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NUMBER 3, VOLUME 1, OCTOBER 2019 ISSN 2339-4034

THE EFFECT OF LIQUIDITY RISK MANAGEMENT THROUGH INFLATION AS A MODERATING


VARIABLE ON BANKING PERFORMANCE ON THE INDONESIA STOCK EXCHANGE, Herry
Hutabarat.

THE EFFECT OF THE QUALITY OF DRUG INFORMATION SERVICE ON PATIENT


SATISFACTION LEVEL IN BPJS OUT-PATIENT INSTALLATION OF SILOAM HOSPITAL KEBON
JERUK, Ekadipta & Anisha Mutiara..

LEADERSHIP AND A LOT OF FACTORS INFLUENCING WORK SATISFACTION OF


EMPLOYEES, PJP Ginting.

ANALYSIS OF COMPANY STOCK PORTFOLIO PSEI INDEX USING MARKOWITZ METHOD,


Hermiyetti, Dito TriUtomo, Usmar.

CORPORATE STRATEGY WITH ENTREPRENEUR MENTAL REVOLUTION Giri Nurpribadi.

HUMAN CAPITAL AS SOURCE OF COMPETITIVENESS IN SHARIA SMALLHOLDER


FINANCING BANKS, Pandu Adi Cakranegara, Msc, Dedi Rianto Rahadi

LOCAL COMMUNITY PERCEPTION UNDER ECOTOURISM ACTIVITY (Mangrove


Ecotourism, Pantai Mekar Village, Muara Gembong, Bekasi Regency), Agustini Tanjung .

MANAGEMENT AND ACCOUNTABILITY OF ALLOCATION OF VILLAGE FUNDS ON


PITUMPANUA SUB-DISTRIK, DISTRICT OF WAJO, SOUTH SULAWESI, Tri Pudjadi Susilo,
Hermiyetti, Eka Arianty Arfah.

..International Journal of Applied Science @2019


NUMBER 3, VOLUME 1, OCTOBER 2019 ISSN 2339-4034

Editorial Policy
About Systematics Writing in The Journal

Dear Readers,

Hereby conveyed Editorial Policy About Systematics Writing in the International Journal on Applied
Science as follows: The article title is written using a capital letter above the name and institution of
the article and followed by abstraction of the article followed by the article all of which are written
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The introduction consists of: Background explains why this research needs to be carried out, as well
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Theory Study contains literature review conducted by other researchers to be used as a


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results of other research journals related to research objects and relevant research variables to
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The results of the study discuss how the results of the study are explained, processed, and analyzed
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Company Overview, Respondents' Descriptions and Data Processing Results. Discussion The results
involve the interpretation of the results of quantitative data analysis obtained and their
relationship with the existing qualitative data both quantitatively, qualitatively and statistically.
Managerial implications discuss the synthesis of hartus findings conducted with respect to the
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suggestions reveal suggestions and implications that can be taken from the results of this study,
including suggestions to other researchers who will continue this research or to develop this
completed research.

 EDITOR

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NUMBER 3, VOLUME 1, OCTOBER 2019 ISSN 2339-4034

Number 3, Volume 1, October 2019 ISSN 2339-4034

TABLE OF CONTENT

THE EFFECT OF LIQUIDITY RISK MANAGEMENT THROUGH INFLATION AS A 01-17


MODERATING VARIABLE ON BANKING PERFORMANCE ON THE INDONESIA
STOCK EXCHANGE, Herry Hutabarat.

THE EFFECT OF THE QUALITY OF DRUG INFORMATION SERVICE ON PATIENT 18-29


SATISFACTION LEVEL IN BPJS OUT-PATIENT INSTALLATION OF SILOAM HOSPITAL
KEBON JERUK, Ekadipta & Anisha Mutiara..

LEADERSHIP AND A LOT OF FACTORS INFLUENCING WORK SATISFACTION OF 30-70


EMPLOYEES, PJP Ginting.

ANALYSIS OF COMPANY STOCK PORTFOLIO PSEI INDEX USING MARKOWITZ 71-92


METHOD, Hermiyetti, Dito Tri Utomo, Usmar.

CORPORATE STRATEGY WITH ENTREPRENEUR MENTAL REVOLUTION Giri 93-98


Nurpribadi.

HUMAN CAPITAL AS SOURCE OF COMPETITIVENESS IN SHARIA SMALLHOLDER 99-111


FINANCING BANKS, Pandu Adi Cakranegara, Dedi Rianto Rahadi

LOCAL COMMUNITY PERCEPTION UNDER ECOTOURISM ACTIVITY (Mangrove 112-133


Ecotourism, Pantai Mekar Village, Muara Gembong, Bekasi Regency), Agustini
Tanjung

MANAGEMENT AND ACCOUNTABILITY OF ALLOCATION OF VILLAGE FUNDS ON 134-150


PITUMPANUA SUB-DISTRIK, DISTRICT OF WAJO, SOUTH SULAWESI, Tri Pudjadi
Susilo, Hermiyetti, Eka Arianty Arfah.

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NUMBER 3, VOLUME 1, OCTOBER 2019 ISSN 2339-4034

No. 3 Volume 1, October 2019


Published by IPWI Consulting Group
Manila, Philippines

EDITORIAL TEAM

Editor in Chief:

Bambang Tri Cahyono


(Ph.D., University of Hawaii, 1988)

Editorial Board:
Felina Co Young
(DBA, De La Salle University, 1990)
Besar Agung Martono
(DBA, De La Salle University, 2001)
Profesor Eun Sup Lee
(Ph.D., Busan National University)
Endang Siswati
(DBA, Jose Rizal University, 2013)

Editorial Staf:
Henry H. Loupias

International Journal of Applied Science are published three times each year in February,
June, and October by the BTC consultant group in Manila Philippines. Editors accept
contributions from articles from scientists and applied science researchers, economics and
management.

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NUMBER 3, VOLUME 1, OCTOBER 2019 ISSN 2339-4034

THE EFFECT OF LIQUIDITY RISK MANAGEMENT THROUGH INFLATION AS A


MODERATING VARIABLE ON BANKING PERFORMANCE ON THE INDONESIA STOCK
EXCHANGE

Herry Hutabarat
Bunda Mulia Uinversity, Jakarta

ABSTRACT

In the period 2008 to 2018, banking liquidity in Indonesia was relatively stable. This can be
concluded based on the results of tests conducted through empirical research. The purpose of
this study is to determine the effect of individual and simultaneous liquidity risk management
which are projected with a capital adequacy ratio / capital adequacy ratio (CAR), operating
costs to operating income (BOPO) and non-performing loans (NPLs) and minimum statutory
reserves / reserves requirements (RR) and inflation (INF) as a moderating variable on
performance with a return on asset (ROA) proxy. This research method, is a quantitative study,
with a purposive sampling of conventional banking financial statement data listed on the
Indonesia Stock Exchange from 2008 to 2018. The results showed that partial testing: X2
(BOPO) had a significant effect on Y (ROA), while X1 (CAR), X3 (NPL) and X4 (RR), had no
significant effect on Y (ROA). Simultaneous testing, X1 (CAR), X2 (BOPO), X3 (NPL) and X4 (RR),
have a significant effect on Y (ROA). From testing each variable X1 (CAR), X2 (BOPO), X3 (NPL)
and X4 (RR) with inflation (INF) as a moderating variable against Y (ROA); the interaction value
of each variable with the inflation variable (INF) is not significant, so the inflation variable (INF)
is concluded as not a moderating variable in the research model.
Keywords: ROA, Liquidity risk, Inflation (INF).

INTRODUCTION

Liquidity risk management is a factor that determines a company's performance. Cash flow,
which is part of liquidity management, is a five principles that form of finance. 1) Industry 4.0
era known as 'Internet of Things (IoT)', on line systems in banking operations are widely used,
but for liquidity management, still depends on the ability of human resources in making
decisions. In relation to human resources, in Indonesia today is intensified with mental
revolution, one of which is to improve the joints of the Indonesian economy. 2)

The role of the banking industry in the Indonesian economy, in the period 2008 to 2018 is

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dominant. From Indonesian banking statistics (SPI), published by the Financial Services
Authority (OJK) as of December 2018, it is known that the total banking assets of Rp.8,068.35,
originally Rp2,310.56 trillion at the end of 2008, or increased 349.19%. The amount of banking
assets is almost four times the Indonesian Revenue and Expenditure Budget (APBN) in the
same period. Return on assets (ROA) is 2.55 at the end of 2018, originally 2.33 at the end of
2008. Operating costs to operating income (BOPO) 77.86% at the end of 2018, originally at
88.59% at the end of 2008 or decreased by 10, 73%; non-performing loans (NPL) 3.20 at the
end of 2018, originally 2.37% at the end of 2008, or decreased by 0.83%. These indicators do
not indicate the existence of efficiency in managing liquidity risk management. Inflation was
3.13% at the end of 2018, originally at 11.06% at the end of 2008, or decreased significantly by
7.93%. 3)

Effective liquidity risk management guarantees the ability of banks to meet obligations that are
due, and reduces the possibility of bad ones that can develop (Kumar and Yadaf, 2013). The
management of liquidity risk also guarantees that banks have liquidity so that banks can
continue to function (Vossenand Ness (2010).

The liquidity crisis occurs in other parts of the world. Mortgage Case in the United States in
2008, was the biggest financial crisis after the great depression of the 1930s, resulting in a
shortage of liquidity on the stock exchange, the banking sector in other forms of business. To
maintain financial stability, financial authorities are forced to disburse liquidity assistance
(Longworth 2010; Bernanke 2008).

Other financial crises that resulted in the deterioration of the stock exchange, the scarcity of
interbank market liquidity, the foreign debt crisis, occurred in several European countries in
early 2010 including Greece, Portugal, Ireland, Italy and Spain.

The failure of two commercial banks in Lithuania around 2014 was also the management's
inability to manage liquidity risk or unable to manage its liquidity properly (Erika Baraikaite
et.al., 2014).

Another problem in the macro economy is the possibility of systematic risk in the banking
world that affects the macro economy of a country. John Hull (2007) states "Systematic risk is

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the risk that a default by one financial institution will create a ripple effect that leads to
defaults by other financial institutions".

Good and successful risk management implemented by banks can also ultimately improve
bank performance and increase profits, which can be reflected in the bank's Return on Assets
(ROA) and Return on Equity (ROE).

This paper is organized into four sections. The next presents the material and method. The
results obtained from quantitative analysis and their discussion are the subject of third section.
The fourth section concludes.

LITERATURE REVIEW

Liquidity Risk Management

Jensen and Meckling, 1976, describe an agency relationship as arising where there is a contract
under which one party (the principal) engages another party (the agent) to perform some
service on the principal’s behalf. Under the contract the principal delegates some decision-
making authority to the agent.4) Jensen dan Meckling, said : we define agency costs as the sum
of (1) the monitoring expenditures by principal, (2) the bonding expenditures by the agent, (3)
the residual loss.

Banks as agents of capital owners have the obligation to monitor various risks related to
banking operations. From the codification of Bank Indonesia regulations (PBI) it can be seen
that risk is the potential loss due to certain events. Risk management is a set of methodologies
and procedures to identify, measure, monitor and control risks arising from all bank activities.
Liquidity risk - is the risk due to the inability of banks to meet obligations due from cash flow
funding sources and / or from high liquidity assets that can be pledged, without disrupting the
activities and financial condition of the bank. 5)

Empirical research shows that there is a significant relationship between the risks taken by
banks and their performance (Stiroh, 2004). Liquidity which can be interpreted as the ability of
banks or institutions to meet their obligations that are due, does have two opposing sides.

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First, the excess of liquidity that is not in accordance with the needs becomes a burden for
banks / institutions. Second, by using liquid assets to total asset ratio it is known that with high
liquidity in the form of cash and government securities affect bank interest income (Demirguc-
Kunt et. Al., 2003).

Capital Adequacy Ratio

The capital adequacy ratio / capital adequacy ratio (CAR) is a ratio between bank capital and
risk-weighted assets. This ratio shows the ability of banks to provide the funds needed to
anticipate possible risks and maintain bank solvency, and maintain financial system stability.
CAR ratio can be calculated by dividing capital by weighted assets according to risk. The greater
the value of CAR, the better in anticipating possible losses and maintaining bank solvency. In its
technical calculations, capital consists of Tier I and Tier II.

The core capital component (Tier 1) consists of: (1) main core capital (Tier 1 common equity),
which is a high-quality capital instrument in the form of common stock and does not have a
preference feature in dividend / yield payments, (2 ) Additional core capital (Additional Tier 1),
namely refinement of innovative capital components in the form of preferred shares or debt
instruments that are subordinated, do not have a term, dividend payments or non-cumulative
returns, and do not have a step up feature.

Complementary capital components (Tier 2), namely debt instruments that are subordinated,
have a period of at least 5 (five) years, and do not have a step-up feature. Banks are required
to provide core capital (Tier 1) as low as 6% (six percent) of RWA and major core capital
(Common Equity Tier 1) as low as 4.5% (four point five percent) of RWA both individually and
individually consolidation with subsidiaries.

Regulators pay serious attention to CAR in order to stabilize the financial system (Awdeh et al,
2011, Naceur and Kandil, 2009). Naceur and Kandil (2009) also found that CAR influences
ownership risk and increases ROA.

Operating Cost to Operating Revenue

Funds provided by banks to debtors generally come from third party funds (savings, current

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accounts, deposits), the interest expense provided is quite expensive. Operating costs describe
efficiency, the smaller the operating cost to operating revenue (biaya operasional terhadap
pendapatan operational /BOPO) ratio, the more efficient the bank is in managing its operating
expenses. Simply put BOPO ratio = (Operating Expenses / Operating Income) x 100%.

In Bank Indonesia Regulation (PBI) Number 14/26 / PBI / 2012 concerning Business Activities
and Office Networks based on Bank Core Capital; It is said that in carrying out efficient
operations, targets are measured in the BOPO ratio. The BOPO ratio for commercial banks
(BUKU) I is a maximum of 85%, BUKU II ranges from 78% - 80%, BUKU III 70-75% and, BUKU IV
65% - 60%.

Non Performing Loan

The quality of the bank's productive assets or the collectibility of bank credit, is an assessment
of the quality of the bank's productive assets. The quality of the bank's productive assets is
based on the business prospects, performance and ability to pay debtors. In PBI number
14/15 / PBI / 2012 concerning the assessment of the quality of assets of commercial banks, it is
stated that bank assets are productive assets and non-productive assets.

Earning Assets are the provision of bank funds to obtain income, in the form of credit,
securities, interbank placement of funds, acceptance receivables, claims for securities
purchased with agreements to resell (reverse repurchase agreements), derivative claims,
investments, administrative account transactions and other forms of provision of funds which
can be likened to it. Non-Earning Assets are Bank assets other than Earning Assets that have
potential losses, including but not limited to foreclosed assets, abandoned property, inter-
office accounts, and suspense accounts.

Credit quality is determined to be: (a) current, (b) special attention (c) substandard, (d)
doubtful and (e) non-performing. Allowance for possible losses on assets and allowance for
impairment losses are as follows: a) current 1%, (b) under special attention 5% (c) substandard
15%, (d) doubtful 50% and (e) bad debt 100% of outstanding credit after deducting the value of
the collateral. Non-performing loans (NPLs) include asset classifications: substandard, doubtful
and loss. The NPL ratio can be calculated by dividing the NPL by total credit x 100%, if the NPL

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ratio is smaller or equal to 5% is still within reasonable limits.

Research conducted by Akhtar, 2007 shows that many banks focus on corporate lending,
which requires banks to maintain the required liquidity position. These loans are mostly long-
term loans which can cause liquidity problems (Kashyap et al. 2002).

Reserve Requirement

The minimum statutory reserve (reserve requirement/RR) is a minimum amount of funds that
must be maintained by the Bank, the amount of which is determined by Bank Indonesia at a
certain percentage of third party funds. This reserve requirement is determined by the central
bank in accordance with the condition of the banking system at a certain time, thus the
percentage can change at any time.

Reserve requirement consist of primary Statutory Reserves, the amount of which is


determined by Bank Indonesia at a certain percentage of third party funds, secondary
Statutory Reserves which are minimum reserves that must be maintained by Banks in the form
of Bank Indonesia Certificates, Bank Indonesia Deposit Certificates, Government Securities
and / or Excess Reserve, the amount of which is determined by Bank Indonesia at a certain
percentage of third party funds. In Bank Indonesia Regulation No.20 / 3 / PBI / 2018 dated
March 29, 2018 concerning Statutory Reserves in Rupiahs and Foreign Currency for
Conventional Commercial Banks, Sharia Commercial Banks and Sharia Business Units

Return on Asset

Banking performance in general can be seen from the rate of return on assets or known as
return on assets (ROA). This rate of return is obtained by dividing the bank's net income by the
average bank assets for a period. Net bank income is the accumulation of interest income from
loans which are reduced by credit costs from third party funds. Bank income derived from
credit is the main income of the bank, other income can come from other services provided by
banks other than credit provided, known as fee-based income.

Another measure of banking performance that is commonly known is the rate of return on
capital from shareholders or known as return on equity (ROE). This rate of return is obtained

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by dividing the net income of the bank after deducting the dividend for preferred shares by the
average shares outstanding. Banking performance as measured by ROA and ROE is regularly
reported by the relevant bank in the form of quarterly publication reports in accordance with
regulatory provisions in this case Bank Indonesia. ROA reported by the bank is a reflection of
the performance of the bank concerned. In the ROA and ROE reporting process, various risk
analyzes have been carried out that affect the income of the bank concerned.

Inflation

Inflation occurs when overall prices of goods and services increase, and vice versa if overall
prices of goods and services increase, it is called deflation (Choi and Meek, 2010). This inflation
in the calculation of the performance of a company including the banking industry is generally
not taken into account. If this inflation is not calculated there is a possibility the calculation of
ROA as described above can be biased.

In Law No. 23 of 1999 concerning Bank Indonesia as amended by Act No. 6 of 2009, article 7
paragraph (1) states that Bank Indonesia has 1 (one) single goal, which is to achieve and
maintain the stability of the value of the rupiah. In this article, the stability of the value of the
rupiah against goods and services as well as against the currencies of other countries. The
stability of the value of the rupiah is reflected in developments in the rate of inflation which if
high inflation would reduce the value of the rupiah (purchasing power from a weakening
rupiah). The stability of the value of the rupiah against other countries' currencies is measured
by or reflected by developments in the exchange rate against strong currencies from other
countries, for example against the strong currency of the United States dollar, the British
pound, the euro and other strong currencies.

Prior Research

Liquidity affects profitability: L Etienne Bordeleau and Chirstoper Graham (2010); Ahmed Arif,
Ahmed Nauman Anees (2012). Effects of risk management on financial performance: Aruwa
and Musa (2012), Poudel (2012), Musyoki and Kadubo (2012). Whereas Jibrin, Meshack, Ejura
(2013) examined the effect of fiscal and monetary policies in Naira on the exchange rate for

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the period 1990 to 2009, where inflation as one of the independent variables had a significant
effect on the exchange rate.

RESEARCH METHODOLOGY

Descriptive quantitative research, designed to determine the effect of liquidity risk


management on bank performance partially from the risk management subset and
simultaneously. Data processing was carried out using the Statistical Packages for Social
Sciences (SPSS) program 24.

The study population is banks listed on the Indonesia Stock Exchange (IDX) from 2008 to 2018.
The population is 45 (forty-five) banks. The research sample was chosen by 24 (twenty four)
banks. The sample criteria are as follows: (1) registered on the IDX until 2018, (2) paying
dividends in the last 3 (three) years, (3) not receiving a warning from the Financial Services
Authority (OJK), (4) issuing annual financial reports in accordance with the provisions (OJK).
Bank samples studied can be seen in the appendix.

Research Questions

1. Is the management of liquidity risk partially and simultaneously proxy (projected) with a
capital adequacy ratio (CAR), operational costs to operating income (BOPO) and non-
performing loans (NPLs) and minimum statutory reserves / reserve requirements (RR) , has
an effect on banking performance which is projected by return on assets (ROA)?

2. Is the liquidity risk management proxy (projected) with a capital adequacy ratio (CAR),
operational costs to operating income (BOPO) and non-performing loans (NPLs) and
minimum reserve requirements / reserve requirements (RR), and inflation (INF) ) as a
moderating variable influencing banking performance which is projected by return on
assets (ROA)?

No Symbol Description Measurement : Ratio


1 X1 (CAR) Capital Adequacy Ratio Tier 1 capital + Tier 2 Capital/Risk Weighted assets

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No Symbol Description Measurement : Ratio


2 X2 (BOPO) Operational Cost/Revenue Percentage of Operational Cost/Revenue

3 X3 (NPL) Non Performing Loans Non Performing Loans/Gross Loans and Advances

5 X4 (RR) Reserve Requirement Percentage of Reserve Requirement


6 X5 (INF) Inflation Percentage of Inflation
6 Y (ROA) Return on Asset Net Income/Total Assets

Graphic model

Hyphotesis

1. X1, X2, X3, X4 affect Y


2. X1 has an effect on Y which is moderated by X5
3. X2 has an effect on Y which is moderated by X5
4. X5 has an effect on Y which is moderated by X5

Model matematis:

Y = a1 + b1X1+b2X2+b3X3+b4X4+e1
Y = a2 +b1X1+b5X5+b9X1X5+e2
Y = a3+b2X2+b6X5+b10X2X5+e3
Y = a4+b3X3+b7X5+b11X3X5+e4
Y = a5+b4X4+b8X5+b12X3X5+e5

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RESEARCH RESULTS AND DISCUSSION

Descriptive statistics

Return on Assets (ROA) from sample banks from 2008 to 2018, the lowest is 0.29 and the
highest is 2.20 and the average is 1.45. The capital adequacy ratio (CAR) of the sample banks
from 2008 to 2018, the lowest was 15.20 and the highest was 20.18 and an average of 17.54.
The average CAR value is quite high compared to the minimum CAR of 8% set by the regulator.
Operating costs to operating income (BOPO) from sample banks during 2008 to 2018, the
lowest was 78.89 and the highest was 96.37, an average of 87.27.

The average value of this BOPO is quite high, the higher the BOPO number indicates low
efficiency. Non-performing loans (NPLs) from sample banks from 2008 to 2018, the lowest is
1.71, the highest is 3.98 and the average is 2.84. This average value is low with a standard
assumption of 5%. The minimum reserve requirement / reserve requirement (RR) of the
sample banks during 2008 to 2018, the lowest is 5.32, the highest is 8.85 and the average is
7.56. Inflation (INF) from sample banks from 2008 to 2018, the lowest was 2.78, the highest
was 11.06 and the average was 5.34.

Analysis

1. The effect of liquidity risk management (CAR, BOPO, NPL and RR) partially on banking
performance which is predicted by return on assets (ROA).

a. For X1 Sig is 0,700> 0,05, X1 (CAR) does not have a significant effect on Y (ROA). Capital
adequacy ratio (CAR) of sample banks from 2008 to 2018, an average of 17.5, above
the minimum CAR of 8%.

b. For X2 Sig is 0.044 <0.05, X2 (BOPO) has a significant effect on Y (ROA). Operating costs
to operating income (BOPO) from sample banks during 2008 to 2018, averaging 87.27.
The average value of this BOPO is quite high, indicating low efficiency.

c. For X3 Sig is 0.737> 0.05, X3 (NPL) does not have a significant effect on Y (ROA). Non-
performing loans (NPLs) from sample banks from 2008 to 2018, averaged 2.84,
including low with an assumption of a minimum standard of 5% NPL.

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d. For X4 Sig is 0.108> 0.05, X4 (RR) does not have a significant effect on Y (ROA). The
minimum reserve requirement / reserve requirement (RR) of the sample banks from
2008 to 2018, an average of 7.56, the regulatory provisions with a range of 5% of total
third party funds is still within reasonable limits.

Regression Equation: Y = 7.163 + 0.29X1 - 0.80X2 - 0.63X3 + 0.26X4 + e1.

2. The simultaneous effect of liquidity risk management (CAR, BOPO, NPL and RR) on banking
performance which is predicted by return on assets (ROA)

a. From the ANOVA test results above, it is known sig 0.00 <0.05 so that it can be
concluded that there is a significant influence of the independent variables X1 (CAR),
X2 (BOP), X3 (NPL), and X4 (RR) on the dependent variable Y1 (ROA)

b. Adjusted R Square is 0.893 which means that 89.30% of the dependent variable Y
(ROA) is influenced by the independent variables X1, X2, X3 and, X4, the remaining
11.70% is influenced by other factors. These results indicate that the independent
variables in this study are very dominant in influencing the dependent variable.

3. The influence of liquidity risk management (CAR, BOPO, NPL and RR) and inflation (INF) as
a moderating variable on bank performance which is projected (proxy) by return on assets
(ROA). Tests to answer the problems in the formulation of problem number 3 are carried
out by testing each variable as follows :

a. Effect of X1 on Y with X5 as a moderating variable

The adjusted R square (R2) value is 0.230, this means that 23% of the Y variable can be
explained by the variables X1, X5, and moderation1. Anova test or F test significance
0.204> 0.05, then X1, X5, and moderation1, together do not affect the Y. Variable X1
significance 0.704 (> 0.05). Variable X5 was 0.255 significance (> 0.05). The moderation
variable1 significance of 0.266 (> 0.05). The moderation variable1 which is the interaction
between X1 and X5 was not significant, so it can be concluded that the X5 variable is not a
moderation variable.

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b. Effect of X2 on Y with X5 as a moderating variable

The adjusted R square (R2) value is 0.830, this means that 83% of the Y variable can be
explained by the variables X2, X5, and moderation. Anova test or F test significance is 0.001
<0.05, then X2, X5, and moderation2, together the same effect on Y. Variable X2
significance 0.05 (> = 0.05). X5 variable significance 0,966 (> 0,05). The moderating variable
of significance was 0.969 (> 0.05). The moderation variable2 which is the interaction
between X2 and X5 is apparently not significant, so it can be concluded that the X5 variable
is not a moderation variable.

c. Effect of X3 on Y with X5 as a moderating variable

The adjusted R square (R2) value is 0.656, this means that 65.60% of the Y variable can be
explained by the variables X3, X5, and moderation3. Anova test or F test 0.014 significance
<0.05, then X3, X5, and moderation3, together affect the Y. Variable X3 significance 0.67 (>
0.05). X5 variable significance 0.576 (> 0.05). The moderation variable3 significance of
0.666 (> 0.05). The moderation variable 3 which is the interaction between X3 and X5 was
not significant, so it can be concluded that the X5 variable is not a moderation variable.

d. Effect of X4 on Y with X5 as a moderating variable

The adjusted R square (R2) value is 0.677, this means that 67.70% of the Y variable can be
explained by the variables X4, X5, and moderation4. Anova test or F test 0.012 significance
<0.05, X4, X5, and moderation4, together affect the Y. Variable X4 significance 0.016 (>
0.05). The significance variable is 0.063 (> 0.05). The moderation variable3 significance of
0.101 (> 0.05). The moderation variable4 which is the interaction between X4 and X5 is not
significant, so it can be concluded that the X5 variable is not a moderation variable.

CONCLUSION

In the period 2008 to 2018, banking liquidity in Indonesia was relatively stable. This can be
concluded based on the results of tests conducted through empirical research.

The influence of risk management on banking performance which is proxy by the independent

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operational cost variable on operating income, partially has a significant influence on the
dependent return on asset variable in other words inefficiency occurs in the management of
these variables. While other independent variables as a proxy for risk management, namely
the capital adequacy ratio, non-performing loans and reserve requirements have no significant
effect.

From testing each variable independent, with inflation as a moderating variable against return
on assets, the interaction value of each variable with the inflation variable as a moderating
variable is not significant, so the inflation variable is concluded as not a moderating variable in
the research model.

Liquidity risk management is proxy by a capital adequacy ratio, operating cost to operational
income, non-performing loan reserve requirements must be managed properly, considering
that in this research model the adjusted R square determination coefficient reaches 89.30%
which is the dominant percentage. By looking at the average return on assets during the study
period is low at 1.45 which is far from the generally accepted standard of 2.5.

The inflation variable in the research model concluded is not a moderating variable, because
the interaction between the independent variables and the moderating variable is not
significant. This is likely due to the low average inflation rate. However, it is recommended that
the inflation variable be considered and managed well in relation to liquidity management, as
it is evident from the research data that high inflation in a particular year affects the return on
assets.

Foot Notes
1)
See : Keown et.al., Foundations of finance, 2017, page 28
2)
www.kominfo.go.id October 2nd, 2015.
3)
www.ojk.go.id Indonesian Banking Statistic, December 2018
4)
See : Godfrey et.al., Accounting Theory 7 th Edition, page 362-363
5)
Indonesian Central Central Bank Regulations (PBI No.11/25/PBI/2009, dated 1 st July 2009)

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BIBLIOGRAPHY

Arif, A. Nauman., Liquidity risk and performance of banking system. 2012.


Aruwa, S.A. dan Musa, O.A., Risk components and the financial performance of deposit money
in Nigeria. International Journal of Social Science and Entrepreneurship. 2014.
Awdel, et.al., The effect of capital requirement on banking risk. 2011.
Barakaite, Erika, et.al., liquidity risk and its management in Lithuanian. 2014.
Bernanke, B. S., Liquidity provision by the Federal Reserve; Risk Transfer Mechanisms and
Financial Stability Workshop. Switzerland. 2008.
Choi,F.D.S., Meek,G.K., International Accounting, terjemahan. Penerbit Salemba Empat, Jakarta
2010.
Demirguc-Kunt et.al., The impact of Bank Regulations Concentration, and Institutions on Bank
Margins. World Bank Policy Reasearch Working Paper, no. 3030.
Hull, John C., Risk Management and Financial Institutions. Pearson Education Inc. New Jersey.
2007
Jensen and Meckling, Theory of the firm : managerial behavior agency costs, and ownership
structure, M Journal of Financial Economics 3 (1976) 305-360. Q North-Holland
Publishing Company
Jibrin, Meschak, Ejura., The Impact of Monetary and Fiscal Policies on the Naira Exhange Rate
Between 1990 and 2009, Asian Economic and Financial Review, 2013.
Kashyap. A. et.al., Bank as Liquidity Providers: an explanation for the coexistence of lending
and deposit taking. 2002.
Longworth, D., Bank of Canada Liquidity Facilities: Past, Present and Future. 2010.
Musyoki D. dan Kadubo A.S., The Impact of credit risk management on the financial
performance of banks in Kenya for the period 2000-2006. International Journal of
Business and Public Management. 2012.
Naccur, Kandil. The impact of capital requires in banks intermediation and performance, the
case of Egypt. 2009.
Poudel, R.P. The impact of credit risk management on financial performance of commercial
banks in Nepal. International Journal Arts and Commerce. 2012.
Stiroh, A., “Diversification in banking is noninterest income the answer?” Journal of Money,
Credit and Banking Vol. 36 No.5,pp. 853-882.
Website:
www.bi.go.id Indonesian Central Bank (Bank Indonesia)
www.ojk.go.id Financial Service Authority (Otoritas Jasa Keuangan)

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Table 1.1.
Bank Samples
BBCA BANK CENTRAL ASIA BCAP BANK CAPITAL
MAYB MAYBANK BDMO BANK DANAMON
BBNI BANK NEGARA INDONESIA MAYA BANK MAYAPADA
BANK OF INDIA
MAND BANK MANDIRI BOII INDONESIA
CIMB BANK CIMB NIAGA BPAN BANK PANIN
OCBC BANK OCBC NISP BYUD BANK YUDHA BHAKTI
PERM BANK PERMATA BSIN BANK SINARMAS
BANK TABUNGAN
BNPA BANK NUSANTARA PARAHYANGAN BBTN NEGARA
BANK TABUNGAN
VICT BANK VICTORIA BTPN PENSIUNAN NEGARA
BANK MNC
BART BANK ARTHA GRAHA MNC INTERNATIONAL
AGRO BANK BRI AGRONIAGA BUOB BANK UOB BUANA
BKOP BANK BUKOPIN BPAS BANK PANIN SYARIAH

Table 1.2.

