The Village Credit Institution (LPD) is a microfinance institution unique to Bali, owned by customary communities and managed based on local wisdom and customary law. LPD are vital for boosting the community’s economy and preserving local customs and culture.
Objectives
This study aims to examine the influence of ethical leadership, organizational culture, social responsibility, and stakeholder pressure on LPD performance in Bali, with levers of control acting as a moderator.
Methodology
Using quantitative methods and Partial Least Squares (PLS) analysis on data from 320 Heads of LPD in Bali, using a questionnaire.
Results
The findings reveal that ethical leadership and organizational culture both have a positive effect on LPD performance. Conversely, corporate social responsibility and stakeholder pressure do not affect LPD performance. Regarding control mechanisms, levers of control strengthen the positive effect of ethical leadership on LPD performance. However, levers of control do not strengthen the influence of organizational culture or stakeholder pressure. Interestingly, levers of control actually weaken the effect of corporate social responsibility on LPD performance.
Conclusion
The study concludes that LPD management must prioritize preserving organizational culture and promoting ethical leadership. Utilizing levers of control can further reinforce ethical leadership practices, maximizing LPD performance.
IanSMarhaeniANnY. The role of village credit institution (LPD) to realize the economic empowerment. Indicator2012; 2013(2014): 2015.
2.
CheffiWAbdel-MaksoudAFarooqMO. CSR initiatives, organizational performance and the mediating role of integrating CSR into management control systems: testing an inclusive model within SMEs in an emerging economy. J Manag Control2021; 32(3): 333–367.
3.
NemrMAALiuY. The impact of ethical leadership on organizational citizenship behaviors: moderating role of organizational cynicism. Cogent Bus Manag2021; 8(1): 1865860.
4.
LamLNguyenPLeN, et al.The relation among organizational culture, knowledge management, and innovation capability: its implication for open innovation. J Open Innov Technol Mark Complex2021; 7(1): 66. Available from: https://www.sciencedirect.com/science/article/pii/S2199853122008356
5.
BautistaMPJTUyC. The effects of organizational culture and leadership style on organizational performance in times of COVID-19 pandemic. Rev Integr Bus Econ Res2023; 12(1): 175–194.
6.
ZhaoHTengHWuQ. The effect of corporate culture on firm performance: evidence from China. China J Account Res2018; 11(1): 1–19.
7.
IkpwSIbmpMLgpseJ. The effect of the implementation of corporate social responsibility good corporate governance and Tri Hita Karana on the financial performance of village credit institutions (Lpd) throughout Tabanan district. J Tour Econ Policy2022; 2(2): 98–103.
8.
KhanSRJavedU. Revision of ethical leadership scale. J Res reflections Educ2018; 12(2): 121–135.
9.
AwayshehAHeronRAPerryT, et al.On the relation between corporate social responsibility and financial performance. Strateg Manag J2020; 41(6): 965–987.
10.
Rubio-AndrésMdel Mar Ramos-GonzálezMSastre-CastilloMÁ, et al.Stakeholder pressure and innovation capacity of SMEs in the COVID-19 pandemic: mediating and multigroup analysis. Technol Forecast Soc Change2023; 190: 122432.
11.
ShiYTsaiK-H. A sequential process from external stakeholder pressures to performance in services. J Serv Theory Pract2022; 32(5): 589–619.
12.
MartynPSweeneyBCurtisE. Strategy and control: 25 years of empirical use of Simons’ levers of control framework. J Account Organ Change2016; 12(3): 281–324.
13.
Elsye HataneSGabrielleLFebe AngelinaS. The levers of management control system in organizational life cycle. KnE Soc Sci2019; 3(11): 188.
14.
PešaljBPavlovAMicheliP. The use of management control and performance measurement systems in SMEs. Int J Oper Prod Manag2018; 38(11): 2169–2191.
15.
BrownMETreviñoLKHarrisonDA. Ethical leadership: a social learning perspective for construct development and testing. Organ Behav Hum Decis Process2005; 97(2): 117–134.
16.
HsiehC-CTaiS-ELiH-C. A bibliometric review of ethical leadership research: shifting focuses and theoretical insights. AERA Open2023; 9: 23328584231209264.
