "measured uncertainty” (wolff et al., 2019). in economics and psychology, based on expected utility theory defines risk as to the result of people's assessment of the probability and severity of negative outcomes. on the other side, jungermann & slovic (1993) argued that the term perception is more widely used in cognitive psychology which applied to a person's mental processes through the way they receive, handle, and assess information from the environment (both physical and communicative) through the senses. the perception of risk is well investigated in the previous scientific literature (slovic, 1987, 1992), especially about various factors related to an individual's risk perception (renn et al., 1992). however, this study mainly focuses on the characteristics of risk perception in entrepreneurship, which are determined by individual differences, context, the way risk is processed, and how information is communicated. risk perception is recognized as being related to a person's cognition and affection (arini, 2016; slovic et al., 2005; slovic & peters, 2006), and several researchers review risk as a form of feeling (loewenstein et al., 2001; slovic et al., 2004). from the first time this concept was introduced, researchers have confirmed the role of context and perspective in the use of this very broad and interdisciplinary nature of risk perception. the evidence to date suggests that common people's risk perceptions could be modeled with relatively simple structures (holtgrave & weber, 1993; slovic, 1992). this conceptualization of risk perception recognizes the multifaceted nature of perception under conditions of risk. the study of risk perception has focused on a long list of problems related to risk. another attempt to study risk perception across national lines draws attention to one issue. entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic by iin agustina, mohd na’eim bin ajis, hafid aditya pradesa 192 while measuring concerns about various hazards is useful, hazards that are evaluated as risky can cause worry and anxiety, they don't necessarily have to be. the question of risk is central to life both in society and individually, with humans living in a universe of meaning, not in a world governed by statistics (le breton, 2018). based on those descriptions, the simple meaning of the concept is the subjective probability held by an individual for a certain event. in this study, risk perception will be measured through questions for entrepreneurs about the magnitude of damage from pandemic effect and probability of the damage occurrences in three aspects of risk perception were measured. as risk perception is known as a multifaceted construct, it is believed that the important aspects related to the perception of risk in business caused by the pandemic situation are about (1) business, (2) profit, and (3) product. risk-taking behavior in the classical decision theory, the risk is often understood as reflecting variations in the distribution of possible outcomes, their probability, and their subjective value (march & shapira, 1987). the idea of risk is embedded in decision-making is attested by its position in decision theory. thus, it is firmly believed that managers are quite insensitive to estimates of the probabilities of possible outcomes (march & shapira, 1987). manager decisions are greatly influenced by the way their attention is focused on important performance targets (veling & bijleveld, 2015) and they could make a sharp distinction between taking risks and gambling. previous scholars who have studied decision-making behavior in risky organizational situations have focused on the direct effects of one or two of these behavioral determinants (sitkin & weingart, 1995). however, this situation has not developed since risk studies have evolved in contexts and perspectives across multiple disciplines. the concept of risk-taking is different from the perception of risk, and several authors have emphasized the importance of measuring the concept of risk-taking correctly (bran & vaidis, 2020; sitkin & weingart, 1995). risk-taking is a form of a person's tendency to behave. michel et al. (2001) define risk-taking as a decision concerning a choice of the degree of uncertainty over the probability of failure or success. risk for entrepreneurs is not considered as an obstacle to success but becomes a challenge, and entrepreneurs are people who like challenging things to achieve success (mullins & forlani, 2005). hence, risk-taking is what distinguishes entrepreneurs from others (brockhaus, 1980), including their readiness to take risks. in the entrepreneurial context, risk-taking is recognized as one of the most jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 193 important characteristics that support entrepreneurial orientation (covin & lumpkin, 2011), and is considered the most important dimension to be explored in-depth (agustina & pradesa, 2020; kharisma et al., 2020; lumpkin & dess, 1996). those activities are important to promote sustainable entrepreneurial efforts and initiatives that ensure the renewal of enterprises, which also applies to family firms (zahra, 2018). in particular, conceptualizing entrepreneurial risk-taking is quite difficult in a multidimensional construct. in the conceptual area, an expanded definition of entrepreneurial risk-taking focuses on all types of entrepreneurial activity in family firms (zahra, 2018) and start-ups (forlani & mullins, 2000; guo & jiang, 2020; mullins & forlani, 2005) remains unclear. in its development, the risk-taking framework was also applied and explored in the student analysis unit associated with entrepreneurial intentions (nathasia & rodhiah, 2020; wijaya et al., 2015). previous research has also examined gender differences in risk-taking for entrepreneurs (agustina & pradesa, 2020), with the results obtained show that there are no significant differences in risk-taking for both male and female entrepreneurs. the proposed hypotheses developed in this study are based on the theory of reasoned action (ajzen, 1991) and the theory of entrepreneurship (casson, 2005b) in explaining how aspects of risk perception could stimulate risk-taking by entrepreneurs. risk perception contains cognitive and affective aspects, while risk-taking contains a tendency to behave. it is believed that the two are related to each other, and risk perception as reflected by the dimensions of business insecurity, profit insecurity, and product insecurity can be considered as a determinant of the risk-taking entrepreneur. to test the model presented, we developed three possible hypotheses to explore differences in risk perceptions through the concepts developed by (weber et al., 2002). this study considers that individual differences in risk can reflect two different processes. first, entrepreneurs may have different perceptions of risk. they may have different perceptions of how risky or beneficial a particular behavior is. second, entrepreneurs may also differ in their risk-taking behavior. they may differ in the likelihood of engaging in risk-taking behavior. therefore, risk perception and risk-taking behavior may vary independently. in a business context, if two or more entrepreneurs, for example, have different perceptions of business insecurity risk, then they may be equally willing (or unwilling) to continue their business (reflecting different risk perceptions on equivalent risk behavior). or, if two or more entrepreneurs may perceive their business to be equally risky, but one of them is more likely to continue the business and engage in that behavior (reflecting the same risk perception in different risk behaviors). from the example, it can be assumed that risk-taking entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic by iin agustina, mohd na’eim bin ajis, hafid aditya pradesa 194 behavior cannot be carried out without reflection on risk perceptions (davis-berman & berman, 2002). concerning today's covid-19 pandemic situation, it is indeed difficult to predict the possible total loss incurred by the tourism industry. the tourism sector is struggling in this period of crisis. not only for tourists, both local and foreign, who tend to minimize or eliminate spending on tourism, but at the same time, industry actors must also struggle to keep their businesses alive. entrepreneurs experience a lot of income declines in all segments, so many of them are trying to find ways to optimize their business operations (sheth, 2020). the continuous decline in income has the potential to create insecurity in the business continuity of entrepreneurs, thus encouraging smes entrepreneurs to be able to adapt to the current situation and achieve business continuity management (yuliawati et al., 2021). in addition, entrepreneurs also start thinking about how to reduce risk or minimize the impact of the crisis on their business. mitigation business plans need to be carried out by incorporating disaster risk factors where their business practices adopt scenarios about what can be implemented in a crisis (yuliawati et al., 2021). the ability to respond quickly will be achieved if the entrepreneur has a business continuity management plan, which requires support from stakeholders, such as local governments, the private sector, and financial institutions. thus, the first hypothesis in this study is formulated as follows: h1: business insecurity has a significant effect on entrepreneurial risk-taking behavior. taking a risk exhibits behavior that involves the possibility of obtaining a favorable outcome as well as negative or harmful consequences (boyer, 2006). the entrepreneurial theory attempts to broaden this view by allowing individuals to differ, not only in risk-taking or risk aversion, but also in their access to information, and therefore exhibit the subjective probabilities on risk assessment. perceived risk is also a function of uncertainty and consequences, and one of them includes the uncertainty inherent in the product (moutinho, 2000). as in other sectors, purchasing products around tourism areas triggers a certain degree of risk-taking (moutinho, 2000; roehl & fesenmaier, 1992). in tourism studies, like other marketing studies, the concept of risk perception is strongly related to the decisions of entrepreneurs and the behavior of the businesses they operate, in addition to consumer decisions and their travel behavior. this assumption is based on a behavioral perspective, as explained earlier that jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 195 perception of risks are individual and situational and are characterized by type and intensity (pizam & mansfeld, 2006). the risks to products perceived by entrepreneurs refer to product insecurity, as a result of the cessation of business activities in the tourism area, to reduce the spread of covid-19 (ratten, 2020b). the pandemic, as we know, has had a significant impact on the business performance of entrepreneurs in tourism places, especially entrepreneurs of handicraft and fashion products. the risk of physical loss caused by unsold products has the potential to disrupt the product cycle, thereby creating anxiety for entrepreneurs whose product will be damaged and outdated (not following the trend), particularly for fashion products whose turnover tends to be very fast. in this case, the risk of declining product performance gives real fear that it is possible for consumer consumption of the product will require a long period, depending on the existing pandemic situation and government policies. thus, the second hypothesis in this study is formulated as follows: h2: product insecurity has a significant effect on entrepreneurial risk-taking behavior. the covid-19 crisis can be seen as a 'sudden threat', as the crisis develops suddenly and affects not only the entire organization but also the entire economic sector. smes entrepreneurs, for example, experience daily loss of income (sales) caused by disrupted supply chains due to the closure of supporting sectors, in addition to labor shortages and a significant decline in cash flow (fabeil et al., 2020; shepherd, 2020; yuliawati et al., 2021). however, the crisis condition due to the covid-19 pandemic has caused a lot of losses for smes businesses. therefore, entrepreneurs need to think of strategies to manage and plan alternative approaches to not only maintain the continuity of their business but also be able to continue to generate profits and improve their business cash flow. risk of profit known as profit insecurity means the entrepreneurs' perception who likely have the risk of losing profits from their business. the perception of entrepreneurs can potentially be right or wrong. when their optimism is warranted, then their investment will be profitable, otherwise, they will bear the loss. entrepreneurs with good judgment are most likely to succeed, while entrepreneurs with poor judgment are more likely to fail. furthermore, successful entrepreneurs are usually sustainable because they generate profits, on the other hand, unsuccessful entrepreneurs are usually unsustainable which can ultimately damage business performance and consume all available funds, thus threatening the existence of entrepreneurs and their business continuity. crisis experiences are known to have led entrepreneurs to act more rationally and be involved in planning when making decisions, entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic by iin agustina, mohd na’eim bin ajis, hafid aditya pradesa 196 thereby achieving 'good growth' and earning them a net profit (dollar & kray, 2001). thus, the third hypothesis in this study is formulated as follows: h3: profit insecurity has a significant effect on entrepreneurial risk-taking behavior. methods table 1. research instruments constructs code item business insecurity (bisc) bisc1 covid-19 pandemic makes business hard to forecast. bisc2 covid-19 pandemic makes business hard to control. bisc3 the line of business looks less conducive. bisc4 covid-19 pandemic caused a potential decline of business targets. bisc5 covid-19 pandemic increases the possibility of closing the business and switching into another one. product insecurity (pdisc) pdisc1 covid-19 pandemic creates the potential of a massive reduction in purchased products. pdisc2 there are many damages or expired products that could not be sold amid the pandemic. pdisc3 covid-19 pandemic decreases the quality of the product. profit insecurity (prisc) prisc1 business experiences a huge potential loss due to the covid-19 pandemic. prisc2 covid-19 pandemic increases operating costs of the business prisc3 businesses cannot meet the profit targets due to the covid-19 pandemic. entrepreneurial risk-taking behavior (rtb) rtb1 the term "risk-taker" is considered a positive attribute for people in our business. rtb2 people in our business are encouraged to take calculated risks of new ideas. rtb3 our business emphasizes both exploration and experimentation for opportunities. rtb4 our business has a strong preference for high-risk projects. rtb5 i believe that wide-ranging acts are necessary to achieve a firm's objectives when situations involving uncertainty rtb6 i constitutively adopt a bold strategy and aggressive posture to maximize the probability of exploiting potential opportunities. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 197 figure 1. research framework bisc pdisc prisc rtb the deductive paradigm with a quantitative approach was employed in the study to answer the objective of the study in which whether there are significant influences between risk perceptions (business insecurity, product insecurity, profit insecurity) on entrepreneurial risk-taking behavior during a crisis like the covid-19. the study used purposive sampling as a sampling technique with a focus on entrepreneurs from two popular tourism cities in indonesia, which are malang (east java) and denpasar (bali). the focuses of the study in exploring entrepreneurial risk-taking behavior in the tourism sector are mainly because the tourism and leisure business has been affected the most by covid-19, and it is one of the most impacted global industries (abbas et al., 2021). moreover, data were collected by distributing the likert-scale online questionnaires to potential selected respondents. a total of 333 respondents participated in the survey with only 177 of them that are classified and completed all the survey assignments. for the operationalization of concepts on research instruments, several previous research instruments that have been tested and valid were adopted to be the basis for developing and reconstructing statement items in research questionnaires. table 1 and figure 1 show the detailed research framework and instruments. finally, this study conducted partial least square to test the significances of inner and outer models. the results of the analysis will show not only the value of the relationship between variables but also the factor weight value of each indicator on the research variables. table 3 presents factor loadings and mean value for each indicator among constructs (risk perception of business insecurity, profit insecurity, product insecurity, and risk-taking behavior) that demonstrate a good fit of constructs validity. based on loading factor value, risk perception of business insecurity is most reflected by the line of business looks less entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic by iin agustina, mohd na’eim bin ajis, hafid aditya pradesa 198 conducive. while risk perception of profit insecurity tends to be reflected by the huge potential for loss during a pandemic, risk perception of product insecurity is most reflected by potential loss quality of the product. lastly, risk-taking behavior is most reflected by constitutively adopting a bold strategy and aggressive posture to maximize the probability of exploiting potential opportunities. furthermore, table 3 shows the result of internal consistency reliability and content validity to assess the reliability and validity of constructs that are observed in the study. the generalized measure of risk-taking is highest compared with the risk perception aspect (business insecurity, profit insecurity, and product insecurity). table 3 also shows that the relationship between constructs is considered fair, ranging from 0.391 – 0.671. while coefficient alpha is italicized in parentheses as seen in table 3, it operationalizes the true-score model by providing multiple measures of the same theoretical concept, and reliability score in this study estimates ranged from 0.640 to 0.801. table 2. loading factors indices loading statistics mean values bisc1 0.710 9.941 bisc2 0.714 10.221 bisc3 0.730 12.822 bisc4 0.638 6.080 bisc5 0.710 9.941 pdisc1 0.746 9.969 pdisc2 0.792 9.472 pdisc3 0.813 13.440 prisc1 0.867 19.607 prisc2 0.679 6.162 prisc3 0.732 8.569 rtb1 0.721 9.918 rtb2 0.578 4.670 rtb3 0.700 9.568 rtb4 0.745 12.538 rtb5 0.741 10.037 rtb6 0.762 15.715 jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 199 table 3. constructs validity and reliability constructs the values of α (sig.) bisc (.719) prisc 0.633** (.640) pdisc 0.391* 0.392** (.686) rtb 0.671** 0.516** 0.558** (.801) mean 3.903 3.919 3.938 4.030 standard deviation 3.358 2.873 1.961 1.707 notes: **p: 0.010; *p: 0.050 result and discussion table 4. hypotheses test result relationship loading statistics t-statistics t-table decision bisc -> rtb 0.465 4.132 1.973 h1 accepted pdisc -> rtb 0.156 1.466 1.973 h2 rejected prisc -> rtb 0.274 2.989 1.973 h3 accepted the majority of respondents in this study were male (52.5%) with handicrafts-focused business (58%) and denpasar as the majority of respondents domicile (53%). therefore, based on the results of the significances test in table 4, it can be concluded that there is a significant effect between business insecurity and entrepreneurial risk-taking behavior among respondents of the study as the result of t-statistics of the proposed hypothesis was higher than t-tables (4.132 > 1.973). besides, table 4 also shows that there is a significant effect between product insecurity and entrepreneurial risk-taking behavior as the result of t-statistics of the proposed hypothesis was higher than t-tables (2.989 > 1.973). however, the significant effect of profit security on entrepreneurial risk-taking behavior was failed to prove since the result of t-statistics of the proposed hypothesis was lower than t-tables (1.466 < 1.973). it means that the higher the level of business and product insecurity perceptions (as long as it can generate profitability and ensure business sustainability), the higher the level of risktaking of entrepreneurs. standard parameter estimates for the model are also presented in the appendix. it displays the result of each path of the model proposed in this study. from the appendix, the path coefficient shown about the r-square score is 0.540. these results indicate that the entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic by iin agustina, mohd na’eim bin ajis, hafid aditya pradesa 200 explanatory variance of risk-taking in terms of risk perception is 54%, while the remaining 46% are other factors outside the three aspects of risk perception. it is important to consider the greatest effect among risk perception dimensions on risk-taking among entrepreneurs. the findings suggest that business insecurity – such as the potential for reducing business targets, temporarily closing businesses, and switching to other businesses making business more difficult to control and predict – can have the greatest effect on entrepreneurs' propensity to take risks. the findings show that risk perception as a form of feeling, influence, and cognition (arini, 2016; loewenstein et al., 2001; slovic & peters, 2006) can be considered and customized as a multidimensional construct (holtgrave & weber, 1993; wolff et al., 2019). although one of these dimensions was found to have no significant effect on risk-taking, this study provides a new understanding as well as empirical evidence on exploring the concept of risk perception. two of the risk perception constructs have a significant effect on risk-taking behavior. regarding the connection between risk perception and risk-taking behavior, findings can confirm previous important findings (forlani & mullins, 2000; sitkin & weingart, 1995). the results reveal interesting information that the entrepreneur's risk perception is more about the fear of losing customers and the products they produce. a different phenomenon for business insecurity and product insecurity with comparable effects on risk-taking is the impact bias. to date, this study has developed aspects of risk perception among entrepreneurs and entrepreneurial risk-taking in a pandemic context. with the increasing recognition of findings, considering these variables as a series of activities (or even processes) would have better implications that give substance and meaning to the entrepreneurial capabilities of business by ascertaining their regenerative qualities and providing direction to these activities. the crisis caused by the covid-19 outbreak has been running for one and a half years. it not only makes healthy people sick, but the pandemic also makes a good business chaotic. entrepreneurial business models and approaches merely affected by the pandemic will have an impact on how entrepreneurship is perceived as a future job choice. while most startups may view shifting business focus as an opportunity or a short-term solution mostly for entrepreneurs, it still needs a fundamental survival and coping strategy and building growth opportunity for the nation's economy and industry. as part of that, the handicraft and fashion sector managed by an entrepreneur in tourism areas must be considered and empowered properly in the current pandemic situation. while entrepreneurs must dare to take risks in jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 201 every business they do, they also must be able to manage all issues and then receive financial and non-financial profits and losses. it is commonly recognized that taking risks is one of the keys to starting a business. but this research shows that taking risks is the result of efforts to maintain business sustainability when entrepreneurs feel that the risk to the continuity of their business and the potential for losing their products or customers is increasing, this will encourage them to take risks. however, this study only focuses on the determinants of risktaking, with regards to the perspective from an entrepreneurial lens in perceiving risk in business during the pandemic. this research opens a potency for further research on how to encourage entrepreneurs in taking risks is also carried out in a measured and thorough manner. conclusion and suggestion the result of the study revealed that among the three aspects of risk perception assessed by entrepreneurs, there are only two aspects that were proven to have an influence on the degree of entrepreneurial risk-taking (especially in the current pandemic situation) namely business insecurity and product insecurity. while entrepreneurs' perceived risk on business and product aspects was the most significant aspect that could affect their risk-taking behavior, entrepreneurs' perceived risk on profit aspects has an insignificant influence on their risk-taking behavior. it implies that the higher the level of business and product insecurity perceptions (as long as it can generate profitability and ensure business sustainability), the higher the level of risk-taking of entrepreneurs. risk-taking behavior is most reflected by constitutively adopting a bold strategy and aggressive posture to maximize the probability of exploiting potential opportunities in the study. the result of the current study gives widely understanding of entrepreneurs' risk perception and risk-taking behavior in the tourism sector within varying business contexts. future research could examine for more detailed and precise descriptions of how risk perception is built and measured. the usages of more precise methodological and standardization in the definition and assessment of risk perception may increase the accumulation of knowledge and even allow for the discovery of new cognitive biases like different risk aspect of a business. however, this study also has several limitations. first, the scope of the subject was limited which may not represent the situations of overall countries. second, large multi-subject in risk analysis and studies require researchers to assess risk about their organization (i.e. business, education) as well as the study in general as this can influence how they perceive risk. third, one of the drawbacks of using a questionnaire is the fact that it lacks interaction and response from entrepreneur’s perceived risk and risk-taking behavior in the small-sized creative businesses of tourism sector during covid-19 pandemic by iin agustina, mohd na’eim bin ajis, hafid aditya pradesa 202 entrepreneurs regarding their answers. therefore, there is the possibility that different measures of risk perception or risk-taking may lead 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(2020). chinese public attention to covid-19 epidemic: based on social media. medrxiv, march 2020. https://doi.org/10.1101/2020.03.18.20038026 jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,187-209 http://dx.doi.org/10.31106/jema.v18i2.12563, issn (online) 2597-4017 209 appendix jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 210 financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes i wayan widnyana1*, i made dauh wijana2, almuntasir3 1 department of management, faculty of economy, universitas mahasaraswati, denpasar, indonesia 2 department of management, faculty of economy, universitas mahasaraswati, denpasar, indonesia 3 department of management, faculty of economics and business, universitas gadjah mada, yogyakarta, indonesia *corresponding author(s) email: wywid@unmas.ac.id abstract indonesia's small and medium enterprises (smes) are considered the backbone of the national economy. however, the fact that smes still contribute less to the national gross domestic product (gdp) in terms of valueadded, need to be addressed. while previous studies mainly focused on financial (access) constraints as one of the major constraints faced by small enterprises which affect their growth and performances, this study aims to extend the relationship between capital and financial performance of indonesia smes with the moderating effect of financial constraints and partners. this study is different from others as it uses a bigger panel dataset which is about 4.36 million smes in indonesia and is the first to explore the role of financial partners comprehensively. moreover, the panel regression model with geographic analysis unit uses as a data analysis method. the results of the study show that financial capital has a positive and significant effect on the financial performance of smes. furthermore, while the moderation role of financial partners on the relationship between financial capital and financial performance of indonesia smes was failed to prove, the negative moderation effect of financial constraints was able to prove in this study. keywords: small and medium enterprises (smes); financial performance; capital; financial constraints; financial partners jel code: c23, e22, g21, g28, l26, p12 doi: 10.31106/jema.v18i2.11318 article history: received 2021-06-26 reviewed 2021-07-29 revised 2021-08-14 accepted 2021-08-29 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 211 introduction indonesia is one of the countries with the largest number of small-medium enterprises (smes) around the world. as of 2018, there are more than 62 million smes active (which represent 99.98 percent of all enterprises) in the country (dinutistomo & lubis, 2021). in terms of economic impact, smes accounted for almost 60% of indonesia's total gross domestic product (gdp) in 2018. smes also play a significant role to enhance indonesia's total employment rate with a contribution of 97.02 percent in 2018. however, despite these major contributions, the survey result from the national agency of statistics shows that their average operating profit tended to be corrected by 10.29% which is resulted in the downward of their average income by 3.88% annually from 2017 to 2019. even worse, the pandemic of covid-19 in early 2020 caused 48.6% of the total of 62 million units of smes to close their business due to a drastic decline in sales number (sadjiarto et al., 2020; tambunan, 2011). numerous factors could affect sme's performances, including capital issues, raw materials, marketing, competitors, energy, infrastructure, labor, weather, and others (prasetya et al., 2021; zamrudi & wicaksono, 2018). rosengard & prasetyantoko (2011) highlighted the perplexing paradox of indonesia's financial sector related to smes which is although over the last decade most of indonesia's commercial banks are liquid and profitable, and has positive performance of the national economics, smes are increasingly experiencing a credit crunch. according to the national agency of statistics (2019), there were more than 85% of indonesian smes are relying on their capital (internal capital) and have no support from external capital, including banks, venture capital, cooperation, and others. even worse, msmes in indonesia have a financial inclusion rate of roughly 30%, with 76.1 percent of them receiving finance from banks and 23.9% of them getting funding from a non-bank financial institution (bank of indonesia, 2015). dinutistomo & lubis (2021) argues that these conditions occur because of the low credit market information quality exchanges between creditors and lenders. thus, smes are often being subjected to tighter loan restrictions due to their high credit risk profiles. however, several studies found the opposite as there is a negative relationship between the proportion of smes lending and bank risk level and there was a positive influence between smes credit and banks profitability (boadi et al., 2017; shihadeh et al., 2019). furthermore, the relationship between capital and sme performance has been widely discussed globally covering various aspects of capital including intellectual capital, social capital, human capital, intellectual capital, and financial capital. studies from beretta et al. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 212 (2019), dabić et al. (2019), paoloni et al. (2021), and sardo et al. (2018) confirms that intellectual capital has positive associations with smes business performances of high-tech, non-high-tech companies, small and medium-sized hotel, agri-food firms, and other sectors. xu & li (2019) even added that intellectual capital is positively associated with firm earnings, operation efficiency, and profitability. along with that finding, social capital and financial capital also have shown that it has positive and significant influences on business (financial) performances among smes around the word (abbas, 2018; adlešič & slavec, 2012; boohene et al., 2019; chittithaworn et al., 2011; fatoki, 2011; philip, 2011; omar & azmi, 2020; sombolayuk et al., 2019; utari & dewi, 2014). nakku et al. (2020) added that the effect of financial capital on sme's performance will be stronger when government support existed. meanwhile, several studies also confirm that financial constraints are one of the factors that affect the relationship between smes capital and performance. they concluded that financial constraints have a negative moderating effect on smes performance, the relationship will be stronger when the company has low financial constraints, and vice versa (altaf & ahmad, 2019; baños-caballero et al., 2014; kaushik & chauhan, 2019; kowsari & shorvarzi, 2017; laghari & chengang, 2019). this study differs from other studies, for three reasons. first, we will examine the relationship between capital and financial performance of 4.36 million smes across all sectors and regions in indonesia. so far, research on smes has focused on certain sectors or regions, so the results may not reflect actual conditions. therefore, testing on 4.7 million smes is expected to reflect more accurate results. second, we examine the relationship using panel data for three years, to be able to provide more complete information with a high degree of variability and be able to explain the relationship between periods, both short-term and long-term. third, we will explore the role of financial partners in the relationship between capital and the financial performance of smes. the role of financial partners in the relationship between capital and financial performance has never been studied by anyone, and we are the first to explore it. so far, partnership relationships in the context of smes are dominantly carried out in supply chain partnerships, as was done by sukwadi et al. (2013) and mofokeng & chinomona (2019). therefore, exploring the role of financial partners in this relationship is expected to make a positive contribution to the development of science and research methodologies, especially in the field of entrepreneurship. in addition, an assessment of the role of this financial partner can also identify the efforts of the government and other stakeholders. thus, the results of this study are also expected to provide practical contributions, which can be used as a consideration for formulating related policies. financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 213 literature review small medium enterprises (smes) small and medium enterprises (smes) is a term that denotes a business entity, with certain criteria. smes are divided into three groups, namely micro, small and medium enterprises. definitions and terms of smes vary from country to country. the european commission (2015) defines micro-enterprises as enterprises with an annual number of units of work less than 10 with an annual turnover or total annual balance sheet less than or equal to €2 million. small businesses have an annual number of work units of less than 50 with an annual turnover or total annual balance sheet less than or equal to €10 million. meanwhile, medium-sized enterprises have an annual number of work units of less than 250 with an annual turnover or total annual balance sheet less than or equal to €50 million. meanwhile, they define micro-enterprises as businesses that have less than 10 employees with total assets or total annual sales of less than or equal to $100,000. moreover, while small businesses have more than 10 employees less or equal to 50 people, with total assets or total but annual sales of more than $100,000 but less or equal to $3 million, medium-sized is classified as businesses that have more than 50 employees but less or equal to 300 people, with total assets or total annual sales of more than $3 million but less or equal to $15 million. in indonesia, the definition of smes can refer to law no. 20 of 2008. in the law, microenterprises are defined as businesses that have a maximum wealth of idr 50 million, with a maximum turnover of idr 300 million. small businesses are defined as businesses that have assets of more than idr 50 million to idr 500 million, with a turnover of more than idr 300 million to idr 2.5 billion. meanwhile, medium-sized businesses are defined as businesses that have assets of more than idr 500 million to idr 10 billion, with a turnover of more than idr 2.5 billion to idr 50 billion. besides being defined by a quantitative approach, smes in indonesia is also defined by a qualitative approach. in this case, the national agency statistics uses the number of workers in defining it, where micro-enterprises have a maximum of 4 permanent workers, small businesses 5 to 19 people, and medium-sized businesses 20 to 99 people. in general, smes are business entities that are not legal entities or are often referred to as informal businesses or individual companies. most are managed directly by the owners, who are assisted by family members. the sme decision-making system is quite flexible, informal, and relies on personal encouragement from its executives (ayandibu & houghton, 2017). decision-making systems are often automated and not based on accurate business analysis. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 214 viewed from the operational aspect, they generally have a narrow reach with a simple organizational structure, rely less on technology, and have low risk (gronum et al., 2012). according to the world bank (2008) reports, smes play an important role in the country's economy, because they are the engine of economic growth. they are important for creating competitive and efficient markets, and they are important for alleviating poverty. therefore, all parties must prioritize it in all respects so that its growth and development are maintained and getting better from time to time. however, the fact is that until now, they are difficult to develop. olawale & garwe (2010) stated that two factors affect their performance so that it often hinders their growth, namely internal and external factors. internal factors include financial and management constraints, while external factors include economic, market, and infrastructure factors. meanwhile, ayandibu & houghton (2017) have summarized various problems that are often experienced by smes, including lack of access to finance, lack of collateral, inadequate government support, high loan interest rates, insufficient demand, inadequate marketing research, the location is not strategic, high competition, poor credit record, high production costs, lack of information technology, high taxes, lack of entrepreneurial experience and knowledge, and lack of business networks. financial capital and financial performance of smes one theory that is often used to explain the performance of companies, including smes is the resource-based view (rbv). this theory focuses on managerial attention to the company's internal resources, both tangible and intangible. resources should not be embedded in organizational routines or practices, organizational reputation, culture, knowledge, experience, relationships or networks, etc. for smes, internal and external capital is used to maintain and increase their competitive advantage (eniola & ektebang, 2014). lack of financial capital can hinder smes (abiodun & amos, 2018; eniola & entebang, 2017). in general, sme capital consists of two, namely internal capital (own capital) and external capital. internal capital is capital that comes from the founder or owner and is generally very limited. external capital is other than internal capital. external capital can come from bank loans and financing from other financing, grants, personal loans, etc. external capital, especially from financing, is generally unlimited, but most sme institutions find it difficult to access it. access the capital needed to acquire resources to take advantage of business opportunities. lack of physical resources can fail them (fatoki, 2011). according to bolingtoft et al. (fatoki, 2011), to build and maintain smes, entrepreneurs need to have financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 215 access to various types of resources, including human resources, physical capital, and financial capital, each of which plays a different role but is equally important to the life cycle. furthermore, they also stated that there are many reasons related to the failure of smes, one of the most important is the unavailability of capital, thus impeding their survival and growth. the important role of capital on the performance of smes has been widely studied in various countries, including thailand (chittithaworn et al., 2011), bangladesh (philip, 2011), malaysia (omar & azmi, 2020), and south africa (fatoki, 2011). specifically in indonesia, research on the relationship between capital and sme performance has also been carried out, for example, abbas (2018) and sombolayuk et al. (2019) in makassar city, utari & dewi (2014) in denpasar. capital is positively related to the performance of smes, where a capital increase will encourage better sme performance, and vice versa. h1: financial capital is positively related to financial performance. the role of financial constraints on the relationship of capital and financial performance of smes financial constraints refer to a condition where the company has broad access to profitable investment opportunities but has limited funds to fund these opportunities. financial constraints are a topic that is highlighted in the context of smes because smes are the main drivers of economic growth, but the majority always experience financial constraints, thus failing to execute profitable investment opportunities (belas et al., 2017). financial constraints for smes are generally caused by the limited availability and unclear information so that the prospects for business growth are doubtful. as a result, banks or other funding sources are unwilling to accept their proposals. in addition, business legality and collateral also play an important role in these financial constraints (lukas menkhoff et al., 2012; rahman et al., 2016). in general, smes are informal or individual businesses, with a limited number of assets. as a sole proprietorship, the assets of smes are inseparable from the personal assets of their owners. this is what makes it difficult for them to access external finance, and if it is accessible, the amount of funds is very limited. therefore, olawale & garwe (2010) stated that financial constraints are one of the factors that greatly affect the performance of smes. the same thing was stated by (bodlaj et al., 2020), where financial constraints can hinder innovation and creativity, thereby hindering their performance and development. financial constraints have a strong moderate effect on the relationship between capital and firm performance. in particular, financial constraints harm the relationship. several jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 216 studies have confirmed this. for example, altaf & ahmad (2019)(altaf & ahmad, 2019), who tested the moderating effect of financial constraints on 437 non-financial firms in india. they found that there is a positive relationship between working capital and firm performance, where the relationship will be stronger in companies with low financial constraints. however, this relationship will weaken in companies with high financial constraints. in line with these findings, baños-caballero et al. (2014) also found the same thing in non-financial companies in the uk. financial constraints provide strong support for the relationship between working capital and firm performance. this implies an optimal level of investment in working capital that balances costs and benefits and maximizes firm value (altaf & ahmad, 2019; kowsari & shorvarzi, 2017; laghari & chengang, 2019; setianto & hayuningdyah, 2020). h2: financial constraints have a negative moderating effect on the relationship between capital and financial performance, where the relationship will be stronger when financial constraints are low, and vice versa. the role of financial partners on the relationship of capital and financial performance of smes partnership, in general, can be interpreted as a form of mutually beneficial cooperation between two or more parties to achieve common goals. in the context of smes, a partnership can be defined as cooperation between small businesses and large businesses and/or large businesses by taking into account the principles of mutual need, mutual strengthening, and mutual benefit. classical literature, such as astley & ven (1983), mcdowell & harris (2009), and nooteboom (2000) has stated that sustainable inter-organizational partnerships in smes are important. this is to improve their performance. in indonesia, efforts to increase the role of smes through partnership patterns are regulated in the presidential decree no. 127 of 2001, concerning msmes and partnerships, which states that it is necessary to have a type of business that is reserved for small businesses and open opportunities for medium or large performance with the conditions of the partnership. the concept of partnership in smes is a business strategy used for business development. partnerships in smes can be carried out in all aspects, such as finance, raw materials, marketing, capital goods, etc. following law no. 20 of 2008, partnerships in smes can be in the form of: 1. the nucleus-plasma partnership pattern, namely, the partnership relationship between small or large businesses as the core company fosters and develops small businesses that financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 217 become plasma by providing technical guidance, technology development, providing production facilities, and providing other assistance needed to increase effectiveness, efficiency, and productivity; 2. subcontracting partnership pattern, namely a partnership relationship where the partner group produces the components needed by the partner company as part of its production; 3. the pattern of general trade cooperation, namely, a partnership relationship where the partner group provides the needs needed by the partner company and the partner company markets the production of the partner group; 4. the pattern of profit-sharing cooperation, namely, partnership relationships carried out by large and small businesses, the results of which are calculated from the net results of the business and if they experience mutual losses by the agreement; 5. operational cooperation patterns, namely partnerships carried out by large or mediumsized businesses with micro-enterprises to carry out a joint business using assets and/or business rights that are jointly owned; 6. the pattern of joint ventures, for example, partnerships carried out by micro and small businesses to carry out joint economic activities, in which each party contributes capital and shares the results and risks proportionally; 7. other cooperation patterns, namely partnerships other than those already mentioned. in the financial context, partnerships are generally for two things. first, increase capital. second, improve capital management. therefore, smes with financial partners will find it easier to access more capital and be able to manage their finances effectively and efficiently, thereby encouraging better company performance. thus, financial partners can act as a moderating variable in the relationship between capital and financial performance. this is because on the one hand financial partners can facilitate access to funds for smes so that their capital will increase, while on the other hand, they can improve the quality of smes in managing their capital so that it will encourage effectiveness, efficiency, and profits. h3: financial partners have a positive moderating effect on the relationship between capital and financial performance, where the relationship will be stronger when the company has financial partners, and vice versa. the research framework as depicted in figure 1, consists of three main variables which are financial performance (dependent variables), financial capital (independent variable), financial constraints, and financial partners (moderating variable). financial capital is thought to have a positive relationship with financial performance, as explained in the rbv theory, which is supported by empirical findings from several researchers (abbas, 2018; jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 218 chittithaworn et al., 2011; fatoki, 2011; omar & azmi, 2020; philip, 2011; sombolayuk et al., 2019; utari & dewi, 2014). financial constraints are thought to have a negative moderating effect on the relationship between financial capital and financial performance (altaf & ahmad, 2019; baños-caballero et al., 2014; kowsari & shorvarzi, 2017; laghari & chengang, 2019; setianto & hayuningdyah, 2020). the relationship between financial capital and financial performance will be very strong when the company is not financially constrained. on the other hand, the relationship will be weak when the company is financially constrained. figure 1. research framework in opposite to financial constraints, financial partners are considered to have a positive moderating effect on the relationship between financial capital and financial performance. the relationship will be very strong when smes have financial partners, but the relationship will be weak when smes do not have financial partners. when smes have financial partners, it is possible to access external capital more easily and the amount of capital obtained is greater than smes without financial partners. meanwhile, other benefits obtained by smes with financial partners are quality in managing finances, so that financial management becomes effective, efficient, and profitable. substantially, these two benefits will drive better financial performance. financial partners in this study are exploratory because there has been no research examining the relationship between capital and performance. this study is the first to attempt to test this relationship. financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 219 methods the research design uses quantitative methods, precisely existing statistics. according to lawrence neuman (2017), existing statistics are research based on statistical data collected by certain parties, such as the government or supervisory agencies, which are carried out by rearranging or providing information in new ways to present more information. he further stated that the existing statistics could be used for descriptive, exploratory, or explanatory purposes. the object of study in the existing statistics is the statistical report itself. in this case, the object of this research is the national agency of statistics (2017, 2018, 2019) survey report for 2017, 2018, and 2019 with coverage of more than 4 million indonesian smes annually. furthermore, the majority of the type of industry in the study is food and beverages (37.13%), wood industry, goods made of wood, cork, woven goods made of rattan, bamboo, etc. (14.17%), and apparel (13.25%). while the minority is the computer, electronic, and optical goods industry (0.02%), the electrical equipment industry (0.03%), and the motor vehicle, trailer, and semi-trailer industry (0.06%). by region, the majority of them are localized in java (59.63%), sumatra (16.07%), bali and nusa tenggara (9.26%), sulawesi (8.66%), and kalimantan (4.41%). the data of this research can be explained in three perspectives. the first perspective, according to its type, this research uses quantitative data, namely data that is expressed in numbers and can be measured. the second perspective, based on the source of data acquisition, this study uses secondary data, namely, data obtained from the national agency of statistics (2017, 2018, 2019) survey reports in 2017, 2018, and 2019. the third perspective, based on the period, this study uses panel data. data analysis used panel regression model – common effect, with ordinary least squares method and the geographical as the unit data analysis. data analysis was assisted by stata software. table 1 below presents the research variables along with their operational definitions and measurements. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 220 table 1. variables, operational definitions, and measurements variables definition measurements financial performance (fin_perf) the ability of smes to earn operating profit in the current year. financial capital (fin_cap) total sme capital, which consists of internal and external capital in the current year. natural logarithm of total capital. financial constraints (fin_const) a condition where an sme has broad access to profitable investment opportunities but does not have the funds to execute those opportunities. a dummy variable, where a score of 0 is given to smes that are experiencing financial constraints, and a score of 1 is given to smes that are not experiencing financial constraints. financial partners (fin_part) a condition, where an sme has a partnership relationship in the financial sector. a dummy variable, where a score of 0 is given to smes that are having partners, and a score of 1 is given to smes that are not having partners. size (size) the size of sme. total sales. human capital (hc) human resources or non-financial resources are controlled by an sme to achieve its goals. the additional amount of the interaction number of employees with education level and entrepreneur education level. social capital (sc) social resources or non-financial resources are controlled by an sme to achieve its goals. in this case, the source is in the form of cooperation with other parties other than cooperation in the financial sector. number of non-financial cooperation. regional economic growth (reg) regional economic growth, which reflects the economic conditions and business climate in the area. financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 221 the econometric models developed for the study can be described as below: fin_perfit = α + β1fin_capit+ β2sizeit + β3hcit + β4scit + β5regit + εit (1) fin_perfit = α + β1fin_capit+ β2fin_constit + β3fin_cap* fin_constit + β4sizeit + β5hcit + β6scit + β7regit + εit (2) fin_perfit = α + β1fin_capit+ β2fin_partit + β3fin_cap* fin_partit + β4sizeit + β5hcit + β6scit + β7regit + εit (3) fin_perfit = α + β1fin_capit+ β2fin_constit + β3fin_partit + β4fin_cap* fin_constit + β5fin_cap* fin_partit + β6sizeit + β7hcit + β8scit + β9regit + εit (4) where: fin_perfit : financial performance of smes in the year of ; fin_capit : financial capital of smes in the year of ; fin_constit : financial constraints of smes in the year of ; fin_partit : financial partners of smes in the year of ; fin_cap* fin_constit : the interaction of financial capital and constraint of smes in the year of ; fin_cap* fin_partit : the interaction of financial capital and partners of smes in the year of ; sizeit : the size of smes in the year of ; hcit : human capital of smes in the year of ; scit : social ccapital of smes in the year of ; regit : economic growth of region in the year of ; : constant; : coefficient; : residual error. result and discussion table 2 displays the descriptive statistics of the national agency of statistics (2017, 2018, 2019) survey reports. from the table, it can be seen that the number of smes during the year of observation tends to fluctuate. at the beginning (2017), the number of smes reached 4.46 million, thus, in 2018 the number decreased by around 4.49% to 4.26 million, and lastly in 2019 increased again by about 2.27% to 4.38 million. to summarize, the average number of smes surveyed for the last three years has amounted to 4.37 million. