PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

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15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA

INTERNATIONAL CONFERENCE
“Creativity as The Lifeblood of Business”

October 14-16, 2016 Universitas Brawijaya

Universitas Brawijaya Malang

2016
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Assalamualaikum wr wb.
Welcome to the International Conference of 15th Anniversary Doctoral Program in
Management Faculty of Economics and Business Universitas Brawijaya.Business
environment has rapidly changed nowadays. Every organization has to adapt in order to
cope with the changes and fulfill the stakeholder needs. Knowledge is one of the most
important thing that organization should carefully consider and manage. By a good
knowledge management combined by sound learning process, organization can win the
competition. The importance of knowledge had inspired Universitas Brawijaya,
specifically Faculty of Economics and Business to create and develop a study program that
is able to provide the society with various, newest, and beneficial knowledge in the area
of management.
Doctoral Program in Management Faculty of Economics and Business Universitas
Brawijaya plays a central role in creating knowledge and inspiring society with various
applicable knowledge in management. That is reflected by the stated vision, which is “to
become an internationally reputable Doctoral Program in Management and to actively
participate in the national development through education, research, and community
services.”. Time goes by, and Doctoral Program in Management Faculty of Economics and
Business Universitas Brawijaya has been establishedfor 15 years. It has been coloring
many organizations, entities, as well as individual beings with recent and applicable
knowledge and memorable experiences in management. The students comefrom some
countries around the world and various regions in Indonesia. Their background ranges are
from academicians into practitioners. There is sound academic climate which is able to
facilitate both lecturers and students to share and discuss knowledge and recent issues in
management areas.
With regards to the achievements, in its 15th anniversary, Doctoral Program in
Management Faculty of Economics and Business Universitas Brawijaya conducts a
memorable event that is able to unite all of the academic community and to facilitate
lecturers, students, as well as alumni to share their ideas and opinions for the
development of Indonesia as a whole. It has been realized that creativity is one important
factorfortheorganization to exist. By having creativity, each organization will be able to
continuously innovate in product developments as well management processes. By a
continuous innovation, the organization cancope with the environmental changes and
adapt to the needs of stakeholders.
Related to those backgrounds, Doctoral Program in Management Faculty of Economics
and Business Universitas Brawijaya holds an event named International Conference of the
15th Anniversary of the Doctoral Program in Management Faculty of Economics and
Business Universitas Brawijaya, with thetheme “Creativity as the Lifeblood of Business”.
Therefore, this proceeding contains various ideas and opinions around the world
presented in discussion sessions as well as written articleswhich is hoped to inspire the
readers to be more creative and innovative in facing the chalanging of the environmental
changes.
Finally, I would like to give appreciations to all of the committees, presenters, participants,
and the sponsors that actively support this event. Hopefully this international
conferencewould bebeneficial forall of us.
Wassalamu 'alaikum Wr. Wb

Prof. Dr. Armanu

Head of Doctoral Program in Management
Faculty of Economics and Business Universitas Brawijaya

Proceeding Foreword ii
PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Program Chairman
Yulist Rima F, SP., MM.

Conference Editorial Board

Prof. Hung-Che Wu, Ph.D
Associate Professor, Business School,
Nanfang College of Sun Yat-sen
University, China
Dr. Andi Subroto
Director at PT. Omya Indonesia
Prof. Ubud Salim
Syariah Financial Pracitioner
Dr. dr. Arry Pongtiku
Health Pracitioner and Researcher

Conference Administrator
Prof. Dr. Candra Fajri A.
Prof. Armanu, SE., M.Sc., Ph.D
Dr. Aulia Fuad Rahman, SE., M.Si.
Dr. Sumiati, SE., M.Si
Dr. Ainur Rofiq, SE., M.Com.
Prof. Dr. Margono Setiawan, SE.
Dodi W. Irawanto, SE., M.Com., Ph.D.
Ananda Sabil H, SE., M.Com., Ph.D.
Prof. Dr. Noermijati
Dr. Sujono
Dr. Benhur Tomy Mano
Edy Sulistiyawan, S.Si. M.Si.
Prof., Dr.Tulus Haryono, M.EK
Prof. Dr. Asri Laksmi Riani M.S.
Prof. Dr. Prihatin Lumbanraja, SE., M.SI.
Prof. Dr. Kamaludin
Prof. Dr. Hatane Samuel, M.S.
Dr. Roslina Alam, SE., M.SI.
Dr. Suganda Thalib
Dr. Marwan, SE, M.SI.
Dr. John Agustinus, STH, SE, MM
Dr. Rudy S. Wenas, SE.MM.
Dr. Hasrudy Tanjung,S.E, M.SI.
Dr. Sitti Raha Agoes Salim, M.SC.
Dr. Ahyar Yuniawan SE. MSI.
Dr. Dra. Ec. Iramani, M.SI.
Dr. Ni Nyoman Kerti Yasa, SE., MS
Dr. Didi Sundiman, ST.,MM.
Uke Prajogo, STP., MM.
Dr. Adi Indrayanto
Ir. Faisal Junaidi, MM.
Jondry Adrin Hetharie, SE., MM.
Nadiyah Hirfiyana R, SE., MM.
Dr. Hendra Lesmana
Dr. Sonny Bagus Purwanto, SE., MM.

Program Assistants
Widhy Tri Astuti, SE., M.Si

iii
PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Henny Dwijayani, SE., M.Si

Rahaditya Y, SE., MM
Marwan Soleman, SE., M.Si.
Victor Ernest Huwae, SE., MM
Faizal R. Djumadi
Drs. Rujita, MM.
Markiz Yudiawan
Iqbal Alan Abdullah, SE., MM.
Rahmat Yuliawan, SE., MM.
Adi Bagus
Prof. Dr. Asri
Dr. Didi Sundiman
Dr. Anna Triwijayanti
Bayu Ilham Pradana, SE., MM
Eko Yuniarto
Angga Endre Restianto
Hanantya Gilang M., SE.
Choirul Anam, SE.
Gigih Eko Wahyu Prasetyo
Didir Prasetyo
Taufiq Ismail, SE., MM.
Erwin Tri Handoko
Habib Rachman
Prof. Dr. Tulus Haryanto
Dr. Adi Indrayanto
Dr. Ainur Rofiq
Dr. Ketut Astawe
Dr Ananda Sabil Hussein
Caterine Ana P, SS
Agus Widodo
Maulida Khosyia, SE.
Agus Widyatama, A.Md.
Yusuf Afandi
Dr. Widi Dewi Puspasari
Dr. Ifa Khoiria Ningrum
Dr. Kukuh Liyanto
Sigit Pramono, SE., MM.
Dr. Jack Henry Syauta
Prof. Dr. Asri Laksmi Riani, MS

Sponsors
Royalindo Convention International
Semen Indonesia
Pos Indonesia
Uniplast
PT. Ragam Maju Tangguh
MM 2100 Industrial Town PT. Megalopolis Manunggal
Bulog

Copyright © 2016 Belong to the Writers

iv
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TABLE OF CONTENTS

ANALYSIS OF INVESTMENT RISK AND STOCK RETURN ON

TELECOMMUNICATIONS INDUSTRY LISTED IN INDONESIA STOCK EXCHANGE
Arna suryani and Eva Herianti................................................................................... 1
DESIGN UNCERTAINTY ON SUPPLY CHAIN INTEGRATION SUCCESS AND SUPPLIER
PERFORMANCE IN THE CONSTRUCTION SECTOR
Fahmy Hermawan, Surachman, Fatchur Rohman, and Siti Aisjah............................ 11
THE DETERMINANTS OF CAPITAL STRUCTURE: ANALYSIS OF MANUFACTURE
FIRMS LISTED IN INDONESIA STOCK EXCHANGE IN INDONESIA
Dian Sulistyorini ........................................................................................................ 20
THE ANALYSIS OF THE CONSUMER’S BEHAVIOR IN SHOPPING BATIK IN SOLO
WHOLESALER CENTRE
Siti Maryam ............................................................................................................ 36
BEYOND BRAND SWITCHING BEHAVIOUR: AN EXPLORATION CONCEPT OF
BUTTERFLY CUSTOMER
Anna Triwijayati ...................................................................................................... 50
HOW GREEN TRAVEL CAN INFLUENCE GREEN ECONOMY USING GOOGLE
TRENDS?
Y. C. Chen and H.C. Wu ............................................................................................. 60
MANAGING GLOBAL COMMUNICATIONS TO INTERNATIONAL MARKETING
COMMUNICATIONS (IMPLEMENTATION OF MICE INDUSTRY ON THE ISLAND
LOMBOK WEST NUSA TENGGARA)
Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum ........................ 64
ANALYSIS OF CUSTOMER’S DECISION TO CHOOSE SHARIA BANKING IN
SURAKARTA
Sudarwati and Burhanudin. AY ................................................................................ 72
INDIVIDUAL COMPETENCIES AND LEARNING ENVIRONMENT FOR CAREER
DEVELOPMENT AT THE REGIONAL DEVELOPMENT BANKS
Pamela Magdalena ................................................................................................. 81
MARKETING OVERVIEW: CADILLAC & L.A. GEAR
Puput Ichwatus Sholihah, Mohammad Ali, dan Ramazyan Shavarsh ...................... 87
ANALYSIS OF FACTORS AFFECTING THE STUDENTS ON THE DECISION TO CHOOSE
THE PRIVATE HIGHER EDUCATION (A CASE STUDY OF STUDENT NATIONS PELITA
CIKARANG BEKASI REGENCY)
Ergo Nurpatria Kurniawan, Margono, Ainur Rofiq, Sunaryo ................................. 98
BECOMING EMOTIONALLY ATTACHED TO TEAM: THE ROLE OF ETHICAL CLIMATE
DIMENSION IN NURSING PROFESSION
Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony
Harijanto ................................................................................................................. 105
EFFECT OF GOOD CORPORATE GOVERNANCE AND PREMIUM ON THE
PERFORMANCE OF INSURANCE COMPANIES LISTED ININDONESIA STOCK
EXCHANGE
Markonah, Achmad Sudiro, Surachman and Mintarti Rahayu ................................ 121
HOW BANKING SERVICE QUALITY, IMAGE BANKING, AND BANK CUSTOMER
SATISFACTION AFFECT CUSTOMER COMPLAINT?
Markonah, Achmad Sudiro, Surachman and Mintarti Rahayu ................................ 129

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EFFECT OF WORK FAMILY CONFLICT AND FAMILY WORK CONFLICT TOWARDS

JOB STRESS OF FEMALE LECTURERS IN UPN VETERAN JATIM
Resi Permanasari and Bowo Santoso ........................................................................ 144
EXPLORING COMPARATIVE LOW COST CARRIER SERVICE QUALITYAND FULL
SERVICE AMONG IN EUROPE, USA, TURKEY AND MALAYSIA
Setiyo Purwanto and Armanu ................................................................................ 157
THE INFLUENCE OF SOCIAL CAPITAL, INTELECTUAL CAPITAL AND ENVIRONMENT
DYNAMISM TOWARD EMPLOYESS PERFORMANCE
Anwar Hamdani and I Gusti Putu Diva Awatara ..................................................... 171
MODEL OF DEVELOPMENT COMPETENCE ENTREPRENEURSHIP FOR SME’S
PRACTITIONERS LIVING IN THE FLOW OF RESERVOIR GAJAH MUNGKUR
WONOGIRI BASED THE VALUE OF A CHARACTER AND LOCAL WISDOM
Anggoro Panji Nugroho and Agus Utomo ............................................................. 178
CSR FOR SUSTAINABILITY: ETHICS FOR FOOD MANUFACTURING IN INDONESIA
FOCUS ON NON-TAYYIB FOOD ADDITIVES
Listian Indriyani Achmad, Noermijati, Rofiaty and Dodi Wirawan Irawanto ......... 182
ANALISA MODAL INTELEKTUAL TERHADAP KINERJA KEUANGAN BANK SYARIAH
PERIODE 2011 – 2015
Preatmi Nurastuti...................................................................................................... 196
ANALISIS PORTOFOLIO OPTIMAL PADA INDEKS JII MENGGUNAKAN METODE
SINGLE INDEKS MODEL
Adibah Yahya ............................................................................................................ 197
IMPLEMENTATION OF RICE IMPORT STRASTEGI CIRCULATION IN EAST TIMOR
UNIVERSITY DILI EAST TIMOR
Alfredo dos Santos .................................................................................................... 198
EXPERIENTIAL KNOWLEDGE IN SMALL FIRM INTERNATIONALIZATION
Sri Palupi Prabandari and Ding Xiu Hao .................................................................... 199
EFFECT OF AIRLINE CUSTOMER SERVICE PERFORMANCE, QUALITY EXPERIENCE
AND BRAND LOYALTY IN INDONESIA
Kuwat Riyanto, Armanu Thoyib, Achmad Sudiro,and Ainur Rofiq............................ 200
MARKETING MIX ANALYSIS OF INFLUENCE SUCCESS OF SMALL AND MEDIUM
ENTERPRISES (SMEs) IN THE FIELD OF CULINARY JABABEKA CIKARANG BEKASI
DISTRICT
Nur’Aeni .................................................................................................................... 201
UNDERSTANDING SPECTATOR LOYALTY: DOES EMOTION AND CULTURE PLAY
IMPORTANT ROLES?
Radityo Putro Handrito ............................................................................................. 202
CHARACTERISTICS OF GENDER AS A RISK MODERATING EFFECT PERCEPTION OF
STOCK ON THE DECISION TO PURCHASE AND SALE OF SHARES OF COMMON
STOCK (STUDY INVESTOR PALEMBANG CITY SOUTH SUMATRA)
Yuliani ........................................................................................................................ 203
EFFECT OF INDIVIDUAL AND INVOLVEMENT OF WORK CHARACTERISTICS
MEDIATED JOB SATISFACTION ORGANIZATIONAL COMMITMENT OF THE
DEPARTMENT OF MARINE AND FISHERIES PORVINSI CENTRAL JAVA
Tri Wahju Wirjawan .................................................................................................. 204
STRATEGY OF DEVELOPMENT ON CORE COMPETENCIES IN IMPROVING
COMPETITIVENESS OF COCOA IN MAMUJU REGENCY WEST SULAWESI
PROVINCE
Maat Pono, Mursalim, and Palmarudi Mappigau ..................................................... 205

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DETERMINE AND ANALYZE THE INFLUENCE OF THE MARKETING STRATEGY

SERVICE QUALITY CUSTOMER SATISFACTION AND ITS IMPACT ON CUSTOMER
LOYALTY IN PRIVATE SCHOOLS IN SOUTH TAMBUN
Wanti Aprilia ............................................................................................................. 206
DEVELOPING A MODEL OF ENTREPRENEURSHIP INTENTIONS TO REDUCE YOUTH
EDUCATED UNEMPLOYMENT (CASE STUDY OF STUDENTS IN TADULAKO
UNIVERSITY, PALU)
Harnida W. Adda ....................................................................................................... 207
THE EVIDENCE OF LEADERSHIP BEHAVIOR BASED ON LOCAL CULTURE:
BANYUMAS CASE STUDY
Adi Indrayanto .......................................................................................................... 208
LABOR PRODUCTIVITY IMPROVEMENT BASED VOCATIONAL TRAINING,
COMPENSATION, AND FUTURE WORK (STUDY IN PT. MITRATANI DUA TUJUH
JEMBER)
Dwi Rizky Dhian Pangestu, Nurul Qomariah, and Yusron Rozzaid ........................... 209
ANALYZE THE SENSITIVITY (ERC) STOCK PRICE MOVEMENT (STOCK RETURN) TO
THE PROFIT AND LOSSES INFORMATION ON THE COMPANY’S MANUFACTURING
IN INDONESIA
Elsye Fatmawati ........................................................................................................ 210
ROLE OF BANKING AND FISCAL TOWARD SUCCESS MICRO, SMALL
Hedwigis Esti Riwayati, Ubud Salim, Gozali Maski, and Nur Khusniyah Indrawati ... 211
MEASURING SME’S PERFORMANCE: ISLAMIC HUMAN CAPITAL AND
ENTREPRENEURIAL ORIENTATION
Hujjatullah Fazlurrahman, Hafid Kholidi Hadi, dan Anang Kisyanto ......................... 212
ANALYSIS VARIABLES AFFECTING PREPARATION OF BUDGET BASED
PERFORMANCE IN JAYAPURA
John Agustinus .......................................................................................................... 213
CREATING SHARED VALUES THROUGH CONTRACT FARMING SYSTEM (A CASE OF
UNILEVER INDONESIA)
Kartika dewi Sri Susilowati ........................................................................................ 214
USE OF SOCIAL MEDIA AND CONTENT MARKETING AMONG STUDENTS
SMARTPHONE USERS IN MALANG RAYA
Koko Nakulo Djatikusumo ......................................................................................... 215
FINANCIAL DISTRESS AND CAMEL RATIO CASE STUDY SYARIAH BANKING
Lisa Kustina and Emmelia Tan ................................................................................... 216
ENTREPRENEURIAL MARKETING: STUDI LINTAS BUDAYA DENGAN PENDEKATAN
THEORY OF PLANNED BEHAVIOUR
Mokhamad Arwani, Mochamad Edris, Armanu Thoyib, and Marthin Nanere ......... 217
THE ROLE OF LEADER CHARACTERISTICS AND COGNITIVE SOCIAL CAPITAL ON
THE PERFORMANCE OF MICRO ISLAMIC FINANCIAL INSTITUTION
Nurita Andriani ........................................................................................................ 218
"PERCEPTION ON RISK AND THE RISK PREVENTION STRATEGY
(PHENOMENOLOGY STUDY ON MUSLIM ENTREPRENEURS OF KELOMPOK
PAHAM QUR’AN INDONESIA"
Nur Khusniyah Indrawati and Ubud Salim ................................................................ 219
THE IMPACT OF KNOWLEDGE MANAGEMENT ORIENTATION, INNOVATION AND
MARKET ORIENTATION ON CREATIVE INDUSTRY PERFORMANCE
Ananda Sabil Hussein, Mintarti Rahayu, and Nadiyah Hirfiyana Rosita ................... 220

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ORIENTATION EFFECT OF ENTREPRENEURSHIP AND ENTREPRENEURIAL

CHARACTERISTICS OF ENTREPRENEURIAL MOTIVATION, COMPETENCE AND
PERFORMANCE OF BUSINESS
Siti Aisyah, Jannati Tangngisalu, and Herman Sjahruddin ........................................ 221
STRATEGY FOR CREATING ENTREPRENEURIAL INTENTION OF STUDENTS BASED
CURRICULUM PERSONALITY AND ENTREPRENEURSHIP (STUDY ON STUDENTS
FACULTY ECONOMIC IN STATE UNIVERSITY OF SURABAYA)
Srisetyo iriani and Monica Tiarawati ........................................................................ 222
CREATIVE DESTRUCTION AND COMPETITIVENESS OF SMALL AND MEDIUM-SIZED
ENTERPRISES: CHALLENGES AND OPPORTUNITIES FOR INCUMBENT AND NEW
ENTRANT FIRMS
Stefanus Yufra M. Taneo ........................................................................................... 223
ANALYSIS OF TOURISM DEVELOPMENT STRATEGY DISTRICT OF BEKASI
Surya Bintarti ............................................................................................................ 224
CAPITAL MARKET REACTION TOWARD GOVERNMENT’S DECISION TO DEATH
PENALTY OF DRUG CRIME IN INDONESIA (CASE OF DEATH PENALTY IN THE FIRST
WAVE, SECOND WAVE AND THIRD WAVE ON LQ 45 INDEX INDONESIA STOCK
EXCHANGE)
Uswa Alhamid, Ubud Salim, and Sumiati .................................................................. 225
STRATEGY COMPETITIVENESS OF TOURISM DESTINATIONS IN THE DISTRICT OF
BEKASI
Surya Bintarti, Ubud Salim, Ananda Sabil Husein, and Mintarti Rahayu .................. 226
FORMATION OF CHARACTER BASED ON ENTREPRENEURSHIP THROUGH THE
NATION MEDIA STORIES FOR CHILDREN PRIMARY
Uke Prajogo ............................................................................................................... 228

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ANALYSIS OF INVESTMENT RISK AND STOCK RETURN ON

TELECOMMUNICATIONS INDUSTRY LISTED IN INDONESIA STOCK
EXCHANGE

Arna suryani
Lecturer at Faculty of Economics in Batanghari University Jambi
Eva Herianti
Lecturer at Faculty of Economics in Muhammadiyah University Jakarta

Abstract: This study aims to know how to effect of investment risk simultaneously
on stock returns. This research was conducted in telecommunications industry
listed in Indonesia Stock Exchange in 2009-2014 periods. The research method
was analyzed descriptively and using a linear regression analysis with panel data
using SPSS 22. Test were carried out which hypothesis test F and test t, as well as
2
to determine how big the coefficients Detrmination (R ). Based on the result of this
study, it is indicated that there is simultaneous significant influence of investment
risk on stock returns since F count is larger than F table at 13.720> 2,53 and the
large number of sig level of 0.000 <0.05 so there is a positive influence. Partially ,
only market risks and business risks that effect stock returns due to market risk sig
level is 0.000 <0.05 and for businesses with a level of risk sig 0.007 <0.05.
2
Conclusion of this study is that the value of the coefficient of determination (R ) of
72.5% influenced by the investment risk on stock returns, while the remaining
27.5% is influenced by other factors. The contribution of the research can be taken
into consideration in the company's policy and investors consider the investment
risks, especially the market risk. Investors should have wider knowledge and
information to analyze the risk of this market because market risk is the risk that
can not be eliminated through diversification.

Keywords: Investment Risk, Interest Risk, Market Risk, Inflation Risk, Business
Risk, Financial Risk, Liquidity Risk, Stock Return.

Investment is the placement of do not like to have risk, so investors

funds at this recent time with the
expectation to make a profit in the
future. According toGumanti (2011:
49), investment is related to testing
how capital markets set the price of the
securities to individual investors learn
how to choose among a wide range of
financial assets based on the degree
of fondness for the risk and return. One
of the most important parts of the
investment study is how we measure
risk and return.
Every investor who invested sha-
res have the same goal; gaining profit
shares that covers capital gains in form
of the positive difference between the
sale price and the purchase price of
shares and cash dividends received
from listed companies. Stocks allows
investors get a return or profit (capital
gain) in large numbers for a consider-
able period of time. Investors generally
consider the risks to be faced before
investing.
Consideration by investors is to
bear certain risks in order to obtain the
maximum return or with the smallest
risk to earn a certain return. To antici-
pate the return and risk of fluctuations
that exist, investors usually invest in a
few stocks or stock portfolio with the
expectation of fluctuations in returns
stocks that are formed in the portfolio
that is not too sharp.
The occurrence of fluctuating
stock price movement of each
company indicates that the stock price
continues to move in line with demand
purchase of shares from investors.
Obviously, this will cause a risk.
Investors took the return (yield) is
maximal at a particular risk to obtain
certain results on minimal. It means,
the risk is investment risk arising from

Arna suryani and Eva Herianti 1

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
the reality that happened
merupakanbentuk which risks it is
always difficult to avoid but have grown
occur in a very minimal amount.
Securities trading on the
telecommunications industry is
currently one of the lucrative business,
it is indicated denganPergerakan price
of shares listed on the Indonesia Stock
Exchange (BEI), causing many
investors are keen to engage in
business in the field of
telecommunications It shows how
much investors to buy the shares of
the respective telecommunication
companies in Indonesia.
Based on the description that
has been presented, this study aims to
examine: (1) how is the effect of invest-
ment risk with indicators of interest rate
risk, market risk, inflation risk, business
risk, financial risk and liquidity risk
simultaneously on stock return in the
Telecommunications Industry-listed in
Indonesia stock exchange in period of
2009-2014? (2) how does the invest-
ment risk with indicatr of interest rate,
market risk, inflation risk, business risk,
financial risk and liquidity risk partially
on stock returns in the
Telecommunications Industry listed in
Indonesia Stock Exchange in period of
2009-2014 ?.
Theoretically, this study is expec-
ted may be useful as reference
material and additional study material
for subsequent researchers,
particularly with regard to investment
risk and stock returns, and practically
this study can be taken into
consideration for determining the
company's policy to consider investing.
Contribution to the financial statement
users, especially investors in
understanding the investment risk and
return stock, so they can make the
right decisions related to investments
made.
THEORETICAL BACKGROUND
On this theoretical basis, we will
first be described various theories and
concepts that form the basis of this
Arna suryani and Eva Herianti
research, the investment risk, interest
rate risk, market risk, inflation risk,
business risk, financial risk and
liquidation risk. This theoretical basis is
expected to provide a frame of
reference in the preparation of the
framework and conceptual framework
as well as basic research in lowering
the hypothesis in this study.
Investment risk
Investors in making any invest-
ment decision is always trying to mini-
mize the risks arising, whether the risk
is short-term or long-term risks. Any
change in various micro and macro
economic conditions will also stimulate
the formation of a variety of conditions
that require an investor to decide what
to do and what strategies are imple-
mented to keep him obtain the
expected return. According to Fahmi
(2012: 151), the investment risk so we
can interpret as the possibility of a
difference between the actual return
and expected return [E (R)].
Interest Rate Risk
According to Tandelilin (2001:
48) changes in interest rates can affect
the variability of return of an
investment. Changes in interest rates
will affect the stock price upside down,
ceteris paribus. To be able to measure
the rate of interest can be retrieved
data from the BI Rate.
Market Risk
Halim (2005) stated that Market
Risk is the risk arising from the econo-
mic conditions of changing state is
affected by the recession and other
economic conditions. Market risk can
be calculated by looking at the Compo-
site Stock Price Index (CSPI) yearly.
Inflation Risk
According to Tandelilin (2007:
49) Investment Risk that rising inflation
will reduce the purchasing power of the
rupiah which has been invested.
Therefore, the risk of inflation can also
be referred to as purchasing power
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
risk. If inflation has increased,
investors usually require additional
inflation premium to compensate for
the decline in purchasing power
dialaminya.Untuk can measure the risk
of inflation can be seen from the
current inflation in the Data Bank
Indonesia, which contains the report
Inflation (Consumer Price Index) is
based on the calculation of annual
inflation.
Business Risk
According to Brigham and Hous-
ton (2006) Risk is defined as the
opportunity or possibility of some
events that are not profitable. The
business risk is the uncertainty faced
by the company in carrying out its
business activities. The business risk is
an intrinsic risk include business risk,
risk of financial leverage, operating
leverage and risk. Earning Volatility or
so-called Business Risk is an indicator
variable that describes risks that are
created as a result of inefficient
operations, where there is a failure of
internal controls which resulted in
losses that are not expected before
measuring with a standard deviation of
EBIT divided by total assets, with the
following formula:
Standar Deviasi
EBIT
Earning Volatility =
Total Asset
Financial Risk
According to Fahmi (2012: 189)
Financial Risk is put on debt to finance
the company, it will cause an increase
in debt to have an effect on the risks
increase as well so that the financial
risk will automatically participate
increase. In where the financial risk is
measured by the ratio of the variability
of shareholder returns that the ratio of
earnings before interest and taxes to
net income before tax, with the
following formula:
Earning Before Interest and Taxes
Arna suryani and Eva Herianti
Financial Risk =
Earning Before Taxes
Liquidity Risk
According to Tandelilin (2007:
50), Liquidity Risk is the risk
associated with a speed of securities
issued by the company can be traded
in the secondary market. The faster a
security traded, more liquid securities,
and vice versa. An increasingly illiquid
securities, the greater the liquidity risks
faced by the company. Current ratio is
high then the better the position of the
creditors, because there is a greater
likelihood that the company's debt will
be paid on time. The formulation of the
Current Ratio (CR) is as follows:
Quick Asset
Current ratio = X 100%
Quic Debt
Stock Returns
According to Husnan (2005: 19)
return is a measure which measure the
change in investor wealth both incre-
ases and decreases as well as being a
material consideration for the purchase
or maintain security. The expression to
calculate stock returns received during
the specified period t on asset i based
on historical data (percentage price
dari
shares), as follows:
Pit – Pit -1
Rt =
Pit -1
In which:
Rt = Stock Return in t period
Pit = Price or final value in t period
Pit -1 = Price or final value in te
previous t period (t-1)
HYPOTHESIS DEVELOPMENT
The price of a stock is influenced
by interest rates. The effect is
negative, if the interest rates go up
then the stock price will decline. When
interest rates decline, the investment in
the stock market become more
attractive because investors tend to
3
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
find a better rate of return higher
tinggi.Semakin market risk will be
higher required rate of return.
Tingginyariskmempunyai positively
related to stock returns. Improved JCI
showed capital market conditions are
on the rise (bullish), otherwise if
declines showed the capital market is
declining (bearish). Therefore, an
investor must understand the behavior
patterns of stock prices in the capital
market.
Rising inflation is a relatively
negative signal for investors. High
inflation will lead to decreased
purchasing power. The higher inflation
rate will further reduce the level of
profitability of the company. And vice
versa if the lower inflation will further
enhance the level of corporate
profitability. The business risk is an
inherent uncertainty in projections of
return on invested capital, the
uncertainty in estimates of future
Investment Risk
(X)
1. Interest Rate Risk
2. Interest Risk (X1)
3. Market Risk (X2)
4. Inflation Risk (X3)
5. Business Risk (X4)
6. Financial Risk (X5)
7. Risiko Likuiditas (X6)
Figure 1. Research Model
The research hypothesis can be
formulated as follow:
H1 : interest rate risk, market risk,
inflation risk, business risk,
financial risk, and liquidity risk
effects simultaneouslyand signi-
ficantly on stock return
Arna suryani and Eva Herianti
pendaapatan perusaahaan operation.
This business risks associated with the
ability of the company running the
capital would be a positive influence on
the increase stock.Semakin return high
financial risk / financial risk, the greater
the additional risks to the company as
a result of decisions the use of debt in
the capital structure of companies and
so are sebaliknya.dari terms of
liquidity, if Shareholders have the
liquidity level is low (illiquid), the cost of
the liquidation will be great. With this
reality, investors are definitely expect-
ing a higher return so that the cost of
such liquidation may be compensated.
If the current ratio decreased liquidity
of the company means showing a
decline which will affect stock return
that will be earned by the investment.
From the above description, the
research model can be described as
follows.
Stock Return
(Y)
H2 : risk interest rate has partially
and significantly effect on return
stock.
H3 : risk market has partially and
significantly effect on stock
return.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
H4 : risk inflation has partially and
significantly effect on stock
return.
H5 : risk business has partially and
significantly effect on stock
return.
H6 : risk financial has partially and
significantly effect on stock
return.
H7 : risk liquidity has partially and
significantly effect on stock
return.
RESEARCH METHODS
The object of this study is
telecomunication company listed on
the Indonesian stock exchange period
from 2009 to 2014. The sampling
technique used is saturated sample is
equal to the number sampel.Source
population data used in this research is
secondary data from library research.
This research data derived from: (1)
the capital market directory Indonesia
(Indonesian Capital Market Directory)
Tabel 1. Operasional Variabel
Definisi
Variabel
Variabel
The is the possibility
for diffrence between
Risiko
actual return and
Investasi
expected return [E(R)]
(X)
According to
Tandelilin (2001:46)
Arna suryani and Eva Herianti
in the form of summaries of data about
financial reports and capital markets,
(2) Indonesia Stock Exchange website
(www.idx.co.id) of data in the form of
annual financial statements and the
notes to the financial statements, (3).
www.yahoofinance.com website. Data
is in the form of stock price and the
stock price index is taken from daily
stock price (Pit) is the stock price on
the date t i after the closing price.
Stock price index (CSPI) during the
estimation period and observation, is
used to calculate market return (RMT).
Investment risk as a free or
independent variable (X) consisting of
interest rate risk (X1), market risk (X2),
the risk of inflation (X3), business risk
(X4), financial risks (X5) and liquidity
risk (X6). Return the stock is regarded
as bound or dependent variable (Y).
The following table can be described
operational definition of variables can
be seen in Table 1.
Indikator
Ukuran S kala
Interest rate Risk (X1) Rasio
A %
=BI Rate
M arket Risk (X2
B % Rasio
SG
Inflation Risk (X 3)
C % Rasio
= Inflation level
Business Risk (X 4)
D Std. Deviasi fromEBIT % Rasio
EVOL =
Total Asset
Financial Risk (X 5)
E EBIT % Rasio
Risk.Finan=
Earning Before Taxes
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Liquidity Risk (X 6)

F Current Asset % Rasio

CR = X 100%
Current Debt

One of the motivated

factors to invest the
Return return to take the risk Pit – Pit -1
Saham for investment that has Rt = % Rasio
(Y) been done by the Pit -1
investors according to
Tandelilin (2007:47)

Source: from several source

Methods of data analysis used in Business Risk = X4, X5 = financia lX6

this study is quantitative analysis.
According to Sunyoto (2013: 26)
quantitative analysis is analysis using
statistical formulas that are tailored to
the title of the study and formulation of
the problem, for the calculation of the
figures in order to analyze the obtained
data. In this study, the data obtained
will be analyzed by using multiple
linear regression analysis with panel
data regression equation is:
Yit =   +   X1it +   X2it +   X3it +
  X4it+   X5it +   X6it + µit
Description : ssion model, so the regression model
I = Unit Cross Section, T = Time
Period, β = slope coefficient with
dimensions K x 1, where K is the
number of independent variables, μ =
Error, Yit = Variable not free the
individual units of the i-th and the unit
when all t, Xit = variables are free for
individual units and units of the i-th
time all t, X1 = Interest Rate Risk,
Market Risk = X2, X3 = Inflation Risk,
= Liquidity Risk.
The statistical test was perform-
ed with the classical assumption used
is Normality Test, Test Multicollinearity,
Heteroskidastity test, autocorrelation
test and then test hiposesis F test and t
test.
RESULTS AND DISCUSSION
From the classical assumption
and normality tests, it obtained normal
distribution of data, there is no symp-
toms of multicollinearity between the
independent variables, no symptoms of
heteroskedastisity on panel data regre-
utilizable for variable Interest Rate
Risk, Market Risk, Risk of Inflation,
Business Risk, Financial Risk ,
Liquidity Risk and Return stock, the
regression is free from both positive
and negative autocorelation issue.
Based on the multiple regression
analysis results model, it obtained
coefficients for independent variables
that can be seen in the following table

Tabel 2. Coefficientsa Regression

Standardized
Unstandardized Coefficients
Model Coefficients
B Std. Error Beta
(Constant)
1 -,028 ,104
Interest Rate Risk _X1 -,044 ,106 -,044
Market Risk _X2 ,604 ,120 ,601
Inflation Risk _X3 -,159 ,113 -,159

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Business Risk _X4
Financial Risk X5
Liquidity Risk _X6
a. Dependent Variable: Return
Saham_Y
YitX1itX2it 
X3it X4it X5it
X6it + µit
From the panel data equation, it
can be analyzed as follow:
Constants (a) of -0,028.
Koefisien Regression variable of
Interest Risk (X1) is -0.044. Negative
coefficient values indicate that the
interest rate risk (X1) negatively affect
the stock return. This shows that with
the addition of 1% interest risk will
lower stock returns of 0,044%.
Regression Variable coefficient
of market risk (X2) of 0.604. Positive
coefficient values indicate that the mar-
ket risk (X2) has positive effect on
stock returns This shows that with the
addition of 1% market risk will increase
the stock return of 0.604%.
The regression coefficient of
inflation risk variable (X3) of -0.159.
Negative coefficient values indicate
that the risk of inflation (X3) negatively
affect the stock return. This shows that
with the addition of a 1% risk of
inflation then by 1% would lower the
stock return of 0.159%.
Business risk variable regression
coefficient (X4) of -0.376. Negative
coefficient values that the risk of
Table 3.Uji F (Simultaneous) ANOVAa
Model Sum of Squares Df
1 b
Regression 22,667
Residual 6,333
Total 29,000
Arna suryani and Eva Herianti
-,376 ,118 -,384
-,043 ,182 -,043
,063 ,265 ,042
business (X4) negatively affect the
stock return. This shows that with the
addition of 1% of business risks, the
amount of 1% would reduce the stock
return of 0.376% variable regression
.Koefisien financial risks (X5) of -0.043.
Negative coefficient values indicate
that the financial risks (X5) negatively
affect the stock return. This shows that
with the addition of 1%, the financial
risk of 1% would lower the return of
shares amounting to 0.043%.
The coefficient regression of
liquidity risk variables (X6) of 0.063.
Positive coefficient values indicate that
the risk of liquidity (X6) positive effect
on stock returns. This shows that with
the addition of liquidity risk by 1% will
increase the share return of 0.063.
From Table 3 below can be seen
that the calculated F value is 13.720
while the F table value is 2.53 with α =
0.05. Therefore, the value of F count
larger than F table (13.720 ˃ 2.53),
then Ho is rejected and accepted Ha
and sig value less than 0.05 (0.000
<0.05), then Ho is accepted and Ha
refused, it can be concluded that there
significantly effect between interest
rate risk, market risk, inflation risk,
business risk, financial risk, and
liquidity risk simultan to stock return on
the Telecommunications Industry in
Indonesia Stock Exchange in 2009-
2014 period is 95% confidence level.
Mean Square F Sig.
6 3,778 13,720 0,000
23 ,275
29
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

a. Dependent Variable: Return Stock on X3,, Risk Business X4, Risk

Y Financial_X5, Risk Liquidity_X6
b. Predictors: (Constant), Risk Interest Partial test by using a test ti
rate X1, Risk Market X2, Risk Inflati- answer the hypotesis 2 - 7 which can
be shown in Table 4.
Table 4. Result Coefficientsa

Unstandardized Standardized
Model Coefficients Coefficients t Sig.
B Std. Error Beta
(Constant)
1 -,028 ,104 -,266 ,793
Risk Interest rate_X1 -,044 ,106 -,044 -,414 ,683
Risk Market_X2 ,604 ,120 ,601 5,049 ,000
Risk Inflation_X3 -,159 ,113 -,159 -1,404 ,174
Risk Business_X4 -,376 ,118 -,384 -3,181 ,004
Risk Financial_X5 -,043 ,182 -,043 -,235 ,816
Risk Liquidity_X6 ,063 ,265 ,042 ,239 ,813
a. Dependent Variable: Return Stock risk bungatidak significant effect on
Y return business rate risk stock.Variabel
(X4) has the t-3.181 <t table 2, 0686
From Table 4 above, it can be with a value of 0.004 sig then Hoditolak
seen interest rate risk variable (X1) has Haditerima which indicates that the
a 0,414-t <t table 2.0686 with sig of variable risk against return stock.
0,683. Then, Ha is rejected while is Business variabel haa significant
accepted which indicates that the financial risks (X5) has the t-0.235 <t
variable of interest rate has significant table 2.0686 with sig of 0,816maka Ha
effect on stock returns. Market risk rejected is accepted which indicates
variables (X2) has a 5.049 t count> t that the variable financial risk has
table 2.0686 with sig of 0,000 then Ho significantly influence on stock. Return
rejected Haditerima which indicates liquidity risk variable (X6) has t 0.239
that the market risk variables <t table value of 2.0686 with sig 0.813
significantly influence the risk so Ho is accepted which indicates that
stock.Variabel return rate of inflation the risk variables liquidity has no
(X3) has the t-1,404 < t table 2.0686 significant effect on stock returns.
with sig at 0.174. A value significantly based on the output result of
greater than the expected level sig SPSS, the value of adjusted R2 can be
(0.174> 0.05) rejected Ho Ha received seen in Table 5 below. Table 5. The
which indicates that the variable rate result of Coefiicien Determination (R2)

Model Summaryb

Adjusted R Std. Error of the

Model R R Square Durbin-Watson
Square Estimate
a
1 ,884 ,782 ,725 .52473327215 1,330

a. Predictors: (Constant), Interest Rate b. Dependent Variable: Return Stock

Risk X1, Market Risk X2, Inflation Y
Risk X3, Business Risk X4,
Financial Risk X5, Liquidity Risk X6 The value of Adjusted R Square
(R2) is 0.725 or 72.50%. it shows that

Arna suryani and Eva Herianti 8

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
theinterest rate risk, riskmarket,
inflation risk, business risk, financial
risk and liquidity risk only able to
describe 72.50% of stock return
variabel whilethe rest 27.5% is
influenced by other factors that is not
tested. Therefore, it is mainly affected
by model used (interest rate risk,
market risk, inflation risk, business risk,
risk financial and liquidity risk) and it
has no significant effect of dependent
variable of stock return.
CONCLUSIONS, IMPLICATIONS
AND LIMITATIONS OF THE
RESEARCH
Based on the research results, it
can be concluded as follows:
1. Based on the simultaneous test
results (Test-F), it is known that
from the interest rate risk variable,
market risk, inflation risk, business
risk, financial risk and liquidity risk
against return stockada significant
influence interest rate risk, market
risk, inflation risk, business risk,
financial risk and liquidity risk
simultaneously on stock return in
the Telecommunications Industry
in Indonesia Stock Exchange in
2009-2014 periodss.
2. There is effect of interest risk,
market risk, inflation risk, business
risk, financial risk, and liquidity risk
partially on stock retrun in Tele-
communications industry listed in
Indonesia Stock Exchange in
period of 2009-2014: furthermore,
it is knoen that variable that has
that partial effect on stock return is
market risk and business risk pada
Telecommunications Industry in
Indonesia Stock Exchange in
2009-2014 periods
3. From the test results of the
coefficient of determination (R ²)
adjusted R Square (R2) found that
the interest rate risk variable,
market risk, inflation risk, business
risk, financial risk and liquidity risk
effect of 72.50% on return stocks
variable while the remaining
27.5% is affected by other
Arna suryani and Eva Herianti
variables that are not tested in this
study.
4. From the results of multiple linear
regression analysis, it is found that
the most dominant variable that
influence on stock return on the
Telecommunications Industry in
Indonesia Stock Exchange 2009-
2014 is the market risk that is
equal to 0.604. Market risk is the
risk that can not be eliminated
through diversification. With
excessive diversification will have
the negative impact that is difficult
to control.
This research has implications
for the telecommunications industry
and investors, in terms of predicting
stock returns should pay attention to
other factors that influence both
internal such as company size, capital
structure and other assets as well as
attention to the economic, social and
political atmosphere that can give
effect. The Telecommunication
Industry should be more bold in risk-
taking investment by raising the price
of shares on the Indonesia stock
Exchange, thus, it can further increase
stock returns that are required in order
to maximize return stock to reduce the
risk of investment at certain points.
Suggestions for the future study
of this research can be done on other
industries in addition to see whether
there is influence investment risk on
return, and it would be better to include
some variables that are considered
necessary or supported this research,
for example regarding financial ratios,
portfolio, and risk of other investments.
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Brigham, Eugene F and Joel F. Houst-
on, 2006. Basic of Financial
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Akbar Yulianto, Bukusatu, 10th
Edition, PT. Salemba Empat,
Jakarta.
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Fahmi, Irham. 2012. Risk
Management: Theory, Case, dan
Solution. Bandung: Penerbit
Alfabeta Bandung.
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sys. Jakarta: Penerbit Salemba
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karta.
Husnan, Suad dan enny Pudjiastuti.
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Magement. UPP AMP YKPN
Yogyakarta.
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Husnan, Suad. 2005. Basic of Portofo-
lio Theory and Invetment Anali-
sys. Yogyakarta: UPP STIM
YKPN.
Mamduh M. Hanafi. 2004. Financial
Reporting Analisys. UPP MPP
YKPN. Yogyakarta.
Martono dan D. Agus Harjito,2004,
Financial, First Edition 4th printed,
Publisher Ekanisa, Yogyakarta.
Sunyoto, Danang. 2013. Research
Methodology for Accounting.
Bandung: Refika Aditama Ban-
dung
Syamsuddin, Lukman. 2007. Financial
Management, PT Raja Grafindo
Persada, Jakarta.
Van Horne, James C, dan Machowicz,
John M. 2009. Priciple of Finan-
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TandelilinEduardus. (2007).
Investment Analisys and
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Terry, George R. 2000. Principle of
Management. (Indonesian Lan-
guage Edition). PT .BumuAksara
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10
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

DESIGN UNCERTAINTY ON SUPPLY CHAIN INTEGRATION

SUCCESS AND SUPPLIER PERFORMANCE IN
THE CONSTRUCTION SECTOR

Fahmy Hermawan
Surachman
Fatchur Rohman
Siti Aisjah
Economics and Business Department Brawijaya University

Abstract: Supply Chain (SC) integration success depends on the different

processes and activities involved in upstream and downstream relationships that
produce products and services of value to the consumer (Christopher, 1998,
Chapter 1). SC involves various stakeholders such as suppliers, manufacturers,
distributors, retailers, and consumers to make the operation process more efficient
and effective. The construction Industry differs from manufacturing industry
because its products are not uniform, the customer’s demand can be modified, and
project durations are short. These factors make it a challenge for a construction
industry to implement SC. Phenomena shows that SC implemented in construction
industry gives benefit to the construction company and also to its supply network,
but the uncertainty in design can affect that relationship. The aim of this study is
to test how design uncertainty factors affect the relationship between SCI (Supply
Chain Integration) and the contractor’s performance and the problems they face.
The research method is to study SCI in construction companies, conduct
interviews, give questionnaires, and process data using analytical hierarchical
regression to test the hypothesis. These findings will provide a better
understanding about design uncertainty in the relationship between SCI and
performance, giving direction to construction organizations which will support the
growth and sustainability of construction companies, thus making a valuable
contribution to the theory of SCI.