17.
DmytriyevSDFreemanREHörischJ. The relationship between stakeholder theory and corporate social responsibility: differences, similarities, and implications for social issues in management. J Manag Stud2021; 58(6): 1441–1470.
18.
TokoroN. Stakeholders and corporate social responsibility (CSR): a new perspective on the structure of relationships. Asian Bus Manag2007; 6: 143–162.
19.
SimonJLBeisnerECPhelpsJ. The state of humanity. Blackwell Oxford, 1995.
20.
ZhuWHeHTreviñoLK, et al.Ethical leadership and follower voice and performance: the role of follower identifications and entity morality beliefs. Leadersh Q2015; 26(5): 702–718.
21.
Al HalbusiHTangTL-PWilliamsKA, et al.Do ethical leaders enhance employee ethical behaviors? Organizational justice and ethical climate as dual mediators and leader moral attentiveness as a moderator: empirical support from Iraq’s emerging market. Monetary wisdom. 2024; 317–337.
22.
ZhuWTreviñoLKZhengX. Ethical leaders and their followers: the transmission of moral identity and moral attentiveness. Bus Ethics Q2016; 26(1): 95–115.
23.
HangNTTHiepNNguyenNP, et al.The relationship between organizational culture and firm performance: a study in Vietnam. HueUni-JED2021; 130(5B): 5–15.
24.
JardiouiMGarengoPEl AlamiS. How organizational culture influences performance measurement systems in SMEs. Int J Prod Perform Manag2020; 69(2): 217–235.
25.
AmanMK. The effect of employee engagement and organization culture on company innovation capability. Int J Contemp Account2019; 1(1): 13–22.
26.
GaselaMM. The influence of organizational culture on performance in public entities of South Africa. Africa’s Public Serv Deliv Perform Rev2022; 10(1): 563.
KhanSARYuZUmarM. How environmental awareness and corporate social responsibility practices benefit the enterprise? An empirical study in the context of emerging economy. Manag Environ Qual An Int J2021; 32(5): 863–885.
29.
GunawanJ. Corporate social responsibility in Indonesia: why is environmental disclosure the least disclosed information in annual and sustainability reports for natural products industries in Indonesia? In: Current global practices of corporate social responsibility, in the era of sustainable development goals, 2021, pp. 711–743.
30.
GongLLiuZRongY, et al.Inclusive leadership, ambidextrous innovation and organizational performance: the moderating role of environment uncertainty. Leadersh Organ Dev J2021; 42(5): 783–801.
31.
BairdKTungA. Green human resource management: the role of positive levers of control and environmental performance measures in managing performance. Int J Manpow2023; 44(5): 880–899.
32.
KoCHaneyMHLeeG. Effects of ethical leadership and formal control systems on employee opportunistic behavior in China. Benchmarking An Int J2018; 25(5): 1350–1362.
33.
AdiputraIMPSujanaE. Management control systems, organizational culture and village credit institution financial performance. Indones J Account Res2021; 24(1): 75–108.
34.
ZebAAkbarFHussainK, et al.The competing value framework model of organizational culture, innovation and performance. Bus Process Manag J2021; 27(2): 658–683.
35.
DaiJMontabonFLCantorDE. Linking rival and stakeholder pressure to green supply management: mediating role of top management support. Transp Res Part E Logist Transp Rev2014; 71: 173–187.
36.
NoorSTajikOGolzarJ. Simple random sampling. Int J Educ Literacy Stud2022; 1(2): 78–82.
37.
HairJFRisherJJSarstedtM, et al.When to use and how to report the results of PLS-SEM. Eur Bus Rev2019; 31(1): 2–24.
38.
Tulcanaza-PrietoABAguilar-RodríguezIEArtiedaC. Organizational culture and corporate performance in the Ecuadorian environment. Adm Sci2021; 11(4): 132.
39.
LiuM-LLinC-PChenM-L, et al.Strengthening knowledge sharing and job dedication: the roles of corporate social responsibility and ethical leadership. Leader Organ Dev J2020; 41(1): 73–87.
40.