One-Sample Kolmogorov-Smirnov Test


ROA CAR BOPO NPL RR
N 11 11 11 11 11
a,b
Normal Parameters Mean 1.447 17.5382 87.2673 2.8382 7.5618
3
Std. .5544 1.32898 5.42792 .74976 1.0505
Deviation 2 7
Most Extreme Absolute .133 .147 .201 .163 .186
Differences Positive .115 .108 .201 .163 .111
Negative -.133 -.147 -.137 -.130 -.186
Test Statistic .133 .147 .201 .163 .186
c,d c,d c,d c,d
Asymp. Sig. (2-tailed) .200 .200 .200 .200 .200c,d
a. Test distribution is Normal.
b. Calculated from data.
c. Lilliefors Significance Correction.
d. This is a lower bound of the true significance.

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Table 1.3.
Coefficientsa
Unstandardized Standardized Collinearity
Coefficients Coefficients Correlations Statistics
Zero- Toler
Model B Std. Error Beta t Sig. order Partial Part ance VIF
1 (Constant) 7.163 1.742 4.111 .006

CAR .029 .073 .071 .405 .700 -.552 .163 .042 .351 2.852
BOPO -.080 .032 -.786 -2.541 .044 -.939 -.720 -.263 .112 8.949
NPL -.063 .180 -.086 -.351 .737 -.857 -.142 -.036 .180 5.558
RR .126 .066 .238 1.890 .108 .690 .611 .195 .674 1.483

a. Dependent Variable: ROA

Table 1.4.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation


Statistic Statistic Statistic Statistic Std. Error Statistic
ROA 11 .29 2.20 1.4473 .16716 .55442

CAR 11 15.20 20.18 17.5382 .40070 1.32898


BOPO 11 78.89 96.37 87.2673 1.63658 5.42792
NPL 11 1.71 3.98 2.8382 .22606 .74976
RR 11 5.32 8.85 7.5618 .31676 1.05057
INF 11 2.78 11.06 5.3400 .85792 2.84538

Valid N (listwise) 11

Table 1.5.
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 2.877 4 .719 21.906 .001b
Residual .197 6 .033
Total 3.074 10
a. Dependent Variable: ROA
b. Predictors: (Constant), RR, CAR, NPL, BOPO

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Table 1.6.

Model Summaryb

Std. Error of the


Model R R Square Adjusted R Square Estimate Durbin-Watson
1 .967a .936 .893 .18120 3.134

a. Predictors: (Constant), RR, CAR, NPL, BOPO

b. Dependent Variable: ROA

Table 1.7.

Coefficientsa
Unstandardized Coefficients Standardized Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) -.874 5.272 -.166 .873
CAR .118 .297 .282 .396 .704
INF 1.600 1.290 8.211 1.240 .255
Moderasi1 -.089 .074 -7.880 -1.209 .266
1 (Constant) 9.623 3.504 2.746 .029
BOPO -.094 .040 -.919 -2.360 .050
INF .033 .743 .168 .044 .966
Moderasi2 .000 .009 -.149 -.040 .969
1 (Constant) 4.032 1.195 3.374 .012
NPL -.853 .393 -1.154 -2.168 .067
INF -.121 .207 -.621 -.586 .576
Moderasi3 .034 .075 .413 .451 .666
1 (Constant) -5.687 2.099 -2.710 .030
RR .912 .289 1.728 3.159 .016
INF .547 .248 2.809 2.204 .063
Moderasi4 -.067 .036 -2.452 -1.885 .101

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THE EFFECT OF THE QUALITY OF DRUG INFORMATION SERVICE ON PATIENT


SATISFACTION LEVEL IN BPJS OUT-PATIENT INSTALLATION OF SILOAM HOSPITAL
KEBON JERUK

Ekadipta, Anisha Mutiara


Institut Sains dan Teknologi Al-Kamal

ABSTRACT

Satisfaction is a level of feeling that arises as a result of health services obtained after the
patient compares with what is felt. Patients will feel satisfied if the health services obtained
are the same or exceed expectations. This study aims to determine the level of patient
satisfaction with drug information services at the BPJS Out-patient Pharmacy Installation
Siloam Hospitals KebonJeruk. This study uses a descriptive survey research method of analysis
with a quantitative approach. Data collection was done by using questionnaire tools to 380
respondents. For quizione, validity and reliability were tested using 50 respondents. The
minimum score results indicate that the determinants of patient dissatisfaction are in score 3
by 21.1% in the guarantee variable. While the maximum score shows that the determinants of
patient satisfaction are at a score of 5 as much as67.3% in the reliability variable.
Keywords: Drug Information Services, Patient Satisfaction, Hospital Pharmacy Installation

INTRODUCTION

Patient satisfaction is the patient's response to the suitability of the level of importance or
expectations of patients before receiving services with after receiving services. Health service
user satisfaction is closely related to health service outcomes, both medical and non-medical
such as adherence to treatment, understanding of medical information and continuity of care
(Nursalam, 2011).

The quality of health services is something that is expected and has become a basic need of
everyone. Health facilities such as hospitals and health centers as well as clinics or clinics which
consist of various services such as examination, healthcare, pharmacy, laboratory also
including medical record services are public service organizations that serve the community
directly. Therefore hospitals, health centers, medical centers, pharmacies, and laboratories

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must provide quality services in accordance with patient expectations (Iman, 2017).

A hospital is a health service institution that conducts complete individual health services that
provide inpatient, outpatient and emergency services. Hospital pharmaceutical services are an
inseparable part of the hospital health care system which is intact and oriented to patient
care(Permenkes RI, 2016).

Health Social Security Organizing Agency (BPJS) is a State Program that aims to provide
certainty of protection and social welfare for all people and designed to cover all types of
diseases. BPJS Health will cover BPJS members from all age levels and all severity of illness
(Adrian 2018).

One effort to strengthen this primary health facility is expected to be health workers who are
at the health facility levelthis primer, must have the ability and must master the latest things
about predictions,signs, symptoms, diagnosis and comprehensive management of various
diseases, because two important elements in the improvement effortshealth service is the
level of patient satisfaction as a service user and compliance with predetermined service
standards. Patient satisfaction is an important element inevaluate service quality by
measuringthe extent of the patient's response after receiving services.With the good quality of
service, it willcreate satisfaction for patients (Imbalo, 2016).

Siloam KebonJeruk Hospital is a type B private hospital that has duties and obligations in
health development. So that it takes various efforts in improving the quality of service. One of
the factors that support in improving the quality of service is a pharmacy because the
pharmacy is in direct contact with patients in pharmaceutical services. Factors that need to be
considered in improving the quality of service at the KebonJeruk Hospital Pharmacy
Installation are drug information services. Where the purpose of the drug information service
itself is to prevent medication errors and adverse events (unexpected events) in using drugs,
because it has become the responsibility of a pharmacist for the safety of his patients.

Pharmaceutical services provided at the Pharmacy Installation of the Siloam KebonJeruk


Hospital, especially drug information services, are expected to provide patients with a separate
assessment of the services at the Siloam KebonJeruk Hospital Pharmacy Installation. If the

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services provided are not appropriate it will cause a negative image of the hospital, which will
result in a decrease in the number of patients. Patients who are satisfied with the services they
receive will show a great tendency to reuse the services offered by the service provider in the
future.

Based on this background, here the authors as researchers want to study the level of patient
satisfaction, especially related to drug information services at Badan Penyelenggara JaminanS
osial (BPJS) Outpatient Pharmacy Installation, Siloam KebonJeruk Hospital.

RESEARCH METHODOLOGY

Research Design
This research is a non-experimental research with a descriptive quatitative approach. The
study was limited to operations express a problem or situation or event as such so that they
are uncovering the facts or reality.

The design of this research is quantitative descriptive research with survey data collection
techniques. Where, descriptive research is a method used to describe or analyze a research
result but is not used to make broader conclusions (Sugiyono, 2015)

Population and Sample

The population in this study were all patients at BPJS Outpatient Pharmacy Installation at
Siloam KebonJeruk Hospital. The sampling technique in this study is the accidental sampling
technique by taking into account the inclusion and exclusion criteria(Martono, 2015). The
sample in this study were patients at BPJS Outpatient Pharmacy Installation at Siloam Kebon
Jeruk Hospital with the following criteria:

1. Inclusion Criteria

Inclusion criteria are criteria by which research subjects can represent in research samples
that have the requirements to be sampled.

a. Patients aged 18-64 years

b. Patients who redeem prescriptions at BPJS Outpatient Pharmacy Installation at Siloam

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KebonJeruk Hospital.

1. Exclusion Criteria
Exclusion criteria are criteria where research subjects cannot meet the requirements as
research samples.
c. Child and elderly patients

d. Patients who do not redeem prescriptions at BPJS Outpatient Pharmacy Installation at


Siloam KebonJeruk Hospital

Based on the Slovin formula sampling can be done using the formula(Sugiyono, 2016):
n=

Information : n = number of samples


N = population size
e = error rate
After the population was reduced by inclusion and exclusion criteria the total sample obtained
was 7561 respondents. Therefore a sample is obtained with the following calculation:

n=

Hypothesis

The hypotheses in this study are as follows:

H0: There is no influence on the quality of Drug Information Services with the level of patient
satisfaction in the Outpatient Pharmacy Installation of BPJS Siloam KebonJeruk Hospital.

HA: There is an influence of the quality of Drug Information Services with the level of patient
satisfaction in the Outpatient Pharmacy Installation of BPJS Siloam KebonJeruk Hospital.

Data Analysis

Test analysis used in this study using statistical software SPSS.25, the data analysis test
performed includes:

1. Validity test

Validity comes from the word validity which means the extent to which the accuracy and
accuracy of a measuring instrument in carrying out its measurement function, or provide

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measurement results in accordance with the purpose of the measurement(Arifin, 2018).


Where testing the validity of the construction of the questionnaire used in this study using the
Pearson Product Moment correlation technique with the statistical formula as follows
(Sugiyono, 2016):

Where :
a. If rcount>rtable, then the question is valid

b. If rcount<rtable, then the question is declared invalid

2. Reliabilityt test

Reliability test, which is a test to show the extent to which a measurement result is relatively
consistent if the measurement is repeated twice or more (Arifin, 2018). In this study using the
Alpha Cronbachtechnique, which is done using the following formula (Sugiyono, 2016):

Where :
a. If the alpha value> constant value (0.6), the question is declared reliable

b. If the alpha value <constant value (0.6), the question is declared unreliable

3. Descriptive Statistics Test

Descriptive Statistics Test function gives an overview or description of a data seen from the
value - average (mean), standard deviation, variance, maximum, minimum, sum, range,
kurtosis, and skewness (Sugiyono, 2015).

4. Hypothesis Test

Hypothesis testing here uses the Pearson product moment test or correlation test, in addition
to bias used for questionnaire validation in the pre-survey stage, the correlation test can also
be used to make a decision, whether the hypothesis will be rejected or accepted (Arifin, 2018).

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Correlation test is one of the analyzes used to find the relationship between two variables that
are quantitative.Correlation analysis is also a study of the degree of relationship or association
between two variables (Sugiyono, 2016).

Basic decision making:

a. If the value of sig. > 0.05, H0 is accepted and HA is rejected

b. If the value of sig. <0.05, H0 is rejected and Ha is accepted

RESULT AND DISCUSSION

Patient Demographics Based on Gender

Patient Demographic Based on Gender

Fig. 2.1. Patient Demographics Based on Gender

Based on the pie chart above it can be seen that the proportion of male patients is more than
the proportion of female patients. From the above data there are 205 male patients (54%),
whereas 175 female patients (46%). According to Notoatmojo (2010), men are more at risk of
developing the disease and have a low level of health care than women.

46%

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Patient Demographics Based on Gender

Patient Demographics based on Age

56-65 73
Fig. 2.2. Patient Demographics Based on Age

Based on the table above it can be seen that the number of patients in the age range of 15-25
46-45
years is 17 patients, the number of patients in the age range of 26-35 years is 70 patients, the
number of patients in the range of 36-45 years is 116 patients, the number of patients in the
range of 46-55 years as many as 104 patients and the number of patients ranging from 56-65
36-45
years as many as 73 patients. Where, the highest number of patients is in the age range 36-45
years with a percentage of 30.52% of the total sample studied. According to Notoatmojo
(2003), patients with an age category that rises to the upper age are vulnerable so that at this 70
26-35
age people will easily experience fatigue and decreased endurance.

Validity and Reliability Test Results


15-25 17
1. Validity test

0 20
Table 2.1. 40 60 80
Validity Test Results
No. Dimension Statement rcount rtable conclusion
A1 0.700 0.279 Valid
1 Responsiveness
A2 0.714 0.279 Valid
B1 0.895 0.279 Valid
B2 0.990 0.279 Valid
2 Reliability
B3 0.990 0.279 Valid
B4 0.990 0.279 Valid

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Table 2.1.
Validity Test Results
No. Dimension Statement rcount rtable conclusion
B5 0.990 0.279 Valid
3 Secure C1 0.829 0.279 Valid
C2 0.869 0.279 Valid
4 Empathy D1 0.775 0.279 Valid
D2 0.699 0.279 Valid
5 Facilities E1 0.688 0.279 Valid
E2 0.807 0.279 Valid

From the above table all the results of r count> r table, so that decisions can be taken that the
questions in the questionnaire are all valid and can be forwarded for the reliability test.

2. Reliability test

Table 2.2.
Reliability Test Results
Reliability Statistics
Cronbach's N of
Alpha Items
.859 13

From this table, it appears that the alpha value is greater than the constant value (0.6), so that
all questions contained in the questionnaire are reliable, so that researchers can continue
collecting data until the respondent reaches a minimum sample value of 380 respondents.

Average Item Variable Score

Table 2.3.
Average Item Variable Score
Avarage Descriptio
No. Type of Service
Score n
Pharmacists provide a demonstration of the drug without
1 4.03 Satisfied
having to be asked
2 Pharmacists respond quickly when responding to patients 4.03 Satisfied
3 Pharmacists provide information on the name of the drug 4.15 Satisfied
4 Pharmacists provide information about drug dosages 4.13 Satisfied
5 Pharmacist gives information about how to use drugs 4.12 Satisfied

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Table 2.3.
Average Item Variable Score
Avarage Descriptio
No. Type of Service
Score n

6 Pharmacist provide information about how to store drugs 4.11 Satisfied

Pharmacist provides information about the drug's expiration


7 4.11 Satisfied
date

Pharmacists have sufficient knowledge in providing drug


8 3.96 Satisfied
information
There is a guarantee of the suitability of the quality and
9 3.87 Satisfied
number of drugs given
Pharmacists are friendly and polite in providing drug
10 4.09 Satisfied
information

11 Pharmacists use language that is easy to understand 4.03 Satisfied

12 The waiting room is comfortable and clean 3.95 Satisfied


13 Adequate facilities 4.1 Satisfied

From the output data above it can be seen that the average score on each variable approaches
score 4, which means that the patient feels satisfied with the drug information service at BPJS
Outpatient Pharmacy Installation, Siloam KebonJeruk Hospital, Jakarta.

Minimum Score Obtained

Table 2.4.
Minimun Score Obtained
Number of Percentage
No. Dimension Statement
Patients (%)
A1 5 1.3
1 Responsiveness
A2 6 1.6
B1 5 1.3
B2 5 1.3
2 Reliability B3 2 0.5
B4 6 1.6
B5 2 0.5
C1 25 6.6
3 Secure
C2 55 14.5
D1 10 2.6
4 Empathy
D2 16 4.2

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Table 2.4.
Minimun Score Obtained
Number of Percentage
No. Dimension Statement
Patients (%)
E1 31 8.2
5 Facilities
E2 6 1.6

From the table above, it appears that the highest minimum score is in the guarantee variable
of 21.1%. so that this can be a consideration for the hospital to increase patient confidence in
the suitability of the quality and amount of drugs given so that patients feel a guarantee in
service.

Maximum Score Obtained

Table 2.5.
Maximun Score Obtained
Number of Percentage
No. Dimension Statement
Patients (%)
A1 15 3.9
1 Responsiveness
A2 18 4.7
B1 61 16.1
B2 53 13.9
2 Reliability B3 48 12.6
B4 49 12.9
B5 45 11.8
C1 8 2.1
3 Secure
C2 5 1.3
D1 44 11.6
4 Empathy
D2 27 7.1
E1 11 2.9
5 Facilities
E2 45 11.8

From the table above it can be seen that the maximum score mostly appears on the reliability
variable of 67.3%. This can be considered by hospitals to continue to maintain reliability in
drug information services, so patients will continue to feel satisfied with the services provided.

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Hyphothesis Test

Based on the hypothesis test output data generated sig. values as follows:

Table 2.6.
Hypothesis test results
Significant Significant
No. Dimension Statement Conclision
test score
A1 0.000 0.05 HA Accepted
1 Responsiveness
A2 0.000 0.05 HA Accepted
B1 0.000 0.05 HA Accepted
B2 0.000 0.05 HA Accepted
2 Reliability B3 0.000 0.05 HA Accepted
B4 0.000 0.05 HA Accepted
B5 0.000 0.05 HA Accepted
C1 0.000 0.05 HA Accepted
3 Secure
C2 0.000 0.05 HA Accepted
D1 0.000 0.05 HA Accepted
4 Empathy
D2 0.000 0.05 HA Accepted
E1 0.000 0.05 HA Accepted
5 Facilities
E2 0.000 0.05 HA Accepted

From the data above, it appears that the results of the comparison of the significance value of
less than 0.05, so that the results of the hypothesis test 100% accept an alternative hypothesis
that there is an influence on the quality of drug information services with the level of patient
satisfaction in the BPJS Outpatient Pharmacy Installation at KebonJeruk Hospital.In accordance
with the results of research conducted by Abidin (2016) where BPJS service quality affects
patient satisfaction.

CONCLUSION

Based on the results of the average score per item shows that drug information services in the
Outpatient Pharmacy Installation of BPJS Siloam KebonJeruk Hospital are at a score of 4. With
these figures indicate that all patients are satisfied with drug information services.Based on the
results of the minimum score showed that the determinants of patient dissatisfaction with
drug information services were score 3 as much as 21.1% in the guarantee variable.Based on

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the results of the maximum score shows that the determinants of patient satisfaction with
drug information services are at a score of 5 as much as 67.3% in the reliability variable.From
hyphotesis test we accept alternative hyphothesis (HA) that there is an influence on the quality
of drug information services with the level of patient satisfaction in the BPJS Outpatient
Pharmacy Installation at KebonJeruk Hospital, with sig. value less than 0.05.

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Kefarmasian di Apotek. Jakarta : KEMENKES RI.
Sugiyono. 2015. Metode Penelitian Administrasi. Bandung: Alfabeta.
Sugiyono. 2016. Statistika untuk Penelitian, Cetakan ke-27. Bandung: Alfabeta.

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LEADERSHIP AND A LOT OF FACTORS INFLUENCING


WORK SATISFACTION OF EMPLOYEES

PJP. Ginting, MM.


Mpu Tantular University

ABSTRACT

The issue of employee job satisfaction is an important and fundamental issue in the field of
human resource management. Employee motivation in the work to be one of the factors that
play a role in influencing employee satisfaction. In addition, the implementation of reward
systems in the company are other factors that influence job satisfaction. However, leadership
is one which affects motivation and reward system implementation, because through the
leadership of the company's management policy is applied. This study aims to determine the
effect of leadership on employee motivation, reward systems and employee job satisfaction.
Knowing the influence of employee motivation on employee job satisfaction. Knowing the
reward system influences employee job satisfaction. A total of 92 samples taken by random
sampling method. Proportionate used as the data analysis. Samples were selected from
employees working at BPR in Pati frequency about 120 of a total of 11 RBs. Multiple regression
analysis was used as an analytical tool.
The results found that leadership was found to have a positive effect on the reward system.
Thereby good leadership applied the better application of the system of rewards. Leadership
was found to have a positive effect on employee motivation. Thereby good leadership applied
to higher employee motivation. Leadership was found to have a positive effect on employee
job satisfaction. Thereby good leadership applied to higher employee job satisfaction. The
reward system has no effect on employee job satisfaction. In this case the reward system is not
necessarily determine employee job satisfaction, but it indicates a positive influence on
employee motivation. Work motivation was found to have a positive effect on employee job
satisfaction. Thus the higher work motivation is the higher the job satisfaction of employees.
Keywords: leadership, reward systems, motivation, job satisfaction.

INTRODUCTION

Motivation

Robbin (2002: 55) suggests that motivation is the desire to do as a willingness to spend a high
level of effort for organizational goals, which is conditioned by the ability of the effort to meet
an individual's needs. Siagian (2002: 94) argues that in organizational life, including working life

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in business organizations, aspects of work motivation absolutely receive serious attention from
managers. Because 4 (four) main considerations are:

1. The philosophy of human life revolves around the principle of " quit pro quo ", which in
layman's language is reflected by a saying that says "there is sweet potato, there is taro,
there is reason there is reciprocation",

2. The dynamics of human needs are very complex and not only material, but also
psychological,

3. There is no saturation point in satisfying human needs,

4. Differences in individual characteristics within the organization or company, resulting in


the absence of any motivational technique that is equally effective for everyone in the
organization also for someone at different times and conditions.

Radig (1998), Soegiri (2004: 27-28) in Antoni (2006: 24) argues that giving encouragement as a
form of motivation, it is important to do to increase employee morale so that it can achieve
the desired results by management. The relationship of motivation, work enthusiasm and
optimal results have a linear form in the sense of providing good work motivation, employee
morale will increase and work results will be optimal in accordance with established
performance standards. Work passion as a form of motivation can be seen, among others,
from the level of employee attendance, responsibility for work time that has been set.

Mangkunegara (2005: 101) states that there are 2 (two) motivating techniques for employee
work, namely:

1. Techniques for meeting employee needs, which means that meeting employee needs is a
fundamental underlying work behavior.

2. Persuasive communication techniques, is one of the techniques to motivate employee


work carried out by influencing employees extra logically.

This technique is formulated with the terms "AIDDAS", namely Attention, Interest, Desire,
Decision, Action, and Satisfaction. Its use, the first time the leader must pay attention to
employees about the importance of the goals of a job so that employee interest arises in the

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implementation of work, if interest has arisen then the desire will be strong to take decisions
and take action in achieving the goals expected by the leader. Thus, employees will work with
high motivation and feel satisfied with their work.

Rewards System

Rewards are gifts to employees or something that employees receive as remuneration for their
achievements to the company in carrying out work. Economic rewards are usually given in the
form of salaries, wages, benefits, bonuses, incentives, and others.

Experts generally divide rewards into 2 groups namely intrisic rewards and extrinsic rewards.
Intrinsic rewards are rewards that come from the employees themselves such as task
completion, achievement, autonomy, personal development. While extrinsic rewards are
rewards that come from outside employees such as salary and benefits, interpersonal (status
and recognition), and promotion (Gibson, James L. et.al., 1982; Davis, Keith. 1985).

Research linking rewards, especially salary with job satisfaction, was conducted by researchers
such as Kalleberg (1974), Locke, EA (1973), Ronen et al (1973), and Vroom, VH (1964). The
results of his research concluded that there was a positive relationship between salary and
work performance. Lawler, EE and Porter, LW (1966) reported that there was a significant
relationship between salary and job satisfaction.

Leadership

Leadership is the ability to influence others to achieve goals with enthusiasm (David, Keith,
1985). Gibson, James L. et.al., (1982) explained that leadership is a narrower concept than
management. Managers in formal organizations are responsible and trusted in carrying out
management functions. Leaders sometimes are in informal groups, so they are not always
responsible for management functions. A manager who wants to succeed is demanded to have
effective leadership.

The efforts of a leader to influence others or that subordinates follow what is ordered will
depend on the leadership style used. However, no effective leadership style applies generally
to all situations (Gibson, James L. et.al., (1982).

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DuBrin (2005: 3) argues that leadership is an effort to influence many people through
communication to achieve goals. How to influence people with instructions or orders, actions
that cause others to act or respond and cause positive change. Important dynamic forces that
motivate and coordinate organizations in order to achieve goals, the ability to create
confidence and support among subordinates so that organizational goals can be achieved.

Siagian (2002: 62) argues that leadership is the ability of a person to influence others (his
subordinates) in such a way that other people are willing to do the will of the leader even
though personally it might not be pleasing to him. Nimran (2004: 64) argues that leadership is
a process of influencing the behavior of other people to behave as they would like. Robbins
(1996: 39) argues that leadership is the ability to influence a group towards the achievement
of goals.

Siagian (2002: 66) states that the role of leader or leadership in an organization or company
there are three forms, namely the role that is interpersonal, the role that is informational, and
the role of decision making. What is meant by interpersonal roles in organizations is that a
leader in a company or organization is a symbol of the existence of the organization, a leader is
responsible for motivating and giving direction to subordinates, and a leader has a role as a
liaison. The role of informational means that a leader in the organization has a role as a giver,
receiver and analyzer of information. Whereas the role of the leader in decision making means
that the leader has a role as a policy maker to be taken in the form of business strategies that
are able to develop innovation, take opportunities or opportunities and negotiate and run a
business consistently.

Leader behavior is one of the important factors that can affect job satisfaction. According to
Miller et al. (1991) show that leadership style has a positive relationship with employee job
satisfaction. Gruenberg's research (1980) found that a close and mutual relationship with
coworkers and supervisors is very important and has a strong relationship with job satisfaction
and has nothing to do with workplace conditions and type of work.

Mintzberg in Luthans (2002) and Sutiadi (2003: 4) suggest that the role of leadership in
organizations is as a regulator of vision, motivator, analyzer, and mastery of work. Yasin (2001:

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6) argues that the success of organizational development business activities is largely


determined by the quality of leadership or managers and the commitment of the top
leadership of the organization to the energy investment needed and the personal efforts of the
leadership.

Anoraga et al. (1995) in Tika (2006: 64) states that there are nine leadership roles in an
organization, namely leaders as planners, leaders as policy makers, leaders as experts, leaders
as executors, leaders as controllers, leaders as gift or punishment givers, leaders as role
models and symbols or symbols, the leader as a place to place all blame, and the leader as a
substitute for the role of other members.

One factor that causes job dissatisfaction is the nature of supervisors who do not want to hear
complaints and views of workers and are willing to help if needed (Pinder, 1984). This is proven
by Blakely (1993) where workers who receive awards from higher supervisors compared to
their own judgment will be more satisfied, but oversight supervision will lead to lower
satisfaction levels (King et al., 1982).

Types of Leadership

Leadership style according to Davis, Keith. (1985) is a pattern of overall leader action as
perceived by its employees. The leadership style represents the philosophy, skills and attitudes
of leaders in politics.

There are 3 types of leadership styles that are very influential on the effectiveness of a leader,
namely autocratic, democratic / participatory, and free of control (Reksohadirpodjo, S and T.
Hani Handoko, 1986; David. Keith, 1985). In practice, of the three leadership styles, several
types of leadership develop; among these are the following sections (Siagian, 1997).

1. Autocratic type

An autocratic leader is a leader who has the following criteria or characteristics.

a. Regard the organization as a private owner;

b. Identifying personal goals with organizational goals;

c. Regard subordinates as mere tools;

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d. Do not want to accept criticism, suggestions and opinions;

e. Too dependent on formal authority;

f. In the act of driving it often uses an approach that contains an element of coercion and
is punitive.

2. Militaryistic type

A leader who is militaristic is a leader who has the following characteristics.

a. In moving subordinates the command system is more often used;

b. In moving subordinates happy to depend on the rank and position;

c. Pleased with excessive formality;

d. Demanding high and rigid discipline from subordinates;

e. It is difficult to accept criticism from subordinates;

f. Enjoys ceremonies for various circumstances.

3. Paternalistic type

A leader who is classified as a paternalistic leader is someone who has the following
characteristics.

a. Regarding his subordinates as immature humans; overly protective (overly protective);

b. Rarely provide opportunities for subordinates to make decisions;

c. Rarely provide opportunities for subordinates to take the initiative;

d. Rarely provide opportunities for subordinates to develop their creativity and fantasy;

e. Often be omniscient.

4. Charismatic type

Until now experts have not been able to find out the reasons why a leader has charisma. It is
generally known that such leaders have enormous appeal and therefore generally have a very
large number of followers, even though these followers often cannot explain why they become
followers of that leader. Because of a lack of knowledge about the causes of a person
becoming a charismatic leader, it is often only said that such a leader is endowed with

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supernatural powers. Wealth, age, health, profiles cannot be used as criteria for charisma.

5. Democratic type

Knowledge of leadership has proven that the type of democratic leader is the most
appropriate for modern organizations. This happens because this type of leadership has the
following characteristics.

a. In the process of mobilizing subordinates, it always starts from the opinion that
humans are the noblest creatures in the world;

b. Always trying to synchronize the interests and goals of the organization with the
interests and personal goals of his subordinates;

c. Happy to accept suggestions, opinions, and even criticism from subordinates;

d. Always try to prioritize cooperation and teamwork in an effort to achieve goals;

e. Ikhlas gives the widest possible freedom to his subordinates to make mistakes which
are then corrected so that the subordinates no longer make the same mistakes, but
are braver to make other mistakes;

f. Always trying to make his subordinates more successful than him;

g. Trying to develop his personal capacity as a leader.