Keywords: Network supply chain, the uncertainty of the design, the

construction industry, the performance.

Correct Implementation of su- arch shows there are other

pply chain integration right will imp-
rove organizational performance
(Huang et al., 2014; Boon-itt and
Paul, 2006; Lee et al., 2007;
Lummus et al., 2008; Masson et al.,
2007) because the SC make the p-
roduction process systematic through
strategic coordination and tactics ac-
ross all business functions within a p-
articular company and across busine-
ss units in the SC, for the purpose -
of increasing the long-term performa-
nce of each company (Mentzer, 20-
01). The results of other empirical
studies however, show a negative
relationship between SCI and organi-
zational performance (Rosenzwig, et
al., 2003; Vickery et al., 2003). The
inconsistency of the empirical rese-
variables that affect the benefits of the
implementation of the SC in the
organization that can improve
performance. A recent study by
Huang et al (2014) showed that the r-
elationship between SCI and perform-
ance can be positive but also can be -
negative as moderated by the deman-
d uncertainty variable which can wea-
ken that relationship but the technolo-
gy uncertainty will strengthen the rela-
tionship. Huang et al suggest to test -
other variables such as supply uncert-
ainties, a competitive uncertainties. T-
his study will examine supply uncertai-
nty and competitive uncertainty’s effect
on the relationships between SCI and -
performance.

Fahm y Herm awan, Surachm an, Fatchur Rohm an, and Siti Aisjah 11
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Supply Chain (SC) was
originally constructed in the
manufacturing industries to improve
efficiency and effectiveness by
creating a relationship of integration in
various processes and activities of
different production to create goods
and services from upstream to downst-
ream until accepted by the consumer -
(Christopher, 1998, Chapter 1). SC in-
volves various stakeholders such as -
suppliers, manufacturers, distributors,
retailers, and consumers (Sariyun N-
aja Anwar,
2011) so that they can
overcome communication problems
with coordination, monitoring and
process control (Power, 2005).
Sharing information and
interdependence are important chara-
cters of SCI, which ensure smooth
material supply, implementtation stan-
dards, and other factors (Simatupan-
g, et al., 2008). SC improves the
efficiency and effectiveness of the -
production process so as to create val-
ue-added goods and services thus im-
proving organization performance and
improving competitive advantage.
Application of SC in the constru-
ction industry started in 1990 with the
increasing interest in academia about
the theory of Supply Chain Manage-
ment (SCM) to provide understanding
and provide solutions that would impr-
ove coordination between sub-contra-
ctors in SC construction. The constr-
uction industry has a high level of
complexity which is unique and
distinct from manufacturing because
construction products are not uniform
and are consumer demand specific,
because projects have short duration
and frequent project location change,
and because construction can be from
short-term, custom-built construction
products. (Segerstedt and Olofsson
2010; Vrijhoef and Koskela, 2000)
SC practices in the construction
industry can provide benefits to contr-
actors and also to the network of
suppliers as it will improve
workflow, help processing material
Fahm y Herm awan, Surachm an, Fatchur Rohm an, and Siti Aisjah
in storage, increase inventory,
increase responsiveness to the
needs of production, reduce lost -
time, reduce costs, and improve cust-
omer service (Thanaphan Naipinit et -
al ., 2014). However, the construction
industry is complex and involves many
parties, and demand is extremely co-
nsumer specific, unique and non-
repetitive and can become
problematic (Skaates et al., 2002). C-
onstruction products vary in both
type and size. Each product has
its own design and implementation
methods are different. The product is
generally unique, not continuous or
repetitive and the phase of the work
cannot always be identified (Jason,
2010). The construction industry
requires specific expertise such as
architecture, mechanical construction,
and electrical construction. The
construction process includes
building new buildings, maintaining
old buildings, repairing old buildings, -
dismantling old buildings, and develo-
ping the site (Huang et al., 2009). Co-
ntractors generally only do a fraction -
of a construction product, the remaini-
ng approximately 75% is done by su-
b-contractors and suppliers (Dubois &
Gadde, 2000). The uniqueness of the
construction industry is that it can
make one product for each project,
have temporary project organization,
and use technology in one project that
may not necessarily be used in other
projects (Segerstedt A and T.
Olofsson, 2010). Construction
products in one site can be so
different from the construction
products in other sites. The
technology used can be also specific.
Each product has its own design, an-
d the construction design can eas ily -
be changed. Many things can chang-
e the design of the project: availability
of materials, site manager demands, -
customer demand, the project budget,
the function of the building, change of
customer, natural factors and so forth.
Even when the contract between the -
taskgiver, contractor and supplier has
12
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
been agreed, changes will keep h-
appening. Various things that lead to -
changes in design and make the con-
struction company customize the pro-
duct are: architectural arrangement of
elements, materials, components that
create the character of the product, f-
unction, appearance, durability, and
safety (Walsh et al. 1988). As a matt-
er of fact, design is the second
most important factor for business
growth success and to reach comp-
etitive advantage (Design Council,
2004/2005). The rapid design
changes increase the work
complexity. The more difficult the
work, the greater the impact on
organization profit. (Closs et al.,
2008).
The layout of the construction
project will affect the success of the
SC because generally all production
processes within the project site
(Koskela, 1992), such as building,
performing building maintenance,
doing repair work, doing the work of
dismantling the old building and land
development (Eccles, 1981) will
increase production costs and reduce
the company's profits. Other factors
that will increase production costs and
reduce the company’s profits include:
late arrival of materials, lack of
availability of stock, incompletion of a
previous job thus delaying the current
project which raises costs, unused
machinery and heavy equipment, and
unproductive labor.
The findings of this study prove
definite implications for the theory of
transaction cost. Uncertainty is an
important factor in transactions and
affects the selection of management
model appropriate to the culture of
corporate transactions (Williamson,
1979).
THEORETICAL BACKGROUND AND
HYPOTHESES DEVELOPMENT
In this section, we will develop a
hypothesis about the collaborative
relationship between SCI and organiz-
ational performance in the
Fahm y Herm awan, Surachm an, Fatchur Rohm an, and Siti Aisjah
construction industry, and we will deal
with how the design uncertainty will
moderate the relationship between SCI
and performance.
SCI and performance
Previous research states that
there is a positive linear correlation
between SCI and performance,
(Boon-itt and Paul, 2006; Lee et al.,
2007; Lummus et al., 2008; Mason
et al., 2007) but there are studies that
state that there is no significant
relationship between the relationship
SCI and performance (Chen et al.,
2007; Cousins and Menguc, 2006;
Flynn et al., 2007; Sezen, 2008).
Other research states that there is a
negative relationship between SCI -
and performance (Rosenzwig et al.,
2003; Vickery et al., 2003). A recent -
study by Huang et al (2014) showed t-
hat the relationship between SCI and
performance can be strengthened or
can weaken due to moderation by
the environmental uncertainty variabl-
e. Various studies have shown inco-
nsistencies in the relationship betwee-
n SCI and buyer-supplier performanc-
e. SCI requires an established supply
chain mechanism. To achieve succe-
ssful performance of the companies i-
mplementing SC, they have to build c-
ollaborative relationships and partner-
ship relationships to create value, in-
crease efficiency and effectiveness
so that they can compete and achiev-
e better profits compared to the comp-
etitors.
The relationship between SCI
and performance is affected by envi-
ronmental uncertainty based on the
theory of transaction cost theory
which says that transaction costs are
influenced by three things: the assets,
uncertainty and contract. External
integration reduces production costs
and transaction costs, improving the
company's ability to have the
resources and provide strategies
better (Williamson, 1975, 1996). SCI -
shares information and interdepende-
nce, ensures smooth material supply
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
flow, standard implementation, and
other factors (Simatupang, et al.,
2008). SC improves the efficiency a-
nd effectiveness of the production
process so as tocreate value added
goods and services. It can improve
organizational performance and
improve competitive advantage in
line with the theory of organizational
learning which states that the compa-
ny seeks to establish a competitive -
advantage through acquisition efforts -
either secretly or non-verbally, and v-
erbally (Hedlund, 1994). A good inter-
action increases commitment and
desire to obtain a favorable outcome.
This will reduce the opportunistic natu-
re (Sacton, 1997). Uncertainty in the
supply chain needs to be addressed
by building a supply chain network
that is broad and flexible and that
builds collaborative relationships
between members of the supply chain
(Dwyer et al. 1987; Dyer and Ouchi,
1993; KalwanI and Narayandas, 1995;
Lorenzoni and Lipparini, 1999;
Lambert and Kneymeyer, 2004; Fynes
et al,
2005) so that the benefits of a
collaborative relationship are reached,
i.e. a low operating cost. The flexibility
of the supply chain is used to face
uncertainties that happen as the result
of consumer information that drives
the distribution of the supply of goods
and services. This will allow SCM to
be able to respond quickly to any
changes that occur in their
environment. It does that by int-
egrating an organization's network in -
the procurement process from upstre-
am to downstream, in the form of diffe-
rent processes and different activities -
to produce value products and servic-
es to it is being received by consume-
rs (Christopher, 1998, Chapter 1).
From the explanation mentioned
above, the organization network has
wide dimension but there are two
things that are considered essential,
namely:
Fahm y Herm awan, Surachm an, Fatchur Rohm an, and Siti Aisjah
1) networks are built if there are
more than two companies;
2) networks are built in order to
create a partnership in the
procurement of services and
goods
The relationship between
buyers and suppliers in the SCI
through procurement or material
distribution should be efficient and
effective so that it will create added
value to the product. To build a link
that can bring together suppliers,
manufacturers, distributors, retail
outlets, and consumers so that it can -
cooperate in carrying out activities
such as procurement of goods flow,
information flow, the flow of
transactions and the flow of money so
as to produce optimum benefits
(Movahedi et al, 2009), we have to:
1) `Reduce goods inventory.
Inventory is the biggest part of the
company's assets in the range of
30% -40%. Therefore, efforts
and means should be developed
to minimize the accumulation of
goods in the warehouse so that
costs can be minimized.
2) `Ensure the smooth supply of
goods. Smooth supply of material
needs to be guaranteed from the
origin of goods (manufacturers),
to suppliers and to the company
itself, to wholesaler, retailers, up
to the end consumer.
3) Guarantee quality. We need to
preserve the quality of goods
starting from the manufacturing
process, to distribution and ware-
housing, up to the buyer.
Since the development of SCI
depends on the specific infrastructure
and the collective experience of the
organization, an integrated supply
chain is difficult for a competitor to
duplicate (Rosenzweig et al., 2003).
SCI can provide benefits for the or-
ganization by improving reliability of
manufacturing. Efficiency allows orga-
14
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
nizations to gain collaborative (Huang
et al., 2014) benefits. SCI gives
benefits and improves cooperative -
performance by fostering efficient
coordination and manufacturing
improvements in a variety of ways.
First, resource-based and organi-
zation partnerships are useful because
they combine resources and
organization ability to achieve specific
objectives through certain
investments, routine knowledge
sharing between organizations, and
mechanisms for the effective
organization process (Cao and Zhang,
2011; Das and Teng, 2000; Dyer and
singh, 1998).
Intensive SCI coordination
allows members of the supply chain to
take advantage of all resources and
capabilities that exist throughout the
process of procurement of goods and
services (Frohlich and Wstbrook,
2001; Li et al., 2006). SCI also
introduced a plan of cooperation,
value creation, and the development
of problem-solving processes among
the companies involved to maintain
the efficiency of the supply chain (Cao
and Zhang, 2011; Wong et al., 2011;
Wu et al., 2010). Contracts with
insufficient cooperation and
uncertainties that could occur can
cause incomprehensive ex ante
evaluation, so that the evaluation
should be accompanied by ex post
adaptation (Hsieh et al., 2010; Tirole,
2009). Supply chain participants fail to
adapt if buyers and suppliers involved
in the procurement relationship
involving investing in a particular field,
react differently to a condition in a
different way (Williamson, 1991).
Various literature on SCI and
performance prove that transaction
costs theory is affected by
uncertainty; vertical integration
uncertainty can reduce production
costs and transacttion costs, while
opportunistic behavior will complicate
the success of efficiency. SCI
becomes a guidance to supply chain
improvement behavior. A high level
Fahm y Herm awan, Surachm an, Fatchur Rohm an, and Siti Aisjah
of behavior organizational structure
can improve the reliability, speed
and efficiency of the supply chain
participants (Eisenhardt et al., 2010).
Hypothesis H1: increasing SCI will
increase the effect on the performance
of contractors
Uncertainty Design
The construction project
involves many parties. Besides that,
the consumer demand which is
specific and non-recurring becomes
problematic (Skaates et al., 2002).
Consumer demand which is not
uniform will force the construction
company to customize the product by
changing the design of the building.
According to Walsh et al. (1988),
design is the arrangement of
elements, materials, and components
that create the character of the
product, function, appearance, dura-
bility, and safety. Determination of the
design is influenced by consumer
demand which is generally specific
and not uniform. The higher the
variation of the demand, the higher
the design change intensity. The
higher the complexity and the more
difficult the work is, the greater the
impact on organization profit (Closs et
al., 2008). Design is the second most
important factor of business growth
success to achieve competitive
advantage (Design Council,
2004/2005).
Construction work produces
products that have great variation in
the type and size. Each product has
its own design and different
implementtation method. The product
is generally unique, not continuous or
repetitive and the phase of the work
cannot always be identified (Jason,
2010). The general principle is that
design development can be used to
improve construction and reduce
excess material and increase the
value of construction work (Jason et
al., 2010). Different supply chain
systems are applied to different
types of products (Fisher,
15
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
1997). Designing is not only an
activity that can add product value
(Porter, 1985), but also a potential
resource that distinguishes a monitoring implementation, and timing
company from the competitor (Walsh
et al., 1988). The impact of design on
the supply chain has been often
overlooked in previous research
(Khan et al., 2008; Khan Greazza,
2009), especially overlooked are
market fluctuations which are very fast
and influenced by changing consumer
demand. Not much empirical
research exists on the impact of
design changes in the SCI (Yong and
Li, 2011). The builders often make
design changes due to adjustments
made the consumers. Consumers
often make design changes even
when the order has been processed
by the operating section (Yong and Li,
2011). Design changes are one of the
factors that will affect the level of work
difficulties. The harder the work is, the
greater the impact on organization
profit (Closs et al., 2008). The
production department will experience
various problems ranging from
difficulties in material supply,
unstable production, delays in
delivery; these will disrupt the whole
supply chain flow (Yong and Li,
2011). H2: Design changes will
strengthen the effect of SCI on the
performance of suppliers
RESEARCH METHODS
An examination was conducted
on 10 construction companies listed on
the Jakarta stock exchange that
carry out road construction and
building in Indonesia on State-
Owned Enterprises (SOEs) in
Indonesia. The research sampling
technique that was used in this study
was purposive sampling. The
research objects were contracting
companies doing nationwide projects
that require large amounts of
construction material and manage
many suppliers and sub-contractors in
the last 5 years. Data obtained from
the government was in the form of
Fahm y Herm awan, Surachm an, Fatchur Rohm an, and Siti Aisjah
project documents that contain the
contract, costs, technical specifica-
tions, work volume, blueprints and
of the construction work until the job
was completed and accepted by the
government. Questionnaires were
sent to top management to evaluate
supplier performance based on the
quality of the work results. Then the
answers to the questionnaires were
sent back via email. Researchers also
conducted interviews to ask respon-
dents to give evaluations about the
quality of the work results in terms
of strength, beauty, proportions,
layout and to describe problems that
occurred during the execution of
construction, namely how the
uncertainties of time and uncertainty
of the design impact of the work in
order measure supplier performance.
Primary and secondary data would be
processed using hierarchical
regression analysis, to determine the
effect on the relationship between SCI
implementation and the performance
of suppliers in every relationship
model between variables.
VARIABLE AND MEASUREMENT
Previous studies used the 7-
point Liekert scale in which a high
score indicates strong agreement and
a low score indicates strong
disagreement.
Suppliers Performance
This dependent variable has
measurement parameters taken from
previous research by Huang et al.
(2014), Green et al. (2007), Rosen-
zwig et al. (2003) and Sezen
(2008). In performance measurement
there are 4 variables: the rate of
growth in market share, growth rates
of return on assets (ROA), the growth
rate of return of investment (ROI), and
the rate of decline in total distribution
costs.
Supply chain integration
16
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
SCI has a measurement
parameter that is information sharing
that measures the frequency and
volume of information shared between
suppliers and sub-contractors using
the 7-point Liekert scale developed by
Boon-itt and Paul (2006).
Dependence is measured by how one
process is affected by the previous
process in order to add value
(Simatupang, et al., 2002). There are
four dimensions measured: namely,
design dependence between
companies and customers, business
dependence between companies and
customers, design dependence
between suppliers, and business
dependence between suppliers.
Uncertainty design
The success of the construction
work is dependent opon by the right
design. Chappell and Willis (2000)
stated that the architect depends on
others in developing the design.
Knowledge of construction practices is
important to the success of the overall
construction. One of the causes of
failure of construction is a design that
is overdone (Dallas, 1992). Design is
hard to measure because the design
is specific, unique and non-recurring,
thus can become problematic
(Skaates et al., 2002). The
construction project makes clients the
center point of the construction
process. All clients needs has to be
provided by the construction industry
(Latham,
1994). Therefore performance
criteria must reflect the needs of
clients, who are generally interested
in the end product, the cost of
construction, quality and function, and
project completion on time (Egan,
1998). Design is an important factor in
determining the success of a project
and also reflects the performance of
the contractor. The Construction
Industry Research and Information
Association (CIRIA, 1983) explains
that the constructability is the extent
Fahm y Herm awan, Surachm an, Fatchur Rohm an, and Siti Aisjah
to which the design can provide ease
of construction to meet all the require-
ments to make a building completely.
Measurement of the design variable
from the point of constructability
according to Oyedele and Tham
(2005), is the completeness of design
and ease of design, standard
elements, the dimensions of the
elements of the building that have to
be coordinated, flexibility of design
changes, knowledge of characteristics
of the performance of materials and
components, constructability view,
ease of monitoring and control. And
the whole process of the construction
project should be able to meet the
needs of clients as measured by the
level of understanding of client
expectations, consideration of client
requirements, identification of and
ability to prioritize project
expectations, analysis of design con-
cepts and requirements, the cost of
the project in accordance with the
budget, the completion of the
construction on time, and fulfillment of
client design needs.
Control variables
The size of the company beco-
mes a control variable in this study. In
order to distinguish the size of the
company, the amount of income from
the sale was used to assess the size
of the company. The construction
company is the central point of this
study because of the design
uncertainty factor is common in the
construction process. This becomes a
fundamental difference from other
industries.
Validity and Reliability
Measurement
Validity and reliability analysis
uses confirmation factor analysis
with an estimated maximum value
used to establish the reliability of
measurement and uses the
parameters of composite reliability
(CR) and the squared multiple
correlation (SMC) as suggested by
17
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Bagozzi and Yi (1988). To test the
validity discriminant, we use a compa-
reson average variance obtained from
the extraction and variations derived
from the construction adjustment.
Data Collection Methods
Data collection methodology in
this research is the analysis of
hierarchical regression. The research
methods used in the preparation of this
dissertation are:
1. The collection of secondary
data, balance sheet, income
statement, ROA, ROI, market
share growth over the past 10
years from the year 1995-2015
from contracting companies that
own public shares.
2. Literature study to obtain actual
development of SCI and organiza-
tional performance.
3. Interviews and questionnaires
distributed to project managers
of the contracting parties as the
executor of construction operati-
ons. The questionnaire is also
given to the project manager of
the assignor as a representative of
the assignor.
Method of Hierarchical Regression
Analysis
Hierarchical regression analysis
is a method for making decisions in a
comprehensive manner, taking into
account human qualitative perception
put into quantitative Liekert scale. The
hierarchical regression analysis model
consists of a single goal, criterion or
several sub-criteria and is alternative
to solve every problem. Therefore,
the pairwise comparison is used in a
certain scale to generate weighting of
each alternative decision.
LIMITATIONS
The study was limited to the
concept of in-depth research by
testing the above variables.
Relationships between variables have
been analyzed to understand how
Fahm y Herm awan, Surachm an, Fatchur Rohm an, and Siti Aisjah
design uncertainty can moderate the
relationship between SCI and
performance in the construction
industry. This study is limited by the
size of the contracting company and
the type of company, studying only
state- owned enterprises in Indonesia
that own public shares listed on the
Jakarta stock exchange in Indonesia.
This study has not noticed other
design factors that affect the perfor-
mance planners such as quality of
work and management system.
CONCLUSION
This research is very exciting
because it will enrich our understand-
ding of how SCI is applied in the
construction industry which is
heavily influenced by the
uncertainty of the environment. The
findings of the research are expected
to provide updated information on the
effect of contextual variables on the
relationship between SCI and
performance. This study supports
previous research that supports the
strategic match paradigm, and
explains inconsistencies in the
relationship between SCI and perfor-
mance in uncertain environmental
conditions. This study also contributes
to SCM research and has a conti-
ngency that supports SCM research
with organizational theory and indi-
cates that the presence of SCI is
very beneficial for contracting
companies’ competitive advantage.
They will wisely exploit and explore if
they are tied to a more established
SCI. This research can guide
company policies to be more in line
with government policies that support
Indonesian construction industry
growth.
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19
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

THE DETERMINANTS OF CAPITAL STRUCTURE: ANALYSIS OF

MANUFACTURE FIRMS LISTED IN INDONESIA
STOCK EXCHANGE IN INDONESIA

Dian Sulistyorini

Abstract: The decision to choose the source of financing is the decision of the
most important fields of finance for the company. Each funding decision requires
financial managers to be able to weigh the benefits and costs of the sources of
funds that will be selected for each funding source has different financial
consequences. Capital structure can be defined as a special mix between debt and
equity (own capital) of a company that is used to fund its operations. Capital
structure shows balance short amount of debt that is fixed, long-term debt,
preferred stock, and common stock. This study aims to identify and analyze the
influence of Profitability, Growth Opportunity, tangibility, Company Size, Earnings
Volatility, Dividend Payments, Liquidity and Non - Debt Tax Shield on capital
structure in companies listed on the Indonesia Stock Exchange in 2010-2012, both
partially or simultaneously. In addition, this study also examines the return
variables are used because there are differences in the results of previous studies.
This study uses a quantitative approach. This study used secondary data from the
data source ICMD (Indonesian Capital Market Directory) and listed in Indonesia
Stock Exchange observation period 2010-2012, where the method used is
purposive sampling is a sampling method that takes an object with the specified
criteria. The number of samples in accordance with the criteria that have been
determined are 30 manufacturing companies in Indonesia Stock Exchange (IDX).
The results of this study indicate simultaneous Profitability, Growth Opportunity,
tangibility, Company Size, Earnings Volatility, Dividend Payments, Liquidity and
Non-Debt Tax Shield affect the capital structure while partial variables that
influence the capital structure is the size of the Company and Non-debt Tax
Shields . Variable Profitability, Growth Opportunity, tangibility, Earnings Volatility,
Dividend Payments, and Liquidity partially not affect the capital structure. Adjusted
R square of 0.503. This means that 17.4% of capital structure dependent variable
can be explained by the eight independent variables while the remaining 82.6% is
explained by the variable capital structure or other causes outside the model.

Keywords: Profitability, Growth Opportunity, Tangibility, Company Size, Earnings

Volatility, Dividend Payments, Liquidity and Non-Debt Tax Shield

The theories of capital structure well as minimize the cost of fund, a

are the most attractive and complica-
ted issue in the field of finance.
Relating to capital structure two sides
are frequently focused on finance that
are the impact of capital structure of
the firm’s value is pertinent to the
optimal capital structure and the deter-
minants of capital structure of firms.
Decision making in capital structure is
very much susceptible issue for all
firms due to its internal and external
effects on firms. One of the many
objectives of financial managers is to
maximize the wealth of the firm, more
specifically shareholder’s wealth maxi-
mization. To maximize firm’s value as
manager should set up an optimal
capital structure. The fundamental
components in capital structure are
debt and equity. A firm should attempt
to determine the optimal capital
structure that causes the maximization
of a firm’s value. Positive relationship
between leverage and value of the firm
has been identified in some studies
(Champion, 1999; Ghosh et al, 2000;
Chowdhury S. &Chowdhury A., 2010).
Analyzing capital structure is
focused on the type of funds, debt or
equity, used in the firm for financing.
Debt and equity are the two major
classes of liabilities, with debtholders

Dian Sulistyorini 20
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
and shareholders representing the two
types of investors in the firm. Each of
these is associated with different levels
of risk, benefits, and control. While
debtholders exert lower control, they
earn a fixed rate of return and are
protected by contractual obligations
with respect to their investment.
Shareholders are the residual claim-
ants, bearing most of the risk, and,
correspondingly, have greater control
over decisions (La Rocca, 2008).
Moreover these factors vary
across countries and firm’s characteris-
tics i.e. profitability, growth opportunity,
tangibility, the size of the company,
Earning volatility, Dividend payment,
Liquidity, and non-debt taxshield.
Based on the above phenomena,
many problems related to debtutilizing
in the corporate capital structure which
has an effect on the value of the firm,
particularly on group of manufactured
corporate. The reason is useful for
manufacturing companies because
manufacturing company or companies
dominate the companies listed on the
Indonesia Stock Exchange(IDX), which
are grouped into several subcategori-
es.The number of manufacturing com-
panies, as well as current economic
conditions has created a fierce compe-
tition among manufacturers. The com-
petition encourages each company to
improve further performance in order to
remain objective achieved. The
purpose of this paper is to analyze the
factors that determine the capital
structure of manufacturing companies
in Indonesia Stock Exchange. In this
case this research focus on the
leverage as a proxy of debt policy and
some explanatory variables. The ana-
lysis is not conducted by examining the
influence of profitability, growth opport-
unity, tangibility, size of the company,
earning volatility, dividend payment,
liquidity, and non-debt tax shield on
leverage to reveal one theory, namely
agency theory. This topic is interesting
to study because, capital structure
decisions have been the most
significant decisions to be taken by the
Dian Sulistyorini
financial experts in a corporate sector
organization, since it carries a crucial
impact on the overall cost of capital in
terms of weighted average and the
resulting market value of the shares.
Identifying the determinants of capital
structure can help managers make
more informed decisions. One of the
many objectives of financial managers
is to maximize the wealth of the firm,
more specifically, shareholder’s wealth
maximization. To maximize firm’s value
as well as minimize the cost of fund, a
manager should set up an optimal
capital structure. The fundamental
components in capital structure are
debt and equity. A firm should attempt
to determine the optimal capital
structure that causes the maximization
of a firm’s value.
PROBLEM FORMULATION
Does Profitability, Growth Oppor-
tunity, Tangibility, Size of the Compa-
ny, Earnings Volatility, Dividend Pay-
ment, Liquidity and Non-Debt Tax
Shield have an influence on the capital
structure?
LITERATURE REVIEW
Theoretical Foundations
1. Modigliani and Miller (MM) Theory
To represent and examine the
possible determinants of leverage, it
requires some theoretical platforms.
The importance of making a decision
related to the capital structure decision
was firstly introduced by the article
published by Modigliani and Miller
(MM). The firm’s value is unaffected by
the debt to equity ratio. Following the
pioneering work of MM in this field,
many critical studies have been made
about the assumptions made by MM.
In fact, the MM theory does not crystal-
lize the definition on how a company
should finance its assets to enjoy the
benefits of optimal capital structure and
also it does not explain the empirical
findings on capital structure very well.
Then, after such criticisms, they
reviewed their capital structure theory
including corporate tax factor and
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
excluding dividends from the model
and published the new article in 1963.
Then, in 1977, Miller published another
article and included corporate tax and
individual income tax in their models.
According to MM theory, an optimum
capital structure is subject to the tax
advantages of debt and that is why
firms should have a capital structure
almost totally composed of debt. But in
the real world, firms generally assume
to use moderate amounts of debt due
to its high bankruptcy costs.
2. Agency Theory
Jensen and Meckling (1976) are
the pioneers in introducing the agency
theory. Agency theory suggests that
the managers (agent) are given autho-
rity by the shareholders (the principal)
to manage the firm in a way by which
firm’s welfare and shareholder’s wealth
are maximized. In particular, the mana-
gers do not always act in the interest of
the shareholders in which the mana-
gers can adopt an opportunistic beha-
vior and benefit them from achieving
their own selfishness that may put the
firm at risk. Eventually, achieving the
goal of maximizing the value of the firm
often becomes unattainable. Such a
conflict of interest will create agency
problems and costs. According to
Jensen and Meckling (1976), an
individual will work harder for a firm if
he/she owns a large percentage
ownership of the company than if
he/she owns a small percentage.
However, when managers hold a
significant portion of a firm’s equity, an
increase in managerial ownership may
lead to an increase in managerial
opportunism and therefore may cause
lower debt. Moreover, Jensen and
Meckling (1976) argue that managers
avoid leverage to reduce the risk of
corporate bankruptcy and transfer of
control to bondholders. The loss to
managers from bankruptcy is potential-
ly greater when managers hold larger
ownership. Grossman and Hart (1982)
suggest that the use of debt increases
the chances of bankruptcy and job loss
Dian Sulistyorini
that further motivate managers to use
the organizational resources efficiently
and reduce their consumption on
perks. The use of debt in the capital
structure of the firm also leads to
agency costs. Agency costs arise as a
result of the relationships between
shareholders and managers, and tho-
se between debt-holders and share-
holders (Jensen and Meckling, 1976).
The relationships can be characterized
as principal-agent relationships. While
the firm’s management is the agent,
both the debt-holders and the share-
holders are the principals. The agent
may choose not to maximize the
principals’ wealth. The conflict between
shareholders and managers arises
because managers hold less than
100% of the residual claim (Harris and
Raviv, 1990). Consequently, they do
not capture the entire gain from their
profit enhancing activities but they do
bear the entire cost of these activities.
Separation of ownership and control
may result in managers exerting
insufficient work, indulging in perquisi-
tes, and choosing inputs and outputs
that suit their own preferences. Mana-
gers may invest in projects that reduce
the value of the firm but enhance their
control over its resources. For exam-
ple, although it may be optimal for the
investors to liquidate the firm, mana-
gers may choose to continue operati-
ons to enhance their position. Harris
and Raviv (1990) confirm that mana-
gers have an incentive to continue a
firm’s current operation even if share-
holders prefer liquidation. On the other
hand, the conflict between debt-
holders (creditors) and shareholders is
due to moral hazard. Agency theory
suggests that information asymmetry
and moral hazard will be greater for
smaller firms (Chittenden et al., 1996).
Conflicts between shareholders and
creditors may arise because they have
different claims on the firm. Equity
contracts do not require firms to pay
fixed returns to investors but offer a
residual claim on a firm’s cash flow.
However, debt contracts typically offer
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
holders a fixed claim over a borrowing
firm’s cash flow. When a firm finances
a project through debt, the creditors
charge an interest rate that they
believe is adequate compensation for
the risk they bear. Because their claim
is fixed, creditors are concerned about
the extent to which firms invest in
excessively risky projects. For
example, after raising funds from debt-
holders, the firm may shift investment
from a low-risk to a higher-risk project.
According to Jensen and Meckling
(1976), the conflict between debt-
holders and equity-holders arises
because the debt contract gives equity-
holders an incentive to invest sub opti-
mally. More specifically, in the event of
an investment yielding large returns,
equity-holders receive the majority of
the benefits. However, in the case of
the investment failing, because of limit-
ed liability, debt-holders bear the
majority of the consequences. In other
words, if the project is successful, the
creditors will be paid a fixed amount
and the firm’s shareholders will get the
benefit from its improved profitability. If
the project fails, the firm will default on
its debt, and shareholders will invoke
their limited liability status. In addition
to the asset substitution problem
between shareholders and creditors,
shareholders may choose not to invest
in profitable projects (under invest) if
they believe they would have to share
the returns with creditors.
The agency costs of debt can be
resolved by the entire structure of the
financial claim. Bone et al. (1980)
argue that the agency problems asso-
ciated with information asymmetry,
managerial (stockholder) risk incent-
ives and forgone growth opportunities
can be resolved by means of the
maturity structure and call provision of
the debt. For example, shortening the
maturity structure of the debt and the
ability to call the bond before the
expiration date can help reduce the
agency costs of underinvestment and
risk shifting. Bone et al. (1980) also
demonstrate that both features of the
Dian Sulistyorini
corporate debt serve as identical
purposes in solving agency problems.
3. Free Cash-Flows Theory
Jensen (1986) develops the free
cash-flows theory to limit the manage-
ments discretion. He defines the free
cash-flows as the sum of the cash
available to the managers after the
financing of all the projects with a
positive NPV. Jensen also states that
the managers with ample free cash
flow may be tempted to plow too much
cash into mature business or ill-
advised projects. If it is treated as a
problem, then it can be solved by
either using more debt or paying more
dividends. Even a firm can apply both
policies concurrently. According to this
theory debt reduces free cash flows,
because the firm must make interest
and principal payments. Furthermore,
an increase in dividends should benefit
the stockholders by reducing the ability
of managers to pursue wasteful
activities.
4. Signaling Theory
Information is an important
element for investors and business
people as information presents inform-
ation, record or description of the state
of the past, present and future situation
for the survival of a company and how
the market effect. Complete, relevant,
accurate and on time information is
required by investors in the capital
market as an analytical tool to make
investment decisions (Jogiyanto,
2000).
According to Jogiyanto (2000), a
published information announcement
will give a signal to investors in making
investment decisions. If the notice
contains a positive value, so it is ex-
pected the market will react when the
announcement is received by the mar-
ket. Signaling theory is the assumption
of the company managers that have
more accurate information about the
company that is not known by outsi-
ders (investors). This will result in an
asymmetry of information between the
parties concerned (Jogiyanto, 2000).
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Information asymmetry is a
condition in which there is the private
information that is only known and
received by the investors. It will be
seen if management does not fully give
all information acquired about all the
things which could affect the company,
then the market will generally respond
to that information as a signal to an
event which will affect the value of the
company which is reflected through
share price (Jogiyanto, 2000) .
The market reaction is indicated
by a change in the volume of stock
trading. At the time the information has
been announced and all market
participants have received that inform-
ation, market participants must first
interpret and analyze that information
as good news or bad news. If the
announcement of that information as a
good signal for investors, then there
will be a change in the volume of stock
trading. According to Sharpe (1997),
accounting information announcement
gives a signal that the company has a
good prospect in the future (good
news) so that investors are going to be
interested in trade stocks, thus the
market will react as reflected by
changes in the volume of stock trading.
As the result, the relationship between
the publication of the report of financial
information, financial condition or
social politics of the fluctuations in the
volume of stock trading can be seen in
the efficiency of markets. According to
Husnan (2005), efficient capital market
is defined as the market price of
securities already reflecting all relevant
information. In outline signaling theory
is closely related to the availability of
information.
Based on the information, the
capital market can be divided into
(Jogiyanto, 2000):
1. The weak form of the capital mar-
ket, which a market price of secu-
rities reflects past information.
2. Semi-strong form of the capital
market, which a market price of
securities fully reflects all the infor-
mation published.
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3. A powerful form of a capital mar-
ket, which a market price of securi-
ties fully reflects all kinds of infor-
mation including private informa-
tion.
The signaling theories are initially
developed by Ross (1977). According
to Ross, managers often use capital
structure as a signal of firm to inves-
tors. Ross assumes that managers
(the insiders) know the true distribution
of firm returns, but investors do not. If
managers decide to add more debt into
the capital structure, the investors
interpret it as a signal of high future
cash flows and a firm commitment
towards its contractual obligation.
Thus, this shows a higher level of
confidence to the public sentiment that
leads them to think that the firm has
delightful prospects in the near future.
However, if managers decide to finan-
ce the firm by issuing new equity, it
signals that firm has unfavorable pros-
pects and attempt to raise new
investors to share the losses. Accord-
ingly, he concludes that investors take
larger levels of debt as a signal of
higher quality.
5. Trade-off Theory
According to Sayeed (2011),
trade-off theory was first proposed by
Modigliani and Miller (1963). This the-
ory suggests that the firm decides on
capital structure through the trade-offs
between the benefits and costs of ha-
ving debt in the capital structure. The
main benefit of debt is that the interest
is generated from the tax deduction
and thus it reduces the corporate tax
burden. One of the major costs of a
company's own debt is the cost of
bankruptcy (Hasan, 2006) that arise
from the increasing in all likelihood the
company to go bankrupt in case of
failure to pay debts. Other costs are
costs namely an agent-related costs by
eliminating conflicts of interest between
creditors and shareholders.
According to Mustafa (2011)
through this theory we can achieve an
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
optimal capital structure when the va-
lue of the marginal benefits is associ-
ated with the increase in the value of
the debt issue costs associated with
the issuance of more debt. In this stu-
dy, the theory of the tradeoff is repre-
sented by a variable structure and vari-
able tax assets.
6. Pecking Order Theory
This theory was put forward by
Donaldson in 1961, while naming the
Pecking Order Theory is performed by
Myers (1984) in Chen (2010). Pecking
order theory states that companies are
like internal financing (funding of the
operating results of the company inta-
ngibles retained earnings). If external
funding (external financing) is required,
the company will issue the safest
security first, which is initiated through
the issuance of bonds, followed by
option characteristics securities (such
as convertible bonds), and the new will
end if it is still not sufficient, the new
shares issue.
In Pecking Order Theory (Hus-
nan, 2000) high profitability the compa-
ny will use the little loan funds, beca-
H1 (+)
Profitability
Growth Opportunitiy H2 (-)
Tangibility H3 (+)
Size of the Company H4 (+)
Earnings Volatility H5 (-)
Dividend Payment H6 (+)
Liquidity H7 (+)
Non-Debt Tax Shield H8 (+)
Figure 2.1 Research Model and Hypotheses
Dian Sulistyorini
use funding requirements are fulfilled
using internal funding sources IE reta-
ined earnings. While the less profitable
firms will use greater debt. In this study
the pecking order theory is represented
by the variable profitability.
CONCEPTUAL FRAMEWORK &
HYPOTHESIS DEVELOPMENT
Conceptual Framework
A financial manager is faced with
the fact that the company needs to
finance new capital investment. Here
there are two important rules that must
be done in determining the company's
manager of corporate finance sources,
which use internal financing sources
first, and issue the safest securities
first (Hossen, 2012). Factors that affect
the capital structure of a company
vary. In this study the factors used are
Profitability, Growth Opportunitiy, Ta-
ngibility, Size of the Company, Earn-
ings Volatility, Dividend Payment,
Liquidity, and Non-Debt Tax Shield.
Based on this description, the
relationship between the variables are
shown in the following research model:
CAPITAL STRUCTURE
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Hypothesis Development
1. Effect Profitability on Capital
Structure
According Bringham and Hous-
ton (2006), companies with high re-
turns on investment use a relatively
small debt. A high return rate enables it
to finance the majority of the financing
requirements with internally generated
funds. Basically, the cost of internal
funds is cheaper than the cost of
external funds. The assets profit ratio
of the company is used to measure the
profitability of the company. According
to the sequence financing theory, the
enterprise is like interior financing, and
when the exterior financing is impera-
tive under the situation, the company
will lean to loan flotation. So under the
sequence financing theory, the comp-
any should follow the sequence from
interior financing to debt financing to
equity financing. Therefore, the profit-
ability of the company influences the
capital structure (Ning et al. 2009).
However, the trade-off theory, signal-
ing theory, and agency cost theory
support a positive relation between
profitability and leverage. On the other
hand, the high ability of paying debt
obligations which are, in general,
mostly considering factor for all lenders
is often subject to the firm’s profitability
that ultimately measures the firm’s
tolerable level of debt. It is argued that
the most profitable companies can
easily add more debt in their capital
structure. Jensen (1986) shows that
firms with more likelihood of agency
problem use more debt to reduce the
availability of free cash flows at mana-
ger’s hand so that managers can be
restrained from a bad investment
decision. Thus the first hypothesis is
proposed:
H1: Profitability positively affects
the capital structure
2. Effect of Growth Opportunitiy to
Capital Structure
The growth rate of the total
assets is used to measure the growth
Dian Sulistyorini
of the company. According to the agent
theory, the debt will form certain limit-
ation and supervision for the managers
of the enterprise. According to the
sequence financing theory, the industry
with high growth always is hard to
financing, so the enterprises have to
adopt the suboptimal debt financing.
Therefore, the growth influences the
capital structure. Myers (1977) argues
that firms with potential growth will tend
to have less debt in the capital
structure. Growth opportunities can
produce moral hazard effects and push
firms to take more risk. In order to
mitigate this problem, assets in growth
opportunities should be financed with
equity instead of debt due to minimi-
zing the loss/risk per stockholder. It
supports an inverse relation between
firm growth and leverage which is also
the findings of Gued et al. (2003),
Sayilgan (2009), Buferna et al. (2005),
and Akhtar and Oliver (2009). On the
other hand, Titman & Wessels (1988),
and Chen (2003) found a positive
correlation between growth opportuni-
ties and leverage. According to the
pecking order theory firm prefers to
finance new project with internal funds.
Nonetheless, a growing firm may not
have sufficient internal funds to finance
its new projects frequently. As a result
firms require external financing that
prefers debt financing to equity
financing. So the second hypothesis is
proposed:
H2: Growth Opportunity negatevely
affects the capital structure
3. Effect of Tangibility on Capital
Structure
Theories generally state that
tangibility is positively related to
leverage. Since the tangible assets can
be used as collateral in external bor-
rowing, the presence of a large fraction
of tangible assets in a firm help to get
bank loans at a lower interest rate and
it also helps to reduce the risk the lend-
er suffering from the agency cost of
debt. A negative relationship has been
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
reported between leverage and fixed
assets in small and medium firms
(Daskalakis and Psillaki, 2009) and in
less developed economies (Joever,
2006). The tangible assets of a firm
can be considered as collateral to
ensure guarantees against the default
risk of borrowers to its creditors. The
trade-off theory predicts a positive
relationship between measures of
leverage and the proportion of tangible
assets. However, the direction of
influence has not been clear yet.
Empirical studies that confirm the
above theoretical prediction include
Friend and Lang (1988), Harris and
Raviv (1991), Shah & Khan (2007),
Rajan and Zingales (1995), Akhtar
(2005), and Akhtar and Oliver (2009).
Grossman and Hart (1982) suggest the
idea that firms with less collateralizable
assets should use more debt to moni-
tor managerial activity, even at high
cost of debt to limit the manager’s ten-
dency to consume excessive perks.
This implies a negative relationship
between tangibility of assets and lever-
age which is confirmed by the findings
of Sheikh & Wang (2010), Sayilgan et
al. (2006), and Abdullah (2005). This
study measured tangibility as the ratio
of net fixed assets to total assets fol-
lowing Friend and Lang (1988), Shah
& Khan (2007), and Akhtar (2005). So
the third hypothesis is proposed:
H3: Tangibility positively affects the
capital structure
4. Effect of Size of the Company on
Capital Structure
Size is considered as a key fac-
tor that can influence the financial stru-
cture of the firm. Firm size has been
suggested to be an important variable
related to the leverage ratios of the
firm. It is also argued that relatively
large firms tend to be more diversified
and thereby less prone to bankruptcy.
The effect of firm size on leverage is
ambiguous. Rajan and Zingales (1995)
find that financial leverage increases
with size. They justify this finding by
the fact that size is an inverse proxy for
Dian Sulistyorini
the probability of bankruptcy. Bigger
firms can diversify more easily and so
the probability of being in financial
difficulty is lower. Under the trade-off
theory, such companies can increase
the percentage of debt. In this case, a
positive relationship between size and
leverage is to be expected. On the
other hand, size may proxy for the
information available to outsiders.
Under the pecking order theory, less
information asymmetry implies a
preference for equity relative to debt,
thus applying a negative correlation
between size and leverage. Some
literatures offer the positive relationship
between firm size and financial
leverage with reasons that larger firms
are more likely to be more diversified
because of more stable or less volatile
cash flows, less often fail, and more
utilization of the economies of scale in
issuing securities. Eventually, larger
firms may issue debt at lower costs
than smaller firms. In this case,
therefore, we can expect the size to be
positively related to leverage. Empirical
studies, such as Rajan and Zingales
(1995), and Booth et al. (2001),
Guedet. Al. (2003) generally found that
leverage is positively correlated with
company size. On the other hand,
some of the studies conducted by
Chung (1993), and Ozkan (2001)
found no systematic relationship bet-
ween firm size and a total debt ratio.
However, Fama and Jensen (1983)
argue that there may be less asym-
metric information about large firms,
since these firms tend to provide more
information to outside investors than
smaller firms. Therefore, they increase
their preference for equity relative to
debt.Thus the fourth hypothesis is
proposed:
H4: Size of the Company positively
affects the capital structure
5. Effect of Earnings Volatility on
Capital Structure
Earnings Volatility is a measure
of business risk. According to Frank
and Goyal (2003), the companies with
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
more volatile cash flows face higher
expected costs of financial distress and
should use less debt in the objective of
maintaining a moderate total risk pro-
file. This suggests a negative relation
between earnings volatility and levera-
ge. A number of studies such as Harris
and Raviv (1991), and Akhtar and
Oliver (2009) have indicated a negative
relation between earnings volatility and
leverage. Then the fifth hypothesis is
proposed:
H5: Earnings Volatility negatively af-
fects the capital structure
6. Effect of Dividend Payment on
Capital Structure
Donaldson Of Harvard (1961)
suggested that firms set target divi-
dend payout ratios based on expected
future investment opportunities and
expected future cash flows. Firms are
reluctant to raise dividends unless they
are confident that higher dividend can
be maintained, and they are especially
reluctant to cut the dividends. So divi-
dend payment is likely to play a promi-
nent role in the financing-mix decision
mainly because of market imperfect-
ions. Bhaduris (2002) suggested that
dividends are carefully considered as
signal of the financial health of a firm
by the outsiders. If any increase in divi-
dends signals an increase future earn-
ings then the firm’ s cost of equity will
be lower, favoring equity to debt. Then
the sixth hypothesis is proposed:
H6: Dividend Payment positively affe-
cts the capital structure
7. Effect of Liquidity on Capital
Structure
Firms prefer internal financing to
external financing. Therefore, firms are
likely to create liquid reserves from
retained earnings. If the liquid assets
are sufficient to finance the invest-
ments, firms will have no need to raise
external funds. Hence, liquidity is ex-
pected to be negatively related to leve-
rage. Here use the current ratio (calcu-
lated as current assets over current
liabilities) as a proxy of liquidity. Firms
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with higher liquidity ratios are preferred
to acquire more debt because of great
ability to meet short term obligations
(Ozkan, 2001).On the other hand, the
trade-off theory suggests a positive
relationship between leverage and
liquidity because higher liquidity ratio
reflects the greater ability of a firm to
meet short-term obligations on time.
Ozkan (2001) suggests that liquidity
has an ambiguous effect on the capital
structure decisions. Then the seventh
hypothesis is proposed:
H7: Liquidity positively affects the
capital structure
8. Effect of Non-Debt Tax Shield on
Capital Structure
There is another type of expen-
ses that has a power of generating tax
shield like interest expenses and
depreciation expenses and that is why
both can be considered as tax deduct-
ible expenses. Cloyd (1997) claims
that the existence of non-debt tax shi-
elds provide an alternative (and perha-
ps less costly) means of reducing inco-
me taxes and may serve to mitigate
the benefit of debt tax shields. Therefo-
re, some of the literatures like Wiwat-
tanakantang (1999) and Ozkan (2001)
found an inverse relationship between
non-debt tax shields and debt. But in
the contrary to the results of above
literatures, Graham (2006) and AL-
Shubiri (2010) found a positive relation
between non-debt tax shield and leve-
rage. Hence, this study tries to find out
whether non-debt tax shield affects
leverage. Then the eight hypothesis is
proposed:
H8: Non-Debt Tax Shield positively
affects the capital structure
RESEARCH METHOD
Population and Sample
The population in this study is all
listed manufacturing companies on the
Indonesia Stock Exchange from 2010
to 2012. The reason why manufactu-
rers are used in this research is the
manufacturing industries dominate the
companies listed in Indonesia Stock
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Exchange (IDX). Approximately 148 listed companies is increasing the

