trtf international symposium proceeding 2018 · niza nurmalasari, nur kamiliyah firizqi, rino ahmad...

TRTFInternationalSymposiumProceeding2018

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Preface

The present volume contains selected papers of The TRTF International Symposium 2018 held on 24September,2018inUiTMShahAlam,Malaysia.Theconference,whichwasorganizedbytheDepartmentofPostgraduateandProfessionalStudies(DPPS),hasacceptedmorethan30papersandpresentedinthesymposium. Finally, after a rigorous peer reviewprocess, 20 paperswere accepted for publication invariousjournalsandthebalancepaperswereacceptedtobepublishedintheproceeding.Thetopicsthatare covered in the conference include management and administrative studies, marketing andentrepreneurshipstudies,economicsandfinance,technologyandsupplychainmanagementstudies.Weinvitedmore than15 researchers fromrelated fields to reviewpapers for thepublication in theTRTFInternationalSymposiumProceeding.Wewouldliketothankallthereviewersfortheirtimeandeffortinreviewing the documents. The published papers have passed the process of improvementaccommodating the discussion during the conference as well as the reviewers’ comments who haveguidedanynecessaryimprovement.Finally,wewouldliketothankstoalloftheproceedingteamwhohavededicatedtheirconstantsupportandcountlesstimetobringthesescratchesintoabook

EditorsofTRTFInternationalSymposiumProceeding2018


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WelcomeRemarks OnbehalfoftheorganizersoftheinauguralToday’sResearch;Tomorrow’sFuture(TRTF)International Post-graduate Symposium 2018. I would like to express my most sinceregratitudeforyourparticipationinthisevent.UniversityCollaboration–University’sInternationalRelationsWiththegreatandrapidchangesinouracademicworldtoday,wecannotstressenoughthe importance of having extensive top quality higher education. As future demand forcompetence change rapidly; the versatility and high-standard in research and teaching

conductedattheuniversitiescontinuetogrow,butinadifferentwaythanbefore.Universitiesareexpectedtobeactive,creative,open-mindedandnon-biased.Weneednewwayofthinking,embeddedwithcreativityaswellasusingnewoperationalapproaches.Thus,itiscrucialistobuildupsuchinternationaluniversitiesrelationshipthatwillenhancetheexpertiseandcompetence.ResearchCollaboration.Today’sresearch,Tomorrow’sfuture(TRTF)TheProphetMuhammad(peacebeuponhim)said:'Acquireknowledgeandimpartittothepeople.'(AlTirmidhi).Thequest forknowledgehasbeen fromthebeginningof timebutknowledgeonlybecomesvaluablewhen it isdisseminated and applied to benefit humankind. In line with this program’s objectives, it is hoped that thiscollaborationwillbeaplatformtogatheranddisseminatethelatestknowledgeinthebusinessandeconomicsfield.The benefits of today’s researchwill influence the nations’ quality of life in the future. This is provenwith theadvancement in knowledge and technology characterised by the Industrial Revolution in which now we are“mesmerized”and“coined”withthetermIR4.0.AccordingtoTheWorldEconomicForum,anestimated65%ofkidsenrollinginprimaryeducationtodaywillendupworkinginjobsthathaven’tbeencreatedyet.Therefore,thissymposiumbecomesaplatform;fortheacademicians,researchersandpostgraduatestudentsfrombothfaculties:FBMandFEBtoshareanddiscussnewfindingsontheirresearchinthisfield.Itisenvisagedthatmoreintellectualdiscoursewillresultinthiscollaborationsbetweenouruniversitiesandresearchinstitutions.NetworkingandFutureResearchCollaborationIt is alsomy sincere hope that this symposiumwill bemore thanmerely networking opportunity for researchcooperation,but itwillalsobecomeasteppingstone forgreaternetworkingthatwillbenefitboth facultiesanduniversities.WearegratefulthattomorrowwewillbehavingMoUExchangeCeremonywhichfurthercementsourcommitmentfor future networking. Under this collaboration, both faculties agree to encourage and advance effort on theteachingandlearning,researchandcommunityagenda.Therefore,Ihopethestrongrelationshipthatwebuilttodaywillbenurturedandstrengtheninthecomingyears.Wabillahitaufiqwalhidayah.AssalamualaikumW.B.T.Thankyou.

AssociateProfessorDr.SitiHalijjahShariffDean,FacultyofBusinessandManagement,UiTM


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ProceedingsofTheTRTFInternationalSymposium2018

VOLUME1NUMBER1 SEPTEMBER2018

ISBN: 978-967-363-502-3 eISBN: 978-967-363-500-9 This book is a compilation of papers presented at the TRTF International Symposium 2018 - UiTM Shah Alam, Malaysia on 24 September 2018. PaperID. Title Page

P01 ADescriptiveStudyontheSelectionofCarRentalCompanyTakafulPolicyAmirulAfifMuhamat,MohamadNizamJaafar,SharifahFaigahSyedAlwiandNorzitahAbdulKarim

6

P02 Outstanding through Online Social Network: The Intersection of BrandCharacterBuildingandAudienceUsingStorytellingMarketing in theSocialMediaAfizanAmer,SitiHajarMd.Jani,IrwanIbrahimandMuhammadNasirinAbuBakar

10

P03 TheInfluenceofSafetyManagementPracticestoSafetyPerformanceAmongConstructionWorkersinMalaysiaSaifulAzmirKasdi@AbdRahim,IrwanIbrahimandHasmanAbdulManan

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P04 TheFactorsInfluenceProductDeliveryinMalaysiaIrwanIbrahim,ZaimyJohanaJohan,AfizanAmerandNorainFadlinaAbdulRahman

22

P05 CombinedEdutainmentEntepreneurshipProgramforUniversityStudentsatUniversityof17Agustus1945(UNTAG)SurabayaIndonesia YuliarKartikaWijayanti

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P06 Effect of Compensation, Communication and Spirituality at Work on thePerformanceoftheTurnoverIntentionasanInterveningVariableSumiatiandNurHasan

34

P07 Analysis of The Effect of Liquidity On Profitability, Cash Flow, FundingDecisionsandCompanyValueofTheConstructionServiceCompaniesListedOnTheIndonesiaStockExchangeSaptoWiratno, Dr. Slamet Riyadi Msi,,Ak, Ca, Dr. H. Mulyanto Nugroho,MM.,CMA.,CPAI

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P08 InfluencesAnalysisofMacroeconomics,RiskManagement,GoodCorporateGovernance, Earnings, Capitals Toward Company Performances andCompany Values in National Private Public Bank of Go Public ForeignExchangesListedInIndonesianStockExchangeGustafNaufanFebrianto,Dr.SlametRiyadiMsi.,Ak,CaandDrMulyantoNugrohoMM

46

P09 DeterminantsofBrandPurchaseIntentionEvidenceofHalalFoodIndonesiaEstikHariPrastiwi

52


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P10 KnockdownmarketasaSolvingUrbanInformalSectorinSurabayaHousingComplex Dr.H.Zakariya,MS.,MMandDr.RachmawatiNovaria,MM

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P11 EffectofPerceptionOfPrice,PerceptionOfProductQuality,AndCustomerRelationshipManagement,TowardsKfcCustomerSatisfactionInSurabayaFeliksAnggiaBinsarKristianPanjaitan

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P12 TheInfluenceOfReverseLogisticOnSupplyChainPerformance(ACaseStudyOfFoodAndBeverageIndustryInEastJava)NizaNurmalasari,NurKamiliyahFirizqi,RinoAhmadFaizalandWiwinWidiasih

66

P13 TheDeterminantFactorsofWorkplaceErgonomicsForAgingWorkplaceNurdianaSyahiraBtMohdBadrul

71

P14 The Satisfaction of Characteristic Intention on Customer RelationshipManagementPerformanceamongSME’sDeliveryService.MuhdFairosMohdShah,SamsudinWahabandNorhayatiHussin

75

P15 TheModeratingRoleofWork Involvement in Influencing theRelationshipbetween Person-Environment Fit and Organizational Citizenship BehavioramongPublicServiceEmployeesAyuKamareenna,AbdullahThaniandAbdulKadirOthman

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P16 StrategyinDevelopingtheTenunIkatinKediriCityEastJavaProvinceDR.NekkyRahmiyati,MMandDra.SriAndayani,MM 87

P17 EffectofPerceptionofPrice,PerceptionofProductQuality,andCustomerRelationshipManagement,TowardsKFCCustomerSatisfactioninSurabaya.FeliksAnggiaBinsarandKristianPanjaitan

93

P18 Agro-Innovation–PathtoAgriculturalEntrepreneurship:FeasibilityStudyEliasKamaruzzaman,NorzaidiMohdDaud,SamsudinWahabandRozhanAbuDardak

98

P19 TheEffectofIndividualCharacteristics,EmployeesCommitment,JobStressOn Job Satisfaction And Employees Performance In PT. Timbul Persada InTurbanEastJava TikaWahyunanti,DewaKetutRakaArdianaandMohammadSihabRidwan

103

P20 TheImpactofCompetenceandTalentsManagementonSMI’sPerformanceofBatikProductioninEastJava,Indonesia SitiMunajahToyyib

108

P21 TheRolesofIntangibleResourcesinCSRCollaborationforSustainability:AnExtensionofRBV SitiSaraIbrahim,AbdHalimMohdandNoorShafinarIsmail

113

P22 Program design and Financial Literacy Action Plan towards FinancialIntelligence Household small industries of the tourist District of East JavaCrunchTriRatnawati,SitiMunajahandNyomanLokajaya

119

P23 IslamicCapitalMarket:ExplorationfromMalaysiaIslamicHybridSecuritiesMohamadNizamJaafar,AmirulAfifMuhamatandIsmailAhmad

122

P24 ObjectiveClarityandtheWinningManagerialPracticesTheIndonesianEvidenceMohammadSihabRidwan,JohnMarti,SitiSarahOmarandNoorMayaBintiMdSalleh

128


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A Descriptive Study on the Selection of Car Rental Company Takaful Policy

Amirul Afif Muhamat1, Norzitah

Abdul Karim4 1,4Faculty of Business &

Management, UiTM, [email protected]

Mohamad Nizam Jaafar2, Sharifah Faigah Syed Alwi3 and

Norzitah Abdul Karim4

2,3Arshad Ayub Graduate Business School (AAGBS)

ABSTRACT

The car rental business in Malaysia is expanding and growing rapidly parallel with the development in tourism and transportation sectors. The car’s ownership in Malaysia is also increasing year by year due to the attractive financing schemes offered by banks and reduction in most cars’ prices compared to decades ago. Furthermore, the car rental business is also becoming the alternative source of passive income for some cars’ owners especially when they have extra cars that they rarely use, perhaps because they simply have extra car, or they have moved to a new house that is nearer to the work place that caused driving as no longer the best option. Thus, they pledge the cars to the car rental company.

The issue that this study intends to explore is in term

of the selection of takaful or insurance coverage for the cars since the cars’ owners determine types of takaful or insurance for the cars while claims will be managed by the rental car. Therefore, it is interesting to assess the situation which is the current phenomena in Malaysia. By understanding this issue, perhaps it will be another business segment that the takaful operators can consider or another aspect that the regulator needs to evaluate and regulate since the cars are no longer used for private but commercial purpose.

Keywords: takaful, car rental, insurance, pledge,

takaful selection

1. INTRODUCTION

The car rental business in Malaysia is expanding and growing rapidly parallel with the development in tourism and transportation sectors. The car’s ownership in Malaysia is also increasing year by year due to the attractive financing schemes offered by banks and reduction in most cars’ prices compared to decades ago. Furthermore, the car rental business is also becoming the alternative source of passive income for some cars’ owners especially when they have

extra cars that they rarely use, perhaps because they simply have extra car, or they have moved house that is nearer to the work place that caused driving as no longer the best option. Thus, they pledge the cars to the car rental company.

The issue that this study intends to explore is in term

of the selection of takaful or insurance coverage for the cars since the cars’ owners determine types of takaful or insurance for the cars while claims will be managed by the rental car. Therefore, it is interesting to assess the situation which is the current phenomena in Malaysia. By understanding this issue, perhaps it will be another business segment that the takaful operators can consider or another aspect that the regulator needs to evaluate and regulate since the cars are no longer used for private but commercial purpose.

2. LITERATURE REVIEW

Past studies have discussed on various factors that influence on the selection of insurance or takaful coverage which to some extent similar to the determinants that influence selection of customers on other financial products and services such as deposit account, investment account, current account, credit card and others.

In the context of this study, it is unique on the basis

that the selection of insurance or takaful coverage will be determined by the cars’ owners; although claims process (if there is accident) will be managed by the car rental company – the agent for the cars’ owners.

Therefore, this study is interested to explore the

study gap by assessing the car rental company’s information specifically on their cars’ insurance or takaful policies which is then contextualized with the findings of the past studies on takaful. Three most common cited factors that determine the selection of takaful are: religiosity; premium/contribution) cost; and service quality.


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i. Religiosity

Religion is not a trend that can be forgotten by the marketer as a short-term change or long-term phenomenon, therefore it is considered a valuable construct in understanding consumers (Kim et al., 2004).

Humans’ attitude and behaviours are shaped by their

beliefs or a set of moral values and these aspects are pertinent to Islamic financial services patronage behaviour by the customers. Takaful which is one of the main components in the Islamic finance is also exhibited the same patronage trend. Takaful was established on the precepts of Islamic finance that rejects practices that involve the elements of usury, excessive speculation and gambling in its operation.

Thus, it is regarded as an alternative insurance system

that should be aimed to achieve social benefits and at the same time strive for profitability (M. Khan & Bhatti, 2008; Muhamat, Jaafar, & Basri, 2017). Metawa and Almossawi (1998) emphasised that amongst the most important factors in determining the attitudes of Islamic bank customers were religion and followed by profitability, based on their findings towards the banks customers in Bahrain. Ahmad et al. (2008) and Khan et al. (2007) agreed with Metawa and Almossawi (1998) in determining the banking selection process especially for the Muslims – religion is not the only pull factor. From another perspective, commercial elements are the critical factors that the non-Muslims appreciate for, such as cost (expensive or cheap), product features and convenience (Gait & Worthington, 2008).

ii. Premium (contribution) cost

Pricing of takaful policy or premium (contribution) influence the potential policyholders ‘decision when subscribing for insurance or takaful. The relationship between price of insurance and motor insurance or takaful demand has been studied in the past (Savvides, 2006; Sen & Madheswaran, 2007).

Most of the findings of the past studies indicate that price of insurance is positively related to motor insurance or takaful demand. This is because the longer life expectancy which is used to proxy the price of insurance has a positive effect on motor insurance or takaful demand (Yazid, Arifin, Hussin, and Wan Daud, 2012). Moreover, Hwang and Greenford (2005) remarked that by lowering the price of insurance will likely push-up the demand for motor insurance or takaful policy.

iii. Service quality

Findings from a research in a dual banking system indicated that attitude of the customers towards the Islamic banks are influenced by mostly the combined of Islamic and financial reputation, followed by quality of the services offered, social reputation of the Islamic banks, convenience and lastly the product price (Dusuki and Abdullah, 2007). Haron, Ahmad, and Planisek (1994) in their findings suggested Muslims and non-Muslims who were customers

to the Islamic banks emphasised on the features of the Islamic banks’ products as their preference, based on their study over nearly equal percentage of Muslims and non-Muslims respondents in Malaysia.

A study by Erol and El-Bdour (1989) which is always

considered as amongst the earliest study in assessing the customers’ patronising attitude towards Islamic banks; showed that religiosity is not the only significant element that customers considered when “banking” with any bank, from the Jordanians’ feedback. Their selection also focused on the Islamic banks’ products features: percentage of return that from the savings or investment accounts; and rate of borrowing that.

Dar (2004) emphasised on the demand of Islamic

banking products in the United Kingdom is not purely driven by religious factor (three quarter of respondents on this quadrant); in his study over a sample of Muslims population across the United Kingdom. Again, it gives impression that Islamic banks’ products features are still one of the important criteria that the customers consider. 2. METHODOLOGY

This study gathered data from a car rental company, Dummy Car Rental Enterprise which is based in Kuala Lumpur. The used of dummy name is necessary as per the company’s request. This data is then analysed and discussed in the findings section below. Past studies were referred to contextualize the findings with the previous studies. 3. FINDINGS

Types of car protection Amount Percent (%) Conventional Insurance 29 32 Takaful 61 68 Total 90 100

Table 1: Types of car protection Table 1 indicates that the rental company has 90

rental cars in the type of saloon car and most of the cars are insured with takaful, 68%. This reflects the type of preferred car by Malaysians.

Selection of cars’ owners on takaful operators

Amount Percent (%)

Etiqa Takaful 28 46 Zurich Takaful 17 28 Takaful IKHLAS 13 21 Takaful Malaysia 3 5 Total 61 100.0

Table 2: Selection of cars’ owners on takaful operators

In term of takaful, 46% of pledgor insured their cars

with Etiqa Takaful, followed by Zurich Takaful at 17%, Takaful Ikhlas is 13% and last is Syarikat Takaful Malaysia.


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The statistics are consistent with the report on Best Takaful and Motor Insurance Companies 2017/2018 that awarded Etiqa and Syarikat Takaful Malaysia as the winners for takaful category (https://www.ibanding.com/motor-insurance-award-2017-2018/). These results are influenced by the three main factors discussed in the section before which are: religiosity; cost of the premium and product features or service quality. While most of the takaful companies are offering the more or less at the same price, Muslims are the dominant customers; thus the only factor that can differentiate their services is the service quality or product features offered.

Selection of cars’ owners on insurance companies

Amount Percent (%)

Allianz insurance 11 38 Liberty Insurance 9 31 AXA Affin Insurance 3 10 Etiqa Insurance 2 7 MSIG Insurance 2 7 RHB Insurance 1 4 AM General & Kurnia Insurance

1 3

Total 29 100 Table 3: Selection of cars’ owners on insurance

companies Table 3 shows that for insurance companies, Allianz

Insurance is the most popular, followed by Liberty Insurance, AXA Affin Insurance and the rest. The figures also consistent with the report on the Best Takaful and Motor Insurance Companies 2017/2018 that awarded Allianz Insurance as the top two best insurance companies in Malaysia (https://www.ibanding.com/motor-insurance-award-2017-2018/).

Race Pledgor Percentage (%) Malay 44 92 Chinese 3 6 Indian 1 2 Total 48 100 Table 4: Cars’ owners according to race

Table 4 depicts the demarcation of pledgors based

on race and Malays are the highest. Thus, it is not a surprise to notice that takaful is the preferred insurance as in this study since Malays are associated with being Muslims. Nevertheless, the total is only 44 and in Table 2, only 61 cars insured with takaful which means that if comparison is made, many non-Muslims are also insured their cars with takaful (as in this study). Furthermore, total owners or pledgors is 48 while number of cars is 90 which means that some cars’ owners pledge more than one car with the company.

4. CONCLUSION

This descriptive study informs us on the situation that exists in the rental car business which this research focuses on selection of takaful by the owners or pledgor. It shows that most of the pledgors insured with takaful.

The unanswered question is whether the owners

who subscribed motor takaful for their pledged cars choose private motor takaful policy or commercial motor takaful policy since for this study, the cars’ owners were driven by commercial motive while the cars remained insured as private.

REFERENCES

Ahmad, W.M.W., Rahman, A.A., Ali, N.A. and Seman, A.C. (2008), “Religiosity and banking selection criteria among Malays in Lembah Klang”, Shariah Journal, Vol. 16 No. 2, pp. 279-304. Dar, H. A. (2004). Demand for Islamic financial services in

the UK: chasing a mirage? Dusuki, A. W., & Abdullah, N. I. (2007). Why do Malaysian

customers patronise Islamic banks? International Journal of Bank Marketing, 25(3), 142-160. Erol, C., & El-Bdour, R. (1989). Attitudes, behaviour, and

patronage factors of bank customers towards Islamic banks. International Journal of Bank

Marketing, 7(El-Gamal), 31-37. Gait, A., & Worthington, A. (2008). An empirical survey of

individual consumer, business firm and financial institution attitudes towards Islamic methods of

finance. International Journal of Social Economics, 35(11), 783-808. Haron, S., Ahmad, N., & Planisek, S. L. (1994). Bank

patronage factors of Muslim and non-Muslim customers. International Journal of Bank Marketing, 12(1),

32-40. Hwang, T., & Greenford, B. (2005). A Cross-Section Analysis of the Determinants of Life Insurance Consumption in Mainland China, Hong Kong, & Taiwan. Risk Management & InsuranceReview 8(1), 103-125. http://dx.doi.org/10.1111/j.1540-6296.2005.00051.x Khan, M., & Bhatti, M. I. (2008). Islamic banking and

finance: on its way to globalization. Managerial Finance, 34(10), 708-725.

doi:http://dx.doi.org/10.1108/03074350810891029

Khan, M.S.N., Hassan, M.K. and Shahid, A.I. (2007), “Banking behavior of Islamic bank customers in Bangladesh”, Journal of Islamic Economics, Banking and Finance., Vol. 3 No. 2, pp. 159-93.


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Metawa, S and Almossawi M (1998). "Banking Behaviour of Islamic Bank Customers: Perspectives and Implications." International Journal of Bank Marketing 16(7): 299-315. Muhamat, A. A., Jaafar, M. N., & Basri, M. F. (2017).

Corporate social performance (CSP) influences on Islamic bank’s financial performance. Journal

of International Business, Economics and Entrepreneurship, 2(1). Savvides, S. (2006). Inquiry into the Macroeconomic and Household Motives to Demand Life Insurance: Review and

Empirical Evidence from Cyprus. Journal of Business and Society, 19, 37-79. Sen, S. & Madheswaran, S. (2007). Are Life Insurance Demand Determinants valid for Selected Asian Economies and India? Paper for Presentation at Annual Meeting of APRIA, 1-27. Yazid, A.S.; Arifin, J.; Hussin, M.R.; and Wan Daud, W.N.

(2012). Determinants of Family Takaful (Islamic Life Insurance) Demand: A Conceptual

Framework for a Malaysian Study. International Journal of Bussiness and Management. Vol. 7, No. 6.


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Outstanding through Online Social Network: The Intersection of Brand Character Building and

Audience Using Storytelling Marketing in the Social Media

*Afizan Amer 1

1Universiti Teknologi

Mara, Rembau, Negeri

Sembilan, Malaysia ,

[email protected].

Siti Hajar Md. Jani2

2Universiti Teknologi Mara,

Kuala Pilah, Negeri Sembilan, Malaysia,

[email protected]

Irwan Ibrahim(Phd) 3

3Universiti Teknologi Mara, Puncak Alam, Selangor, Malaysia,

[email protected]

Muhammad Nasirin Abu

Bakar4

4Kolej Universiti Islam Melaka,

Melaka, Malaysia.

[email protected]

ABSTRACT

The purpose of this paper is to highlight the importance of building emotional connections between brand character building and audience through storytelling strategy. Using online social networks in social media as a medium of change, the paper aims to stress the importance of using customer insight to drive branding decisions, where they share experiences and stories and consequently influence each other's perceptions and buying behaviour. The method involves a systematic literature review on specific area, brand character building and audience through storytelling strategy, where customer share experiences and stories and consequently influence each other's perceptions and buying behaviour. Through a systematic literature review, researcher learned a novel interpretation on how these online social networks function with regard to the importance of building emotional connections between brand character building and audience through storytelling strategy by off ering a conceptual framework based on the sociological concepts of storytelling, that involve the identified able nine storytelling themes, Down-to-earth Local, Easy Laugh, Role Model, Edutainment, and Cinderella story, Urban Lifestyle, Food for the Soul, Emotional Roller Coaster, and Dream & Aspirations.

Keywors: Storytelling Marketing, Branding, Buying Behaviour

1. Introduction. Information came swiftly today. It comes from various sources such as television, radio, print media, internet, to social media, even as early as when we open our eyes. Millions of content produce provide a big challenge to the marketers today in breaking the clutter of content when they are planning to release a content marketing. With a wrong theme, the content that marketers try to deliver will be ignored by the consumer because it seems not relevant to them. Cost, efforts, time, and energy were wasted and it will lead to marketing strategy ineffectiveness that will cause a product or services branding campaign failed.

In this deep dive conceptual paper discussion, this paper picked up the identified able nine storytelling themes highlighted by Hermawan Kartajaya, 2017, the co-founder of Asia Marketing Federation. The nine themes are Down-to-earth Local, Easy Laugh, Role Model, Edutainment, and Cinderella story, Urban Lifestyle, Food for the Soul, Emotional Roller Coaster, and Dream & Aspirations.

The main idea of this paper is to highlight the importance of building emotional connections between brand character building and audience through storytelling strategy and explore various nine storytelling themes, stories and facts about the story telling strategy and uplift the importance of using customer insight to drive branding decisions, where


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they share experiences and stories and consequently influence each other's perceptions and buying behaviour. This is certainly very useful insight for marketers and business organization in creating content marketing strategy that fits with the audience.

As early as the development of speech it seems that customer communicated through telling stories. In non-marketing theory development storytellers were held in high esteem, they entertained, touched the emotions and passed on knowledge. They also can make people feel part of something.

It is interesting to know that in a marketing context to see how storytelling is used in influence each other's perceptions and buying behaviour. Recently there has been formal, academic interest in it. But the informal traditions go deep. Storytelling is how marketing people enhancing brand character building and audience through storytelling strategy, where customer share experiences, stories and consequently influence each other's perceptions and buying behavior by utilizing online social networks in social media as a medium of change.

These developments not only involve theory and framework development but the development also focusing on application by marketing people. Previous literature emphasize dull presentation has come to life when the material not on the slides, the real examples, are shared.

2. Problem statement In fast-paced times, time and energy is the main thing. All the complicated business, to queue up, as much as possible does not happen. No matter how good a product, it would be disappointing if it is not equipped with fast and precise service. It’s simple, when the company woo consumers until finally buy, but the consumer difficulty when want to ask, complain, or even transact further. This could have the opposite effect. Consumers can turn into hate because of bad service.

The emergence of social media thus requires a fundamental rethink of marketing practices as brands are now co-created through informal conversations by authors largely outside marketers’ control. While a brand may initially embody a manufactured commercialized story, consumers’ storytelling of personal experiences and opinions becomes absorbed into the brand narrative, hence changing, diluting or disintegrating its identity. Social media are therefore facilitating a democratisation of media production and a power shift towards consumers who can now produce content and publish via communication channels where marketers are not invited, Dessart, L. (2018).

Technological sophistication claimed to be the answer. Services that used to involve employees, now can be done alone by consumers through various digital services such as kiosk, applications, social media, and others. In essence, the various services aims to provide convenience, practicality, and speed in terms of purchases, reservations, complaints, and more, Österle, B., Kuhn, M. M., & Henseler, J. (2018).

Liu, L., Lee, M. K., Liu, R., & Chen, J. (2018), brings up the issue of Digital Self-Service: My Wish is My Command complete with various practices from Indonesian companies that have implemented digital self-service. It is expected that the practice of these companies can give an idea that the strategy is not in vain.

Like it or not, marketers today should start to look at marketing in the digital world. All this is inseparable from the fact that consumers today are very dependent on the internet world and all its derivative products.

However, there are various rules of the game that brand owners need to know before trying out this way. From the literature study it can provide some insight that can be a guide, reference, and input for feature study on how brand character building through storytelling marketing in the social media can be deploy.

3. Literature Review 3.1 The Identified Able Storytelling Themes

Previous research indicates that consumers spend about 35 hours a week of TV whereby human brains are hardwired for stories and they have a unique effect on their brains. According to, Ryu, K., Lehto, X. Y., Gordon, S. E., & Fu, X. (2018), when human hear a story it triggers the same area of the brain as when we experience an event. There is little distinction between story and experience. Stories sweep consumer up on a number of levels, where human heart rate goes up and it’s often put them in the story or relate to the protagonist condition. Most of people remember stories, while just minority remembers statistics. Stories are the thing people are going to remembered due to every story should have a beginning, middle and end, Dessart, L. (2018).

An identified able storytelling themes that works for brand character building are the character its self’s. “It’s about a character in pursuit of a goal in the face of some challenge. It’s about how the character overcomes the challenge, which provides conflict and drama and that provides an interest situations. Story Telling in marketing need to highlight the elements: who’s my audience, what are the goals of my customer and then find a character to overcome those challenge.


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An identified able storytelling themes also need to connect with emotion, Dessart, L. (2018). Emotion is the literal and figurative heart of storytelling, Österle, B., Kuhn, M. M., & Henseler, J. (2018). Marketing people that can make them feel something using the power of emotion; will use emotion to triggers decision-making. Storytelling in marketing is about making choices, creating stories that consumer can relate to and standing up to other brands who want to water down their story.

An identified able story telling concept also reflect a concept where less is more, shorter is better, not just less time, less stuff. The key is to use essential details not unnecessary details. This is the key to creating long-term connections with the customers, help build to build the company reputation and sell their products and services, Chang, Y. (2018).

3.2 Storytelling Marketing Strengthen Brand

Storytelling is one of the most powerful ways to breathe life into a brand and often called one of the main components of a content marketing approach. By giving products and services an identity by capturing and sharing the stories they really are, you can take your target audience on a journey they yearn to experience, Lund, N. F., Cohen, S. A., & Scarles, C. (2017). For consumers to form a personal connection with your brand, company stories must be authentic, creative and inspirational, Ramadan, Z. (2017).

Emotional branding is a progressive marketing strategy that has the potential to drive revenue and increase customer retention. How a person feels about a brand typically determines whether they buy or recommended a product. A brand is a matter of perception, von Wallpach, S., Hemetsberger, A., & Espersen, P. (2017).

When crafting their brand story, they must illustrate what their voice is, what their product stands for and why it matters to the lives of the audience that has its own stories. The producer also need to outline actual steps to be taken and show to their customer how they can earn the value if they are engaged to the brand. The story telling strategy must be creative, yet subtle and often it’s indirect.

Previous literature indicate that marketers increasingly interested as in storytelling approaches due to brands do best when they touch the emotions and build relationships, so what could fit better within the human condition is ‘‘static brands are dead, moving brands are living’’ by which means that brands need to convey motion, need to adapt and need to touch emotions, Pongpaew, W., Speece, M., & Tiangsoongnern, L. (2017).

Without a consistent storytelling strategy, it begins to unravel. Company need to form a storytelling strategy whereby ‘‘think of brands as people’’. A consumer cannot be captured by a portrait. A brand cannot be represented by a logo in the digital era.

3.3 The narrative of change

In online social network business environment storytelling is not just about describing events but is about the ‘‘emotional management of an audience’’ and as such meanings are ascribed. Consumers with deep experience of the change process will recognize this process, whether through formal processes such as management meetings, or informal processes such as the rumor mill. In the battle for hearts and minds stories are a powerful weapon.

These multiple narratives would give brand managers nightmares. They would totally confuse the customer. But for change managers they are the norm. Over time they become replaced, refined and re-written to meet the shifting needs of the audience. For operational researchers analyzing storytelling is difficult with much debate as to which methodologies to adopt. Field research notes become important for example and it is a highly qualitative process.

Most of previous research that is focusing on the implementation of operational research and they view storytelling, came out with similar findings, within its knowledge management context observing that ‘‘a story wraps up knowledge, both explicit and tacit, in a coherent and potentially palatable form.’’

3.4 Unleash the Power of Storytelling by Providing Meaningful Content as

Marketing Strategy .

From a group of literature gathered it indicates group of plot storytelling strategy represent the identified able nine storytelling themes was equally revealing. During this preliminary research, it shows for every story the details were different, but the plots, the sequence of events from once upon a time to the end were identical. Each plot contained these core storytelling elements: .

1. Character:- Building a character that can represent a brand or product is not only about using a character in pursuit of a goal in the face of some challenge, it’s about how the character overcomes the challenge, which provides conflict and drama and that will arouse the audience interest. When character are develop representing


13|P a g e I S B N : 9 7 8 - 9 6 7 - 3 6 3 - 5 0 2 - 3

brand nor products, telling stories in marketing the strategy need to consider these elements: who’s my audience, what are the goals of my customer and then find a character to overcome those challenges. The ideal character is one your audience can relate to a public figure or the company identity.

2. Connect with Emotion:- From the literature gathered it can be conclude that connecting with the emotion of audience is the main advantage in storytelling marketing. Emotion is the literal and figurative heart of storytelling. Researcher found that in many condition industry player use the strategic application of emotion for a real business purpose. Storytelling in marketing is about making choices, creating stories that marketers can relate to and standing up to lawyers and others who want to water down their story.

3. Less is more “Shorter is better” :- Not just less time, less stuff. Most research gather throughout this study showing that the key is to use essential details not unnecessary details. In many cases reflect that is the key to creating long-term connections with brand and consumers, help build a brand reputation and sell the products and services in the end.

Anticipation from the literature gathered every storytelling marketing strategy began with a sense of hope for the future. Crisis, of course, all stories contain conflict.

4.Conclusions

Much of the academic work around storytelling can seem esoteric, but companies stay with it, this is an important approach which taps into something almost primeval in our people. For a group of literature gathered in the study researcher identified the groups of collectors perform storytelling exercises in the form of icebreakers, group activities and solo play. Finally researcher grouped the research according to nine storytelling themes, Down-to-earth Local, Easy Laugh, Role Model, Edutainment, and Cinderella story, Urban Lifestyle, Food for the Soul, Emotional Roller Coaster, and Dream & Aspirations. Stories are comprised of a theme, which serves as the moral of the story, and the plot, which is the device that conveys the theme. Every story contained a theme comprised of three core elements:

1. Hardship: the journey and work involved in overcoming obstacles is absolutely necessary to the feeling of being rewarded. Perseverance in the face of hardship is critical. If a reward comes out

of the blue, then we may enjoy the surprise, but we don’t value it the way we do a reward we have worked hard to earn.

2. Reciprocity: critical to the feeling of being rewarded is an equal exchange of value. Human appreciate the give and take of life. Individual give to charity and feel satisfaction. For instance individual stay up all night with a sick friend, and two weeks later their friend returns the favor. The flip side to this expectation of reciprocity, of course, is the minor twinge of disappointment their feeling when they don’t get something back. The fair value exchange is the key.

3. Defining moments: in all human experiences, there are moments of truth – the moments that change their life. They don’t tend to remember much else about their lives besides these defining moments. Happiness, after all, isn’t a continual state of being. It’s an intermittent cycle, in which periods of remembered bliss alternate with periods of forgetfulness. Such defining moments were a common theme in the collector tales of feeling rewarded.

5.Recommendation

First of all, stories are interesting. People are curious in nature, and many of them are good listeners. When a narration is genuinely impressive, they are willing to spend a lot of time digging into these stories. In childhood, we love to listen to fairy tales; when people grow up, they usually hear the stories of their friends. Captivating stories are entertaining for everyone, even asocial people.

Second of all, stories gain trust. Whomever consumer decide to share their personal stories with, it makes they closer to a brand. The thing is that storytelling is quite an intimate thing. Usually consumer doesn’t tell stories just to anyone. The same as in life, publishing an engaging story on company site will help organization become closer to their readers who will come back for more stories.

And finally, people are just more perceptive towards stories, in contrast to dry statistics and facts. Another research study conducted by The Journal of Marketing Theory and Practice showed that despite the content itself, the success of a post is mostly defined by its structure. It turned out that people like stories the most.

6. References

Österle, B., Kuhn, M. M., & Henseler, J. (2018). Brand worlds: Introducing experiential marketing to B2B branding. Industrial Marketing Management.


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Dessart, L. (2018). Do ads that tell a story always perform better? The role of character identification and character type in storytelling ads. International Journal of Research in Marketing.

Liu, L., Lee, M. K., Liu, R., & Chen, J. (2018). Trust transfer in social media brand communities: The role of consumer engagement. International Journal of Information Management, 41, 1-13.

Barcelos, R. H., Dantas, D. C., & Sénécal, S. (2018). Watch Your Tone: How a Brand's Tone of Voice on Social Media Influences Consumer Responses. Journal of Interactive Marketing, 41, 60-80.

Chang, Y. (2018). Perceived message consistency: Explicating how brand messages being processed across multiple online media. Computers in Human Behavior, 85, 125-134.

Akrout, Houcine, and Gàbor Nagy. "TRUST AND COMMITMENT WITHIN A VIRTUAL BRAND COMMUNITY: THE MEDIATING ROLE OF BRAND RELATIONSHIP QUALITY." Information & Management (2018).

Ryu, K., Lehto, X. Y., Gordon, S. E., & Fu, X. (2018). Compelling brand storytelling for luxury hotels. International Journal of Hospitality Management, 74, 22-29.

Lin, H. C., Swarna, H., & Bruning, P. F. (2017). Taking a global view on brand post popularity: Six social media brand post practices for global markets. Business Horizons, 60(5), 621-633.

Black, I., & Veloutsou, C. (2017). Working consumers: Co-creation of brand identity, consumer identity and brand community identity. Journal of Business Research, 70, 416-429.

Frandsen, S. (2017). The silver bullet of branding: Fantasies and practices of organizational identity work in organizational identity change process. Scandinavian Journal of Management, 33(4), 222-234.

Gutiérrez-Cillán, J., Camarero-Izquierdo, C., & San José-Cabezudo, R. (2017). How brand post content contributes to user's Facebook brand-page engagement. The experiential route of active participation. BRQ Business Research Quarterly, 20(4), 258-274.

Ramadan, Z. (2017). Examining the dilution of the consumer-brand relationship on Facebook: the saturation issue. Qualitative Market Research: An International Journal, 20(3), 335-353.

Lund, N. F., Cohen, S. A., & Scarles, C. (2017). The power of social media storytelling in destination branding. Journal of Destination Marketing & Management.

von Wallpach, S., Hemetsberger, A., & Espersen, P. (2017). Performing identities: Processes of brand and stakeholder identity co-construction. Journal of Business Research, 70, 443-452.

Pongpaew, W., Speece, M., & Tiangsoongnern, L. (2017). Social presence and customer brand engagement on Facebook brand pages. Journal of Product & Brand Management, 26(3), 262-281.

Baumann, J., Le Meunier-FitzHugh, K., & Wilson, H. N. (2017). The challenge of communicating reciprocal value promises: Buyer-seller value proposition disparity in professional services. Industrial Marketing Management, 64, 107-121.

Weijo, H., Bean, J., & Rintamäki, J. (2017). Brand community coping. Journal of Business Research.

Janssen, C., Vanhamme, J., & Leblanc, S. (2017). Should luxury brands say it out loud? Brand conspicuousness and consumer perceptions of responsible luxury. Journal of Business Research, 77, 167-174.

Crijns, H., Cauberghe, V., Hudders, L., & Claeys, A. S. (2017). How to deal with online consumer comments during a crisis? The impact of personalized organizational responses on organizational reputation. Computers in Human Behavior, 75, 619-631.

Carnevale, M., Luna, D., & Lerman, D. (2017). Brand linguistics: A theory-driven framework for the study of language in branding. International Journal of Research in Marketing, 34(2), 572-591.

Anselmsson, J., Burt, S., & Tunca, B. (2017). An integrated retailer image and brand equity framework: Re-examining, extending, and restructuring retailer brand equity. Journal of Retailing and Consumer Services, 38, 194-203.

Lee, J. E., & Watkins, B. (2016). YouTube vloggers' influence on consumer luxury brand perceptions and intentions. Journal of Business Research, 69(12), 5753-5760.

Pera, R., Viglia, G., & Furlan, R. (2016). Who am I? How compelling self-storytelling builds digital personal reputation. Journal of Interactive Marketing, 35, 44-55.


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Voss, K. E., & Mohan, M. (2016). Corporate brand effects in brand alliances. Journal of Business Research, 69(10), 4177-4184.

Gao, Q., & Feng, C. (2016). Branding with social media: User gratifications, usage patterns, and brand message content strategies. Computers in Human Behavior, 63, 868-890.

Hjelmgren, D. (2016). Creating a compelling brand meaning by orchestrating stories: The case of Scandinavia's largest department store. Journal of Retailing and Consumer Services, 32, 210-217.

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The Influence of Safety Management Practices to Safety Performance Among Construction Workers in

Malaysia

Saiful Azmir Kasdi@Abd Rahim1 1Faculty of Business

Management, Universiti Teknologi MARA,

Malaysia, [email protected].

edu.my

Dr Irwan Ibrahim2 2Faculty of Business

Management, Universiti Teknologi MARA,

Malaysia, [email protected]

du.my

Dr Hasman Abdul Manan3

3Faculty of Business Management, Universiti

Teknologi MARA, Malaysia,

[email protected]

Abstract The purpose of this study is aims to assess the influence of safety management practices towards safety performance among construction workers. There are six dimensions of safety management practices which are management commitment, safety training, workers’ involvement in safety, safety communication and feedback, safety rules and procedures and safety promotion policies. This study however is limited to construction workers in the area of Meru, Klang Malaysia. The period of observation is also short which need to be highlighted for future researcher’s attention. Keywords - safety management practices, safety performance, accident in workplace and safety dimension. I. Introduction

This research is focused on the relationship between

safety management practices and safety performance of

construction workers in Malaysia. Wilson and Koehan

(2000) was defined the crucial step in improving safety and

health is identification of hazards. The construction industry

has plenty of them. According to Soltanzadeh et al (2016)

that it has being recently remarked and facetiously “It’s not

the fall hurts, it’s the sudden stop”. He added that additional

injuries come from improper use of safety protection.

Schiver (2009) explained that lack of safety protection

was a cause of fatalities during work especially in

construction workplace. Special emphasis on safety standard

and training of employees must be placed to understand how

the safety is much more important while working on it yet

sometimes it is believed that the use of protection equipment

and procedures lowers workers productivity.

Lack of communication to each other between

employers and employees where all the employers whether

large or small industry, there is must had communication

safety requirements to its employees through both informal

and formal during the safety meeting process.

Construction industry is highly regard as one of the main

and important industries in any part of the world.

Construction industry has many employees which are

directly employed to the operations or to support the

operations thus increase the complexity of the Organization

Safety and Health (OSHA). OSHA has identified that the

problems and challenges in this industry as it can be very

hazardous and harmful. A few studies agree that

construction sites and projects bring along high risk of

occupational accidents and occupational injuries. Among

industries, it can be safely said that construction sites and

projects are the most dangerous.

The different kind of work that a worker does or perform

in construction industry can carry its own dangers

differently. In the construction industry, workers do the

different kind of activities which has its very own dangers.

One of the most important implications is safety of training


17|P a g e I S B N : 9 7 8 - 9 6 7 - 3 6 3 - 5 0 2 - 3

at industry itself and OSHA safety management practices as

well. That is including such continuous change in

construction project, that using a lot of material, poor

housekeeping, non-continuous employment and cross-

seasonal work, and other pollutants like dust, noise,

vibration, and direct exposure to the outside weather.

This study is to seek the relationship between six safety

management practices (management commitment, safety

training, workers’ involvement in safety, safety

communication and feedback, safety rule and procedure, and

safety promotion policies) and safety performance.

II. Litreature Review

The dependent variable in this study is safety

performance. The dependent variable that is commonly

known as outcome variable. This variable becomes the

interest or the measured variable in any study. The safety

performance refers a regulatory requirement related to safety

management and implementation of management system.

The primary goal of safety performance is for an

organization to verify its safety performance. By doing this

the organization can develop elements necessary to monitor

or to make assessment to their safety levels. It is can be

verified to the safety policy and approved safety objectives

using dedicated safety performance indicators. (Napsiah

M.S and Faridah, I, 2012)

The independent variables can also be known as a

predictor variable. An independent variable influences the

dependent variable either in positive and negative way. The

variance in the dependent is accounted for by the

independent variable. The independent variable in this study

are six of safety management practices which management

commitment, safety training, workers’ involvement in

safety, safety communication and feedback, safety rules and

procedures and safety promotion policies. Independent

variable is the factor variable that leads to the change in

dependent variable. The influence of independent variable

can be either positive or negative or it does not affect the

dependent variable which the latter shows no relationship.

Management Commitment vs Safety Performance

Sadus, A.M.V (2007) stated that the leadership and

management commitment are the most significant elements

in this success of the safety program in any organization. It

is even going extreme when the writers claim that none of

the elements in safety management can be executed without

proper support from the management. Management

commitment can include providing resources, present and

consent. It is being supported by Hany et al., (2013) that the

management commitment it the key factor in the

management of safety. The display of commitment from the

management should be translated in action. Based by

statement from Vredenburgh, (2002) were assumed the

commitment that management will be giving priority are to

those safety issues and any corrective action. The

management should provide reasonable safety protection,

attend safety meetings or investigate and accidents or near

miss at workplace where construction is the most important

places. Other researcher also supported the ideas as well

such as Carol K.H. Hon, Jimmie H and Albert P.C. Chan

(2014) and Napsiah M.S and Faridah, I (2012), The workers

are willing to participate in safety performance activities if

the employers are concerned on their personal safety.

(Ismail, Z., Omar, A. 2003).

Thus, the construct between management commitment

and safety performance is now can be developed.

Figure 1: The relationship constructs between Management

Commitment and Safety Performance

Safety Training vs Safety Performance

As Vinod Kumar, M.N., Bhasi, M. (2010), stated safety

training effectively identifies as the vital portion in positive

accidental prevention programs. Training is one of the

methods that enables workers to improve. Training also

prepares the workers to identify dangers thus learning the

options to handle the situation. It is important that through

training, workers can increase the knowledge and skill and

improve awareness, behavior and attitudes towards safety.

Management Commitment

Safety Performance


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Sijie et al, (2012) defined safety training is knowledge that

needs to be given for employees to work safety without

danger to their wellbeing thus, an accident can be predictable

if the worker were provided with comprehensive and

systematic safety training very well.

Thus, the construct between safety training and safety

performance is now can be developed.

Figure 2: The relationship constructs between Safety

Training and Safety Performance

Workers’ Involvement In Safety vs Safety Performance

One of the most effective ways to prevent accidents at

workplace is by getting the employees involved in safety

management related activities. These will promote of

workers’ knowledge and understanding of the inclusiveness

of management practices and allow them to be part of the

system. The workers had the rights to enough information

about the safety in the workplace and other related

information which to enable them to be participate

effectively in any safety programs (S. Al Haadir and K.

Panuwatwanich 2011). Thus, the attitude and behavior of

workers as well are the driven factors to ensure the desired

of results are achieved in implementing safety practices at

workplace by according to Vredenburgh (2002).

Thus, the construct between workers’ involvement in

safety and safety performance is now can be developed.

Figure 1: The relationship constructs between Workers’

Involvement in Safety and Safety Performance

Safety Communication and Feedback vs Safety Performance

Sulastre, M.Z and Faridah, I (2012) identified that the

communication is important that keeping people and the

organization working together. Safety related matters need

to be constantly communicated throughout the organization.

This will lead to success of effective safety management

procedures. Agents such as supervisors and workers need to

deliver communication effectively so that the safety message

can be properly disseminated through the organization as the

management intended. It will encourage the safety culture

among the employees through sharing information and

active communication assumes Siddarth et al, (2008). Safety

communication and feedback are required to build up the

regular understanding amongst business and workers on the

association safety necessity and goal.

Thus, the construct between safety communication and

feedback and safety performance is now can be developed.


Communication and Feedback and Safety Performance

Safety Rules and Procedures vs Safety Performance

Safety management where the most importance part of it

is identifying acceptable behaviors in the organization.

Safety management implementation can be one of the

approaches to ensure the safety rules are in place. Inspection

can be one of the great tools to have in the workplace. By

having inspection regularly, it can change workers behavior

and attitude towards safety. By having inspection, unsafe

conditions can be identified immediately and can be

removed if the safety management is well developed by the

management. The activity can modify workers attention

towards their own safety. Employees with positive attitude

towards safety will not break any safety rules and procedure

and have high priorities to safety of workplace (Crucifix,

M.D., 2001).

Thus, the construct between safety rules and procedures

and safety performance is now can be developed.

Safety Performance

Safety Training

Workers’ Involvement

in Safety

Safety Performance

Safety Rules and

Procedures

Safety Performance Safety

Communication and Feedback

Safety Performance


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Figure 1: The relationship constructs between Safety Rules

and Procedures and Safety Performance

Safety Promotion Policies vs Safety Performance

Incentive scheme such as incentive rewards and

recognition can be introduced as an encouragement to

employees. Implementation of those will help to motivate

employees to be involved in safety promotion effort and

encourage employees to comply with regulations. This in the

end will develop more ample safety programs and system at

workplace. There are a few factors to promote safety at

workplace which first, the employees should have adequate

knowledge about safety, and second, the workplace is

encouraging for working safety as defined by Soltanzadeh

A, Mohammadfam I, Moghimbeigi A and Akbarzadeh M

(2016). They added that the safety promotion program will

naturally encourage the organization duty on the safety and

worker attention to work-related injury.

Thus, the construct between safety promotion policies

and safety performance is now can be developed. The

construct and hypothesis are as shown below.


promotion Policies and Safety Performance

III. Research Methodology

To collect the data, a survey or questionnaire from was

given to all sample respondents as the instrument used in this

research paper. The questionnaire form was divided into two

section which are Part A and Part B. In Part A, it consists of

demographic profiling questions while in Part B, there are

30 statements used to obtain the responses through a Likert

Scale from one (extremely disagree) until five (extremely

agree).

The data collection is the process of gathering and

measuring information on targeted variables in an

established systematic fashion, which then enables on to

answer relevant questions and evaluate outcomes. A total of

150 questionnaires were distributed and collected from

workers in various construction projects.

IV. Findings

Frequency Analysis

The study of quantitatively describing the characteristics of

a set data is called descriptive statistic. Frequency analysis is

a part of descriptive statistics, it is important to run

frequency checks on the data contained in those variables.

Table 1: Demographic of Respondents

Category Frequency

Age

20-29 29

30-39 77

>40 44

Gender Male 150

Female 0

Race

Malay 63

Chinese 13

India 37

Others 37

Work

Experience

1-3 24

4-6 30

7-9 42

>10 54

The majority of respondent comes from the 30-39 years

old age group followed by above 40 years old with 77

respondents and 20-29 old age group with 29 respondents.

No female respondents were recorded as construction work

is men dominated field of work. The Malay workers is the

highest respondent in race category with 63 respondents

whereas for Chinese workers is only 13 respondents. Indian

and other races workers share the same number of

respondents at 37 respondents. The other workers group is

the workers from other races which most of them are

foreigner such as Nepalese, Burmese, and Bangladeshi. In

the working experience category, 54 respondents have more

than 10 years of experience. Meanwhile, for 1-3 years, 4-6

years and 7-9 years with 24, 30 and 42 respectively.

Safety Promotion Policies

Safety Performance


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Coefficients of Variations

Table 2: Coefficients of Variations

Model

Unstandardi

zed

Coefficients

Standardi

zed

Coefficie

nts t

Si

g.

B Std.