The other two types of leadership are the transformational type and the transactional type. In
the last two decades, the concepts of transactional (transformational leadership) and
transformational (transformational leadership) developed and received the attention of many
academics and practitioners (Locander et.al., 2002; Yammarino et.al., 1993). This is according
to Humphreys (2002) and Liu et.al. (2003) due to the concept popularized by Bass in 1985 was
able to accommodate the broad spectrum of leadership concepts, including a behavioral
approach, situational approach, as well as a contingency approach.

6. Transformational leadership

Transformational leadership (transformational leadership) based on the principle of


subordinate development (follower development). Transformational leaders evaluate the
ability and potential of each subordinate to carry out a task / job, while looking at the

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possibility to expand the responsibilities and authority of subordinates in the future.


Conversely, transactional leaders focus on achieving goals or objectives, but do not seek to
develop the responsibilities and authority of subordinates for the advancement of
subordinates. These differences cause the concepts of transactional and transformational
leadership to be positioned on one continuum where both are at different ends (Dvir et.al.,
2002).

Humphreys (2002) asserts that the relationship between superiors and subordinates in the
context of transformational leadership is more than just the exchange of "commodities"
(exchanges of economic rewards), but has touched a value system. Transformational leaders
are able to unite all subordinates and be able to change the beliefs, attitudes, and personal
goals of each subordinate to achieve goals, even beyond the goals set (Humphreys, 2002; Liu
et.al., 2003; Rafferty & Griffin, 2004 ; Yammarino et.al., 1993).

Bass et.al (2003) and Humphreys (2002) describe the ability of transformational leaders to
change the value system of subordinates in order to achieve the goals obtained by developing
one or all of the factors that are transformational leadership dimensions, namely: charisma
(then converted into an ideal influence or idealized influence) , inspiration (inspirational
motivation), intellectual development (intellectual stimulation), and personal attention
(individualized consideration).

Idealized influence according to Sarros and Santora (2001) is a behavior (behavior) that seeks
to encourage subordinates to make their leaders as role models (role models). At first, this
dimension was called charisma, but because it received a lot of criticism the term charisma
was changed to an ideal influence or vision. The critical aspect of charisma is the spiritual
power ( transcendent power ) that is believed by subordinates to be owned by their leaders, so
that subordinates fully believe and are willing to do anything for their leader ( true believer ).
This aspect is not shared by everyone and so far has not been included in the study of
transformational leadership, so this dimension is not properly called charisma. The study of
this dimension is more focused on leaders who have far-sighted vision and are able to instill
that vision in subordinates (Rafferty & Griffin, 2004).

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Inspirational motivation according to Humphreys (2002) and Rafferty and Griffin (2004) have a
close correlation with idealized influence. As explained earlier, transformational leaders inspire
subordinates to focus on shared goals and forget personal interests. Inspiration can be
interpreted as an action or power to move the emotions and thinking of others (Rafferty &
Griffin, 2004).

The closeness of the two dimensions, namely inspirational motivation and idealized influence,
encourages the emergence of views to unite these two dimensions in one construct. But in this
study, idealized influence and inspirational motivation are positioned as two different
constructs where idealized influence has a deeper meaning than inspirational motivation, or in
other words, inspirational motivation is the outside or the manifestation of idealized influence
(Humphreys, 2002; Rafferty & Griffin, 2004).

Inspirational motivation according to Humphreys (2002) takes the form of verbal


communication or the use of symbols that are intended to stimulate the enthusiasm of
subordinates. The leader motivates subordinates of the importance of the organization's vision
and mission so that all of their subordinates are driven to have the same vision. The same
vision spurs subordinates to work together to achieve long-term goals with optimism. So that
leaders not only arouse individual enthusiasm but also team spirit (Bass et.al., 2003).

Intellectual stimulation , is an important factor in transformational leadership that rarely gets


attention (Rafferty & Griffin, 2004). Intellectual stimulation is a behavior that seeks to
encourage the attention and awareness of subordinates of the problems faced. The leader
then tries to develop the ability of subordinates to solve problems with new approaches or
perspectives. The impact of intellectual stimulation can be seen from the increased ability of
subordinates to understand and analyze problems and the quality of problem solving (problem
solving quality) offered (Rafferty & Griffin, 2004; Yammarino et.al., 1993).

Bass et.al (2003) and Sarros and Santora (2001) are of the view that intellectual stimulation in
principle spurs subordinates to be more creative and innovative in understanding and solving
problems. Subordinates are encouraged to leave the old ways or methods and are encouraged
to provide new ideas and solutions. Free subordinates offer new methods and every new idea

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will not be criticized or criticized. Instead, leaders try to improve the morale of subordinates to
dare to innovate. Leaders behave and function to foster and direct subordinate innovation and
creativity.

Individualized consideration or personal attention. Individualized consideration refers to the


leader's understanding and attention to the potential and abilities possessed by each of his
subordinates. The leader is aware of the different abilities, potentials, and needs of
subordinates. The leader views each subordinate as an organizational asset. Therefore,
leaders' understanding of the potential and ability of each subordinate makes it easy to foster
and direct the best potential and ability of each subordinate (Bass et al., 2003; Sarros &
Santora, 2001; Yammarino et al., 1993).

7. Transactional leadership

Transactional leadership (transactional leadership) bases itself on the principle of transactions


or exchanges between leaders and subordinates. The leader provides certain rewards or
rewards (for example, bonuses) to subordinates if subordinates are able to meet the
expectations of the leader (for example, high employee performance). On the other hand,
subordinates try to meet the expectations of leaders in addition to getting rewards or rewards,
also to avoid sanctions or punishment.

In transactional leadership a relationship of mutualism is created and the contribution of both


parties will be rewarded (Bass et al, 2003; Humphreys, 2002; Liu et al, 2003; Yammarino et al.,
1993). Sarros and Santora (2001) state that the rewards pursued by both parties are more
economic in nature. The subordinate's physical and material needs are sought by the leader
and in return, the leader receives a reward in the form of high performance of subordinates.

Waldman et.al. (2002) suggest that transactional leadership "operates" in an existing system or
culture and the aim is to strengthen existing strategies, systems, or cultures, not to change
them. Therefore, transactional leaders in addition to trying to satisfy the needs of subordinates
to "buy" performance, also focus on deviations, mistakes, or mistakes subordinates and seek
corrective action. Humphreys (2002) and Yammarino et.al. (1993) states that transactional
leadership is most commonly found in daily life, so that it develops into a paradigm of

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leadership practices in organizations.

Transactional leadership, according to some experts, has two characters called contingent
reward and management by exception. Transactional leaders who have a contingent reward
character will explain the goals and objectives to be achieved and direct subordinates to
achieve them. The size of the reward will depend on (contingent) the extent to which
subordinates achieve these goals and objectives (Bass et.al., 2003; Humphreys, 2002;
Yammarino et.al., 1993). Whereas the transactional leader with the character of management
by exception can be further divided into two characteristics, namely active and passive.

In active management by exception, the leader sets goals and objectives to be achieved along
with work standards that must be obeyed. If deviations occur, the leader does not hesitate to
impose sanctions on subordinates. Leaders with these qualities will tend to supervise their
subordinates closely and take corrective actions if deviations, mistakes, or mistakes arise.
While passive management by exception the leader avoids corrective action or "commotion"
with subordinates as long as the agreed goals and objectives are achieved (Bass et.al., 2003;
Humphreys, 2002; Yammarino et.al., 1993).

Bass et.al. (2003) and Sarros and Santora (2001) explain that the contingent reward character
describes a positive reciprocal relationship between leaders and subordinates, because the
leader provides an explanation and direction in the process of achieving goals in an effort to
spur the performance of subordinates. On the other hand, subordinates are driven to use their
best abilities because the size of the rewards will depend on how far they reach the goal.

Conversely, management by exception (active or passive) according to Yammarino et.al (1993)


can negatively impact the performance of subordinates because subordinates are afraid of
making mistakes to avoid sanctions so they feel they are working under pressure. This
condition causes the organizational process will not run effectively.

Whereas passive management by exception does not encourage subordinates to work hard. As
long as the target is achieved and the organizational system is operating as it should then
everyone feels happy. There are no new adventures or challenges at work. These conditions
will bring boredom to subordinates so that organizational performance will not be maximized

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(Sarros & Santora, 2001).

Research Shea, Christine M. (1999) entitled: The Effect of Leadership Style on Performance
Improvement on a Manufacturing Task, said that leadership style positively influences
performance improvement. Contribute to the influence of leadership style on employee
performance. Yammarino et al. (1993) proved that transformational leadership has a greater
influence on employee performance than transactional leadership.

Job Satisfaction

Job satisfaction is a psychological atmosphere about pleasant or unpleasant feelings towards


their work (Davis, Keith, 1985). Meanwhile Porter and Lawler in Bavendam, J. (2000) explained
that job satisfaction is a unidimensional building, where a person has general satisfaction or
dissatisfaction with his work.

Vroom as quoted by Ahmad, MA Roshidi (1999) defines job satisfaction as a reference of an


employee's effective orientation towards their role in the current position. A positive attitude
towards work can conceptually be expressed as job satisfaction and a negative attitude
towards work is the same as dissatisfaction. This definition has received support from Smith
and Kendall (1963) who explain that job satisfaction is a person's feelings about work.

Werther and Davis (1986) in Prabowo (2003) and Munandar, Sjabadhyni, Wutun (2004: 73)
suggest that job satisfaction is a condition of liking or dislike according to employees' views of
their work. Dole and Schroeder (2001) in Koesmono (2005), suggested that job satisfaction can
be defined as an individual's feelings and reactions to his work environment. Testa (1999) and
Locke (1983) in Koesmono (2005) suggest that job satisfaction is an excitement or positive
emotional statement that results from an assessment of one job or work experiences.
Furthermore Koesmono (2005) suggested that job satisfaction is an assessment, feeling or
attitude of a person or employee towards his work and is related to the work environment,
type of work, compensation, relationships between colleagues, social relations at work and so
on. So it can be said that job satisfaction is the fulfillment of several wants and needs through
work or work activities.

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Gibson, Ivancevich, and Donnely (1996) in Sylvana (2002: 4) suggest that job satisfaction is part
of the motivation process. The satisfaction of organizational members can be related to their
performance and work results and the rewards and penalties they receive. Therefore, the level
of job satisfaction in an organization can be shown by the results such as the attitude of the
members of the organization, the change of work of members of the organization,
absenteeism or absenteeism, tardiness, and weakness that is common in an organization.

Robbins (2001: 148) states that job satisfaction is as a general attitude of an individual towards
his job. Work requires interaction with coworkers and superiors, follows the rules and policies
of the organization, meets performance standards, lives in working conditions that are often
less than ideal, and other similar things. This means that an assessment (assessment) of an
employee of his satisfaction or dissatisfaction with the work is a run-up sum of a number of
discrete work elements (differentiated and separated from each other).

According to Ramayah (2001) and Janssen (2001) in Koesmono (2005: 28) argues that a
manager will be very concerned about aspects of job satisfaction, because it has a moral
responsibility whether it can provide a satisfying environment to its employees and believe
that satisfied employee behavior will make a positive contribution to the organization.
Managers feel their efforts and performance are successful if fairness in rewards provides a
level of job satisfaction and performance. A balanced work situation will increase feelings in
control of work life and produce job satisfaction. So that managers have a responsibility to
increase job satisfaction of their subordinates in order to make a positive contribution to the
organization.

Davis (1985) in Mangkunegara (2005: 117) suggests that job satisfaction is related to a number
of major employee variables, such as turnover, absences, age, occupation, and size of the
organization in which an employee works. Based on this opinion, Mangkunegara (2005: 117)
argues that job satisfaction is related to variables such as turnover, absenteeism, age, level of
work, and the size of a company's organization. Job satisfaction associated with turnover
implies that high job satisfaction is always associated with low employee turnover, and vice
versa if many employees feel dissatisfied, high employee turnover. Job satisfaction is related to

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absenteeism (attendance) means that employees who are less satisfied tend to have a high
absence rate. Job satisfaction with age implies that employees who tend to be older will feel
more satisfied than employees who are relatively younger, because it is assumed that older
employees are more experienced in adjusting to the work environment and younger
employees usually have ideal expectations about the world work, so that between their
expectations and the reality of work there are gaps or imbalances that can cause them to
become dissatisfied. Job satisfaction is associated with the level of work means that employees
who occupy a higher level of work tend to be more satisfied than employees who occupy
lower jobs, because employees who have higher levels of work show good work skills and are
active in expressing ideas and are creative at work. Job satisfaction related to the size of the
organization of the company implies that the size of the company can affect the process of
communication, coordination, and employee participation so that it can affect employee job
satisfaction.

Mangkunegara (2005: 120) states that there are 2 (two) factors that affect job satisfaction,
namely the factors that exist in themselves and work factors. The factors that exist in the
employee are intelligence (IQ), special skills, age, gender, physical condition, education, work
experience, years of service, personality, emotions, ways of thinking, perceptions, and work
attitudes. While the occupational factors are the type of work, organizational structure, rank
(class), position, quality of supervision, financial guarantees, job promotion opportunities,
social interaction, and work relations.

RESEARCH METHODOLOGY

Research Design

This research is an explanatory research ( Explanatory research ) that will prove the causal
relationship between the independent variables , namely the work motivation variable, the
leadership variable, and the reward system variable; and the dependent variable , namely the
employee job satisfaction variable. And correlational research, namely research that seeks to

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see whether between two or more variables have a relationship or not, and how big the
relationship is and how the direction of the relationship (Indriyantoro and Supomo (1999) in
Yasa, 2006: 29).

Sampling Method

Population is a group or collection of individuals or research objects that have certain


standards of characteristics that have been determined previously. The population in this
study were employees who worked at the Rural Credit Bank in Pati Regency.

The sample in this study was determined using the Slovin formula with an error tolerance of
5%. The Slovin equation is determined as follows.

Where n is the number of samples; N is the total population; and e is a fault level tolerance of
5%.

The population of employees working at BPRs in Pati Regency is around 120 out of a total of 11
BPRs. Thus, the number of samples taken in this study is.

Respondents whose research sample was selected by the Proportionate Random Sampling
method (proportional random sample), the sampling technique for heterogeneous populations
(Sugiyono, 2002).

Operational Definition and Measurement of Variables

The operational definitions and measurement of variables in this study, are explained as
follows.

1. Leadership is the attitudes, policies, principles, methods used by leaders in carrying out
their roles in the organization. Measurement of leadership scale using a Likert scale where
1 shows very bad and 5 shows very good. Leadership has four question items as indicators
for forming variables, namely:

a. How to communicate

b. The freedom of work

c. Clear vision and mission

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d. Motivational support

e. The reward system shows employee perceptions of the reward system that is in place
include: basic salary, benefits, incentives, overtime pay, gifts, leave, and awards
received. The reward system is measured using a Likert scale where 1 shows very
dissatisfied and 5 shows very satisfied. The reward system has four question items as
indicators for forming variables, namely:

1) Decent salary
2) A decent bonus
3) Suitability of bonuses to work
4) Salary and bonus system
2. Work motivation is a condition that influences arousing, directing and maintaining
behavior related to the work environment. Work motivation is measured using a Likert
scale where 1 shows very unmotivated and 5 shows highly motivated. Work motivation has
five question items as indicator forming variables, namely:

a. Completion of work

b. Determination to work

c. Work climate

d. Job security

e. Relations between employees

3. Job satisfaction is a psychological condition that involves the general level of satisfaction of
employees in carrying out work or accepting tasks assigned to them. Therefore in research
it is necessary to look at aspects that are indicators of satisfaction such as: liking in carrying
out work, attendance at work, work motivation, responsibility, reaction to policies,
destructive potential , and others. Job satisfaction is measured using a Likert scale where 1
shows very dissatisfied and 5 shows very satisfied. Job satisfaction has five question items
as indicator forming variables, namely:

a. Satisfied with the work climate

b. There is support

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c. Attention boss

d. Salaries and bonuses accordingly

e. Completion of work

Data and Data Sources

The data in this study are quantitative data measured using a questionnaire with a Likert scale .
Data sources were obtained from 11 rural banks in Pati Regency in 2017 . Other data
supporting this research were obtained from articles and journals as a comparison and sifting
of results and discussion.

Analysis Tools

The validity of questionnaire question items is the ability of a question in the questionnaire to
be used as a measurement tool (Azwar, 2013: 92-93). Empirically, the validity of an item is
determined by the coefficient of validity determined based on the score data. A question
item's standard is considered valid if the Pearson coefficient value is ≥ 0.3. The calculation to
determine the validity of an item is determined by Pearson correlation or product moment as
follows.

information:

r arithmetic = correlation number;


n = number of respondents;
X = score of questions to be tested for validity;
Z = total score without involving the question being examined (YX).

Reliability test is a measurement to assess whether the measuring instrument used is able to
provide consistent measurement values. Inconsistent measuring devices will produce dubious
data. The standard variable is said to be reliable if the Cronbach's Alpha value > 0.5. To
measure reliability in this study using the Cronbach's Alpha (CA) technique with the formula.

information:

r = the reliability coefficient sought;

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k = number of questions (questions);


2 xi = variety of questions;
2 = variety of total test scores (tests), calculated from n respondents.
4.5.2 Regression analysis

The research hypothesis was tested using linear regression analysis. Regression analysis was
conducted in 2 stages to test the research hypothesis. An explanation of the regression
analysis is as follows.

Stage 1
Y s = α s + β p1 X p [1]
Y k = α k1 + β s1 X s [2]
Y k = α k2 + β p2 X p + β s2 X s [3]

In stage 1 a regression analysis is carried out on the leadership component, the reward system
and job satisfaction. Based on these equations, Y s is a reward system as a dependent variable
on leadership (X p ). Y k is a dependent variable of job satisfaction for the independent variable
X s (reward system) and leadership (X p ).

In equation [1] the direct influence of leadership is tested on the reward system. Equation [1]
aims to prove the direct influence of leadership on the reward system. Similarly, in equation
[2] is intended to prove the direct effect of the reward system on job satisfaction. In equation
[3] is a multiple linear regression equation intended to see the effect of both leadership and
reward systems on job satisfaction. α and β are the dependent variable regression coefficient
and the independent variable regression coefficient.

Stage 2
Y m = α m + β p3 X p [4]
Y k = α k3 + β m1 X m [5]
Y k = α k1 + β p3 X p + β m2 X m [6]

As in stage 1, stage 2 is a similar test. Equations [4] and [5] aim to test the direct influence of
leadership on work motivation and work motivation on job satisfaction. Furthermore equation
[6] has the same goal as equation [3]. The main purpose of testing in stages 1 and 2 is to find

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out the effect of reward and work motivation regarding its status on leadership, mediating or
non-mediating factors.

Following are the parameters and test assumptions that must be met in a regression analysis.

1. R square

Rated R square or R 2 shows the contribution of all the influence of independent variables on
the dependent variable. The value of R square ranges from 0 to 1. The closer to one
contribution the influence of all independent variables is getting stronger, conversely the
closer to zero the influence of free variables is getting weaker.

2. F statistic

The statistical F indicator shows the size of the goodness of fit of the regression model.
Statistical F values are accepted or significant if F statistics> F tables or probability values (p) at
F statistics <0.05. Statistically significant F values indicate that a linear regression model
actually has a linear type of relationship between the independent variables and the
dependent variable. So it is said that the independent variables together affect the dependent
variable.

3. t statistic

t statistics show indicators of partial influence between the independent variables on the
dependent variable. Statistical t values are accepted or significant if t statistics> t tables or
probability values (p) at t statistics <0.05.

4. Normality test

Normality test aims to test whether the dependent variable and independent variables in the
regression model have a normal distribution or not. A good regression model is one that has a
normal or near normal distribution. The normality test is carried out by the Kolmogorov-
Smirnov test. The normal distribution is achieved if the p value in the Kolmogorov-Smirnov
statistics> 0.05.

5. Multicollinearity test

Multicollinearity test aims to test whether the regression model is found there is a correlation

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between the independent variables (independent). A good model should not occur correlation
between independent variables (Ghozali, 2001). Detection of the presence or absence of
multicollinearity is by analyzing the correlation matrix of independent variables, and can also
be seen in the tolerance value and the value of Variance Inflation Factor (VIF). If the VIF value
is not more than 10 and the tolerance value is not less than 0.1, then it can be said to be free
from multicollinearity.

RESEARCH RESULTS AND DISCUSSION

Validity and Reliability

Table 3.1. shows the results of the validity of the question items and the reliability of the
research variables. Based on the results of the validity test it was found that all the question
items that became indicators of the research variables were valid (Pearson> 0.3). The reliability
test results showed that all research variables were reliable (Cronbach's Alpha> 0.6).

Table 3.1.
Test Results Validity and Reliability
Pearson Pearson
Item Cronbach's Alpha Item Cronbach's Alpha
coefficient coefficient
Q1 0.402 0.684 S1 0.347 0.650
P2 0.507 S2 0.424
Q3 0.493 S3 0.382
Q4 0.468 S4 0.576
M1 0.588 0.752 K1 0.550 0723
M2 0.405 K2 0.457
M3 0.515 K3 0.402
M4 0.450 K4 0.644
M5 0.642 K5 0.371
Source: Appendix

Data Description

This study took a sample of 92 respondents from 11 rural banks in Pati Regency. Table 3.2.
shows the demographic data of the respondents involved in the study.

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Table 3.2.
Demographics of Respondents
Variable Category total Percentage (%)
Gender Man 51 55.4
Girl 41 44.6
Age <25 years old 18 19.6
25-30 years 18 19.6
30-35 years old 18 19.6
35 - 40 years old 21 22.8
> 40 years old 17 18.5
Length of work <5 years 33 35.9
5-10 years 38 41.3
> 10 years 21 22.8
Source: Appendix

Of the total 92 respondents, there were 51 male respondents (55.4%). While there were 41
female respondents (44.6%). Based on this distribution it can be said the number of male and
female respondents involved in this study is quite balanced.

Based on the age level distribution, most respondents aged between 35 to 40 years, namely as
many as 21 people (22.8%). For the age categories of less than 25 years, 25 to 30 years, and 30
to 35 years have the same number, namely 18 respondents (19.6%). For respondents over the
age of 40 years there were 17 people (18.5%). Looking at age level distribution can be said to
have an even distribution.

From a total of 92 respondents, 33 people worked in less than 5 years (35.9%). For
respondents who have worked in BPR between 5 to 10 years there are 38 people (41.3%). And
the number of respondents who have worked at BPR for more than 10 years there are 21
people (22.8%).

Table 3.3. shows a description of the variable data used in the study. Table 3.3. presents the
mean (standard) and standard deviation (standard deviation) on the variables of leadership,
reward systems, work motivation, and job satisfaction.

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Table 3.3.
Mean Values and Standard Deviations of Research Variables

Descriptive Statistics N The mean Std. Deviation

Leadership 92 15.99 2.39


Rewards System 92 16.13 2.18
Work motivation 92 19.93 2.87
Job satisfaction 92 19.83 2.66
Source: Appendix

The leadership variable has an average total score of 15.99 with a standard deviation of 2.39.
Looking at the average value of this total score, it can be said that the respondent's response
related to the average leadership variable answers on a scale of 3 to 4. The reward system
variable has an average total score of 16.13 with a standard deviation of 2.18. Looking at the
average value of this total score, it can be said that the respondent's response related to the
average reward system variable answers on a scale of 3 to 5. The work motivation variable has
an average total score of 19.93 with a standard deviation of 2.87. Looking at the average value
of this total score, it can be said that the respondent's response related to the variable work
motivation, the average answer on a scale of 3 to 4. The job satisfaction variable has an
average total score of 19.83 with a standard deviation of 2.66. Looking at the average value of
this total score, it can be said that the respondent's response related to the variable job
satisfaction averaged on a scale of 3 to 4.

Hypothesis Testing Results

Test Normality

Normality is a statistical indicator to see the distribution of sample data. Normal sample data
shows that the data used are truly representative of the population. Normality test is done by
looking at the value of the ratio on the value of skewness and kurtosis. The results of the
normality test are shown in Table 3.4 . Based on the value of the ratio of skewness and kurtosis
on research variables that are between -2 to +2 shows that the distribution of data in each
variable is normally distributed.

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Table 3.4.
Normality Test Results
Skewness Kurtosis Ratio
Descriptive Statistics Statistic Statistic
s Std. Error s Std. Error Skewness Kurtosis
Leadership -0,061 0.251 -0.858 0.498 -0.243 -0.293
Rewards System 0.159 0.251 -0,857 0.498 0.633 -0.293
Work motivation 0.112 0.251 -0,806 0.498 0.446 -0.311
Job satisfaction -0.257 0.251 -0,806 0.498 -1,024 -0.311
Source: Appendix

Test multikolinieritas

Multicollinearity is a symptom where the relationship between two independent variables is


very strong. As a result of this very strong relationship or correlation or multicollinearity causes
a bias in the results of the regression analysis. Table 3.5. shows the results of the
multicollinearity test on the independent variables.

Table 3.5.
Multicollinearity Test Results
Independent variable Tolerance VIF
Leadership 0.133 7,531
Rewards System 0.205 4,887
Work motivation 0.172 5,813
Source: Appendix

Based on the VIF value, the greatest is in the leadership variable with a VIF value of 7,531. This
VIF value is still smaller than 10, which shows that none of the independent variables cause
multicollinearity symptoms in the regression model. Likewise in tolerance values, all
independent variables have tolerance values> 0.1 which shows no symptoms of
multicollinearity.

Hypothesis Test

Table 3.6. shows the results of the model analysis at stage 1. The results of the regression
analysis at stage 1 are explained as follows.

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Table 3.6.
Results of Regression Analysis in Stage 1
Variable
R square F stats t stats
Free Bound
Leadership Reward system 0.783 324,484 18,013 ***
Reward system Job satisfaction 0.542 106,406 10,315 ***
Leadership Job satisfaction 0.663 87,353 5,643 ***
Reward system 0.577 ns
Note: *** significant at 0.01; ns not significant
Source: Appendix
1. The influence of leadership on the reward system is analyzed by simple linear regression. R
square value of 0.783 shows the contribution of leadership influence on the reward system
is 78.3%. Statistical F value of 324.484> F table at df 1 = 1 and df 2 = 90 with α = 0.05, which
is 3.947. Thus the leadership model in the reward system has a good goodness of fit model
. Leadership has a statistical t value of 18,013> t table at df = 90 with α = 0.05, which is
1.987. Thus this result accepts an alternative hypothesis where leadership influences the
reward system, and rejects the null hypothesis that leadership has no effect on the reward
system.

2. The effect of the reward system on job satisfaction is analyzed by simple linear regression.
R square value of 0.542 shows the magnitude of the contribution of the effect of the
reward system to job satisfaction is 54.2%. Statistical F value of 106.406> F table at df 1 = 1
and df 2 = 90 with α = 0.05, which is 3.947. Thus the reward system model on job
satisfaction has a good goodness of fit model . The reward system has a statistical t value of
10,315> t table at df = 90 with α = 0.05, which is 1.987. Thus these results accept an
alternative hypothesis where the reward system influences job satisfaction, and rejects the
null hypothesis that the reward system has no effect on job satisfaction.

3. The influence of leadership and reward systems on job satisfaction is analyzed by multiple
linear regression. R square value of 0.663 shows the amount of contribution of leadership
influence and reward system to job satisfaction is 66.3%. Statistical F value 87,353> F table
at df 1 = 2 and df 2 = 89 with α = 0.05, which is 3.099. Thus the leadership model and reward
system for job satisfaction have a good goodness of fit model . Or in other words,

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leadership and reward systems together influence on job satisfaction. Leadership has a
statistical t value of 5.643> t table at df = 89 with α = 0.05, which is 1.987. Thus this result
accepts an alternative hypothesis where leadership influences job satisfaction, and rejects
the null hypothesis that leadership has no effect on job satisfaction. The reward system has
a statistical t value of 0.577 <t table at df = 89 with α = 0.05, which is 1.987. Thus these
results reject the alternative hypothesis where the reward system influences job
satisfaction, and accepts a null hypothesis that the reward system has no effect on job
satisfaction.

Table 3.7. shows the results of step 2 regression analysis. The results of the step 2 regression
analysis are explained as follows.

Table 3.7.
Results of Regression Analysis in Stage 2
Variable
R square F stats t stats
Free Bound
Leadership Work motivation 0817 403,034 20,076 ***
Work motivation Job satisfaction 0715 225,268 15,009 ***
Leadership Job satisfaction 0728 118,881 2,069 **
Work motivation 4,658 ***
Note: *** significant at 0.01; ** significant at 0.05; ns not significant
Source: Appendix
4. The influence of leadership on work motivation is analyzed by simple linear regression. R
square value of 0.817 indicates the amount of the influence of leadership influence on
work motivation is 81.7%. Statistical F value of 403,034> F table at df 1 = 1 and df 2 = 90 with
α = 0.05, which is 3.947. Thus the leadership model on work motivation has a good good of
fit model . Leadership has a statistical t value of 20.076> t table at df = 90 with α = 0.05,
which is 1.987. Thus these results accept an alternative hypothesis where leadership
influences work motivation, and rejects the null hypothesis that leadership has no effect on
work motivation.

5. The effect of work motivation on job satisfaction is analyzed by simple linear regression. R
square value of 0.715 shows the magnitude of the contribution of the influence of work

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motivation on job satisfaction is 71.5%. Statistical F value of 225.268> F table at df 1 = 1 and


df 2 = 90 with α = 0.05, which is 3.947. Thus the work motivation model on job satisfaction
has a good goodness of fit model . Work motivation has a statistical t value of 15.009> t
table at df = 90 with α = 0.05, which is 1.987. Thus these results accept alternative
hypotheses where work motivation affects job satisfaction, and rejects the null hypothesis
that work motivation does not affect job satisfaction.

6. The influence of leadership and work motivation on job satisfaction is analyzed by multiple
linear regression. R square value of 0.728 shows the magnitude of the contribution of the
influence of leadership and work motivation on job satisfaction is 72.8%. Statistical F value
of 118.881> F table at df 1 = 2 and df 2 = 89 with α = 0.05, which is 3.099. Thus the
leadership model and work motivation on job satisfaction have a good goodness of fit
model . Or in other words leadership and work motivation influence together on job
satisfaction. Leadership has a statistical t value of 2.069> t table at df = 89 with α = 0.05,
which is 1.987. Thus this result accepts an alternative hypothesis where leadership
influences job satisfaction, and rejects the null hypothesis that leadership has no effect on
job satisfaction. Work motivation has a statistical t value of 4.658> t table at df = 89 with α
= 0.05, which is 1.987. Thus these results accept alternative hypotheses where work
motivation influences job satisfaction, and accepts null hypotheses which state work
motivation has no effect on job satisfaction.