companies running in the manufactur-
ing industry are grouped into several
sub-industry categories. Many compa-
nies in the industry, as well as current
economic conditions have created an
intense competition among manufac-
turers.Competition in the manufactur-
ing industry makes each company in
order to further improve the
performance goals which can still be
achieved. The main purpose of publicly
prosperity of the owners or share-
holders by increasing the value of the
company (Salvatore, 2005). The
samples in this study were obtained by
purposive sampling method. The
samples were taken based on the
criteria used by Researchers. The
samples used are appropriate with the
criteria financial ratios which are used
roles in the study variables. Sampling
can be seen in table 3.1 below:

Table 3.1 The Sample Selection Process

The manufacturing company listed on the Indonesia Stock Exchanged 148

2010-2012
Companies that are not consistently listed in the Indonesia Stock Exchange in 2010 - (118)
2012 and did not have the completeness of the data contained in www.idx.co.id and
company other than Food and beverages, Tobacco manufacturers, pharmaceuticlas,
Automotive and Allied Products, Electronics and Office Equipment, Lumber and Wood
Products, Cement, Photographic Equipment, Stone, Clay, Glass and Concrete
Products, Metal and Allied Products, Chemical and Allied Products and Cables
company.
The number of samples used in the research object 30
Sources: Data Samples were processed

ANALYSIS METHOD DIVIDEND + b7 LIQUID + b8 NDTAX e

Research Model Where:
The formula of linear regression CS = Capital Structure
(multiple linear regressions) in general PROF = Profitability
is as follows: GROWTH = Growth Opportunitiy
Y = a + β1X1+ β2X2+ β3X3+ β4X4+ TNGBL = Tangibility
β5X5+ β6X6 + β7X7 + β8X8+ e SIZE = Size of Company
EARV = Earnings Volatility
Based on the mechanism of the DIVIDEND = Dividend Payment
relationship between the variables, the LIQUID = Liquidity
mathematical formulation of this study NDTAX = Non-Debt Tax Shield
is as follows:
CS = a + b1 PROF + b2 GROWTH + DATA ANALYSIS AND DISCUSSION
b3TNGBL + b4SIZE + b5 EARV + b6 Descriptive Statistic of Research
Variables
Table 4.3. The Variables Descriptive of Manufacturing
De scriptive Statistics
Companies Research
N Minimum Maximum Mean Std. Deviation
PROF_X1 90 -.19 .42 .1030 .11064
GWTH_X2 90 -.87 .64 .1306 .23087
TGBL_X3 90 .00 .79 .3306 .18682
SIZE_X4 90 10.54 17.90 14.6388 1.91508
EA RV_X5 90 -.22 .56 .1430 .14315
DIV_X6 90 .00 365.00 23.4778 47.31397
LIQD_X7 90 .19 108.92 3.2305 11.37823
NDTX_X8 90 .00 4.11 .4065 .58626
CS_Y 90 -31.78 40.37 .9630 5.53640
Valid N (listw ise) 90

Source: Secondary data were processed, 2013

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Classical Assumption Test 1. Normality Test

Table 4.4. Normalities ManufacturingCompany One-Sample
Kolmogorov-Smirnov
One-Sam Test
ple Kolm ogorov-Sm irnov Test

Unstandardiz
ed Residual
N 90
Normal Parameters a,b Mean .0000000
Std. Deviation 2.26079195
Most Extreme Absolute .096
Diff erences Positive .096
Negativ e -.087
Kolmogorov-Smirnov Z .912
As ymp. Sig. (2-tailed) .376
a. Test distribution is Normal.
b. Calculated from data.
Source: Secondary data were processed, 2013

Based on the results in Table 4.4 normally distributed residual, because

above, the data is normally distributed. the significance value is more than
This is indicated by the value of the 0.05.
Kolmogorov - Smirnov for 0.912 and
0.376 is significant at greater than 2. Multicollinearity Test
0.05. This means that the data is
Table 4.5. The Multicolinearity Test Result of Manufacturing Company

Collinearity Statistics
Model
Tolerance VIF
1 (Constant)
PROF_X1 0.108 9.243
GWTH_X2 0.831 1.203
TGBL_X3 0.859 1.164
SIZE_X4 0.805 1.242
EARV_X5 0.114 8.768
DIV_X6 0.873 1.145
LIQD_X7 0.881 1.136
NDTX_X8 0.829 1.206
a. Dependent Variable: CS_Y
Source: Secondary data were processed, 2013

A regression model is free of 10. This show is not the case in the
multicollinearity problem if it has a model multicollinearity.
value under 1 and VIF tolerance under
3. Autocorrelation test
Table 4.6 The Autocorrelation Test Result of Manufacturing Company
Mode l Sum m aryb

Adjusted Std. Error of Durbin-

Model R R Square R Square the Estimate Wats on
1 .498a .248 .174 2.36981 1.953
a. Predictors: (Constant), NDTX_X8, SIZE_X4, DIV_X6, TGBL_X3, LIQD_X7,
GWTH_X2, EARV_X5, PROF_X1
b. Dependent Variable: CS_Y
Source: Secondary data were processed, 2013

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Based on the results of the
regression analysis on the data value
Manufacturing Company Durbin
Watson (DW) of 1.935, DW-table size:
dL (outer boundary) = 1.469; dU
(within limits) = 1.854; 4-dU = 2.146,
and 4-dL = 2.531. Because dU< d <4-
dU, 1.854 < 1.953 < 2.146 these
results indicate that the regression
model is there is no autocorrelation.
4. Heteroscedasticity Test

Table 4.7. The Park Test Results of Heterokedasticity of Manufacturing

Company
Coefficientsa

Unstandardized Standardized
Coef f icients Coef f icients
Model B Std. Error Beta t Sig.
1 (Constant) 2.744 5.190 .529 .599
PROF_X1 -7.767 16.689 -.155 -.465 .643
GWTH_X2 -.088 2.885 -.004 -.030 .976
TGBL_X3 .514 3.507 .017 .147 .884
SIZE_X4 -.056 .353 -.020 -.160 .873
EARV_X5 .721 12.563 .019 .057 .954
DIV_X6 .002 .014 .021 .178 .859
LIQD_X7 -.019 .057 -.040 -.341 .734
NDTX_X8 -1.009 1.138 -.107 -.887 .378
a. Dependent Variable: LNU2i

Source: Secondary data were processed, 2013

regression model. This is consistent

SPSS output display results with the test results scatterplots.
provide parameter coefficients for the
independent variables are not Hypothesis Testing Results
significant, it can be concluded that 1. R2 Test results
there is no heterocedastity at the

Table 4.8. The coefficient of determination (R 2)

Mode l Summaryb

Adjusted Std. Error of Durbin-

Model R R Square R Square the Estimate Wats on
1 .498a .248 .174 2.36981 1.953
a. Predictors: (Constant), NDTX_X8, SIZE_X4, DIV_X6, TGBL_X3, LIQD_X7,
GWTH_X2, EARV_X5, PROF_X1
b. Dependent Variable: CS_Y

Source: Secondary data were processed, 2013

Based on SPSS output appears independent variable are the Profit-

that the calculation of Adjusted R
square value is 0.174 or 17.4%. This
means that 17.4%. of variation the
Capital Structure (CS_Y) which can be
explained by the variation of the eight
ability (PROF_X1), Growth Opportunity
(GWTH_X2), Tangibility (TGBL_X3),
Company Size (SIZE_X4), Earning
Volatility (EARV_X5), Dividend Pay-
ment (DIV_X6), Liquidity (LIQD_X7),

Dian Sulistyorini 31
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

and Non-debt tax shield (NDTX_X8),

while the rest of 82.6% influenced by 2. F Test Results
other factors that are not included in
the regression model.

Table 4.9. Calculation results of F Test Manufacturing Company

ANOVAb

Sum of
Model Squares df Mean Square F Sig.
1 Regression 150.219 8 18.777 3.344 .002a
Residual 454.895 81 5.616
Total 605.114 89
a. Predictors: (Constant), NDTX_X8, SIZE_X4, DIV_X6, TGBL_X3, LIQD_X7, GWTH_
X2, EARV_X5, PROF_X1
b. Dependent Variable: CS_Y

Source: Secondary data were processed, 2013

regression model can be said that the
From the results of the Profitability (PROF_X1), Growth
regression analysis can be seen that Opportunity (GWTH_X2), Tangibility
the independent variables (TGBL_X3), Company Size (SIZE_X4),
simultaneously have a significant effect Earning Volatility (EARV_X5), Dividend
on the dependent variable. This is Payment (DIV_X6), Liquidity
evident from the value of F count > F (LIQD_X7), and Non-debt tax shield
table at 3.344 > 2.04 with a probability (NDTX_X8), have simultaneously
of < 0.05, namely 0.002 < 0.05. affect the Capital Structure (CS_Y).
Because the probability is much
smaller than 0.05 or 5%, of the 3. T Test Results

Table 4.10. Partial regression calculation results Manufacturing Company

Coefficientsa

Unstandardized Standardized
Coef f icients Coef f icients
Model B Std. Error Beta t Sig.
1 (Constant) 4.180 2.147 1.947 .055
PROF_X1 -7.388 6.903 -.313 -1.070 .288
GWTH_X2 -2.210 1.193 -.196 -1.852 .068
TGBL_X3 2.277 1.450 .163 1.570 .120
SIZE_X4 .350 .146 .257 2.395 .019
EARV_X5 2.658 5.196 .146 .512 .610
DIV_X6 -.006 .006 -.111 -1.073 .286
LIQD_X7 -.012 .024 -.054 -.527 .600
NDTX_X8 .940 .471 .211 1.998 .049
a. Dependent Variable: CS_Y

Source: Secondary data were processed, 2013

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

THE ANALYSIS OF THE CONSUMER’S BEHAVIOR IN SHOPPING

BATIK IN SOLO WHOLESALER CENTRE

Siti Maryam
Faculty Of Economics, University Of Islam Batik Surakarta

Abstract: The development of batik in Indonesia attracts businessman to

manufacture and to sell various products and prices as well as convenient
shopping centers. This condition makes the businessman find appropriate strategy
to achieve competitive advantages. This is also followed by the development of
modern and traditional shopping centers, in big cities in Indonesia including Solo.
This research aimed to analyze the customer’s behavior in the shopping batik in
Pusat Grosir Solo (PGS) and the correlation between consumer’s age, job and
income towards batik price, shopping center and types of batik sold in Pusat Grosir
Solo. The instruments used were Chi-Square analysis and contigency analysis.
The research was conducted in Pusat Grosir Solo by using Convenient s ampling
technique. The population are consumers shopping batik there.The number of
samples 93 consumers and the data were collected with questionnaires. Based on
the analysis, it was concluded that customer’s age and batik price have correlation
to other variables. The research shows that price is the factor considered by
customers in shopping batik in Pusat Grosir Solo.

Keywords: Consumer’s Behavior

The word "batik" is derived from At first the government requires

the Java language, which is an amal-
gamation of "amba" which means "to
write", and "point" which means
"point". People are familiar with batik
as a display or patterned fabrics that
are unique to then be used as clothing.
Batik was initially worked in an only
limited palace alone, and the results
are subject to the king, the royal
family, and his followers. Because
many followers of the king who lived
outside the palace, the art of batik was
brought out of the palace and carried
at each venue. Within the development
era, batik art finally began to be
applied by women to fill his spare time.
And finally batik has become populist
clothing.
Now batik has evolved, since the
inauguration on October 2, 2009 as a
day of national batik, the development
of batik as an art heritage of
indigenous cultures of Indonesia is
currently growing rapidly. Batik is not
only worn for formal events, but is
suitable for casual occasions. This is
because of the increasing diversity of
motifs, patterns, colors and models of
batik.
for civil servants to wear batik on
certain days and on a regular basis as
a uniform. Motif assortment can be
used to distinguish the office or work
area. Then, the government
recommends not only the civil servants
who wore the uniform of batik, but also
organizations, offices, agencies,
private institutions, and foundation
batik uniforms on certain days. Even
schools are also encouraged to wear
batik for students, which can
simultaneously show the identity of the
school.
The continued development of
batik in Indonesia attract businesses to
produce and sell a variety of batik. It
provides the business people to be
able to find an appropriate strategy to
achieve competitive advantage. Com-
petitive advantage can be taken with
several aspects, among others; price,
variety of Batik products, and place or
a particular place so that the
consumers can select the appropriate
batik and taste, knowing the behavior
of the consumer businesses hoping to
expand its business and win the
competition. The development of

Siti Maryam 36
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
today's business is followed by the
development of various shopping
venues and modern as well as
traditional shops in major cities in
Indonesia, resulting in increasingly
intense competition in the business
world.
One shopping center in Solo
Batik is PGS (Pusat Grosir Solo), PGS
is a batik shopping center minded by
domestic and foreign tourists. Based
on observations and interviews, batik
shop in the PGS cheap, lots of choice,
the place is also convenient. Based on
this phenomenon, it shows that
consumers are very concerned about
the various aspects in the decision to
look for a place to shop, and this must
be considered because now the
consumer is not only based on low
prices, variety of Batik product
selection but also comfort shopping
centers for example neat layout, a
spacious and comfortable place. For
that, PGS Management must know
and examine the behavior of consum-
ers batik to create a strategy to
accommodate the wishes of consum-
ers, thus its chances to PGS as batik
shopping center of the biggest and
best in the city of Solo can be realized.
It is interesting to examine the
behavior of consumers who shop at
batik Solo or better known as PGS
associated with the marketing mix
strategy.
RESEARCH METHODOLOGY
Research Design
This type of research is descript-
tive correlational to look for a relation-
ship between the characteristics of
consumers with characteristics of
shopping center. This study used
cross sectional approach to do
measurements or observations at the
same time. Referring to the nature of
its analysis, the type of research is the
explanation (explanatory research),
which aims to explain the relationship
between the variables through
hypothesis testing. This research was
conducted by questionnaire to
Siti Maryam
consumers who shop at Pusat Grosir
Solo.
Research Location
This research is located in Solo
Wholesale Center (PGS), in Mayor
Sunaryo-Solo Road. PGS is a building
with the concept as a business center
in the city of Solo Batik trading at
wholesale prices. Its strategic location
makes PGS very easily accessible
from all parts of the city, with a market
share that is quite extensive covering
the entire population of Indonesia as
well as foreign residents, as the city of
Solo, including one shopping
destination.
Population and Sample
The population is the total
number of objects (entities/individuals)
whose characteristics are about to
alleged (Pangestu Subagyo and
Djarwanto, 2005: 93). The population
in this study is the overall consumer
who never makes purchases batik; and
consumers are less comfortable
making a purchase batik in Solo
Wholesale Center. Determination of
the number of samples in research
based on Ibnu widiyanto with the
following formula:
N= = = 93
It means:
N: Number of sample
Z: 1,96 within level of significance 95%
Moe: 10%
It means that means the number
of samples in this study were 93
consumers who ever bought batik in
Solo Wholesale Center. Which amount
is considered to be the representative.
Sampling technique is Convenient
Sampling, which means consumers
shopping at Burberry Solo batik are
sampled, whether they are willing to be
interviewed and given questionnaires
to fill.
Method of Collecting Data
37
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
The collecting data in this study
is by observing the behavior of
consumers who shop at PGS and also
by spreading questionnaires to
consumers who shop batik to be
sampled in the research.Untuk
complement qualitative data, the direct
interviews were conducted to
consumers and other interested parties
in the PGS.
Goodness of fit test
(X1 )
Consumer Character
a.Age
b.Occupation
c.Income
Consumer behaviour in shopping in Grosir
Solo centre
DATA ANALYSIS
Description of Grosir Solo Centre
Solo city is a center of the
famous batik industry in Indonesia and
overseas, because sales have reached
all over the archipelago and is one of
the export products. Batik from Solo
has a characteristic in traditional
patterns and motifs. The motives well-
known among other is Sidomukti and
Sidoluhur. Solo is also known for two
kinds of fabric, namely batik lurik and
batik kasultanan. Usually, the colors
used are blue symbolizing the earth,
brown as fire, and white as air and
water (batikasliindo-
nesia.blogdetik.com, 2011).
Solo city is also famous as a
tourist city of batik. Many find places of
tourist traffic in the city of Solo batik as
Kampung Batik Laweyan, Kauman Ba-
tik, Batik barn, Pasar Klewer, Museum
Siti Maryam
Technique of Data Analysis
This study investigates and
analyzes whether the consumer beha-
vior in shopping Batik in PGS were
categorized into age, job, and income
is influenced by the convenience factor
of shopping place, the price offered by
the seller in PGS, Variation Batik
products in PGS. The More details
can be seen in the following scheme:
PGS Component
a.Place
b.Cost
c.Batik Variation
d.Jenis Batik
of Ancient Danar Hadi Batik Gallery,
PGS Solo, wholesale center Solo and
others.
Solo Wholesale Center (PGS) is
a building with the concept of trading
as a business center. Solo Wholesale
Center is a shopping center (trade
center) serving the needs of fashion for
buyers in the number of wholesale and
retail. PGS is also a wholesale shop-
ping center and the largest complete
Batik particularly in the city of Solo and
the surrounding areas. Its strategic
location makes wholesale center Solo
is easily accessible from all parts of the
city, with a market share that is quite
extensive covering the entire
population of Indonesia as well as
other cities, because Solo is one
shopping destination especially for
tourists who want to look for souvenirs
batik, Solo wholesale center is a
38
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

shopping center located on the street
Major Sunaryo or the exact location
opposite the Fort Vastenburg. And of
course the location mall wholesale
center once solo is very strategic
because it is located in Solo city center
or near the main square of Solo.
In accordance with its Tag Line
"Bestsellers .. Most Complete .. Most
Convenient". Solo Wholesale Center is
always seeking three things to traders
and visitors through management of
building professional management and
marketing communication strategies
are up-to-date , making Burberry Solo
along with traders who joined in beco-
ming the market leader in the trading
city of Solo.
Tag Line "Most Complete" can
be demonstrated with several different
variations in Batik items made of batik
as a laptop bag, praying clothes, hand-
bags, gloves HP, bed covers, purses,
school bags, key chains, ladies acces-
sories, paintings and a variety of T-
shirts cool batik. Not only serve a pur-
chase with the wholesale system, traffi-
cing also sell retail buyer can certainly
make a bargain to get a cheap price.
Tag Line "Most Convenient" can
be proved by the existence of some
facilities provided by the management
PGS like, elevator service, escalator,
toilet per floor, motorcycle parking area
and a spacious car, 24 hour security,
cleaning service, loading dock, gene-
rator, customer service, CCTV,
sprinkle and fire extinguishers.
Description of 93 Research Respon-
dent
Respondents in this study can be
described in terms of the age of the
respondent, the respondent occupation
and income of the respondents. The
results were as follows:
1. Respondent Age
The frequency distribution of the
age of 93 consumers who buy batik in
wholesale center solos are as follows:

Tabel 1. Distribusi Frekuensi Usia Responden

N Usia Frekuensi Persentase

o (%)
1 < 15 Tahun 17 18.3
.
2 15 – 30 Tahun 30 32.3
.
3 31 – 45 Tahun 15 16.1
.
4 > 45 Tahun 31 33.3
.
Jumlah 93 100
Sumber: data primer diolah, 2015

The resulting distribution of 93 aged between 31-45 years and 33.3%

consumers batik in wholesale center
solo by age in mind that 18.3% or 17
consumers aged less than 15 years,
32.3% or 30 consumers aged between
15-30 years, 16.1% or 15 consumers
or 31 consumers aged over 45 years.
2. Respondent Occupation
The frequency distribution of the
work of 93 consumers who buy batik in
wholesale center solos are as follows:

Tabel 2. Distribusi Frekuensi Pekerjaan Responden

N Pekerjaan Frekuensi Persentase

o (%)

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

1 Pegawai Negeri 23 24.7

.
2 Wiraswasta 21 22.6
.
3 Swasta 26 28.0
.
5 Pelajar 23 24.7
.
Jumlah 93 100
Sumber: data primer diolah, 2015

The resulting distribution of 93

consumers batik in wholesale center 3. Respondent Income
based work solo note that 24.7% or 23 The frequency distribution of the
customers to their employment status income of 93 consumers who buy batik
as a Public Servant, 22.6% or 21 in wholesale center solos are as
customers are self-employed, 28.0% or follows:
26 customers as private employees,
24.7% or 23 customers as a student.

Tabel 3. Distribusi Frekuensi Pendapatan Responden

No Pendapatan Frekuensi Persentase (%)
1. < Rp 800.000,- 20 21.51
2. Rp 800.000,- s/d Rp 2.000.000,- 27 29.03
3. Rp 2.000.001,- s/d Rp 3.000.000,- 18 19.35
4. > Rp 3.000.000,- 28 30.11
Jumlah 93 100
Sumber: data primer diolah, 2015

The resulting distribution of 93 Consumer Perception Of Batik Solo

consumers batik in wholesale center
based on revenue solo note that 21:51
or 20% of consumers have incomes of
less than Rp 800.000 -. 29.03% or 27
consumers have incomes between Rp
800.000- Rp 2.000.000-19:35% or 18
consumers have incomes between Rp
2.000.001-Rp 3.000.000-and 11.30%
or 28 consumers have incomes of
more than Rp 3.000.000.
Wholesale Center
The purchasing behavior of
consumers in Burberry Solo Batik
associated with the place, price and
variety Batik, are as follows:
1. Place
Consumer perception of a batik
shopping at wholesale center solo, as
follows:

Tabel 4. Persepsi Responden tentang Tempat berbelanja Batik

No Tempat Berbelanja Frekuensi Persentase (%)

1. Tidak Nyaman 17 18.28
2. Kurang Nyaman 8 8.60
3. Nyaman 26 27.96
4. Sangat Nyaman 42 45.16
Jumlah 93 100
Sumber: data primer diolah, 2015

Perception of 93 consumers four groups: 18:28% or 17 consumers

batik on a spot of shopping at have the perception that shopping
wholesale center solo distributed into batik in PGS is uncomfortable, 8.60%

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

or 8 consumers found less convenient,

27.96% or 26 consumers responded
that a spot of shopping in PGS
categorized tobe cozy and 45.16 %%
or 42 consumer supposes its
convenient shopping place.
2. Price
93 perception of consumers
about the prices at the wholesale
center batik solo, as follows:

Tabel 5. Persepsi Responden tentang Harga Batik

No Harga Frekuensi Persentase (%)

1. Murah 22 23.66
2. Agak Murah 29 31.18
3. Mahal 19 20.43
4. Sangat Mahal 23 24.73
Jumlah 93 100
Sumber: data primer diolah, 2015
The resulting distribution of expensive on batik prices in PGS and
perceptions of 93 consumers batik in the remaining 24.73% or 23
wholesale center solo by price known consumers stated very expensive price
that 23.66% or 22 consumers stated of batik in Solo Wholesale Center.
cost of the batik prices offered by 3. Batik Variation
traders in Solo Wholesale Center, 93 perception of consumers
31.18% or 29 customers found a bit regarding batik variation in wholesale
cheap on the price of batik, 20:43% or center solo, as follows:
19 customers have the perception

Tabel 6. Persepsi Responden Tentang Variasi Batik

No Variasi Batik Frekuensi Persentase (%)

1. Tidak Bervariasi 26 27.95
2. Kurang Bervariasi 23 24.73
3. Cukup Bervariasi 25 26.88
4. Bervariasi 19 20.43
Jumlah 93 100
Sumber: data primer diolah, 2015

The resulting distribution of per- Consumer Shopping Behavior in

ceptions of 93 consumers batik in
wholesale center solo based on varia-
tions Batik is known that 27.95% or 26
consumers have the perception that
batik is not varied, 24.73% or 23 custo-
mers found batik sold in PGS less
varied, 26.88% or 25 consumers stated
that batik Solo Wholesale center is
quite varied and 20:43 or 19% of
consumers have the perception that
batik being available at PGS is very
varied
Solo Wholesale Center
Consumer Behavior against
Blueberry Solo is referred to in this
research is the level of customer
satisfaction and purchasing decisions.
The results were as follows:
1. Consumer Satisfaction
93 consumer perceptions of
customer satisfaction in the batik shop
wholesale center solos are as follows:

Tabel 7. Distribusi Frekuensi Kepuasan Konsumen

No Kepuasan Konsumen Frekuensi Persentase (%)

1. Tidak Puas 5 5.38
2. Kurang Puas 11 11.83

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

3. Cukup Puas 37 39.78

4. Puas 40 43.01
Jumlah 93 100
Sumber: data primer diolah, 2015

Based on the above table of shopping at wholesale center batik

customer satisfaction with batik in
wholesale center solos note that 5:38
or 5% of consumers are not satisfied
shopping at wholesale center batik
solo, 11.83% or 11 consumers were
less satisfied shopping at wholesale
center batik solo, 39.78% or 37
customers feel pretty satisfied
solo and the remaining 44.01% or 40
customers were satisfied shopping at
wholesale center batik solo.
2. Consumer Decision
Consumer decision factors batik
shop at Burberry Solo of 93 consumers
related to the price, and a variety of
batik is as follows:

Tabel 8. Distribusi Frekuensi Faktor Keputusan Konsumen

No Faktor Keputusan Frekuensi Persentase (%)

1. Harga 27 29.03
2. Variasi Batik 27 29.03
3. Tempat 39 41.94
Jumlah 93 100
Sumber: data primer diolah, 2015

According to the table above Testing Result

factors shopping decision batik in
wholesale center solos note that
29.03% or 27 consumers make
purchasing decisions batik in
wholesale center solo because of the
price factor, 29.03% or 27 consumers
decide to buy batik in wholesale center
solo because batik offered vary,
41.94% or 39 consumers make a
decision to buy batik in wholesale
center solo because of the place to
shop.
The result of Chi Square test and
coefficient of contingency is as follows:
1. The relationship between age with
Price in Consumer Decision to
Purchase Batik in wholesale
center solo
The result of the calculation of
the cross table on the relationship
between age and the price of the
consumer's decision to purchase solo
batik in wholesale center is as follows:

Tabel 9. Hubungan antara Usia dengan Harga dalam Keputusan Konsumen

terhadap Pembelian Batik di Pusat grosir solo

Harga
S
A 
Usia M M angat 2 P
gak hitung
urah ahal M
Murah
ahal
< 15 1 6 0 1
Tahun 1
15 – 30 6 1 6 5 3 0
Tahun 0 7,945 ,000
31 – 45 3 7 4 1
Tahun

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

> 45 2 6 9 1
Tahun 6
Sumber: data primer diolah, 2015

Based on the calculation of the relationship between age at a price in

cross table the relationship between
age and the price in the consumer's
decision to purchase batik in wholesale
center solos note that 11 consumers
with the age less than 15 years of
choosing batik products at bargain
prices, 16 consumers over the age of
45 years chose batik products with
prices very expensive. Based on the
calculation,  2hitung value is 37.945 with
p = 0.000 <0.05; so H0 is rejected.
These results indicate that there is a
making purchasing decisions solo batik
in wholesale center.
2. The relationship between the price
Jobs in Consumer Decision to
Purchase Batik in wholesale
center solo
The result of the calculation of
the cross table on the relationship
between work with the price in the
consumer's decision to purchase solo
batik in wholesale center is as follows:

Tabel 10. Hubungan antara Pekerjaan dengan Harga dalam Keputusan

Konsumen terhadap Pembelian Batik di Pusat grosir solo

Harga
Pekerjaan
Murah
Agak
Mahal
Sangat 2hitung P
Murah Mahal
2 5 5 1
PNS
0
Wiraswasta 3 7 7 6
3 0
Swasta 3 6 5 4
7,458 ,000
Buruh 4 5 2 2
1 6 0 1
Pelajar
0
Sumber: data primer diolah, 2015

Based on the calculation of the price in making purchasing decisions

cross table the relationship between
work and the price in the consumer's
decision to purchase batik in wholesale
center solos note that 10 consumers
with a job as a civil servant to choose
products with batik is very expensive,
and 10 of those consumers with jobs
as students choosing batik products at
low prices , Based on the calculation,
 2hitung value is 37.458 with p = 0.000
<0.05; so H0 is rejected. These results
suggest a link between the work at a
solo batik in wholesale center.
3. The relationship between
revenues by Price in Consumer
Decision to Purchase Batik in
wholesale center solo.
The result of the calculation of
the cross table on the relationship
between earnings with a price in the
consumer's decision to purchase solo
batik in wholesale center is as follows:

Tabel 11. Hubungan antara Pendapatan dengan Harga dalam Keputusan

Konsumen terhadap Pembelian Batik di Pusat grosir solo

Harga
Pendapatan
Murah
Agak
Mahal
Sangat 2hitung P
Murah Mahal
< Rp 800.000 11 10 3 3
22,390 0,008
Rp 800.000 – Rp 2.000.000 7 7 5 4

Siti Maryam 43
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Rp 2.000.001 – Rp 3.000.000 1 7 5 4
> Rp 3.000.000 3 5 6 12
Sumber: data primer diolah, 2015

Based on the calculation of the association between income tan with a

cross table the relationship between
income with a price in the consumer's
decision to purchase solo batik in
wholesale center is known that 11
consumers with incomes of less than
Rp 800,000, - choosing batik products
at cheap prices, and 12 consumers
with incomes of more than Rp
3,000,000 , - choosing batik products
with a very expensive price. Based on
the calculation,  2hitung value is 22.390
with p = 0.008 <0.05; so H0 is rejected.
These results indicate that there is an
price in making purchasing decisions.
purchase solo batik in wholesale
center.
4. The relationship between age with
Batik Variation in Consumer
Decision buy wholesale solo Batik
Center
The result of the calculation of
the cross table on the relationship
between age and the purchase batik
batik variation in wholesale center
solos are as follows:

Tabel 12. Hubungan antara Usia dengan Variasi Batik dalam Keputusan
Konsumen membelian Batik di Pusat grosir solo

Variasi batik
Usia Tidak Kurang Cukup 2hitung P
Bervariasi
bervariasi bervariasi bervariasi
< 15 Tahun 10 5 3 0
15 – 30 Tahun 10 6 5 6
34,650 0,000
31 – 45 Tahun 2 7 5 0
>45 Tahun 4 5 12 13
Sumber: data primer diolah, 2015

Based on the calculation of the and variations of batik in batik making

cross table the relationship between
age and variation batik in consumer's
decision to purchase batik in wholesale
center solos note that 10 consumers
with the age less than 15 years of
choosing batik products that not vary,
and 13 of those consumers over the
age of 45 years chose batik products
varies. Based on the calculation,  2hitung
is 34.650 with p = 0.000 <0.05; so H0
is rejected. These results indicate that
there is a relationship between age
purchasing decisions in the wholesale
center solo.
5. The relationship between work
with Batik Variations in consumer
decision in buying wholesale solo Batik
Center
The result of the calculation of
the cross table on the relationship
between work with a variety batik in
consumer decision to purchase solo
batik in wholesale center is as follows:

Tabel 13. Hubungan antara Pekerjaan dengan Variasi Batik dalam

Keputusan Konsumen terhadap Pembelian Batik di Pusat grosir solo

Variasi batik
Peke Tid Kur Cu 
Ber 2 P
rjaan ak ang kup hitung
variasi
bervariasi bervariasi bervariasi
PNS 3 3 8 9 3 0

Siti Maryam 44
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Wiras 3 6 8 7 3,696 ,001

wasta
Swas 5 5 6 3
ta
Buru 5 4 0 0
h
Pelaj 10 5 3 0
ar
Sumber: data primer diolah, 2015

Based on the calculation of the calculation,  2hitung is 33.696 with p =

cross table with variations of the
relationship between employment batik
in consumer's decision to purchase
solo batik in wholesale center is known
that 10 consumers with jobs as
students choosing batik products are
not varied, and 9 of those consumers
with jobs as civil servants choosing
batik products vary. Based on the
7. Purchase Batik in wholesale
center solo
The result of the calculation of
the cross table revenue relationship
0.001 <0.05; so H0 is rejected. These
results indicate that there is a
relationship between work with a
variety of batik in batik making
purchasing decisions in the wholesale
center solo.
6. The relationship between income
with Batik Variation in Consumer
Decision to
with batik variation in the consumer's
decision to purchase at wholesale
center batik solo, as follows:

Tabel 14. Hubungan Pendapatan dengan Variasi batik dalam Keputusan

Konsumen terhadap Pembelian Batik di Pusat grosir solo

Variasi batik
Bervariasi  hitung
2
Pendapatan Tidak Kurang Cukup P
bervariasi bervariasi bervariasi
< Rp 800.000 12 6 4 3
Rp 800.000 – Rp 2.000.000 7 7 5 4
13,639 0,136
Rp 2.000.001 – Rp 3.000.000 4 4 5 4
> Rp 3.000.000 3 6 11 8
Sumber: data primer diolah, 2015

Based on the calculation of the These results indicate that there

cross table the relationship between
income with variations of batik in the
consumer's decision to purchase batik
in wholesale center solos note that 12
consumers with incomes of less than
Rp 800,000, - choosing batik products
are not varied, while 11 consumers
with incomes of more than Rp 3,000.
000, - Simply choose batik products
vary. Based on the calculation,  2hitung
is 13.639 with p = 0.136> 0.05; so
H0diterima.
is no connection between the revenue
with variations of batik in batik making
purchasing decisions in the wholesale
center solo.
8. The relationship between age with
a place in the Consumer Decision
to Purchase Batik in wholesale
center solo
The result of the calculation of
the cross table on the relationship
between age and place in the
consumer's decision to purchase solo
batik in wholesale center is as follows:

Siti Maryam 45
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Tabel 15. Hubungan antara Usia dengan Tempat dalam Keputusan

Konsumen terhadap Pembelian Batik di Pusat grosir solo

Tempat
Usia Tidak Kurang Sangat 2hitung P
Nyaman
Nyaman Nyaman Nyaman
< 15 Tahun 7 1 5 5
15 – 30 Tahun 7 6 7 9
23,635 0,005
31 – 45 Tahun 0 0 6 9
>45 Tahun 3 1 8 19
Sumber: data primer diolah, 2015

Based on the calculation of the relationship between age and where to

cross table the relationship between
age and the place to shop in the
consumer's decision to purchase batik
in wholesale center solos note that 7
consumers younger than 15 years, I
was shopping batik Not Comfortable,
and 19 of those consumers over the
age of 45 years found a place to shop
batik very Comfortable. Based on the
calculation,  2hitung is 23.635 with p =
0.005 <0.05; so H0 is rejected. These
results indicate that there is a
shop for batik in making purchasing
decisions solo batik in wholesale
center.
9. The relationship between the work
place in the Consumer Decision to
Purchase Batik in wholesale
center solo
The result of the calculation of
the cross table on the relationship
between work at a place in the
consumer's decision to purchase solo
batik in wholesale center is as follows:

Tabel 16. Hubungan antara Pekerjaan dengan Tempat dalam Keputusan

Konsumen terhadap Pembelian Batik di Pusat grosir solo

Tempat
Pekerjaan Tidak Kurang Sangat 2hitung P
Nyaman
Nyaman Nyaman Nyaman
PNS 4 0 6 12
Wiraswasta 1 0 8 15
37 0,00
Swasta 4 2 3 8
,509 0
Buruh 1 5 4 2
Pelajar 7 1 5 5
Sumber: data primer diolah, 2015