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 222 table 2. descriptive statistics 2017 2018 2019 total average no. of smes 4,464,688 4,264,047 4,380,176 13,108,911 4,369,637 fin_perf oi (idr mill.) 274,695 258,187 220,574 753,456 251,152 opm (%) 46 45 44 134 47 fin_cap (idr mill.) 327,767 262,457 280,873 871,097 290,366 internal capital 268,383 222,529 245,147 736,059 245,353 external capital 59,384 39,878 35,725 134,987 44,996 bank 25,284 18,362 17,807 61,453 20,484 venture capital 232 1,241 2,123 3,596 1,199 cooperation 3,442 2,546 2,434 8,422 2,807 pawnshop 1,196 312 278 1,787 596 government 1,503 2,031 701 4,235 1,412 others 27,726 15,385 12,381 55,494 18,498 fin_const 1,126,480 752,976 983,958 2,863,414 954,471 fin_part 31,843 34,452 26,594 92,889 30,963 size (idr mill.) 602,462 520,644 501,447 1,624,554 541,518 hc 50,397,314 52,768,716 51,369,690 154,535,720 51,511,906 no. of employees 9,394,193 9,836,228 9,575,446 28,805,867 9,601,956 no school 1,562,486 1,636,007 1,592,633 4,791,126 1,597,042 elementary sch. 3,433,645 3,595,212 3,499,894 10,528,751 3,509,584 junior high sch. 2,626,257 2,368,705 2,305,905 7,300,867 2,433,622 senior high sch. 5,695,901 5,963,917 5,805,799 17,465,617 5,821,872 diploma 61,456 64,348 62,642 188,446 62,815 higher education 169,565 177,544 172,837 519,946 173,315 no. of entrepreneurs 4,464,688 4,264,047 4,380,176 13,108,911 4,369,637 no school 806,811 844,775 822,378 2,473,964 824,655 elementary sch. 1,524,154 1,595,871 1,553,561 4,673,586 1,557,862 junior high sch. 914,606 957,642 932,253 2,804,501 934,834 senior high sch. 899,807 942,147 917,168 2,759,122 919,707 diploma 36,987 38,728 37,701 113,416 37,805 higher education 114,898 120,305 117,115 352,318 117,439 sc 391,347 409,761 398,898 1,200,006 400,002 avg. reg (%) 9.58 9.19 6.70 25.47 8.49 financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 223 the financial performance of smes also tends to decline during the observation year. in 2017 their total operating income was idr 274.70 billion, then in 2018 it decreased by 6.01% to idr 258.19 billion, and in 2019 it fell again by 14.57% to idr 220.57 billion. their average total operating income during the year of observation was idr 251,152.25 billion or around idr 57.48 million per sme. this amount when referring to the criteria in law no. 2 of 2008 is included in the micro-business group. so, the average number of smes in indonesia are micro-enterprises, not small and not medium enterprises. the decline in operating income resulted in their operating profit margin (opm) also tends to fall. in 2017 their opm was 45.60%, then in 2018 it fell to 44.59%, and in 2019 it fell again to 43.99%. however, their opm average is still positive, which is 44.73% per year. their financial capital also seems to decline from year to year, both internal and external capital. in 2017 their total financial capital was idr 327,767.24 billion, which consisted of internal capital of 81.88% (idr 268,382.99 billion) and external capital of 18.12% (idr 59,384.09 billion). financial capital decreased in 2018 by 19.93% to idr 262,456.94 billion, consisting of 84.79% internal capital and 15.19% external capital. in 2019, their total financial capital again increased by about 7.02% to idr 280,873.39 billion, consisting of 87.28% internal capital and 12.72% external capital. during the year of observation, their average total capital was idr 290,365.86 billion, most of which (84.50%) was internal capital and only 15.50% external capital. if averaged per sme, the total financial capital is around idr 66.45 million per sme. sme capital is divided into two types, namely internal capital and external capital. throughout the observation year (2017-2019), both tend to move downward from year to year. however, the decline in external capital was greater than the decline in internal capital. specifically for external capital, about 7.05% came from banking, venture capital (0.41%), cooperatives (0.97%), pawnshops (0.21%), government (0.49%), and other sources (7.37%). the data clearly explains that the development of smes in indonesia is almost entirely dependent on capital from their owners, while external capital does not contribute to its development, be it capital from banks, venture capital, or others. in contrast to its capital and financial performance, the number of smes that are financially constrained tends to decline from year to year. the number of smes that were financially constrained in 2017 was idr 1.13 million or around 25.23%. furthermore, in 2018 the number of smes with financial constraints decreased by around 33.16% to idr 752.98 thousand, but in 2019 increased again beyond 30.68% to idr 983.96 thousand. during the year of observation, the average number of smes with financial constraints reached idr 954.47 thousand, or about 21.84% of the existing smes. meanwhile, the jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 224 average number of smes that have financial partnership relationships is only 30.96 thousand or 0.71% of the average existing smes. this number tends to decrease from year to year. in 2017 the number of smes with financial partners was 31.84 thousand, then in 2018 it increased to 34.45 thousand, and in 2019 it fell drastically to 26.59 thousand or decreased by around 22.81%. besides, the size of smes as measured by total sales is an average of idr 541,518.10 billion or around idr 123.93 million per sme per year. if referring to law no. 20 of 2008, then they are also classified as micro-enterprises, not small businesses, and not medium-sized businesses. their size decreases from year to year. in 2017 their total sales reached idr 602,462.44 billion, then in 2018 it fell by around 13.58% to idr 520,644.44 billion, and in 2019 it fell again by around 3.69% to idr 501,447.43 billion. it also shows that their performance is poor as previously described. in contrast to financial capital, the human capital of smes tends to increase. this can be seen from the number of employees, with the education level of employees with a better level of education, as well as the level of entrepreneurial education. the average number of employees working in the sme sector reaches 9.60 million people per year. or about 2 people per sme. (60.63%) have a high school education, 36.55% have an elementary school education, 25.35% have a junior high school education, 16.63% don't go to school, 1.81% have higher education, and 0.65% have diploma education. employees with basic education tend to decline from year to year, while employees with education are increasing. meanwhile, in terms of entrepreneurship, the largest (35.65%), including elementary, junior high (21.39%), high school (21.05%), not in school (18.87%), higher education (2.69%), and diploma (0.87%). the social capital of smes as measured by the number of drawn nonfinancial partnerships tends to increase. in 2017 the number of non-financial partnership relationships owned by smes was 391.35 thousand, thus, in 2018 it increased by 4.71% to 409.76 thousand, but in 2019 it decreased by about 2.65% to 398.90 thousand. the average number of non-financial partnership relationships during the year of observation was 400,000 thousand relationships or about 8.49% of the total existing smes. this shows that the social capital of smes in indonesia is very low. finally, during the year of observation, the economic condition and business climate were not good. this is reflected in the regional economic growth (reg) which has decreased from year to year. in 2017 regional economic growth was 9.58%, but in 2018 it fell to 9.19%, and in 2019 it fell again to 6.70%. the average regional economic growth during the year of observation was 8.49%. this condition can trigger an increase in sme input-output prices and a decrease in consumer purchasing power which can harm the performance of smes. financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 225 notes: *) significant at 10%, **) significant at 5%, ***) significant at 1% relationship between financial capital and performance: short-term vs. long-term table 3. panel regression short-term long-term 2017 2018 2019 2017-2019 β t β t β t β t panel a (general) fin_cap 0.949 42.897*** 0.802 22.434*** 0.948 14.633*** 0.889 37.348*** size 0.941 89.009*** 0.979 43.434*** 0.989 27.316*** 0.987 71.950*** hc 0.082 2.043** 0.059 0.743 0.089 0.544 0.078 1.198 sc 0.001 0.423 -0.003 -0.416 0.005 0.404 0.005 0.045 reg 0.081 2.119** -0.054 -0.718 -0.051 -0.325 -0.066 -1.064 r2 0.998 0.976 0.999 0.999 f-stat. 906.302*** 292.561*** 397.866*** 244.263*** panel b (by types of capital) int_cap 0.842 29.758*** 0.741 21.219*** 0.857 11.289*** 0.798 32.533*** ext_cap 0.131 13.828*** 0.073 5.489*** 0.095 4..160*** 0.099 10.851*** size 0.960 66.923*** 0.980 41.529*** 0.989 25.226*** 0.987 69.413*** hc 0.074 1.429 0.107 1.210 0.080 0.460 0.072 1.056 sc 0.004 -0.006 -0.005 -0.694 0.007 0.522 0.005 -0.055 reg -0.068 -1.372 -0.098 -1.171 -0.046 -0.275 -0.060 -0.925 r2 0.978 0.977 0.999 0.999 f-stat. 248.281*** 233.985*** 304.209*** 191.513*** panel c (by sources of capital) individual 0.895 13.371*** 0.688*** 8.497*** 1.089 7.109*** 0.841 21.679*** vent. cap 0.001 -0.268 -0.005*** -0.565 0.002 0.083 0.001 0.123 bank 0.047 3.671*** 0.055*** 2.430*** 0.004 0.065 0.057 4.799*** coop. -0.005 -0.529 0.025*** 2.182 -0.037 -1.569 0.012 1.917 panwshop -0.007 -1.548 0.011*** 1.702 -0.003 -0.272 -0.001 -0.363 govmnt. 0.001 0.052 -0.002*** -0.318 -0.013 -1.024 -0.007 -1.066 others -0.017 -0.925 0.003*** 0.640 0.012 0.634 -0.002 -0.691 size 0.998 26.759*** 0.972*** 19.173*** 0.917 17.554*** 0.989 44.300*** hc 0.062 0.603 0.077*** 0.487 0.588 1.759 0.222 2.150** sc -0.004 -0.429 0.006*** 0.374 -0.026 -0.797 -0.009 -1.067*** reg -0.064 -0.678 -0.074*** -0.488 -0.458 -1.671 -0.190 -1.954* r2 0.991 0.989 0.999 0.999 f-stat. 190.853*** 87.089*** 641.817*** 493.462*** jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 226 the results show that in general (see table 3, panel a), financial capital is positively and significantly related to the financial performance of smes, both in the short and long term. this means that an increase/decrease in financial capital will trigger an increase/decrease in the financial performance of smes, thus supporting our first hypothesis. this finding is in accordance with the rbv theory which explains that internal resources such as financial capital are very important to increase competitive advantage. in the context of smes, financial capital plays an important role in financing working capital and long-term assets. the availability of large capital allows them to increase the business productivity effectively and efficiently. an increase in productivity will trigger an increase in sales or revenue and reduce operating costs, thereby driving higher operating profits. in addition, the availability of large financial capital also enables them to execute profitable business opportunities in the future, either through product differentiation or business diversification. on the other hand, limited financial capital will have a negative impact on working capital financing and longterm asset investment. this will affect or even hinder productivity and run profitable business opportunities in the future. this finding also supports findings from (abbas, 2018; chittithaworn et al., 2011; fatoki, 2011; omar & azmi, 2020; sombolayuk et al., 2019; utari & dewi, 2014). they also find that financial capital is positively related to the performance of smes. the financial capital of smes is divided into two types, namely internal capital and external capital. based on table 3, panel b, shows that both types of capital are positively and significantly related to financial performance, both in the short and long term. when compared between the two, the contribution of internal capital to the performance of smes is greater than the contribution of external capital. this is due to the high use of internal capital from the smes studied. during this observation year (2017-2019), around 84.50% of the total sme capital was internal capital and only 15.50% was external capital. therefore, internal capital has a more dominant role than external capital. based on the source of capital (see table 3, panel c), individual capital (internal capital) is positively and significantly related to the financial performance of smes, both in the short and long term. meanwhile, capital originating from banks (credit) varies in the short term. in 2017, bank capital was positively related to the financial performance of smes, as well as in 2018. however, in 2019, bank capital did not have a significant relationship with the financial performance of smes. however, in the long term, capital from banks is positively and significantly related to the financial performance of smes. financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 227 notes: *) significant at 10%, **) significant at 5%, ***) significant at 1% the capital that comes from cooperation, in the short term, varies. in 2017 and 2019, this capital did not show a significant relationship with financial performance. in 2018 this capital is positively related to financial performance, but its contribution to performance is very low. in the long term, this capital is positively related to the financial performance of smes, but with a very low contribution, especially when compared to contributions from banks. meanwhile, capital from venture capital, pawnshops, government, and other sources has not shown a significant relationship with the financial performance of smes, both in the long and long term. moderation effect table 4. moderation effect model 1 model 2 model 3 model 4 β t β t β t β t fin_cap 0.889 37.348*** 0.855 28.017*** 0.884 34.976*** 0.816 22.356*** fin_const ----------------0.067 1.771 ----------------0.225 2.522** fin_cap * fin_const -----------------0.003 -1.805 -----------------0.011 -2.544** fin_part --------------------------------0.023 0.842*** -0.008 -0.213 fin_cap * fin_part ---------------------------------0.001 -0.751*** 0.007 1.040 size 0.987 71.950*** 0.987 71.695*** 0.987 71.683*** 0.987 72.372*** hc 0.078 1.198 0.072 1.005 0.066 0.999*** 0.091 1.270 sc 0.005 0.045 0.005 0.005 0.005 0.054*** -0.003 -0.500 reg -0.066 -1.064 -0.059 -0.886 -0.056 -0.890*** -0.076 -1.151 r 0.999 0.999 0.999 0.999 r2 0.999 0.999 0.999 0.999 f-stat. 244.263*** 176.771*** 173.173*** 141.122*** table 4, model 1, shows the results of testing the relationship between financial capital and the financial performance of smes. the values in table 4, model 1, are the same as those in table 3, long-term column, panel a. we return to table 4 for comparison with model 2, model 3, and model 4. as previously explained, financial capital is related positive and significant with the financial performance of smes. this finding is in accordance with the explanation of the rbv theory and the findings of other researchers, thus supporting our first hypothesis. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 228 model 2 presents the results of testing the moderating effect of financial constraints on the relationship between financial capital and the financial performance of smes. the results show that financial constraints are proven to weaken the relationship between financial capital and the financial performance of smes, thus supporting our second hypothesis. smes experiencing financial constraints will find it difficult to increase their financial capital, especially external capital, such as bank credit or other external sources. lenders will find it difficult to approve loans from financially constrained smes because they are worried about the risk of default. therefore, lenders may require higher return requirements for financially constrained companies. for smes, if they agree to high return terms, it will increase the cost of capital, which will increase their financial costs. so, instead of improving financial performance, they will experience inefficiency. on the other hand, smes that experience low financial constraints will find it easier to increase their finances. lenders are not worried about the risk of default, so they impose moderate repayment requirements on smes. for smes with low financial constraints, the increased financial capital will be used to finance profitable business opportunities. this is done by increasing creativity and innovation effectively and efficiently, thereby encouraging higher financial performance. this finding supports the findings of altaf & ahmad (2019), where they also find that companies experiencing financial constraints will find it easier to increase their financial capital because they will more easily access external credit with low loan interest. this also supports the findings of baños-caballero et al. (2014), where companies that are financially constrained will have a lower optimal working capital point. this means that companies that are financially constrained will find it difficult to increase working capital. when available working capital is limited, this will have a negative impact on financial performance, due to lost sales and discounted payments in the purchase of raw materials. model 3 presents the results of testing the moderating effect of financial partners on the relationship between financial capital and the financial performance of smes. as has been explained in the literature, financial partners in smes are intended for two things. first, to make it easier for them to access external resources. second, improve capital management effectively and efficiently to encourage better financial performance. therefore, the proposed hypothesis is that financial partners have a positive moderating effect on the relationship between financial capital and financial performance of smes, where the relationship will be stronger when smes have financial partners. the results of the data analysis presented in model 3, show that the positive moderation of financial partners on the relationship between financial capital and financial performance of smes is not supported. this can be seen from financial capital, constraints, partners, and performance: an empirical analysis of indonesia smes by i wayan widnyana, i made dauh wijana, almuntasir 229 the coefficient of the interaction of financial partners and financial performance which is not significant. this shows that the financial partners that have been established by smes have not provided significant benefits for smes. on the capital side, existing financial partners have not been able to increase financial capital for smes. meanwhile, in terms of capital management, they have not been able to encourage effective and efficient capital management for smes. model 4 displays the results of the full moderating effect of financial constraints and financial partners. in this case, financial constraints and financial partners together moderate the relationship between financial capital and the financial performance of smes. the results are consistent with model 2 and model 3, where only significant financial constraints weaken the relationship, while financial partners are not significant. this means that the financial constraints on smes are still very high, while the existing financial partners have not been able to reduce financial constraints. as a result, it is still difficult for smes to increase their financial capital, thus hampering performance improvement. conclusion and suggestion based on the results of data analysis, it can be obtained that financial capital is positively and significantly related to the financial performance of smes. increase/decrease in financial capital will trigger an increase/decrease in their financial performance. in addition, financial constraints act as a moderator on their relationship. in this case, financial constraints have a negative moderating effect on the relationship, where the relationship is weak because smes experience high constraints. financial partners do not have a significant impact on the relationship. this implies that the existing financial partners have not provided any benefits to smes. in terms of capital, financial partners have not been able to increase the financial capital of smes. meanwhile, in terms of capital management, financial partners have also not been able to improve the quality of effective, efficient, and profitable capital management for smes. based on these findings, regulators should re-evaluate existing policies to address the current problems of smes and to assist their development in the future. in general, we find that sme's capital mostly relies on internal capital, and this is very limited. meanwhile, external capital, whether from bank credit, cooperatives, venture capital, pawnshops, capital assistance from the government, or capital from other sources, hardly helps them. therefore, most of them are experiencing financial constraints which have a negative impact on their performance and development. in addition, the government's efforts with other stakeholders jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,210-235 http://dx.doi.org/10.31106/jema.v18i2.11318, issn (online) 2597-4017 230 to build financial partnership relationships with smes have also not provided significant benefits. existing financial partners have not been able to increase the capital and performance of smes, and have not been able to overcome their financial problems. in particular, we suggest that the government can facilitate them to be able to access free external capital with a simple procedure. this can be done by increasing credit interest subsidies and increasing capital grants to them. in addition, the government can also integrate csr programs from large companies to improve strategic partnerships for smes, especially in the financial sector. this study measures financial constraints using a dummy variable, which is caused by data limitations. however, the measurement of financial constraints using dummy variables was also carried out by several previous researchers, for example (altaf & ahmad, 2019; baños-caballero et al., 2014; belas et al., 2017). however, we acknowledge that the dummy variable is a weak predictor, so it may not fully explain the role of financial constraints on the relationship between financial capital and the financial performance of smes. therefore, future researchers are expected to be able to measure financial constraints using ratios or measurement scales other than a dummy, so that they can explain explicitly. in addition, this study also explores the role of financial partners in the relationship, but the findings show that financial partners do not have a significant role in the relationship. therefore, future 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(2018). social commerce adoption in sme’s. jema: jurnal ilmiah bidang akuntansi dan manajemen, 15(2), 60. https://doi.org/10.31106/jema.v15i2.1125 hermeneutics of earning management: between pressure and opportunity by murniati, mahmudatus sa’diyah, subadriyah jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 46 hermeneutics of earning management: between pressure and opportunity murniati *) mahmudatus sa’diyah **) subadriyah ***) abstract the purpose of this study was to find out and understand the informants which included internal auditors and staff on the practice of earnings management carried out by managers of savings and loan cooperatives (ksp). this research was conducted at a and b savings and loan cooperatives in jepara. cooperatives are chosen with very high npls and those with npls below the standard. research informants were chosen purposively based on individuals who have been long enough and intensively integrated into their fields of work. the analysis in this study is an interpretive or hermeneutic approach. the way this approach works is by interpreting the language through grammatical and psychological interpretation. the results obtained show different information in earnings management practices. opportunities in utilizing the application of generally accepted accounting principles are the things that underlie earnings management. the informant stated that earnings management could not be considered as profit manipulation as long as the process is carried out in the notification of accounting standards. the accounting staff said his opinion that earnings management behavior could not be considered as corrupt unless the behavior was not carried out in accounting standards. keywords: accrual accounting; earnings management; opportunity; pressure 1. introduction 1.1 research background today's business transactions are increasingly complex. the parties that have concerns in the company, having a right to know the company's operations. for this reason, companies must report that into a form of financial statements. the financial reports provide information relating to company operations, especially financial information to outside parties. so, a financial report must have an accounting standard so that it can be understood by all parties. at present, in preparing financial statements, especially in profit-oriented organizations, they prefer to use accrual basis. accrual basis is considered more rational and fairer in terms of reflecting the real financial condition of the company. also, the accrual basis is also able to provide flexibility to the management in determining the choice of accounting method, as long as it does not deviate from the rules of the applicable financial accounting standards. if the method of accounting by management is doing purposely and has a specific purpose, it called earnings management. in general, the accounting profit rate is always different from cash income. but if accounting earnings are found is the same as the cash income, it is only a coincidence (riduwan, 2012). that was what encourages managers to take earnings management actions. because the number of accounting profits is difficult to trace into net cash inflows. earnings management actions result in financial information being blurred, and financial statement users find it difficult to determine the quality of financial statements. the practice of earnings management is believed to arise as a direct result of the efforts of the managers or compilers of financial statements by regulating the number of profit figures, for personal gain or the interests of the company. riduwan (2012) states that earnings management actions arise because some motivations are based on debt covenants, bonus http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 47 plans, and political costs. debt covenant is carried out by managers to minimize violations of debt agreements that may occur between companies and creditors. bonus plan motivates managers to achieve targeted performance by adjusting the number of profit figures. this arranged so that the bonus that has been prepared by the company for the manager who reaches the target can be achieved whereas political costs are carried out to minimize the political costs incurred due to the existence of laws and regulations which constitute government intervention. earnings management research has been carried out, but most still use quantitative methods, without regard to the interpretation of the true meaning of earnings management practices. for this reason, based on the description above, this study intends to study forms of interpretation or meaning as true conditionals from earnings management practices in savings and loan cooperatives. in the process of interpretation, the researcher will be guided by vorurteil that defined by several experiences and a set of knowledge. researchers try to find the nature of a text or reality in the context of the answers given to the meaning of an earnings management (based on hermeneutical studies). in this case, the researcher conducted a dialectical method with the finance department staff and internal auditors by throwing questions and giving answers to each of the two ksps in jepara. 1.2 research problem based on the background described above, the formulation of the problems in this study is what is the true meaning of management practices in cooperatives? and what are the reasons for earnings management in cooperative operations? 1.3 research purpose a) to find out the true meaning of earnings management practices in cooperatives b) to find out the reason for doing profit management in cooperative operations 2. theoretical framework there are several previous studies that are used as references in this study, riduwan (2012) examines reality in the mirror cracking of accounting profits in the frame of interpreting nonaccountant practitioners with a hermeneutic study approach, the results of his research show that in the frame of interpretation of non-accountant business practitioners, reality which is represented by an unclear accounting profit symbol. also, riduwan (2010) also examines ethics, and corrupt behavior in earnings management practices, from his research, obtained an understanding that informants have different opinions and behaviors on earnings management practices. they argue that the practice of earnings management is always carried out systematically based on certain motivations and interests. faridah (2016) examines the application of management to boarding school cooperatives, the results of his research show that cooperative management is good enough in implementing its management system and has implemented the principle of the family in its organizational culture. 2.1 hermeneutics study the philosophy method of hermeneutic is the activity of thought that interprets and understands the meaning of a text (reality) rationally to search and find the results. hermeneutics as a system of interpretation that defines three things, first, expressing one's thoughts in words, acting as interpreters and translating. second, the effort to divert a language whose meaning is not known to the reader in another language that can be understood by the reader. the last one is the movement of unclear expressions of thoughts which are transformed into clear expressions of mind http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 48 (puspinanti, 2015). putra (2012) revealed that in the process of interpretation, the interpreter is guided by vorurteil (prejudice) that defined by several experiences and a set of knowledge. with his experience and knowledge, the interpreter seeks an essence in the text and reality in the context of history and tradition when the text or reality is born. 2.2 profit management the earnings management means a practical action taken by managers to influence earnings figures. in different perspectives and arguments, there are several parties who express opinions differently. one party said that earnings management is not an act of manipulating profits if it is still done in the corridor of generally accepted accounting principles. while on the other hand profit management is a form of profit manipulation because earnings management is always based on the motivation to obtain personal benefits by describing the company's performance improperly (riduwan, 2010). this earnings management is believed to emerge as a direct result of the efforts of the managers or compilers of financial statements to regulate the number of profit figures for personal or corporate interests. the practice of earnings management is based on motivation and interests and is also motivated by certain economic factors. the basis of managers for earnings management is based on the motivation of political costs, bonus plans, and debt covenants. to achieve targeted performance, managers are motivated to set the number of profit figures about the bonus that will be obtained. strategies that can be implemented by managers in earnings management practices include making a choice of accounting methods and making certain estimates as accounting policies. 3. research method 3.1 research design qualitative approach as an approach in this study. the qualitative approach used is the hermeneutic study or interpretive approach. what do informants understand about earnings management practices? what is the practice of earnings management in view and responded to by informants? the answers to these questions are a problem related to the meaning of "text". every meaning of "text" requires an effort for interpretation and interpretation that aims to gain an understanding of the "text" concerned. the attempt to interpret the text to gain understanding according to findling (2007) is referred to as hermeneutics. according to bungin (2011), a simple way of hermeneutics is a method of interpreting language. this is through grammatical interpretation and psychological interpretation. grammatical is how a person speaks a language, where he talks and how he speaks while psychological interpretation is what can be captured from the meaning contained in each discussion. 3.2 research informants the research subjects who took were financial staff and internal auditors from ksp in jepara. the cooperative was used as a place of research, namely: a and b savings and loan cooperatives in jepara. subjects are chosen purposively based on individuals who have been long enough and intensively integrated into their fields of work. the subject of the study was used as the main informant or main data source. interviews were conducted in jepara. the financial section staff was chosen as the subject / informant in the study because the finance department staff were considered to know the process of preparing financial statements. so that all kinds of recording processes to deliver financial statements, this section knows that. next is the internal auditor; this subject was chosen as an informant because of his responsibilities and http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 49 expertise in ensuring that the financial statements and the preparation process were by existing standards and procedures. table 1 research informants source: primary data processed, 2018 the object of research studied or aspects that become a reality in the research is about the meaning of earnings management practices in savings and loan cooperatives. the first object of research is the savings and loan cooperative a (ksp a). ksp is located in jepara and was established in 2008. members of this cooperative consist of employees from foundations in jepara. this ksp management has never changed since it found until 2013. in 2012 there was a change in management and managers because at the 2011 annual member meeting (rat) held in march 2012. these changes were made after one of the members asked for a difference significant depreciation due to changes in the filing of the useful life of fixed assets. based on these findings, then the members want to revamp the report in the coming period. however, in the following year rat, which was held in march 2013, there was still no change, so the members wanted a change of management and manager. also, members want the existence of continuous audit reports. since 2013 until the end of 2017, this ksp manager has changed three times. this ksp has assets of 3.7 billion until 2017. however, this ksp experiences bad loans of up to 29%. this is very high when compared to the standard provisions, namely for cooperatives is 10%. the second object of research is ksp b. ksp was founded in 2013. like the first research object, ksp is also composed of employees from a foundation in jepara. this ksp has grown rapidly since its establishment until the end of 2017, two branch offices have been established. ksp has as much as 6.7 billion at the end of 2017. the cooperative's bad credit is very much different from the bad credit of ksp a, this ksp b's non-performing loan (npl) is still in the range of standard bad loans for cooperatives, that's 3.6%. 3.3 research framework . picture 1 research framework 4. research result and analysis 4.1 profit management an opportunity accrual recording basis provides opportunities for managers to be able to take earnings management actions. accounting practices, especially accounting-oriented profit organizations today use the basis of accrual accounting. accrual accounting is not only recording transitions in the period in which cash has been received or paid by the company. however, accrual accounting seeks to record all financial effects of events and circumstances that have cash consequences for equity in the period in which the transaction occurred (fasb 1991, sfac 6, paragraph 139). the informant identity work tri financial staff at ksp a zahro finance staff at ksp b diyah internal auditor at ksp a hidayat internal auditor at ksp b hermeneutics study internal auditor and accounting staff profit management practices http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 50 accrual accounting also takes into account deferrals, not only accruals, including allocation and amortization (fasb 1991, sfac 6, paragraph 141). in accrual accounting, the procedures of using deferrals, accruals, and allocations and amortization is to recognize and report income, profits, expenses, and losses for a certain period as a reflection of the company's performance in a certain period. during submitting a performance report, the company continues to carry out its business activities without being known when it will stop. accrual accounting is used to overcome problems related to timing (when) the recognition of cash flow which is sometimes not in line / together with the timing of an activity completed so that the increase and decrease in assets and liabilities and recognition of income, costs, profits, and losses can be displayed in full of assessing the company's performance in the current period. procedures for accruals and deferrals, obscuring information about cash flow. this is a weakness of accrual accounting (subramanyam & wild, 2009). weaknesses in accrual accounting and supported by the existence of information asymmetry between outsiders and managers, are often used by managers in making earnings management actions. in this case, the manager is the manager of a company that has a lot of information when compared to parties outside the company. other companies may not monitor every manager's behavior and the manager's decisions in detail (healy & palepu, 1993; eisenhardt, 1989). earnings management is interpreted differently by several authors. schroeder & clark (1998) interpret earnings management as a management effort to influence the net income currently reported. in addition, fischer & rosenzweig (1995) interpret earnings management as the actions of managers who aim to enlarge and minimize the net income that is being reported without any increase or decrease in the company's economic profitability in the long run. this definition illustrates that actually, earnings management, in the long run, does not affect profitability or total profits. this is because earnings management is carried out by managers by shifting the reporting period of profit alone through minimizing or increasing the profits that are currently recognized. however, schipper (1989) has a different definition from fischer & rosenzweig (1995), earnings management is defined as an action carried out intentionally in the process of preparing financial statements with the aim of gaining personal and/or organizational benefits. likewise, healy & wahlen (1999) say that earnings management is carried out by managers by using their decisions when recording transactions to change, with the aim of giving a wrong picture to stakeholders about the company's economic performance and to influence contractual outcomes that depend on numbers accounting terms reported. the last definition shows that earnings management does not only shift the period of recognition of profits but leads to the efforts of managers to give a wrong picture to stakeholders about the company's performance so that stakeholders make economic decisions by the expectations of managers. the practice of earnings management by managers shows the existence of opportunistic behavior (scott, 2000). this is because the practice of earnings management is being motivated with certain interests and economic factors. these interests are in the form of company interests and the manager's interests. scott (2000) explains that managers have the motivation to do earnings management based on debt covenants, bonus plans, and political costs. this means that the existence of earnings management practices is due to motivation and interests like pressure of affiliated parties, altruistic, minimization of financial costs, manager wealth maximization, earnings management motivation, political costs minimization, speculative motivation (hamid, hashim, salleh, 2012, kang young lee & griffin, 2014; neifar, halioui, & abdelaziz, 2016). while watts & zimmerman (1986) classify earnings management motivation into four, each of them is motivation to avoid debt covenant violations, motivation to get bonuses and other compensation, influence the decisions of capital market players and avoid political costs. the http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 51 motivations underlying earnings management can be classified into three groups, namely capital market motivation, contract motivation, and motivational regulation. more broadly setiawati & na'im (2000) explain that the importance and motivation of earnings management is motivation to fulfil the agreement of accounting numbers in debt contracts, motivation to be able to achieve management compensation associated with accounting profits, motivation to influence stock prices in the capital market, consideration of tax payments, motivation to obtain or maintain control of a company, consideration of competing companies, and consideration of employees. the earnings management pattern that is often carried out by managers is the pattern of increasing profits (income increasing), income smoothing and income decreasing (dechow & skinner, 2000). the pattern of earnings management is achieved through appropriate spending strategies, selection of operating decisions, and investments (mcnichols and wilson 1988), and the selection of accounting techniques that can be considered strategic (schroeder & clark, 1998). operations, spending, and investment decisions are not often producing results as expected by the manager even though the decision is considered to be optimum. for this reason, managers turn to be able to focus their attention by choosing accounting techniques that are considered to be the most effective in influencing earnings figures (teoh, welch, & wong, 1998). the operationalization of earnings figures that utilize this accounting technique is through changes in accounting policies, through accruals management, and earlier application of new accounting standards (ayres, 1994). the practice of earnings management carried out through accrual management is driven by inherent weaknesses in accrual accounting and the flexibility in calculating earnings figures. this flexibility arises because of the many choices of accounting methods, so that management can record certain facts differently, besides allowing subjectivity or judgment in determining the estimation of financial report preparation (djakman 2003). accounting techniques chosen and implemented by management can be carried out freely because there are no restrictions and are still in the corridor of general acceptable accounting principles (pabu). for this reason, earnings management carried out through the use of accrual accounting techniques is permitted. in contrast to earnings manipulation, it is a violation of the gaap in producing the company's financial performance in accordance with the interests of managers or companies (djakman, 2003). similarly, schroeder & clark (1998) give their opinion that earnings management is based on managerial considerations or through the selection of accounting methods and procedures within the limits permitted by accounting standards, earnings management is not a fraud, even though earnings management in these ways can influence stakeholders' decisions. however, it does not rule out the possibility that earnings management practices can lead to fraud. thus, it can be interpreted that the practice of earnings management carried out by ksp, in this case, is the manager, due to the existence of opportunities that exist in the interest of the shareholders/members of the cooperative itself. in the context of the understanding given by fischer & rosenzweig (1994), the practice of earnings management is merely an attempt to "play around" profit figures on paper and not cause material losses to anyone. this profit figure game is carried out by managers by utilizing the flexibility of available accounting standards. this happens because accounting standards provide sufficient opportunities for managers to record certain facts in different ways and have the opportunity to use subjectivity in making accounting estimates. accounting staff and internal auditors have the same opinion and view, that accrual-based accounting can provide better information about company performance than cash-based accounting. the following are their statements: http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 52 current accounting is operationalized by using accrual principles that recognize assets, income and expenses, and liabilities, regardless of whether the related cash has been received or paid. this makes accounting can provide financial information better when compared to cash-based accounting. [diyah internal auditor]. in my opinion, to recognize and report income and expenses on an accrual basis is indeed better in describing the performance of company managers. acceptance of each expenditure is only the effect of the manager's performance, not the performance of the manager himself. [hidayat internal auditor]. accrual-basis is considered better than cash-basis if it is used to measure and assess the manager's operating performance of a company. for example, for example, last month i became a manager and could sell products on credit of idr 10,000, the fees i had paid in cash were idr 8,000. this month you replaced me as a manager. this month you cannot afford to sell any of these products and do not pay any fees, but you can collect the credit sales of rp 10,000 last month. which is better, my performance last month or your performance this month? [zahro accounting staff]. 