The results of the multiple regression analysis in stage 1 and stage 2 in point 3 are confirmed
by multiple regression analysis with three independent variables of leadership, reward systems
and work motivation. The results of this multiple regression analysis are shown in Table 3.8. .

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Table 3.8.
Multiple Regression Analysis of Leadership, Reward Systems and
Work Motivation on Job Satisfaction
Variable R square F stats t stats
Free Bound
Leadership Job satisfaction 0728 78,654 2012 **
Rewards System -0,488 ns
Work motivation 4,619 ***
Note: *** significant at 0.01; ** significant at 0.05; ns not significant
Source: Appendix

The influence of leadership, reward systems, and work motivation on job satisfaction is
analyzed by multiple linear regression. R square value of 0.728 shows the magnitude of the
contribution of the influence of leadership, work motivation, and work motivation on job
satisfaction is 72.8%. Statistical F value of 78.654 > F table at df 1 = 2 and df 2 = 89 with α = 0.05,
which is 3.099. Thus the leadership model, reward system and work motivation for job
satisfaction have a good goodness of fit model . Or in other words leadership, reward systems,
and work motivation influence together on job satisfaction. Leadership has a statistical t value
of 2.012> t table at df = 89 with α = 0.05, which is 1.987. Thus this result accepts an alternative
hypothesis where leadership influences job satisfaction, and rejects the null hypothesis that
leadership has no effect on job satisfaction. The reward system has a statistical t -0,488 <t
table at df = 89 with α = 0.05, which is 1.987. Thus these results reject the alternative
hypothesis where the reward system influences job satisfaction, and accepts a null hypothesis
that the reward system has no effect on job satisfaction. Work motivation has a statistical t
value of 4,619> t table at df = 89 with α = 0.05, which is 1.987. Thus these results accept
alternative hypotheses where work motivation influences job satisfaction, and accepts null
hypotheses which state work motivation has no effect on job satisfaction.

Based on the results of the analysis in stage 1 and stage 2 also multiple linear regression
analysis on leadership, work motivation and job satisfaction can be drawn conclusions related
to the research hypothesis as follows.

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1. At stage 1 in point 1 where leadership has a positive effect on the reward system
supporting hypothesis H 1a which states that leadership has a positive effect on the reward
system.

2. Based on the analysis of stage 2 point 1 where leadership has a positive effect on work
motivation supporting hypothesis H 1b which states that leadership has a positive effect on
work motivation.

3. Based on the analysis of stage 1 point 3, stage 2 point 3 and multiple regression analysis
shows leadership has a positive effect on job satisfaction. Thus, these results support the
hypothesis of H 1c which states that leadership has a positive effect on job satisfaction.

4. Based on point 3 in stage 1 and point 3 in stage 2 and the results of multiple linear
regression analysis states that the reward system has no effect on job satisfaction. Thus,
these results do not support the hypothesis H 2 which states that the reward system has a
positive effect on job satisfaction.

5. Based on point 2 and point 3 in stage 1 and point 2 and point 3 in stage 2 and the results of
multiple linear regression analysis show that work motivation has a positive effect on job
satisfaction. Thus, these results support the hypothesis H 3 which states work motivation
positive effect on job satisfaction.

DISCUSSION

The results of this study prove that leadership has a positive and significant effect on employee
job satisfaction, meaning that the results of the implementation of managerial activities
carried out by leadership certainly have a positive or good impact on the organization, because
the better the implementation of managerial leadership activities is carried out, it will have an
impact on improving the company's performance time after time. Implementation of wise
leadership activities by encouraging and always motivating employees to work better causes
an employee to achieve satisfaction at work, and to bring positive influence in the formation of
subordinate personalities to sincerely work towards achieving organizational goals.

The results of this study are in line with several opinions and theories about leadership put

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forward by experts as follows: Dubrin (2005: 3); Agarwal (1984), Koontz (1984), Kreitner and
Kinicki (2005: 299). Where the leadership role is very influential on employee job satisfaction.
A good leader always tries to achieve the goals of the organization and continues to develop its
achievements and realize that all that is not obtained alone but through the role of all
components in the organization.

One of the managerial manager that is run well by one is to pay attention to employee welfare.
By establishing a good reward system, employee welfare can be achieved. Therefore in this
study also found significant and positive results of the influence of leadership on the reward
system.

However, the reward system has no effect on job satisfaction. In contrast to the results of
Kalleberg (1974), Locke, EA (1973), Ronen et al (1973), Vroom, VH (1964), Lawler, EE and
Porter, LW (1966) as well as from Ruvendi (2005) who found the influence significant between
rewards on job satisfaction. Explanation on the results of this study is possible because the
reward system does not have a direct effect on job satisfaction but must be mediated by work
motivation.

Good leadership does not only affect the reward system but also can lift employee motivation.
As the findings in this study, leadership has a positive effect on work motivation. A good leader
always encourages employees to be more motivated in doing and completing their work. A
good leader is aware that with high work motivation the probability of achieving success in
organizational goals is greater. Therefore a good leader will continue to increase the
enthusiasm and motivation of his subordinates.

The results of this study prove that work motivation has a positive and significant effect on
employee job satisfaction. Work motivation is highly needed by employees to be able to
achieve individual or group achievements which ultimately leads to high job satisfaction. The
results of this study support several opinions and theories about motivation put forward by
experts as follows: Robbins (2005: 55); Ivancevich and Donnely (1997: 89); Sperling (1987:
183); Ivancevich and Donnely (1992: 92).

Participatory leadership style is characterized by two-way communication and decision making

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involving staff / employees. This can be seen at the meeting to establish policies, which always
involve representatives of each section to attend meetings and ask representatives of each
section about problems that occur, and discussed together to get the best solution.
Participatory leadership style also has a positive relationship with work motivation because
there are no staff / employees who have low motivation in the leadership style. Although only
a few staff / employees who view their superiors have a participatory leadership style. In the
delegative leadership style, staff / employees have high motivation. But the leadership style is
classified as rarely applied by the leader, it's just that if there is a lot of work that has not been
completed usually superiors apply the leadership style. The delegation is usually in giving
overtime orders to staff / employees. There is a high motivation in the delegative leadership
style, because in general the staff / employees are willing to work overtime which can increase
staff / employee income.

Participatory leadership style is characterized by two-way communication and decision making


involving employees. This can be seen at the meeting to establish policies, which always
involve representatives of each section to attend meetings and ask representatives of each
section about problems that occur, and discussed together to get the best solution.
Participatory leadership style also has a positive relationship with work motivation because
there are no employees who have low motivation in the leadership style.

Different levels of motivation between staff / employees. The motivation has a relationship
with the leadership style applied by the boss. Consultative leadership style is characterized by
superiors who have the same attention to staff / employees and work. Consultative leadership
style is usually applied by superiors in terms of promoting staff / employees who excel.
Attention superiors of the work usually by providing information that is clear enough to make
the job faster. This is inseparable from the role of superiors in providing direction in work. The
consultative leadership style also has a positive relationship with work motivation because all
staff / employees have high motivation and no employee has low motivation in the
consultative leadership style. Although there are some employees who have moderate
motivation towards the leadership style.

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The consultative leadership style is more likely to be applied by superiors in leading, although
in certain situations superiors also apply directive, participatory and delegative leadership
styles. A positive relationship between consultative leadership style and employee work
motivation can be seen from no employees who have low motivation towards the leadership
style. Most staff / employees have high motivation, although there are some staff / employees
who have moderate motivation. Consultative leadership style is usually applied by superiors in
terms of promoting staff / employees who excel.

The consultative leadership style is usually applied by superiors in terms of promoting


employees who excel. Attention superiors of the work usually by providing information that is
clear enough to make the job faster. This is inseparable from the role of superiors in providing
direction in work. The consultative leadership style also has a positive relationship with work
motivation because all employees have high motivation and no employee has low motivation
in the consultative leadership style.

Participatory leadership style can be seen at meetings to set policies, which always involve
representatives of each section to attend meetings and ask representatives of each section
about problems that occur, and discussed together to get the best solution. Participatory
leadership style also has a positive relationship with work motivation because there are no
employees who have low motivation in the leadership style. Although only a few staff /
employees who view their superiors have a participatory leadership style.

Delegative leadership style is usually applied in giving overtime orders to staff / employees.
There is a high motivation in delegative leadership style, because in general employees are
willing to work overtime which can increase employee income.

In the delegative leadership style, employees have high motivation. But the leadership style is
classified as rarely applied by the leader, it's just that if there is a lot of work that has not been
completed usually superiors apply the leadership style. The delegation is usually in giving
overtime orders to employees. There is a high motivation in delegative leadership style,
because in general employees are willing to work overtime which can increase employee
income.

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The directive leadership style is applied by superiors in enforcing work rules by conducting
strict supervision and imposing sanctions on employees. Generally superiors are more inclined
to supervise and direct new employees compared to senior employees because superiors
consider new employees, still need a lot of direction and guidance in working. In taking action
against violations of work regulations made by employees, superiors usually make decisions
directly without discussing it again with the employee concerned.

According to Keith Davis (in Risky N.Ariwibowo, 2011) states that the general nature of leaders
in influencing the success and effectiveness in their leadership, including: 1). Intelligence,
where leaders have a higher level of intelligence compared to those they lead. 2). Maturity and
breadth of social relations, leaders tend to be mature and have broad attention to social
activities. He has a desire to appreciate and be valued. 3). Self-motivation and drive for
achievement, leaders relatively have a strong motivation for achievement. They work trying to
get awards that are intrinsic compared to extrinsic. 4). The attitude and relations of humanity,
successful leaders are willing to recognize the dignity and strength of their followers and be
able to side with him.

The leadership model above will certainly have implications for the next process, which can
provide motivation for employees and can also have the opposite effect. An effective leader is
at least able to motivate everyone as a member of the organization to continuously learn and
develop their competencies, able to help everyone or members to feel part of the organization
as a community unit and be able to arouse the morale of everyone as a member of the
organization. Motivation can determine the merits of an employee at work. This motivation is
a motivating factor or circumstances that give rise to impetus. A leader can be a motivating
factor for employees to work better, because one of the leaders' roles is to be able to provide
motivation to employees.

According to Robbins and Coulter (2007) A leader is someone who can influence others and
have managerial authority. While work motivation can encourage an employee to work
diligently because motivation is a driver for someone in carrying out an activity to achieve the
planned goals or objectives.

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Leaders who are able to work effectively will be able to carry out their duties and functions
well, not only shown from the ability of theory alone, but more how to be able to provide the
strength they have and also demonstrated the leadership's attention to employee welfare and
satisfaction towards the leader and improving employee quality, especially protective attitude
that is shown to strengthen the willingness of employees to carry out tasks in order to achieve
organizational goals.

Leaders usually have high strength and courage in the process and control of the organization
with the knowledge and skills possessed that are believed to be able to provide change and
success in influencing subordinates. Leadership ethics and behavior are a reflection of
supporting appreciation for others. Integrity and character possessed by the leadership is one
important element in every decision and policy making which is the basic foundation in
determining the direction of the organization.

The leader in decision making must be able to make the right choices from the various
possibilities that have been calculated. Decisions taken are usually based on experience and
assessment of the future that has been calculated based on the costs incurred, the time
required and quality improvement of the results achieved.

Work discipline is one indicator of employees in carrying out work that is a burden and
responsibility. A lecturer must have discipline in working, because this condition will become a
benchmark for students in accepting direct examples. A lecturer will work comfortably and
carry out the work carefully, in an orderly manner both administratively and the results of
work that can be completed in accordance with the time and targets set.

Supporting factors that influence lecturers' performance are the establishment of a


comfortable work environment with a harmonious work environment between superiors and
subordinates, the growth of a sense of comfort in working and there is active interaction in
supporting the completion of work supported by a conducive work climate. The formation of a
work environment that is less supportive of work will lead to the emergence of a less favorable
work atmosphere too. The occurrence of an unfavorable atmosphere can be caused by the
unclear division of labor system, inappropriate interactions and responsibilities and so on.

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Motivation is important because with this motivation it is expected that every employee will
work hard and enthusiastically to achieve high work productivity Job training and good work
motivation can support the success of a company in achieving its goals. Because through the
existence of these two factors will create a high level of work productivity that supports the
success of the company. Conversely, if the level of work productivity decreases it will hamper
the company in achieving its goals.

According to Masrukhin and Waridin (2006), states that: Motivation is a psychological factor
that shows an individual's interest in work, feeling satisfied and partly responsible for the
activity or work performed. Therefore it can be said that motivation can mean a condition that
encourages or becomes the cause of someone doing an action or activity that takes place
consciously.

How important motivation is for every person who wants to develop and progress, because
with this motivation it is expected that every step and work done achieves high production
results. In achieving success, it requires hard work and high encouragement that can support
the success of a business from the company in achieving its goals. If any activity will not be
successfully achieved by hanging on a mercy, even the business will fail due to the lack of
productivity and effectiveness of the business.

Every government and private organization will focus on the orientation of long-term business
development, which is to increase business income while at the same time affecting the
welfare of employees. This is one indicator of the creation of Good Corporate Governance of a
company.

But in practice it often faces obstacles. One contributing factor is job dissatisfaction.
Furthermore, it will affect the performance of employees and organizations. Therefore, one of
the steps taken by the company is to strive for the creation of employee job satisfaction as a
motivation for achieving work results and company profits (optimal output / yield). In other
words, employee productivity or work results will increase along with the creation of job
satisfaction.

When someone feels the satisfaction of working. At least psychologically will exert as much as

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possible its ability to complete its work effectively and efficiently. Job satisfaction can be
measured by how much an employee likes his job (Cherington, 1987: 82).

Job satisfaction is the general attitude of workers about the work done, because in general
when people discuss the attitude of employees, what is meant is job satisfaction (Robbins,
1994: 417). Work is an important part of a person's life, so job satisfaction also affects one's
life. Therefore, job satisfaction is a part of life satisfaction (Wether and Davis, 1982: 42). 

Meanwhile, some companies today emphasize the key to success in how to create customer
satisfaction (consumers). This step is considered more fundamental than the emphasis on
satisfying employees.

Customer (consumer) loyalty occurs because of the dominance of customer satisfaction


aspects. This assumption will be appropriate if viewed from the aspect of profitability that
comes from customers (financial oriented). However, customer satisfaction and loyalty will not
occur if employee contributions are indicated by attitudes or behaviors of job satisfaction less
than optimal. In this case, if there is work dissatisfaction the employees will affect customer
loyalty, customer satisfaction and ultimately will worsen the company's performance. For
example, there is a decrease in service quality (bad services), a decrease in the number of
production and marketing turnover which results in rejection of production results (defects),
in-efficiency, a decrease in the image (goodwill) and other company losses both quantitative
and qualitative.

Moh. As'ad (1980: 109) states that the factors that can cause job satisfaction can be classified
according to: (1) Individual Factors; age, gender and personal attitude to work. (2) Employee
Relations Factors; relationship between managers and employees, social relations between
fellow employees, suggestions from coworkers, physical factors and workplace conditions,
emotions and work situations. (3) External Factors; family situation, recreation, education.

According to Chruden & Sherman (1972: 312-313), the factors that are usually used to
measure employee job satisfaction are: (a) job content, actual appearance of job assignments
and as control of work; (b) supervision; (c) organization and management; (d) opportunity to
advance; (e) salaries and other financial benefits such as incentives; (f) coworkers; and (g)

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working conditions.

One way to determine whether workers are satisfied with their work or not is to compare their
work with certain ideal jobs (gap theory). Then it can be concluded in the general response of
workers as a result of perceptions about matters relating to their work. Job satisfaction will be
obtained if there is a match between the expectations of workers with the reality encountered
and obtained from the workplace. Therein is the workers' perception of matters relating to
security, fairness, feelings of enjoyment, passion, status and pride.

In perceptions involving work situations / environment including work interactions, working


conditions, recognition, relationships with superiors and promotional opportunities. In
addition there is also a synergy (suitability) between the abilities and desires of workers with
the conditions of the workplace organization which includes the type of work, interests,
talents, income and incentives.

Meanwhile between the business world, the world of workers and work itself is increasingly
dynamically picking up the phenomenon of transformation of human life. One of them is the
pattern of recruitment of workers with an outsourcing system. The system is inseparable from
the company's current trends to anticipate the risk of collisions with government regulations
and the company's survival strategy. Or share the risk of HR issues from the current
employment aspects with third parties as outlined in the MOU (Memorandum of
Understanding) or SLA (Service Level Agreement) between the principal (user) company and
the vendor (Outsourcing Company).

In the research report Endang Solichin (2007) stated that in the employment contract between
PT. Pertamina with outsourcing companies have compensation calculations for outsourcing
employees such as: fixed wages (referring to UMR), transportation allowances, Social Security
benefits, leave replacement benefits, THR, oil and gas employee benefits, work clothes and
others. However, in practice, because outsourcing employee status is a contract, the wage /
take home pay between Pertamina permanent employees and outsourcing employees there is
a striking difference. Take home pay for average permanent employees of Pertamina per
month (the lowest group at that time / goal. 13) = ± Rp. 6,000,000 (six million rupiah) while

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outsourcing employees = ± Rp. 1,200,000 (one million two hundred rupiah).

This means that there is an indication that compensation is not given optimally as agreed in
the MOU. In addition, there is no legal relationship between the employer company (Principal)
and outsourcing employees. Managers and regulators of outsourcing employees in the parent
company are outsourcing companies (Vendors) concerned since the recruitment process,
training / apprenticeship, placement, wages & payroll (compensation), work supervision to
attendance and others.

Thus, the division of two different internal institutions in HR management (principal and
outsourcing company) and a striking comparison of the value of compensation will essentially
result in a gap between permanent employees and outsourcing employees, both from financial
and non-financial aspects. For example: significant differences in income (take home pay),
differences in welfare levels caused by differences in income allowances, differences in
treatment for career development (permanent employees are guaranteed by the principal
company, while outsourcing employees are not guaranteed for survival), aspirations of
permanent employees can be channeled through the Trade Unions principal companies,
whereas outsourcing employees do not have advocacy organizations.

Farid Aidid and Malla Latif, founder of the Advance Career outsourcing company in the
Indonesia Career Conference event held by Universitas Bina Nusantara Jakarta (2007) stated:
"Outsourcing companies as a link between labor and the business world have not been an
option for fresh graduates who are currently find a job. Though outsourcing promises many
benefits for employees. According to Malla, outsourcing companies are the choice to find
work, not only for new graduates, but can be an alternative for graduates from previous
generations. He emphasized that outsourcing companies are not just labor suppliers, but also
have dynamic relationships because they are related to human factors. "So, outsourcing does
not only involve transfer of people but also the transfer of a work process," So, in its
development, Malla continued: "outsourcing has gone further into a Business Process
Outsourcing and even later developed again with the Knowledge Process Outsourcing".

Outside management, there are many recipes for creating a successful and productive

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workplace. Some research confirms the importance of building trust, sensitivity to goals and
strong human relationships to achieve goals. Behavioral research conducted by a team from
Harvard University and Massachusetts General Hospital found that employee commitment in
general was strongly influenced by the sensitivity concerned to work goals, feelings for one's
influence and overall trust in the organization. Meanwhile, productivity was influenced by the
quality of human relations, including cooperative traits and social group interactions. "A
workplace that provides a positive environment that supports the development of
interpersonal trust and the quality of personal relationships will produce employees who are
committed and productive," said Nancy Etcoff, one of the researchers.

The survey also found that employee satisfaction was significantly increased by trust built
between coworkers. The more sensitive a person is to the goals surrounding his work, the
greater is his individual commitment to the organization. Productive employees are born from
a combination of trust and support. Work place relationship expert Courtney Anderson said:
"The results of the research confirm how important it is now for business leaders to build
sensitivity to trust and goals in their organizations. Being a good and successful leader today is
not just about carrying out tasks, but must be able to create an environment that supports
team members to be happy, committed and productive. "

The aspect of job satisfaction is finally interesting to study because it is very valuable and
beneficial for both individual and industrial interests. For individuals, at least the causes and
sources of job satisfaction can be sought, as well as the efforts that can be made to improve.
As for industry, research can be linked to economic benefits. For example, with job
satisfaction, companies can take various efficiency measures, reduce production costs or
increase production of goods and services so that customer loyalty is created optimally.

RESEARCH CONTRIBUTION

Academic contributions

The findings in this study academically add to the realm in the field of management studies,

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specifically human resource management. The findings of this study academically enrich the
concept of leadership in organizations related to increasing employee job satisfaction. Related
findings in this study can be a barometer in subsequent studies with the same theme, namely
leadership, work motivation, reward systems and job satisfaction. Furthermore, the findings in
this study can be used as a basis for further research development.

Practical contributions

Practically, the results of this study can be tried to be applied in managerial organizations,
especially BPR in order to increase employee job satisfaction through good leadership. The
results and suggestions in this finding can be used as managerial guidelines in determining a
good reward system, raising employee work motivation which ultimately can increase
employee job satisfaction.

Limitations Research

Every work is not perfect, including in this study also still has shortcomings and limitations.
However, limitations in this study are expected to be able to encourage other research to
develop research on leadership and job satisfaction. The insignificance of the reward system in
the findings of this study shows that the model chosen in this study is not perfect. So that it
can be used as a reference for further research to try to link the effect of the reward system on
work motivation. Another limitation is the sample, the small number of employees in one BPR
causes researchers to take samples from different BPRs, which of course have different
managerial and leadership patterns.

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Bavendam, J. (2000). "Managing Job Satisfaction". J. Special Report, Vol 6, Bavendam Research
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ANALYSIS OF COMPANY STOCK PORTFOLIO PSEI INDEX USING MARKOWITZ METHOD

Hermiyetti, Dito TriUtomo, Usmar

ABSTRACT

The purpose of this research is to analyze company stock portfolio PSEi (Philippine)Index to
reach optimal return and mitigate risk using the Markowitz method. This research is for
measuring portfolio performance with four main portfolio measurements such as Treynor,
Sharpe, and Jensen measurement, and Information Ratio. Population sample used for research
PSEi company from 2014 to 2018. The purposive sampling method is used to pick the
sample.The portfolio results are merged with risk and free-risk assets. Stock Portfolio Result on
PSEicompany using Markowitz methods as follows Expected Return 16,46%, Standard
Deviation 11,48%, Sharpe Ratio 1,12, Result for Treynor 2,03, Jensen 0,12 and 1,05,
Information for Free Risk Level 3,57% and Beta 0,06. Risk and Free asset allocation of 98% and
2%.
Keywords: Markowitz Methods, PSEi, Philippine Stock Exchange (PSE).

INTRODUCTION

The investor can invest stock for different company according to risk and profit. Either on a
financial asset like a stock, obligation, and deposit or real asset. Investment activity not only
being done by the individual investor but also corporate investors that willing to add value
from their assets compare with idle money.

Based on the background above, the research is a development of research conducted by


Paramitha and Anggoro (2013) which produces an optimum portfolio diversification of
fourteen stock of LQ-45 index period 2007 – 2012 using Markowitz modern portfolio theory
which produces an expected return of 79.34% and standard deviation of 48.95%. The Treynor
portfolio performance measure has a value of 60.31% and Sharpe of 147.79%. Changes made
in the object of research from the LQ-45 index to the PSEi index contained in the Philippine
Stock Exchange market because economic growth in Indonesia and the Philippines have the
same growth.

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Based on this background, the title of this study is "Analysis of Company Stock Portfolio in the
PSEi Index Using Markowitz Method". The purpose of this study is to get the analysis in the
optimum of the stock portfolio included the composition and share of shares using the
Markowitz method and the measurement of the performance stock portfolio in the PSEi index.

MATERIALS AND METHOD

PSEi Stock

PSEiIndex is one among index in Philippine Stock Exchange which consists of 30 stock most
liquid option. Criteria, where Stock is identified as PSEi index, are as follows:

1. The stock total minority that is distributed in society is less than 12% from available stock
and easy to buy sell in the market;

2. The company ought to have 25% upper range of liquidity level between listed company
average value daily change per month 9 to 12 months; and

3. Full Market capitalization highest to lowest according to weighted average volume price.

Generally, stocks that are in the PSEi index can be categories by liquidity level, company
performance, and market capitalization. The Philippine Stock Exchange will do emitted
performance periodically.

Asset Portfolio

Asset Portfolio is the result of managing asset investment. Financial Asset which will be
researching is stock. Financial Asset consists of Risk and Free risk asset. A Complete optimum
portfolio consists of risk and free risk that is leveled by aversion risk investor. The risky asset
has an uncertain level of return where there's a level of differences between expected
returnandthe actual return for each product. Contrary to the risky asset, the return of free risk
asset is certain for a while and known to the investor. the higher the risk the higher the return.
Examples of risk-free assets such as Deposito, savings, Country Obligation and Certificate of
Central Bank.

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Return and Risk Portfolio

The formation of a stock portfolio is an attempt to mitigate the risks that will occur and
increase returns. A low level of risk is not necessarily an absolute consideration for investors in
making decisions to invest due to it allows investors to get a low return and vice versa.
However, investors will choose the investment with the best level of return and return in a
portfolio.

Return Portfolio

Return portfolio can be calculated with the equationby using the following steps (Bodie, Kane,
Marcus 2013, 244):

Information:

= expected return portfolio

= portion of portfolio assets to-i

=expected return on portfolio assetsto-i

= amount of investment in the portfolio

Return Portfolio is the expected return value that multiplied by each investment asset.

Risk of Portfolio

Portfolio Risk is a condition when uncertainty occurs in a portfolio. A maximum Returnlow


riskcommonly called Optimumis the most sought condition by the investor.The calculation of
portfolio return or portfolio risk has a different calculation. The sum of each level of risk
(standard deviation) of investment assets multiplied by each portion is not the same as
portfolio risk.

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Information:

= standard deviation of the portfolio

= portion of portfolio assets to-i orto-j

= standard deviation of assetsto-i

= amount of investment assets in the portfolio

Portfolio risk is a standard deviation of the portfolio by using the following equation: (Bodie,
Kane, Marcus 2013, 227):

i≠j
Information:
= standard deviation of the portfolio

= portion asset to - i or to - j in the portfolio

= the asset standard deviation to - i or to - j in the portfolio

= correlation coefficientbetween asset to - i and to - j


n =amount of investment assets in the portfolio

in addition to using the equation above, a portfolio can also be calculated with the following
equation (Bodie, Kane, Marcus 2005, 244):

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Information:

= standard deviation of the portfolio

= portion asset to - i or to - j in the portfolio

= covarianbetween asset to-i or to-j


n = amount of investment assets in the portfolio

Allocation to risk assets and risk-free assets

The portion of investment allocated to risk assets depends on the level of investor aversion.
The equation in calculating the portion to be allocated to the portfolio of risk assets is as
follows (Bodie, Kane, Marcus 2005, 206):

Information:
= optimum portion of the portfolio of risk assets

= expected return portfolio

= risk-free return of assets


A = investor aversion rate (1,2,3,4)
= variant/standard deviation of portfolio squared

Complete Portfolio

Complete Portfoliois a portfolio composition consisting of portfolio risk assets and risk-free
assets. This portfolio's expected return is calculated by the following equation(Bodie, Kane,
Marcus 2005, 201):

Information:
= expected return complete optimum portfolio

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= expected return portfolio risk assets

= risk-free return of assets


y = portion of risk assets
= portion of risk-free assets

Capital Allocation Line (CAL)

Capital Allocation Line (CAL) is a straight line that connects the point of risk-free assets on the
ordinate y axis with the point of line intersection on the efficient frontier curve. CAL illustrates
the combination of portfolio return and risk that can be formed by investors based on the size
of different y portions. To simplify the understanding of CAL, the lines are presented in the
form of images as follows(Bodie, Kane, Marcus 2005, 202):

CAL
P

Figure 4.1. Capital Allocation Line (CAL)

Reward-to-variability ratio

The reward-to-variabilityratio (S) is the ratio of risk premium return [ ] portfolio

with its risk portfolio (standard deviation). S illustrates the enhancementreturn of ratiodue to
increasing risks. The value is the slope of the CAL line. To calculate S, using the following
equation (Bodie, Kane, Marcus 2005, 203):

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Information:

S = reward-to-variability ratio
= expected return on risky asset portfolios

= risk free return

= standard deviation of the portfolio

Leverage

Most investors are risk-averse however some investors are interested in risk (risk-lover), that
investors who dare to take an additional risk by borrowing funds from third parties to be
allocated to the investor's investment. This condition is denoted byy >1 or (1-y) < 0.

Portfolio Performance Measurement

Key portfolio performance measurements that combine risk and return in a value that is,
Treynor's measure, Sharper's measure, Jensen's measure, and Information Ratio / Appraisal
Ratio.

Treynor’s Measure of Portfolio Performance

Treynor (1965) was the first person to develop a portfolio performance measurement involving
the value of risk. Treynor divides risk components into 2 (two) parts, i.e:

1. Risks stemming from market fluctuations generally (systematic risk); and

2. Risks arising from fluctuations in the portfolio (unsystematic risk).

To calculate using the Treynor's measure slope is as follows:

Information:

T = Treynor’s measure

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= the average portfolio return in a period

= the average risk-free return in a period

= beta portfolio

Sharpe’s Measure of Portfolio Performance

Sharpe’s measure (1966) Sharpe measures the portfolio risk in total (systematic dan
unsystematic risk) standard deviation of portfolio returns from market risk (beta). To calculate
using Sharpe's measure is as follows:

Information:

S = Sharpe’s measure
= the average portfolio return in a period

= the average portfolio return in a period

the average portfolio return in a period

Jensen’s Measure of Portfolio Performance

Jensen (1968) states that the performance of a portfolio can be seen from the value of α
(alpha) or the intercept results of the expected portfolio return regression with the expected
return generated from the CAPM equation. The α value describes how much the expected
portfolio return is related to the ability of investors to produce portfolio risk-adjusted returns
related to the ability of investors to produce above-average risk-adjusted returns. To calculate
using the CAPM equation is as follows:

Information:

E(r) = expected return

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= risk free return

= market return

= beta portfolio

Portfolio Performance Measures based on Information Ratio

To see the ability of investors to utilize the capabilities and information needed to produce
portfolio returns that are different from their approaches, they can use a measure commonly
referred to as Information Ratio (IR) or also known as Valuation Ratios.