Based on the calculation of the relationship between work and where

cross table the relationship between
work and where to shop for batik in the
consumer's decision to purchase batik
in wholesale center solos note that 7
consumers with jobs as students
declare shopping batik is not
comfortable, and 15 of those
consumers to work as self-employed
declare a batik shopping very
Comfortable , Based on the
calculation,  2hitung is 37.509 with p =
0.000 <0.05; so H0 is rejected. These
results indicate that there is a
to shop for batik in batik making
purchasing decisions in the wholesale
center solo.
10. The relationship between income
with the Consumer Decision to
Purchase Batik in wholesale
center solo
The result of the calculation of
the cross table on the relationship
between income with a place in the
consumer's decision to purchase solo
batik in wholesale center is as follows:

Siti Maryam 46
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Tabel 17. Hubungan antara Pendapatan dengan Tempat dalam Keputusan

Konsumen terhadap Pembelian Batik di Pusat grosir solo

Tempat
Pendapatan Tidak Kurang
Nyaman
Sangat 2hitung P
Nyaman Nyaman Nyaman
< Rp 800.000 8 3 7 9
Rp 800.000 – Rp 2.000.000 2 3 9 11
25,907 0,004
Rp 2.000.001 – Rp 3.000.000 4 2 3 6
> Rp 3.000.000 3 0 7 16
Sumber: data primer diolah, 2015

Based on the calculation of the People familiar with batik as a

relationship between income cross
table with a batik shopping in the
consumer's decision to purchase solo
batik in wholesale center is known that
16 consumers with incomes of more
than Rp 3.000.000- expressed a batik
shop very comfortable, while 11
consumers with incomes between USD
800.000-Rp 2.000.000- also stated that
a very comfortable place. Based on the
calculation,  2hitung is 25.907 with p =
0.004 <0.05; so H0 is rejected. These
results indicate that there is a
relationship between income with a
batik shop in making purchasing
decisions solo batik in wholesale
center.
DISCUSSION
shopping batik are all factors
relating to the consumer's decision to
buy batik in wholesale center solo and
there is correlation between consumer
characteristics (age, income, and
employment) with PGS characteristic
factors (price, variety of batik, and
shopping).
The continued development of
batik in Indonesia attract businesses to
produce and sell batik. These are an
opportunity for businesses to be able
to find an appropriate strategy to
achieve competitive advantage in the
form of price, variety of batik, and a
convenient shopping, so that buyers
can choose their own products as
desired and personal tastes of
consumers, in the hope the
perpetrators businesses can survive,
continue to grow and win the
display or patterned fabric unique.
Batik is initially worked only limited in
the palace alone, and as clothing for
the king, the royal family, and his
followers. Because many followers of
the king who lived outside the palace,
the craft of batik is taken outside the
palace and carried at each venue. This
times, making changes also on the
craft of batik that women fill his spare
time to make batik. And finally batik
has become a populist clothing. Based
on the results of research, the
relationship between consumers
characteristics and shopping center
batik namely Solo Wholesale Center to
the consumer decision that price,
variety batik
competition. The development of
today's business environment also
participate in the development of
various shopping and shopping
modern and traditional in major cities in
Indonesia as well as in the city of Solo
eg Solo Wholesale Center (PGS),
Beteng Trade Center (BTC), Solo
Square, Solo Grand Mall and many
more. This has led to increasingly
intense competition in the business
world. In order to attract buyers even
businesses require a separate marke-
ting strategies that are considered
good for business development.
Indirectly, consumers are very
concerned various aspects in the
decision to shop. It should be noted at
this time because consumers are not
only based on low prices, but also on a
variety of products in this study,

Siti Maryam 47
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

namely batik, and the convenience of characteristics and factors have a

shopping and other places. That is,
consumers now begin selective,
efficient in time and rational in making
decisions to buy. Meanwhile, if the
observed condition of traditional
markets are still unsatisfactory in the
eyes of consumers. For example
merchandise that is less structured so
that consumers find it difficult to find
the necessary items, the quality of his
choice, the atmosphere is less
comfortable, the location was cramped
and so forth. It is these factors that
make consumers turned to shopping
that has advantages compared to
traditional markets such as the lay out
is neat, the availability of a large
selection of products with a certain
quality, convenient location and
spacious. Thus, the opportunity to
increase the volume of sales can be
realized.
Consumer's decision to buy batik
products related to several factors,
including price, variety of batik, and
place. These factors were seen as key
elements associated with the buyer's
decision to purchase transactions that
are next in Solo Wholesale Center.
In this study, the authors aimed
to analyze the factors which are related
to consumer decision in buying batik in
wholesale center solo. The result
shows that the factor of consumer
correlation to the characteristics of the
product in the consumer's decision to
buy batik in wholesale center solo.
Based on the survey results,
those revealed a significant
relationship between the factors of
consumer characteristics and product
characteristic factors of the consumer's
decision to buy batik in wholesale
center solo. So the hypothesis is that
there is a significant relationship
between the factors of consumer
characteristics and factors
characteristic has been verified or can
be received by each has a value of p
<0.05. So that the problem in the study
have been verified and the purpose of
the study has been reached.
Furthermore, to determine the
strength of the relationship between
consumer characteristics with the
characteristics of the product the
author analyzes contingency
coefficient C and to assess the degree
of relationship between these factors, it
should be compared with the maximum
contingency coefficient Cmax. A
minimum value between C and C max
that has the smallest number indicates
the most powerful relationships
between variables or dominant
consumer characteristics and variable
product characteristics. The following
table calculation results C and Cmax:

Tabel 18. Selisih Perhitungan antara C - Cmax dengan n = 4

No Hubungan 2hitung C Cmax |C - C max|

1. Usia – Harga 37,945 0,524 0,866 0,342
2. Pekerjaan – Harga 37,458 0,522 0,866 0,344
3. Pendapatan – Harga 22,390 0,428 0,866 0,438
5. Usia – Variasi batik 34,650 0,507 0,866 0,359
6. Pekerjaan – Variasi batik 33,696 0,502 0,866 0,364
7. Pendapatan – Variasi batik 13,639 0,346 0,866 0,520
9. Usia – Tempat 23,635 0,437 0,866 0,429
10. Pekerjaan – Tempat 37,509 0,522 0,866 0,344
11. Pendapatan – Tempat 25,907 0,467 0,866 0,399
Sumber: data primer diolah, 2015

Based on the calculation above, of the product which has n = 4 is

the relationship between consumer known that the relationship between
characteristics with the characteristics age and the price obtained by the

Siti Maryam 48
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

value of the difference | C-Cmax | a shop place, the price of batik

amounted to 0.342 smaller than the and batik variations offered at
other variables that have n = 4. This PGS has been trusted and tested;
shows that the relationship between 4. Based on the analysis of the
age and the price is the factor most relationship between consumer
closely associated with purchasing characteristics with Solo Whole-
decisions. sale Center characteristics, then
Based on the test contingensi the most powerful relationships
above shows that the relationship are between the ages of
between age at the price of having the consumers who shop with batik
smallest margin so it has a level higher offered in Solo Wholesale Center.
relationship than the relationship of
other characteristics. Ages at prices REFERENCES
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we all know that the price level of Pemasaran: Analisa Perilaku
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quality of the product, and the age BPFE
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The research findings found a 2000. Manajemen Pemasaran:
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each factor of consumer characteristics Edisi Pertama. Yogyakarta:
and product characteristic factors of BPFE.
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wholesale center solo. So, the Yogyakarta: PT. BPFE.
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relationship between the factors of Pemasaran Edisi Bahasa
consumer characteristics and Indonesia. Jakarta: PT. Indeks.
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Management. Jakarta:
CONCLUSION PT.Prehallindo.
Based on the results of research Maryam, Siti. 2013. Statistik Induktif.
and discussion in the mentioned, it can Surakarta: UNIBA Press.
be summed up as follows: Simamora, Bilson. 2002. Panduan
1. A hypothesis stating There is a Riset Perilaku Konsumen.
relationship between the age of Jakarta: PT. Gramedia.
consumers who shop at PGS Sutisna. 2001. Perilaku Konsumen &
Solo, the price of batik and batik Komunikasi Pemasaran.
variations offered has been trusted Bandung: PT. Remaja
and tested; Rosdakarya Offset.
2. The hypothesis stating there is a Tjiptono Fandy. 2001. Strategi
relationship between the work of Pemasaran. Yoyakarta: Andi
consumers who shop at PGS with Offset.
the shop place, the price of batik Wahyono Teguh. 2006. Analisis Data
and batik variations offered at Statistik dengan SPSS 14.
PGS has been trusted and tested; Jakarta: PT. Gramedia.
3. The hypothesis stating there is a Wulandari, Ari. 2011. Batik Nusantara.
relationship between income Yogyakarta: Andi Offset.
consumers who shop at PGS with

Siti Maryam 49
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

BEYOND BRAND SWITCHING BEHAVIOUR: AN EXPLORATION

CONCEPT OF BUTTERFLY CUSTOMER

Anna Triwijayati
Management Study Program, University of Ma Chung

Abstract: Brand Switching Behavior is the type of consumer behavior that found in
today's market. This behavior is increase because the consumers are exposed to
millions of marketing stimulus and get huge product and brand choices. Consumer
can choose more than one brand in one type of product. When consumers are on
huge marketing choices and stimulus, brand switching behavior is not sufficient. In
the extreme continuum of brand switching behavior, this behavior is called butterfly
customer. In the concept of butterfly consumer it will take much effort to reach and
difficult to believe who the customers are loyal. Butterfly customer is most
challenging customer because they are not just common brand switching behavior.
This paper will discuss the phenomena that can give new sight and awareness for
marketers. In the era of free and on line market, marketer have to know the market
are not in the same situation. Marketer will face more difficult marketing strategy to
reach butterfly customer. This type have unique characteristic and not likely with
brand switching behavior, such as can switch cross segments, smart, pessimistic
and sceptic, well educated, well inform, and easier to move. In the real market,
supposing there is no loyalty in butterfly customer. So, that’s why marketers have
to create dinamic marketing strategy. The marketing strategy have to run fastly
following the dinamic consumer needs and wants. Butterfly consumers are called
profitable but disloyal consumers. For the short time marketer can persuade with
short-term hard-sell offers. After the purchasing drops off, marketer have to renew
or renew or replace the offers.

Keywords: Butterfly Consumer, Consumer, Brand Switching Behavior

Technology development and the customer is more likely to perform

product variety ultimately benefit the
consumers in making their decisions.
In the end, the consumers will have
lots of available product alternatives.
This competition condition to conquer
the market share in all products and
services, at last, has raised price war.
When on the one side it may benefit
consumers, but it also brings together
a fog towards the consumers to
process the information available. This
price war undoubtedly tends to result in
disloyal customer on a certain brand or
in the other words, it is commonly
known as the Butterfly Customer. This
kind of customer tends to buy product
as being driven by the sales promotion
incentives offered other than the
product function. Bombing adver-
tisements which struck the customer’s
feeling at once will not be appropriately
processed, thus the customer’s
decision in purchasing a product is not
underline by deep cognitive flow and
such action which is commonly known
as jumping to conclusion towards the
advertisement and marketing stimulus.
Butterfly Customer segment
emerges along with the increasing
offer diversity and product alternatives
in market. Customer’s intrinsic inde-
pendency in making product purchase
decision is implemented by the cus-
tomer in such optimal way. Degeratu,
Rangaswamy and Wu (2001) found
that the behaviour switches more in
traditional market than on online
market since the sellers are free in dis-
playing their products and the buyers
can search over on all alternatives at
once. But this condition has become
irrelevant as the online market also
offers same level attractiveness to their
customers. The understanding on why
the customer switches into the other
products also become the critical issue
(N’goala. 2006)

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
New phenomenon of Butterfly
Customer may be correlated with the
switching behaviour effect (a behaviour
in switching the product or brand
intention) as one of the characteristics
of butterfly customer segment is swit-
ching the brand or product references.
Switching behaviour is frequently link-
ed with post- purchase behaviour, for
example, the satisfaction/dissatisfac-
tion, loyalty and repurchase. Many re-
searches correlate the switching beha-
viour (switching brand preference) with
post- purchase behaviour (Yanaman-
dram and White, 2007), loyalty (Lee
and Murphy, 2005) and Loyalty and
Retention (Thomsom, 2005; Sidhu,
2005). Butterfly Customer may also be
linked with repurchase behaviour since
it relates to the switching behaviour
which arises prior to the purchase or at
the time of decision making (Degeratu,
Rangaswamy and Wu. 2001).
The marketers are faced into a
big challenge to understand the market
segment of butterfly customer, since
the impact of these customers’s be-
haviour towards the market share.
From business perspective, O’Dell and
Pajunen (1997) argue that (1) it will be
absolutely expensive to win the
butterfly customer’s attention, (2) the
butterfly customer has high demand
standard which is difficult to be served,
and (3) it is almost impossible to reach/
embrace the butterfly customer. Con-
sequently, comprehension upon the
reason on why the customer switches
the preference will bring so much help
in executive planning in arranging
defending and acquisition strategies
towards the customer (Lees, Garland
and Wright. 2005)
The terminology of “The Butterfly
Customer” is actually mentioned for the
first time by O’Dell and Pajunen (1997)
in their book titled with “The Butterfly
Customer- Capturing the Loyalty of
Today’s Exclusive Consumer.” This
term emerged due to a breath-taking
phenomenon on the new market seg-
ment which has specific charac-
teristics, which are disloyal and high
Anna Triw ijayati
intention in switching the brand pre-
ference. A review upon Butterfly Cus-
tomer will be much interesting since it
turns into a difficult way for the
marketer to predict, or even know what
is actually thought by the consumer.
Consumer Purchase Intention and
Decision Making
Damatubun (2002) defines beha-
viour concept as one integral part of
the cultural concept. Someone beha-
viour is significantly affected by know-
ledge, belief, values and norms in their
social environment, as being based on
the individual’s cultural background.
Before making a purchase, the
consumer usually develops the inten-
tion to behave according to the pos-
sible action may be taken. Behaviour
intention in purchase action is ex-
plained by Fisbein et al. in the one
famous theory known as Theory of
Reasoned Action. Instead of predicting
the behaviour itself, this theory reveals
the intention to act since the behaviour
comes from a specific intention form to
act. Fishbein and Azjen (1980:8 as
being quoted by Wignjohartojo, 2001),
state that the Theory of Reasoned
Action defines the relationship bet-
ween four concepts, that is the confi-
dence which arises from the know-
ledge, attitude, intention and action.
The intention to behave in the
purchase action is determined by
someone response towards the
behaviour being done and subjective
norm being followed by the consumer
(Mowen and Minor, 2001: 338- 339).
The behaviour intention is the best
predictor of the actual behaviour and it
turns into consumer’s proposition for
the future action and plan to engage
such behaviour in achieving the goals
(Peter and Olson, 2001: 150- 151).
The behaviour intention in purchase
may be measured by the possibility
level being owned by the consumer in
which they will form purchase
behaviour.
Several empirical researches
point out that behavior intention or in
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

this case is purchase intention, is not
only defined by belief and response
(Zuraida and Chasanah, 2001), but
also by other factors. Purchase
intention may be drawn up by the
perception towards product value
(Grewal, Monroe and Krisnhan (1998)
and the effect of the words of mouth
(Februadi and Kusdibyo, 2003).
Littlefair (2003) has presented several
useful behavioral theory in this
following table:

Table 1. Summary of Behavioural Theory

Theory or Model Authors Key Concepts
Model of Manfredo and Behaviour is a function that emerges from role
Persuasion Bright, 1991 elaboration, which is measured through the
total generalization of thought, new belief
acquisition and change in the former belief.
Elaboration of Petty and Motivation and ability to process an argument
Likelihood Model Cacioppo. 1981 will define whether the persuasion goes along
Petty and the central route or peripheral route. Central
Cacioppo. 1986 route engages high elaboration upon the
Petty, et al. message and it takes vice versa for peripheral
1992 route.
Theory of Ajzen 1991 Human behaviour or at least, behaviour
Planned Ajzen & intention, is consistent with the response, and
Behavioural and Fishbein 1980 this response is consistent with someone
Theory of Fishbein 1967 belief. Behaviour intention is influenced by the
reasoned Action Fishbein dan response towards behaviour (belief and
Ajzen 1975 evaluation towards behaviour), subjective
norm (normative belief and evaluation onto
such belief), and behaviour control.
Norm Focus Cialdini et al. Human tend to behave in accordance with
Theory 1990 what comes into their mind, they will do that,
Festinger 1957 as being based on social norm. Such norm
Reno et al. 1993 may take descriptive in nature (what is felt by
the human) and injunctive in nature (what we
think must be accept by social)
Mindfulness Langer 1989a In every situation, human may be mindful or
Langer 1989b even mindless. Mindfulness is affected by
Moscardo background factors (such as display, signs,
1999b maps and walks) and visitor factors (familiarity
with the location, motivation and conformity)
Model of Hines et al. The intention to responsibly act or behave on
Responsible 1986/87 to the environment is affected by action skills,
Environmental knowledge upon the action strategy,
Behaviour knowledge upon the personality issue and
factors (response, focus or control and
personal responsibility).
Conceptual Cottrell & Behaviour is influenced by socio- demography
Framework of Graefe 1997 variable, environment in general, experience,
Responsible specific issue and situational factor.
Environmental
Behaviour
Source: Littlefair, 2003

Table 1 displays lots of variable belief, motivation and ability to process

determining the behaviour intention. an argument, attitude/ response, locus
Most of behaviour intentions are the of control, ability to act, knowledge,
factors contained in the consumer’s personality and experience. The
personal, such as role elaboration, external factors comprise of subjective

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

norm, background factor and situa-
tional factor.
Brand Switching Behaviour
It is quite challenging to under-
stand the customers, since there is
various kinds of determinant that
underlying their behaviour. Even the
customer’s preference is not stable, or
in the other words, it can be said that
the customer’s preference is dynamic
(Meyer et al, 1997). Chimboza and
Mutandwa (2007) define that the factor
of brand promotion, product price,
availability, packaging, product quality
and percentage of product variety
being offered, all of them influence
product or brand preferences. This
preference itself is or becomes the
determinant upon the consequence of
brand preference (Meyer et al. 2007).
Behaviour intention to switch into
the other brands or products is also
driven by various factors. Rangel
(2004) suggests that there is a specific
individual component that systema-
tically affects the customer’s switching
behaviour:
1. Consumer awareness in
considering the preference among
the providers
2. Preference into the establish firm
3. Preference towards new company
4. The expected saving when
switching into the other providers
5. Information accessibility upon the
available offer
6. Information accessibility upon the
best offer which may suits personal
requirement.
7. Expectation upon the facility to
switch into the other providers
8. Expectation to receive/ not receive
extra fee from provider switching
9. Membership of Consumetenbond
10. Demography (gender, house
ownership status, house type,
status, total children, education,
income and age)
It seems that Rangel more
emphasizes on to the internal/
psychological aspects of the consumer
as the independent variable of pre-
purchase switching behaviour. Several
authors use brand switching factors
suggested by Keaveney. Even it does
not specifically distinguish the situation
pre- and post- purchase, but it will later
show the independent variables
influencing the switching behaviour.

Table 2. Determinant Factor of Brand Switching Behaviour

DEGERATU, LESS, GARLAND LEE AND
KEAVENEY SIDHU N’GOALA
NO RANGASWAMY AND WRIGHT MURPHY
(1995) (2005) (2005)
AND WU (2001) (2005) (2005)
Core service
Core Core
Core service failures
1 service service
failures (Expectation
failures failures
Disconfirmation)
Service Service Service Service encounter Functiona
2 encounter encounter encounter failure (Expectation l Service
failure failure failure Disconfirmation) quality
Employee
Response to
Response Response to s’
service failure
3 to service service responses
(Expectation
failure failure to service
Disconfirmation)
failures
Pricing (Utility
4 Pricing Pricing Pricing Pricing Pricing
Maximization)
Inconvenien Inconvenien Inconvenie Inconvenience
5
ce ce nce (Stochastic)
Ethical Ethical Ethical problem
6
problem problem (Stochastic)
Attraction
Attraction
by
Competitive Competitive by Competition (Utility
7 competito
offers offers competitor Maximization)
r -Loyalty
s
Program
8 Involuntary Involuntary Involuntar Involuntary

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Sw itching Sw itching y Sw itching
Sw itching
Complete
9 service
provider
Change in
10
technology
Soft
11
Shoppers
High
12 Sw itching
Cost
13
14
17
18
Sumber: Keaveney (1995), Sidhu (2005), N’goala (2005), Dengeratu, Rangas-
wamy and Wu (2001), Less, Garland and Wright (2005); Lee and Murphy (2005).
Table 2 shows that price factor
has become the factor that drives
brand and product switching behaviour
by the customer which is frequently
used by the researchers. Different from
several other researchers, Dengeratu,
Rangaswamy and Wu (2001) are more
likely to emphasize the factor of
product (price, attribute and brand
name effect) as the determinant in the
switching behaviour. Sidhu (2005)
strengthens Keaveney’s arguments by
proposing the aspect of Complete
Service Provider, Change in Tech-
nology, Soft Shoppers and High
Switching Cost, since they are related
to Consumer’s product category. Less,
Garland and Wright (2005) categorize
these factors into three factors, namely
Expectation Disconfirmation, Utility
optimization and Stochastic. Lee and
Murphy (2005) also support the opinion
by proposing the factor of behaviour
and the impact of reference group.
“Butterfly customer” behaviour
results in the impact on the pre- and
post- purchase behaviours. The first
impact of switching behaviour is the
disappearance of customer’s depen-
dency towards such product or
provider. Dependency factor is influ-
enced by the perception upon un-
certainty cost, pre- switching cost, Set
up cost, Post Switching cost, Benefit-
loss cost, interpersonal relationship,
Anna Triw ijayati
(Stochastic)
Technical
Service
Quality
Technolo
gy
Sw itching
cost
Sensory attribute
Brand
Brand name effect
trust
Referenc
e group
influence
Behaviora
l factors
attractiveness of alternatives (Yana-
mandram and White, 2007). Except the
attractiveness of alternatives factor,
Yanamandram and White (2007) make
a proposition that the higher cus-
tomer’s perception, then the higher
customer’s dependency towards the
product or company.
The second impact of switching
behaviour is the unavailability of cus-
tomer’s commitment, namely affective
commitment (N’goala, 2006). Effective
commitment is a commitment to
engage in such business since it is
desired by the customer itself. Affective
commitment is directly influenced by
the reliability and perceived fairness
perceptions; moreover these percep-
tions will either directly or indirectly
affect the Consumer’s Switching Re-
sistance (N’goala. 2006).
The third impact of switching
behaviour is the absence of calculative
commitment. Commitment or conti-
nuance is the commitment to relate to
the provider as the customer needs it
(N’goala, 2006; Yanamandram and
White, 2007). Calculative commitment
is influenced by the factor of un-
certainty cost, pre-switching cost, set
up cost, post switching cost, benefit-
lost cost. All those factors will affect the
calculative commitment positively. The
factor of customer dependency also
directly influences the calculative com-
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
mitment and it either indirectly or di-
rectly affects Consumer’s Switching
Resistance (Yanamandram and Whi-
te, 2007).
Characteristic of Butterfly Customer
"Butterfly customers" being
defined by O'Dell and Pajunen (1997)
as follow:
“ …people that flit from one store or
supplier to another, always searching
for a lower price or a different shopping
experience. They have no loyalty to
Table 3. Differences between the Characteristic of Switcher and Continuer
Item/ Characteristic Factors
Seeking for External information source
Seeking for interpersonal information source
Seeking for the information source from the expert
Usage Frequency
Total Usage
Usage intensity
Income
Education
Propensity to risk tak ing
Satisfaction
involvement
Source: Keaveney and Parthasarathy. 2001
Switcher has a characteristic of
higher usage intensity on product and
interpersonal information source (Word
of Mouth/ WOM). On the other
characteristics, Switcher is the type of
consumer with lower level of
satisfaction, and risk taking and
engagement towards product and
service when being compared to the
continuer.
Not all switchers are Butterfly
Customer, O’Dell and Pajunen (1997)
show 8 characteristics of Butterfly
Customer down below:
1. Ready to get an offer as the loyal
customer, such as club
membership, point programme,; but
this programme will not really turn
them as the loyal customer.
2. May switch across the
segmentation, for example the
customer may buy a luxurious car
on a certain day, but for the
following day, this customer seems
Anna Triw ijayati
any particular store, and are always in
search of a better deal or a new
promotion.”
From the above definition, the
main characteristics of the Butterfly
Customer segmentation are switcher,
and then followed by opportunist
attitude disloyal, and negosiator.
Keaveney and Parthasarathy (2001)
provide comparison between the
characteristic of switcher and continuer
as follow:
Switcher Continuer
Fewer Higher
Higher Fewer
Fewer Higher
Lower Higher
Lower Higher
Lower lower
Lower Higher
Lower Higher
Lower Higher
Lower Higher
Lower Higher
to stand on a queue to save $1 for
only a pair of shock.
3. Smart, well-educated and has wide
information. These characteristics
differ from the switcher’s cha-
racteristic being suggested by Kea-
veney and Parthasarathy (2001).
4. Pessimistic and sceptical, tend not
to trust the advertising message
and always read the message
carefully.
5. Prefer to switch other than having to
“fight”
6. In the end, they tend to belief on the
experience, but word of mouth
seems to be much credible and
reliable as the information source.
7. Do not be embarrassed / awkward
to be "butterfly", and see that the
pattern of behaviour is most
appropriate for today economically.
8. Know their own value.
Butterfly Customer tends pur-
posefully to behave in this way to ge-
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

nerate the advantage and the oppor-
tunity. Moreover, they are dishonest
and inadvisable in making decision.
This segment is also sceptic towards
the ads coming from the company and
tends to belief consumer’s preference.
The Implication of Butterfly
Customer towards the Marketing
Strategy
Observing the characteristic of
Butterfly Customer, it can be seen that
this segment follow the butterfly’s
character, which is perching and
moving from on flower to the others.
Although Reinartz and Kumar (2002)
confirm that butterfly customer is kind
of disloyal customer but this segment
is the potential segment. Especially for
this era, the major/ the biggest seg-
ment is Z generation or adolescence
generation. In accordance with the
growth of innovation and communi-
cation technology era, Z generation ap-
pear as having a characteristics which
similar to butterfly customer. Z Gen is
the generation being born between
1995- 2004, of which their population
is predicted for being more than 2
billion people.

Figure 1. Gen Z/Gen Alpha infographic

Source: http://generationz.com.au/

Infopgraphic on Figure 1 shows (Australian Z Generation), the effective

that Z Gen is the largest user of social strategy to approach this Z Gen has
media in the world, of which their shifted from Baby Boomer Strategy, as
population is greater than Chinese and being detailed below:
India population. According to the site

Table 4. The Shifting of Effective Engagement

Baby Boomer Generation Z
Verbal Virtual
Sit and Listen Try and See
Teacher Fasilitator
Job Security Flexibility

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Commanding
Curriculum Centered
Closed Book Exam
Book and Paper
Source: http://generationz.com.au/
When comparing Generation Y
and Z with previous genartions, it is
clear that how are made and how
consumers are engaged have
changed. Today we are dealing with
consumer who need to be engaged
more on the emotive than the cognitive
scale. They have been influenced not
just by scientific method but also by
virtual reality. To engaged Gen Z as
consumers, marketing tools should be
looking to create products that are, or
make Gen Z feel socially connected,
fun and entertaining, cool and socially
desirable, life enhancing, new and
innovative (http://generationz.com.au/)
The shifting of the effective way
to attract an intention must be followed
by appropriate marketing strategy
which suits the targeted customer’s
character. These following strategies
are designed to meet the demand and
the characteristic of butterfly customer.
1. Classical strategy such as
Customer Relationship Manage-
ment (CRM) and other customer
loyalty program. CRM strategy is
classically intended to maintain the
customer’s commitment and reten-
tion in a long run. Various loyalty
programmes are commonly desig-
ned to maintain the customer, for
example by reward programme,
member card, loyalty card, special
price and others.
2. Most of generation of butterfly
consumer is generation Z who’s
closed to gadget and communi-
cation technology. For the mobile
generation Lazarevic, and Lazarevic
(2009) suggest Integrated Mar-
keting Communication (IMC) and
Branding strategy to reach them.
The integration between IMC and
branding strategy may be applied
on the digital marketing as con-
sidering that butterfly customer is
Anna Triw ijayati
Collaborating
Learner centric
Open book world
Glass and Devices
very close with their gadget and
devices.
3. The focus of a short-term consumer
retaining strategy is two way
communication and conflict
handling. These strategies will be
more effective when applied to the
service company (Lombard, 2011).
4. Similar to butterfly in general, but-
terfly consumer is called as profit-
able yet disloyal customer. Reinartz
and Kumar (2002) stated that for
the short time they buy, persuade
them with short-term, hard-sell
offers. After their purchasing drops
off, stop investing much time and
effort into selling to them. Since
butterfly customer is a type of
customer who got to switch easily
from one product and brand to
others, than the most suitable stra-
tegy for butterfly customer is
implementing sustainable product
innovation and always searching for
incredible. Especially, butterfly cus-
tomer is a pessimistic and sceptic
customer, then the product must be
up to date and differ from the others
to attract this type of customer.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

HOW GREEN TRAVEL CAN INFLUENCE GREEN ECONOMY USING

GOOGLE TRENDS?

Yi-Chang Chen
Accounting School, Nanfang College of Sun Yat- sen University, China
Hung-Che Wu
Business School, Nanfang College of Sun Yat- sen University, China

Abstract: Prior studies have provided many explanations for the green economy
indicators; however, the effect of tourism on green economy remains scarce. This
study examines travelers’ attention to green travel used as an indicator to measure
green economy using Google Trends’ search query volume (S QV). We find that
SQV has a significant effect on green economy. Our res ults suggest that the SQV
as the proxy plays a significant role in influencing green economy, specifically
during periods of declining markets.

Keywords: Green economy; green travel; Google Trends; search query volume

A green economy emphasizes businesses, tour operators, and

that improved human well-being and
social equity, reducing environmental
risks and ecological scarcities [17].
However, the green economy faced
the incapacity of development and the
conflicts of global socio-economic and
ecological imperatives during the
global financial crisis in 2008 [2], [3]. In
terms of the green economy, the goal
of its challenge is to contribute to the
growth in the green industry, including
the tourism sector [15].
In Towards a Green Economy,
tourism is identified as a brown sector
that provides green investment can
contribute to a green economy [17].
The tourism sector in the transition
towards a green economy plays a role
in building on the understanding that
the green investment in tourism can
contribute to economically viable and
robust growth, decent work creation,
poverty alleviation, improved efficiency
in resource use and reduced
environmental degradation [15].
The green economy paradigm
presents a new situation of change for
travel [8]. According to Responsible
Travel Report, green travel is a term
used to describe responsible travel
practices that focus on economic,
socio-cultural and environmental
sustainability [16]. Through green
travel, travelers can choose
transportation methods that maintain
and preserve the ecological integrity of
the environment and contribute to local
community development, satisfying the
needs of the present without
compromising the needs of current or
future generations [16]. Green travel
should be considered to be
mainstreamed by all in green economy
strategies in the next five years [9].
There are a wide variety of
indicators used to help measure the
transition towards a green economy,
such as Human Development Index,
Environmental Performance Index, and
the System of Environmental–
Economic Accounting [18].
Governments can choose from a range
of indicators depending on their
national circumstances. A composite
index used to measure green
economic performance (e.g. GDP)
based on 26 indicators across the
economic, social and environmental
dimensions [11].
To develop a quantitative
measure of the traveler interest in
green travel, the Google Trends search
engine can be used to track the online
search query volume (SQV) for
phrases that prospective travelers are
likely to use in a search for green travel
[6], [20]. The SQV data acquired from
Google Trends is a function of settings

Y. C. Chen and H.C. Wu 60

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
the user determines [12], [13]. While
green travel has been researched
extensively in the last few decades [7]
and studies are increasingly focused
on tourism and climate change [2],
[14]. However, as yet, no studies
attempt to obtain the SQV data for
green travel, targeting the United
States. The purpose of this study is to
test travelers’ attention to green travel
as an indicator to measure green
economy using the SQV data.
RESEARCH METHODS
GDP is a reasonable indicator of
the level of economic production in a
region or country. Several studies
attempts to adjust GDP for a green
economy, or to develop indicators to
supplement or even replace it [11].
One important approach to considering
economic (e.g. GDP) and non-
economic criteria (e.g. SQV) is a non-
linear model which is used to estimate
the data. In general, the non-linear
model appears to be a feasible and
easy extension of linear specification.
A discussion of the estimation and
inference in econometric models [4],
[5], which can be used to adopt
different data characteristics and be
suitable for the flexible relationship
between the SQV data and economy
index. In this study, we concentrate on
the estimation and examination of non-
linear specifications on the marginal
propensity for a green economy
(henceforth MPGE). Thus, the non-
linear specification using Equation 1 is
proposed:
,
(1)
where is the actual GDP on
time t, implies the parameter of
and is referred to as green travel while
denotes the parameter of
specifications for the method of non-
linear least squares (NLS), and is
the stochastic error term which is
assumed to be IID normal with mean
zero and constant variance.
In a second step, the indicator of
a green economy which is referred to
Y. C. Chen and H.C. Wu
as the MPGE statistics is calculated
below:
(2)
where is defined as the
change of green travel for one percent
green economic changes. The
specification through Equation 2 is
motivated by utility function, implying
that travelers tend to show their
concerns about the green economy
which can bring numerous potential
economic benefits.
The regression of MPGE is
estimated under a variety of economic
conditions with two lags of SQV.
Following the recommendation of the
mixed-frequency data is proposed [19]:
(3)
where the matrix X shows that
the raw values of SQV are concurrently
considered as two lag periods, and
matrix T includes seasonal dummy
variables into the model in order to
avoid the seasonal bias.
METHOD OF COLLECTING DATA
Through Google Trends, our
initially weekly data was derived from
the search term “green travel” during
the period January 1, 2014 through
December 31, 2015. All of the data are
relative values after the normalization
is conducted. The GDP data in the
United States reported by the OECD
are received within the aforementioned
period.
RESULTS AND DISCUSSION
The average of SQV is 62
percent, the GDP growth rate is 1.875
percent, and the indicator of MPGE is
0.226.
In general, people are willing to
pay attention to the environmental
issue when the economy is on the
mend, while a significantly negative
coefficient of SQV. Two lag periods of
SQV are used to test whether the
attention focuses on forecasting the
economic situation in advance. In total,
61
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

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Y. C. Chen and H.C. Wu 63

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

MANAGING GLOBAL COMMUNICATIONS

TO INTERNATIONAL MARKETING COMMUNICATIONS
(IMPLEMENTATION OF MICE INDUSTRY ON THE ISLAND LOMBOK
WEST NUSA TENGGARA)

Ira Mariyah Ulfa

Muhammadiyah Mataram University
Didin Hadi Saputra
Meiyanti Widyaningrum
Nahdlatul Wathan University

Abstract: Lately this has been a tendency on the market players to replace the
term MICE tourism became "The Meetings Industry". MICE world is a world of
unspoiled well in Indonesia. Though MICE world is one of the mainstays of tourism
in some developed countries. MICE world is one of the promising business world.
But only very few Indonesian side who want to play in the world MICE. As Japan
with "Tokyo Motor Show", German "Frankfurt Motor Show", and so forth. Even the
various travel agencies have made travel package to visit a variety of MICE events
in various parts of the world. This is a huge business potential. MICE world has a
huge multiplier effect. Very many jobs would be created from any MICE event in a
country. Dozens of industrial wheels in the world will spin well because there MICE
events. MICE as part of the tourism industry increasingly play a role in the tourism
industry and the Asia Pacific region, including Indonesia, which assessed the
region's rapid growth in the MICE industry and has great potential. The training
program is directly related to the potential of MICE tourism is currently growing in
the Asia Pacific region. Several countries in the Asia-Pacific region that has been
developing MICE tourism, among others, Australia, Japan, Korea and Singapore.
The increasing role of tourism in development, the role of tourism in the MICE
industry continues to grow and becomes diversification of tourism products
continue to be developed by various countries. Asia Pacific is a region with its
MICE industry growth quite rapidly, such as Australia, Japan, Korea and
Singapore, which have a very high MICE activities annually. Indonesia itself, has
been slowly growing MICE infrastructure such as in Bali, Jakarta, Medan, Manado,
Makassar. Is currently in cooperation with the WTO to continue to develop MICE
tourism in Indonesia. There are still many areas that have not prepared the
infrastructure, accommodation, and that many do not have a human resources
professional or a good quality is one of the many factors in the international
marketing communications MICE industry in West Nusa Tenggara. In fact, very
MICE industry to be developed because of the resulting economic impac t is very
large compared to the usual leisure travel industry. The method used in this
research is using quantitative methods with descriptive approach. The population in
this study are all the people involved and are associated in the implementation of
the management of MICE in West Nusa Tenggara. The results showed that the
implementation of MICE in West Nusa Tenggara Lombok Island is still needed
better promotion better, both in terms of communication, as well as acceleration of
marketing.