Error Beta

1 (Con

stant

)

Managemen

Commitment

Safety

Training

Workers’

Involement

Safety

Communicatio

n

Safety Rules

Safety

Promotion

Policies

2.7

53

.12

3

.05

3

-

.04

2

.10

2

.02

2

.08

2

.385

.097

.090

.080

.082

.086

.089

.138

.062

-.054

.111

.023

.080

7.1

47

1.2

67

.58

7

-

.52

6

1.2

44

.25

2

.93

0

.00

0

.20

7

.55

8

.59

9

.21

5

.80

1

.35

4

a. Dependent Variable: SP

The unstandardized beta coefficients are the value of

regression equation function for predicting the dependent

variable. The safety performance is 2.753, management

committee is 0.138, safety training is 0.062, workers’

involvement in safety is -0.054, safety communication and

feedback is 0.111, safety rules and procedures is 0.023 and

safety promotion policies is 0.08. For each one-unit increase

in management committee, safety performance will increase

by 0.138 units with holding other independent variable

constant thus, for each one-unit increase in safety training,

safety performance will increase by .062 units with holding

other independent variable. Meanwhile, for each one unit

decrease in workers’ involvement in safety, safety

performance will decrease by -0.054 units with holding other

independent variable constant. Then, for each one-unit

increase in safety communication and feedback, safety

performance will increase by 0.111 units with holding other

independent variable constant. For each one-unit increase in

safety rules and procedures, safety performance will increase

by 0.023 units with holding other independent variable

constant. And for each one-unit increase in safety promotion

policies, safety performance will increase by 0.08 units with

holding other independent variable constant.

Therefore, management commitment is the highest

influencer with a beta weight of .138. The second would be

the safety communication and feedback variable with a beta

weight of .111. The weakest variable would be the workers’

involvement in safety with a beta weight of -.054. While the

safety rules and procedures variable does not explain the

variance in safety performance satisfaction.

Conclusion

From overall hypothesis that have been gathered, the

safety management practices played as main role in

determining the safety performance. Therefore, it advisable

to the company that they should take a lot of initiative to be

always being aware about safety among their employee and

employer, whether they were being work or take a task to

work within the place that needed much more attention about

safety behaviour among themselves. However, the top

management should take a lot of responsibility to motivated

toward among their workers and always be remaining

themselves about the importance of safety in the workplace.

For example, the company might have had an advocate the

safety program in the industry. In addition, the management

need to be more committed in the safety and health

management in workplace especially always checks and

make sure the workplace is safe to work.

References

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THE FACTORS INFLUENCE PRODUCT DELIVERY IN MALAYSIA

Irwan Ibrahim1

1Operation Management

Program, Faculty of

Business and Management, UiTM Puncak

Alam, Selangor, [email protected]

Zaimy Johana Johan2

2Operation Management

Program, Faculty of

Business and Management, UiTM Puncak

Alam, Selangor, [email protected]

Afizan Amer3

3Faculty of Business and Management,

UiTM Rembau, Negeri

Sembilan, afizanamer@uit

m.edu.my

Norain Fadlina Abdul Rahman4

4Faculty of Business

Management, University of Technology

MARA,Puncak Alam, Malaysia norainfadlina@g

mail.com

ABTRACT

The purpose of this study is to investigate factors influence product delivery. The target population was the employee in electronics industry and directly involved in making decision on the product delivery. The non-probability purposive sampling technique has been used to ensure the collected data were from valid sources. Data collection was done using self-administrated questionnaire. 45 copies of questionnaires were distributed and 41 completed copies

were subsequently collected.Statistical Package for the Social Sciences (SPSS) modeling was adopted to perform correlation analysis. The research findings show that supplier network responsiveness and logistics network responsiveness have progressive influence on product delivery of a company. The effects of the results were discussed and directions for future research are provided.

Keywords: Product delivery, Information sharing, Supplier network responsiveness, Logistics process responsivenes

1. Introduction

As product delivery services rivalry in the 21st century strengthens, firms are necessary to provide superior quality services, at dependable delivery performance and low costs with on-time (Thatte, Agrawal, & Muhammed, 2009). Nowadays in competitive business environment, product delivery is the service that is required in order for the product or service to be considered by a customer. Firms are exploring different strategies to achieve these requirements by implementing different intra and inter organizations exercises (Thatte et al., 2009).


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Sezen (2008) stated that synchronization among functional component within the purchasing firms as well as between purchaser firms and their key suppliers is extremely important in mind the end goal to enhance the product reliability and overall quality performance. Ryu & Cook (2005) noted that importance of long orientation culture in managing effective interfere relationships in the supply chain. This is such long term orientations between supply chains members will be a key in determining the success of the ever-growing force of the international business.

Specifically, electronics manufacturing industry contributed over a quarter of manufacturing value over a quarter of manufacturing export in Malaysia over the period of 1980-2005 (Sundram, Ibrahim, & Govindaraju, 2011). Owing to a small domestic market, electronics manufacturing is always driven by the export market through global orientation (Sundram et al., 2011). The current research investigates the factors influence product delivery of a firm. Thus by providing theoretical framework and empirical evidence of said relationships, this study offers useful recommendations for determining and improving the product delivery of a company.

2. Literature Review

2.1 Product delivery

Product delivery defines as the capability to meet expected delivery dates and capacities on a constant basis (Closs, Swink, & Nair, 2005). It is the capability of an organization to have exact and consistent delivery to the end user (Joseph D.Blackburn, 1991). Koufteros (1999) defined product delivery as the extent to which the company is efficiently to meet customer requirements. Summary all definitions product delivery as the ability of an organization to supply on time the type and volume of product required by customer (Thatte et al., 2009).

Product delivery includes order fill rate, on time delivery, frequency of delivery and speed (Zhang, Vonderembse, & Lim, 2002). Soosay & Chapman (2006) founded that the important pointer of delivery performance is on time delivery that stated by majority of the organization. According to Koufteros (1999), delivery product on time is an extraordinary significance due to the current global nature of business and move towards just in time (JIT) practices by organization. Ward & Duray (2000) revealed that if companies keep on missing due dates, customers will progressively quit considering them as future suppliers, leading to loss sales and customers or even the entire business. These company will require improving upon their product delivery without which they may not get a chance to compete in the marketplace (Ward & Duray, 2000). In this way, the timing and reliability of the delivery is a vital as the quantity being delivered. Thus in today‘s competitive business environment, product delivery is considered as an arrange qualifier in addition to quality and price of product (Thatte et al., 2013).

In an empirical study of manufacturing firms, delivery performance was chose as the second most important logistics strategic priority after quality, cost, ahead of flexibility, cost leadership and service innovation (Fawcett, Calantone, & Smith, 1997).This is because in the midst of inflation, delay means extra

addition which regularly cannot be recovered from the customer (Kerner, 1976). Delays were clearly associated with severe damage to a company’s image, reputation and customer relationships. Delivery performance like profitability is something that happens as neglects to happen at the level of the firm (Kerner, 1976). It reflects the quality of the firm’s production arranging and related systems, procedures and organization and those of supplier (Kerner, 1976). One of the reason might be that the impacts of poor performance, though they might be perceived subjectively as being important are not easily quantifiable (Kerner, 1976). Penalty clauses for late delivery are particularly the exception in most industry (Kerner, 1976).

2.2 Factors influence product delivery

2.2.1 Information sharing According to Li & Lin (2006), information sharing refers to the degree to which basis and proprietary information is communication to one‘s supply chain partner. Information sharing is a key element for any supply chain management system (Moberg et al., 2006). Simatupang & Sridharan (2002) stated that information sharing refers to access private information between suppliers hence empowering them to monitor the advance of products and arrange as they pass through different processes in the supply chain. .

According to Li & Lin (2006), information sharing enhances synchronization between supply chain processes to manage the material flow and inventory costs reduced. Information sharing will affect high levels of supply chain integration and enable organizations to make on time product delivery and introduce products to the markets faster (Li & Lin, 2006). Information sharing influences the supply chain performance in terms of both total cost and service level (Zhao, Xie, & Zhang, 2002). Yu, Yan, & Cheng (2001) pointed out that sharing information with supply chain partners can reduce the negative impact of the bullwhip effect of the operations. Technology like Radio Frequency Identification (REID) systems could be used to greatly enhance supply chain visibility (Thatte et al., 2009). The Radio Frequency Identification (RFID) systems are a common and useful tool in manufacturing, supply chain management, and inventory control (Weis, Sarma, Rivest, & Engels, 2004). RFID systems consist of radio frequency (RF) tags, or transponders, and RF tag readers, or transceivers.

Tag readers interrogate tags for their contents by broadcasting an RF signal (Weis et al., 2004). Tags respond by transmitting back resident data, typically including a unique serial number. Narsing (2005) suggested that RFIDs allow a company supply chain to increased product visibility, to reduce stock, warehouse costs trimming, stock errors elimination, reducing thievery and shrinkage and allows company to update their logistics and real-time inventory databases information.

Furthermore, supply chain information sharing is useful only if it is significant, precise, appropriate and dependable (Simatupang, 2005). Information sharing assure that the right information is available in the right time and at the right place (Liu & Kumar, 2003). By taking the information accessible and sharing it to different parties within the supply chain, information can be used as a source of competitive advantage (Jones C, 1998).


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2.2.2. Suppliers network responsiveness Responsiveness is described as the ability of timeliness and the degree to which an entity firm can address changes in customer demand (Ibrahim & Jaafar, 2016). Supplier network responsiveness is defined as the ability of a firm‘s major suppliers to address changes in the firm’s demand (Thatte et al., 2013). A key to responsiveness is the nearness of responsive and adaptable partners upstream and downstream of the focal firm (Christopher & Peck, 2004). Reichhart & Holweg (2007) stated that suppliers manufacturing systems responsiveness could be treated as the supply chain‘s responsiveness.

The capability of a firm to respond rapidly to customer demand is much dependent on the response time of its suppliers to address the firm’s demand (Thatte et al., 2009). When supplier enable to response material quickly, it will opportunity to firm to quick process of production and delivery product. Hence, responsive firm should be able choose supplier who can add new product and can make changes quickly (Thatte et al., 2013). It is to ensure supplier can fast response to firm when unexpected demand request happen. Holweg & Frits (2001) stated that flexibility in the supplier network is an important element of being responsive to changes in customer demand and adaptability in the supplier network.

It is well known that responsive suppliers are a crucial asset of a firm when planning and manufacturing of outsourced products are involved (McGinnis & Vallopra, 1999).It has been argued that the reliability and responsiveness of suppliers play an important roles in the shortening s firm’s delivery cycle thus making deliveries more dependable (Srivastava, 2006).

According to Thatte et al., (2013), supplier selection are based on product development capabilities and quick arrangement capabilities, positive affect delivery time for products. Burt & Soukup (1985) suggested that inability to incorporate suppliers’ input in product development is a vulnerable perspective of supply chain management. Chen & Paulraj (2004) found that the capability of suppliers to make product volume changes to be critical factor in supplier selection.

Manna (2008) stated that the supplier’s relationship is crucial to the success of an organizations. Burt & Soukup (1985) advised that failures in including suppliers’ input in product development is a vulnerable aspect of supply chain management. McGinnis & Vallopra (1999) discovered that suppliers involvement could make successful new product development. Cheraghi Hossein S, Dadashzadeh Mohammad (2004) stated that effective supplier evaluation and purchasing process of key significance for organizations to succeed in today ‘s worldwide dynamic economy and citied many achievement factors for selection of supplier.

2.2.3 Logistics network responsiveness According to (McKinnon, Palmer, Edwards, & Piecyk, 2008), logistics can be described as a collective term for activities that starts with the movement of the goods from the production focuses to the final focuses of the sales by guaranteeing the requirements of the versatility of supply chain are entirely met. Logistics process responsiveness is defined as the ability capability of a firm’s outbound transportation; distribution and warehousing system (including 3PL/4PL) to address changes in

customer demand (Ibrahim & Jaafar, 2016; Thatte et al., 2013). Logistics and distribution management incorporates the activities of transportation of product from suppliers to manufacturer to distribution centers to last focuses of consumption (Duclos, Vokurka, & Lummus, 2003). These activities include warehousing, packaging and shipping, transportation arranging and management, inventory management, reverse logistics and order tracking following delivery (Ibrahim & Jaafar, 2016; Thatte et al., 2013).

Fuller, O’Conor, & Rawlinson (1993) stated that firm’s logistics framework is instrumental in making value for its customer. This value creation suggests guaranteeing logistics flexibility and speed inside the supply chain to serve each particular customer’s need (Duclos et al., 2003). All those activities are expected to drive from the demands of the material management (Hesse & Rodrigue, 2004). The functionally of logistics in a company are a difficult process whereas it is contains all of the activities that consists of the flow of the goods that starts from the raw material to the end consumer, containing the activities such as purchasing, warehousing, transportation, order processing and inventory control (Lancioni & Grashof, 1997). Lambert, Stock, & Ellram (1998) emphasized that they opportunity to perk up both the competitive performance and profitability of firms is by having an effective logistics management.

Organizations can minimize risk and remain competitive if flexibility can be supplemented by an incremental speed of detecting and respond (Simchi-Levi, Kaminsky, & Simchi-Levi, 2003). This responsiveness in the logistics process is an imperative component in the success of a responsive supply chain methodology (Fawcett et al., 1997) (Fawcett, 1992). Hoon Hum (2000) stated that to gain a competitive advantage, many organizations are looking to manage their logistics operation strategically but figure it out that they lack of the rare competencies and are progressively seeking to outsource their logistic activities. Apart from this, another important advancement that is making an effect on the organizations is the expanded emphasis on time based competition (Rohit Bhatnagar,Amrik S.Sohal, 2006).

Prater, Biehl, & Smith (2001) stated that the fact produce has been redesigned using the use of containers designed to be carried through ship, train and trucks, postponement and potential for mistake still happened. Firm ‘s operation and supply chain can be expensive to the organization investors when they encounter disruptions(Hendricks&Singhal,2003). McKinnon et al., (2008) expressed that warehouse operation, which incorporates poor production planning equipment breakdown, and staffing problem, which possibly happen more frequently, and lead to longer average delays in product distribution. Banomyong (2005) stated that the key part of an integrated logistics framework is to aid in the production, consumption and distribution, in other word, the supply chain of goods and services which implies that goods must be created and delivery to the market in the right quantity and without deformity.


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2.3 Conceptual Framework

Adopted from Thatte et al., (2009)

3. METHODOLOGY A quantitative approach which assumes positivist paradigm was adopted in the present study. The target population was made up by employee in electronics industry. They were chosen because they directly involved in making decision on the product delivery. To ensure the respondents sampled matched the purpose of the study, non-probability purposive sampling technique was used to ensure the collected data were from valid sources. It is this sample based on who researcher think would be appropriate for the study.

Data collection was done using self-administrated questionnaire. The questionnaire was adopted form (Closs et al., 2005; Thatte et al., 2009; Zhang, 2001) and pre-tested. Apart from profiling questions, all variables used multiple items and 5-point (strongly disagrees, disagree, neutral, agree, and strongly agree) using Likert scale for measurement and consists of 22 questions. Data collection was executed in end of November, 45 copies of questionnaires were distributed and 41 completed copies were subsequently collected. The response rate of over 91.11% indicates non-response error was not a major issue (Nulty, 2008). After initial screening, 41 copies were retained for data entry and further analyses. Statistical Package for the Social Sciences (SPSS) modeling was adopted to perform correlation analysis.

3.1 Hypotheses According to Swink & Zsidisin (2006), an experimental study on advantages and risks of suppliers’ commitment strategy found that drew in obligation including creating mutual trust and long term relations which would incorporate into part information sharing with suppliers for efficient decision making prompts upgrade delivery performance including delivery speed and delivery steadfastness among others for the firm. Sharing information with other parties within the supply chain can be utilized as a source of competitive advantage on different dimensions for example cost, quality, product delivery, product innovation and time to market (Jones C, 1998; Novack, Rinehart, & Langley, 1994). Tompkins & Ang (1999) noticed that consider the effective use of significant, timely and precise information by supply chain members as a key competitive factor for firm. For instance, information sharing with suppliers has given Dell Corp.

the benefits of faster cycle times, reduced inventory and improved forecasts (Thatte et al., 2009). The above arguments lead to:

H1: There is a relationship between information sharing and product delivery.

Many firm depend upon supplier delivery as instead to stocking large amount of inventories (Xenophon A. Koufteros, 2002). Responsive suppliers will have a positive influence on the responsiveness of a firm (Thatte et al., 2009). Any inefficiency at the upstream end of the supply chain will be transmitted to the downstream firm and to the customer in turn (Thatte et al., 2009). By having responsive suppliers, a firm is ensuring of on time and accurate deliveries from suppliers in this manner straight forwardly influencing its own specific delivery performance (Thatte et al., 2009). In other words if supplier responsiveness is high, it would contribute towards enhance the firm’s own delivery performance manifested in greater delivery reliability (Thatte et al., 2009). This can likewise give firm focused competitive abilities for example reduced time to market (Thatte et al., 2009). Milgate & Michael (2000) establish that late deliveries by suppliers significantly expected the late deliveries of the near downstream company in terms of lead-time and throughput times. This indicates that supplier network responsiveness significantly predicts the product delivery. The above arguments lead to:

H2: There is a relationship between supplier network responsiveness and product delivery.

Responsiveness of a firm ‘s logistics in transportation and distribution process will empower it to introduce new products faster than competitors for example lowering time to market (Thatte et al., 2013). Besides, it prompt to greater capability of a firm to give on time the type and quantity of product required by customers such as enhancing product delivery trustworthiness (Thatte et al., 2013). On the off chance that is invested with responsive suppliers this can enhance its ability to rapidly introduce new products and features in the market place for instance compete based on product innovation, reduce time to advestive for new products and provide on time delivery (Thatte et al., 2009). A supply chain characterized by speedy responsiveness to customers will likewise be focused of competitive in terms and quality (Thatte et al., 2009). The above arguments lead to:

H3: There is a relationship between logistics process responsiveness and product delivery.

Information sharing

Supplier Network Responsiveness Product

delivery

Logistics process responsiveness


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4. FINDING AND ANALYSIS

4.1 Frequency Analysis

Gender % Job Position % Male 51.4 Manager 5.7 Female 48.6 Executives 35.6 Non-Executives 58.7 Age (Years)

20 -29 Years 54.3 Working Experience

30 -39 Years 40.0 Below>1 Years 22.9 40 And Above 5.7 2 Years>5 Years 60.0 6 Years>9 Years 2.9 Department 10 Years>Above 11.4 Account/Finance 14.3 Logistics 17.1 Education Administration 17.1 SPM 8.6 Marketing 8.6 Diploma 40.0

Information Technology 5.7 Bachelor's Degree 42.9

Human Resource 5.7 Master's Degree 5.7 Production 11.4 Professional 2.9

Quality 8.6 Engineering 11.4

Table 1: Description of the respondents

Demographic data showed in Table 1 depict that the majority of the respondents are from male as they represent 51.4 percent of gender type. The majority of the respondents are from 20-29 years old and as non-executive position. The majority respondents come from logistics and administration department. The respondents mostly from bachelor’s degree education and has work experience between two until five years.

4.2 Correlation Analysis

IS SNR LPR PD

IS 1

SNR 0.007 1

LPR 0.069 0.534** 1

PD 0.007 0.662** 0.551** 1 **Correlation is significant at 0.01 levels

(2- Tailed)

From the above table, it is shows the relationship between dependent variable (product delivery) and three independent variables (information sharing, supplier network responsiveness, logistics process responsiveness). There is a low positively correlation and very low relationship (p=0.007) between the information sharing and product delivery and also this relationship is not significant.

The supplier chain responsiveness and product delivery have a strong relationship. In other words, have moderate correlation when the value is 0.662 and also significant. The

results demonstrate that higher-level supplier network responsiveness will lead higher levels of product delivery performance of a firm. While logistics process responsiveness have a strong relationship (p=0.551), which is substantial relationship with product delivery. The results demonstrate that a higher level of logistics process responsiveness will lead higher level of product delivery performance of a firm.

5. Discussions and conclusion

The study along with its handling has provided additional insights into factors influence product delivery in Malaysia. This result can be used by the academic institutions to further explore and test the causal linkages in supplier network and logistics process responsiveness to a company. The results of this study have several important propositions for researches. First, the result do not support hypotheses 1, demonstrating that a firm's information sharing practice cannot improve product delivery of a firm by itself, however when it is supplemented by other best industry practices or characteristics which, when joined together can give the firm improved product delivery (Thatte et al., 2009). The outcomes proposed that information sharing between partners although vital for the responsiveness of a firm’s suppliers, may not be adequate basis for making and supporting a long term enhanced delivery performance of a firm (Thatte et al., 2009).

Next, the supported hypotheses 2, indicates that supplier network responsiveness has a direct influence on product delivery of a firm. The findings empirically confirm the assertion in the hypotheses that a responsive supplier could provide the firm its quick downstream customer with improved product delivery (Milgate & Michael, 2000). This should encourage firms to collaborate with suppliers to meet customer demand keeping in mind the end goal to make win position in the supply chain (Thatte et al., 2009).

Lastly, discover that empirically confirm the assertion in the literature that a responsive logistics that is making an impact on the firms is the expanded emphasis on time-based competition (Bhatnagar, Sohal, & Millen, 1999). Extensively, time-based competition refers to the speed with which products can be manufactured and delivered to the market (Thatte et al., 2013). The results of this study also important implications for practitioners to attain good performance of product delivery one of element of competitive advantage is not means to an end. The desired output is a satisfied customer rather than just a delivered product without quality.

5.1 Recommendation

The results of the study shows that the main factors of influencing product delivery are logistics process responsiveness and supplier network responsiveness. Here, somewhat stronger relationships are evident in the conceptual framework with the finding of study. It shows that firms that are rely on information sharing connections with suppliers can advantage from responsiveness suppliers. The benefits of information sharing are firmly connected with the accompany of supplier network responsiveness. Generally, firms must take the advantages of practice of information sharing with suppliers with enhanced


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suppliers’ responsiveness to improve its own delivery performance.

While top management expresses belief in the possible for responsive suppliers, concern grows regarding how to implement such arrangements. Creating confidence, long-term partnering and information sharing are fundamental means by which firms can increase profit from responsive suppliers such as collaboration efforts in a supply chain can benefits both the buyer and the supplier which is probably to minimize costs and maximize profile.

Then, the application of logistics enables a greater efficiency of movements with an appropriate choice of modes, terminals, routes and scheduling. Logistics is a main element of efficiency improvements in product delivery delay. In logistics, the operation of transportation determines the efficiency of moving products. Without well-developed transportation systems, physical distribution logistics could not bring its advantage into full play. Besides, a good transport system could give better logistics efficiency, decrease operation cost and promote service quality.

5.2 Limitation of the study and further study

This research has important theoretical and practical contribution. The limitations are described below and will assist future researchers to work around them.

There are three limitations exist in conducting this study which is in the period of data gathered, difficulty in obtaining information and unwillingness to respond. Firstly, the limitation of the study is the period of time taken in gathering data. The time duration of gathering the data needed was very restricted. Researchers intended to use longer time duration for this study in order to obtain more accurate results.

Secondly, it is difficult to obtain information. Usually, they don’t have the time to give feedback or respond to the questionnaires that have been distributed. They also refuse to participate due to some other managerial reasons such as secrecy of their information. Thirdly, respondents in this research unwillingness to respond because the majority of them no want to spend their time to answer questionnaire. There are some limitation happen during conducted this research.

Future researcher should consider other relevant practices and initiatives for example customer relationship, strategic supplier partnership, postponement and process modularity, operation system responsiveness and firm attributes, position in the supply chain and number of tiers in the supply chain. Future researchers also may look into specific dimensions of delivery performance such as cycle time, delivery speed response accuracy and dispatch error and finally delivery consistency to get bigger picture on the overall delivery performance of a firm.

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Combined Edutainment Entepreneurship Program for University Students at University of 17 Agustus 1945

(UNTAG) Surabaya IndonesiaYuliar Kartika Wijayanti Economics and Business

Faculty, University of Tujuh Belas Agustus, 1945 Surabaya

[email protected]

ABSTRACT

Every university has to make entrepreneurship program in university. This research would like to make overview of what we have to do in the university especially in entrepreneurship lecturing program. The practise of teaching learning experiences for years will give the overviews and sharing with the other lecturers also who had done a lot for entrepreneurship program in the university. Having program in edutainment for business teaching and learning will make the university students successfull. By writing combined Edutainment Entepreneurship Program at University of 17 Agustus 1945 (UNTAG) Surabaya, Indonesia is really giving good ideas for lecturers who teach entrepreneurship program in the university. Motivating the students by doing some programs visiting and doing role playing, also practicing of selling combined with practising doing small business. By having practicing doing creative ideas in the creative industry surround university. Keywords Entrepreneurship program, combined edutainment program, creative industry

INTRODUCTION Business program has done a lot by youths in every countries

in the world. We can see business has been done also in the countries all over the world. In Asia Singapore? This is the heaven country for shopping in South East Asia even in Asia and the world. it is one of the well developped country in the world? How can it be one of the developped country in the world? What is the reason? That is because many of the people are having entrepreneurship souls in their minds. What we can learn from Singapore is, we have to make our country survive by copying what the Singaporeans do, of course not copying only but with modification which is suited with our country well. We can learn also from China. It is now becoming one of the succesfull country also. Because of that Indonesia needs the human resources who have the entrepreneurs’ soul as many as we can.

We have already many entrepreneurs in Indonesia but still not enough to cover the whole Indonesian people comparing to other countries because only 2 % has become entrepreneurs nowadays. It is said by Dr.Ir. Ciputra a successfull real estate entrepreneur in Indonesia. He said that it is the reason why Indonesia is still poor even have many natural resources because they can not managed well. Besides small entrepreneurs which Indonesia has already proofed becoming the only survivors in the economic crisis where as the big companies most of them had collapsed at that time.

So that is why entrepreneurship program is a trend nowadays. Not just only because of the trend but it is the need and become the important program for helping the university students to achieve their goals to earn their living even when they are still studying or after they have graduated from the university. It is the time to think for everybody to become the worker or the one who creates jobs for everybody has their own business.

STATE OF PROBLEMS The situation of unemployment which is spread out throughout the world and in Indonesia especially also has the same critical problems. All we can see arround us everywhere the young generation are seeking for jobs, they are high schools graduates, diplomas, university graduates, even masters and doctors. This is proofed by the long line of graduated students who have applied in every bursa kerja or job seekers program which is only want to get only few candidates to become their employees for some companies.

The last thing that it is issued the more and more in America, one of the developped country in the world has the critical problem until some job seekers are willing to work first without having payment, they will get payment if only the employer really satisfied with their work. This shows to us that even in the developped country that same problem happens. If we know that we are left behind 10 years from those developped countries so we will know also that the same problems will be happened in our country Indonesia. We have to be aware of it. Don’t wait to be happened here. We have to try hard to overcome and solve it.

Starting from the schools in senior high schools SMK SMA and universities, we have to teach and give the skills with many kinds of programs for our students as our young generation in the future. This will make them ready to face those problems and becoming the survivors to face their bright future and successfull entrepreneur who can own companies and help the other people to earn their living by working in their companies. Creating and making more job places for other people.

The government is trying hard to help by giving support with donation and fund to help their young generation to become successfull entrepreneurs. Some small companies and offices also banks, big companies, foundations are also participating in this program. Unemployment in the year of 2007 will increase 2.5 millions people from in the year of 2006 which will be arround 10.9 millions unemployment in the whole Indonesia. Can you imagine nowadays in the year of 2018?


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The employment department or DEPNAKERTRANS government will focus in the entrepreneurship program for all people, including training, sertification and job placement program and the other things are creating condusive employment, spreading more job fields, job chances, and the workers welfare. This will be done nationally and also will ask the universities to help as hard as they can by giving chance to make and create their own program as a plus for the subjects in the universities. They have to manage themselves their own program and the government and some experts and also practitioners arrange seminars and talk shows for supplements. We can see from the data that it is very urgent to make improvement of what we had done with the lecturing in the university nowadays.

The rate of PDB contribution of creative industry in Indonesia 2002-2006 is 6.3 percentage of total PDB National with the value of Rp 104,6 trilliun. The value of industrial export of crative industry ekspor the amount is Rp 81,4 trilliun and the contribution 9,13 percentage of total national export value with human resource achievement tenaga arround 5,4 million workers. PDB creative industry is in the 7th level of 10 jobs site in Indonesia. The PDB of creative industry nowadays is still dominated by fashion, craft, advertising and design. Indonesia has art and culture mwith many kinds which has potential creative industry. We have to do the best for the students in the creative industry to achieve the goals.

2010 2011 2012 2013

Feb Aug Febr Aug Feb Aug Feb

59 066 157586 92 142 190 370 123 213 82 411 109 865

547 164 600221 552 939 686895 590 719 503379 513 534

1522 465 1402858 1 275890 1120090 1415 111 1449508 1421 653

1657 452 1661449 1 803009 1890755 1716 450 1701294 1822 395

2111 256 2149123 2 264376 2042629 1983 591 1832109 1841 545

1336 881 1195192 1 082101 1032317 990 325 1041265 847 052

538 186 443 222 434 457 244 687 252 877 196 780 192 762

820 020 710 128 612 717 492 343 541 955 438 210 421 717

8592 490 8319779 8117 631 7700086 7614 241 7244956 7170 523

Percentage 2014 Percentage 2015 Percentage 2016 Percentage 2017

Jan Dec Jan Dec Jan Dec Jan

Dec

6,6 5,6 5,7 5.05,0 4,9 4,7 4,7 4,1

Data source: The Survey of Angkatan Kerja Nasional (Sakernas) 2004 until 2017

We know from the table that it is really needed the government and also the senior high schools also universities can invent new entrepreneurs as fast as they can to make this country not having problem in the future with more and more unemployment people everyday

THEORY The writer chooses the right model for the teaching and learning of the whole enrepreneurship program, we will try to give the overview of some theories. Edutainment is coming from the word

edu and tainment. Creating the model of teaching and learning for the students in entrepreneurship program for every faculty is really important for the university to arrange the program with any kinds of creativity to make them improved. So it means that we have to make and arrange edutainment program that is very interesting to do and also motivate the students to study happily in class.

To motivate the students by doing some activities and doing role playing, also practicing selling and combining of how to manage the business well . It means by making them success in their surrounding .They have to make their body and soul for motivating themselves and because of that they can be a successful entrepreneur in their business. Beside of the joining program they still have to make them help each other as friends in the university but also in the surroundings, helping other people also good way to make them success.

Some of the things are, to do some good things by sacrificing their power to help other people who needs help, such as sick people, poor people, and other social works. Some volunteer workers have to be done in the right way in order to feel the feeling of creating successfullness which is very easy if it is supported by doing some social works continually. All kinds of programs above has to be done together with the entrepreneur program as a lesson in the university. All those social programs that are combined by the entrepreneur lesson will be good experiences and motivations for the students. With the help of some fund that is given from the governement that we call Hibah in research and some programs of entrepreneur competition also can make the students really anxious to join and also can make them very active in the program and make their entrepreneur proposal for starting their business comes true.

Giving loan 0% for strarting their own business in groups. Teaching by doing creative working by giving ideas and examples also from successfull business man adn business women that will becoming to the university to give them clues and views also guding them to copy what they have done from still small business at the beginning until becoming big business nowadays. This program will be useful if students actively asking questions of how to start their own business without doubtness or fearness. These kind of seminars have to be done continually when they are still becoming students in the university.

Drs I Ketut Murdana, M.SN stated that creative economy

development hopefully will give new optimism to support the future in Indonesia.

The development until the year of 2025 will develop the pride of Indonesia also. He stated also that it is very important in the new era of the shifting of agriculture to the era of industrialization in technology and communication.In the other side creative industry based on the human resources with innovation and creativity. To encourage the students we have to give award and honour for the creativity of their new ideas to invent the condusive business climate. The changing of industrial economy to the creative economy will change dramatically. The power is the invention of ideas. In the economy era which is based on the ideas and success as yahoo, google is bigger because the ideas spread out fast in the public. The profit will be very big just by copying the successful products. So we have also to protect the new ideas. Because the intellectual invention will kill the innovation.


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THE ENTREPRENEUR’S MODEL PROGRAM FOR UNIVERSITY STUDENTS The students in the entrepreneur’s program in the university is the important thing to be improved. The models that we would like to propose to all faculties in the university. By making edutainment program for the students by making good edutainment program which combine the education and the entertainment program. Motivating the students by doing some practising programs, visiting, doing role playing, also practicing selling combined with practising doing small business are some of the media for learning fun the program and the lecturing. The Duration of entrepreneur’s program is one semester until three semesters.

Model 1,2,3 The three semester entrepreneurship program

no meeting Subject (first semester)

(Second semester)

(Third semester)

1 The first introduction to business

introduction to the whole program in the second semester

Introduction and group making BMC

2 The second

business motivation I

reativity and ideas

making BMC

3 The third

business motivation II

creativity and ideas presentation in the group

making BMC presentation

4 The fourth

interviewing small business around the university in groups

creative industry

business plan making

5 The fifth

entrepreneur’s DNA and business surroundings

making puppet

business plan presentation

6 The sixth

business behaviour

role play and games in business behaviour

proposal making

7 The seventh

the importance of business network

making breads products

proposal presentation

8 The eighth

mid evaluation

mid evaluation

business real practice with the group

9 The ninth

visiting small and big business

the film in business

Business practice

guided by the lecturer

10 The tenth

evaluation and presentation of visiting small and big business around the university.

making painting products

Business practise guided by the lecturer

11 The eleventh

business discussion in group work 1

seminar Practising selling

12 The twelveth

business discussion in group work 2

craft making Practising selling

13 The thirteenth

discussion in the first film presentation

seminar

Exhibition in groups of 5 students

14 The fourteenth

discussion in the second film presentation

batik making Evaluation, winner award

15 The fifteenth

review

craft making in groups

16 The sixteenth

final evaluation

final evaluation

From these overviews and models that we would like to propose some ideas of arranging the model of meetings that we combine with edutainment program that we hope will be needed for entrepreneurship program in the university. In the third model with three semesters at the end, they will have certificate of practicing entrepreneurship program in the real situation. The implementation of the program is the exhibition in groups of 5 students. Some of the things from variation are some activities in role plays, traditional and modern games, singing, group work motivation, group work activities, small business tours, practising some small business ideas and learning.

Nowadays the program in our university is running well with the help of Canada world youth program. So after the first which is called foundation program and the second is entrepreneur program or employement program. At last after finish with the program the certificate that the students have are international certificates.

CONCLUSION We conclude that entrepreneurship program for university students is really important to create business people from students or graduate students in the future. When they are still in the university, studying, it is really good to have the entrepreneurship knowledge as early as they can. Because they will become entrepreneur before leaving university or graduate from university so that when they graduate in the future they have already have their own businesses


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and after graduation they will not becoming graduate students who will look for job or becoming job seeker.

A real entrepreneur that can survive by themselves even some graduate students who become a real entrepreneur and start their own business can give some jobs for other people who will work for them as their workers in their business place. We hope that unemployment will be decreasing, more and more graduate students becoming survivors in their business and if there will be happen, all problems can be solved by themselves and government only giving loan through banks for UKM and UMKM with light installments and light interest rates for the new business owners.

All kind of programs above has to be done together with the entrepreneur program as a subject lesson in the university. All those social programs that are combined by the entrepreneur lesson will be good experiences and motivations for the students. With the help of some fund that is given from the government and also from Canada world youth as in Youth innovation Fund that we call Hibah in research and some programs of entrepreneur competition also can make the students really anxious to join and also can make them very active in joining the program and make them a real entrepreneur. By making Business Model canvass and the basic of making business plan and proposal .it is good ways for starting their own business in the future will come true and it is not impossible for creating jobs for other people as their partner or workers in their own business. Variations in teaching and learning that are very interesting to do by the students is really needed in the class.

REFERENCES http://www.indonesiakreatif.net/index.php/id/page/read/definisi-

ekonomi-kreatif

http://bisniskeuangan.kompas.com/read/2011/11/03/06582548/Era.Ekonomi.Kreatif

http://www.antaranews.com/berita/301109/akademisi-pengembangan-ekonomi-kreatif-wujud-optimisme

http://ekonomi-kreatif.blogspot.com/ Data of government unemployment workers in Indonesia


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Effect of Compensation, Communication and Spirituality at Work on the Performance of the Turnover Intention as

an Intervening Variable

Sumiati Economics and Business Faculty, University of Tujuh Belas Agustus

1945 Surabaya

Nur Hasan Economics and Business Faculty, University of Tujuh Belas Agustus

1945 Surabaya

ABSTRACT

The purpose of this study is to determine and analyze the effect of compensation, communication, spirituality to employee performance and employee turnover intention. The research approach used in this study is a quantitative research. This type of research is explanatory research using a survey method. The sample used in this study saturated or census sampling means that the number of samples as similar as to the number of population are 84. To further analyzed using the methods and analysis techniques Partial Least Square (PLS). The results showed that compensation, communication, and spirituality of the performance of employees have positive and significant influence, compensation and spirituality in the workplace against turnover intention have a negative impact significantly, the communication on turnover intention have a negative impact not significant and turnover intention of

Keywords Compensation, Communication, Spirituality in the workplace, Turnover intention, Employee performance.

INTRODUCTION Within the last 5 years the rate of turnover Muslim Voices

Radio Network employees is high enough it can be seen from the high percentage of employees who left the company. Percentage of turnover in 2012 amounted to 19%, in 2013 by 24%, in 2014 by 32%, in 2015 by 16% and in 2016 by 24%. The average turnover Muslim Voices Radio Network reaches 23% per year, it falls within the category of high, Gillies (1989) states that the employee be considered normal discharge ranged between 5-10% per year, said to be high when more than 10%. Among the factors the high rate of employee turnover Muslim Voices Radio Network is not still standard due compensation received by employees, especially those in the lower level.

The early symptoms of the turnover is usually characterized by their desire to move the so-called turnover intentions (Intention exit). According Zeffane (2003) turnover intention is the tendency or intention of employees to stop work on the job. Employee turnover intention will have an impact on the performance of employees who are not productive and are likely to

do undisciplined which would be detrimental to the company (Harnoto, 2002). This is consistent with Alfatania Pandu Asmara’s (2017) research with the title "The Influence of Employee Turnover Intention to Performance Surgical Hospital in Surabaya". The results showed turnover intention affect the performance of the employee with p value or significant of 0.03 and smaller than α = 5% (0.05). It can be concluded that the turnover intention affects the performance of employees.

However, the above theory does not apply in Muslim Voices Radio Network, a high turnover intention not affect the performance of Muslim Voices Radio Network employee. This is evident in a period of 7 years according to research conducted by Nielsen Company (2017) SMRN be the most listeners of radio media in third place in the region of the range of Gresik area, Bangkalan, Mojokerto, Surabaya, Sidoarjo and Pasuruan.

Figure 1.1. The number of listeners Muslim Vote 2017

Alleged while researchers there are factors that cause the turnover intention no significant effect on the performance of employee in Muslim Voices Radio Network. These factors include the highly-developed communication in the work environment Muslim Voices Radio Network so as to affect the performance of the employee's reached mutual success.

Another thing that causes turnover intention not affect the performance, according to researcher’s conjecture is the strong


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factor of spirituality in the workplace. Muslim voice of Radio Network is the radio medium that gives great attention to spirituality that is reflected in the organization's culture SMRN "1 - 2 - 5": 1 Basic, 2 Pillar, 5 Attitude. The basic aspects are the dawn Love is commitment from all employees to morning prayers at the mosque in congregation for men and at home beginning of time for female employees. Aspect 2 is the pillar of Professional and Teamwork, and its implementation is a five attitude aspects namely trust, best charity, discipline, familial and encourage one another. The application of spiritual values is expected to grow high performance employees, so that the company makes the application of the values above as part of employee performance benchmarks. This aspect is very dominant researchers expected to grow at a Muslim Voices Radio Network employees so that employee productivity is maintained

LITERATURE REVIEW Compensation Compensation is something that is received by the employee as a reward for his achievements in implementing the tasks (Kadar Nurjaman, 2014: 179). Every company should be fair in giving compensation in accordance with the employee's work load. According Sitohang (2007: 220), the compensation is setting the overall provision of remuneration for employees and managers, both financially and in the form of goods and services received by each employee. Drs. Malay SP Hasibuan (2014: 118), the compensation is all the income in the form of money, goods directly or indirectly received by employees as a reward for services rendered to the company. The indicators compensated by Noe in Aulia and Troena (2013: 4) includes:

a. Wages / salaries

b. Incentive

c. Allowances.kinerja.

Communication Etymologically, the term comes from the Latin communication and speech communication originates in the word communis. The meaning here is the same in the sense of equal significance is the same meaning about something. The similarity of meaning in the process of communication is an important factor due to the similarity of meaning between communicants and communicators that communication can take place and better understanding.

2.3 Spirituality in the Workplace Spirituality in the workplace is often also called Islamic work environment which is everything that is Islamic who were around employees who can influence and support a person in carrying out the activities. In Ashmos and Duchon (2000) state that in order to understand the notion of spirituality in the workplace must begin with the recognition that each person has a personal life (inner) and life outcomes (outer) and that the development of personal life can lead to the outdoor life more meaningful and more productive. Recognition of spirituality in the workplace means looking at the workplace as a place inhabited by people who have the mind (intellect) and the spirit, and believe that the development of the spirit is as important as developing the mind.

Environment in the workplace have a considerable influence on the smooth operation of the company, so that ultimately can affect the productivity of the company in general, therefore, the management

companies that make up the work environment should consider the convenience of employees, since most employees want a room conditions and safe working comfortable so be very pleasant working atmosphere.dimana merupakan refleksi dari keberhasilan kinerja perusahaan (Dwi Wahyu Pril Ranto, 2016).

Turnover intention Based on the theory of reasoned action proposed by Fishbein

and Ajzen (1975) can be seen that the behavior of turnover can be measured by intention of the behavior of turnover (turnover intention). Mobley et al. (1979) concluded that turnover intention is an early sign of turnover behavior, because there is a significant relationship between turnover intention and turnover behavior that occurs.

turnover intention is the tendency or intention of employees to stop work on the job (Zeffane, 1994). Turnover intention refers to the individual evaluation results of the continuation of individual relationship with the organization and has not been realized in the action would have left the organization. (Hersusdadikawati, 2005). Turnover intention is also defined as a mediating factor between attitudes affect the intention to stop and actually stop of an organization (Glissmeyer et al., 2008).

The factors that influence the occurrence of turnover is quite complex and intertwined with each other. among those factors that will be discussed include age, length of employment, education, commitment to the organization, job satisfaction and corporate culture.

FRAMEWORK 1. Communication variables (X2) with indicator (a) wise and decency, (b) the receipt of feedback, (c) information sharing, (d) provide information tasks, (e) reduce the uncertainty of the task. 2.Spirituality in the workplace variable (X3) with indicator (b) enforcement of values, (b) a sense of meaning in work, (c) feeling of being connected with the community. 3. Variable turnover intention (Z) with indicator (a) mind to come out, (b) the desire to look for another job opening, (c) a desire to leave the organization in the coming months. 4.The dependent variable (Y) with indicator (a) quality, (b) the quantity, (c) the execution of tasks, (c) responsibility.

RESULTS AND DISCUSSION The results of this research includes several variables of Compensation, Communication, Spirituality in the workplace, Employee turnover intention and Performance and after analysis obtained the following results: Table 2. Description Average Answer Respondents About the

variables studied

Variables Average Category Compensation 3.01 Enough Communication 3.83 High Spirituality in the workplace 3.86 High Turnover intention 2.37 Low Performance 4.03 High

Source: Data processed


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From table 1 it can be seen that the variable compensation is measured by several indicators, namely wage or salary, incentives, benefits get it demonstrates the value of 3.01 of compensation according to the perception of respondents included in the category enough. Dimension wise communication with the indicator and courtesy, receiving feedback, share information, provide information about the task, the task of reducing uncertainty had an average score of respondents is 3.83. This indicates that the level of communication that occurs included in both categories. Dimensions of spirituality in the workplace with enforcement indicator values, sense of meaningful work and feeling of being connected with the community, the perception of respondents with an average score of 3.86, which means employees feel the spirituality in the workplace included either. Dimensions turnover intention with indicators of mind to go out, the desire to look for another job, the desire to leave the organization next few months had an average score of 2.37 is included in the low category, it indicates the employee wants to keep contributing in Muslim Voices Radio Network. While the average performance of 4.03 respondents included in the high category, which means that the performance of employees Muslim Voices Radio Network including well. Subsequent analysis begins with the validity and reliability of the questionnaire using data pre-sampling number of 30 respondents. The results of the validity of the statement items have a valid study of each variable with a value Person Product Moment generate significant value less than 5%. While the reliability test results are generating Cronbach's Alpha value> 0.60 so that each variable has a valid research. SEM data processing method begins by assessing Outer Model or Measurement Model. There are three criteria in the use of data analysis techniques to assess the outer SmartPLS models: Convergent Validity, Composite Discriminant Validity and Reliability. Convergent Validity of the measurement model with a reflexive use limit indicator loading factor of 0.5. Loading Factor for the first latent variable is the variable compensation are:

Tabel 2. Loading Factor Compensation

X11 X12 X13 X1.1.1 .930 X1.1.2 * 0.391 X1.1.3 0.886 X1.2.1 0,880 X1.2.2 .881 X1.2.3 .873 X1.3.1 .832 X1.3.2 0.891 X1.3.3 .846

Table 2 shows the testing of value loading factor of the first order. The highest value of testing is X1.1.1 loading factor of 0.930 and the lowest value of the test loading factor is X1.1.2 is 0.391. Because the value is less than 0.5, then the indicator should be eliminated. So that the resulting modification factor loading value in the table below: Tabel 3. Loading Factor Compensation (Modification)

X11 X12 X13 X1.1.1 0.946 X1.1.3 0.922 X1.2.1 0,880 X1.2.2 .881 X1.2.3 .873 X1.3.1 .832 X1.3.2 0.891 X1.3.3 .845

Based on Table 3 above shows a modified form of the test loading factor value of the first latent construct in first. X1.1.2 indicator removed after the results of the tests no modification loading factor of less than less than 0.5 so that all indicators are already considered to be adequate. 5:19 The next table will explain the value loading factor The second latent variables namely Communication as follows:

Tabel 4. Loading Factor Communication

X21

X22

X23

X24

X25

X2.1.1

0.865

X2.1.2

0.804

X2.1.3

0.819

X2.2.1 0.

901

X2.2.2 0.

835

X2.2.3 0.

904

X2.3.1 0.

796

X2.3.2 .8

20

X2.3.3 .8

52

X2.4.1 0.

875

X2.4.2 0,

806

X2.4.3 0.

841

X2.5.1 .95

0 X

2.5.2 .938

X2.5.3 0.9

11 Source: Appendix Loading Factor

Based on Table 4 above shows the testing of value loading factor of the first order latent construct in second. The value of the loading factor testing no less than less than 0.5, then there is no indicator


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that should be eliminated. The highest factor loading value is 0.950 at X2.5.1 while lowest loading factor value is 0.796 in X2.3.1. Next grades loading factor of three latent variables that spirituality will be explained in 5:20 the following table:

Tabel 5. Loading Factor Spirituality X31 X32 x33

X3.1.1 .857

X3.1.2 0.801

X3.1.3 0,816

X3.2.1 0.908

X3.2.2 0.899 X3.2.3 0,900

X3.3.1 0.907

X3.3.2 .892

X3.3.3 0,880

Source: Appendix Loading Factor

Based on Table 5 above shows the testing of value loading factor of the first order construct in third latent variable Spirituality nothing less than 0.5, then there is no indicator that should be eliminated. Rated loading factor of 0.907 at X3.3.1 highest and lowest values in X3.1.2 loading factor of 0.801. After the first order then the next measurement is to measure the construct according to the second order in a manner involving an average of valid indicators in each dimension of the construct. Results of testing the loading factor of the second stage of the order can be seen in Table 5:21 below:

Tabel 6. Loading Factor Second Order

performance

Compensation

Communication

spirituality

TurnoverIntention

X1.1 .818

X1.2 0,812 X1.3 0.876

X2.1 .853

X2.2 0.866

X2.3 0,848

X2.4 0.901

X2.5 0.909

X3.1 .914 X3.2 .942

X3.3 0.932

Y1 0,877

Y2 0.872

Y3 0.904

Y4 .773

Z1 0.948

Z2 0.935 Z3 .942

Source: Analizes of Loading Factor

From Table 6 above it can be stated that all indicators have a value above 0.5. The highest value at Z1 of 0.948 while the lowest value in the Y4 at 0.773.

Then the validity and reliability criteria can also be seen from the reliability of a construct and value Average Variance Extracted (AVE) of each construct.

The construct is said to have a high reliability if the value is above 0.70 and 0.50 AVE. In Table 7 will be presented Composite Reliability and AVE values for all variables.

Table 7. Composite Reliability and Average Variance Extracted (AVE)

composite Reliability

Average Variance Extracted (AVE)

performance 0.918 .736

Compensation 0.874 0.698

Communication 0.943 0.767

spirituality .950 .864

turnover Intention 0,959 0.887

Information: Valid if Reliability> 0.70 and RD> 0.50

Table 7 can be explained based composite reliability indicator value is 0.874 and Compensation AVE value of 0.698. Then indicator Communication has composite reliability and AVE values of 0.943 and 0.767. Indicators composite reliability spiritual values 0.950 and 0.864 AVE. Further indicators Turnover Intention composite reliability values of 0.959 and 0.887 AVE value. The last indicator that performance composite reliability values of 0.918 and 0.736 AVE value. Formed structural models were tested to see the relationship between the constructs to see the R-square value of the research model. Table 8 is an R-square estimation using SmartPLS.

Table 8.Table R-Square R-Square

performance 0.72

TurnoverIntention 0.80

From Table 8 is known that the performance variable R2 of 0.72 which indicates variations latent variables that performance can be explained by the latent variables / constructs the exogenous form of variable compensation, Communication and Spirituality 0.72 while the remaining 28% can be explained by other variables which has not been explained by the model. Turnover Intention latent variable has a value R2 of 0.80 so that the latent variable Turnover Intention variation can be explained by the variable compensation, Communication and Spirituality at 0.80 while the remaining 20%


38|P a g e I S B N : 9 7 8 - 9 6 7 - 3 6 3 - 5 0 2 - 3

is explained by other variables that have not been explained by the model. Percentage of value R2 of smaller latent variable performance when compared to the latent variable Turnover Intention.