The equation used in calculating IR is as follows:

Information:

IR = Information Ratio
= alpha Portfolio

= standard error of regression / tracking error

Portfolio Mathematics

The guidelines for calculating the context of forming a portfolio are namely the mathematical
and statistical aspects.

PORTFOLIO MODEL WITH THE MARKOWITZ METHOD

Markowitz calculates portfolio risk by looking at the relationship between portfolio asset
returns (covariance) to reduce portfolio risk to a minimum. So it can be concluded that the risk
that exists in the combination of two assets will be different from the risk of two assets
separately.

Assumption

In this Markowitz, the Model has several assumptions. The assumptions contained in the

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Markowitz portfolio formation model are as follows:

1. Investors are rational;

2. Investors are risk-averse;

3. Investors have the free and correct access to risk and return information; and

4. The market is efficient and absorbs information perfectly and quickly.

Diversification according to Markowitz

Markowitz is sure that diversification is an election process aimed at not only reducing risk by
reducing the standard of deviation but also by reducing covariance arising from the risk
relationship between investment assets. In theory, to get the level of portfolio risk from zero
up to the maximum value can be done by combining different portfolio assets.

To diversify, there are several main parameters used in applying the Markowitz portfolio
theory as follows

1. Expected Return;

2. Measurement of return effectiveness using standard deviations; and

3. Covariance.

Efficient Frontier

Figure 4.2. represents the placement of risk points and returns of individual white shares and
portfolio risk points of black returns resulting from calculations with the Markowitz Method.

Global Minimum
Variation portfolio

E(r)

Figure 4.2. Efficient Frontier

Source: Bodie, Zvi; Alex, Kane; J. Marcus, Alan, Investment, Tenth Ed., Irwin/McGraw-Hill,

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Singapore, 2013, page. 241


The frontier minimum-variance curve is a curve that describes the return points and portfolio
risks in forming a curve that shows the smallest portfolio variance (standard deviation) at a
particular return condition. The global minimum variance portfolio is a condition that is
indicated by the point on the curve with the lowest standard deviation portfolio value.
Portfolios can provide higher returns compared to investing in individual assets separately as
indicated by Efficient Frontier.

Portfolio Optimum

In the efficient frontier curve, there is the most optimum portfolio among the formed
portfolios. The optimum portfolio is formed at the point where the CAL line (the line where
assets are at risk-free level) intersects the efficient frontier on the efficient frontier curve.

Figure 4.3. Capital Allocation Line (CAL) dan Efficient Frontier

Source: Bodie, Zvi; Alex, Kane; J. Marcus, Alan, Investment Tenth Ed., Irwin/McGraw-Hill,
Singapore, 2013, page 241.

Complete Optimum Portfolio

The combination of risk-free assets with an optimal portfolio where the portion (y) depends on
the level of investor aversion can form the optimum portfolio (Optimal Complete Portfolio).

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Figure 4.4. Portfolio Optimum

Source: Bodie, Zvi; Alex, Kane; J. Marcus, Alan, Investment, Tenth Ed., Irwin/McGraw-Hill,
Singapore, 2013, page 239

The Equation for return and standard deviation of the complete Optimum Portfolio are as
follows (Bodie, Zvi; Alex, Kane; J. Marcus, Alan, 2013, 201-202):

Information:

= expected return Complete Optimum Portfolio

= Standard Optimum Portfolio Complete deviation

= Portfolio standard deviation

= expected return Portfolio Optimum


y = Portfolio Optimum
= risk free assets

Data Collection

The data used in this study are secondary. Secondary data is data obtained indirectly through
intermediary media (Indriantoro dan Supomo 2014, 147). The data used are data from 2013 to

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2018. Financial statement data are also taken from the factbook and PSE website.

Data Processing Method

The data processing will use the Solver feature. The solver is an add-in that has the purpose of
providing value solutions to a linear programming formula based on value criteria with some
constraints or formulation formulations in a Microsoft Excel spreadsheet. Besides, this can help
all parties who do the portfolio calculation using the portfolio calculation procedure using the
Markowitz method.

RESULT AND DISCUSSION

Object of Research

In this study, the sample that became the object of research is 22 consistent shares that are
always listed in the PSEi Index from January 2014 to December 2018, there are 24 shares,
namely Ayala Corporation (AC), Aboitiz Equity Ventures, Inc. (AEV), Alliance Global Group, Inc.
(AGI), Ayala Land, Inc. (ALI), Aboitiz Power Corporation (AP), BDO Unibank, Inc. (BDO), Bank of
the Philippines Islands (BPI), DMCI Holdings, Inc. (DMC), First Gen Corporation (FGEN), Globe
Telecom, Inc. (GLO), International Container Terminal Services, Inc. (ICT), Jollibe Foods
Corporation (JFC), JG Summit Holdings, Inc. (JGS), Metropolitan Bank & Trust Company (MBT),
Megaworld Corporation (MEG), Metro Pacific Investments Corporation (MPI), Petron
Corporation (PCOR), Robinsons Land Corporation (RLC), Semirara Mining Corporation (SCC),
SM Investments Corporation (SM), San Miguel Corporation (SMC), SM Prime Holdings, Inc.
(SMPH), Philippine Long Distance Telephone Company (TEL) , Universal Robina Corporation
(URC).

Stock Return, Variance, Beta, Standard Deviation, Sharpe, Treynor, Jensen & Information
Ratio

The following table that presents the results of the calculation of returns and standard

deviations of each stock for the PSEi index:

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Tabel 4.1.
Return Saham, Variance, Beta, Standard Deviation, Sharpe, Treynor,
Jensen and Information Ratio
No. Code Company Name Average Monthly Average Beta Standar Annual Sharpe Treynor Jensen Information
Monthly Variance Annual Deviasi Standar Ratio
Return Return Deviasi
1 AC Ayala Corporation 0,93% 0,32% 9,79% -1,52% 5,62% 19,47% 0,47 -6,01 0,09 0,48
2 AEV Aboitiz Equity Ventures, Inc -0,15% 0,59% -5,53% -8,42% 7,71% 26,71% -0,23 0,74 -0,07 -0,25
3 AGI Alliance Global Group, Inc -0,79% 0,72% -13,67% 15,97% 8,50% 29,43% -0,49 -0,90 -0,12 -0,41
4 ALI Ayala Land, Inc 0,84% 0,68% 6,86% 2,97% 8,24% 28,54% 0,22 2,09 0,06 0,21
5 AP Aboitiz Power Corporation 0,07% 0,19% -0,25% 15,24% 4,33% 14,98% -0,06 -0,06 -0,01 -0,05
6 BDO BDO Unibank, Inc 0,99% 0,55% 9,33% 54,20% 7,43% 25,73% 0,34 0,16 0,04 0,15
7 BPI Bank of Phillipines Islands 1,89% 4,10% 0,00% -91,19% 20,24% 70,11% -0,01 0,01 -0,01 -0,02
8 DMC DMCI Holdings, Inc 0,39% 0,51% 1,69% 39,37% 7,15% 24,78% 0,04 0,03 0,01 0,03
9 FGEN First Gen Corporation 0,77% 0,72% 5,16% 37,21% 8,49% 29,41% 0,15 0,12 0,03 0,10
10 GLO Globe Telecom, Inc 0,50% 0,68% 2,17% 3,01% 8,22% 28,47% 0,05 0,50 0,01 0,05
11 ICT International Container Terminal Services, Inc 0,37% 0,71% 0,33% 1,06% 8,44% 29,25% -0,01 -0,32 0,00 -0,01
12 JFC Jollibe Foods Corporation 1,25% 0,28% 14,18% -0,49% 5,33% 18,47% 0,73 -27,69 0,14 0,74
13 JGS JG Summit Holdings, Inc 0,85% 0,54% 7,30% 9,76% 7,34% 25,44% 0,26 0,68 0,06 0,24
14 MBT Metropolitan Bank & Trust Company 0,42% 0,37% 2,86% 29,87% 6,12% 21,20% 0,10 0,07 0,02 0,07
15 MEG Megaworld Corporation 0,83% 0,67% 6,24% 16,72% 8,19% 28,38% 0,20 0,33 0,05 0,16
16 MPI Metro Pacific Investments Corporation 0,34% 0,42% 1,56% 11,40% 6,50% 22,51% 0,04 0,08 0,01 0,04
17 PCOR Petron Corporation -0,60% 0,87% -11,40% 29,11% 9,33% 32,31% -0,37 -0,41 -0,09 -0,26
18 RLC Robinsons Land Corporation 0,32% 0,47% 1,05% -22,89% 6,85% 23,71% 0,02 -0,02 0,00 0,02
19 SCC Semirara Mining Corporation 0,10% 0,58% -2,33% 35,35% 7,63% 26,42% -0,11 -0,08 -0,02 -0,07
20 SM SM Investments Corporation 1,25% 0,22% 14,59% 15,16% 4,71% 16,30% 0,85 0,92 0,12 0,72
21 SMC San Miguel Corporation 2,16% 1,17% 21,78% -22,05% 10,82% 37,50% 0,56 -0,96 0,26 0,69
22 SMPH SM Prime Holdings, Inc 1,56% 0,28% 18,53% 6,46% 5,32% 18,45% 0,97 2,77 0,17 0,91
23 TEL Philippine Long Distance Telephone Company -1,15% 0,61% -16,15% 23,19% 7,81% 27,06% -0,62 -0,73 -0,13 -0,48
24 URC Universal Robina Corporation 0,36% 0,41% 2,02% -3,83% 6,38% 22,10% 0,06 -0,35 0,01 0,06

Stock Correlation for the PSEi Index

The 24 stocks selected for the PSEi index will produce 576 correlations. The results of the
correlation are presented in the matrix as follows:

Tabel 4.2.
Correlation of PSEi Index
AC AEV AGI ALI AP BDO BPI DMC FGEN GLO ICT JFC JGS MBT MEG MPI PCOR RLC SCC SM SMC SMPH TEL URC
AC 1 0.144308 0.133604 0.257432 0.191051 0.087912 0.223152 0.232781 0.303014 0.278701 0.185097 0.101814 0.206164 0.251172 0.347865 0.147576 0.071847 0.244258 0.061095 0.323807 -0.014795 0.253974 0.157106 0.244352
AEV 0.144308 1 0.077688 0.102561 0.010314 0.058580 0.291029 -0.157234 0.203664 -0.048000 -0.048899 0.021584 0.185983 0.198033 0.027673 0.103751 0.120611 -0.032818 -0.211547 0.014155 -0.108672 0.175373 0.012918 0.149754
AGI 0.133604 0.077688 1 0.017085 -0.024594 0.020291 0.001145 0.273688 0.057263 0.160012 -0.337592 0.172874 -0.004188 0.240898 0.129753 0.294940 -0.054266 0.065427 0.020524 0.153964 -0.008921 0.077180 0.104663 0.034297
ALI 0.257432 0.102561 0.017085 1 0.246801 0.568110 0.062395 0.069103 -0.021459 0.227753 0.096036 -0.000181 0.219777 0.066980 0.109590 0.172723 0.156140 0.129085 -0.035706 -0.056418 -0.021162 0.146973 0.216328 0.239790
AP 0.191051 0.010314 -0.024594 0.246801 1 0.163607 0.073769 0.250768 0.391460 0.208142 0.055612 0.462482 0.570841 0.286365 0.352985 0.298481 -0.019797 0.491758 0.117010 0.242468 -0.163324 0.164594 0.082152 0.450472
BDO 0.087912 0.058580 0.020291 0.568110 0.163607 1 0.172968 0.156363 0.068564 0.084556 0.024391 0.019212 0.196658 0.237870 0.253185 0.047897 0.107146 0.023106 0.249559 -0.057861 -0.051223 0.091534 0.035778 0.226738
BPI 0.223152 0.291029 0.001145 0.062395 0.073769 0.172968 1 -0.120625 0.074988 0.344323 0.079818 -0.000344 0.327919 0.068268 0.130274 0.017794 -0.082371 -0.057308 -0.002831 0.340279 0.188938 0.091488 0.324616 0.227717
DMC 0.232781 -0.157234 0.273688 0.069103 0.250768 0.156363 -0.120625 1 0.183473 -0.039536 -0.013264 0.402908 0.261896 0.318763 0.497673 0.338443 0.085727 0.292333 0.493908 0.132607 -0.088586 0.107987 -0.041255 0.168376
FGEN 0.303014 0.203664 0.057263 -0.021459 0.391460 0.068564 0.074988 0.183473 1 0.141953 0.228963 0.400971 0.375442 0.545876 0.488836 0.313420 0.159352 0.438864 -0.012217 0.400430 -0.079206 0.220530 0.154254 0.453362
GLO 0.278701 -0.048000 0.160012 0.227753 0.208142 0.084556 0.344323 -0.039536 0.141953 1 0.221308 0.062255 0.380840 0.175606 0.257035 0.230975 0.189791 0.299975 0.098443 0.306180 0.075167 0.200093 0.510189 0.229182
ICT 0.185097 -0.048899 -0.337592 0.096036 0.055612 0.024391 0.079818 -0.013264 0.228963 0.221308 1 0.126815 0.275324 0.114666 0.185638 -0.005496 0.199586 0.223632 -0.027089 0.283859 0.009260 0.241310 0.154102 0.142794
JFC 0.101814 0.021584 0.172874 -0.000181 0.462482 0.019212 -0.000344 0.402908 0.400971 0.062255 0.126815 1 0.393420 0.487113 0.456080 0.322820 0.054277 0.362344 0.197661 0.327267 -0.012663 0.124260 0.102086 0.338338
JGS 0.206164 0.185983 -0.004188 0.219777 0.570841 0.196658 0.327919 0.261896 0.375442 0.380840 0.275324 0.393420 1 0.453622 0.343031 0.296968 0.090815 0.300652 0.200043 0.424705 -0.061516 0.234312 0.243782 0.612722
MBT 0.251172 0.198033 0.240898 0.066980 0.286365 0.237870 0.068268 0.318763 0.545876 0.175606 0.114666 0.487113 0.453622 1 0.577463 0.337992 0.187310 0.213312 0.148626 0.501982 -0.109004 0.336555 0.110793 0.253784
MEG 0.347865 0.027673 0.129753 0.109590 0.352985 0.253185 0.130274 0.497673 0.488836 0.257035 0.185638 0.456080 0.343031 0.577463 1 0.319721 0.279224 0.543303 0.155591 0.366486 -0.017382 0.549116 0.180516 0.278677
MPI 0.147576 0.103751 0.294940 0.172723 0.298481 0.047897 0.017794 0.338443 0.313420 0.230975 -0.005496 0.322820 0.296968 0.337992 0.319721 1 0.086763 0.295614 0.062730 0.339370 0.208161 0.392526 0.358303 0.351724
PCOR 0.071847 0.120611 -0.054266 0.156140 -0.019797 0.107146 -0.082371 0.085727 0.159352 0.189791 0.199586 0.054277 0.090815 0.187310 0.279224 0.086763 1 0.151683 -0.023526 0.088865 0.001796 0.189776 0.049245 0.086206
RLC 0.244258 -0.032818 0.065427 0.129085 0.491758 0.023106 -0.057308 0.292333 0.438864 0.299975 0.223632 0.362344 0.300652 0.213312 0.543303 0.295614 0.151683 1 0.054685 0.230884 0.016542 0.308926 0.022957 0.344219
SCC 0.061095 -0.211547 0.020524 -0.035706 0.117010 0.249559 -0.002831 0.493908 -0.012217 0.098443 -0.027089 0.197661 0.200043 0.148626 0.155591 0.062730 -0.023526 0.054685 1 0.122596 -0.003626 -0.110553 0.067071 0.171199
SM 0.323807 0.014155 0.153964 -0.056418 0.242468 -0.057861 0.340279 0.132607 0.400430 0.306180 0.283859 0.327267 0.424705 0.501982 0.366486 0.339370 0.088865 0.230884 0.122596 1 0.004221 0.398704 0.290519 0.257592
SMC -0.014795 -0.108672 -0.008921 -0.021162 -0.163324 -0.051223 0.188938 -0.088586 -0.079206 0.075167 0.009260 -0.012663 -0.061516 -0.109004 -0.017382 0.208161 0.001796 0.016542 -0.003626 0.004221 1 -0.017039 0.308459 0.074577
SMPH 0.253974 0.175373 0.077180 0.146973 0.164594 0.091534 0.091488 0.107987 0.220530 0.200093 0.241310 0.124260 0.234312 0.336555 0.549116 0.392526 0.189776 0.308926 -0.110553 0.398704 -0.017039 1 0.210481 0.053853
TEL 0.157106 0.012918 0.104663 0.216328 0.082152 0.035778 0.324616 -0.041255 0.154254 0.510189 0.154102 0.102086 0.243782 0.110793 0.180516 0.358303 0.049245 0.022957 0.067071 0.290519 0.308459 0.210481 1 0.188020
URC 0.244352 0.149754 0.034297 0.239790 0.450472 0.226738 0.227717 0.168376 0.453362 0.229182 0.142794 0.338338 0.612722 0.253784 0.278677 0.351724 0.086206 0.344219 0.171199 0.257592 0.074577 0.053853 0.188020 1

The lowest value of -0.333759, namely between ICT and AGI means the relationship between

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the two stocks has the opposite direction.

Stock Covarian for the PSEi Index

Tabel 4.3.
The covariance of PSEi Index
Variance-Covariance Matrix
AC AEV AGI ALI AP BDO BPI DMC FGEN GLO ICT JFC JGS MBT MEG MPI PCOR RLC SCC SM SMC SMPH TEL URC
AC 0,037283 0,00738 0,007529 0,014066 0,005481 0,00433 0,029953 0,011041 0,017058 0,015191 0,010366 0,003599 0,010042 0,010194 0,0189 0,006361 0,004445 0,011089 0,00309 0,010107 -0,00106 0,008969 0,00814 0,01034
AEV 0,00738 0,070143 0,006005 0,007686 0,000406 0,003957 0,053581 -0,01023 0,015726 -0,00359 -0,00376 0,001047 0,012426 0,011024 0,002062 0,006134 0,010234 -0,00204 -0,01467 0,000606 -0,0107 0,008494 0,000918 0,008692
AGI 0,007529 0,006005 0,085167 0,001411 -0,00107 0,00151 0,000232 0,01962 0,004872 0,013182 -0,02858 0,009237 -0,00031 0,014777 0,010655 0,019214 -0,00507 0,004489 0,001569 0,007263 -0,00097 0,004119 0,008196 0,002193
ALI 0,014066 0,007686 0,001411 0,080075 0,010376 0,041004 0,012274 0,004803 -0,00177 0,018193 0,007882 -9,4E-06 0,015688 0,003984 0,008726 0,01091 0,014156 0,008588 -0,00265 -0,00258 -0,00223 0,007606 0,016426 0,01487
AP 0,005481 0,000406 -0,00107 0,010376 0,022073 0,0062 0,007619 0,009152 0,016956 0,008729 0,002396 0,01258 0,021394 0,008942 0,014757 0,009899 -0,00094 0,017178 0,004553 0,005823 -0,00902 0,004472 0,003275 0,014667
BDO 0,00433 0,003957 0,00151 0,041004 0,0062 0,065056 0,030668 0,009797 0,005099 0,006088 0,001804 0,000897 0,012653 0,012752 0,018171 0,002727 0,008756 0,001386 0,016671 -0,00239 -0,00486 0,00427 0,002449 0,012674
BPI 0,029953 0,053581 0,000232 0,012274 0,007619 0,030668 0,483234 -0,0206 0,015198 0,067566 0,016093 -4,4E-05 0,057503 0,009975 0,025482 0,002761 -0,01834 -0,00937 -0,00052 0,038237 0,048831 0,011631 0,06055 0,03469
DMC 0,011041 -0,01023 0,01962 0,004803 0,009152 0,009797 -0,0206 0,060342 0,01314 -0,00274 -0,00095 0,01812 0,016229 0,016458 0,0344 0,018558 0,006747 0,016883 0,031776 0,005266 -0,00809 0,004851 -0,00272 0,009064
FGEN 0,017058 0,015726 0,004872 -0,00177 0,016956 0,005099 0,015198 0,01314 0,085 0,011683 0,019361 0,021403 0,027612 0,033451 0,040102 0,020398 0,014884 0,030082 -0,00093 0,018871 -0,00859 0,011759 0,012067 0,028966
GLO 0,015191 -0,00359 0,013182 0,018193 0,008729 0,006088 0,067566 -0,00274 0,011683 0,079683 0,018119 0,003217 0,027119 0,010419 0,020416 0,014554 0,017164 0,019909 0,007278 0,013971 0,007889 0,01033 0,038644 0,014177
ICT 0,010366 -0,00376 -0,02858 0,007882 0,002396 0,001804 0,016093 -0,00095 0,019361 0,018119 0,084123 0,006734 0,020144 0,00699 0,01515 -0,00036 0,018546 0,01525 -0,00206 0,013309 0,000999 0,0128 0,011993 0,009076
JFC 0,003599 0,001047 0,009237 -9,4E-06 0,01258 0,000897 -4,4E-05 0,01812 0,021403 0,003217 0,006734 0,033519 0,01817 0,018745 0,023496 0,013193 0,003184 0,015597 0,009478 0,009685 -0,00086 0,004161 0,005015 0,013575
JGS 0,010042 0,012426 -0,00031 0,015688 0,021394 0,012653 0,057503 0,016229 0,027612 0,027119 0,020144 0,01817 0,063635 0,024052 0,024349 0,016723 0,00734 0,017831 0,013216 0,017318 -0,00577 0,01081 0,016501 0,033872
MBT 0,010194 0,011024 0,014777 0,003984 0,008942 0,012752 0,009975 0,016458 0,033451 0,010419 0,00699 0,018745 0,024052 0,044178 0,034153 0,015858 0,012613 0,010541 0,008182 0,017055 -0,00852 0,012937 0,006248 0,01169
MEG 0,0189 0,002062 0,010655 0,008726 0,014757 0,018171 0,025482 0,0344 0,040102 0,020416 0,01515 0,023496 0,024349 0,034153 0,079177 0,020082 0,025172 0,035943 0,011466 0,01667 -0,00182 0,028258 0,013629 0,017184
MPI 0,006361 0,006134 0,019214 0,01091 0,009899 0,002727 0,002761 0,018558 0,020398 0,014554 -0,00036 0,013193 0,016723 0,015858 0,020082 0,049829 0,006205 0,015515 0,003667 0,012246 0,017276 0,016025 0,021461 0,017206
PCOR 0,004445 0,010234 -0,00507 0,014156 -0,00094 0,008756 -0,01834 0,006747 0,014884 0,017164 0,018546 0,003184 0,00734 0,012613 0,025172 0,006205 0,102643 0,011426 -0,00197 0,004602 0,000214 0,011119 0,004233 0,006053
RLC 0,011089 -0,00204 0,004489 0,008588 0,017178 0,001386 -0,00937 0,016883 0,030082 0,019909 0,01525 0,015597 0,017831 0,010541 0,035943 0,015515 0,011426 0,055277 0,003367 0,008775 0,001446 0,013283 0,001448 0,017735
SCC 0,00309 -0,01467 0,001569 -0,00265 0,004553 0,016671 -0,00052 0,031776 -0,00093 0,007278 -0,00206 0,009478 0,013216 0,008182 0,011466 0,003667 -0,00197 0,003367 0,068593 0,00519 -0,00035 -0,0053 0,004713 0,009826
SM 0,010107 0,000606 0,007263 -0,00258 0,005823 -0,00239 0,038237 0,005266 0,018871 0,013971 0,013309 0,009685 0,017318 0,017055 0,01667 0,012246 0,004602 0,008775 0,00519 0,02613 0,000254 0,011787 0,012601 0,009125
SMC -0,00106 -0,0107 -0,00097 -0,00223 -0,00902 -0,00486 0,048831 -0,00809 -0,00859 0,007889 0,000999 -0,00086 -0,00577 -0,00852 -0,00182 0,017276 0,000214 0,001446 -0,00035 0,000254 0,13823 -0,00116 0,030772 0,006076
SMPH 0,008969 0,008494 0,004119 0,007606 0,004472 0,00427 0,011631 0,004851 0,011759 0,01033 0,0128 0,004161 0,01081 0,012937 0,028258 0,016025 0,011119 0,013283 -0,0053 0,011787 -0,00116 0,033447 0,010329 0,002158
TEL 0,00814 0,000918 0,008196 0,016426 0,003275 0,002449 0,06055 -0,00272 0,012067 0,038644 0,011993 0,005015 0,016501 0,006248 0,013629 0,021461 0,004233 0,001448 0,004713 0,012601 0,030772 0,010329 0,071999 0,011056
URC 0,01034 0,008692 0,002193 0,01487 0,014667 0,012674 0,03469 0,009064 0,028966 0,014177 0,009076 0,013575 0,033872 0,01169 0,017184 0,017206 0,006053 0,017735 0,009826 0,009125 0,006076 0,002158 0,011056 0,048025

The highest covariance value is 0.483234, namely BPI shares and BPI shares, while the smallest
is -0.05634 shares, namely ICT and AGI shares.

Portfolio Simulation Before Using Solver for PSEi

The results of the stock portfolio with the same portion of shares produce an expected return
of 3.17% and a standard deviation of 11.68% and a Sharpe value of -0.03. This shows that for
1% of the risk borne, the portfolio gives an excess return of 0.03%.

Stock Portfolio Simulation After Using Solver for PSEi

The results of the stock portfolio using solver produce a weight of 35.45% for SMPH, 22.51%
for JFC, 19.13% for SM, 14.15% for SMC, 8.13% for BDO and 0.62% for AC. From the results of
the stock portfolio with an average risk-free rate of 3.57%, it will produce an expected return
of 16.46%, Standard Deviation of 11.48%, Sharpe Ratio 1.12, Beta 0.06, Treynor 2.03, Jensen
0.12 and Information Ratio 1.05. This shows that for 1% of the risk borne, the portfolio gives an
excess return of 1.12%, 1% of systematic risk borne, the portfolio gives an excess return of
2.03% with Jensen alpha of 0.12 and management performance of 1.05. Based on the stock

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portfolio above, the results of the stock allocation based on the stock aversion level are as
follows:

Tabel 4.4.
The Allocation of Risky Asset and Risk-free Asset
A Y* 1-Y U E(rc)
1 98% 2% 16.40% 16.53%
2 49% 51% 16.34% 18.28%
3 33% 67% 16.28% 18.85%
4 24% 76% 16.23% 19.17%

Sharpe, Treynor, Jensen and Information Ratio for the PSEi index measurements

The measurement results of the performance of the stock portfolio based on measurements
using Sharpe, Treynor, Jensen and Information Ratio are as follows:

Tabel 4.5.
The Measurement of Performance Stock Portfolio PSEi Index
Stock
Measurement PCOMP Result
Portfolio
Sharpe 1.12 0.31 Good
Treynor 2.03 0.04 Good
Jensen 0.12 0.00 Good
Information Ratio 1.05 0.00 Good

Stock Portfolio for Index PSEi by using Markowitz

An optimal form of a stock portfolio based on the Markowitz method is as follows:

Tabel 4.6.
The Composition and Portion of Stock Portfolio PSEi Index
Stock Composition Portion
AC 0.62%
BDO 8.13%
JFC 22.51%
SM 19.13%
SMC 14.15%
SMPH 35.45%
Total 100.00%

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In the diagram, the optimal portfolio formed on the PSEi Index shares is as follows:

Figure 4.5. Stock Composition in PSEi Index

Based on the diagram above it is known that to get the optimum portfolio form on the PSEi
index using the Markowitz method, the composition and portion of its shares is 35.45% of the
shares of SM Prime Holdings, Inc. (SMPH), 22.51% shares of Jollibee Foods Corporation (JFC),
19.13% shares of SM Investments Corporation (SM), 14.15% shares of San Miguel Corporation
(SMC), 8.13% shares of BDO Unibank, Inc ( BDO), and 0.62% stake in Ayala Corporation (AC).

SMPH shares received the largest allocation of funds compared to other shares. SMPH shares
are attractive to investors because they have the largest expected return compared to other
PSEi stock samples in the period from January 2014 to December 2018. The optimum portfolio
calculation above is expected to produce an expected return of 16.46% with a standard
deviation of 11.48%. If we assume Rp. 1,000,000,000,- equal to 3,700,000 PHP, then the
calculation of optimum portfolio investment in PSEi index shares is as follows:

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Tabel 4.7.
The Simulation of Stock Portfolio in the PSEi Index

From the above table it can be seen that by investing PHP 3,700,000 in the PSEi index portfolio,
investors are expected to get a return of 16.46% percent or PHP 150,969. The level of risk
faced in PSEi's optimal portfolio investment is 11.48%. The portfolio table above produces
performance measurements with a Sharpe value of 1.12, Treynor value of 2.03, Jensen value
of 0.12 and Information Ration of 1.05. This shows that for 1% of the risk borne, the portfolio
gives an excess return of 1.12%, 1% of systematic risk borne, the portfolio gives an excess
return of 2.03% with Jensen alpha of 0.12 and management performance of 1.05.

If we simulate with an assumption of 100% in SMPH shares, investors are expected to get a
return of 18.53% percent or PHP 685,610. The level of risk faced in SMPH stock investment
increased compared to portfolio risk to 18.29%. The portfolio table above produces
performance measurements with Sharpe value of 0.82, Treynor value of 2.32, Jensen value of
0.14 and Information Ration of 0.77. This shows that for 1% of the risk borne, SMPH shares
only provide an excess return of 0.82% or 0.3% less than portfolio excess return, 1% of
systematic risk borne, SMPH provides an excess return of 2.32% with Jensen alpha of 0.14 and
management performance of 0.77. Thus, it can be said that investments made only in SMPH
shares cannot be said to be more optimum than stock portfolios because SMPH stock
performance has a higher risk than optimum stock portfolio risk or a difference of 0.24% of the
expected return generated.

If we simulate with the assumption that 100% of selected stock portfolios are evenly
distributed to 6 shares, investors are expected to get a return of 14.70% percent or PHP 90,654
so that this value is lower than the optimum stock portfolio. The level of risk faced in portfolio

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investments in 6 selected shares with the same portion is 10.92%. The portfolio table above
produces performance measurements with a Sharpe value of 1.02, Treynor value of 1.29,
Jensen value of 0.10 and Information Ration of 0.92. This shows that for 1% of the risk borne,
the portfolio of 6 selected shares with the same portion gives excess return of 1.02%, 1% of
systematic risk borne, the portfolio of 6 selected shares with the same portion gives an excess
return of 1.29% with Jensen alpha of 0.10 and management performance of 0.92. So, it can be
said that the investment made in the portfolio of 6 selected shares with the same portion is
not more optimum to the optimum stock portfolio because the expected return is lower than
the expected return and the resulting performance measurement results are lower than the
optimum portfolio performance measurement results.

