Corporate Governance with the Institutional Theory Approach on Regional Development Banks in Indonesia
Abstract: The purpose of this
research paper is to analyze the implementation of corporate governance at the
Regional Development Banks, or locally known as Bank Pembangunan Daerah, in
Indonesia. The focus of this study is on the role and the position of the
governing body or board as well as the relations between governance in micro
context and macro condition in the framework of institutional theory. The kind
of paradigm that is used in this research paper is the post-positivist paradigm
by using mixed methods. To analyze the implementation of corporate governance,
this research paper is using several key actors: BOD's Size, Board of
Commissioners Size, Board of Independent Commissioners Size, Audit Committee's
Size, Block-holder Ownership, Risk Monitoring Committee, and Nomination and
Remuneration Committee. The results of this research paper indicate that Bank
Pembangunan Daerah merely fulfill the requirements of important tools in the
implementation of corporate governance.
In the end, this will influence the manageability of risk management and
compliance process. This condition has positioned the importance of the
existence of board in the form of both board of commissioners and board of
directors in the management and the achievements of the performance of Bank
Pembangunan Daerah (BPDs). In the perspective of corporate governance
theorizing that is related to the institutional approach, board can be the
balancing power in the context of the diversity of agents that display the
relationship patterns not only in the micro-level that involve principal,
management, and employees, but also in the macro condition such as legal system
in the forms of regulations, social and cultural system, and political system
in the form of relations between companies and both legislative and executive
institutions. This is related to the strong influence of bureaucracy and
political institutions that demonstrate the emergence of conflicting objectives
and political interference in the management of Bank Pembangunan Daerah. This
condition emerges as the consequences of the existence of Bank Pembangunan
Daerah as regional-owned enterprises (BUMDs) that has dual functions, namely as
a business enterprise that focuses on making profits as well as an agent of
regional development and providing services to the public.
Keywords: corporate
governance, institutional theory, conflicting objective, political
interference, regional development banks
Author: Umanto, Chandra
Wijaya, Andreo Wahyudi Atmoko
Journal Code: jpadministrasinegaragg150048