To prove the hypothesis of the study to look at the significance of the influence between variables by looking at the parameters and values coefficient t statistical significance. At PLS 3.0 it is done by looking at the Algorithm Boostrapping Report. Boostrapping Results are summarized in Table 9 below:

Table 9. Path Coefficients (mean, STDEV, T-Values)

Source: Appendix

In Table 9 above demonstrated the direct influence of the independent variables to the dependent variables in the model or can be interpreted as a step to show the level of direct influence on the relationship between variables in the study as follows: H1: Compensation (X1) directly influence the Turnover Intention (Z) Compensation has a negative relationship with Turnover Intention with the original sample values -0.165 and no significant effect on the behavior of Turnover Intention compensation with T-statistic values of 2.001> 1.98. Value and has a P value of 0.038 which is less than 0.05 based on the data PLS 3.0 provides an answer hypothesis 1 (H1) is accepted. H2: Compensation (X1) directly affects the performance (Y) Compensation has a positive relationship with the performance of the original value of 0,303 samples and no significant effect on the performance of compensation with T-statistic values of 2.0101> 1.98. And has a value of P Value 0.044 smaller than 0.05 based on the data PLS 3.0 provides an answer hypothesis 2 (H2) is accepted. H3: Communications (X2) significantly affects Turnover Intention (Z)

Communications has a negative relationship with Turnover Intention with the original sample values -0.058 and show kemunikasi no significant effect on Turnover Intention with T-statistic values of 0.393 <1.98. And has a value of P Value 0.694 greater than 0.05, based on the data PLS 3.0 provides an answer hypothesis 3 (H3) was rejected. H4: Communication (X2) significantly affects the performance (Y) Communication has a positive relationship with performance with the original value and the 0,249 samples showed a significant effect on the performance of communication with T-statistic values of 2.301> 1.98. Value and has a P value of 0.023 which is less than 0.05 based on the data PLS 3.0 provides an answer hypothesis 4 (H4) is received. H5: Spirituality (X3) significantly affects Turnover Intention (Z) Spirituality has a negative relationship with Turnover Intention with the original value of -0.460 sample and showed a significant effect of spirituality on Turnover Intention with T-statistic values of 2.956> 1.98. And has a value of P Value 0.003 smaller than 0.05 based on the data PLS 3.0 provide answers Hypothesis 5 (H5) is accepted. H6: Spirituality (X3) significantly affects the performance (Y) Spirituality has a positive correlation with the performance of the original value of 0.329 samples and showed a significant effect of spirituality on the performance of the T-statistic values of 2.587> 1.98. And has a value of P Value 0.013 smaller than 0.05 based on the data PLS 3.0 provide answers Hypothesis 5 (H5) is accepted. H7: turnover Intention (Z) significantly affects the performance (Y) turnover Intention has a negative correlation with the performance of original sample values -0.029 and shown no effect on the Performance Turnover Intention with T-statistic values of 0.200 <1.98. And has a value of P Value 0.842 greater than 0.05 based on the data PLS 3.0 provides an answer hypothesis 6 (H6) was rejected.

CONCLUSION AND RECOMMENDATION The observation of the respondents on the policy applied Muslim Voices Radio Network in the area of compensation, communication and spirituality in the workplace in pretty good employee value only on the variable compensation is insufficient. It is expected to be the attention of the management to further improve policies towards the improvement of compensation that increases employee performance and turnover rate can be decreased. While testing the hypothesis formulated from getting compensation, communication, and spirituality of the performance of employees have a positive and significant influence, compensation and spirituality in the workplace against turnover intention have a significant negative effect, communication of the turnover intention have no significant negative effect on the performance and turnover intention have a significant negative effect.

The factors that influence the occurrence of turnover is quite complex and intertwined with each other. Among those factors that will be discussed include age, length of employment, education, commitment to the organization, job satisfaction and corporate culture.

Original Sample

(O)

Sample Mean (M)

Standard Deviation (STDEV)

T Statistics

(|O/

STDEV |)

P Values Information

Compensation -> Performance 0,303 0.304 .150 2,019 0,044 significant

Compensation ->Turnover Intention

-0.165 -0.189 0.122 2,001 0.038 significant

Communications -> Performance

0,249 0,260 0.161 2.301 0,023 significant

Communications -> Turnover

Intention -0.058 0.043 0.148 .393 0.694 Not

significant

Spirituality-> Performance .329 .350 .207 2,587 0,013 significant

Spirituality-> Turnover

Intention -0.460 -0.439 0,156 2.956 0,003 significant

Turnover

Intention-> Performance

-0.029 -0.013 0,146 .200 .842 Not significant


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REFERENCES A.A. Anwar Prabu Mangkunegara. 2002. Manajemen Sumber

Daya Manusia. Perusahaan. Bandung: PT. Remaja Rosdakarya.

Ashmos, D.P. and Duchon, D. (2000), “Spirituality at work: a conceptualization and measure”, Journal of Management Inquiry, Vol. 9 No. 2, pp. 134-45.

Asmara, Pandu Alfatania. (2017). Pengaruh Turnover Intention terhadap Kinerja Karyawan di Rumah Sakit Bedah Surabaya. Jurnal Akuntansi dan Keuangan Indonesia Volume 5, Nomor 2, 2017.

Effendy, Onong Uchjana. 2006. Ilmu Komunikasi, Teori dan Praktek. Bandung: Remaja Rosdakarya.

Harnoto, 2002. Manajemen Sumber Daya Manusia, Edisi Kedua, PT. Prehallindo, Jakarta

Hasibuan, Malayu S.P. 2010. Manajemen Sumber Daya Manusia. Jakarta: PT Bumi Aksara

Nurjaman, Kadar. (2014). Manajemen Personalia. Bandung: CV. Pustaka Setia.

Rivai, Veithzal dan Sagala, Ella Jauvani. 2010. Manajemen Sumber Daya Manusia untuk Perusahaan dari Teori ke Praktik. Jakarta: PT Raja Grafindo.

Sihotang. (2007). Manajemen Sumber Daya Manusia. Jakarta : PT. Pradnya Paramita.

Sugiyono. (2014). Metode Penelitian Pendidikan Pendekatan Kuantitatif, Kualitatif, dan R&D. Bandung: Alfabeta

Zeffane. 2003. Organizational Behavior A Global Perspective. Australia: John Wiley and Sons Australia Ltd


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Analysis Of The Effect Of Liquidity On Profitability, Cash Flow, Funding Decisions And Company Value Of The Construction Service Companies Listed On

The Indonesia Stock Exchange

Sapto Wiratno Student Master of

Management Department, Faculty of

Economics and Bussiness, University of 17 Agustus 1945

Surabaya, Indonesia.

Dr. Slamet Riyadi Msi,,Ak, Ca

Lecturer of Faculty of Economics and

Bussiness, University of 17 Agustus 1945


Dr. H. Mulyanto Nugroho,

MM.,CMA.,CPAI Lecturer of Faculty of

Economics and Bussiness, University of 17 Agustus 1945


ABSTRACT

Construction companies has an important and strategic role considering the construction services produce the final product such as buildings or other physical forms, eitherin the form of infrastructure or facilities that support the growth and development of various fields, especially in the economic, social, and cultural fields. Besides supporting the various fields of construction,construction services also play a role to support the growth and development of various goods and services industries that are required in the implementation of construction work.

The impact of Ld (Liquidity) on PB (Profitability) is significant with t-statistic value of 2.352 (> 1.96) and the original valueof the sample is positive ie 0.660, so the impact direction of Liquidity on Profitability is positive. The effect of LD (Liquidity) on CF (Cash Flow) is significant with t-statistic value of 2.518 (> 1,96) and the original valueof the sample is positive ie 0.752, so that the effect direction of LD (Liquidity)onCF (Cash Flow) is positive. The impact of LD (Liquidity) on FD (Funding Decision) is significant, with t-statistic value of 2,175 (> 1,96) and the original value of the sample is negative is -0.432, so the direction of impact of LD (Liquidity) on FD (Funding Decision) is negative. The impact of PB (Profitability) on CV (Company Value) is significant with t-statistic valueof 2.057 (> 1,96) and the original value of the sample is positive ie 0.426,so the impact direction of PB (Profitability) on CV (Company Value) is positive. The effect of CF (Cash Flow) on CV (Company Value) is significant with t-statistic value 2,161 (> 1,96) and original value of sample is positive ie 0,626, so that the direction of effect of CF (Cash Flow) on CV (Company Value) is positive. The effectofFD (Funding Decision) on CV (CompanyValue) is significantwith t-statisticsvalue 2.036 (> 1,96) and the original value of the sample is positive ie 0.443, so the effect direction of FD (FundingDecision) on CV (Company Value)is positive. The impact of LD (Liquidity) on CV (CompanyValue) is significant with t-statistic value of 2.502 (> 1,96) and the

original value of the sample is positive is 0.610, so the direction of impact of LD (Liquidity) on CV (Company Value) is negative.

The infrastructure development of the nation can pay attention to how the sustainability of construction companies in order to run optimally and this national development can increase the economic growth in each region, especially the areas that are left behind. Keywords: Liquidity, Profitability, Cash Flow, Funding Decision, and Company Value


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1. INTRODUCTION Background

Construction companies has an important and strategic role considering the construction services produce the final product such as buildings or other physical forms, either in the form of infrastructure or facilities that support the growth and development of various fields, especially in the economic, social, and culturalfields. Beside supporting the various fields of construction, construction services also play a role to support the growth and development of various goods and services industries that are required in the implementation of construction work. List of public companies / listed sub-sectors Construction and Building in Indonesia Stock Exchange (BEI)

No Code Nama Emitten

1 ACST Acset Indonusa Tbk

2 ADHI Adhi Karya (Persero) Tbk

3 DGIK Duta Graha Indah Tbk

4 NRCA Nusa Raya Cipta Tbk

5 PTPP Pembangunan Perumahan (Persero) Tbk

6 SSIA Surya Semesta Internusa Tbk

7 TOTL Total Bangun Persada Tbk

8 WIKA Wijaya Karya (Persero) Tbk

9 WSKT Waskita Karya (Persero) Tbk

10 IDPR Indonesia Pondasi Raya

Based on the data from the Indonesia Stock

Exchange (BEI) there are 10 construction companies listed on the Stock Exchange as a public company that often partners with the government, but most of them have limited funding. This is such an interesting issue why service companies tend to experience a decline in running a business. Therefore, the author conducts a research on a construction service company listed on the Indonesia Stock Exchange (BEI) to prove the real state of the construction service companies associated with those issues. Picture 1. Construction Company’s Profit

Based on the table above, it can be analyzed that from ten different companies, SSIA is the one that that experienced a significant decline almost every year. In 2003, the profit was 691 billions, in 2004 down to 415 billions, in 2005 down to 303 billions, and in 2006 down again to 63 billions. Fortunately, in 2007 the profits drastically increased to 1178 billions. Therefore, the profit of SSIA has decreased for four years in a row, from 2013 to 2016, and in 2007 increased. Problem of Analysis Based on the scope of analysis that has been selected, the author formulates the following problem, such as:

1. Does liquidity have a significant effect on profitability of construction service companies listed on Indonesia Stock Exchange?

2. Does liquidity have a significant effect on cash flow of construction service companies listed on Indonesia Stock Exchange?

3. Does liquidity have a significant effect on funding decisions of construction service companies listed on Indonesia Stock Exchange?

4. Does profitability have a significant effect on the company value of construction service companies listed on Indonesia Stock Exchange?

5. Does cash flow have a significant effect on the company value of construction service companies listed on Indonesia Stock Exchange?

6. Does the funding decision have a significant effect on the company value of construction service companies listed on Indonesia Stock Exchange?

7. Does liquidity have a significant effect on the company value of construction service companies listed on Indonesia Stock Exchange?

2. LITERATURE REVIEW 2.1 LIQUIDITY

There are two measures of company liquidity in

this study, namely Current Ratio (CR) and Quick Ratio (QR). CR is obtained by comparing current assets to current liabilities. In addition, the CR can indicate the level of safety of the short-term obligations (margin of safety). QR is the ratio between current assets minus inventories and the current liabilities. QR is used to measure the company's ability to pay off current liabilities by using the most liquid assets (quick assets), such as cash, marketable securities, and accounts receivable.

0

1000

2000

3000

4000

5000

2013 2014 2015 2016

ACST

ADHI

DGIK

NRCA

PTPP

SSIA

TOTL


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2.2 PROFITABILITY Profitability is the company's ability to profit,

associated with sales, total assets, and own capital (Sartono, 2001, Arfan and Pasrah 2012, in Setyowati and Nursiam, 2014).

According to Brigham & amp; Houston (2014: 107) profitability ratio is a group of ratios that show the combined effects of liquidity, asset and debt management on operating results. This ratio includes the profit margin of sales, the basic ability ratio to generate profit, the return on equity of the common stock. Funding Decision

According to Brigham and Houston (2001) in Lihan RiniPuspoWijoyo (2010), the increase in debt is interpreted by outsiders as the company’s ability to pay its future liabilities or there is a low business risk, which will be responded positively by the market. There are two views regarding funding decisions. The first view is known by the traditional view which states that capital structure affects company value. The traditional view is represented by two theories: Trade off Theory and Pecking Order Theory. The second view is proposed by Modigliani and Miller (1958) which states that capital structure does not affect company value. Cash flow

The existence of cash for the company is very important to conduct operations, investments and funding to achieve company goals. Cash is the most liquid (approximate) account compared to other accounts in the company's balance sheet.

Cash and cash equivalents according to PSAK No.2 (IAI: 2009: 22), consists of cash balances (cash on hand) and checking accounts. Cash equivalent is an investment that are very liquid, short term and can be used as cash in a certain amount quickly without facing the risk of significant changes in value. Cash flow statement

According to Financial Accounting Standards (IAI) (2009:1-7), the cash flow statement is a financial statement that contains cash inflows and cash outflows of the company during a certain period. Company Value

Company value is the investor's perception of a public company, which is often associated with stock prices (Sujoko and Soebiantoro, 2007 in Ayuningtias and Kurnia, 2013). High stock prices make the value of the company high also, and high company value indicates the prospect of the company in the future. The value of the company is very important because high company value will be followed by high shareholder wealth (Brigham and Gapenski(1996) in Sukirni (2012). 3. CONCEPTUAL FRAMEWORK

AND STUDY HYPOTHESIS Conceptual Framework

Conceptual framework of this research is compiled based on the theoretical basis associated with the phenomena which become the focus of the research. The

conceptual framework will explain the variables that can be measured in this study. The variables are as follows: a) Independent variable

Independent variable also known as predictor variable, stimuli, input, antecedent, or influencing variable. Independent variable is a variable that infulences or becomes the cause of change or the incidence of the dependent variable (Sugiyono, 2016, 39).

b) Dependent variable Dependent variable is a result of or influenced by independent variable (Sugiyono, 2016, 39).

c) Intervening Variable Intervening variable is a variable that affects (strenghten or weaken) the correlation between independent and dependent variable. (Sugiyono, 2015, 39).

Connection between independent, dependent, or intervening variable in this study can be depicted by the following scheme of conceptual framework:

Research Hypothesis H1 :There is a significant effect of liquidity in

profitability in construction service companies listed on the Indonesia Stock Exchange.

H2 :There is a significant effect of liquidity in cash flow in construction service companies listed on the Indonesia Stock Exchange.

H3 :There is a significant effect of liquidity in financing decisions in construction service companies listed on the Indonesia Stock Exchange.

H4 :There is a significant effect of profitability in company value in construction service companies listed on the Indonesia Stock Exchange.

H5 :There is a significant effect of cas flow in company value in construction service companies listed on the Indonesia Stock Exchange.

H6 :There is a significant effect of financing decisions in company value in construction service companies listed on the Indonesia Stock Exchange.

H7 :There is a significant effect of liquidity in companyvalue in construction service companies listed on the Indonesia Stock Exchange.

4. RESEARCH METHODOLOGY Research Design This study uses qualitative and quantitative approach. Qualitative approach is a descriptive study and tends to

Sourcebytheresearcher

Scheme1.ConceptualFramework


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use analysis. The process and meaning (subject perspective) are more highlighted in qualitative study. Theoretical basis is used as a guide so that the focus of the research is corresponded to facts is the field. Data Analysis Technique Descriptive Analysis

Sugiyono (2014:147) stated that descriptive statistic is statistic used to analizing data by describing all collected data without any conclusion made, and can be generally applied. There are two data analysis techniques in quantitative study, that are descriptive and inferential statistic. Inferential statistic includes parametrics and nonparametric statistic (Sugiyono, 2014, 147). This research emphasizes the inferential statistic, which often called by inductive or probability statistic, to analize sample data the apply its result on the population (Sugiyono, 2014, 148). Quantitative Analysis

Data analyzing in this study is using PLS (Partial Least Square) application ver. 3.0 M3 PLS, that is first developed by Wold as a general method to estimate path model using laten construct with multiple indicators. PLS is a powerful indeterminacy factor of analysis method because it does not assume data should use a specific scale measurement and can take a small number of sample. PLS can also be used to confirm the theory. Data Processing

Data processing using PLS based on predictive measurement that is nonparametric. Measurement model or outer modelwith reflection indicator is evaluated using convergent and discriminant calidity from its indicator and composite realibility indicator block. 5. DATA ANALYSIS AND

DISCUSSION Research Data

Data used in this research is a secondary data, that is financial reports from construction service companies listed on Indonesia Stock Exchange during 2013-2017 with a total of 50 data but IDPR construction service company at 2013 did not have financial statement at that time since it had not go public, and that makes a total data of 49. After data screening bu purposive sampling, we had 10 companies to be the sample of this study Data Analysis Data analysis methods using Partial Least Square (PLS) is a variance based structural equation model. An analyzing toward PLS model is done in three steps, that are an outer and inner model analysis, then hypothesis testing. Hypothesis Testing Hypothetis testing using PLS Path Modeling (PLS-SEM) with the help of SmartPLS 3.0 is done by boostrapping count. This test is done to look for the significance of influences between variables by looking for parametric coefficient and T-statistic significance score. To look for parametric coefficient and T-statistic significance score by boostrapping can be seen through path coefficients report that osoriginal sampel (O) as a

parametric coefficient and T-Statistics (|O/STDEV|) that are presented below: Path Coefficients Table

No. Path Coefficients

Original Sampel

T-Statistics P Values

1. LD-PB 0.660 2.352 0.021 2. LD-CF 0.752 2.518 0.011 3. LD-FD -0.432 2.175 0.033 4. PB-VF 0.426 2.057 0.045 5. CF-NP 0.626 2.161 0.027 6. FD-VF 0.443 2.036 0.036 7. LD-VF 0.610 2.502 0.009

Source: Analyzed by author Data Analysis Result Table presented above shows a whole hypothesis testing submitted in this research done by SmartPLS 3.0 based PLS testing. Discussion In this part, author will discuss about data analysis result by correlating data analysis result with theories explained at the previous chapter, and also discussing results using concept from previous studies, to make a logical conclusion. 1. Effect of LD (Liquidity) on PB (Profitability) on

construction company listed on Indonesia Stock Exchange. This study shows that Liquidity affects the Company Value and indicates that the higher the Liquidity, the higher the Company Value, and vice versa. High cash capability will impact the ability of short-term liabilities of the company and have a positive impact on the value of the company (KikynoviemMery, 2017). The results of this study is in line with the results of Telasih (2014) showed that liquidity (LD) affects on profitability (PB).

2. Effect of LD (Liquidity) on CF (Cash Flow) on construction company listed on Indonesia Stock Exchange. In the results of research data above can be seen that the finance of a company can grow in value of the construction company cash flow itself because all other costs and the company’s earning can be seen from construction company’s cash flow in the presence of liquidity of the company against good cash flow causing many investors join the construction company, so the growth of construction companies is good for the investors.

3. Effect of LD (Liquidity) on FD (Financial

Decisions) on construction company listed on Indonesia Stock Exchange. The results of this study shows that construction companies can grow from funding/financial decision but there are constraints from the external, that is the funding decision is not easy because many regulations that the company has to face to obtain additional funds from debt or the issuance of shares, therefore cause the continuity of work is hampered


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and many work that does not match deathline as determined by the stakeholders.

4. Effect of PB (Profitability) on CF (Company

Value) on construction company listed on Indonesia Stock Exchange. Profitability research results have a significant positive effect on company value. This means the higher the value of profitability gained, the higher the company value of the company. Because high profits will provide an indication of good company prospects that can trigger investors to increase share demand. Increased stock demand will lead to the increasing of company value. An increase in earnings per share of the company will make investors interested to invest their capital by buying shares of the company.

5. The effect of CF (Cash Flow) on CV (Company Value) on construction companies listed on Indonesia Stock Exchange. The result of this study is based on the coefficient of the path marked positive. It can be interpreted that the bigger cash flow contained in a company the higher company value, and vice versa. This result is in accordance with research conducted by Vogt and Vu (2000) which stated that firms with higher levels of cash flow will have a higher return than firms with low cash flows. In addition, cash flows should be paid to shareholders if the company wants to maximize its value. Crutchley and Hansen (1989) through his research stated that the company can distribute cash flow to shareholders by making dividend payments to avoid misuse of the cash flows. Market pressure will encourage managers to distribute cash flows to shareholders or eliminate corporate risk

6. The effect of FD (Funding Decision) on CV (Company Value) on construction companies listed on Indonesia Stock Exchange. The result of this study found that funding decision has a positive significant effect to company value. This indicates that the company's decision on the composition of funding to be used will affect the value of the company. Increasing profits will also affect the market value of the company's stock, so it will have an impact on increasing the value of the company. The higher the value of the company will attract investors to invest. The results of this study support several previous studies conducted by Moradi et al. (2012), Rizqia et al. (2013), Wijaya et al (2010), and Afzal and Rohman (2012) who found that funding decisions have positive and significant impact on company value.

7. The Effect of LD (Liquidity) on CV (Company Value) on construction companies listed on the Indonesia Stock Exchange. The results of this study support the research conducted by Erlangga (2009) which shows that the dividend policy can moderate the relationship between financial performance andcompany value.The dividend policy can increase the value of the company when the liquidity is high and vice

versa. The study conducted by Erlangga (2009) is supported by Fadhli's research (2015). The higher the liquidity the lower the company value, which is reflected through the stock price.

6. CONCLUSION This study examines “Analysis of the effect of liquidity on profitability, cash flows, funding decisions and company value on the listed construction services company InIndonesia Stock Exchange". based on this research found that: 1. The effect of LD (Liquidity) on PB (Profitability)

has a positive coefficient value of 0,660 and the value of t-statistic shows a significant value of 2,352. Based on the results, it can be concluded that LD (Liquidity) has a positive and significant impact on PB (Profitability) on service companies listed on Indonesia Stock Exchange.

2. The effect of LD (Liquidity) on Cash Flow has a positive coefficient value of 0,752 and the value of t-statistic shows a significant value of 2,518. Based on the results, it can be concluded that LD (Liquidity) has a positive and significant impact on Cash Flow on service companies listed on Indonesia Stock Exchange.

3. The effect of LD (Liquidity) on FD (Funding Decisions) has a negative coefficient value of -0,432 and the value of t-statistic shows a significant value of 2,175. Based on the results, it can be concluded that LD (Liquidity) has a significant impact on FD (Funding Decisions) on service companies listed on Indonesia Stock Exchange.

4. The effect of PB (Profitability) on Company Value has a positive coefficient value of 0,426 and the value of t-statistic shows a significant value of 2,057. Based on the results, it can be concluded that PB (Profitability) has a positive and significant impact on Company value on service companies listed on Indonesia Stock Exchange.

The effect of Cash Flow on Company Value has a positive coefficient value of 0,626 and the value of t-statistic shows a significant value of 2,161. Based on the results, it can be concluded that Cash Flow has a positive and significant impact on Company Value on service companies listed on Indonesia Stock Exchange 5. The effect of FD (Funding Decisions) on Company

Value has a positive coefficient value of 0,443 and the value of t-statistic shows a significant value of 2,036. Based on the results, it can be concluded that the funding decisions (FD) has a positive and significant impact on Company Value on service companies listed on Indonesia Stock Exchange.

6. The effect of LD (Liquidity) on Company Value has a positive coefficient value of 0,610 and the value of t-statistic shows a significant value of 2,502. Based on the results, it can be concluded that LD (Liquidity) has a positive and significant impact on Company Value on service companies listed on Indonesia Stock Exchange.

Suggestions Suggestions that can be given by research based on the results of this study are as follows:


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The government that plays an important role in infrastructure development of the nation is expected to pay attention to how the sustainability of construction

companies in order to run optimally and so that this national development can increase economic growth in each region - especially the areas that are left behind


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Influences Analysis Of Macroeconomics, Risk Management, Good Corporate Governance,

Earnings, Capitals Toward Company Performances And Company Values In National Private Public Bank Of Go Public Foreign Exchanges Listed In

Indonesian Stock Exchange

Gustaf Naufan Febrianto, Dr. Slamet Riyadi Msi.,Ak,Ca Dr Mulyanto Nugroho MM

Managemental Master Study Program, Economical Faculty, University of 17 Agustus 1945 Surabaya

Abstract

The purpose of this study is to examine the

effect of macro economy, risk management, good corporate governance, earnings, capital to firm performance and value of the firm in private national bank of public foreign exchange go public listed in Indonesia stock exchange. The sample used in this research is 20 companies with 5 years observation from 2013-2017. Analysis of research data using Partial Least Square (PLS). The results showed: Macro economy has a significant effect on firm performance and also significant effect on value of the firm. Risk Management significant effect on firm performance and have no significant effect on value of the firm. Good Corporate Governance has an insignificant effect on firm performance and significant effect on value of the firm. Earning has a significant effect on firm performance and significant effect on value of the firm. Capital significant effect on firm performance And no significant effect on value of the firm, firm performance significantly influence the value of the firm. 1. INTRODUCTION Bank efforts in showing the efectivities can be seen from rentability aspects in which seen from bank performances in resulting profits, maintaining the component stabilities that support bank incomes and profit abilities in increasing capitals in order to support profit prospects next year, the indicators for this research use NIM (Net Interest Margin). And, they also use profit comparison values resulted from the total assets owned, so the ratio analysis of Return On Asset (ROA) and ROE become focuses in this research. If Net Interest Margin (NIM) of ROE (Return On Equity) and Return On Asset (ROA) increase, so bank reputation will be better and better and the people trust level toward the bank will be bigger and bigger, so it will increase investments in the bank and it will increase incomes and capitals in Go Public National Private Public Bank itself. And, stock is a sertificate that shows ownership evidences of some company, and stockholder has claim rights upon incomes and company assets. Stock prices in the market will determine the values of some company, so will the company values in which the company performances and

healths also influence the stock prices. The company health is investor guarantee for predicting the profits that will be accepted in the future.

Banking stock is a stock that is considerably wanted. Even, it is issued to surpass the growths of Composite Stock Price Index. Banking sector has important roles in mediating economics between the parties who have excessive funds and the parties who need funds. For such interests, it is needed bank with the healthy financial managemental system performances. The banking health evaluation will be able to help the parties who need to take decisions. And, it becomes the research focus and the company values are also measured by Price Book Value (PBV) and Price Earning Ratio (PER)

But, it is not like what happens in ROA, NIM, NPL, LDR and BOPO in go public foreign exchange national private bank in Indonesia, such as showed in the graphics of picture 1.1., i.e. the development in Go public National Private Public Bank in 2013 to 2016.

Graphics 1.1 THE DEVELOPMENT OF ROA, NIM, NPL, LDR

AND BOPO IN GO PUBLIB FOREIGN EXCHANGE NATIONAL PRIVATE PUBLIC

BANK IN 2013 TO 2016 Quarterly II


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2. RELATED THEORY OF LITERATURE

Company Value “According to”,(Bringham & Houston, 2006 :

19) Company value is defined as market value because company value can give prosperities of stockholder maximally if the company stock prices increase. Many policies are taken by the management in the efforts of increasing company values through the owner and and the stockholder prosperity increases reflected in stock prices. Financial Performance

“According to”, Mishkin (2001) he stated that performance of some bank is seen from the main purpose, i.e. how they operate to get the highest profit potencies. Based on the operational ones or fundamental businesses, manager of some bank concerns in four main cases. First, liquidity management in which bank ensures to have adequate cashes for buying the saving customers who will withdraw their funds. Second, asset management in which bank must pursue the low risks and diversify the asset ownership. Third, liability management in which bank cares about how to get funds with low costs. The last, capital adequacy management in which bank must decide the total capitals that must be managed and get the total capitals needed.

Macroeconomics

“According to” (Blancard dan Fischer, 1998), Behind all complexities from financial markets, generally the case is represented in macroeconomical models only by two changers, they are rate interest and money stock. However, today, there are various types of literature that state that interest rates only are not enough to reflect relationship among financial markets, one of them is bank with some economical ones. Credit availability and quality from balance sheet become main determinants in investment level. They emphasize credit roles in business cycles and especially in monetary policy transmission for influencing economics.

Bank Business Risk or Risk Management

There are main differences of characters between fund owner and user and bank as intermediation council. Whereas, uncertainty about condition outside banking because of economical changes domestically and abroad, makes banking industries are difficult to achieve the main purposes. Therefore, risk management application is very useful. Good Corporate Governance

The understanding of Good Corporate Governance “According to” Bank of Indonesian Bank Regulation number 11/33/PBI/2009, GoodCorporate Governance, then it is called by GCG, it is some bank management that applies the principles of transparency, accountability, responsibility, professional, and fairness.

The definition of Good Corporate Governance according to World Bank is rule, standard and organization in economical field that rule attitudes of company owner, director, and manager and also direktur duty details and descriptions and their authorities and responsibilities to investor (stockholder and creditor).

Earning

“According to”, (Kasmir,2013 150:151) Net Interest Margin (NIM) is ratio used for measuring bank managemental abilities in managing the productive assets for getting net interests. Net interest income is achieved from interest income reduced by interest expense. The bigger the ratio, so it will increase interest income or productive assets managed by bank so possibly some banks in problem conditions are lower and lower. According to determinational standard of Bank of Indonesia, the value of Net Interest Margin (NIM) of some bank is stated as healthy if having ratio above 2%. Capital

Capital is asset in the form of money or other forms which are not money owned by investor who has economical values (Clause 1 verse (4) Bill of Capital Investment); based on Indonesian Bank Regulation Number 14/18/PBI/2012 About Minimal Capital Supply Obligation for public bank 3. CONCEPTUAL FRAMEWORK

Based on the explanation in Chapter II about literature review, so it occurs some conceptual framework that has functions as references and gives thinking plots in solving research problems and formulating hypothesis. The conceptual framework can be seen in the picture 3.1 below this:

Picture 3.1 Conceptual Framework

Research Hypothesis H1: Macroeconomics influences toward the company performances in Go Public Foreign Exchange National Private Public Bank H2: Macroeconomics influences toward the company values in Go Public Foreign Exchange National Private Public Bank H3: Risk Management influences toward the company performances in Go Public Foreign Exchange National Private Public Bank H4: Risk Management influences toward the company values in Go Public Foreign Exchange National Private Public Bank H5: GCG influences toward the company performances in Go Public Foreign Exchange National Private Public Bank H6: GCG influences toward the company values in Go Public Foreign Exchange National Private Public Bank H7: Earning influences toward the company performances in Go Public Foreign Exchange National Private Public Bank H8: Earning influences toward the company values in Go Public Foreign Exchange National Private Public Bank H9: Capital influences toward the company performances in Go Public Foreign Exchange National Private Public Bank H10: Capital influences toward the company values in Go Public Foreign Exchange National Private Public Bank


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H11: The company performances influence toward the company values in Go Public Foreign Exchange National Private Public Bank 4. RESEARCH METHOD This research uses quantitative research by descriptive study. The population in this research is The Company of Go Public Foreign Exchange National Private Public Bank listed in Indonesian Stock Exchange in period of 2013 to 2017. The total samples in this research are 20 companies. The data are processed and analyzed by using PLS program. 5. RESEARCH AND DISCUSSION

RESULTS Data Analysis and Interpretation Validity Test Some indicator is stated as valid if having Loading Factor above 0.50 toward the construct directed. SmartPLS Outputs of Loading Factor give the results as follows:

Picture 5.1 Original Factor Loading Value

Table 5.3 Result For Outer Loading

Based on Table 5.3. for The Results For Outer

Loading above, so the indicators from several variables are taken out from the model because having the loading less than 0.5 and it is conducted re-test for getting the better results. Below this, The Results For Outer Loading after it happened the value of loading dropping in one of

indicators in the variables henceforth, so the results are in the picture 5.2 below this.

Picture 5.2 above shows that several indicators that have been taken out from the model are less than 0.5, so henceforth, it will be also showed the Results For Outer Loading Dropping in the table 5.4 below this

The table above shows that loading factor has

given the suggested value, i.e. more than 0.5. It means that the indicators used in this research are valid or they have fulfilled Convergent Validity.

Discriminant Validity of reflective indicators can be seen in Cross-Loading between the indicators and the constructs by using PLS Algorithm report, by choosing Dicriminant Validity then cross loading below this, so the outputs of smart PLS in the Table 5.5. can be seen below this


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Table 5.5 Discriminant Validity of Cross-Loading

The Table of Cross-Loading shows that the

variables of Macroeconomics (X1) by indicators of X1.1 to X1.3 are higher than the indicators in the other variables. Therefore, latent contacts that predict indicators in their blocks are better than the indicators in the other blocks. The other method for seeing discriminant validity is by seeing the value of square root of average variance extracted (AVE). The suggested value is above 0.5. Below this, they are the values of AVE in the research in the following Table 5.6.

Table 5.6 Average Variance Extracted (AVE)

The Table above gives the values of Average Variance Extracted (AVE) above 0.5 for all variables in the research model. Reliability Test

Reliability test is conducted by seeing the value of Composite Reliability. This value shows internal consistency, i.e. the high composite reliability value shows the consistency value from each indicator in measuring the construct. The results of Composite Reliability will show the satisfied values if they are above 0.7. Below this, they are the values of Composite Reliability in the following outputs.

Table 5.7 Composite Reliability

The table above shows that the values of composite reliability for all variables are above 0.7, it shows that all variables in the estimated model fulfill discriminant validity criteria. Structural Model Test (Inner Model)

After the estimated model fulfills the criteria of Outer Model, so it is conducted the structural model test (Inner model). Below this, they are the values of R-Square in the constructs:

Tabel 5.9 R-Square

R Square (R2) is often called by determinational

coefficient, it measures goodness of some variable (goodness of fit) from regression similarity, i.e. giving proportion or percentage of total variations in the dependent variables explained by independent variables. The value of R2 is situated between 0 to 1, and the model suitability is said as better if R2 is closer and closer to 1. The Table R2 above gives the value of 0.710 for the company performances (Z) it means that macroeconomics (X1), Risk management (X2) good corporate governance (X3) Earning (X4) Capital (X5) can be explained by the company performances (Z) as 7.1% and the rest of 92.9 % is not explained in this research; and the value of 0.271 for the variables of the company values (Y) that mean macroeconomics (X1), Risk management (X2) good corporate governance (X3) Earning (X4) Capital (X5) and company performance (Z) can be explained by the company values (Y) as 2.7 % and the rest of 97.3 % is not explained in this research.

Bootstrap uses empirical distribution for estimating sampling distribution. So, if the analytical solution is impossible to be conducted in which the assumption (some distribution, e.g. data normality) is not fulfilled, so by using Bootstrap, it can be still conducted some inference. Below this, they are Algorithm Boostrapping reports

Picture5.3AlgorithmBoostrapping

Hasil Algorithm Boostrapping is Path

Coefficient in which Path Coefficient is standardized regression coefficient (beta), it shows direct influences


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from independent variables to dependent variables in the model or it can be meant as the steps for showing the level of direct influences in the relation inter variables in the research. Therefore, it gives the results as follows: H1: Macroeconomics influences toward the company performances in Go Public Foreign Exchange National Private Public Bank The influences as macroeconomics that influence toward the company performances in Go Public Foreign Exchange National Private Public Bank show that the influences inter macroeconomics that influence toward the company performances are significant. T-statistic as 3.405> 1,96 in macroeconomics influences toward the company performances by the positive value of original sample estimate as 0.200. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 1 (H1) is accepted H2: Macroeconomics influences toward the company values in Go Public Foreign Exchange National Private Public Bank The influences as macroeconomics that influence toward the company values in Go Public Foreign Exchange National Private Public Bank show that the influences inter macroeconomics that influence toward the company value are significant. T-statistic as 2.088> 1,96 in macroeconomics influences toward the company values by the positive value of original sample estimate as 0.120. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 2 (H2) is accepted H3: Risk Management influences toward the company performances in Go Public Foreign Exchange National Private Public Bank The influences as risk management that influence toward the company performances in Go Public Foreign Exchange National Private Public Bank show that the influences inter risk management that influence toward the company performances are significant. T-statistic as 9.220> 1,96 in risk management influences toward the company performances by the negative value of original sample estimate as -0.674. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 3 (H3) is accepted H4: Risk Management influences toward the company values in Go Public Foreign Exchange National Private Public Bank The influences as risk management that influence toward the company values in Go Public Foreign Exchange National Private Public Bank show that the influences inter risk management that influence toward the company values are significant. T-statistic as 0.744> 1,96 in macroeconomics influences toward the company performances by the negative value of original sample estimate as -0.111. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 4 (H4) is rejected H5: GCG influences toward the company performances in Go Public Foreign Exchange National Private Public Bank The influences as good corporate governance that influences toward the company performances in Go Public

Foreign Exchange National Private Public Bank show that the influences inter good corporate governance that influence toward the company performances are insignificant. T-statistic as 0.391> 1,96 in good corporate governance influences toward the company performances by the negative value of original sample estimate -0.034. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 5 (H5) is rejected H6: GCG influences toward the company values in Go Public Foreign Exchange National Private Public Bank The influences as good corporate governance that influence toward the company values in Go Public Foreign Exchange National Private Public Bank show that the influences inter good corporate governance that influence toward the company values are significant. T-statistic as 2.015> 1,96 in good corporate governance influences toward the company performances by the negative value of original sample estimate as -0.143. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 6 (H6) is accepted H7: Earning influences toward the company performances in Go Public Foreign Exchange National Private Public Bank The influences as as Earning that influence toward the company performances in Go Public Foreign Exchange National Private Public Bank show that the influences inter Earning that influence toward the company performances are significant. T-statistic as 2.139> 1,96 in earning influences toward the company performances by the positive value of original sample estimate as 0.102. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 7 (H7) is accepted H8: Earning influences toward the company values in Go Public Foreign Exchange National Private Public Bank The influences as earning that influence toward the company values in Go Public Foreign Exchange National Private Public Bank show that the influences inter earning that influence toward the company performances are significant. T-statistic as 3.405> 1,96 in earning influences toward the company values by the positive value of original sample estimate as 0.238. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 8 (H8) is accepted H9: Capital influences toward the company performances in Go Public Foreign Exchange National Private Public Bank The influences as capital that influence toward the company performances in Go Public Foreign Exchange National Private Public Bank show that the influences inter capital that influence toward the company performances are significant. T-statistic as 4.090> 1,96 in capital influences toward the company performances by the positive value of original sample estimate as 0.248. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 9 (H9) is accepted


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H10: Capital influences toward the company values in Go Public Foreign Exchange National Private Public Bank The influences as capital that influence toward the company values in Go Public Foreign Exchange National Private Public Bank show that the influences inter capital that influence toward the company values are significant. T-statistic as 0.516> 1,96 in capital influences toward the company values by the positive value of original sample estimate as 0.044. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 10 (H1) is rejected H11: Company performance influences toward the company values in Go Public Foreign Exchange National Private Public Bank Kinerja perusahaan The influences as the company performance that influence toward the company values Go Public Foreign Exchange National Private Public Bank show that the influences inter company performance that influence toward the company values are significant. T-statistic as 2.579 > 1,96 in the company performance influences toward the company values by the positive value of original sample estimate as 0.233. Based on the data processing using PLS 3.0, therefore, automatically it gives the answer that hypothesis 11 (H1) is accepted

6. CONCLUSIONS

Based on the explanations in the previous analysis and discussions, so it can be taken several conclusions as follows: 1. Macroeconomics influences significantly toward

the company performances. 2. Macroeconomics also influences significantly

toward the company values. 3. Risk Management influences significantly toward

the company performances. 4. Risk Management influences insignificantly toward

the company values. 5. Good Corporate Governance does not influence

significantly toward the company performances 6. Good Corporate Governance influences

significantly toward the company values. 7. Earning influences significantly toward the

company performances. 8. Earning influences significantly toward the

company values. 9. Capital influences significantly toward the company

performances. 10. Capital influences insignificantly toward the

company values. The company performances influence significantly toward the company values of Go Public Foreign Exchange National Private Public Bank listed in Indonesian Foreign Exchange


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Determinants of Brand Purchase Intention Evidence of Halal Food Indonesia

Estik Hari Prastiwi, Universitas 17 Agustus 1945 Surabaya

[email protected]

1. ABTRACT This study aims to determine the variables that influence the brand purchase intention of halal labeled restaurant consumers namely Perceived Brand Quality, Halal Brand Image, Halal Brand Satisfaction, Halal Brand Trust and Halal Brand Loyalty. The Coefficient of Brand Purchase Intention Determination was 47.6% so that Perceived Brand Value, Halal Brand Image, Halal Brand Satisfaction, Halal Brand Trust, and Halal Brand Loyalty were able to explain 47.6% variants of Brand Purchase Intention variables. Perceived Brand value is significantly related to Halal Brand Image, Halal Brand Satisfaction, and Halal Brand Trust. Perceived Brand Value is not significantly related to Brand Purchase Intention, and Halal Brand Loyalty. Halal Brand Image and Halal Brand Satisfaction variables are not significantly associated with Brand Purchase Intention variables. Key Word : Brand Purchase Intention, Perceived Brand Quality, Customer Restaurant, Halal Brand Loyalty. 2. INTRODUCTION

In this millennial era the lifestyle of people is experiencing changes since consumers become smarter in choosing products and services, including food. In this particular type of commodity, Muslims are more selective since there are foods they are not allowed to eat, the haram food. Therefore, they have to make sure that the food they consume is halal. They will be assured if the food sold by restaurants, especially those of foreign origin such as McDonald’s, KFC, and Yosinoya, is declared halal by MUI, the Indonesian Ulema Council. The halal label issued by the council provide assurance that the ingredients and the preparation of the food comply the sharia law, so consumers feel safe to eat the food (Alam and Sayuti, 2011; Yunus et el, 2014). Young consumers use Google or other apps to choose food outlets and restaurants with halal label. Before consuming the food, they make sure that the outlets or restaurants have been granted with halal certificate by MUI. They are rational in making decisions and not easily influenced by hoaxes in social media telling that certain outlets or restaurants serve food whose ingredients and preparation is considered as not halal (Syazwan, 2015). They do not consider price in consuming halal food, so student consumers who are limited in meal budget choose outlets or stalls that only sell halal food such as penyetan ayam or ayam geprek (chicken served with sambal).

To be considered as halal food, halal animals must be slaughtered according to the sharia: the butcher must call the name of God and make a swift and deep incision that cuts the wind pipe, jugular veins, and carotid arteries of both sides but leave the spinal cord intact. In addition, the slaughter house must have the halal certificate. Therefore, restaurant or food outlet managers must cooperate with trustworthy meat suppliers in providing halal ingredients (Soon, 2018).

Muslim consumers generally choose halal food by choosing outlets or restaurants with halal label; they cannot really see the supplier or the preparation of the food. Therefore, MUI must be transparent to the society in giving information about their assessment and the halal label they grant to outlets or restaurants. The purchase intention of Muslim consumers is influenced by many factors, e.g. halal awareness, Islamic Brand, and product ingredients (Azam, 2016).

There are various factors that encourage repurchase toward food with halal label. The research of Ali (2018) finds that factors that influence brand purchase intention are brand perceived quality, halal brand image, halal brand satisfaction, halal brand trust, and halal brand loyalty. 3. THEORITICAL REVIEW

The benefit and motivation of companies and

suppliers in providing halal food product are increased consumer trust and consumer’s safety feeling. Products that are used by outlets and restaurants must also meet the requirements, i.e. Islamic way of slaughtering and come from slaughter house with halal certificate. Consumers who are satisfied and believe in the halal products will do repurchase and will become loyal to companies with halal label (Syazwan, 2015). Therefore, halal-certified suppliers and those who gain consumer’s trust will improve company’s revenue and profit.

Knowledge on halal products, with the perception that halal food consistently insures food safety, health, and freshness, boosts the intention of consumers to buy halal food. Halal food is not only consumed by Muslims. Non-Muslims also consume it due to its better quality since halal-certified food has been through multi-disciplinary assessment. Thus, the quality of food will be assured if the food has been labelled as halal, so the food is safe to consume. The perception of halal food is influenced by the quality of halal food, knowledge about halal, and animal welfare concern (Ayyub, 2015).

The market for halal food consumers grows rapidly, so food with halal label is prioritized by consumers. The perception about the quality of a brand will influence consumers to make repetitive purchase if the quality of the brand is considered good and the brand is consistent in maintain its quality. Besides the perception toward the quality of halal food, consumer’s image on halal product, satisfaction after consuming halal product, and trust toward halal brand are factors influencing consumers to purchase product with halal brand. The variable that serves as he antecedent of brand purchase intention is brand perceived quality mediated by halal brand image, halal brand satisfaction, halal brand trust, and halal brand loyalty (Ali, 2018).

Studies on the determining factor for halal meat consumption in Muslim population in China use theory of planned behavior as its conceptual framework. The role of


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self-identity as a Muslim, dietary acculturation in host culture, moral obligation to purchase halal meat, and trust toward the genuineness of halal meat are explored. Attitude toward halal meat, personal believes, compliance motivation, perceived control, and perceived availability are significant determining factors, while habit is not significant. We added four determining factors that are related with food decision in religion, migration, norm, and believe context. Finally, Muslims with low trust toward halal product are influenced by their attitude, personal believes, and perceived control on halal meat consumption, while Muslims with high trust are influenced by motivation to comply and perceived control (Ali, 2017).

Muslim societies, which are minority in UK, believe in using halal-labeled products in their purchase. The perception of Muslim consumers about the safety and health of halal food is seen from their attitude toward purchasing halal-labelled food, subjective norm, and perceived behavioral control (Reham, 2017). 4. RESEARCH MODEL

Sumber : Ali (2018) Research Hypotheses H1. Brand Perceived Quality is related with Brand Purchase Intention H2: Brand Perceived Quality is related with Halal Brand Image H3: Brand Perceived Quality is related with Halal Brand satisfaction H4: Brand Perceived Quality is related with Halal Brand Trust H5: Brand Perceived Quality is related with Halal Brand Loyalty H6: Halal Brand Image is related with Brand Purchase Intention H7: Halal Brand Loyalty is related with Brand Purchase Intention H8: Halal Brand Satisfaction is related with Brand Purchase Intention H9: Halal Brand Trust is related with Brand Purchase Intention 5. RESEARCH METHOD

The data of this study was collected through questionnaires distributed to 100 students of University of 17 Agustus 1945 Surabaya and Brawijaya University, from which 97 pieces of questionnaires were returned. The age of the respondents is 19 to 23 years-old; 48 of them are male, and 49 of them are female; 86 of them are Muslims, and 11 of them are non-Muslims. Halal restaurants frequently visited by university students are Lesehan Yogya, Khilan Sushi, KFC, M Donald, Nasi Padang, Primarasa, Ayam goreng

Nelongso, Kampung Steak, Yosinoya, Solaria, Ayam Geprek, and Mie Setan. The questionnaire uses 5-point Likert scale, where 1 means strongly disagree, 2 means disagree, 3 means neutral, 4 means agree, and 5 means strongly agree. The data was analyzed using PLS by considering data reliability and validity and evaluating the relationship between independent variable and dependent variable and mediating variable.

Brand Perceived Value directly influences Brand Purchase Intention, Halal Brand Image, Halal Brand Satisfaction, Halal Brand Trust, and Halal Brand Loyalty. The influence of Brand Perceived Value on Brand Purchase Intention is mediated by Halal Brand Image, Halal Brand Satisfaction, Halal Brand Trust, and Halal Brand Loyalty. The coefficient of determinant of 47.6% on Brand Purchase Intention means that Brand Perceived Value, Halal Brand Image, Halal Brand Satisfaction, Halal Brand Trust, and Halal Brand Loyalty explain 47.6% of loyalty variable variant. The relationship between Brand Perceived Value and Halal Brand Image is the strongest, reaching 68.9%. The relationship with the strongest influence is between Brand Purchase Intention and Halal Brand Loyalty. Path analysis in PLS method explains the relationship between latent variable and inner model, while the relationship between latent variable and indicator is explained by outer model. The objective of the evaluation in PLS is to minimize the difference between predictive and actual value of the dependent variable. The evaluation of structural model (inner model) and measurement model (outer model) is based on non-parametric evaluation using bootstrapping and blindfolding procedures. There are two PLS SEM model evaluations: measurement model (outer model) and structural model (inner model), where measurement model evaluation precedes the structural model evaluation. 6. DATA ANALYSIS AND RESULT

Picture 1 PLS Model

Path analysis in PLS method explains the relationship between latent variable and inner model, while the relationship between latent variable and indicator is explained by outer model. The objective of the evaluation in PLS is to minimize the difference between predictive and


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actual value of the dependent variable. The evaluation of structural model (inner model) and measurement model (outer model) is based on non-parametric evaluation using bootstrapping and blindfolding procedures. There are two PLS SEM model evaluations: measurement model (outer model) and structural model (inner model), where measurement model evaluation precedes the structural model evaluation.

Outer model evaluation consists of: 1. Indicator reliability

Indicator reliability is based on outer loading. If the loading value is above 0.7, the indicator variable will be maintained. The outer loading of all indicator variables is above 0.7, so all indicator variables are maintained.

Table 1 Outer Loadings

Brand

Perceived Quality

Brand Purchase Intention

Halal Brand Image

Halal Brand Loyalty

Halal Brand Satisfaction

Halal Brand Trust

X11 0.753 X12 0.798 X13 0.805 X14 0.748 X21 0.710 X22 0.885 X23 0.804 X24 0.851 X32 0.834 X33 0.867 X41 0.803 X42 0.721 X43 0.797 X44 0.836 X42 0.798 X53 0.810 X54 0.813 X61 0.914 X62 0.899

2. Discriminant validity

Table 2 Fornell Larcker

The Fornell Larcker value for each variable has been higher than the correlation among variables


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3. Internal consistency Table 3 Composite Reliability dan Average Variance Extraced

Composite reliability is used to evaluate internal consistency. Based on the result of Composite Reliability assessment of above 0.7 and Cronbach’s Alpha, there is one that is below 0.7, i.e. Halal Brand satisfaction. However, the value is above 0.5, so the variable is tolerable.

4. Convergent validity

The Average Variance Extracted values are presented in table 3, from which the values are above 0.5, which means that all variables do not have any convergent validity problem

Inner Model Evaluation Structural equation model (inner model) evaluation explains the influence of dependent latent variable. There are two basic evaluation in this stage; they are: 1. Significance and magnitude of independent latent

variable’s influence This test assesses independent latent variables through t test. It also evaluates the magnitude of influence of each independent latent variable by observing its path coefficient. Table 4 presents that the p values are above 0.05, so the relationships between Brand Perceived Value and Brand Purchase Intention, Brand Perceived Quality and Halal Brand Loyalty, Halal Brand Image

and Brand Purchase Intention, and Halal Brand Satisfaction and Brand purchase Intention are insignificant. The relationship between Brand Perceived value and Halal Brand Image is significant. The relationship between Brand Perceived value and Halal Brand Satisfaction significant. The relationship between Brand Perceived value and Halal Brand Trust significant. The relationship between Brand Halal Loyalty and Brand Purchase Intention significant. The relationship between Brand Halal Trust and Brand Purchase Intention significant

Table 4 Path Coefficients


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2. Coefficient of Determinant (R2). Coefficient of Determinant measure the magnitude of

influence of independent variable on dependent variable.

Table 5 presents that all values of coefficient of determination R2 are above 0, which means that the dependent variable can be explained by the independent variable.

Table 5 R Square (Determinant)

Discusion

The result of the research shows that significant relationships are found between Brand Perceived Value and Halal Brand Image, Halal Brand Satisfaction, and Halal Brand Trust, while insignificant relationships are found between Brand Perceived Value and Brand Purchase Intention and Halal Brand Loyalty. Significant relationships with Brand Purchase Intention are found on Halal Brand Loyalty and Halal Brand Trust, while insignificant relationships with Brand Purchase Intention are on Halal Brand Image and Halal Brand Satisfaction. Therefore, H2: Brand Perceived Quality is related with Halal Brand Image is accepted; H3: Brand Perceived Quality is related with Halal Brand Satisfaction is accepted; H4: Brand Perceived Quality is related with Halal Brand Trust is accepted; H7: Halal Brand Loyalty is related with Brand Purchase Intention is accepted; H9: Halal Brand Trust is related with Brand Purchase Intention is accepted; H1: Brand Perceived Quality is related with Brand Purchase Intention is rejected; H5: Brand Perceived Quality is related with Halal Brand Loyalty is rejected; H6: Halal Brand Image is related with Brand Purchase Intention is rejected; H8: Halal Brand Satisfaction is related with Brand Purchase Intention is rejected.