Keywords: MICE, Global Communications, International Mark eting

The background of this paper is of Law of the Republic of Indonesia

that the development of Industry MICE
(Meeting, Incentive, Convention, and
Exhibition) in Indonesia has great
potential and is one of the flagship
products industry Tourism Indonesia
as stipulated in article 14 paragraph 1
Number 10 Year 2009 on Tourism , In
the era of globalization is primarily
supported by the advancement of
technology, knowledge and business
competition caused many held various
meetings, negotiations both at national

Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum 64

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
and international scale, so the prospect
of increasingly convincing MICE Indus-
try.
In general, the MICE Industry
creates the tourists who come with
huge amounts, length of stay longer so
that the amount of money spent more
and have an impact on the promotion
and image of Indonesia to the interna-
tional world in addition provide direct
benefits to the local economy such as
hotels, travel agents, business culina-
ry, souvenirs, guide, to local transport-
ation. This is in line with the purpose of
tourism contained in article 4 of Law of
the Republic of Indonesia Number 10
Year 2009 concerning tourism, namely:
(1) enhancing economic growth, (2)
improve the welfare of the people, (3)
remove poverty, (4) unemployment, (5)
preserve the nature, environment and
resources, (6) the promotion of culture,
(7) to lift the country's image, (8) foster
a love for the homeland, (9) strengthen
the identity and unity of the nation, and
(10) fostering friendship between nati-
ons.
Meanwhile, according to the
Directorate General of Tourism, quoted
by Oka Yoeti (2000: xviii), there are
four reasons why this type of travel
(MICE) needs to be developed, especi-
ally in Indonesia: 1) Participants MICE
consists of people professionally who
already own position has been steady
and strong economy , which tetntunya
when traveling tourist will spend the
dollars more than ordinary tourists. 2)
The number of participants at each
meeting MICE quite a lot. 3) Not much
affected by various crises. 4) Improve
the foreign exchange earnings of
tourism sector.
In 2011, the government has
established 10 main towns and 3 cities
potential MICE destination in Indone-
sia. 10 major cities are Medan, Padang
/ Bukit Tinggi, Batam, Jakarta, Band-
ung, Yogyakarta, Surabaya, Bali,
Makassar and Manado. While three
potential city is Palembang, Lombok
and Balikpapan. But the development
of the MICE industry is not confined to
Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum
the cities, but all the cities here at
home. The role of local government is
very important in developing the MICE
industry. With the aggressive growth in
the hospitality field today, in general,
every provincial capital in Indonesia
capable of conducting MICE national
and even international scale.
MICE industry in which there is a
field Meeting, Incentive, Conference,
and Exhibition, showing an encourage-
ing trend. Various events Meeting, In-
centive, Conference, and Exhibition an
international scale that has been held
in Indonesia is expected to be a medi-
um to promote the products of creative
products Indonesia. Various types of
products are exhibited creative econo-
my is expected to encourage the grow-
th of the creative actors so as to be
able to support regional and national
economy. Major cities in Indonesia as
a center for MICE industry-national and
international scale to support the
promotion and sale of products of Indo-
nesia. Implementation of the various
activities of both the mega sports
event; meeting, incentive, conference,
exhibition (MICE); entertaintment mega
event (live music event that became a
trend in the world today), festivals and
others will encourage the growth of the
industry which is the follow-up hero in
the gain of foreign affairs, image en-
hancement, investment, small busi-
ness development, and others. Among
them is the meeting / convention indus-
try, sports industry, exhibition industry,
music (live music / concert) industry,
and others. In other words, economic
development opportunities will be more
open in the future, provided that the
size aspect, the management and
maintenance of various venue is
maintained over time. And many coun-
tries have struggled this time to take
positions in the respective industries.
Creative economy can play an import-
ant role in tackling the global financial
crisis. When economic growth amid
downturn in conditions of crisis, the
creative economy and culture-based
tourism can still grow positively.
65
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
As a country that has a lot of
tourist destinations, Indonesia can
become a paradise MICE world. many
cities in Indonesia potentially strong so
the location MICE international level.
MICE cities in Indonesia that perform
various activities are such as Jakarta,
Bali, Bandung, Yogyakarta, Makassar,
Surabaya, Medan, Manado, Semarang
and Batam. In addition, many opportu-
nities other cities in Indonesia can be a
destination for MICE tourism. To the
Regional Government has a very
important role in the effort to develop
MICE tourism in the area each - each
(Hakansson & Snehota 1995).
In the implementation of the
MICE industry, the needed communi-
cation network in every line of the
implementtation of the MICE activities.
Lombok Island as the new regional
MICE destination certainly has the
potential for development of new desti-
nations to each MICE activities. The
way it can be a way to optimize mana-
gement of global communication,
which is still less visible, and then to
accelerate global communication towa-
rds international marketing. Things -
things related to creativity in advancing
the MICE industry in the island of
Lombok, need the support of all part-
ies, especially with regard to ideas -
creative ideas for marketing the natural
potential of the island of Lombok to
foreign countries.
However, when viewed over the
years, since its launching process in
MICE activities several years ago up to
the development process, the MICE
industry on the island of Lombok still
face several challenges including:
1. The low awareness of the import-
ance of MICE destinations and the
need for promotion of MICE;
2. Lack of MICE online database and
comprehensive;
3. Limited facilities and support facili-
ties, especially the accessibility of
MICE activities (direct flights), and
the limited incentives for MICE
activities (exhibition goods and
Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum
souvenirs for the participants of
the incentive tour into the category
of imports).
Of obstacles or above proble-
ms, the most important thing is how to
manage communication between local
government; with the organizers of
MICE in Lombok island associated with
each event or activity that will be held
by users or stakeholders. Of these
activities, must be supported by an
intensive communication between part-
ies - parties related to MICE activities
in a sustainable manner. The commun-
ication can be developed through a
global communication between one
phak with other parties.
In principle, global communi-
cation is a long-term communication
between producers, consumers, sup-
pliers and other actors. The essence of
global communications least concern-
ing the relationship lasting and continu-
ous exchange and prosecuted for
mutual trust and dependence. Thus, in
the concept of relationship marketing,
marketers emphasized the importance
of good relations with customers and
long-term marketing infrastructure,
which can create awareness in the
form of a comprehensive relationship
and commitment.
Global communication is defin-
ed as communication process as a
whole, maintain and improve the
relationship with the business network
(Berry, 1995 in Wibowo S 2006).
Global communication is more of a
long-term approach, where this is
different from transactional marketing
approach that is more short-term
oriented. The purpose of marketing is
to get the customer's transactional
alone, whereas the purpose of global
communication is to acquire and retain
customers.
Global communication is more
often used in the tourism industry and
events, such as business activities, as
well as the arena MICE (Meeting,
Incentif, Convention and Exhibition),
while marketing transactional more
66
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
applicable and suitable for marketing
for companies that produce products
manufacturing (Grönroos, 1995 in
Wibowo S 2006). This study focuses
on how to manage global communica-
tion towards international marketing
communications in the MICE industry,
especially on the island of Lombok.
The underlying reasons for this
research topic is the MICE activities
ongoing on the island of Lombok, need
to be managed better with every pract-
ice. This is because in many events or
activities that are national, or even
international nature of various fields.
The many activities that take place on
the island of Lombok as the impact of
the MICE activities have a positive
impact for the citizens of West Nusa
Tenggara. Global communication is a
strategy that can be implemented to
support the achievement of the MICE.
This research focus on how to manage
global communications for international
marketing optimization of MICE
activities on the island of Lombok.
DISCUSSION
According Kesrul (2004: 3),
MICE tourism is an activity whose
activity is a fusion Leasure and Busi-
ness, usually involves a group of
people together. The series of activities
in the form of Meetings, Incentives,
Conventions and Exhibitions (Meeting,
Incentive, Convention, and Exhibition).
Meanwhile, according to Oka (2000:
13) that MICE is a series of activities,
in which entrepreneurs or profession-
nals gathered at a place which is
conditioned by the problem, discus-
sion, or the same interests. MICE has
become such a suggestion at once a
product that can be categorized in
tourist packages ready for sale to the
association of organizations, agencies,
institutions, corporations, large enter-
prises and so both scale local,
regional, national or international.
MICE business is a service
business tourism which move around
Meetings, Incentives, Conventions and
Exhibitions (Meeting, Incentive, Conve-
Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum
ntion, and Exhibition), a type of tourism
in which a large group, usually
carefully planned, for a particular
purpose. The industry can not stand
alone means needs to work together or
collaborate with various stakeholders
as it requires care and other compo-
nents from many parties.
MICE world is one of the world
promising business for the tourism
industry one giant world that encoura-
ges the growth sectors of the economy
most rapidly. MICE business big
impact can be seen from the tourism
foreign exchange earnings to the hold-
ing of a number of conventions, nation-
nal or international scale. MICE indus-
try has the potential for positive growth
in line with the improving economy and
rising incomes Communities. Develop-
ment of the MICE industry has a huge
multiplier effect, because it involves so
many businesses. Among the potential
benefit most MICE business is printing,
hotel, souvenir of company, travel age-
ncy, transportation, professional confe-
rence organizer (PCO), small and
medium enterprises (SMEs), and event
organizer. Many sectors related to the
MICE industry, namely (1) the hospi-
tality industry, (2) restaurants, (3) craft,
(4) travel agency air and ground, (5)
culinary (food), (6) translators, and
others.
With the MICE events, a series
of economic chain can be achieved to
be very profitable and can be felt by
many parties. The reason is this which
makes the rate of growth entrepre-
neurs sprung MICE organizers, so the
MICE industry is regarded as the
industry today are much in demand by
the business.
The tourism industry become
part of public relations for Indonesia.
Through a global communications net-
work and management as well as thro-
ugh the information that is dissemi-
nated by foreign tourists, Indonesia
actual conditions can be disseminated
to the international community through
international marketing. These active-
ties will support the business
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
communications in Indonesia, especi-
ally on the island of Lombok is being
built intensively by the government in
the international world. Tourist arrivals
to Lombok is not just a vacation, but
there were following the event MICE in
Indonesia. That is, the tourists were
present on the island of Lombok are
those sent by corporations, non-gover-
nmental organizations, even as envoys
Countries that have a positive value for
the national economy, because the
average length of stay MICE partici-
pants for at least 3 days. In general,
MICE participants come from the
highest integrity and capability in policy
making, came from the upper middle
class, with economy high enough so
that the expenditure incurred larger,
reaching 3 to 4 times greater than ordi-
nary tourists.
PROSPECTS FOR MICE IN LOMBOK
ISLAND
MICE prospect on the island of
Lombok in the year - next year will be
much improved. MICE world trend
remains positive with most activities
carried out by the tourism sector (bbls,
National MTQ, etc). Trend domestic
MICE activities also showed encoura-
ging progress, not only carried out by
the business, association and educa-
tion, but also from governments and
parties - political parties, both national
and international scale. It can also be
seen at the more requests for support
from various parties to the Govern-
ment, from bidding activities, promo-
tions, delegate boosting, site visit and
enrich the program at an event
organized MICE.
Various strategic step in the
development of MICE in the island of
Lombok, among others with Co-Mar-
keting Approach with industry players.
Community approach, which supports
the implementation of the activities
undertaken by various communities, as
well as take advantage of prominent
persons / public figures as 'Ambas-
sador' to promote MICE and tourism.
Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum
However, things that need to be
considered within the framework of the
implementation of the MICE and can
also be regarded as a determining
factor in the successful implementation
of the MICE are as follows:
1. Security
All consumers MICE mengingin the
guarantee of security, both the govern-
ment and by the organizers. In any
event the international need for strict
security facilities, especially in the
venue and accommodation. Besides
the place being part of the supporting
activities must also be kept for savety,
for example at airports and nightclubs
throughout the event.
2. Price
Competitive prices with complete
facilities become one of the criteria for
consumers in determining regional MI-
CE destination activities. Recreational
facilities were adequate and supporting
facilities outside of the main activities is
an added value of a region to attract
consumers MICE.
3. Ease of Access
MICE destination area requires acces-
sibility and transfer facilities by land,
sea or air. Easy transportation is safe,
efficient and easier for consumers free-
way MICE in reaching the area.
4. Preserved Facilities
Well-maintained facilities on the imple-
mentation of the MICE venue will make
consumers MICE comfortable for a
longer stay. Various facilities are provi-
ded at the venue with international
standards, world-class resorts and
entertainment venues of interest.
5. Infrastructure
In the organization of international
events, required infrastructure facilities
directly as meeting and convention
venue of international standard with a
number of sufficient capacity and
integrated with hotels and entertain-
ment venues. The supporting infrastru-
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
cture for consumers to get to the venue
implementation is very important. Besi-
des easy to access, international
standard infrastructure needed
urgently include, airports are able to
accommodate large aircraft and their
direct line to the international city.
6. Things spare time
The entertainment program during the
implementation of the activities is the
main attraction for consumers MICE.
To eliminate the saturation attend,
usually interspersed with entertainment
activities, including cultural and artistic
performances and visiting attractions.
7. Language
To make it easier for consumers to
follow the agenda MICE activities, hen-
ce the need for hospitality and MICE
tourism staff who can speak foreign
languages. Depending on the origin of
the MICE consumers. MICE service
providers should provide professionals
who speak foreign languages.
The development of global com-
munications has created a global envi-
ronment. That is, a global culture crea-
ted by different media such as televi-
sion, internet and global media along
with others such as films currently
allows cultures and different peoples to
develop common expectations about
the judgments about whether right or
wrong, desirable or undesirable, and
the attitude of heroic or vice versa.
In marketing the MICE program
on the island of Lombok, required their
international marketing activities aimed
at further enhancing Brand island of
Lombok in the international world. In
principle, international marketing is the
marketing activities that seek to pene-
trate across borders in terms of
geographical, political, legal, social and
cultural. James E Keegan mentions
that global marketing: 'A series of
marketing activities undertaken by the
company that emphasizes on cost
efficiency and efforts through the
boundaries of the state and regional
levels, the opportunity to transfer pro-
Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum
duct, brand, and other ideas that go
beyond the state, to meet the needs of
global customers and develop coordi-
nation between national marketing
infrastructure into a global marketing
infrastructure '(Keegan, 1999: 2).
Surrounded by diverse internati-
onal marketing macro environment
such as the economic, political and
legal environment, social and cultural
environment (Gruen, et al: 2000) Of
the five environmental economic
environment gives the most direct
effect on the performance of interna-
tional marketing. This environment
affects the determination of the method
of determination of the product, price,
promotion and distribution companies
and of course the marketing strategy.
A manager of a multinational company
should have the international economic
and financial indicators. Economic
changes took place very quickly, beca-
use the world economy is currently not
solely rely on conventional trade (the
movement of goods and services).
International Marketing Manage-
ment is required by the company, (in
this case the organizer MICE) is pretty
great for seeing an alternative market-
ing strategy that arguably very broad,
and the sustainability of operational
activities of companies do not want in
the stalled condition (stuck) on one
condition only. On the other hand the
company did not want competitors
enter the market first comprehensive
strategic alternatives it. So a company
should do the International Marketing
Management and run a positive
competition with its competitors.
International marketing manage-
ment is an integrated functional areas,
including human resource mana-
gement, finance, accounting, and
operational management (Hewett and
Bearden: 2001) That is, in this case all
four of these elements influence each
other. In carrying out the marketing
strategy, each company (MICE organi-
zers) can choose the most suitable for
the product and the target market. For
example, by reducing costs or
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
production costs, the use of materials
with lower costs, and determine with
lower profit margins. For some
companies, lower marketing costs are
often considered to be more profitable
and help gain a larger profit by
emphasizing on quantity. This method
is often referred to as international
business strategy which emphasizes
on cost leadership. A company can
also adopt another system called the
focus strategy. In this strategy, a
marketing manager will focus on a
specific market segment or region. Eg
MICE market in teenagers, so then
marketing is also a very "young
people". The difference this marketing
strategy is the preference of each
company, adjusted with the market
share of each product. (Chakraborty, et
all 2007).
In addition, the location of the
international marketing of MICE itself is
also an important consideration,
relating to the stability of the economy
and the purchasing power as well as
the tastes of the people in the place or
the country. In addition, the culture, the
level of competition, distribution net-
works, and the availability of infrastruc-
ture is also an important consideration
for marketing offender. After determi-
ning the place, then the necessary
steps called marketing mix, which
consists of; (1) how to develop
products MICE, (2) how to give "value"
products (MICE) is, (3) how to sell the
product, and (4) how to distribute the
"product" contained in the "MICE" is up
to the consumer.
When a product is marketed
internationally, then the product will
intersect with an assortment of cultures
and characteristics of local commu-
nities. Therefore, then there is the
question, should the background that
makes a product becomes to be
adjusted or standardized internati-
onally? There are three approaches to
explain this, namely; ethnocentrism
approach, the approach polisentrisme
and geocentric approach. Ethnocen-
trism approach argue that a product
Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum
may be marketed with the same shape
throughout the country. That is, this
approach believe that an item that is
sold in the country of origin would sell
well if it is sold in other countries.
Polisentrisme approach emphasizes
the adjustment between a product
where the product is marketed.
While the geocentric approach
emphasizes the standardization of
products and marketing strategies so
similar around the world. Options for
standardizing and customizing a corpo-
rate choice because it has adventages
and disadvantages amsing each. Stan-
dardization has advantages in cost
savings, both the cost of marketing and
research and development costs.
While customization has advantages in
reception, for adjusting the legal
differences, behavioral and usability
differences between one country and
another.
In considering whether a
company would choose to standardize
or customize the product, the company
must have several factors into conside-
ration. First, the legal force. Second,
the cultural influences that affect the
company in packaging products, for
example, or make innovation with such
products. Third, the economic factor.
And Fourth, the product brand.
However, in practice, the imple-
mentation of the MICE industry in
Lombok island, not in spite of the
challenges of international marketing,
namely
1. Perubahan type of business
2. The scope of international market-
ing
3. The increased importance of
global awareness
4. The development became a global
marketer
5. The importance of the criteria of
reference in the international
marketing
CONCLUSION
International marketing manage-
ment is an integrated functional areas,
70
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
including human resource manageme-
nt, finance, accounting, and operation-
al management. That is, in this case all
four of these elements influence each
other. In carrying out the marketing
strategy, each company (organizer
MICE), can choose the most suitable
for the product and the target market.
For example, by reducing costs or
production costs, the use of materials
with lower costs, and determine with
lower profit margins. For some compa-
nies, lower marketing costs are often
considered to be more profitable and
help gain a larger profit by emphasi-
zing on quantity. This method is often
referred to as international business
strategy which emphasizes on cost
leadership. A company can also adopt
another system called the focus strate-
gy. In this strategy, a marketing mana-
ger will focus on a specific market
segment or region. For example, a
manufacturer of Swatch watches mar-
ket focused on adolescents, so then
marketing is also a very "young peo-
ple". The difference this marketing
strategy is the preference of each
company, adjusted with the market
share of each product.
In addition, the location market-
ing is also an important consideration,
relating to the stability of the economy
and the purchasing power as well as
the tastes of the people in the place or
the country. In addition, the culture, the
level of competition, distribution net-
works, and the availability of infrastruc-
ture is also an important consideration
for marketing offender. After determi-
ning the place, then the necessary
steps called marketing mix, which
consists of; (1) how to develop the
company's products, (2) how to give
the price of the product, (3) how to sell
the product, and (4) how to distribute
the product to the consumer.
Ira Mariyah Ulfa, Didin Hadi Saputra, dan Meiyanti Widyaningrum
REFERENSI
Armstrong, G., & Kotler, P. (2000).
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Dependence, trust, and relational
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Chakraborty, G., Srivastava, P., &
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ANALYSIS OF CUSTOMER’S DECISION TO CHOOSE

SHARIA BANKING IN SURAKARTA

Sudarwati
Burhanudin. AY
Faculty of Economics, Batik Islamic University of Surakarta

Abstract: Sharia Banking is one of the banking systems which is getting serious
attention from the government. There is possibility that it will become an alternative
banking system in Indonesia in the future. The research aims at determining the
influence of profit-sharing system, security of funds, facilities and services toward
customer’s decision to choose sharia banking in Surakarta. The research employs
method survey; it analyzes customer’s decision to choose sharia banking. The
researcher collects the data from the respondents through questionnaire. The
sample is taken by purposive random sampling. There are 100 customers that
come from 10 sharia banking in Surakarta. To test the hypothesis, the researcher
uses multiple regression analysis, t test, F test, and determinant coefficient by
using SPSS. The finding of the research is that there is significant influence among
variable profit-sharing system (X1), security of funds (X2), facilities (X3), and
service (X4) toward customer’s decision to choose sharia banking (Y). However,
there is one outstanding influence, it is profit-sharing system toward customer’s
decision to choose sharia banking. The contribution of the four variables; profit -
sharing system, security of funds, facilities, and services toward customer’s
decision to choose sharia banking is 46.50%. While the rest is about 53.50 %,
derived from another variable which is out of reserach.

Keywords: Customer’s decision, Sharia banking

Sharia banking is a bank which community’s service of product/service

operates based on the principles of
Islamic Sharia; refers to the provision
in the Qur'an and Hadith. Since it
refres to Quran and Hadith therefore it
is expected that Sharia banking can
avoid some practices that contain
elements of riba and conduct the
investation business activities based
on profit-sharing system and trade
finance (Mudrajad Kuncoro Suhardjono
2002: 594).
Nowadays, Sharia Banking is
one of the banking systems which is
getting serious attention from the
government. There is possibility that it
will become an alternative banking
system in Indonesia in the future since
there is a significance development of
sharia banking recently. People find it
easily to proof the existence of several
sharia banking and financial institution
which based on Islamic sharia. The
more sharia banking, the more healthy
competition. It is hopefully increase the
and sharia banking.
Besides the avoidance of bank
interest (riba), one of the challenges
faced by the Islamic world today after
the Indonesian Council of Ulama
(MUI’s) fatwa that riba is illegitimate.
Thus, the role of sharia banking begins
to get attention from economist sharia
who tries to find a way to replace riba
system in conventional banking to a
system which is appropriate to Islamic
ethic.
In firming the position of sharia
banking as a bank which based on
Islamic jurisprudence, sharia banking
in its operation have to compete with
conventional banking. Therefore,
sharia banking have to give more offer
to the community. The advantages of
sharia banking is profit-sharing system,
safety, facilities, and services to the
customers. From the turning point of
the above introduction, the researcher
wants to conduct a research entitled

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
“Analysis of Customer’s Decision to
Choose Sharia Banking in Surakarta".
RESEARCH QUESTIONS
Based on the previous introduc-
tion, the present researcher proposes
two questions:
a. Do the profit-sharing system, the
security of funds, facilities and
services influence the customer's
decision to choose sharia banking
in Surakarta?
b. Which is the most significant varia-
bles; profit-sharing system,
security of funds, facilities and
services, toward the customer’s
decision to choose sharia banking
in Surakarta?
PURPOSE OF THE RESEARCH
General Purpose
a. Conducting research dealing with
profit-sharing system, security of
funds, facilities and services in
sharia banking in order to know
the factors that influence the
customer's decision to choose
Sharia banking in Surakarta.
b. Knowing the factors that influence
the customer's decision to choose
Sharia banking in Surakarta will be
hopefully increasing the number of
customer in Sharia banking in
Surakarta.
Specific Purpose
a. To determine the influence of
profit-sharing system, the security
of funds, facilities and services
toward the customer's decision to
choose Sharia banking in
Surakarta.
b. To determine the importance of
profit-sharing system, security of
funds, facilities and services of
Sharia banking, which finally
increase the number of customers
in Sharia banking in Surakarta.
LITERATURE REVIEW
Sharia Banking
The word Bank derives from the
Italian word banco, which means the
bench. The bench is used by bankers
Sudarwati and Burhanudin. AY
to serve customers and useful for
operation a well. The term banco
becomes popular and formally
becomes bank (Malay Hasibuan, 2002:
1). There are several definitions of
sharia banking. To Mohammed,
“sharia banking is a financial institution
which operation is based on Quran
and Hadith of prophet Muhammad
SAW. (Drs Muhammad, M.Ag: 2002).
From that definition, financial institu-
tions which run the business by
providing finance and other services in
circulation of money which operation is
based on Islamic Sharia. According to
Law No. 7 year 1992 , revised with the
Banking Law No. 10 year 1998 defines
sharia banking as follows: Sharia
banking is a financial institution which
operate based on profit-sharing
system. Sharif Arbi defines Sharia
banking is “a bank which established to
fulfill human need based on Islamic
jurisprudence” (Syarif Arbi, 2002: 21).
From these definitions, it can be said
that Sharia banking is an institution
which fulfill human need based on
Islamic jurisprudence. There are many
other similar definitions of sharia
banking which central point is based
on Islamic jurisprudence in its
operational. The differences is only in
its business.
Customer
In traditional concept, customer
is everyone who buys and uses the
products or services of that company.
In a modern concept, customer falls
into two categories; internal or external
customer. External Customer is every-
one who buys/uses the product/service
of the company, while internal
customer is all parties in the
organization that use a part /particular
departments (it includes step by step
process in production stages).
Accorrding to Tjiptono (1996: 7),
customer is the person or party that
has their need served, thus everyone
can become a customer. Customers or
consumers are also dynamic subjects
and strongly influenced by internal
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

factors and external factors as well.
Customers’ response and action emer-
ge from the perception and expectation
of the stimulus, both from within
him/her and outside him/her in fulfilling
the needs and demands.
The term customer in Law No. 10
year 1998 Article 1 number 16 is:
"those who use the services of the
bank" (Editorial Team Focus Media,
2004: 11). Based on that law, customer
falls into two categories:
a. Depositor is customer who places
their funds in banks in the form of
bank deposits based on the pact
between bank and customer.
b. Debitor is customer who gets
credit facilities or financing based
on Islamic principles or the
equivalent of it based on the pact
between customer and the bank.
The dynamism of customer is
clearly seen from diverse factors, it can
be simple or complex, it depends on
the particular circumstances. There are
several factors which affect dynamism
of customer; age, adolescent customer
/ student, adult customer and elderly
customer, each of those factors has
different characteristic.
Customer is the person or legal
entity who holds an agreement to save
money in a bank in the form of giro,
savings and deposit. These savings is
based on the pact between customer
and bank. Therefore, bank or customer
is not restricted to particular group
although they only have a little money.
Customer’s Decision
There are several factors which
affect consumer to make decision; cul-
tural, social, personal and psycholo-
gical. All of these factors influence the
consumer in decision-making. Before
consumer’s behavior occured, a mar-
keting man first thing first has to find
the needs and demands of the
consumers. The research conducts to
know and understand the customer’s
behavior and how the customer
choose sharia banking.
RESEARCH METHOD
Framework
In schematic framework, this
research is described as follows:

Profit-sharing system

Security of funds

Affected factors Customer’s

Facilities decision

Services

Data Collection Bank BRI Syariah, Bank BTN

a. Object of the Research
The object of the research is 100
respondents derived from the
customers of Sharia banking in
Surakarta. Those 100 respondents
come from Bank Mandiri Syariah,
Syariah, Bank CIMB Syariah,
Bank Muamalat Syariah, Bank
Bukopin Syariah, Bank BNI
Syariah, Bank BCA Syariah, Bank
Danamon Syariah and Bank Panin
Syariah.

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b. Location of the Research

No Name of Sharia Banking Address

1 Bank Mandiri Syariah Jl. Slamet Riyadi No. 388 Purwosari Laweyan Solo.
2 Bank BRI Syariah Jl. Slamet Riyadi No.236 Solo
3 Bank BTN Syariah Jl. Slamet Riyadi No.322 Sriwedari Solo
4 Bank CIMB Syariah Jl. Slamet Riyadi No.371 Sondakan, Laweyan, Surakarta.
5 Bank Muamalat Syariah Jl. Slamet Riyadi N0.314 Solo
6 Bank Bukopin Syariah Jl. Slamet Riyadi No. 271 Solo
7 Bank BNI Syariah Jl. Slamet Riyadi No. 318 Sriwedari Laweyan Solo
8 Bank BCA Syariah Jl. Slamet Riyadi No. 488 Purwosari Solo
9 Bank Danamon Syariah Jl. Piere Tendean No.199 Nusukan Banjarsari Solo
10 Bank Panin Syariah Jl. Piere Tendean Nusukan Banjarsari Solo
c. The Source of Data and Sample research. The purpose of this
1. Primary Data (Sample) method is to get the precise data
The researcher employs purposive of the research.
sampling by giving questionnaire Data Analysing Techniques
to 100 respondents of sharia Data Processing Operation:
banking’s customer and doing 1. Variables of the research:
direct observation in research Y = customer’s decision as
places. dependent variable.
2. Secondary Data X1 = independent variable value of
Make a note of some sharia profit-sharing system.
banking’s data which covers the X2 = independent variable value of
history and development of sharia security of funds
banking, facilities, types and X3 = independent variable value of
services as well. facilities
d. Data collecting technique X4 = independent variable value of
1. Observation services
Data collecting technique of this
research is by conducting Validity test
observation in Sharia banking in This test is useful to determine
Surakarta. It does direct the validity of the questionnaire. The
observation to know the facility calculation of this test is by using
and services which is given to the correlation test from each statement
customers. with total score, the formula is as
2. Questionnaires follows:
Data collecting method of the NXY - (X) (Y)
NX NY 
research is by spreading rxy =
 X   Y 
2 2 2 2
questionnaire which consist of a
list of questions related to the
research questions. Note:
3. Library Research r xy : The correlation coefficient
Library research deals with between X and Y
collecting data from scientific N : The number of respondents who
journal, books, recording and other tested
reading or literature related to the X : Total score items
issues of the research. Y : The sum total of individual scores
4. Documentation. The test result compared to the
Documentation is collecting number of criticism, this research
method by finding variables of the uses 5% of signficant level. If the

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number of r is greater than the X4 = independent variable value of

table of r value, it means the list of services.
statement as a means of
measuring is valid and vice versa. Multiple Linear Regression
Significance Test.
test F
Reliability Test It is useful to determine whether or not
Reliability test is used to determi- the relationship between variable
ne the level of reliability of an instrume- X and Y are significance.
nt. To test the reliability of an Ftable = F ( / 2 : n – 2)
instrument by using Alpha Cronbach
formula, as follows: n-2

Fcount = r
k  
2
r11 =   1
b  1 - r²
 k  1  t 
2
 Note:
(Umar, 2002:207)
r: correlation coefficient between
independent variables and the
Note : dependent variable
r11 : reliability instrumen
n: number of samples
k : list of questions
 b²: number of variant item T test
 1² : total variant To determine whether or not each
independent variable is partially
Classical Assumption Test significance in influencing
Here are some ways to test: dependent variable. In this
a. Normality test research, the present researcher
b. Multicollinearity test uses significant level 0.05.
c. Autocorrelation test ttable = t ( / 2 : n – 2)
d. Heteroskidastity test tcount = b
Sb
Multiple Linear Regression Analysis
Note :
Multiple regression analysis is B : regression coefficient of each
useful to determine the significance variable
influence of independent variables Sb : Standard error of coefficient
(reliability, responsiveness, assurance, regression
empathy, tangibles) overall toward
dependent variable (public satis- The coefficient of determination (R2)
faction). It is used to determine the
The formul is as folows: contribution of a given independent
variable (X) dependent variable (Y).
Y = a + b1 x1 + x2 + b2 b3 b4 x3 + x4 The following is the formula of
+ e (Ghozali, 2003: 32) Correlation of determination:
Note: b1  x1 y  b2  x2 y
R2 
Y = customer’s decision as the y2
dependent variable. Note:
X1 = independent variable value of R² : multiple correlation coefficient
profit-sharing system. X : independent variable
X2 = independent variable value of Y : dependent variable
security funds. N : number of samples
X3 = independent variable value of
facilities. DATA AND DISCUSSION

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Table of multiple regression analysis

Coefficientsa
Unstandardized Standardized
Coef f icients Coef f icients Collinearity Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 7.375 1.910 3.862 .000
Prof it-sharing -X1 .465 .122 .386 3.817 .000 .529 1.889
Security _X2 .153 .114 .138 1.340 .183 .511 1.957
f acilities_X3 .209 .118 .177 1.778 .079 .546 1.833
Serv ice_X4 .172 .136 .130 1.272 .206 .518 1.929
a. Dependent Variable: Y ’s’ decision

Sources: Primary data are processed, 2016

Based on the results of assumption that the other

regression from primary data which are variables remain stable.
processed using SPSS 15 for b3 = 0.209 coefficient regression
windows, it shows the following result: facilities is positive, it means that
if Facility (X3) has been
Multiple Linear Regression Analysis increasing, thus the level of
Here is the equation of linear customer's decision will be
regression analysis: increasing as well, with the
Y = 7.375 + 0.465 + 0.153 X1 + assmption that the other
0.172 X2 + 0,209X3, X4 + e variables remain stable.
Note: b4 = 0.172 coefficient regression of
A = 7.375 positive constanta, it service is positive, it means that
means that in profit-sharing if services (X4) has been
system (X1), Security funds (X2), increasing, the level of the
Facilities (X3), and Services (X4) customer's decision will be
= 0 (none), then the customer’s increasing as well, with the
decision is 7.375. assumption that the other
b1 = 0.465 coefficient regression variables remain stable.
system is positive, it means that
if profit-sharing system (X1) has F test
been increasing, thus level of F test is a calculation to determine
customer's decision will be whether the independent variables
incresing as well with the consist of variables profit-sharng
assumption that the other system (X1), security (X2), facilities
variables remain stable. (X3), services (X4), simultaneously
b2 = 0,153 coefficient regression of have a significant influence on the
security funds is positive, it dependent variable, it is customer's
means that if security funds (X2) decision (Y) in this case. From the
has been increasing, thus the analysis, the result is is the
level of customer's decision will following table.
be increasing as well, with the Test Result of F test is as follows:

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

ANOVAb

Sum of
Model Squares df Mean Square F Sig.
1 Regression 344.344 4 86.086 22.502 .000a
Residual 363.446 95 3.826
Total 707.790 99
a. Predictors: (Constant), Service_X4,Security_X2, Facility_X3,Profit-sharing_X1
b. Dependent Variable: Y’s decision

Sources: Primary data are processed, 2016

From the above table, the value
of Fcount in first hyphothesis is 22.502.
While the value of F table at trust level is
95% (α = 0.05) which is 2.24 thus the
value of Fcount > F table, ie 22.502> 2.24.
It makes sense that independent
variables; profit-sharing system (X1),
security funds (X2), facilities (X3),
services (X4), simultaneously give
significant influence to the customer's
decision (Y).
In addition, based on the
analysis using SPSS 15.0, it shows
Table: t test
that Fcount is 22.502 with significance
(p) is 0.000<  (0.05), it means that Ho
is refused and Hi is accepted, thus the
result state that simultaneously there is
a very significant influence among
these variables; profit-sharing system
(X1), security funds (X2), facilities (X3),
and service (X4).
c. t test
Based on data analysis using
SPSS 15.0, tcount derived from each
variable of the table as follows:
Sources: Primary data are processed,
2016

a
Coefficients
Unstandardized Standardized
Coef f icients Coef f icients Collinearity Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 7.375 1.910 3.862 .000
Prof it-sharing_X1 .465 .122 .386 3.817 .000 .529 1.889
Security _X2 .153 .114 .138 1.340 .183 .511 1.957
Facility _X3 .209 .118 .177 1.778 .079 .546 1.833
Serv ice_X4 .172 .136 .130 1.272 .206 .518 1.929
a. Dependent Variable: Y ’s decisioin

1. Significance influence of profit- tcount is 1,340, which has p-value or

sharing system (X1) toward the significance 0.183. Based on this
customer's decision (Y) result, it shows that the value of p>
Tcount is 3,817, which has p-value or (0.05) which means that Ho is
significance 0.000. Based on this accepted, thus this result indicates
analysis, it shows the value of p that partially, there is no significant
<(0.05) which means that Ho is influence between security of funds
refused, therefore this result (X2) to customer's decision (Y).
express that partially, there is 3. Significance influence of facility (X3)
definitely significance influence toward satisfaction (Y)
between profit-sharing system (X1) tcount is 1.778, which has p-value or
to customer’s decision (Y). significance 0.079. Based on this
2. Significance influence of security result, it shows that the value of p>
fund (X2) towarad customer's decision (0.05) which means that Ho is
(Y) accepted, thus this result express

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
that partially, there is no significant
influence between facility (X3) to
customer's decision (Y).
4. Significance influence of services
(X4) toward customer’s decision (Y)
tcount is 1,272, which has p-value or
significance 0.206. Based on this
result, it shows that the value of p>
(0.05) which means that Ho is
accepted, thus this result state that
partially, there is no significant
influence between services (X4) to
customer’s decision (Y).
Model Summaryb
Adjusted
Model R R Square R Square
1 .697 a .487 .465
a. Predictors: (Constant), Service_X4, Security_X2, Facility_X3,
Profit-sharing_X1
b. Dependent Variable: Y’s decision
Based on the analysis of the above
table, it shows that coefficient of
determination (Adjusted R Square) is
0.465 or 46.50%. It means that
variable of profit sharing system (X1),
security of funds (X2), facilities (X3),
and service (X4) give its contribution
about 46.50% toward customer’s
decision to choose sharia banking.
While the rest shows about 53.50%,
the influenced factors are out of the
variables of the research, they are
religious factor, personal factor,
external factor, social factor,
psychological factor and some others.
CONCLUSION
1. There is a very significant
influence among these variables;
profit-sharing system (X1), security
funds (X2), facilities (X3), and
service (X4).
2. There is definitely significance
influence between profit-sharing
system (X1) to customer’s
decision (Y).
3. There is no significant influence
between security of funds (X2) to
customer's decision (Y).
Sudarwati and Burhanudin. AY
d. R² Test (coefficient of determination)
Coefficient of determination is
useful to determine the contribution
of independent variables (profit-
sharing system, security of funds,
facilities and services) toward
dependent variable (the customer's
decision) which is shown by the R².
The result of coefficient of
determination calculation can be
seen in the following table.
Results: Table The coefficient of
determination (R2)
Std. Error of Durbin-
the Estimate Watson
1.956 1.816
4. There is no significant influence
between facility (X3) to customer's
decision (Y).
5. There is no significant influence
between services (X4) to
customer’s decision (Y).
6. Coefficient of determination
(Adjusted R Square) is 0.465 or
46.50%. It means that variable of
profit sharing system (X1), security
of funds (X2), facilities (X3), and
service (X4) give its contribution
about 46.50% toward customer’s
decision to choose sharia banking.
While the rest shows about
53.50%, the influenced factors are
out of the variables of the
research, they are religious factor,
personal factor, external factor,
social factor, psychological factor
and some others.
REFERENCES
Arbi Syarif,2002, Mengenal Bank dan
Lembaga Keuangan Non Bank,,
Djambatan, Jakarta.
Fandy Tjiptono, 1996, Total Quality
Manajemen, Andi Offset,
Yogyakarta.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Ghozali, Imam,2003, Aplikasi Analisis Muhammad, 1989, Manajemen Bank

Multivariate dengan SPSS 2001, Syari'ah, UPP AMP YKPN,
UNDIP Semarang Yogyakarta.
Hasibuan Malayu,2002, Perbankan Mudrajad Kuncoro & Suhardjono,
Islam, PT Bumi Aksara, Jakarta. 2002, Manajemen Perbankan
Kotler Philip,2000, Manajemen Teori & Aplikasi Edisi Pertama,
Pemasaran Edisi Milenium, BPFE, Yogyakarta.
Evanston, Illinois. Tim Redaksi Fokusmedia, 2004,
___________,1993, Analisis Perbankan dan Lembaga
Perencanaan Implementasi Penjamin Simpanan, Jakarta:
Pengendalian, (alih bahasa) Penerbit Fokusmedia.
Jaka Wasana, Erlangga, Jakarta. Umar, Husein. 2000. “Riset
Muhammad, 2002, Kebijakan Moneter Pemasaran dan Perilaku
dan Fiskal Dalam Ekonomi Konsumen”. PT. Gramedia
Islam, Salemba Empat, Pustaka Utama. Jakarta
Yogyakarta.

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

INDIVIDUAL COMPETENCIES AND LEARNING ENVIRONMENT FOR

CAREER DEVELOPMENT AT THE REGIONAL
DEVELOPMENT BANKS

Pamela Magdalena
Student Doctoral Program In Management Faculty Of Economics And Business
Brawijaya University

Abstract: This article describes the theoretical framework and examine the
influence of individual competencies and learning environment on career
development. The discussion will contribute to the determination of an individual's
career development. It is hoped the findings will be useful for individual career
development that originated from the competency of the individual and got the
science of learning environments, both formal and nonformal. This article is a
proposal that will be the basis for research to be conducted. The research will be
directed at how the individual competencies are influenced by the learning
environment will affect the career development of individuals in the areas of
business, such as banking. Bank selected because the science is given in the
learning environment the bank has its particularity. Individual competencies are
built from the individual's knowledge that comes from learning environments that
have a certain qualification standards. The learning environment to equip
individuals to individuals compete for career development that is in place works.
Individual competencies derived from formal learning environment, where
individuals acquire an initial competence before obtaining informal knowledge that
comes from learning environment in the workplace. From the study of theory and a
review of previous studies found differences in findings that will be used to conduct
further research to find an individual's competence and environmental learning
how to be a provision individual to develop a career in the workplace. Is the
formal learning environment sufficiently provided supplies for the individual or the
individual competencies they require non-formal learning environment. Research to
be carried out will be expected to provide input to the banking industry of the
recommendations of individual competency standards.

Keywords: individual competencies, learning environment, career

development, banking industry, the regional development bank

Individual competencies are possessed an employee, especially

supported by the learning envi-
ronment at the college in this case the
origin of an employee and the training
obtained is considered to affect career
development within the organization
that employs the employee. If the
knowledge and skills provided fairly
and in accordance with the demands of
work in an organization, the employee
is able to compete with other em-
ployees.
In addition to individual com-
petencies, learning environment, train-
ing is obtained, and the culture of the
organization is also suspected to affect
the employees' career development.
The diversity of individual competence
in the form of knowledge and skills
those who come from a different
learning environment, causing the
organization must provide the de-
briefing in order to homogenize the
knowledge of the employees, es-
pecially for a particular job. This
uniformity can be either orientation,
training, special education, and
mentoring.
For the financial industry such as
banking, require knowledge and skills
that are different from non-financial
industries. For that, it takes a special
individual competencies to the banking
industry's employees. With the com-
petence of individuals who owned
banking organization can give a spe-
cial briefing to enable the expansion of

Pamela Magdalena 81
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
knowledge expected a continuation of
the stock owned of educational
background.
Moreover, after obtaining suf-
ficient knowledge of the uniform of the
banking organization hoped that an
employee has the competence of
individuals to be able to develop his
career and be able to compete with
other employees, both within the or-
ganization the same banking and the
banking organization to another if the
employee should leave the orga-
nization to be able to entering another
banking organization.
This study is one industry,
banking, and with only one learning
environment, the learning environment
of banking. Determination of the in-
dustry aims to focus on existing con-
ditions and can provide an overview on
the banking industry that is the subject
of observation.
This research is expected to
generate a conclusion about the mini-
mal provisions that must be owned by
an employee at the time of entering the
banking industry. By knowing the
minimal provisions that must be owned
by an employee, the banking industry
is expected to provide the minimum
requirements for an employee that will
minimize the cost in providing an
additional provision for its employees
with education and training.
LITERATURE REVIEW
Bennington & Habir (2003)
describes the condition of human
resources in Indonesia, both internally
and externally in the company, relating
to the conditions in Indonesia. This
paper provides an overview of human
resource needs in Indonesia and the
implementation of management related
to the recruitment process in a com-
pany in Indonesia. Which became the
center of attention from the description
given is how the possibility of
Indonesian human resources can
compete with human resources coming
from other countries. In addition,
Pamela Magdalena
this paper also gives a picture of
the employee training in Indonesia.
Schuler (2000) provides an
overview of human resource
management from time to time,
particularly changes in human
resources an asset to the company,
human resources development
strategy, through the upgrading of
human resources. This article also
gives an overview of human resources
in the international world.
Research from Kuijpers et al.
(2011) showed that environmental
education should provide guidance to
their students in order to determine
their career direction. In addition,
environmental education needs to
regularly hold dialogues to advise
graduates to find out the problems
experienced in the workplace. Gui-
dance given turned out to provide
additional capabilities for graduates if
one day these graduates have to
change jobs because the dialogue is
given provides the possibility for
graduates to have the competence for
a career. With the dialogue with the
educational environment, graduates
can further develop his character as
independent individuals. In addition,
the dialogue held also required to
establish lasting relationships with
graduates.
Koen, Klehe, & Van Vianen
(2012) describe how the training in the
company provided supplies for new
employees to be able to adapt to the
work environment. The study provides
an overview of how the results shown
by the participants after six months of
training.
Jackson & Sirianni (2009) shows
how the administration of career
development certainty provided by the
organization can improve the quality of
service of employees in front-line
services industry.
Suroso (2011) conducted a study
on the basis of competence structuring
of career paths. The conclusion of the
research is the competence of the
system can be upgraded with a career
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
path. Research conducted at the
hospital showed that nurses careers
abroad in general is based on com-
petence, meanwhile, in some hospitals
in Indonesia competence conducted to
evaluate the application of the career
ladder.
Hendriani (2013) describe the
influence of education and training,
employee performance competence
to conclude that education and
training provide direct influence on
the competence of the employees of
PT Bank Central Office Pekanbaru
Riau Riau.
Individual Competence
Individual competence is the
ability inherent in man. The better a
person's individual characteristics, the
higher a person's ability to produce
what became their duties. Individual
competence consists of physical,
background, intellectual, and per-
sonality. Individuals affected by internal
and external factors. Individual internal
factors such as age, education, ability,
skills, experience and positions, as well
as employee motivation. While external
factors include the employees work
facilities, work environment, the level
of appreciation and income. (Kuij-
pers, Meijers, and Gundy, 2011)
Competence is a personal as-
pect employees that allows the
achievement of specific performance.
Personal aspect includes motif, nature,
system of values, attitudes, knowledge,
and skills that drive behavior. This
behavior will produce a performance.
Competence is also the knowledge,
skills and abilities associated with the
job, as well as the skills needed to
pekejaan nonroutine. Competence
is built on education, development,
and training. (Kunartinah and Dawn
Sukoco, 2011)
Learning Environmental
Learning environmental is the
place of origin of a person acquires the
provision of education before someone
entering the workforce. This envi-
Pamela Magdalena
ronment will equip someone before
entering the workforce. Education
given to a provision for a person
concerned to be a member of society,
in addition to functioning competitive
and employability (Atmanti, 2005).
Training
Training is a briefing given to
the concerned person after joining
the organization. The purpose of the
briefing is to provide a common per-
ception that employees have the ability
to standards according to the needs of
the organization. (Kunartinah and Fajar
Sukoco, 2011)
Career Development
Career is a pattern of employee
management that aims to monitor and
develop an employee in order to be
useful, both for themselves and for the
employees of the organization. Career
development bank has its own mana-
gement pattern. Clarity career system,
fairness, appropriateness career with
the ability of employees to encourage
employee performance is more
developed. Career development inclu-
des regular careers and career choi-
ces. (Abubakar, 2009) Career is de-
termined by the pace of work, labor
relations, the continuation or stages of
a career, the workload, have auto-
nomy, complexity of work, the sui-
tability of capability or competence of
individuals, and the facilities provided.
Career development is the result
of planning activities from the
perspective of individuals and orga-
nizations. Career development is also
a long process of coaching and deve-
lopment that form the working life of
individuals so as to form a talent,
kerampilan, knowledge, and deve-
lopment in order to provide benefits for
individuals and industries (Siew.J.C,
2001)
Theorerical Framework
Previous research and articles
are used are expected to be the basis
for this study. Articles on human
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
resources in Indonesia illustrates how
the condition activity management
strategies in developing human re-
sources is an asset to the organization
and how organizations implement
training activities in order to develop its
human resources. In addition, the
article also gives an overview of how
the competition condition of Indonesian
human resources to human resources
from outside Indonesia (Bennington &
Habir, 2003). Schuler (2000) shows the
human resource environment in the
global environment, development of
human resource management, and
human resource management.
Kuijpers et al., (2011) showed
how the mentoring done by the
educational environment can provide
added value for human resources who
have joined in one organization. This
study became the basis in increasing
the environmental role of education in
providing supplies for graduates to
have the competence and character
more than the other employees in the
organization. This research forms the
basis for research to be done, which is
to see the role of environmental
education in the provided supplies for
graduates.
Koen et al. (2012) conducted on
new employees by comparing among
those who received training and no
training turned out to give different
results. The results of this study will be
Training
Individual
Competencies
Learning
(Educational)
Environment
The independent variable in this
study is the Individual Competence,
Environmental Education and Training.
Pamela Magdalena
used to further deepen the knowledge
about the importance of training for
new employees entering the orga-
nization. Jackson and Sirianni (2009)
supports research to be conducted that
career development opportunities un-
dertaken by the organization has an
impact on improvement of services
provided by the employees on the front
lines in service industries. Sasra, 2015
described the competence impact,
education, training and deployment of
staff to career development to their
impact on employee performance
concluded that competence influence
on career development, education and
training directly influence career deve-
lopment, competence and education
and training directly influence career
development.
Moeheriono (2005) conducted a
study to see the effect of education
and leadership training Level III on
work motivation, career, and the East
Java provincial government employee
competence. The results showed that
education and training directly influ-
ence motivation. Education and train-
ing also affects the competence of the
employees directly. Meanwhile, educa-
tion and training did not have direct
influence to employee career.
From the observations of
previous studies, compiled the follow-
ing research conceptual framework.
Career
Development
The dependent variable in this
research is the Career Development.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Competence is the ability of
individuals attached to someone.
Ability possessed by an employee in
the form of insight, knowledge, skills,
and attitudes necessary for the
person's behavior on the implemen-
tation of the task organization. This
competence is measured by indicators
of achievement, passion, understan-
ding of the task, a good relationship,
tactics and strategies, skills, problem
solving and analysis, creation of new
concepts, and use of technology
(Moeheriono, 2005).
Learning environment is a place
and a means for a person in obtaining
additional knowledge, either formally or
informally.
Training is an investment
made by an intermediary organi-
zation with employees. With this in-
vestment is expected to results in the
future could double the investment
made. Training provided by each or-
ganization relies heavily on the orga-
nization's needs.
Career is a sequence of
promotion or transfer for Employees
with positions higher or better, pro-
moted or fixed or moving the unit
works. This career seen from their sale
immediately after training, better career
in the future, directly promoted after
training, or new positions and promo-
ted (Moeheriono, 2005).
The present study shows that the
training undertaken by employees give
opportunity to develop a career. The
study showed a significant correlation
between training and career develo-
pment opportunities.(Nouri & Parker,
2013)
The relationship between human
resources practices, such as training
and development of positive influ-
ence on career development (Nada-
rajah, Kadiresan, Kumar, Nurul Nissa
Ahmad Kamil, & Yusliza Mohd. Yusoff,
2012)
CONCLUSION
This article provides a descri-
ption of the theory for the research to
Pamela Magdalena
see how the influence of enviro-
nmental training and education to
individual competencies and how to
influence individual competencies on
individual career development.
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MARKETING OVERVIEW: CADILLAC & L.A. GEAR

Puput Ichwatus Sholihah

Mohammad Ali
Hohai University China
Ramazyan Shavarsh
University of Electronic Science and Technology China

Abstract: This paper presents two case studies that occurred in General Motors
Cadillac and LA Gear. The discussion is more focused on the field of marketing by
analyzing the marketing mix for each company. According to Philip Kotler
"Marketing Mix is the set of controllable variables that the firm can use to influence
the buyer's response". The controllable variables in this context refer to the 4 'P's.
An analysis carried out to find solutions to the problems and case studies that have
been outlined in the two companies.