4.2 a pressure profit management management, in this case, is expected to provide benefits to shareholders. management seeks to reduce the company's risk to meet the interests of shareholders so that earnings management actions must be carried out (wang, 1994). stability in achieving company profits provides benefits for shareholders in profit sharing. on the other hand, empirical studies show markets prefer stable earnings. the market considers that the average profit rate is considered to have a low risk compared to the fluctuating profit figures (putra, 2010). management is expected to be able to keep profits stable so that stock prices remain stable as well. fluctuating company operations result in fluctuating stock prices as well. especially for companies that are conducting an ipo, fluctuating profits will hurt the company because they risk the shares not selling or less attractive. the company has an interest in the survival of the business. besides companies, external parties such as shareholders also have an interest in the companies survive. such conditions require companies to continue to provide a stable profit so that stock prices remain stable as well. furthermore, it is expected that the company will survive and continue to grow. in the context of the bonus program, scott (2000) provides an example of how strategies and patterns of earnings management are carried out. managers who are facing a bonus program related to profit targets, are likely to be involved in various patterns and earnings management strategies such as the following: 1) taking a bath, namely the act of shifting the cost of discretionary accruals in the next period to the current period or shifting discretionary accruals earnings from current period to the next period; (2) minimizes profits when profits before accrual decisions are smaller than the lower limit or exceeds the upper limit of profits; (3) maximize profit when earnings before accrual decisions exceed the lower limit but do not exceed the upper limit of profits, and (4) income smoothing. although the pattern and strategy of earnings management above are related to management motivation in dealing with bonus programs, the pattern and strategy can also be applied in the context of motivation and other management interests. these auditors agree that the manager's performance is evaluated based on the company's ability to generate cash, but the cash flow is not a measure for their performance that evaluates which is limited by the accounting period. diyah (internal auditor) asserts that if the manager's reported profits are exactly same as the amount of net cash received, that is just a coincidence. the informants agreed that accrual accounting is far better than accounting which only records cash receipts and expenses. they realize that accounting is basically just focusing on recording and reporting transactions that have consequences on cash. however, because cash flow http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 53 is not always concurrent with the completion of a transaction, it is operationalized with the accrual accounting concept. nevertheless, they have the opinion that the application of accrual accounting should be limited to real business events and can be tested for truth. according to hidayat (internal auditor), accrual accounting applied to a non-real transaction can obscure the cash flow of the reported transaction. he argues that the accrual principle in calculating profits is set for real events; therefore accounting earnings can be easily understood. however, at present, the accrual basis is also often applied to events that are not real and events that are not according to facts. this causes accounting earnings to be difficult to understand. as a result of the accrual basis that is applied to events that are not real, it makes the flow of money become vague and difficult to interpret. the objectivity of accounting earnings still needs to be questioned: what is the fact for the money flows? agreeing with hidayat (internal auditor), zahro (accounting staff) said that in accounting practices there are events that are actually just concepts but have been recorded as real events, so accounting profits do not show financial performance that is easily understood operationally by ordinary people. actually, in describing financial performance, accrual accounting is very good. however, if it is applied beyond the money flow limit reflected in the profit rate, it becomes unclear. the impact that can be generated from accrual accounting that blurs cash flow and the company's ability to generate cash is also experienced by tri (accounting staff). tri stated that if accrual accounting is used for conceptual events that are not real, then the cash flow that actually wants to be represented by recording and also reporting income becomes unclear. he added: laws and tax regulations do not fully adhere to the concept of accrual accounting applied in accounting. i think we all understand that the concept of financial accounting and the concept of tax accounting are different where financial accounting emphasizes more on the part of economic substance than its legal form, tax accounting favored both. in addition to the economic substance, the legal aspects of income and costs are important in terms of taxation. cash flow on income and costs in taxation must be clear and arise from a real transaction, not just a concept. according to tri, the clarity of the cash flow on income and costs is closely related to the certainty of the amount of tax that must be paid by the taxpayer. the tax payable is the amount that must be paid instead of the conceptual amount. "therefore, the accrual principle is only applied to real transactions and events in tax accounting," tri said. for accountants, the term earnings management is often a frequently used term. educator accountants, management accountants, and public accountants are very familiar with this term. however, the expectations of each accountant vary according to the background of the work or profession they are living. likewise, for accountants or financial departments in savings and loan cooperatives. interpretation of earnings management by accountants in savings and loan cooperatives is formed by thinking about the structure of earnings formation in financial statements, namely profits occur from reducing income with expenses. referring to various existing literature, for example schipper (1989), earnings management is a very deliberate intervention in the external financial reporting process with the intention of gaining personal benefits. diyah (ksp a internal auditor) and hidayat (ksp b internal auditor) interpret earnings management exactly as understood by schipper (1989: 94). earnings management is a deliberate intervention carried out by managers to influence the amount of profit, "said diyah. "several times, i encountered a condition of recording that was not fair. where there is a change in the useful life of fixed assets from previous years, this is done so that the depreciation value becomes smaller and then profits increase ", he continued. meanwhile, hidayat said that based on the literature i read, earnings management is carried out by managers and managers of cooperatives to convey the profit figures according to their http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 54 wishes. earnings management, by itself, is done through income management and cost management. likewise, the interpretation given by accounting staff, namely tri of ksp a and zahro of ksp b. tri interpreted earnings management as a manager's effort to influence earnings figures, he said that such practices are requested by managers because there are certain interests. managers and administrators want some adjustments in the recording process, especially at the end of the year. based on his experience as an accounting staff member, he simply said that from the various books that i have read about earnings management it is true, not only in theory but indeed that is what happens in practice. apart from that, i also often read the writing of the results of the research and it was true. the profit figure can indeed be arranged according to your wishes. its interests are various, among others, to fulfil the requirements in disbursing bank credit ceiling in an effort to obtain a substantial annual bonus, as an effort of managers and administrators so that members of the cooperative continue to believe and maintain their position when rats can be as an effort to reduce the amount of tax paid. the statements of the informants show that the earnings management carried out by managers is always based on motivations and certain interests. this is consistent with scott's statement (2000: 180) that the practice of earnings management arises because of the manager's opportunistic behavior. as explained earlier, djakman (2003) revealed that earnings management carried out through accrual management is not as same as earnings manipulation. earnings management is carried out by utilizing the inherent weaknesses of an accrual accounting policy and is still in the corridor of generally accepted accounting principles. while earnings manipulation is an action that violates the generally accepted accounting principles to produce a company's financial performance that is by the interests of managers and the interests of the company (see also schroeder & clark, 1998). internal auditors and accounting staff of ksp a and ksp b agree with djakman (2003) and schroeder & clark (1998). the following are the comments they gave: the practice of earnings management is considered valid if carried out under financial accounting standards. managers and accountants cannot be blamed by that because earnings management in such a manner is not fraudulent. however, earnings management can turn into fraudulent deeds if there is intentional managers or accountants who violate accounting standards for example in the form of data manipulation, calculation and reporting. [hidayat-internal auditor]. through accrual accounting, earnings management basically can affect earnings figures on paper by utilizing flexible accounting rules. if everything is done without violating accounting rules, what is wrong with earnings management? choosing suitable accounting techniques is a management right, while accounting rules do allow it. [diyah internal auditor]. to influence the rate of profit with the accounting method is not an act of fraud so that the practice of earnings management in a manner like this can be done. let alone just choosing an accounting method to shift transactions that affect income and costs alone is not a violation as long as the recording and reporting are consistent and do not violate accounting standards. financial performance is affected short-term if accrual management is within limits permitted by accounting standards, while for long-term corporate performance reflected in earnings figures are the same as if the profit figures were not affected. [tri-accounting staff]. the informant's view above shows that in the informant's perspective, the practice of earnings management is not corrupt behavior if carried out in the corridors of accounting standards. this is because accounting standards are seen as rules that are believed not to produce misleading information for users of financial statements. the accountant's view that earnings management is not an act of fraud is also inseparable from their understanding of the meaning of "fraud" in a frame http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 55 of their profession, especially those contained in the audit standard section 316 (iai 2001) below: fraud is different from mistakes. the factors that distinguish it are whether the underlying actions that result in misstatements in the financial statements, both in the form of intentional and unintentional actions. fraud in financial reporting in the form of intentional omission of the amount or disclosure of financial statements fooling users of financial statements involving manipulation, changes in accounting records, forgery including intentional misappropriation of accounting principles relating to the amount, method of presentation, method of disclosure and classification . from a different perspective, it is interesting to look at the views on earnings management practices by diyah (internal auditor). diyah understands that earnings management is a deliberate intervention by managers or accountants in an external financial reporting process that has the purpose of gaining personal benefits. although earnings management is carried out through accrual management strategies or real operations management that do not violate accounting standards. he disagrees with the opinions of accountants who say that the practice of earnings management is not corrupt behavior. he stated that carried out through any strategy by violating accounting standards or not the practice of earnings management was corrupt. i say corrupt action because it is based on motivation and personal interests by overriding the interests of other parties. the existence of earnings management actions causes the financial statement numbers to be affected and in favor of the manager's interests. the purpose of the practice is clear, that is, expect financial report readers to be targeted by earnings management practices to make decisions that benefit managers or companies. this is detrimental to the other party. diyah's opinion is very consistent with iai's (2015) statement in kdpplk paragraph 16 relating to the neutrality of financial statements, and psak no.1 (revised 2015) paragraph 5 relating to the purposes and objectives of the following financial statements: information must be directed at the general needs of users and does not depend on the needs and desires of certain parties. there should be no business that only benefits some parties from presenting information, while it can harm other people who have opposing interests. [kdpplk paragraph 16 italics added as an emphasis] the general purpose of financial statements is to provide information about the financial position, cash flow and company performance that can be useful for users of financial statements to make an economic decision and show management accountability for the use of resources entrusted to them. [psak no.1 rev.1998 paragraph 5 italics added as an emphasis] diyah stated that there was no earnings management carried out without motivation and interests, both personal interests and interests of a company. "to achieve this interest, earnings management must be done intentionally and systematically," he said. diyah then continues the sentence. based on normal thinking, the selection of accounting methods should be carried out without motivation and certain interests that provide superior benefits to one party than the other. the choice of accounting method should also be without going through a systematic study by considering the impact on the rate of profit because any accounting method will produce the same rate of profit in the long run. because the mind of the manager and the accountant is more focused in the form of displaying his profit numbers rather than the substance, then the practice of earnings management is considered a matter of course. furthermore, diyah revealed that the practice of earnings management includes corrupt behavior that is driven by corrupt thoughts. "i simply define a corrupted mind as a thought that is not wrong with something that is wrong or thinks it is not evil towards something that is evil," explained diyah. according to him, such thoughts arise because the legal aspects take precedence over the nature of an action and its impact. he also stated that in my view the practice of earnings management is not an act of fraud if it is done without violating accounting standards, is a statement http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 56 based on reason and thoughts that deviate from reason and normal thoughts. the thought was corrupted by consideration of legal and regulatory aspects, namely accounting standards. the practice of earnings management does not rig accounting standards when viewed from the legal aspect, but rigging the interests of other parties by making accounting choices systematically. diyah's opinion seems to be very inspired by the criticisms of kwik kiangie on the corruption phenomenon written in his book. kian-gie (2006) stated his criticism of acts of corruption. corruption thoughts are indeed difficult to see from actions but are easily seen from motivation. it is not possible for all crimes starting from bad faith can be anticipated and arranged very completely by the sentence in any precise legislation. the reason is the power of innovation and unlimited human creative power in finding ways and formulating words that state that they have committed no crime. (p. 44) corruption in the sense of being a corrupted mind that does not steal state money is no less dangerous than corruption. corrupted thought flow also results in extraordinary losses. (p. 48) as an internal auditor, diyah said that earnings management practices are unacceptable behavior. this is because earnings management can cause a loss of credibility of financial statements and increase information bias in financial statements. so that this can disturb the users of financial statements in believing the engineered profit figures as profit figures without engineering. "with earnings management, users of financial statements, for example, investors do not receive accurate information about profits in order to evaluate the results and risks of their investment portfolios," said diyah. the results of the research that has been conducted show the results that the proportion of earnings management actions is mostly carried out in savings and loan cooperatives. this is emphasized by the motivation of managers to achieve targeted performance and to minimize violations of debt agreements and opportunities that exist in the interests of shareholders and the interests of the members themselves. most managers carry out earnings management through strategies for selecting accounting methods and determining accounting estimates. only a small portion is made through real legitimate transactions. this earnings management action still contains controversial understanding, where on the one hand it is always underestimated and tends to be misleading. however, on the other hand, this action is not fraud if carried out in accordance with accounting principles. earnings management is seen as an estimation of profits to avoid negative reactions from investors or users of financial statements. in addition, it is also used to protect yourself and the company in anticipating unexpected events for the benefit of the parties involved in the contract. this study contributes theoretically and practically to the concept of earnings management in cooperatives and can also be used as a discourse by users of financial statements in making decisions. from the creditor side, it can help in analyzing credit and earnings management practices so that creditors can make good decisions regarding creditworthiness. 4.3 research proportion p1: accrual accounting is believed to be one of the reasons for managers to practice earning management. p2: earning management is motivated by certain interest and economic factors. these interest are in the form of company interest and manager personal interest. p3: the practice of earning management through accrual management driven by inherent weakness in accrual accounting and flexibility in calculating earning figures. p4: the size of the bonus is a key consideration in encouraging earnings management practices. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 57 5. research conclusion and limitation 5.1 conclusion accrual is an important concept that is used as an underlying assumption in accounting practices. although the accrual concept itself is an imperfect concept and brings weaknesses. the imperfections and weaknesses inherent in accrual accounting are often used by managers to conduct earnings management with the intention of achieving certain goals. the interests of other parties, both shareholders and stake holders, are very important for savings and loan cooperatives in particular, and organizations in general for the survival of the organization. these interests force organizations to take earnings management actions but remain in the context of gaap without breaking the rules or earning manipulation. thus, can the practice of earnings management be equated with the practice of earnings manipulation? is earnings management a reflection of corrupt behavior? the answers to these questions are still controversial, according to the perspective of each research informant. accounting staff assess that earnings management is not the same as earnings manipulation. and also, not corruptive actions as long as they are within the frame of accounting standards. meanwhile, internal auditors say that the practice of earnings management is an unacceptable behavior. however, earnings management can cause loss of credibility of financial statements and increase information bias in financial statements. this can disrupt financial report users who believe in the engineering profit figures as profit figures without engineering. even though it is still in the corridor of the standard of action, this provides an opportunity for managers to be able to take actions that lead to corrupt actions. 5.2 limitation the implementation and results of this study contain several limitations. the first limitation is that this study only seeks to understand the opinions and attitudes of informants on earnings management practices carried out by managers in accordance with their respective positions and professions, and do not try to express their opinions more about what should be done in accounting management practices profit does not occur. second, in this study the opinions and attitudes of informants on earnings management practices have not been generalized as interpretations of accountants and business people as a whole. further research on different informants is still very necessary. references ayres, f. l. 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(1986). positive accounting theory. new jersey: prentice hall. *) murniati, department of islamic communication and broadcasting, university of islam **) mahmudatus sa’diyah, department of islamic economy, university of islam nahdlatul ulama, jepara, indonesia (email: mahdah@unisnu.ac.id) nahdlatul ulama, jepara, indonesia (email: murniati@unisnu.ac.id) ***) subadriyah, department of accounting, university of islam nahdlatul ulama, jepara, indonesia (email: subadriyah@unisnu.ac.id) http://creativecommons.org/licenses/by/4.0/ the perception of auditor career from university student perspective by muhammad reza ramdani, andi muara arum barkah, ismi ayu lestari jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 104 the perception of auditor career from university students perspective muhammad reza ramdani *) andi muara arumbarkah **) ismi ayu lestari ***) abstract this study explores the perceptions of accounting students about their selection in a career as an auditor through several indicators. this study aims to see what is the indicator that matter to students in in choosing career as auditors. the approach used was quantitative descriptive. the total sample of 100 students from muslim university of indonesia and muhammadiyah university of makassar. the method of data collection was through questionnaires distributed to students and by purposive sampling method and processed by regression analysis. the results of the study showed that financial appreciation, professional recognition, and market considerations have a positive and significant effect while professional training, work environment and personality have a positive and not significant effect on auditor career selection and social value variables that have a negative and insignificant effect on career choice as an auditor. financial award is a dominant variable in the career choice of students as auditors. keywords: perception; auditor; career; accountant; student 1. introduction 1.1 research background nowadays the importance of an auditor career is growing massively. especially in makassar, there are only seven public accounting firms and 40 auditors. although from year to year public interest in the accounting profession is quite high from year to year, which provides accounting education services at various levels, including undergraduate education (s1). the various types of careers that can be pursued by accounting scholars show that every accounting graduate is free to choose what career he will pursue (rahayu, sudaryono, & setiawan, 2003). bachelor of accounting has at least three alternative steps that can be taken. first, after completing economics education majoring in accounting, one can immediately work. second, continuing academic education at the undergraduate level. third, continuing professional education to become a public accountant. in other words, after completing an education at the undergraduate degree majoring in accounting, accounting graduates can choose to work as public accountants or non-public accountants. career selection is an individual process such as an effort to prepare to enter the stages associate with work (setyawardani, 2009). undergraduate accounting decisions to choose an auditor's career need careful consideration including incentives, professional training, professional recognition, social values, work environment, and job market. they must go through a rigorous selection process to get the title of the professional auditor. this is needed to be able to distinguish the level of quality and ability of the certificate holder with those who do not have a certificate. the existence of difficult process is not a few of accounting scholars withdraw their intention to become auditors except those who have broad competence and believe that they can go through the selection process (ramdani & kamidin, 2018). the career choice of accounting students is influenced by several factors, such as financial or salary awards, professional training, professional recognition, social values, work enviro nment, job security, and ease of access to job vacancies (putra & silfi, 2016). the factors that influence the http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 105 career choice of students and type of career they will pursue are interesting things to study because the knowledge of career choices students is interested, it can be seen the reasons for choosing a career (rahayu, sudaryono, & setiawan, 2003). then the researcher wants to explore student perceptions of financial awards, professional training, professional recognition, social values, work environment, and work environment towards the selection of their careers for the profession of auditors, so they can find out benchmarks of students in choosing a career as auditors. 1.2. research problem based on research background above, this study needs to evaluate the perception of auditor career that consists of perception on a financial award, professional training, professional recognition, social value, work environment, market consideration, and personalit y from the university students perspective. 1.3 research purpose this study needs to evaluate the perception of auditor career that consists of perception on the financial award, professional training, professional recognition, social value, work environment, market consideration, and personality from a university student perspective. 2. theoretical framework and hypotheses development professional training does not significantly influence career choice like a public accountant because the career into chosen is not far from the knowledge gained by college, so it does not focus on job training. in addition to professional training, professional recognition is also considered in career selection (suyono, 2014). someone works not only to meet financial needs but to get recognition of achievement and develop themselves. this is not in line with 's research where professional recognition has no significant effect on career choice. the three factors above are financial awards, professional training, and professional recognition are mutually supportive factors. rational financial awards are a fundamental requirement of job satisfaction. however, this is not easy to obtain. being an auditor requires a lot of work experience to avoid mistakes of giving conclusions and audit reports. social values are shown as factors that reveal a person's ability to his community or one's values from the point of view of those around him (suyono, 2014). the work environment has a significant effect on the profession selection toward auditors (putra & silfi, 2016). unlike stated that the work environment does not affect career choice. but this is about not in line with the result of merdekawati & sulistyawati (2012) which concluded that market considerations did not affect career choice. this seems that the desire of students in principle to work is inseparable from the field of accounting. in addition to financial factors, professional recognition, professional training, social values, work environment, and market considerations, there is one more important factor in this study that is personality factors. personality factors talk about the personality of each person differently. rahayu, sudaryono, & setiawan, (2003) stated that personality is one of the potential determinants of individual behavior when dealing with certain situations/conditions especially in choosing a career. likewise, putra & silfi (2016) study concluded that personality factors have a significant effect on career selection. however, different from the results of merdekawati & sulistyawati (2012) and yanti & ratnawati (2014) stated that personality factors did not affect student career selection. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 106 2.1 financial reward financial incentives linked to academic performance have been proposed as a potentially cost-effective way to support improvement. treated students perform better than those in control of the same non-incented test (list et al., 2018). the study which included financial rewards were initial salary, pension fund, and the potential increase in financial reward/salary. wheeler (1993) and astuti (2014) found that business people, psychology, and education in addition to accountant public (auditor) assume that this profession offers higher income than jobs in marketing, general management, finance, and banking. financial reward and career auditor relationships perceive that the profession of auditors has relatively high salaries compared to other professions. h1: financial reward has a positive and significant effect on auditor career choice. 2.2 professional training professional training is considered by students who choose the profession of government auditors (astuti, 2014). it means that in choosing a profession student not only seeking financial rewards but also to pursue achievements and develop themselves. h2: professional training has a positive and significant effect on auditor career choice. 2.3 professional recognition professional recognition is related to the recognition of an achievement (work results) stated that professional recognition is considered by students who choose the profession of public accountant. it means that choosing a profession is not only aimed at seeking financial expectations but also there is a desire for recognition of achievement and self-development. professional recognition that will be tested in this study includes opportunities to develop, recognition achievers, special skills in work, easy to get promoted, and opportunities to compete (merdekawati & sulistiyawati, 2012). easy to rise in rank. h3: professional recognition factor has a positive and significant effect on the auditor career choice. 2.4 social value social values are intended as a factor that shows a person's ability from the point through view other people towards his environment (wijayanti, 2001). shows that social values are shown as factors that reveal a personal ability to society or in other words the value for someone toward the point of view through other people in their environment. the auditor profession enhances social quality in people's views of them. h4: factors of social values have a positive and significant effect on auditor career choice. 2.5 work environment the work environment is everything in around the workers and which can affect themselves in carrying out the tasks that are charged (nitisemito, 2001). the work environment in government auditors is a work environment that more required to face challenges because with the variety of services provided by clients be able to lead various types of work pressure to achieve perfect results (aprilyan, 2011). the work environment that struggles in the financial sector makes a person become challenged and can improve abilities. world auditors themselves have an environment that is familiar with financial checks so they can improve performance. h5: work environment factors have a positive and significant effect on auditor career choice. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 107 2.6 market consideration the labor market is all the needs and supplies out of labor or all requests and offers in the community with all the mechanisms that allow productive transactions among people to sell their labor with the employers who need the labor (suroto, 1990). while simanjuntak (2001) stated that the job market is all activities of the actors that bring together job seekers and job openings individuals who are engaged in the profession of auditors for power market, especially in the city of makassar are still relatively small compared to the number of other professions. it becomes an application of labor for the profession of auditors. this actor consists of who needs an entrepreneur, job seekers, intermediaries or third parties that make it easy for employers and job seekers to interact with each other. h6: market consideration factors have a positive and significant effect on the auditor career choice. 2.7 personality personality is one of the potential determinants of individual behavior when dealing with certain situations/conditions. personality shows how to control or reflect a person's personality at work. personality will form individuals; an auditor indirectly shapes his personality into a person who is skilled, disciplined, thorough and flexible and puts independence first. this is the reason for the relationship between the formation of personal individuals and the profession of auditors. h7: personality factors have a positive and significant effect on auditor career choice. 3. research method 3.1 research design this study used a descriptive quantitative approach and was conducted at two universities namely the faculty of economy, muslim university of indonesia and muhammadiyah university of makassar. this study held in march june 2018. the data sources used in this study was obtained directly from respondents. data collection at this study was a questionnaire that upon spreading a list of the states have been compiled, and then respondents were asked to answer according to their opinions. all instruments used an ordinal likert scale with a score of 1 (strongly disagree) – 5 (strongly agree). table 2 variable and indicator variable definition indicator source financial award special compensation was given to increase individual performance, apart from what should be obtained from his work. careers that provide high initial salaries, relatively fast salary increase, providing pension funds, careers that provide work bonus, there is no fixed income guarantee, careers that provide home facilities list, livingston, & neckermann (2018) professional training professional training covers matters related to increasing expertise, skills, and knowledge. professional recognition includes recognition of achievement training before starting work training outside the institution, regular job training within the institution, work experience that does not vary crowley (2017). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 108 variable definition indicator source professional recognition with the recognition of work, performance will be able to improve the quality of work produced and can increase motivation in achieving a better career. this factor can improve and foster the development of the company or individual itself. more opportunities to develop, there is recognition of achievement for the services provided, requires expertise into work, there is no chance to compete, easy to rise in rank sulistyawati, ernawati, & sylviana (2013) social value expressing sociology views values as notions (something in people's heads) about the good or not of actions. in other words, the value is the result of moral judgment or judgment. opportunity to do social activities, it's easier to interact with other people, the opportunity to run a hobby, want to be appreciated, work with experts in other fields sari (2014) work environment work environment has a big influence on work effectiveness and orientation. therefore, the work environment will provide a new atmosphere for him which will have an influence on the successful implementation of his duties to the work. regular work, many challenges, flexible working hours (changeable), frequent overtime, there is no work pressure to achieve perfect results tumiwa, tewal, & palandeng (2017) market consideration one of the most important factors that determine individuals’ quality of life and wellbeing is their position in the labor market and the type of jobs that they hold. when workers are rationed out of the formal segment of the labor market against their will, i.e., the labor market is segmented, their quality of life is limited, and their wellbeing is reduced ease of accessing job vacancies, career auditors are much needed lehmann & pignatti (2018). personality personality measures that can help explain economic values and choices systematically suitability of work with one's personality, not easily affected and impartial, to be responsible, high discipline boyce, czajkowski, & hanley (2018). http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 109 variable definition indicator source career auditor an auditor is someone who expresses an opinion on fairness in all material respects, the financial position of business results and cash flows that are by accounting principles generally accepted in indonesia a trusted business consultant auditor, auditors expand accounting insight, professional auditors in accounting, the auditor receives the appropriate benefits, auditors are often overtime and work intensive, personal satisfaction can be achieved, a career whose work security is guaranteed, auditors obtain high expectations in the community. arens, elder, & beasley (2002). 3.2 population and sample the sample of this study are accounting students who are considered to have an alternative plans or thoughts about what will be done after graduating from the undergraduate program. the sample collection method used in this study was non-probability sampling (accidental sampling) table 1 research population no. university number of students 1. muslim university of indonesia 530 2. muhammadiyah university of makassar 539 total population 1.069 3.3 research framework picture 1 research framework this study employs seven main variables; financial award, professional training, professional recognition, social value, work environment, market consideration, personality and career auditor as seen in the table below. professional recognition social value auditor career career auditor career auditor work environment financial award market consideration h1 personality professional training h2 h4 h3 h6 h5 h7 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 110 4. research result and analysis 4.1 descriptive analysis the majority of respondent in this research are female (63%) with most of them already though auditors as career choice. the reason of student in pursuing career as auditor is because they know that auditor offers many benefit especially financial reward. 4.2 validity and reliability table 3 validity result item rvalue rtable rule of thumb decision item rvalue rtable rule of thumb decision 1 ,444 ,2061 rvalue > rtable valid 22 ,439 ,2061 rvalue > rtable valid 2 ,523 ,2061 rvalue > rtable valid 23 ,527 ,2061 rvalue > rtable valid 3 ,522 ,2061 rvalue > rtable valid 24 ,498 ,2061 rvalue > rtable valid 4 ,401 ,2061 rvalue > rtable valid 25 ,338 ,2061 rvalue > rtable valid 5 ,471 ,2061 rvalue > rtable valid 26 ,468 ,2061 rvalue > rtable valid 6 ,481 ,2061 rvalue > rtable valid 27 ,456 ,2061 rvalue > rtable valid 7 ,425 ,2061 rvalue > rtable valid 28 ,449 ,2061 rvalue > rtable valid 8 ,615 ,2061 rvalue > rtable valid 29 ,354 ,2061 rvalue > rtable valid 9 ,621 ,2061 rvalue > rtable valid 30 ,305 ,2061 rvalue > rtable valid 10 ,462 ,2061 rvalue > rtable valid 31 ,587 ,2061 rvalue > rtable valid 11 ,555 ,2061 rvalue > rtable valid 32 ,363 ,2061 rvalue > rtable valid 12 ,496 ,2061 rvalue > rtable valid 33 ,414 ,2061 rvalue > rtable valid 13 ,431 ,2061 rvalue > rtable valid 34 ,414 ,2061 rvalue > rtable valid 14 ,265 ,2061 rvalue > rtable valid 35 ,406 ,2061 rvalue > rtable valid 15 ,475 ,2061 rvalue > rtable valid 36 ,488 ,2061 rvalue > rtable valid 16 ,381 ,2061 rvalue > rtable valid 37 ,574 ,2061 rvalue > rtable valid 17 ,473 ,2061 rvalue > rtable valid 38 ,362 ,2061 rvalue > rtable valid 18 ,484 ,2061 rvalue > rtable valid 39 ,408 ,2061 rvalue > rtable valid 19 ,269 ,2061 rvalue > rtable valid 40 ,226 ,2061 rvalue > rtable valid 20 ,410 ,2061 rvalue > rtable valid 41 ,266 ,2061 rvalue > rtable valid 21 ,558 ,2061 rvalue > rtable valid source: primary data processed, 2018 the table above shows that all statement items have positive correlation coefficients and greater than r-table 0.2061. it means that the data obtained is valid and further testing of data can be done. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 111 table 4 reliability result source: primary data processed, 2018 based on the table above the results of the data reliability test above, shows that each item has an alpha coefficient> of 0.60 so that all items are declared reliable and can be used for further testing. 4.3 research analysis table 5 collinearity result variable collinearity statistics tolerance vif financial award ,698 1,433 professional training ,625 1,600 professional recognition ,476 2,103 social value ,577 1,734 work environment ,553 1,807 market consideration ,672 1,489 personality ,735 1,360 source: primary data processed, 2018 item cronbach's alpha of item deleted rule of thumb decision item cronbach's alpha of item deleted rule of thumb decision 1 ,915 > 0.60 reliable 22 ,915 > 0.60 reliable 2 ,914 > 0.60 reliable 23 ,914 > 0.60 reliable 3 ,914 > 0.60 reliable 24 ,915 > 0.60 reliable 4 ,916 > 0.60 reliable 25 ,916 > 0.60 reliable 5 ,915 > 0.60 reliable 26 ,915 > 0.60 reliable 6 ,915 > 0.60 reliable 27 ,915 > 0.60 reliable 7 ,915 > 0.60 reliable 28 ,915 > 0.60 reliable 8 ,913 > 0.60 reliable 29 ,916 > 0.60 reliable 9 ,913 > 0.60 reliable 30 ,917 > 0.60 reliable 10 ,915 > 0.60 reliable 31 ,914 > 0.60 reliable 11 ,914 > 0.60 reliable 32 ,916 > 0.60 reliable 12 ,915 > 0.60 reliable 33 ,916 > 0.60 reliable 13 ,915 > 0.60 reliable 34 ,916 > 0.60 reliable 14 ,917 > 0.60 reliable 35 ,916 > 0.60 reliable 15 ,915 > 0.60 reliable 36 ,915 > 0.60 reliable 16 ,916 > 0.60 reliable 37 ,914 > 0.60 reliable 17 ,915 > 0.60 reliable 38 ,916 > 0.60 reliable 18 ,915 > 0.60 reliable 39 ,916 > 0.60 reliable 19 ,917 > 0.60 reliable 40 ,918 > 0.60 reliable 20 ,916 > 0.60 reliable 41 ,917 > 0.60 reliable 21 ,914 > 0.60 reliable http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 112 the independent variable has a variance inflation factor (vif) value of about 1 to 10, as well as the results of the tolerance value of more than 0.10; it can be concluded that there is no multicollinearity problem between independent variables. picture 2 normality result it can be seen that the data points spread around the diagonal line and follow the direction of the diagonal line, so the data model meets the assumption of normality. 4.4 research discussion table 6 the contribution of variable r r square adjusted r square std. an error of the estimate durbin-watson ,738a ,545 ,507 ,41775 2,056 source: primary data processed, 2018 the adjusted r2 value is 0.507, means that the contribution of the financial reward, professional training, professional recognition, social values, work environment, market consideration, and personality toward the auditor career choice is 50.7%, while the rest of 49.3% influenced by other variables which excluded from this model. based on regression result (table 7), it can be concluded that accounting students consider higher initial salaries, relatively fast salary increases the availability of pension funds, bonus, and facilities to be considered in the auditor's career selection. this is also seen in the results of the respondent's responses and the results of descriptive statistics which as a whole are on the scale/category agreed. primarily in the fourth revelation item, accounting students agree with the career statement, the auditor provides a work bonus. this fourth statement item has the highest total frequency of other statement items. the more bonus is given, the higher the income earned. the http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 113 existence of a high financial / salary award is expected by accounting students to be able to fulfill their future life needs. the results of this study are in line with the research conducted list, livingston, & neckermann (2018). special compensation given to increase individual performance, apart from what should be obtained from his work. table 7 regression analysis source: primary data processed, 2018 based on the results of the data, there are still some respondents who disagree when professional training is taken into consideration in the career choice of auditors. they see that professional training namely training carried out before work, training in institutions and training outside the institution does not become a guarantee in career selection, because the career to be chosen is not much different from the knowledge that has been obtained from the lecture bench. the knowledge or ability has been obtained at the time of the lecture is the basis for them to work. so, they assume that choosing a career is not focused on job training. the results of this study are in line with the results of (astuti, 2014), namely that professional training factors have no significant effect on career choice as an auditor. accounting students agree that in choosing the career of an auditor not only consider the factors of financial rewards but also require recognition of an achievement. this recognition can be categorized as an intangible financial award given to workers as a reward or gift, so the individual or worker continues to improve his performance and get the right to work has been done in achieving an achievement. accounting students assume that the auditor's career can provide many opportunities to develop, recognition of achievement, respect for special skills, and easy to move up to motivate them to choose careers as auditors. the results of this study are in line with the results of rahayu, sudaryono, & setiawan (2003) regarding the factors that influence the career choice of accounting students. among the factors studied, one of them is professional recognition, where professional recognition has a positive and significant effect in choosing the accounting student auditor's career. humans are born as social beings so that whatever their careers are, they will certainly socialize with their environment. the results of this study are in line with the results of research senjari (2016) which concluded that social value variables did not have a significant effect on auditor career choice because consideration of high social values would reduce auditor career choices. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 114 at the beginning of pioneering the auditor's career, there may be many complaints due to complicated work, many challenges, and often overtime. the results of this study are in line with the yendrawati (2007). accounting students who choose a career as an auditor assume that everything that will happen in the auditor's work environment when he works later is a sacrifice that must be faced and for the accounting student the award or satisfaction he will get later is greater than the sacrifice he faces. significant results are because most accounting students assume that the auditor's career is guaranteed security and is much needed in various fields. especially in the current era, many new companies were founded. certainly, to produce good financial reporting, an auditor is needed. the results of this study are in line with astuti (2014) research, labor market considerations are factors that influence students to choose auditor careers. likewise, with the research of yanti & ratnawati (2014) labor market consideration factors are things that are considered in choosing auditor career. personality includes a person is an attitude towards a job as well as whether the career requires high responsibility and discipline or not. auditors need an independent attitude that is not easily influenced and impartial to anyone. however, this is not only needed in the auditor's career, but all good careers must also need good personalities. the insignificant results were caused by some students arguing that personality did not have a significant effect on the auditor's career. rahayu, sudaryono, & setiawan (2003) state that personality is one of the potential determinants of individual behavior when dealing with certain situations/conditions especially in choosing a career. the phenomenon that happening now is someone wants to undergo a career to get a financial award/salary. the existence of high income/salary can be fulfilled daily needs. accounting students assume that the auditor's career can guarantee a person's financial needs. this is in line with yanti & ratnawati (2014) research which states that financial factors partially predominantly influence career choice of accounting student auditors. 5. research conclusion and limitation 5.1 conclusion the results of the study showed that financial appreciation, professional recognition, and market considerations have a positive and significant effect while professional training, work environment and personality have a positive and not significant effect on auditor career selection and social value variables that have a negative and insignificant effect on career choice as an auditor. financial award is a dominant variable in the career choice of students as auditors. 5.2 limitation this study has limitations; it does not examine other factors that influence the choice of career as an auditor and only investigates within the scope of private universities. further study should increase the scope of study by taking samples of accounting students from other public and private 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(2017). pengaruh teknologi informasi, lingkungan kerja dan kompetensi terhadap produktivitas karyawan (study pada kantor pusat bank sulutgo). jurnal emba: jurnal riset ekonomi, manajemen, bisnis dan akuntansi, 5(3). retrieved from https://ejournal.unsrat.ac.id/index.php/emba/article/view/18194/18339. yanti, n., & ratnawati, v. (2014). analisis faktor-faktor yang mempengaruhi mahasiswa akuntansi dalam pemilihan karir menjadi akuntan publik (studi empiris pada perguruan tinggi negeri dan swasta di pekanbaru). jurnal online mahasiswa (jom) bidang ilmu ekonomi, 1(2), 1-15. yendrawati, r. (2007). persepsi mahasiswa dan mahasiswi akuntansi mengenai faktor-faktor yang mempengaruhi pemilihan karir sebagai akuntan. jurnal fenomena, 5(2), 1-11. *) muhammad reza ramdani, department of accounting, university of muslim indonesia, makasar, indonesia (email : reza.ramdani@umi.ac.id) ***) ismi ayu lestari, btfd public accountant, makasar, indonesia (email : ismiayulestari22@gmail.com) **) andi muara arumbarkah, department of accounting, university of muslim, makasar, indonesia (email : muaraarumbarkah@umi.ac.id) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 107 evaluations of an entrepreneurship development program: a systematic literature review ronal ferdilan 1* , wawan dhewanto 2 , sonny rustiadi 3 1 school of business and management, institute of technology bandung, bandung, indonesia 2 school of business and management, institute of technology bandung, bandung, indonesia 3 school of business and management, institute of technology bandung, bandung, indonesia *corresponding author(s) email: ronal-ferdilan@sbm-itb.ac.id abstract the contribution of entrepreneurship at both the microeconomic and macroeconomic levels is remarkable. there are many entrepreneurship development programs (edp) initiatives proposed by policymakers around the world to ensure the growth of entrepreneurs. while edp is necessary to improve entrepreneur capabilities, however studies on edp evaluation literacy remain limited. this study aims to fill the gap by investigating edp evaluation literacy by using a systematic literature review (slr). this study carried out a bibliometric analysis on a scopus database in the last three decades, from 1989 to 2021 with all the manuscripts were written in english. the results show that most of the literature on edp evaluation-related themes is mainly focused on program evaluation, characteristics, challenges, stakeholders, and context, with program evaluation and characteristics are considered as the most significant issues of edp evaluation. interestingly, this study also reveals that few manuscripts review the process of edp as the success criterion of edp implementation. keywords: entrepreneurship; development; small and medium enterprises (smes); education; training; systematic review; bibliometric analysis jel code: i25, i30, m13 doi: 10.31106/jema.v18i2.11461 article history: received 2021-07-08 reviewed 2021-07-30 revised 2021-08-02 accepted 2021-08-19 licensed: cc-by mailto:ronal-ferdilan@sbm-itb.ac.id http://creativecommons.org/licenses/by/4.0/ evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 108 introduction entrepreneurship development programs (edp) are activities (or a package of training and counseling designed) to increase knowledge and creativity. edp encourages the entrepreneurial spirit of people to start and grow their business in both formal (high-school and post-secondary school students) and informal sectors (gangi, 2017; hägg & gabrielsson, 2020; lackéus, 2015; valerio et al., 2014). the purposes of edp are to improve skills, knowledge, and attitudes of targeted individuals and community (fayolle et al., 2016; gedeon, 2017; klingler-vidra et al., 2019), to start a new business, and to add new jobs (decker et al., 2014; jeng & hung, 2019), to provide an alternatives sources of income (dvouletý, 2017; terjesen et al., 2016), and to initiate economic growth (martínez et al., 2018; song & winkler, 2014; stoica & roman, 2020). nowadays, edp implementation is getting more recognition and attention from policymakers and academicians because of its contributions (tsai et al., 2014). edp offered many benefits to the entrepreneurial community. it increases the economic contribution, gives alternative solutions to youth unemployment issues, creates social impact, etc. (nabi et al., 2017; pettersson et al., 2017; valerio et al., 2014). the academic literature edp-related has been expanding steadily over the years, covering themes like entrepreneurship program categorization, attitudes, and perception, edp objective, program content and framework, social entrepreneurship, evaluation, and impact (gabrielsson et al., 2020; kakouris & georgiadis, 2016; loi et al., 2016; martin et al., 2013). however, gustafsson-pesonen & remes (2012) argued that despite its popularity, it’s very often reported that the biggest obstacles of entrepreneurship programs are on what (and how) educators or trainers teach and their attitudes toward entrepreneurship. besides, gustafssonpesonen & remes (2012) also pointed that the evaluation of the edp effectiveness remains arguable. fayolle (2013) added that while the impact of the program or session on trainees, students, and other participants may be an appropriate evaluation criterion, there is still the issue of how to measure it. what should the indicators be, and how should they be measured? how can you quantify a shift in someone's intention or behavior? how may the sign of the time component be considered? and how can educational, teaching, and training aspects be distinguished from all other factors that influence the decision to pursue a particular career path or profession? the clear edp evaluation measurement is necessary to provide tremendous program improvement of all deficiencies in achieving the program’s goals and objectives and closing jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 109 the loop of the program decision-making. although there is still debate about evaluation measurement due to the absence of a control group (fayolle, 2013) and meta-analysis (bae et al., 2014), this problem can be minimized by analyzing its nature, educational interventions, and context. therefore, to fill such a gap, the study aims to explore the state of edp evaluations using a systematic literature review (slr) since this method can give an exceptional knowledge of the current body of work (frank & hatak, 2014). we have investigated 366 papers from the scopus database that were published from 1989 to 2021 that used the keywords “entrepreneur,” “develop,” “evaluate,” “education,” and “training.” the usage of scopus as the primary database in the study is because this reputable international database is utilized by academicians worldwide. by investigating state of the art, we identified five main themes: evaluation, program characteristics, challenge, stakeholder, and context. besides these central themes, we also evaluated the manuscript based on the period it was published, the contributors, and the subject area of the manuscript. this study is considered the first amongst edp-related manuscripts that uses slr to explore the evaluations of the edp. furthermore, the systemic literature review is used as this method can create an academic map regarding edp evaluation trends and futures (alvesson & sandberg, 2011). the manuscript is composed as follows: the first and second sections will briefly review academic literature, concentrating specifically on the theme’s critical aspect of edp. subsequently, the third section states the methodology of the research to produce a duplicable slr. following these come the results of the slr and a review of edp trends constructed in journals studied of this theme. thus, the final part contains the result, suggestions, limitations, and suggestions for future research. literature review entrepreneurship development program (edp) entrepreneurship is considered a critical alternative strategy to deal with various situations, such as financial crises and increased unemployment rates (galvão et al., 2018). it is appreciated as a trigger of regional prosperity and social development (ashrafi et al., 2020; galvão et al., 2019; song & winkler, 2014). the entrepreneurship level of a country has been shown to influence the advancement of national economies (atems & shand, 2018; prieger et al., 2016), progress and innovation (landström & harirchi, 2018; sánchez, 2013), the number of job creation (shane & venkataram, 2012), and the growth in nominal gross domestic product (khyareh et al., 2018). therefore, due to the critical contribution to the evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 110 economy’s sustainable development, policymakers have been focused on shaping education and training to ensure entrepreneurship development. this program is vital for developing entrepreneurship as it is packaged with managerial, financial, vocational, and technical training. suminar et al. (2021) added that the entrepreneurship development program (edp) is the right strategy to scale up the level of innovation, creativity, ability, and literacy of entrepreneurs to produce new, profitable young entrepreneurs to create jobs and assist the government in alleviating unemployment and poverty. many researchers have discussed various connotations and meanings of edp that different direct approaches in its theoretical development. such discussions are still going on, multiple researchers’ ahmad et al., (2018), fayolle & gailly (2008), and gibb (2002) stated that there is no complete consensus on definitional terminology. they claimed that the meaning of edp can only be deduced from their emphasis and the objective of public policy 'initiatives. for example, sudha (2019) argues that edp improves entrepreneurial passion, competency, and capability to run enterprises. edp also changes people's attitudes in developing their competency, passion, working capacity, and knowledge. besides, edp helps participants identify any business opportunities. it also boosts the confidence, reflection, expertise, and qualification to operate a successful business (jones & english, 2004; kumar, 2017). landra et al. (2018) explained that edp are set up to train their entrepreneurial abilities and innovation. to summarize, numerous researchers (béchard & denis, 2005; béchard & denis, 1998; gabrielsson et al., 2020; heinonen & hytti, 2016; interman, 1992; kyrö, 2015; lackéus, 2015) classified these education and training programs into simple three purposes. the purposes are to promote business awareness and creation, small business development, and train trainers. entrepreneurship development programs (edp) evaluation the attention of edp is booming worldwide. although there is debate whether these programs should be introduced at an early age (elementary school) or university level, more and more public policy “initiatives” related to entrepreneurship are implemented by the government to accelerate the growth of business and enhance entrepreneurial spirit and literacies. (fayolle, 2013) also added that given that it is a hot topic on the political agenda, there is an increasing number of publications by academicians that have focused on edp. however, the critical question now arises, whether the implementation of edp affects the intended goals and produces an effective result. (brentnall et al., 2018) argued that if public money were allocated on such initiatives because they are represented as solutions to societal jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 111 issues, it was reasonable to examine whether they were a good investment. therefore, more investigations should be made in evaluating edp (farashah, 2013; larso et al., 2018). surprisingly, despite the huge number of public initiatives allocated to this program (and the critical issue from government perspectives), a little study is available to comprehensively discuss the assessment and evaluation of edp (fayolle, 2013). yet acs et al. (2016) and gustafsson-pesonen & remes (2012) also pointed out that the review of the effectiveness of the edp remains debatable. while the impact of the program or session on trainees, students, and other participants may be an appropriate evaluation criterion, there is still the issue of how to measure it. what should the indicators be, and how should they be measured? how can you quantify a shift in someone's intention or behavior? how may the sign of the time component be considered? and how can educational, teaching, and training aspects be distinguished from all other factors that influence the decision to pursue a particular career path or profession (fayolle, 2013)? the nature of edp that is inseparable from training and education made the teaching model one of the critical sources in evaluating edp. eseryel (2002) identified six approaches that can be used in assessing edp: goal-based evaluation, goal-free evaluation, responsive evaluation, systems evaluation, and professional review and quasi-legal. fayolle (2013) added that among these approaches, goal-based (kirkpatrick's reaction, learning, behavior, result framework) and systems-based approaches (such as input, process, output, outcome model by bushnell) are predominantly used to assess edp. edp evaluation should focus more on the process than content (gruenwald, 2014). lundström et al. (2014) and vesper & gartner (1997) also strengthened that argument by stating that the accomplishment of programs goals and teaching methods are the two most commonly used to assess edp. moreover, galvão et al. (2019), nyadu-addo & mensah (2018) added that the attendances and participation in the business clinic (assessment), context (galvão et al., 2018; jessica & menold, 2015; purzer et al., 2016), individual characteristics (fretschner & weber, 2013; huang-saad et al., 2018), knowledge/theory understanding (brentnall et al., 2018; neergaard, 2014), as another edp successful indicator. the program assessment offers information required for external certification and accountability information and delivers information used internally for quality control and improvement purposes (lundström et al., 2014; palomba & banta, 1999). evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 112 methods this study used systematic literature reviews that cover edp evaluation-related topics for program improvement. armitage & keeble-ramsay (2008) borrego et al. (2014) and tranfield et al. (2003) added that the slr technique shows an important practical (in terms of accuracy for duplicability) when dealing with many investigations presented in a long period. slrs are widely used for conducting evidence-based policy (pittaway, 2016; pittaway & cope, 2007). therefore, considering these points, we utilize slr to identify issues on edp evaluation and analyze its growth. the analysis also intends to assess the impact of papers on this subject, analyze journals that produce documents, verify significant writers and academicians, and classify desirable topics and procedures. the search was conducted using the scopus database and covered the period 1989 to 2021. the terms used to determine relevant studies were examined in titles, abstracts, and keywords. these terms were entrepreneur*,” “develop*,” “evaluate*,” and “education or training.” the core logic to select the scopus database was its extensive analysis of universally indexed papers of a value standard by academics. furthermore, many papers recognized by scopus are also accessible in other databases. as one of the most comprehensive databases, scopus can also form a different bibliographic outcome than other databases. because the research of edp evaluation remains thin, we chose to use all articles about this topic in scopus, from 1989-2021, to have a rich data source. to the best of our knowledge, there is no existing slr that focuses on exploring the evaluations of the edp from the scopus database published from 1989 to 2021. from this search, it can be known that the first papers in the scopus were written by wan (1989) and curran & stanworth. (1989) while wan (1989) study focused on evaluating the type and efficacy of a company’s workshop program to promote business planning competencies, curran & stanworth (1989) assessed the character of entrepreneurship education. for our study, these two papers published in 1989 will be treated as the beginning point of the edp evaluation discourse. furthermore, we first selected documents with analytically confirmed information and eliminated documents other than journal articles to obtain the necessary papers. then, we chose “entrepreneur*,” “develop*,” “evaluate*,” and “education or training” as keywords to discover papers related to this theme. the resulting outcome was a total of 1191 papers. these papers then undergo four phases of elimination. first, we eliminated papers not written in english (reducing the article count from 1191 to 1132). second, writings other than social, management, and business scope were eliminated, reducing the papers to 481. third, we jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 113 excluded other disciplines to focus just on the theme. lastly, we stopped outcomes that were not a journal article or different than the theme. the final result used as the base for slr is 366 papers. table 1 presents a summary of the phase used in the slr method. table 1. literature review exclusion criteria stage exclusion criteria amount stage 1 search scopus bibliography by “entrepreneur*,” “develop*,” “evaluate*,” and “education or training” keywords. 