Local Government Capability in Managing Village Owned Enterprises (BUMDes) in Indonesia: A Case Study of Bintan Regency
One of the Indonesian government's efforts to improve the economy of rural communities is the establishment of Village Owned Enterprises (BUMDes). BUMDes that are successful in their management cannot be separated from the role of local governments as those who have the authority to foster, supervise and develop BUMDes. Therefore, this study aims to determine the capability of the local government of Bintan Regency to the management of BUMDes. This study uses a qualitative method with a case study approach. Data were obtained through in-depth interviews using purposive sampling techniques to key people in the local government of Bintan district and managers of advanced and developing BUMDes in Bintan district. This study found that the government's capabilities include entrepreneurial capabilities, motivational capabilities, investment capabilities, and adaptive capabilities. The researcher also found that the importance of legislative capability by the local government as a guarantor that all investments that have been given by the government are able to survive and develop. The challenge for the government in its implementation is that there are still BUMDes that have not been able to accept the policies made by local governments. This is due to the low resources of BUMDes managers, the lack of village community support for BUMDes and the disharmony of relations between the village government and BUMDes managers.
Agunggunanto, E. Y., Arianti, F., Kushartono, E. W. & Darwanto, D. (2016) The Development of Independent Villages Through the Management of Village-Owned Enterprises, Journal of Economic & BusinessDynamics, 13(1), pp. 67–81.
Alshaher, A. (2021) IT capabilities as a fundamental of electronic government system success in developing countries from users perspectives, Transforming Government: People, Process and Policy, 15(1), pp. 129–149.
Alting, H. (2021) Legal Analysis of the Empowering Legal Entities of Badan Usaha Milik Desa (BUMDes) After the Enactment of the Job Creation Law, International Joined Conference on Social Science (ICSS 2021), pp. 532–538.
Antoniades, N. & Haan, P. (2019) Government capabilities as drivers of performance: path to prosperity, Heliyon, 5(2).
Arifin, B., Wicaksono, E., Tenrini, R. H., Wardhana, I. W., Setiawan, H., Damayanty, S. A., Solikin, A., Suhendra, M., Saputra, A. H. & Ariutama, G. A. (2020) Village fund, village-owned-enterprises, and employment: Evidence from Indonesia, Journal of Rural Studies, 79, pp. 382–394.
Bake, J., Akib, H. & Niswaty, R. (2021) Management Model and the Success Factors of Village Owned Enterprises (VOEs) in Indonesia, International Journal of Economics and Business Administration, IX(2), pp. 82-100, https://doi.org/10.35808/Ijeba/690.
Barton, D. L. (1992) Core capabilities and core rigidities: A paradox in managing new product development, Strategic Management Journal, 13(1), pp. 111–125.
Bosma, N., Content, J., Sanders, M. & Stam, E. (2018) Institutions, entrepreneurship, and economic growth in Europe, Small Business Economics, 51, pp. 483-499.
BPS.go.id. (2020) Persentase Penduduk Miskin Maret 2020 naik menjadi 9,78 persen, available at: https://www.bps.go.id/pressrelease/2020/07/15/1744/persentase-penduduk-miskin-maret-2020-naik-menjadi-9-78-persen.html (December 15, 2022).
Braithwaite, V. (2020) Beyond the bubble that is Robodebt: How governments that lose integrity threaten democracy, Australian Journal of Social Issues, 55(3), pp. 242–259.
Butt, R. S., Wen, X., Hussain, R. Y. & Pervaiz, S. (2020) Effect of Job Stress, Benefits and Salary on Employee Job Satisfaction Based on Mediating and Moderating Role of Work Environment and Leadership: Evidence from Telecom Sector, International Journal of Engineering and Management Research, 10(3), pp. 121-130.
Creswell, J. W. & Poth, C. N. (2016) Qualitative inquiry and research design: Choosing among five approaches (United Kingdom: Sage publications).
Dhewanto, W., Ratnaningtyas, S., Permatasari, A., Anggadwita, G. & Prasetio, E. A. (2020) Rural entrepreneurship: towards collaborative participative models for economic sustainability, Entrepreneurship and Sustainability Issues, 8(1), p. 705.