All hypotheses in the research of Ali (2018) regarding halal milk brand in Pakistan are accepted. Some of the hypotheses of this study, whose respondents are university students who consume halal food in restaurants and outlets, are rejected because some of the respondents do not always consume halal food in halal-labelled restaurants and outlets. They consume halal food in chicken dish outlets that provide meals at a cheaper price, but they believe that the food is halal although the outlets do not put halal label.

7. CONCLUSION

Muslim and non-Muslim consumers prefer halal food due to its safety, health, and freshness. The hypotheses that

Brand Perceived Quality is related with Halal Brand Image, Halal Brand Satisfaction, and dan Halal Brand Trust are accepted, and the hypotheses that Brand Perceived Quality is related with Brand Purchase Intention and Halal Brand Loyalty are accepted, but the hypotheses that Halal Brand Image and Halal Brand Satisfaction is related with Brand Purchase Intention are rejected. 8. REFERENCES Adnan Ali, Afzaal Ali, Guo Xiaoling, Mehkar Sherwani,

Sikander Hussain, "Expanding the theory of planned behaviour tonpredict Chinese Muslims halal meat purchase intention", British Food Journal, https://doi.org/10.1108/BFJ-05-2017-0278

Afshan Azam , (2016),"An empirical study on non Muslim’s packaged halal food manufacturers: Saudi Arabian consumers’ purchase intention", Journal of Islamic Marketing, Vol. 7 Iss 4 pp. - Permanent link to this document: http://dx.doi.org/10.1108/JIMA-12-2014-0084

Afzaal Ali, Guo Xiaoling, Mehkar Sherwani, Adnan Ali, (2018) "Antecedents of consumers’ Halal brand purchase intention: an integrated approach", Management Decision, https://doi.org/10.1108/ MD-11-2016-0785

Ahasanul Haque Abdullah Sarwar Farzana Yasmin Arun Kumar Tarofder Mirza Ahsanul Hossain, (2015),"Non-Muslim consumers’ perception toward purchasing halal food products in Malaysia", Journal of Islamic Marketing, Vol. 6 Iss 1 pp. 133 – 147

Anis Najiha Ahmad Tajul A. Yang Wan Nadiah Wan Abdullah , (2015),"Perceived versus actual knowledge of alcohol and halal food among food technology undergraduate students in a Malaysian university", Journal of Islamic Marketing, Vol. 6 Iss 3 pp. 294 – 313

Azmawani Abd Rahman Ebrahim Asrarhaghighi Suhaimi Ab Rahman , (2015),"Consumers and Halal cosmetic products:knowledge, religiosity, attitude and intention", Journal of Islamic Marketing, Vol. 6 Iss 1 pp. - Permanent


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link to this document: http://dx.doi.org/10.1108/JIMA-09-2013-0068

Rana Muhammad Ayyub , (2015),"Exploring perceptions of non-Muslims towards Halal foods in UK",British Food Journal, Vol. 117 Iss 9 pp. 2328 – 2343 Permanent link to this document: http://dx.doi.org/10.1108/BFJ-07-2014-0257

Jan Mei Soon, Carol Wallace, (2017) "Application of theory of planned behaviour in purchasing intention and consumption of Halal food", Nutrition & Food Science, Vol. 47 Issue: 5, pp.635-647, https://doi.org/10.1108/NFS-03-2017-0059

Hayat Muhammad Awan Ahmad Nabeel Siddiquei Zeeshan Haider , (2015),"Factors affecting Halal purchase intention - evidence from Pakistan’s Halal food sector", Management Research Review, Vol. 38 Iss 6 pp. - Permanent link to this document: http://dx.doi.org/10.1108/MRR-01-2014-0022

Marco Tieman Maznah Che Ghazali , (2013),"Principles in halal purchasing", Journal of Islamic Marketing, Vol. 4 Iss 3 pp. 281 – 293 Permanent link to this document: http://dx.doi.org/10.1108/JIMA-01-2012-0004

Mohamed Syazwan Ab Talib, "Motivations and benefits of Halal food safety certification", Journal of Islamic Marketing

Reham Ibrahim Elseidi, "Determinants of halal purchasing intentions: evidences from UK", Journal of Islamic Marketing, https://doi.org/10.1108/JIMA-02-2016-0013

Suddin Lada, Geoffrey Harvey Tanakinjal, Hanudin Amin, (2009),"Predicting intention to choose halal products using theory of reasoned action", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 2 Iss: 1 pp. 66 – 76 Permanent link to this document: http://dx.doi.org/10.1108/17538390910946276


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Kockdown market as a Solving Urban Informal Sector In Surabaya Housing Complex

Dr. H. Zakariya, MS., MM

Faculty of Social Science and Political Science

University of 17 Agustus 1945, Surabaya, Indonesia

[email protected]

Dr. Rachmawati Novaria, MM Faculty of Social Science and Political

Science University of 17 Agustus 1945, Surabaya,

Indonesia [email protected]

ABSTRACT Surabaya is the second metropolitan city in Indonesia

has the largest population after Jakarta. Increasing population pushed housing demand from time to time, especially on Eastern and Western Surabaya allotment for housing development. The growth of housing industry increasing significantly of informal sector from outside Surabaya. The increasing urban informal sector development around housing complex cause negative impact. The purpose of this research are (i) To identify the most crucial cause and effect in Surabaya housing Complex; (ii) To obtain policy model to solve informal urban impact in Surabaya housing Complex. The Method that will be used to achieve the purpose of this research is Research and Development, and also combining with qualitatve and quantitative method.

The result of this research showed that the increasing informal urban sector in a residential in the city of Surabaya caused by the origin place of the informal sector subject lack the economic resource. While the effect are traffic congestion, dirty environment and security issues around housing complex. As for the policy model that can be developed in order to solve the the increasing of informal urban sector in Surabaya housing Complex is the city government can push every developer to provide vending facility for informal sector. These empiric foundings consistent whit the theoretical view that there is tendency to aapproach buyer-seller. So the solution closser to sellers with the buyer by providing a location for the informal sector selling integrated resedential complex it is called “Knockdown Market”. Keywords: Knockdown Market, Urban Informal Sector,

Housing Complex


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1. INTRODUCTION The growth of the workforce is very high in rural areas that are not offset by the availability of jobs. It’s resat encouraging massive migration of labor force from rural areas to cities. The existence of the village labor force in urban areas who do not have the skills are not allowed to be absorbed in the formal sector. The growth of the housing industry in urban areas is fertile territory for the rapid pace of the informal sector of the wild. It is almost guaranteed that every new housing has opened up opportunities for the informal sector separately conducting business around the housing. This phenomenon is very possible to happen, as Losch in Tarin Robinson (2009) argues that the development of the informal sector, the market was formed with the principles of the seller approached the buyer. Surabaya is the second metropolitan city in Indonesia have the largest population after the city of Jakarta encourage the growth of housing over time is increasing, especially Territory of East Surabaya include: Mulyorejo, Sukolilo, Rungkut, Tenggilis and Gunung Anyar. While the West Surabaya region includes: Tandes, Sambi Kerep, Suko Manunggal and Dukuh Pakis. The growth of the housing industry in Surabaya will increasingly provide greater opportunities for the growth of the informal sector of the wild (Sundari Ekowati, 2012). Referring to the background presented, it can be formulated research problem as how prototypes policy models in addressing the urban informal sector growth in the residential complex of Surabaya.

2. THEORY FRAMEWORK Street Vendors is a social entity in which there are groupings according to certain characteristics such as ethnicity, ethnic, language, customs, origin, and the types of activities as well as religion (Sarjono, 2006). Yustika (2001) describes the hawkers are groups of people marginalized and powerless. Cross (2000) defines vendors is a category of economic activity that are not formal. This category includes the production and exchange of goods and services which are legal, but their activities are not accompanied by an official permission or a legal contract of related parties such as suppliers and clien. When the Indonesia economic crisis in 1997 the informal sector proved to be able to demonstrate toughness and capable of being buffers turmoil in the urban labor market to accommodate the overflow of millions of workers victims of layoffs in the formal sector. The existence of the informal sector create unemployment and poverty (Patrick C. Wauran, 2013). The positive impact of the rate of rapid informal sector is that this sector to accommodate the workforce who do not get jobs, of which include the youth labor force who are still inexperienced or work forces first entered the job market. So the pace of the rapid informal sector will also be able to reduce unemployment. Housing growth is significant in urban areas as a result of increasing population growth and economic development course will provide greater opportunities to the rapid pace of informal sector housing environment.

The informal sector is often regarded as a illegal sector. This sector can often have an impact irregularities and disturbing beauty of the city. Pramoediatma Asihanto (2013) says that the irregularity arising from the existence of the informal sector is very disturbing beauty of the city and opposite to the formal sector seem more neat, orderly and well-organized. The existence of the informal sector also often lead to traffic congestion and littering the city. This argument is relevant to view Sri Maryuni (2007) says that the existence of the informal sector is often seen as illegal and marginal groups in urban areas that often creates many problems. These problems, among others, traffic jams, polluted cities, and reduce the beauty of the city. It has been argued that for the informal sector in addition having a positive impact but the informal sector also had a negative impact. Efforts to formalize the informal sector still seems to be very difficult because the perpetrators of the informal sector is mostly people who are less highly educated and the numbers are very large and growing from time to time. Nevertheless let alone the informal sector without any attempt to organize it better, also not a wise decision, because this sector can also be very inefficient and could jeopardize environmental comfort. Spatial planning for the informal sector in some cities are already showing very positive results, as presented by Haryo Winarso and Gede Bob said that the Government of Surakarta for example, has successfully organized the informal sector were intruding on one main road and moved into a building Special to them. 3. RESEARCH METHOD

This type of research using the Research and Developmentt with a view to produce a model or prototype. Research and development is used to produce the model and will further test the model to determine the reliability when it will be applied in the field. This study focuses on the existence of the informal sector of urban conducting business in a residential area in East Surabaya and Surabaya West. Includes housing: Perumahan Kosagra, Wisma Indah I, Wisma Gunung Anyar, Wisma Keputih, Wisma Tegal Timur, Wisma Kerta Jaya Indah, Wisma Mulyosari, Wisma Permai, Perumahan Manakantama, Perumahan Graha Asri, Perumahan Wisma Mukti and Perumahan Taman Pondok Indah. As noted that this type of research is research Research and Development measures includes: (1). Recognizing the potential and problems; (2). Data collection; (3). Product design; (4). Revision of product design; (5). Product trials; (6). Product revision; (7). Utility testing; (8). Revision products, and (9). A mass product (Sugiyono 2007). To determine the degree of significance of differences in the performance of the model prevention trial results with post-test which has received repairs performed statistical analysis before-after d ith different test statistical tests (Djarwanto, 1996). Namely the testing procedures.

4. THE RESULT From the survey results show that phenomenon of the growth of the informal sector in the city of Surabaya as indecision apparatus is mainly carried out by the Civil Service Police Unit (Satpol PP). Informal sector traders do


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not understand the rules of the ban on selling on roads leading to the residential complex or a residential complex in the region. Informal sector traders approaches to consumers in the residential complex. The reason for the high cost of renting a place on the formal market. The reason for selling at an informal place need not require substantial capital investment. The reason for the absence of taxation, levies are low, does not require a business license, the price of goods sold informal market cheaper than the formal market and the reason for faster turnover rate. While the cause of the growth of informal sector in a residential complex in Surabaya due to the economic potential of their home areas is low. Informal traders assess the difficulty of finding a job in the place of origin. In the metropolist city is more promising. In the metropolist city does not have to require a high level of education. Informal sector received information from a friend about the glamorous life in large cities. Informal sector wanted to improve the standard of living. informal sector assuming the joy of life in the big city. informal sector the notion looking for a job in the big city is not difficult and in the metropolis needs imple skill. From the survey results also show the impact of their the high growth of the informal sector in the city of Surabaya traffic jam in the housing complex, environment less clean and less beautiful, a little disturbing environmental health and potentially negative influence behavior. From interviews and FGD (Forum Group Discussion) done by including community leaders, developer, public oficial, the community around the housing and informal sector have reached common ground that in order to avoid traffic jam towards housing and maintaining the beauty and cleanliness around residential complex is necessary to provide land available in most public facilities housing market can be used that is unloading the market. In the research termed " Knockdown Market". Knockdown market can have multiple functions. In the morning informal sector to sell the coals in insedential. In the afternoon it can be used to play for children and at night can be used as the night market. With the "Market Knockdown" will provide benefits that are multiplier. 5. THE CRITICISM OF RESEACH As Losch in Tarin Robinson (2009) argues that the development of the informal sector, the market was formed with the principles of the seller approached the buyer. Then with new residential housing in the big city encouraging the growth of informal traders more rapidly. This is as a consequence of a seller closer to potential buyers. Where is the rationality of citizens who live in residential complex on average have a higher income than the people who live in the township. Other than that, residents in housing also helped for time efficiency if the informal sector traders approached the residential complex. 6. THE CONCLUSION References: To avoid traffic jam towards housing and maintaining the beauty and cleanliness around the housing complex should be provided land in most public facilities housing

market can be used that is unloading the market or in research results give researchers term "Knockdown Market". 7. REFERENCES

Bagus Pramoedhiatma Asihanto, 2013. Implikasi Tempat Berjualan terhadap Tingkat Pendapatan Sektor Informal (Studi Kasus di PPS Merjosari Kecamatan Lowokwaru Malang), Jurnal Ilmiah Jurusan Ilmu Ekonomi Fakultas Ekonomi dan Bisnis Universitas Brawijaya Malang.

BAPPENAS, 2009. Peran Sektor Informal Sebagai Katup Pengaman Masalah Ketenagakerjaan, Kedeputian Evaluasi Kinerja Pembangunan Badan Perencanaan Pembangunan Nasional.

Daru Wahyudi, 2005. Peran Sektor Informal Dalam Menanggulangi Masalah Pengangguran di Indonesia, Jurnal Ekonomika, volume I nomor 1, Agustus

Dieter – Evers, H., 1991. Ekonomi Bayangan Produksi Subsistem dan Sektor Diluar Aktivitas Pasar Umum dan yang terlepas dari Negara. Jakarta: Prima Nomor 5 LP3ES

Djarwanto, 1996. Mengenal Beberapa Uji Statistik Dalam Penelitian, Liberty Yogyakarta, edisi Pertama

Haryo Winarso & Gede Budi, 2013. Sektor Informal Yang Terorganisasi: Menata Kota Untuk Sektor Informal, Serial Online Desember 2008, Available from URL: http:// buletin. Penataan ruang. net/ upload/ data artikel/ sektor % 20 Informal % 20 yang % 20 Terorganisasi- Pak Haryo % 20 pdf. Pdf.

Patrick C. Wauran, 2012. Strategi Pemberdayaan Sektor Informal Perkotaan di Kota Manado, Jurnal Pembangunan Ekonomi & Keuangan Daerah (PEKD) Volume 7 Nomor 3 edisi Oktober

Riza Ali Fikry, 2013. Hubungan Dialogis Tim Pembina Pedagang Kaki Lima Dalam Kebijakan Relokasi Pedagang Kaki Lima Alun-alun Sidoarjo, Kebijakan dan Manajemen Publik, Volume 1 Nomor 1

Robinson Tarigan, 2009. Ekonomi Regional, Teori & Aplikasi, PT. Bumi Aksara, Cetakan 5

Sri Maryuni, 2007. Alternatif Kebijakan Terhadap Sektor Informal di Kota Pontianak, Spirit Publik, Volume 3 Nomor 2 hal 141-148

Sugiyono, 2007. Metode Penelitian Kuantitatif, Kualitatif dan R & D, Bandung: Alfabeta

Sundari Ekowati, 2012. Pengembangan UKM Dalam Rangka Membuka Lapangan Kerja, PPEB Fakultas Ekonomi Universitas 17 Agustus 1945 Surabaya

Suradi, 2011. Peranan Sektor Informal dalam Penanggulangan Kemiskinan, Informasi Volume 16 Nomor 3

Wiwik Retnaningsih, 2008. Analisa Strategi Management Terhadap Kinerja Usaha Kecil & Dampaknya Terhadap Kesejahteraan Masyarakat di Kota & Kabupaten Mojokerto. Program Doktor Ilmu Ekonomi, Program Pasca Sarjana Universitas 17 Agustus 1945 Surabaya


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EFFECT OF PERCEPTION OF PRICE, PERCEPTION OF PRODUCT QUALITY, AND CUSTOMER

RELATIONSHIP MANAGEMENT, TOWARDS KFC CUSTOMER SATISFACTION IN SURABAYA

Feliks Anggia Binsar Kristian Panjaitan1 1Faculty Of Economics University of 17 August 1945 Surabaya, Indonesia.

[email protected]

ABSTRACT

Culinary business growth in Indonesia has been increasingly in recent years, some have tried their fortune again in building a culinary business as before but with different concepts, and some continue to innovate in the type of food, how to serve food, using technology to be closer to consumers, so that it is not eroded and always survive amid fierce competition. The purpose of this research is to find out whether perception of price, perception of product quality, customer relationship management can increase customer satisfaction. The population in this study is KFC Restaurant Managers in Surabaya, Indonesia, 17 respondents. The type of data used are primary data with questionnaires. The analytical tool used is the path analysis. Results from this study are: the perception of price affect toward customer satisfaction, customer relationship management affect toward customer satisfaction, and surprisingly perceptive of product quality doesn’t affect toward customer satisfaction Keywords: KFC fast food restaurant, perception of price, perception of product quality, customer relationship management 1. INTRODUCTION

Fast food service restaurants have long had their own unique where each of them gave each other advantages in the culinary business strategy. Various types of fast food service restaurants in Indonesia, A & W, Mc Donald's, Kentucky Fried Chicken, Texas Fried Chicken and many others. In this modern era, if it only competes with the advantages of fast food, it will quickly be eroded by changing times. Companies must be able to determine the right marketing strategy so that the business can survive and win the competition, so that the goals of the company can be achieved. The company is trying to establish a business and create types of products that will be favored by potential customers. So, fast food services now not only provide competitive prices, but also create food that was previously unthinkable in consumers' minds, the use of technology both in promotion and cooperation with various tenants. This is done by fast food service restaurants in addition to providing benefits for the company and also

satisfaction for customers which will continue to repurchase their products. Tjiptono (2006) states that the occurrence of long-term partnerships with customers is continually expected to occur repeat business. The price given by fast food restaurants at this time is not only how much should be sacrificed by consumers to get products produced by fast food service, restaurants, where, according to Kotler and Armstrong (2001), the price is the amount of money exchanged for a product or service. In other words, price is the sum of all values that consumers exchange for the amount of benefits by owning or using an item and service. Many considerations are made by consumers before deciding to buy a product, for example, product quality, price, and advertising (Engel, 1994). In order to get a satisfied customer in accordance with the wishes of the company, the company needs to use a strategy which creates a relationship between the company and the customer known as customer relationship management. In this strategy the company can understand customer expectations which is a very important factor, because a relationship-based approach to doing business is an understanding of what the customer really needs and wants and sees the customer as a long-term asset that will provide the continuously as long as their needs are met. At present, Customer Relationship Management has become the capital of the company to maintain and improve customer satisfaction in order to achieve long-term benefits. Where According to (Buttler: 2007), CRM is the core strategy in a business that runs internal processes and functions with all external networks to create value for target consumers profitably. CRM is supported by quality data and information technology. In October 1979, the first KFC outlet in Jakarta was opened by PT. Fast Food Indonesia, which is one of Gelael Group and received a positive response, so that it can expand into various major cities in Indonesia, one of which is Surabaya. In realizing consumer satisfaction, KFC adds a strategy by using informatics-based technology, which enables KFC to manage its business in real time online systems in all Surabaya branches like consumers make offline purchases at this time. The objectives to be achieved in this study are:

1. Knowing and explaining the effect of perception of price toward customer satisfaction

2. Knowing and explaining the effect of perception of product quality toward customer satisfaction


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3. Knowing and explaining the effect of customer relationship management toward customer satisfaction

2. LITERATURE REVIEW AND HYPOTHESES

2.1 Perception Of Price Price is the amount of money needed to obtain several combinations of products and accompanying services (Kotler and Keller, 2009). Prices depend on the company, but of course by considering various aspects. The size of a product is very relative in nature. Therefore, it needs to be compared first with the price of similar products produced and sold by other companies. In other words, companies must continue to monitor prices set by competitors so that the prices set by the company are not too high or vice versa. Price According to Tjiptono, 2008 is one element of the marketing mix that requires careful consideration. This is because there are a number of dimensions in the price:

1. Price is a statement of the value of a product, while value is the ratio between the perception of benefits and the costs incurred to get the product.

2. Price is the main influence of demand. The higher the price the less the number of requests for the product.

3. Prices are flexible, meaning they can be adjusted easily. Price is the most easily changed and adapted to market conditions.

4. Prices affect the valuation and placement. Consumers always associate prices with product quality.

The goal of price fixing is the company to survive, maximize current profits, market share leadership, or retain customers and build relationships. According to Kotler and Keller (2009) Price is one of the marketing elements that generates income. 2.2 Perception of Product Quality According to Kotler and Armstrong (2008) product quality is a characteristic of a product or service that depends on its ability to satisfy customer needs that are expressed or implied. According to Kotler and Keller (2009), there are 4 dimensions of product quality that need attention:

1. Quality of performance, fundamental dimensions and related to the main function of a product.

2. Features, most products can be offered with a variety of features that are different but complete the basic functions of the product.

3. Quality of conformance (conformance quality), level of suitability and fulfillment of all units produced against specifications.

4. Style, this dimension describes the appearance and feeling that the product creates for consumers.

2.3 Customer Relationship Management In doing marketing, companies do various ways to satisfy their customers. One of them is by conducting a customer relationship management strategy. The company believes, with a good relationship, the

company can know exactly what is the needs and desires of its customers. According to Kotler & Armstrong (2008) customer relationship management is an overall process to build and maintain relationships with consumers by conveying the superior value and customer satisfaction. According to Zinkmund, McLeod, & Gilbert (2002) stated that customer relationship management is a process of gathering information to improve understanding of how to manage corporate relationships with consumers. Customer relationship management is a business activity and uses technology to manage customer relationships in order to maximize revenue, profit, customer satisfaction, and consumer retention. Technology is used to create relationships with consumers and analyze in order to maximize long-term customer value so that the company can simultaneously maximize satisfaction for consumers. In terms of the concept of customer relationship management. Storbacka and Lehtinen (2001), there are three main concepts of CRM: 1. shape customer value. The goal is not to

maximize profits from one transaction but rather to build long-term relationships with customers.

2. Products as a process, where the traditional differentiator between goods and services is meaningless. Products are seen as entities which include exchanging between service providers and customer processes.

3. Relate to the responsibility of the service provider, where this is not enough for the company to only be able to provide consumer needs and their satisfaction. A company building stronger relationships can only be done if it fulfills the responsibility to form relationships and offer customers the possibility to create value for themselves.

2.4 Customer Satisfaction According to Kotler (2009), satisfaction is a person's level of feeling after comparing the performance or results he feels compared to his expectations (Kotler et al, 2000). Customer satisfaction with a product or service is actually something that is difficult to measure if the service company or industry does not really understand what is expected by consumers. For products or services of the same quality, it can provide different levels of satisfaction for different consumers. Therefore, according to Kotler (2009), there are four methods that can be used to measure customer satisfaction;

1. Complaints and suggestions system, a company that provides opportunities for its customers to express opinions and complaints for consumer-oriented companies.

2. Customer satisfaction surveys, companies need to conduct customer satisfaction surveys on the quality of services or products produced by the company. Through the survey, companies can find out the shortcomings and advantages of products or services produced, so that the company can immediately make improvements to things that are considered lacking by customers.

3. Analysis of lost customers, this method is done by contacting customers who have not visited for


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a long time or made purchases again in the company because they have moved to competitors. In addition, the company can ask the reasons for the transfer of customers to competitors.

Bolton, Warlop and Alba (2003) argue that the perceived price perception as an assessment is obtained whether the results of or an item process are reasonable, acceptable, or appropriate. According to Lamb, Hair and Mc. Daniel (2004), the perception of the appropriate price influences positivity to customer satisfaction, customers are more interested in gaining a perception of a reasonable price, which means having the value that the customer wants when the transaction. Based on the description above, the hypothesis is stated: H1: perception of price has a significant effect toward customer satisfaction. Each consumer has a different perception of the quality of a product. The difference in perception of product quality is usually influenced by differences in information received by each consumer about the related product. If consumers perceive a product to be of good quality, it is likely that consumer satisfaction will arise. Yamin (2013) said that the perception of product quality has a significant effect on consumer satisfaction. The higher the perceived value of product quality, the higher the level of satisfaction perceived by consumers and vice versa. Sugianto and Sugiharto (2013) also stated similar things. Based on some of the results of the previous research, the hypothesis that appears as follows: H2: perception of product quality has a significant effect toward customer satisfaction CRM provides an encouragement to consumers to establish strong ties with the company. Some marketing experts reveal the relationship between CRM and customer satisfaction as follows: According to Gaffar (2007) revealed that CRM is a process by which a company obtains, maintains, and develops profitable customers and requires a focus on the attributes of a service that can produce value to customers. Can generate loyalty. The focus of CRM itself is to increase the level of customer satisfaction, customer loyalty, and revenue from existing customers in the face of high levels of competition, globalization and customer turnover and the development of customer acquisition costs. The goal is not to maximize profits from a single transaction but build long term relationships long with customers and improve customer satisfaction. H3: Customer Relationship Management has a significant effect toward Customer Satisfaction

Figure.1 Conseptual Framework

4. RESEARCH METHODES

The population, according to Djarwanto and Subagyo (2003) is the sum of all objects (units / individuals) whose characteristics are to be suspected. According to Sugiyono (2008), "The population is the region of generalization consisting of objects / subjects that have certain qualities and characteristics. Determined by researchers to study and then draw conclusions. As for in this study, the population is 17 KFC fast food restaurants in Surabaya. While the analytical tools in this study are:

1. Validity and Reliability Test Validity test is used to determine whether a questionnaire is valid or not. A questionnaire was declared valid if the question in the questionnaire was able to reveal the results that the questionnaire would measure (Ghozali, 2006). To measure validity, corelation productt moment technique is used by correlating item scores with total scores. In testing this validity, the researcher uses 17 respondents and a significance level of 5% with the help of WarpPLS 6.0. Validity Testing, namely: If r counts > r table, it means there is a correlation between variables X and Y variables and said to be valid. If r count < r table, it means there is no correlation between variable X and variable Y and said to be invalid.

2. Reliability is actually a tool for measuring a questionnaire which is an indicator of a variable. A questionnaire is said to be reliable if someone's answer to the question is consistent or stable over time. A data said to be reliable, is a variable that has a Cronbach alpha value less than 0.6 (Ghozali, 2006). In this test, reliability testing is carried out using the alpha coefficient. Calculation of alpha coefficients utilizes WarpPLS 6.0 and critical limits for alpha values to indicate that a reliable questionnaire is 0.60. So the alpha coefficient value> 0.60 is an indicator that the questionnaire is reliable.

3. Path Analysis This study used WarpPLS 6.0 to determine the effect of independent variables with the dependent variable. This test includes a t-test that is used to find out the magnitude of the balance of each variable on the dependent variable partially, the F-test, the coefficient of determination (R2) to determine how much the


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dependent variable can be explained by the independent variables listed in this study.

4. Partial Test (t-test) This test is conducted to determine whether the constants and regression coefficients of independent variables are significant or not individually to customer satisfaction (Y). The trick is to compare the statistic count with table statistics.

- Determine the formula for Ho and Ha Ho: β = 0, there is no effect of independent variables on the dependent variable Ha: β> 0, there is a positive influence of the independent variable on the dependent variable

- Level of significant α = 0.05 Test 1 side with t table = (α, n-k, -1)

- Determine testing criteria Ho is accepted if t counts α t table or - t counts> - t table Ho is rejected if t count α t table or - t count <- t table

5. F-test (goodness of fit model) This test is carried to find out whether together independent variables affect the dependent variable. If together the independent variables influence the dependent variable which is indicated by the significance value of F <0.05, the regression model is said to be good, on the contrary, if the independent variables together do not affect the dependent variable which is indicated by the significance value F> 0, 05, then the regression model is not good.

6. Coefficient Determination (R2) Coefficient determination is used to explain the proportion of the dependent variable that can be explained by the independent variable. The coefficient of determination is between 0 and 1. The determination coefficient value is small, meaning that the price of the independent variable in explaining the dependent variable is very limited. The value that approaches one means that the independent variable provides almost all the information needed to predict the dependent variable.

5. RESULT AND DISCUSSION

5.1 Validity and Reliability Test

Validity testing results obtained that all indicators used to measure price perception variables, service quality, customer satisfaction and repurchase interest have r table for n = 17 that is 0.455, so that all indicators are valid. Reliability testing is a test of the consistency of the results of the respondents' answers, whether consistent over time. Cronbach Alpha obtained a greater cronbach alpha count of 0.6. Thus, the reliability test results for all variables are reliable

5.2 Path Anaysis

Path Analysis that has been done is obtained by regression coefficient, t-count value and level of significance as shown in the following table:

Figure 2. Coefficient of research model path

Table 1

Path Coefficients

H Relationship Standarized

coefficient

SE P Decision

H1 Pr_pri

satisf

0.356 0.192 0.041 accepted

H2 Pr_pro

satisf

0.024 0.239 0.461 rejected

H3 CRM

satisf

0.605 0.163 0.000 accepted

5.3 Partial Test (t-test) a. Perception of price has a significant effect

toward customer satisfaction Testing the price perception variable on customer satisfaction obtained t value of 0.356 with a significance level of 0.192. Because the significance value is 0.192 <0.05, H0 is rejected and Ha is accepted. Thus the price perception variable has a positive and significant effect toward customer satisfaction. This means that H1 is accepted. The results of this test indicate that KFC customers in the city of Surabaya feel that the price of KFC products is in line with what is expected. The price of KFC products is generally feasible and can still be affordable and is comparable to the value of products obtained by consumers. This is one of the things that causes price perception to affect customer satisfaction.

b. Perception of product quality has a significant effect toward customer satisfaction Testing of product quality perception variables on customer satisfaction obtained t


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value of 0.024 with a significance level of 0.461. Because the significance value is 0.461 > 0.05, H0 is accepted and Ha is rejected. Thus the perception of product quality has no effect toward customer satisfaction. This means H2 is rejected. The insignificance of the influence of product quality on customer satisfaction in this study, shows that the quality of KFC products is standard, the quality of KFC products in each outlet in Surabaya is the same. Thus, customers feel satisfied when they first enjoy KFC products, and for subsequent purchases, the customer's perceived enjoyment is the same as the previous pleasure (no additional enjoyment). This needs to be a concern of KFC management, where the KFC should always innovate the product and the quality of the product it has. We recommend that every certain period of KFC create different product and product quality from time to time.

c. Customer relationship management has a significant effect toward customer satisfaction Testing of Customer Relationship Management variables on customer satisfaction obtained t value of 0.605 with a significance level of 0.000. Because the significance value is 0.000 <0.05, H0 is rejected and Ha is accepted. Thus Customer Relationship Management variables have a positive and significant effect toward customer satisfaction. This means that H3 is accepted. This test results informs that the KFC is already doing and run strategy, customer relationship management as well. This is proven by the existence of the online service, member card, and the presence of surprises provided KFC party on certain events, such as the awarding of the cake to the customer at the time were apparent birthday.

5.4 Coefficient Determination (R2)

The coefficient of determination is indicated by the value of Adjusted R Square that is equal to 0.77 which shows that between price perception, product quality perception and customer relationship management together can explain customer satisfaction by 77 percent, while the rest is explained by other factors

6. SUMMARY

The test results show that the dominant factor influencing KFC fast food restaurant customer satisfaction is Customer Relationship Management, this is evidenced by the highest beta standardized coefficient value of 0.605. The second is price perception with a standardized beta coefficient of 0.356. Whereas the results of descriptive calculations

carried out on the research variables, indicate that both Customer Relationship Management variables and Price Perceptions are perceived as "high". While the perception of product quality is perceived as "low" by consumers.

References [1] Bolton, Warlop & Alba (2003) "Consumer

Perceptions of Price (Un)Fairness" Journal of Consumer Research; Mar2003, Vol. 29 Issue 4, p474-491

[2] Buttle,Francis. 2007. Customer Relationship Management: Terjemahan Arief Subiyanto. Penerbit Bayumedia Publising: Jakarta.

[3] Charles W. Lamb, Joseph F. Hair, Carl Mcdaniel., 2004, Pemasaran. Edisi Pertama, Salemba Empat, Jakarta

[4] Djarwanto, dan Subagyo, Pangestu, ((2000), Statistik Induktif, Edisi 4, BPFE, Yogyakarta.

[5] Engel, Blackwell, dan Miniard. 1994. Perilaku Konsumen. Jakarta: Binarupa Aksara

[6] Fandy,Tjiptono. 2006. Manajemen Jasa. Andi, Yogyakarta.

[7] Gaffar, Vanessa. 2007. CRM dan MPR Hotel (Customer Relationship Management and Marketing Public Relations), penerbit, ALFABETA. Bandung

[8] Ghozali, Imam. 2006. Aplikasi Analisis Multivariate dengan Program SPSS (Edisi Ke 4). Semarang: Badan Penerbit Universitas Diponegoro.

[9] Jimmy Sugianto dan Sugiono Sugiharto, (2013), Analisa Pengaruh Service Quality, Food Quality, dan Price Terhadap Kepuasan Pelanggan Restoran Yung Ho Surabaya, Jurnal Manajemen Pemasaran PETRA Vol. 1, No. 2, 2013, Page 1-10.

[10] Kotler dan Amstrong. 2008. Prinsip-prinsip Pemasaran. Jilid 1 dan 2.Edisi 12. Jakarta: Erlangga.

[11] Kotler, Philip, et, al. 2000. Marketing Manajemen an Asian Perspective. Jakarta : Prentice Hall

[12] Kotler dan Keller. 2009. Manajemen Pemasaran. Jilid I. Edisi ke 13. Jakarta: Erlangga

[13] Storbacka, Kaj, Lehtinen, R Jamor, (2001) Customer Relationship Management Creating

[14] Competitive Advantage Through Win Win Relationship Strategies. New York: McGraw Hill, Inc

[15] Sugiyono. 2008. Metode Penelitian Kuantitatif Kualitatif dan R&D. Bandung : ALFABETA

[16] Yamin, Martinis.2013. Strategi dan Metode dalam Model Inovasi Pembelajaran . Jakarta : Gaung Persada Press group

[17] Zikmund, William G., McLeod Jr, Raymond., Gilbert, Faye W. (2003). Customer Relationship Management: Integrating Marketing Strategy and Information Technology. John Wiley and Sons Inc., USA.


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The Influence Of Reverse Logistic On Supply Chain Performance (A Case Study Of Food And Beverage

Industry In East Java)

ABSTRACT Reverse logistics has become an important issue and gaining attention of organizations due to increase flow of the return product. The purposed of this paper is to examine the Influence of Reverse Logistics on Supply Chain Performance mediated by product life cycle, case study of food and beverage industry in East Java, Indonesia. The design of this research conducted is a cross sectional study using explanatory methods, and trying to explain the interrelationships between variables through hypothesis testing. The numbers of samples used were 30 respondents are practitioners and expertise as those who have the authority to manage RL in food and beverage where located in East Java, Indonesia. This data analysis technique is using SPSS 22 and PLS (Partial Least Square). Based on the findings of this study that reverse logistics has significant influence on Supply Chain Performance mediated by of product life cycle.

Keywords Reverse logistics; Product life cycle; Supply chain performance; Indonesian Food and Beverage Industry.

INTRODUCTION Supply chains are undergoing radical transformations due

to the mega competition taking place on a global scale(Ravi & Ravi, 2006). Supply chain management is a relatively young discipline that extends logistics by integrating the management of operations with that of material and information flow (Handfield and Nichols, 1999). Its initial focus was economic sustainability, based on the premise that an integrated and efficient supply chain potentially minimizes monetary risks and increases profit (Fawcett, Magnan, & McCarter, 2008a, 2008b). To improve efficiency, the supply chain must use modern techniques and approaches, such as JIT purchasing, economic batch sizes, strategy inventory, reverse logistics, and third party logistics (Govindan, Palaniappan, Zhu, & Kannan, 2012). Logistics has been defined as that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from

point-of-origin to the point-of-consumption in order to meet customers’ requirement (CLM,1999). Moreover, which are many users will participate in this flow such as suppliers, manufacturers, retailers, and also customers. The behavior of firms with regard to the environment and corporate responsibility plays an increasing role in determining consumer choice (Hillenbrand, Money, & Ghobadian, 2013; Mohr & Webb, 2005). Firms are finding that they must deal with a high level uncertainty, which is not only technical in nature. It has been observed by companies that there is an increase in the flow of returns of the product due to product recalls, warranty returns, service returns, end-of-use returns, end-of-life returns, and so on (Ravi, Shankar, & Tiwari, 2005). With continuing pressures to reduce operating costs while often incurring additional costs brought about the environmental restrictions, firms must be concerned with the cost of returning materials associated with the products that they deliver(Alshamrani, Mathur, & Ballou, 2007).

Niza Nurmalasari Student of Master of

Management Department Universiti of 17Agustus 1945

Surabaya Indonesia niza.nurmala@

gmail.com

Nur Kamiliyah Firizqi Student of Master of

Management Department Universiti of 17Agustus

1945 Surabaya Indonesia nurkamiliyahf93

@gmail.com

Rino Ahmad Faizal Student of Master of

Management Department Universiti of 17Agustus

1945 Surabaya Indonesia rino.ahmadfaizal93

@gmail.com

Wiwin Widiasih Department of Industrial Engineering,Faculty of

Engineeering Universiti of 17Agustus 1945

Surabaya Indonesia wiwin_w@untag-

sby.ac.id


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Many firms were focused particularly on the supply chain activities to meet the customers’ demand that is forward supply chains and logistics. Product returns are increasingly issue in manufacturer and vendor which has received much attention. The concept of reverse logistics has received growing attention in the last decades, due to competition and marketing motives, direct economic motives and concerns with the environment(Kaynak, Koçoğlu, & Akgün, 2014). However, today supply chains are steadily implement reverse logistics strategies. According to the Ministry of Industry, the contribution of the food and beverage industry to the non-oil and gas industry GDP (Gross Domestic Product) reached 34.95 percent in the third quarter of 2017. This performance result made the sector as the largest contributor to industrial GDP compared to other sub sectors. In addition, these achievements have increased four percent compared to the same period in 2016. Meanwhile, its contribution to national GDP was 6.21 percent in the third quarter / 2017 or up 3.85 percent over the same period the previous year. Furthermore, from the development of investment realization, the food and beverage industry sector for domestic investment (PMDN) in the third quarter of 2017 reached 27.92 trillion rupiah, an increase of 16.3 percent compared to the same period in 2016. Meanwhile, for foreign investment amount to USD1.46 billion. Furthermore, according to a study from the Economist Intelligence Unit, Indonesia is the world’s second largest food waster, binning almost 300 Kg of food per person each year. The study, titled Fixing Food: Towards a More Sustainable Food System found that only Saudi Arabia is worse than Indonesia in food waste, throwing away 427 kg of food per individual on an annual basis. Worldwide, one third of all food produced annually is lost or wasted costing us around one trillion dollars. This problem is particularly sensitive in countries such as Indonesia, where millions of people still suffer from malnutrition. Precisely, 7.6 % of the 260 million populations suffer from malnutrition. In this aspect, Indonesia is only better than Ethiopia (32 %) and India (15.2 %). Food wastes can be attributed to a number of factors such as excess buying, premature harvesting, inadequate labeling and storage instructions, poor storage facilities and transportation, production errors, trial runs, packaging defects, and wrong weights and sizes (FAO, 2011; Vlachos, 2014) Based on the above phenomenon with the increasing number of food industries and through food waste is a serious and costly issue to the Indonesian government. The significant of reverse logistics in the food industry is evident in the requirement to provide quality and safe food to consumers without posing any threat on human health, wellbeing and the environment(Vlachos, 2014). The research contribution of this study is to review the relevant literature and propose framework of indicators to test the research objective of this study. The contribution to practice of this study is that it offers specific managerial implications based on previous study and suggestions to manage reverse food logistics that helps reduce waste throughout the food supply chain and increase value from returned products especially in East Java Food Industry.

LITERATURE REVIEW

1.1 Reverse Logistics in Food Industry

According to (Vlachos, 2014) the major challenge for reverse logistics in food industry relies on the perishable nature of food and agricultural product which have short shelf life and require fast and efficient logistics operations. Even the smallest deviation in an organoleptic characteristic may create a food safety incident and subsequently pose a possible threat to consumer’s health, is a clear indication that deviations from the promised food quality may harm public confidence and generate distrust even among loyal customers. Poor reverse logistics can have devastating legal and economic repercussions. The performance of reverse logistics is affected by many factors, which we found useful to review them under five research streams: food specific features, cost, competitive advantage, regulation and legislation, and information management.

1.2 Product life cycle (PLC) in reverse food

supply chains

(Madaan & Wadhwa, 2007) proposed PLC analysis as a tool to design analysis logistics operations and extract value from returned products.

Sustained that food quality management affects the supply chain performance (Van Der Vorst, Tromp, & Van Der Zee, 2009). Food quality elements are affected by many logistics functions such as packaging, loading techniques and handling, temperature-controlled transportation and warehouse. Referring to the food industry, supply chain performance is dependent on how effectively uncertainty is managed at three levels of the supply chain (Kumar & Nigmatullin, 2011):

• The retailer, which is influenced by demographic changes, competitive forces and inflation

• The distributor and manufacturer, which are affected by bullwhip affect

• Customer demand, which can have unpredictable patterns.

Figure 1: PLC position of reverse logistics (Source : Madaan &

Wadhwa, 2007)

The typical PLC is comprised of four phases (Figure 1); a product introduction phase that is characterized by investment


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in product research and development, a growth phase characterized by increasing production capacity and logistics channels, a maturity phase where process and cost efficiencies are typically implemented, and a decline phase where the focus is on product disinvestment (Madaan & Wadhwa, 2007).

1.3 Supply Chain Performance Metrics

Improving supply chain performance has become a challenge for companies aiming to sustain their competitive advantage (Cai, Liu, Xiao, & Liu, 2009; Estampe, Lamouri, Paris, & Brahim-Djelloul, 2013). The SCOR (Supply chain operations reference) model emphasizes the operational process and includes customer interactions, physical transactions, and market interactions. SCOR model has been increasingly adopted by the company to improve their supply chain (Huang, Sheoran, & Keskar, 2005).

(Vlachos, 2014) has been examined the reverse logistics performance by using Key Performance Indicators in the food industry, there are:

• Speed • Flexibility • Quality/Reliability • Sustainability: Economic Performance • Sustainability: Environmental Performance • Sustainability: Social Performance

Research Method The research method is basically a scientific way to get

data with specific purposes and uses (Sugiyono, 2017:2). Associative analysis aims to determine the influence or also the relationship between two or more variables, where this study is to know the influence of the reverse logistics on the supply chain performance mediated by of product life cycle. The type of research conducted is a cross sectional study using explanatory methods, and trying to explain the interrelationships between variables through hypothesis testing. The approach of this study used is quantitative, which includes the development of empirical models and measurements based on theoretical studies, data collection using questionnaires and Likert scale, then testing of the hypotheses built. Likert scale is used to measure attitudes, opinions and perceptions of a person or group of people about social phenomena (Sugiyono, 2013:132).

This study use non-probability techniques, where the sampling uses in this study is purposive sampling. Positive sampling technique is a sampling technique using certain considerations (Sugiyono, 2016:85). Samples taken are companies that implement reverse logistic system and the respondents are practitioners and expertise as those who have the authority to manage RL (i.e. expertise of logistics, warehouses, transportation / distribution, production, planning and production and inventory control, procurement and marketing) in food manufacturer companies located in East Java.

Table 1 present sample distribution of by the industry and supply chains and the questionnaire were distributed to 30 respondents. Moreover, Questions that address a sensitive subject (e.g., financial performance) may increase the potential for response bias. Therefore, this study avoided collecting sensitive data and information (Vlachos, 2014).

Table 1: Percentage of participation: forward logistics vs reverse logistics

Product Raw

Material Manufacture Distribution Retailing Other Total Non-dairy Product 0.00% 6.67% 0.00% 0.00% 0.00% 6.67%

Dairy Product 0.00% 3.33% 0.00% 3.33% 0.00% 6.67%

Noodle 0.00% 0.00% 3.33% 0.00% 0.00% 3.33%

Bakery 6.67% 3.33% 3.33% 0.00% 10.00% 23.33%

Biscuit 0.00% 13.33% 0.00% 0.00% 0.00% 13.33%

Snack 10.00% 10.00% 0.00% 0.00% 0.00% 20.00%

Frozen Food 3.33% 0.00% 6.67% 0.00% 0.00% 10.00%

Coffee 3.33% 0.00% 0.00% 0.00% 0.00% 3.33%

Other 0.00% 6.67% 0.00% 6.67% 0.00% 13.33%

Total 23.33% 43.33% 13.33% 10.00% 10.00% 100.00

%

RESULTS AND DISCUSSION We run SPSS 22 as samples test and run 2 tailed to paired differences between forward and reverse logistics with 6 performance measures. There were no significant differences in all dimensions of performance. This finding also support the argument that reverse logistics operations do not receive the required attention from managers who tend to focus on forward chains (Vaidyanathan and Yadong (2007) in Vlachos, 2014). Table 2: Paired samples test between forward and reverse

logistics

Paired Samples Test

Paired Differences

Paired Differences

t Sig. (2-tailed) Mean Std.

Deviation

Speed -.05633 .73196 -.422 .676 Flexibility .03400 .66472 .280 .781 Reliability and Quality -.03133 .47870 -.359 .723


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Sustainability: Economic .02300 .57335 .220 .828 Sustainability: Environmental -.11600 .63523

-1.000 .325

Sustainability: Social .21967 .74289 1.620 .116

To identify amongst variable we run PLS. The significant effects are those variables with a p-value ≤ 0.05 and had statistically significant effect on the result. Table 3: Path Coefficients with PLS

Path Coefficients

Original Sample

(O)

Sample

Mean (M)

Standard Deviatio

n (STDEV

)

T Statistic

s (|O/STDEV|)

P Values

RL * PLC -> SC Performance

1.201 0.260 0.567 2.118 0.045

PLC -> SC Performance

1.480 0.208 0.638 2.320 0.000

RL -> PLC 1.421 0.743 0.583 2.437 0.026

RL -> SC Performance

2.812 0.200 0.799 3.519 0.018

RL has a significant effect on the product life cycle and product life cycle on SC performance (table 2). In line with Vlachos (2014) that all food products go through the same stages of product life cycle which include:

• Introduction stage: characterized by low sales and low return rates

• Growth stage: characterized by increasing sales and customer returns

• Maturity stage: characterized by steady demand levels as well as customer returns

• Decline stage: characterized by new products entering the market resulting in decline sales of existing products.

RL on SC performance and RL on SC performance through product life cycle significantly affect (Table 2). With the company's ability to implement reverse logistics systems, companies can responsively in solving RL problems; especially in customer satisfaction is the important of the SC performance indicator. Moreover, with systems and procedures help companies solve RL problems more efficiently. These results support the findings of Vlachos (2014) that economic performance was found to be a significant performance goal for the reverse flow.

Figure 2: Path diagram analysis PLS

Discussion and conclusions The study examines the influence of reverse logistics on supply chain performance mediated by product life cycle in food industry, in East Java, Indonesia. Moreover, in their implementation of reverse logistics systems were improving their supply chain performance for the companies to be effective and efficient. The role of supply chain performance metrics or KPIs it can help the company to measures the performance of their supply chain system in achieving reverse logistics objectives related to cost containment and improved profitability. These findings are supported by the work Vlachos (2014).

Furthermore, it was recommended that the company implement the reverse logistics system and integrate all the functional area that affect or can be affected by the returned product especially in food industry in relies on the perishable which have short shelf life and require fast and efficient logistics operations in order more efficiently. Future researchers should evaluate between forward and reverse logistics with different modeling by considering the barriers affecting performance measurement in food and beverage industry in Indonesia.