1191 stage 2 choosing outputs that were written in english. 1132 stage 3 choosing output that focused on social, management, and business scope. 481 stage 4 choosing the scientific papers only, eliminate conference papers and review. 366 figure 1. summary of slr process evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 114 the quality impact of the manuscript often refers to the number of citations. although the usage of citation has been a debate for over decades (as the older the manuscript has had more time to accumulate citations), the usage of citation as the proxy of the quality of manuscript remained still (dumay et al., 2014). therefore, to overcome the bias, this study uses citation analysis into three points of view which are co-authors citations network analysis, co-citations sources network analysis, and co-citations and corresponding group analysis. the result of tables 3 and 4 compare the top 10 authors and top 10 co-cited authors indicated that rather than a few authors dominating the rankings, the rankings show a wide range of authors; this reflects the breadth and diversity of scholars and institutions working in this field (demartini & beretta, 2020; massaro et al., 2016). furthermore, the analytical framework and dataset (text queries) must be defined and coded using the developed framework as another phase of slr (massaro et al., 2016). following the coding process, we completed the final phase of the slr, which involves analyzing the results to produce insights and critiques, respond to the research question, and make recommendations for future research directions. figure 1 shows the summary of the slr process used in the study. result and discussion entrepreneurship development programs (edp) research trends figure 2. number of publications (edp related) per year figure 1 shows the development of published researches on the topic of edp evaluation. in 2001, the subject started to appear at a constant level, whereas some periods before this year had no papers. between fourteen years (1989-2003), there were only 29 papers jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 115 published concerning edp evaluation. the amount started to rise dramatically since 2004, with the largest amount of published research being 42 papers in the year 2019. at the beginning of 1989, the edp study has focused on the program characteristics identification and their target participants. furthermore, the program improvement is made based on the program’s evaluation. wan (1989) explores the characters and effectiveness of the enterprise training program. the australian government founded this in 1989 to promote business planning competency. all training programs are held in the capital city of each state of australia and are divided into three phases: seminar series, intensive training, and business plan competition. thus, these programs were evaluated by past participants’ perception of the program effectiveness, economic (monetary) impact, and feedback evaluation from sources other than participants (employers and academicians). he found that the training program has effectively achieved the program’s goals to promote business planning competency. the evaluation of these enterprise’s workshop results is that these programs lack focus on personal training qualities, as they over-emphasize practical skills in business planning. following wan (1989) and curran & stanworth (1989), the study concerned four typologies of entrepreneurial education: entrepreneurial education for small businesses, entrepreneurial awareness for entrepreneurs, advancing industry for small business owners, and small business awareness. they evaluate that the program with the highest effectiveness was small business education for small business owners. figure 3. publications based on countries and continents figure 2 confirms that the united kingdom (64 manuscripts), united states america (56 manuscripts), australia (23 manuscripts) is the most contributors of edp-related studies in cumulative with the contribution of more than 50%. europe accounted for the biggest continent contributors of the study related to edp with a contribution of 45% followed by evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 116 america, asia, oceania, and africa. table 2 presents the top five publishers of 160 journals that discuss this issue. in addition, this topic began to come up in 1990 in the journal of business venturing. the subject area of management, business, and education appears the most in the top-five publishers. table 2. top five publishers journals number of articles first published number of citations sjr snip subject area education and training 34 2005 965 0.752 1.504 bs, mg, ac, ed journal of entrepreneurship education 29 2011 141 0.283 1.030 ac, bs, mg, ed, ec, et industry and higher education 18 1998 196 0.450 0.718 bs, mg, ed journal of business venturing 12 1990 2867 4.977 3.700 bs, mg emerald emerging markets case studies 11 2013 0 0.166 0.048 bs, mg, ed, st note: ac= accounting, bs=business, ed=education, ec=economics, et=econometric, mg=management, st=strategic table 3. top ten authors based on number of publications authors number of publications total citations average citations jones, paul 4 66 16.5 baptista, rui 3 35 11.6 frese, michael 3 127 42.3 januario, carlos 3 26 8.7 maritz, alex 3 25 8.7 mcelwee 3 33 11 naia, ana 3 35 11.7 trigo, virginia 3 35 11.7 abdullah, moha asri 2 2 1 balan, peter 2 27 13.5 while co-author in this study is defined as one or more persons who write the article, cocitations are the frequency in which two documents are cited together by other documents. table 3 highlighted the most performed authors in the current time and the number of their jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 117 citations. even though jones issued the most publications related to edp (4 publications), it was fayolle that has the most cited of publications (563 citations) followed by hornsby and palich (506 and 488 citations). table 4. top ten co-citations authors authors number of publications total citations average citations fayolle, alain 173 563 3.3 hornsby, jeffrey 46 506 11.0 palich, leslie. 22 488 22.2 fischer eileen 71 483 6.8 chandler, g. n., 24 445 18.5 linan, fransisco 59 283 4.8 zacharakis, andrew 34 273 8.0 fiet, james 33 269 8.2 gurol, yonca 4 207 51.8 heinonen, jarna 28 183 6.5 the citation network analysis the citation network analysis (cna) is based on the list of references found in journal articles or other types of publications. references are citations to prior works that have influenced the direction of a study. even though papers with a large number of citations are not necessarily representative of influential and world-class research, it is widely accepted that citations can be used to assess the relevance of publications (colicchia et al., 2018; dawson et al., 2014). papers may be removed from the study if no other works cite them, regardless of their content's importance, or if they have garnered a small number of citations due to their recent publication. other technologies, like keyword analysis and citation score analysis, might thus complement and minimize the aforementioned flaws. therefore, to build bibliographic networks, a vos viewer was used to analyze bibliometric networks and cluster analysis. figure 3 presents the co-author's network analysis based on (at least) 20 co-citations per author, demonstrating the “world” of five groups of the most outstanding co-authors of 106 authors. although these authors discuss a diverse range of topics, they cite one another quite frequently. it signifies the presence of a solid network (correlation) between them. it also can be acknowledged that the edp study is growing by citing each other’s papers. furthermore, figure 4 that was formed with at least 20 co-citations per journal shows that evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 118 most of the journals – out of 78– with co-citations were issued in the recent periods and polarized into the six biggest connected groups. the top three journals that published edp frequently are the journal of business venturing, entrepreneurship theory and practice, and journal of small business and management. there is a link between groups, indicating the interconnection among them. figure 4. authors citations network analysis (authors perspective) figure 5. co-citations network analysis (sources of publication perspective) for further analysis with at least four co-citations per manuscript, 80 most of the co-cited manuscripts were carefully chosen and classified into 5 segmented groups. these 5 groups selected are group 1 that includes 30 percent of the journals and group 2 group 5 which has jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 119 17.5 percent respectively. figure 5 proved that these five groups have a strong connection to each other. figure 6. co-citations and corresponding group network analysis group 1 this group consists of 30 lists of the manuscript, with 8 of them having more than four co-citations. the authors in group 1 evaluated the edp based on the impact and process. (kolvereid & moen, 1997; matlay, 2008; matlay et al., 2009; souitaris et al., 2007) evaluated the program based on the impact, while jones did the evaluation based on the process. matlay (2008) evaluated the impact of the edp on the entrepreneurial result of the graduates of higher education institutions. he found the entrepreneurial education improves these graduates with sufficient literacy and competency to enter both an entrepreneurial profession and their careers – after one year, five years, and ten years. the results of this ten–year– entrepreneurship–education evaluation show that the program has a successful entrepreneurial outcome. the majority of participants experience fast progression on owning a small business or obtaining impressive management levels. meanwhile, souitaris et al. (2007) evaluated the entrepreneurship program’s result to the entrepreneurial mindset and motive of 250 science and engineering undergraduates from two campuses in london and grenoble. their analysis confirms that entrepreneurship programs increase some evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 120 entrepreneurial mindset and reason. besides, the most significant benefits come from a program framework that incorporates an emotional component. the results contribute to the planned behavior theories and education theories. the findings also have broader inferences for the entrepreneurial emotion philosophy and for teaching entrepreneurship practices. next, kolvereid & moen (1997) evaluated the impact of entrepreneurship education on business graduates with a major in entrepreneurship versus graduates in other majors in a norwegian business school. they found that graduates with a major in entrepreneurship have a bigger entrepreneurial motive. lastly, matlay et al. (2009) that evaluated the edp in 1995-2004, found that edp in the united kingdom hei positively impact the graduate’s mindset towards their career and promote the potential entrepreneurs requiring expertise and competency in starting, running, and growing their business (matlay & carey, 2007). they found that, in 2000, the regional government funding and cultural issues were perceived as a barrier for edp. in 2004, they discovered that all the 40 campuses in the samples establish entrepreneurship education because of the demand from students, faculty staff affiliates, and government support funding. katz (2003) who analyzed more than 100 publications of the entrepreneurship education in america from 1876 until 1999, found that the cited authors formed an outline to define the chronology of entrepreneurship education in america. this framework is beneficial as a guide for future research. in addition, jones’s study provides an exclusive technique of understanding the learning process to be entrepreneurial in university (jones, 2010). based on the research findings, the author argues that the students in the university understand the limitation of entrepreneurship education they learn. consequently, the educators should consider the students’ capacity to provide a better learning atmosphere to develop the students’ capability. understanding the limitations of both educator and student is crucial to maximizing the entrepreneurship program in the university. the edp could be evaluated based on two aspects: the participants and their business. the evaluation based on participants could be determined from the development of knowledge of entrepreneurship theory; the essential of entrepreneurship; the significance of entrepreneurship; creative and innovation competency; entrepreneurial and ethical self-evaluation; and interacting, selling, and negotiation. in addition, the business developments are dependent on their business changes: finding and estimating chances; monetary of a concept; constructing opening strategies; developing a business planning; getting capital; opening the enterprises; growing the enterprise; and harvesting plan. the program characteristic and the delivery of the edp are also discussed in this group as fiet (2000a, 2000b) argues that the teaching process should jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 121 not be dull, as the most effective programs for coaching theory are connected to definite persons, places, timing, contacts, and environments. group 2 this group consists of 14 list manuscripts with seven of them having more than four cocitations, emphasizing four topics which are program evaluations, program characteristics, program stakeholders, and challenges. the authors in this group evaluated edp based on the impact and process. the first publication assessed the influence of the entrepreneurship education program on the students’ entrepreneurial intention. they found that the program had an extremely low positive effect on their recognized behavioral controls (fayolle, a., gailly b., 2006). the second paper proposes a model of entrepreneurship education majority stimulated by education sciences. also, this publication analyses the ontological and educational of the program. fayolle & gailly (2008) used the proposed framework to review several categories of entrepreneurship education programs, concentrating on three main types of education processes. moreover, duval-couetil (2013) discussed the approach of the edp evaluation. she argued that the impact evaluation should be determined by the stakeholder consensus, considering the diverse range of internal and external collaborators with different interests in the educational program. this slr also focused on the program challenges. the challenges especially relate to entrepreneurship education program valuation. moreover, she promoted the stakeholders’ involvement and consensus on developing, implementing, and evaluating entrepreneurship education programs. she also proposed to involve comprehensive stakeholders. the evaluation requires many resources: time, money, and expertise. also, participation from expert evaluators is essential. she offered three assessment instruments of entrepreneurship education: evaluation on the course-level that appraises the participants’ reaction to an entrepreneurship program; assessment on the broader agenda that measures a wider array of results, including interest, expertise, response, career decision, business creation, financial impact; and evaluation on specific parts or ideas related to entrepreneurship. meanwhile, rauch & hulsink (2015) have tested the effectiveness of entrepreneurship education. they evaluated the program impact based on the planned behavior theory. then, martin, et al. (2013) reported a meta-analysis of the formulation of human resources in entrepreneurship. they found a significant impact of entrepreneurship education and training on human resources and entrepreneurship outcomes. also, they observed that the entrepreneurship outcome is stronger for entrepreneurship education programs than entrepreneurship training programs. evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 122 furthermore, the topic of program characteristics was discussed by fayolle & gailly (2008). there are three categories of entrepreneurship programs namely learning to be enterprising persons, learning to be competent entrepreneurs, studying to be academicians (teachers or researchers in the field of entrepreneurship). another study from gibb (2002) and gorman et al. (1997) even added that as the rising of entrepreneurship interest is mainly due to the pressure of globalization, the need for entrepreneurial behavior is being felt by a broad variety of stakeholders (e.g., pastors, medics, educators, communities, and others) with a concern on the market. group 3 this group consists of 14 list manuscripts that emphasize the program characteristics such as content program (detienne & chandler, 2004; edelman et al., 2008; fiet, 2000b). the first paper studied by solomon (2007) presented an analytical synopsis of contemporary entrepreneurship education in the usa in 2004-2005. the second article was the research of shane & venkataraman (2000) that conceptualized the agenda of the entrepreneurship study. detienne & chandler (2004) discussed opportunity identification as a crucial subject in the entrepreneurship program. they appreciated opportunity identification as a core content of entrepreneurship education, which can be advanced as exclusive skills. the participants can learn the competency through the solomon four group designed experiment. moreover, while edelman et al. (2008) found that there are some intersections and differences between the real-life of start-ups to the textbook content, fiet (2000a, 2000b) in his articles, reviewed several assumptions that teaching theories to students have a more significant impact than only showing them what entrepreneurs do. he also explored the content of entrepreneurship education and the process of the program actualization. group 4 this group is composed of 14 manuscripts that emphasize the edp evaluation and context. it contains five publications with more than three co-citations with the most of them concurs that edp evaluation should be carried out based on the impact (karlan & valdivia, 2011; krueger et al., 2000; oosterbeek et al., 2010). while ajzen (1991) analyzed the theory of planned behavior in edp evaluation, oosterbeek et al. (2010) evaluated the impact of an entrepreneurship education program on university scholars’ competency and enthusiasm. however, the latter found that the program did not achieve the expected effect. in 2011, karlan & valdivia (2011) evaluated the impact of training on microfinance customers and organizations. also, krueger et al. (2000) contrasted two intention-based schemes with their capacity for the entrepreneurial intention estimation. the models are based on the planned jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 123 behaviour theory of ajzen (1991) and the entrepreneurial event model of shapero. they proposed that the prediction model should depend on the intention because situational or individual determinants have a low prediction ability based on the empiric cases. finally, thomas & mueller (2000) investigated culture or the connection among philosophy on four personality traits that are linked with entrepreneurial passion. the personal entrepreneurial characteristics are innovation, locus of control, risk-taking, and energy. group 5 this group contains 14 manuscripts that emphasize edp evaluation, characteristics, and challenges. similar to the previous group, most of the manuscripts in this group concurs that edp evaluation can be and should be conducted based on the impacts (athayde, 2009; fayolle & gailiy, 2015; graevenitz & weber, 2009; liñán et al., 2011; nabi et al., 2017). on the first topic, fayolle & gailiy (2015) recommended the framework of entrepreneurial intention and its antecedents to evaluate the impact of the edp. thus, the second study of edp evaluation by nabi et al. (2017) found that the research of the edp (education) impact still mainly emphasizes short-term measures with impact index based on the emotion-based methods and the intention-to-behavior change. moreover, while graevenitz & weber (2009) proposed a theoretical framework of bayesian learning to evaluate the improvement skills of entrepreneurship as the impact of entrepreneurship education, athayde (2009) assessed the impact of the young entrepreneurship program on the participants. lastly, liñán et al. (2011) proposed the elements forming an entrepreneurial intention. they stated that personal characters and perceived behavioral control are the determinants of entrepreneurial intention. the second topic is program characteristics. kuratko (2005) and pittaway & cope (2007) studied the contents of edp which is the contents of market entry, compromise skills, leadership, construction skills, creative problem solving, and skills to use technology and innovation skills, intention to be entrepreneurs, business capital, copyright, risk management, characters of an entrepreneur, and growth constrain. the entrepreneurship education contents are established based on the real-life situation: business strategy, creating business for scholars, discussion with industrialists, situation investigation, and case study. thirdly, the program challenges topic. kuratko (2005) divided the challenges of entrepreneurship study into ten issues namely stagnation, low quality of publications, lack of academician experts in entrepreneurship, low level of technology usage, the dot-com tradition, conflicting of academia with the real-life, the dilution of entrepreneurship, managing the risk, the leadership revolving of academic administrative, and the one-man show. therefore, to overcome the challenges in promoting entrepreneurship programs, the evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 124 usage of robust theoretical and conceptual basics combine with a real investigation (not take it for granted) is a mandatory act (fayolle, 2013). discussion the descriptive of edp issue from the five selected groups above is mostly concerned with program evaluation, characteristics, challenges, stakeholders, and context. in addition, the topic of program evaluation and program characteristics are recognized as the main significant them of edp evaluation (see table 5). in addition, the findings show that most evaluations are conducted based on the impact of the program. just a few of the papers consider the process of edp as the assessment of the edp implementation. table 5. edp issues group evaluation characteristics challenges stakeholders context 1 √ √ 2 √ √ √ √ 3 √ 4 √ √ 5 √ √ √ table 5 above illustrates the five topics of co-authors in the edp-related studies. from the existing papers, several topics are discussed, with some of them revealing similarities. the most significant issues are program evaluations and program characteristics, found in four groups. firstly, edp can be evaluated based on impacts and processes (although most of the assessments also assess the implications to assess the program achievement). to appraise the result of the program is necessary, but to assume by its impact alone is significantly insufficient, as the goal of the review is to improve the program. the findings above also reveal that a few articles review the process. nevertheless, since two other minority authors use the process as a basis of a program evaluation, it can be considered as rebalancing the program evaluation and identifying current and future trends. there were five topics discussed in the literature. the first topic was the edp evaluation. the literature on edp evaluation reveals that edp evaluations are primarily concerned with the impact of the program on the participants' capabilities and their business. nevertheless, just a few of the bibliography suggested for review on the edp implementation process, such as the delivery process, the expertise of stakeholders involved, and other aspects of the implementation process. even though most previous research conducted the edp evaluation jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,107 -136 http://dx.doi.org/10.31106/jema.v18i2.11461, issn (online) 2597-4017 125 based on the impact, this study expands the scope for edp evaluation based on both effect and the process. the aim to evaluate the impact is to find whether the intended goals are achieved or not. besides, the objectives of the review of the operation of the edp are to find out the quality of the process and improvement purposes. the findings conclude the assessment typology based on both the impact to see the result and the process that consist of the evaluation of the impact and process, the evaluation of the impact, and the evaluation of the process. however, since the edp evaluation is complex due to the variety of the content, purpose, and approach (fayolle & gailiy, 2015), the edp evaluation should be conducted to ensure the program enhancement (warhuus et al., 2017). this edp evaluation and implementation need the participation of various stakeholders who have resources of expertise, money, and information (bischoff et al., 2018; duval-couetil, 2013) in short, medium, and long-term periods of evaluation (galvão et al., 2019; matlay, 2011). while numerous researchers evaluated the edp based on the impact to measure the effectivity, nevertheless the evaluation of the process of the execution was also needed to ensure improvements of the future edp. consequently, it is suggested to evaluate edp based on the impact and the process of the edp. the second topic discusses three program characteristics: program delivery, design programs, and program content. thirdly, the discussion is about challenges, namely the program implementation, the challenge to understand the program, and the challenge of evaluating. since the sources of the program come from the activity of attention of various stakeholders, then the success level depends on the stakeholder’s participation level (galvão et al., 2017). the fourth issue is the stakeholder. bischoff et al. (2018) declared that stakeholder theory in a business context commonly refers to the organizations and individuals who can influence or be influenced by business activities. there are more than ten stakeholder categories that were defined by leonidou et al. (2020) which consists of academia, government, community, customers, service intermediaries, user community, suppliers, business networks, start-up teams, innovation intermediaries, social media, university peers, ngos, industry cluster, associations, friend and family. however, these wider ranges of stakeholders have often produced contra-productive conflict between each other due to the different systems and interests of each stakeholder. some authors use quadruple helix (dhewanto et al., 2021; primanto et al., 2018), the penta helix (tonkovic et al., 2015), collaboration, and the individual actors’ model (rustiadi & arina, 2019) as a framework to analyze the roles that stakeholders. finally, the last issue of edp evaluation in this study is the context, which means the diversity of programs. evaluations of an entrepreneurship development program: a systematic literature review by ronal ferdilan, wawan dhewanto, sonny rustiadi 126 conclusion and suggestion in this literature review, we have investigated 366 edp manuscript related and explored several issues such as program evaluation, characteristics, challenges, stakeholders, and context, with program evaluation and characteristics. this study shows that most manuscripts that conducted edp evaluations are based on the program's impact on the participants' competency, their businesses, or their career. while a few that the review of the process of edp as the success criterion of edp implementation. this study helps to identify edp evaluation criteria based on their impact and process so it can produce a more comprehensive evaluation to improve edp implementation. from a practical perspective, this study shows the policymaker the benefits of edp evaluation. other edp studies may also be inspired to conduct edp evaluation to make the program more effective and efficient. in summary, to accomplish the goal effectively and efficiently, there should be an evaluation of the goal’s achievement and the antecedents. the limitation of this study is the use of the scopus database by excluding some papers in which involves subjectivity in grouping the articles and choosing the keywords. future research could include web of science bibliographies, books, book chapters, and conference papers as sources. future studies could also be an investigation on the evolution of the edp implementation and evaluation during 1947-1989. it would also be compelling to discuss the conduct of the evaluation of edp within asia, australia, and africa contexts. furthermore, future studies should also consider the need to explore, reflect, and ask questions more critically, not on the side of being taken for granted. for instance, by asking again, how could a program improvement be accomplished with a thorough evaluation? considering the available resources are very limited, how do we do the evaluation? is there any other benefit besides study, insight, and talent? are there any differences between trainers with a practical background to the academician one? do innovative ideas lead to wealth creation? do the program significantly influence the business performance? references acs, z., åstebro, t., audretsch, d., & robinson, d. t. 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(2017). from i to we: collaboration in entrepreneurship education and learning? education and training, 59(3), 234–249. https://doi.org/10.1108/et-08-2015-0077 jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 137 the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study yeney widya prihatiningtias 1*, gracyella natalie putri karo karo2 1 department of accounting, faculty of economics and business, universitas brawijaya, malang, indonesia 2 department of accounting, faculty of economics and business, universitas brawijaya, malang, indonesia *corresponding author(s) email: yeney.wp@ub.ac.id abstract social media platforms have been an important source for the dissemination of information, especially during the covid-19 social restrictions (work from home) mandate. as a result, most companies now rely more on social media influencers to deliver their brand values. however, many of these influencers do not report and pay their income tax from their social media paid activities. this study is the first to understand the reasons behind their tendency behavior to comply and or incompliance income tax in indonesia during the covid-19 pandemic. a qualitative method with in-depth interviews, observation, and documentation was used as the method of study. a total of thirteen indonesian millennials influencers with a minimum number of 10,000 followers and taxable income from social media were involved in the study to share their views about their tax compliances behavior. our findings revealed that there are indices that affect tax incompliant behavior among millennial social media influencers such as the sufficiency of knowledge about tax, unclear tax imposition and categorization mechanism, the level of trust, nationalism, and administrative needs for works. these finding also implies that there is an urge to educate influencers about tax compliance by using more suitable content and media to maximize the potential tax revenue from this booming profession. keywords: covid-19; tax compliance; social media; influencers; millennial jel code: h21, h26, h30 doi: 10.31106/jema.v18i2.12789 article history: received 2021-08-14 reviewed 2021-09-12 revised 2021-09-30 accepted 2021-10-10 licensed: cc-by http://creativecommons.org/licenses/by/4.0/ the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 138 introduction the tax has an essential role as the largest source of state revenue and a tool for the government to drive national economic development. therefore, the effectiveness of tax payments by the taxpayers, usually specified as tax compliance, is an important contributor to government income. de neve et al. (2021) define tax compliance as the involvement of both the truthful reporting of taxable income and the timely payment of tax dues. however, there are still many taxpayers who do not understand their tax obligation and some of them intentionally violate tax rules (tarjo & kusumawati, 2006). in the meantime, the covid-19 pandemic has affected almost all sectors in life, including the tax sector. unfortunately, taxpayer compliance has always been a problem that until now has not been resolved, especially in the emergence of a new profession called social media influencer (suciu, 2020; uly, 2020). compliance and incompliance are defined as behavior influenced by several aspects such as material, emotional, and normative (etienne, 2011). the government around the world has tried to minimize the gap between the expected amount of tax received and the real tax income by understanding the drivers of tax compliance and the most effective way to minimize the cost of doing so (de neve et al., 2021). this has been a challenging effort, especially during the covid-19 pandemic. based on the government revenue and expenses budget, income from the tax sector has experienced a significant decline of -9.2% in 2020 compared to previous years which always increased. this may be due to the hardships faced by industries during the pandemic for the last two years so that their ability to pay tax has also decreased. on the other hand, the technology sector has experienced a positive impact especially for the use of social media which has doubled compared to the previous year (kemp, 2021). social media platforms have been an important source for the dissemination of information, especially during the covid-19 social restrictions (work from home) mandate. as a result, most companies now rely more on social media influencers to deliver their brand values. according to taylor (2020), 13–18-year-olds are 70% to 54% more likely than a year ago to follow a celebrity online (bloggers, vloggers, instagram, youtube, and other social media). furthermore, 58 percent of gen z and 48 percent of millenials say they've purchased something based on a celebrity's recommendation. therefore, due to the potential contribution to enhancing the national economy, the risen of the social media influencer profession is taken seriously as the new potential taxpayer. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 139 although, the topic of tax compliance determinants is not relatively new for the taxation study (batrancea et al., 2019; hofmann et al., 2017; hunt & iyer, 2018), there are a few studies that explored the emerging jobs like social media influencers in the taxation study comprehensively. anggadha & rosdiana (2020) and roria & sari (2021), which analyzed the imposition of tax and optimizing tax solutions for endorsement activities by social media influencers in indonesia, found that the treatment of income tax on endorsement activities of social media influencers can be carried out with several collection techniques following the conditions in which each endorsement activity is grouped as a tax object and payable vat (value-added tax) so that the local government can increases their national incomes to fill social welfare (falya & dirkareshza, 2021). in addition, a detailed study was held by radvan (2021) who argues that rather than create narration about how to increase the compliance of the influencers, the tax authorities should learn the finest way to impose a tax on influencers by focusing on the content of the relationship generating influencers' income so that the government may finally able to calculate the best amount of tax should be paid. groulx & mcgregor (2018) and sekeroglu & bilgin (2019) also do the same thing in seeing a design to integrate social media data into the tax analytics process to detect tax evasion by influencers and promote tax enforcement activities, and to provide tax regulations in such a way to fit the government needs with the ability of influencers to pay tax. thus, this current study tries to mix what previous researchers have done on the topic of influencers and tax by exploring other factors which may originate from the internal perspectives of influencers to comply in paying tax, as well as to see the perspectives of the government of indonesia in terms of the efforts have done so far in imposing a tax to influencers. this may balance the point of view of the compliance itself since the focus is not only on the side of the taxpayers or the influencers but also from the tax authority who has the responsibility to socialize the tax regulation as well as to ensure the best way to impose it to the taxpayers. this study is also held during the covid-19 pandemic when the number of influencers has risen significantly, so that the results may indicate whether the government revenue from income tax from the influencers has also increased. a case study method was applied to gather data from indonesian social media influencers, dominantly instagram, regarding their compliant decisions. online interviews were also conducted with a tax officer to validate the information had been collected from the informants. the paper continues with a literature review, method, results, and discussion as well as conclusion and suggestions for future research. the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 140 literature review tax regulations in indonesia tax is the largest contributor to state revenue to improve welfare and national development, as stated in article 1 uu kup (andreas & savitri, 2015). therefore, taxpayer compliance in paying tax is very important. tax revenue is very influential for a country's development which is why tax compliance must have strived. efforts to increase tax compliance can be carried out by extensification and intensification of tax by the addition of tax subjects and objects through various socializations (nugroho et al., 2016). the obligation to pay tax by the citizens is a tangible manifestation of obedience to the law. there are many types of tax, one of which is income tax. income tax is a tax imposed on a tax subject who receives or earns income during a tax year or income in part of a taxable year if the tax obligations objectively begin or end in the tax year. the subject of income tax according to law no 36 of 2008 is divided into two, namely, first, the subject of domestic income tax. it is the income of a domestic individual who is an indonesian citizen or foreigner who works and earns income and is domiciled (permanently) in indonesia for more than 183 days within 12 months, or who in one tax year is in indonesia and has the intention to stay in indonesia; except for a taxpayer who receives income below the non-taxable income of idr 54,000,000 annually is not required to pay income tax. second, foreign income tax subject, who is a foreign individual income tax subject that is not domiciled and stays less than 183 days in indonesia within 12 months. regarding, the recent trends of social media technologies, the minister of finance of the republic of indonesia, sri mulyani, clearly stated that social media influencers (from various social media platforms) are obligated to pay tax routinely. as it is regulated on law number 210/pmk.010/2018 which refers to the tax treatment of transactions made through social media platforms that are also applied to social media influencers (nurhaliza, 2020). an influencer is categorized as an art worker and obligated to report and pay income tax as regulated in law 36 of 2008. tax compliance compliance and incompliance are complex forms of behavior that are caused by various factors which are the combination of material, emotional, and normative goals (etienne, 2011). some experts argue that compliance behavior is grouped into “planned” behavior and “automatic” behavior. automatic behavior is defined as the product of habits and routines, while planned compliance and disobedience are carried out intentionally for various purposes jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 141 and reasons (etienne, 2011). tax compliance in indonesia has been a classic issue that has not been fully addressed (mutia, 2014), which is defined as the ability and willingness of taxpayers to comply with tax laws determined by ethical, legal environment, and other situational factors at a certain time in a certain place. tax compliance can also be described as a voluntary action in reporting and paying tax, and the taxpayer does not have to wait for follow-up from the tax authorities (singh & bhupalan, 2001). tax knowledge is necessary for determining taxpayer compliance behavior and can be divided into two aspects, namely general and formal knowledge (palil, 2010). tax compliance is also defined as fulfilling all tax obligations and rights of taxpayers following tax laws and regulations and can be divided into two, namely formal tax compliance, which directs taxpayers to comply with tax laws and regulations, and material tax compliance, which is a condition where the taxpayer substantially complies with all material tax provisions. moreover, taing & chang (2021) use the theory of planned behavior (tpb) to understand the behavior of phnom penh's citizens in complying with their tax obligation and find that tax morale, tax fairness, and tax complexity have influenced the intention to pay tax. le & moore (2021) also use tpb to analyze the electronic tax compliance of small and medium enterprises (smes) in vietnam and find that the most influencing factor to increase tax compliance is taxpayer awareness. the vietnamese government should pay attention to promoting and supporting smes to raise their tax obligation awareness. owusu et al., (2021) also confirm a similar research result that taxpayers would not comply if the tax rate is assumed to be too high and the tax authority cannot be trusted. the study also finds that the perceived tax complexity, antecedent-based intervention strategies, attitude, subjective norms, and moral obligation are believed to increase tax compliance intention. besides, the use of advanced computer technology in the tax payment system is also argued to improve tax compliance among african business owners (mascagni et al., 2021). on the contrary, new technologies for implementing tax regulations and clear tax regulations are the lowest factor influencing iranian football players' tax compliance (memari et al., 2021). in the meantime, in the context of small and medium enterprises in indonesia, novikasari et al. (2021) show that the reduction of the final income tax tariff from 1% to 0.5% and the existence of legal certainty regarding the taxation time frame have a positive impact on tax compliance. indonesia applies a self-assessment system in tax reporting. the self-assessment system is where taxpayers calculate, deposit, and report taxes owned voluntarily. the tax officials only supervise through a series of monitoring and law enforcement actions. the the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 142 application of the self-assessment system to tax reporting carries a risk where taxpayer judgment relies on the temptation to rely on tougher law enforcement regimes (james & alley, 2002). according to the website of government tax officials, one of the keys to tax compliance is the ease of paying taxes. the facilities that have been implemented in indonesia include improving the electronic payment system, combining several types of taxes or even removing the irrelevant tax, and simplifying the taxpayer reporting process. such increased convenience is expected to raise public awareness in paying taxes. social media influencers and tax obligation social media has become one of the most important communication tools, which is an application built on an internet base that allows the creation and exchange of user-generated content (kaplan & haenlein, 2010). social media is also defined as a technology that allows users to communicate, create and share content through a virtual community or social networks such as instagram, youtube, and tiktok. the use of these social media applications has increased drastically since the covid-19 pandemic because people may enjoy entertainment as well as receive current news or information during the quarantine, lockdown, and limitation of outside activities (hussain, 2020; wiederhold, 2020). social media has changed the way of consumers interact with the brand. the trend of using social media to promote products is a significant shift in the marketing sector. many businesses used social media (influencers) to disseminate their promotional efforts (ardiansyah & sarwoko, 2020; enyioko & okwandu, 2019). social media influencers on instagram, youtube, and tiktok, also known as digital opinion leaders because they can mediate and influence communities in the digital environment, where messages can be disseminated quickly and easily with potential viral effects (uzunoğlu & misci kip, 2014). the connection between social media influencers and tax is based on the income that influencers receive through marketing services they provide on social media. every social media platform offers various types of features for its users. instagram has a variety of features, one of which is a promotion feature. this feature applies a conversion system for regular posts on instagram into a paid one where the instagram algorithm will provide higher outreach and engagement which works best for boosting the influencer's account or branding awareness and visibility. this feature is independently selected by account owners who wish to promote their account and get more people to follow into their account. the fee rate charged may vary depending on the type of engagement, location, duration, and the targeted outreach, which will then be taxed at 10%. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 143 in addition to the marketing scheme held on social media, there are other types of marketing activities carried out by individuals that have been identified or provided by instagram. the intended individual is an influencer on social media platforms. the types of transaction and marketing procedures carried out by influencers are also varying and quite complex. when social media audiences see influencers on platforms such as instagram, facebook, twitter and then the audience may check on the influencers' shows when expressing their preference toward a brand's product or service. later, the audience may check the brand and get interested. this is an example of influencer marketing. influencers provided a service by reviewing, liking, and commenting on particular products. influencers also have the potential to provide feedback to brand partners in form of exposure, potential customer, and brand awareness to their followers. this procedure will create income for influencers from the payment toward their marketing services (endorsement, paid promote and so on). the income generated by influencers varies and there is no standard and limit to the fee charged for influencers' service. the rates charged by influencers may vary, starting from idr 500,000 to millions of rupiah. the income earned by influencers results in the influencer’s obligation to pay tax as long as the income has exceeded the amount of non-taxable income. influencers are subject to income tax on transactions made for services provided by influencers on social media. instagram classifies user accounts into accounts for content creators and brands. meanwhile, personal accounts and business accounts are distinguished based on the insight features on their social media accounts. however, in a business account, there is still no liability from the content creator's account about taxation toward their commercial activities although they have been regulated to pay income tax. the reason is that it is still difficult to identify and count influencer commercial activities in detail as some of the information is confidential. unlike instagram influencers, youtubers generate income from the number of views on their videos or fee per mile after they monetize their account where google can advertise a contracted advertiser on youtuber's video. the income, called fee per miles, will be performed through google adsense. however, for instagram, there is still no rigid measurement to be imposed of tax as it is hard to distinguish between paid posts and updated posts that contain promotional elements. therefore, instagram influencers need to have their voluntary sense of reporting their true and honest income from social media activities as one of the indonesian citizen obligations. the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 144 methods this study employed a qualitative or inductive method which starts from a specific to a more general discussion. the use of the inductive method in this study makes it easier to analyze the relationship of each aspect under the qualitative method. qualitative research is used to explore and explain a phenomenon or problem completely and thoroughly with the orientation that the research result can have a positive impact on the world by empowering the experience of a group of individuals towards a phenomenon (creswell, 2007). this method produces non-numeric and descriptive data (sekaran & bougie, 2019). in addition, the use of the qualitative method also aims to gain a general understanding of the phenomena faced by the informants, which will later be drawn from general conclusions to specific conclusions. the method used in this study is a case study that focuses on gathering information and empirically investigating the object of contemporary events or phenomena in in-dept and specifically in real-life contexts (yin, 2012). the basis for the consideration of the researcher using the case study method is because the study aims to find out strategically selected cases in naturalistic settings that allow a researcher to directly and deeply study the issues (piekkari et al., 2009). table 1. interview protocol questions related to the informants’ tax compliance or incompliance do you know that influencers have to report and pay tax? do you report your income tax? what do you think about indonesia’s tax system for social media influencers? what are the reasons for your compliance or incompliance in reporting your income tax? questions related to the effect of the covid-19 pandemic on the informants occupation what are the differences between being an influencer before and after the covid-19 pandemic? does the covid-19 pandemic affect your compliance with reporting income tax? how is your social media account progressing before and after the covid-19 pandemic? have you experienced an increase in income since the covid-19 pandemic? what kind of products do you often promote before and after the covid-19 pandemic? primary data was collected directly from instagram influencers that meet certain criteria such as indonesian citizens domiciled in indonesia, active social media users, have a jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 145 minimum number of 10,000 followers on their personal instagram account or other social media platforms and received material returns such as freebies or money minimum idr 500,000 to each provision of services they provide in the form of advertisement/ promotions/ endorsement or paid promotion. unstructured interview technique was used to get the data from thirteen influencers from five different regions in indonesia. interviews were conducted through video conference and telephone. the interview protocol used during the data collection is as described in table 1. data analysis strategy was carried out through three streams of data processing activities simultaneously, namely data reduction, data display, and conclusion drawing and verification (miles & huberman, 1994). the data obtained from informants have to be credible and comprehensive. thus, triangulation was employed to obtain the validity of this study. triangulation has been proven and widely accepted to be an effective tool in achieving a level of validity or confidence and to improve the analysis and interpretation of findings in a study (beverland & lindgreen, 2010; yin, 2012). to do so, an interview with the tax officer was conducted to validate and synchronize the findings and reality of the result. result and discussion a total of thirteen informants have taken part in this study, namely vs, nk, tt, gk, nt, rk, ik, an, ja, sr, op, yt, and nc. their names are abbreviated for privacy. the informants comprised of ten females and three males with the age range of 18-25 years, from five different regions in indonesia. most of the influencers on this study have an account on more than one social media application other than instagram, such as tiktok, youtube, and twitter. the interviews were conducted with those who met the criteria as an influencer. the informants live in several cities in indonesia namely, medan, surabaya, jakarta, bandung, and jogjakarta. the interview process was carried out separately, one by one, virtually through zoom, google meet, and telephone. from the results of interviews conducted with informants, instagram is classified as the most social media platform usages for paid promotion and endorsement. paid promotion is an activity where influencers have to promote a product or service from a brand which influencers have to mention the brand on their social media account without receiving any product in their hand. the partnered brand also has to pay for these services based on the rate requested by an influencer. not so different with paid promotion, endorsement lies in the product being sent to an influencer to be reviewed or promoted based on their perspective. even so, each influencer has their own opinion and taste in choosing the types of goods to promote. the promotional activities are subject to varying the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 146 rates. each influencer has a different rate depending on their respective desires when promoting a product. based on the interview’s results, paid promotion rates ranged from idr 500,000 to millions. other commercial activities that influencer got paid for include sponsored posts and blogs, digital products, selling ad and editorial space, and webinars and podcast. reason for incompliance there are ten of thirteen informants were classified as tax incompliant. during the interview, informants gave various reasons behind their tax-incompliant behavior. most of them agree that the insufficient and lack of understanding about taxation is the main causes of their incompliances. “i didn’t know that this profession (influencers) would be taxed.” (ja) “i haven’t been an influencer that long, so i also just found that i supposed to pay tax.” (rk) “to be honest, i’ve never heard about income tax imposed on my profession, i thought it only applies for official workers since i consider this job (influencers) as a freelance.” (an) based on the interview result with yt on april 10th, 2021, through telephone, he stated that the difference in a generation become a reason for his incompliance behavior. “as a millennial generation, i have not heard about taxation charge to influencer until i discussed this with my fellows.” (yt) therefore, op suggests that to encourage tax compliances behavior and awareness of the young generation, the tax education should be narrated in a “millennial way” "…people nowadays, especially millennials like me, get info from tiktok, and i haven't seen any tax education on the platform." (op) based on the informants' statement, influencers tend to have insufficient knowledge and a lack of understanding of the tax imposition for the influencer profession. few informants mentioned their knowledge of legal aspects of the income tax system. it is because they have little or/and they do not consider it important. "i don't have any knowledge about the legality of tax and the tax itself whatsoever… i think it is not important to think about tax and the system.” (nk, tt, gk, nt, ik, and sr) jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 147 one of the aspects that consider as the root causes of the low level of tax compliance is the low awareness and knowledge about taxation. according to nugroho et al. (2016), taxpayer awareness of the tax function as state financing is needed to improve tax compliance. this profession is considered a new type of job and still needed an extension process due to the wide age range. thus, equitable distribution of tax information is needed to support influencers' understanding of the importance of paying income taxes in a more targeted manner. acknowledging this issue, the government should start to consider utilizing eminent online platforms or social media to distribute news, awareness, and education related to tax with millennials as the targeted audience (risdiana et al., 2020). the second is a low level of trust in the taxation system. following are statements conveyed by informants regarding their incompliance behavior toward the tax system. "…based on my income, i know that should've paid tax since my income exceeds, but i still don't trust the tax system. i haven't been chased and billed by a tax official, so for now, there's no reason to report either." (vs) “i still do not have the intention (to pay taxes). also, i am afraid authorities will charge a large amount of tax…” (yt) the low level of trust in the tax system implemented to influencer's tax law causes the premise that it is considered avoidable. however, this action is regulated in law and subject to sanctions. the level of trust is a subjective aspect and is considered an influential factor to taxpayer compliance (faizal et al., 2017). trust is defined as a positive expectation or hopes that others will not do through words, actions, and policies to act opportunistically. trust in this study is defined as how individuals perceive that indonesia's tax system can be trusted or not. based on the slippery slope model theory, social psychology variables, and deterrence affect the level of voluntary tax compliance (kirchler et al., 2008). if individuals trust legal policies, the taxpayer’s desire to comply will increase (batrancea et al., 2019). williams (2020) also mentions that the likelihood of participating in tax-incompliant is mostly associated with the level of vertical (government) and horizontal (others) trust. the lower the trust, the higher the incompliance level. on the other hand, if an individual's trust toward the system is low, the taxpayer will maximize utility and avoid tax resulting in low levels of compliance (faizal et al., 2017). therefore, it is necessary to have a good relationship between the parties involved. based on the data collection, there is a common threat that informants claimed to have low trust in the tax system because there is still no good relationship between tax authorities and taxpayers so the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 148 that it gives space for influencers to discourage their intention to report their income tax deliberately. considering that nowadays the largest tax contributors are millennials and generation x, tax officials or governments must build trust by showing a good attitude to taxpayers to maintain good relationships and perceptions (tjondro et al., 2019). the third is unclear tax imposition and categorizing mechanism. on april 1st, 2019, the indonesian minister of finance officially issued regulation number 210/pmk.010/2018 concerning tax treatment of trade transactions through the electronic system. influencers are categorized as service providers. a service provider is an individual, entity, or permanent establishment that resides, is domiciled, or has business activities in the customs area that conducts transactions with service recipients using the platform facilities provided by the marketplace platform provider. on the other hand, social media such as instagram is categorized as an electronic platform. an electronic platform is a space in the form of applications, websites, and/or other internet-based content services used for transactions and/or trading facilities through an electronic system or e-commerce (punardi, 2019). the informants in this study are famous people with different specializations and characteristics. although influencers are categorized as art workers, there is no clear procedure for imposing and collecting tax toward influencers' income from commercial activity on social media. similar to other professions, an influencer has multiple types of fields, although they provide similar services. informants in this study have various types of specialties and trademarks in promoting their service. informants with the initials of nt, nk, tt, ja, and ja are influencers in the beauty, fashion, and lifestyle products. others, with initials of vt, op, and yt focus on comedy or pranked content. the rest, with initials of sr, ik, and nc specialized in providing educational content about stock and financial matters. this diversity becomes one of the reasons for informants claiming there is no absolute categorization toward influencer's field, and it has caused the absence of compliance behavior on paying income tax, as included in the following statement. "i discussed with a fellow friend (influencers), and it turned out that some of them in the same field got the same job offer but got billed with a different amount of tax. thus, it makes me question how the tax system is imposed. moreover, i don't think the government has specified tax regulation for social media activity such as endorsement or paid promotion on social media either." (nc) jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 149 based on the statement above, there are differences in the imposition of tax toward tax subjects who pursue the same field as an influencer. this urges influencers' be incompliant because the tax mechanism produces different outcomes due to unclear categorizations of social media activity that will be charged. german experimental studies explain that tax avoidance is positively related to income earned (kemme et al., 2020; nguyen et al., 2020). the greater the amount of income earned by influencers, the less desire they are willing to report their tax because they are afraid, they will be taxed a large sum amount. indeed, no specific policy about influencer activities makes it difficult to determine the amount of tax on their income (pradana, 2020). according to the directorate general of taxes official website, income tax is charged to art workers in two categories, namely agent or artist management, which if the users endorse a subject (influencers) with using an agent or third parties' services, income tax article 23 will be imposed. the other one is independent art workers, which means subjects (influencers) make direct contact (without intermediaries) with their clients or users, who will be imposed income tax article 21. apart from the classification above, there is still no specific tax regulation devoted to influencers regarding their specific field and commercial activities. the work of influencers as content creators requires them to continue to innovate. therefore, a clear legal grounding for influencers in social media platforms is considered crucial, just like any other profession. unlike instagram influencers, youtuber income tax is measurable by calculating their income based on miles per ad-sense. at the same time, influencer on instagram does not have a definite unit of measurement yet. therefore, there is a need for regulations that compile the categorization of the types of influencers based on their particular services on social media to minimize the influencers' ignorance and excuse of not paying income tax as required as indonesian. reason for compliance despite all the incompliance reasons mentioned before, the study found that some influencers already reported and pay their income tax. aside from their obligation as an indonesia citizen, three out of thirteen informants who claimed fulfilled their obligations have explained their motives. first, they are having more understanding about tax so that they have more adequate technical knowledge about taxation in which leads to their awareness to pay tax. information about tax education nowadays is easy to gather. tax education and socialization is an advanced investment for future benefit to increase the awareness of potential taxpayers in paying taxes especially due to the possibility for a professional such as the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 150 the influencers (andreas & savitri, 2015). all conveniences to tax information can be obtained by visiting the nearest tax office and directly interacting or consulting both online and offline. consulting services are usually handled by tax oversight and consulting departments. moreover, one of them even shares their ‘heroic’ moments to do tax obligation into their social media account. publishing their tax fulfillment experience is one of the forms of awareness and supportive gestures to encourage their fellow influencers who may not or are reluctant of the importance of taxation. "…my income as an influencer is uncertain and volatile. however, i have learned that the amount of the earnings are positively correlated with the tax that will be charged, which means if my income decreases, so do my taxes bill. i did my research about taxation when i first got an email notification regarding my tax bill." (ik) the second is a high sense of nationalism. according to a statement by one of the informants who compliant with income tax, their compliance behavior with tax is influenced by their nationalism and sensitivity toward the national development, especially in an emerging country like indonesia. “we might not receive immediate feedback when paying taxes. however, as i paid my first bill, somehow, i felt like my duty as a citizen was complete, although the amount charged wasn’t small.” (tt) "…paying tax is our obligation as indonesian citizens. since high school, i've learned that by paying tax, we have already contributed to developing our country." (ik) tax education needs to be delivered from an early age, both in the social and educational institutions, intending to cultivate and build awareness of the importance of paying tax. developing a sense of nationalism will positively build awareness of taxpayers to actively participate in development carried out by the government for the public benefit (krisna, 2020). as an indonesian citizen, the obligation to pay tax is a form of compliance with the law. sensitivity and a high sense of nationalism formed from habits, a love for the nation, and responsibility as a good citizen can increase taxpayer compliance on reporting income tax. the third is administrative needs for work. another reason affecting influencers' compliance is their needs related to work requirements. owning a personal bank account is primary since the service provided is done virtually and usually paid electronically, especially for influencers who take this profession as their main job. thus, influencers have to carry some documents to be able to run their job smoothly as their job involved various parties to jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 151 work. the process of making a personal bank becomes one of the elements of influencer compliance toward tax obligation. one informant admitted that he/she complies due to the needs of administrative matters which required a taxpayer identification number (tin). "i was making a business bank account and required to own a taxpayer identification number (tin)"; "when i was first billed, i paid a large sum money, but now i learned and used professionals to arrange my taxes." (nk) “…it was when i made my taxpayer identification number (tin) for work purposes which later i got a notification email from the tax authorities.” (ik) the reasons given by the informant are unintentionally subjective and not caused by external factors, which then lead to tax. the needs of administrative documents such as taxpayer identification number (tin) can be an effective tool, especially for tax authorities to identify potential taxpayers (influencers). when an individual already has a tin, it means that a tax report must be made every year, which consists of the amount of income earned during the year and the calculation of tax that should be paid. this method, which is utilize tin as a requirement to process administrative matters, has proven effective in influencing taxpayers' thoughts, which later directly affect their compliance. informants also admitted that they hire professionals or consultants to help them in managing their tax payments. the effect of covid-19 pandemic five out of thirteen informants declared that they are relatively new to the business and had just started the profession only when the covid -19 occurs. those informants began to receive exposure during the pandemic and gained a significant increase of followers on their accounts. the informants begin to accept job offers to review and promote products on their social media account as they reach a certain number of followers, which is considered as prominent to be called an "influencer." out of those five informants, others have said that they had been carried this profession long before the covid-19 pandemic. however, the pandemic increases their account traffic and received more job offers as some brands started to use social media platforms to sell their products due to the effect of large-scale social restrictions or lockdown which made business owners depend on online selling. the informants mentioned that: “i often did endorsement and paid promotion, but i received more offers and have packed promotion stories during the pandemic. i also discovered a new brand that launched and opened because of the covid-19.” (nk) the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 152 “…started this (instagram) account on 2019, but wasn’t that intense and gained double followers to as much as 20.000 new followers during the pandemic.” (ja) "…my post went viral in 2020, which when pandemic first started and i started to gain more followers and receive an endorsement." (gk) according to the informants’ statements above, the covid-19 pandemic has a positive effect on social media users as well as social media influencers. in addition, the emerging of new influencers is driven by offers from brands produced during the pandemic. vs and an have confirmed this matter since they promote several brands of medical face masks. “i promote many brands of face masks during the pandemic.” (vs and an) while sr, yt, and op were very happy to promote some brands and types of hand sanitizers that they never knew before. “this is the first time for me to promote hand sanitizers.” (op) “this pandemic situation is a blessed for me because many health products need promotion, including hand sanitizers.” (sr) “i hope stays longer so that i can promote sterilizers and hand sanitizers. hahaha… no… just kidding…“ (yt) through this time, most of the activities are carried out at home using online platforms. therefore, business owners considered this period is effective to sell products by utilizing social media. most of the informants experience a massive increase due to several reasons. firstly, most of the advertisements are dominated by influencers instead of traditional advertisements. second, the increase in e-commerce users by 154% shows that consumers rely on social media when searching for products. it emerges the influencers demand to depend on influencer reviews and impressions toward the products. third, there is an explosion of demand for useful content, especially educational content, self-care, homeworkout, and other activities at home. this situation is beneficial for influencers as a social link between brands and potential consumers who are vital amid social restrictions. tax officer feedbacks income tax is a tax withheld on income in the form of salaries, wages, honorariums, allowances, and other forms of payments related to work, services, or activities carried out by individual domestic taxpayers. according to law no 36 of 2008 mentioned previously, influencers who carried out commercial activities on social media can be identified as tax subjects and are required to pay income tax if their income exceeds idr 54,000,000 annually. jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 153 to support the data comprehensiveness, a tax official in the indonesian directorate general of taxes is involved in this study. the interview was conducted to have a comparison between influencers' responses and tax authorities with regards to the influencer's compliance and incompliant behavior in paying income tax. tax authorities' statements are also used to support the validity of the data to present research results on this study (patton, 1999). several similarities are found between the results of interviews with tax officers and influencers. according to him, the number of tax subjects (influencers) who comply in reporting their tax obligation is still few compared to those who do not comply. he explained that the number of influencers that reported their tax was only a few. however, although the number of influencers who comply is relatively small, the contribution is quite significant. the nominal distribution for commercial activities obtained as influencers is relatively large. in addition, the number of taxpayers who do not report their taxes is considerably large compared to the list owned by the directorate general of taxes (dgt). those taxpayers' data are obtained from a system called the dgt information system. this application contains a taxpayer dataset that is used to facilitate tax officers to find prospective taxpayers by integrating various communication systems, which will later be distributed to each tax office across indonesia. currently, dgt is also developing this system to be able to analyze potential social media subjects such as influencers, so that tax officers can observe taxpayers in detail. the efforts that have been done by dgt here are in line with the explanation by anggadha & rosdiana (2020). he added that regarding the number of obedient tax subjects that is considerably small, influencer's compliance behavior may be influenced by several factors as mentioned by the tax officer below: “…they have received tax education from schools, teachers, parents, managers, friends, and others.” “…some of them need taxpayer identification number (tin) for administrative purposes for their work, especially financial matters such as opening bank accounts, deposits, securities, and others.” “…some taxpayers end up reporting their tax because they are often approached by tax officers.” therefore, it can be concluded that there are several reasons behind influencers' compliance with tax reporting. one of them is sufficient knowledge about tax education, which is an obligation as a citizen, and their sensitivity to the importance of paying taxes from income the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 154 they earn from social media activities. besides that, external factors such as urgencies of administrative documents such as taxpayer identification number (tin) to support their job also become crucial aspects of influencer's compliance behavior. moreover, intense pressure and visits by tax officials to carry evidence toward taxpayer obligations become one of the most common processes to reach taxpayers although the procedure is considered ineffective. in addition to the reason for influencers' compliance behavior, the informants also mentioned several statements regarding influencers' incompliance to report income tax such as lack of sensitivity and ignorance about the profession as influencers. as stated by the tax officer, awareness and a direct approach to influencers are necessary to be carried out. tax officers explain that they are using an approach method to reach out to taxpayers. the method is called the triggering method. a triggering method is an approach in which the tax officer asks for direct interaction to obtain tax payer's recognition of the assets/wealth or income obtained, which will then be compared with the dataset. other than taxpayer insensitivity toward taxes, social psychology such as trust level on both the tax system and tax authorities influenced taxpayer incompliant behavior. as mentioned previously, tax officer has applied the triggering method to attract more obedient taxpayers. some of the taxpayers refuse to acknowledge their wealth from the data-informed by taxpayers (kemme et al., 2020). the reason is that the distrust of tax authorities causes the taxpayer to tend to cover up income and become reluctant to pay tax. discussions after conducting interviews with thirteen informants, several reasons for compliance and incompliant behavior of influencers in reporting and paying income tax during the covid19 pandemic are found. the following are the reasons concluded based on the statements mentioned by ten out of thirteen non-compliant influencers regarding paying income tax. first is insufficient knowledge about tax (hajawiyah et al., 2021). five out of ten informants explained that the lack of knowledge and understanding about taxation causes an incompliance behavior in paying tax. according to law no 17 of 2003, tax revenue is one of the sources of state income, which must be able to meet the needs of government administration. one of the indicators to measure tax revenue is called the tax ratio. the tax ratio relies on three conditions, namely economic situation, tax policies, and administrative capacity. the tax ratio shows the government’s ability to collect tax revenue. the higher the tax revenue of the country, the greater the tax ratio will be. indonesia’s tax ratio is at 10.3% and continues to jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 155 decline sharply in 2020 due to the covid-19 pandemic. the position of indonesia’s tax ratio is below the standard as a developing country. taxpayer compliance in paying taxes for state income is positively related to the tax ratio, which shows that taxpayer compliance is still relatively low. one of the reasons is due to inadequate technical knowledge which eventually forced taxpayers to seek the help of professionals. lack of technical knowledge among influencers causes unintentional incompliant behavior. insufficient knowledge and absence of awareness of taxation to influencers also become obstacles to the implementation of the self-assessment system in indonesia. insufficient knowledge of taxation causes the taxpayer to be reluctant to contribute to paying taxes (wardani & wati, 2018). therefore, it is necessary to provide tax education for influencers on social media, especially during the pandemic, which may be conducted with the assistance of technology. authorities may also use social media as a platform to educate the public and reach potential taxpayers to increase their knowledge about taxation. taxation approaches and education need to be directed, especially for the millennial generation, whose presence and influence have increased significantly during the covid-19 pandemic (sari, 2019). second is the low trust level in the tax system. taxpayers' trust affects tax compliance which is applied in a self-assessment system (voluntary). the sense of trust rests on a good relationship between taxpayers and tax authorities (faizal et al., 2017). the level of compliance will be at its maximum level when the power and trust of the tax authorities are high. thus, the low level of awareness of influencers is caused by low trust in the system and relationship with tax authorities. therefore, building a good relationship among taxpayers and tax authorities is a great foundation to produce awareness to be compliant and lower the possibility of taxpayers' tendency not to comply with their obligation to pay income tax. building influencers' trust in the tax system is also necessary to create an honest and cooperative behavior, especially for an influencer to follow income tax charged from their earnings received through commercial activities on social media account. the third is unclear tax imposition and mechanism in categorizing activities. the mechanism is crucial in regulating the process of implementing a policy. the lack of clarity on an enforcement system will result in unwanted actions (novikasari et al., 2021). indonesia still has not specifically classified the types of influencer activities on tax regulations. the profession as an influencer has currently categorized as an art worker instead. other than that, diversification is needed since the social media industry by influencers is a massive business. the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 156 likewise, the unclear mechanism imposed on the activity of influencers has resulted in incompliance tax behavior. thus, specific and targeted categorization is needed to make it easier for taxpayers to understand their obligation to pay income tax. in the united kingdom, the government has set a detailed tax regulation describing the imposition of tax charges for influencers which are based on the type of activity carried out on social media. therefore, it is necessary to create a legal procedure that contains special regulations regarding the category of imposition on influencer income. among the thirteen informants, only three complied in paying income tax. their compliance is based on several reasons as follows. first is sufficient knowledge about tax. public awareness is strongly supported by the education they get from information conveyed in their society, tax authorities, or obtained directly by the taxpayer through personal research (palil, 2010). if every taxpayer has high awareness and compliance, then the tax revenue will be optimal, and its effect on state revenue will also be greater. furthermore, according to alshira’h et al. (2021), tax knowledge has a moderating role in the association between socioeconomic factors and tax compliance. the second is a high sense of nationalism. a high sense of nationalism and concern for the nations positively affect individual taxpayer compliance behavior (krisna, 2020). alshira’h et al. (2021) also believe that patriotism and public governance increase and improve tax compliance. the sense of nationalism is fostered from an early age both in the environment and educational institution in building taxpayer awareness in paying tax. it means that a sense of nationalism is one of the motivations for influencer tax compliance. the third is a need for the administrative requirement for works matter. the emergence of requirements related to tax for works has become one of the most common reasons for taxpayer unintentional compliance behavior. the imposition of the obligation for every indonesian citizen to have a taxpayer identification number (tin) through several educational and financial institutions can affect influencers' intention to comply and report their income tax. in addition, as influencers perform a commercial business on social media, having a tin is mandatory as their job is done online and electronically (jamain, 2021). according to article 2 of law no. 28 of 2000, it is explained that an individual is required to have a tin when subjective and objective requirements have been met. an influencer is identified as an individual taxpayer who must register for a tin a month after their income exceeds the non-taxable income. to increase influencers' tax compliance, it is necessary to hold updates obtained from influencers themselves regarding their perspective toward tax regulation. in addition, a specific regulation or tax design or system, as well as fair sanction, should be made, jema: jurnal ilmiah bidang akuntansi dan manajemen, 18(2) 2021,137-163 http://dx.doi.org/10.31106/jema.v18i2.12789, issn (online) 2597-4017 157 especially for influencers' commercial activity that will be taxed (groulx & mcgregor, 2018; t. t. d. nguyen et al., 2020; radvan, 2021; sekeroglu & bilgin, 2019). through this process, it is expected that influencers may understand more and grow their sensitivity to the importance of paying tax from income received through social media platforms to increase the stability of the profession they pursue. conclusion and suggestion there are several reasons behind influencers' tax incompliance behaviors which are insufficient understanding about income tax, low trust level in the tax system, and unclear tax imposition and categorization mechanisms. contrary, this study also finds out some reasons regarding influencer's tax compliance which are sufficient knowledge about tax, a high level of nationalism, and the emergence needs related to tax, such as for administrative requirements for work. in addition, regarding the rising number of influencers during the covid-19 pandemic, the indonesian tax general directorate has prepared strategies to identify new influencers who are eligible as taxpayer candidates. on the other hand, the growth of many influencers during the pandemic has also increased the public's sensitivity toward the use of social media and technology as income-earning platforms. the number of influencers is predicted to increase in the future, and it is expected that they can contribute to more government revenue from the tax. the government has also increased the intensity of their official instagram account to spread awareness also to educate targeted profession, especially influencers and their audience. in terms of increasing the number of taxpayers, this study can be used as a tool to analyze what reasons behind their behavior. this study was conducted carefully by applying scientific procedures. however, there are still several limitations in the data collection process, such as the struggle to find informants from influencers. out of a hundred emails sent to prominent influencers, only thirteen influencers were willing to be informants due to their privacy concerns. besides, influencers who become informants for this study also do other jobs, resulting in broad answers to their tax compliance behavior due to their diverse source of income. moreover, due to the limited time duration provided by the influencers for the interview, then there is a possibility not to gather data as in-depth as expected. further studies should conduct more number of informants with wider category influencers and a more comprehensive approach by using a quantitative method. an influencer who is famous in one particular category such as beauty, lifestyle, trading, and so on, may earn different amounts of income. the income tax compliance of social media influencers during covid-19 pandemic: an exploratory study by yeney widya prihatiningtias, gracyella natalie putri karo karo 158 references alshira’h, a. f., al-shatnawi, h. m., al-okaily, m., lutfi, a., & alshirah, m. h. 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(2012). applications of case study research (vol. 3). sage publisher, inc. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 54 designing online marketplace to resolve marketing problem for small and medium enterprises (smes) aditya hermawan *) aniek murniati **) abstract the study aims to design an online marketplace to provide solutions that faced by small and medium enterprises (smes). one of the problems that faced by smes is the difficulty to market their products online. one of the solutions that we provide is by designing an online marketplace to solve their marketing problems effectively. we found that smes have attempted to market their products through social media such as facebook, twitter and others. in addition, some smes also have a website and advertise their products through online advertising. however, many of those who did not know how to market products online in order to increase sales. we designed an online marketplace for smes based on the concept of e-commerce to resolve the problems faced by smes, the effective marketing. the online market design is made taking into account the needs of smes as well as customer needs. therefore, this study was conducted to smes in malang, east java, indonesia and the people who often make purchases online.with the existence of the online market, smes can increase sales lead to increased profits for smes. keywords: online market, e-commerce, marketing 1. introduction 1.1 research background small and medium enterprises (smes) face a variety of problems in running the business. one of the problems faced by smes is difficult to market their products. most smes have the skills to create a product or service and rely solely on conventional marketing and simply reach customers in the area around smes only, then the impact on the sales turnover was not boosted and accompanied with increasing production costs. the demands of customers who want easy access to information about the products they want from the seller. limitations customers to access product information from vendors create resistance to the seller (ram and jagdish, 1989). studies research center of integrated enterprise services cooperative, micro, small and medium enterprises (msme plut) surakarta period january march 2016, showed that 38% of smes in the city of solo constrained marketing (http://www.etalasebisnis.com/berita/ukm/2045/pemasaran-masih-menjadi-masalah-terbesar-bagi-umkmsurakarta.html). for small-scale businesses such as smes would have a different marketing strategies to large corporations. smes usually have a limited marketing budget, so that the necessary creativity to find an effective way to market a product with low marketing costs (http://www.beonesolution.com/blog/strategi-bisnis-ukm-pemasaran-yang-efektif-to-smes-small-medium-business/). with a limited budget for marketing their products widely, it can have an impact on customer difficulties in obtaining information about the products marketed smes. isaac (2005) explains that the lack of access to information, especially the information about the market, making obstacles for smes in marketing their products. with limited access to such information, resulting in low impact on the market orientation and competitiveness at the global level. until ultimately resulted smes can not steer clear of their business development and lead to not focus the development of smes. thus, the weakness of smes in marketing their products is access to information on products marketed broadly hard earned customers where marketing of sme products on average are still marketed only the area around, but the quality of the product has been able to reach out to other countries to export. with only marketed in the surrounding area, smes tend to only control the market is relatively narrow so jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 55 that customers who are outside the area around the smes difficulties or even no information on the sme products. to overcome these problems, information technology is needed in order to market its products widely so that customers can obtain information on the marketed product. developments in information technology today provides an opportunity for smes to provide their product information to the public. along with the development of information technology, not least smes who do marketing its products by using information technology. various attempts were made to market their products by utilizing information technology, such as through social media or have their own websites that are specific to their own products and are usually in the form of an online store. there is also market their products through online selling sites. in other words, smes have tried as much as possible to market their products by utilizing information technology. the use of information technology by smes to market their products online provide ideas for designing an online market. some sites are used as a reference in designing the online market include the www.tokopedia.com, www.olx.com, and www.indonetwork.com. the fifth site was selected as a reference in designing the online market because it is the site that implements the concept of customer to customer, which provides an opportunity for sellers to market their products online to customers. therefore, the online market will be designed to apply the concept of customer to customer making it easier for smes to market their products online making it easier for customers to access information about the products they want. 1.2 research problem based on the above points of thought, the authors are interested to know which is the best online marketplace system that can help to overtake small and medium enterprises (smes) their market problem? 1.3 research purpose this research aims to design the best online marketplace system to provide solutions that faced by small and medium enterprises (smes). 2. theoretical framework 2.1 theoretical framework 2.1.1 small and medium enterprises (smes) based on presidential decree no. 99 in 1998, the definition of small business is: "economic activity people are small-scale business sector in the majority of the business activities of small and need to be protected to prevent it from competition is not healthy." according hallberg (2008: 1), smes are a group heterogeneous which has a variety of sophistication and skill, and operates in a market and a social environment that is very different. some sme is a business that is dynamic, innovative and growthoriented. but other traditional businesses that are quite satisfied with the existing conditions. law no. 9 of 1995 provides criteria for smes as follows: 1. the net worth of rp. 200.000.000, (two hundred million rupiah) not including land and buildings. 2. have an annual sales turnover of rp. 1.000.000.000, (one billion rupiah). 3. owned by indonesian citizens. 4. stand-alone, not subsidiaries or branches of companies that are not owned, controlled or affiliated directly or indirectly with medium business or large business. 5. shaped individual business, a business entity that is not a legal entity, or entities with legal status, including cooperatives. based on such understanding, it is clear that smes are companies that have limitations in terms of venture capital, so the impact on marketing operations. venture capital constraints forcing smes to market their products effectively, where customers can obtain accurate information regarding the products marketed by smes. marketing of products made by the smes during limited only to the area around the smes are located, so that it is less extensive marketing coverage. less wide scope of marketing these jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 56 products make customers who are outside the area around smes difficulty or even not be able to obtain information about the products offered smes. 2.1.2 marketing kotler (2000: 11) explains that marketing is a social and managerial process in which individuals and groups obtain their needs and desires by creating, offering and exchanging something of value to one another. this definition is based on the core concept of the needs, desires, and demands, product value, value and satisfaction, exchange, transactions and relationships, markets and marketing and marketers. based on this definition, if a customer trouble or even not able to obtain the information they need about the products they want, then the marketing is done by the smes would be ineffective. therefore, the online market will have to be designed to meet the needs of customers and smes as the seller. customers need accurate information about the products offered, the information concerning the procedure of online transactions, information on smes as parties that offer products, information on transactions executed, and others. similarly, smes also need information about the customer, information regarding the payments made by customers, and others. 2.1.3 online marketplace baum (purbo, 2001) explains that e-commerce is a dynamic set of technologies, applications, and business processes that connect corporate, consumer, and certain communities through electronic transactions and trade in goods, services, and information that will be conducted electronically. according fuady (2005), e-commerce is a business process by using electronic technology that links between businesses, consumers and the public in the form of electronic transactions and exchange / sale of goods, services, and information electronically. it can be concluded that the e-commerce¬ the business processes that use information technology in the distribution of goods and electronics layanansecara from the seller to the buyer. thus, the online marketplace that would be designed to connect smes with the customer so that it can accommodate the needs of customers to smes. therefore, an online marketplace that would be designed will apply the concept of business to customer (b2c). business to customer (b2c). is a form of buy-sell products involving vending companies and end consumers are made electronically. therefore, the online market provides facilities for smes to market their products to the general public or to other smes. 3. research method the biggest problem that faced by many smes is to extent their market scope toward online landscape. therefore, it takes an online marketplace that allows smes to market their products online and customers can access information about the products offered by smes. the online market can be designed using a qualitative approach, in which the targets of a qualitative research study was pla-pattern of behavior based on human behavior (suparlan, 1994: 3-5), in this case the smes and customers. poerwandari (1998: 17) explains that qualitative research is done for to explore the understanding toward phenomenon. understanding in this case is the online marketplace designed based on the behavior of smes in finding an effective online market to increase sales as well as the behavior of customers who want to easily access information about the products they need from the seller. qualitative research can declared as the construction of social reality, because the qualitative research views that knowledge not only experience on facts, but also the result of the construction of the ratio of the subject under study. the introduction of social reality on the subject and not on the object, this means the science results as well experiences constructed by the ratio. therefore, the online market must be built based on the behavior of smes and customers, the online market that are designed to meet the needs of both parties. designed online market is the result of learning on the behavior of smes and customers. this is a phenomenon on the essentials of life in society, which overall are bound together and interact with each other. therefore phenomenology is the proper perspective in designing an online marketplace that required by smes. this is because phenomenology is a principle study with the primary objective jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 57 studying the essentials of life as well as the inter-relation matters thoroughly and carefully. phenomenology as a perspective of this research will be based on the behavior of smes and customers to design the online market. smes and customer behavior can be described by the needs of smes to market online so that they can market its products widely and customer demand for accurate information about the products they want. smes and customer behavior is a phenomenon which makes the method of user centered design (ucd) as an appropriate method in designing the online market. this is because ucd puts the user as the center of the system development process, and the purpose / nature, context and environment systems that are all based on the user experience (kadir, 2008). in addition, ucd describes the functional requirements of the application that is designed, in this case the online market. functional requirements of applications designed can be illustrated by making an explicit statement of user needs and the organization, the needs of smes to the online market so that they can market its products widely and customer demand for accurate information about the products they want. ucd itself is a new paradigm in the development of web-based system using participation and user experience in the design process. what is meant by the user is the person who will use or operate the system. in this case, the online market is smes and customers. 4. research result and analysis in designing an online marketplace that required by smes, the first step is to analyze the needs of the system. the purpose of the analysis is to understand the needs of the system in good faith requirements of the new system and develop a system to accommodate those needs. at this stage, the analytical study of the existing problems, including the type of system that has existed along with the problems that arise, needs of users of the new system, as well as functional requirements and application needs that accommodates the needs of users. users are referred to in this case are smes and customers. therefore, the new system will be designed to be able to accommodate the needs of smes and customers, so as to provide solutions to the problems faced by smes, namely marketing. in the next stage of the analysis conducted on the feasibility of the system. designed online market will have to have eligibility so that it can be used by users. analysis of the feasibility of the system is done in four ways, namely: 1. eligibility technology: feasibility of technology related to the availability of technology system builder market. in terms of technology, the proposed online market deserve to be applied by smes so as to provide adequate information on the products offered to customers. this is because the use of information technology by smes and customers have done so far, so the design of the online market by leveraging existing information technology can be to be applied. 2. legal feasibility: feasibility of law in terms of the intended use of the system, the legality of the materials for the system as well as in terms of the information generated. from the goal of making the system is fully carried out for commercial legal activities. in making the online market used software is open source, so that the legality of legally feasible to design the online market dibutuhkna by smes. 3. operational feasibility: designed online market can be said to be feasible operationally because there have been several similar systems and the use of information technology that has been carried out by smes and the customer. some e-commerce sites that use b2c concepts like www.indonetwork.com, www.tokopedia.com, and www.olx.com showed that the use of information technology by several businesses, including smes, have been carried out to the fullest in order to market their products. 4. economic feasibility: in this economic feasibility, aspect to consider is the amount of funds that is strictly necessary to develop the system and the benefits derived by the system. the system is said to be economical if the benefits are obtained greater than the costs incurred. by utilizing the internet, allows the manager to perform maintenance which resulted in cost efficient. the online market that are designed utilizing the internet that facilitate the delivery of information and jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 58 communication between smes and customers. therefore, utilizing the internet, then the cost will be more efficient as well as the time spent on running an online business is also relatively lebioh efficient. the next stage is the analysis of the same system that has been running. based on observations, some sites such as www.indonetwork.com, www.olx.co.id, www.tokopedia.com, had been run using b2c concept. b2c concept allows smes can offer its products widely to customers. some of the above site provides information on the vendor to the customer so as to give an opportunity to the customers to communicate directly with the seller. based on observations obtained the following results: 1. www.olx.co.id, www.tokopedia.com, and has implemented www.indonetwork.com user interface (ui) that is excellent in providing ease of access to users. can be seen on the site by using images and buttons are easy to understand. 