Ghofar, A., Subandi, H. & Kusumadewi, A. W. (2022) Agency problem, intellectual capital and good corporate governance model for village-owned enterprises (BUMDes) in Indonesia, International Journal of Business and Systems Research, 16(4), pp. 484–512.
Gökalp, E. & Demirörs, O. (2016) Towards a process capability assessment model for government domain, Software Process Improvement and Capability Determination: 16th International Conference, SPICE 2016 (Dublin, Ireland, June 9-10, 2016), Proceedings 16, pp. 210-224.
Hasnati, H. & Yalid, Y. (2020) Policy Impact Areas of Spatial Plan Investment Climate of Business Plantation in Riau Province, IOP Conference Series: Earth and Environmental Science, 469(1), https://doi.org/10.1088/1755-1315/469/1/012072.
Iriani, S. S., Andjarwati, A. L. & Rahman, Z. (2020) Performance Optimization of Village-Owned Enterprises Through Business Management Training, International Joint Conference on Arts and Humanities (IJCAH 2020), pp. 1368–1373, https://doi.org/10.2991/assehr.k.201201.231.
Jamil Shah, M., Mehmood, T. & Hayat, A. (2019) Governance, Economic Growth and Socioeconomic Development in Pakistan, European Online Journal of Natural and Social Sciences: Proceedings, 8(4 (s)), p. 20.
Kania, I., Anggadwita, G. & Alamanda, D. T. (2021) A new approach to stimulate rural entrepreneurship through village-owned enterprises in Indonesia, Journal of Enterprising Communities: People and Places in the Global Economy, https://doi.org/10.1108/JEC-07-2020-0137.
Kehik, B. S. (2021) Patterns of Relationship between Local Government and Regional People’s Representative Council through Common Perception and Effective Communication, Turkish Journal of Computer and Mathematics Education (TURCOMAT), 12(12), pp. 2601–26011.
Kemendesa.go.id. (2021) Ini prioritas penggunaan dana desa 2021, available at: https://www.kemendesa.go.id/berita/view/detil/3650/ini-prioritas-penggunaan-dana-desa-2021 (November 16, 2022).
Kooiman, J. (2004) Governing as governance, International Public Management Journal, 7(3), pp. 439-442.
Kusmulyono, M. S., Dhewanto, W. & Hariadi, M. F. (2023) Determinant Factors of Village-Owned Enterprise Best Practice in Indonesia, AGRARIS: Journal of Agribusiness and Rural Development Research, 9(1), pp. 15-29, https://doi.org/10.18196/agraris.v9i1.104.
Kusumawanti, N., Susanti, A. & Izana, N. N. (2017), Bumdes and Asean Economic Communities in Developing Rural Economy, International Conference of ASEAN Golden Anniversary 2017, pp. 128–139.
Meng, L. (2021) Using IoT in supply chain risk management, to enable collaboration between business, community, and government, Smart Cities, 4(3), pp. 995-1003, https://doi.org/10.3390/smartcities4030052.
Miles, M. B., Huberman, A. M. & Saldana, J. (2014) Qualitative data analysis 3rd Edition: Source book of Bew Methods (Baverly Hills: SAGE Publications Inc.).
Muryanti, M. (2020) Menuju Kewirausahaan Sosial di Desa melalui Badan Usaha Milik Desa, Society, 8(1), pp. 163-174, https://doi.org/10.33019/society.v8i1.161.
Naku, D. W. C., Kihila, J. & Mwageni, E. A. (2021) Towards programs sustainability: an exploration of socio-economic determinants for effective Community Participation in Development Programs in Tanzania, Science Publishing Group, 7(3), pp. 61-70.
Nasution, F. A., Anshari, A., Thamrin, H., Thamrin, M. H., Indainanto, Y. I. & Aqmarina, Y. (2022) How agroecology practices in lobu rappa village can improve peasant community welfare, IOP Conference Series: Earth and Environmental Science, 1115(1), https://doi.org/10.1088/1755-1315/1115/1/012099.
Nelly Sari, R., Junita, D., Anugerah, R., Tri Nanda, S. & Zenita, R. (2022) Effect of governance practices on value co-creation and organizational performance: Evidence from village-owned enterprises in Riau, Indonesia, Problems and Perspectives in Management, 20(4), pp. 532-543, https://doi.org/10.21511/ppm.20(4).2022.40.