REFERENCE Alshamrani, A., Mathur, K., & Ballou, R. H. (2007). Reverse

logistics: simultaneous design of delivery routes and returns strategies. Computers and Operations Research, 34(2), 595–619. https://doi.org/10.1016/j.cor.2005.03.015

Cai, J., Liu, X., Xiao, Z., & Liu, J. (2009). Improving supply chain performance management: A systematic approach to analyzing iterative KPI accomplishment. Decision Support Systems, 46(2), 512–521. https://doi.org/10.1016/j.dss.2008.09.004

Council of Logistics Management (CLM) (1999), 1999 Membership Roster, Bylaws, Article I, Council of Logistics Management, Oak Brook, IL, p. 506

Estampe, D., Lamouri, S., Paris, J. L., & Brahim-Djelloul, S. (2013). A framework for analysing supply chain performance evaluation models. International Journal of Production Economics, 142(2), 247–258. https://doi.org/10.1016/j.ijpe.2010.11.024

FAO. (2011). Global food losses and food waste - Extent, causes and prevention. SAVE FOOD: An initiative on Food Loss and Waste Reduction. https://doi.org/10.1098/rstb.2010.0126

Fawcett, S. E., Magnan, G. M., & McCarter, M. W. (2008a). a


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Three-Stage Implementation Model for Supply Chain Collaboration. Journal of Business Logistics, 29(1), 93–112. https://doi.org/10.1002/j.2158-1592.2008.tb00070.x

Fawcett, S. E., Magnan, G. M., & McCarter, M. W. (2008b). Supply chain alliances and social dilemmas: bridging the barriers that impede collaboration. International Journal of Procurement Management, 1(3), 318. https://doi.org/10.1504/IJPM.2008.017528

Govindan, K., Palaniappan, M., Zhu, Q., & Kannan, D. (2012). Analysis of third party reverse logistics provider using interpretive structural modeling. International Journal of Production Economics, 140(1), 204–211. https://doi.org/10.1016/j.ijpe.2012.01.043

Handfield, R.B., Nichols, E.L., 1999. Introduction to Supply Chain Management. Prentice-Hall, Upper Saddle River, NJ

Hillenbrand, C., Money, K., & Ghobadian, A. (2013). Unpacking the Mechanism by which Corporate Responsibility Impacts Stakeholder Relationships. British Journal of Management, 24(1), 127–146. https://doi.org/10.1111/j.1467-8551.2011.00794.x

Huang, S. H., Sheoran, S. K., & Keskar, H. (2005). Computer-assisted supply chain configuration based on supply chain operations reference (SCOR) model. Computers and Industrial Engineering, 48(2), 377–394. https://doi.org/10.1016/j.cie.2005.01.001

Kaynak, R., Koçoğlu, İ., & Akgün, A. E. (2014). The Role of Reverse Logistics in the Concept of Logistics Centers. Procedia - Social and Behavioral Sciences, 109, 438–442. https://doi.org/10.1016/j.sbspro.2013.12.487

Kumar, S., & Nigmatullin, A. (2011). A system dynamics analysis of food supply chains - Case study with non-perishable products. Simulation Modelling Practice and Theory, 19(10), 2151–2168. https://doi.org/10.1016/j.simpat.2011.06.006

Madaan, J., & Wadhwa, S. (2007). Flexible process planning approaches for sustainable decisions in reverse logistics systems. Global Journal of Flexible Systems Management, 8(4), 1–8. https://doi.org/10.1007/BF03396528

Mohr, L., & Webb, D. (2005). The Effects of Corporate Social Responsibility and Price on Consumer Responses. Journal of Consumer Affairs, 39(1), 121–147. https://doi.org/10.1111/j.1745-6606.2005.00006.x

Ravi, V., & Ravi, S. (2006). Reverse logistics operations in paper industry: a case study. Journal of Advances in Management Research. Retrieved from http://dx.doi.org/10.1108/97279810680001248

Ravi, V., Shankar, R., & Tiwari, M. K. (2005). Analyzing alternatives in reverse logistics for end-of-life computers: ANP and balanced scorecard approach. Computers and Industrial Engineering, 48(2), 327–356. https://doi.org/10.1016/j.cie.2005.01.017

Sugiyono. 2013. Metode Penelitian Pendidikan Pendekatan Kuantitatif, Kualitatif, dan R&D. Bandung: Alfabeta

Sugiyono. 2016. Metode Penelitian Kombinasi (Mixed Methods). Bandung: Alfabeta

Sugiyono. (2017). Metode penelitian pendidikan pendeketan kuantitatif, kualitatif, dan R & D (revisi ke). Bandung: Alfabeta

Van Der Vorst, J. G. A. J., Tromp, S. O., & Van Der Zee, D. J. (2009). Simulation modelling for food supply chain redesign; Integrated decision making on product quality, sustainability and logistics. International Journal of Production Research, 47(23), 6611–6631. https://doi.org/10.1080/00207540802356747

Vlachos, I. P. (2014). Reverse food logistics during the product life cycle. International Journal of Integrated Supply Management, 9(1/2), 49. https://doi.org/10.1504/IJISM.2014.064356


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The Determinant Factors of Workplace Ergonomics for Aging Workplace

Nurdiana Syahira Bt Mohd Badrul

Faculty of Business Management

Universiti Teknologi MARA dianabadrul95@gmail

ABSTRACT

This study explores how the workplace ergonomics affect job performance among aging workforce. Purposive sampling will be used to collect the data as it is more focused towards aging workforce. Bank Muamalat Malaysia Berhad has been chosen for distribution of data. Previous studies focused on ergonomics among workers but not specific towards aging workforce. This study aims on how to increase or maintain older workers’ job performance by providing better workplace ergonomics.

Keywords Job Performance, Workplace Ergonomics, Aging Workforce

INTRODUCTION Every single organization requires human resource to manage the employees in every levels and departments to ensure the continuance smoothness of its operation. Since every employee has their own “character”, human resource personnel especially, plays an important role in dealing with their needs as well as fulfilling their satisfaction. Nevertheless, the employees’ satisfaction affects directly to their performance. Apart from that, employees are considered as a very important ‘tools’ to help the company and organization to achieve more in their business (Ching et al., 2016). Since workplace environment plays a major role towards the employees’ performance, there are quite a number of researches on workplace ergonomics and job performance has been done but it is not specific towards the aging workforce. Job performance is important as it plays a major role in determining the productivity of the organization and the country itself. Based on Productivity Report 2016/2017 by Malaysia Productivity Corporation (MPC), Malaysia’s labor productivity expanded by 3.5% in 2016 to RM78,218 from RM75,548 in 2015. While manufacturing contributes the highest contribution of productivity at RM106,647 and with a growth of 1.4%, services sector was the second highest with a level of RM68,166 and growth of 2.8%. Older workers or aging workforce clearly has more experience and knowledge to deal with work issue and make decision rather than younger workers thus sometimes they are needed even though they have reached beyond their retirement age due to their expertise.

Furthermore, the rate of aging workforce is increasing day by day. According to (Sewdas et al., 2017), older workers are ranged 65 years and above. In Malaysia, the mandatory retirement age for employees are at the age of 60 years old. However, there are still quite a high number of old people working after the retirement age. “The number of Malaysians aged 60 years and above is projected to reach 3.5 million in 2020 and 6.3 million in 2040 which is about 20 percent of the total population,” SSRC director Professor Datuk Norma Mansor said, Bernama (2017, October 6) More Malaysians Opt to Stay in Active Employment After Retirement – Study. The New Straits Time. Retrieved from

https://www.nst.com.my. Thus, the older the worker, the more concern on ergonomics issues need to be see to ensure the continuity of excellent performance and productivity of the aging workforce.

Ergonomic is basically an important factor to ensure employees are comfortable to do their work. It is a common understanding that all workers need a comfortable work station and surrounding to be able to perform their work especially those whom are working in the office. According to Rowan & Wright (1995), ergonomics refers to the complex relationship between workers and their work that permeates every aspect of the workplace as cited by (Mohd Makhbul, Abdullah, & Senik, 2013). The ergonomic process is basically aimed at prevention of work place illness and development of best possible workplace design (Omar et al., 2016).

Problem Statement Many researches have been done on ergonomics but there is lack or limited research has been done that is solely done on aging workforce. For aging workforce, researches usually focused on how to promote health awareness, prevent risk and accident at the workplace and relate how the environment can affect the productivity of aging workforce. Therefore, the purpose of this research is to investigate how workplace ergonomic factors can affect aging workforce.

Many companies do not employ appropriate safety approaches and procedures to protect and promote healthy behavior in older employees (Canning & Bloom, 2012; Loeppke et al., 2013) as cited by (Delloiacono, 2015). The company that took this issue lightly are exposing their employees with high risk of accident and chronic diseases. As a person gets older, metabolism and body capability


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will be lower. Employee especially older workers need to take care of their health so that they are able to perform well. An organization cannot operate if there is lack of employees that is responsible to perform their duty. In simple words, sick employees will apply sick leave thus, reducing the number of work force.

Each year about 270 million occupational accidents and 160 million occupational diseases occur in the world, as reported by the International Labour Organization (Rahim, Ng, Biggs, & Boots, 2014)). Older workers are more exposed with risk due to their conditions. Care and prevention must be prioritized to all workers especially to older employees. This research will study the risk exposed for older workers in Bank Muamalat Malaysia Berhad and how to prevent accidents and diseases. Furthermore, if accidents and diseases occurred, company need to spend quite an amount of money as medical nowadays is expensive.

Research Objectives

a) To investigate the relationship between human and job performance.

b) To investigate the relationship between machine and job performance.

c) To determine whether there is a relationship between work area and job performance.

d) To determine whether there is a relationship between environment and job performance

e) To determine whether there is a relationship between workplace ergonomic factors and job performance in Bank Muamalat Malaysia Berhad. Significance of Study The findings of this study will redound to the benefit of society considering that the percentage regarding aging workforce in Malaysia are getting higher year by year. Organizations in Malaysia need to educate employees in safety and health to ensure the percentage of accidents and diseases decrease every year. Thus, with this study, organizations in Malaysia such as Bank Muamalat Malaysia Berhad are able to determine the working ergonomic factors that affect job performance of aging workforce in this organization. While Human Capital Division as well as Security and Safety Department in Bank Muamalat Malaysia Berhad will be able to reduce these problems among its employees as well as able to offer the employees with better surrounding, work station and accommodate tools that caters better to older workers.

LITERATURE REVIEW Job Performance

According to Sinha (2001) as cited by (Naharuddin & Sadegi, 2013), that employees’ performance is depending on the willingness and also the openness of the employees itself on doing their job. There are several ways to separate performance which are employee performance and organizational performance (Otley, 1999) as cited by (Ching et al., 2016). Otley is also stated that the organizational performance is not only based on the employee performance (job performance), but it is also based on the other

factor such as working environment in organization. Truly, employee’s job performance is the core in determining the organization’s performance as well as the country’s performance and productivity. Performance is an ability (both physical & psychological) to perform a particular task in a specific method that can be evaluated as excellent, average or low in scale (Raza et al., 2014).

In the case of aging workforce, performance of old workers may vary based on their motivation. There is some research has been done that stated that performance of older workers tends to be lower than young workers. This is due to changes in their physical and ability. According to (Fox, Brogmus, & Maynard, 2015), in many jobs, experience, quality and learned efficiencies make older workers more productive than younger workers. This one of the reasons why nowadays most of older workers are the key personnel in the organizations and it is rare to see young workers are able to compete with these factors. Sometimes, trade-off results in higher quality work at lower speed from older workers.

3.2 Ergonomics

Ergonomics is derived from the combination of two Greek words, ergon (work) and nomos (natural laws). Ergonomics defined by Fernandez (1995) is the design of the workplace, equipment, machine, tool, product, environment and system taking into consideration the human’s physical, psychological, biomechanical, and psychological capabilities, and optimizing the effectiveness and productivity of work systems while assuring the safety, health and wellbeing of the workers as cited by (Mohd Makhbul et al., 2013). Ergonomics are made fundamentally to design job to fit all workers. (Fox et al., 2015), stated that most guidelines already consider the older worker, including guidelines for manual materials handling, repetitive motion and control or display selection. When designing workstations, the main variables of ergonomic considerations involve the human, in regards to body posture and health, the machine in terms of tools suitability and maintenance, the work area, which includes but is not limited to working chair and work area design and the work environment, which includes factors such as humidity, acoustics, lighting, shiftwork and working hours (Mohd Makhbul et al., 2013).

3.2.1 Human

A human being regarded as an individual is called a person and employees are all human. Components in human are body postures, health, garment and exercise. All these are the components lies in factor for human. Body posture can lead to work stress (Tarcan et al., 2004) as cited by (Mohd Makhbul et al., 2013). Some research has been made and proved that wrong body posture can lead to many diseases and body pain. As cited by (Studebaker & Murphy, 2014), they stated that the poor posture often associated with the seated position can place increased demands on the postural muscles of this region (Trujillo & Zeng, 2006).

According to US Department of Labour, Awkward postures, or unsupported positions that stretch physical limits, can compress nerves and irritate tendons and cause musculoskeletal disorder (MSD) at parts such as arms, hands, fingers, neck, back, wrists, legs


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and shoulders. That includes mostly all parts of the body. Body postures indirectly relates to health as wrong body postures leads to various pains. Health not only covers body pains or body ache but it covers diseases whether it is chronic diseases or minor diseases. CDC (Ward & Schiller, 2013) reports that more than 60% of persons age 65 and older have at least two of 10 leading chronic medical conditions (hypertension, coronary heart disease, stroke, diabetes, cancer, arthritis, hepatitis, weak or failing kidneys, chronic obstructive pulmonary disease or asthma) as cited by (Fox et al., 2015) It is not impossible that garments play an important role in ergonomics. Changing in body figure can make someone feels uncomfortable wearing their own clothes. Clothing can play an important role in helping older adults maintain a positive self-image in the midst of overwhelming change (Gupta et al., 2013). They also stated that aesthetics, fit, comfort, ease of wear, price and ease of personal care are common concerns for this class of users. There are also research on ergonomic garments by Rudolf, A., 2017. Rudolph studies involved ergonomic garments that were developed using virtual prototyping, sewn and tested by IMP. There is a great gap in the fashion industry that fails to provide garments adapted to the positional constraints of different tasks, especially when users are seated due to most clothing are designed for people who are walking or standing (Bragança, Fontes, Arezes, Edelman, & Carvalho, 2015).

Exercises are no doubt is one of the most important activity in daily life no matter if you are young or old. It helps to maintain healthy body and lifestyle. Exercise, habitual activity and genetic endowment all play a role in how much or how little strength changes with age and in most cases, factors such as exercise and regular or habitual activity can slow down or moderate some of the decline in physical capacities (Fox et al., 2015). Not only that, a recent study which concluded that regular stretching exercises performed for four weeks can decrease neck and shoulder pain (Shariat et al., 2018). This recent study proved that exercise is beneficial towards human.

3.2.2 Machine Tools is the only component in machine. Tools in specific is device, gadget or appliances used in the workplace. For example, computers, mouse and keyboard. According to US Department of Labour, the usage of improper tools and poor machine design can create physical stress on workers’ bodies, which can lead to injury. In relation to machines, research demonstrates that injuries at the workplace occurred because of tools used by employees in performing their tasks (Wickens, Lee, Liu & Becker 2004) as cited by (Mohd Makhbul et al., 2013).

3.2.3 Work Area Work area consists of two components which are work chair and work area design. Work area design is the most crucial part in ergonomic since it will determine whether the employees are comfortable or uncomfortable. Work area design is strongly connected with working environment. Work chair is one of the tools used in work area. In fact, it is one of the most important tools as employees will spend most of their time sitting while doing work. According to (Studebaker & Murphy, 2014), a chair with a deeper seat pan is thought to create increased compression of the popliteal fossa of the posterior knee, limiting blood flow by

reducing the lumen size of the popliteal artery during the time spent sitting. Who would have thought a simple act such as sitting can give a negative effect to health.

3.2.4 Environment Humidity, acoustic, lighting, shiftwork and working hours are the components in environment. Employees interact with work environment (Fak, Kaya, Merve, & Necla, 2015). Moreover, they also stated that by having a proper workplace environment, it helps in reducing the number of absenteeism and thus can increase the employees’ performance which will leads to the increasing number of productivity in the workplace (Boles, et al., 2004) as cited by (Naharuddin & Sadegi, 2013). According to Department of Occupational Safety and Health, environmental factor has considerable effect on human performance and may lead to poor work enthusiasm including productivity. Examples of environmental factors are extreme temperatures, lighting and noise. Long working hours and insufficient rest can result in chronic fatigue (Ahasan 2002), and, expectedly, extreme fatigue will lead to stress (Savery & Luks 2000; Tucker 2003) as cited by (Mohd Makhbul et al., 2013). Thus, every each of the components play an important role in affecting a worker’s performance.

CONCEPTUAL FRAMEWORK

RESEARCH DESIGN Purposive sampling will be used for this research. It is a non- probability sampling that is selected based on characteristics of a population and the objective of the study. Purposive sampling is also known as judgmental, selective, or subjective sampling.

REFERENCES Bragança, S., Fontes, L., Arezes, P., Edelman, E. R., & Carvalho,

M. (2015). The Impact of Work Clothing Design on Workers’ Comfort. Procedia Manufacturing, 3(Ahfe), 5889–5896. https://doi.org/10.1016/j.promfg.2015.07.898

Ching, M., Wei, C., Ong, S., Nien, K., Sin, T., Wong, H., & Loon, S. (2016). the Impact of Motivation on Employees’ Job Performance At Prudential Assurance Malaysia Berhad in Seberang Jaya, Penang, (August).


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Delloiacono, N. (2015). Musculoskeletal Safety for Older Adults in the, (February), 48–53. https://doi.org/10.1177/2165079915570299.

Fak, B., Kaya, E., Merve, M., & Necla, Z. (2015). ERGONOMICAL ANALYSIS OF WORK ENVIRONMENTS OF, 1, 82–106.

Fox, R. R., Brogmus, G. E., & Maynard, W. S. (2015). Aging workers & ergonomics: A fresh perspective. Professional Safety, 60(1), 33–41.

Gupta, D., Das, A., Jain, V., Soneja, T., Dang, P., & Srivastava, P. (2013). Design of Ergonomic Garment for Elderly Indian Women. Research Journal of Textile and Apparel, 17(3), 118–127. https://doi.org/10.1108/RJTA-17-03-2013-B012

Mohd Makhbul, Z., Abdullah, N. L., & Senik, Z. C. (2013). Ergonomics and stress at workplace: Engineering contributions to social sciences. Jurnal Pengurusan, 37, 125–131.

Naharuddin, N. M., & Sadegi, M. (2013). Factors of Workplace Environment that Affect Employees Performance: A Case Study of Miyazu Malaysia. International Journal of Independent …, 2(2), 66–78. https://doi.org/10.1108/09574090910954864

Omar, M. K., Dahalan, N. A., Mohammed, I. H., Shah, M. M., Nadiah, N., & Azman, M. (2016). Supervisor Feedback , Ergonomics and Job Performance : A Study at One of Malaysia ’ s Frontline Government Agency, 6, 71–75.

Rahim, N. A., Ng, H. K., Biggs, D., & Boots, K. (2014). Perception of safety, physical working conditions and stress between Malaysia and united kingdom. International Journal of Business and Society, 15(2), 321–338.

Raza, H., Anjum, M., Zia, S. M., Behavior, J. P., Culture, O., & Productivity, O. (2014). The Impacts of Employee ’ s Job Performance Behavior and Organizational Culture on Organizational Productivity in Pharmaceutical Industries in Karachi . Journal Of Contemporary Research In Business, 5(12), 385–401.

Sewdas, R., De Wind, A., Van Der Zwaan, L. G. L., Van Der Borg, W. E., Steenbeek, R., Van Der Beek, A. J., & Boot, C. R. L. (2017). Why older workers work beyond the retirement age: A qualitative study. BMC Public Health, 17(1), 1–9. https://doi.org/10.1186/s12889-017-4675-z

Shariat, A., Cleland, J. A., Danaee, M., Kargarfard, M., Sangelaji, B., & Tamrin, S. B. M. (2018). Effects of stretching exercise training and ergonomic modifications on musculoskeletal discomforts of office workers: a randomized controlled trial. Brazilian Journal of Physical Therapy, 22(2), 144–153. https://doi.org/10.1016/j.bjpt.2017.09.003

Studebaker, C. D., & Murphy, B. P. (2014). Current Concepts on the Physiological Effects of Seated Postures at Work. Profesional Safety, (September), 42–49.


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The Satisfaction of Characteristic Intention on Customer

Relationship Management Performance among SME’s Delivery Service.

Muhd Fairos Mohd Shah Universiti Teknologi MARA

Shah Alam Selangor. [email protected]

Samsudin Wahab

Universiti Teknologi MARA Shah Alam Selangor.

[email protected]

Norhayati Hussin

Universiti Teknologi MARA Shah Alam Selangor.

[email protected]

ABSTRACT SME development plays an important role as a catalyst for the country's economic growth. In an effort to transform Malaysia into a developed and high-income nation, the Government will continue to provide solid support to SME companies so that the number of innovative and high-growth SMEs can be increased thus boosting their contribution to the country's economic growth. Objective this study to investigate customer intention that influence on customer relationship management performance logistic service provider. The populations of this study are customers from a logistic service company located in Penang, Selangor and Johor Bharu. Simple random sampling method was used to select respondents from the target populations. Only 391 respondents that consumed the logistic services answered the questionnaires and this applied research by analysis SPSS Software. Additional study has exposed that key managerial insinuations that will permit management of SMEs to appreciate increasingly and extremely diverse CRM practices.

Keywords “Customer Intention, CRM, SME, Transport service”.

INTRODUCTION The sympathetic of consumer behaviour assistances to see the influence of situation and other exterior factors on the behaviour of consumers. The mainstream of factors that effect buyer behaviour layoff be skilful by marketers and advertisement, but they stagnant have to be careful while sympathetic the difficulty of the issue. Category of consumer behaviour controls consumer’s purchasing

decisions. Purchase satisfaction is the relation of the potentials of the buyer and the real abilities of the product (Shah et al.,2017). The grade of customer satisfaction hinge on the choice to re-purchase and appraisals about the element among friends and connections.

To preserve the customer satisfied, advertisement creator must loyally reproduce the tangible and the probabilistic characteristics of goods. Some provider may to range even minimize the item qualities so the customer accepts certain desire of purchase. Satisfaction or obstruction of the consumer controls one’s next steps. If a customer is satisfied with the purchase, greatest possible customer will buy this product for a second time. Unsatisfied customer reacts quite differently. A customer can simply stop buying this product and warn all friends and acquaintances (Shah et al., 2018).Good intentions from consumers can provide good product release feedback. This is because the best-selling product is the product that gets good feedback from users and is a repeat user. Also, good product will be the most sought after product by the consumer because of the benefits in the product (Shah et al., 2017).

1.1 Objectives Of The Study The objectives of this study are as follow: 1. To investigate the effect of customer intention on customer relationship management performance of SME’s delivery.

1.2 Customer Relationship Management Performance The perception of customer satisfaction is a multifarious of a large number of mechanisms, which contrast for dissimilar businesses and consumers (Shah et al., 2017) .To achieve this multifarious, one must first classify its precise mechanisms and only then mark an effort to uphold them at the good level. Satisfaction is related with the individual perception of how the customer meets the needs or the opportunities of a specific consumer. And the likeness of the

Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. To copy otherwise, or republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee. Conference’04, Month 1–2, 2004, City, State, Country. Copyright 2004 ACM 1-58113-000-0/00/0004…$5.00.


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quality of goods in the consumer’s attention can be established or not established by the actual situation. In the last situation, consumers touch dissatisfaction. At the similar period, the relationship between customer satisfaction and effectiveness of a delivery service company is generally recognized (Shah et al., 2016). The significant to achievement of a delivery service company in the marketplace is satisfied customer who is loyal to the logistic company .Deprived of precise dimension of customer satisfaction managers cannot make actual conclusions about what needs to be enhanced for products and services. Only if roughly is measured, it can be accomplished.

CUSTOMER INTENTION An intention can be definite as a individual’s promise, strategy, or choice to transport out an act or realise a goal. Some of the factors that shake purchase intention are variety name, product quality and price (Rizwan, Qayyum, Qadeer, and Javed, 2014). Since the buying power of Malaysian will increase, they will start to search for brand name product to show their status. Even if the product come at greater price, they will be willing to pay for it because they believe that it will elevate their status and the product is a good quality product. Good intentions from consumers can deliver decent product to announcement response (Shah et al., 2016). This is because the successful product is the product that gets good feedback from users and is a repeat user. Also, good product will be the most sought after product by the consumer because of the benefits in the product.

The readiness of a customer to buy a positive product or a positive service is identified as purchase intention. Purchase intention is a mediating variable that be influenced by on numerous outside and inside factors (Rana et al., 2015).Incentive or activate is the signal that activates a buyer towards bearing in mind a product or a brand to be comprised in their attention customary. This strength be the characteristics of a product or simply its service of packaging. Consequence anticipation is the outcome predictable out of the use of a product or a service. Ambitious price is the product strength satisfy some ambitions of a buyer. At the same time Shah et al.,(2016) added that reference by a trust well-intentioned or consistent source of passionate relationship is being expressively related with a product or a service to the brands. Good intentions from consumers can provide good product release feedback. This is because the bestselling product is the product that gets good feedback from users and is a repeat user. Also, good product will be the most sought after product by the consumer because of the benefits in the product

CUSTOMER RELATIONSHIP MANAGEMENT PERFORMANCE AND CUSTOMER INTENTION. Consumer behavior can be deliberate with the assistance of market research. This is done by showing consumer behavior, the study of intentions and influences characterizing the customer needs and the ways of gathering those. On top of that, the behaviour of consumers can be influenced. Promoting can have a solid influence on the motivation and behavior of consumers. This can be realised by providing that the products obtainable are certainly a means of satisfying customer needs (Rana et al., 2015). At the same time there must be no process of consumers’ behavior. Lastly, Shah et al (2017) it is vital to remember that consumer behavior is socially genuine due to the detail that consumer authority in a market

economy is grounded on a number of rights. In specific, consumers are permitted to pertinent and consistent information about the company, which is produces goods or provides a range of services. Consumers are also officially safe from imbalanced competition in advertising of unsuitable advertising that is able to misinformed consumers. The observation of genuine rights and benefits of consumers is a significant task not only for the humanity, but also for individual intention. Community rightfulness of consumer rights is a promise to encounter their needs (Shah et al., 2017).

THEORETICAL BACKGROUND FOR THE MODELS Logistic service provider SMEs are progressively looking for to instrument Customer Relationship Management in order to discovery a good benefit on which to base business prospects for long life. In this modest world market, Logistic service provider SMEs play an important character in the national economies by providing that job opportunities, improving trades of the company and also preparing goods intention to other business industries (Fishbein, M., & Ajzen, I. 2010), Attitude is a stands for a individual's general sensation of favourableness or unfavourableness’ near a perception. Therefore it represents the volume of affect (Fishbein and Ajzen, 1975). The attitude toward behaviour reflects behavior as a concept, it "characterises the person's overall feeling of favourableness or unfavourableness for the behavior in demand"(Ajzen and Fishbein, l980). Based on Theory Reason Action, the first element of individual intention to act, as stated earlier, is the attitude.Refering to Ajzen and Fishbein, attitude towards behavior is the approximation of positive or negative self-evaluation in relation to a certain behavior. So Theory of Reasoned Action (TRA) was adapted in this studies and displays a strong predictor of actual behavior in different locations. All these categories of behaviors can be accounted by adapted the TRA theory and last but not least Fishbein & Ajzen (1975) proposed the perfect underneath to present and support the impression of numerous authors on the significant of customer intention in realizing Customer Relationship Management Performance in the organization.

Figure1.TheTheoryofReasonedAction(TRA)(Source:Fishbein&Ajzen(1975)


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THEORETICAL FRAMEWORK Prototypical proposed that present research a technology strategy as the determinacy of Customer Relationship Management Performance models for SMEs in Malaysia. The complete models proposed are as follows.Refering to Mackinnon, D. (2008) mediating variable is represent by customer intention.

Hypotheses Development Shah,et al (2016),Shah et al (2017),Shah et al (2018),(Rizwan, Qayyum, Qadeer, and Javed,2014) and Rana et al., (2015) at historical research was explored the character of customer value in customer intention. Nearby that it is a positive significant relationship between customer intention and customer relationship management performance. For that reason, we hypothesized that:

Hypothesis There is a significant relationship between customer intention and Customer Relationship Management Performance.

METHODOLOGY This research is experimental test as well as correlational research in nature. Questionnaire survey was passed out for this research and dispersed to the respondents that consume logistic service provider .Population is a mark groups any the individual person or the customer on the logistic service provider. The mark population of this study were three hundred and ninety one respondent from Selangor,Johor Bharu and Pulau Pinang on L,M and N transport delivery service. Permitting to Hair et al (2010), the quantity of respondents in pilot test would be at more than thirty as well as fitting and acceptable for analyses which are bigger than hundred samples as recommended by (Hair,Black,Babin and Anderson 2010). In statistics, normality tests are used to regulate if a data set is well-modeled by a normal distribution and to calculate how apparent it is for a random variable fundamental the data set to be normally distributed. In descriptive statistics rapports, one measures a goodness of fit of a normal model to the data and if the fit is poor then the data are not well modeled in that respect by a normal distribution, without making a judgment on any underlying variable (Henry C. Thode, Jr. 2002)( Sürücü, Barış 2008).

Research Finding Table 1. Tests of Normality Customer Relationship

Management Performance. Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig.

ci4 0.271 391 0.000 0.859 391 0.000

ci2 0.266 391 0.000 0.864 391 0.000

ci3 0.261 391 0.000 0.851 391 0.000

crmp1 0.258 391 0.000 0.83 391 0.000

crmp5 0.303 391 0.000 0.829 391 0.000

crmp2 0.268 391 0.000 0.828 391 0.000

crmp3 0.284 391 0.000 0.835 391 0.000

crmp6 0.309 391 0.000 0.817 391 0.000

crmp8 0.271 391 0.000 0.831 391 0.000

a. Lilliefors Significance Correction Mardia, K. V. (1970) state that,this study concludes Shapiro–Wilk has the best power for a given significance, followed closely by Anderson–Darling when comparing the Shapiro–Wilk, Kolmogorov–Smirnov, Lilliefors and Anderson–Darling tests. Conferring to the customer relationship management statistic, calculating the normality assumption wished be involved into interpretation for using parametric statistical tests. It is recovering that normality be measured for both visually and through normality tests, of which the Shapiro-Wilk test, delivered by the SPSS software, is highly recommended. The normality supposition also needs to be considered for validation of data presented in the literature as it shows whether correct statistical tests have been used. Therefore referring to customer relationship management statistic it showed that Kolmogorov-Smirnov and Shapiro-Wilk is significance .000.

CONCLUSION Customer Relationship Management or CRM is used in managing a company’s interactions with prospective customers and current customers. It is a strategy designed to help companies increase their productivity and improve customer satisfaction and retention (Chen and Popovich 2003). This strategy is very powerful as it provides a comprehensive view and it helps monitor previous interactions, pending invoice, status of orders and many others. Many businesses are using CRM software in tracking data of individual clients.Wahab et al.,(2017) add that another characteristic by knowing the data of each client is necessary so that the sales team will know the information needed in dealing with their customers. Having the necessary information is useful so that each customer will be given individualized service. Even though it is conceivable to define consumer behaviors in particular market, they cannot be attuned to the product. On the conflicting, each product has to outfit to the supplies and stresses of consumers on a market. While numerous of the factors determining consumer behavior cannot be prejudiced they motionless have to be studied in order to understand the customer profile and individualities of buying behaviors in specific market. Affording to these behaviors products and services can be attuned in order to suit the major needs of customers. As a consequence, the study of buying behaviors will not only upsurge the sales, but also increase the satisfaction heights amongst product customers. Hence, without the understanding of customer behavior and purchase patterns it is very durable to attain high satisfaction levels of customers.

Mediating

DVDependentVariable

CustomerIntentio

CustomerRelationshipManagement

Figure2:Theoreticalframework


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REFERENCES Chen and Popovich (2003) Understanding customer relationship

management (CRM) Business Process Management Journal;9 (5), 672-688.

Fishbein, M., & Ajzen, I. (1975). Belief, attitude, intention and behaviour: an Introduction to theory and research, Addison-Wesley, California.

Fishbein, M., & Ajzen, I. (2010). Predicting and changing behaviour: The reasoned action approach. Psychology Press. New York.

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Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E.(2010), Multivariate Data Analysis, A Global Perspective.7th ed.New Jersey:,Pearson Education Inc.

Krejcie,R.V. and D.W.Morgan,(1970). Determining Sample Size for Research Activities. Educational and psychological measurement, 30, 607-610.

Mackinnon, D. (2008). Introduction to statistical mediation analysis. New York: Taylor & Francis Group.

Mardia, K. V. (1970). Measures of multivariate skewness and kurtosis with applications. Biometrika 57, 519–530.

Muhamad Fairos Mohamad Shah,Samsudin Wahab,M. Hussin Abdullah(2018) Characterising of Customer Relationship Management and corporate entrepreneurship: A Case Study in a Malaysia logistic service. The 5th IBSM International Conference on Business, Management and Accounting. Paper Code : M13 – 136.145-153.

Muhamad Fairos bin Mohamad Shah,Samsudin b Wahab,Mohd Subri b Tahir (2017). The Contributing Factor of Technology Strategy on Customer Relationship Management Performance: A Pilot Study among SME’s Logistic Operators.The 4th World Conference on Islamic Thought and Civilization,147-154; Journal of Thaqafah,Retrieved from http://www.wcit.my.

Muhamad Fairos bin Mohamad Shah,Samsudin b Wahab,Norhayati bt Hussin(2018).The contributing Factors of Business Process Strategy on Customer Relationship Management Performance: A Pilot Study among SME’s logistic operator.3rd International Conference on Information Science,006;22 The Journal of fundam.App.Sci;10(5s)841-850.Retrieved from http://www.ipneducationgroup.org/.

Muhamad Fairos bin Mohamad Shah,Samsudin b Wahab,Mohd Subri b Tahir (2017). The Contributing Factor of Technology Strategy on Customer Relationship Management Performance: A Pilot Study among SME’s Logistic Operators.The 4th World Conference on Islamic Thought and Civilization,147-154; Journal of Thaqafah,Retrieved from http://www.wcit.my.

Muhamad Fairos bin Mohamad Shah,Samsudin b Wahab,Norhayati bt Hussin(2017).The contributing Factors of Business Process Strategy on Customer Relationship Management Performance: A Pilot Study among SME’s logistic operator.3rd International Conference on Information Science,006;22 The Journal of Services Marketing;Retrieved from http://www.ipneducationgroup.org/.

Muhamad Fairos bin Mohamad Shah, Samsudin bin Wahab (2017), The Contributing Factors of Location Strategy on Customer Relationship Management Performance: A Pilot Study among SME’s Logistic Operators, National Conference on Creativity in Education and Humanities. OP54, Journal of Economics, Business and Management Retrieved from http://www.ncc2017.usm.my/.

Muhamad Fairos bin Mohamad Shah, Samsudin b Wahab.(2017),The Mediating Effect Of Customer Intention Toward Customer Relationship Management Performance Among Malaysia Logistic Service Industries, International Conference Islam Borneo (X), (Ekp 007), International Journal of Entrepreneurial Behaviour & Research Retrieved from://www.kaib.com.my/

Muhamad Fairos b Mohamad Shah, Samsudin b Wahab, Mohd Subri b Tahir (2016). The determinant of Supplier 2 Customer Relationship Management Performance Model for SMEs.International Conference on Post Graduate Education (ICPE-7); T02,47,(36) 1284-1293. Journal of Information, Knowledge and Management Retrieved from http:// www.ipsis.uitm.edu.my/icpe7//.

Muhamad Fairos b Mohamad Shah, Samsudin b Wahab, Mohd Subri b Tahir (2016). Customer-Supplier Relationship Management Performance Model for SMEs: The Integration of Financial and Technology Strategy. Advances in Business Research International Journal, 2 (2), 567.Retrived from:www.abric2016.uitm.edu.my/

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The Moderating Role of Work Involvement in Influencing the Relationship between Person-Environment Fit and

Organizational Citizenship Behavior among Public Service Employees

Ayu Kamareenna Abdullah Thani

Faculty of Business and Management Universiti Teknologi MARA Shah Alam,

Selangor, Malaysia [email protected]

Abdul Kadir Othman

Faculty of Business and Management Universiti Teknologi MARA Shah Alam,

Selangor, Malaysia [email protected]

ABSTRACT Studies have put considerable effort to examine the influence of person-environment fit on organizational citizenship behaviour (OCB). However, the findings indicate that the direct relationship is not always satisfactory. Therefore, this study decided to introduce work involvement as a moderator to clearly explained the influence of person-environment fit and OCB. A total of 376 questionnaires were distributed and 371 questionnaires were returned, giving a response rate of 98.67%. The SPSS was used for the analysis. Person-environment fit consists of person-job fit, person-organization fit, person-group fit and person-supervisor fit. The results of this study show that work involvement moderates the relationships between person-job fit and OCB, person-organization fit and OCB and person-supervisor fit and OCB. The implications of the study are discussed in the paper.

Keywords “Person-Environment Fit, Job Performance, Organizational Citizenship Behavior (OCB) and Work Involvement”.

INTRODUCTION The issues pertaining to job performance of Malaysia public services have been discussed critically in the previous studies (e.g., Johari, Yahya & Omar., 2012; Nayan, 2012). Poor performance of public servants is due to lack of communication skills, lack of leadership commitment to manage the human resource at the agency level, high resistance to change, problems to handle and deal with individuals with poor performances because of the lack of an exit policy, decision making process which is over centralized, lack of a systematic succession planning that leads to uncertainty in career paths and last but not least, the lack of focus particularly on the management of human resources by the top management of the agencies.

It has been observed that although there are great efforts that have been put on the reformation of public servants’ performance, public service is still far behind from achieving the intended results especially when it involves the quality of the service as well as its delivery (Johari, Che Mit & Omar, 2010). This issue is

obviously seen when the Ministry of Home Affairs recorded the highest number of formal complaints by the public from 2011 to 2016 as compared to other 25 ministries in Malaysia. According to Public Complaints Bureau (2011), Ministry of Home Affairs had received a total of 1,386 complaints. Meanwhile, in 2012, the Ministry of Home Affairs received a total of 1,246 complaints (Public Complaints Bureau, 2012). The number of complaints decreased to 1,186 complaints in the year 2013 (Public Complaints Bureau, 2013). In 2014, the number of complaints slightly dropped to 1,176 (Public Complaints Bureau, 2014). In the following year, the Ministry recorded 1,192 complaints (Public Complaints Bureau, 2015). Up to 31st August 2016, the number of complaints was 536 (Public Complaints Bureau, 2016). From eight departments and agencies under the Ministry of Home Affairs, Royal Malaysian Police, Department of Immigration and Registration Department are the major contributors to the highest number of complaints received.

It is seen that the public servants in the department and agencies need to change the way they execute their task to enhance their levels of OCB, which eventually contributes towards better quality of service and delivery.

PROBLEM STATEMENT Malaysian public servants performance was evaluated based on certain aspects of organizational citizenship behavior (OCB) (Johari et al., 2012). Thus, OCB should be practiced by all Malaysian public servants. Johari (2010), Rayner, Lawton and Williams (2012) and Saraih (2014) suggested that research that focuses on job performance of public officials is critical for these reasons; (i) the research findings within this context are still unsatisfying, and (ii) job performance happens to have great impact on the overall performance of the public sector. Therefore, these authors urged researchers to examine the levels of job performance among public officials and its predictors. This study welcomed the suggestion and was conducted by basically focusing on the public sector specifically the three departments of Ministry of Home Affairs.


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There are numerous predictors of job performance such as personality, job characteristics, organizational commitment and job attitudes (Ariffin, 2014; Johari, 2010). Although previous studies confirmed the significant role of job performance predictors such as job characteristics (Johari, 2010; Nayan, 2012), personality (Chiaburu, Oh, Berry, Li & Gardner, 2011; Johari, 2012), organizational commitment (Ariffin, 2014; Nayan, 2012), June and Mahmood (2011) and Soltis (2012) highlighted that work environment must be considered as one of the major predictors of job performance. Optimum performance can be achieved if the working environment and job context allow employees to exert maximum efforts performing their tasks. In addition, employees and their work environment must be compatible so that they can work happily to achieve the performance goal. When the characteristics of individuals (employees) match their work environment, this is actually called person-environment fit (P-E fit).

Person-environment (P-E) fit research in Malaysian public service is still limited (Ahmad, Veerapandian & Ghee, 2011) as compared to private sector (e.g. June & Mahmood, 2011; Johari, 2012) because of low urgency to solve the performance related issues in government agencies. In the private sector, performance relates to profitability but in the public sector, it is less quantifiable in the monetary term. Nevertheless, as the scope of person-environment fit research in public service is limited as stated by Ahmad et al. (2011), this study would like to make some contributions by concentrating on the consequences of person-environment (P-E) fit study especially in the Ministry of Home Affairs.

Thus, this study is designed specifically to examine whether all four dimensions of person-environment fit affect job performance of the employees in the Ministry of Home Affairs. Most of the previous studies examined fit dimensions separately (e.g. Ahmad et al., 2011; June & Mahmood, 2011; Soltis, 2012) but for this particular study, all the four dimensions of fit act as the independent variables to influence the dependent variable. To further support the need for this study, Chuang, Shen and Judge (2014) contended that there should be more investigations on the linkage between these four dimensions of person-environment (P-E) and its outcome variable due to inconsistent results reported in the literature.

This study incorporates work involvement as a moderator in examining the influence of all four dimensions of fit on OCB among public servants. A moderator is a variable through which the predictor is able to influence the criterion variable (Sekaran & Bougie 2013). A moderator explains how and why a certain effect occurs. Saraih (2014) strongly suggested that in identifying antecedents of job performance, particularly OCB, a moderating variable is required to better explain the influence of the predictor on the criterion variable.

Some previous studies (Chinomona et al., 2013; Johari, 2012; June & Mahmood, 2011) ignored the role of a moderating factor when investigating the relationship between P-E Fit and OCB. As a result, these studies found inconsistent findings pertaining to the relationship between person-environment fit and OCB. As suggested by Chinomona et al. (2013), a moderator variable is needed for future research that can show the clear relationship between person-environment fit and OCB. Aslam (2016) claimed that there are limited studies conducted having work involvement as a moderator. In this study, the role of work involvement was examined to clearly explain the relationship between P-E fit and OCB of public servants.

LITERATURE REVIEWS Organizational Citizenship Behavior (OCB) It is important for organizations to maximize the employees’ efforts besides only performing core tasks in order to sustain the competitive advantage, keep up with changes as well as engage in innovation (Podsakoff, Podsakoff & Mackenzie, 2014). This particular situation eventually requires all employees within the organization to showcase the organizational citizenship behavior (OCB). OCB was regarded by Organ (1997) and Podsakoff et al. (2014) as contextual performance or extra role performance, which is also the outstanding factor that leads to organizational effectiveness. OCB was originally introduced by Bateman and Organ in the early 1980s that emphasizes on the extra role behavior (Huang, 2016).

Person-Environment Fit In understanding person-environment fit, it is important to define what “person” and “environment” stand for (Yang, Levine, Smith, Ispas, & Rossi, 2008). Basically, a person is defined by one’s knowledge, skills, abilities, and other traits such as personality, values, and interests. On the other hand, “environment” concerns those external characteristics of an individual, which are job characteristics (e.g. challenge and autonomy) and organization characteristics (e.g. values or pay structure). There are still lack of studies which actually put these four dimensions of person-environment fit into their perspectives. Primarily, this particular study aims to examine the person-environment fit, which includes the combination of all four stated perspectives i.e. person-organization fit, person-job fit, person-group fit and person-supervisor fit and this is parallel to what has been stated by Edwards and Billsberry (2010) that person-environment fit is known as a multidimensional construct and thus, it should also be treated that way. The focus of the present study involves an integrative empirical study of four dimensions of person-environment fit: person-job fit, person-organization fit, person-group fit and person-supervisor fit. Person-job fit fit revolves around the compatibility between people and organization where they worked for (Kristof-Brown, 1996). Kristof-Brown also defined person-job fit as the compatibility of the individual towards a specific job. Another influential person-environment fit dimension is person–organization fit, which is defined as the compatibility between individuals and the organization in which they work (Chuang et al., 2014). Person-group fit, on the other hand, is known as the interpersonal comparability between individuals and their peers and work groups (Kristof-Brown & Guay, 2010). Another emerging dimension of person-environment fit is person-supervisor fit where it revolves around the employees and the supervisors’ characteristics (Chuang et al., 2014).

Work Involvement This particular study also includes the work involvement as a moderator in explaining the link of person-job fit, person-organization fit, person-group fit and person-supervisor fit with OCB. Basically, work involvement is known as the extent to which the interest of the employees in working is identified and observed to be relatively interconnected to other aspects in their respective lives (Kanungo, 1982). It has been found by Aslam (2016) that when the work involvement increases, the person–environment fit increases. Work involvement is also considered to be a determinant of organizational effectiveness (Stoner & Gallagher, 2010) and individual motivation (Johari, 2010).


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Thus, this particular study apparently highlighted the following essential hypotheses; H1:Work involvement moderates the relationship person-job fit and OCB.

H2:Work involvement moderates the relationship person-organization fit and OCB

H3: Work involvement moderates the relationship person-group fit and OCB

H4: Work involvement moderates the relationship person-supervisor fit and OCB

METHODOLOGY Research Design This present study is a quantitative research and it was conducted as a correlational study in explaining the association of the dependent variable, moderator variable and the independent variables. The approaches involve the descriptive analysis, the correlation analysis and also the regression analysis in the efforts to explore the relationship among the variables.

Population This study focuses on the public servants from Royal Malaysian Police, Department of Immigration and Registration Department under the Ministry of Home Affairs, which are located in Selangor as the population of the study because all three departments have received higher complaints as compared to other departments or agencies.

Sampling Technique The quota sampling technique was utilized in this study and it is specifically chosen because the quota fixed for each subgroup is based on the total number of each group in the population (Sekaran & Bougie, 2013). In this study, samples were selected based on departments or agencies. The quota is based on the proportion of subclasses in the population (Chua, 2012). The sampling process involves the distribution of the respondents into exclusive groups or strata such as departments or agencies.

Table 1: Sample determination

No Strata by Department

Number of Population

Number of Respondents

1 Royal Malaysian Police

15,111 283

2 Department of Immigration

2,906 54

3 Registration Department

2,102 39

TOTAL 20,119 376

Data Analysis SPSS Statistics Version 24.0 was used to key in the data obtained and to perform the descriptive analysis. The descriptive analysis includes percentage, median, mode and also the frequencies. The correlation analysis and multiple linear regression were then utilized to analyze the relationship between the variables of P-E fit and OCB of the employees.

Instrument The questionnaire survey was used in order to collect the data that are required for this study. Based on the objectives and also the hypotheses of the study, the questionnaire is considered as a

suitable tool in the effort to gather the responses from the respondents.

FINDINGS The sample consisted of 161 or 43.4 percent male and 210 or 56.6 percent female. There were 49 or 13.2% of respondent below 25 years old. 9.2% or 34 respondents aged from 25 to 35 years old. 55 respondents aged between 31 and 35 years old. The amount of respondents who aged between 36 and 40 years old was 88 or 23.7%. 16 or 4.3% of respondents aged between 41 and 45 years old. For those who aged between 46 and 50 years old, the amount of respondents was 61 or 16.4%. 34 respondents aged between 51 and 55 years old. The rest of public servants in Ministry aged more than 55 years old. Given the fact that the departments and agencies under the respective the ministry were dominated by Malays, 85.1% of the respondents came from this category. Only 5.7% and 9.2% were Chinese and Indians, respectively. Furthermore, the majority of the respondents, which is 91.4%, were married while 8.6% were single. The majority of respondents or 39.1% were Bachelor Degree holders, 35.6% were Diploma holders, and 13.7% were SPM holders. The rest of the respondents or 11.6% were Masters Degree holders. A total of 154 respondents had been working in the organization for six to 10 years, while 96 of respondents had been working for 11 to 15 years. 85 of respondents had been working in the organization for one to 5 years. The rest of respondents had been working in the organization for more than 15 years. Finally, 65.5% of the respondents were support staff and 34.5% were professional and managerial staff.

Correlation Analysis Pearson correlation coefficient describes the relationship between two continuous variables. Correlation and regression analyses are related in the sense that both deal with relationships among variables.

Table 2: Correlation Analysis of Person-Environment Fit, Work Involvement and OCB

No Variables 1 2 3 4 5

1 PJ-Fit

2 PO-Fit -0.025

3 PG-Fit -0.019 -0.047

4 PS-Fit 0.081 -.142** -0.037

5 Work Involvement 0.088 -.128* -0.043 .940**

6 OCB 0.039 -0.086 -0.043 .855** .844** Notes: **. Correlation is significant at the 0.01 level (1-tailed); *. Correlation is significant at the 0.05 level (1-tailed).

In general, correlation coefficients among the variables in person-environment fit (independent variables), a moderator variable and OCB (dependent variable) are ranging from -.019 to .940. It can be concluded that overall correlations between independent variables and dependent variables are ranging from very low to very high. Similarly, the moderator has low to high correlations with the independent variables and the dependent variable.


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Hypotheses Testing Hypothesis testing is to examine the moderating effects of work involvement on the relationship between person-environment fit and employees’ job performance that involves OCB.

Work involvement is hypothesized to moderate the relationship between each person-environment fit and OCB. Table 3 below summarizes the results of the moderating effects of work involvement on the relationships between person-environment fit dimensions and OCB.

Table 3: The results of the moderating effects of work involvement on the relationships between person-environment

fit dimensions and OCB

Notes: *** significance at the .01 level; ** significance at the .05 level;

From table above, work involvement has moderation effect on the relationship between person-job fit, person-organization fit and person-supervisor fit and OCB. It can be concluded that, work involvement is a moderator for the link between person-job fit, person-organization fit, person-supervisor fit and OCB as the dependent variable and the hypothesis are supported. Meanwhile, another dimension of person-environment fit (i.e person-group fit) shows no moderation effect on the relationship with OCB. It can be concluded that, work involvement is not a moderator for the link

between person-group fit and OCB as a dependent variable and the hypothesis is not supported.

Figure 1. Moderating effect of work involvement on the

relationship between person-job fit and OCB The outcome of this study established that work involvement moderates the relationship between person-job fit and OCB. The result shows that low person-job fit but high work involvement is required for employees to have high OCB. This shows that when work involvement among personnel is high, it can counter the effect of low person-job fit and consequently contributes to high OCB. Therefore, government servants should be highly involved in their work and continuously exert efforts to improve their OCB. The findings support those found by Johari, Yean and Yahya (2015) that when the work involvement level of the incumbents is high, they are more likely to become high performers.

Dependent Variable

Dependent Variable

Dependent Variable

OCB OCB OCBIndependent

VariablesIndependent

VariablesIndependent Variables

Person-job fit -0.028 Person-job fit -0.033Person-job

fit.715**

Person-organization

fit0.038

Person-organization

fit0.036

Person-organization

fit-.447*

Person-group fit

-0.011Person-group

fit-0.008

Person-group fit

0.215

Person-supervisor fit

.860**Person-

supervisor fit.504**

Person-supervisor

3.224**

ModeratorWork

involvement.379** 4.391**

Interaction terms

PJF x WI -.863**

POF x WI .497*

PGF x WI -0.223

PSF x WI -6.369**

R² 0.726 R² 0.746 R² 0.766

Adjusted R² 0.729 Adjusted R² 0.742 Adjusted R² 0.761

R² Change 0.729 R² Change 0.017 R² Change 0.021

F Change 246.435 F Change 23.815 F Change 7.977Significance F

Change0.000

Significance F Change

0.000Significance

F Change0.000

MODEL 1 MODEL 2 MODEL 3

Variables Variables Variables


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Figure 2. Moderating effect of work involvement on the relationship between person-organization fit and OCB

The outcome of this study further established that work involvement moderates the relationship between person-organization fit and OCB. High person-organization fit and high work involvement are required for employees to engage in high OCB. This indicates that when work involvement of personnel is high, coupled with high person-organization fit, they tend to engage in high OCB. This significantly means that employees usually develop stronger passion towards their works over time, and they then become more involved in their works. Furthermore, employees also strive to find the organizations that would fit their values and personalities and once they have found it, their level of OCB becomes high because they are willing to contribute to the well-being of the organization. It can be argued that since OCB is an extra-role behavior and more associated with personal willingness, value similarity between the employee and organization could foster attitudes towards helping others and volunteering for extra-role behaviors (Khaola & Sebotsa, 2015).

The outcome of this research also indicates that there is no significant role of work involvement in moderating the relationship between person-group fit and OCB. This occurrence might be due to demographic dissimilarity. Demographic dissimilarity refers to the extent to which an individual and some second entity fluctuate in terms of numerous characteristics (Cicek & Bicer, 2013). It could reflect the degree to which individuals in the group have common attributes and the degree to which an individual’s attributes are shared by other group members (Thatcher & Patel, 2012). When there are high group member differences, work involvement is difficult to be achieved.

Figure 3. Moderating effect of work involvement on the

relationship between person-supervisor fit and OCB

This study shows that high person-supervisor fit and high work involvement are required for employees to engage in OCB.

Employees would feel respected if they feel that their supervisor encourages their involvement and supports them. As a result, employees’ OCB level will increase and they would demonstrate stronger commitment. Thus, some scholars perceive involvement as a way to enhance citizenship behaviors among the employee, particularly through their commitment toward the organization (Zhang, 2014).

Based on the social exchange theory, the result indicates that an employees’ intention to perform OCB could be affected by the supervisor, for instance, an employee would be likely to go beyond the minimum role requirements when he/she perceives that the supervisor is fair and takes care of his/her well-being. The effect is more intense when work involvement is high.