Keywords: Marketing, Marketing Mix, Case Study, Cadillac, L.A. Gear.

Cadillac Motor Car Division of demand. Cardilac have chalenges not

General Motors got its start in 1899 as
the Detroit Automobile Company and
was renamed Cadillac in 1902. Cadi-
llac manangement disregarded the lure
of volume sales and dedicated the
company to making quality automo-
biles. This lost Cadillac its position as
a high-volume producer, but led to
engineering accomplishments that
made Cadillac one of the leading fine
car manufacturers. Their commitment
to quality and innovation propelled
Cadillac’s status as the “standard of
the world.” Cardillac customers are
those who have demanded the best in
traditional luxury cars. These
traditional Cadillac consumers were
most often professionals, above
average in income and education, and
in recent years an average of 58 years
of age. In an effort to appeal to the
younger upscale consumers who were
not a part of the traditional Cardillac
market, GM offered a new Cadillac in
the 1970s. After it, cadillac declared
itself to segment two targets, with
young people as a new target. Cadillac
have floated several products aimed at
young people such as Seville (May
1975), Cimarron (1981), Sedan de
Ville (1985), Eldorado / Seville
(1986), and the Allante (1987). all of
which have the technological reliability
and could answer their buyers
only from GM and ford, but als from
Europan and Asian Competitor as well.
Japanese win the competition between
US, europe, and Asian Company
because Japanese manufacturers
sucsess in producing these small, fuel
efficient automobiles with hight quality.
That time (1970s) energy price
increased in response of to the high
cost of fuel, costumer not only
shopped for the best model but also
the best sale incentive. The US luxury
car market can be classified into two
segments: traditional and functional.
US manufaturers have typically
produced entries to the traditional
segment, and the Europeans, the
functional segment. Traditional luxury
cars strive to make the driving
experinces as efforthless as possible.
The funcional luxury car attempts to
put the driver in touch with the road via
steering an suspension system.
Cadillac plotted its strategy for luxury
car market.
Literature Review
The marketing mix refers to the
set of actions, or tactics, that a
company uses to promote its brand or
product in the market. The 4Ps make
up a typical marketing mix - Price,
Product, Promotion and Place (Kotler
et al., 2016).

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
1. Price: refers to the value that is
put for a product. It depends on
costs of production, segment
targeted, ability of the market to
pay, supply - demand and a host
of other direct and indirect factors.
There can be several types of
pricing strategies, each tied in with
an overall business plan. Pricing
can also be used a demarcation,
to differentiate and enhance the
image of a product.
2. Product: refers to the item
actually being sold. The product
must deliver a minimum level of
performance; otherwise even the
best work on the other elements of
the marketing mix won't do any
good.
3. Place: refers to the point of sale.
In every industry, catching the eye
of the consumer and making it
easy for her to buy it is the main
aim of a good distribution or
'place' strategy. Retailers pay a
premium for the right location.
4. Promotion: this refers to all the
activities undertaken to make the
product or service known to the
user and trade. This can include
advertising, word of mouth, press
reports, incentives, commissions
and awards to the trade. It can also
include consumer schemes, direct
marketing, contests and prizes
(Borden, 1984).
Marketing mix resource
allocation and planning has assumed
prominence as companies have
attempted to optimize spending across
all marketing activities. That is no
surprise, considering that senior
marketing executives are under
increasing pressure to help their
organizations achieve organic sales
growth with tighter, top downdriven
budgets and short time horizons to
deliver tangible payback on their
marketing campaigns. With less
influence over the size of their budgets,
senior marketers must instead attempt
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
to maximize the impact of the dollars
they distribute for programs across
multiple products, markets, channels,
and specific customers, using an
increasingly complex mix of new and
traditional media (Pour et al., 2012)
Problem
1. Cadillac division decreased
market share from luxury car
sales. In 1983, cardillac
accounted for over one third of all
luxury car sales. in 1987 cadillac
made up less than one quarter of
all such sales. model that had
been previously very popular were
selling poorly. it is caused
decreased sales in some products
such as Eldorado, seville, and
Cimmaron. sales od the exclusive
allante have also been
disappointing. This product was
expected to be a selout its first
year at 6000 units, but by years
end the allente tallied just over
2.500 units.2. Cadillac division
was declining reputation for
luxury car excellence become
“look a like cars”
3. Cadillac innovation in the late 1970s
and early 1980s was also a cause
for concern. The availabity of a V-
8 diesel engine, manufactured
from a odified gasoline engine,
was discontinued when its
reliability proved disastrous
4. Feed back from customers who
were not good. On september 27,
1988, consumer actibist Ralph
Nader issued a report called
“Cadillac- The Heartbreak of
America”. According to Nader,
“This report was written because
of the large volume of mail we
have received from indignant
cardillac purchasers who expect
better quality from a 25000
investment.”
Analysis Marketing Mix 4P Product
This table will show us about
descriptions of models Cadillac with
domestic comparison
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1978 target 1988 target

Cadillac
Traditional Traditional large,
large, 4 door, 4 door, 6
6 passenger, front
De Ville/Fleetwood
passenger, wheel drive, V-8
rear wheel
drive, V-8
N/A Traditional large,
4 door, 6
Brougham
passenger, rear
wheel drive, V-8
Traditional International size,
large, 2 2 door,
Eldorado door, front wheel drive,
front wheel V-8
drive, V-8
International International size,
size, 4 door, 4 door,
Seville
front wheel front wheel drive,
drive, V-8 V-8
N/A 2 seat,
Allante
couple/convertible
Lincoln
Traditional Traditional large,
large, 4 door, 4 door, 6
6 passenger, rear
Town Car
passenger, wheel drive, V-8
rear wheel
drive, V-8
Traditional Smaller, funcional
large, 2 2 door, rar
Mark V/VII door, wheel drive, V-8
rear wheel
drive, V-8
International International size, 4
size, 4 door, door, rear
rear wheel wheel drive, V-6,
Versailes/Continental
drive, V-8, traditional market
traditional
market

From the table we could see that
cadillac product is equivalent to
domestic competitors. Comparing with
domestic competitors will not be
sufficient, given the competitors in this
industry, cadillac not only from
domestic
only. The following table will explain
some of the differences in product
specifications cadillac when compared
to its foreign competitors. look for
comparison of key specifications

Lexus Infiniti BMW Mercedes Cadillac Cadillac 1989

LS 400 Q-Series 735i 300 E de Ville Seville Lincoln
Wheelbase 110.7 113.4 111.5 110.2 113.8 108 109
Length 197.6 199.8 193.3 187.2 205.3 190.8 205.1

Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh 89

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Width 71.7 71.9 72.6 68.5 72.5 70.9 72.7

Height 55.1 56.3 55.6 56.9 55 53.5 55.6
Weight 3.800 3.860 3.835 3.195 3.470 3.449 3.626
Engine V-8 V-8 I-6 I-6 V-8 V-8 V-6
Size 4 4.5 3.4 3 4.5 4.5 3.8
Horsepower 250 270 208 177 155 155 140
Price - - 54,000 43,365 23,404 27,627 26,078

At first glance, it is clear that the
products of the cadillac has specs on
par with foreign competetors.
Especially if we compare with the
price, Cadillac look so compitable with
their foreign competitor. However, from
the information available, the
technology cadillac having problems
where: The availabity of a V-8 diesel
engine, manufactured from a odified
gasoline engine, was discontinued
when its reliability proved disastrous.
This same scenario played a second
time, and in the same time period, with
cadillac’s exclusive multidisplacement
engine. The engine was programmed
to run on 8, 6, or 4 cylinders
depending on engine load demand.
However, as with the diesel, lack of
reliability killed the innovative engine.
Speaking about the product, this is a
product that is intended for upper
class, quality assurance and
technology is imperative that compa-
nies need to be met in order to answer
the needs of consumers. Although
innovations same engine specs, but if
the offer presents cadillac quality
worse than on the other, it can be
predicted that those who have bought it
will be disappointed, if they feel
disappointed, then they will give bad
feedback. Bad feedback can affect a
potential buyer's purchasing power so
that they are not buying this product. If
this is not addressed and allowed to
continue, this condition can also lead
to decline in brand image in the minds
of consumers.
Whats more important to cardillac
and to reuss executive vice president of
North American car operations, was
the division’s steadily declining
reputatition for luxury car excellence.
On the surface the cause for the
decline was multifaceted. Forst,
cardillac suffered from what the press
called “look alike cars”. The cadillac de
villes and fleet woods looked like buick
electras and oldmobile ninety eights.
To overcome the problem of the points
of this product, can be done by
completing the following product
attributes:
Product Variety: In this issue I
think cadillac no need to fix it again
because cadillac has had enough
variety of products which each of these
products were developed to meet the
needs of each target. Quality: To
resolve this issue, Cadillac repair
technicians can pursue deficiencies of
existing products so as to identify the
lacking factors in their product and
thus make improvements as an
excellent quality is the key to success
in the automotive industry. In addition
to the success of Japanese products
Acura Because success in japanese
manufacturers producing these small,
fuel efficient aoutomobiles with high
quality. There is no harm in learning
from the Japanese product, and what
is important is the quality and fuel
efficiency also note Because in that
time Increased energy prices, so
consumer not only shopped for the best
models but also for the best sale
incentive.
Design: to overcome the problem
of "look alike cars" cadillac need to
develop a product design with new
model in which the design of this model
should be sufficiently different from
existing products as well as other
brands of products. Design products
must remain based on the tastes of
consumers. Fetures: add fetures
appropriate and not excessive car can
be advantages to attract consumers to
buy the product cadillac. Services,
warranties, and returns: repairing sales

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
service is also becoming important
points to be considered by consumers.
Open a special branch of service,
guaranteed up to a certain time period
to damage and even replacement of
facilities that can be obtained free of
charge can be a positive value in
addition, the ease to do after
purchasing a car service is also a key
consideration for which the consumer
will choose the product or not. provide
facilities to perform service car with an
easily accessible place should also be
considered.
Price
According to General Manager
Grettenberger, "Our vision is to move
every Cadillac upscale in terms of its
expressivess, image, distinctiveness,
and overall content. I do not see us
having a scale-weighted average of $
43,000 - $ 44,000 like Merzadesh
Benz. But i would like to see Cadillacs
move upscale.” This statement reflects
the Cadillac has committed to not give
the price is too high but remains a top
class product. While the price
comparison in EXHIBIT 15 1988
Luxury Car manufacturers suggeted
retail prices, can be seen that most of
the product is below its competitors
cadillac. Events like this once again
can be the plus points and minus
points. For example, if someone
confronted on the choice of the same
specifications and quality equivalent
while a cheaper price, then for sure
this person will tend to attribute the
choice to goods which have a cheaper
price. Therefore, in such conditions it
can be said that the company gain a
competitive adventage because of
price leadership. The example may
illustrate that in these conditions the
product price cadillac cheaper than the
competetors indicated cadillac price
leadership excellence. Cadillac may
apply proven production efficiency by
producing the same output with a more
competitive price. The price is cheaper
than its competitors can be a minus
point on the following conditions:
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
because the target market of this
cadillac is the middle class and above
people, sometimes that becomes a
problem for them was not the price,
they would be willing to pay any price
for the product to meet their
expectations and has advantages that
no other product. Sometimes people
also use luxury products because they
want to be recognized social status,
with the same specifications,
sometimes people prefer products with
a higher price to buy the product
because it will be recognized social
status. Price is a mechanism to also
communicate the nethwork of the
individual consumer to their friends
where brands are known, and the cash
price of the brand is as much of
bragging point as the quality of the
merchandise.
Promotion
This lost Cadillac its position
as a high-volume producer, but
led to engineering accomplishments
that made Cadillac one of the
leading fine car manufacturers.
Their commitment to quality and
innovation propelled Cadillac’s status
as the “standard of the world.” Cardillac
customers are those who have
demanded the best in traditional
luxury cars. These traditional Cadillac
consumers were most often
professionals, above average in
income and education, and in recent
years an average of 58 years of age. In
an effort to appeal to the younger
upscale consumers who were not a
part of the traditional Cardillac market,
GM offered a new Cadillac in the
1970s. From the available information
it is known that since the 1970s, most
cadilac formerly segmented: often
professsionals, above average in
income and education, and in recent
years an average of 58 years of age
by presenting products tarditional
cadillac add segementasinya to the
younger upscale consumers who were
not a part of the traditional Cardillac
market. Since the cadillac so intense,
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positioning and producing new
products to achieve their segmentation
Each Cadillac model has its own
individual spirit. For example, the
Allante is the “New spirit of Cadillac”.
The Allante was positioned to create a
new class of performance that merges
European road anners with cadillac
comfort and convenience. The sedan
de Ville and Coupe de Ville are
cadillac’s “contemporary spirits
representing Cadillac’s belief that
today’s luxury cars should reflect
today’s values. Eldoradi is the “driving
sipirt” while the Seville is the “elegan
spirit”. Sharing the same chassis, The
Eldorado is a two-door coupe with a
suspension system that delivers
control with a minimum of body roll and
sway, while the seville is a four- door
sedan that emphasizes supreme
comfort and an exceptional array of
standard luxury features. The
Cimarron is the “Sporty Spirit” of
Cadillac. Cadillac is GM’s luxury
market idivision. Cadillac was
positioned as the highest priced
division, offering the consumer
automobiles that are conservative but
not far from an even split between
conservative and aggressive, and
family and personal orientations.
Talking about promotion budgeting, in
all of 1987, Cadillac spent $
35,334,300 on TV advertising to
promote the “siprit of Cadillac”, a 32.5
percent increase from the previous
year. Cadillac’s TV budget in 1988
increased to $ 54,126,200. In fact,
when compared to the costs incurred
competitors on television advertising,
BMW issued a number more in the
back advertising and getting increased
sales. Nevertheless Acura which
secrete an amount almost equal to the
Cadillac can increase sales, while
sales decreased cadillac themselves.
This condition may also be possible for
a TV ad aired by two competitors:
(1) interesting advertisement
(2) serving ads where the
advertisement is displayed on the
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
spots right time so that it can be
seen by potential prospects.
It is also possible competitors do
other than on television advertising in
which ads are more effective to
increase sales of their products. To
increase sales and get more market
share, Cadillac can use other way of
promotion such as wathching it in
action or experiencing a trial version
for a limited time. Customers can learn
more about a product from using it,
wathching it in action or experiencing a
trial version for a limited time than
simply being told about it. Cadillac can
offers virtual test drives on their car
including a video of the car in action,
and tourist guide of the test drive area.
This gives a feel for the car in action,
and the lifestyle choices that Cadillac
feels match their machine’s brand and
style.
Place
The case study was not given
much information about this point. But
we can say that we still have to give
plus value in this point. Place is
covered: Channels, Coverage, Assort-
ments, locations, Invetory, and
Transport. Performance attemp to
overcome the problems that cadillac
have, at least Cadillac should provide
added value on each of this points.
In the Channels point, Cadillac
can begin while maintainin the quality
of existing channels (if the channels is
already quite good). Some
suggestions, Cadillac can eliminated if
there is channel that unnecessary, in
order to maintain efficiency and also
keep a good communication channels.
In addition, renovating the dealer
seller by adding the impresssion of
exclusice and comfortable in it, would
be a good idea. Dealers should provide
product information as detailed as
possible about caddilac product and
also other supplemantary information.
Seller also must be capable not only
good at conveying product information,
but also must be good to convienxe
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potentia buyers to purchase Cadillac
product.
CONCLUSION
To overcome the problem of the
points of product, can be done by
completing the following product
attributes: (1) Product Variety: has had
enough variety of products which each
of these products were developed to
meet the needs of each target. (2)
Quality: Cadillac repair technicians can
pursue deficiencies of existing
products so as to identify the lacking
factors in their product and thus make
improvements as an excellent quality
is the key to success in the automotive
industry. (3) Design: to overcome the
problem of "look alike cars" cadillac
need to develop a product design
with new model in which the design
of this model should be sufficiently
differrent from existing products as
well as other brands of products. (4)
Fetures: add fetures appropriate and
not excessive car can be advantages to
attract consumers to buy the product
cadillac.(5) Services, warranties, and
returns: repairing sales service is also
becoming important points to be
considered by consumers.
the product price cadillac
cheaper than the competitors indicated
cadillac price leadership excellence.
Cadillac may apply proven production
efficiency by producing the same
output with a more competitive price.
But, because the target market of this
cadillac is the middle class and above
people, sometimes that becomes a
problem for them was not the price,
they would be willing to pay any price
for the product to meet their
expectations and has advantages that
no other product.
To increase sales and get more
market share, Cadillac can use other
way of promotion such as wathching it
in action or experiencing a trial version
for a limited time. Customers can learn
more about a product from using it,
wathching it in action or experiencing a
trial version for a limited time than
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
simply being told about it. Cadillac can
offers virtual test drives on their car
including a video of the car in action,
and tourist guide of the test drive area.
This gives a feel for the car in action,
and the lifestyle choices that Cadillac
feels match their machine’s brand and
style.
In the Channels point, Cadillac
can eliminated if there is channel that
unnecessary, in order to maintain
efficiency and also keep a good
communication channels. In addition,
renovating the dealer seller by adding
the impression of exclusice and
comfortable in it, would be a good idea.
CASE OVERVIEW
The athletic Footwear industry
has averanging 21 percent growth
wholesale and 23 percent growth retail
between 1985-1990, the forces that
have been driving the growth can be
identified as :
Late 1970s-The popularity of
running
Early 1980s-The aerobic craze
Early 1980s-The emphasis on
overall health and fitness, the
introduction of speciality shoes for
each sport (basketball to
boardsailing) or all sports (cross-
training).
Late 1980s, early 1990s-The
use of miltimilion dollar media
campaigns and star
spokespeople.
LA Gear is third in retail sales in
the US market after Nike and Rebook.
La Gear Found a niche in the fashion
segment of the 1986 $5 billion athletis
footwear industry and exploited it. The
company initially designed and sold
roller skate shoes and owned ruller
palaces. By 1985, LA Gear had $10,7
million in sales of women’s aerobic
shoes and leather athletic styled
leisure shoes. LA Gear provided shoes
for wearers who choose athletic shoes
as their casual shoe chioce.
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Their tactic was to target their
products to women, mainly teenegers,
and stress the style of California. Their
shoes are splashed with color, multiple
laces, inlaid rhinetones, fringers,
colored cutouts, neon trim, marbleizad
leather, vibrant lae colors, silver
buckles, and leather lattices.
PROBLEM
1. LA Gear Success has been
reflected in its stock price.
Previously considered only a
trendy valley girl shoe company,
L.A Gear had the best performing
stock in 1989, showing an
increase of 185 percent total
return to investors.
2. LA Gear attributes their success
to their ability to identify and
respond promptly to changes in
consumer preferences. Sales
have skyrocketed from $9 million
in 1984 to $223 million in 1988 to
$600 million in 1989.
3. a random survey which published
in sporting Goods Business’s
March 1990 issue about market
share of footwear market. With the
result showing retailer’s
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
perceptions making LA Gear
number 1 over Reebok.
ANALYSIS MARKETING MIX
From LA Gear case study, the
analyst finds that there is existing
answer in every problem. analyst tries
to analyst this case study using
Marketing Mix 4P.
Product
The athletic shoe manufacturers
are forced to addredd the fashion
issue. In athletic footwear industry,
buyers are not only serious athletes
but also working women, casual or
weekend athletes, and casual fashion
wearers in search of comfortable,
attractive shoes. Currently, 80 percent
of all athletic shoe purchases are for
casual use. Their shoes are splashed
with color, multiple laces, inlaid
rhinetones, fringers, colored cutouts,
neon trim, marbleizad leather, vibrant
lae colors, silver buckles, and leather
lattices.
On the other hand, the following
table show us data of the buyer of
athletic footwear industry.
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Source: Mues & Simmons, 1988
Table indicate that total female
pupulation is more than total male
population. Moreover, 63.5% of
women who buy spend over $15. LA
Gear provided shoes for weares who
choose athletic shoes as their casual
shoe choice. Their tactic was to target
their products to women, mainly
teenegers, and stress the style of
California. LA Gear use 102
independent, regional individu sales
representative. This individu sales
representative will profide information
about LA Gear product and also can
make customer derive useful
pre/pasca purchase information about
the style and content of the product.
Product-value links the capacity
of the offering to reduce a cost
elsewhere in the consumer’s life by
increasing the feature set of a product
in this case, L.A Gear offering to
reduce a cost. Considering that the top
three manufacturers use low-cost
production facilities in South Korea and
Taiwan and that is costs only $15 to
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
$20 to manufacture a pair of sneakers
that will retail at $60 to $100. L.A
Gear manufacturers their shoes using
independent producers in Pusan,
South Korea, and Taichung, Taiwan.
However, condition that LA Gear does
not have master manufacturing
agreement with its producers, must be
changed. LA Gear must have signing
agreement in an effort to maintain
product quality, sustainability of
production, and the prevention of the
possibility of counterfeiting products.
Access at the product level is a
case of asking where the customer can
find the solution within the product. It is
a multi-faceted aspect which examines
the design of the product against the
needs of the target market, and
whether the feature set aids or hinders
access to the sought-after solution.
Sustainability of LA Gear products no
doubt, consumers do not have to
worry about the unavailability of the
product when they want to buy or want
to buy again.
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Promotion
Branding and marketing
communication messages are part and
parcel of the extended product, and a
key aspect in how the solution will
address intangible factors of social
prestige and the construction of the
consumer’s self image. Brands form a
part of the solution by creating a social
message that can be adopted,
adapted and displayed by the
consumer. LA Gear uses heavy
promotions to create brand image and
pull the buyers into the stores. In
marketing, LA Gear conducts
extensive marketing research product
testing, focus groups, store and
consumer interviews, and survey to
help determine designs and
technological attributes consumers
want to evaluate.
Promotional activities by the
marketer give the customer the official
corporate message from the
organization about their products. It
forms a useful base line for the
(Exhibit5) Advertising and promotional expenditures (in $ millions)
1986 1987
L.A. Gear $2.6 $5.4
Reebok 12
Nike 62.5 65.9
*Estimated for 1990
For L.A Gear, dollars include
trade shows, trade and consumer
publications (.12), merchandise, TV
(.50), and specialty billboards.
International advertising of $3 million is
not included.
For Reebok, the $70 million is
divided between $40 million domestic
and $30 million in promotions.
International advertising of $20 million
is not included. Ten percent of
expenditures in 1989 were for
children’s footwear.
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
customer to use to compare with word
of mouth information as means of
crosschecking what the advertising
promises and the product delivers. LA
Gear used the ambassador of
basketball with continues to appear as
their performance ambassador in the
1990 UNSTOPPABLE campaign. It
match because most of LA Gear
product is basketball shoes.
The strength of a firms’s R&D
and image advertising is heavily
correlated with leading market share
and/or high sales growth. LA Gear
performance over the past four years
demonstrates how positioning and
strategy can chane the perceptions
and performance of company.
Internationally, sales increaed from $
2.3 million to $20.5 milion (a 791
percent gain).
This table will show us that LA
Gear have promotion Value in case
compare with its two competitors
1988 1989 1990*
$12.6 $25 $50
35 60 70
85.3 50 100
For Nike, $25-$30 million will be
spent on promotions in 1990.
Promotion and access combine
to inform the customer as to where the
solution can be found by identifying
retail outlets, distribution channels or
websites. LA Gear has not used this
point, since most buyers will know
where he can get the shoes. however,
given the competition faced by LA
Gear is not easy, if LA Gear want to
increase sales, this method can be
tried. added “where can get” is a value-
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
added product to facilitate consumers
buy products both online and offline.
Price
Price is a means for a consumer
to measure the worth of a product, and
as such, the price helps inform the
purchase decision from the extreme of
if you have to ask, you can’t afford it
through to assessing the affordability of
the solution.
From EXHIBIT 14 LA Gear
produtct categories we can know that
LA gear price range is quite competible
with two big competitors NIKE and
Reebok. We can also said it much
cheaper. The price of a product will
dictate how accessible it is to a market,
and, even if it is an optimum solution to
their problem, whether it will be
adopted or if a cheaper alternative will
win out. Access prices incorporate the
costs associated with the logistics of
shipping products, the inconvenience
of delays between ordering and
consumption of a product, and the total
costs associated with receiving the
benefit embedded somewhere in a
service, good or experience.
Place
Distribution is the mission critical
element in the total value of a solution.
No matter how useful the product
appears in the promotion, and how
much the word of mouth endorses it,
the proof of the product is in the
ownership and use. If the distribution
network cannot deliver a product to the
customer, it cannot be considered to
be a solution to the customer’s needs.
It also determines if the value of the
services is location dependent or can
move to the customer. LA Gear
divides their sales into four divisions:
(1) department stores and women’s
shoe stores; (2) sporting goods stores
and athletic footwear stores; (3) men
stores, and (4) children’s shoe stores.
Place and information allow for
in-store displays, point of purchase
promotions, and the in- store trials of
the product in a safe environment for
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
the customer (and the product) where
help, explanations and assistance are
a sales clerk away. LA Gear employs
five national accunt managers and 14
technical representatives who assist in
marketing. Thay are responsible for
improved [roduct display and point of
purchase advertisements.
Part of the information provided
by the distribution channel relates to
the exclusivity and desirability of a
product. The value of a luxury good is
based on the extent to which it offsets
the consumer from the rest of the field.
This is determined in part by price and
part by access to the product.
Paradoxically, exclusivity can increase
the perceived value and benefit of the
product by increasing the difficulty of
acquisition, and the subsequent
reward for success. Learning from the
past, LA Gear selling his product to
discount outlets, swapmeets, and 7-
Eleven which hurt the company’s
image. LA Gear place the new line
sneakers in full price department
stores and shoe stores.
Access is the question of
whether the customer can get to the
solution they want, when they want it,
and in a manner that the organization
can deliver without compromising the
value or solution. LA Gear have
agreement with 43 distributors in 77
countries for distribution of footwear
and apparel. By 1991, they intend to
be selling in 100 countries including
the Soviet Union. This condition makes
LA Gear into a product that can be
accessed anywhere when consumers
wanted to purchase it.
CONCLUSION
LA Gear has sought the best
efforts to be able to compete with the
two major players (NIKE and Reebok)
in the athletic footwear industry. after
doing repairs for 4 years in all aspects
of its marketing mix, a random survey
which published in sporting Goods
Business’s March 1990 issue about
market share of footwear market. With
the result showing retailer’s
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perceptions making LA Gear number 1
over Reebok. LA Gear wins 29,1
percent in athletic footwear industry.
However, if LA Gear intends to g
beyond $600 million in sales, they will
need to be a mojor player in the
mens’s market. This is not going to be
easy, remember LA Gear had been
specializes in women's footwear. An
extensive research and marketing
campaign will be necessary to
penetrate this market and still
maintaining its loyal custumers and
brand recognition. Other than that LA
Gear also must learn to look at all the
competitors movements (NIKE and
Reebok) in its efforts to satisfy the male
segment. mimic some of the activities
they have done, but with a touch of
new specialty will increase chances of
success to win the competition. in the
end, hope LA Gear could be the owner
of the largest market share.
Puput Ichwatus Sholihah, Mohammad Ali, dan Ram azyan Shavarsh
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Kotler, Philip, Gary Armstrong, and
Margaret H. Cunningham. 2016.
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Mues, C., and P. Simmons. 1988. The
Effects of US Farm Policy on
Australian Cotton Revenues.
Paper presented at 32nd
Annual Conference of Australian
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University Melbourne, Australia
(8-12 February).
Pour, Bahman Saeidi, Kamran Nazari,
and Mostafa Emami. 2013. The
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Journal of Business
Management.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

ANALYSIS OF FACTORS AFFECTING THE STUDENTS ON THE

DECISION TO CHOOSE THE PRIVATE HIGHER EDUCATION
(A CASE STUDY OF STUDENT NATIONS
PELITA CIKARANG BEKASI REGENCY)

Ergo Nurpatria Kurniawan

Margono
Ainur Rofiq
Sunaryo
University of Brawijaya

Abstract: Education has become the most important part in the life of mankind in
the world. Once the importance of education, the Indonesian Government has set
in the Basic Law (Constitution) 1945 Chapter XIII of the Education and Culture (as
amended), especially as it is known that the number of people in the City area and
distric of Bekasi up to 5.7 million people (Cikarang Bekasi go.id center), then surely
become a shared obligation either government or the private sector to provide
decent education institutions for people in need. College Pelita Nation is one of the
private universities in Bekasi Regency, where the region Bekasi Regency study
program that owned are 6 (six). In the City area and district of Bekasi, there are
also several universities other private there are approximately 10 (ten) private
universities, such as STIE Mulia Pratama, STIE, Tribuana, University Presidents
and private universities, but the average is located in the city of Bekasi. Based on
observations made showed that of the existing colleges in the City area and Bekasi
Regency College has a number of the largest student and always has increased
continuously from 2012 to the present and is currently in the period of the
academic year 2016-2017 the number of students who active reached more than
10,000 students, it is very interesting to study. According to data collected from 345
respondents who were later analyzed, it can be concluded as follows: 1) Factor
product (program) a positive effect on student's decision amounted to 57%, the
price factor (cost of education) positive effect on student's decision of 91%, factor a
positive effect on student's decision amounted to 82%, and the service factor
positive influence terdapa student's decision amounted to 80%, 2) Overall factor of
the product (XI), price (X2), point (X3) and services (X4) simultaneously influence
student's decision in choosing Pelita Bangsa College of Bekasi, amounting to 97%.

Keywords: product, price, place and service as well as the student's decision.

Education is the most important institution responsible in maintaining

part in the life of mankind in the world.
Once the importance of education, the
Indonesian Government has set in the
Basic Law (Constitution) 1945 Chapter
XIII of the Education and Culture (as
amended), especially as it is known
that the number of people in the City
and County of Bekasi up to 5.7 million
people (Cikarang Bekasi go.id center),
then surely become a shared
obligation either government or the
private sector to provide decent
education institutions for people in
need.
The college is one of the world
level in education has a role as the
the nation's competitiveness. The
competitiveness of a nation can be
built properly if it is supported by the
College (PT) quality, so as to have a
strong competitive edge in the global
economic competence. Along with the
development of education, higher
education is divided into two, namely
the State Universities (PTN) and
Private Universities (PTS). Universities
run by the government while the
Colleges maintained by certain
agencies (foundation).
Pelita Bangsa college is one of
the private universities in Bekasi
Regency, where the region Bekasi

Ergo Nurpatria Kurniaw an, Margono, Ainur Rofiq, Sunaryo 98

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Regency study program that owned
are 6 (six). In the City area and district
of Bekasi, there are also several
universities other private there are
approximately 10 (ten) private
universities, such as STIE Mulia
Pratama, STIE, Tribuana, University
Presidents and private universities, but
the average is located in the city of
Bekasi. Based on observations made
showed that of the existing colleges
diwilayaj City and Bekasi Regency
College has a number of the largest
student and always has increased
continuously from 2012 to the present
and is currently in the period of the
academic year 2016-2017 the number
of students who active reached more
than 10,000 students, it is very
interesting to study.
This study will explore the factors
that influence a student's decision in
choosing Pelita Bangsa College
students as well as study what factors
are dominant in their influence in
choosing Pelita Bangsa College
KAJIAN LITERATURE
Marketing Mix
The marketing mix (marketing
mix) is a set of tools that companies
use to marketers continue - constantly
achieve its marketing objectives in the
target market.
According to Kotler (2000: 24):
"The marketing mix is a powerful group
of marketing used by companies to
achieve their marketing objectives in
the target market".
These three things are related to
the nature of the services which the
operational stages to consumption is a
series that can not be separated and
engage consumers and service
providers directly. In other words, the
direct interaction between the two
(though not for all types of services).
1. Product (product)
Marketers must understand the
product (in the program) what is
desirable and beneficial from the
perspective of the customer, which in
this case is a student. As the benefits
Ergo Nurpatria Kurniaw an, Margono, Ainur Rofiq, Sunaryo
of products that can meet the desires
and student satisfaction. Then like
quality, the architecture of the building,
the campus and the environment that
supports the function of education in
the college.
Furthermore, higher education
institutions also have to understand the
existing products, such as curriculum,
conformity of products to the needs of
the labor market and so to improve the
quality of education of the institutions.
If it can be fulfilled, educational
institutions in marketing the product in
the form of education services will be a
positive response. This response, of
course, the decision in choosing
college students as a place to study for
his education.
2. The price (price)
Pricing decisions also so
important in determining how much
care services rated by consumers and
also in the process of image building.
Component prices on matters as
follows:
a. Money registration or re-registration
each semester start
b. Money lectures covering the cost of
providing education money also
matters relating to the development
and fostering extra-curricular activities
such as books, equipment and so
forth.
c. Cost per SKS (Semester Credit
Units)
d. Money donated building that once
paid upon receipt at the institutions.
e. State examination fees
3. Points (place)
According to Kotler (2009): "The
place is a function of distribution and
logistics involved in order to provide
products and services of a company".
According Kulsum (2008: 24). The
importance of the location for services
dependent on the type and level of
interaction involved. The interaction
between the service provider with the
customer consists of:
a. Customers visiting provider jasa
b. A service provider customers come
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c. Service providers and customers
transact business in a far distance
procession
4. Promotion (promotion)
According Djaslim Saladin (in
Amalia, 2011: 18): Promotion of "An
information communication sellers and
buyers that aims to change the
attitudes and behavior of buyers, who
previously did not know become
familiar with so that it becomes a buyer
and still recall the product terse but".
Promotion is one factor
determining the success of a marketing
program. Although the quality of the
products offered, if consumers have
not heard so consumers will not buy
that products. In order for the
company's survival is assured, then in
the delivery of products produced by
the company, should the information
that lure and attract buyers to try and
use products produced by the
company.
5. People (people)
According Lupioyadi (in Kulsum,
2008: 26): Stating that "In connection
with the marketing of services, then
people who function as service
providers greatly affect the quality of
services received". Decisions in these
people means relating to the selection,
training, motivation and human
resources.
According Kulsum (2008: 27):
The person (people) is meant here is
the staff college consisting of faculty
and administrative staff which is owned
by educational institutions, which play
a role during the process and
communication service.
Basically there are two types of
college staff, the academic staff who
do the work of teaching, research and
community serve service and support
staff that includes workers in certain
fields, administrative staff, security,
technical and others - others. J adi in
the discussion
6. The process (process)
According Lupioyadi (Kulsum,
2008: 24): The process is a
combination of all the activity, generally
Ergo Nurpatria Kurniaw an, Margono, Ainur Rofiq, Sunaryo
consists of procedures, work
schedules, activities and things -
routine, where the service is produced
and delivered to the consumer. The
process can be divided in two ways,
namely:
a. Complexcity, it is associated with the
steps and stages in the process.
b. Divergence, associated with
changes in steps or stages of the
process. So in this case referred to the
process according to the study in this
college is the beginning of the
procedures for admission to the re-
registration process to become a
student.
c. Services (customer service)
According Hardiyanti (2009):
"Customer service is how the level of
services that will be given to the
consumer". Education services in the
discussion here is based on the
process characteristics such as:
consumers are served in small groups,
individually serviced customers or
consumers served himself.
According Purnama (in Kulsum,
2008: 28): A dimension or factor -
determinants that can be used as a
reference to assess the quality there
are five, namely:
1. Tangibles, the physical appearance
of service
2. Empathy, a willingness and desire to
serve in a friendly, warm and friendly
3. responsivenes, is the willingness
and readiness of employees to provide
services
4. Assurance, is a trustworthy, honest
and engaging consumers
5. Realibility, namely consistency in
performance and trustworthy
Consumers Behavior & Decision
According to Big Indonesian
Dictionary (2005: 859): "The behavior
is a response, or individual reactions to
stimuli or the environment ".
According to Big Indonesian
Dictionary (2005: 590): "The consumer
is the consumer of goods production
(clothing materials, food, etc.)".
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Understanding Decision-making
is a person's behavior in deciding to
choose something to be desired, it is
also stated by some experts as follows:
According to Chuck Williams (2001:
28): "Understanding the decision-
making process is choosing one of the
problem-solving of many alternatives
available".
According to Chuck Williams (2001:
34): "Decision making is rational is a
systematic process in which managers
define the problem, evaluate
alternatives, and choose optimal
solution to provide maximum benefit to
the organization".
RESEARCH METHODS
Research Framework
Their desire to be the best
educational institutions in Bekasi and
surrounding areas, as well as the
developments in the world of education
that require extremely rapid change for
the better. So transmitted is also
research and analysis of the reasons
why a student mernilih to study in
Universities Pelita Bangsa equally
important to be studied, so that can
know what factors are affecting the
selection
Hipotesis Researt
1. Ho : bl = b2 = b3 = b4 = 0
Factor product (program), price (cost of
education), the place, and the service
does not affect the student's decision
choose Pelita Bangsa College Bekasi,
either partially or simultaneously.
2. Ha : bl-::/- b2-::/- b3-::/- b4 = 0
Factor product (program), price (cost of
education), places, and services affect
the student's decision choosePelita
Bangsa College Bekasi, either partially
or simultaneously
Methods of Data Collection
When the research center carries
used samples or surveys. Where
Marshall collection of information is
how to work compiling information for
aggregate bersistem reach the
destination research, conducted
Ergo Nurpatria Kurniaw an, Margono, Ainur Rofiq, Sunaryo
Previous exploration on College
Students Pelita Bangsa Bekasi District
Higher Education Project.
Teknik Data Collection
Data collection techniques in this
study, using the technique as follows:
1. W Interview
Through interviews can obtain
information by asking questions
directly to the respondents, university
students Pelita Bangsa Bekasi
Regency.
2. Questionnaire
The questionnaire is a way of
collecting data that consists of a set of
questions presented to the
respondents, expecting to give a
response to these questions.
Population and Sampling
The population in this study is
the overall regular students first
semester of Academic Year 2015-2016
University of Pelita Bangsa Bekasi
Regency are 2.500 people. The
population was taken on the grounds
that the student in the semester has
just taken the option to continue
studying at the College of Pelita
Bangsa Bekasi District (based on the
theory Sugiyono (2008: 80)).
According Sarwono (2008: 127):
"The sample is a sub of a set of
elements that have to be learned". In
this study by using a sampling
technique Slovin opinion, the results
obtained 344.83 (345)
Methods of Data Analysis
Data analysis method here using
correlation and regression analysis,
which first tested the reliability and
validity of the data that answers to a
questionnaire from 345 respondents.
To make it easier to process the
researchers used SPSS and PLS.
RESULTS AND ANALYSIS
Uji Reliability
If the value of alpha> 0.7 means
sufficient reliability (sufficient reliability)
while if alpha> 0.80 is mean
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throughout the entire test items reliably coefficient> 0.80 indicating that all
and consistently internally because variables in this study is reliable.
consist strong reliability
Validity
Tabel 01 :Reliability Test Results This study has been carried out
Variabel Cronbach's N of some testing, such as testing the
Alpha Item validity and reliability. Validity item is a
Product 0,879 4 statistical test used to determine how
Price 0,933 4 valid an item questions measure
The place 0,852 4 variables studied. In a test of the
Service 0,865 5
validity of the generated that item
Decision 0,892 4
product, price, place and service all of
Source :Research result (2016) Data
them are valid. Validity test results by
processed.
using SPSS 17:00 on this research can
be seen in the following table:
According to the table 1 we can
see that the Cronbach's alpha

Tabel 02 :Validity of Test Results

Sig
Variabel Pearson Correlation Explanation
(2- tailed)
Product
Pelita 1.PTS Nation 0,628 0,000 Valid
2.Program study 0,637 0,000 Valid
3. Industry’s visit 0,645 0,000 Valid
4. Workreal 0,712 0,000 Valid
Price
1.The Registration 0,635 0,000 Valid
2.The Compulsory contributions 0,685 0,000 Valid
3.The Study 0,625 0,000 Valid
4.The Semester exams 0,591 0,000 Valid
The place
1.Near to downtown
2.Near to shopping center 0,555 0,000 Valid
3.Near to office residence 0,475 0,000 Valid
4.Near to residential 0,474 0,000 Valid
Service 0,515 0,000 Valid
1.Services
2.Information submitted 0,501 0,000 Valid
3.Informasi when Admissions 0,711 0,000 Valid
4.Campus Environtment 0,504 0,000 Valid
5.Study Room 0,553 0,000 Valid
Decision 0,685 0,000 Valid
1.The offer
2.Consideration 0,495 0,000 Valid
3.Accuracy in deciding 0,572 0,000 Valid
4. The impact of psychological 0,593 0,000 Valid
0,575 0,000 Valid
Source :Research result (2016) Data processed.

