Good corporate governance in cooperatives organization: Lesson learn from Indonesia

Document Type : Review Article

Authors

Faculty of Economics and Business, University of Mataram, Mataram, Indonesia

Abstract

Governance is a set of compliance principles that are now being applied to all types of companies, including non-bank financial corporations such as cooperatives. A cooperative is a national institution based on the principle of mutual cooperation that collects funds from the community and channels them back into the community. Governance has five main principles: transparency, accountability, responsibility, independence, and fairness and equality. This research aims to analyze the existing good corporate governance at cooperative organizations in East Lombok, Indonesia. The results of this research show that the principle of responsibility is the most widely implemented principle by the cooperatives in East Lombok, namely 67.75%. According to the principle of fairness and equality, an average of 48% of the cooperatives have undergone fair cooperation between each existing stakeholder. Then in third place is the principle of independence, with an average of 44.25%. The findings also demonstrate that 41% of cooperatives in East Lombok operate transparently, allowing all members, administrators, supervisors, and employees to access financial and non-financial information. The lowest figure is in accountability; that is, only 35.5% of the cooperatives have clarity of the functioning of the structure, system, and responsibility in its enforcement. The results of this study show that cooperatives in East Lombok have a good corporate governance system of only 59.12%. This is not a high value, so the cooperative in East Lombok should improve the good governance of cooperatives according to its principles.

Keywords

Main Subjects

References

Agustina, Y., Winarno, A., & Dyan, A. (2021). Good Corporate Governance and Financial Performance on Capital Adequacy Ratio: A Reflection of Indonesian Conventional Banking. Management and Banking, 7(2). https://doi.org/10.21070/jbmp.v7vi2.1542
Al-Sartawi, A. (2018). Corporate governance and intellectual capital: Evidence from Gulf Cooperation council countries. In Article in Academy of Accounting and Financial Studies Journal. https://www.researchgate.net/publication/323535586
Donaldson, L., & Davis, J. H. (1991). Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns. Australian Journal of Management, 16(1), 49–64. https://doi.org/10.1177/031289629101600103
Dwiputri, R. M. (2019). The Influence of Corporate Governance on Financial Performance and Stock Performance on the Lq45 Stock Index. Journal of Economy and Industry, 20(1), January-April 2019.
Ekayani, N. N. S., Sara, I. M., Sariani, N. K., Jayawarsa, A. A. K., & Saputra, K. A. K. (2020). Implementation of good corporate governance and regulation of the performance of micro-financial institutions in the village. Journal of Advanced Research in Dynamical and Control Systems, 12(7), 1–7. https://doi.org/10.5373/JARDCS/V12I7/20201977
Hopt, K. J. (2021). Corporate Governance of Banks and Financial Institutions: Economic Theory, Supervisory Practice, Evidence and Policy. European Business Organization Law Review, 22(1), 13–37. https://doi.org/10.1007/s40804-020-00201-z
Ikatan Akuntan Indonesia. (2023, February 22). IAI – LPDB KUMKM Memorandum of Understanding Collaboration to Improve Cooperative Governance and Financial Reporting. https://web.iaiglobal.or.id/Berita-IAI/detail/nota_kesepahaman_iai_lpdb_kumkm_kerjasama_untuk_tingkatkan_tata_kelola_and_pelaporan_keuangan_koperasi#gsc.tab=0
Jefri, R. (2018). Stewardship and Good Governance Theory. Journal Unibos Makassar, 4(3).
Khafid, M., & Nurlaili, D. (2017). The Mediating Role of Accountability in the Influence of Cooperative Characteristics on its Financial Performance. https://www.researchgate.net/publication/317718845
Komite Nasional Kebijakan Governance. (2014). Indonesian Banking Good Corporate Governance Guidelines. Published by: Copyright @ 2014 Komite Nasional Kebijakan Governansi.
Komite Nasional Kebijakan Governance. (2022). General Guidelines for Indonesian Cooperative Governance (PUG-KOPIN). Published by: Copyright @ 2022 Komite Nasional Kebijakan Governansi.
Lestari, BAH., Jumaidi, L., Lenap, IP., & Suryantara, AB. (2019). Accounting for Cooperatives and EMKM (Micro Small and Medium Entities). University Mataram Press.
Ma, W., Hong, S., Reed, W. R., Duan, J., & Luu, P. (2023, September 1). Yield effects of agricultural cooperative membership in developing countries: A meta-analysis. Annals of Public and Cooperative Economics. https://doi.org/10.1111/apce.12411
Mwanja, B. K., Marangu, W. N., Wanjere, D. M., & Thuo, K. J. (2014). Effect of Corporate Governance on Performance of Savings and Credit Co-operative Societies in Kakamega County. European Journal of Business and Management, 6(30).
Pramesti, G. A. A., & Tandio, D. R. (2018). Analysis of the Implementation of Good Corporate Governance in Cooperatives in Denpasar City. Journal of Accounting Research, 8(2).
Presiden Republik Indonesia. (1992). Constitution of the Republic of Indonesia Number 25 of 1992 concerning Cooperatives.
Putra, K. M. K., & Cipta, W. (2021). The Effect of Implementing the Principles of Good Corporate Governance and Risk Management on the Financial Performance of Savings and Loans Cooperatives in Buleleng District. Journal of Accounting Profession, 12(2). https://doi.org/10.23887/jippg.v3i2
Salmato, Lestari, B. A. H., & Jumaidi, L. T. (2023). Performance Accountability Financial Reports of Saving and Loan Cooperatives in East Lombok (Study on KSUSPPS Bina Al-Mandiri Syaria’ah). International Journal of Business and Applied Economics, 2(4), 639–650. https://doi.org/10.55927/ijbae.v2i4.5248
Siwi, M. K., Kurniawati, T., & Marna, J. E. (2020). Analysis of Factors Inhibiting the Health of Various Embroidery Producer Cooperatives in Agam Regency. EcoGen Department of Economic Education Universitas Negeri Padang.
Sofyani, H., Ali, U., & Septiari, D. (2020). Implementation of Good Governance Principles and Their Role in Performance in Village-Owned Enterprises (BUMDes). JIA (Accounting Scientific Journal), 5(2).
Taylor, K. (2021). An analysis of the entrepreneurial institutional ecosystems supporting the development of hybrid organizations: The development of cooperatives in the U.S. Journal of Environmental Management, 286. https://doi.org/10.1016/j.jenvman.2021.112244
Wibowo, T. F., Zarefar, A., & Arifulsyah, H. (2019). Preparing Savings and Loans Reports Using Microsoft Access at the Caltex Riau Polytechnic Employee Cooperative. In Journal Financial and Business Accounting, 12(1). http://jurnal.pcr.ac.id
Wuryani, E., & Yanthi, M. D. (2020). Determining Factors of Corporate Governance in Women Corporate of East Java Indonesia. AKRUAL: Journal Accountancy, 11(2), 136. https://doi.org/10.26740/jaj.v11n2.p136-148
Yusma, L. N. S., Sakti, D. P. B., & Furkan, L. M. (2021). Cooperative Governance in East Lombok District (Case Study on Savings and Loans Cooperative) Cooperative Governance in East Lombok District (Case Study on Savings and Loans Cooperative). Journal EMBA: Journal Riset Economy, Management, Business and Accountancy, 9(2), 23–33.

Files

History

  • Receive Date: 03 August 2023
  • Revise Date: 02 October 2023
  • Accept Date: 13 October 2023

Share

How to cite

Statistics