Journal of Indonesian Economy and Business

Innovative Governance in the Startup Era: The Interplay of Technology, Innovation, and Value Creation

Dian Kartika Rahajeng — 2025-05-28

Introduction: This groundbreaking paper examines the uncharted territory of corporate governance within non-traditional organizations, focusing on the dynamic landscape of start-up enterprises. Background Problem: In an era dominated by rapid technological advancements and unprecedented growth in start-ups, this research sheds light on the intricate relationship between innovation processes and value creation that fundamentally reshapes corporate governance mechanisms. Novelty: The novelty of this study paper lies in bridging the research gap in corporate governance studies, specifically in non-traditional settings like start-up enterprises. Research Methods: Embarking on a multi-exploratory study, the author examines the value of co-creation processes in eleven vibrant start-up organizations. The study unravels the interplay between stakeholders' value creation and innovation through primary and secondary data from interviews, focus group discussions, observations, and documentary analyses. This exploration vividly illustrates how these dynamics influence organizational culture and, consequently, redefine the very structure of these innovative entities. Findings: The findings spotlight unique innovation and co-creation processes intricately tied to customer needs and leadership styles. From product newness to bespoke offerings and active, dynamic leadership, these factors intricately mold the organizational structure of start-ups. Contributions: This paper offers insights into successful corporate governance in start-ups, focusing on the social impact of value generation. It outlines transformations like strong leadership, integrated communication systems, innovative remuneration schemes, and technology use, promoting a holistic approach to governance in the fast-paced startup world.

Determinants of Indonesian SMEs’ Intentions to Adopt Fintech: an Innovation Diffusion Theory Perspective

Muhsin N. Bailusy — 2025-05-28

Introduction/Main Objectives: Financial technology (Fintech) has become a solution for many SMEs seeking to improve business performance in an increasingly competitive business environment. Thus, it is important to investigate the factors underlying SMEs’ decision to adopt Fintech. Background Problem: Previous studies have applied various theoretical frameworks to explore Fintech adoption. Despite this, limited knowledge exists regarding the determinants influencing the adoption of Fintech among SMEs. Novelty: By using innovation diffusion theory, this study examines the underlying elements that contribute to the adoption of Fintech by SMEs. Research Methods: Data were collected using the survey approach. Self-administered questionnaires were distributed to SMEs in Indonesia using purposive sampling, yielding 273 responses. The data were then analyzed using the partial least square structural equation modelling (PLS-SEM) method. Findings/Results: The results confirmed all hypotheses developed for the study. Specifically, relative advantage, compatibility, complexity, and observability positively affect attitude towards Fintech adoption. In turn, positive attitude towards the adoption of Fintech has a significant impact on the intention to use Fintech. In addition, attitude mediates the relationship between IDT factors (relative advantage, compatibility, complexity, and observability) and Fintech adoption intention. Conclusion: Innovation diffusion theory is able to explain the factors that form SMEs' attitude and adoption intention toward Fintech. The outcomes of this research provide important implications both theoretically and practically.

Rebuild the Trust: Predicting the Financial Well-Being of Indonesian Insurers

Endang Dwi Astuti — 2025-05-28

Introduction/Main Objectives: The emerging markets’ economic growth relies on stable insurance sectors, which mitigate risk, maintain liquidity, and manage profitability for sustainable growth. This paper aims to examine the financial well-being prediction model using logit regression for Indonesian life and general insurance companies one year and two years before a failure event. Background Problems: The rise of insurance failures erodes people's trust, especially in Indonesia where financial literacy is still an ongoing issue. Novelty: Numerous studies examine the methodology for predicting insurance failure, but some of these procedures have statistical limitations or do not address the unique issue in the emerging markets’ setting. Research Methods: This study employs logistic regression as its methodology and focuses on the life and general insurers operating in Indonesia between 2012 and 2020, using publicly available data. Finding/Results: This study finds the financial well-being of general insurance companies is dependent on their investment performance, profitability, liquidity, change in asset mix, premiums, and surplus growth, leverage, the inflation rate, and change in money reserves. While firm size, the operating margin, premium growth, liquidity change in the asset mix, the combined ratio of loss and expense ratios, surplus growth, and leverage are the key leading indicators of life insurers’ insolvency. Conclusion: Firms with poor investment performance, low premium growth, and extreme levels of leverage are more likely to be insolvent. This study suggests that local authorities should regulate insurance companies' investment strategies, moderate their asset mix changes, and implement sound risk management systems to mitigate performance fluctuations.

The Role of Corporate Governance, Type of Ownership, and Capital Structure, in the Achievement of Sustainable Development Goals