The validity of each question is study demonstrates the value of

greater than 0.30 then the questions Pearson correlation greater than 0.30.
are considered valid. In Table 2 it can So it can be said to be any question in
be seen that every question in this this research is valid.

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Regression analysis
Product R1=0,755
R square1=0,570
R1=0,955
Pri ce R square2=0,912
R3=0,911
The place R square3=0,829
R4=0,892
Servi ce R square4=0,796
Hypothesis testing
1. Testing t
T test aims to determine whether
the independent variable (X) effect on
the variable (Y). In this study, t-test
aims to determine the effect of variable
product (XI), price (X2), point (X3), and
service (X4) against the decision of the
student select Pelita Bangsa College of
Bekasi Regency.
SPSS version 17 o'clock basil t
test or t value of each independent
variable. T value will be compared with
the value t table at a rate of 95% (a =
0.05). While t table value obtained from
(a: df) = (0.05: 265) = 1.886.
Partial effect of variable product
(XI) is obtained by the t value of I, 668
<I, 886, then Ho is accepted and Ha
rejected, which means that the variable
product is not partial effect on student's
decision to choose.
Partial effect of the price variable
(X2) obtained by value t arithmetic
amounted to 4.934> I, 886, then Ho is
rejected and Ha accepted which
means the price variable partial effect
to the decision of the students choose
universities Pelita Bangsa Bekasi
Regency.
Partial effect of a variable (X3) is
obtained by the t value of O, I80 <I,
886, then Ho is accepted and Ha
rejected, which means that the variable
Ergo Nurpatria Kurniaw an, Margono, Ainur Rofiq, Sunaryo
Decision
R 1,2,3,4=0,987
R square1,2,3,4=0,974
is not a partial effect on student's
decision choosing Pelita Bangsa
College of Bekasi Regency.
Partial effect of variable service
(X4) obtained by value t arithmetic
amounted to 3.049> I, 886, then Ho is
rejected and Ha accepted yangberarti
that service variable partial effect to the
decision of the students choose a
College Pelita Bangsa Bekasi
Regency.
2. Test F (Simultaneous)
Hypothetical model used in the F
test are Ho : bi= b2 = b3 = b4 = 0 ;
Factor product (program), price (cost of
education), point of service and does
not affect the student's decision in
choosing Pelita Bangsa College of
Bekasi Regency Ha : bl -::/- b2 -::/- b3 -
::/- b4 = O; Factor product (program),
price (cost of education), point of
service and influence the student's
decision in choosing Pelita Bangsa
College of Bekasi District
CONCLUSION
Having done this study, the result
obtained is that:
1. Factor product (program) a positive
effect on student's decision amounted
to 57%, the price factor (cost of
education) positive effect on student's
decision of 91% ,, factors place
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positive effect on student's decision Diponegoro University Publishers

amounted to 82%, and the service Agency
factor positive influence there are
student's decision amounted to 80% Harjanto, 2004 Environmental Effect of
2. Overall Factor product (XI), price Individual Students and
(X2), point (X3) and Services (X4) Performance Marketing Mix
simultaneously influence the student's Decision Process Against
decision in choosing Pelita Bangsa College Students Choosing And
College of Bekasi, amounting to 97%. Its Implication On Values
education services.
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Amalia, Fitri. 2012 .Influence Translators: Heriyat Purwoko.
Campaign Against Fees Total Volume 1. The third Moulds.
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Penelitian.Program reports Management. Jakarta : Indeks
Studies Diploma in Accounting. Sarwono, Jonathan dan Tutty
Hara pan Polytechnic Joint Martadiredja. 2008. Business
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Program IBN 19. Jakarta: Partial Least Square (PLS), Andi
Yogyakarta

Ergo Nurpatria Kurniaw an, Margono, Ainur Rofiq, Sunaryo 104

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

BECOMING EMOTIONALLY ATTACHED TO TEAM: THE ROLE OF

ETHICAL CLIMATE DIMENSION IN NURSING PROFESSION

Ida Bagus Agung Dharmanegara

Faculty Of Economic, Warmadewa University, Bali, Indonesia
Hafid Aditya Pradesa
UB Graduate Program, Brawijaya University Malang
Hasrudy Tanjung
Faculty Of Economic, Department of Management, Muhammadiyah University of
Medan, North Sumatra
Djony Harijanto
Magister of Management, Post Graduate Programme, University of Islam
Malang, East Java, Indonesia

Abstract: Nowadays, there are growing attention about how ethic plays important
role in shaping individual attitude and behavior. Recognizing concept of ethical work
climate as one of popular topic in organizational research, which first introduced
almost thirty years ago by Victor and Cullen. Ethical climate has been tested in
context of many profession, which many previous established study was aimed to
analyze ethical climate on individual effect. The purpose of the current study was to
examine the role of ethical climate dimension in terms of predicting nursing team
affective commitment. Data were collected from 169 nurses of public state hospital
in District Badung Bali through survey questionnaire. Result show that from five
ethical climate dimension, two of them have no important effect on nursing affective
team commitment. Among the nurses, those who perceived a strong perception of
three ethical climate dimension (rules and codes, service, caring) will develop
emotional attachment to their team. Further discussion, both applied and theoretical
recommendations and suggest for future research direc tions are shown in this
study.

Keywords: Ethical Climate Dimension, Team Affective Commitment, Nursing

Profession

Teams are sometimes and teams. A better understanding of

differentiated from groups by their
structure and their effectiveness and
ability to create synergy. A team is “a
set of interpersonal relationship
structured to achieve established
goals” (Johnson and Johnson, 1991).
The team has synergy, by sharing a
common goal or vision that can
accomplish what individuals cannot do
alone (Scarnati, 2001). However,
teams are a major feature of
organizational life. In every work
organization and its sub-units are
made up of groups of people. Teams
are seen more than collections of
individuals (Paris et al, 2000) and
teamwork is more than the aggregate
of their individual behaviours. It is
important to have an deeper
understanding of working in groups
the nature of team is vital if leader
have purpose to influence the attitude
and behavior of people in the work
situation. Thus, it will support the
leader to promote effective
organizational
performance.
In health care organization such
as hospital, nursing teams are groups
of two or more nurse who interact and
influence each other, which are
mutually accountable for achieving
common goals associated with hospital
as ultimate objectives. As far
concerned, „nursing team‟ is used to
refer to a group of registered nurse
and care assistants working together.
Erdem and Ozen (2003) said first
requirement for a team that could
perform better in organization if there

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is a strong social interaction between
its members. Based on social
exchange theory, Bishop et al (2005)
suggests that individuals feel
commitment in two various way,
toward both their employing
organizations and their work teams.
Thus, nurses have to build a
commitment to the hospital or
healthcare institution and to their team.
However, this interaction
cannot be
guaranteed by the formal rules of an
organization. Nursing teamwork has
been increasing in order to enhance
the flexibility and responsiveness in
hospital. A nursing team commitment
will have its own main antecedents and
outcomes. This is similar with a distinct
pattern of correlates for organizational
and team commitment that was found,
in which its pattern implies that nurses
distinguish between antecedent of
commitment by directing perception
and attitudes toward the corresponding
entity (Bishop et al, 2000).
Emerging concept of
organizational commitment is not new.
Particularly many researchers have
dedicated several years to this topic in
various field of study. This research
should consider seriously about
affective commitment for some
pragmatic reasons as well. As attitudinal
mechanism, commitment often seen
and tested in individual level. But
organizations are inherently multilevel
and are comprised of a hierarchy of
individual employees, work groups,
and organization as a whole itself.
Studying organizations is rather too
complex and researchers need to
carefully not confusing levels-of-
analyses. The approach applied in this
study is by examined commitment in
team-level. We also believe that
affective commitment as one form of
organizational commitment has proven
as main component. This is because of
some researchers have discussed that
higher affective commitment among
those employees are beneficial to
organization rather than employees
Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto
with continuance or normative
commitment (Zeidan, 2006; Mohamed
et al, 2006).
While take issue about
commmitment, research must also
notice the importance to develop
concept of climate that induce
objective responses at the correct
level-of-analysis. In construct
measurement, organizational climate
(so does commitment) is often
assessed using perceptual measures,
and used to consider affective
questions at individual level-of-
analysis. Instead of that, problems of
level-of-analysis in organizational
climate research have plagued and still
remain as problematic matter.
Providing good nursing care is
really demanding and challenging
process that are increasingly complex
and fraught with ethical matters and
dilemmas. In every western
industrialized nation, nurse shortages
affect delivery of caring experienced by
health care patient (Schluter et al,
2008). Spesifically in hospital, nurses‟
capacity to process and resolve ethical
concerns identified as a important
factor could attract and retain nursing
staff in a dynamic and competitive
environment. As attention to ethical
issues increases in health care, many
nurses are increasingly concerned
about ethical aspects of their care in
daily activities. Previous study such as
Kish-Gephart et al (2010) stated that
ethical climate is considered a
significant antecedent of unethical
intention and behaviour such as
unsafe care. Nurses‟ ability to
adequately address the many ethical
issues they confront can be influenced
by their perceptions of the ethical
climate in which they practice (Hart,
2005).
There is growing attention on
ethical climate, with many previous
studies have examined how perception
of ethical climate affects individual‟s
attitudes and behaviors toward the
organization. This happen when basic
premise about “an organization is
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made of people, in addition to its
culture, climate and policies” has been
arise. Previous studies make greater
contributions by demonstrating the
relationships between ethical climate
and its consequences, but there are
still some limitations exist. General
issue from many previous studies
show ethical climate related to
individual outcome, rather than
considerate the potential effect on
team or organizational outcomes.
Regarding as ethical climate outcome,
organizational commitment had been
tested and discussed in previous
studies such as Borhani et al (2014),
Shafer et al (2013), and Shafer (2009).
This causal relationship issued by
Cullen et al (2003) as a pioneer with
their study about relationship of ethics
and organizational commitment.
According to the current study,
we argue that there is a strong
relationship between ethical climate
dimension and team affective
commitment. This study focus on
ethical climate is critical and
complementary to other research on
health care practice, focusing in
individual attitudes. Ethical climate will
provides a context for nursing practice
(Pauly et al, 2009) that in turn
contributes to patient and nurse
outcomes in attitudinal mechanism.
Examining the ethical climate can help
to understand work setting influences
on nursing practice. This paper will
address general research questions:
do nurse perception of ethical climates
dimension differ in their effect on team
affective commitment?
THEORETICAL BACKGROUND AND
HYPOTHESES DEVELOPMENT
Ethical Climate
It was Victor and Cullen (1987)
who are the first introduced concept of
ethical work climate in 1987. Typology
of ethical climate was constructed
based on ethical philosophy and later
developmental psychology, also
sociological theory of reference
groups. As individuals develop morally,
Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto
different types of ethical criteria would
display different types of moral
reasoning. Ethical climate consist of
“prevailing perceptions of typical
organizational practices and
procedures that have ethical content”
(Victor and Cullen, 1988, p. 101). The
ethical dimension of organizational
climate has been conceptualized by
Victor and Cullen (1988) as a
multidimensional construct, which they
are the first who term it as “ethical work
climate.” Ethical climates in
organizations has a functions of
aggregated individual perceptions of
ethical norms which are believed by
people inside the organization.
Especially for nurses, ethical climate
described as the nurses‟ perceptions
of how ethical issues are handled in
the workplace (Olson, 1995).
A conceptual typology of ethical
climate types was proposed by Victor
and Cullen (1988) proposed based on
two major dimensions are:
1. Ethical criteria which used in
decision making process (egoism,
benevolence, principle);
2. The locus of analysis (individual,
local, cosmopolitan).
Another criteria used was ethical
criteria which are based on three major
classes of ethical theory:
1. Egoism, which this criteria focuses
on maximizing self-interest;
2. Utilitarianism, which this criteria
extends concern or caring to
mutual or group interests;
3. Deontology which this criteria
emphasizes moral principles.
As Silen et al (2012) stated that
research on ethical climate in health-
care settings is still relatively scant.
There is a need for further studies that
will deepen knowledge concerning
health care and its phenomenon
within. In nursing profession, ethical
climate has been described as “nurses‟
perceptions of how ethical issues are
handled at workplace” (Olson 1995).
This concept become similar with
individual perceptions of the
organization that influences individual
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attitudes and behaviour, and this could
serves as a reference for individual
about how to behave properly. This is
basis for developing an instrument, the
Hospital Ethical Climate Survey
(HECS), for studying the perceptions
of nurses working in hospitals
regarding ethical climate.
Manning (2010) argues the
pattern of relevant climate dimensions
will vary between organisations in
different industries and between
different types of organization within an
industry. Davidson, Manning, Timo and
Ryder (2001) suggest thath different
types of organization will clearly have
difference exhibit variation within
particular dimensions. This leads to the
expectation that ethical climate studies
in different types of organisation will,
similarly, find different patterns of
climate dimensions
There is also a clear distinction
among ethical climate dimension. The
various patterns of ethical climate
dimensions across studies is not
unexpected. Theoretically, ethical
climate construct has multiple di-
mensions. For instance, Cullen and
Victor (1993) stated about nine types
of theoretical ethical climates with two
dimensions of ethical theory and locus
of analysis. Focusing on ethical climate
in hospitals, Olson (1998) proposed
five ethical climate dimensions related
to patients, managers, colleagues,
physicians and hospital. Hwang and
Park (2014) reveals finding about
nurses with a more positive perception
of ethical climate dimension (such as
„patient‟, „manager‟, „hospital‟ and
„physician‟ dimensions) were less likely
to leave their current job.
Five ethical climate components
described by Victor and Cullen (1988)
or the five components described by
Wimbush et al. (1997) as neither of the
earlier studies reporting the variance
proportion of their factors explained. A
pattern of review of ethical climate
dimensions extracted, that Victor and
Cullen (1987) and Wimbush et al.
(1997) provides degree of support for
Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto
using Ethical Climate Questionnaire to
identify each ethical climate
dimensions observed in this study.
For the purpose of this study, we
adopted Victor and Cullen (1988) con-
ceptualization of ethical climate that is
applied in hospital context.
Team Affective Commitment
The root of commitment identifies
the individuals‟ emotional attachment,
devotion and sense of responsibility
(Galunic and Anderson, 2000).
Organizational commitment is viewed
as the values and goals of the
organization, willingness to act on
behalf and wish to remain part of the
organization (Abdullah and Shaw,
1999). Organizational commitment can
be categorized into behavior and
attitude, therefore commitment is
viewed as more dynamic and
constructive attitude towards the
organization. Meyer and and Allen
(1991) categorized organizational
commitment into three components:
affective, normative and continuance
commitment which leads to desire,
need and requirements to stay in the
organization. According to the
researchers organization commitment
is the bond and reliability of an
individual to engage with an
organization. It is found that affective
commitment is more valuable than job
satisfaction because it influence the
service quality of workforce. Due to
skillful employees the decision making
power reduces, and service quality of
employees is affected by lack of
affective commitment (Jaaron, 2009).
Organizational commitment is
employees‟ emotional connection with
the organization which results from the
working environment. When
employees feel motivated by their
employers this will create a bond
between them and employees tend to
be committed as employer value the
participation. So motivation and
commitment have a strong relationship
because it binds to parties together to
achieve the common objective.
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Commitment can be described that workplace commitments vary

by the interaction of the three along two dimensions: foci (orga-
components which are affective, nization or team) and direction (from or
normative, and continuance to the employee). Based on this
organizational commitment. Among argument, we believe another foci of
these three, affective commitment commitment (team commitment) will
plays a vital position since it captures take important role for individuals
the fundamental meaning of have an incentive to distinguish among
commitment (Sharma and Dhar, 2016). entities with respect to the exchange
Many authors have done research on process in organization.
organizational commitment and the Bennett et al, (2009) explained
focal point of their study was affective that commitment is seems as an
commitment as it is considered to be under-theorized concept in nursing
the most reliable predictor which literature. The majority of nursing
results in employee retention (Allen research about commitment in
and Meyer, 1996). multilevel of analysis is focused on its
Kuok and Taormina (2015) manifestation in relation to
reveals in their study that in object of organizational factors. A broader
casino dealers, affective commitment approach seems to be considered the
was found significantly lower than their interface between the nurse and
continuance commitment, suggesting healthcare organization in generating
dealers do not like their jobs but do not commitment. Bennett et al, (2009)
want to leave them, which indicates have argued about multiple
they have cognitive dissonance about expressions of commitment, which
their jobs. For instance, organizational may differ at different levels of the
socialization, organizational support, organisation.
and supervisor integrity were positively Park et al (2005) suggest the
correlated with affective commitment. need to shift attention beyond the
Meyer et al (2002) conducted dominant and common organizational
meta-analyses in their staudy and paradigm toward other forms or
found that the three forms of component of commitment like
commitment are related yet commitment to team to which an indi-
distinguishable from one another as vidual may feel attached (Bishop and
well as from job satisfaction, job Scott, 2000; Bishop et al., 2000,
involvement, and occupational Bishop et al, 2005) . This is because
commitment. Another important of many previous research
findings are : (1) Work experiences perspectives on commitment tend to
were found to have much stronger focus on commitment to the
relations, particularly with affective organization (organizational
commitment; (2) Perceived commitment), and people may have
organizational support has the strong- multiple commitments such as
est positive correlation with affective employee commitment to the
commitment; (3) Affective generally workplace may not be adequately
correlated as expected with their explained by organizational
hypothesized antecedent variables. commitment alone (Park et al, 2005).
Consistent with field and social According to previous
exchange theory, Bishop et al (2005) explanation above and based purpose
suggest the proximal difference of this study, we adopted Allen and
between the team and the organization Meyer (1990) conceptualization of
should aid individuals to distinguish the affective commitment that is applied on
source of perceived support. In team- nursing team in hospital context.
based environments it seems likely

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Relationship of Ethical Climate and
Commitment
This relationship between ethical
climate and its outcomes is something
which is still missing although ethic has
always posited as behavioral
antecedent. Research on ethical
climate using the Hospital Ethical
Climate Survey (HECS) has shown
that the more positive the ethical
climate was perceived to be, the more
likely it was that the nurses reported
intentions to stay in their current
position (Hart 2005, Ulrich et al. 2007).
Sharma and Dar (2016) would expla-
nate commitment can be described by
the interaction of the three components
and affective commitment is one of the
three elements. It is a psychological
state that identifies both the
distinguishing features of employee
relations with the organization and the
consequence of the decision to
continue or discontinue membership
with an organization (Meyer and Allen,
1991).
People who are identifies with
ethics of their organization will have
increased intrinsic motivation, thus,
they will reinforcing the tie to the
organization (Sharma et al, 2009).
Babin et al. (2000); Schwepker, (2001)
noted that ethical climate is have
significant effect on work-related out-
comes.Trevino et al. (1998) suggest
that, generally, organizational
commitment should be lower jus
because of the ethical climate is
perceived as egoistic; and contrary will
be higher when the climate is
perceived as benevolent or principled.
From their findings, Cullen et al (2003)
suggest that there is important
relationship between ethical context
(ethical climate dimension) on
organizational commitment. Another
previous study such as Shafer (2009)
reveals that certain ethical climate
dimension are significantly related to
organizational and professional
commitment, also to affective
commitment.
Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto
Tsai and Huang (2008) tested
the impact of ethical climate dimension
on job satisfaction and organizational
commitment among nurses. Their
findings reveal that caring and rules
have significant effect on normative
commitment, while instrumental have
positive impact to build continuance
commitment, but it will significantly
decrease affective and overall
organizational commitment. While
Huang et al (2012) added important
implication from their findings that
hospital administrators can foster
effective and efficiency within
organizations by building the ethical
climate types of caring, law and code
and rules, and affective commitment
and normative commitment that
increase organizational citizenship
behavior. But otherwise hospital
administrators must preventing
organizations from developing the type
of instrumental climate and con-
tinuance commitment that will
decreases it. This investigation will
add importance of treating component
of commitment differently, regarding its
antecedents and outcomes.
However, another line of
conclusion from the literature suggests
that ethical climate have a positive
relationship with organizational
commitment spesifically affective
commitment. The apparent tendency
to exaggerate one‟s affective
organizational commitment also does
not seem surprising in behavioral
research. Since individuals
commitment to their organization
should generally be viewed as socially
desirable.
From the literature review, we
had basis for predicting what the levels
and variations in ethical climate
dimension and its outcomes might be
for nurses. Thus, we hypothesized that
increased levels of each ethical climate
dimension would be related positively
with perceptions of team affective
commitment.
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Caring
Instrumental
Independence
Service
Rules and Codes
ETHICAL CLIMATE
Figure 1. Conceptual Framework
The relationships depicted above
represented through a direct effect
model. Based on the previous findings
and theoretical described previously,
we expect that every ethical climate
dimension could predict nursing team
affective commitment. Hypotheses
proposed in this study that:
H1. Caring have a significant effect on
team affective commitment among
nurses.
H2. Instrumental have a significant
effect on team affective
commitment among nurses.
H3. Independence have a significant
effect on team affective
commitment among nurses.
H4. Service have a significant effect on
team affective commitment among
nurses.
H5. Rules and codes have a significant
effect on team affective
commitment among nurses.
METHODOLOGY
A cross-sectional design was
used to survey registered nurses in
public state hospital in district Badung,
Denpasar – Bali. The sample included
169 practical and registered nurses –
both men and women – working in a
Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto
Nursing Team
Affective
Commitment
public general hospital in district
Badung, Denpasar, Bali Province,
Indonesia. Medical doctors and
psychiatrists were not included in the
study. Both of them usually do not
belong to a specific team or unit in
hospital and are not considered by
nurses as part of their team. All the
members of nursing team in each unit
participated in our research. Although
at least over 80 percent of the
participants were women, no precise
information on the composition of the
sample was available. In such a real-
work environment, participants seems
to be feared by recognized of their
personal information such as age and
gender. Therefore, questionnaires in
this study had to be totally anonymous.
We gathered two informational types
from each respondents: a series of
organizational ethical climate
dimension, and nursing team affective
commitment measures. Sampling was
guided by predetermined criteria. All
staff nurses with a understanding and
willing to participate in the study, and
working in public hospital in district
Badung Bali, taken as respondents.
The survey consisted of the 22
items of the ECQ. The procedure and
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instructions were same as those larger sample.

described in previous studies (Victor
and Cullen, 1987) which have been
developed by Goldman and Tabak
(2010). By adopting affective
organizational commitment (Allen and
Meyer, 1990) another questionnaire in
this study was developed to measure
nursing team affective commitment.
This construct is consisted of 6 items
similar to affective organizational
commitment adapted to measure
perception of affective personal state
in team-level. Subjects indicated their
responses on a five-point likert scale to
asses constructs observed.
Based on Partial Least Square
(PLS) approach, we tested the
research hypotheses in structural
equation modeling. The structural
model shown in Figure 1 was analyzed
using the PLS method through the
SmartPLS package. As a second
generation multivariate technique
(Fornell and Cha, 1994), PLS can
simultaneously evaluate the
measurement model (outer model) and
the structural model (inner model) with
the purpose to minimize error variance
(Chin, 1998). Decision to use PLS as
the primary data analysis technique
because of the following reasons
(Chin, 1998; Fornell and Cha, 1994):
(1) PLS is a variance-based technique
that is focusing aim on the predictive
aspects (variance explanation) of the
model; (2) PLS does not need
assumption about multivariate
normality and it takes into account the
error of measurement when assessing
the structural model; and (3) PLS
requires minimal demands in terms of
sample size, it does not always need
RESULTS
We evaluate the individual item
reliability by examining the loadings
and cross-loadings of indicators on
their respective construct. We
conducted confirmatory factor
analyses and found that the loadings
of the manifest indicators on their
respective latent variables were highly
statistically significant (See table 1).
Among exogenous variables, the
highest mean score is independence,
which more indicaed by perception of
individuals should decide what is right
or wrong by themselves. The lowest
mean score is rules and codes, in what
this is more indicated by nurses‟
perception about importance to follow
prcedures and professional standards.
For endogenous variable, the mean
score for team affective commitment
was moderate, and lower than the
overall mean value of all constructs
measured in this study. These also
confirmed feeling emotionally attached
to nursing team was found as highest
mean among indicator of team
affective commitment.
Results showed that all the
critical ratios of all indicators were
significant (critical ratios >1.96,
p<0.05) and ranged from 3.642 to
45.597 (see table 1). Outer loading of
all indicators were all significant and
ranged from 0.465 to 0.896 (see table
1). Therefore, it appears that all of the
latent variables in this study had been
well measured by their respective
indicators (observed variables).Thus,
this measurement model was used to
test the hypothetical structural model.

Table 1. Descriptive Statistic and Outer Loading of Item

Outer t
Construct Item Mean
Loading statistic
People care for each other‟s well-being 0.849 21,625 3.73
Caring People help each other 0.867 26,482 3.74
Major consideration is what is best for
0.881 29,509 3.83
everyone
The most important thing is teamwork 0.881 31,626 3.84
Working methods are acceptable as 0.732 7,407 3.89

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long as no harm
Successful workers are those who
0.778 7,465 3.96
Instrument care for their own interests
al People protect their own interests
0.777 4,825 4.09
above anything else
Most efficient one is always the right
0.680 5,652 3.75
one treatment methods
People further their own interests
0.688 6,326 3.88
above anything else
The major responsibility of people to
0.806 5,684 3.91
control costs
Concern with institution‟s interests
0.773 6,578 3.99
above anything else
Each person should decide for what is
0.681 3,642 4.04
Independe right or wrong
nce people are guided by their own sense
0.857 9,147 3.95
of personal ethics
Decides for what is right or wrong
0.813 6,817 4.00
while making decisions
Individual decides by himself/herself
0.781 12,118 3.87
what is right or wrong
Important benefit that the right thing
0.888 31,008 3.77
Service should be done
Important provide quality treatment
0.881 22,987 3.82
without considering its cost
People always do what is right for the
0.896 30,807 3.86
patient
Important to follow procedures and
0.818 19,187 3.54
Rules and professional standards
Codes Considering procedures above any
0.846 15,067 3.58
while making decisions
People first follow principles of
0.881 45,597 3.91
professional code of ethics
Law or codes of ethics are a major
0.894 38,128 3.73
consideration
Working in team has a great deal of
0.800 13,320 3.69
Team personal meaning
Affective Feel a strong sense of belonging of
0.803 17,108 3.74
Commitme team
nt Proud to tell others about working for
0.789 14,500 3.76
team
Feel emotionally attached to team 0.465 3,735 3.98
Feel caring about team entirely 0.718 8,627 3.83
Feel as if team problem are my own 0.733 9,505 3.79
All loading factor (outer loading) were statistically significant at p < .001.

The means, standard deviations present the correlations between the

and correlations for the study variables latent variables, with major correlations
are shown in Table 2. The alpha relia- were highly statistically significant (p <
bilities ranged from 0.794 to 0.892, .001).
these are all good reliability criteria and These results were taken as
clearly acceptable and allowed for evidence of acceptable convergent
further analyses. In Table 2, we also validity (Gerbing and Anderson, 1988).
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The average variance extracted (AVE)
for the constructs of caring, instrumen-
tal, independence, service, rules and
codes, team affective commitment we-
re 0.757, 0.561, 0.617, 0.789, 0.740
and 0.530, respectively. While the
composite reliabilities were 0.925,
0.899, 0. 865, 0.918, 0.919, and
0.868, respectively.

Table 2. Descriptive Statistic, Intercorrelations and PLS Quality Criteria

1 2 3 4 5 6
1.Caring (.892)
2.Instrumental .415** (.869)
3.Independence .403** .599** (.794)
4.Service .667** .442** .385** (.867)
5.Rules and Codes .604** .394** .273** .688** (.884)
6.Team Affective .431** (.817)
.131* .147* .574** .727**
Commitment
Mean 3.784 3.926 3.966 3.819 3.692 3.798
Standard Deviation 2.835 3.780 2.337 2.317 2.905 3.627
AVE .757 .561 .617 .789 .740 .530
Composite Reliability .925 .899 .865 .918 .919 .868
Notes: **p , 0.01; *p , 0.05; Cronbach‟s alphas for each scale are italicised and
shown in the diagonal.

AVE and composite reliability of ethical climate dimension are five

can be assessed to confirm dis-
crimination and convergent validity
among constructs in study. We assess
the discriminant validity by using the
average variance extracted (Fornell
and Lacker, 1981). To further test for
discriminant validity, the AVE for each
factor was compared with and ex-
ceeded the squared correlations bet-
ween that factor and all other factors
(see Table 2).
In order to test the hypotheses, a
structural model was estimated with six
constructs: caring, instrumental, inde-
pendence, service, rules and codes,
and nursing team affective commit-
ment. In the model, all
exogenous constructs, while the nur-
sing team affective commitment is the
lone endogenous constructs.
The path coefficient for Caring 
team affective commitment link was
significant (estimate = 0.195, t =
2.1576, p-value = 0.019). That is,
Hypothesis 1 was supported. The two
other path coefficent for Instrumental
 team affective commitment link
(estimate = -0.016, t = 0.2436, p-value
= 0.589) and Independence  team
affective commitment link (estimate =
0.075, t = 0.9543, p-value = 0.497)
were insignificant. That is, Hypothesis
2 and 3 was rejected.

Table 3. Direct effects in Model and Hypotheses Validation

Effect in Model Direct t-Value p-value Status
1. Caring to Team Affective 0.195* 2.1576 .040 Supported
Commitment
2. Instrumental to Team Affective -0.016 0.2436 .787 Rejected
Commitment
3. Independence to Team Affective 0.075 0.9543 .098 Rejected
Commitment
4. Service to Team Affective 0.236* 2.1927 .037 Supported
Commitment
5. Rules and Codes to Team Affective 0.482** 4.8168 .000 Supported
Commitment
Notes: **p, 0.01; (two-tailed significance); *p, 0.05; (two-tailed significance);

Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto 114
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

The Service  team affective
commitment link was also significant
(estimate = 0. 236, t = 2.1927, p-value
= 0.027), suggesting that there is
relationship between service ethical
climate and team affective
commitment. Hence, Hypothesis 4 was
also supported. The last one path
coefficient for rules and codes  team
affective commitment link was also
significant (estimate = 0. 482, t =
4.8168, p-value = 0.000). Hypotheses
5 was also supported. Thus, we find
main effect of rules and codes on team
affective commitment is the highest
one comparing to the other links.

Caring

β = 0,195 (Sign)

Instrumental β = - 0,016 (NS)

R2 = 0,333

Independence β = 0,075 (NS) T eam Affective

Commitment

β = 0,236 (Sign)
Service

β = 0,482 (Sign)
Rules and
Codes

Figure 2. Final Model (Reduced Insignificant Path)

The structural model indicates (2) there is mutual belief among

the causal relationships among
constructs in the model. It includes
estimates of the path coefficients,
which indicate the strengths of
hypothesized relationship. Thus, R2
value, which determine the predicting
power of the model (i.e. the amount of
variance explained by the independent
variables). Together, the R 2 and the
path coefficients (loadings and
significance) indicate how well the data
support and hypothesized model
(Chin, 1998).
As illustrated in the figure, not all
of the ethical climate dimension have
significant path coefficients on team
affective commitment. Therefore, an
affective or emotional attachment of
team peceived by nurses can be
enhanced when:
(1) caring in ethical climate is
accepted and understood by
nurses
nurses in building service climate
in their work
(3) nurses are expected to work
based on hospital or unit rules and
codes
DISCUSSION
Given the above statistical test
results, it is confirmed that the scales
and constructs demonstrate sufficient
and high reliability and validity. Ethical
climate dimension tested in this study
accounting for approximately 70,28
percent of variance in nursing team
affective commitment. The moderate
level of nursing team affective
commitment is clear from the mean
score, but the reasons for this may not
be obvious. For example, the nursing
work is routine (mainly dealing with
patients) and very stressful because
nurses must make no mistakes with
operational procedures, and they are

Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto 115
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
under pressure from both the patients
and the hospital management.
The current study provides
testing the relationships among ethical
climate dimension and team affective
commitment in nursing profession
setting. The overall results of the PLS
path modeling analyses indicated that
three of five ethical climate dimension
is a significant antecedent of team
affective commitment. Instrumental
and independence ethical climate are
not considered as predictor, while
other three could increase team
affective commitment. From a that the strongest predictor of nursing
theoretical point of view, this work con-
tributes to how ethical climate
dimension differ in the effect on
commitment in other foci of analysis.
Not all of ethical climate dimension
could plays as predictor of
commitment, in line with some findings
of previous study (Tsai and Huang,
2008; Shafer, 2009; Huang et al,
2012). This is consistent with The
Victor and Cullen typology model of
theoretical ethical climate types, which
stated previously by Victor and Cullen
(1987,1988) not all climate types can
be expected to emerge in all
organizations.
This study affirms that a higher
level of caring, services, rules and
codes contributes to the feeling of
team affective commitment among
nursing staff. This is consistent with
previous studies that building ethical
climate is important to foster
commitment (Babin et al., 2000;
Schwepker, 2001; Cullen et al, 2003;
Shafer, 2009), but it must considering
multidimensionality of commitment and
their effect of another antecedents and
outcomes (Tsai and Huang, 2008;
Huang et al, 2012, Borhani et al,2014).
However, nurse will feel more
emotionally attached to an organiza-
tion that supports values such as
caring, services, rules and codes for
nursing profession and the broader
community and adherence to ethical
principles. Since affective commitment
is a vital state with pertinent conse-
Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto
quences for organization, such health-
care institutions must find a way to cre-
ate such a working environment to
sustain and enhance the emotional
attachment of nurses with their team.
Nurses also had greater intentions to
attached emotionally with their team
when they had received higher per-
ception of ethical caring, services, ru-
les and codes from hospital. It must be
realized that developing ethical rules
and codes will lead to better affective
state of nurse in hospital.
In addition, the study showed
team affective commitment was rules
and codes rather than caring and
service. Rules and codes are the most
important thing that must be con-
sidered by healthcare institution to
mantain and explore it gradually. That
is, how nurses felt about rules and
codes applied in hospital, what it
meant and important to them, and
whether it sat comfortably with their
other values and goals, will develop
their strong emotional attachment.
When nurses are emotionally
attached and suited to their team,
tasks can be completed in a shorter
period of time because positive team-
work will be generated from affective
state perceived by nurses. However,
teamwork is a key component of many
professions including nursing profes-
sion. The profession of nurses manda-
tes teamwork, eficiency and effective
working decision. When nurses feel as
if they are part of a unit, relevant
outcomes are improved such as
performing their jobs effectively. It will
providing nurses with more time to
complete other assignments. Caring,
service, rules and codes (as ethical
climate dimension) are suitable to en-
hance nurses‟ feeling to be emotionally
attached to their team. Based on fin-
dings, we argued that instrumental and
independence are not properly suited
in building affective state in nursing
profession.
The use of such a theoretically
derived and empirically examined
116
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
measure of ethical climate will facilitate
positive emotional state of nurses for
their team. We believe more positive
application of these findings is pos-
sible. Healthcare organizations should
be sensitive to the possibility that
treating employees fairly may mask
ethical breaches. Ethical climate per-
ceived by nurses will fostering impor-
tance feeling attachment of individuals
to their team. In each team nurses will
do nothing less than their best to
complete their part in process beco-
mes readily apparent.
Every organization is rich in
talent, that is why the best team efforts
center on a shared vision, idea and
mission. Teamwork requires everyone
to accept responsibility and everyone
to contribute toward the achievement
of a goal. Consequently when the nur-
sing team activities had a good “fit”
with other hospital activities then posi-
tive performance would be enhanced
and resistance to change will be redu-
ced.
Limitation and Future Research
There are several limitations of
this study. First, we did not have
access to the demographic variables;
in addition, we used self-reported data,
which is one of the limitations of sur-
veys. The usual limitations of a self-
report research questionnaire apply
i.e., non-response bias, which this bias
may come about when sampled sub-
jects who are significantly different
from the respondents do not respond.
In order to minimize the impact of this
error, subjects were approached by
expert interviewers in a very friendly
environment.
Second, the sample comprises
nurses who work in one public hospital
at Bali. Although most of these nurses
hold full-time positions in hospital, they
may not be representative of the
population of nurses in Indonesia. Fur-
ther, the findings may not be gene-
ralized to a different population or a
different geographical region. Third,
the variables investigated in the study
Ida Bagus Agung Dharmanegara, Hafid Aditya Pradesa, Hasrudy Tanjung and Djony Harijanto
are not meant to be complete or ex-
haustive. For example, affective team
commitment are only one of several
possible organisational attitudinal out-
comes.
A more comprehensive study
could be carried out with a combination
of various qualitative and quantitative
techniques. This presents an oppor-
tunity for future research through inter-
views or a qualitative study to obtain
support for the specific correspon-
dence between ethical climate dimen-
sion and other form of outcomes in
such different level of analysis. Further
study must explore another outcome of
ethical climate, regarding of many
attitudinal form or mechanism, which is
vary in level of analysis (individual,
team or organizational). The findings
will provide a better understanding of
ways to improve nurses‟ retention in
hospitals. Future research in different
care settings is also recommended to
expand existing knowledge, empirical
evidence and theoretical foundation on
relationships of ethical climate and its
outcomes with multi foci, such as other
component of commitment or satisfac-
tion.
The findings of this study could
serve as a basis for future studies. In
addition, we suggest future studies on
interventions to promote hospital ethi-
cal climate. It is submitted that organis-
ations in the twenty-first century have
to enhance organizational ethics, a-
mong other things, in order to enhance
important organizational outcomes.
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EFFECT OF GOOD CORPORATE GOVERNANCE AND PREMIUM

ON THE PERFORMANCE OF INSURANCE COMPANIES LISTED
ININDONESIA STOCK EXCHANGE

Markonah
Achmad Sudiro
Surachman
Mintarti Rahayu

Abstract: Insurance companies regardful governance. While Corporate

Governance is still a major problem during the post-financial crisis period in
emerging markets, particularly in Indonesia. Especially, Financial Institutions held
to review the increase covers the costs and increase profits of the Company. The
purpose of this study was to measure corporate governance, insurance preium and
performance of the insurance sector in particular determine the mechanisms of
corporate governance.
The dependent variables used in this study is Return on Assets (ROA), company
performance. While the independent variable that is of good corporate governance
and insurance premium. The sample used in this study is a insurance company
listed in Indonesia Stock Exchange 2011-2015. The data of this study is derived
from the Indonesian Stock Exchange Corner. The method of analysis used
descriptive statistics and linear regression, according to the research objectives are
to analyze the influence of independent variables on the dependent variable.
Purposive sampling method is used to determine the sample size of the study. This
method obtained from a sample of 9 commercial insurances.
The analysis showed that corporate governance significantly and positively related
to the return on Assets. Insurance Premium not significantly related to the return on
Assets.