CONTRIBUTION This study has established valuable evidence on the importance of work involvement in enhancing the role of person-environment fit in improving employees’ OCB. Therefore, this construct must be considered when addressing the issue of job performance or OCB of employees in the organization. However, this construct should not be equated with work engagement. Work engagement refers to a strong desire to be part of the value an organization creates. Whereas, work involvement is an environment in which workers are encouraged to, and can directly impact, the decisions and activities in their work environment. The instrument measuring work involvement might not be suitable to measure work engagement.

DIRECTION FOR FUTURE RESEARCH Based on the research results and discussions, this study has successfully come out with several directions for research to be conducted in future. First of all, the study sample could be extended to a larger population, i.e. different ministries in all states in Malaysia. This may appear to be more meaningful to grasp the understanding and knowledge in terms of the empirical association of all variables of interest highlighted in this study. Besides, the set of population in any future studies is also suggested to be expanded to different groups of public servants, i.e. the management and professional groups. This could help in enhancing the level of understanding of how person-environment fit might have an impact on OCB of the managerial level public servants as compared to the support staff group in an organization.

CONCLUSION All in all, this study has successfully provided the satisfied empirical evidence in terms of the moderating role of work involvement on the relationship between person-environment fit and OCB. The research outcomes have also provided support for the key theoretical propositions for this study. What is more important is, this study has successfully answered all of the research questions despite some of the limitations. Although there are many studies which have concentrated on examining the relationship between person-environment fit and OCB, this study has successfully addressed the huge gap by integrating work involvement as a significant moderating variable.

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Strategy in Developing the Tenun Ikat in Kediri City East Java Province

DR. Nekky Rahmiyati, MM,

Lecturer in Economics Faculty of 17 Agustus 1945 University

(UNTAG),Surabaya

Dra. Sri Andayani, MM, Lecturer in Faculty of Social and

Political Sciences of 17 Agustus 1945 University (UNTAG), Surabaya

ABSTRACT Kediri City in East Java Province has a centre of ‘tenun ikat’ crafts that has already been in existence since the year 1980s. The tenun ikat cloth, as one of the cultural heritages, becomes the icon of Kediri City community and at the same time also becomes the regional product of excellence. The problems of research are as follows: 1) How is the potential, strength, constraint, opportunity and threat of the ‘tenun ikat’ compound in Bandar Kidul, Kediri? 2) How is the strategy in developing the ‘tenun ikat’ compound in Kediri City?. The aims of this Research are as follows: 1) To know the potential, strength, constraint, opportunity and threat to the ‘tenun ikat’ compound in Bandar Kidul, Kediri City. 2) To make the plan in preparing the development strategy for ‘tenun ikat’ village in Bandar Kidul, Kediri City. Meanwhile, the outputs of this Research are as follows: 1) The mapping of the potential, strength, constraint, opportunity and threat to the ‘tenun ikat’ compound in Bandar Kidul, Kediri City. 2) The findings of the strategy and the follow-up plan for the ‘tenun ikat’ compound in Kediri City.

This research applies the descriptive qualitative method, supported by the qualitative data and analyzed qualitatively by using the SWOT analysis. The Results of this Research are as follows: The commitment on strength is to implement the good and sufficiently opened business management system to renewal. Weakness: Less availability of raw materials in Kediri; limitedness of manpower with technical skill; export market, institution, waste treatment and work safety. Opportunities: The demand for product is relatively stable and even increasing, the manpower willing to be trained is available. Media of promotion is quite a lot. Threats: There are quite a lot of competitors’ products; the family management puts the business continuity in worrying situation, lack of consumers’ interest in hand-made / traditional products, manpower hijacking to other regions with the lure of bigger compensation, the high trend in hijacking the ‘tenun ikat’ design model by other regions.

Finally, based on these SWOT – Strength, Weakness, Opportunity and Threat, the strategy is analyzed.

Keywords

“Strength, Weakness, Opportunity and Threat”

INTRODUCTION An economic development is a process causing the income per capita of citizen in a certain community increases in a long term, accompanied by the change in important characteristics of the said community, namely the changes in technology, in people’s mindset and also in institution. Meanwhile, the globalization and regional autonomy bring quite logical consequences that the level of competition is getting sharper and sharper, either in regional, national or international levels.

The regional products of excellence produced by the Small and Medium Scaled Enterprises are potentially able to be developed by utilizing the resources owned by regions, either in the forms of natural resources, human resources or the local culture. They also create the income for community and for government, expected to become the economic power for region and for local community, as the potential products having the competitiveness, selling power and able to enter into the global markets. This is in conformity with the Regulation of Home Affairs Minister Number 9 the Year 2014 on Guidelines in Developing the Regional Products of Excellence. The Kediri City has the centre of ‘tenun ikat’ crafts already been in existence since the year 1980s. . At present, there are many tenun ikat crafters having their production continuously on Jalan Agus Salim Gang VIII, Bandar Kidul village, Sub-District of Mojoroto, Kediri City. The tenun ikat is an Indonesian woven fabric in the form of cloth and dipped into a natural dye. The loom applied is called “ATBM” (Non-Machined Loom).

The policy of Kediri City Administration on the use of work-clothes in the form of traditional woven fabric is one of the efforts of the Kediri City Administration to conserve the ‘tenun ikat’ as the specific traditional cloth of the Kediri City whose existence seemingly is beginning to sink. This policy is expected able to lift-up the prestige of ‘tenun ikat ‘ which has ever dimmed and the tenun ikat cloth as the cultural heritage becomes the icon of the community of Kediri City and at the same times becomes the regional product of excellence. Problems of Research: Based on the aforesaid background, the problems can be identified as follows:

1. How are the potential, strength, constraint, opportunity and threat to the tenun ikat compound ?


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2. How is the development strategy of the tenun ikat compound in Kediri City?

Aims of Research: 1. To know the potential, strength, constraint, opportunity and

threat to the tenun ikat compound.

2. To know the strategy in developing the tenun ikat compound.

Outputs of this Research: 1. The mapping of the potential, strength, constraint,

opportunity and threat to the tenun ikat compound.

2. The finding of strategy and the follow-up plan for the tenun ikat compound in Kediri City.

LITERATURE REVIEW 1. Industrial Strategy: Strategy is a long-term goal of a company as well as the

empowerment and allocation of all important resources to achieve the said goal (Chandler, 1962: 13 in Rangkuti, 2002:4). Good understanding concerning with the concept of strategy and other pertinent concepts is very crucial in determining the success of strategy to be prepared. Those concepts are as follows:

a. Distinctive Competence: is an action conducted by a company in order to be able to perform it much better than that by its competitors. This Distinctive Competence covers skill of the manpower and ability of the resources.

b. Competitive Advantage: is a specific activity developed by a company in order to be able to perform it much better than that by its competitors. The strategy applied in order to gain excellence in competition covers the cost leadership, differential and focus.

2. Industrial Strategy Through Stages of SWOT Analysis The idea of SWOT Analysis is the strategic planning method used to evaluate the strength, weakness, opportunity, and threat in a project or in a business speculation. The SWOT Analysis can be implemented by means of analyzing and selecting various subjects influencing its four factors, then implementing them at the SWOT Matrix Drawing, in which its application is how the strength can take the advantage from the available opportunities. Further is how the can deal with the existing threat, and the final is how to overcome the weakness able to make the threat to be real or to make a new threat encountered by a company, namely the new government regulations harming the businessmen very much.

Drawing 1. Motif of Tenun Ikat

RESULTS AND DISCUSSION SWOT ANALYSIS, IDENTIFICATION OF INTERNAL AND EXTERNAL FACTORS OF TENUN IKAT COMPOUND IN BADAR KIDUL, KEDIRI.

Based on the results of characteristic identification and interview as well as the field observation, the internal and external factors of tenun ikat crafts existence can be identified. The identification result is as shown on the table-1:

Table 1. Matrix of internal strategic factors

FACTOR IDENTIFICATION

A Strength Factors Weight Rating Weight x Rating

1. Lots of raw materials are available at the local

market / easily obtainable and located

not too far.

0.05 4 0.2

2. The Human Resource experiences and skills of the Owner hereditarily

are good enough.

0.05 4 0.2

3. The Applied Manual Technology is available and easily obtainable.

0.075 4 0.3

4. It has labor intensive nature, so that it

becomes the means of livelihood.

0.05 3 0.15

5. The product marketing to other cities tends to

increase.

0.1 4 0.4

6. Majority of them join the Joint Venture Group

(JVG).

0.05 3 0.15

7. Easily obtainable access to capital

0.1 4 0.2

8. Business management is sufficiently opened;

vision and mission are clear.

0.05 3 0.15

Total Score 1.75

B. Weakness Factors: Weight Rating Weight

x Rating

The Motifs of Beras Tumpah (Spilled Rice), the Motifs of Daud, Kawung, Pokemon, Prawan Kalimantan (the Kalimantan Virgin), the Motifs of Sakuntala, Butterfly, Orchid, Rose, and Parang Rusak Motif.


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1. Raw material still has to be purchased and

even parts of them are imported, and not yet

been able to be produced by the tenun

ikat joint-venture groups themselves in

Kediri City.

0.01 1 0.1

2. Application of technology is still

very limited to ATBM (Non-Machined Loom) so that Its

selling price is relatively inferior to that of tenun (woven

fabrics) manufactured by using machines.

0.1 1 0.1

3. Though there are sufficient numbers of manpower, but only few of them have the designing skill and diversification of

tenun ikat products.

0.1 2 0.2

4. The limitedness in export marketing, and if doing the export, it

is still through the third party.

0.1 1 0.1

5. The Institution of Joint-Venture Group

(JVG) is still very weak and tends to

stand alone, considering the fact

that some of them are not yet the members of JVG of Tenun Ikat

Kediri.

0.01 1 0.1

6. Waste treatment still needs attention

0.05 3 0.15

7. Production certainty is still limited. The

majority are to fulfill the orders.

0.05 3 0.15

8. The work safety of employees still needs to be improved, for example through Manpower Social

Insurance.

0.025 4 0.1

Total Score 1.00

Table-2. Matrix of external strategic factors

FACTOR IDENTIFICATION

A Opportunity Factors Weight Rating Weight x

Rating

1. Product demand is relatively stable and

even it tends increasing.

0.05 4 0.2

2. Sufficient number of available manpo-wer

are willing to be trained.

0.05 4 0.2

3. There are quite lot of Promotion Media such

as Expo/Exhibition, Online Busi-ness,

Visit, Comparative Study, and Touring

Visit, etc.

0.075 4 0.3

4. Services for transportation,

communi-cation, goods distribution and

delivery are quite easy and available.

0.05 3 0.15

5. Access to financial institutions is quite a

lot; the JVG cooperates with Bank of

Indonesia, so that it facilitates the banking

access.

0.05 3 0.15

6. The social environment of surrounding

community is very conducive, even tends

to become the workers..

0.05 4 0.2

7. The programs of related government

(Kediri City Administration)

supports very much and facilitates

existence of this tenun ikat business in

Bandar, cooperates with various

Universities for

0.05 3 0.15


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training and mentoring programs.

8. The manpower protection / insurance is available through

BPJS and Manpower insurance.

0.05 3 0.15

Total Score 1.50

B Threat Factors Weight Rating Weight x

Rating

1. Competitor products / similar products either

from domestic or overseas are in sufficient

big amount and their prices are relatively

cheap because they use machines.

0.15 1 0.175

2. Hereditary/continuing Family Manage-ment is still relatively dominant, so that if its continuity is not well maintained on shift of generation, it

will bring worry to the business continuity.

0.175 1 0.175

3. Exchange Rate of Rupiah fluctuates very

much and it gives influence to the raw

material.

0.175 1 0.175

4. Decreasing interest of consumers in hand-made

/ traditional products.

0.15 1 0.15

5. Many efforts of manpower hijacking to other regions with the

lure of bigger compensation.

0.15 1 0.15

6. The tendency of hijacking the tenun ikat design model by other regions is sufficiently

high.

0.15 1 0.15

Total Score 0.950

Source: The Processed Primary Data. CONCEPT OF STRATEGY IN DEVELOPING TENUN IKAT IN BANDAR KIDUL, KEDIRI By virtue of the aforesaid data, a strategy can be made by synchronizing the Strength (S) and the Opportunity (O), known as the S-O Strategy. Then, synchronizing the Weakness (W) and Opportunity (O), known as W-O Strategy, and synchronizing the Strength (S) and the Threat (T) known as the ST-Strategy. The S-O Strategy is intended as an effort to maximize each element of strength owned in order to sieze every element of the available opportunities as optimally as possible. Meanwhile, the W-O Strategy is intended as an effort to improve each element of weaknesses in order to be able to be to utilized as optimally as possible each element of the available opportunities. Whereas the S-T Strategy is intended as an effort to maximize each element of strength in order to counteract and subdue each element of challenges as optimally as possible.

Table-3. Strategy based on SWOT analysis

Strength (S)

Strength (S) Weakness (W)

1. Business Management continues

hereditarily.

2. Vision and Mission of Business are clear.

3. Numbers of male and female workers are

sufficiently available.

4. Manpower absorbing.

5. Cooperating with Gove-rnment and

Private

6. Though the production is done

by ATBM, but remains committed to make innovation.

1. Raw material still has to be purchased and even parts of them are im-

ported, and not yet capable of

producing themselves.

2.The use of technology is

very limited to ATBM (Non-

Machined Loom).

3. Manpower with design skill and product diversi-fication is very

limited.

4. Limitedness in Export

marketing.

5. j Institution is still very weak

and tends to stand alone.

6. Waste treatment still needs attention.


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7. Production capacity is still limited, mostly

to fulfill the orders.

8.The Manpower social Insurance

is low.

Opportunity (O) Strategy S-O) Strategy W-O

1. Demand for product is

relatively stable and tends

increasing.

2. Many manpower are willing to be

trained.

3. Many Promotion Me-dia are

available and the tour visit.

4. Services in transport-ation, communication

and goods distribu-tion and

delivery.

5. Lots of access to the financial institutions,

business groups and cooperating

with Bank of Indonesia, so

that it facilitates to get the

banking access.

6. Social environment of the surrounding com-munity are very con-ducive.

7 . Related Programs of Government

(Kediri City Administration) supports very

much and facilitates the existence of Tenun Ikat

Bandar.

1. Increasing the produ-ction

by innovating the ATBM.

2. Setting-up an educa-tion institution, voca-tional school or courses in

woven fabrics.

3. Cooperation with the Banking

Institution shall be

maintained well and

increased.

4. Cooperation with the

travel and goods

delivery bureaus.

5. Improving develop-ment

and mentoring

with Government

and the related Private Sectors.

6. Cooperation with

Universities to impro-ve

Management and

Production Technology

1. Making a cooperation with the raw

material suppliers.

2. Motivating business-men to be the raw material

providers.

3. Improving Marketing Strategy, especially

Export.

4. Improving existence of JVG (Joint-

Ventu-re Group), so that it leads

to the Centre.

5. Serious handling on

Waste Treatment.

6. Paying attention to

the Manpower

Social Insurance.

Challenge /Threat (T)

Strategy S-T Strategy W-T

a. Competitor products or similar ones either from domestic or overseas are

many and relatively cheap

because they use machine.

b. Hereditary / continu-ing

Family Manage-ment is still dominant so that if its

continuity is not well maintained

in the shift of genera-tion it

will worry the business

continuity.

c. Exchange Rate of Ru piah

fluctuates very much and

influences the raw materials.

d. Decreasing interest of the Consumers to the hand-made

/tradi-tional products.

e. Many efforts to hijack

manpower to other regions with lure of

bigger compensation.

f. High tendency of hijacking the

design model of tenun ikat by other regions

1. Product innovation is adjusted to the tastes of consumers

and fashion.

2. Improving the ability of Family

Manage-ment for the next business

continuity.

3. Motivation the growth of Small & Medium Scaled

Enterprises to be the raw

material providers.

4. Motivation the growth of Small & Medium Scaled

Enterprises operating in

Woven Fabric Loom.

5. Improving the Manpo wer Insurance

and Wages to avoid the

manpower hijacking.

6. To get the Patent for Product

Design and model.

1. Innovating the ATBM (Non-

Machined Loom).

2. The use of ATBM and

Woven Fabrics

Machines.

3. Work Uniforms worn at the

Government and Private

Agency.

4. It becomes a compul-sory.

5. Government assis-tance in Patent, Tra-de

Mark, Business

Permit, etc.

6. Improving the ability of

manpower for the Design and Motif.

7. Business Partnership is

increased.

CONCLUSION Based on SWOT Analysis and discussion on Strategy on Tenun ikat Business in Bandar Kidul, Kediri, as stated above, it can be concluded as follows:


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1. The existence of the Tenun Ikat Industry in Bandar Kidul has developed relatively in a long time and managed hereditarily, mostly is under a Family Management, so that the improvement in business management ability needs to be increased.

2. The existence of the Tenun Ikat Crafts Industry in Bandar Kidul has not yet been able to be declared as the “Centre”, because the amount of businessmen who has developed the Tenun Ikat Small & Medium Scaled Enterprises are less than 20 (twenty) persons, so that it needs to be developed to be the Industrial centre.

3. Development of tenun ikat crafts fluctuates but at present it tends to undergo the increase in sales in many cities in Indonesia, so that it needs a better promotion.

4. Export market is carried out by using the third party, so that a breakthrough is required by means of design innovation, strengthening the business network, and also better product quality.

5. Most production only uses the ATBM manual technology, and this becomes the excellence o tenun ikat, so that it shall be well maintained.

6. Numbers of manpower and the availability of manpower, either male or female are lots enough, but those who have the skills in design and the skill in making the innovative motif are very limited, so that a training in design is required.

BIBLIOGRAPHY Hadi Sabari Yunus, 2010, “Metodologi Penelitian Wilayah

Kontemporer” (Methodology of Contemporary Regional Reseach), Yogyakarta: Pustaka Pelajar.

Mudrajat Kuncoro, 2005, “Strategi Bagaimana Meraih Keunggulan Kompetitif” (Strategy on How to Grab the Competitive Excellence), Erlangga, Jakarta.

Permendagri (Regulation of Home Affairs Minister) Number 9, the year 2014, on “Pedoman Pengembangan Produk Unggulan Daerah” (Guidelines in Developing the Regional Product of Excellence)

Porter, Michael E., 2008, Competitive Advantage ( Menciptakan dan Mempertahankan Kinerja Unggulan = Creating and Maintaining the Performance of Excellence), Kharisma Publishing Group.

Rangkuti, Freddy, 2002, Analisis SWOT, Teknik Membedah Kasus Bisnis (SWOT Analyisis, Techniques in Dissecting the Business Cases), PT Gramedia Pustaka Utama, Jakarta.

………………….…., 2002, “Riset Pemasaran” (Marketing Research), Gramedia Pustaka utama, Jakarta.

……………….……., 2009, “Strategi Promosi yang Kreatif dan Analisis Kasus Integrated Marketing Communication” (Creative Promotion Strategy and Analysis on the Case of Integrated Marketing Communication), PT Gramedia Pustaka Utama, Jakarta.


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Effect of Perception of Price, Perception of Product Quality, and Customer Relationship Management, Towards KFC Customer Satisfaction in Surabaya.

Feliks Anggia Binsar Kristian Panjaitan

Faculty Of Economics University of 17 August 1945 Surabaya, Indonesia. [email protected]

ABSTRACT Culinary business growth in Indonesia has been increasingly in recent years, some have tried their fortune again in building a culinary business as before but with different concepts, and some continue to innovate in the type of food, how to serve food, using technology to be closer to consumers, so that it is not eroded and always survive amid fierce competition. The purpose of this research is to find out whether perception of price, perception of product quality, customer relationship management can increase customer satisfaction. The population in this study are KFC Restaurant Managers in Surabaya, Indonesia, 17 respondents. The type of data used are primary data with questionnaires. The analytical tool used is the path analisys. Results from this study are: the perception of price affect toward customer satisfaction, customer relationship management affect toward customer satisfaction, and surprisingly perception of product quality doesn’t affect toward sustomer satisfaction.

Keywords “KFC fast food restaurant, perception of price, perception of product quality, customer relationship management”

INTRODUCTION Fast food service restaurants have long had their own uniqueness where each of them gave each other advantages in the culinary business strategy. Various types of fast food service restaurants in Indonesia, A & W, Mc Donald's, Kentucky Fried Chicken, Texas Fried Chicken and many others. In this modern era, if it only competes with the advantages of fast food, it will quickly be eroded by changing times. Companies must be able to determine the right marketing strategy so that the business can survive and win the competition, so that the goals of the company can be achieved. The company is trying to establish a business and create types of products that will be favored by potential customers. So, fast food services now not only provide competitive prices, but also create food that was previously unthinkable in consumers' minds, the use of technology both in promotion and cooperation with various tenants. This is done by fast food service restaurants in addition to providing benefits for the company and also satisfaction for customers which will continue to repurchase their products.

Tjiptono (2006) states that the occurrence of long-term partnerships with customers is continuously expected to occur repeat business. The price given by fast food restaurants at this time is not only how much should be sacrificed by consumers to get products produced by fast food service restaurants, where according to Kotler and Armstrong (2001), the price is the amount of money exchanged for a product or service. In other words, price is the sum of all values that consumers exchange for the amount of benefits by owning or using an item and service. Many considerations are made by consumers before deciding to buy a product for example, product quality, price, and advertising (Engel, 1994). In order to get a satisfied customer in accordance with the wishes of the company, the company needs to use a strategy which creates a relationship between the company and the customer known as customer relationship management. In this strategy the company can understand customer expectations which is a very important factor, because a relationship-based approach to doing business is an understanding of what the customer really needs and wants and sees the customer as a long-term asset that will provide the continuously as long as their needs are met. At present, Customer Relationship Management has become the capital of the company to maintain and improve customer satisfaction in order to achieve long-term benefits. Where According to (Buttle: 2007), MHP is the core strategy in a business that runs internal processes and functions with all external networks to create value for target consumers profitably. MHP is supported by quality data and information technology. In October 1979, the first KFC outlet in Jakarta was opened by PT. Fast Food Indonesia, which is one of Gelael Group and received a positive response, so that it can expand into various major cities in Indonesia, one of which is Surabaya. In realizing consumer satisfaction, KFC adds a strategy by using informatics-based technology, which enables KFC to manage its business in realtime online systems in all Surabaya branches like consumers make offline purchases at this time. The objectives to be achieved in this study are:

4. Knowing and explaining the effect of perception of price toward customer satisfaction

5. Knowing and explaining the effect of perception of product quality toward customer satisfaction

6. Knowing and explaining t the effect of customer relationship management toward customer satisfaction


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LITERATURE REVIEW Perception of Price Price is the amount of money needed to obtain several combinations of products and accompanying services (Kotler and Keller, 2009). Prices depend on the company but of course by considering various aspects. The size of a product is very relative in nature. Therefore, it needs to be compared first with the price of similar products produced and sold by other companies. In other words, companies must continue to monitor prices set by competitors so that the prices set by the company are not too high or vice versa. Price According to Tjiptono, 2008 is one element of the marketing mix that requires careful consideration. This is because there are a number of dimensions in the price:

5. Price is a statement of the value of a product, while value is the ratio between the perception of benefits and the costs incurred to get the product.

6. Price is the main influence of demand. The higher the price the less the number of requests for the product.

7. Prices are flexible, meaning they can be adjusted easily. Price is the most easily changed and adapted to market conditions.

8. Prices affect valuation and placement. Consumers always associate prices with product quality.

The goal of price fixing is the company to survive, maximize current profits, market share leadership, or retain customers and build relationships. According to Kotler and Keller (2009) Price is one of the marketing elements that generates income.

Perception of Product Quality According to Kotler and Armstrong (2008) product quality is a characteristic of a product or service that depends on its ability to satisfy customer needs that are expressed or implied. According to Kotler and Keller (2009), there are 4 dimensions of product quality that need attention:

5. Quality of performance, fundamental dimensions and related to the main function of a product.

6. Features, most products can be offered with a variety of features that are different but complete the basic functions of the product.

7. Quality of conformance (conformance quality), level of suitability and fulfillment of all units produced against specifications.

8. Style, this dimension describes the appearance and feeling that the product creates for consumers.

Customer Relationship Management In doing marketing, companies do various ways to satisfy their customers. One of them is by conducting a customer relationship management strategy. The company believes, with a good relationship, the company can know exactly what is the needs and desires of its customers. According to Kotler & Armstrong (2008) customer relationship management is an overall process to build and maintain relationships with consumers by conveying superior value and customer satisfaction. According to Zinkmund, McLeod, & Gilbert (2002) stated that customer relationship management is a process of gathering information to improve understanding of how to manage corporate relationships with consumers. Customer relationship management is a business activity and uses technology to manage customer relationships in order to

maximize revenue, profit, customer satisfaction, and consumer retention. Technology is used to create relationships with consumers and analyze in order to maximize long-term customer value so that the company can simultaneously maximize satisfaction for consumers. In terms of the concept of customer relationship management. Storbacka and Lehtinen (2001), there are three main concepts of MHP: 4. shape customer value. The goal is not to maximize profits

from one transaction but rather to build long-term relationships with customers.

5. Products as a process, where the traditional differentiator between goods and services is meaningless. Products are seen as entities which include exchanging between service providers and customer processes.

6. Relate to the responsibility of the service provider, where this is not enough for the company to only be able to provide consumer needs and their satisfaction. A company building stronger relationships can only be done if it fulfills the responsibility to form relationships and offer customers the possibility to create value for themselves.

Customer Satisfaction According to Kotler (2009), satisfaction is a person's level of feeling after comparing the performance or results he feels compared to his expectations (Kotler et al, 2000). Customer satisfaction with a product or service is actually something that is difficult to measure if the service company or industry does not really understand what is expected by consumers. For products or services of the same quality, it can provide different levels of satisfaction for different consumers. Therefore, according to Kotler (2009), there are four methods that can be used to measure customer satisfaction;

7. Complaints and suggestions system, a company that provides opportunities for its customers to express opinions and complaints for consumer-oriented companies.

8. Customer satisfaction surveys, companies need to conduct customer satisfaction surveys on the quality of services or products produced by the company. Through the survey, companies can find out the shortcomings and advantages of products or services produced, so that the company can immediately make improvements to things that are considered lacking by customers.

9. Analysis of lost customers, this method is done by contacting customers who have not visited for a long time or made purchases again in the company because they have moved to competitors. In addition, the company can ask the reasons for the transfer of customers to competitors.

HYPOTHESES Bolton, Warlop and Alba (2003) argue that the perceived price perception as an assessment is obtained whether the results of or an item process are reasonable, acceptable, or appropriate. According to Lamb, Hair and Mc. Daniel (2004), the perception of the appropriate price influences positivity to customer satisfaction, customers are more interested in gaining a perception of a reasonable price, which means having the value that the customer wants when the transaction. Based on the description above, the hypothesis is stated:


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H1: perception of price has a significant effect toward customer satisfaction. Each consumer has a different perception of the quality of a product. The difference in perception of product quality is usually influenced by differences in information received by each consumer about the related product. If consumers perceive a product to be of good quality, it is likely that consumer satisfaction will arise. Yamin (2013) said that the perception of product quality has a significant effect on consumer satisfaction. The higher the perceived value of product quality, the higher the level of satisfaction perceived by consumers and vice versa. Sugianto and Sugiharto (2013) also stated similar things. Based on some of the results of the previous research, the hypothesis that appears as follows: H2: perception of product quality has a significant effect toward customer satisfaction MHP provides an encouragement to consumers to establish strong ties with the company. Some marketing experts reveal the relationship between MHP and customer satisfaction as follows: According to Gaffar (2007) revealed that MHP is a process by which a company obtains, maintains, and develops profitable customers and requires a focus on the attributes of a service that can produce value to customers. can generate loyalty. The focus of MHP itself is to increase the level of customer satisfaction, customer loyalty, and revenue from existing customers in the face of high levels of competition, globalization and customer turnover and the development of customer acquisition costs. The goal is not to maximize profits from a single transaction but build long term relationships long with customers and improve customer satisfaction. H3: Customer Relationship Management has a significant effect toward Customer Satisfaction.

RESEARCH METHODES Population according to Djarwanto and Subagyo (2003) is the sum of all objects (units / individuals) whose characteristics are to be suspected. According to Sugiyono (2008), "The population is the region of generalization consisting of objects / subjects that have certain qualities and characteristics. determined by researchers to study and then draw conclusions. As for in this study, the population are 17 KFC fast food restaurants in Surabaya. While the analytical tools in this study are:

7. Validity and Reliability Test

Validity test is used to determine whether a questionnaire is valid or not. A questionnaire was declared valid if the question in the questionnaire was able to reveal the results that the questionnaire would measure (Ghozali, 2006). To measure validity, corelation productt moment technique is used by correlating item scores with total scores. In testing this validity, the researcher uses 17 respondents and a significance level of 5% with the help of SPSS version 20. Validity Testing, namely: If r counts> r table, it means there is a correlation between variables X and Y variables and said to be valid. If r count <r table, it means there is no correlation between variable X and variable Y and said to be invalid. Reliability is actually a tool for measuring a questionnaire which is an indicator of a variable. A questionnaire is said to be reliable if someone's answer to the question is consistent or stable over time. A data said to be reliable is a variable that has a Cronbach alpha value less than 0.6 (Ghozali, 2006). In this test, reliability testing is carried out using the alpha coefficient. Calculation of alpha coefficients utilizes SPSS 20 and critical limits for alpha values to indicate that a reliable questionnaire is 0.60. So the alpha coefficient value> 0.60 is an indicator that the questionnaire is reliable.

8. Path Analysis Multiple regression analysis can be used to determine the effect of independent variables with the dependent variable. This test includes a t-test that is used to find out the magnitude of the balance of each variable on the dependent variable partially, the F-test, the coefficient of determination (R2) to determine how much the dependent variable can be explained by the independent variables listed in this study.

9. Partial Test (t-test) This test is conducted to determine whether the constants and regression coefficients of independent variables are significant or not individually to customer satisfaction (Y). The trick is to compare the statistic count with table statistics.

- Determine the formula for Ho and Ha Ho: β = 0, there is no effect of independent variables on the dependent variable Ha: β> 0, there is a positive influence of the independent variable on the dependent variable

- Level of significant α = 0.05 Test 1 side with t table = (α, n-k, -1)

- Determine testing criteria Ho is accepted if t counts α t table or - t counts> - t table Ho is rejected if t count α t table or - t count <- t table

10. F-test (goodness of fit model) This test is carried to find out whether together independent variables affect the dependent variable. If together the independent variables influence the dependent variable which is indicated by the significance value of F <0.05, the regression model is said to be good, on the contrary if the independent variables together do not affect the dependent variable which is indicated by

PerceptionOf

PerceptionOf

Product

CustomerRelationsh

ip

CustomerSatisfaction

Picture.1ConseptualFramework


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the significance value F> 0, 05, then the regression model is not good.

11. Coefficient Determination (R2) Coefficient determination is used to explain the proportion of the dependent variable that is able to explain the proportion of the dependent variable that can be explained by the independent variable. The coefficient of determination is between 0 and 1. The determination coefficient value is small, meaning that the price of the independent variable in explaining the dependent variable is very limited. The value that approaches one means that the independent variable provides almost all the information needed to predict the dependent variable.

RESULT AND DISCUSSION 1. Validity and Reliability Test

Validity testing results obtained that all indicators used to measure price perception variables, service quality, customer satisfaction and repurchase interest have r table for n = 17 that is 0.455, so that all indicators are valid. Reliability testing is a test of the consistency of the results of the respondents' answers, whether consistent over time. Cronbach Alpha obtained a greater cronbach alpha count of 0.6. Thus, the reliability test results for all variables are reliable.

2. Path Anaysis Path Analysis that has been done is obtained by regression coefficient, t count value and level of significance as shown in the following table: Table 1.Multiple Analysis Regression Result

3. Partial Test (t-test) d. Perception of price has a significant effect toward

customer satisfaction Testing the price perception variable on customer satisfaction obtained t value of 2.856 with a significance level of 0.023. Because the significance value is 0.023 <0.05, H0 is rejected and Ha is accepted. Thus the price perception variable has a positive and significant effect toward customer satisfaction. This means that H1 is accepted.

e. Perception of product quality has a significant effect toward customer satisfaction Testing of product quality perception variables on customer satisfaction obtained t value of 0.182 with a significance level of 0.858. Because the significance value is 0.85> <0.05, H0 is accepted and Ha is rejected. Thus the perception of product quality has no effect toward customer satisfaction. This means H2 is rejected.

f. Customer relationship management has a significant effect toward customer satisfaction Testing of Customer Relationship Management variables on customer satisfaction obtained t value of 4.236 with a significance level of 0.001. Because the significance value is 0.001 <0.05, H0 is rejected and Ha is accepted. Thus Customer Relationship Management variables have a positive and significant effect toward customer satisfaction. This means that H3 is accepted.

4. Coefficient Determination (R2) The coefficient of determination is indicated by the value of Adjusted R Square that is equal to 0.771 which shows that between price perception, product quality perception and customer relationship management together can explain customer satisfaction by 77.10 percent, while the rest is explained by other factors.

SUMMARY The test results show that the dominant factor influencing KFC fast food restaurant customer satisfaction is Customer Relationship Management, this is evidenced by the highest beta standardized coefficient value of 0.691. The second is price perception with a standardized beta coefficient of 0.630. Whereas the results of descriptive calculations carried out on the research variables, indicate that both Customer Relationship Management variables and Price Perceptions are perceived as "high". While the perception of product quality is perceived as "low" by consumers.

REFERENCES Bolton, Warlop & Alba (2003) "Consumer Perceptions of Price

(Un)Fairness" Journal of Consumer Research; Mar2003, Vol. 29 Issue 4, p474-491

Buttle,Francis. 2007. Customer Relationship Management: Terjemahan Arief Subiyanto. Penerbit Bayumedia Publising: Jakarta.

Charles W. Lamb, Joseph F. Hair, Carl Mcdaniel., 2004, Pemasaran. Edisi Pertama, Salemba Empat, Jakarta

Djarwanto, dan Subagyo, Pangestu, ((2000), Statistik Induktif, Edisi 4, BPFE, Yogyakarta.

Engel, Blackwell, dan Miniard. 1994. Perilaku Konsumen. Jakarta: Binarupa Aksara

Fandy,Tjiptono. 2006. Manajemen Jasa. Andi, Yogyakarta. Gaffar, Vanessa. 2007. CRM dan MPR Hotel (Customer

Relationship Management and Marketing Public Relations), penerbit, ALFABETA. Bandung

Ghozali, Imam. 2006. Aplikasi Analisis Multivariate dengan Program SPSS (Edisi Ke 4). Semarang: Badan Penerbit Universitas Diponegoro.

Jimmy Sugianto dan Sugiono Sugiharto, (2013), Analisa Pengaruh Service Quality, Food Quality, dan Price Terhadap Kepuasan Pelanggan Restoran Yung Ho Surabaya, Jurnal Manajemen Pemasaran PETRA Vol. 1, No. 2, 2013, Page 1-10.

Kotler dan Amstrong. 2008. Prinsip-prinsip Pemasaran. Jilid 1 dan 2.Edisi 12. Jakarta: Erlangga.

Standardized Coefficients

BStd.

ErrorBeta

(Constant) -12,898 7,958 -1,621 ,129

PriPerc ,630 ,244 ,412 2,586 ,023

ProQuaP ,049 ,268 ,036 ,182 ,858

CRM ,691 ,163 ,670 4,236 ,001

Model

Unstandardized Coefficients t Sig.

1


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Kotler, Philip, et, al. 2000. Marketing Manajemen an Asian Perspective. Jakarta : Prentice Hall

Kotler dan Keller. 2009. Manajemen Pemasaran. Jilid I. Edisi ke 13. Jakarta: Erlangga

Storbacka, Kaj, Lehtinen, R Jamor, (2001) Customer Relationship Management Creating Competitive Advantage Through Win Win Relationship Strategies. New York: McGraw Hill, Inc

Sugiyono. 2008. Metode Penelitian Kuantitatif Kualitatif dan R&D. Bandung : ALFABETA

Yamin, Martinis.2013. Strategi dan Metode dalam Model Inovasi Pembelajaran . Jakarta : Gaung Persada Press group

Zikmund, William G., McLeod Jr, Raymond., Gilbert, Faye W. (2003). Customer Relationship Management: Integrating Marketing Strategy and Information Technology. John Wiley and Sons Inc., USA.


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Agro-Innovation – Path to Agricultural Entrepreneurship: Feasibility Study

Elias

Kamaruzzaman Post Graduate

Student Faculty Business

Management UiTM Shah Alam

Norzaidi Mohd Daud

Chairman CoRe and Director IRMI,UiTM,

Shah Alam

Samsudin Wahab Lecturer

UiTM Permatang Pauh, Penang

Rozhan Abu Dardak

Deputy Director General (Services),

Mardi, Serdang

ABSTRACT Technology changes will always be for the better, not only to the end users but also to the intellectual property owners of the technology and the implementers of the technology. The objective of this paper is to study the feasibility and viability for entrepreneurs to become service providers for the dispensation of fertilizers, pesticides, fungicides and supporting services such as aerial crop reconnaissance using Unmanned Aerial Vehicles (UAV) or drones. The methodology used for this study is SWOT Analysis. Both primary and secondary data is used for this analysis. This study finds that paddy farming employing drones is feasible. The beneficiaries of this study shall be the government, by way of lowering financial cost to subsidise the paddy planting, the farmers who no longer need the services of migrant workers, thus saving production cost, and finally the drone service providers and their downstream business associates who can engaged themselves in very lucrative businesses.

Keywords “Agro innovation, unmanned aerial vehicles, organic fertilizers, entrepreneurs”

INTRODUCTION The total area of paddy field in Malaysia is 689,730 hectares (Ricepedia, 2015) The yield in Malaysia is 4.04 mega-ton / hectare (mt/hectare). On the contrary, it has been reported that the Chinese ethnic rice farmers in the Sekinchan area in Selangor average about 9 (mt/hectare) (Muthiah, 2016).

Paddy farming has traditionally been a very labour-intensive activity. One of the bigger problems is the need to address farm labour shortages. (Bloss, 2014). Bloss further stated that robots and many new and innovative methodologies for performing traditional agricultural tasks of all types are now available. Tasks such as dispensing of fertilizers, pesticides, fungicides and weed killers are very important jobs to achieve the standard for good agricultural practises which will ultimately lead to producing a higher yield. For these tasks, the Unmanned Aerial Vehicles (UAVs) is probably the solution. With a recorded yield of 4.04 mt/hectare, the rice production self-sufficiency level (SSL) stood at 72% (Insight, 2018). As a result of the shortfall of 28% of the SSL, Malaysia imported 900,000 metric tons of rice in 2016 worth RM1.57 billion. (Levels, 2017). Compared to other countries in South East Asia, Malaysia is lacking behind. See Figure 1 below.

Figure 1. Paddy yield in south east asian countries. Source

levels (2017) The current use of mechanization in rice farming is limited to ploughing using tractors to prepare the land before planting and mechanical harvesters. The rest of the chores are done using human labour, most of whom are workers from Indonesia, Myanmar, and Bangladesh. In short, rice farming using the present method is very costly in production.


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1.1 Issues and problems The issue faced by the paddy farmers in Malaysia is the low yield at 4.04 mt/hectare, compared to the 9.0 mt/hectare at Sekinchan (Muthiah, 2016) (Muthiah. From the issues of low yields and the high production cost, the problems that arose can be summarised as: Low income for the farmers; low quality of life for the farmers and their families; not attractive for the younger generation to work on the farm. To augment the small income from the paddy farming, farmers are forced to take on secondary jobs elsewhere. This, in turn, will cause them to further neglect their paddy farm. Numerous studies have been conducted in more agriculturally advanced countries for wheat, millet, corn, and vegetables with success. However, very little studies have been conducted on the use of state-of-the-art mechanization and especially UAVs for paddy farming in Malaysia.

Objectives The main objective of this paper is to study the feasibility for entrepreneurs to become service providers for the dispensation of fertilizers, pesticides, fungicides and supporting services such as aerial crop reconnaissance. The specific objectives are to investigate if use of UAVs or drones to lower production cost without compromising on the yield is feasible, to investigate if the present fertilizer subsidies can be dispensed by UAVs and if in the negative to investigate substitute fertilizers, pesticides and fungicides that can work with UAVs, and to investigate feasibility of providing financially viable services and downstream business to the farmers.

Scope and Limitation of Study This study shall only cover the farmers' ability to practise good agricultural practices leading to higher yield and the ability to replace migrant labour by using UAVs, which at the same time will lower the production cost. Other related factors such as government policies and other aspects of agro-innovation shall be studied at a later time.

LITERATURE REVIEW Government Fertilizer Subsidies In the seventies, farmers in the rural areas of Malaysia were generally poor (Economic Planning Unit, 2010). More than two third of Malaysians, are Malays or Bumiputeras. In the poorer northern parts of Malaysia, quite a significant number of villagers are rice farmers. There exists a stigma then, where the association between farming and rural life creates a somewhat negative image of agriculture (Jan, 2011). As a result of this negative stigma, farming is seen as a job fit only for the poor. It is rare for members of the younger generation to aspire to be farmers, hence the urban migration. The government on the other hand, and without any doubt, see farming as a vital economic activity in rural areas. Chemical based herbicides, pesticides, and fertilizers are also widely used in Malaysian farms. Weeds are the biggest single problem that can reduce yields by up to 90 percent. Similarly, rodents, insects, and fungi will also further reduce yield. Nearly all herbicides, insecticides, fungicides, and rodenticides were given to the farmers as government subsidies, are chemical-based, as they are cheaper and more easily available (Jan, 2011) However, it is known that chemical-base herbicides, insecticides, fungicides, and rodenticides have their own environmental problems. It was concluded that the overall policy implication indicated that paddy production in Malaysia cannot be sustained without fertilizer

subsidy and the farmers are not willing to buy their own fertilizer. (Ramli, 2012) The present government subsidies per hectare of paddy is two hundred and forty kilograms of granular chemical-based fertilizers, worth RM600.00, and RM320 worth of both liquid and powder form of pesticides and fungicides making a total of RM920.00 At this stage, this researcher wishes to state that granular fertilizers are only dispensed manually or by using back-pack mechanical blowers. Either way, the workers have to tread into the field to apply a more even dispense of fertilizers. This causes damages to the rice plants which in turn will reduce the yield. Migrant labours are used to dispense the fertilizers. Likewise, the dispensation of pesticides and fungicides are done by migrant workers and incur costs to the farmers. Granular fertilizers presently can only be dispensed by hand or blowers on the backpack. The more advanced UAVs are able to dispense fertilizers, pesticides, and fungicides in liquid form in a single operation. Hence, if the plan is to use UAVs then the granular fertilizers have to be discarded and instead replaced by liquid fertilizers. There are now available in the market liquid form of fertilizers, pesticides, and fungicides that can be dispensed in one operation, thus saving time, labour and cost. One such liquid form of fertilizers, pesticides, and fungicides have been produced by a Thai scientist and available in the market. The important aspect of this Thai product is, it is organic, and can be sprayed onto paddy fields in mist form using UAVs. This researcher has experience with these Thai products dispensing with DJI Argas MG1 Auto Copter Drone. The more frequently used mix is 6 ml each of the fertilizer, pesticides, fungicides, and vaccine using stem cell technology to repair and prevent damages from diseases, to 20 litres of water. Each hectare would require 40 litres of water. Using the 6ml to 20 litre mix for each hectare the requirement shall be 48 millilitres.

Dispensing of Fertilizers by UAV or drone. The most popular brand of UAV for agriculture in agriculturally advanced countries is the DJI Argas MG-1. This is a quadcopter with eight engines. Manufacturer specification is as shown in Table 3 below.

Table 1. Capabilities of DJI Argas MG-1

Payload 10 litres or 10kg

Dispensing time 20 minutes per hectare

Maximum flying time per day

4 hours due to battery constraint

Productivity per day

12 hectares per day

Cost per hectare for 1 season

RM220 per hectare

In summary, with the current system, the government contributes RM920.00 worth of fertilizers for 1 hectare per season, whereas the proposed system the government only contributes RM175. It is evident that there is a saving of RM745 (920 – RM175) per hectare per season using the proposed system.

METHODOLOGY The total size of rice fields in Malaysia at 689,730 hectares (Ricepedia, 2015) is too voluminous for the purpose of this study. Instead, a parcel of 240 hectares, which normally is about the size


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controlled by a Persatuan Peladang Kawasan (PPK) will suffice and if successful can be replicated throughout Malaysia. As this study is more inclined towards entrepreneurship the SWOT Analysis as developed by Albert Humphrey in the early nineties shall be used as an instrumentation to resolve this problem.

Data Analysis Primary data are collected from field surveys and open-ended interview questions with local farmers, officers of government paddy agencies and migrant workers at survey sites, while secondary data are gathered from reliable sources such as statistical report and manufacturer's specifications of both UAVs and fertilizers. Both primary and secondary data are analysed using content analysis and further analysed using the strategic management tool - SWOT methodology.

SWOT Analysis

Strength Weaknesses

* The support from the Ministry of Agriculture and Agro-based Industries and supporting agencies can be counted upon if this project can bring in a higher yield and at a lower production cost.

* Mind sets of older farmers need to be changed and this will not be easy. It may take time but will not be of much problems if they can see with their own eyes that the new technologies give them better yield and better money and with lighter workload.

* If this project requires some changes in land use and financial policies, the Government can be counted to give full support.

* There is going to be a reverse migration of the younger generation from the urban areas back to their villages. There is bound to be minor cultural problems but not difficult to deal with.

* The country has a vast pool of young technocrats who are able to operate new machines such as the UAVs.

* These younger generations migrating back to the villages will have higher level of education in engineering, chemistry and administration. The local population may take time to readjust their way of living.

* Dependency on migrant workers shall be minimised.

* Initially the district middle level workers in the agriculture industries may not cooperate with the new technocrats, but time will change.

* If the project can benefit farmers financially and socially it will be easily accepted.

* If fertilizers subsidies are replaced by the fertilizer service providers, some farmers may not be too happy with the change as there is empirical knowledge on pilferages with fertilizers.

* Any business projects that can achieve the same or better benefits at a lower production cost compared to an existing system, will ultimately earn a fatter margin and be readily accepted by its clients.

* This is a business opportunity that has never been offered seriously to the customers and with government support will be a sure success.

*Products of farming using organic fertilizers will have a higher demand in the world market even though priced slightly higher

Opportunities Threat

* Any change for the better and at the same time save government money giving huge subsidies will be grabbed by the newly installed government.

* It is empirical knowledge that a business organization in the northern state of Malaysia is aggressively pursuing a similar service. The essence of time in launching this business is important.

* It will open up blue-collar job opportunities to thousands of young local technocrats.

* If this project is initiated and controlled by the government, the likelihood is that, no threat would exist.

* Opportunities will be available to young entrepreneurs to conduct businesses as service providers and other downstream businesses.

* With a higher yield at lower production cost, a self-sufficiency level in excess of 100% is achievable.

FINDINGS This study finds that by using UAVs instead of the present manual migrant labour, there is a lot of savings in times and costs. The cost for the dispensation of fertilizers, pesticides, and fungicides is cheaper and more efficient than the current dispensation by migrant workers. Hence, the use of UAVs in the paddy growing industry is both sellable and will be very well received by the farmers. Not only that, we can do away with migrant workers and instead use locals for blue collar jobs. This study established the viability


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and feasibility of businesses opportunities for our budding entrepreneurs. To support the statements in the two above paragraphs, let us assume an area of 240 hectares would require fertilizers, pesticides, and fungicides application.

Case One. [Old Method] Twenty men equipped with the present method of dispensing (mechanical blowers), fertilizers, pesticides, and fungicides given as government subsidy. The time required for 20 men to complete the job in an area of 240 hectares shall be 20 days. Whereas;

Case Two [The Proposed Method] Four men with 2 UAVs, using drone friendly fertilizers, pesticides and fungicides which can be applied in one operation, the time required to complete the job shall be 10 days.

The next consideration is cost. For the purpose of comparison, the same area size of 240 hectares shall be used. Case One [Old Method]

The number of fertilizers, pesticides, fungicides and their costs for 1 hectare for 1 season are as follows:

a Fertilizers (12 bags per application) RM600.00 b Pesticides RM160.00 c Fungicides RM160.00 d Labour for applying fertilizers RM144.00

e Labour for applying pesticides & fungicides RM150.00

Total RM1,297.00 Case Two [New method] The per hectare per season cost of fertilizers, pesticides, and fungicides:

a Drone services RM220.00

b Fertilizers RM175.00

Total RM395.00

In summary, with the present system, it takes 20 days with 20 men working to apply fertilizers, pesticides, and fungicides, while with using UAVs it takes 10 days with 4 men with 2 drones to apply same. Worthwhile noting that the cycle for the application of fertilizers, pesticides, and fungicides is 15 days, except between day 30 to day 50 which is 20 days. This being the case one would definitely need more than 20 workers to work in an area of 240 hectares. On the other hand, by using 2 drones with 4 men, the time taken is only 10 days. From the study, we find that there is a saving of labour and costs for paddy production. These savings gives the opportunity to the farmers to practise good agricultural practices resulting in higher yield. Higher yield and lower production cost translate into more income for the farmers. Without a doubt, the

objectives of this research are achieved and research questions answered From the entrepreneur perspective, a paid-up capital of RM300,000 is sufficient to start a business with 2 drones, employing about 7 technical and 3 admin staff. Summary of financial figures derived from detail forecasted profit and loss over a period of 2 years by month are as shown below:

Table 2. Summary of start-up cost, forecast of profit and loss for each year

Suggested paid-up capital

RM300,000 Gross profit per month

RM41,300

Expected sales per month

RM69,800 PBT at end of year 1

RM194,400

Monthly expenditure

RM28,500 PBT at end of year 2 onwards

RM547,900

Details of forecasted profit and loss in spreadsheet are available but intentionally omitted here because of its business confidentiality.

RECOMMENDATIONS AND CONCLUSION It is recommended that the government, takes a serious view on this study to overcome the problems of shortage of labour, high production cost which resulted in lower yield thus directly will influence the rice self-sustainable level of the nation. The government is encouraged to start a pilot project and when successful replicate to other rice fields in the country. The older rice farmers must open up to new technologies instead of depending on decade-old practices. The younger generation must erase the perception that paddy farming is a low-class job which will now be reclassified as blue collar jobs. The government must be daring enough to invest a small sum of RM 300,000 to start this pilot project. For this amount, the return on investment on 240 hectares is RM353,500 a year. The total size of paddy land in Malaysia is 689,730 hectares. Simple arithmetic can generate the total income if implemented nationwide. Furthermore, thousands of young Malaysians will be blessed with blue collar jobs. By the grace of Allah: Who Dares Wins.

REFERENCES Bloss, R. (2014). Robots Innovations Brings to Agricultural

Efficiency, Safety, Labour Savings and Accuracy. Economic Planning Unit, G. o. (2010). Tenth Maloaysia Plan

2011-2015. Insight, M. (2018). Malkaysia's Rice Production. Self Sufficiency

Level at &2%. Insight.


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Jan, W. (2011). Modern Agrothechnology and Subsidies in Malaysia Agriculturew: Are We Using Them Wisely. IDEA.

Levels, S. (2017). Muthiah, W. (2016). Padii Farmers: Do more for our rice bowls.