2. to increase the productivity of users accessing the ui, www.olx.co.id, www.tokopedia.com, and www.indonetwork.com provides a search facility to allow users to search for and find the information they need. users also do not need to bother to enter a keyword in this search facility. because when users just by typing a few letters and have not completed fully keyword, the facility is capable of displaying the keyword in question automatically as shown above. it also provides related opsikeyword. so in search of information can be more quickly and efficiently. 3. to minimize the errors in data entry, the system makes the terms and conditions should be read first by first-time users to use online trading services on www.olx.co.id, www.tokopedia.com, and www.indonetwork .com. it is understood that www.olx.co.id, www.tokopedia.com, and www.indonetwork.com really concerned about the procedures used. 4. www.olx.co.id, www.tokopedia.com, and www.indonetwork.com provide feedback to the user in private, so that confidential information is asked by the user can only be seen by the www.olx.co.id, www.tokopedia.com, and www.indonetwork.com only. due to maintain the confidentiality of the information right from both the user and the system. 5. the initial view web www.olx.co.id, www.tokopedia.com, and www.indonetwork.com which looks simple yet attractive with white background and symbols with a striking color as the core point of this web. thus making the visitor's eyes directed straight to the point which is highlighted in this web. then the second is about the layout of the icons and menu, which has a design web menu entirely shown so the user can know what the menu is brand wanted in the first gaze opened the first page, without having to open-open sub-menu. another thing to note their presence hypertext pictorial and written on this website. where it is easier for users to obtain information that is related to what users are looking for. 6. the term is often used in the buying and selling of products or services, the system www.olx.co.id, www.tokopedia.com, and www.indonetwork.com using language and images that is easily understood in just one glance. so users will immediately understand what the purpose of the text or images. based on the above observations, it can be made online market overview as follows: 1. the online market is an e-commerce site that implements the concept of b2c, which provides an opportunity for smes to expand the scope of its product marketing. this is because smes are given access to carry out sale and purchase transactions with customers, providing solutions for marketing problems faced by smes. 2. smes have access to perform transactions with customers. for that smes can display information and business profile and its product offerings, communicate with customers, validating payments made by customers, and so forth. 3. customers have access to perform transactions with smes. customers can make payments to smes confirmation on goods purchased, communicate with smes on product information offered, and others associated with the activity of buying and selling online. 4. the online market administrators have access to manage sites online market and is responsible for the design, smooth operations, and can function as a mediator between smes and customers. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 59 based on the overview of the online market, as mentioned above, can be made online market framework as follows: picture 1 framework of online market the framework of the online market, then the design can be made on the online market as follows: 1. visitor’s page page visitors are the pages that were first opened by visitors. on the pages of this visitor, presented the following features, among others: a. home page on the homepage, the information presented on the 12 smes that have just signed up, 12 sme products, brief information on the online marketplace, and visitor statistics. b. the list of smes on this page, presented smes registered in the online marketplace as many as 20 smes per page. visitors can click the button detail on each column of smes so that leads directly to the specific page of the smes. customers can find out the profile of smes, the products are sold, a shopping cart, confirmation of payment, the contacts can be contacted, as well as other required. c. list of sme’s products on this page are presented information about products owned smes as many as 20 products per page. visitors can click the button detail that leads directly to the specific page of smes in the product detail page. on that page, customers can find out information about a product in the form of product images, product specifications, prices, discounts, quantity of goods available, as well as other required. to be able to order products, so visitors must be registered as a customer in the market online. d. related searches smes on this page, visitors can search by name and their sme sme temapt region is located. visitors can charge by writing the name of the smes in the search form and choose the location of these smes, and then click the search button. this will bring up a list of smes that match the search criteria. visitors can click the button detail that leads directly to the specific page of the smes. customers can find out the profile of smes, the products are sold, confirmation of payment, the contacts can be contacted, as well as other required. e. sme product search on this page, visitors can search for products of smes by product name and pricing of these products. visitors can write the name of sme products in the search form and choose the price of the product, and then click the search button. this will bring up a list of sme products that matches the search criteria. visitors can click the button detail that leads directly to the specific page of sme products. customers can find out information about a product in the form of product images, jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 60 product specifications, prices, discounts, quantity of goods available, as well as other required. to be able to order products, so visitors must be registered as a customer in the market online. f. registration of smes this page is only for smes that have not been registered in the market online to be able to join as a member at the online market. you do this by filling out a registration form that was provided and then clicking the button list. after that smes will directly log-in as a member of the online marketplace with access to as smes. g. the customer registration this page is only for visitors who want to become regulars in the market online. you do this by filling out a registration form that was provided and then clicking the button list. after that the visitors will be logged in as a member of the online marketplace with access as a customer. h. log-in for smes and customers this page is only intended for log-in member of the online marketplace. both smes and customers can log-in by entering their username and password each and if appropriate it will log-in to the respective pages as smes and customers. i. market online profile this page is intended to provide information about the online market. visitors can find the profile of the market online. in addition, visitors can contact the market administrator online form contact person messages and information that has been provided. 2. sme’s page this page is only for smes. to gain access to these smes, the visitor can log-in on the log-in and must be registered as smes in the market online. in these smes, presented the following features, among others: a. sme’s account this page presents information on smes account. smes can change username and password periodically or not. b. sme’s profile this page provides information about the profile of smes. smes can provide complete information about the business being operated. the information that can be presented by smes is a business name, business location, business establishment, tin, type of business, type of business, number of contacts that can be contacted, e-mail, website address if it has, as well as smes can include information about your bank account for transfer payment for ordering the products by the customer. c. product’s this page presents information on sme products. smes can provide complete information about the products offered. the information presented is the product name, product price, the physical specifications of the product, as well as product photos. smes can add, change or delete products that omission. d. sales order’s these pages provide information about ordering products made by customers. the information presented is the order code, the booking date, customer name, customer contact info, list of products ordered, the total amount to be paid by the customer, product delivery address. e. payment confirmation this page provides information about the confirmation of the payment made by the customer. once the customer ordered goods, the customer must make a payment to the account of smes that have been provided. after payment, the customer must confirm the tang payment has been done. the information presented is the date of confirmation of payment, booking code, customer name, the total amount to be paid, and the payment amount. to be able to know that payment was actually made, smes can check for mutations money to the account designated by the customer. if it has no mutation money coming in, then smes can provide validation of the payment made. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 61 f. shipping this page presents information delivery carried out by smes. delivery of goods is based ordering payment products that have been validated by smes. if ordering these products have not been declared invalid, it will not be entered on the list of goods delivery. smes can make deliveries of goods to the designated shipping address. if there is a failed delivery, smes can provide information on the page and you can inform the customer that the delivery failed. g. sales returns these pages provide information about the sale of goods returned by customers. customers can return the goods received based on evidence that such goods do not conform with the order or the goods are damaged upon receipt. information sales returns based on information that the goods have been delivered. the information that can be presented is the code of delivery, date of delivery, the addressee, the products delivered, the products are returned, and the reason for the return of goods. h. sales report this page presents information about the sales report. smes can find the sales that have been made, which has not been done prduk booking payment by the customer, product orders that have been sent and failed messages, sales returns that occur as well as the cancellation of sales. i. sales graphics this page presents a graph of sales made by smes. sales chart presented by product, and by the time such as per week, per month, per quarter, per semester or per semester. j. list of customer this page presents information on sme customers. smes can find customers who make a reservation, customers who make payments, customers who make returns, as well as customers who do not cancel product orders. the information presented is a photo of the customer, the customer name, the domicile of the customer, contact information, e-mail address, as well as the product order history. k. related complaints smes this page is intended to provide information about the complaint made by smes. smes can complain to the online market administrator concerning fraud committed by the customer, such as return the goods with other goods that do not correspond to the goods delivered. this page is used to protect smes from fraud committed by the customer. l. mailbox this page presents information on messages between smes and customers. smes can make contact with the customer or by administrator online market through the facilities mailboxes. m. online market profile this page is intended to provide information about the online market. smes identify the profile of the market online. in addition smes can contact the market administrator online form contact person messages and information that has been provided. n. log-out this page provided smes out of these smes and leads directly to the visitors at home. 3. customer’s pages this page is only for customers. to be able to access a customer's site, the visitor can log-in on the log-in and must be registered as a customer in the market online. from this page, presented the following features, among others: a. customer’s account these pages provide information about a customer's account. customers can change the username and password periodically or not. b. customer’s profile this page presents information on the customer profile. customers can provide complete information regarding dirinyanya. the information that can be presented by the customer is the jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 62 name, domicile, the number of contacts that can be contacted, e-mail address, and the address of the site if it has. c. list of sme’s on this page, presented smes registered in the online marketplace as many as 20 smes per page. customers can click the button detail on each column of smes that directly leads to the sme specific page. customers can find out the profile of smes, the products are sold, a shopping cart, confirmation of payment, the contacts can be contacted, as well as other required. d. list of product on this page are presented information about products owned smes as many as 20 products per page. customers can click the button detail that leads directly to the specific page of smes in the product detail page. on that page, customers can find out information about a product in the form of product images, product specifications, prices, discounts, quantity of goods available, as well as other required. to be able to order products, so visitors must be registered as a customer in the market online. e. product’s order these pages provide information about ordering products made by customers. customers can find ordering products that have been paid or unpaid. in addition, the customer may cancel the subscriber products that have been done. f. payment confirmation this page presents information on the booking confirmation of payment products that have been done. customers can make payments on the confirmation of the booking product that has been done. after confirming the payment, smes will perform validation on customer payment confirmation. if smes have declared the payment is valid, then the customer can also find validation for the confirmation that payment has been made. g. accept goods these pages provide information about the product delivered by smes to customers along with proof of receipt of goods by the recipient. customers can see that the goods ordered have been delivered and accepted by the customer or the addressee. h. return of goods these pages provide information returns product purchases made by customers. customers can inform smes that received product does not comply with the order, or damaged so returned. purchase return shipment based on data that has been samapai or received by the customer. i. customer complaint this page is intended to provide information about the complaints made by customers. customers can complain to the administrator regarding the market online fraud by smes, such as not validate the confirmation payments made by customers in a given time period, eg 7 days or 14 days. this page is used to protect customers from fraud by smes. j. mailbox this page presents information on messages between customers and smes. customers can make contact with the customer or by administrator online market through the facilities mailboxes. k. online market profile this page is intended to provide information about the online market. customers can find out the profile of the market online. in addition, customers can contact the market administrator online form contact person messages and information that has been provided. l. log-out this page is provided for customers out of these customers and leads directly to the visitors at home. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 63 m. online market administrator’s page is a land for online market administrator. on this page, presented the following features, among others: n. online market administrator’s account these pages provide information about online market administrator account. online market administrator can change username and password periodically or not. o. online market profile setting these pages provide information about the online market. online market administrator has the authority to be able to change the profile online market. p. sme’s complaint these pages provide information about complaints by smes. smes can sue the customer if the customer is concerned to commit fraud such as return the goods with other goods that do not correspond with items that have been sent and received. if there are complaints, then the online market administrator may request confirmation from the customer concerned and if it can not provide conclusive evidence, then the customer may be incorporated in the black book and the customer is not able to make transactions in the market online. q. customer’s complaint these pages provide information about complaints dilakukian by customers. sme customers can complain if the sme concerned commit fraud such as do not provide validation for the confirmation of payment the customer and not deliver goods that have been ordered even though has been declared valid upon confirmation of payment. if there are complaints, then the online market administrator may request confirmation of the smes concerned and if it can not provide conclusive evidence, the sme can be included in the black book and smes are not able to make transactions in the market online. r. sme’s black book this page presents information on smes that have been barred from joining in the market online. the information presented is based on complaints made by customers. online market administrator can insert smes into the black book if there are some complaints made by customers and smes of the complaint can not provide conclusive evidence. black book is intended to protect customers from fraud committed by smes and smes that have been entered in the black book can no longer transact in the market online. s. customer’s black book this page provides information about customers who have been barred from joining in the market online. the information presented is based on complaints made by smes. online market administrator can enter the customer into the black book if there are some complaints made by smes and customers complained they can not provide conclusive evidence. black book is intended to protect smes from fraud committed by customers and customers who have been entered in the black book can no longer transact in the market online. t. mailbox these pages provide information about online market administrator messages between smes and customers. online market administrator can make contact with the customers and smes through the facilities of the mailbox. u. log-out this page is out of the administrator online market online market site administrator and leads directly to the visitors at home. 5. research conclusion and recommendation 5.1. conclusion based on the discussion and description aboves, it can be concluded that online market is a marketing solutions for problems faced by smes. with the online market, smes can market its products jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 64 widely and have regulars. online market in order to work well, it would require presentation of complete and accurate information on smes and the products it offers, and the procedures are efficient at conducting transactions online. this is because the needs of customers to obtain adequate information about the products offered and the ease in conducting transactions online. in addition, customers have the right to be protected from fraud committed by smes and vice versa, smes have a right to be protected from fraud committed by customers. online market provides better opportunities to smes to market their products more widely and has regular customers. in addition, customers also receive adequate information on the product he wants and ease of transacting online. thus, it can be concluded that the online marketing is a solution to the problems that faced by smes. 5.2. recommendation quality research is heavily dependent on the individual skills of the researcher and more easily get personal biases and idiosyncrasies. future research should be done by comparing this online marketplace design with the best practice of online marketplace wholeword. references fuady, m. (2005). pengantar hukum bisnis. bandung: pt. citra aditya bakti hallberg, kristin. 2008, a market-oriented strategy for small and medium-scale enterprises, discussion paper number 40, world bank, washington, d.c. ishak, effendi. 2005. artikel : peranan informasi bagi kemajuan ukm. yogyakarta : kedaulatan rakyat. jogiyanto, h.m., 1999, analisis dan desain sistem informasi pendekatan terstruktur teori dan praktek aplikasi bisnis, andi offset, yogyakarta. kadir, abdul. 2008. dasar pemograman web dinamis mengunakan php. yogyaarta, andi kotler, philip. manajemen pemasaran, edisi milenium 1. prenhailindo : jakarta, 2002. poerwandari. e. k. 1998. pendekatan kualitatif dalam penelitian psikologi. lembaga pengembangan sarana pengukuran dan pendidikan psikologi (lpsp3) fakultas psikologi universitas indonesia, jakarta purbo, o. w. (2001). mengenal e-commerce. jakarta: pt. elex komputindo ram, sundaresan; jagdish n. sheth, 1989, consumer resistance to innovations: the marketing problems and its solutions, the journal of consumer marketing, vol. 6 no. 2, spring 1989 sukarmi, (2008). cyber law: kontrak elektronik dalam bayang-bayang pelaku usaha (cyberlaw indonesia). bandung : tbo suparlan. p. 1994. metodologi penelitian kualitatif. program s-2 kajian wilayah amerika universitas indonesia, jakarta rohim, taufik 2002, sistem informasi, itb, bandung. http://www.beone-solution.com/blog/strategi-bisnis-ukm-pemasaran-yang-efektif-untuk-ukm-usahakecil-menengah/ (diakses terakhir pada tanggal 12 september 2016) http://www.etalasebisnis.com/berita/ukm/2045/pemasaran-masih-menjadi-masalah-terbesar-bagi-umkmsurakarta.html diakses terakhir pada tanggal 12 september 2016 republik indonesia, undang-undang no. 9 tahun 1995 tentang usaha kecil jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 65 republik indonesia, keputusan presiden ri no. 99 tahun 1998 tentang bidang/jenis usaha yang dicadangkan untuk usaha kecil dan bidang/jenis usaha yang terbuka untuk usaha menengah atau usaha besar dengan syarat kemitraan *) aditya hermawan, stie asia malang **) aniek murniati, stie asia malang jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 66 revitalization bmt and cooperatives function in developing syari'ah economy ach baihaki *) abstract the growth of islamic economics have been more improvement, as in infrastructure, assets and number of employee year of the year. but by that improvement, there are some problems to be payed attention, like development of quality of human resources in islamic economics system with holistic approach. so that, to strengthen the character of islamic economics system need to restore it’s concept to the nature of islamic thought consider with the islamic economics history and also accommodate local wisdom. to support the improvement of islamic economics proper with ideology objectives of islam, cooperation and bmt should be have priority to increase their functions and responsibilities in economics development. operational of cooperation and bmt will make variability of islamic contracts more variative. then islamic contract by partnership approach based profit and losses sharing will have more proportions and cost of control also will be more efficient and worries about information asymmetry will be declined. it caused, awareness of partnership and togetherness to increase cooperation member welfare will be easily achived. keywords: business entity, islamic financial institutions, cooperation, bmt 1. pendahuluan 1.1 latar belakang lahirnya kajian tentang ekonomi syari’ah yang berlandaskan nilai-nilai keislaman awalnya menjadi sebuah bahan tertawaan orang lain (harahap, 2001:12). karena memang tidak bisa dipungkiri hegemoni sistem perekonomian kapitalis dan sosialis sangat mempengaruhi pemikiran dan pola praktek perekonomian suatu negara hingga pada akhirnya sistem ekonomi sosialis runtuh dan yang menjadi pesaing ideologi utama kapitalis adalah islam. lahirnya lembaga keuangan syari’ah yang pertama di mesir pada tahun 1963 juga menjadi momentum awal tumbuh kembangnya perekonomian islam pada zaman kontemporer ini. meskipun sistem ekonomi syari’ah masih baru berkembang beberapa dekade terakhir ini dengan bermunculannya lembaga keuangan syari’ah baik mikro, kecil, menengah ataupun korporasi dengan segala bentuk instrumen layanan keuangan yang diberikan. akan tetapi sebenarnya perekonomian syari’ah telah ada sejak zaman awal kemunculan islam yang ditandai dengan lembaga baitul maal yang menjadi lembaga central dalam tata kelola keuangan negara yang sesuai dengan kaidah ajaran islam. disamping itu seperangkat tata etika pengelolaan perekonomian telah berkembang baik dan telah diajarkan secara sempurna oleh rasulullah. saw semasa hidupnya. sehingga pertumbuhan lembaga keuangan syari’ah beberapa akhir ini juga bukan merupakan hal yang baru dalam dunia islam. akan tetapi yang perlu menjadi perhatian adalah perkembangan lembaga keuangan syari’ah ini yang telah menjadi pendorong munculnya kajian dan aplikasi perekonomian berbasis islam ini akan menjadi sebuah bumerang nantinya. karena kemunculan instrumen pembiayaan dan pendanaan syari’ah dan bahkan lembaga keuangan syari’ah ini jangan sampai menghilangkan citacita luhur dari nilai-nilai ajaran islam dalam bidang ekonomi yang berbasis tolong menolong dan kesejahteraan ummat. kekhawatiran ini menjadi perlu mendapatkan perhatian serius. karena perkembangan minat masyarakat untuk menggunakan lembaga jasa keuangan syari’ah, baik funding maupun lending akhir ini hanya akan menjadi target pasar dalam dunia bisnis bagi beberapa lembaga keuangan yang hanya mengandalkan orientasi tata kelola organisasinya pada profit oriented. hal ini terbukti dengan bermunculannya berbagai lembaga keuangan yang sedari awal berbasis konventional dan profit oriented semata juga mengembangkan usahanya pada sektor syari’ah. peningkatan jumlah entitas dari sisi jumlah kantor dan sumber daya manusia untuk meningkatkan layanannya dapat diperhatikan dalam tabel 1. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 67 berdasarkan data pada tabel 1 tersebut, jika tahun 2010 dijadikan tahun dasar, maka pertumbuhan jumlah kantor sebagai bentuk pertumbuhan lembaga keuangan syari’ah yang juga menjadi indikator berkembangnya sistem perekonomian syari’ah menjadi sesuatu yang menggembirakan. akan tetapi pada proses selanjutnya, bagaimana perkembangan ini tidak hanya dari sisi kuantitas jumlah kantor layanan dan sdm yang melayani. akan tetapi perkembangan ini juga diikuti oleh peningkatan kualitas aplikasi pelayanan lembaga keuangan syari’ah tersebut yang tidak meninggalkan tujuan dari penerapan ekonomi syari’ah tersebut. karena berdasarkan penerapan akad dalam lembaga keuangan syari’ah masih bertumpu pada pembiayaan yang mendekati skema kredit pada lembaga konvensional dengan pola keuntungan atas pembiayaan yang diberikan kepada nasabah bersifat tetap. sehingga kadang kala masih sering muncul pertanyaan secara umum di masyarakat tentang “apakah bedanya antara konvensional dengan syari’ah?”. hal ini menjadi ironis, karena seharusnya akad pembiayaan yang menjadi ciri khas lembaga keuangan syari’ah masih belum menempati prioritas jenis pembiayaan yang ditawarkan lembaga keuangan syari’ah. hal lain yang menarik untuk menjadi perhatian dalam pengembangan perekonomian syari’ah adalah sektor usaha mikro dan mikro yang berbasis ekonomi masyarakat akar rumput masih menjadi perhatian kecil lembaga keuangan perbankan syari’ah. padahal secara ketersediaan modal kerja yang bisa disalurkan kepada masyarakat jauh lebih besar dibandingkan dengan lembaga keuangan mikro syari’ah. data yang berkaitan dengan pembiayaan yang ditawarkan oleh perbankan syari’ah indonesia tersaji dalam tabel 2 dan tabel 3. tabel 1 jumlah kantor dan sdm bank syari’ah jenis 2010 2012 2013 2014 apr-15 bank absolut pertumbuhan absolut pertumbuhan absolut pertumbuhan absolut pertumbuhan absolut pertumbuhan jumlah kantor bus 1215 100% 1745 144% 1998 164% 2151 177% 2135 176% uus 262 100% 517 197% 590 225% 320 122% 323 123% bprs 286 100% 401 140% 402 141% 439 153% 433 151% jumlah karyawan bus 15224 100% 24111 158% 26717 175% 41393 272% 49587 326% uus 1868 100% 3108 166% 11511 616% 4425 237% 4404 236% bprs 3172 100% 4559 144% 4826 152% 4704 148% 5000 158% sumber: statistik ojk ri 1 berdasarkan data pada tabel 2 dan 3 tersebut diketahui bahwa akad yang menjadi dasar pembeda antara praktek keuangan lembaga keuangan konvensional yang berbasis bunga dengan praktek keuangan syari’ah yang seharusnya berbasis profit and losses sharing (pls) masih belum kelihatan signifikan. berdasarkan tabel tersebut diatas bank umum syari’ah (bus) dan unit usaha syari’ah (uus) masih mengalokasikan pembiayaannya kepada pembiayaan yang berbasis pls sebanyak 33%, sedangkan 58,33% berbasis margin dengan pembayaran keuntungan bagi lembaga keuangan bersifat tetap dan sisanya berbasis fee. sedangkan bprs yang memiliki cakupan operasional lebih sempit dibandingkan dengan bus dan uus justru mengalokasikan pembiayaan kepada akad pembiayaan yang berbasis margin sebesar 79,35% dari total pembiayaannya. padahal jika bprs berkeinginan untuk bermitra dengan nasabah yang minus dana, pengawasan atas kerja samanya tersebut bisa lebih optimal, karena kedekatan terirorial operasional antara lembaga keuangan syari’ah dengan nasabah pembiayaannya. 1 http://www.ojk.go.id/data-statistik-perbankan-syariah /diakses tanggal 5 oktober 2015. http://www.ojk.go.id/data-statistik-perbankan-syariah jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 68 tabel 2: pembiayaan bus dan uus tabel 3: pembiayaan bprs per: april 2015 (dalam miliar rupiah) per: april 2015 (dalam jutaan rupiah) jenis jumlah persentase jenis jumlah persentase pembiayaan pembiayaan akad mudharabah 14388 7% akad mudharabah 133805 3% akad musyarakah 52672 26% akad musyarakah 582366 11% akad murabahah 117210 58% akad murabahah 4212147 79% akad salam 0 0% akad salam 16 0.0003% akad istishna' 664 0.0033% akad istishna' 12059 0.2264% akad ijarah 11454 6% akad ijarah 6614 0.1242% akad qardh 5138 3% akad qardh 108523 2% akad lainnya 0% akad lainnya 270571 5% total 201526 100% total 5326101 100% sumber: statistik ojk ri 2 selain itu yang perlu menjadi perhatian adalah bagaimana lembaga keuangan syari’ah yang berbasis korporasi tersebut diatas memberikan pembiayaan terhadap sektor-sektor perekonomian di indonesia. karena sektor perekonomian yang menjadi prioritas pembiayaan lembaga keuangan tersebut akan menunjukkan komitmennya dalam mewujudkan kesejahteraan masyarakat. adapun penyaluran pembiayaan berdasarkan sektor ekonomi oleh bank umum syari’ah dan unit usaha syari’ah bisa diperhatikan pada tabel 4 serta oleh bprs pada tabel 5. berdasarkan data tersebut, maka jumlah pembiayaan yang dialokasikan kepada sektor pertanian dari seluruh sektor ekonomi hanyalah 3% oleh bank umum syari’ah dan unit usaha syari’ah, sementara itu 5% disalurkan oleh bprs dari seluruh total pembiayaannya. sementara itu masyarakat indonesia menurut sumber biro pusat statistik pada tahun 2013 memiliki masyarakat yang bekerja di sektor pertanian sebanyak 31.705.337 orang. jika lembaga keuangan syari’ah tidak hanya memperhatikan profitabilitas semata, akan tetapi juga proses pemberdayaan masyarakat, maka pengembangan perekonomian masyarakat mikro juga akan menjadi lebih baik. lembaga keuangan tidak hanya akan menjadi lembaga intermediasi keuangan yang akan menjembatani masyarakat surplus dana kepada masyarakat minus dana sehingga perekonomian nasional akan menjadi lebih baik lagi. tapi juga lembaga keuangan syai’ah khususnya juga akan menjadi lembaga yang efektif dalam mengurangi kesenjangan kesejahteraan sosial di dalam masyarakat. atas kesenjangan ketercapaian visi dan misi dari pengembangan ekonomi syari’ah tersebut, bahkan pembiayaan lembaga keuangan syari’ah yang berbasis profit and losses sharing malaysia yang terkenal sebagai salah satu kiblat perekonomian islam dunia pada akhir tahun 2004 hanya sebesar 0,5% (chong dan liu, 2009:133). 1.2 permasalahan penelitian berdasarkan deskripsi latar belakang tersebut permasalahan penelitian yang diajukan adalah bagaimanakah revitalisasi koperasi dan bmt dalam pengembangan ekonomi berbasis syariah. 1.3 tujuan penelitian adapun tujuan dilakukan penelitian ini adalah untuk mengetahui bagaimanakah revitalisasi koperasi dan bmt dalam pengembangan ekonomi berbasis syariah, 2 http://www.ojk.go.id/data-statistik-perbankan-syariah /diakses tanggal 5 oktober 2015. http://www.ojk.go.id/data-statistik-perbankan-syariah jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 69 tabel 4: pembiayaan bus dan uus tabel 5: pembiayaan bprs berdasarkan sektor ekonomi berdasarkan sektor ekonomi per 30 april 2015 (dalam miliar rupiah) per 30 april 2015 (dalam juta rupiah) sektor ekonomi jumlah persentase sektor ekonomi jumlah persentase pertanian, kehutanan, dan 6554 3% pertanian, kehutanan, dan 264579 5% sarana pertanian sarana pertanian pertambangan 5165 3% pertambangan 7968 0.15% perindustrian 14475 7% perindustrian 59852 1% listrik, gas dan air 5655 3% listrik, gas dan air 12413 0.23% konstruksi 11465 6% konstruksi 279906 5% perdagangan, restoran, hotel 26476 13% perdagangan, restoran, hotel 1989033 37% pengangkutan, pergudangan pengangkutan, pergudangan 2% dan komunikasi 14105 7% dan komunikasi 91754 jasa dunia usaha 69209 34% jasa dunia usaha 288917 5% jasa sosial/ masyarakat 11176 6% jasa sosial/ masyarakat 439045 8% lain-lain 37247 18% lain-lain 1892633 36% 201527 100% 5326100 100% sumber: statistik ojk ri 3 2. kajian pustaka 2.1 penelitian terdahulu begitu banyak penelitian yang telah dilakukan untuk meningkatkan kualitas pemikiran dan penerapan sistem ekonomi syari’ah. akan tetapi dari pemikiran-pemikiran tersebut masih banyak yang menggunakan pendekatan mean stream, sehingga pemikiran yang dibangun hanyalah bagaimana ekonomi syari’ah bisa memiliki badan yang bisa memenangkan persaingan dengan sistem ekonomi yang lain. disamping itu lahirnya lembaga keuangan syari’ah yang juga menjadi indikator perkembangan sebuah sistem perekonomian lebih hanya dipandang sebagai sebuah lembaga yang bisa mengatasi masalah keuangan semata. sehingga kemunculan lembaga keuangan syari’ah bukan hanya semata-mata untuk memenuhi persaingan ideologi, akan tetapi kemampuan bersaing dalam dunia bisnis tanpa menghilangkan esensi ideologi menjadi hal yang penting dan menarik untuk diperhatikan. padahal sebenarnya munculnya lembaga keuangan tersebut harus juga disertai dengan spirit yang dibawa oleh ideologinya. ekonomi yang islami menjadi penting untuk dimiliki oleh masyarakat muslim, apalagi mayoritas penduduknya adalah islam. akan tetapi ada beberapa hal yang mempengaruhi manusia dalam pola kehidupan ekonominya sebagaimana yang diungkapkan chapra (2000:24) berikut “there are a number of institutions in human society that influence individual and society outcomes. the market is only one of them. some other are family, society and the state.” sehingga dengan hal tersebut bisa diperhatikan tentang adanya pengaruh pasar, masyarakat dan negara terhadap kehidupan perekonomian suatu masyarakat. maka ketika masyarakat ingin mengembangkan sebuah sistem perekonomian yang berbasis islam tentunya semangat ideologi dan budaya yang membentuk sistem perekonomian tersebut haruslah sesuai dengan konsep ideologis yang dibawa. sehingga aplikasi sistem perekonomian yang dibangun tidak kehilangan spirit dan karakteristiknya yang tidak hanya sebagai pemenuhan ekspektasi pasar sesaat. 3 http://www.ojk.go.id/data-statistik-perbankan-syariah /diakses tanggal 5 oktober 2015. http://www.ojk.go.id/data-statistik-perbankan-syariah jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 70 ekonomi syari’ah membutuhkan fondasi pengembangan yang kokoh untuk terus berlanjut sebagai sebuah sistem ekonomi yang seharusnya menjadi pilihan bukan lagi alternatif. akan tetapi hal ini membutuhkan peran serta masyarakat untuk membiasakan diri bertransaksi secara syari’ah dengan segenap kesadaran konsekuensi plus dan minusnya serta dukungan regulasi pemerintah yang mendukung bukan hanya pertumbuhan secara statistik lembaga keuangan syari’ah akan tetapi juga konsistensi penerapan sistem perekonomian syari’ah tersebut. sehingga aplikasi sistem ekonomi tersebut bisa menjadikannya sebuah karakteristik yang menguatkan alasan untuk memilih untuk menggunakan sistem tersebut. disamping itu ketersediaan tenaga yang tidak hanya memahami konsep syari’ah dan kurang cepat beradaptasi dengan konsep ekonomi modern akan melahirkan sebuah kesenjangan harapan baru akan pencapaian sistem perekonomian islam. karena aplikasi bisnis islami hanya akan menjadi sebuah pengikut sistem ekonomi lama dengan kemasan yang baru tanpa adanya karakteristik yang bisa membedakannya. disamping itu adanya sumber daya manusia yang hanya mampu menangkap peluang berkembangnya pasar ekonomi islam tanpa didasari oleh semangat berekonomi yang berketuhanan akan melahirkan sebuah pengamalan yang berorientasi pasar tanpa adanya semangat untuk konsisten dalam pengamalannya. sakai (2010) dalam penelitian yang telah dilakukan atas peran bmt di jawa tengah dalam kegiatan perekonomian para wanita, dimana pada penelitian tersebut disampaikan bahwa memang skema penghimpunan dan penyaluran dana yang dilakukan oleh bmt tidak didesain khusus untuk kaum wanita. akan tetapi dengan adanya lembaga keuangan tersebut, maka kegiatan perekonomian masyarakat pada area beroperasinya bmt tersebut juga akan terbantu. karena bmt melandaskan operasionalnya kepada keadilan sosial dan kerjasama di dalam kegiatan perekonomian. disamping itu bmt secara khusus juga bisa menanggulangi kebutuhan dana masyarakat khususnya kaum wanita yang tidak dilayani oleh dunia perbankan formal. penelitian ini diarahkan kepada bagaimana berdasarkan data perkembangan aktivitas perekonomian syari’ah, lembaga keuangan yang bisa menyelamatkan tujuan mulia penerapan ekonomi syari’ah tersebut dapat tercapai. sehingga bidang kajian bagaimana pengembangan lembaga keuangan syari’ah sebagai ujung tombak pengaplikasian sistem ekonomi syari’ah tersebut perlu untuk terus dilakukan dengan segala bentuk kelebihan dan kekurangannya. koperasi dan bmt merupakan lembaga keuangan yang sangat potensial untuk menjawab tantangan tersebut, karena landasan filosofis gotong royong yang melandasinya sangat sesuai dengan ajaran agama islam pada khususnya dan kebudayaan serta karakteristik bangsa indonesia pada umumnya. 2.2 kajian pustaka 2.2.1 badan usaha asyhadie (2009:35) menyebutkan bahwa perusahaan adalah setiap badan usaha yang menjalankan kegiatan dalam bidang perekonomian secara terus menerus, bersifat tetap dan terang-terangan dengan tujuan untuk memperoleh laba yang dibuktikan dengan pembukuan. sehingga yang namanya badan usaha adalah tidak hanya sah secara hukum ataupun berbadan hukum, akan tetapi juga menjalankan kegiatannya secara terus menerus atau secara berkesinambungan. maka atas dasar pengertian diatas, perusahaan diperlukan dalam kegiatan perekonomian apapun jenisnya. akan tetapi suatu sistem perusahaan pastinya akan melakukan tindakan operasionalnya sesuai dengan ideologisnya dan karakteristik dari badan usaha tersebut. adapun jenis-jenis badan usaha adalah persekutuan perdata, persekutuan firma, persekutuan komanditer, perseroan terbatas, dan badan usaha milik negara. adapun penjelasan masing-masing adalah sebagai berikut: 1. persekutuan perdata: suatu persekutuan yang dibentuk atas suatu perjanjian, dimana dua orang atau lebih mengikatkan diri untuk memasukkan sesuatu (inbreng) ke dalam persekutuan dengan maksud untuk membagi keuntungan. (rt. sutandya r. hadikusuma dan sumantoro, 1991:13 dalam asyhadie (2009:35)) jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 71 2. firma: suatu jenis persekutuan perdata yang khusus didirikan untuk menjalankan perusahaan dengan nama bersama. 3. persekutuan komanditer: suatu firma yang mempunyai satu atau beberapa orang sekutu komanditer. 4. perseroan terbatas: suatu bentuk usaha yang berbadan hukum yang tertuju pada tanggung jawab pemegang saham yang hanya terbatas kepada nilai nominal dari semua saham yang dimilikinya. menurut uu no. 40 tahun 2007 tentang perseroan terbatas adalah badan hukum yang merupakan persekutuan modal, didirikan berdasarkan perjanjian, melakukan kegiatan usaha dengan modal dasar yang seluruhnya terbagi dalam saham dan memenuhi persyaratan yang ditetapkan dalam undang-undang ini serta peraturan pelaksananya (silondae dan andi (2013:97). 5. badan usaha milik negara: badan usaha yang seluruh atau sebagian besar modalnya dimiliki oleh negara melalui penyertaan secara langsung yang berasal dari kekayaan negara yang dipisahkan. 6. koperasi: badan hukum yang didirikan oleh orang perseorangan atau badan hukum koperasi, dengan pemisahan kekayaan para anggotanya sebagai modal untuk menjalankan usaha, yang memenuhi aspirasi dan kebutuhan bersama di bidang ekonomi, sosial, dan budaya sesuai dengan nilai dan prinsip koperasi. (uu no. 25 tahun 1992 tentang perkoperasian). 2.2.2 ekonomi syari’ah banyak pihak yang telah menginterpretasikan ekonomi syari’ah, mulai dari yang bersifat normatif sampai dengan positif, dimana banyak yang hanya memahami sebagai sistem ekonomi yang tidak ribawi. di lain pihak ada juga yang mengartikannya sebagai sebuah sistem ekonomi yang berdasarkan nilai-nilai keislaman. namun secara positif seharusnya sistem ekonomi islam juga harus ditunjang oleh ilmu-ilmu terkait yang mendukung suatu perekonomian dan tidak hanya dalam sebuah kemasan syari’ah yang berhaluan sistem pasar. menurut mozer kahf (1978) menyatakan bahwa ekonomi islam adalah bagian dari ilmu ekonomi yang bersifat interdesipliner. sehingga sebagai sebuah sistem akan membutuhkan banyak sekali cabangcabang ilmu yang lain yang harus digunakan sebagai penunjang dari pelaksanaan sistem tersebut. di sisi lain kemunculan semangat untuk memunculkan dan menjalankan ekonomi islam sebagai sebuah pilihan dan tidak lagi menjadi alternatif seharusnya diikuti dengan perkembangan ilmu-ilmu pendukung dalam bidang ekonomi, yaitu bisnis, akuntansi dan manajemen (al arif dan euis, 2010:7). sehingga perkembangan ekonomi islam akan menjadi suatu penerapan sistem yang komprehensif, bukan lagi menjadi sistem ekonomi penghimpunan dan penyaluran dana yang islami. karena dalam suatu perekonomian tidak hanya berpusar kepada kegiatan menghimpun dan menyalurkan dana, akan tetapi banyak hal lain, yaitu produksi dan konsumsi serta distribusinya, pencatatan dan pelaporannya, pengaturan dan optimalisasinya. maka ketika ada pembahasan sistem ekonomi islam tidak hanya membahas tentang bagaimana akad dalam penghimpunan dan penyaluran dana yang halal dengan mengenyampingkan kehidupan ekonomi yang komprehensif seperti yang dicontohkan oleh rasulullah, saw. sehingga ekonomi syari’ah tidak hanya menjadi peluang bisnis semata atau yang lebih dikenal dalam setiap propaganda pengembangan ekonomi islam yaitu menjadi sistem ekonomi alternatif. akan tetapi nantinya akan menjadi sebuah sistem ekonomi pilihan, jika sistem ekonomi syari’ah dikembangkan dan diaplikasikan berdasarkan model tata kelola ekonomi yang dilakukan oleh rasulullah, dimana tidak hanya aspek keuntungan yang diperhatikan akan tetapi, sosial ekonomi, pembangunan yang berkelanjutan juga menjadi perhatian dalam hal ekonomi islam. ajaran islam mungkin akan mengarahkan kepada praktek akuntansi dan perbankan islam yang akan membentuk keadilan sosial, bekerja dengan komunitas lokal, menjamin kesempatan bisnis bagi yang memiliki cash flow rendah, pengambilan keputusan berdasarkan kriteria keuangan, lingkungan, akuntabilitas dan transparansi yang seharusnya semua terpusat kepada praktek akuntansi dan perbankan islam (kamla, 2009:924). sehingga lahirnya sistem ekonomi islam harusnya menjadi pilihan untuk ekonomi yang berkesinambungan dan terwujudkannya keadilan sosial seperti yang menjadi amanat konstitusi negara kesatuan republik indonesia. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 72 2.2.3 lembaga keuangan syari’ah untuk mewujudkan tumbuh dan berkembangnya sistem ekonomi syari’ah yang pada masa kontemporer ini dimotori oleh lembaga keuangan, maka keberadaan lembaga keuangan haruslah terus dijaga. adapun lembaga keuangan tersebut telah banyak sekali bermunculan baik sebagai lembaga intermediasi keuangan, finance, asuransi, pasar modal syari’ah dan beberapa lembaga nirlaba yang juga telah menjadi perhatian masyarakat sebagai bagian tak terpisahkan dari sistem perekonomian berbasis nilai-nilai islam. sehingga perlu diperhatikan dengan baik, dari sekian banyak lembaga keuangan tersebut yang manakah yang akan mendukung terwujudnya nilai-nilai luhur sistem perekonomian syari’ah. 1. lembaga keuangan syari’ah berbasis intermediasi keuangan lembaga keuangan syari’ah pada kelompok ini melakukan kegiatan dengan cara menghimpun dana dari masyarakat dan menyalurkannya kembali kepada masyarakat. jadi menghimpun dana dari masyarakat yang memiliki surplus dana dan menyalurkannya kepada masyarakat yang defisit dana. hal ini dilakukan oleh lembaga keuangan konvensional maupun syari’ah, baik dalam bentuk koperasi, bmt, bank perkreditan rakyat, bank pembiayaan rakyat syari’ah, bank umum dan juga bank umum syari’ah. keberadaan lembaga keuangan konvensional sebagai lembaga intermediasi keuangan sebenarnya secara aplikatif telah didahului oleh tata kelola ekonomi dunia islam. karena dalam islam dikenal dengan adanya zakat, infaq dan shadaqah yang menjadi kewajiban ummat islam yang memiliki kelebihan dana untuk mengalokasikan sejumlah dananya kepada masyarakat yang membutuhkan baik secara suka rela ataupun yang bersifat memaksa. adapun tata kelola tersebut dilakukan oleh baitul maal pada masa rasulullah dan keemasan peradaban islam. sehingga semangat untuk kembali ke pemahaman ajaran yang berlandaskan nilai-nilai agama tersebut yang kemudian menggerakkan masyarakat untuk mendirikan lembaga keuangan yang berbasis intermediasi keuangan yang berbasis syari’ah. untuk mengakomodasi kepentingan pihak-pihak yang memiliki bakat entrepreneurship skill dengan kendala modal, lembaga ekonomi syari’ah memiliki stok tertentu, terutama modal yang dihimpun dari dana zakat, infaq dan shadaqah. kemudian dikemas dalam bentuk produk al qard al hasan, pinjaman kebajikan yang bisa disalurkan kepada mareka (muhammad, 2005:69). sehingga dengan skema ini lembaga ekonomi syari’ah memberikan peluang kepada masyarakat untuk menggali kreatifitas dan kerja yang tinggi dengan memanfaatkan modal yang ada dalam membangun roda ekonominya. adanya lembaga keuangan non formal seperti bmt tersebut akan menjadikan kelompok ekonomi lemah yang selama ini tidak tersentuh oleh lembaga keuangan formal memiliki kesempatan yang sama untuk mengakses modal pembiayaan dari lembaga ekonomi syari’ah. yang kemudian perkembangan sektor riil bisa lebih cepat terwujud dalam sistem berbasis kerja sama. 2. lembaga keuangan syari’ah berbasis pembiayaan lembaga keuangan syari’ah yang berbasis pembiayaan (finance) ini tidak menghimpun dana dari masyarakat dalam kegiatan operasionalnya. akan tetapi dalam kegiatan usahanya akan tetap dilakukan dalam bentuk menyalurkan dana langsung kepada masyarakat, baik dalam bentuk pembiayaan konsumtif ataupun produktif. adapun lembaga keuangan syari’ah yang berbasis pembiayaan ini akan lebih mengarahkan kegiatan usaha penyaluran dananya kepada kebutuhan pembiayaan yang bersifat konsumtif. karena skema pembiayaan yang ditawarkan memang lebih kepada untuk memfasilitasi kebutuhan masyarakat terhadap hal-hal yang bersifat konsumtif (perumahan, kendaraan, kebutuhan keuangan jangka pendek) yang sesuai dengan ketentuan syari’ah. akad-akad yang bersifat finance tersebut banyak disediakan oleh lembaga-lembaga pegadaian yang menyediakan layanan rahn dan ijarah. sehingga kebutuhan jangka pendek tetap terpenuhi dengan cepat tanpa harus menghilangkan keterpenuhan akan unsur syarat dan ketentuan transaksi dalam syari’ah. selain itu lembaga yang juga banyak bermunculan adalah lembaga leasing yang berbasis syari’ah untuk memenuhi kebutuhan masyarakat untuk membeli barang-barang yang dibutuhkan dengan pembayaran angsuran (salman, 2012:7). disamping itu kadang kala muncul juga kebutuhan masyarakat untuk memenuhi kebutuhan dananya dengan melakukan diskonto atas piutang yang dimiliki. maka untuk tetap memberikan pelayanan jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 73 kepada masyarakat dengan tidak melanggar syari’ah, muncullah akad jasa hiwalah yang juga banyak diberikan oleh bank yang berbasis lembaga intermediasai keuangan ataupun lembaga lain yang sah untuk memberikan layanan tersebut. akan tetapi berdasarkan prinsip jasa yang diberikan, hal ini bisa dilakukan oleh lembaga khusus yang menangani anjak piutang 3. lembaga keuangan syari’ah berbasis asuransi asuransi muncul sebagai bentuk tanggung jawab sosial untuk saling tolong menolong dalam kehidupan bermasyarakat. sehingga dalam kehidupan bermasyarakat ada semangat bersama untuk saling menjamin antar masyarakat. adapun perbedaan asuransi konvensional dengan asuransi takaful adalah terletak pada proses pengelolaan premi yang dibayarkan oleh anggota asuransi. jika pada asuransi konvensional, premi yang dibayarkan oleh nasabahnya akan diinvestasikan dan dikelola untuk mendapatkan keuntungan sebagai kompensasi atas jaminan atas kerugian yang akan diberikan oleh perusahaan asuransi. sehingga dalam perusahaan asuransi konvensional, dana yang terkumpul akan bebas diinvestasikan pada segala bentuk kegiatan usaha tanpa memperhatikan unsur syari’ah dan keuntungan yang dijanjikan bersifat tetap. sedangkan dalam asuransi syari’ah yang biasa dikenal dengan asuransi takaful, maka ada sebagian dana premi yang dicadangkan untuk menjadi dana tolong menolong ketika ada anggota asuransi tersebut mengalami kerugian. sementara dana yang lain akan diinvestasikan ke dalam jenis usaha yang diperbolehkan dalam ketentuan syari’ah. disamping itu balas jasa yang akan diberikan juga tidak dipersyaratkan dengan tegas di awal. adapun industri asuransi syari’ah pada akhir-akhir ini telah berkembang dengan cepat dengan naiknya kesadaran masyarakat dalam mengasuransikan setiap potensi dirinya dari kerugian yang mungkin timbul. adapun perkembangan ini didukung juga dengan peningkatan kesadaran masyarakat untuk menggunakan transaksi-transaksi yang berbasis syari’ah. maka pada beberapa asuransi yang awalnya juga beroperasi dengan konsep asuransi konvensional telah juga menyediakan produk yang berbasis syari’ah. 4. lembaga keuangan syari’ah berbasis pasar modal syari’ah pasar modal syari’ah juga telah menghiasi perkembangan dan dinamika perekonomian syari’ah, dimana pasar modal sebagai salah satu wahana investasi harus juga mengikuti perkembangan dinamika keinginan masyarakat untuk menginvestasikan dananya dengan tidak meninggalkan nilai-nilai luhur ajaran agamanya. sehingga kemunculan entitas ekonomi yang mampu menjadi ruang investasi saham dan surat berharga lain yang sesuai dengan ajaran islam harus segera dimunculkan. adapun kemunculan lembaga pasar modal ini akan menjadi jawaban atas kebutuhan masyarakat tersebut, dan di indonesia telah dikenal beberapa indeks yang berbasis syariah seperti jakarta islamic index (jii) dan indeks saham syari’ah indonesia (issi). 5. lembaga keuangan berbasis entitas nirlaba lembaga keuangan berbasis entitas nirlaba ini adalah lembaga keuangan yang menghimpun dan menyalurkan dananya dengan prinsip syari’ah dan tidak dibentuk untuk menghasilkan laba. akan tetapi keberadaan lembaga keuangan tersebut hanya untuk mengakomodir kegiatan-kegiatan sosial. disebut lembaga keuangan karena berhubungan dengan pengelolaan keuangan yang dilakukan oleh lembaga tersebut, meskipun untuk kegiatan sosial. dalam hal ini lembaga keuangan yang menggunkan prinsip tata kelola syari’ah diantaranya adalah badan amil zakat, masjid, pesantren (tempat pendidikan islam) dan lembaga-lembaga lain yang melakukan kegiatan nirlaba yang berbasiskan ajaran islam. dalam hal ini badan amil zakat nasional (baznas) saja telah mengumpulkan dan menyalurkan dana yang sedemikian besar dan berdasarkan data perbandingan tahunan yang didapatkan dari laporan baznas pengumpulan dana zakat,infaq dan shadaqah selama tahun 2012 dan 2013 adalah sebagai berikut: jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 74 tabel 6 laporan penerimaan dan penyaluran dana zakat badan amil zakat nasional 2012 2013 penerimaan sampai akhir tahun 50,220,719,886.92 59,019,259,845.87 penyaluran dana sampai akhir tahun 38,513,551,378.00 44,363,070,093.00 sumber, baznas 4 bisa diperhatikan bahwa meskipun dana yang bergulir untuk dana sosial hanya pada satu lembaga yaitu baznas sudah sedemikian besar dalam satu tahun. jika seluruh lembaga keuangan nirlaba yang seharusnya berbasis syari’ah mendokumentasikan kegiatannya dengan baik dan mempublikasikan pertanggungjawaban keuangannya sesuai dengan standar. maka bisa dipastikan sedemikian besar jumlah perputaran uang yang berada dalam lingkaran lembaga keuangan ini dan seharusnya bisa meningkatkan taraf hidup masyarakat dengan variabilitas akad yang dimiliki oleh lembaga keuangan syari’ah. lembaga keuangan jenis inipun seharusnya sudah menjadi perhatian untuk dikembangkan dan menjadikannya suatu karakteristik yang tidak hanya berfungsi sosial, akan tetapi juga berfungsi ekonomis. 3. metode penelitian penelitian ini dapat digolongkan ke dalam penelitian deskriptif dimana peneliti ingin menganalisa data yang yang telah dikumpulkannya melaui proses riset kualitatif. peneliti menggunakan studi literartur dan observasi dalam usahanya untuk mendeskripsikan sebuah fenomena. 