Okutayeva, S. T., Askerov, E. K., Kunafina, G. T., Tolysbayeva, M. S. & Mukhambetova, Z. S. (2021) Social Entrepreneurship: Kazakh Way of Establishment and Development, Public Policy and Administration, 20(5), pp. 703–714.
Pearce, J. L., Xin, K. M., Xu, Q. J. & Rao, A. N. (2011) Managers’ context: how government capability affects managers, British Journal of Management, 22(3), pp. 500-516, https://doi.org/10.1111/j.1467-8551.2011.00756.x.
Prafitri, N., Setyoko, P. I. & Puspita, D. R. (2018) The business management of the village government in managing Village Owned Enterprise [Manajemen bisnis pemerintah desa dalam pengelolaan Badan Usaha Milik Desa], Masyarakat, Kebudayaan Dan Politik, 31(3), pp. 328-338, https://doi.org/10.20473/mkp.V31I32018.328-338.
Ridho, H., Thamrin, M. H., Nasution, F. A. & Indainanto, Y. I. (2023) Disposition of Waste Management Policy Implementers Through the Regional Cooperation Scheme, International Journal of Sustainable Development and Planning, 18(1), pp. 275-282, https://doi.org/10.18280/ijsdp.180129.
Ritsema, R., Dawson, J., Jorgensen, M. & Macdougall, B. (2015) “Steering our own ship?” An assessment of self-determination and self-governance for community development in Nunavut, Northern Review, 41, pp. 157-180, https://doi.org/10.22584/nr41.2015.007.
Rohim, Asmuni, Sunarsiyani, F. E., Makmun, S., Muttaqin, M. Z., Suryanti, M. S. D. & Evendi, A. (2022) Common Thread: The Management of Village-Owned Enterprises and Women’s Empowerment, Sustainability and Climate Change, 15(3), pp. 166–169.
Saha, P., Nath, A. K. & Salehi‐Sangari, E. (2012) Evaluation of government e‐tax websites: an information quality and system quality approach, Transforming Government: People, Process and Policy, 6(3), pp. 300-321, https://doi.org/10.1108/17506161211251281.
Sofyani, H., Atmaja, R. & Rezki, S. B. (2019) Success factors of village-owned enterprises (BUMDes) performance in indonesia: An exploratory study, Journal of Accounting and Investment, 20(2), pp. 44-58.
Thamrin, M. H., Ridho, H. & Nasution, F. A. (2022) Strengthening Community Participation in Spatial Planning of Riverflow Regions in Medan City, International Journal of Sustainable Development and Planning, 17(6), pp. 1849-1854, https://doi.org/10.18280/ijsdp.170619.
Ulumudin, A., Fauzan, H. S. & Rismayanti, H. H. (2019) Analisis manajemen badan usaha milik desa (studi pada badan usaha milik desa padaawas kecamatan pasirwangi kabupaten garut), Jurnal Ilmu Administrasi: Media Pengembangan Ilmu Dan Praktek Administrasi, 16(2), pp. 228-242, https://doi.org/10.31113/jia.v16i2.514.
Widyastuti, S. & Ambarwati, S. (2020) Increasing the Rural Economy of Village Owned Enterprises BUMDes Antajaya Bogor, 6th Annual International Conference on Management Research (AICMaR 2019), pp. 224–228, https://doi.org/10.2991/aebmr.k.200331.048.
Yaya, R., Suryanto, R., Abubakar, Y. A., Kasim, N., Raimi, L. & Irfana, S. S. (2022) Innovation-based diversification strategies and the survival of emerging economy village-owned enterprises (VOEs) in the COVID-19 recession, Journal of Entrepreneurship in Emerging Economies, ahead-of-print, https://doi.org/10.1108/JEEE-06-2021-0213.
It is a condition that the authors assign copyright or license the publication rights in their articles, including abstracts, to Institute for Local Self-Government Maribor. This enables us to ensure full copyright protection and to disseminate the article, and of course Journal, to the widest possible readership in print and electronic formats as appropriate. Authors retain many rights under the Institutes' right policies, which can be found at journal.lex-localis.press. Authors are themselves responsible for obtaining permission to reproduce copyright material from other sources.