SchäferF-SHirschBNitzlC. Stakeholder pressure as a driver of risk management practices in public administrations. J Account Organ Change2022; 18(1): 33–56.
41.
BhuiyanFBairdKMunirR. The association between organisational culture, CSR practices and organisational performance in an emerging economy. Meditari Account Res2020; 28(6): 977–1011.
42.
WidiyatiDMurwaningsariE. Achieving green competitive advantage through organizational green culture, business analytics and collaborative competence: the mediating effect of eco-innovation. Int J Soc Manag Stud2021; 2(4): 98–113.
43.
UgheokeSO. Does organizational culture matter in managerial role and high-performance achievement? Lessons from Nigeria SMEs. Bus Perspect Res2021; 9(3): 385–398.
44.
AtmadjaATSaputraKAKTamaGM, et al.Influence of human resources. J Asian Financ Econ Bus2021; 8(2): 563–570.
45.
SaputraKAKJayawarsaAAKPriliandaniNMI. Antonio Gramsci hegemonical theory critical study: accounting fraud of Hindu - Bali. Int J Bus2022; 27(2): 1–11.
46.
ManurungDTHHidayahNSetianyE, et al.Does carbon performance and green investment affect carbon emissions disclosure?J Environ Account Manag2022; 10(4): 335–344.
47.
JayawarsaAAKSaputraKAKSAnggiriawanPB. Tri Hita Karana culture, good governance and apparatus commitment on fraud prevention in village fund management with apparatus awareness as moderator. Int J Soc Sci Hum Res2022; 5(9): 4226–4230.
48.
MahoneyLSThorneLCecilL, et al.A research note on standalone corporate social responsibility reports: signaling or greenwashing?Crit Perspect Account2013; 24(4–5): 350–359.
49.
KohKLiHTongYH. Corporate social responsibility (CSR) performance and stakeholder engagement: evidence from the quantity and quality of CSR disclosures. Corp Soc Responsib Environ Manag2023; 30(2): 504–517.
50.
SaputraKAKSubrotoBRahmanAF, et al.Mediation role of environmental management accounting on the effect of green competitive advantage on sustainable performance. J Sustain Sci Manag2023; 18(2): 103–115.
51.
SaraIMPutraIBUSaputraKAK, et al.Financial literacy, morality, and organizational culture in preventing financial mismanagement: a study on village governments in Indonesia. Cogent Bus Manag2023; 10(1): 1–15.
52.
SaputraKAKSubrotoBRahmanAF, et al.Eco-efficiency and energy audit to improve environmental performance: an empirical study of hotels in Bali-Indonesia. Int J Energy Econ Pol2022; 12(6): 175–182.
53.
AnanzehH. Corporate governance and the quality of CSR disclosure: lessons from an emerging economy. Soc Bus Rev2022; 17(2): 280–306.
54.
SaputraKAKParanoanS. Do cyber security, digitalisation and data visualisation affect the quality of internal environmental audits?Australas Account Bus Finance J2024; 18(2): 158–174.
55.
SaputraKAKLaksmiPASSmarkC, et al.The influence of accounting digitalisation transformation and sustainable management on ESG performance to achieve environmental sustainability. J Sustain Sci Manag2024; 19(7): 120–135.
56.
Padilla-LozanoCPCollazzoP. Corporate social responsibility, green innovation and competitiveness – causality in manufacturing. Compet Rev2022; 32(7): 21–39.
57.
TranNPDinhCTHHoangHTT, et al.Intellectual capital and firm performance in Vietnam: the moderating role of corporate social responsibility. Sustain Times2022; 14(19): 12763.
58.
LinWLCheahJHAzaliM, et al.Does firm size matter? Evidence on the impact of the green innovation strategy on corporate financial performance in the automotive sector. J Clean Prod2019; 229: 974–988.
59.
HidayahNHapsariDWSaputraKAK, et al.Can institutional good governance and intellectual capital affect university quality. Int J Econ Manag2023; 17: 251–261.
SartoriTDrogemullerROmraniS, et al.A schematic framework for life cycle assessment (LCA) and green building rating system (GBRS). J Build Eng2021; 38: 102180.