The economic growth of the Philippines is higher than the Indonesian economy than the GDP
value in the Philippines reached an all-time high of 330.91 billion US dollars in 2018. Economic
results in the Philippines increased by 5.6 percent because it is still the fastest growth rate
since the March quarter 2015, and continued the 6.3 percent expansion which was revised up
in the last quarter of 2018.

CONCLUSSION

Based on the results of an analysis of stock portfolios on the PSEi index using the Markowitz
method for the period January 2014 to December 2018 it can be concluded as follows:

1. Based on the calculation of average risk (standard deviation) and return of 24 selected
shares, a portfolio of risk assets can be formed with a composition consisting of six shares,
namely Ayala Corporation (0.62%), BDO Unibank, Inc. (8.13%), Jollibee Foods Corporation
(22.51%), SM Investments Corporation (19.13%), San Miguel Corporation (14.15%) and SM
Prime Holdings, Inc. (35.45%). Based on the calculation of average risk (standard deviation)
and return of 24 selected shares, a portfolio of risk assets can be formed with a
composition consisting of six shares, namely Ayala Corporation (0.62%), BDO Unibank, Inc.
(8.13%), Jollibee Foods Corporation (22.51%), SM Investments Corporation (19.13%), San
Miguel Corporation (14.15%) and SM Prime Holdings, Inc. (35.45%).

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2. The portfolio of risk assets for the PSEi index, it will produce an expected return of 16.46%
and a risk level of 11.48%.

3. The level of investor risk aversion will affect the composition of the complete optimum
portfolio. For the PSEi index, investors with aversion 4 (risk-averse) have a composition of
risk-free assets of 76% and risk assets of 24% while investors with aversion 1 (risk-lovers)
have a composition of risk-free assets of 2% and risk assets of 98%.

4. Based on the results of performance measurements, the portfolio on the PSEi index
showed good results with the following detailed values: Sharpe’s Measure which has a
value of 1.12 compared to the market (PCOMP) which has a value of 0.31; Treynor's
measure which has a value of 2.03 compared to the market (PCOMP) which has a value of
0.04; Jensen's measure which has a value of 0.12 compared to the market (PCOMP) which
has a value of 0.00; Information Ratio which has a value of 1.05 compared to the market
(PCOMP) which has a value of 0.00.

5. Based on the research conducted, the optimum portfolio for the PSEi index will produce an
expected return of 16.46% with a risk level of 11.48%. The results of the performance
measurements of the PSEi Index are as follows:

Tabel 4.8.
The Measurement of Stock Portfolio Performance in the PSEi Index

BIBLIOGRAPHY

Bodie, Kane, & Marcus. (2013). Investment. New York: McGraw-Hill.


Bringham, Eugene F, C. Ehrhadt& Michael. (2010). Financial Management Theory and Practice,
13th Edition. United States of America: The Harcourt College Publishers.

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Clarke, Silva, & Thorley. (2013). Risk Parity, Maximum Diversification, and MinimumVariance:
An Analytic Perspective. Los Angeles: The Journal of Portfolio Management2013.39.3,
39-53.
Dominguez, Herraiz. (2015). A Sharpe-Ratio-based measure for currencies. Spanyol: European
Journal of Government and Economics, 71.
Dong, Leung& Cai. (2015). What Drives Fixed Asset Holding and Risk-Adjusted Performance of
Corporates in China? An Empirical Analysis. China: International Real Estate Review-
Journal, 1.
Drakopoulou, Vellota. (2015). A Review of Fundamental and Technical Stock Analysis
Techniques. California: Journal of Stock & Forex Trading, 1.
Fabozzi, Frank J. (1991). Manajemen Investasi, Edisi Pertama. Jakarta : Salemba Empat.
Francis, Jack Clark. (1993). Management of Investment. New York: McGraw-Hill.
Grinold, R. C. & Kahn, R.N. (2000). Active Portfolio Management: A Quantitative Approach for
Producing Superior Return and Controlling Risk. New York: McGraw-Hill.
Hartono, Jogiyanto. (2015). Teori Portofolio dan Analisis Investasi. Yogyakarta : BPFE.
Hubner, Georges. (2003). The Generalised Treynor Ratio. Lille, Prancis: EDHEC Business School
Journal, 4.
Husnan, Suad. (2015). Teori Portofolio dan Analisis Sekuritas. Yogyakarta: UPP STIM YKPN.
Indriantoro, Nurdan Supomo, Bambang (1999). Metodologi Penelitian Bisnis Untuk Akuntansi
& Manajemen. Yogyakarta : Penerbit BPFE.
Jack Clark, Francis. (1993). Management of Investment. New York: McGraw-Hill.
Jones, Charles P. (2012). Investments: Analysis and Management 12th Edition. New York:
Wiley.
Jones, Charles P & Jensen, Gerald R. (2016). Investment: Analysis and Management, 13th
Edition. New York: Wiley.
Kamarudin, Ahmad. (2004). Dasar-Dasar Manajemen Investasi dan Portofolio. Jakarta : PT.
Rineka Cipta.
Kang & Lee. (2013). A Bias in Jensen’s Alpha When Returns Are Serially Correlated. Seoul,
Korea Selatan: Theoretical Economic Letters Journals, 189.
Levisauskaite, Kristina. (2010). Development and Approbation of Applied Courses Based on the
Transfer of Teaching Innovations in Finance and Management for Further Education of
Entrepreneurs and Specialists in Latvia, Lithuania, and Bulgaria. Lithuania: Journal of
Education and Culture DG, 12.
Markowitz, H.M. (1952). Portfolio Selection. United States of America: America Finance
Association Journal, 12.
Paramitha, Fadila & Anggono, Achmad H. (2013). Performance Analysis and Optimum
Portfolio Diversification of fourteen stocks of LQ-45 Index period 2007-2012 using
Markowitz Modern Portfolio Theory. Bandung: Journal of Business and Management,
Volume 2, No 1, 29-38.

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Reily, Frank K & Brown, Keith C. (2005). Investment Analysis and Portfolio Management. New
York: McGraw-Hill.
Sehgal, Sanjay & Garg, Vidisha. (2016). Cross-sectional Volatility and Stock Returns: Evidence
for Emerging Markets. Ahmedabad: SAGE Journals, 22-29.
Sengupta, Chandan. (2009). Financial Modelling Using Excel and VBA. New Jersey, USA: John
Wiley & Son, Inc.
Sharpe, William F. (1994). Investment. New York: McGrawHill Inc.
Sirucek & Kren. (2015). Application of Markowitz Portfolio Theory by Building Optimum
Portfolio on the US Stock Market. Ceko: ACTA Universitatis Agriculturae Et Silviculturae
Mendelianae Brunensis Journal, 1376.
Stankovic, Markovic, & Stojanovic. (2015). Investment Strategy Optimization Using Technical
Analysis and Predictive Modelling in Emerging Markets. Serbia: Procedia Economics
and Finance, Volume 19, 51-62

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CORPORATE STRATEGY WITH ENTREPRENEUR MENTAL REVOLUTION

Giri Nurpribadi
Pelita Bangsa University

ABSTRACT

The purpose of research about know how some people as a students with their goals during
living on the earth interested in for entrepreneurship life style scrupulously.
Questionnaire with 44 respondents, An Analysis with 44 respondents , we have got
conslusions 43,182 % respondents interested in to have got a goals as an Entrepreneur,
although 12 % including very interested in, and also 12 % provide information regarding
interested in having goals as a Chief Executive Officer, interpretation about this still need
mental revolution to increase more achievement. Career on the human resources area need
longlife to achieve level CEO. Students with 27,3 % very interested in with ambitious to achieve
level CEO,and career in human resources area step by step with small probability and also
more slowly rather than without ambitiously.
Research method which had been applied are use likert scale with questionnaire which to
provide some respondents which had been choice shall be provide respons relevant with three
option employee, entrepreneur option and both of those. As a choice from research result had
received from result research have got solution.
Keywrods: KKNI, Corporate Strategy, Entrepreneur.

INTRODUCTION

A Company which moving to country around, and also continental are a phenomena which
very needed to develop human resources at international scale, furthermore these research
writing had been implemented whenever theses attitudes paradigm through realities and also
through develop relevant with people population development, living modernization and
business organization on corporate strategic scope.

The problem of strategic which had been applied on mental revolution. It means employee
mentalities still society life style Indonesia quality has been dominated.Because no risks
attitude so that with load about substantial quality as resulted from higher education. All the
KKNI. Whereas entrepreneurship very needed so that getting efforts, including creative, idea

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and innovative. Idea so that progressive mindset adjusting the real of abilities.

RESEARCH PURPOSE

The purpose of research about know how some people as a students with their goals during
living on the earth interested in for entrepreneurship life style scrupulously.

CORPORATE STRATEGIC

A company strategy is the game plan management has for positioning the company in in its
chosen market arena,competing successfully,pleasing customers,and achieving good business
performance (Olsen,1999). A strategic vision is a roadmap of a company’s future-the
direction it is headed,the business position it intends stake out,and the capabilities it plans to
develop. Strategy management is a process ;the boundaries betrween the five tasks are
conceptual.not fences that prevent some all of them being done together.

Corporate Strategy is the overall managerial game plan for a diversified company.Corporate
strategy extends companywide an umbrella overall a diversified company’s business.It consists
off the moves made to establish business positions in different industries and the approaches
used to manage the company’s group of business.

Corporate Strategy concerns how a diversified company intends to establish business


positions in different industries and the actions and approaches employed to improve the
improve the performance of the group of business the company has diversified into.

Crafting corporate strategy for a diversified company involves four kinds of initiatives:

1. Making the moves to establish positions in different businesses and achieve diversification.

2. In a diversified company,a key piece of corporate strategy is how many and what kinds of
businesses the company should be in specifically, what industries should the company
participate in and whether to enter the industries by starting a new business or acquiring
another company(an established leader,an up and coming company,or a troubled
company with turnaround potential).This piece of corporate strategy establishes whether

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diversification is based narrowly in a few industries or broadly in many industries and


whether the different businesses will be related.

3. Initiating actions to boost the combined performance of the businesses the firm has
diversified into.As positions are created in the chosen industries,corporate strategy making
concentrates on ways to strengthen the long term competitive positions and profitabilities
of the business the firm has invested in.Corporate parents can help their business
subsidiaries be more successful by financing additional capacity and efficiency
improvements,by supplying missing skills and managerial know how,by acquiring another
company in the same industry and merging the two operations into a stronger business.
Management’s overall strategy for improving company wide performance usually involves
pursuing rapid growth strategies in the most promising businesses,keeping the other core
business healthy, initiating turnaround efforts in weak-performing business with potential,
and divesting businesses that are no longer attractive or that don’t fit into management’s
long range plans.

4. Pursuing ways to capture the synergy among related business units and turn it into
competitive advantage. When a company diversifies into business with related
technologies,similar operating characteristics, common distribution channels or customers,
or some other synergistic relationship, it gains competitive advantage potential not open
to a company that diversifies into totally unrelated business.Related diversification
presents opportunities to transfer skills share expertise or facilities,and leverage a common
brand name,thereby reducing overall costs,strebgthening the competitiveness of some of
the company’s products,or enhancing the capabilities of particular business units – any of
which can represent a significant source of competitive advantage and provide a basis for
greater overall corporate profitability.

5. Establishing investments priorities and steering corporate resources into the most
attractive business units.A diversified company’s different businesses are usually not
equally attractive from the standpoint of investing additional funds.This facet of corporate
strategy making involves channeling resources into areas where earnings potrentials are

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higher and away from areas where they are lower. Corporate strategy may include
divesting business units that are chronicallypoors performers or those in an increasingly
unattractive industry. Divestiture frees up unproductive investments for redeployment to
promising business units or for financing attractive new acquisitions. Corporate Strategy is
crafted at the highest levels of management. Senior corporate executives normally have
lead responsibility for devising corporate strategy and forchooding among whatever
recommended actions bubble up from lower level managers. Key business unit heads may
also be influential,especially in strategic decisions affecting the business they head. Major
strategic decisions are usually reviewed and approved by the company’s board of
directors.

RESEARCH METHODS

Research had been done after data gained. All the questionnaire 44 respondents

VERY
NR JOBS INTEREST MAYBE MAYBE NO NO
INTEREST
1 CEO 12 12 - - -
2 ENTREPRENEUR 19 1 - - -
3 MARKETING STAFF - - - - -
4 FINANCE STAFF - - - - -
5 QC STAFF - - - - -
6 HRM STAFF - - - - -
7 TEACHER - - - - -
8 MILITARY - - - - -
9 POLICE - - - - -
10 LECTURER - - - - -
11 FACTORY EMPLOYEE - - - - -
12 LEGISLATIF - - - - -
13 CIVIL SERVANT - - - - -

Analysis

Questionnaire with 44 respondents,An Analysis with 44 respondents ,we have got conslusions
43,182 % respondents interested in to have got a goals as an Entrepreneur, although 12 %

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including very interested in, and also 12 % provide information regarding interested in having
goals as a Chief Executive Officer, interpretation about this still need mental revolution to
increase more achievement. Career on the human resources area need longlife to achieve
level CEO. Students with 27,3 % very interested in with ambitious to achieve level CEO, and
career in human resources area step by step with small probability and also more slowly rather
than without ambitiously.

Research method which had been applied are use likert scale with questionnaire which to
provide some respondents which had been choice shall be provide respons relevant with three
option employee,entrepreneur option and both of those. As a choice from research result had
received from result research have got solution.

Management with some scholarly from small medium enterprise until international business
need scientific through cause employee with knowledge about mecatronica in spite of financial
technology needed so that society have ability quality of life.

Career from business unit level until corporate strategy level need struggling so that
experience and highly qualified team will be implemented. Business development look like
very good so that big company with business team not from initiative foreign company with
implication to Indonesia Human Resource dependable solution had been receive are
entrepreneur implementation on big scale for capabilities resources with Technical skills,
Human skills and Conceptual Skills.

CONCLUSIONS

Some students as a respondents need goals at his/her life with as argumentation to studying
about management science to achieve his/her goals for longterm whenever living on earth,
had been entrepreneurship dominated, all of them millennials generation.

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BIBLIOGRAPHY

Beamish,P.W. and Delios,A. 2004 International Business,Pearson Prentice Hall.Singapore.


Cooper,D.R. and Schindler .P.S. 1998 Business Research Methods.McGraw Hill.Singapore.
Deal and Glasman,H. 2016 Science Writing Skills. Imperial College Press.London.
Gully,S.M. and Phillpis,J.M. 2014 Human Resources Management,SouthWestern Cengage
Learning.Australia.
Jolley,J.M and Mitchell,M.L. 2007 Research Design Explained,Thomson Wadsworth.Belmont.
Strickland,A.J. and Thompson,A.A. 1999 Strategic Management.McGrawHill.Singapore.

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HUMAN CAPITAL AS SOURCE OF COMPETITIVENESS


IN SHARIA SMALLHOLDER FINANCING BANKS

Pandu Adi Cakranegara, Dedi Rianto Rahadi

ABSTRACT
The development of technology is impacting various sectors including financial sectors. In
Indonesia, the financial sectors is separates into several categories. Therea are big commercial
banks, Shariah Banks and Sharia Smallholder Financing Banks also known as BPRS. BPRS is
having difficult to compete for financing source due several reason such as competition. In this
article, researcher is focusing on human capital as source of competitive factors. The research
results is that there are factors that need to be done by BPRS to increase their competitivenes.
Those factors are empowering of human capital and developing human capital but also retain
it afterwards.
Keywords: Human Capital, BPRS, Business Model Development

INTRODUCTION

Background

In current global market, companies are composed by competitors, regardless of industry. To


develop a competitive advantage, it is important that firms truly leverage on the workforce as
a competitive weapon. A strategy for improving workforce productivity to drive higher value
for the firms has become an important focus. Firms seek to optimize their workforce through
comprehensive human capital development programs not only to achieve business goals but
most important is for a long term survival and sustainability. To accomplish this undertaking,
firms will need to invest resources to ensure that employees have the knowledge, skills, and
competencies they need to work effectively in a rapidly changing and complex environment.

The introduction of the concept of human capital related with the economic science
development. Economists wanted highlight and draw attention to the ability of other workers
who worked with machines, designed the new machines which helped them at hard physical
work.

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The activity of managing and developing human resources (HR) is an important and strategic
matter in HR management at a Rural Bank (BPR). Human Resources has a very important role
to improve the performance and development of the Rural Bank or Sharia People's Financing
Bank industry, so it needs to be well prepared and planned through continuous education and
training. As an illustration, whatever the strategy that is owned by the leader of the BPR /
BPRS, without the management of HR to run it, the strategy could be meaningless. From the
HR management function, the very obvious activities that have a link in selecting, managing
and developing HR are in the aspect of making or evaluating job analysis; recruitment,
selection and placement; and HR development. Development of banking human resources to
become a professional force through continuous education requires a long time and a large
cost, so that each bank is required to provide funds for this purpose. From the description
above, the formulation of the problem is How to Develop a Human Capital Model in
Supporting the Sharia Performance of Smallholder Financing Banks (BPRS).

Literature Review

Human Capital

The history of human capital is traceable to the works of the Chicago school of economics
where economists first develop the idea of human capital, such as T.W. Schultz and G.S. Becker
in the 1960s. Even though there was some initial resistance to the idea at the early stage of
development of the concept, scholars soon come to terms with the theory of human capital.
Human capital by the day, is receiving more and more attention all over the world both at the
organizational and individual levels

Bontis (1999) defined the human capital as the human factor in the organization; the
combined intelligence, skills and expertise that gives the organization its distinctive character.
The human elements of the organization are those that are capable of learning, changing,
innovating and providing the creative thrust which if properly motivated can ensure the long-
run survival of the organization. Davenport (1998) says that people possess innate abilities,
behaviors and personal energy and these elements make up the human capital they bring to
their work. Armstrong (2006) defines the human capital as knowledge and skills which

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individuals create, maintain, and use. New theories of economic growth characterized the
human capital as the sum of the individual congenital and acquired skills, knowledge, and
experiences of individuals. OECD defines human capital as knowledge, skills, abilities, and
other characteristics that are relevant for economic activity

Definition of Human Capital and Firm Performance What is human capital? According Schultz
(1993), the term “human capital” has been defined as a key element in improving a firm assets
and employees in order to increase productive as well as sustain competitive advantage. To
sustain competitiveness in the organization human capital becomes an instrument used to
increase productivity. Human capitals refer to processes that relate to training, education and
other professional initiatives in order to increase the levels of knowledge, skills, abilities,
values, and social assets of an employee which will lead to the employee’s satisfaction and
performance, and eventually on a firm performance. Rastogi (2000) stated that human capital
is an important input for organizations especially for employees’ continuous improvement
mainly on knowledge, skills, and abilities. Thus, the definition of human capital is referred to as
“the knowledge, skills, competencies, and attributes embodied in individuals that facilitate the
creation of personal, social and economic well-being” (Organization for Economic Co-
Operation and Development or OECD, 2001: 18). The constantly changing business
environment requires firms to strive for superior competitive advantages via dynamic business
plans which incorporate creativity and innovativeness. This is essentially important for their
long term sustainability. Undoubtedly, human resource input plays a significant role in
enhancing firms’ competitiveness (Barney, 1995). At a glance, substantial studies were carried
out on human capital and their implications on firm performance were widely covered and
obviously, human capital enhancement will result in greater competitiveness and performance
(Agarwala, 2003; Guthrie et al., 2002). Meantime, there is a significant relationship between
innovativeness and firm performance under the human capital philosophy (Lumpkin & Dess,
2005). In relation to this, the definition of firm performance could vary from one and another.
Nonetheless, some clear definitions of firm performance in the context of human capital
enhancement could be put forward. In some cases, financial performance measures such as
percentage of sales resulting from new products, profitability, capital employed and return on

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assets (ROA) (Selvarajan et al., 2007; Hsu et al., 2007). Besides, return on investment (ROI),
earnings per share (EPS) and net income after tax (NIAT) can also be used as measures of
financial performance (Grossman, 2000). Interestingly, researchers also tend to benchmark
managerial accounting indicators against the financial measures in six dimension; ‘workers
compensation’ (workers’ compensation expenses divided by sales); ‘quality’ (number of errors
in production); ‘shrinkage’ (e.g. inventory loss, defects, sales return); ‘productivity’ (payroll
expenses divided by output); ‘operating expenses’ (total operating expenses divided by sales)
(Wright et al., 2005). On the other hand, firm performance can also be measured using
‘perceived performance approach’ (also referred to as subjective performance measure)
where Likert-like scaling is used to measure firm performance from the top management
perspectives (Selvarajan, 2007). Human Capital Theory The theory of human capital is rooted
from the field of macroeconomic development theory (Schultz, 1993). Becker’s (1993) classic
book, Human Capital: A Theoretical and Empirical Analysis with special reference to education,
illustrates this domain. Becker argues that there are different kinds of capitals that include
schooling, a computer training course, expenditures on medical care. And in fact, lectures on
the virtues of punctuality and honesty are capital too. In the true sense, they improve health,
raise earnings, or add to a person’s appreciation of literature over a lifetime. Consequently, it
is fully in keeping with the capital concept as traditionally defined to say that expenditures on
education, training, and medical care, etc., are investment in capital. These are not simply
costs but investment with valuable returns that can be calculated.

1. Human Capital in Sharia Smallholder Financing Banks (BPRS)

Referring to the Financial Services Authority Regulation Number 47 / Pojk.03/2017 Concerning


the Obligation of Providing Education and Training Funds for the Development of Human
Resources for Rural Credit Banks and Sharia People Financing Banks, Human Resources,
hereinafter abbreviated to HR are:

a. members of the Board of Directors and members of the Board of Commissioners of an


RB or BPRS;

b. members of the Sharia Supervisory Board of the SRB; and

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c. BPR or BPRS employees

The regulation also requires BPR and BPRS to provide Education and Training Funds. The
Education and Training Fund is set at least 5% (five percent) of the realization of the previous
year's HR costs. If there is not enough to include HR in education and training, BPR and BPRS
are required to increase Education and Training Funds so that they can include at least 1 (one)
person in education and training.

2. Sharia Smallholder Financing Banks

Since the development of the Islamic banking system in Indonesia began, in two decades the
development of national Islamic finance, there has been a lot of progress, both in terms of
institutions and supporting infrastructure, regulatory and supervisory systems, public
awareness and literacy of sharia financial services. Our sharia financial system is one of the
best and most complete systems that is internationally recognized. As of June 2015, the Islamic
banking industry consisted of 12 Sharia Commercial Banks, 22 Sharia Business Units owned by
Conventional Commercial Banks and 162 BPRS with total assets of Rp. 273,494 Trillion with a
market share of 4.61%.

In a further development, the development of BPR that grew more and more by using Islamic
Law procedures as the basis for its implementation and was named the Sharia BPR. The first
BPR Syariah was established was PT. BPR Dana Mardhatillah, kec. Margahayu, Bandung, PT.
BPR Berkah Amal Sejahtera, kec. Padalarang, Bandung and PT. BPR Amanah Rabbaniyah, kec.
Banjaran, Bandung. On October 8, 1990, the three Sharia BPRs were granted a principle permit
from the Indonesian Minister of Finance and began operations on August 19, 1991.

In addition, the background of the establishment of Sharia BPR was an active step in the
context of Indonesia's economic restructuring as outlined in various financial, monetary and
banking policy packages in general. Specifically filling opportunities for bank policies in rate of
interest, which is then widely known as the profit-sharing banking system or the Islamic
banking system in the scale of retail banking outlets (rural banks)..

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3. BPRS Business Activities

Collecting funds from the public in the form of: 1) Deposits in the form of savings or equivalent
according to the wadi'ah contract or other agreements that do not conflict with Sharia
Principles; and 2) Investments in the form of deposits or savings or other forms equivalent to
that based on mudharabah agreements or other contracts that do not conflict with Sharia
Principles.

a. Collect funds from the community in the form of:

1) Deposits in the form of savings or equivalent according to the wadi'ah agreement


or other contracts that do not conflict with the Shari'ah principle; and
2) Investments in the form of deposits or savings or other forms equivalent to that
based on mudharabah agreements or other agreements that do not conflict with
Shari'ah principles.
b. Distributing funds to the community in the form of:

1) Profit sharing financing based on mudharabah or musyarakah agreement.


2) Financing based on the murabahah, salam, or istishna contract.
3) Financing based on the qardh agreement.
4) Moving or immovable property leasing financing to customers based on ijarah
contract or lease purchase in the form of ijarah muntahiya bittamlik; and
5) Debt collection based on contract agreement.
c. Placing funds with other Syari'ah Banks in the form of deposits based on the wadi'ah
contract or investments based on mudharabah agreements and / or other contracts
that do not conflict with Shari'ah principles.

d. Transferring money, both for its own interests and for the interests of customers
through the Syari'ah People's Financing Bank accounts in Syari'ah Commercial Banks,
Conventional Commercial Banks and UUS.

e. Providing products or conducting business activities in other Syari'ah Banks in


accordance with Shari'ah principles based on Bank Indonesia approval.

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RESEARCH METHODOLOGIES
This type of research uses descriptive qualitative analytical methods. Bogdan and Taylor in
Moleong (2010, p. 4) suggest that qualitative research is "a research procedure that produces
descriptive data in the form of written or oral words from people and observable behavior".
Qualitative research relies on a natural background holistically, positioning humans as research
tools, conducting data analysis inductively, prioritizing the process rather than the results of
research conducted agreed upon by researchers and research subjects. According to Sugiyono
(2005: 21) states that the descriptive method is a method used to describe or analyze a
research result but is not used to make broader conclusions.

RESULT AND DISCUSSION

Research Result

The results show the general organizational structure of BPRS in Indonesia as follows :

Figure 6.1. Sharia Smallholder Financing Bank organization structure

The BPRS organizational structure has complied with Financial Services regulation Number 47 /
Pojk.03/2017 Regarding the Obligation of Providing Education and Training Funds for the

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Development of Human Resources for Rural Credit Banks and Islamic People's Financing Banks
and Financial Services Authority Regulation Number 3 / Pojk.03 / 2016 About Islamic People's
Financing Bank.

In general the duties and functions of the position

Sharia Supervisory Board

1. Task:

a. Overseeing the operations of banks and bank products in accordance with the
provisions of the Sharia

b. Socializing to the public about BPRS in particular and extending about Islamic
Economics

c. Creating and developing Islamic values in the BPRS and other financial institutions

2. Function:

a. As an advisor and giver of advice to directors as regarding matters relating to sharia

b. As a representative and mediator between banks and the National Sharia Board in the
development of bank products and services that require studies in accordance with
the fatwa of the National Sharia Board.

Board of Commisioner

a. Task:

a. Manage bank liquidity

b. Establish all the bank policies he leads

2. Function:

a. Responsible for bank management

b. Responsible for overall bank operations

Board of Director

1. Task:

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Managing and supervising directly on all bank operational activities

2. Function:

As the leader and implementer of all policies of the general meeting of shareholders

DISCUSSION

How to get good quality human resources to support the performance and sustainability of
BPRS businesses? To make this happen first, a good job evaluation or job evaluation is needed.
Of course, besides that from the business side of the SRB is expected to also have the ability to
attract good quality workers and at the same time the ability to maintain good quality
employees. There are several attractions that can be used to maintain good quality human
resources, such as 1) compensation (salary, incentives); 2) recognition and respect; 3) feeling
needed; 4) ownership of company shares; 5) clear career development; 6) effective
communication; 7) learning opportunities; 8) working environment and compact working
relationship.

In order to select or recruit, manage or promote and develop HR, it is worth observing the
concept or recipe applied by Dee Hock, founder of Visa International, which places aspects of
the HR experience as not very decisive. The concept, accept and promote HR based on the
following priority scale: 1) integrity; 2) motivation; 3) ability; 4) understanding; 5) knowledge;
6) experience. With that recipe, Dee Hock succeeded in bringing Visa International to develop
at a rate of around 20% per year. Since it was founded in 1970, Visa has grown by 10,000%,
reaching 200 countries in various parts of the world, with 500 million customers. The
important things behind the Dee Hock recipe are as follows: Without integrity, motivation will
be dangerous; without motivation, ability will have no power; without ability, understanding
will be limited; without understanding knowledge becomes meaningless; without knowledge,
experience becomes blind. The youngest experience is given and can quickly be used by people
who have other qualities.

The first and second priorities, namely integrity and motivation have a tight link with

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emotional intelligence. Therefore, in the context of human resource development or training,


activities that can make HR emotional intelligence get better need to be pursued through
training modules, in addition to the usual training so far. With good emotional intelligence,
every HR will be able to organize emotions for the better every day.

To add recipes for tips on managing human resources, let us examine the five provisions put
forward by Gede Prama (1998), first, as entrepreneurs and managers, avoid looking for people
who are exactly the same as us. The initial spirit to look for HR is to accept and manage
differences. That is certainly not easy, because it requires maturity, maturity and a willingness
to think multi-perspective.

Second, the organization's front door is a procurement system. It is much easier to examine
the prospective thief at the front door, than to deal with it after being in the house. Before
determining the face of the front door, and given the importance of the difference, the face of
the organization that you want to have now and later must be designed and made clear. We
want a face that is continually seeking knowledge, full of innovation and creativity, harmonious
relationships, or whatever. Test or selection tool, the parties involved, and the mechanism of
action are made according to the desired face of the organization.

Third, the characteristic of living humans is to develop themselves. For that, do not be bored of
developing humans. And we must be sure that no development costs are wasted. It's just that,
due to limited resources and funds, focus on development in sectors that are needed.

Fourth, after developing do not forget to maintain it. However, avoid nurturing the wrong
person. It's like storing a thief in the house. For that, we certainly need foresight, both in terms
of performance appraisal, payroll, the creation of a work environment, and others.

Fifth, the essence of all the steps above lies in the word "learning". Humans (HR) are not
inanimate objects. He is more similar to water that continues to flow in the river. For that
reason, look at all efforts to manage people in a multi perspective manner.

Given this, after the HR is accepted, then don't forget to develop. Change must be endured,
both personally and institutionally. Words of wisdom that support it is a Chinese word that
says: "we can never step into the same river twice". Today is not a continuation of yesterday,

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tomorrow is another day. Change can be achieved through the learning process. Absolute
learning is done. The choice is in the following two words: "Study or Disband". If in a long time
there is no change, aka turning from that to that, this is a form of subtle and inhuman suicide
(Gede Prama, 2004).