Surifah — 2025-05-28

Introduction/Main Objective: This study presents research that makes a theoretical contribution to the literature on the achievement of sustainable development goals (SDGs), and provides empirical evidence of the role of corporate governance (CG), type of ownership, and capital structure of companies in Indonesia in achieving the SDGs. Background Problem: This research is motivated by the phenomenon that the business sector plays major roles in economic growth, damage to the natural environment—as well as its preservation—well the social life of local and global communities. The active involvement of the business world is needed to support the achievement of the SDGs. This research is important because the president directors and president commissioners (as proxies for CG) are the parties that play the biggest roles in their companies in achieving the SDGs. In addition, owners can pressure directors and commissioners to commit to achieving SDGs. A capital structure that reflects the company's financial flexibility also plays a role in realizing the SDGs. Novelty: This research uses unique proxies for the SDGs and CG variables. The SDGs are proxied using the SDG index, covering 17 SDGs fields, consisting of 101 items.CG is proxied by the competence of president directors and president commissioners. Competence is measured by level of education, work experience, and global insight. In addition, research examining the effect of the four types of ownership and capital structure on the SDGs is still very limited. This research was conducted on all companies listed on the Indonesia Stock Exchange during the period 2017 to 2021. The samples were taken purposively, with certain criteria. The dependent variable is SDGs, while the independent variables are CG, type of ownership, and capital structure. The analysis technique uses multiple linear regression. Findings/results: The research proves that the president commissioner, government, and individual shareholders, as well as leverage have a significant positive effect on SDGs disclosure. Meanwhile, domestic institutional shareholders, capital structure, and company size negatively affect SDG’s disclosure. Conclusion: The results show that the president commissioner, government, and individual shareholders become the key shareholders who significantly affect the company’s SDG disclosure policy. Thus, the results confirm and support the stakeholder theory and stewardship theory.

E-Blue: Implementation of an Integrated Blue Economy Ecosystem to Increase Coastal MSMEs Competitiveness

Tito Aditya Perdana — 2025-05-28

Introduction/Main Objectives: This study aims to determine the implementation and the right business strategy for sustainable fisheries that adopt the "E-Blue" blue economy ecosystem model. Background Problems: The challenges faced in developing a booming blue economy emphasize the need for strong commitment and collaboration between central and regional governments, to support overall development. The background problems also recognize technology’s impact on the activities of micro, small and medium enterprises (MSMEs) and stress the significance of quick responses to these changes. Novelty: This lies in the study’s exploration of the role of digital transformation in sustainable fisheries within the blue economy framework. It emphasizes the need for commitment, innovation, and technological adaptation to ensure the success of blue economy-based development. Research Methods: This qualitative study adopts a narrative approach to gather data on sustainable fisheries strategies aligned with the blue economy ecosystem model. The research utilizes this approach to gain insights into the development possibilities for the research object. Finding/Results: The study's findings highlight the crucial role of the government’s commitment and decisive actions for the successful development of the blue economy in the fisheries sector. The study underscores the potential of digital transformation as a bridge between stakeholders and consumers, enabling efficient supply chain management and diverse product processing for community welfare. Conclusion: The study concludes that successful blue economy development relies on strong collaboration between governments, innovative policy programs, and swift responses to technological changes. The study emphasizes the importance of continuous innovation to enhance competitiveness and market access in Indonesia's fisheries sector.

Uncertainty about Economic Policy and Decisions to Engage in Real Earnings Management: Evidence from Indonesia’s Capital Market

Yeni Januarsi — 2025-05-28

Introduction/Main Objectives: This study examines whether economic policy uncertainty (EPU) influences managers’ choice to engage in real earnings management (EM) in the Indonesian capital market. Background Problems: As a major driver of aggregate economic growth and business cycles, EPU may induce information asymmetry, affect the quality of financial reporting, and raise concerns about how macroeconomic conditions may impact how managers behave in managing reported accounting numbers. Novelty: This study explains how the lean against the wind theory and the lean with the wind theory affect real EM behavior in emerging markets. In addition, this study considers the endogeneity problem, which has frequently been overlooked in similar studies, and provides a robust analysis utilizing a variety of tests to validate the proposed hypothesis. Research Methods: This study investigates 1,800 firm-year observations represented by 200 Indonesian publicly listed firms from all industries that have data available, except the banking and financial industries, from 2012 to 2020.The researchers employ time-series cross-sections, pooled ordinary least squares (OLS),and robust standard errors clustered by years. Finding/Results: EPU causes managers to engage in more real EM. This result holds for a series of robustness tests, including testing by using a presidential election for alternative measurements for EPU. From additional analysis, this study reveals that the effect of EPU on real EM is more significant for more profitable firms. Conclusion: This study supports the lean against the wind theory for emerging markets. This evidence implies that EPU conditions induce managers to engage in more real earnings management in emerging market firms, and the uncertain environment can reduce the quality of financial information .

Balancing Caution and Expansion: The Non-Performing Loans Threshold for the Credit-Growth Nexus

Idah Zuhroh — 2025-05-28

Introduction/Main Objectives: This research explores how non-performing loans (NPLs) affect economic growth while assuming that the economy can sustain a certain ratio of NPLs without disruption. Background Problems: Studies employing the threshold approach have not explicitly defined the upper limit of NPLs that supports economic growth. Novelty: This study adds to the existing literature by examining the non-linear relationship between NPLs and economic growth, grounded in two key assumptions: 1) the complete elimination of NPLs is unrealistic, and 2) a threshold level of NPLs exists. Research Methods: Based on this assumption, the study constructs a non-linear model with an inverted U-shape pattern, applying annual data from 33 provinces in Indonesia during 2010–2021 and employing dynamic panel data regression with the GMM estimator. Finding/Results: The results reveal that NPLs will have a negative impact on growth when the NPL ratio exceeds 5.8% in total credit and 2.4% for household credit. However, no inverted U-shaped pattern is observed for working capital and investment credit. In addition, bank credit in total, as well as working capital credit and household credit show a significant positive coefficient on growth, while investment credit has an insignificant negative coefficient. We also introduce the concept of NPLs-growth risk, categorizing it as risk-free, low-risk, moderate-risk, and high-risk based on the area under the curve. The findings indicate that the NPLs-growth risk in Indonesia is generally at a low level. Conclusion: Ensuring that NPLs remain within a safe threshold is essential for sustaining economic growth and avoiding financial instability.