Ramli, S. (2012). Impact of Fertilizer Subsisidy on Malaysia Paddy/Rice Industrey Using a System Dynamic Approach. International Journal of Social Science and Humanity.

Ricepedia. (2015). The On Line Authority on Rice. .


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The Effect of Individual Characteristics, Employees Commitment, Job Stress on job satisfaction and

employees performance in PT. Timbul Persada in Turban East Java

Tika Wahyunanti Student of Master of

Management Faculty of Economics and Business

University of 17 Agustus 1945 Surabaya Indonesia [email protected]

Dewa Ketut Raka Ardiana Lecturer of Faculty of

Economics And Business

University of 17 Agustus 1945 Surabaya Indonesia

[email protected]

Mohammad Sihab Ridwan Lecturer of Faculty of

Economics And Business

University of 17 Agustus 1945 Surabaya Indonesia

[email protected]

ABSTRACT Human resources have a very important role in the company's activities. Therefore, the contribution of employees is needed for the company to achieve its objectives. The purpose of this study is to attest and analyze the influence of individual characteristics, employee commitment, job stress on job satisfaction and employee performance on PT. Timbul Persada Tuban East Java. This research uses the type of causality research with quantitative approach. Population taken in this research is all staff and manager at PT. Timbul Persada who is a permanent employee. Using total sampling technique with 95 employees. Data collection was done by distributing questionnaires. Data analysis technique used is SEM analysis with PLS program. the results of the study were accepting the hypotheses 1,3,4,5 and 7 while the hypotheses 2 and 6 were rejected.

Keywords Individual characteristics, job stress, job satisfaction, employee performance.

INTRODUCTION The important role is held by human resources in carrying out company activities. The success of a certain company in achieving its goals depends on the ability of the human resources or its employees to carry out their duties can be seen through their performance, so that employees’ performance is very important to the success of the company.

The demands for high employees performance are part of every company since a successful company cannot be separated from performance of its employees, but not all company have high performance employees, as found by the researcher at PT. Timbul Persada that there are several employees whose performance are still less than maximum seen from the target that cannot be achieved. Further, the result of the interview with General Manager of PT. Timbul Persada indicates that there is an impact of individual characteristics such as the different skill and ability levels between employees when they are working.

The performance can be influenced by the commitment due to the commitment of the work itself.The initial interview results indicate

the existence of work stress which has an impact to the low employment satisfaction, as explained by Robbins and Judge (2016) which said that the psychological impact of stress can reduce employees’ job satisfaction.

According to the background and explanation above, this study aims to analyse the effects of individual characteristics, employees’ commitment, job stress on job satisfaction and employees performance at PT. Timbul Persada in Tuban, East Java.

THEORETICAL REVIEW

Hasibuan (2014) defined the individual characteristics as the nature of human who can be changed through education or the environment. Revai (2014) stated that the individual characteristics, morals, mental characteristics, or characters possessed by someone can be distinguished with the others.

Zurnali (2010) defined commitment as a strong and close feeling of a person towards the goals and values of an organization in relation to their role to achieve these goals and values. According to Mowday in Muchlas (2008), employees’ commitment is often called as organizational commitment. Mangkunegara (2010) defined job stress is the feeling of distress experienced by employees while working. This can be seen from emotional instability, feeling depressed, increased blood pressure and indigestion. Handoko (2011) stated that work stress is an emotion, someone’s condition and the process of thinking influenced by a condition of tension. High stress can suppress a person’s ability in dealing with the environment.

Job satisfaction is closely related to employee attitudes towards various factors in work, such as: work situation, social influence in work, reward, and leadership, and the other factors. Job satisfaction is a response or emotional effectiveness to various aspect of work (Kreiner and Kinicki, 2014). Employment satisfaction refers to the commonly attitude seen by employees towards their work. Recently, performance is what the employees do or do not do. In general, employees’ performance includes elements of quantity of results, quality, presence, and timeliness and ability to work together (Mathis and Jackson, 2016). Work performance or


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achievement is a work result obtained by someone in carrying out the job given. Sutrisno (2014) also explained the same thing, he stated that the performance of employees is the result of employees’ work assessed from the aspect of quantity, quality, work time, and cooperation in order to achieve the goals set by the company.

Figure 1: Conceptual framework

Hypothesis

H1 : Individual Characteristics have a significant effect on Job Satisfaction in PT. Timbul Persada in Tuban, East Java.

H2 : Employees Commitment has a significant effect on Job Satisfaction in PT. Timbul Persada in Tuban, East Java.

H3 : Job Stress has a significant effect on Job Satisfaction in PT. Timbul Persada in Tuban, East Java.

H4 : Individual Characteristics have a significant effect on Employees Performance in PT. Timbul Persada in Tuban, East Java.

H5 : Employees Commitment has a significant effecr on Employees Performance in PT. Timbul Persada in Tuban, East Java.

H6 : Job Stress has a significant effect on Employees Performance in PT. Timbul Persada in Tuban, East Java.

H7 : Job Satisfaction has a significant effect on Employees Performance in PT. Timbul Persada in Tuban, East Java.

RESEARCHMETHODS

These studies uses a causal research that explains the relationship between free variables and bound variable, and measure their strengths (Kuncoro, 2013) and use quantitative methods. The population in this research is all managers and staffs in PT. Timbul Persada Tuban, East Java, who are the permanent employees, consist of 95 employees. In this study, the sampling technique used is sampling jenuh. Therefore, the numbers of samples taken in this study are 95 managers and staff of PT. Timbul Persada Tuban, East Java, who are the permanent employees.

Individual characteristics in this study are measured through several dimensions which refer to Saputri and Yuniati (2016: 7), namely: Ability, Personality, Attitudes, Interests, and Needs. Research measures Employees Commitment through several indicators which refer to Allen and Meyer in New Zealand (2010) which consist of: Affective Commitment, Continuance Commitment, and Normative Commitment. In this study, job stress is measured through several indicators which refer to Hasibuan (2014), such as: Workload, leader attitude, work time, conflict, communication, and work authority. This study measures Job Satisfaction through several indicators which refer to Luthans (2011), such as: The work itself, Pay, Promotion opportunities,

Supervision, Co-workers. Employees’ performance is measured using indicators which refer to Mathis and Jackson (2016: 378), such as: Work quantity, work quality, time utilization, cooperation. In order to collect the data needed, therefore the data used in this research is the primary data. The source of primary data used is by spreading the questionnaire. The questionnaire used by the researcher is closed questionnaire, which are given the answer choice so that the respondents only choose the answer in the prepared column (Arikunto, 2013). The technique used to analyse the data and to examine the hypothesis in this study is The Structural Equation Model (SEM). To examine the hypothesis, the technique used is Partial Least Square (PLS) with 2.0 version of SmartPLS software.

THE DATA ANALYSIS AND DISCUSSION

Validity Test According results of the analysis, which shown that, the value of convergent validity in each indicator has a loading value in over 0.5 which means all indicators are valid. Discriminant validity test towards the indicators can be known in cross leadings between the indicator and its construct. The result shows that there is a good discriminant. Discriminant validity is also measured by the Average Variance Extracted (AVE). The AVE is used to examine the construct variable reliability. The result of the AVE test can be seen in Table 1 below:

Table 1. The Value Average Variance Extracted (AVE)

The results of the AVE value to indicator block that measure the construct, have a good discriminant validity value. This means that all construct variables are reliable. Reliability Test The reliability test which uses composite reliability from indicator block that measures construct (Ghozali and Latan, 2012).

Table 2. Composite Reliability Based on the table 2, it can be explained that from the provision of composite reliability, so it can be declared that the overall

Construct AVE

Individual Characteristics (X1) 0.914

Employees Commitment (X2) 0.912

Work Stress (X3) 0.951 Job Satisfaction (Z) 0.948

Employee Performance (Y) 0.934

Construct AVE

Individual Characteristics (X1) 0.515

Employees Commitment (X2) 0.540

Work Stress (X3) 0.620 Job Satisfaction (Z) 0.646

Employee Performance (Y) 0.640


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constructs analysed are fulfil the criteria of composite reliability, therefore every construct is able to be positioned as research variable. It indicates that all variables have sufficient internal consistency in measure the laten variable measured, so it can be used in the next analysis. Hypothesis Test

To answer the research hypothesis, it can be seen in t-statistic in the table 3 below.

Table 3. Table Inter Construct

4.2 Discussion The effect of Individual Characteristics towards Job Satisfaction in PT. Timbul Persada, Tuban, East Java.

Based on the results of the research, there is positive and significant impact between Individual Characteristics towards Job Satisfaction. It can be seen from the t-statistic value of 3,341 which means greater than 1,96. It means that, if the employees of PT. Timbul Persada Tuban East Java have good individual characteristics, so it will be followed by higher job satisfaction.

The effects of both variables show the positive impacts, therefore the better individual characteristics, the more job satisfaction of

employees will increase. It proves that the high satisfaction can be formed through good individual characteristics, so that if PT. Timbul Persada Tuban East Java wants to improve the job satisfaction, it is very important to pay attention on individual characteristics. It supports the theory by Thoha (2010) which explains that an individual characteristic is a behaviour or character that exists in an employee both positive and negative.

The results of this research support the findings on the research by Husein and Hady (2012), and Lubis (2012) who found that individual characteristics have positive impact to job satisfaction of the employees.

The effect of the Employees Commitment towards Job Satisfaction in PT. Timbul Persada Tuban East Java

The result of the data analysis shows that the Employees Commitment does not have a significant impact on the Job Satisfaction in PT. Timbul Persada Tuban East Java. It is indicated by the T-Statistics values produced by Employees Commitment lower than 1,96 which is 0,146. Thus, the hypothesis is not accepted. The insignificant impact of employees commitment towards job satisfaction shows that the stronger employees commitment is not necessary able to increase the job satisfaction of the employees. It rejects the theory found by Noe et al (2011) which explains that the organizational commitment is the extent to which an employee identifies the organization and to propose his self. The employees who have high organizational commitment will propose themselves to assist the organization in facing challenges.

The results of this research are not in accordance with the findings found by Renyut et al (2017) and Dadie and Nugraheni (2016) which prove that the organizational commitment has positive and significant impacts to job satisfaction.

The effect of Work Stress towards Job Satisfaction in PT. Timbul Persada Tuban East Java.

Based on the results of the research, it is known that Work Stress has a negative and significant impacts on Job Satisfaction, it is seen from the t-statistics value of 2,589 which greater than 1,96. The direction of the relationship of both variables is negative which means that the lower works stress, the higher job satisfaction of the employees. Then, the hypothesis is accepted.

It indicates that the high job satisfaction can be formed through the low work stress, therefore, if PT. Timbul Persada Tuban East Java wants to improve job satisfaction, it is important to reduce work stress experienced by the employees. It supports the theory found by Robbins and Judge (2016: 377) which explains that reducing job satisfaction is one of the impacts of psychological stress.

The results of this research is in accordance with the findings of Shofiah et al (2017), Adawiyah and Siswanto (2015) which prove that work stress has negative and significant impact to job satisfaction.

The effect of Individual Characteristics towards Employees Performance in PT Timbul Persada Tuban East Java

Based on the results of the research, it is known that there are positive and significant impacts between Individual Characteristics towards Employees Performance. It can be seen through t-statistics value of 2,565 which means greater than 1,96. It means that, the employees in PT. Timbul Persada Tuban East Java have good individual characteristics will able to improve their performance. Therefore, the hypothesis is accepted.

Original sample

estimate

Mean of sub sample

s

Standard deviation

T-statistic

s

Information

Individual Characteristics (X1) -> Job Satisfaction (Z)

0.468 0.439 0.140 3,341 Significant

Employee Commitment (X2) -> Job Satisfaction (Z)

0.029 0.051 0.201 0.146 Not Significant

Job Stress (X3) -> Job Satisfaction (Z)

-0.266 -0.272 0.103 2,589 Significant

Individual Characteristics (X1) -> Employee Performance (Y)

0.264 0.282 0.103 2,565 Significant

Employee Commitment (X2) -> Employee Performance (Y)

0.253 0.228 0.117 2,166 Significant

Job Stress (X3) -> Employee Performance (Y)

-0.028 -0.034 0.099 0.284 Not Significant

Job Satisfaction (Z) -> Employee Performance (Y)

0.444 0.446 0.117 3,799 Significant


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The positive impact means that high employees’ performance will be formed through good individual characteristics, therefore if PT. Timbul Persada Tuban East Java wants to improve the employees’ performance, so it is important to pay attention on the individual characteristics.

This research is in accordance with the findings of Saputri and Yuniati (2016) who examine the employees of PT BRI (Persero) Tbk Branch Kapas Krampung in Surabaya. It is found that the individual characteristic has a significant impact to the employees’ performance.

The effect of Employees Commitment towards the Employees Performance in PT. Timbul Persada Tuban East Java

The result of the data analysis shows that the Employees Commitment has significant impact on the Employees Performance in PT. Timbul Persada Tuban East Java. It is indicated by the T-Statistics value produced by Employees Commitment variable is above 1,96 which is 2,166. Therefore, the hypothesis is accepted.

The employees’ performance can be improved through the high employees’ commitment. Therefore, this study supports the theory explained by Verawati and Utomo (2011) which stated that performance can be influenced by commitment, since work commitment itself is a source to increase the employees’ comfortness in working. Therefore, if PT. Timbul Persada Tuban East Java wants to increase its employee’s performance, it is very important to pay attention on how much employee’s commitment to the company.

This research is in accordance with the finding of the research by Hidayat (2012) and Suryahadi (2015: 629) which state that to improve a higher employees’ performance, it needs serious attention.

The Effects of Work Stress towards Employees Performance in PT. Timbul Persada Tuban East Java

The result of the data analysis shows that Work Stress does not has a significant impact on Employees Performance in PT. Timbul Persada Tuban East Java. It indicates by the T-Statistics value produced by Work Stress variable lower than 1,96 which is 0,284. Therefore, the hypothesis is accepted.

This result denies the theory explained by Robbins and Judge (2016) which stated that a high level of stress can influence performance, since it becomes a threat to someone’s ability in facing the environment. This result also is not in accordance with the theory by Siagian (2009). The insignificant impact of work stress to employees’ performance is in accordance with the finding by Adawiyah and Siswanto (2015).

The effects of Job Satisfaction towards the Employees Performance in PT. Timbul Persada Tuban East Java

The result of the data analysis shows that Job Satisfaction has positive and significant impacts to the Employees Performance in PT. Timbul Persada Tuban East Java. It is indicated by the T-Statistics value produced by Employees Commitment variable upper 1,96 which is 3,799. Therefore, the hypothesis is accepted.

The employees’ performance can be improved by the higher employees’ job satisfaction. It is in accordance with the theory by Umar (2005) which explains that the impact of job satisfaction will be linked to several outputs produced, one of them is by the performance. Therefore, if PT. Timbul Persada Tuban East Java wants to improve its employees’ performance, it is very important

to pay attention on how much the satisfaction of the employees while working on the company. The result of the research is in accordance with the finding of Renyut et al (2017), Syaifuddin (2017), Dadie and Nugraheni (2016) who found that job satisfaction has positive and significant impacts to the employees performance.

CONCLUSION Based on the results of the research which have been

done, it can be concluded below:

1. The Individual Characteristics has significant and positive impacts to the Job Satisfaction in PT. Timbul Persada Tuban East Java.

2. The Employees Commitment does not have significant impact to the Job Satisfaction in PT. Timbul Persada Tuban East Java.

3. Work Stress has significant and negative impacts to the Job Satisfaction in PT. Timbul Persada Tuban East Java.

4. The Individual Characteristics has significant and positive impacts to the Employees Performance in PT. Timbul Persada Tuban East Java.

5. The Employees Commitment has significant and positive impacts to the Employees Performance in PT. Timbul Persada Tuban East Java.

6. Work Stress does not have significant impact to the Employees Performance in PT. Timbul Persada Tuban East Java.

7. The Job Satisfaction has significant and positive impacts to the Employees Performance in PT. Timbul Persada Tuban East Java.

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Jakarta: Gramedia Pustaka Utama. Renyut, B.C., H.B. Modding., J. Bima., dan St. Sukmawati. 2017.

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Robbins, S.P., dan T. A Judge. 2016. Perilaku Organisasi. Edisi Keenambelas, Cetakan Pertama. Jakarta: Salemba Empat

Saputri, T.D.D., dan T. Yuniati. 2016. “Pengaruh Karakteristik Individu, Pekerjaan, Dan Lingkungan Kerja Terhadap Kinerja Karyawan”, Jurnal Ilmu dan Riset Manajemen, Vol. 5, No. 8, pp.1-18.

Siagian, S. 2013. Manajemen Sumber Daya Manusia. Jakarta: Bumi Aksara. Subyantoro, A. 2009. “Karakteristik Individu, Karakteristik

Pekerjaan, Karakteristik Organisasi dan Kepuasan Kerja Pengurus yang Dimediasi oleh Motivasi Kerja (Studi pada Pengurus KUD di Kabupaten Sleman)”, Jurnal Manajemen Dan Kewirausahaan, Vol.11, No. 1, pp.11-19

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Characteristics, Employees’ Competency and Organizational Climate on Job Satisfaction and Employees’ Performance at a State-Owned Trading Company in Indonesia”, Expert Journal of Business and Management, Volume 5, Issue 2, pp. 83-90

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Organisasi, Partisipasi Dan Motivasi Terhadap Kinerja Karyawan Pada PT. Bank Lippo Tbk Cabang Kudus”, Analisis Manajemen, Vol. 5, No.2, pp.1-8

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“The Impact of Competence and Talents Management on

SMI’s Performance of Batik Production in East Java, Indonesia”

Siti Munajah

University 17 Agustus 1945 Surabaya Toyyib

University 17 Agustus 1945 Surabaya

ABSTRACT Tujuan dari penelitian ini adalah untuk menganalisis pengaruh Kompetensi dan Talenta terhadap Kinerja Usaha Kecil dan Menengah Batik di Kabupaten Bangkalan, Indonesia. Penelitian ini dilakukan dengan menggunakan pendekatan kuantitatif, sumber data adalah data primer yaitu data yang di peroleh melalui survey dengan instrumen kuesioner. Populasi dalam penelitian ini adalah pemilik usaha atau pengelola Usaha Kecil Mikro Batik di Kabupaten bangkalan, Madura Indonesia yaitu sebanyak 80 responden dan semua populasi diambil sebagai sampel atu total population sample. Teknik Analisis data di lakukan dengan analisis regresi untuk mengetahui pengaruh kompetensi dan talenta terhadap kinerja UKM Batik, sedangkan untuk menguji masing-masing hipotesis di gunakan Uji-F dan Uji-t dengan menggunakan software SPP versi 24. Hasil penelitian menunjukkan bahwa kompetensi dan talenta secara parsial maupun simultan berpengaruh signifikan terhadap kinerja UKM Batik.

Keywards Kompetensi, Talenta dan Kinerja UKM

INTRODUCTION Usaha Mikro Kecil dan Menengah (UMKM) memiliki peran terhadap produk domestic bruto mengalami peningkatan dan menggeliat dalam 5 tahun terakhir. Hal itu dikarenakan Kementrian Koperasi dan Usaha Kecil Menengah (UKM) Indonesia telah memberikan peluang dan pendampingan terhadap UMKM. Kementrian telah mencatat bahwa kontribusi disektor UMKM meningkat mulai dari 57.84 persen menjadi 60,34 persen. Disamping itu UMKM juga mampu menyerap tenaga kerja di dalam negri, tenaga kerja UMKM tumbuh dari 96,99 menjadi 97,22 persen dalam 5 tahun terakhir. Hal itu berdampak pada pertumbuhan ekonomi Indonesia menjadi lebih baik (Henry Aryco, 2017)

UKM terbesar di wilayah Indonesia, salah satunya adalah pengrajin batik, Beberapa wilayah yang menjadi pusat pengrajin batik di Indonesia antara lain Pekalongan, Solo, Yogyakarta, Sidoarjo, Madura, dan kota lainnya. Bangkalan Madura merupakan salah satu pusat UKM batik yang telah dikenal sejak lama menjadi sentra batik terbagus di Madura dan banyak di minati oleh semua konsumen terutama yang dari luar kota.

Peningkatkan UKM Batik di Wilayah Bangkalan tidak lepas dari Upaya Dinas Koperasi dan Perdagangan dalam memberikan

ketrampilan sehingga menjadi kompeten. Menurut Spencer & Spencer (1993) kompeten adalah suatu karakteristik dasar yang dimiliki oleh seorang individu yang berhubungan secara kausal dalam memenuhi kriteria yang diperlukan dalam menduduki suatu jabatan. Kompetensi terdiri dari 5 tipe karakteristik, yaitu motif (kemauan konsisten sekaligus menjadi sebab dari tindakan), faktor bawaan (karakter dan respon yang konsisten), konsep diri (gambaran diri), pengetahuan (informasi dalam bidang tertentu) dan keterampilan (kemampuan untuk melaksanakan tugas). (Sugiyono, 2015).

Menurut Ida Ayu Oka Martini et all (2018) Kompetensi karyawan terdiri dari tiga dimensi yaitu pengetahuan, keterampilan, dan dimensi sikap, dan kompetensi karyawan berpengaruh signifikan terhadap kinerja, dan bahkan menunjukkan pengaruh terkuat di antara variabel lain. Sebagaimana hasil penelitiannya Sethela & Rosli (2011) yang menyatakan bahwa Kompetensi berpengaruh positif dalam meningkatkan kinerja. Kompetensi menyebabkan seseorang melakukan suatu pekerjaan dengan baik (Spencer & Spencer, 1993), demikian juga hasil penelitiannya Sumantri (2018) bahwa Kompetensi berpengaruh terhadap kinerja.

Selain kompetensi yang diperlukan untuk meningkatkan kesuksesan berwirausaha adalah pengembangan potensi diri UKM atau talenta yang harus di kembangkan melalui manajemen talenta dalam mencapai kesuksesan dalam berusaha karena variabel kompetensi merupakan kemampuan dari eksternal seseorang yang bisa di pelajari dan di tingkatkan, namun kalau talenta merupakan bakaat seseorang yang berasar dari pembawaan yang tidak bisa dirubah namun bisa de kelola untuk mencapai sukses dalam menekuni bidang yang dilakukan sehingga sukses. Menurut David Kurniadi (2009) Talenta adalah kemampuan yang khas yang dimiliki seseorang untuk dapat berprestasi pada bidang-bidang tertentu sesuai dengan talenta yang dimilikinya. Seseorang yang memiliki talenta berbisnis mempunyai kemampuan berfikir untuk melihat kebutuhan sebagai peluang. Mampu menghasilkan gagasan untuk memenuhi kebutuhan, dan menggunakannya sebagai kesempatan untuk menghasilkan uang dan menaikkan taraf kehidupannya.

Sedangkan Muhfirman (2014) menyatakan bahwa Talent yang diartikan sebagai Bakat atau Talenta yang melekat dalam diri seseorang. Bakat yang dimaksud disini adalah Sekumpulan karakteristik alamiah seseorang, yang merupakan accelerator, faktor yang mempercepat penguasaan skill atau kompetensi


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seseorang serta mendorong munculnya performance yang luar biasa.sedangkan manajemen talenta dalam perusahaan, mengacu pada langkah-langkah khusus perusahaan untuk merekrut, mengembangkan dan mempertahankan kelompok orang-orang yang bertalenta (Asri, Nadira Femitri, 2017), manajemen talenta berpengaruh positif terhadap kinerja karyawan.

Berdasarkan fenomena diatas maka penelitian ini dilakukan untuk menganalisis bagaimana pengaruh Kompetensi dan Manajemen Talenta terhadap kinerja UKM Batik di Jawa Timur Indonesia, dengan di ketahuinya pengaruh dari kompetensi dan manajemen talenta terhadap kinerja maka dapat di gunakan sebagai dasar dalam penyusunan strategi UKM dalam meningkatkan kinerjanya dengan mengoptimalkan kompetensi yang dimiliki dan mengoptimalkan talenta yang dimilikinya sehingga usahanya sukses.

Kajian Teori

Kompetensi

Menurut Trotter dalam Saifuddin (2004) mendefinisikan bahwa seorang yang berkompetensi adalah orang yang dengan keterampilannya mengerjakan pekerjaan dengan mudah, cepat, intuitif dan sangat jarang atau tidak pernah membuat kesalahan. Sedangkan Menurut Byars dan Rue (1997) kompetensi didefinisikan sebagai suatu sifat atau karakteristik yang dibutuhkan oleh seorang pemegang jabatan agar dapat melaksanakan jabatan dengan baik, atau juga dapat berarti karakteristik/ciri-ciri seseorang yang mudah dilihat termasuk pengetahuan, keahlian, dan perilaku yang memungkinkan untuk berkinerja. Berdasarkan pengertian di atas maka dalam penelitian ini kompetensi diartikan sebagai kombinasi antara pengetahuan, keterampilan, perilaku dan nilai-nilai yang digunakan dalam melaksanakan pekerjaannya.

Kompetensi juga dapat diartikan sebagai karakteristik seseorang yang berkaitan dengan karakteristik individu yang melekat pada kepribadian seseorang yang dapat dipergunakan dalam menjalankan pekerjaan tertentu. Tingkat kompetensi seseorang dapat berpengaruh terhadap kinerja karena kompetensi dapat memprediksi perilaku dan kinerja, sebagaimana hasil penelitian Kus Margono, Jono M. Munandar dan Pudji Muljono (2017) yang menyatakan bahwa karyawan dengan kompensasi sedang berpengaruh signifikan terhadap kinerjanya. Demikian juga hasil penelitian Ida Ayu Oka Martini, I Ketut Rahyuda, Desak Ketut Sintaasih (2018), yang menyatakan bahwa kompetensi berpengaruh signifikan terhadap kinerja karyawan. Pengetahuan, keterampilan dan sikap sebagai satu kesatuan yang harus dimiliki dan dikembangkan wirausaha agar mampu memunculkan kinerja terbaiknya dalam berwirausaha.

Fogg (2004) membagi Kompetensi menjadi 2 (dua) kategori yaitu kompetensi dasar (Threshold) yaitu karakteristik utama yang berupa pengetahuan atau keahlian dasar seperti kemampuan untuk membaca dan yang kedua adalah kompetensi pembeda (differentiating) yaitu kompetensi yang membuat seseorang berbeda dari yang lain. Menurut Abdullah (2014) Komponen-komponen yang dapat membentuk kompetensi menurut adalah Pengetahuan, Keterampilan, Konsep diri, Ciri diri, dan Motif. Seseorang yang memiliki kompetensi tinggi akan mencapai kinerja dengan lebih baik karena lebih berpengetahuan, trampil dan berperilaku yang lebih baik (Anche Selfi Adianita, dkk 2017).

LITERATURE REVIEW

Talenta Talenta merupakan proses pengembangan talenta yang dimiliki secara optimal, talent juga diartikan sebagai Bakat yang melekat dalam diri seseorang. Bakat yang dimaksud disini adalah Sekumpulan karakteristik alamiah seseorang, yang merupakan accelerator, faktor yang mempercepat penguasaan skill atau kompetensi seseorang serta mendorong munculnya performance yang luar biasa (Muhfirman, 2014). Sedangkan menurut David Kurniadi (2009) menyatakan bahwa Talenta adalah kemampuan yang khas yang dimiliki seseorang untuk dapat berprestasi pada bidang-bidang tertentu sesuai dengan talenta yang dimilikinya

Talenta yang di miliki oleh seseorang akan berkembang apabila di kelola dengan baik dalam pencapaian kinerja yang lebih tinggi. Rampersad (2006:234) berpendapat bahwa: “Mangelola talenta dalam organisasi secara efektif dikukan dengan perencanaan dan pengembangan suksesi di perusahaan, realisasi pengembangan diri karyawan secara maksimal, dan pemanfaatan bakat secara optimal.” Menurut Pella dan Inayati (2011): “Manajemen talenta adalah suatu proses untuk memastikan suatu perusahaan mengisi posisi kunci pemimpin masa depan (future leaders) dan posisi yang mendukung kompetensi inti perusahaan (uniqe skill and high strategic value).”

Manajemen talenta merupakan pendekatan yang terencana dan terstruktur untuk merekrut, mempertahankan dan mengembangkan orang-orang bertalenta dalam organisasi. Sistem manajemen talenta yang dilaksanakan ini bertujuan untuk menyiapkan sumber daya manusia yang handal dalam jumlah yang memadai untuk menempati posisi-posisi kunci perusahaan sehingga keberlangsungan bisnis perusahaan dapat terjamin (Katili, 2015). Menurut Aksakal (2013) menjelaskan bahwa manajemen talenta merupakan sebuah proses yang dilakukan untuk menempatkan karyawan pada posisi yang tepat dalam pekerjaannya. Manajemen talenta juga memberi kesempatan pada karyawannya untuk melakukan pelatihan serta meningkatkan kemampuan yang mereka miliki. Menurut Kamal M.Y, dan Lukman Z.M. (2017) bahwa apabila talenta di kelola dengan baik maka akan meningkatkan kinerja. hal ini juga di dukung oleh hasil penelitiannya Abdul Quddus Mohammed (2015), Ali Sadria, Hesam Pirouzb, Shadi Sharific, dan Mehdi Farhadid (2015), dan Niko Satria Rachmadinata, serta hasil penelitiannya Asri, Nadira Femitri (2017) yang menyatakan bahwa terdapat pengaruh positif manajemen talenta terhadap kinerja.

Kinerja Perusahaan Kinerja merupakan suatu fungsi dari motivasi dan kemampuan. Untuk menyelesaikan tugas atau pekerjaan, seseorang harus memliki derajat kesediaan dan tingkat kemampuan tertentu. Kesediaan dan keterampilan seseorang tidaklah cukup efektif untuk mengerjakan sesuatu tanpa pemahaman yang jelas tentang apa yang akan dikerjakan dan bagaimana mengerjakannya (Hersey and Blanchard: 1993). Kinerja merupakan hasil kerja yang di peroleh baik kuantitas maupun secara kualitas, sebagaimana disampaikan oleh Suci (2006) bahwa kinerja merupakan tingkat pencapaian atau prestasi dari perusahaan dalam periode waktu tertentu. Kinerja (performa) perusahaan dapat dilihat dari tingkat penjualan, tingkat keuntungan, pengembalian modal, tingkat turn over dan pangsa pasar yang diraihnya. Sedangkan Pelham dan Wilson (1996) mendefinisikan kinerja perusahaan sebagai sukses dalam


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pengembangan pasar untuk produk baru, di mana kinerja perusahaan dapat diukur melalui pertumbuhan penjualan dan pasar.

Menurut Mulyadi (2006) kinerja perusahaan merupakan salah satu upaya agar dapat dilakukan peningkatan sumberdaya secara efektif dan dapat memberikan arah pada pengambilan keputusan strategis yang menyangkut perkembangan suatu organisasi pada masa yang akan datang. Kinerja perusahaan dapat diukur dengan menggunakan unit yang terjual (peningkatan volume penjualan), pertumbuhan pelanggan dan tingkat turnover pelanggan untuk lebih menyatakan kegiatan pemasaran Kemampuan menghasilkan laba merupakan salah satu indikator dalam pengukuran kinerja. Laba digunakan karena keluasan penggunakan tolok ukur ini untuk mengukur kinerja pada penelitian-penelitian terdahulu dimana merupakan refleksi dari keberhasilan kinerja perusahaan (Dwi Wahyu Pril Ranto, 2016).

METODOLOGI PENELITIAN Penelitian ini menggunakan pendekatan kuantitatif, karena data dalam penelitian berupa angka yang dianalisis menggunakan statistik untuk menguji hipotesis Sumber data dalam penelitian ini adalah data primer yaitu data yang di peroleh dari responden melalui kuesioner sebagai instrumen dalam penelitian ini mengenai kompetensi, talenta, dan kinerja UKM batik di Kabupaten bangakalan. Populasi dalam penelitian ini adalah pemilik usaha batik di Kabupaten Bangkalan, Madura Indonesia yaitu sebanyak 80 UKM. Oleh karena itu semua populasi dalam penelitian ini diambil sebagai sampel atu total population sample.

Kuesioner telah di desain dengan sejumlah pertanyaan berdasarkan indikator dari setiap variabel penelitian. Indikator dari kompetensi terdiri dari Keterampilan, Pengetahuan, Peran Sosial, Konsep Diri dan Krakteristik Pribadi (Gaol, 2014), sedangkan indikator dari Manajemen Talenta adalah terdiri dari Pemikiran, Pembinaan, Pengembangan, Pemeliharaan dan Pemikatan, serta indikator dari Kinerja UKM terdiri dari kinerja keuangan, Pertumbuhan Pelanggan, Pembelajaran dan pertumbuhan karyawan, serta Proses bisnis internal (sukardi 2003).

Analisis data di lakukan setelah diketahui bahwa semua item pertanyaan yang dijawab oleh responden valid dan reliabel. Sedangkan teknik analisis data dalam penelitian ini dilakukan dengan analisis regresi untuk mengetahui pengaruh dari Kompetensi dan talenta terhadap kinerja UKM Batik, sedangkan untuk menguji masinh-masing hipotesis di gunakan Uji-F dan Uji-t dengan menggunakan software SPP versi 24.

HASIL DAN PEMBAHASAN Analisis korelasi digunakan untuk mengetahui seberapa kuat hubungan antara variabel kompetensi dan manajemen talenta dengan variabel kinerja ukm, untuk itu dilakuakan perhitungan dengan analisis korelasi, determinasi dan Regresi. Perhitungan dilakukan melalui bantuan softare SPSS 24, dan hasilnya dapat dilihat sebagai berikut:

Table 3. Hasil Analisis Koefisien Korelasi Model Summary

Model R

R-Square

Adjusted R Square Std. Error of the

Estimate

1 .702a .493 .466 410.18379 a. Predictors: (Constant), X2, X1

b. Dependent Variable: Y

Sumber: Hasil perhitungan analisis korelasi

Berdasarkan tabel 1 dapat diperoleh informasi bahwa R menunjukkan nilai korelasi antara variabel kompetensi (KM) dan talenta (TL) terhadap kinerja ukm dimana hasil korelasi menunjukkan angka sebesar 0,702 yang artinya bahwa hubungan antara variabel kompetensi dan talenta dengan variabel Y mempunyai hubungan yang sangat kuat.

Koefisien determinasi (R2) digunakan untuk mengukur seberapa jauh kemampuan model dalam menerangkan variasi variabel dependen. Tabel 5.10 berikut ini merupakan hasil pengujian koefisien determinasi dalam penelitian ini. Tabel 1 juga memberikan informasi tentang nilai koefisien determinasi atau R Square yang digunakan untuk mengetahui seberapa besar variabel bebas dapat menjelaskan variabel terikat, nilai R Square sebesar 0,493 atau 49,3% yang menunjukkan bahwa kemampuan variabel bebas yang terdiri kompetensi, talenta dalam mempengaruhi variabel terikat atau kinerja ukm dapat dijelaskan dalam model persamaan sebesar 49.3%. Sisanya sebesar 51.7% dapat dipengaruhi oleh variabel lain yang tidak terdapat dalam model persamaan ini.

Tabel 2 menunjukkan model Koefisien Regresi yang terdiri dari Unstandaridized coefficient dan standardized coeficients.

Tabel 2. Hasil Uji Model Regresi (Uji t)

Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

T Sig. B Std. Error Beta

1 (Constant) -564.860 613.151 -.921 .363 X1 .587 .166 .470 3.544 .001 X2 .319 .122 .346 2.609 .013

a. Dependent Variable: Y Sumber : Olah data uji t SPSS (Lampiran V)

Dari tabel 2 dapat di buat persamaan Regresi sebagai berikut: Y = -564.860 + 0, 587 KM + 0,319 TL + e

Berdasarkan analisis regresi linier berganda, dikentahui adanya pengaruh kompetensi dan talenta terhdap kinerja ukm dapat diliat dari persamaan garis regresi linier berganda yang diperoleh. Dengan konstanta minus sebesar -564.860 menunjukkan betapa pentingnya pengaruh kompetensi dan talenta terhadap kinerja UKM Batik, karena tanpa adanya Kompetensi dan Talenta maka kinerja UKM Batik akan berada pada minus 564.86. Namun jika kompetensi di tingkatkan atu satuan maka kinerja UKM akan meningkat sebesar 0, 587 dan apabila Talenta di perhatikan atau di kelola dengan baik sebesar satu satuan maka kinerja akan meningkat sebesar 0,319.

Pengujian Hipotesis Pengujian hipotesis dalam penelitian ini dilakukan dengan Uji F dan uji-t. Uji F digunakan untuk menguji signifikansi pengaruh variabel kompetensi, dan talenta secara bersama-sama terhadap kinerja ukm batik di kabupaten bangkalan. Tabel 3 berikut ini merupakan hasil uji F dalam penelitian ini.


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Tabel 3. Hasil Uji Model Regresi (Uji F)

ANOVAa

Model Sum of Squares Df Mean Square F Sig.

1 Regression 6054472.600 2 3027236.300 17.992 .000b

Residual 6225277.400 37 168250.741

Total 12279750.000 39

a. Dependent Variable: Y b. Predictors: (Constant), X2, X1 Sumber : olah data uji f SPSS (Lampiran V) Dari hasil perhitungan uji-f menunjukkan bahwa nilai F-test sebesar 17,992 menunjukkan angka yang lebih kecil dari F tabel sebesar 3,25 atau tingkat signifikan sebesar 0,000 yang menunjukkan nilai lebih kecil dari α yaitu 0,05 (0,000 < 0,05), sehingga dapat dikatakan bahwa hipotesis penelitian pertama yang menyatakan kompetensi, dan talenta secara simultan berpengaruh signifikan terhadap kinerja UKM batik di kabupaten bangkalan Madura Indonesia. Hasil ini mengindikasikan bahwa variable kompetensi, dan talenta berpengaruh secara nyata berdampak pada kinerja UKM, sehingga hasil penelitian mengindikasikan bahwa sebagai pengusaha Batik harus terus meningkatkan pengetahuan, ketrampilan, Peduli Sosial, mengembangkan Konsep Diri dan mengembangkan Krakteristik Pribadi sehingga mampu berinvoasi, meningkatkan kreatifitas dalam mebatik sehingga mampu meningkatkan produknya yang berdaya saing tinggi namun juga harus dibarengi dengan mengelola talenta yang telah di milikinya sehingga bisa berkembang untuk lebih produktif dan kreatif.

Uji T Uji t digunakan untuk mengetahui apakah variabel bebas secara partial memiliki pengaruh terhadap variabel terikat. Hasil perhitungan uji-t dalam penelitian ini dapat dilihat pada tabel 3. Dimana hasil uji- t dibandingkan dengan t-tabel dengan menggunakan tingkat kesalahan 0.05. Kriteria yang digunakan adalah sebagai berikut: - Ho ditolak jika thitung > ttabel atau nilai sig < α - H1 diterima jika thitung < ttabel atau nilai sig > α Berdasarkan hasil analisis regresi linier berganda di atas, didapatkan nilai konstanta dari Unstandardized Coefficients sebesar -564.860. Hal tersebut menunjukkan bahwa apabila variabel bebas tidak mengalami peningkatan maupun penurunan, maka rata-rata Kinerja Ukm akan konstan sebesar -564.860. Berikut penjelasan menganai persamaan regresi uji t yang dihasilkan: Pada tabel 5.12 dapat dilihat nilai variabel Kompetensi t hitung sebesar 3.544 < t table sebesar 2,02619 dan tingkat signifikasinya sebesar 0,001. Karena nilai (sig) lebih kecil dari taraf uji yang digunakan dalam penelitian adalah sig > α = 0,05 atau (0,001 > 0,05). Hal ini dapat disimpulkan bahwa terdapat pengaruh yang positif dan signifikan dari variabel kompetensi terhadap variabel kinerja ukm. Berdasarkan hasil hipotesis penelitian (H1) yang menduga kompetensi berpengaruh terhadap kinerja ukm dapat diterima. Yang berarti Ho ditolak dan H1 diterima. Pada tabel 5.12 dapat dilihat nilai variabel talenta t hitung sebesar 2.609 > t tabel sebesar 2,02619 dan tingkat signifikasi sebesar

0,013. Karena nilai (sig) lebih kecil dari taraf uji yang digunakan dalam penelitian adalah sig < α = 0,05 atau (0,013 < 0,05). Hal ini dapat disimpulkan bahwa terdapat pengaruh yang positif dan signifikan dari variable talenta terhadap variabel kinerja ukm. Yang berarti talenta yang baik di dalam ukm akan meningkatkan produktifitas kinerja ukm. Berdasarkan hipotesis kedua (H2) yang menduga talenta berpengaruh terhadap kinerja ukm dapat diterima. Yang berarti Ho ditolak dan H1 diterima.

Pembahasan Hasil Penelitian Analisis regresi linier Berganda yang telah dilakukan dapat diketahui pengaruh kompetensi dan talenta terhadap kinerja ukm pada batik tulis di kota bangkalan, berikut penjelasan dari masing-masing variabel. Y = -564.860 + 0, 587 KM + 0, .319 TL + e Berdasarkan analisis regresi linier berganda, dikentahui adanya pengaruh kompetensi dan talenta terhdap kinerja ukm dapat diliat dari persamaan garis regresi linier berganda yang menyatakan bahwa hasil nilai konstanta minus sebesar -564.860 menyatakan bahwa kompetensi (KM) dan talenta (TL) sama dengan 0 (nol), maka besarnya perubahan kinerja ukm -564.860. Hasil penelitian ini juga menunjukkan bahwa analisa koefisien korelasi, diketahui bahwa adanya tingkat keeratan huubungan antara variabel bebas terhadap variabel terikat dimana nilai koefisien korelasi (R) yaitu sebesar 702a yang berada pada katagori sangat kuat. Berdasarkan analisis koefisien determiansi parsial, diketahui bahwa variabel bebas memiliki kontribusi pengaruh terhdap variabel terikat dimana r square menunjukkan nilai sebesar 0,493 atau sebesar 49,3% dan sisanya sebesar 50,7% dipengaruhi oleh variabel diluar penelitian ini. Hasil pengujian hipotesis menunjukkan sebagai berikut: H-1 Kompetensi berpengaruh signifikan terhadap kinerja ukm Berdasarkan uji-t, menyatakan bahwa variabel kompetensi secara parsial berpengaruh signifikan terhadap kinerja UKM. Hal ini diketahui dari hasil perhitungan analisa dimana variabel kompetensi pada tabel uji parsial di atas diperoleh t hitung untuk variabel kompetensi sebesar 3.544. Dengan demikian kriteria pengambilan keputusannya adalah thitung 3,544 > t tabel 2.02619. Sehingga Hipotesis diterima yang berarti kompetensi berpengaruh secara signifikan terhadap kinerja UKM dengan signifikan 0,001 yang berarti bahwa kompetensi berpengaruh signifikan terhadap kinerja ukm. Hal ini berarti bahwa penelitian ini mendukung hasil penelitiannya Margono, Jono M. Munandar dan Pudji Muljono (2017) yang menyatakan bahwa karyawan dengan kompensasi sedang berpengaruh signifikan terhadap kinerjanya. Demikian juga hasil penelitian Ida Ayu Oka Martini, I Ketut Rahyuda, Desak Ketut Sintaasih, dan Putu Saroyeni Piartrini (2018), Fogg (2004:90), Abdullah (2014) dan Anche Selfi Adianita, dkk 2017, serta hasial penelitiannya Mujanah (2009). H-2: Talenta berpengaruh signifikan terhadap kinerja UKM Berdasarkan uji T, menyatakan bahwa variabel talenta secara parsial berpengaruh terhadap kinerja UKM. Hal ini diketahui dari hasil perhitungan analisa dimana variabel talenta pada tabel hasil uji parsial di atas diperoleh t hitung untuk variabel X2 sebesar 2,609. Dengan demikian keriteria pengambilan keputusannya adalah thitung 2,609 > t tabel 2,02619. Sehingga Ho2 ditolak dan Ha2 diterima yang berarti talenta berpengaruh secara signifikan terhadap kinerja UKM. Dengan signifikan 0,013 yang berarti bahwa talenta berpengaruh signifikan terhadap kinerja UKM. Dengan demikian dapat di katakan bahwa hasil penelitian ini


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mendukung hasil penelitiannya Nafeei (2015) yang menyatakan bahwa talenta berpengaruh terhadap kinerja sebagaimana halnya hasil penelitian dari Kamal M.Y, dan Lukman Z.M (2017), Abdul Quddus Mohammed (2015), Ali Sadria, Hesam Pirouzb, Shadi Sharific, Mehdi Farhadid (2015), dan Hani Gita Ayuningtias (2017) serta hasil penelitiannya Asri, Nadira Femitri (2009) H-3: Kompetensi dan talenta secara simultan berpengaruh terhadap kinerja UKM Berdasarkan uji F, menyatakan bahwa variabel kompetensi dan talenta secara simultan berpengaruh signifikan terhdap kinerja UKIM. Hal ini diketahui dari perhitungan analisa dimana variabel kompetensi dan talenta pada tabel uji simultan diperoleh F-hitung untuk variabel kompetensi dan talenta sebesar 17,992. Dengan demikian kriteria pengambilan keputusannya adalah F-hitung 17,992 lebih besar dari nilai F tabel 3,25 sehingga Hipotesis ketiga (H3) diterima yang berarti kompetensi dan talenta secara simultan berpengaruh signifikan terhadap kinerja UKM.

SIMPULAN Dari pembahasan yang telah diuraikan, maka dapat ditarik kesimpulan sebagai berikut:

Hasil pengujian menyatakan bahwa kompetensi berpengaruh positif dan signifikan terhadap kinerja ukm batik di Kota Bangkalan. Demikian juga talenta berpengaruh siggnifikan terhadap kinerja ukm. Hasil penelitian ini juga menyampaikan bahwa secara simultan antara Kompetensi dan Talent berpengaruh signifikan terhadap Kinerja. Selain itu juga dapat diketahui bahwa secara simultan antara Kompetensi dan Talent berpengaruh signifikan terhadap Kinerja. Selain itu juga dapat diketahui bahwa kompetensi merupakan variabel dominan berpengaruh terhadap kinerja, dengan demikian dapat di tarik suatu kesimpulan bahwa kompetensi dibandingkan dengan talent lebih dapat diandalkan, sehingga implikasi dari penelitian ini dapat dikatakan bahwa UKM Batik dapat di kembangkan dengan memberikan kompetensi yang lebih agar mereka dapat mengembangkan kreatifitas dan inovatif sehingga mampu membuat usaha batik lebih sukses dibandingkan dengan talenta atau bakat yang telah di milikinya.

Saran

Berdasarkan kesimpulan yang ada maka penulis dapat memberikan saran-saran sebagai berikut :

Hendaknya UKM batik di kabupaten bangkalan untuk terus meningkatkan kompetensinya, agar supaya dapat meningkatkan pengetahuan, ketrampilan dan perilaku menjadi kreatif dan inovatif sehingga berdampak positif terhadap tujuan dan nilai-nilai pada ukm yang mereka miliki atau yang mereka kelola. UKM batik di kabupaten bangkalan lebih bisa mengelola talenta yang mereka miliki, agar mampu mengembangkan bakat seni dan budaya yang mereka miliki dalam menunjang usaha mereka.

Bagi Peneliti yang akan datang disarankan untuk melakukan penelitian dengan menambah variabel lain yang dapat mempengaruhi kinerja UKM. Sehingga akan diperoleh informasi lebih lengkap atas faktor-faktor yang mempengaruhi kinerja UKM.


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The Roles of Intangible Resources in CSR Collaboration for Sustainability: An Extension of RBV

Siti Sara Ibrahim

Business Management Faculty Universiti Teknologi Mara,

Negeri Sembilan [email protected]

Abd Halim Mohd Noor Business Management Faculty

Universiti Teknologi Mara, Melaka

[email protected]

Shafinar Ismail Business Management Faculty

Universiti Teknologi Mara, Melaka

[email protected]

ABSTRACT It is crucial for Corporate Social Responsibilities (CSR) to create an impact toward sustainable socio-economic development. Collaboration in CSR projects seems to be a strategic practice to CSR as the government itself has recently propagated sustainable socio-economic wellbeing as a national agenda by promoting collaborative approaches between the government, private organization and the social sector to address social disparities. In order to make this collaboration successful in achieving its objective, firm’s resources playing their roles to ensure the CSR project collaboration is able to deliver an expected outcome to the firm, community and environment. Responding to this issue, a study is done to conceptualized the roles of firm’s resources in CSR collaboration toward sustainability. Intangible resources become the focus of this study when there is an incorporated of Social Capital (SC) to extend existing Resource Based View (RBV) theory in CSR collaboration practices.

Keywords CSR Collaboration, Intangible Resources, Sustainability

INTRODUCTION As today’s market environment has increasingly focused on becoming socially and environmentally conscious, CSR has since occupied a centre stage in corporate strategic agenda (Guadamillas-Gómez, Donate-Manzanares, & Ŝkerlavaj, 2010). The increasing integration of CSR into strategic agenda is stimulated by increasing demands from society to control the growing power of major firms and their environmentally devastating activities. Consistent with this, the study opined that the concept of strategic CSR and its philosophy is continuously growing and becoming a global trend since the last decade, further implying that the current level of CSR had evolved over time. Hence, it is important that this evolution is highlighted in the academia.

To ensure that strategic practices of CSR is continuously implemented for sustainable impacts toward the economy, society and environment, this study proposed to have collaborative strategy created within CSR projects delivered by firms. However, those initiatives are not without controversy. While

various social issues in Malaysia continue to rise along the years, the phrase 'doing well is just not good enough' is relevant in situations where firms are unsuccessful in creating sustainable benefits for the community. This is due to the lack of planning with respect to expenditures and allocation of corporate giving funds or activities, also whether those resources are being identified, managed and utilized strategically (Klaus M. Leisinger, 2012; Liket & Maas, 2016; Porter & Kramer, 2002; Ricks & Peters, 2013). In turn, most firms are still practising a preference of having short-term relationships or operating on case-by-case basis alone when delivering their CSR practices. This will subsequently lead to unsustainable socio-economic impact to the community. To ensure that collaboration is successful for CSR strategic practices, firm’s resources play a major roles toward sustainability (J. B. Barney, 1991).

Resource Based View (RBV) theory has found wide acceptance, particularly in the management literature(Wills-Johnson, 2008). It focuses on “strategic” resources. (Wernerfelt, 1984) coined the phrase, examining the role of strategic resources in raising barriers to entry, and (J. B. Barney, 1991) built upon Wernerfelt’s ideas, codifying what made a resource strategic in a way which has since become germane to the literature. According to Barney, a strategic resource has four qualities: (1) valuable, (2) rarity, (3) inimitability and (4) non-substitutability. These resources and capabilities can be viewed as bundles of tangible and intangible assets, including a firm’s management skills, its organizational processes and routines, and the information and knowledge it controls (J. Barney, Wright, & Ketchen, 2001). However, in collaboration, a key focus of the RBV literature is the third characteristic, determining what it is that makes a resource inimitable. Much of this literature focuses on the “intangible assets” as these are held to be less imitable than tangible assets (Wills-Johnson, 2008).