4. pembahasan hasil penelitian konsep pembangunan berkelanjutan adalah konsep ekonomi yang berketuhanan, dimana dari sifatnya yang kekal menyiratkan adanya sistem manajerial yang baik yang sepatutnya menjadi pembelajaran bagi manusia. bahkan secara tegas dalam qs. al-maidah ayat 2 yang dengan jelas mengajarkan kerja sama dalam hal kebaikan. seperti di indonesia, berdasarkan nilai-nilai luhur yang diamanatkan dalam konstitusi negara kesatuan republik indonesia yaitu uud 1945 pasal 33 ayat 1 yang menyatakan bahwa “perekonomian disusun sebagai usaha bersama berdasar atas azas kekeluargaan“. sehingga berdasarkan ajaran agama mayoritas penduduk indonesia tidak ada keraguan untuk mengembangkan pola perekonomian yang saling bekerja sama untuk menuju kualitas kehidupan yang lebih baik dan pembangunan ekonomi yang berkesinambungan. di lain hal, koperasi yang melandaskan operasionalnya pada nilai-nilai seperti yang dicantumkan dalam pasal 5 ayat 1 uu nomor 25 tahun 1992 tentang perkoperasian: a. keanggotaan bersifat suka rela dan terbuka b. pengelolaan dilaksanakan secara demokratis c. pembagian sisa hasil usaha dilakukan secara adil sebanding dengan besarnya jasa usaha masingmasing anggota d. pemberian balas jasa yang terbatas terhadap modal e. kemandirian dari nilai-nilai yang diamanatkan tersebut tergambar bahwa koperasi adalah suatu perwujudan badan usaha yang keanggotaannya berdasarkan atas cita-cita luhur untuk menguatkan posisi ekonomi diri sendiri yang berdasarkan azas kekeluargaan. sehingga tidak akan ada eksploitasi sepihak karena semua anggota memiliki hak yang sama dalam pengambilan keputusan dan tidak bertumpu pada akumulasi modal. disamping itu juga karena adanya semangat kebersamaan yang bertanggung jawab, maka seharusnya tidak akan ada asimetri informasi yang akan menjadikan pemilik informasi lebih berpengaruh dibandingkan yang lain. 4 http://pusat.baznas.go.id/wp-content/uploads/downloads/2015/06/laporan-desember-2014.pdf (diakses tanggal 3 november 2015) http://pusat.baznas.go.id/wp-content/uploads/downloads/2015/06/laporan-desember-2014.pdf jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 75 adapun menanggapi masalah rendahnya penyaluran dana yang berbasis bagi hasil yang menjadi karakteristik lembaga keuangan syari’ah yang kemunculannya sebagai jawaban atas ketidakberhasilan sistem perekonomian dengan sistem bunga. karena penyaluran dana dengan menggunakan instrumen bagi hasil bagi bank umum syari’ah yang hanya 33% dan lebih menyedihkan lagi bank pembiayaan rakyat syari’ah menyalurkan dananya dalam konsep bagi hasil hanya sebesar 79%. hal ini sesuatu hal yang menyedihkan, dimana masyarakat beranggapan bahwa tidak ada perbedaan antara lembaga keuangan syari’ah dengan lembaga keuangan konvensional. hal tersebut bukanlah tanpa alasan, karena penyaluran dana dalam instrumen pembayaran tetap berbasis murabahah merupakan pilihan dari sebagain besar lembaga keuangan syari’ah. instrumen pembayaran tetap yang lain biasanya yang ditawarkan oleh lembaga keuangan mikro adalah penyaluran dana berbasis fee. sehingga dari sudut pandang bisnis masyarakat tidak ada kelebihan yang dimiliki oleh lembaga keuangan syari’ah dalam hal biaya modal yang harus dibayar oleh nasabah pembiayaan lembaga keuangan syari’ah. kecuali yang menarik adalah terpenuhinya kebutuhan dana jangka pendek masyarakat oleh lembaga keuangan mikro syari’ah, karena memang banyak sekali menawarkan jasa pegadaian yang secara keamanan penyaluran dana lebih tinggi dibandingkan dengan prinsip bagi hasil. adapun fakta yang terkait dengan fakta dan masalah yang timbul dalam penyaluran dana yang bertumpu kepada basis margin adalah sebagai berikut: a. resiko asimetri informasi antara mudharib dengan shahibul maal asimetri informasi menjadikan suatu ancaman tersendiri bagi para pelaku bisnis untuk memutuskan kerja sama bisnis secara tepat. karena informasi yang dikuasai secara sepihak akan cenderung merugikan pihak yang kurang memiliki informasi. sehingga kerja sama dengan asimetri informasi akan cenderung terjadinya eksploitasi sepihak, dimana pihak yang menguasai informasi akan bisa melakukan keputusankeputusan strategik dan tekhnis yang lebih menguntungkan dirinya. dalam konsep penyaluran dana oleh lembaga keuangan syari’ah, didapatkan fakta bahwa dalam skema bagi hasil sangat rendah. sehingga karakteristik sistem ekonomi syari’ah tidak bisa ditunjukkan, karena konsep kerja sama dalam membangun perekonomian tidak dilakukan. akan tetapi dalam tata kelolanya menekankan kepada keamanan penyaluran dana dan menghindari adanya non performing loan (npl). lalu atas dasar itulah kemudian bisa disimpulkan bahwa berkembangnya sistem perekenomian syari’ah tidak hanya menyangkut berkembangnya jumlah nasabah, jumlah kantor, karyawan ataupun laba yang dihasilkan. akan tetapi perkembangan sistem perekonomian syari’ah juga bisa ditandai dengan berkembangnya kualitas pelaksanaan dengan konsistensi yang baik atas akad transaksi syari’ah yang juga tidak menghilangkan esensi nilai atas penerapan akad tersebut. untuk menuju terbentuknya sistem perekenomian syari’ah yang baik, maka masalah asimetir informasi harus diselesaikan dengan meningkatkan kesadaran akuntabilitas bagi mitra-mitra perbankan dengan penuh kesadaran. bahkan tidak ada kesenjangan harapan informasi antara nasabah penabung dengan bank, hal ini mungkin disebabkan oleh rendahnya nilai tabungan yang ditempatkan. sehingga untuk memperoleh informasi yang lebih banyak bukanlah hal yang penting bagi nasabah. adapun nasabah deposito mudharabah yang seharusnya mendapatkan bagi hasil dan menuntut adanya informasi yang lebih besar untuk memperhitungkan hak bagi hasilnya juga tidak membutuhkan informasi yang lebih besar, karena nasabah tersebut menabung lebih karena keharusan membayar cicilan pembiayaan yang diperoleh dari bank syari’ah (yaya, aji dan ahim, 2014:98). disamping itu kebanyakan tabungan yang membentuk modal kerja nasabah adalah tabungan wadi’ah yang berbasis bonus. sehingga tidak ada kewajiban lembaga keuangan syari’ah untuk memberikan balas jasa kepada nasabahnya dan nasabah juga tidak mengharapkan kembalian atas dana yang dititipkannya. atas dasar inilah kemudian lembaga keuangan hanya cukup saja mengamankan dana yang diterimanya dan tidak ada beban untuk harus memberikan balas jasa tertentu. jika sudah tidak ada kesenjangan harapan antara nasabah dengan lembaga keuangan syari’ah dalam hal laporan dan media pelaporan keuangan terkait dana simpanannya. maka kemudian, apakah dalam penyaluran dana dengan akad kerja sama tidak bisa dilakukan dengan skema bagi hasil yang jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 76 membutuhkan informasi yang simetri antara mudharib dengan shahibul maal, dimana lembaga keuangan syari’ah akan berfungsi sebagai manajer investasi yang akan mengarahkan investasi nasabah ke investasi yang aman dan tidak meninggalkan prinsip-prinsip nilai luhur ajaran ekonomi islam. asimetri informasi inilah yang cenderung menjadikan dunia lembaga keuangan syari’ah cenderung untuk lebih hati-hati dalam menyalurkan dananya. karena informasi yang diterima dan disajikan oleh pemohon pembiayaan terkait keuangan dan proyeksi yang diberikan tidak sesuai dengan standar dan bagi lembaga keuangan mikro syari’ah hanya melihat riil jaminan yang diberikan tanpa bisa menginterpretasikan laporan posisi keuangan dan kinerja dengan baik. sehingga pembiayaan yang dimunculkan hanyalah pembiayaan-pembiayaan dengan resiko rendah dan tidak melanggar aturan syari’ah. selain itu dalam penetapan margin khususnya, nasabah pembiayaan hanyalah mendapatkan konsep yang ditawarkan dengan skema pembayaran yang ditawarkan oleh pihak lembaga keuangan syari’ah. hal ini akan menjadikan juga asimetri informasi atas penetapan margin kepada nasabah, dimana nasabah hanya menjadi objek untuk mendapatkan keuntungan dari lembaga keuangan tersebut. maka munculnya pernyataan dari masyarakat tentang tidak ada perbedaan yang signifikan antara lembaga keuangan konvensional dengan syari’ah adalah karena skema pembayaran angsuran dan keuntungan yang didapatkan oleh lembaga keuangan bersifat tetap. disamping itu penentuan keuntungan ataupun margin juga ditentukan di awal kontrak dengan nasabah sudah harus mengikuti ketentuan lembaga keuangan. meskipun hal itu dibolehkan, akan tetapi terciptanya asimetri informasi akan semakin mengemuka. b. resiko moral hazard mudharib di indonesia memang sudah sedemikian banyak kasus yang menyalahgunakan wewenang yang berdimensi terhadap kebocoran keuangan. hal ini terjadi karena dekadensi moral yang terus terjadi, sehingga banyak sekali terjadi tindakan manipulasi keuangan yang merugikan pihak lain. maka dalam kaitannya dengan investasi yang harus diberikan oleh lembaga keuangan syari’ah dalam bentuk pembiayaan bagi hasil akan sangat sulit dilakukan, karena masyarakat yang memohon pembiayaan sangat sulit dibedakan yang akan melakukan moral hazard dengan yang tidak akan melakukannya. hal ini juga mengindikasikan telah menurunnya nilai-nilai kemanusiaan. sehingga tidak jarang harga barang menjadi lebih mahal dibandingkan nilai-nilai kemanusian. manusia yang seutuhnya seharusnya meskipun hanya berupa fisik akan lebih mahal dibandingkan hewan dan harta tetap berwujud lainnya, apalagi manusia yang seutuhnya dengan karakter dan moral yaang dijunjung tinggi. selain itu moral hazard juga bisa ditanggulangi dengan jalan pengawasan yang lebih efektif dan efisien. c. biaya kontrol yang menjadi masalah mendasar juga adalah kontrol yang harus dilakukan jika bentuk penyaluran dananya dalam skema bagi hasil. karena dengan skema tersebut diperlukan kemitraan yang berkesinambungan antara lembaga keuangan syari’ah dengan nasabah. sehingga dengan adanya kerja sama akan menuntut juga biaya kontrol yang lebih besar dibandingkan dengan skema pembiayaan dengan pembayaran angsuran tetap dan pendapatan atas penyaluran dana tersebut juga yang bersifat tetap. akan tetapi dengan konsep seperti itu nilai luhur ekonomi islam yang berbasis kerja sama (taawun) akan semakin hilang dan menjelma menjadi lembaga keuangan yang berbasis intermediasi keuangan yang dihalalkan dan menghilangkan fungsi lembaga keuangan yang akan menjadi lembaga intermediasi potensi. d. tingkat keamanan penyaluran dana tingkat keamanan penyaluran dana juga menjadi faktor yang sangat penting dalam konsep penyaluran dana. sehingga harus disalurkan dengan baik kepada pihak-pihak yang bisa dipercaya, sehingga banyak sekali lembaga keuangan syari’ah terutama yang berbasis mikro syari’ah menyediakan jasa penyaluran dana yang berbasis keuntungan yang bersifat tetap. karena konsep keamanan penyaluran dana itulah menjadikan lembaga keuangan syari’ah menjadi konservatif dan hanya mengejar keuntungan. masyarakat indonesia masih hanya sebagian kecil yang bisa memahami perbedaan investasi dengan menabung. sehingga sebagian melakukan tabungan dan menganggapnya sebagai kegiatan investasi, padahal tidak ada nilai tambah yang bisa dihasilkan. hanya sebagian kecil saja yang melakukan investasi jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 77 secara langsung dan hanya minoritas yang melakukan investasi di sektor keuangan. sehingga budaya investasi inilah yang terkadang masih mempengaruhi masyarakat untuk menyertakan dananya dalam lembaga keuangan syari’ah dalam bentuk tabungan investasi yang jika dana tersebut digunakan, tidak akan memberatkan pihak lembaga keuangan dalam menyalurkan dananya. karena masyarakat juga telah dengan secara sadar mengalokasikan kelebihan dananya untuk disalurkan kepada masyarakat dalam skema kerja sama dan bagi hasil dengan segala konsekuensinya. e. pemahaman terhadap instrumen bisnis islami bisnis lembaga keuangan islam merupakan bisnis yang memiliki variabilitas jenis penghimpunan dana dan penyaluran dana yang lebih banyak. sehingga seharusnya dengan variablitas tersebut menjadi kekuatan untuk tumbuh dan berkembangnya bisnis lembaga keuangan syari’ah dengan baik. bukan kemudian variabilitas tersebut hanya dalam penentuan kontrak, sementara karakteristik dan nilai luhurnya didekatkan satu sama lain yang kemudian membiaskan dari tujuan munculnya kontrak tersebut. akad yang variatif akan memberikan pilihan yang lebih memberikan keleluasaan bagi investor/ kreditor dan debitor dalam mengikatkan dirinya dalam kontrak kerja sama yang diinginkan (baihaki, 2015:22). dalam konteks ini seharusnya calon nasabah sendiri selain lembaga keuangan syari’ah harus juga mendorong dilakukannya akad kerja sama dan tidak ingkar atas kontrak yang telah dilakukan. karena bisnis dalam islam tidak hanya menyangkut laba/ rugi akan tetapi ada tata nilai yang harus dilakukan sebagaimana etika bisnis rasulullah. saw. sehingga lembaga keuangan syari’ah seharusnya dituntut lebih sadar untuk mengembangkan jenisjenis produk penyaluran dananya dengan memanfaatkan kelebihan-kelebihan yang dimiliki oleh setiap akad dalam transaksi keuangan lembaga keuangan syari’ah. jika hal tersebut dilakukan, maka tidak akan ada bias lagi antara penyaluran dana qardul hasan yang mirip dengan murabahah. kemunculan perbankan syari’ah yang seharusnya bisa menjembatani harapan masyarakat yang memiliki surplus potensi dan minus modal kerja akan bisa diselesaikan dengan akad syari’ah yang berbasis kerja sama tidak berbasis bunga yang akan memberatkan pengusaha baru. namun hal tersebut masih belum bisa dilakukan karena faktor pelaksana kegiatan penyaluran dana khususnya tersebut hanya berorientasi pada laba dan keamanan penyaluran dananya. untuk mengatasi masalah-masalah yang timbul dalam pengembangan ekonomi syari’ah baik yang bersifat tekhnis operasional, pengembangan sumber daya dan infrastruktur. maka perlu dilakukan pendekatan kajian komprehensif yang harus dimulai dari mencari dan menentukan model entitas ataupun badan usaha secara ekonomi yang paling mendekati semangat pengembangan ekonomi syari’ah. sehingga akan ada momentum untuk mencapai cita-cita luhur ekonomi syari’ah diperlukan tempat menyemaikan transaksi yang sesuai. maka untuk memecahkan masalah ketepatan badan hukum yang seharusnya digunakan untuk pengembangan ekonomi syari’ah perlu dianalisa berdasarkan beberapa faktor berikut: 1. faktor sejarah sistem ekonomi islam berkembang dan meneladani sistem baitul maal pada zaman rasulullah. saw, sehingga dari nilai-nilai historis itulah maka untuk menuju pengembangan sistem ekonomi islam perlu untuk tidak melupakan sejarah. baitul maal wat tamwil (bmt) yang berkembang sekarang ini sebenarnya tidak boleh lepas dari nilai-nilai yang telah berkembang sebelumnya, dimana sebagai lembaga pengatur kesejahteraan sosial. akan tetapi dalam dunia kontemporer saat ini, maka lembaga tersebut tidak bisa lepas dari faktor bisnisnya. sedangkan bmt diterjemahkan sebagai lembaga keuangan mikro syari’ah yang berbadan hukum koperasi (salman, 2012:10). sehingga dengan adanya hal tersebut, maka bmt sudah sangat tepat untuk dijadikan wadah dalam pengembangan ekonomi islam tersebut. karena bmt tidak lepas dari nilai-nilai sejarah pengembangan ekonomi islam dan mengakomodir pengembangan perekonomian yang dicita-cita oleh pendiri negara kesatuan republik indonesia. kemunculan ideologi perekonomian indonesia tidak lepas dari konsep kearifan lokal masyarakat indonesia yang mayoritas muslim yaitu gotong royong. sehingga jika ekonomi islam dikembangkan dengan hanya mengakomodir kepentingan bisnis semata, maka perkembangan yang terjadi hanyalah jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 78 perkembangan yang fatamorgana dengan meninggalkan substansi dan hanya terfokus kepada hal-hal yang bersifat kepentingan sesaat yaitu laba yang terbatas kepada suatu periode tertentu. selain itu yang lebih penting adalah bagaimana peradaban itu berkembang dan tidak terpengaruh oleh kepentingan atau bahkan menjadi alat kepentingan peradaban yang lain. 2. faktor cita-cita ideologis badan usaha setiap badan usaha memiliki cita-cita ideologisnya masing-masing, dimana perusahaan perseorangan tentunya didirikan untuk kepentingan pemiliknya. begitupun persekutuan perdata, firma, dan persekutuan komanditer yang didirikan oleh beberapa orang atau lembaga bertujuan untuk menghasilkan laba bagi para anggotanya dengan pembagian yang disepakati. perseroan didirikan yang berbasis modal dan tanggung jawab serta hak dan kewajibannya sesuai dengan proporsi modal penyertaannya. akan tetapi koperasi dibentuk dengan tujuan meningkatkan kesejahteraan anggota pada khususnya dan masyarakat pada umumnya, sekaligus sebagai bagian yang tidak terpisahkan dari tatanan perekonomian nasional yang demokratis dan berkeadilan (uu no. 25 tahun 1992 tentang perkoperasian. adapun tujuan ekonomi islam adalah untuk mewujudkan kesejahteraan sosial (kamla, 2009:929). maka bisa disimpulkan bahwa untuk mewujudkan keadilan sosial diperlukan sinergitas yang tinggi yang juga berkeadilan. adapun berdasarkan tujuan dari cita-cita lembaga keuangan tersebut, bisa disimpulkan untuk mengembangkan sistem perekonomian syari’ah yang bertujuan untuk mewujudkan keadilan sosial yang berdasarkan konsep kerja sama diperlukan lembaga keuangan berupa koperasi atau dalam konsep bisnis lembaga keuangan syari’ahnya adalah bmt. karena pembentukan bmt yang berbadan hukum koperasi tersebut seharusnya untuk menguatkan daya saing dan kesejahteraan anggota. sehingga dalam tata kelolanya nantinya akan mengarah kepada pemberdayaan, karena pada intinya koperasi atau bmt dimiliki secara bersama-sama oleh anggota dan kompensasinya atau hak atas laba tergantung usaha nyata para anggota untuk memajukan koperasi tersebut. oleh sebab itu tidak akan ada eksploitasi sepihak dari dan kepada anggota yang lain. 3. faktor bisnis bisnis lembaga keuangan syari’ah dilihat dari perkembangannya menjadi sesuatu bisnis yang prospektif, sehingga banyak sekali kantor-kantor baru lembaga keuangan syari’ah dibuka baik dalam skala mikro, kecil, menengah ataupun korporasi. padahal kemunculan mereka sebenarnya hanya dalam memenuhi kebutuhan akan laba dan tidak kehilangan pangsa pasarnya, terutama bagi korporasi perbankan yang induk perusahaannya masih banyak yang berupa lembaga keuangan konvensional. padahal jika dipahami dengan baik, bahwa bisnis islam selain berkah juga bisa menghasilkan keuntungan yang besar. karena dengan kerja sama yang baik, akan ada banyak sekali keuntungan, yang mana tingkat keuntungan yang bisa tidak terbatas dan sektor riil akan tergerak dengan baik. karena dengan adanya fungsi dari lembaga keuangan sebagai lembaga intermediasi potensi atau manajer investasi, maka akan menghasilkan suatu pola investasi langsung yang menggerakkan sektor riil dan tidak hanya bersifat keuangan. hal ini akan bisa diwujudkan dengan baik, jika dalam proses bisnis lembaga keuangan syari’ah tersebut dilakukan oleh koperasi yang biasanya bergerak di bidang usaha penyaluran produk karyawannya dan menyediakan kebutuhan anggotanya. sehingga setiap keuntungan yang timbul dari setiap usaha para anggota akan kembali kepada para anggota tersebut. disamping itu koperasi bisa berperan ganda sebagai suplier dan konsumen yang akan menguatkan perekonomian anggota dalam menghadapi persaingan pasar yang lebih luas. dalam hal kebutuhan akan modal, maka skema pembiayaan yang tidak hanya berbasis margin atau menggunakan pembayaran tetap akan menjadi alternatif bagi masyarakat akar rumput yang menjadi bagian terbesar masyarakat indonesia khususnya yang mayoritas juga beragama islam. sehingga penyelamatan aqidah atas ekonomi merekapun harus menjadi perhatian dalam tata kelola bisnisnya. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 79 4. ketepatan untuk menjawab tantangan atas lima masalah-masalah pokok tersebut diatas yang meliputi resiko asimetri informasi antara mudharib dengan shahibul maal, resiko moral hazard mudharib, biaya kontrol, tingkat keamanan penyaluran dana, pemahaman terhadap instrumen bisnis islami bisa diterapkan jika ekonomi islam dikembangkan dalam bentuk koperasi ataupun bmt. karena dengan pengembangan sistem perekonomian dengan menggunakan lembaga keuangan bmt atau koperasi, tidak akan ada asimetri informasi. koperasi melandaskan pengelolaan dari, oleh dan kepada anggota. sehingga pengurus, pengawas dan pemiliknya adalah anggota. koperasi melandaskan operasionalnya pada kerja sama dan keunggulannya adalah memiliki tujuan untuk meningkatkan kesejahteraan anggota. maka dengan demikian koperasi bisa menjadi badan usaha yang tepat dalam mewujudkan cita-cita luhur sistem perekonomian syari’ah yang menginginkan terwujudnya kesejahteraan sosial. disamping itu bmt yang berbadan hukum koperasi memiliki kewajiban yang diikat oleh aqidah islam untuk juga bertanggung jawab secara sosial dalam bentuk dana zakat, infaq, shadaqah dan waqaf. atas dana-dana yang dialokasikan ataupun dihimpun tersebut harus dilaporkan dalam laporan keuangan sesuai dengan amanat dalam standar akuntansi syari’ah 101 tentang penyajian laporan keuangan syari’ah. terwujudnya kesejahteraan sosial akan lebih terwujud, karena adanya pola kemitraan antara orangorang yang terlibat dalam perikatan. baik itu dalam prinsip bagi hasil, bonus, margin ataupun sewa. hal ini dilandasi oleh sebuah orientasi awal yang bersifat tolong menolong (baihaki, 2015:23). sehingga koperasi atau bmt adalah solusi terbaik untuk mewujudkan semangat bekerja sama seperti yang diajarkan oleh islam dan nilai-nilai luhur budaya bangsa yaitu gotong royong. dengan prinsip tersebut, maka diharapkan tidak ada kesenjangan informasi dari pihak yang memerlukannya. moral hazard yang juga sering terjadi biasanya diakibatkan oleh kurangnya integritas penanggung jawab suatu entitas, sehingga pertanggung jawaban hanya dimaknai sebagai suatu laporan yang bersifat kuantitatif saja. akan tetapi laporan yang seharusnya disajikan bisa memaknai sebuah aktivitas. misalnya terbukti pada tabel 2 dan 3 tentang skema pembiayaan yang dilakukan oleh bank umum syari’ah dan bprs lebih banyak dan bahkan diatas 50% menggunakan akad murabahah yang berbasis margin yang jika diperhatikan sebenarnya dengan skema tersebut masalah tidak terakomodirnya pemilik potensi yang miskin modal kerja tidak terselesaikan. pada tabel 4 dan 5 menunjukkan bahwa sektor yang banyak digeluti masyarakat belum banyak disentuh oleh skema pembiayaan bus dan bprs. sehingga hal tersebut menjadi tugas dan tanggung jawab koperasi ataupun bmt yang memiliki cakupan operasional lebih kecil dan seharusnya menyentuh kehidupan masyarakat secara langsung untuk memperhatikannya. karena dengan model koperasi yang juga mengedepankan pembinaan kepada anggota dan melindungi kepentingan anggota maka moral hazard antara pengelola yaitu anggota yang menjadi pengurus dan anggota biasa bisa dijembatani. karena berangkat dari tujuan dan cita-cita yang sama, sehingga sangat tidak layak untuk melakukan tindakan-tindakan yang merugikan anggota yang lain. untuk melakukan kerja sama yang baik antar pihak diperlukan biaya kontrol yang besar yang dimulai dari studi kelayakan sebelum terjadinya kontrak dan setelah terjadinya kontrak. maka biasanya lembaga keuangan konvensional akan melakukan studi kelayakan dengan baik dan akan membebankan segala bentuk kejadian setelah terjadinya kontrak kepada nasabahnya. hal ini terjadi karena keterbatasan sumber daya yang ada untuk melakukan kontrol kemitraan atas akad-akad dalam bentuk kerja sama. akan tetapi dengan koperasi ataupun bmt biaya kontrol itu akan menjadi lebih murah, karena ruang lingkupnya yang langsung berhadapan dengan nasabahnya dan dalam ruang lingkup satu wilayah. selain itu koperasi ataupun bmt bisa memanfaatkan semangat para anggotanya sebagai kontrol internal atas pribadi masing-masing anggota untuk tidak menyalahgunakan kepercayaan dari anggota yang lain untuk memajukan koperasi. yang paling penting dari itu semua adalah dalam koperasi ataupun bmt adalah setiap kenaikan pendapatan akan menjadi kenaikan pendapatan bagi seluruh anggota koperasi dan berbanding lurus juga dengan peran serta aktif para anggota koperasi untuk memajukan koperasi yang dibentuknya. jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 80 koperasi juga bisa menjadi wahana ataupun solusi untuk memberikan pemahaman tentang bisnis islam yang memiliki variabilitas akad yang jauh lebih komprehensif dibandingkan konvensional yang hanya berbasis bunga dan hanya dikelola dan bentuk produk yang beraneka ragam. akan tetapi dengan koperasi maka akad-akad yang tidak familiar karena faktor resiko ataupun cakupan yang tidak terpenuhi akan menjadi solusi, karena dengan ruang lingkup yang lebih kecil maka resiko akan semakin kecil. sehingga adanya koperasi atau bmt diharapkan bisa meningkatkan pemakaian akad yang sesuai yang akan menuju tercapainya tujuan dari keberadaan akad syari’ah tersebut. adanya keterterapan akad yang lebih beragam akan menunjukkan bahwa lembaga keuangan syari’ah bukanlah lembaga bisnis yang dibentuk yang hanya berubah bentuk dari akad-akad konvensional, akan tetapi memang lembaga keuangan syari’ah betul-betul memiliki ciri khas yang bisa membedakannya dengan lembaga keuangan konvensional dan bukan hanya menjadi alternatif akan tetapi menjadi pilihan. 5. kesimpulan a. ekonomi syari’ah yang mengakomodir tata kelola keuangan negara seperti yang terjadi pada zaman rasulullah. saw yaitu bmt, maka untuk mengembangkan perekonomian islam, faktor sejarah harusnya juga menjadi pertimbangan. b. koperasi patut menjadi penopang perkembangan sistem ekonomi islam, karena memiliki cita-cita luhur dan tujuan yang sama dengan tujuan sistem ekonomi islam yaitu berbasis kerja sama untuk kesejahteraan bersama. c. koperasi ataupun bmt mampu menjadi generator untuk menjembatani tidak diakomodirnya sektor ekonomi mayoritas masyarakat oleh lembaga keuangan formal yang berbentuk bus dan bprs yang biasanya berbasis modal. d. lembaga keuangan syari’ah yang biasanya banyak menyalurkan dananya dengan skema pembayaran balas jasa atas pembiayaan yang diterimanya bersifat tetap. maka dengan koperasi ataupun bmt akan banyak sekali keterterapan variabilitas akad yang tersedia untuk bisnis lembaga keuangan syari’ah. karena dengan bmt akad kerja sama akan lebih mudah dilakukan dengan dekatnya cakupan operasional yang juga akan meningkatkan pemberdayaan dan biaya kontrol yang tidak terlalu besar. e. moral hazard juga akan lebih mudah dikurangi karena adanya semangat kebersamaan dan kekeluargaan untuk meningkatkan kesejahteraan bersama. f. melindungi kepentingan kaum yang termarginalkan secara ekonomi dengan meningkatkan kesejahteraan mereka melalui kewajiban sosial dengan dana zakat, infaq dan shadaqah yang berbasis lingkungan lokal. karena dalam penyalurannya akan lebih mudah dilakukan dengan semakin sempitnya cakupan operasional. sehingga masalah-masalah kesenjangan kesejahteraan sosial akan lebih mudah diselesaikan dengan semakin realistisnya pemahaman atas masalah di masyarakat. daftar pustaka al arif, m. nur rianto, euis amalia. 2010. teori mikroekonomi: suatu perbandingan ekonomi islam dan ekonomi konvensional. jakarta: kencana prenada media group. asyhadie, zaeni. 2009. hukum bisnis prinsip dan pelaksanaannya di indonesia. jakarta: rajawali pers. baihaki, ach. 2015. analisis penerapan akuntansi syari’ah pada entitas non lembaga keuangan syari’ah. equilibrium vol. 4 (1 juli 2015). 15-32. chapra, m. umer. 2000. is it necessary to have islamic economics?. the journal of socio-economics 29 (2000). 21-37 jurnal ilmiah bidang akuntansi dan manajemen (jema) vol. 14 no. 1 (2017) http://riset.unisma.ac.id/index.php/jema 81 chong, beng soon, ming-hua liu. 2009. islamic banking: interest-free or intersest based?. pacificbasin finance journal 17 (2009) 125–144 harahap, sofyan syafri. 2001. akuntansi islam. jakarta: bumi aksara. kamla, rania. 2009. critical insights into contemporerary islamic accounting. critical perspective on accounting 20 (2009). 921-932. muhammad. 2005. pengantar akuntansi syari’ah. jakarta. salemba empat. qs. al-maidah ayat 2 sakai, minako. growing together in partnership: women's views of the business practices of an islamic savings and credit cooperative (baitul maal wat tamwil) in central java, indonesia. women's studies international forum 33 (2010) 412–421 salman, kautsar riza. 2012. akuntansi perbankan syari’ah berbasis psak syari’ah. jakarta: akademia permata. silondae, arus akbar, andi fariana fathoeddin. 2013. aspek hukum dalam ekonomi dan bisnis (edisi revisi). jakarta: mitra wacana media. uud 1945 pasal 33 ayat 1 uu no. 17 tahun 2012 tentang perkoperasian yaya, rizal. aji erlangga martawireja, ahim abdurrahim. 2014. akuntansi perbankan syariah teori dan praktik kontemporer edisi 2. jakarta: salemba empat. www.st2013.bps.go.id/dev/st2013/index.php/site/tabel?tid=23&wid=0 (diakses 25 agustus 2015) http://pusat.baznas.go.id/wp-content/uploads/downloads/2015/06/laporan-desember-2014.pdf (diakses tanggal 3 november 2015) http://www.ojk.go.id/data-statistik-perbankan-syariah (diakses tanggal 5 oktober 2015) *) ach baihaki, universitas madura http://www.st2013.bps.go.id/dev/st2013/index.php/site/tabel?tid=23&wid=0 http://pusat.baznas.go.id/wp-content/uploads/downloads/2015/06/laporan-desember-2014.pdf http://www.ojk.go.id/data-statistik-perbankan-syariah optimal portfolio construction: application of sharpe's single-index model on dhaka stock exchange by imroz mahmud jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 60 optimal portfolio construction: application of sharpe's single-index model on dhaka stock exchange imroz mahmud *) abstract this study aims to find whether sharpe's single-index model of portfolio construction offers better investment alternatives to the investors of the dhaka stock exchange (dse). for this purpose, month-ended closing price data of 178 companies listed on the dse, the prime bourse of bangladesh, and the month-ended index value of dsex have been used for the period starting from january 2013 to february 2018. the stocks selected for this study belong to 16 industrial sectors, and purposive sampling technique has been used to select these sectors. sharpe's model formulates a unique cut-off rate and selects the stocks having an excess return-to-beta ratio above that rate. in this study, 54 stocks qualified to be a part of the optimal portfolio. hence, the proportion of investment to be made on each of the stock is calculated according to the model. the study reveals that three industries occupy a hefty chunk (65.78%) of the proposed investment portfolio. the constructed portfolio offers a monthly return of 2.1489% and carries 1.9516% risk as measured by standard deviation. the beta of the optimal portfolio is only 0.124003. the constructed portfolio outperforms every individual stock as well as the market index in terms of offering the optimal riskreturn combinations. therefore, this five-and-a-half-decade-old model offers a great opportunity for bangladeshi investors to optimize return and diversify risk in an efficient manner. keywords: single-index model; sharpe; optimal portfolio; dhaka stock exchange 1. introduction 1.1 research background the ground-breaking article published by markowitz in 1952 marked the beginning of modern portfolio theory. his model is concerned with creating an optimal portfolio of assets by risk-averse investors. according to markowitz (1952), a risk-averse investor should choose efficient portfolios. an efficient portfolio is one that maximizes return for a given level of risk or minimizes risk for a given level of return. markowitz's pioneering article, named portfolio selection, and his subsequent studies have been a source of inspiration for many researchers and scholars. his model was intended to be pragmatic and implementable. however, it is ironic that the volume of work required to construct an optimal portfolio was staggering, and thus the model was rarely used in practice (elton, gruber, & padberg, 1976). to form a portfolio using markowitz's model we will need n×(n-1)/2 correlation coefficients, where "n" stands for the number of stocks a firm or an investor follows (elton, gruber, brown, & goetzmann, 2009). consequently, the implementation of the model is also quite time consuming and expensive. recognition of these problems has motivated researchers to develop and simplify the portfolio construction process. in quest of a solution, william f. sharpe came up with a simplified alternative to the markowitz's model that significantly reduces the data input and computational requirements. the model developed by sharpe, known as sharpe single-index model, is based on the assumption that co-movement between stocks' return is due to movement in return of a broad market index (sharpe, 1963). such a return on a broad market index is taken as a valid substitution for the common macroeconomic factor (bodie, kane, & marcus, 2009). according to sharpe's model, a single value, known as the cut-off rate, measures the desirability of including security in http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 61 the optimal portfolio. the portfolio construction process is simplified if the cut-off rate can dictate which securities to include in our optimal portfolio, and which ones to exclude. this simplified model not only allows an investor to pick securities for his/her optimal portfolio but also helps determine how much to invest in each of those securities (elton, gruber, & padberg, 1976). hence, this five-and-a-half-decade-old model is still considered as one of the simplest and most widely used models for portfolio construction. dhaka stock exchange (dse), formerly known as east pakistan stock exchange association ltd. (1954-1962) and east pakistan stock exchange ltd. (1962-1964), began its journey long before the independence of bangladesh with a paid-up capital of about bdt 4 billion (dhaka stock exchange, 2017). the introduction of dse has opened the door to many investors and businesses in fulfilling their investment and financing needs. however, dse evolved slowly and could not properly fulfill these needs due to various political unrest, corruption, military coups and other massive anomalies (rahaman, hasan, & ahsan, 2013). these evils have always haunted the capital market of bangladesh that resulted in some turmoils in 1990, 1996, 2011 and 2012 for instance. as a result, investors’ trust and confidence in dse have plummeted. unless we make the necessary changes to this situation, the capital market can’t contribute in a desirable way to the economic growth of bangladesh. these present a great challenge for the rational investors of bangladesh in picking a good investment, which necessitates the adoption of a systematic approach in the investment decision. a sound and in-depth knowledge of portfolio analysis can help them to diversify the investment risk without unfavorably affecting the return. the present study has been carried out with a view to evaluating how well the portfolio constructed using sharpe's single-index model performs in the bangladeshi capital market. besides, the study aims to assist both domestic and foreign investors of dse in simplifying the construction of an optimal portfolio of equity securities. although there have been extensive studies on this regard in the developed economies, empirical work on simplifying the portfolio construction and evaluation of its performance is comparatively scarce in the developing economies. specifically, in bangladesh, there is a significant lacuna of research in this context. besides, none of the studies carried out in the developing economies consisted of a wide-ranging collection of stocks representing various industrial sectors. as a result, these studies cannot completely reveal the portfolio optimization potential of sharpe's model. 1.2 research problem a) does sharpe’s model of portfolio construction offer better risk-return combination to the investors of dse? b) does the portfolio construction model propounded by sharpe simplify the investment decision for the investors of dse? 1.3 research purpose the primary objective of this study is to find whether sharpe’s single-index model of portfolio construction offers better investment options to the investors of dse. 2. theoretical framework before markowitz's monumental work on portfolio selection, investors concentrated on evaluating the risk and return characteristics of individual stocks in constructing their portfolios. the rule of thumb was to pick a stock that offered the best opportunity of earning reward with the least amount of risk (paudel & koirala, 2007). markowitz revolutionized the investment criteria by http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 62 suggesting three statistics: mean, standard deviation, and correlation with other stocks for selecting the best portfolio at any given level of risk. the theoretically sophisticated and conceptually comprehensive model of markowitz has a severe drawback: the volume of work required to form a portfolio using this model is staggering and beyond the capacity of all but a few specialists. a lot of researchers tried to simplify the portfolio construction process and finally, william f. sharpe came up with a solution in 1963 that is known as sharpe's single-index model. skarica & zrinka (2012) stated that the classical markowitz’s model often been criticized because of useless and impractical as they are not structured to apply a mean-variance optimization approach. elton, gruber, & padberg (1976, 1977, 1978) applied a variety of models, such as singleindex, multi-index, and constant correlation models, to establish simple criteria for optimal portfolio selection. according to their findings, they have suggested using the single-index model for its simplicity and efficiency. the model was also recommended to apply to a large population of securities as it serves as a simplified alternative to the classical mean-variance approach of portfolio optimization (haugen, 1993). paudel & koirala (2007) conducted a study on the application and comparison of markowitz and sharpe’s model and advised using either of the models for optimizing portfolio performance. however, the findings of briec & kerstens (2009) portrays a contrasting picture. they suggested using markowitz’s model for long-term investments and argued that a single-index model is not suitable for investment portfolios having multi-period durations. to form efficient portfolios using the markowitz model, clustering of high dimensional stock data was found to be more effectual (nanda, mahanty, & tiwari, 2010). by clustering stocks, the problem of efficient frontier can be solved more efficiently, which results in enhanced diversification. according to frankfurter, phillips, & seagle (1976), the single-index model is just a simplified variation to the markowitz's model, and it is based on the assumption that co-movement between stocks' return is due to movement in market return, or return of a broad market index to be specific. as per their study, both models produced identical results under conditions of certainty. however, in conditions of uncertainty, the single-index model produced superior results than markowitz's model. nevertheless, when a short span of historical data is used, the single-index model performed worse than markowitz's model. the findings of omet (1995) is also consistent with the previous studies. he stated that both models yield similar outcomes, but emphasized using the single-index model, as it is more pragmatic in generating the efficient frontier. rani & bahl (2012) used sharpe’s model for portfolio construction with and without the procedure of short sales on 30 stocks selected from bse (bombay stock exchange). both of their portfolios were efficient as they offered the best risk-return combinations possible. but the portfolio prohibiting short sales performed a tad bit better than the one allowing it. sen & fattawat (2014) also attempted to construct portfolios from 30 stocks, listed on bse, using both markowitz and sharpe’s model. their study revealed that sharpe’s model outperformed its predecessor in risk reduction. in another study, singh & gautam (2014) and ahuja (2017) formed an optimal portfolio of stocks selected from the banking sector of nse (national stock exchange, mumbai) and bse (bombay stock exchange). they also suggested sharpe’s model for its simplicity and efficacy. from the literature reviewed, we could easily conclude that most of the studies were conducted in the developed economies. only a few studies were carried out in the developing ones. specifically, in bangladesh, there exists a lacuna of research regarding this context. besides, none of the studies conducted in developing economies were extensive. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 63 2.1 sharpe’s single-index model william sharpe (1963) simplified variant of the markowitz model, universally known as the sharpe’s single-index model, assumes that the co-movement between stocks’ return is due to movement in return of a broad market index, which is dsex in our case. hence, the primary equation underlying the single-index model is: 𝑅𝑖 = 𝛼𝑖 + 𝛽𝑖 𝑅𝑚 + 𝜀𝑖 (1) where, 𝑅𝑖 = expected return on security i, 𝛼𝑖 =intercept of the straight line or alpha coefficient (constant), 𝛽𝑖 = slope of a straight line or beta coefficient, 𝑅𝑚 = the rate of return on market index, and 𝜀𝑖 = error term. alpha co-efficient (𝛼𝑖 ) and error term (𝜀𝑖) are two components of a random variable denoted by 𝑎𝑖 . since the error term (𝜀𝑖) has an expected value of zero, therefore the mean return on security can be expressed as: �̅�𝑖 = 𝛼𝑖 + 𝛽𝑖 𝑅𝑚 (2) to perform the portfolio optimization, the measurement of spread and co-movement of return statistics is also required. the mathematical equations required regarding this respect are: 𝜎𝑖 2 = 𝛽𝑖 2𝜎𝑚 2 + 𝜎𝑒𝑖 2 (3) where, 𝜎𝑖 2 = total variance of a security’s return, 𝛽𝑖 2𝜎𝑚 2 = market-related variance, 𝜎𝑒𝑖 2 = variance of a stock's movement that is not associated with the movement of the market index, i.e. the stock's unsystematic risk. 𝜎𝑖𝑗 = 𝛽𝑖 𝛽𝑗 𝜎𝑚 2 (4) where, 𝜎𝑖𝑗 =the covariance of returns between securities i and j, 𝛽𝑖 = beta of security i, 𝛽𝑗 = beta of security j, and 𝜎𝑚 2 = variance of market return. the monthly return of the selected securities is calculated using the following equation. 𝑅𝑖𝑡 = 𝑃𝑖𝑡 𝑃𝑖𝑡−1 − 1 (5) where, rit = monthly return on stock i at time t, pit = monthly closing price of the stock i at time t, and pit−1 = monthly closing price of the stock i at time t-1. in the same manner, the return characteristics of the benchmark market index (dsex) is calculated using the following equation. 𝑅𝑚𝑡 = 𝐼𝑖𝑡 𝐼𝑖𝑡−1 − 1 (6) where, rmt = monthly return on the market index at time t, iit = monthly closing market index value at time t, and iit−1 = monthly closing market index value at time t-1. the excess return yielded by risky security is calculated by subtracting the risk-free rate of return, which is 0.4784 percent per month (or 5.74 percent per annum) in our case, from the expected return of that risky security. the sensitivity of security's return to the movement in the market's return, popularly known as systematic risk or beta coefficient, is required for analyzing the risk of a security. the beta coefficient can be calculated as follows: 𝛽𝑖 = 𝜎𝑖𝑚 𝜎𝑚 2 (7) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 64 where, 𝜎𝑖𝑚 = covariance of the stock i return with the market return, and 𝜎𝑚 2 = variance of the market return. based on the equations depicted above, it is just a matter of a few steps to reach our optimal portfolio. sharpe's single-index model greatly simplifies the portfolio construction process by taking a single number to quantify the desirability of a stock’s inclusion in the optimal portfolio. if one is ready to accept the standard form the single-index model as describing the co-movement between securities, such a number exists. in this instance, the desirability of any stock is directly related to the excess return to the beta ratio (elton, gruber, brown, & goetzmann, 2009): 𝑅𝑖 −𝑅𝑓 𝛽𝑖 (8) where, 𝑅𝑖 = expected return on stock i, 𝑅𝑓 = return on a riskless asset, and 𝛽𝑖 = expected change in the rate of return on stock i associated with a 1% change in the market return. the excess return to beta ratio measures the additional return on security for each unit of systematic risk or non-diversifiable risk. in a colloquial manner, this ratio expresses the relationship between the potential risk and reward. once we have the excess return to the beta ratio for each of the stocks under consideration, the following step is to rank those stocks in descending order of their respective ratios. since we are assuming that short selling is prohibited, any stock with a negative excess return to beta ratio has been excluded from further analyses. the stocks to be included in the optimal portfolio depend on an unprecedented cutoff rate such that all stocks with higher ratios of (𝑅𝑖 − 𝑅𝑓 )/𝛽𝑖 are included and all stocks with lower ratios are excluded. this cut-off point is indicated by c*, and is computed from the characteristics of all the stocks that belong to the optimal portfolio. to determine c*, it is required to estimate its value as if there were different numbers of stocks in the optimal portfo lio. if we nominate 𝐶𝑖 as a candidate for c*. the value of 𝐶𝑖 is calculated when i securities are assumed to belong to the optimal portfolio. for a portfolio of i stocks, 𝐶𝑖 is given by: 𝐶𝑖 = 𝜎𝑚 2 ∑ (𝑅𝑗−𝑅𝑓)𝛽𝑗 𝜎𝑒𝑗 2 𝑖 𝑗=1 1+𝜎𝑚 2 ∑ 𝛽𝑗 2 𝜎𝑒𝑗 2 𝑖 𝑗=1 (9) where, 𝜎𝑚 2 = the variance in the market index, and 𝜎𝑒𝑗 2 = the variance of a stock’s movement that is not associated with the movement of the market index. this is commonly referred to as a stock’s unsystematic risk. after estimating the 𝐶𝑖 of all the stocks, the highest 𝐶𝑖 value is selected as the cut-off point (c*), which is then compared with the excess return to the beta ratio of each stock. all stocks used in the calculation of 𝐶𝑖 have an excess return to beta above 𝐶𝑖 and all stocks not used to calculate 𝐶𝑖 have an excess return to beta below 𝐶𝑖 . there will always be one and only one 𝐶𝑖 with this property and it is the cut-off point, c*. after determining which stocks to be included in the optimal portfolio, the investors must find out the optimum percentage of capital to be invested in each of them. the percentage invested in each stock is: 𝑋𝑖 = 𝑍𝑖 ∑ 𝑍𝑗 𝑁 𝑗=1 (10) where 𝑍𝑖 = 𝛽𝑖 𝜎𝑒𝑖 2 ( 𝑅𝑖 −𝑅𝑓 𝛽𝑖 − 𝐶 ∗) (11) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 65 the former expression indicates the weights on each stock, and they sum up to one. the latter expression determines the relative investment in each stock. the residual variance on each security 𝜎𝑒𝑖 2 plays a vital role in determining the amount to be invested in each security. after determining the weights on each security, beta and alpha on a portfolio are estimated to find out the portfolio risk and return. beta on a portfolio, 𝛽𝑝, is a weighted average of the individual 𝛽𝑖 on each stock in the portfolio and is denoted by: 𝛽𝑝 = ∑ 𝑋𝑖𝛽𝑖 𝑛 𝑖=1 (12) similarly, the alpha on the portfolio, 𝛼𝑝, is calculated as: 𝛼𝑝 = ∑ 𝑋𝑖𝛼𝑖 𝑛 𝑖=1 (13) the return on the investor's portfolio can be expressed as: 𝑅𝑝 = 𝛼𝑝 + 𝛽𝑝 𝑅𝑚 (14) finally the risk of the investor’s portfolio, 𝜎𝑝, as: 𝜎𝑝 = √(𝛽𝑝 2𝜎𝑚 2 + ∑ 𝑋𝑖 2𝑁 𝑖=1 𝜎𝑒𝑖 2 ) (15) all the equations (eq. 1-15) cited above are sourced from the book of elton, gruber, brown, & goetzmann (2009). 3. research method 3.1 research design in the pursuit of constructing an optimal portfolio of equity securities traded on dse, monthly closing price and benchmark market index (dsex) data have been used for the period starting from january 2013 to february 2018. the secondary data used in this study are collected from dse library. 3.2 population and sample the study was initially aimed at all, 228 to be specific, the "a" category companies offering equity securities that belong to sixteen industrial sectors. the industries covered in this study are listed in table 1. purposive sampling technique has been applied to select these industrial sectors. the companies which are regular at holding annual general meetings and have declared a dividend at the rate of ten percent or above in the last calendar year are classified as “a” category companies (dhaka stock exchange, 2018). due to the unavailability of data during the aboved study period, 50 companies have been excluded from the portfolio construction, which leads to a final sample size of 178 companies. the average monthly cutoff yield of 91-day treasury bill has been used as a proxy for the risk-free rate of return (bangladesh bank, n.d.). the 178 sample companies selected following the above-mentioned criteria constitutes 61.59 percent of all the equity securities (289) from the sixteen industrial sectors (refer to table 1). a number of statistical techniques have been applied to analyze the risk-return characteristics and to construct the optimal portfolio of equity securities using microsoft excel 2016. in addition to substantial data coverage, the study covers a period of five years and two months, which reduces the possibility of sampling error and the influence of temporary fluctuations to distort the study outcome. hence, the sample size can be assumed as adequate to represent the population and make smart investment decisions. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 66 table 1 sector-wise representation of sample stocks name of the industry/sector total number of companies number of category-a companies sample companies data coverage (%) banks 30 29 29 96.67% financial institutions 20 12 12 60.00% engineering 36 29 17 47.22% food & allied 18 9 8 44.44% fuel & power 19 16 13 68.42% jute 3 2 2 66.67% textile 49 35 18 36.73% pharmaceuticals & chemicals 28 24 16 57.14% service & real estate 7 6 3 42.86% cement 7 6 5 71.43% it sector 8 7 5 62.50% tannery industries 6 5 4 66.67% ceramics sector 5 3 3 60.00% insurance 47 42 41 87.23% telecommunication 2 2 1 50.00% travel & leisure 4 1 1 25.00% total 289 228 178 61.59% source: secondary data processed, 2018 3.3 research framework picture 1 research framework 4. research result and analysis 4.1 descriptive analysis risk and return have always been the decisive factors in any investment model, and sharpe's single-index model is of no exception. to apply this model, expected return and risk of each instrument are required. thus, the month-ended closing price data of the 178 sample stocks as well as the month-ended index value of dsex, for the period ranging from january 2013 to february 2018, have been used to estimate various risk and return characteristics. the mean monthly return and risk in terms of standard deviation, variance, covariance with market return, and the beta coefficient for each of the selected stocks have been calculated and depicted in appendix-a. the risk-return combinations offered by each of the 178 selected stocks have been portrayed in picture-1. analysis of the return data on the vertical axis reveals that most of the stocks yielded a monthly return from -0.27 percent to 1.3 percent. however, the average risk carried by the stocks is about 11.5 percent (picture 1). although picture 1 paints an overall picture of the risk and returns dhaka stock exchange sharpe’s single-index model optimal portfolio investment http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 67 composition offered by the stocks, we cannot pinpoint any precise information from it. an in-depth examination of the data in appendix-a can be quite useful in this regard. as revealed by appendix a, the stock of northern jute manufacturing co. ltd. yields the highest monthly return (8.227 percent) followed by desh garments ltd. (5.439 percent) and renwick jajneswar & co (bd) ltd. (4.892 percent). in terms of risk, the stock of legacy footwear ltd. has the highest standard deviation (29.845 percent) followed by grameenphone ltd. (27.499 percent) and northern jute manufacturing co. ltd. (26.969 percent). it is also found that 114 stocks offered a return below the market rate, which is 0.681 percent in our study, and surprisingly none of the stocks in this study had a beta value above the market. picture 2 risk-return combination of each stock (secondary data processed, 2018) according to sharpe’s single-index model, the expected return (�̅�𝑖) has two components: a unique or firm-specific part (𝛼𝑖 ) and a market-related part (𝛽𝑖 𝑅𝑚 ). likewise, a security’s variance (𝜎𝑖 2) has the same two components: a unique risk (𝜎𝑒𝑖 2 ) and a market-related risk (𝛽𝑖 2𝜎𝑚 2 ). the stocks having larger beta value also have a greater part of return that is dependent on the market’s performance. breakdowns of risk & return will guide us to glean some idea about how much this model is going to benefit the investors in their quest for optimizing risk and return. besides, these variables will be used in further calculations related to portfolio construction and performance evaluation. hence, the decomposition of each firm's return and risk into unique and market-related parts are presented in appendix-b. by analyzing the decomposition of return, we can infer that the contribution of a stocks independent component is the dominant factor than its market-related component. similarly, the breakdown of risk leads us to the identical conclusion: the contribution of a security’s unsystematic variance in its total variance is the dominant factor than its systematic variance. the result suggests that the stocks selected for this study offer a significant opportunity for reduction of unsystematic risk, which we will be able to verify when we construct the optimal portfolio and measure its performance. sharpe’s model provided a simple criterion, called the excess return-to-beta ratio, to quantify the desirability of a stock’s inclusion in the optimal portfolio. therefore, the excess return-to-beta -0,04 -0,02 0,00 0,02 0,04 0,06 0,08 0,10 0 ,0 0 0 ,0 5 0 ,1 0 0 ,1 5 0 ,2 0 0 ,2 5 0 ,3 0 0 ,3 5 m e a n r e tu rn standard deviation http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 68 ratio for each stock has been calculated and the stocks are ranked in descending order according to their respective ratios (appendix-c). the mean monthly cutoff yield of 91-day treasury bill, which is 0.4784 percent, has been used as a proxy for the risk-free rate of return. of the 178 stocks studied, only 70 stocks have a positive excess return-to-beta ratio. since short selling is assumed to be prohibited, the rest of the stocks have been excluded from further analysis. among the stocks studied, renwick jajneswar & co (bd) ltd. secured the top spot with an excess return-to-beta ratio of 6.18333. legacy footwear ltd. and grameenphone ltd. were in the second and third spot with the respective ratio of 4.21675 and 1.12589 (appendix-c). among the top scorers, only renwick jajneswar & co (bd) ltd. secured the third position in terms of highest return generation. these outcomes suggest that the significantly lower beta value of legacy footwear ltd. and grameenphone ltd. is the reason why these companies made their way to the top of the chart in terms of the excess return-to-beta ratio. 4.2 validity and reliability this study only used secondary data from dsex to defined the optimal investment portfolio proposed model, therefore, the validity and reliability test is not needed in this study. 4.3 research analysis according to the single-index model, the selection of stock in the optimal portfolio depends on a unique cut-off rate (𝐶 ∗) and its comparison with the excess return-to-beta ratio of each stock studied. all stocks used for the estimation of 𝐶 ∗have an excess return-to-beta ratio above the cut-off rate and the stocks excluded from the estimation have an excess return-to-beta ratio below that rate. the detailed calculation of the cut-off rate is portrayed in table 2. table 2 calculation of the cut-off rate rank stock no. 