In developing human resources through the learning process, it is worth pondering the opinion
of Ken Blanchard: "Our minds are like parachutes, which are only useful when open" (a
person's mind is like parachute, it does not function unless it is open.

In the context of developing BPR HR there are three things that need to be considered. First is
team orientation. The working relationship at the BPR organization should improve the quality
of team performance. In the selection process, the competency aspect of working in a team
should be one of the requirements.

Second, HR development related to BPR internal supervision. In supporting the tendency of BPR
development, the competency of BPR internal supervision human resources is expected to be
increasingly functional, with a paradigm, what is wrong, not who is wrong.

Third is transnational (global) competence. BPR is indeed a business field that cannot be
entered by foreign investors, but foreign financial institutions, such as Citi Financial, HSBC
Loans, DSP have taken part in channeling microcredit. Considering this, it is necessary to
develop a better BPR HR in the areas of credit, risk management, marketing, to deal with
competitors with transnational features.

CONCLUSION AND RECOMMENDATION

Conclusion

Human capital development model needs to be planned to obtain the quality of human
resources in accordance with the requirements of the company and the government,
especially the financial services authority.

Human capital development is tailored to the needs of the company

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Recommendation

Based on the results obtained during the research, the researcher suggests maintaining and
improving sharia-based HR development strategies so that employees in work get the blessing
of God for the balance of the world and the hereafter.

Career Development needs to be realized by an organization or company to support


employees getting the opportunity to develop their careers.

BIBLIOGRAPHY

Agarwala, T. (2003). Innovative human resource practices and organizational commitment: An


empirical investigation. International Journal of Human Resource Management, 14(2),
175–197.
Armstrong, M.:A Handbook of Human Resource Management Practice. London. 2006
Becker, G.S. (1993). Human Capital: A Theoretical and Empirical Analysis with Special
Reference to Education (3rd ed.). Chicago: University of Chicago Press.
Grossman, R. J. (2000). Measuring up: Appropriate metrics help HR prove its worth. HR
Magazine, 45(1), 28–35.
Hsu, I. C., Lin, C. Y. Y., Lawler, J. J., & Wu, S. H. (2007). Toward a model of organizational human
capital development: Preliminary evidence from Taiwan. Asia Pacific Business Review,
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Lumpkin, G. G. & Dess, G. T. (2005). The role of entrepreneurial orientation in stimulating
effective corporate entrepreneurship. Academy of Management Executive, 19(1), 147–
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Peraturan Otoritas Jasa Keuangan Nomor 3/Pojk.03/2016 Tentang Bank pembiayaan Rakyat
Syariah
Peraturan Otoritas Jasa Keuangan Nomor 47 /Pojk.03/2017 Tentang Kewajiban Penyediaan
Dana Pendidikan Dan Pelatihan Untuk Pengembangan Sumber Daya Manusia Bank
Perkreditan Rakyat Dan Bank Pembiayaan Rakyat Syariah
Rastogi, P.N. (2002). Sustaining enterprise competitiveness –is human capital the answer.
Human System Management. 19(3), 193-203.
Schultz, T.W. (1993). The economic importance of human capital in modernization. Education
Economics, 1(1), 13-19.
Selvarajan, T. T., Ramamoorthy, N., Flood, P. C., Guthrie, J. P., MacCurtain, S., & Liu, W. (2007).
The role of human capital philosophy in promoting firm innovativeness and
performance: Test of a causal model. International Journal of Human Resource
Management, 18(8), 1456-1470.

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Wright P. M., Gardner L. M., Moynihan L.M., & Allen M.R. (2005). The relationship between
human resource practices and firm performance: Examining causal order. Personnel
Psychology, 58, 409-446.

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STRATEGY MANAGEMENT:
LOCAL COMMUNITY PERCEPTION UNDER ECOTOURISM ACTIVITY
(Mangrove Ecotourism, Pantai Mekar Village, Muara Gembong, Bekasi Regency)

Agustini Tanjung
Philippines Women's' University

ABSTRACK

Ecotourism as one part of the tourism industry that has experienced a shift in interest where
tourists focused on activities interacting with various aspects of lives as of local communities
such as local social culture, promoting environmental and natural conservation. It was
important considering the transformation of natural resource-based economic activities
(ecotourism) is much sought after and with the existence of an international tourism paradigm
of model tourism to ecotourism. Indonesia has natural resources, cultural properties that are
not owned by other countries. Natural wealth such as marine biota, the beauty of natural
scenery, a group of islands and beaches stretching from east to west that can be utilized as one
of the discourses for community economic continuity, socio-cultural, economic sustainability,
environmental resilience and community life satisfaction that can make maximum use natural
wealth that has been bestowed upon us. Utilization of natural resources and object of
ecotourism will be a very important force in the achievement of the goals of a country,
specialy for local community . in 2018 and become a priority scale in preparing areas that have
the potential of mangrove forests made as ecotourism mangrove areas.
This research used quantitative methods with non-propability to 40 respondents with snowball
methods who has directly involved into business activities in Pantai mekar Village ecotourism,
precisely located in RT. 001 / RW. 001 precisely in Muara Jaya village, Hamlet 1 which is the
center of ecotourism activities mangrove forest in Pantai Mekar Village. There was a significant
positive difference in people's perceptions of the expectations of Economic Sustainability
growth, the expectations of the Social Cultural Sustainability, the hopes of a partial
Sustainability Environment for (before) ecotourism activities and (after) ecotourism activities.
Quality of Life satisfaction is not significant where community expectations before ecotourism
activities were higher compared to the reality.
Keywords: Perception, Ecotourism, Economic Sustainability, Social Cultural Sustainability,
Environmental Sustainability, Quality of Life Satisfaction

INTRODUCTION

Indonesia was a country that has a very large population, has a wealth of nature, cultural
wealth, wealth of the sea complete with marine biota that stretches from the east to the west

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of the Indonesian archipelago. The natural wealth that is owned is a very big opportunity for
the Indonesian government to be able to utilize the wealth of natural resources as the main
source in ensuring the connectivity of the island sector by building synergies of all functions of
the main functions of regional government as a form of commitment to realize the economic
activities of society and the country in general. Infrastructure development and sustainability
in all regions of Indonesia such as on the coast of Indonesia, revitalizing the economic sectors
of the community, rehabilitating environmental damage and conserving biodiversity,
increasing the quality and quantity of human resources in all fields, especially improving
education for communities in the regions. The huge population with increasing purchasing
power is a potential market. Indonesia is in the transition period of the structure of the
productive age population. This condition is increasingly important for the provision of
employment so that the economy can make maximum use of the portion of the population of
productive age. More importantly, if the level of education in general increases. Besides having
human resources, Indonesia also has natural resources, cultural assets that are not owned by
other countries. In terms of marine biota, the beauty of natural scenery, a group of island
islands and beaches stretching from east to west that can be used as one of the discourses for
community economic continuity, socio-cultural, economic sustainability, environmental
security and community life satisfaction that can make maximum use of wealth nature that has
been bestowed upon us. . This must be the vision and mission of all office bearers and be
aware that the regional budget is limited, it cannot be denied that it will hamper certain
program programs. Utilization of natural resources and the object of ecotourism will be a very
important force in achieving the goals of a state, namely the welfare of its people.

Tourism is one of the development sectors that can spur economic growth in a region
(Soemardjan, 1974: 58), is considered a strategic asset in encouraging the development of
certain regions or regions that have been provided by nature and have potential tourism
objects. Awareness by developing tourism potential through education, invites local people
and visitors to jointly understand that with ecotourism that has influence in various aspects
such as economic aspects (sources of foreign exchange, tax tax), social aspects (job creation)
and cultural aspects will benefit stakeholders. in this case the local government and the local

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community, education for the community and generally for all parties. Based on the report of
the World Travel Tourism Council (WTTC), in (https://industri.kontan.co.id/news/wttc-
pariwisata-indonesia-tumbuh-paling-tinggi), According to The World Travel & Tourism Council
(WTTC) which is a global authority for the tourism industry, tourism growth in Indonesia is the
highest among other countries incorporated in the G20. Where last year Indonesian tourism
was able to contribute 8.4% of national economic growth. The 2014 Annual Report on the
WTTC Economic Impact showed that Indonesia recorded double-digit growth in international
visitor spending (15.1%) and 7.2% in domestic tourists last year. According to David Scowsill,
President and CEO of WTTC Indonesia is experiencing rapid economic growth, the burgeoning
middle class is traveling a lot for business and leisure which is experiencing considerable
international visitor expansion and contributing to foreign exchange earnings. The WTTC study
predicts the contribution of tourism to the Indonesian economy in 2014 will grow to 8.1%.
Meanwhile, the growth of the number of international tourists to Indonesia this year is
estimated to reach 14.2% or exceed the average growth of domestic tourists which is expected
to reach 6.3%. By taking advantage of this tourism growth opportunity, the WTTC calls on the
government to create a business climate conducive to investment and support infrastructure
to facilitate a sustainable tourism industry. In addition, the government can also implement a
more open visa regime to attract more tourists. Globally, the WTTC noted the tourism industry
contributed US $ 7 trillion to the global economy in 2013. For this year it is estimated that its
value will grow by 4.2%. Meanwhile, the contribution of tourism to workers, both directly and
indirectly, reached 226 million jobs (8.9% of the total workforce).

Apart from the effects that have been caused, both positive and negative influences on the
lives of local people. The steps to prevent change go negative, during the process,
implementation, development and development of natural tourism or better known as
ecotourism which will affect social and economic aspects, the involvement of all parties, the
community, central and regional government, private CSR is expected to be able to synergize
well for the sake of achieved a goal of public welfare. And with the support of Minister of
Home Affairs Regulation No. 33 of 2009 concerning the Guidelines for the Development of
Ecotourism in the Regions, it has encouraged Regional Governments to develop ecotourism

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activities in their respective regions. Ecotourism as one part of the tourism industry that has
experienced a shift in interest where tourists are more focused on activities interacting with
various aspects of the lives of local communities such as local social culture, promoting
environmental and natural conservation. This is important considering the transformation of
natural wealth-based economic activities (ecotourism) in many interests with the existence of
an international tourism paradigm of the form of mass tourism to tourism especially
ecotourism.

Attending the magnitude of the impact of natural use made as an alternative source of income
for the community and the state, Ecotourism of Mangrove Forest in Pantai Mekar Village,
Muara Gembong Subdistrict, is an area with 3Ha being the concentration of Bekasi Regency
Government Tourism Office in 2018 and becoming a priority scale in prepare areas that have
the potential of mangrove forests which are made as ecotourism mangrove areas. The
development plan that will be carried out includes the tourist attraction of Bahagia beach,
enjoying the atmosphere of mangrove forests by boat, diversifying tourism in mangrove
forests through the development of adventure and nature recreation activities by enjoying the
sight of rare species of "Lutung Jawa Barat", "Elang Bondol" witnessing community activities
directly in conducting fish cultivation and shrimp ponds. Ecotourism which includes nature
tourism, cultural tourism, ecological tourism and village tourism. The potential of natural
tourism which includes a variety of natural beauty is available, will be the strength of
mangrove tourism in Muara Gembong, Bekasi Regency. Ecotourism, which was only opened in
early December 2018, initially the bamboo bridge on Ecotourism was only 100 meters away,
now it has added another 100 meters along with its love bridge and is targeted to be extended
up to 900 meters stretching over the coast of Pantai mekar around the mangrove forest. This
condition received a positive response from the community with an increase in visitors on the
Mangrove Forest Ecotourism Pantaimekar a day to 20-50 visitors and the weekend could reach
100 people by taking the time to take selfies (source:
https://megapolitan.antaranews.com/berita/46535/jumlah-wisatawan-hutan-mangrove-
bekasi-meningkat)

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FORMULATION OF THE PROBLEM

Ecotourism development is expected to be able to drive the economy of the people and give
an influence on the economic continuity of the local community of Gombong Bekasi, can
introduce social socio-culture or visiting tourists, can affect the resilience of the environment
and the object of ecotourism and are expected to provide life satisfaction to local communities
where ecotourism activities, communities and local governments can feel the positive impact
of natural tourism activities, so that further research is conducted on the perception of
ecotourism on economic continuity, socio-culture, environmental resilience and life
satisfaction by formulating research as follows:

1. Perception of the local community before ecotourism activities and after ecotourism
activities for local economic continuity outside the city

2. Perception of local communities before ecotourism activities and after ecotourism


activities for social and cultural activities in the local area of Muaragembong

3. Perception of the local community before ecotourism activities and after there are
environmental resilience ecotourism activities in the local area muaragembong

4. Perception of the local community before ecotourism activities and after life satisfaction
ecotourism activities for the community in the local area of Muaragembong

LITERATUR REVIEW

Ecotourism

The definition of ecotourism was first introduced by the organization. The Ecotourism Society
(1990) states that ecotourism is a form of travel to natural areas that is carried out with the
aim of conserving the environment and preserving the lives and well-being of the local
population. Originally ecotourism was carried out by nature lovers who wanted tourism
destinations to remain intact and sustainable, in addition to maintaining the culture and
welfare of the people.Ecotourism

The definition of ecotourism was first introduced by the organization. The Ecotourism Society

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(1990) states that ecotourism is a form of travel to natural areas that is carried out with the
aim of conserving the environment and preserving the lives and well-being of the local
population. Originally ecotourism was carried out by nature lovers who wanted tourism
destinations to remain intact and sustainable, in addition to maintaining the culture and
welfare of the people.

Figure 7.1. Ecotourism and Sustainable Tourism


Sources: Ecotourism: Principle, Practices, and Policies for Sustainable (Wood, M.E. 2002)

Minister of Home Affairs Regulation No. 33 of 2009 states that ecotourism or ecotourism is
one of the tourism activities that is environmentally sound by prioritizing aspects of nature
conservation, aspects of socio-cultural empowerment of local communities and aspects of
learning and education. Chang Hung (2004) mentions ecotourism as a form of tourism carried
out in nature, containing elements of environmental education so that visitors respect nature

and apply the principles of sustainable environmental management. Some of the benefits of
ecotourism that are attractive to decision makers that ecotourism: Can adapt to existing
infrastructure, accommodation, facilities and communities Encourage the opening of new jobs

Development of Community Based Ecotourism

Community-based ecotourism is an ecotourism business that focuses on the active role of the
community. This is based on the fact that the community has knowledge of nature and culture
which is a potential and selling value as a tourist attraction, so that community involvement is
absolute. The community-based ecotourism pattern recognizes the rights of local communities

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to manage tourism activities in areas that they have customarily or as managers. The existence
of a community-based ecotourism pattern does not mean that the community will run its own
ecotourism business. Based on the Minister of Home Affairs Regulation No. 33 of 2009 that the
principle of ecotourism development includes: (1) conformity between types and
characteristics of ecotourism; (2) conservation, namely protecting, preserving and sustainably
utilizing natural resources used for ecotourism; (3) economical, namely providing benefits to
the local community and driving economic development in the region and ensuring that
ecotourism can be sustainable; (4) education, which contains elements of education to change
one's perception in order to have care, responsibility, and commitment to environmental and
cultural preservation; (5) giving visitors satisfaction and experience; (6) community
participation, namely the participation of the community in the activities of planning, utilizing
and controlling ecotourism by respecting the socio-cultural and religious values of the
communities around the area; and (7) accommodating local wisdom.

Ecotourism Impact

Impact is a change that occurs as a result of an activity (Soemarwoto, 1989). Ecotourism is one
of the important sectors in development. Good management of ecotourism will yield several
benefits in various aspects. However, if it is not managed properly, ecotourism can potentially
cause negative problems or impacts. Based on the macroeconomic perspective, ecotourism
has several positive impacts (Yoeti, 2008), namely:

1. Creating business opportunities

2. Creating employment opportunities

3. Increasing income while accelerating the distribution of people's income, as a result of the
multiplier effect that occurs from relatively large tourist expenditure

4. Increasing government tax revenue and regional retribution

5. Increase gross national income (Gross Domestic Gross) (GDB)

6. Encouraging increased investment from the tourism industry sector and other economic
sectors

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7. Strengthen the balance of payments. If the balance of payments has a surplus, it will
naturally

8. strengthen Indonesia's balance of payments, and vice versa.

Ecotourism development not only has a positive impact, but can also have a number of
negative impacts, among others (Yoeti, 2008):

1. Biological sources are damaged, which causes Indonesia to lose its appeal for the long
term;

2. Careless garbage disposal which in addition to causing unpleasant odors, can also make the
surrounding plants die

3. There is often an art-culture commercialization and

4. A demonstration effect occurs, the personality of young people is damaged. The way to
dress for children is worldwide wearing shirts and oversized pants.

Influence on Economic Continounity

According to Sedarmayanti (2005), ecotourism activities that attract a lot of tourists have
contributed to foreign exchange for the country and have also opened up employment
opportunities for the surrounding community. The community not only gets a job and
increases income, but also can create a new field of work that supports tourism activities.
Living standards quoted from BPS data in 2005 in Rahman (2009) are poverty variables namely
residential floor area, type of floor of residential building , facilities for defecation, household
lighting sources, sources of drinking water, cooking fuel, consumption of meat / chicken /
milk / week, purchase of new clothes for each household member every year, frequency of
meals in a day, ability to pay for medical treatment to puskesmas or doctor, employment of
household head, highest education of the head of the household and ownership of movable
and immovable assets / assets. The standard of living is the level of ability to fulfill their needs.

Influence on Socio-Culture

Ecotourism as a tourism industry is part of a cultural industry that involves the entire

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community. Although only a part of the community is involved, the social influence is broader
such as the occurrence of social inequality in the community. The influence of tourism on the
community includes changes in the social processes of the community in which there is
cooperation and competition between tourism actors. Social process is a reciprocal
relationship between individuals, individuals with groups, and between groups, based on their
potential or strength (Abdulsyani, 1994). Social processes are dynamic aspects of people's lives
where there is a process of inter-human relations in the form of social interactions that occur
in human life continuously. The formation of social interaction in the event of social contact
and social communication. Social processes can occur in various forms, namely, cooperation,
competition, conflict / conflict, and accommodation (Tafalas, 2010).

Environmental Resilience (Ecology)

Ecotourism development must be truly carried out with caution and careful management, not
trapped or tempted by short-term economic benefits, but must be guided by sustainable
development. That is, generations can now reap the benefits, but without forgetting that the
next generation also has the right to benefit from the same natural resources (Warpani, 2007).
Therefore, policies in relation to ecotourism are based on ecological dimensions, namely
(Damanik and Weber, 2006):

1. Determination and consistency in the carrying capacity of the environment.

2. Waste management and reduction in the use of energy-saving raw materials

3. Priority for environment-based product and service development.

4. Increasing environmental awareness with conservation needs.

Ecotourism development can bring positive impacts in the form of increasing efforts to reserve
natural resources, build national parks, protect beaches, and marine parks. But on the other
hand, improper management of ecotourism activities can cause negative impacts in the form
of pollution, damage to the physical environment, over-utilization, construction of facilities
without regard to environmental conditions, and damage to mangrove forests (Tuwo, 2011).

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Life Satisfaction

Based on the cognitive approach, life satisfaction is a cognitive assessment in which a person
compares his current situation with the conditions he considers to be ideal standards (Diener,
Emmons, Larsen, & Griffen, in Frisch, 2006). The smaller the perceived difference between
what is expected with what is achieved by the individual, the greater the satisfaction of one's
life (Diener et al., In Frisch, 2006). Life satisfaction is based on beliefs or attitudes of individuals
in assessing their lives (Schimmack in Eid & Larsen, 2008). In this case, the individual assesses
whether the situation and conditions in his life are positive and satisfying (Pavot in Eid &
Larsen, 2008).

RESEARCH HYPOTHESIS

1. Knowing the differences in community perceptions of economic sustainability felt before


and after the existence of community-based ecotourism activities in Muara Gembong

2. Knowing the differences in perceptions of socio-cultural conditions before and after


community-based ecotourism activities at Muara Gembong

3. Know the differences in perceptions of environmental resilience conditions before and


after community-based ecotourism activities in Muara Gembong.

4. Know the differences in perceptions of conditions of life satisfaction before and after
community-based ecotourism activities at Muara Gembong.

5. Knowing the differences in perceptions before ecotourism activities are run and after
ecotourism on the road on the variables of economic continuity, socio-cultural,
environmental sustainability, mutual satisfaction together.

RESEARCH METHODOLOGY

Research Location

The research was carried out at muara gembong bekasi Bekasi, where the ecotourism location

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which had been developed in December 2017 in Pantai Mekar Village, Muara gembong
District, Bekasi Regency, and in collaboration with CSR of PT Pertamina EP, was recorded as
having 1872 Family Cards recorded in 2016 (Catalog: 1102001.3216150, Kecamatan Muara
Gembong 2017). The research location was chosen based on purposive from the results of
internet browsing, literature studies and research surveys. The location was chosen
considering that this village has more ecotourism potential than the other 6 villages, namely
Pantai harapan jaya village, Pantai sederhana village, Pantai bakti village, coastal village, village
jaya sakti.

Population and Sampling Techniques

The population in this study were residents of Pantaimekar Village who had suspected
characteristics. The units studied are households, business owners in the field of ecotourism,
working in the ecotourism industry, as well as ecotourism managers who are in the target units
in this study are husband / wife / other household members who can provide relevant data on
research issues

Determination of until / respondent based on the reason that business owners, workers, and
managers in the field of ecotourism are communities involved in organizing community-based
ecotourism so that they can provide relevant data regarding differences in ecotourism
perceptions, economic sustainability, socio-cultural, environmental resilience and life
satisfaction before and after ecotourism there is ecotourism. The number of respondents with
this census method was 40 people who were directly involved in the Pantaimekar Village
ecotourism business activities, precisely in RT. 001 / RW. 001 precisely in Muara Jaya village,
Dusun 1 which is the center of mangrove forest ecotourism activities in Pantai Mekar Village.

The qualitative approach to the non-probability sampling model was obtained through in-
depth interviews with informants. Informants are selected using the snowball method.
Informants are parties who provide information about themselves, other parties and their
environment, in this study specifically regarding the management of mangrove ecotourism in
Pantai Mekar Village, the profile of the village of Pantai Mekar, as well as the ecological and
socio-economic changes of the community with the development of ecotourism in the

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research object area.

Data Collection Techniques

The data used in this study are primary data and secondary data. Primary data obtained from
questionnaires and in-depth interviews, questionnaires addressed to respondents, and
informants. In-depth interviews are directed through interview question guides. Secondary
data obtained from documents related to data on research topics obtained from the study of
literature relating to research objectives such as textbooks, articles, theses, theses, scientific
works, and archives / documents of the Village Government of Pantai mekar.

Data Processing and Analysis Techniques

The quantitative data obtained in this study were obtained from the results of respondents'
questionnaires which were processed using cross tabulation and statistically analyzed by t
statistical tests that tested the same two dependent variables for different periods with
comparative models of data using SPSS 16.0 For Windows software. Test validity and reliability,
classical assumption test, test coefficient of determination (R2). The t (t test) statistical test is
used to test the difference in the change between the conditions of difference Perception of
ecotourism through economic sustainability, socio-cultural, environmental resilience and life
satisfaction before and after ecotourism, In addition to quantitative data analysis, qualitative
data analysis is also carried out as a support. A qualitative approach is used to provide
reinforcement of data obtained through in-depth interviews and observations. Combined data
is processed and analyzed by being presented in the form of narrative texts, graphs, tables,
column charts or charts, then drawn conclusions from all data that has been processed.

Profile of Research Location

Muara Gembong Subdistrict is one of the coastal areas which is under considerable pressure in
land use. Pressure in the use of land in Muara Gembong Subdistrict is caused by a lot of
development activities in the region, causing the rate of growth and land use change to occur
very rapidly. This condition is related to the resources of coastal areas that are multi-resource
(multi resources) and multipleuses (multipleuses). The majority of the community's initial

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activities were pond farmers, which were divided into two main fish farmers and side farmer
farmers, fishermen, community servants, factory workers, traders, where 60% of the people's
livelihoods were fisheries ponds. Ecotourism of mangrove forests as the object of this research
is that the area located above + 3 Ha of peatland is located on the coast of Pantai Mekar
Village, 1 of 6 villages located in Muara Gembong sub-district which has an area of 1,457,385
hectares with a population of 7,369 people consisting of 1872KK spread in 4 hamlets, 3825
male and 3544 female residents and covering 23 RTs spread across 8 RTs (source:
pantaimekar.blogspot.com/2014), which is one of the 6 villages in Muara Gembong District
which is the widest sub-district in Bekasi with an area of 13 310 hectares with 60% being a
coastal area. At RT. 001 / RW. 001, precisely in the village of Muara Jaya, this hamlet 1 of the
activities of the mangrove forest ecotourism was centered.

RESEARCH RESULT

Hypothesis 1 Test Results:

In this study there was a level of public trust in a significant change in Economic Sustainability
before and after ecotourism activities start.

T-Test
X1 Economic Sustainability BEFORE and AFTER
Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Pair 1 Economic Sustainaibility BEFORE 14.70 40 2.524 .399
Economic Sustainability AFTER
21.10 40 2.863 .453

From the results of the T test it was found that Economic Sustainability before Ecotourism
activities began 14.7 and Economic Sustainability after Ecotourism activities starting was 21.10,
it can be concluded that there were differences before and after the variable Economic
Sustainability.

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X1 Economic Sustainability BEFORE and AFTER


Paired Samples Test
Paired Differences
95% Confidence Sig.
Std. Std. Error Interval of the T
Mean (2-tailed)
Deviation Mean Difference
Lower Upper
Pair 1 Economic Sustainability -6.400 3.788 .599 -7.611 -5.189 -10.686 .000
BEFORE
Economic Sustainability
AFTER

The mean of -6.4 with a standard deviation of 3.7 means that the distribution varies where
there are differences in Economic Sustainability before ecoturism activities start and Economic
Sustainability after ecoturism activities starting. The standard error for this variable is 0.599.
The results of the t test are -10,686 and the distribution table t is 2,021. It can be concluded
that the results of the t test count more than t table with the number of respondent data 40. P
Value indicates the number 0,000 can be concluded that Economic Sustainability before
ecotourism activities starting and Economic Sustainability after ecotourism activities starting
are significant because less than 0.05

Hypothesis 2 Test Results:

In this study, there are differences in the conditions of Social Culture Sustainability before
ecotourism activities and Social Culture activities Sustainability after ecotourism activities, with
an average of -3.6 with a significant level of good enough.

T-Test

X2 Social Cultural Sustainability BEFORE and AFTER


Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Pair 1 Social Cultural Sustainability BEFORE 17.83 40 3.587 .567
Social Cultural Sustainability AFTER 21.43 40 3.153 .499

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From the results of the T test it is known that Social Culture activities start activities 17.8 and
Social Culture Sustainability after ecoturism activities starting was 21.43, it can be concluded
that there are differences before and after the Social Culture Sustainability variable

X2 Social Cultural Sustainability BEFORE and AFTER


Paired Samples Test
Paired Differences
95% Confidence
Std. Sig. (2-
Std. Error Interval of the t
Mean Deviati tailed)
Mean Difference
on
Lower Upper
Pair 1 Social Cultural Sustainability
BEFORE -Social Cultural -3.600 4.390 .694 -5.004 -2.196 -5.186 .000
Sustainability AFTER

The mean of -3.6 with standard deviation 4.3 means that the distribution varies where there is
a difference in Social Culture Sustainability before and after ecotourism activities are carried
out. The standard error for this variable is 0.694. The results of the t test are -5,186 and the
distribution table t is 2,021. It can be concluded that the results of the t test are more than t
table with the number of data respondents 40. P Value indicates the number 0,000 can be
concluded that the variable before and after significant because it is less than 0.05

Hypothesis 3 Test Results:

In this study, there were differences in the Environmental Sustainability before the Ecotourism
Activities Start and Environmental Sustainability after Ecotourism activities starting, with a
mean of -2,425 with a significant degree of good enough.

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T-Test

X3 Environmental Sustainaibilty BEFORE and AFTER


Paired Samples Statistics
Std. Error
Mean N Std. Deviation Mean
Pair 1 Environmental Sustainability BEFORE 8.25 40 1.316 .208
Environmental Sustainability AFTER 10.68 40 1.774 .281

From the results of the T test it was found that Environmental Sustainability before ecotourism
activities start was 8.25 and Environmental Sustainability after ecotourism activities starting
was 10.68, can be concluded that there were differences before and after the Environmental
Sustainability variable.

X3 Environmental Sustainaibilty BEFORE and AFTER


Paired Samples Test
Paired Differences
95% Confidence
Std. Sig. (2-
Std. Interval of the t
Mean Error tailed)
Deviation Difference
Mean
Lower Upper
Pair 1 Environmental Sustainability
BEFORE - Environmental -2.425 2.263 .358 -3.149 -1.701 -6.776 .000
Sustainability AFTER

The results of the mean of -2.425 with a standard deviation of 2.263 means that the
distribution varies where differences in Environmental Sustainability before ecoturism
activities start and after ecoturism activities starting. The standard error for this variable is
0.358. The results of the t test are -6,776 and the distribution table t is 2,021. It can be
concluded that the results of the t test are more than t table with the number of data
respondents 40. P Value indicates the number 0,000 can be concluded that the variable before
and after significant because it is less than 0.05

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Hypothesis 4 Test Results:

There are differences in Quality of Life Satisfaction before Ecoturism activities and Quality of
Life. Satisfaction after ecoturism activities starting, with a mean of -3,325 with a fairly good
level

T-Test

X4 Quality Of Life Satisfaction BEFORE and AFTER


Paired Samples Statistics
Std. Std. Error
Mean N
Deviation Mean
Pair 1 Quality of Life Satisfaction BEFORE
48.93 40 9.085 1.436

Quality of Life Satisfaction AFTER 45.60 40 7.801 1.234

The results of the T test it was found that the Mean Quality of Life activities start activity was
48.93 and Quality of Life 45.60, can be concluded that there were differences before and after
the variable Quality of Life Satisfaction.