To this study, looking at the extension of RBV theory with Social Capital (SC) from the perspective stakeholder view, “intangible resources” which comprises of commitment, connection, trust and urgency; is considered to play a role in making a successful collaboration (J. B. Barney, 1991; J. B. Barney, Ketchen, & Wright, 2011; J. Barney et al., 2001; Horisch, Freeman, & Schaltegger, 2014; Putnam, 1993, 2001). This has been conceptualized from a definition of intangible resources by (J. Barney et al., 2001) as and organizational process or “routine” by


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(J. Barney et al., 2001; Jacoby, Jacoby, Evolutionary, Change, & Fried-, 2011; Teece & Pisano, 2004) and intangible resources as a “reputation” (Marcuzzo, 2017; Rothschild, 1987). As such, this study seeks to bring clarity to the notion of managing intangible resource in CSR collaboration, as well as its potential and actual relationship to sustainability. Objectives of this study are to evaluate the roles of intangible resources in CSR collaboration for sustainable impact to economy, society and the environment. The research model proposed in this study can be adopted and further developed by future empirical studies. This paper is hence organized as follows; a literature reviews to show how CSR collaboration has been portrayed in the literature as well as in industry, this study would then focus on intangible resources based on the extension of RBV and SC theory from the perspective of stakeholder view using a table to conceptualize the definition and application of the resources. Finally, a study ends with a conclusion and recommendation. The general contribution which this study sets out to make to the subject of management studies therefore is to provide an additional perspective with respect to the role of intangible resources in CSR strategy for sustainable development of economy, social and environment.

THE DEVELOPMENT OF CSR COLLABORATION IN MALAYSIA There is a growing interest in theoretical development and practical aspects of CSR. In a comprehensive literature review, (Galant & Cadez, 2017) highlighted a paper by Dahlsrud and Dahlsrud (2008) which identified 37 different definitions of CSR. These definitions are categorized into five dimensions, which include environmental dimension, social dimension, economic dimension, stakeholder dimension and voluntariness dimension. In a more comprehensive approach previously, (Carroll, 1991); also (Edmondson & Carroll, 1999) attempted to integrate previous conceptualizations by introducing four elements of CSR; which are economy, law, ethics and philanthropy. This definition has been used and applied successfully for over 25 years in CSR research studies.

The tremendous development of CSR practices can be seen in developed Western countries, for example the United Kingdom and United States, where both countries view CSR as a valuable business strategy to develop holistic economic and societal growth (Forte, 2013). Adapting from practices of those countries, Malaysia and other developing countries are also showing concern towards the growth within corporate philanthropy for benefits of socio-economic wellbeing. Although these countries are developing economically, their social development is not growing at the same pace, hence resulting in sections of society that are marginalised. Rapid progress has caused the social environment to evolve and Malaysia, like many other countries, is finding its societal dynamics which is becoming increasingly complex (Chang et al., 2017). Traditional ways of delivering social services are not fully effective, as they consume a huge portion of public expenditure. While the role played by private corporations through their social responsibilities is commendable, unfortunately they are unable to address systemic social ills. Additionally, social purpose organisations continue to combat social struggles faced by the community as they often lack resources and professionalism to scale and achieve wide impact.

Despite various efforts, the government alone cannot address all social issues. Responding to this, the government is currently

promoting a collaborative approach between the government, private organisations and social organisations in enhancing the socioeconomic development. This strategic collaborative approach is known as “Social Private and Public Partnership” or SPPP, which is also an initiative under The National Blue Ocean Strategy (NBOS) as well translated under the 11th Malaysia Plan (RMK-11). NBOS initiatives provide a creative and systematic way to create high value impact at low cost, with various ministries and agencies collaborating towards developing and implementing numerous programmes to help stimulate rapid and sustained growth, develop communities, and create harmony. In view of SPPP and the move to sustainability, at the United Nations Sustainable Development (UNDP) Summit on 25 September 2015, world leaders adopted Sustainable Development Goals (SDGs), officially known as Transforming our world: the 2030 Agenda for Sustainable Development which includes 17 goals to end poverty, fight inequality and injustice, and tackle climate change by 2030 (UNDP, 2015). This is a universal call for all countries to adopt in accordance with their own priorities, to ensure people can enjoy peace and prosperity. The focus on SDGs has gained substantial momentum in developed markets as evidenced by a growing number of major institutional funds and investors subscribing in assets based on sustainable and responsible objectives or principles.

Further, to respond to the government initiatives, The Central Bank of Malaysia issued a strategy paper titled “Value-Based Intermediation (VBI): Strengthening the Roles and Impact of Islamic Finance” in July 2017. It shows that Islamic Financial Institutions (IFIs) in Malaysia are moving forward to realign their focus beyond profit and compliance toward value creation in ensuring long-term sustainable socio-economic growth. The other organizations from different industries will also follow this step forward for a strategic sustainability purpose if this strategy can be implemented effectively and efficiently throughout all industries in Malaysia. The implementation approach of this strategy paper is based on level of readiness of the individual banks in Malaysia. However, in the absence of a concerted effort towards the application of the VBI concept, these initiatives may have been consciously or unconsciously applied in line with the VBI concept, resulting in suboptimal socioeconomic impact (Bank Negara Malaysia, 2017)

DEFINING AND UNDERSTANDING INTANGIBLE RESOURCES IN CSR COLLABORATION Collaboration between firm and other stakeholders are demanded to strengthen the delivery impact of CSR practices for sustainable socio-economic wellbeing. The government has made an initiative to strategize practices through Social Private and Public Partnership (SPPP) and Value Based Intermediation (VBI) strategies. Thus, in making successful CSR project collaborations that are able to reach sustainable development objectives of the firm, society and the environment, intangible resources are crucial to be adhered and managed. This resources are closely related and crucial in any collaboration alike, for example SPPP and VBI.

The resource-based view (RBV) of a firm is a concept that has been used in strategic management literature as a means of explaining competitive advantage and superior performance of firms (Barry, Clulow, & Gerstman 2005). According to the RBV,


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resources are defined as stocks of available factors such as knowledge, physical assets, human capital, and other tangible and intangible items that are owned or controlled by a firm, which can be converted into final products or services. According to (J. Barney et al., 2001) resources can be classified as tangible and intangible resources. Tangible resources include things like capital, buildings, warehouses, and other facilities, while intangible resources consist of knowledge, skills, and reputation (Sexton, 2001). By virtue of their value and nature, resources are difficult to obtain, and necessitate a process of mediation with stakeholders to be acquired, for instance through collaboration. (Okpara, 2012). Focusing on intangible resources in CSR project collaboration, the item of the resources is gathered from extended Resource Based View (RBV) and Social Capital (SC) theory while looking from the perspective of stakeholder view. RBV theory discusses on how firms gain attention in recent years as means to understand how strategic business unit obtains sustainable competitive advantage. This aspect is measured from the usage of internal firm resources to give advantages toward performance for sustainability.(J. Barney et al., 2001)(J. B. Barney, 1991)(Freeman & Reed, 2010). Researchers find RBV resources to be socially complex, hence they are usually difficult to imitate as valuable resources are created and stored within individual firm or other stakeholders. There is no direct information on what dependent variables and independent variables that can be defined for study. However, looking at past literature, this study comprehends dependent variables could include sustainability, whereas independent variables could test on heterogeneous intangible resources bases and capabilities (Wang, 2014).Particular to this study, intangible resources are chosen as independent variable.

A combination of SC and RBV theories in this research becomes important in exploring the integration of corporate strategic practices for sustainable socio-economic wellbeing. With regards to social capital, this study perceives that firms do not only depend on internal sources, they also rely on other stakeholders which can also contribute to business success. SC theory looks into network resources (social network) within the power in social networking, as well as trust. Further, stakeholder view is the accepted paradigm to explain why firms involve themselves in socially responsible activities as a strategy to maximize their long-term return on investment and sustain their business successes by recognizing the importance of each stakeholder group, hence incorporating this knowledge into their corporate strategy (Samy, Odemilin, & Bampton, 2010). Stakeholder view becomes a cornerstone in both CP thinking and business ethics which implies that firms must justify their strategies, not only to shareholders and authorities with regulatory responsibilities, but also to an extensive group of stakeholders related to them. It links up with a strong tradition in organizational theory which subsequently relates to RBV and SC theories, where firm’s ties to its environment become a major premise for its value creation (Ditlev-Simonsen & Midttun, 2011).

Intangible resources may be classified as ‘assets’ or ‘competencies’. Intangible assets include the intellectual property rights of: patents, trademarks, copyright and registered designs; as well as contracts, trade secrets and data bases. (City, 1993). Table 1.0 illustrates a literature on intangible resources that qualified the item proposed in this study (commitment,

.

connection, trust and urgency) to be inimitable lied under the categories of intangible resources from previous literature which adapted from an extension of RBV, SC theory and stakeholder view. Intangibles consist of objective facts, conscious cognitive interpretations, and unconscious interpretations. Therefore, although there might be a chance for a common definition and classification of intangible assets and intangible investments for accounting and statistical purposes, a common basis for intangible phenomena as cognitive or unconscious structures and processes in a firm might be unlikely. (Kristandl & Bontis, 2007)

Title and Authors The title (Helvetica 18-point bold), authors' names (Helvetica 12-point) and affiliations (Helvetica 10-point) run across the full width of the page – one column wide. We also recommend phone number (Helvetica 10-point) and e-mail address (Helvetica 12-point). See the top of this page for three addresses. If only one address is needed, center all address text. For two addresses, use two centered tabs, and so on. For more than three authors, you may have to improvise.1

Table 4: LR Development of Intangible Resources Defines in RBV study

Author Variables Matching

(City, 1993) 1. The intellectual property rights of patents,

trademarks, copyright and registered designs 2. Trade secrets 3. Contracts and licenses 4. Data bases

5. Information in the public domain 6. Personal and organizational networks 7. The know-how of employees, professional

advisers, suppliers and distributors

8. The reputation of products and company

9. The culture of the organization;

Urgency Commitment Trust Networking

(Hodkinson, 1987;

Eisenschitz, 1987)

Intellectual property rights (Hodkinson, 1987;

-

(Holgate, 1988; Mullen, 1988; Economist, 1992)

Brand names Trust Networking

(Harrison, 1972; Peters and

Organizational culture Urgency


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Waterman, 1982; Kanter, 1983; Schein 1985; amongst others);

Commitment

(Kristandl & Bontis, 2007)

Intellectual property rights, trademarks or information technologies, that can be measured at any time in a company due to their static nature (MERITUM, 2002); Hall (1992) divides them into assets (trademarks,

patents, copyrights, registered designs, etc.) and skills (know-how, culture).

Urgency Commitment

(Okpara, 2012) Management reputation, culture, and knowledge

Urgency Commitment

Trust Networking

CONCLUSION AND RECOMMENDATION Sustainability is a vital element in the implementation of CSR practices today. In CSR collaboration, external stakeholders including the government, societies, NGOs and the local community have meaningful roles in delivering strategic CSR practices to achieve sustainable socio-economic wellbeing. However, resources become a crucial issue that needs to be managed by firms in ensuring success of CSR collaboration, hence contributing towards sustainable development of socio-economic development. Reviews of relevant literature pointed out several gaps that pertain to the effect of intangible resource within the context of firm-stakeholder collaboration for CSR strategic practice on sustainability. To fill the gaps, this study formulated a research framework which applies RBV and SC theories within the perspective stakeholder view, as well as other supported resources.

This work sets out to demonstrate that a taxonomy of intangible resources can be developed which provides a means of identifying both the sources of sustainable competitive advantage, and the relative contribution which the different intangible resources make to business success and the aim of this work is to bring these, and related, subjects together in one framework which can encompass the broad area concerning the role of intangible resource in strategic management. Diagram 1.0 shows how intangible resources is proposed to have significant relationship toward sustainability in CSR project collaboration. It is ideal that a model of CSR collaboration based on sustainability is designed and presented to firms as a tool to better implement their CSR practices in a manner which adheres to worldwide standards. This way, sustainable effects of a firm's CSR practices upon social and economic development can be guaranteed.

Limited evidences were explored, with most of them do not have empirical analysis of real data from existing firms. Thus, future study is proposed to be conducted on Malaysian firms which have been involved in CSR collaboration projects.

Diagram 3.0 : Proposed Model

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Chang, R. D., Zuo, J., Zhao, Z. Y., Zillante, G., Gan, X. L., & Soebarto, V. (2017). Evolving theories of sustainability and firms: History, future directions and implications for renewable energy research. Renewable and Sustainable Energy Reviews, 72(May), 48–56. https://doi.org/10.1016/j.rser.2017.01.029

City, D. (1993). A FRAMWORK LINKING INTANGMKE RESOURCES AND CAPABlLllTES TO SUSTAINABLE COMPETITIVE, 14(July 1992).

Ditlev-Simonsen, C. D., & Midttun, A. (2011). What motivates managers to pursue corporate responsibility? a survey among key stakeholders. Corporate Social Responsibility and Environmental Management, 18(1), 25–38.


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Edmondson, V. C., & Carroll, A. B. (1999). Giving Back: An Examination of the Philanthropic Motivations, Orientations and Activities of Large Black-Owned Businesses. Journal of Business Ethics, 19(2), 171–179. https://doi.org/10.1023/A:1005993925597

Eisenschitz, T. S. (1987). Patents, trade marks and designs in information work. London: Croom Helm.

Forte, A. (2013). Corporate Social Responsibility In The United States And Europe: How Important Is It? The Future Of Corporate Social Responsibility. International Business & Economics Research Journal , 12(7), 815–824.

Freeman, E., & Reed, D. (2010). Stockholders and stakeholders: A new perspective on corporate governance. Strategy Sythesis: Resolving Strategy Paradoxes to Create Competitive Advantage, XXV(3), 88–106.

Galant, A., & Cadez, S. (2017). Corporate social responsibility and financial performance relationship: A review of measurement approaches. Economic Research-Ekonomska Istrazivanja, 30(1), 676–693. https://doi.org/10.1080/1331677X.2017.1313122

Guadamillas-Gómez, F., Donate-Manzanares, M. J., & Ŝkerlavaj, M. (2010). The integration of corporate social responsibility into the strategy of technology-intensive firms: A case study. Zbornik Radova Ekonomskog Fakultet Au Rijeci, 28(1), 9–34. https://doi.org/http://dx.doi.org/65.012.412:17.026.1:001.11

Harrison, R. (1972). organization's character. Business Review.

Hodkinson, K. (2002). Protecting and exploiting new technology and designs. Routledge.

Holgate, P. (1988). The accounting rules on intangibles and goodwill. In a paper presented in London at the Coopers and Lybrand conference on Quantifying the Value of Brands and Goodwill.

Horisch, J., Freeman, R. E., & Schaltegger, S. (2014). Applying Stakeholder Theory in Sustainability Management: Links, Similarities, Dissimilarities, and a Conceptual Framework. Organization & Environment, 27(4), 328–346. https://doi.org/10.1177/1086026614535786

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Program design and Financial Literacy Action Plan towards Financial Intelligence Household small industries

of the tourist District of East Java Crunch

Tri Ratnawati University August 17,

1945 in Surabaya [email protected]

Siti Munajah University August 17,

1945 in Surabaya [email protected]

Nyoman Lokajaya University August 17,

1945 in Surabaya

ABSTRACT

The purpose of this research is to make the concept of program design and plan follow-up financial literacy financial intelligence meuju for small industrial households. Based on previous research on the factors that affect the financial literacy is old age, knowledge and experience in the field of finance, economic behavior, attitude and behavioral finance, gender, self control, Government policy, socialization Finance, budgeting household finances. The design of the proposed program is a great program that sustained involving stake holder consisting of Government, industry, households are large scale companies and academia. The follow-up plan priorities is a plan that applied to the household industry to become a smart family financial future. Existing condition indicates that household industry keicl the lowliest County Tourism crunch is still in the stage of haven't reached financial literacy so need to program design and follow through toward the financial industry from small household financial literacy to financial intelligence. Keywords Financial Literacy, Financial Intelligence

INTRODUCTION The County has a large potential crunch in terms of tourism is shown by the number of tourist destinations by as much as 27 destinations diwisata giri, there are religious tourism with 97 small industry consisting of food beverage industry, batik and crafts. Issues that are important to a small tourist industry taeniatus giri district crunch is still mixing up between financial businesses with financial bylaws so that can not reflect the financial literacy, including households in this industry Yet the financial records all his efforts are good and yet comply with financial accounting standard effective EMKM applied as of 1 January 2018. The soul of the spirit of entrepreneurship and motivation is very high. Therefore, the required program design and follow-up of financial literacy so that household financial industry into a financial savvy. smart financial criteria is shown with household financial decisions a small industry for melaukan investment, if the household financial industry came to the stage of getting to know the savings and deposits are then classified as literacy Finance.

LITERATURE REVIEW Financial Literacy The term financial literacy (financial literacy) expressed by financial experts as well as a variety of literature none are exactly

the same. Financial literacy is used as a manifestation of a person's ability in taking decisions setting personal finance or family. Lusardi and Mitchell (2007) defined financial literacy financial knowledge and abilities as applying it (knowledge and ability) with the aim of achieving prosperity. Danes and Hira (1987) and Chen and Volpe (1998) identify financial literacy as knowledge to manage finances (financial literacy is money management knowledge).

Financial literacy is a measure of understanding of financial concepts and skills in the right financial management in making decisions for short-term and long-term planning in accordance with the dynamics of the needs and conditions of the economy (Hung et Al, 2009; Remund, 2010, Huston 2010). Financial literacy is the ability to use knowledge and expertise to achieve good financial behavior so that the knowledge, skills and behaviors is the unity of interrelated in financial literacy (concept & Schmitz Bova, 2013; Lusardi & Mitchell, 2014). Lusardi and Mitchell (2006) found that the lack of financial literacy is affected by age for cases in the United States so much as the study of Cole et al (2008) that the age becomes a factor which significantly to financial literacy in India and Indonesia. Another factor is gender as Lusardi and Mitchell (2006, 2008) which explains that gender differences are too big in Sweden where women rarely make economic decisions in the household. Study of Goldsmith and Goldsmith (1997) shows that women have a low interest in investment and finance and rarely use financial services than men. Study of Cole et al (2008), Worthington (2004), Lusardi and Mitchell (2006, 2008) found that communities with high levels of education have more financial knowledge than communities with low levels of education

Empirical evidence, Lusardi and Mitchell (2006.2009) found that there is a difference between men and women in making financial decisions, and men better because it has a higher financial knowledge. Ibrahim, Aaron and Isa (2009) also found that the majority of students in Malaysia have knowledge of Finance (financial literacy) are less high, thus causing no directional in making financial decisions every day.

Hilgert and Hogarth (2003) as well as Cude, Lawrence, Lyons, Metzger, LeJeune, Marks, and Machtmes (2006) also States that required knowledge of how to manage their finances as well as how the technique of investing into things that can not be ignored again like the previous times. Et.al Cude. (2006) States that the development of financial instruments, not accompanied by the will


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of the people to start investing, and presumably one of the reasons is the low level of financial literacy of the public.

Orton (2007) clarify by stating that financial literacy is an integral part in the life of someone because of financial literacy is an essential tool for making informed financial decisions. But from pengalamanpengalaman in various countries still show relatively less high. Byrne (2007) also found that a low financial knowledge will lead to the creation of a financial plan is wrong, and lead to a bias in the achievement of well-being at a time when the age is not productive anymore.

National Financial Literacy Strategy Blueprint Indonesia (SNLKI) launched by the financial services authority (OJK) defined financial literacy as a set of processes or activities to improve knowledge, skills ( skill), and confidence (confidence) of consumers and the public at large so that they are able to manage your finances better.

The Association of Chartered Certified Accountants (2014) formulated the concept of financial literacy that includes knowledge of financial concepts, ability to understand financial concepts, communication skills to manage personal finance/corporate and the ability to do financial decisions in certain situations. Lusardi (2012) stated that financial literacy is comprised of a number of the ability and knowledge of finance, owned by a person to be able to manage or use the money to improve his life. Financial literacy is highly associated with the behavior, habits and the influence of external factors.

METHODOLOGY This research is qualitative research with types describe and analyze the results of the in-depth interviews against the household which has a small tourist industry taeniatus giri and ujungpangkah crunch Regency East Java. The target of this research is to 30 household’s small tourism industry giri and 20 households of small tourism industry ujungpangkah.

RESULTS AND DISCUSSION Based on the initial study detected that this small industry household actually has a soul, spirit and high motivation for entrepreneurship. However, this small industry households still need to be improved through financial literacy kesejahteraannya so tercapailah financial intelligence. Based on the factors of financial lietrasi anaisis dominated by old age factors show that in fact they are worried about their financial future if they sign at old age. Therefore need to be given the design of the programs that do need to be given to financial education and socialization for household industry. Plan follow-up is necessary the introduction of household financial record keeping so that household financial industry reports have little finance consisting of the position of the asset, debt and capital, as well as reports on the activities of the household reports are small. Knowledge and experience in the field of finance, the design of the proposed program is knowledge of household consumption which in principle is frugal but not miserly and does not reduce the quality of life of his household. Whereas in terms of experience with regard to the length of the household mmemiliki small industries of in-depth interview results, it turns out that households that have a small industry with a long lifetime, not necessarily reflect success Financials compared with household industry. Therefore, the need to finance the recording of the introduction programme for households so that the finance industry has a household in terms of

financial independence, no need to wait for the length of the Foundation of the industry. Behavioral economics, for household industry shared responsibility be among Government, academia, the household industry itself and the large industrial region of the target with the rise of credit cards without a collateral cause household industry small can behave konsumtip economy, this means greater expenses than the industry in revenue caused by the ease and speed of access is supported with marketing online shopping increasingly accessible. This will affect the attitudes and behavior of household finances small industries. Attitude and behavioral finance, mirrored by the financial habits for small industrial households especially in terms of how to get the money from his business and spend it quickly. This is detected from the reluctance of saving, putting his money on deposit and investment as the menguntugkan capital investment for a household industry. Gender, the majority of small industry business owners are women, it is actually shows that women have a great potential to be a discipline noted financial bylaws as well as finance his efforts. But what happens is that the household industry not separating household finances and financial efforts. Self-control, in order not to behave so consumer household small industries should be able to control myself not to consumerist, so their financial expenses in addition to the need for daily living, for the cost of the her efforts and priorities savings or the deposits will be used for investment by buying the means of production in order to be able to produce quickly, increasing its production capacity, increasing the kaulitas production, reducing defective product so has value and can compete with superior products. Government policy, must support the motivation of the perpetrators of the small industries in terms of management of the licensing business, access to capital, building his business networking, facilitating a large industry in the implementation of social responsibility his company, doing a work Apprentice programs, provide training which is increasing competitiveness and improving the quality of the product, provide socialization about the Indonesia national standard, so the product has value sale and export. Socializing finance, must be done by academics in providing financial literacy learning, calculation of cost of goods production, education about the importance of business efficiency, education regarding the forms and types of investment profitable, there needs to be cooperation with the banking to the effort of adding capital flowering is very low, if not have the guarantees can be assisted by pemeritah through credit assurance region (JAMKRIDA). Budgeting Household Finances, this needs to be done so that the waste does not occur if the financial realization of greater than penganggarannya. If the household small industry makes financial budgeting, then the financial performance of the industry the small household can be evaluated every month so know when waste is caused by factors that can be controlled or the factors that cannot be controlled. Household finance industry is said to have a small keceradasan when the household small industry has been able to invest the financial savings from the results of his household by means of developing her business, for example adding the tools industry or transport tools and all assets that support his efforts so that a small industry growing forward.] Financial Literacy

No. Indicator Factor Values 1 Old Age 0,920 2 Financial Education 0,913


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3 Financial Experience 0,905 4 Budgeting Business Finance 0,868 5 Economic Behavior 0,836 6 Financial Attitude 0,828 7 Gender 0,810 8 Financial Behavior 0,802 9 Self Control 0,788 10 Government Policy 0,784 11 Financial Socialization from the

Government 0,772

12 Budgeting Family Finance 0,747

CONCLUSION There are four pillars were responsible for the success of the financial rumha the ladder industry smaller, local government through service-related service, small industry, a major industry and academia.

The design of the program's priority is to conduct financial literacy to introduce socialization towards financial intelligence while doing education and pedampingan this role is carried out by academics.

The plan is to conduct follow-up mentoring finance small industry in a sustainable way so that a small industry household became a household financial independence to have financial resilience when the Country experienced the economic crisis then household industry small negative no impact..

REFERENCES Chen, h., & Volpe, r. p. (1998). An Analysis of Personal Financial

Literacy among College Students. The Financial Services Review, 7 (2): 107128.

Lusardi. Annamaria is., & Mitchell, Olivia s. (2006). Financial Literacy and Planning: Implications for Retirement Wellbeing. Taken from: http://www.dartmouth.edu/~alusardi/Papers/FinancialLiteracy. pdf

Remund, D.L. (2010). Financial Literacy Explicated: The Case for a Clear Definition in an Increasingly Complete Economy. The Journal of Consumer Affairs, 44 (2), 276-295.

The Financial Services Authority. (2013) National Financial Literacy Strategy. Indonesia. Directorate of Literacy and education for the financial services authority, November 19, 2013. Jakarta.


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ISLAMIC CAPITAL MARKET: EXPLORATION FROM MALAYSIA ISLAMIC HYBRID SECURITIES

2Mohamad Nizam Jaafar, 3Amirul Afif Muhamat 4Ismail Ahmad

Arshad Ayub Graduate Business School And Faculty of Business Management

Universiti Teknologi Mara Correspondence e-mail: [email protected]

ABSTRACT

Albeit Malaysia is considered as one of the key active players of Islamic Financial Market industries, there are still limited studies has been conducted on the hybrid securities issuance in the Islamic capital market. The underlying objectives of this study are to enrich the literature review by providing comprehensive analysis of the hybrid securities on Malaysia Islamic capital. There are several theories that related for the motivation of the firms to issue hybrid securities such as risk shifting exercise (Green, 1984), backdoor equity financing (Stein, 1992) and sequential financing problem (Mayers, 1998) respectively. Besides, there are several others benefits of hybrid securities features that the firms could leverage by opting to hybrid securities. By exploring hybrid security issuance among shariah compliance firms will also fill up the gap of lacking of awareness and understanding of security market against the essential of the instruments in financial system.

Keywords : Capital structure, Risk shifting exercise, Backdoor equity financing hypothesis, backdoor equity financing, sequential financing problem

1.0 INTRODUCTION

The need for raising capital is escalating in conjunction with the growth of the firm’s business. The two most common ways of raising external capital is either by issuing equity or via incurring debt respectively. Obtaining capital via equity from the public is carry out in the stock market. Meanwhile securing debt is normally by either borrowing the capital from the financial institutions or by issuing debt securities such as commercial papers, bonds and notes. Alternative to debt and equity, the firms could also issue hybrid security which has gradually become one of the important capital or securities issuance choice. Hybrids securities also generally are deeply within the issuer’s capital structure. Typically, hybrid securities are ranking lower to other forms of debt but higher to common stock. As a result, the rating

2Dr.MohamadNizamJaafar,SeniorLectureratFacultyofBusinessManagementUitmPuncakAlam,3En.AmirulAfifMuhamat,LectureratFacultyofBusinessManagementUitmPuncakAlam4Dr.IsmailAhmad,ProfessoratFacultyofBusinessManagementUitmShahAlam

agency and regulator always give good rating to the issuers when they analyzing the issuers’ capital structure position.

The literature offers several hypothesis that motivated the issuance of hybrid issuance namely risk shifting exercise (Green, 1984), backdoor equity financing (Stein, 1992) and sequential financing problem (Mayers, 1998) The reason for Green (1984) to proposed risk shifting hypothesis is to address the issue of minimizing agency cost arise from the conflict of interest between bondholder and shareholders. Stein (1992) through it backdoor equity hypothesis proposed on how the firms using hybrid as the substitute for common equity as indirect financing in order to minimize the cost related to direct equity offering. Meanwhile, Mayer (1998) extend Stein’s model(1992) of “backdoor equity hypothesis” by including sequential financing problems. Mayer(1998) claim that issuing hybrid securities offer lower financing cost as hybrid financing carry lower coupon rates than straight debts (due to the conversion option features) and has the possibility to sell off at a premium prices.

This study’s objective is to analyse the Islamic hybrid securities in Malaysia Capital market. Section 2 summarizes the theory capital structure particularly on the hybrid capital structure. Section 3 discusses on the benefit of hybrid securities and Section 4 presents the instruments of hybrid securities available in Malaysia. Section 5 concludes the paper.

2.0 LITERATURE REVIEWS

The foundation of the modern theory of capital structure was initiated from Modigliani-Miller (M&M) theorem, established by Franco Modigliani and Merton Miller (1958). This theory stated that a firm’s capital structure choice does not affect the firm’s value when the capital market is prefect or efficient with the assumption of there is no taxes imposed, no issuing cost for raising capital via debt or equity and no agency cost respectively. Nevertheless, it is contradict to the real world practice which eventually attribute to several other theories were also found to challenge this studies and define the optimal capital


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structure for the firms in a various perspective such as agency theory, (Jensen and Meckling, 1976, Smith and Warner 1979, Pinegar and Wilbricht 1989, Lubatkin and Chatterjee 1994, Elliot 2002), asymmetric information, (Akerlof G. A, 1970 and Myers and Majluf 1984, Clarke and Shastri, 2001, and Hasbrouck, 2005), pecking order theory, (Myers and Majluf, 1984, Mayers, 2001, Fama and French, 1998, 2005 ), bankruptcy cost, (Berger et al, 1995, Florackis, 2008), risk shifting, (Green, 1984, Lewis C.M et al, 1999, 2004), backdoor equity financing, (Stein, 1992, C.M. Lewis et al, 1999, 2004).

The popular dispute among practitioners on why they are choosing for issuing the hybrid securities instead of debt i.e. convertible bond is because of the cost factor. Convertible bond carry lower coupon rate as compared to the normal bond and subsequently permit the issuers to sell the security at a premium over the current prices where the conversion price is higher that the stock price (Mayers, 2000). This is in line with Mayer’s model of Sequential Financial problem (Mayers 1998) which is extension from the “backdoor equity hypothesis model” (Stein, 1992).

Stein (1992) proposed that backdoor equity financing theory that the firms are able to delay issuance of equity via hybrid financing when they face high degree of informational asymmetries cost making less attractive to issue equity. As such, convertible debt stand for a financing option that diminished the unpleasant selection costs of an immediate sale of equity. This facilitates the firms to issue equity without having to acquire higher financial risk. Thus, Lewis et al. (1999) argue that although convertible debt issuers may have firm characteristics that are similar to equity issuers, leveraged firms that are optimistic about their future investment opportunities but that are subject to significant information asymmetries, are more likely to choose convertible debt or straight debt. However, Stein (1992) notes should the firm that having significant asymmetric information proceed with the issuance of straight debt may attribute to firms to face other value decrease costs. When the financial distress is very expensive, firms that are highly gearing and have poor future cash flow will relinquish straight debt issues. Consequently, financial distress costs prevail over unfavourable selection costs. Stein (1992) concludes that convertible bonds are a replacement for equity and that this substitute is most probable to take place in firms facing major information asymmetries and high financial distress costs.

3.0 THE BENEFITS OF HYBRID SECURITIES IN MALAYSIA CAPITAL MARKET

Hybrid securities are very crucial in Capital Market. It

offers the solution for the conflict of interest between manager and shareholders. Traditionally, the firm always issue either debt or equity in raising capital. Nevertheless, there is always divergence of interest between manager and shareholder. The limited liability of equity holder gives them greater value for investing in more risky projects. This is because when the investment work in favour of the firm, the shareholder have unbounded upside potential. However, if the investment fails, the debt holder will have the bear all the losses. The bondholder respond the unfavourable risk that being expose to them by charging higher yield to the issuer/shareholder to compensate their risk which known as the cost of risk shifting. As a solution,

hybrid securities such as convertible bond, allowed the manager to venture into high risk business with lower cost as the convertible bond is carrying lower interest rate than the normal debt instrument. In addition, the feature of conversion option in the convertible bond, permit the bond holder to gain maximize upside prospect of the business venture. The convertible also reduce the value of the shareholders’ residual claim which discourages the shareholder to endeavour in more risk projects.

In line with backdoor equity financing theory, hybrid securities also allow the firms to delay issuance of equity when they face high degree of informational asymmetries cost making less attractive to issue equity. As such, convertible debt stand for a financing option that diminished the unpleasant selection costs of an immediate sale of equity. This facilitates the firms to issue equity without having to acquire higher financial risk.

Other benefits of hybrid securities is allowing high risk firm (high asymmetric) to secure capital for expansion. According to Stein (1992) when the firm that having significant asymmetric information proceed with the issuance of straight debt may attribute to firms to face other value decrease costs. When the financial distress is very expensive, firms that are highly gearing and have poor future cash flow will relinquish straight debt issues. As an alternative, the firms can always opt for hybrid securities. In addition, hybrid securities such as Convertibles bond also allow firms to take advantage of the tax deductibility of the coupon payments until conversion occurs. This assist the firms to achieve maximize shareholders value.

Hybrids securities also generally are deeply subordinated within the issuer’s capital structure. Typically, hybrid securities are ranking junior to other forms of debt but senior to common stock. Therefore, the rating agency and regulator always give good rating to the issuers when they analyzing the issuers’ capital structure position. Nevertheless, the real benefits of a hybrid security are depending on its “equity-like features” or “debt-like features” characteristics of the firms. From a rating agency and bank regulatory perspective, more equity-like hybrids generally receive more favourable treatment as the issuer is considered having less debt which subsequently lowering the bankruptcy risk. Meanwhile, from the tax perspective, more debt like hybrids offers more favourable tax treatment for issuers.

Despite various benefits can be obtained by issuing hybrid securities to the firms and capital market, there are very limited hybrid securities instruments in Malaysia Capital market inclusive Malaysia Islamic capital market. The most dominant hybrid securities that are being issued by most of the firms are preferred stock, company warrant convertible bond/ loan stock. Please refer table 1.0, on the details of hybrid securities current outstanding in Malaysia Capital market.

TABLE 1.0

The securities outstanding in Malaysia Capital

Market as at Dec 2014


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Type Securities

Islamic Securiti

es

Conventional

Total

% Islamic Instrumen

ts

Equity 817 923 923 89

Debt 457.0 534.0 1,010

45.2

Warrant 25 199 199 12.5

Preffered Stock

1 9 9 11.0

Convertible Bond

3 45 48 0.06

Loan Stock

0 35 35 0

Source : http://www.sc.com.my , 15 February 2015

4.0 INSTRUMENTS OF HYBRIDS SECURITIES IN

MALAYSIA ISLAMIC CAPITAL MARKET

There are various type securities in Malaysian Capital Market that can be classified as hybrid such as bond with convertible loan, bond with warrant, structured warrant, company warrant, loan stock and others. The details of the instruments are discussed as follows:-

4.1 Warrant

In general, there are two major type of warrants issued in Malaysia capital market namely the company warrant and structure warrant respectively. The company warrant is being issued by the firm itself that required capital meanwhile the structure warrants are issued by a third party such as stockbroker of financial institutions that give holders the right, but not the obligation, to buy or sell the underlying instrument in the future for fixed price. The money raise by structure warrant will not received by the company. Considering, the structure warrant is not issued by the company itself, we decided to exclude this instrument from our model and only focus on company warrant.

Company warrant or also known as transferable subscription right (TSR) provide the holder the right but not the compulsion to buy or subscribe for a new ordinary share at the certain exercise price within the certain given period of time (exercise period). If the investors do not subscribe the share upon the expiry period of the exercise, the warrant will become worthless and this warrant is known as call option. Warrant is the hybrid securities that have the feature of equity.

The value of the warrant is calculated based on the underlying asset of the original ordinary share of the issued firm. The theoretical price of the warrant is the difference between the market price of the issuance firm and the exercise price. Nevertheless, in the normal circumstances, the market value of

the warrant is stated at premium in conjunction with the lower capital outlay and speculative reasons. The price of the warrant will be determined by the expiry date of the warrant.

4.2 Loan Stocks- Secured, unsecured, redeemable and irredeemable

Loan stock is one of the hybrid securities with debt features that are commonly issued by various firms in Malaysia capital market. Loan stocks appear to be uniquely Malaysia hybrid securities. Despite there are non convertible loan in the market, most of the firms normally issue loan stock with convertible features as the non convertibles loan stock will have to carry a higher coupon rate.

4.3 Convertible loan stock (CULS)

CULS are one of loan stock that convertible to other instrument which is normally to equity. CULS investors received the benefit of bonds such as interest from the coupon rate and also have the possibilities of capital appreciation upon converting CULS to equity. In essence, it may be similar to fixed income debt instrument awaiting conversion into equity at the predetermined dates. At first quick look, one could think that CULS is compatible with convertible bond. Indeed, CULS can be considered as Malaysian version of convertible bond.

CULS can be offered in the structure of redeemable (RCULS) or irredeemable (ICULS) convertible unsecured loan stock. In the case of ICULS, the investors are required to convert the ICULS into ordinary shares upon the maturity period. Meanwhile for RCULS, the investors have the option whether to convert the RCULS into ordinary shares or redeem the RCULS itself from the issuing company at their par value.

The advantages of issuing CULS are to attract more investors to buy the instrument considering the addition features of conversion privilege. CULS also lowering the firm’s cost of borrowing as it bearing lower coupon rate. Besides, the issuing firm also could benefit the capital gain upon conversion of CULS into shares.

4.4 Preferred Stock (PS)

Preferred Stock (PS) is also known as preference share is one of the most prominent hybrid securities instruments. It has the combination of both features of bond and equity. Nevertheless, it term of ranking for claiming of asset in case of liquidation, PS is senior to common stock but lower to bond. PS also have more priority in term of dividend payment over common stock.

Equally to bonds, preferred stocks are evaluated by the credit rating agencies. In general, the rate for PS is generally subordinate to bonds considering PS’s dividend payment is not guarantee and PS holders' claims are junior to those of all creditors.

Generally, PS has priority over common stock in dividend payments. Nevertheless, the preference is not a guarantee payment of dividends, but the company is obligated to reimburse the stated dividends on PS prior to paying any dividends on common stock


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Besides, PS also has the features of cumulative or noncumulative. A cumulative PS entail that should a company unable to make any dividend payment (or any amount below the stated rate), it must make the payment for it in the future. Meanwhile, non cumulative PS, if no dividend is declared and the company is fail to pay on time, no accumulate dividend is required to be paid to the shareholders in the future.

Preferred stocks give a firm an option form of financing as the dividend payment is not fixed. As such, a firm that defer dividends is not consider default and unaffected its credit rating. Comparing to traditional debt, a missed payment would put the company into a default status.

PS can also be used by the firm to prevent any hostile takeover, by creating PS with a poison pill (or forced-exchange or conversion features) which are exercised upon a change in control. A firm normally issues a number of classes of PS. The firm require stage amount of financing, with respective stage receiving separate rights and having a different class of PS. Such a company might have "Series A Preferred," "Series B Preferred," "Series C Preferred" and common stock.

Despite the above, there are only 9 firms have issued PS in Malaysia. Due to limited firms for studies, we have excluded PS in our model of study.

4.5 Convertible bond

This is an instrument that offers the bondholders or the investors the right to convert from fixed rate securities of bond to certain number of the shares at the agreed conversation price and rate. This instrument is preferable for the investors that looking for the mixture of fixed income and equity. The investors could benefit from the capital appreciation during the conversion of this instrument. In addition, the investors could benefit from the dividend stream. In other word, Convertibles appeals to investors who seek both the cash flow and safety of a bond while still enjoying the prospects of capital appreciation should the company’s ordinary shares perform well.

For issuers, they can benefit from the lower cost since CB’s coupon rate is lower than normal bond. They also could gain from capital appreciation during conversion exercise.

To-date, there are 48 number of convertible bond currently outstanding in Malaysia with only 3 or 0.06% consists of Islamic convertible bond. The details of Islamic convertible bond issued in Malaysia Islamic capital are as follows:

• Subordinate Convertible Sukuk (Bond) issued by Maybank in 2005 under the contract of Bai Bitamin Ajil

• Subordinate Convertible Sukuk (bond) issued by AmIslamic Bank Bhd in 2006 under the contract of Musyarakah

• Sukuk mushārakah issued by Rafflesia Capital Limited in 2006 known as Khazanah TMB exchangeable sukuk musharakah

4.6 Warrant Bond

As mentioned before, warrants alone are securities that give the rights, but not obligation, to buy equity of a company at

a specific price and period. Warrants are usually issued in combination with other securities, namely: bonds and equities. Warrant bonds are detachable which permit the investors to sell warrant but keep the bond. This feature provides the option to the issuer to set different maturities for bonds and warrants. Unlike convertible bond, warrant bond is not callable. As a result the number of issuance for bond warrant is not very encouraging. The following table, provide the details of hybrid bond securities issuance in Malaysia.

Table 2. 0

The issuance of Convertible Bond and Bond Warrant in Malaysia

Securities

Year of issuance

Convertible bond Warrant Bond

2010 9 4

2009 7 0

2008 3 0

2007 3 4

2006 4 0

2005 6 0

2004 5 0

2003 10 0

Source : http://www.sc.com.my , 13 February 2015

5.0 CONCLUSION

Islamic finance has emerged as one the most important segment in financial system. Started from a humble beginning, Islamic finance has evolved into a complete set of financial system consists of banking, insurance, money market and capital market and equally compatible with the conventional financial system. Islamic finance has registered tremendous growth ever since its inception and eventually surpasses the growth of conventional system. In addition, there is remarkable trend among non Muslims society to start employing Islamic finance instruments for their financial requirement.

Hybrid securities is one of the instrument availed in Capital market. Hybrid securities has it owned niche that cater the requirement for certain circumstances that could not be fulfilled by the traditional form of capital neither debt nor equity. Firstly, hybrid securities are useful to address the issue of agency cost between the manager and shareholders. Secondly, hybrid securities permit the firm that having high cost of issuing equity due to asymmetric information to raise capital at lower price. Lastly but not least, hybrid securities allow the high risk firm to invest into positive NPV project at lower cost.


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Despite the advance stage of Malaysia Islamic capital, the issuance of Islamic hybrid securities among the shariah compliance firms is very low. As such, by exploring hybrid security issuance among shariah compliance firms will also fill up the gap of lacking of awareness and understanding of security market against the essential of the instruments in financial system.

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Objective Clarity and the Winning Managerial Practices

The Indonesian Evidence

ABSTRACT

This study seeks to examine how objective clarity contributes to the successful managerial practices (planning process). This study used a qualitative research method as the basis for this study to achieve an authentic explanation of the standpoints of interviewees. The data collection method adopted detailed semi-structured and unstructured cross-examines of both managers and non-managers in each recognized firm. The three firms were selected due to their dedication in strategic planning and their high accomplishment posture. This study utilized research information from a board of professionals to first affirm a firm as high performing in the first occurrence, and then to choose the three top performing firms for the query. This study has provided significant findings regarding the practices of objectives setting during the strategic planning process as the main part of the managerial practices. The significance of how the clarity of objectives facilita the successful strategy has been identified, among other accompanying findings.

Keywords

Clear and Measurable Objectives, Managerial Practices, High Performance Banks, Indonesia.

INTRODUCTION

Strategic planning has been used widely both in the private and in the public sector to improve the performance of managerial practices in an organisation (Bryson, 2005; Ridwan, 2017). This study investigates the two very important constructs of the planning process as an essential part of the managerial practices: clarity objectives, communication and their role to facilitate the successful managerial practices. Objective-setting is a statement of what is to be achieved (Rue and Holland, 1986), thus, the clarity of objectives is essential. It is a must as well that the organisation pursues input, uses and gives out information as an essential basis for the successful managerial practices.

LITERATURE REVIEW Writing in 1979, Steiner states that objectives must support the company’s basic purposes and mission. Greenly (1989) states that determining organisational objectives is the second step in planning direction and the higher level objectives provide a base for lower levels. Richards (1986) connects stages of objectives to stages within the organisational structure, specific managerial job titles, and the strategies which are found at different stages in the structure. Greenly further posits that objectives are also found at other levels in a company, while the larger and the more complicated the structure, the greater the potential for a broad range of objectives in order to adapt the aims of the various business areas.

Mohammad Sihab Ridwan

Faculty of Economics and Business, University of 17 Agustus 1945 Surabaya

shihab2untag-sby.ac.id

John Marti Southampton Business

School, University of Southampton, England,

UK

Siti Sarah Omar Faculty of Technology

Management and Business, University Tun Hussein Onn (UTHM),

Malaysia

Noor Maya Binti Md Salleh

School of Business, Institute Technology

Brunei


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Urwick (1952), an early writer on objectives states that “unless purposes (objectives) are specified then individuals find difficulty in co-operating,” (as cited by Greenley,1989:168). Mintzberg (2000) criticised assumptions of strategic planning that objectives are determined by the top management for the whole organisation, which in turn brings to mind the process of formulating strategy, cascade down the structural hierarchy, as devices of motivation and control (that is, to give incentives and tools to assess performance).

METHODOLOGY To explore the strategy development, strategy execution, and feedback and evaluation, the author used qualitative research as a framework for this study since it is considered as the most suitable method in the setting of this study in which to comprehend processes, experiences, actions and values, and to focus on the explanation of the setting being studied (Creswell; Murphy et al. in Baker; Yin) and deals with ‘how’ and ‘why’ queries rather than ‘how many’ and ‘how much’ (Yin), as well as to find themes and connection at the case level (Gall et al.,). In the occasion of strategic planning investigation, as depicted in Grant’s study on leading oil enterprises, most research embrace a quantitative approach, which then go wrong to take the abundance and complexity of a company’s strategic planning practice. For that purpose, the qualitative method was adopted in this study to take explanation of the theories and perspectives of members investigated (Yin) with the intention of getting an authentic and valuable description in terms of structural change and managerial activity in particular strategic planning procedures.

Supporting type of academics in the field, (e.g. Yin; Merriam,; Eisenhardt), this study, then, utilized case study approach of six case studies as research strategy to examine the structural changes and managerial activities, particularly strategy formulation and execution practices.20-21 24-25 The strategy development and execution activity is part of social constructions in an organisation, then, it is very difficult to divide the activity of strategy formulation and execution from the setting in which the activity occurs, for the reason that the borders between phenomenon and setting are not well-defined. In addition, the validation from various cases is every so often considered as more promising, and the whole study is as a result considered as being more strong (Yin); in addition to the engagement of single-case study design is at risk to errors (Patton). With these in conviction, this study, hence, used multiple-case study scheme as a research strategy to explore strategy and execution, and feedback and evaluation practices in the Indonesian enterprises.

RESULTS AND DISCUSSION The data showed that the objectives were adjusted with the vision and mission of the organisation translated into the long term, middle term, and short term objectives and communicated to all levels around the bank. Based on vision and mission, the objectives

for the entire organisation then were set up. In the business plan, they were then translated into three years’ objectives. In short term planning, they were translated into one years’ objective. There was a hierarchy of objectives in all six banks in this study. These findings were consistent with Steiner’s view (1979) that objectives must support the company’s basic purposes and mission; and also matching with Rue and Holland’s observation (1986) that objectives are normally stated in terms of a desired level of attainment within a specific time frame. At the top most of hierarchy is the widest aim for the entire firm embodied by mission. At the following stage are the detailed objectives relating to the entire firm. The subsequent stage is a set of whole objectives for each of the divisions. The operational objectives are exclusive to each of the business functions such as finance, marketing, and so forth. Subunit objectives relate to particular activities within each of the operations. At last, the lowest of the hierarchy embodies the individual objectives. However, the lowest hierarchy (personal objectives) didn’t appeared in the text during interviews in all six banks that participated in this study. The findings were also parallel to Quinn’s view (1980), which suggested that objectives should be clear and decisive whereby all efforts are aimed toward clearly understood, decisive, and achievable overall goals. The findings also supported Greenly’s views (1989) that determining organisational objectives is the second step in planning direction and the higher level objectives provide a base for lower levels. There was a logical sequence from mission to objectives. Objectives were also set up at other levels in the various perspectives in each bank researched, such as: objectives from financial perspective, customer perspective, and so forth. At the end, talking about objectives was to achieve sustainable value to shareholders. These findings were compatible with the Richards’s observation (1986) that connects stages of objectives to stages within the organisational structure, specific managerial job titles, and the strategies which are founded at different stages in the structure; and also parallel with the Greenly’s opinion (1989) that objectives are also founded at other levels in a company, while the larger and the more complicated the structure the greater the potential for a broad range of objectives, in order to adapt the aims of the various business areas. As already revealed in the previous chapter, data also showed that there were clear measurements both long and middle strategic planning as well as short strategic planning. Objectives were set as detailed as possible to allow bank measuring them precisely. Each task had key performance indicators connected to the attainment of the objectives of organisation. All six banks in this study developed metrics for each objectives to make sure the achievement. Banks in this study realised the importance of having clear and measureable objectives as devices of monitoring the attainment of the business target and strategic objectives. These findings were consistent with Urwick’s view (1952), an early writer on objectives, as quoted by Greenley (1989:168)) that “unless purposes (objectives) are specified then individuals find difficulty in co-operating”; and supported the Steiner’s view (1979:165) that “only when objectives are expressed in concrete terms for specified periods of time can


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their achievement be measured reasonably objectively”; as well as Greenley’s views that the objectives give a basis for measuring and assessing company performance, by contrasting actual results with the standards set up in the objectives (1989). It was clear, then, that monitoring the attainment of the business target and strategic objectives, and measuring company performance could be performed well if the objectives in the various levels were clear and measurable. Furthermore, data in all three banks in this study also showed that the formulation of organization objectives was the authority of top management. However, the objectives for lower levels involved the managers of related business unit and departments. This findings supported the assumptions of strategic planning criticized by Mintzberg (2000) that objectives are determined by the top management for the whole organization, which in turn bring to mind the process of formulating strategy, and themselves, cascade down the structural hierarchy, as devices of motivation and control- that is to give incentives and tools to assess performance. The findings also matched with Steiner’s observation (1979) that best results are reached when those who are responsible for reaching objectives have some role in setting them; and they are more possible to be motivated to reaching them than are people who have little contribution in this field. However, Mintzberg criticised that if the objectives really exist to motivate, then according to behavioural scientists, “people have to be involved in the setting of their own ones” (Mintzberg,2000:71). So instead of cascading down, objectives have to be made in diverse places and then accumulated. But if so, how can they connect to strategies easily? With one accumulating and the other cascading down, how do they get together? To quote Eigerman (1988), “In a purely bottom up system, the integration of strategy across units is achieved with a stapler”! (Mintzberg,2000:72). Thus, the connection between the setting of objectives and the formation of strategies remains unspecified. “It is one thing to describe strategy as being driven by values in a general sense, as does the design school model, quite another to establish a link with formal, quantitative targets” (Minztberg, 2000:72). The researcher thinks that it was an interesting and challenging debate between the proponents of design school of thought with the bottom up school of thought that needs clarification further by other research. In this matter, the researcher would like to note that whichever the system organisation would adopt, managerial participation is critical; it was fundamental to involve various levels of managers in addition to top management in the objectives setting process.

CONCLUSION

The study findings support the previous research that objectives must support the company’s basic purposes and mission; and the higher-level objectives provide a foundation for lower levels. There is a logical sequence from mission to objectives. It is clear, then, that monitoring the attainment of the business target and strategic objectives, and measuring company performance, can be performed well if the objectives in the various levels are clear and measurable.

This study makes contributions by filling the gap through exploring and documenting the roles of the clarity of objectives to enabling the winning managerial practices in the Indonesian high-performing banks.

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