𝑅𝑗 − 𝑅𝑓 𝛽𝑗 (𝑅𝑗 − 𝑅𝑓 )𝛽𝑗 𝜎𝑒𝑗 2 ∑ (𝑅𝑗 − 𝑅𝑓)𝛽𝑗 𝜎𝑒𝑗 2 𝑖 𝑗=1 𝛽𝑗 2 𝜎𝑒𝑗 2 ∑ 𝛽𝑗 2 𝜎𝑒𝑗 2 𝑖 𝑗=1 𝐶𝑖 1 49 6.1833 0.0073 0.0073 0.0012 0.0012 0.00002 2 134 4.2167 0.0039 0.0111 0.0009 0.0021 0.00003 3 130 1.1259 0.0148 0.0260 0.0132 0.0153 0.00006 4 107 1.0012 0.0135 0.0395 0.0135 0.0288 0.00010 5 109 0.8374 0.0276 0.0671 0.0329 0.0617 0.00017 6 135 0.6287 0.0516 0.1187 0.0821 0.1438 0.00029 7 82 0.5761 0.0203 0.1390 0.0353 0.1791 0.00035 8 106 0.4258 0.1135 0.2525 0.2666 0.4457 0.00063 9 44 0.3861 0.1156 0.3682 0.2995 0.7452 0.00091 10 61 0.3066 0.2533 0.6214 0.8262 1.5713 0.00154 11 100 0.2588 0.0416 0.6631 0.1609 1.7322 0.00164 12 114 0.2069 0.1415 0.8046 0.6838 2.4161 0.00199 13 50 0.2031 0.1291 0.9337 0.6356 3.0517 0.00230 14 84 0.1954 0.0619 0.9956 0.3169 3.3686 0.00245 15 108 0.1947 0.1225 1.1181 0.6291 3.9976 0.00275 16 81 0.1537 0.0786 1.1967 0.5114 4.5090 0.00294 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 69 rank stock no. 𝑅𝑗 − 𝑅𝑓 𝛽𝑗 (𝑅𝑗 − 𝑅𝑓 )𝛽𝑗 𝜎𝑒𝑗 2 ∑ (𝑅𝑗 − 𝑅𝑓)𝛽𝑗 𝜎𝑒𝑗 2 𝑖 𝑗=1 𝛽𝑗 2 𝜎𝑒𝑗 2 ∑ 𝛽𝑗 2 𝜎𝑒𝑗 2 𝑖 𝑗=1 𝐶𝑖 17 60 0.1528 0.1357 1.3324 0.8883 5.3973 0.00327 18 128 0.1359 0.0945 1.4269 0.6959 6.0933 0.00349 19 59 0.1270 0.2025 1.6295 1.5950 7.6883 0.00397 20 102 0.1211 0.2675 1.8970 2.2082 9.8965 0.00460 21 125 0.1186 0.0325 1.9295 0.2738 10.1703 0.00468 22 103 0.1176 0.2264 2.1559 1.9256 12.0959 0.00520 23 90 0.1047 0.0410 2.1969 0.3919 12.4878 0.00529 24 113 0.1010 0.1387 2.3356 1.3734 13.8611 0.00561 25 104 0.0992 0.0801 2.4158 0.8079 14.6690 0.00579 26 105 0.0936 0.1938 2.6096 2.0704 16.7394 0.00622 27 64 0.0896 0.0943 2.7038 1.0528 17.7922 0.00643 28 48 0.0868 0.1199 2.8237 1.3806 19.1728 0.00670 29 87 0.0819 0.1334 2.9571 1.6285 20.8013 0.00699 30 25 0.0722 0.3478 3.3050 4.8185 25.6198 0.00772 31 123 0.0647 0.1242 3.4291 1.9183 27.5381 0.00797 32 36 0.0631 0.2517 3.6809 3.9896 31.5277 0.00848 33 67 0.0618 0.3244 4.0052 5.2473 36.7750 0.00912 34 54 0.0613 0.2144 4.2197 3.4989 40.2739 0.00953 35 52 0.0565 0.3183 4.5379 5.6297 45.9035 0.01012 36 43 0.0513 0.1049 4.6428 2.0452 47.9487 0.01031 37 131 0.0511 0.1841 4.8269 3.6000 51.5487 0.01063 38 118 0.0508 0.0415 4.8684 0.8164 52.3652 0.01070 39 132 0.0496 0.4443 5.3127 8.9565 61.3217 0.01145 40 28 0.0426 0.1613 5.4740 3.7847 65.1064 0.01171 41 133 0.0290 0.1108 5.5848 3.8159 68.9222 0.01185 42 116 0.0285 0.0541 5.6388 1.8946 70.8169 0.01191 43 101 0.0280 0.3158 5.9546 11.2757 82.0925 0.01229 44 68 0.0267 0.0759 6.0305 2.8452 84.9377 0.01237 45 120 0.0254 0.1475 6.1780 5.8076 90.7453 0.01253 46 18 0.0240 0.2192 6.3972 9.1414 99.8867 0.01273 47 2 0.0223 0.1510 6.5481 6.7828 106.6695 0.01286 48 110 0.0222 0.0598 6.6079 2.6927 109.3622 0.01291 49 111 0.0219 0.5929 7.2008 27.0920 136.4542 0.01336 50 121 0.0195 0.1831 7.3839 9.4061 145.8602 0.01347 51 119 0.0193 0.0034 7.3873 0.1762 146.0365 0.01347 52 46 0.0172 0.0635 7.4508 3.6943 149.7308 0.01349 53 91 0.0162 0.0283 7.4791 1.7408 151.4716 0.01350 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 70 rank stock no. 𝑅𝑗 − 𝑅𝑓 𝛽𝑗 (𝑅𝑗 − 𝑅𝑓 )𝛽𝑗 𝜎𝑒𝑗 2 ∑ (𝑅𝑗 − 𝑅𝑓)𝛽𝑗 𝜎𝑒𝑗 2 𝑖 𝑗=1 𝛽𝑗 2 𝜎𝑒𝑗 2 ∑ 𝛽𝑗 2 𝜎𝑒𝑗 2 𝑖 𝑗=1 𝐶𝑖 54 78 0.0145 0.0944 7.5735 6.5132 157.9849 0.01351 55 74 0.0108 0.0431 7.6166 3.9735 161.9583 0.01349 56 22 0.0087 0.0587 7.6753 6.7159 168.6742 0.01344 57 39 0.0083 0.0254 7.7008 3.0653 171.7395 0.01341 58 55 0.0080 0.0509 7.7516 6.3729 178.1124 0.01335 59 76 0.0056 0.0483 7.8000 8.7019 186.8143 0.01324 60 16 0.0050 0.0542 7.8542 10.9465 197.7608 0.01308 61 10 0.0048 0.1366 7.9908 28.5501 226.3108 0.01271 62 164 0.0044 0.0032 7.9940 0.7142 227.0250 0.01270 63 122 0.0041 0.0094 8.0034 2.3078 229.3328 0.01267 64 26 0.0034 0.0181 8.0215 5.3407 234.6735 0.01259 65 129 0.0032 0.0142 8.0358 4.3931 239.0666 0.01253 66 117 0.0029 0.0288 8.0646 9.9684 249.0350 0.01238 67 77 0.0020 0.0144 8.0790 7.0901 256.1252 0.01227 68 73 0.0019 0.0140 8.0930 7.2801 263.4053 0.01215 69 89 0.0007 0.0043 8.0973 6.4328 269.8381 0.01204 70 11 0.0002 0.0012 8.0985 6.3358 276.1739 0.01193 source: secondary data processed, 2018 from table 2, it is apparent that the highest 𝐶𝑖 value is 0.01351 for stock number 78, i.e. mjl bangladesh limited; hence, the cutoff rate (𝐶 ∗) is 0.01351. sixteen stocks have an excess return-tobeta ratio below the 𝐶 ∗, therefore are excluded from the optimal portfolio. so according to sharpe’s single-index model, the remaining fifty-four stocks, having an excess return-to-beta ratio above the 𝐶 ∗, qualify to be a part of the optimal portfolio. 4.4 research discussion 4.4.1 constructing the optimal portfolio sharpe’s single-index model not only identifies the stocks to be included in the optimal portfolio but also recommends the proportion of fund to be invested in each of them. thus, the investors can reduce the unsystematic risk and construct a highly diversified portfolio. the following chart (table 3) depicts the proportion of investment to be made on the fifty-four stocks qualified for the optimal portfolio. table 3 weight of stocks in the optimal portfolio rank stock no. name 𝑍𝑖 weight (𝑋𝑖) 1 49 renwick jajneswar & co (bd) ltd. 1.01938 2.3242% 2 134 legacy footwear ltd. 0.42581 0.9709% 3 130 grameenphone ltd. 0.46446 1.0590% 4 107 kohinoor chemicals company (bangladesh) ltd. 1.04414 2.3806% 5 109 libra infusions limited 1.03220 2.3534% 6 135 monno ceramic industries ltd. 1.03242 2.3539% http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 71 rank stock no. name 𝑍𝑖 weight (𝑋𝑖) 7 82 al-haj textile mills limited 0.62054 1.4148% 8 106 pharma aids ltd. 2.19126 4.9961% 9 44 eastern cables ltd. 1.60392 3.6570% 10 61 british american tobacco bangladesh company ltd. 3.57568 8.1526% 11 100 ambee pharma ltd. 0.92550 2.1102% 12 114 marico bangladesh ltd. 1.64882 3.7593% 13 50 national tubes ltd. 0.94147 2.1466% 14 84 rahim textile mills ltd. 0.59819 1.3639% 15 108 the ibn sina pharmaceutical industry ltd. 1.21949 2.7805% 16 81 sonali aansh industries limited 0.88817 2.0250% 17 60 apex foods limited 1.03144 2.3517% 18 128 daffodil computers ltd. 0.86783 1.9787% 19 59 olympic industries limited 1.33037 3.0332% 20 102 glaxosmithkline(gsk) bangladesh limited 1.74671 3.9825% 21 125 bdcom online ltd. 0.35259 0.8039% 22 103 aci limited. 1.30947 2.9856% 23 90 anlima yarn dyeing ltd. 0.45627 1.0403% 24 113 aci formulations ltd. 0.70168 1.5998% 25 104 renata ltd. 0.82110 1.8721% 26 105 reckitt benckiser (bd.)ltd. 1.18977 2.7127% 27 64 agricultural marketing company ltd. (pran) 0.76257 1.7387% 28 48 quasem drycells ltd. 0.61289 1.3974% 29 87 apex spinning & knitting mills limited 0.79501 1.8126% 30 25 brac bank ltd. 1.31509 2.9984% 31 123 lafarge surma cement ltd. 0.55550 1.2665% 32 36 ipdc finance limited 0.87316 1.9908% 33 67 linde bangladesh limited 1.23684 2.8200% 34 54 national polymer industries ltd 0.90478 2.0629% 35 52 rangpur foundry ltd. 1.30733 2.9807% 36 43 bangladesh lamps limited 0.47902 1.0922% 37 131 apex tannery limited 0.59892 1.3655% 38 118 summit alliance port limited 0.19958 0.4550% 39 132 bata shoe company (bangladesh) limited 1.46201 3.3334% 40 28 trust bank ltd. 0.47989 1.0942% 41 133 apex footwear limited 0.28786 0.6563% 42 116 samorita hospital ltd. 0.21311 0.4859% 43 101 beximco pharmaceuticals ltd. 0.53449 1.2187% 44 68 padma oil co.ltd. 0.18160 0.4141% 45 120 heidelberg cement bangladesh ltd. 0.30133 0.6870% 46 18 mutual trust bank ltd. 0.35594 0.8116% 47 2 the city bank ltd. 0.20815 0.4746% 48 110 orion infusion ltd. 0.13563 0.3092% 49 111 square pharmaceuticals ltd. 0.72062 1.6430% 50 121 confidence cement ltd. 0.17536 0.3998% http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 72 rank stock no. name 𝑍𝑖 weight (𝑋𝑖) 51 119 unique hotel & resorts limited 0.01107 0.0252% 52 46 singer bangladesh ltd. 0.05939 0.1354% 53 91 h.r. textile ltd. 0.02716 0.0619% 54 78 mjl bangladesh limited 0.02648 0.0604% ∑ 𝑍𝑖 = 43.85946 100.00% source: secondary data processed, 2018 as shown in table 3, the largest chunk of investment (8.1526%) should be made in british american tobacco bangladesh company ltd., followed by pharma aids ltd. and glaxosmithkline (gsk) bangladesh limited with an investment proportion of 4.9961% and 3.9825%, respectively. a sector-wise study on the fifty-four stocks in our optimal portfolio, shown in picture 2, reveals that most of them belong to three industries: pharmaceuticals & chemicals, engineering, and food & allied. these three industrial sectors account for 65.78 percent of the total investment to be made in the optimal portfolio, while the rest of the twelve sectors represent only 34.22 percent of the total investment. picture 3 sector-wise proportion of investment (secondary data processed, 2018) from the above pie chart (picture 2), it is evident that pharmaceuticals & chemicals sector occupies the highest proportion of fund to be invested in the optimal portfolio, followed by engineering and food & allied industry. among the sixteen industrial sectors selected for this study, all but insurance sector have at least one representative stock in the final portfolio. hence, the final portfolio has stocks from fifteen industrial sectors that react differently to the changes in economic forces. banks, 5,38% financial institutions, 1,99% engineering, 15,80% fuel & power, 3,29% jute, 2,03% textile, 5,69% pharmaceuticals & chemicals, 34,70% service & real estate, 0,94% cement, 2,35% it sector, 2,78% tannery industries, 6,33% ceramics sector, 2,35% travel & leisure, 0,03% http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 73 4.4.2 performance of optimal portfolio once we have decided about the stocks along with their respective weights in the optimal portfolio, the final task is to evaluate its overall performance. therefore, the performance of the constructed portfolio in terms of risk and return is calculated, and the key results are summarized in table 4. for detailed calculations, refer to appendix-d. table 4 evaluation of portfolio performance portfolio return calculation portfolio risk calculation alpha on portfolio (𝛼𝑝 ) = 0.020644 ∑ 𝑋𝑖 2 𝑁 𝑖=1 𝜎𝑒𝑖 2 = 0.0003427 beta on portfolio (𝛽𝑝)= 0.124003 𝛽𝑝 2𝜎𝑚 2 = 0.0000382 return on market index (𝑅 𝑚 )= 0.6812% portfolio standard deviation (𝜎𝑝) = 1.9516% portfolio return (𝑅 𝑝 )= 2.1489% portfolio coefficient of variation (cv) = 90.8184% source: secondary data processed, 2018 as apparent from the above table (table 4), the constructed portfolio offers a generous monthly return of 2.1489 percent. however, the portfolio risk, measured by the standard deviation, is only 1.9516 percent. the portfolio has a cv of 90.8184 percent, a rate that is considerably lower than any individual stock in the optimal portfolio. the portfolio beta, expressing the systematic risk, also leads us to the identical conclusion. a comparison of the portfolio beta with that of the market indicates a substantial absence of systematic risk in the constructed one. the results of this study conform to the earlier researches conducted on portfolio optimization. since the portfolio formed using sharpe’s single-index model offers the best risk-return combinations possible in the given context, the portfolio can be termed as the optimal portfolio and the stocks consisting this portfolio as the efficient stocks. 5. research conclusion and limitation 5.1 conclusion in addition to simplifying the portfolio construction process, sharpe’s single-index model reduces the number of inputs required to form the optimal portfolio. if we were to form a portfolio using the same number of stocks, markowitz’s model would require 16,109 inputs. whereas, sharpe’s model required only 536 inputs, which is about 2,905 percent less than that of its predecessor. the findings of the study reveal a huge possibility of risk reduction through diversification while achieving a substantial return for bangladeshi investors. the constructed portfolio outperforms every individual stock as well as the market index in terms of offering the optimal risk-return combinations. therefore, this five-and-a-half-decade-old model offers a great opportunity for bangladeshi investors to optimize return and diversify risk in an efficient manner. nevertheless, investors should not slack off at this point. they need to evaluate the performance of each stock and make necessary amendments in the optimal portfolio at regular intervals. otherwise, the risk may go up and return may go down, evaporating the benefits of portfolio optimization. http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 74 5.2 limitation this study certainly has some limitations. the stocks selected for this study belong to only “a” category companies traded on dse. future studies may consider the stocks from other categories and from chittagong stock exchange (cse), the second bourse of bangladesh. in addition, the study has excluded fifty “a” category stocks for lack of data. although the monthly closing price data of five years and two months was adequate to form an optimal portfolio, daily closing price data and longer time horizon may result in better optimization of risk & return. as the study focused on simplifying the markowitz’s model of portfolio optimization using sharpe’s model, a side-by-side comparison of portfolios formed using both techniques can enhance or diminish the credibility of our hypothesis. lastly, allowing short sales may change the nature of the optimal solution, as stocks having opposite characteristics will be a part of the optimal portfolio. references ahuja, r. (2017). sharpe single index model: evidence from bombay stock exchange (bse) in india. research bulletin, 43(1). bodie, z., kane, a., & marcus, a. j. (2009). investments, eight edition. international edition. new york: mcgraw-hill/irwin. briec, w., & kerstens, k. (2009). multi-horizon markowitz portfolio performance appraisals: a general approach. omega, 37(1): 50-62. https://hal.archives-ouvertes.fr/hal-00288174. dhaka stock exchange. (2017). annual report 2016-17. dhaka: dhaka stock exchange ltd. retrieved from http://www.dsebd.org/download/annual_report.zip dhaka stock exchange. (2018). dse clearing and settlement system. retrieved from www.dsebd.org/settle.php. elton, e. j., gruber, m. j., & padberg, m. w. (1976). simple criteria for optimal portfolio selection. the journal of finance, 31(5), 1341-1357. https://doi.org/10.1111/j.15406261.1976.tb03217.x. elton, e. j., gruber, m. j., & padberg, m. w. (1977). simple rules for optimal portfolio selection: the multi group case. journal of financial and quantitative analysis, 12(3), 329-345. https://doi.org/10.2307/2330538. elton, e. j., gruber, m. j., & padberg, m. w. (1978). simple criteria for optimal portfolio selection: tracing out the efficient frontier. the journal of finance, 33(1), 296-302. https://doi.org/10.2307/2326368. elton, e. j., gruber, m. j., brown, s. j., & goetzmann, w. n. (2009). modern portfolio theory and investment analysis. new york: wiley. frankfurter, g. m., phillips, h. e., & seagle, j. p. (1976). performance of the sharpe portfolio selection model: a comparison. journal of financial and quantitative analysis, 11(2), 195204. https://doi.org/10.2307/2979049. haugen, r. (1993). modern investment theory, third edition. new jersey: prentice-hall. markowitz, h. 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(2013). stock market performance under different government periods: evidence from bangladesh. universal journal of accounting and finance, 1(2), 42-50. https://doi.org/10.13189/ujaf.2013.010202. rani, m., & bahl, s. (2012). optimal portfolio selection with or without the procedure of short sales. asian journal of research in business economics and management, 2(7), 220-234. sen, k., & fattawat, c. d. (2014). sharpe’s single index model and its application portfolio construction: an empirical study. global journal of finance and management, 6(6), 511516. sharpe, w. f. (1963). a simplified model for portfolio analysis. management science, 9(2), 277293. https://dx.doi.org/10.1287/mnsc.9.2.277. singh, s., & gautam, j. (2014). the single index model & the construction of optimal portfolio: a case of banks listed on nse india. risk governance & control: financial markets & institutions, 4(2), 110-115. https://doi.org/10.22495/rgcv4i2c1art3. skarica, b., & zrinka, l. (2012). a comparison of basic and extended markowitz model on croatian capital market. croatian operational research (crorr), 3(1), 236-244. retrieved from https://hrcak.srce.hr/96823. *) imroz mahmud, department of business administration, university of asia pacific, dhaka, bangladesh (email: imroz@outlook.com) http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 76 appendix-a: risk and return characteristics of 178 sample stocks and the benchmark market index (dsex) with code a as stock number code e as standard deviation code b as name code f as covariance code c as mean return code g as beta code d as variance a b c d e f g 1 ab bank limited -0.00260 0.01528 0.12360 0.00339 0.22182 2 the city bank ltd. 0.01113 0.01217 0.11032 0.00347 0.28493 3 ific bank ltd. -0.00070 0.02645 0.16264 0.00326 0.12338 4 islami bank bd ltd 0.00209 0.01626 0.12751 0.00250 0.15359 5 national bank ltd. -0.00479 0.01138 0.10666 0.00262 0.23006 6 pubali bank ltd. -0.00084 0.00694 0.08332 0.00188 0.27022 7 rupali bank ltd. 0.00042 0.01736 0.13175 0.00322 0.18556 8 united commercial bank ltd. 0.00287 0.01029 0.10145 0.00288 0.28005 9 uttara bank ltd. 0.00001 0.00809 0.08996 0.00265 0.32736 10 eastern bank ltd. 0.00650 0.00485 0.06963 0.00174 0.35953 11 al-arafah islami bank ltd. 0.00484 0.01143 0.10692 0.00305 0.26704 12 prime bank ltd. -0.00472 0.00863 0.09288 0.00168 0.19448 13 southeast bank ltd. 0.00426 0.00812 0.09009 0.00259 0.31930 14 dhaka bank ltd. -0.00096 0.01042 0.10209 0.00341 0.32680 15 national credit and commerce bank ltd. 0.00091 0.00520 0.07214 0.00208 0.39944 16 social islami bank ltd. 0.00599 0.00553 0.07434 0.00134 0.24267 17 dutch-bangla bank ltd. 0.00311 0.00657 0.08106 0.00215 0.32799 18 mutual trust bank ltd. 0.01123 0.00808 0.08991 0.00217 0.26881 19 standard bank ltd. -0.00235 0.00887 0.09419 0.00288 0.32447 20 one bank limited 0.00212 0.00805 0.08971 0.00296 0.36771 21 bank asia ltd. 0.00429 0.00826 0.09086 0.00196 0.23776 22 mercantile bank ltd. 0.00689 0.00882 0.09391 0.00213 0.24136 23 export import (exim) bank of bangladesh ltd. -0.00260 0.00646 0.08035 0.00203 0.31399 24 jamuna bank ltd. 0.00131 0.00565 0.07516 0.00160 0.28406 25 brac bank ltd. 0.02030 0.00971 0.09852 0.00209 0.21499 26 shahjalal islami bank ltd. 0.00553 0.00910 0.09539 0.00199 0.21899 27 premier bank ltd. 0.00008 0.00854 0.09241 0.00235 0.27575 28 trust bank ltd. 0.01457 0.01406 0.11857 0.00323 0.22960 29 first security islami bank ltd. -0.00085 0.00919 0.09588 0.00268 0.29198 30 idlc finance limited 0.00461 0.01739 0.13186 0.00480 0.27608 31 united finance limited -0.00221 0.01157 0.10756 0.00361 0.31180 32 uttara finance and investments limited. -0.00008 0.00815 0.09029 0.00328 0.40203 33 premier leasing & finance limited. 0.00417 0.01478 0.12157 0.00337 0.22791 34 islamic finance & investment ltd. 0.00183 0.01323 0.11500 0.00361 0.27282 35 lankabangla finance ltd. 0.00469 0.02970 0.17233 0.00560 0.18862 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 77 a b c d e f g 36 ipdc finance limited 0.01908 0.01299 0.11399 0.00294 0.22657 37 union capital ltd. 0.00067 0.02101 0.14493 0.00406 0.19313 38 bangladesh finance and investment co. ltd. 0.00371 0.02006 0.14165 0.00466 0.23210 39 phoenix finance and investments ltd. 0.00683 0.02006 0.14162 0.00495 0.24701 40 bay leasing & investment ltd. 0.00281 0.01693 0.13011 0.00360 0.21247 41 gsp finance company (bangladesh) limited 0.00478 0.02556 0.15987 0.00384 0.15041 42 aftab automobiles limited 0.00066 0.01322 0.11499 0.00374 0.28280 43 bangladesh lamps limited 0.01305 0.01277 0.11302 0.00206 0.16122 44 eastern cables ltd. 0.03165 0.01617 0.12718 0.00113 0.06957 45 monno jute stafflers ltd. 0.03474 0.01998 0.14137 -0.00091 -0.04531 46 singer bangladesh ltd. 0.00873 0.01435 0.11977 0.00329 0.22916 47 atlas bangladesh ltd. 0.00279 0.01168 0.10808 0.00238 0.20380 48 quasem drycells ltd. 0.01912 0.01982 0.14077 0.00327 0.16512 49 renwick jajneswar & co (bd) ltd. 0.04892 0.04320 0.20785 0.00031 0.00714 50 national tubes ltd. 0.03079 0.02582 0.16070 0.00331 0.12802 51 anwar galvanizing ltd. 0.03342 0.02169 0.14729 -0.00049 -0.02251 52 rangpur foundry ltd. 0.01526 0.00618 0.07862 0.00115 0.18526 53 s. alam cold rolled steels ltd. -0.00368 0.00830 0.09110 0.00276 0.33294 54 national polymer industries ltd 0.01611 0.00984 0.09920 0.00182 0.18475 55 bsrm steels limited 0.00718 0.01438 0.11994 0.00432 0.30040 56 navana cng limited 0.00088 0.01116 0.10566 0.00378 0.33858 57 deshbandhu polymer limited 0.00194 0.01373 0.11719 0.00221 0.16092 58 gph ispat ltd. 0.00326 0.01568 0.12520 0.00425 0.27131 59 olympic industries limited 0.02206 0.01165 0.10793 0.00158 0.13604 60 apex foods limited 0.02311 0.01623 0.12740 0.00195 0.11994 61 british american tobacco bangladesh company ltd. 0.02554 0.00556 0.07457 0.00038 0.06771 62 gemini sea food ltd. 0.03379 0.04662 0.21592 -0.00223 -0.04778 63 national tea company limited -0.00264 0.00489 0.06994 0.00031 0.06378 64 agricultural marketing company ltd. (pran) 0.01419 0.01050 0.10245 0.00110 0.10499 65 fu wang food ltd. 0.00218 0.01547 0.12438 0.00316 0.20425 66 rangpur dairy & food products limited -0.00021 0.01674 0.12937 0.00325 0.19446 67 linde bangladesh limited 0.01745 0.00811 0.09004 0.00166 0.20492 68 padma oil co.ltd. 0.01029 0.01505 0.12269 0.00310 0.20622 69 eastern lubricants ltd. 0.04159 0.05485 0.23421 -0.00094 -0.01710 70 summit power ltd. -0.00089 0.01099 0.10482 0.00401 0.36483 71 dhaka electric supply company ltd. -0.00548 0.00734 0.08568 0.00206 0.28067 72 power grid company of bangladesh ltd. 0.00283 0.00827 0.09094 0.00220 0.26586 73 jamuna oil com. ltd. 0.00520 0.00647 0.08042 0.00139 0.21505 74 meghna petroleum ltd. 0.00688 0.00945 0.09721 0.00182 0.19282 75 titas gas trans. & dist. co. ltd. -0.00547 0.00374 0.06117 0.00154 0.41024 76 khulna power company ltd. 0.00630 0.00871 0.09334 0.00237 0.27241 77 baraka power limited 0.00537 0.01206 0.10981 0.00349 0.28984 78 mjl bangladesh limited 0.00831 0.00921 0.09598 0.00224 0.24299 79 gbb power limited -0.00711 0.00969 0.09845 0.00354 0.36546 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 78 a b c d e f g 80 northern jute manufacturing co. ltd. 0.08227 0.07274 0.26969 -0.00044 -0.00611 81 sonali aansh industries limited 0.01719 0.01276 0.11296 0.00103 0.08073 82 al-haj textile mills limited 0.02320 0.02898 0.17023 0.00093 0.03196 83 stylecraft limited 0.02568 0.03174 0.17815 -0.00033 -0.01040 84 rahim textile mills ltd. 0.02361 0.02932 0.17122 0.00282 0.09635 85 saiham textile mills ltd. -0.00421 0.00634 0.07964 0.00218 0.34376 86 desh garments ltd. 0.05439 0.05976 0.24447 -0.00093 -0.01552 87 apex spinning & knitting mills limited 0.01626 0.01211 0.11003 0.00170 0.14013 88 delta spinners ltd. -0.01595 0.01623 0.12739 0.00230 0.14202 89 prime textile spinning mills ltd. 0.00495 0.00908 0.09530 0.00218 0.23979 90 anlima yarn dyeing ltd. 0.01299 0.01568 0.12523 0.00123 0.07836 91 h.r. textile ltd. 0.00762 0.01759 0.13263 0.00307 0.17462 92 alif manufacturing company ltd. -0.00579 0.02221 0.14902 0.00299 0.13463 93 square textiles limited -0.00935 0.00297 0.05449 0.00106 0.35771 94 r.n. spinning mills ltd. -0.00971 0.01274 0.11287 0.00128 0.10019 95 malek spinning mills ltd. 0.00250 0.00885 0.09409 0.00184 0.20731 96 zahintex industries limited -0.00638 0.01283 0.11327 0.00170 0.13270 97 saiham cotton mills limited -0.00905 0.00538 0.07334 0.00163 0.30217 98 generation next fashions limited -0.01481 0.01303 0.11415 0.00250 0.19177 99 envoy textiles limited -0.00498 0.00458 0.06767 0.00098 0.21435 100 ambee pharma ltd. 0.01582 0.01131 0.10635 0.00048 0.04265 101 beximco pharmaceuticals ltd. 0.01334 0.00852 0.09230 0.00260 0.30569 102 glaxosmithkline(gsk) bangladesh limited 0.02127 0.00843 0.09181 0.00115 0.13605 103 aci limited. 0.02278 0.01222 0.11054 0.00187 0.15302 104 renata ltd. 0.01314 0.00881 0.09385 0.00074 0.08427 105 reckitt benckiser (bd.)ltd. 0.01783 0.00943 0.09711 0.00131 0.13937 106 pharma aids ltd. 0.02614 0.00944 0.09717 0.00047 0.05015 107 kohinoor chemicals company (bangladesh) ltd. 0.01758 0.01209 0.10994 0.00015 0.01278 108 the ibn sina pharmaceutical industry ltd. 0.02298 0.01390 0.11791 0.00130 0.09345 109 libra infusions limited 0.02678 0.02097 0.14481 0.00055 0.02627 110 orion infusion ltd. 0.00861 0.01110 0.10535 0.00191 0.17229 111 square pharmaceuticals ltd. 0.01167 0.00390 0.06247 0.00123 0.31474 112 keya cosmetics ltd. -0.01192 0.01373 0.11718 0.00288 0.20939 113 aci formulations ltd. 0.02209 0.02144 0.14641 0.00367 0.17129 114 marico bangladesh ltd. 0.02138 0.00943 0.09709 0.00076 0.08022 115 active fine chemicals ltd. -0.00861 0.00926 0.09624 0.00240 0.25872 116 samorita hospital ltd. 0.00859 0.00945 0.09722 0.00126 0.13350 117 eastern housing limited 0.00561 0.00847 0.09202 0.00243 0.28701 118 summit alliance port limited 0.01253 0.02854 0.16893 0.00435 0.15249 119 unique hotel & resorts limited 0.00657 0.04854 0.22033 0.00449 0.09248 120 heidelberg cement bangladesh ltd. 0.01060 0.00916 0.09571 0.00210 0.22901 121 confidence cement ltd. 0.01100 0.01109 0.10533 0.00354 0.31933 122 meghna cement mills ltd 0.00562 0.01827 0.13515 0.00374 0.20473 123 lafarge surma cement ltd. 0.01623 0.01639 0.12801 0.00290 0.17688 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 79 a b c d e f g 124 m.i. cement factory limited 0.00162 0.00526 0.07252 0.00198 0.37557 125 bdcom online ltd. 0.01447 0.02435 0.15606 0.00199 0.08163 126 intech limited 0.00470 0.01326 0.11514 0.00288 0.21731 127 agni systems ltd. 0.00136 0.00948 0.09736 0.00324 0.34223 128 daffodil computers ltd. 0.01811 0.01386 0.11771 0.00136 0.09811 129 aamra technologies limited 0.00559 0.01429 0.11955 0.00356 0.24921 130 grameenphone ltd. 0.04033 0.07562 0.27499 0.00239 0.03157 131 apex tannery limited 0.01635 0.01434 0.11976 0.00324 0.22622 132 bata shoe company (bangladesh) limited 0.01575 0.00558 0.07470 0.00123 0.22110 133 apex footwear limited 0.01076 0.01119 0.10579 0.00230 0.20568 134 legacy footwear ltd. 0.04283 0.08907 0.29845 0.00080 0.00902 135 monno ceramic industries ltd. 0.03555 0.02916 0.17078 0.00143 0.04893 136 fu-wang ceramic industries ltd. 0.00094 0.01036 0.10179 0.00260 0.25127 137 rak ceramics (bd) ltd. 0.00204 0.01278 0.11303 0.00364 0.28468 138 bangladesh general insurance company ltd. -0.00183 0.01372 0.11712 0.00375 0.27374 139 green delta insurance company ltd. 0.00062 0.00888 0.09422 0.00200 0.22480 140 united insurance company ltd. -0.00136 0.01537 0.12399 0.00408 0.26563 141 peoples insurance company ltd. -0.00215 0.00622 0.07889 0.00222 0.35636 142 eastern insurance co. ltd. -0.00274 0.00632 0.07948 0.00251 0.39755 143 phoenix insurance company ltd. -0.00962 0.01097 0.10474 0.00263 0.23969 144 eastland insurance company limited -0.01261 0.00995 0.09975 0.00310 0.31146 145 central insurance company limited -0.00573 0.00663 0.08143 0.00139 0.20969 146 karnaphuli insurance co. ltd. -0.00853 0.00577 0.07593 0.00191 0.33039 147 rupali insurance company ltd. -0.01092 0.01173 0.10832 0.00342 0.29158 148 national life insurance co ltd -0.00689 0.00952 0.09757 0.00178 0.18738 149 reliance insurance ltd. -0.00418 0.00596 0.07720 0.00198 0.33274 150 purabi gen. insurance company ltd. -0.01711 0.01308 0.11436 0.00300 0.22962 151 delta life insurance co. ltd -0.01578 0.03089 0.17576 0.00374 0.12120 152 pragati insurance ltd. -0.00832 0.00944 0.09715 0.00264 0.27977 153 sandhani life insurance ltd -0.01503 0.01121 0.10589 0.00278 0.24798 154 prime insurance company limited -0.00360 0.01679 0.12958 0.00356 0.21221 155 pioneer insurance company ltd. -0.01376 0.00623 0.07894 0.00125 0.20022 156 mercantile insurance co. ltd. -0.00224 0.00992 0.09959 0.00261 0.26278 157 agrani insurance co ltd. -0.00354 0.01143 0.10689 0.00241 0.21098 158 popular life insurance company ltd. -0.00241 0.01622 0.12737 0.00269 0.16608 159 fareast islami life insurance co. ltd. -0.00355 0.00784 0.08855 0.00287 0.36616 160 meghna life insurance co. ltd. -0.00709 0.01119 0.10580 0.00343 0.30623 161 nitol insurance co. ltd. 0.00132 0.01083 0.10405 0.00310 0.28661 162 asia pacific general insurance co. ltd. -0.00219 0.01044 0.10216 0.00330 0.31658 163 sonar bangla insurance ltd. -0.00769 0.00722 0.08494 0.00213 0.29561 164 pragati life insurance ltd. 0.00530 0.01903 0.13796 0.00222 0.11649 165 prime islami life insurance ltd. -0.00410 0.01936 0.13915 0.00296 0.15289 166 paramount insurance co. ltd. -0.00236 0.01021 0.10104 0.00148 0.14503 167 city general insurance co. ltd. -0.00785 0.01200 0.10953 0.00324 0.26965 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 80 a b c d e f g 168 continental insurance ltd. -0.00123 0.01732 0.13162 0.00338 0.19511 169 takaful islami insurance ltd. -0.00403 0.01048 0.10239 0.00129 0.12321 170 standard insurance ltd. -0.00292 0.01117 0.10570 0.00188 0.16809 171 northern general insurance co. ltd. -0.00475 0.01937 0.13918 0.00486 0.25091 172 republic insurance company ltd. -0.00391 0.01574 0.12545 0.00329 0.20893 173 asia insurance co. ltd. -0.00481 0.01039 0.10191 0.00276 0.26595 174 rupali life insurance co.ltd. -0.01071 0.01135 0.10654 0.00219 0.19293 175 islami insurance bd. ltd. 0.00309 0.00885 0.09409 0.00270 0.30455 176 provati insurance company ltd. -0.00725 0.00609 0.07802 0.00161 0.26502 177 dhaka insurance co. ltd. -0.01203 0.00779 0.08826 0.00272 0.34932 178 padma islami life insurance limited -0.00215 0.01256 0.11208 0.00295 0.23507 179 market index (dsex) 0.00681 0.00248 0.04985 0.00248 1.00000 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 81 appendix-b: breakdown of each firm’s return and risk into unique and market-related part with code a as stock number code k as 𝝈𝒆𝒊 𝟐 code h as 𝜶𝒊 code l as 𝜷𝒊 𝟐𝝈𝒎 𝟐 code i as 𝜷𝒊𝑹𝒎 code m as 𝝈𝒊 𝟐 code j as �̅�𝒊 a h i j k l m 1 -0.00411 0.00151 -0.00260 0.01515 0.00012 0.01528 2 0.00918 0.00194 0.01113 0.01197 0.00020 0.01217 3 -0.00154 0.00084 -0.00070 0.02642 0.00004 0.02645 4 0.00104 0.00105 0.00209 0.01620 0.00006 0.01626 5 -0.00636 0.00157 -0.00479 0.01124 0.00013 0.01138 6 -0.00268 0.00184 -0.00084 0.00676 0.00018 0.00694 7 -0.00084 0.00126 0.00042 0.01727 0.00009 0.01736 8 0.00096 0.00191 0.00287 0.01010 0.00019 0.01029 9 -0.00222 0.00223 0.00001 0.00783 0.00027 0.00809 10 0.00406 0.00245 0.00650 0.00453 0.00032 0.00485 11 0.00302 0.00182 0.00484 0.01126 0.00018 0.01143 12 -0.00605 0.00132 -0.00472 0.00853 0.00009 0.00863 13 0.00209 0.00218 0.00426 0.00786 0.00025 0.00812 14 -0.00319 0.00223 -0.00096 0.01016 0.00027 0.01042 15 -0.00181 0.00272 0.00091 0.00481 0.00040 0.00520 16 0.00433 0.00165 0.00599 0.00538 0.00015 0.00553 17 0.00088 0.00223 0.00311 0.00630 0.00027 0.00657 18 0.00940 0.00183 0.01123 0.00790 0.00018 0.00808 19 -0.00456 0.00221 -0.00235 0.00861 0.00026 0.00887 20 -0.00038 0.00250 0.00212 0.00771 0.00034 0.00805 21 0.00267 0.00162 0.00429 0.00812 0.00014 0.00826 22 0.00525 0.00164 0.00689 0.00867 0.00014 0.00882 23 -0.00474 0.00214 -0.00260 0.00621 0.00024 0.00646 24 -0.00063 0.00194 0.00131 0.00545 0.00020 0.00565 25 0.01884 0.00146 0.02030 0.00959 0.00011 0.00971 26 0.00404 0.00149 0.00553 0.00898 0.00012 0.00910 27 -0.00180 0.00188 0.00008 0.00835 0.00019 0.00854 28 0.01301 0.00156 0.01457 0.01393 0.00013 0.01406 29 -0.00284 0.00199 -0.00085 0.00898 0.00021 0.00919 30 0.00273 0.00188 0.00461 0.01720 0.00019 0.01739 31 -0.00434 0.00212 -0.00221 0.01133 0.00024 0.01157 32 -0.00282 0.00274 -0.00008 0.00775 0.00040 0.00815 33 0.00262 0.00155 0.00417 0.01465 0.00013 0.01478 34 -0.00002 0.00186 0.00183 0.01304 0.00018 0.01323 35 0.00341 0.00128 0.00469 0.02961 0.00009 0.02970 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 82 a h i j k l m 36 0.01754 0.00154 0.01908 0.01287 0.00013 0.01299 37 -0.00065 0.00132 0.00067 0.02091 0.00009 0.02101 38 0.00213 0.00158 0.00371 0.01993 0.00013 0.02006 39 0.00515 0.00168 0.00683 0.01990 0.00015 0.02006 40 0.00137 0.00145 0.00281 0.01682 0.00011 0.01693 41 0.00376 0.00102 0.00478 0.02550 0.00006 0.02556 42 -0.00127 0.00193 0.00066 0.01302 0.00020 0.01322 43 0.01195 0.00110 0.01305 0.01271 0.00006 0.01277 44 0.03117 0.00047 0.03165 0.01616 0.00001 0.01617 45 0.03505 -0.00031 0.03474 0.01998 0.00001 0.01998 46 0.00716 0.00156 0.00873 0.01421 0.00013 0.01435 47 0.00140 0.00139 0.00279 0.01158 0.00010 0.01168 48 0.01799 0.00112 0.01912 0.01975 0.00007 0.01982 49 0.04887 0.00005 0.04892 0.04320 0.00000 0.04320 50 0.02992 0.00087 0.03079 0.02578 0.00004 0.02582 51 0.03357 -0.00015 0.03342 0.02169 0.00000 0.02169 52 0.01400 0.00126 0.01526 0.00610 0.00009 0.00618 53 -0.00595 0.00227 -0.00368 0.00802 0.00028 0.00830 54 0.01485 0.00126 0.01611 0.00976 0.00008 0.00984 55 0.00514 0.00205 0.00718 0.01416 0.00022 0.01438 56 -0.00143 0.00231 0.00088 0.01088 0.00028 0.01116 57 0.00085 0.00110 0.00194 0.01367 0.00006 0.01373 58 0.00141 0.00185 0.00326 0.01549 0.00018 0.01568 59 0.02113 0.00093 0.02206 0.01160 0.00005 0.01165 60 0.02229 0.00082 0.02311 0.01620 0.00004 0.01623 61 0.02508 0.00046 0.02554 0.00555 0.00001 0.00556 62 0.03411 -0.00033 0.03379 0.04662 0.00001 0.04662 63 -0.00307 0.00043 -0.00264 0.00488 0.00001 0.00489 64 0.01347 0.00072 0.01419 0.01047 0.00003 0.01050 65 0.00078 0.00139 0.00218 0.01537 0.00010 0.01547 66 -0.00154 0.00132 -0.00021 0.01664 0.00009 0.01674 67 0.01606 0.00140 0.01745 0.00800 0.00010 0.00811 68 0.00888 0.00140 0.01029 0.01495 0.00011 0.01505 69 0.04170 -0.00012 0.04159 0.05485 0.00000 0.05485 70 -0.00337 0.00249 -0.00089 0.01066 0.00033 0.01099 71 -0.00739 0.00191 -0.00548 0.00714 0.00020 0.00734 72 0.00102 0.00181 0.00283 0.00810 0.00018 0.00827 73 0.00373 0.00146 0.00520 0.00635 0.00011 0.00647 74 0.00556 0.00131 0.00688 0.00936 0.00009 0.00945 75 -0.00827 0.00279 -0.00547 0.00332 0.00042 0.00374 76 0.00444 0.00186 0.00630 0.00853 0.00018 0.00871 77 0.00340 0.00197 0.00537 0.01185 0.00021 0.01206 78 0.00665 0.00166 0.00831 0.00907 0.00015 0.00921 79 -0.00960 0.00249 -0.00711 0.00936 0.00033 0.00969 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 83 a h i j k l m 80 0.08231 -0.00004 0.08227 0.07274 0.00000 0.07274 81 0.01664 0.00055 0.01719 0.01274 0.00002 0.01276 82 0.02298 0.00022 0.02320 0.02898 0.00000 0.02898 83 0.02575 -0.00007 0.02568 0.03174 0.00000 0.03174 84 0.02295 0.00066 0.02361 0.02929 0.00002 0.02932 85 -0.00656 0.00234 -0.00421 0.00605 0.00029 0.00634 86 0.05449 -0.00011 0.05439 0.05976 0.00000 0.05976 87 0.01531 0.00095 0.01626 0.01206 0.00005 0.01211 88 -0.01692 0.00097 -0.01595 0.01618 0.00005 0.01623 89 0.00331 0.00163 0.00495 0.00894 0.00014 0.00908 90 0.01246 0.00053 0.01299 0.01567 0.00002 0.01568 91 0.00643 0.00119 0.00762 0.01752 0.00008 0.01759 92 -0.00670 0.00092 -0.00579 0.02216 0.00005 0.02221 93 -0.01179 0.00244 -0.00935 0.00265 0.00032 0.00297 94 -0.01039 0.00068 -0.00971 0.01272 0.00002 0.01274 95 0.00108 0.00141 0.00250 0.00875 0.00011 0.00885 96 -0.00728 0.00090 -0.00638 0.01279 0.00004 0.01283 97 -0.01111 0.00206 -0.00905 0.00515 0.00023 0.00538 98 -0.01612 0.00131 -0.01481 0.01294 0.00009 0.01303 99 -0.00644 0.00146 -0.00498 0.00446 0.00011 0.00458 100 0.01553 0.00029 0.01582 0.01131 0.00000 0.01131 101 0.01126 0.00208 0.01334 0.00829 0.00023 0.00852 102 0.02034 0.00093 0.02127 0.00838 0.00005 0.00843 103 0.02173 0.00104 0.02278 0.01216 0.00006 0.01222 104 0.01257 0.00057 0.01314 0.00879 0.00002 0.00881 105 0.01688 0.00095 0.01783 0.00938 0.00005 0.00943 106 0.02580 0.00034 0.02614 0.00944 0.00001 0.00944 107 0.01749 0.00009 0.01758 0.01209 0.00000 0.01209 108 0.02234 0.00064 0.02298 0.01388 0.00002 0.01390 109 0.02660 0.00018 0.02678 0.02097 0.00000 0.02097 110 0.00743 0.00117 0.00861 0.01102 0.00007 0.01110 111 0.00953 0.00214 0.01167 0.00366 0.00025 0.00390 112 -0.01335 0.00143 -0.01192 0.01362 0.00011 0.01373 113 0.02092 0.00117 0.02209 0.02136 0.00007 0.02144 114 0.02084 0.00055 0.02138 0.00941 0.00002 0.00943 115 -0.01037 0.00176 -0.00861 0.00910 0.00017 0.00926 116 0.00768 0.00091 0.00859 0.00941 0.00004 0.00945 117 0.00366 0.00196 0.00561 0.00826 0.00020 0.00847 118 0.01149 0.00104 0.01253 0.02848 0.00006 0.02854 119 0.00594 0.00063 0.00657 0.04852 0.00002 0.04854 120 0.00904 0.00156 0.01060 0.00903 0.00013 0.00916 121 0.00883 0.00218 0.01100 0.01084 0.00025 0.01109 122 0.00422 0.00139 0.00562 0.01816 0.00010 0.01827 123 0.01503 0.00120 0.01623 0.01631 0.00008 0.01639 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 84 a h i j k l m 124 -0.00094 0.00256 0.00162 0.00491 0.00035 0.00526 125 0.01391 0.00056 0.01447 0.02434 0.00002 0.02435 126 0.00322 0.00148 0.00470 0.01314 0.00012 0.01326 127 -0.00098 0.00233 0.00136 0.00919 0.00029 0.00948 128 0.01745 0.00067 0.01811 0.01383 0.00002 0.01386 129 0.00389 0.00170 0.00559 0.01414 0.00015 0.01429 130 0.04012 0.00022 0.04033 0.07562 0.00000 0.07562 131 0.01481 0.00154 0.01635 0.01421 0.00013 0.01434 132 0.01425 0.00151 0.01575 0.00546 0.00012 0.00558 133 0.00935 0.00140 0.01076 0.01109 0.00011 0.01119 134 0.04277 0.00006 0.04283 0.08907 0.00000 0.08907 135 0.03522 0.00033 0.03555 0.02916 0.00001 0.02916 136 -0.00077 0.00171 0.00094 0.01020 0.00016 0.01036 137 0.00010 0.00194 0.00204 0.01258 0.00020 0.01278 138 -0.00369 0.00186 -0.00183 0.01353 0.00019 0.01372 139 -0.00091 0.00153 0.00062 0.00875 0.00013 0.00888 140 -0.00317 0.00181 -0.00136 0.01520 0.00018 0.01537 141 -0.00458 0.00243 -0.00215 0.00591 0.00032 0.00622 142 -0.00545 0.00271 -0.00274 0.00592 0.00039 0.00632 143 -0.01126 0.00163 -0.00962 0.01083 0.00014 0.01097 144 -0.01473 0.00212 -0.01261 0.00971 0.00024 0.00995 145 -0.00716 0.00143 -0.00573 0.00652 0.00011 0.00663 146 -0.01078 0.00225 -0.00853 0.00549 0.00027 0.00577 147 -0.01291 0.00199 -0.01092 0.01152 0.00021 0.01173 148 -0.00817 0.00128 -0.00689 0.00943 0.00009 0.00952 149 -0.00645 0.00227 -0.00418 0.00569 0.00028 0.00596 150 -0.01867 0.00156 -0.01711 0.01295 0.00013 0.01308 151 -0.01661 0.00083 -0.01578 0.03086 0.00004 0.03089 152 -0.01023 0.00191 -0.00832 0.00924 0.00019 0.00944 153 -0.01672 0.00169 -0.01503 0.01106 0.00015 0.01121 154 -0.00504 0.00145 -0.00360 0.01668 0.00011 0.01679 155 -0.01512 0.00136 -0.01376 0.00613 0.00010 0.00623 156 -0.00403 0.00179 -0.00224 0.00975 0.00017 0.00992 157 -0.00497 0.00144 -0.00354 0.01131 0.00011 0.01143 158 -0.00354 0.00113 -0.00241 0.01616 0.00007 0.01622 159 -0.00605 0.00249 -0.00355 0.00751 0.00033 0.00784 160 -0.00918 0.00209 -0.00709 0.01096 0.00023 0.01119 161 -0.00063 0.00195 0.00132 0.01062 0.00020 0.01083 162 -0.00435 0.00216 -0.00219 0.01019 0.00025 0.01044 163 -0.00970 0.00201 -0.00769 0.00700 0.00022 0.00722 164 0.00451 0.00079 0.00530 0.01900 0.00003 0.01903 165 -0.00514 0.00104 -0.00410 0.01930 0.00006 0.01936 166 -0.00335 0.00099 -0.00236 0.01016 0.00005 0.01021 167 -0.00969 0.00184 -0.00785 0.01182 0.00018 0.01200 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 85 a h i j k l m 168 -0.00256 0.00133 -0.00123 0.01723 0.00009 0.01732 169 -0.00487 0.00084 -0.00403 0.01045 0.00004 0.01048 170 -0.00406 0.00115 -0.00292 0.01110 0.00007 0.01117 171 -0.00646 0.00171 -0.00475 0.01921 0.00016 0.01937 172 -0.00534 0.00142 -0.00391 0.01563 0.00011 0.01574 173 -0.00662 0.00181 -0.00481 0.01021 0.00018 0.01039 174 -0.01202 0.00131 -0.01071 0.01126 0.00009 0.01135 175 0.00102 0.00207 0.00309 0.00862 0.00023 0.00885 176 -0.00906 0.00181 -0.00725 0.00591 0.00017 0.00609 177 -0.01440 0.00238 -0.01203 0.00749 0.00030 0.00779 178 -0.00375 0.00160 -0.00215 0.01242 0.00014 0.01256 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 86 appendix-c: ranking of stocks according to their excess return-to-beta ratio with code n as rank code q as (𝑹𝒊 − 𝑹𝒇) code o as company name code r as 𝜷𝒊 code p as (𝑹 𝒊 ) code s as 𝑹𝒊−𝑹𝒇 𝜷𝒊 n o p q r s 1 renwick jajneswar & co (bd) ltd. 0.04892 0.04413 0.00714 6.18333 2 legacy footwear ltd. 0.04283 0.03805 0.00902 4.21675 3 grameenphone ltd. 0.04033 0.03555 0.03157 1.12589 4 kohinoor chemicals company (bangladesh) ltd. 0.01758 0.01279 0.01278 1.00118 5 libra infusions limited 0.02678 0.02200 0.02627 0.83736 6 monno ceramic industries ltd. 0.03555 0.03077 0.04893 0.62871 7 al-haj textile mills limited 0.02320 0.01841 0.03196 0.57611 8 pharma aids ltd. 0.02614 0.02135 0.05015 0.42578 9 eastern cables ltd. 0.03165 0.02686 0.06957 0.38610 10 british american tobacco bangladesh company limited 0.02554 0.02076 0.06771 0.30655 11 ambee pharma ltd. 0.01582 0.01104 0.04265 0.25884 12 marico bangladesh ltd. 0.02138 0.01660 0.08022 0.20693 13 national tubes ltd. 0.03079 0.02600 0.12802 0.20314 14 rahim textile mills ltd. 0.02361 0.01883 0.09635 0.19539 15 the ibn sina pharmaceutical industry ltd. 0.02298 0.01819 0.09345 0.19466 16 sonali aansh industries limited 0.01719 0.01241 0.08073 0.15372 17 apex foods limited 0.02311 0.01833 0.11994 0.15279 18 daffodil computers ltd. 0.01811 0.01333 0.09811 0.13586 19 olympic industries limited 0.02206 0.01727 0.13604 0.12698 20 glaxosmithkline(gsk) bangladesh limited 0.02127 0.01648 0.13605 0.12113 21 bdcom online ltd. 0.01447 0.00968 0.08163 0.11864 22 aci limited. 0.02278 0.01799 0.15302 0.11757 23 anlima yarn dyeing ltd. 0.01299 0.00821 0.07836 0.10474 24 aci formulations ltd. 0.02209 0.01730 0.17129 0.10103 25 renata ltd. 0.01314 0.00836 0.08427 0.09916 26 reckitt benckiser (bd.)ltd. 0.01783 0.01305 0.13937 0.09361 27 agricultural marketing company ltd. (pran) 0.01419 0.00940 0.10499 0.08956 28 quasem drycells ltd. 0.01912 0.01433 0.16512 0.08681 29 apex spinning & knitting mills limited 0.01626 0.01148 0.14013 0.08192 30 brac bank ltd. 0.02030 0.01552 0.21499 0.07219 31 lafarge surma cement ltd. 0.01623 0.01145 0.17688 0.06473 32 ipdc finance limited 0.01908 0.01430 0.22657 0.06310 33 linde bangladesh limited 0.01745 0.01267 0.20492 0.06182 34 national polymer industries ltd 0.01611 0.01132 0.18475 0.06129 35 rangpur foundry ltd. 0.01526 0.01047 0.18526 0.05653 36 bangladesh lamps limited 0.01305 0.00827 0.16122 0.05127 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 87 n o p q r s 37 apex tannery limited 0.01635 0.01157 0.22622 0.05115 38 summit alliance port limited 0.01253 0.00774 0.15249 0.05079 39 bata shoe company (bangladesh) limited 0.01575 0.01097 0.22110 0.04960 40 trust bank ltd. 0.01457 0.00979 0.22960 0.04263 41 apex footwear limited 0.01076 0.00597 0.20568 0.02903 42 samorita hospital ltd. 0.00859 0.00381 0.13350 0.02853 43 beximco pharmaceuticals ltd. 0.01334 0.00856 0.30569 0.02800 44 padma oil co.ltd. 0.01029 0.00550 0.20622 0.02668 45 heidelberg cement bangladesh ltd. 0.01060 0.00582 0.22901 0.02540 46 mutual trust bank ltd. 0.01123 0.00645 0.26881 0.02398 47 the city bank ltd. 0.01113 0.00634 0.28493 0.02226 48 orion infusion ltd. 0.00861 0.00382 0.17229 0.02219 49 square pharmaceuticals ltd. 0.01167 0.00689 0.31474 0.02188 50 confidence cement ltd. 0.01100 0.00622 0.31933 0.01947 51 unique hotel & resorts limited 0.00657 0.00179 0.09248 0.01932 52 singer bangladesh ltd. 0.00873 0.00394 0.22916 0.01720 53 h.r. textile ltd. 0.00762 0.00284 0.17462 0.01624 54 mjl bangladesh limited 0.00831 0.00352 0.24299 0.01450 55 meghna petroleum ltd. 0.00688 0.00209 0.19282 0.01085 56 mercantile bank ltd. 0.00689 0.00211 0.24136 0.00874 57 phoenix finance and investments ltd. 0.00683 0.00205 0.24701 0.00830 58 bsrm steels limited 0.00718 0.00240 0.30040 0.00798 59 khulna power company ltd. 0.00630 0.00151 0.27241 0.00555 60 social islami bank ltd. 0.00599 0.00120 0.24267 0.00495 61 eastern bank ltd. 0.00650 0.00172 0.35953 0.00479 62 pragati life insurance ltd. 0.00530 0.00052 0.11649 0.00443 63 meghna cement mills ltd 0.00562 0.00084 0.20473 0.00408 64 shahjalal islami bank ltd. 0.00553 0.00074 0.21899 0.00339 65 aamra technologies limited 0.00559 0.00081 0.24921 0.00324 66 eastern housing limited 0.00561 0.00083 0.28701 0.00289 67 baraka power limited 0.00537 0.00059 0.28984 0.00203 68 jamuna oil com. ltd. 0.00520 0.00041 0.21505 0.00192 69 prime textile spinning mills ltd. 0.00495 0.00016 0.23979 0.00067 70 al-arafah islami bank ltd. 0.00484 0.00005 0.26704 0.00019 71 gsp finance company (bangladesh) limited 0.00478 0.00000 0.15041 -0.00002 72 intech limited 0.00470 -0.00008 0.21731 -0.00038 73 lankabangla finance ltd. 0.00469 -0.00009 0.18862 -0.00050 74 idlc finance limited 0.00461 -0.00018 0.27608 -0.00064 75 southeast bank ltd. 0.00426 -0.00052 0.31930 -0.00164 76 bank asia ltd. 0.00429 -0.00050 0.23776 -0.00209 77 premier leasing & finance limited. 0.00417 -0.00061 0.22791 -0.00268 78 bangladesh finance and investment co. ltd. 0.00371 -0.00107 0.23210 -0.00461 79 dutch-bangla bank ltd. 0.00311 -0.00167 0.32799 -0.00511 80 islami insurance bd. ltd. 0.00309 -0.00169 0.30455 -0.00556 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 88 n o p q r s 81 gph ispat ltd. 0.00326 -0.00152 0.27131 -0.00562 82 united commercial bank ltd. 0.00287 -0.00191 0.28005 -0.00684 83 one bank limited 0.00212 -0.00266 0.36771 -0.00724 84 power grid company of bangladesh ltd. 0.00283 -0.00195 0.26586 -0.00734 85 m.i. cement factory limited 0.00162 -0.00316 0.37557 -0.00842 86 bay leasing & investment ltd. 0.00281 -0.00197 0.21247 -0.00928 87 rak ceramics (bd) ltd. 0.00204 -0.00274 0.28468 -0.00964 88 national credit and commerce bank ltd. 0.00091 -0.00387 0.39944 -0.00969 89 atlas bangladesh ltd. 0.00279 -0.00199 0.20380 -0.00979 90 agni systems ltd. 0.00136 -0.00343 0.34223 -0.01002 91 islamic finance & investment ltd. 0.00183 -0.00295 0.27282 -0.01081 92 malek spinning mills ltd. 0.00250 -0.00229 0.20731 -0.01104 93 navana cng limited 0.00088 -0.00390 0.33858 -0.01153 94 nitol insurance co. ltd. 0.00132 -0.00346 0.28661 -0.01208 95 uttara finance and investments limited. -0.00008 -0.00487 0.40203 -0.01211 96 jamuna bank ltd. 0.00131 -0.00348 0.28406 -0.01225 97 fu wang food ltd. 0.00218 -0.00261 0.20425 -0.01277 98 uttara bank ltd. 0.00001 -0.00477 0.32736 -0.01459 99 aftab automobiles limited 0.00066 -0.00413 0.28280 -0.01459 100 fu-wang ceramic industries ltd. 0.00094 -0.00385 0.25127 -0.01531 101 summit power ltd. -0.00089 -0.00567 0.36483 -0.01554 102 premier bank ltd. 0.00008 -0.00470 0.27575 -0.01705 103 islami bank bd ltd 0.00209 -0.00270 0.15359 -0.01757 104 dhaka bank ltd. -0.00096 -0.00575 0.32680 -0.01759 105 deshbandhu polymer limited 0.00194 -0.00284 0.16092 -0.01766 106 green delta insurance company ltd. 0.00062 -0.00416 0.22480 -0.01851 107 eastern insurance co. ltd. -0.00274 -0.00753 0.39755 -0.01893 108 first security islami bank ltd. -0.00085 -0.00564 0.29198 -0.01931 109 peoples insurance company ltd. -0.00215 -0.00694 0.35636 -0.01947 110 pubali bank ltd. -0.00084 -0.00562 0.27022 -0.02080 111 union capital ltd. 0.00067 -0.00412 0.19313 -0.02133 112 standard bank ltd. -0.00235 -0.00713 0.32447 -0.02199 113 asia pacific general insurance co. ltd. -0.00219 -0.00698 0.31658 -0.02204 114 united finance limited -0.00221 -0.00700 0.31180 -0.02244 115 fareast islami life insurance co. ltd. -0.00355 -0.00834 0.36616 -0.02277 116 united insurance company ltd. -0.00136 -0.00615 0.26563 -0.02314 117 rupali bank ltd. 0.00042 -0.00436 0.18556 -0.02352 118 export import (exim) bank of bangladesh ltd. -0.00260 -0.00739 0.31399 -0.02352 119 bangladesh general insurance company ltd. -0.00183 -0.00661 0.27374 -0.02416 120 titas gas trans. & dist. co. ltd. -0.00547 -0.01026 0.41024 -0.02500 121 s. alam cold rolled steels ltd. -0.00368 -0.00846 0.33294 -0.02542 122 rangpur dairy & food products limited -0.00021 -0.00500 0.19446 -0.02571 123 saiham textile mills ltd. -0.00421 -0.00900 0.34376 -0.02618 124 mercantile insurance co. ltd. -0.00224 -0.00702 0.26278 -0.02673 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 89 n o p q r s 125 reliance insurance ltd. -0.00418 -0.00897 0.33274 -0.02695 126 padma islami life insurance limited -0.00215 -0.00693 0.23507 -0.02950 127 continental insurance ltd. -0.00123 -0.00602 0.19511 -0.03084 128 gbb power limited -0.00711 -0.01189 0.36546 -0.03254 129 ab bank limited -0.00260 -0.00738 0.22182 -0.03327 130 asia insurance co. ltd. -0.00481 -0.00960 0.26595 -0.03609 131 dhaka electric supply company ltd. -0.00548 -0.01026 0.28067 -0.03656 132 northern general insurance co. ltd. -0.00475 -0.00953 0.25091 -0.03798 133 meghna life insurance co. ltd. -0.00709 -0.01188 0.30623 -0.03879 134 agrani insurance co ltd. -0.00354 -0.00832 0.21098 -0.03943 135 prime insurance company limited -0.00360 -0.00838 0.21221 -0.03950 136 square textiles limited -0.00935 -0.01414 0.35771 -0.03952 137 karnaphuli insurance co. ltd. -0.00853 -0.01331 0.33039 -0.04030 138 national bank ltd. -0.00479 -0.00958 0.23006 -0.04162 139 republic insurance company ltd. -0.00391 -0.00870 0.20893 -0.04163 140 sonar bangla insurance ltd. -0.00769 -0.01248 0.29561 -0.04220 141 popular life insurance company ltd. -0.00241 -0.00719 0.16608 -0.04330 142 ific bank ltd. -0.00070 -0.00548 0.12338 -0.04443 143 provati insurance company ltd. -0.00725 -0.01204 0.26502 -0.04542 144 envoy textiles limited -0.00498 -0.00976 0.21435 -0.04555 145 saiham cotton mills limited -0.00905 -0.01383 0.30217 -0.04578 146 standard insurance ltd. -0.00292 -0.00770 0.16809 -0.04583 147 pragati insurance ltd. -0.00832 -0.01310 0.27977 -0.04684 148 city general insurance co. ltd. -0.00785 -0.01263 0.26965 -0.04685 149 dhaka insurance co. ltd. -0.01203 -0.01681 0.34932 -0.04812 150 prime bank ltd. -0.00472 -0.00951 0.19448 -0.04888 151 paramount insurance co. ltd. -0.00236 -0.00715 0.14503 -0.04929 152 central insurance company limited -0.00573 -0.01052 0.20969 -0.05015 153 active fine chemicals ltd. -0.00861 -0.01339 0.25872 -0.05176 154 rupali insurance company ltd. -0.01092 -0.01571 0.29158 -0.05386 155 eastland insurance company limited -0.01261 -0.01739 0.31146 -0.05583 156 prime islami life insurance ltd. -0.00410 -0.00889 0.15289 -0.05812 157 phoenix insurance company ltd. -0.00962 -0.01441 0.23969 -0.06011 158 national life insurance co ltd -0.00689 -0.01168 0.18738 -0.06231 159 takaful islami insurance ltd. -0.00403 -0.00882 0.12321 -0.07156 160 alif manufacturing company ltd. -0.00579 -0.01057 0.13463 -0.07851 161 keya cosmetics ltd. -0.01192 -0.01670 0.20939 -0.07978 162 sandhani life insurance ltd -0.01503 -0.01981 0.24798 -0.07989 163 rupali life insurance co.ltd. -0.01071 -0.01549 0.19293 -0.08031 164 zahintex industries limited -0.00638 -0.01116 0.13270 -0.08413 165 pioneer insurance company ltd. -0.01376 -0.01854 0.20022 -0.09261 166 purabi gen. insurance company ltd. -0.01711 -0.02189 0.22962 -0.09535 167 generation next fashions limited -0.01481 -0.01960 0.19177 -0.10218 168 national tea company limited -0.00264 -0.00742 0.06378 -0.11640 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 90 n o p q r s 169 r.n. spinning mills ltd. -0.00971 -0.01449 0.10019 -0.14467 170 delta spinners ltd. -0.01595 -0.02073 0.14202 -0.14599 171 delta life insurance co. ltd -0.01578 -0.02056 0.12120 -0.16967 172 gemini sea food ltd. 0.03379 0.02900 -0.04778 -0.60706 173 monno jute stafflers ltd. 0.03474 0.02995 -0.04531 -0.66110 174 anwar galvanizing ltd. 0.03342 0.02863 -0.02251 -1.27203 175 stylecraft limited 0.02568 0.02090 -0.01040 -2.00855 176 eastern lubricants ltd. 0.04159 0.03680 -0.01710 -2.15210 177 desh garments ltd. 0.05439 0.04960 -0.01552 -3.19625 178 northern jute manufacturing co. ltd. 0.08227 0.07749 -0.00611 -12.69015 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 91 appendix-d: evaluation of portfolio performance with code a as stock number code n as rank n a 𝜷𝒊 𝑿𝒊 𝑿𝒊𝜷𝒊 𝜶𝒊 𝑿𝒊𝜶𝒊 𝝈𝒆𝒊 𝟐 𝑿𝒊 𝟐𝝈𝒆𝒊 𝟐 1 49 0.00714 0.02324 0.00017 0.04887 0.001136 0.04320 0.000023336 2 134 0.00902 0.00971 0.00009 0.04277 0.000415 0.08907 0.000008395 3 130 0.03157 0.01059 0.00033 0.04012 0.000425 0.07562 0.000008480 4 107 0.01278 0.02381 0.00030 0.01749 0.000416 0.01209 0.000006850 5 109 0.02627 0.02353 0.00062 0.02660 0.000626 0.02097 0.000011613 6 135 0.04893 0.02354 0.00115 0.03522 0.000829 0.02916 0.000016157 7 82 0.03196 0.01415 0.00045 0.02298 0.000325 0.02898 0.000005800 8 106 0.05015 0.04996 0.00251 0.02580 0.001289 0.00944 0.000023554 9 44 0.06957 0.03657 0.00254 0.03117 0.001140 0.01616 0.000021614 10 61 0.06771 0.08153 0.00552 0.02508 0.002045 0.00555 0.000036880 11 100 0.04265 0.02110 0.00090 0.01553 0.000328 0.01131 0.000005034 12 114 0.08022 0.03759 0.00302 0.02084 0.000783 0.00941 0.000013300 13 50 0.12802 0.02147 0.00275 0.02992 0.000642 0.02578 0.000011881 14 84 0.09635 0.01364 0.00131 0.02295 0.000313 0.02929 0.000005449 15 108 0.09345 0.02780 0.00260 0.02234 0.000621 0.01388 0.000010731 16 81 0.08073 0.02025 0.00163 0.01664 0.000337 0.01274 0.000005226 17 60 0.11994 0.02352 0.00282 0.02229 0.000524 0.01620 0.000008957 18 128 0.09811 0.01979 0.00194 0.01745 0.000345 0.01383 0.000005415 19 59 0.13604 0.03033 0.00413 0.02113 0.000641 0.01160 0.000010675 20 102 0.13605 0.03983 0.00542 0.02034 0.000810 0.00838 0.000013296 21 125 0.08163 0.00804 0.00066 0.01391 0.000112 0.02434 0.000001573 22 103 0.15302 0.02986 0.00457 0.02173 0.000649 0.01216 0.000010840 23 90 0.07836 0.01040 0.00082 0.01246 0.000130 0.01567 0.000001696 24 113 0.17129 0.01600 0.00274 0.02092 0.000335 0.02136 0.000005468 25 104 0.08427 0.01872 0.00158 0.01257 0.000235 0.00879 0.000003081 26 105 0.13937 0.02713 0.00378 0.01688 0.000458 0.00938 0.000006904 27 64 0.10499 0.01739 0.00183 0.01347 0.000234 0.01047 0.000003165 28 48 0.16512 0.01397 0.00231 0.01799 0.000251 0.01975 0.000003856 29 87 0.14013 0.01813 0.00254 0.01531 0.000278 0.01206 0.000003962 30 25 0.21499 0.02998 0.00645 0.01884 0.000565 0.00959 0.000008624 31 123 0.17688 0.01267 0.00224 0.01503 0.000190 0.01631 0.000002616 32 36 0.22657 0.01991 0.00451 0.01754 0.000349 0.01287 0.000005099 33 67 0.20492 0.02820 0.00578 0.01606 0.000453 0.00800 0.000006364 34 54 0.18475 0.02063 0.00381 0.01485 0.000306 0.00976 0.000004151 35 52 0.18526 0.02981 0.00552 0.01400 0.000417 0.00610 0.000005417 36 43 0.16122 0.01092 0.00176 0.01195 0.000131 0.01271 0.000001516 37 131 0.22622 0.01366 0.00309 0.01481 0.000202 0.01421 0.000002651 http://creativecommons.org/licenses/by/4.0/ jema: jurnal ilmiah bidang akuntansi dan manajemen, vol. 16 no. 1 (2019) http://riset.unisma.ac.id/index.php/jema (e-issn : 2597-4071) jema: jurnal ilmiah bidang akuntansi dan manajemen is licensed under a creative commons attribution 4.0 international license 92 n a 𝜷𝒊 𝑿𝒊 𝑿𝒊𝜷𝒊 𝜶𝒊 𝑿𝒊𝜶𝒊 𝝈𝒆𝒊 𝟐 𝑿𝒊 𝟐𝝈𝒆𝒊 𝟐 38 118 0.15249 0.00455 0.00069 0.01149 0.000052 0.02848 0.000000590 39 132 0.22110 0.03333 0.00737 0.01425 0.000475 0.00546 0.000006065 40 28 0.22960 0.01094 0.00251 0.01301 0.000142 0.01393 0.000001668 41 133 0.20568 0.00656 0.00135 0.00935 0.000061 0.01109 0.000000478 42 116 0.13350 0.00486 0.00065 0.00768 0.000037 0.00941 0.000000222 43 101 0.30569 0.01219 0.00373 0.01126 0.000137 0.00829 0.000001231 44 68 0.20622 0.00414 0.00085 0.00888 0.000037 0.01495 0.000000256 45 120 0.22901 0.00687 0.00157 0.00904 0.000062 0.00903 0.000000426 46 18 0.26881 0.00812 0.00218 0.00940 0.000076 0.00790 0.000000521 47 2 0.28493 0.00475 0.00135 0.00918 0.000044 0.01197 0.000000270 48 110 0.17229 0.00309 0.00053 0.00743 0.000023 0.01102 0.000000105 49 111 0.31474 0.01643 0.00517 0.00953 0.000157 0.00366 0.000000987 50 121 0.31933 0.00400 0.00128 0.00883 0.000035 0.01084 0.000000173 51 119 0.09248 0.00025 0.00002 0.00594 0.000001 0.04852 0.000000003 52 46 0.22916 0.00135 0.00031 0.00716 0.000010 0.01421 0.000000026 53 91 0.17462 0.00062 0.00011 0.00643 0.000004 0.01752 0.000000007 54 78 0.24299 0.00060 0.00015 0.00665 0.000004 0.00907 0.000000003 𝜷𝒑 = 0.124003 𝜶𝒑 = 0.020644 ∑ 𝑿𝒊 𝟐 𝑵 𝒊=𝟏 𝝈𝒆𝒊 𝟐 = 0.000342655 http://creativecommons.org/licenses/by/4.0/