X4 Quality Of Life Satisfaction BEFORE and AFTER


Paired Samples Test
Paired Differences
95% Confidence
Std.
Std. Interval of the t Sig. (2-tailed)
Mean Error
Deviation Difference
Mean
Lower Upper
Pair 1 Quality of Life 3.325 12.715 2.010 -.741 7.391 1.654 .106
Satisfaction BEFORE
Quality of Life
Satisfaction AFTER

The mean of -3,325 with a standard deviation of 2,010 means that the distribution varies
where there are differences in Qualityof Life Satisfaction before ecoturism activities start and
after ecoturism activities starting. The standard error in this variable is 2010. The results of the
t test are -1,654 and the distribution table t is 2,021. It can be concluded that the results of the
t test are more than t table with the number of data respondents 40. P Value indicates the
number 0,000 can be concluded that the variable before and after significant because it is less

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than 0.05

Hypothesis 5 Test Results:

In this study, there are differences in Economic Sustainability, Social Cultural Sustainability,
Environment Sustainability, Quality of Life activities before starting activities with ecotourism
activities starting, with an average (mean-2.275 with a fairly good level of significant).

T test X1 Economic Sustainability BEFORE and AFTER


X2 Social Cultural Sustainability BEFORE and AFTER
X3 Environmental Sustainabilty BEFORE and AFTER
X4 Quality Of Life Satisfaction BEFORE and AFTER

Paired Samples Statistics

Mean N Std. Deviation Std. Error Mean

Ecoturism Impact Before 22.4250 40 2.67359 .42273


Pair 1
Ecoturism Impact AFTER 24.7000 40 2.26045 .35741

From the results of the T test, it was found that Economic Sustainability, Social Cultural
Sustainability, Environment Sustainability before activities started 22,42 and Economic
Sustainability, Social Cultural Sustainability, Environment Sustainability, Quality of Life
Satisfaction together, after ecoturism activities starting was 24.70, it can be concluded that
there are differences before and after ecoturism activities.

X1 Economic Sustainability BEFORE and AFTER


X2 Social Cultural Sustainability BEFORE and AFTER
X3 Environmental Sustainabilty BEFORE and AFTER
X4 Quality Of Life Satisfaction BEFORE and AFTER

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Paired Samples Test


Paired Differences
95% Confidence
Std. Sig. (2-
Std. Interval of the t
Mean Error tailed)
Deviation Difference
Mean
Lower Upper
Pair 1 Ecoturism Impact
Before –
-2.27500 3.74970 .59288 -3.47421 -1.07579 -3.837 .000
Ecoturism Impact
AFTER

The mean -2,275 results with a standard deviation of 3,7497 means that the distribution varies
where differences in Economic Sustainability, Social Cultural Sustainability, Environment
Sustainability, Quality of Life start activities and Economic Sustainability, Social Cultural
Sustainability, Environment Sustainability, Quality of Life Satisfaction after ecoturism activities
start in simultaneous. The standard error for this variable is 0.5928. The results of the t test are
-3,837 and the distribution table t is 2,021. It can be concluded that the results of the t test
count more than t table with the number of respondents' data 40. P Value indicates the
number 0,000 can be concluded that Economic Sustainability, Social Cultural Sustainability,
Environment Sustainability activities start and Economic Sustainability, Social Cultural
Sustainability, Environment Sustainability, Quality of Life The satisfaction after ecoturism
activities start in simultaneous is significant because it is less than 0.05

CONCLUSION AND SUGGESTION

Conclusion

1. There is a significant difference between the perception of local respondents to Economic


Sustainability before and after ecotourism activities starting in the T test with Economic
Sustainability before ecotourism activities starting 14.7 and Economic Sustainability after
ecotourism starting activities were 21.10 and with mean -6.400

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2. There is a significant difference between the perception of local respondents towards


Social Culture Sustainability before and after ecoturism activities starting in the T test with
Social Culture Sustainability before ecoturism activities starting 17.8 and Social Culture
Sustainability after ecoturism activities starting was 21.43 with a mean of -3.600

3. There is a significant difference between the perception of local respondents towards


Environmental Sustainability before and after ecotourism activities starting in the T test
with Environmental Sustainability before ecoturism activities starting 8.25 and Social
Culture Sustainability after ecoturism activities starting was 10.68 with mean -2,425

4. There is a significant difference between the perceptions of local respondents towards


Quality of Life activities starting at the T test with Quality of Life. Satisfaction before
ecoturism activities start was 48.93 and Social Culture Sustainability after ecoturism
starting activities were 45.60 with mean -3,325

5. There is a significant difference between the perception of local respondents to ecoturism


activities through Economic Sustainability, Social Sustainability, Environment Sustainability,
Quality of Life before and after ecotourism activities perception starting in the T test with
activities start ecoturism activities before ecoturism, 22 42 to ecoturism activities through
Economic Sustainability, Social Cultural Sustainability, Environment Sustainability, Quality
of Life Satisfaction after starting was 24.70 with mean -2.275

Suggestion

1. It is recommended that ecotourism activities be more developed and supported by


infrastructure considering the large growth expectations of Sustainability, Social Cultural
Sustainability, and Environment Sustainability in part to the expectations of society

2. It is recommended that community-based ecotourism activities be more focused


considering that Quality of Life Satisfaction is not significant where community
expectations before ecotourism activities are higher when compared to the existing reality.

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BIBLIOGRAPHY

Adnyani, N.N.D., Sukerti, N.W, dan L. Masdarini. Strategi Pengembangan Agrowisata Salak Di
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Emma Hijriati dan Rina Mardiana. Pengaruh Ekowisata Berbasis Masyarakat Terhadapa
Perubahan Kondisi Ekologi, Sosial dan ekonomi di Kampung Batusuhunan,Sukabumi,
Jurnal Departemen Sains Komunikasi dan Pengembangan Masyarakat, Fakultas Ekologi
Manusia, IPB, ISSN : 2302 - 7517, Vol. 02, No.03
Pengusahaan Ekowisata (2000), Chafid Fandeli., Mukhlison., Fakultas Kehutanan Univ. Gadjah
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Dias Satria, Strategi Pengembangan Ekowisata Berbasis Ekonomi Lokal Dalam Rangka Program
Pengentasan Kemiskinan di Wilayah Kabupaten Malang,Fakultas Ekonomi Universitas
Brawijaya,
Kompas.com, Kawasan Ekowisata Hutan Bakau Muara Gembong Bekasi Resmi Dibuka",https://
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https://news.detik.com/berita/d-4321221/melihat-ekowisata-mangrove-di-muara-gembong-
bekasi.
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MANAGEMENT AND ACCOUNTABILITY OF ALLOCATION OF VILLAGE FUNDS ON


PITUMPANUA SUB-DISTRIK, DISTRICT OF WAJO, SOUTH SULAWESI

Tri Pudjadi Susilo, Hermiyetti, Eka Arianty Arfah

ABSTRACT

The purpose of this research is to describe how APBDes management accountability in sub-
district of Pitumpanua, district of Wajo, in the province of South Sulawesi. The population in
this study are the 23 villages in the district of Pitfeedua. The sampling technique in this study is
the census method. The analytical method used in this research is qualitative data analysis,
following the concept given by Miles and Huberman (in Usman, 2009: 85). The results showed
the accountability of the implementation in APBD management of the Sub-District of
Pitumpanua, District of Wajo in the Village Fund Allocation (ADD) has been going quite well.
Keywords: Management and Accountability, APBDes Governance, Allocation Fund Village

INTRODUCTION

The management of add is a unit with financial management. villageThe management of add
district wajo aim for bupati regulation wajo number 25 years 2011 about funding allocations.
villageIn the regulation regent wajo referred to explain that the allocation of funds village is
the funds allocated by the district government for the village stemming from the financial
balance funds the central government and the regions received by the district government.

The allocation in kabupaten wajo village funds , going on a reduction in the size of the add in
2010 with indirectly causing the lack of motivation the village administration in the
implementation of the government , development and social affairs for programs and activities
that can be conducted at village automatically adjusting to their funds are .In addition to add
revenue from the perspective of the number declines in the last two years , so in terms of the
management of add also found the ability add management from government institutions as
well as the village social affairs in villages have not make the planning , the implementation of
and control activities to work optimally .When viewed from the side of the lack of participation
of the community in planning development planning meeting ( musrenbang ) the use of add , a
list of activities ( plan proposal from durk ) more arranged by the village head and village

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officials to the exclusion of the aspirations of the needs of the people .In the sight of the
implementation of the ,

With the implementation of, the village head rarely village community involving an institution
as the institution of rural community empowerment ( LPMD ), the consultation village ( BPD).
and others Is the low level of participation gotong royong. community initiativeViewed from
the side, control to the administration of the activities are often late and lacking orderly so as
to hinder the add in phase II and phase III.

MATERIALS AND METHOD

APBDES Management Accountability


It is expected to improve quality as well as the perfoemance of the government of the
government of to become a governance and oriented in public interests. The concept of a
member of the delete is based on individuals or the group 's term in the directory of the term
of the term of the term respond on the activities of which he did (Waluyo, 2009:195). In
addition to her own account in the government agencies the institution of the state of the
state (LAN) collaborated with finance oversight and the start of the qunan (BPKP) has to
provide a guidelines or principles in the application of accountsbility in an agency.

In addition to make the account of it effectively, the principle must be supported by powerful
commitment of authority and responsibility in the field of supervision and valuation (BPKP,
2007:8). The following are the principles of akuntations on the government agencies according
to BPKP (2007:7-8): There must be a leadership commitment and all of the staff to perform the
conduct of a mission of aqar akutable mission, must be a system of which the use of the use of
days has consistent with the statutes of such statutes, and i must demonstrate the levels of
purpose and goals that had been set up, should be oriented with missions and results as well
as benefits, and must trends, i obiektive transference, and innovative as katalisator for the
management of the management of agencies.

One source of the village income is the centre of financial centers and the area being
developed 10% from APBD. It is also described Sumpeno (2011 :216) that in order to increase

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empowerment, the acquisition of the development of the development

Allocation of village fund (ADD)

Duty of government, administration county to village and the government must be


accompanied by financing, facilities and infrastructures, as well as human resources ( solekhan,
2012: 79 ) thus there are development budget as capital for peoples welfare known as village
funds allocation.Relating to add ( village funds allocation ) is village continuation of assistance
programs since 1969 provided by the central government in the form of inpres village
development.Since regional autonomy add then be allocated through apbdes ( solekhan, 2012:
80 ).Therefore the government district is required to give credence to the village
administration as autonomous village to manage the budget a activities in accordance with
duties and functions.

Financial villages is the right and village duty in order of the village in order to decide with the
money including its own wealth associated with the rights of the rights and village liabilities, so
need to be managed in a financial management system (Solekhan, 2012:86). Therefore, in the
financial management of the village is required a arrangement of a setting that cost from
planning aspects, and the budget and aspects of a shopping.

The government county of the Wajo governed management ADD through the rule of the Wajo
of Wajo number 25 years of 2011 about the management of alocation of village (ADD). In the
policies were discussed, the future government included:

1. Improving the country organizers in carrying out the village government’s service in
bringing out governments, development, and rendering society in her capacity

2. Increasing rural community skills in village planning, execution, and development control
accorded with the potential village

3. Increasing income equalization, working opportunities and trying opportunities for rural
communities in order development the society’s social economy development

4. Encourage increased participation and community cooperation

They were encouraged through and the self-help mutual cooperation community village.

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ADD’s is one of the reception of the village 's entry at the revenue and shopping tories
(apbvillages). In addition to the management of the comprehensive language of the principles
ADD to include:

1. ADD’s financial management is an integral part of management in the village’s income and
shopping budget (APBD village).

2. The entire activity of add is planned, carried out and evaluated openly and involves all
elements of society in the village

3. The entire activity needs to be accounted for in the technical and legal capacity.

4. ADD is implemented using the principle of economical, directed and controlled.

Village financial management.

Definition of Village Finance according to the Village Law no. 6 of 2014 is all village rights and
obligations that can be valued in money and everything in the form of money and goods
related to the implementation of village rights and obligations. These rights and obligations
create income, expenditure, and financing that need to be regulated in good village financial
management. The village financial management cycle includes planning, implementation,
administration, reporting and accountability, with a period of 1 (one) fiscal year, starting from
January 1 to December 31.

In the Village Financial Management Cycle Each stage of the village financial management
process has rules that must be understood and implemented in accordance with
predetermined time limits. In order for village financial management to be carried out as
mandated by village law, the village must have a village policy as stated in the village
organizational structure. In order for each function in the village organization to carry out their
duties properly, each function must be have job description.

Village Financial Organization Structure

As explained above, for the principle of good village financial management to run, the village
must have a village financial organizational structure. Because premises of the village financial
organizational structure accompanied by the division of tasks each will contain village

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organizations to run in harmony.

Village financial organizations can be seen in the village organizational structure as stipulated
in the village law. The organizational structure is as follows:

Headman
Village Management Power

Village Secretary
PTPKD Coordinator

The Service Welfare Officer Superintendent Financial General Affairs Planning


Section Chief of government Affairs Chief Chief Business Chief
Chief Chief

Superintendent Superintendent Superintendent


Village Treasurer of government of government
of government
Financial Affairs Chief Chief Chief

Figure 8.1. Village Organizational Structure

Sources : Berdesa.com/ in accordance with Permendagri Nomor 84 year 2015

Types of research

In this study, researchers used a descriptive research method with a qualitative approach
because the researcher wanted to explain how the application of the principles of
accountability was carried out in the villages of the District of Pitumpanua in Wajo District in
the management of the Village Fund Allocation.

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Research Focus

The focus of this research is the application of the principles of accountability in the
management of the allocation of village funds (ADD) in the Villages of Pitumpanua Subdistrict,
Wajo Regency, Pitumpanua District, Wajo Regency. The principles of accountability (BPKP,
2007: 7-8) are as follows: Commitment leadership and all staff, a system that guarantees the
use of resources consistently with applicable laws and regulations, the level of achievement of
the goals and objectives set, the achievement of the vision and mission and the results and
benefits obtained, and honesty, objectivity, transparency, and innovation.

Site Research

The location of research is the area or where it used to carry out research activities and
acquired data required in the completion of this study. The location of this research being
conducted in villages for the District of Wajo, the Pitumpanua Sub-district.

Data Source

The informants used as resource persons (key informants) in this study consisted of several
elements, namely:

1. Elements of the Community Empowerment and Village Government Board as the


Facilitation Team

2. District level.

3. Elements from the Pitumpanua District Office as the District Level Support Team.

4. The elements of the Village Level Executive as the person in charge of the activities.

5. The elements of the community as those who feel the impact and benefits of the ADD
policy.

Data Collection Techniques

Data collection techniques used in this study are triagulation techniques. Where researchers
will combine three kinds of data collection techniques, namely: unstructured interviews, direct
observation and documentation.

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Data Analysis

The analysis data in qualitative research is carried out when the data collection takes place and
after the data collection is completed within a certain period. The data analysis technique used
in this study is qualitative data analysis, following the concept given by Miles and Huberman
(in Usman, 2009: 85). They suggest that the activities in qualitative data analysis are carried
out interactively and take place continuously at each stage of the study so that it is complete,
and the data is saturated. Includes data collection, data reduction, data presentation, and
drawing conclusions or data verification.

RESULT AND DISCUSSION

General Description Of Research Object

The object of this research is the area or where it used to carry out research activities and
acquired data required in the completion of this study. The object of this research being
conducted in villages for the District of Wajo, the Pitumpanua Sub-district.

Geographical conditions

Wajo Regency is one of the regencies located in the Sulawesi region, specifically in the
Province of South Sulawesi and surrounded by West, Central and Southeast Sulawesi. Wajo
Regency is rich in natural resource potentials where some of these potentials have not been
utilized optimally. Natural resources and the results are the main source of income of Wajo
Regency precisely Maniangpajo District, especially from the agricultural sector and other
products. Wajo Regency and Sengkang Capital City, is located in the central part of South
Sulawesi Province

Wajo Regency is divided into 14 Districts, in which smaller regions are formed, which can be
seen in the following table:

% Terhadap Luas
No Kecamatan Luas (Km2)
Kabupaten
1 Sabbangparu 137.75 5.3
2 Tempe 38.27 1.53
3 Pammana 162.1 6.47

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% Terhadap Luas
No Kecamatan Luas (Km2)
Kabupaten
4 Bola 220.13 8.78
5 Takkalalla 179.76 7.17
6 Sajoanging 167.01 6.66
7 Penrang 154.9 6.18
8 Majauleng 225.92 9.01
9 Tanasitolo 154.6 6.17
10 Belawa 172.3 6.88
11 Maniangpajo 175.96 7.02
12 Gilireng 147 5.87
13 Keera 368.36 14.7
14 Pitumpanua 207.13 8.26
Kabupaten Wajo 2.506.19 100
Source: Central Statistics Agency of Wajo Regency

Nature and climate

The characteristics and potential of Wajo Regency land are expressed as areas lying with the
position of "Mangkalungu ribulu`e, Massulappe Ripottanangnge, Mattodang Ritasi`e" which
means Wajo Regency has three main dimensions, namely:

1. Hilly lined land from the south starting from the Tempe District to the North which is
increasingly mountainous, especially in Maniangpajo District and Pitfeedua District which
are industrial forest plantations, cocoa plantations, cloves, cashew nuts, and livestock
development.

2. Lowland land which is a stretch of rice fields and plantations / fields in the eastern,
southern, central and western regions.

3. Lake Tempe and its surroundings and the expanse of sea that stretches along the coast of
Bone Bay. In the east is a potential area used for the development of aquaculture ponds. In
addition, Wajo Regency also has a large enough potential source of water, both ground
water and surface water contained in large rivers (Sungai if, Walennae, Gilireng, and Awo)
existing. This river is a potential that can be used for irrigation and clean water supply.

The Condition of Demographic

1. Population

As one of the regencies in South Sulawesi, Wajo Regency is quite densely populated, because

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Wajo Regency is famous for its trade flows and business world that is quite competitive,
especially in the silk-based trade and handicraft industry so that it can draw the attention of
the outside community to domicile or invest and try your luck in this area.

The condition of the population of Wajo Regency is based on 2014 data from the Office of the
Regional Secretariat of the General Administration of 390,603 people. The most populous
population is located in Tempe Subdistrict, which is the capital city of the regency with a total
of 62,038 inhabitants and an area with a small population compared to other regions found in
the District of Gilireng with a total of 11,074 inhabitants. Unequal population growth in each
district and the community is more centered on the capital because among others, the city
area, in this case Tempe District, is still available with ample land to be a residential area, on
one side this area is equipped with sufficiently developed infrastructure to encourage a part of
the population, especially middle to lower income separately residing in this region. The speed
of life development in the capital is able to help improve life compared to the development in
villages, so that many people outside the city come to the district capital to try to improve the
level of education and life in the district capital, precisely in Tempe District. This condition is
expected to be in accordance with the existing regional development planning, the pattern of
population distribution and the level of facilities are not only concentrated in the city area, but
also spread throughout the sub-district and district in accordance with their functions and
purposes and are not centered at one point.

2. Employment

Meeting the increasing needs of people's lives requires a strategic step in fulfilling them. Work
becomes something important and a guarantee to meet the needs of life. Job seekers are
increasing from year to year in line with the demands of meeting people's needs.

General description of Pitumpanua

1. Profile of Pitumpanua

Pitumpanua is one of 14 sub-districts in Wajo Regency, South Sulawesi, Indonesia. The capital
of Pitumpanua is Shiva. Shiva is an old city that has been for centuries. He once joined the
Luwu Kingdom then joined the Wajo Kingdom under the government of Arung Matoa Wajo IV

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La Tadampare Puang rimaggalatung. At the beginning of the 20th century rejoined Wajo after
merging into Bone. Whitewater Matowa at the time was, Ishaka Manggempuani. The first
Dulung in the City of Siwa, in Pitumpanua was Karaeng Bella, Petta Kangkung. This city has
developed rapidly due to its strong earth yield, namely cloves and chocolate and milkfish /
shrimp ponds.

Pitumpanua is one of the 14 sub-districts in Wajo Regency. The district which is the
northernmost of Wajo Regency is centered in Siwa and has an area of 207 13 km2 which is
divided into 23 villages and 4 villages. Located at an altitude of less than 100 meters above sea
level, the area of the Sub-district of Pitfeedua is directly adjacent to the beach. This district is
bordered by Bone Bay to the east, Luwu Regency to the north of Sidrap Regency to the west
and Keera District to the south. In 2015, 25.11 percent of the total area of land in the District
of Pitumpanua was paddy fields. The majority of the population uses these rice fields to grow
rice.

The capital city of Pitumpanua Sub-District is Siwa Village. The closest village / village from the
center of the Pitumpanua subdistrict is Bulete and Batu Village, which is 1 km away, while the
farthest distance is Simpellu Village, which is 20 km away. The distance traveled from the
village / village in Pitumpanua to the Regency capital in Sengkang is approximately 78 km. This
distance is the farthest distance from the district capital when compared to the distance of all
sub-districts in Wajo Regency.

2. Government

Based on MOHA Decree No. 587890100000000 dated December 15, 2015, there was a change
in the government structure of the District of Pitumpanua. Previously, Pitumpanua Subdistrict
consisted of 14 villages / kelurahan, in 2015 experienced a division into 27 villages / village
office. The division of the village area / village Pitumpanua formed 13 new villages.

As one of the large sub-districts in Wajo District, the government of the Subdistrict of
Pitumpanua requires the support of government resources for public services. In 2015, the
number of civil servants in Pitumpanua was recorded at 449 people spread throughout the
village /village office. The number is still inadequate when compared with the population of

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Pitumpanua which reaches 44,733 people. With the number of villages 23, 4 villages and
hamlets / neighborhoods 54. Pitumpanua has as many as 90 male civil servants and 269 female
civil servants.

3. The Population

The total population of Pitumpanua Subdistrict in 2015 was 44,733 people consisting of 22,069
men and 22,664 women. With an area of around 207.13 km per km, there were 216 people in
2015. In general, the number of women was higher than the number of men. This is also
shown by the number of Sex ratio in Pitfeedua District in 2015 which was 97.37, meaning that
for every 100 female residents there were 97 male residents. The composition of the
population of Pitumpanua in 2015 was dominated by young residents. Based on the
population pyramid, it can be seen that the population of the young age group is greater than
the old age group, which indicates a high birth rate.

The dependency ratio of Pitumpanua Subdistrict is 49, which means that for every 100 people
who are of working age (considered productive have dependents as many as 49 people who
are not productive and are considered no longer productive. When viewed from the
population per village / village office , out of 23 villages /village office in the Pitumpanua
Subdistrict, the highest population is in Siwa Village with a population of 7,218 people, while
the lowest is in Simpellu Village, 1,049 people.The highest population density is in Siwa which
is 897 people per km2 following ilesang Village with a density population of 541 inhabitants
per km2 Whereas Abbanderange is the village with the lowest population density, which is
only 68 people per km2.

4. Education

In 2015, the educational facilities in the Pitumpanua Subdistrict consisted of 35 elementary


units, consisting of 32 units of the Inpres State Elementary School and 3 State Islamic
Elementary Schools (MIN); 5 state junior high schools and 1 Madrasah Tsanawiyah (MTs); and
2 public high schools and 1 vocational school unit. Educational facilities for elementary schools
are evenly distributed in each village / village. Conditions such as elementary school education
facilities that are evenly distributed in every village, are not experienced by junior and senior

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high schools. Until 2015, there were only 5 junior high schools in the villages / village office,
while there were only high school / vocational school facilities in Bulete and Lompoloang.

The student teacher ratio for all levels of education in the District of Pitumpanuaa in 2015 is in
the range of 14 to 19 students. On average, one teacher in Pitumpanua in 2015 handled 15
students so that the learning process could take place effectively.

5. Health

The availability of adequate health facilities and health workers is needed to improve the level
of public health. Health facilities in the District of Pitumpanua consist of 1 hospital unit, 6 unit
puskesmas / pustu, 10 units poskesdes / polindes and 23 posyandu. When compared with the
total number of people affected by nearly 45 thousand people, the number of these facilities is
still considered to be insufficient to meet the needs for health facilities and infrastructure in
Pitumpanua As with the number of health facilities, the number of health workers in
Pitumpanua is relatively minimal. The number of health workers in Pitumpanua did not
increase much in 2015. Only nurses' health personnel experienced an increase.

The number of active family planning (KB) acceptors in Pitumpanua Subdistrict in 2015 were
4,490 acceptors. The most commonly used type of contraception is the type of pill (44 percent)
because it is considered not to have many risks and the price is relatively cheap. The next
choice is injections chosen as many as 36 percent of active acceptors and 11 percent choose
implants. The rest use contraception types of condoms, IUDs and MOWIMOP. In 2015 there
were 116 people with disabilities in Pitumpanua, 39 of whom were visually impaired and 73
people with disabilities. However, due to the high sense of brotherhood of the people of
Pitumpanua the people with disabilities were acceptable and lived alongside the community.

6. Poverty

Various efforts that have been made by the government to improve the welfare of the
community have shown quite encouraging results. Based on data from the National Family
Planning Coordinating Board (BKKBN), it is recorded that the welfare level of the majority of
families in Pitumpanua is classified into the Prosperous Ill family category (as much as 36
percent) and the welfare family category (as much as 26 percent). The number of pre-

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prosperous families in 2015 decreased compared to 2013. It was reduced by 86 HH or about 8


percent. The families of well-being II also experienced an increase as shown in the table beside
This indicates the standard of living and the level of welfare of the people of Pitumpanua
getting better.

The focus of research was the concentration, in the purpose of research. The focus of this
research is the principle of the principle of accountability in the management of the allocation
village Fund (ADD) in the chief population Pitumpanua district of the district of the Wajo. The
principles of accountability (BPKP, 2007:7-8) as follows: commitment and the entire staff, a
system of which the use of resources is consistent with the statutory regulations, and the goals
of the purpose of the purpose and goals has been established, the observation of missions and
the results as well as benefits, and the nature of the ability, transparency, and innovations.

Management and Accountability of Allocation of Village Funds on Pitumpanua Sub-Distrik,


District of Wajo, South Sulawesi. Village Government in Pitumpanua District in carrying out the
principles of corporate governance are as follows:

a. Transparency

Budget transparency is also needed to improve supervision. Transparency is one of the prerequisites
for the creation of good governance and governance that is clean and free from corruption.
Transparency is built on a free flow of information, all government processes, institutions and
information need to be accessible to interested parties, and the information available must be
sufficient to be understood and monitored. According to Sopanah (2003) the budget prepared by
the executive is said to be transparent if it meets the following criteria:

1) There are announcements of budget policies,


2) Budget documents are available and easily accessible,
3) Timely accountability reports are available,
4) Accommodation of votes / proposals from the people,
5) There is a system of providing information to the public.

The village government in Pitumpanua has implemented the transparency criteria with
announcements made at the Village office about the amount of the budget and the use of
the budget, the village government has also accommodated proposals from the

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community, and has disseminated information to the community in the form of


circulations and announcements at the village hall. However, for the convenience of
documents to be accessed it still cannot be implemented properly, as well as reports
finance. The village government in submitting financial reports is not in accordance with
the format specified in government regulations.

b. Accountability

Vertically accountability relates to accountability for managing funds to higher authorities,


for example the accountability of work units (dinas) to the Regional Government, then the
Regional Government to the Central Government. This has gone well in the village of
Pitumpanua. While the horizontal accountability where the responsibility for managing
public funds is to the wider community. This is still lacking in its implementation, this is
illustrated by the results of interviews and discussions with village community leaders in
the Pitumpanua district. The village government is still not transparent in implementing
the project. Especially in terms of whether the project implemented uses funding with
village funds or is the project funded using funds from the district government. However,
the village government in Pitumpanua district has implemented adequate procedures in
carrying out activities using village funds.

c. Responsibility

One of the fundamental principles towards the ideals of good governance is


responsiveness, that is, regional governments must be sensitive and responsive to
community issues, the needs of the people, do not wait for them to convey their desires,
but they proactively study and analyze the needs of their people later gave birth to
strategic policies to meet public interests. Regarding responsiveness, the government must
formulate social development policies towards all groups of society indiscriminately. As a
public servant, the local government must be sensitive to matters relating to the needs of
the community to realize capable governance and high professional loyalty.

In the village government in Pitumpanua district it has been proactive and studied and
analyzed community needs. People can also express their desires indiscriminately.

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However, this community involvement is still not optimal, this is indicated by the results of
interviews and discussions with the community and community leaders that, village fund
allocation for a project has been well implemented, but the allocation is not in accordance
with the provisions or bestek in the criteria already set in the budget. So that the projects
that are built become quickly damaged, some even cannot be used because they are not in
accordance with the needs of the community.

d. Community participation in the budget cycle

Community involvement in making decisions both directly and indirectly through


representative institutions that can channel their aspirations on the basis of freedom of
association and speech and constructive participation. Community participation is the most
important element in implementing good governance in a country / region. Through this
participation the community is directly involved in decision making / policy of the local
government (public policy). The concrete manifestation of this participation can be
participation in the planning, implementation and supervision of the Regional Budget. The
village government in Pitumpanua District, in the implementation of the project from the
village budget allocation has involved the community, although not all communities feel
involved by the village head.

CONCLUSSION

Based on the results of an analysis of the village government in Pitumpanua can be concluded
as follows:

1. The village government in Pitumpanua has implemented the transparency criteria with
announcements made at the Village office about the amount of the budget and use of the
budget, the village government has also accommodated proposals from the community,
and has disseminated information to the community in the form of circulations and
announcements at the village hall. However, for the convenience of documents to be
accessed it still cannot be implemented properly, as well as financial statements. The

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village government in submitting financial reports is not in accordance with the format
specified in government regulations.

2. Accountability to the management of village fund allocations in the pitumpanua sub-


district, wajo district is still lacking. This is illustrated by the results of interviews and FGDs
with community and community leaders in the Pitumpanua district, where the village
government was not transparent in implementing the project. Does the project
implemented use funding with village funds or is the project funded using funds from the
Regency government.

3. In the village government in Pitumpanua district it has been proactive and studied and
analyzed community needs. People can also express their desires indiscriminately.
However, this community involvement is still not optimal, this is indicated by the results of
interviews and discussions with the community and community leaders that, village fund
allocation for a project has been well implemented, but the allocation is not in accordance
with the provisions or bestek in the criteria already set in the budget. So that the projects
that are built become quickly damaged, some even cannot be used because they are not in
accordance with the needs of the community.

4. The budget for village funds issued for a project has been carried out properly, but the
designation is not in accordance with the provisions or bestek in the criteria set out in the
budget. So that the projects that are built become quickly damaged, some even cannot be
used because they are not in accordance with the needs of the community.

5. The village government in Pitumpanua District, in the implementation of the project from
the village budget allocation has involved the community, although not all communities
feel involved by the village head.

6. The results of the study will be input for the District Government Pitumpanua to analyze
the Policy on allocating Village Funds to be more targeted and in accordance with the
budget for village funds allocation for Pitumpanua sub-districts such as those agreed to by
the government.

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