Keywords: good corporate governance, insurance premium, corporate

performance

Economic and industrial deve- tion Yang performed by the insurance

lopment are increasingly progressive
finance until today raises are also
increasingly complex implications for
the growth of the insurance business in
Indonesia. Very Difficult should be
recognized that , for a review to con-
vince those orangutans about impor-
tance of insurance for a review of Per-
sonal , Family and treasure.
When you see the amount of
insurance policy holders, may be said
the community has very less aware-
ness towards insurance (uninsurance
minded). According Hotbonar Sinaga,
the former chairman of the Insurance
Council of Indonesia (DAI), there are
three causes of low awareness in
Indonesia for the insured, namely the
low economic capability society that
impact on low purchasing power, And
the lack of promotion and dissemina-
industry for Indonesian society As well
as the bad image in the eyes of
society. According to Article 246 of the
Bill of Commerce ( Commercial Code)
is defined as follows: insurance or
agreement is a range , with which a
person binds Himself to an insured
with premium accept a , to provide
reimbursement to him for the loss ,
damage or loss of expected profit ,
which may will suffer because of an
event that is not certain. Insurance in
Article 1 ( 1 ) of Law No. 2 of 1992 on
Insurance Business ( Law on Insu-
rance Business ) , defined as follows :
Insurance or coverage is an agreement
between two parties or by which party
is binding to the parties , by receiving
insurance premiums , to reimburse the
insured for loss , damage , or loss of
expected benefits or coverage arising

Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu 121

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
from an uncertain events or for
payment is based or the life of an
insured person . Referring to the
definition above can be concluded that
the insurance is an agreement where
the insurer to bind himself to the
insured to receive a payment of a
premium , which will be the insurer will
provide a replacement for any loss ,
damage , loss of profits expected by
the insured arising out of events
uncertain .
As according to Mark S. Dorfman
( 2007 ) Insurance is a risk transfer
from an individual like you , or an
organization , such as your company,
to the insurance company . The risk in
question is risk being found if some-
thing experienced by the insurance po-
licy holder either life-threatening or pro-
perty owned , so the losses will be ex-
perienced insurance policyholders will
be taken over the insurance company .
Thus insurance is a service
business institution that provides
protection to a family or company from
any future losses so that the security of
lives and property will be owned by
every policyholder . Services offered
by the insurance company should be
considered every individual , especially
a family. Family is the most important
aspect in the life of every parent. Mo-
rally, interest in life insurance agree-
ment does not deserve to be rated with
money..but not mean that it can not be
determined by money .
Insurance policies are securities
that contain about the agreement
between the insured and the insurer
complete with rules that have been
established and have been agreed.
The regulations are written in the
insurance policy is what will become a
reference in the payment of the claim
made by the insurance company
GCG started to emerge in 1998
when in Indonesia experienced a pro-
longed crisis. There were two trigger
GCG issues, namely, the rapid envi-
ronmental changes which had an im-
pact on changing the map of global
market competition. Second, the incre-
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
asing number of interested parties
(constituents) including complex ow-
nership structures that affect the mana-
gement of stakeholders (Syakhroza,
2000). Many say that the lengthy res-
toration process in Indonesia was due
to the weak corporate governance ap-
plied within the company in Indonesia.
Since then, both the government and
investors began to give significant at-
tention in the practice of GCG. GCG
implementation in the business indus-
try, especially in Indonesia, is the de-
mands of the times so the companies
can compete on international level.
GCG is an effort to improve and pro-
vide progress upon company perfor-
mance. Several studies have been
conducted to prove that GCG imple-
mentation affect company's perfor-
mance, Berghe and Ridder states that
companies with poor performance are
caused by poor governance. This sta-
tement is also supported by a rese-
arch, Gompers et al. (2003) in Dar-
mawati (2004), which indicates that
there is a positive relationship between
corporate governance and corporate
performance as measured by Return
on Assets (ROA). Milton (2000) in
Darmawati (2004) also showed that the
variables associated with GCG have a
strong impact on company perfor-
mance. But on the other hand,another
research shows that GCG has no
effect on the company's performance,
Khomsiah et al (2003).
The performance of each com-
pany not only serves to enhance the
company's market value but also lead
to the growth of the entire sector which
ultimately leads to overall economic
prosperity ( Mehari and Aemiro , 2013 )
. According to Gitman and Zutter (
2012) the company's performance is
generally measured by the profitability
of a company's financial statements.
According Akotey et al (2013),
gross written premium has a positive
impact on sales profitability and under-
writing profits. It is clear that the growth
of premiums increase the profitability of
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
the core insurance operations and
overall profitability .
Mehari and Aermiro (2013) sta-
tes bahwa hasil research conducted
found that there is no influence bet-
ween premium growth and financial
performance.
THEORITICAL REVIEW
Theoretical basis
Premium, Mehari and Aermiro
(2013) states that the premium growth
is measured using gross written pre-
mium ( gross premium ) growth. Pre-
mium used as a proxy for measuring
changes in premium increases gene-
rated by the company. .
Good Corporate Governance
(GCG)
Two main theories associated
with GCG, namely Stewardship Theory
and Agency Theory. Stewardship The-
ory is built on philosophical assum-
ptions about human nature, namely
that men are essentially trustworthy,
able to act with full responsibility,
integrity and honesty towards others.
In other words, stewardship theory
views management as something that
can be trusted to act in the best
possible way for the benefit of the
public and stakeholders. Meanwhile,
the Agency Theory, developed by
Michael Johnson, believes that the
company's management as "agents"
for shareholders, which will act with full
awareness of its own interests. GCG is
defined as structures, systems and
processes used by a company in order
to provide more value sustainable in
the long term. Meanwhile, according to
Jensen and Meckling (1976), agency
theory is a contract between the
manager (agent) with the owner
(principal). Klapper (2002) states that
GCG is associated with means or
mechanism to convince the owners of
capital in obtaining the return on
investment that has been invested.
Syakhroza (2002) defines corporate
governance as a system that uses the
leadership of an organization to direct,
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
control, and supervise the organiza-
tion’s resources management in an
efficient, effective, economical and pr-
oductive with the principles of trans-
parency, accountable, responsible, in-
dependent and fairness to achieve or-
ganizational goals. Theoretically, cor-
porate governance practices can im-
prove the performance of a company,
reduce the risks that might be done by
the board with a decision which only
benefits themselves. Generally, GCG
can increase the investors’ confidence
to invest which happens to affect
performance (Darmawati et al, 2004).
The research, conducted by Pranata
(2007), aims to determine the effect of
applying GCG on ROE.
According to Dani and Hasan
(2005), in Monisa Like Wati (2012) sta-
tes that the factors affecting financial
performance include Good Corporate
Governance (GCG).
PREVIOUS STUDIES
Companies that follow the CGPI
survey showed a willingness to beco-
me a trusted and open. This effort sho-
uld be perceived positively by stake-
holders (Juniarti and The Lia Natalia,
2012). The results of McKinsey & Co.
(2002) survey have shown that in-
vestors tend to avoid companies with
poor corporate governance. Investors’
attention given to GCG is as big as the
attention to the company's financial
performance.
Research Dea Naufal charisma
and Dudi Pratomo entitled influence of
third party funds and non- performing
finance to the profitability of Islamic
banking aims to determine whether
there is influence of third party funds
and non- performing finance to the
profitability of Islamic banking, the
analysis tools used in this study is the
linear regression analysis a multiplier
significantly the rate of 5 %. The re-
sults of this study identifies partially
that third party fund significant positive
effect , non- performing finance does
not significantly , to the profitability of
Islamic banking is proxied by Return
123
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
On Assets ( ROA ) . While simulta-
neously significant effect though small
at 28.5 % .
GCG
INSURANCE
PREMIUM
HYPOTHESIS
a. The effect of good corporate go-
vernance on the performance of
insurance listed in Indonesia Stock
Exchange.
At the insurance company is get-
ting good corporate governance it will
be the good acquisition premiums
earned. Denagn thus the better gover-
nance of insurance companies will be
higher the insurance performance .
b. The influence of insurance pre-
miums on the performance of
insurance listed in Indonesia Stock
Exchange
According Joice Santi and Nurul
Qomariyah Tauris ( 2015 ) states that
insurance premiums will affect the
performance of the insurance , the
premium income even though new
start enjoyed by the company in the
fourth year, because in the early years
of premiums used to finance the
administration, especially the agency
fee. The greater the premium the more
banak money coming into the company
so that it will raise the performance of
insurance .
Table 1. Variables Measurement
No Variabel
1 Good Corporate Governance
2 Insurance Premium
3 Return on Assets
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
The above description is the ba-
sis for the establishment of a concep-
tual framework to be established , this
conceptual framework.
INSURANCE
PERFORMANCE
EE.
RESEARCH METHODOLOGY
Population and Sample
The objects of this research are
insurance companies listed on the
Indonesian Stock Exchange (BEI) that
implement GCG and premium with the
observation samples period starting
from 2011 to 2015. Sampling was done
by using purposive sampling, namely
the determining the sample with a
target or specific considerations
(Sekaran, 2003). The considerations
used in selecting samples are: 9
Companies that belong to the group of
the best insurance company in the
implementation of GCG and premium
in 2011 until 2015, listed on the Stock
Exchange and that have outstanding
stock price data starting in late
December 2011 until the end of
December 2015.
Variables and Variables
Measurement
In this study, there is a
dependent variable,return on assets
(ROA), and two independent variables;
Good Corporate Governance (GCG)
and Insurance Premium. The mea-
surement of each variable is as
follows:
Notasi Pengukuran
GCG Dewan Direksi and Dewan Komisaris
IP Broto Premium
ROA Total Assets
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

DATA ANALYSIS RESEARCH RESULT

To answer the hypothesis pro- Hypothesis Test Results
posed in this study requires accurate To test the hypothesis of linear
analysis tools. This study uses linear regression model, SPSS 21.0 calcu-
regression model to measure company lation is used where Return on Assets
performance towards corporate gover- (ROA), is a measurement of financial
nance variables and SPSS 21.0 as a performance which happens to be
proponent. The multiple regression dependent variable. And for Inde-
model is as follows: pendent variables there are; Good Cor-
porate Governance (GCG) and Insu-
InsurancePerformance rance Premium (IP). as shown in table
= α + β1GCG + β2IP below Anova (Table 2)
a
Table 2. ANOVA
Model Sum of df Mean Square F Sig.
Squares
b
Regression 9,864 2 4,932 9,751 ,000
1 Residual 21,242 42 ,506
Total 31,105 44
a. Dependent Variable: Y
b. Predictors: (Constant), X2, X1

From the ANOVA table above it we use (goodness of fit). So that fur-
can be concluded that the model fra- ther testing can be done.
mework described above, it is feasible Multiple Linear regression model
test can be seen at table 3

Table 3. Hypothesis Test Results (T Test)

Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) 19,700 20,074 ,981 ,332
1 X1 1,132 ,287 ,666 3,942 ,000
X2 -6,808 6,290 -,183 -1,082 ,285
a. Dependent Variable: Y
So Multiple Linear regression model as :

Insurance Performance = α + β 1GCG + β 2IP

Insurance Performance = 19,700 + 1,132 GCG – 6,808 IP
The model mean if GCG up 1 unit performance will be increased by 1,132 units,
and if insurance premium up 1 unit performance will be decline by 6,808 units.

The results of T test in table 3.
shows that the significance level of
GCG to ROA is at 0.000; smaller than
the required significance level (<0.05),
so GCG has a positive and significant
impact on ROA. T test results shows
that the significance level Premium to
ROA is at 0.285; higher than the
required significance level (>0.05), so
premium has a positive and not signi-
ficant impact on ROA
DISCUSSION
GCG influence on ROA
Darmawati et al. (2005) found
that statistically, GCG significantly af-
fects the company's operating perfor-
mance that is proxied by ROA. This

Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu 125

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
may be due to the market response
towards the implementation of corpo-
rate governance which takes time.
Samples taken are 9 Insurance
companies listed on the Jakarta Stock
Exchange in 2011 and 2015. This
study provides additional evidence on
another research, Gompers et al.
(2003), who found a positive relation-
ship between corporate governance
indexes with a long-term company
performance. Oktapiyani (2009) also
examined the effect of corporate
governance on ROA. It is found that
corporate governance has a significant
negative effect on ROA. Similarly,
Pramono (2011), found that corporate
governance is negatively related to
company performance. Indifference to-
wards corporate governance can redu-
ce company achievement of compe-
titive which leads to a negative impact
on performance.
Premium influence on ROA
As described above, the results
of t test done by the researcher found
that the significance level Insurance
Premium to ROA is at 0.285; higher
than the required significance level
(>0.05). Insurance Premium has a ne-
gative and not significant impact on
ROA. And also has a standard error of
6,290, this is in accordance with the
opinion Mehari dan Aermiro (2013) are
saying that there are no influence
between premium growth and perfor-
mance.
CONCLUSION
Based on the analysis of 9
insurance companies taken from 2011-
2015, it can be concluded as follows:
GCG has a positive and significant
impact on company's financial perfor-
mance and it has also been proven
true. This is indicated by the results of
regression calculation by linear regres-
sion analysis test that has the t value
of 3,942 with a significance level of
0.000 (<0.05). This receives hypo-
thesis 1 in a study that states "GCG
has a positive and significant impact on
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
financial performance of the compa-
ny".It is also true that GCG disclosure
has apositive effect on financial perfor-
mance. This is indicated by the results
of the regression calculation by linear
regression analysis test that has the t
value of 1,082 with a significance level
of 0,285 (>0.05). This no accepts hy-
pothesis research 2 which states
"premium positive no effect on financial
performance".The Company assets
composition not significant positive ef-
fect on a company financial perfor-
mance.
SUGGESTION
The higher the corporate gover-
nance, Company Assets Composition
as well as the size of the company
show that a company has strength in
the market competition against com-
petitors. In addition, the company sho-
uld improve corporate governance,
Company Assets Composition and the
size of company, such as making po-
sitive issues, improving management
of the company, so investors would be
interested in investing and ultimately it
leads to the increase in ROA and ROE
and create good corporate gover-
nance. For investors; return on equity
and return on assets can be used as a
basis for making decisions whether to
invest or not because this ratio mea-
sures the company's ability to produce
a return rate on the investment made
within the company. For further rese-
arch; for scholars who are interested in
researching the problem of return on
equity and return on assets, this rese-
arch could be proceeded by inves-
tigating the influence of Debt Equity
Ratio on both ROE and ROA with lo-
nger time span, so it will produce more
valid conclusions.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

HOW BANKING SERVICE QUALITY, IMAGE BANKING, AND

BANK CUSTOMER SATISFACTION AFFECT CUSTOMER
COMPLAINT?

Agus Salim
Margono Setiawan
Fathur Rohman
University Of Brawijaya

Abstract: This study will explore the effects of three factors related to the
management of customer complaints commercial banks, namely 1) banking
service quality, image bank, and a bank customer satisfaction. To do this,
researchers built theoretical approach signal from Spence (1974), and proposes a
framework in which the effectiveness of the organization's three responses to
customer complaints (timeliness, compensation, and communications). This study
will be conducted at commercial banks in Jakarta, the number of respondents 275
people using a Likert scale. The data were processed using structural equation
modeling with AMOS. Expected results of the study will show that: 1) differences in
the handling of customer complaints initiatives affecting the signal understood by
different customers. 2) The bank heterogeneous response in handling customer
complaints be explained by differences in attitudes of customers in the context of
the failure. 3) handling of customer complaints more (or less) effective for
increasing customer benefits, when benefits offered by banks is very bad and not
in accordance with the desired benefits customers. These results contribute to a
better theoretical understanding of the response of the bank heterogeneous
handling customer complaints and offer recommendations for allocating managerial
resources worldwide marketing of alternative strategies handling customer
complaints with hopes of bank customer complaint rate will decrease.

Keywords: Banking Service Quality, Image Bank, Bank Customer Satisfaction,

Customer Complaints, Management of Customer Complaints.

Banking is an important financial ta, Friday, January 8, 2016 said "there

industries in developing countries
given its big role in development
financing. Besides the bank as an
alternative place of investors to invest
their funds. Therefore, the role of
banks becoming so big in economic
development in developing countries,
especially in Indonesia. It can be seen
from bank interest and for results that
are much higher than in the ASEAN
countries especially compared with
developed countries. The consumer is
king, is a phrase often heard by
marketing managers. Yet in practice is
not as easy as it is spoken, consumers
often do not obtain the right as it
should be. This is reflected in the
constantly befall the consumer. Chief
Executive of the Indonesian
Consumers Foundation (YLKI) Tulus
Abadi told a news conference in Jakar-
are still many complaints about
banking in spite of the Financial
Services Authority (FSA). Therefore,
the FSA must be strong and constantly
educate consumers, especially regard-
ing complaints of credit card". Thro-
ughout 2015, the complaint against
banking services still dominate the
complaints coming into YLKI. Although
the number of complaints has
decreased compared with 2014, but
banks are still ranked first since 2012.
In addition to banking, the four major
complaint coming YLKI is the
telecommunications sector, housing,
transportation, and electricity (YLKI,
2016).
Meanwhile, staff members and the
Legal Complaints YLKI Abdul Basith
said, in 2015, complaints about
banking coming into YLKI 176

Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu 129

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
complaints or 17.09 percent of the total
complaints. Banking products most
widely complained of is the credit card
70, 49 loans, mortgages 23 Savings 20
ATM 7 Deposits and Giro 4, electronic
money 2, telemarketing 1
Besides "As for the service of the
most widely complaint is a matter of
burglary, the refusal of the cost-flower-
fines, customer service, transaction
systems, failure to pay, ask for relief,
loan guarantee, debiting unilateral,
etc." Regarding the bank's most widely
reported to YLKI 2015 is a bank
Mandiri 22, Bank Mega 20, BCA 19,
BNI 16, BRI 13, CIMB 10, HSBC 8,
ANZ and Standard Chartered 8, BII 6,
Nukopin 5, Bank Permata 5, Bank
Danamon 5, Citibank 4, BPR 14 other
9, Bank Syariah 5 (YLKI, 2016).
"If compared to 2014, a complaint
to the Bank in 2015 decreased due to
previous complaints received up to 32
pieces. Likewise, the Bank Mega previ-
ous 25 complaints. However, for the
BCA, previously only 9 complaints,
"said Basith. Complaints and Legal
Coordinator Sularsih asserted, the
number of complaints received against
certain banks do not necessarily
indicate that most troubled banks
(YLKI, 2016).
YLKI Based on the data above,
there is the problem of "complaints
against banking customer services
dominate the complaints coming into
YLKI since 2012-2015". This study
would like to contribute to the literature
by doing research on customer
complaints management at Commer-
cial Bank SOE. In addition, this study
also provides new insight to the bank
to react proactively to resolve customer
complaints effectively and efficiently, or
reactively customer complaints after
the bank's name in YLKI publication,
the FSA, or other third parties. In
addition the results of this study is to
provide feedback to the FSA as a
regulator and supervisor of banks.
The object of this study is the
Commercial Bank SOE in which there
are customers who make a complaint
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
on bank services. Commercial Bank
SOE in question are Bank Mandiri,
Bank BNI, Bank BTN, and BRI. The
reason the researchers chose
commercial banks SOEs due
merupakah bank owned by the
government and of the majority of
customers feel more secure if the
deposited funds in state banks
compared to deposit funds in a bank
owned by the private sector. Commer-
cial Bank Customer SOEs examined
are customers who make a complaint
to the complaint YLKI.
Complaint management is essenti-
al for a successful business because it
can affect the company's relationship
with customers, showing the level of
customer orientation of companies
(Chebat, Davidow, & Borges, 2011;
Estelami, 2003). If the response the
company satisfying the customer, the
customer may be loyal. Conversely, an
effective response can not disappoint
the customers and encourage them to
leave the company (Hulten, 2012).
The banking industry should be
appropriately manage complaints from
customers to achieve customer satis-
faction and minimize retention. Manrai
and Manrai (2007) showed that dissa-
tisfaction is one reason why customers
switch to another bank. When custo-
mers feel the bank did not properly
handle their complaint, they filed a
complaint with the regulatory body of
the bank, it is a complaint to a third
party according to the classification
Singh (1998).
Baker, Meyer, and Chebat (2013)
found that customer experience negati-
ve emotions with service failure and
usually do not respond verbally, and
can make a complaint to a third party.
Then, the name of the financial
institution can appear in reports on
complaints for example in the news the
Indonesian Consumers Foundation
(YLKI) or the Financial Services
Authority (FSA). This fact will affect
future profits of financial institutions
due to the declining reputation (Rose &
Thomsen, 2004).
130
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Gambetta, Grima, Benau (2015)
results indicate that the financial
institutions (banks) are more pro-active
with complaints customers and chang-
ing bank error before the regulator
issued a report to the public, has a
ratio of high efficiency, very profitable
at the operating level with the level of
liquid assets high and other interest-
bearing liabilities. While banks tend to
be reactive and fix errors after
regulators issued a report favorable to
the customer, the bank has a portfolio
with more credit, the loan loss
provisions were recorded lower.
Within the framework of reducing
the number of customer complaints,
need to improve the bank's image in
the eyes of its customers. Weiwei
(2007), stated that the Corporate
Image (corporate image) is an
impression owned by the customer
against the company, which has two
components, namely the functional and
emotional. Functionally related to the
real attribute that can be measured,
while emotionally related to
psychological factors which includes
feelings and attitudes toward the
company, in the sense that the
company's image is the consumer
response to the total supply and is
defined as the sum of beliefs, ideas,
and challenges that are common to
companies. It is associated with the
name of the business, architecture,
products or services, tradition,
ideology, and the impression of quality
communicated by each person who
interacts with the customers of the
bank. Thus the corporate image
(corporate image) that comes to mind
is when consumers hear the name of
the company or its products.
Results of research Misbach et al.
(2013) describes the quality of service,
customer satisfaction and trust of
Islamic banks in Napier. Similarly, the
results of research Berry (1995);
Bravo, et al. (2009); Dimitriadis, et al.
(2011), providing an important
reference on the basis of this study,
which will investigate the relationship
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
quality of services and customer
satisfaction. Results achieved an
important justification as the reference
that the relationship customer relation-
ship, banking service quality, image
bank, with customer satisfaction, and
customer complaint in a bank.
Quality of service (service quality)
can be determined by comparing the
perceptions of consumers for services
that obviously they received the actual
services they expect to attributes of an
enterprise service. If the services are
accepted as doing or felt (perceived
service) as expected, then the percei-
ved service quality is good and
satisfactory, if the services received
exceed the expectations of consumers,
the perceived service quality is very
good and the quality (Parasuraman, et
al., 1985). Conversely, if the service
received is lower than expected, then
the perceived poor quality of their
services.
Bahoosh, et al. (2004) identifies
the main priorities that affect customer
satisfaction in Tehran. Quality is a
mutli-dimensional concept, which
includes five main dimensions, namely
reliability, responsiveness, assurance,
empathy, and tangibles (Parasuraman,
et al., 1988). Reliability here is the
ability of banks to provide excellent
service to its customers is the ability
and attitude of employees in providing
services, responding to customer
complaints and complaints relating to
transactions that have been carried
out. Rensposiveness here indicates
how willing banks in helping to provide
excellent service, fast, precise, and
accurate. Assurance is a bank
business to create customer
confidence in the services provided for
services rendered. Empathy is the
attitude of bank employees in treating
customers as individuals who should
get priority in every transaction. While
tangibles as the fifth dimension of the
service is to focus on the services of a
physical nature, such as buildings,
ATM machines, banking hall,
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
information technology and physical
infrastructure of other banks.
Special services for the banking
industry called Banking Service Quality
(BSQ). Bahia and Nantel (2000) deve-
loped the concept BSQ because
Servqual and concepts of quality of
service measurement Another much-
criticized and proved to have draw-
backs. In establishing the quality of
service to banking services that, Bahia
and Nantel (2000) uses the framework
of the marketing mix developed by
Booms and Britner, 1981 (in Bahia and
Nantel, 2000) commonly called 7P,
namely Products / Services (Product
and Service), process (process), Parti-
cipant (Participant), the Physical Envi-
ronment (Physical Surrounding), Price
(Price), and Promotion (Promotion).
Based on the analysis Zeithaml, et
al. (2009), the obtained six dimensions
of quality of service, which later
became the study variables, namely:
The effectiveness and Security
(Effectiveness and Assurance), Access
(Access), Price (Price), Keterwujudan
(Tangible), Portfolio Services (Service
Portfolio) Reliability (Reliability). The
relationship between service quality,
customer satisfaction and customer
loyalty (Cronin and Taylor, 1992) is to
examine the relationship between
kualitaas service, customer
satisfaction, and customer purchase
intention. They put forward three
propositions for their studies. First,
customer satisfaction is the antecedent
of perceived service quality. Second,
customer satisfaction memiiliki
significant impact on purchase intent.
Third, perceived service quality has a
significant impact on purchase intent.
Their results found that proposition one
and two have a significant effect on
customer satisfaction and purchase
intention, respectively. However, in the
case of three propositions, they found
that the quality of service does not
have a significant impact on purchase
intent.
Keller (1993), states that the
company's image has a tradition,
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
ideology, business name, reputation,
wide range of services, which in turn
can improve the interaction with the
customer to determine the communica-
tion quality impression. The company's
image also affects customer expectati-
ons with regard to the quality of
services offered (Yoon, 1993).
Hussein, et al. (2009) compared the
Islamic bank with conventional banks,
Islamic banks because customers
choose the image, not because of its
brand.
The company's image and
reputation are considered an important
factor in the overall evaluation of the
organization (Bitner, 1990, 1991; Grön-
roos, 1984; Gummersson and Grön-
roos, 1998; Andreassen and Lanseng,
1997; Andreassen and Lindestad,
1998; Kandampully and Hu 2007;
Saartedt el al. , 2012) because of the
power that lies in customer perception
and mind when they hear the name of
the company (Fombrun, 1996; Hatch et
al., 2003; Nguyen, 2006; Bravo et al.,
2009). Abd-El-Salam et al. (2013)
states the bank's image, service quality
and reputation of the bank effect on
customer satisfaction that have an
impact on customer loyalty. Therefore,
continuous research on the bank's
image is a must for banks that want to
distinguish their position in the market.
In addition to problems of compla-
ints from customers (customer compla-
int) in banks in Indonesia from 2012 to
2016, the research on the behavior of
bank customers have been done as
mentioned previously, partially there
are hypotheses that supports and does
not support, this study will examine
client relationships (customer relation-
ship), the quality of bank services
(banking service quality) and the
bank's image (image bank) customer
complaints (customer complaint)
LITERATURE REVIEW
In this study on which the main
library (grand theory) sourced from
Kotler and Keller (2012), Kotabe and
Helsen (2011), Cutlip et al. (2006). A
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
literature review begins by examining
the marketing theory as a grand theory
used in this study was followed up by a
study supporting the theory (middle
range theory) were used in this study is
based on the theory of services
marketing, sourced from Zeithaml et al.
(2010), Cutlip et al. (2006), Fitzsim-
mons and Fitzsimmons (2008), Love-
lock (2011), Tjiptono (2014), Meyler
and layton (2000), Grönroos (2011),
Payne (2001), Cronin et al. (2001),
Bateson and Hoffman (2011), Kotabe
and Helsen (2011).
While the literature review begins
by examining the concept of marketing
services as a grand theory that is used
as a reference in the study, followed by
a review of the theory pendukkung
(middle range theory) to discuss the
research variables used in this study
were 1). The theory of relationship
marketing (relationship marketing),
sourced from John Egan (2001),
Svend Hollensen (2003), Alexander
and Colgate (2000), Grönroos (2011),
Gummesson (2007), Wulf and Gabi
(2001). 2). The image of the company
(Corporate Image), which comes from
Cravens and Piercy (2013), Peter's
Olson (2010), Kotabe and Helsen
(2011), Kotler and Keller (2012),
Hawkins and Motherbaugh (2010).
The Applied Theory as applied is
used to analyze the variables that the
level of quality of service (service quali-
ty) is from Bahia and Nantel (2000),
Zeithaml et al (2010), Ndubisi, Oly N.
(2004), Parasuraman and Zeithaml
(1998) , Rong (2008), Oliver (2007),
Andota (2008). Applied Theory is used
to analyze the variable image of the
bank (bank image) is the end result of
the interaction of all experience (all
experiences), impressions (impressi-
ons), beliefs (beliefs), feelings
(feelings) and knowledge of customers
of a bank, Yeo et al. (2010), Almahy et
al. (2014), Al-Tamimi et al. (2009),
Cengiz et al. (2007), Andreassen and
Lindestad (1998).
Applied theory is used to analyze
the variables kerelasian customers
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
(customer relationship) is a derivative
relationship marketing (relational mar-
keting), Grönroos (2011), Gummerson
(2007), Alexander and Colgate (2000),
Hollensen (2003). Relationship market-
ing is also known as customer relation-
ship (customer kerelasian), Harwood et
al. (2008) give insight as to attract,
retain and develop relationships with
customers. The creation of a relation-
ship (correlation) is the focus of the
strategy of relationship marketing (rela-
tionship marketing). Applied theory is
used to analyze the variables customer
relationship also derived from Kotler
and Keller (2012), Tjiptono (2014),
Fitzsimmons and Fitzsimmons (2008),
and Zeithaml et al. (2009).
While Applied theory is used to
analyze the variables complaints from
customers (Customer Complaint)
Singh (1998), Baker, Meyer, and
Chebat (2013), Gambetta, Grima,
Benau (2015). Quality of Service Bank
(Banking Service Quality)
Grand Theory proposed by Kotabe
and Helsen (2010), the product of the
different services with a tangible prod-
uct or in kind, which the facts prove
that to differentiate services much
more easily than goods (tangible).
Clottey and Collier (2008), defines
the quality of services is an important
issue in the management of services.
Research Job (2007) as applied theory
said that other services are still low,
another cause is the lack of information
and the inability of the bank employee
to clarify questions from customers
about a product that inhibits the growth
of the bank. Grönroos (1984), wrote
about a model of service quality and
marketing implications, as the basic
theory of the conceptualization efforts
to improve the quality of the services it
provides nasbah satisfaction, custo-
mers are satisfied with the service will
be loyal.
Quality of service can be determi-
ned by comparing the consumer
perception of the service they receive
with the service expected to attribute
the service of a company. When the
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
service is received as expected, then
the perceived service quality is good
and satisfactory, if the received exceed
the expectations of customers, the
perceived service quality is superb.
Conversely, if the received lower than
expected, then the perceived poor
quality of service. (Parasuraman et al.,
1985) states that service quality is a
function of the difference between
expectations and the actual performan-
ce of the whole dimension of quality.
The service company will attract
customers by offering benefits not pro-
vided by competitors in various ways,
such as using an ATM card that serves
not only to take cash but can be used
for shopping in all the stores without
charge or tariff. Although trade and
investment activity in the services
sector has been growing rapidly, but
the area is still relatively new in terms
of research, especially in an
international context (Axinn and
Matthyssens, 2002). Historically the
emphasis has been placed on
domestic issues and mono-culture,
particularly in the areas of quality of
service (Malhotra el al., 2005).
However, the manager of a service
company domestically or
internationally aware that the superior
quality of services that are responsive
to customer complaints, will provide
performance advantages are
significant, so the impact on customer
loyalty, market share growth and
productivity as suggested by previous
researchers (Berry et al. 1985; Capon
et al., 1990; Berry and Parasuraman,
1991; Anderson et al., 1994; Rust el
al., 1994; Barnes and Cumby, 1995;
Lassar et al., 2000; Roberts el al.,
2003) ,
Tool or instrument used to
measure the quality of service
perceived by the customer is the level
of service the bank or banking service
quality (BSQ) developed by Bahia and
Nantel (2000). Bahia and Nantel
(2000) states there are six dimensions
of quality of service levels (BSQ):
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
1. The effectiveness and Security
(Effectiveness and Assurance),
which combines a good response
rate and competence of emplo-
yees, as well as the safety factor.
2. Access (Access), which is the
perception of consumers about the
infrastructure and the essential
elements that provide ease of
access to the transaction.
3. Price (Price), are factors that are
directly related to the costs
charged.
4. Keterwujudan (Tangible), can be a
banking hall atmosphere, see the
service and equipment available
services.
5. Portfolio Services (Service Portfo-
lio), involve a mix of services and
high quality services and
constantly adjust to the needs of
customers who use banking
services.
6. Reliability (Reliability) is composed
of three main indicators, namely
filing system and level of speed
and accuracy in the process of
completion of each transaction.
Research on customer satisfaction
and loyalty using BSQ which other
researchers have tested the BSQ in
Greece to investigate the effects of
gender-customer and bank status to
the perception of quality services that
affect customer satisfaction to be loyal
(Spathis et al., 2001, 2004) and these
instruments proved valid and reliable.
Parasuraman, Berry and Zeithaml
(1990), stating that the quality of
service is a function of customer
expectations on pre-purchase, in the
process of providing acceptable quality
and at acceptable output quality.
Quality of service is defined as a
concept that accurately represents the
core of the performance of a service,
which is the ratio of the reliability
(excellence) in the service counter
made by customers. In further
experiments, Parasuraman, el al.
(1990), identifies and summarizes the
ten dimensions of quality of those
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
services menjai five dimensions of
service quality, namely:
1. Reliability, defined as the ability to
deliver services as promised accu-
rately. This involves holding
promises, like the promise of
delivery, price, and others.
2. Responsiveness, defined as the
desire to help our customers and
provide the services needed. This
dimension emphasizes the beha-
vior of personnel services for more
attention to customer requests, qu-
estions and respond to complaints.
3. Assurance, is defined as the
dimension of service quality focus-
sed the ability to appreciate the
trust and kerhasiaan.
4. Empathy, defined as aspects of
the service that emphasizes
customer service as an individual.
5. Tangible or physical evidence, defi-
ned as the dimension of service
that focuses on elements that re-
presents the service physically.
The dimensions of service quality
in general has indeed been widely
used, but not the least criticism given.
To overcome weaknesses in the
quality of service, it developed a new
measuring method for measuring the
quality of special services for the
banking industry called Banking
Service Quality (BSQ). Bahia and
Nantel (2000) developed the concept
ServQual BSQ as well as the concepts
of measuring the quality of other
services, such as Parasuraman et al.
(1990) there is no element of
effectiveness and service portfolio and
proven to have drawbacks. In
establishing the quality of services to
suit the banking, Bahia and Nantel
(2000) uses the framework of service
marketing mix developed by Booms
and Bitner (1981), which is commonly
called 7P is a product or service (Pro-
duct and Service), place (Place), pro-
cess (Process), Participant (Partici-
pant), the Physical Environment (Phy-
sical Surrounding), Price (Price), and
Promotion (Promotion). Quality servi-
ces capable of making our customers
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
satisfied and willing to continue the
company's transactions with banks and
more than that, a quality service even
able to distinguish a bank by another
banking company (Allred and Adams,
2000).
The quality of service has a close
relationship with the customer satisfac-
tion. To determine the level of
customer kupuasan need to first know
the quality of services provided to bank
customers. Customer satisfaction will
occur after someone experiences with
the quality of the services provided by
the service provider. (Boloemer et al.,
1998) suggests that his research
showed that variables affect service
quality on customer satisfaction. In this
study developed that level of service
quality banks will influence the level of
customer complaints (cusomer
complaint) that is not done by previous
researchers.
The relationship between
customer satisfaction and service
quality is also expressed Lassar, et al.,
(2000), which explains that the quality
of service (Service Quality) as the
independent variable significant
positive effect on customer satisfaction
(Customer Satisfaction) and not to
further examine the impact on
customer complaints ( Customer
Complaint). So there is a gap between
researchers formerly with research that
will be conducted by the researchers.
The many dimensions of service
quality in general has indeed been
used, but there are still criticisms
delivered. To overcome weaknesses in
the quality of service, it developed a
new measuring method for measuring
the quality of special services for the
banking industry called Banking
Service Quality (BSQ). The level of
quality banking services (BSQ) is a
form of assessment of customers the
level of service received (services
received) with the level of service
expected (expected service) that affect
the level of customer complaints
(customer complaint), for maintaining
and increasing client need to be
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
investigated regarding their
implications customer relationship to
consequently minimize customer
complaints and improve customer
satisfaction so that customers do not
move to another bank.
BANK IMAGE
In the Marketing Research
Institute conference, in March 1970 in
the paper "Building a Corporate Image"
and Cengiz et al. (2007) defines
"Corporate Image" as "the net result of
the interaction of all experience (all
experiences), impressions (impressi-
ons), beliefs (beliefs), feelings
(feelings) and knowledge (knowledge)
people about a company". Lovelock
(1984) image of the companies tend to
only play its own role in kepututsan
options traders, but in line with the
development of services, the
company's image is considered almost
synonymous with performance, price,
and level of satisfaction (Lovelock,
2009; Andreassen and Lanseng, 1997;
Andreassen and Lindestad , 1998).
Caruana and Chircop (2000) states
that the company's image is closely
related to brand equity. In general, the
corporate image is a reputation that is
considered as a corporate asset that
distinguishes itself and aims to
increase market share, profits, attract
new customers, retain existing ones, to
neutralize the actions of competitors to
maintain the success and viability of
the company in the market (Fombrun
and Shanley, 1990 ; Bravo et al., 2009;
Starstedt et al., 2012). The willingness
of customers to maintain relations
depend on their perceptions of the
companies on the benefits of better
relationship quality, relationship
satisfaction, and benefit from
relationships that provide continuity
over the value obtained.
Company image (Nguyen and
LeBlanc, 1998), deals with the physical
attitudes and behavior of a company,
such as business name, architecture,
types of products and services, as well
as maintaining good relations with the
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
company's customers. Formation of
the company's image is considered as
a process where ideas, feelings, and
valuable experience previously with an
organization is stored in memory and
transformed into a sense based on the
categories stored (MacInnis and Price,
1987; Hu et al., 2009). In this case the
marketing communications can be
strongly influential in shaping the
image of a potential bank owned by a
bank and its customers about the types
of products and services and can
initiate the purpose of account opening
for its customers.
Bravo et al., (2010) suggest the
image of a strong enterprise is the
most effective tool to differentiate the
bank, and a strong brand is an
appropriate alternative to reduce the
doubt that is felt in decision making
and gain a sustainable competitive
advantage (Heerden and Puth, 1995 ;
Chernatony and Cottam, 2006;
O'Loughlin and Szmigin, 2005; Kay,
2006; Yavas and Shemwell, 1996).
The development of a strong
corporate image is very important for
the company because it can cause the
client's preferences for the first time
customers as well as the loyalty of
existing clients (Bravo et al., 2010;
Andreassen and Lindestad, 1998).
Customers who have had service
encounters first with an image of the
bank will be more grip because of the
influence of the experience that has
been experienced. For example, when
clients or potential clients come to the
bank branch office, it will be greeted
with a good morning and said "nothing
could be assisted Mr. or Mrs."? For
customers that make imagery and
memorable experience about the res-
ponsiveness of the bank employees.
Previous research has shown that
bank there is a positive relationship
between image and satisfaction (Ball et
al., 2006; Boloemer and Ruyter, 1998).
Research (Tang, 2007) found evidence
of a positive effect of corporate image
and corporate reputation of companies
and consumer interaction on consumer
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
loyalty. While (Andreassen and Linde-
stad, 1998) stated on the company's
image, customer satisfaction and loyal-
ty have different levels on different
services.
According Anggoro (2000) Image
Corporate benefits are:
1. A good relationship with
community leaders. With the
communication is established
properly, will lead to good relations
that have an impact on the
company's image.
2. The positive relationship with local
authorities. The relationship both
with the local authorities will have
a positive impact on the company.
3. Risk of crisis smaller. Companies
are able to cope with the risk if the
crisis will leave a good impression
on customers.
4. Sense of pride in the organization
and among the target audience.
Need generated a sense of pride
in the company to each employee
can have a positive impact on
society.
5. Mutual understanding among tar-
get audiences, both internally and
externally.
6. Increase employee loyalty and
attract other employees.
7. Being able to attract the attention
of corporate investors.
8. Increase revenue through custo-
mer satisfaction and customer
loyalty.
9. Reducing the cost of operations.
Companies that can do efficiency
in operational management will
have a positive impact on
company performance.
10. Improving the effectiveness of
marketing strategies. With
increase the effectiveness of the
marketing strategy of the company
can increase the number of
customers who use the company's
services.
Liou and Chuang (2009), Corpora-
te Image dimensions divides into four
major parts, namely:
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
1. Moralities, with regard to how a
company has on the environment
and social moral. Moralities inclu-
de:
a. Charity Activities, the company
conducts social activities for the
surrounding community.
b. Eco-friendly Activities, the
company is able to perform the
production process and produce
environmentally friendly products.
2. Managements, relates to how a
company is well managed,
include:
a. Employee Skills, the ability of
employees is expected to increase
consumer satisfaction.
b. Teamwork, cooperation between
employees in the company.
3. Performance, related to the perfor-
mance of the company in its
business activities, including:
a. Reasonability of price, the suitabili-
ty of prices paid by consumers
with quality products.
b. Promotional activities, promotional
activities capable manarik
attention of consumers.
c. Advertisement, advertising to
boost revenues for the company.
d. Selling Channel, ease of transac-
tions provided by the company.
4. Services, deals with how a compa-
ny to satisfy its customers, includ-
ing:
a. Speed of Service, the speed provi-
ded to consumers.
b. Complaint handling, how employe-
es cope with complaints from con-
sumers.
c. Focussing on the customer's
needs, the company is able to
meet the needs of its customers.
The image formation is regarded
as a process through some of the
ideas, feelings, and previous
experience with an organization that
could potentially be stored in memory
and transformed into a sensory based
categories are stored (MacInnis and
Price, 1987; Hu et al., 2009). This
study aims to examine the extent to
which the effect of the bank's image on
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
customer satisfaction and customer
complaints that have not been
investigated by previous researchers.
BANK CUSTOMER SATISFACTION
Based on the concept of Zone of
Indifference adopted from Erevelles
and Leavitt (1992), Santos and Boote
(2003) identified four types of affective
state purnabeli: 1) deligth, 2) satisfac-
tion (indifference positive), 3)
acceptance (indifference negative),
and dissatisfaction (see Figure 1).
Satisfaction and accepatance are in
the zone of indifference between
confirmation and disconfirmation.
Acceptance (negative indifference)
could occur when the performance of
the products / services that customers
perceived to be among the minimum
tolerable predicted expectation and
expectation, while satisfaction (positive
indifference) can occur when the
perceived performance desired taste
between expectation and expectation
predicted. Meanwhile, the condition of
affective delight and dissatisfaction
occurs outside the zone of indifference.
Delight will happen if the perceived
performance is greater than the
desired expectation, whereas
dissatisfaction occurs when the percei-
ved performance below the minimum
tolerable level of expectation. Table 2
summarizes the relationship between
the four states with the hierarchy
affective expectations.
Furthermore, all four affective
state (delight, contentment,
acceptance, and dissatisfaction)
influence the affective action, namely
behavioral complaints and praise the
behavior (complimenting behavior)
(see Figure 2.5). If a product or service
is greater than the desired
performance and customer expectation
in question was delighted, then compli-
menting behavior (for example, a
positive recommendation gethok mo-
uth) may occur. If the product or
service performs between predicted
and desired expectation expectation,
and the customer is satisfied,
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
complimenting behavior may also
occur. Along with an increase in
positive disconfirmation, the greater
the intensity of complimenting
behavior.
Instead, the complaint behavior
(eg, negative-of-mouth communication
gethok, stop buying the product, com-
plain to the company, and complaints
to a third party) may occur when the
perceived performance of a service is
in between the minimum tolerable
worst imaginable expectation and
expectation. Complaint behavior may
also occur if the perceived
performance is between adequate
levels of expectation and tolerable
minimum expectation. Along with the
increasing negative disconfirmation,
the greater the intensity of the
complaint.
Stauss and Neuhaus (1997)
questioned the assumption of majority
of the operations and the
measurement of customer satisfaction
assume that customers who express
the same level of satisfaction that will
have an experience that is qualitatively
idendik and have behaved the same
interests, such as repeat purchase
loyalty. They argue that the satisfaction
or dissatisfaction have the qualitative
dimension. That is, it is possible that
an answer just given to the customer
satisfaction index (eg, "very satisfied"
on a 7-point Likert scale) with regard to
the various components of emotional,
cognitive, and interest behave.
Stable customer dissatisfaction.
Customers of this type are not satisfied
with the performance of service provi-
ders, but they tend not to do anything.
Their relationships with service
providers colored negative emotions
and the assumption that their expecta-
tions will not be met in the future. They
also do not see a chance for change or
improvement.
Demanding customer dissatisfac-
tion. This type is characterized by
aspiration level of active and deman-
ding behavior. At the emotional level,
causing dissatisfaction and opposition
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
protests. This implies that they will be
active in demanding improvements. At
the same time, they also feel no need
to remain loyal to the service provider.
Based on negative experiences, they
will not choose the same provider at a
later date.
When viewed from one side, some
experts believe that customer satisfac-
tion raises the quality of services.
Customer satisfaction with the experi-
ence of certain services will lead to an
evaluation of the overall attitude
towards the quality of service at all
times (Bitner, 1990; Oliver, 1981;
Parasuraman, et al., 1988). Patterson
and Johnson (1993) developed a
model of integration satisfaction and
quality service that puts customer
satisfaction as an antecedent of
service quality. Complaints System
and Suggestions
Every organization that is oriented
to the customer (customer-oriented)
need to provide opportunities and
access easy and convenient for custo-
mers to submit suggestions, criticisms,
opinions, and their complaints. Media
used dapatberpa kotk suggestions are
placed in strategic locations (easily
accessible or frequently bypassed the
customer), a comment card (which can
be charged directly or sent via mail to
the company), a dedicated phone line
is free, websites, etc., Some of the
information obtained through this met-
hod can provide new ideas and valu-
able input to the company, allowing it
to be responsive and fast beeaksi to
overcome some of the problems that
arise. Based on its characteristics, this
method is passive, as companies wait
Bank Service
Quality
Bank Image
Customer
Satisfaction
Figure 1. Conceptual Framework Research
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
for customer initiatives for the
complaint (complaint) or opinions.
Therefore, it is difficult pemdapatkan
complete picture of customer
satisfaction or dissatisfaction in this
way alone. Not all of dissatisfied
customers will submit complaints. They
could have immediately switched
suppliers and will not buy products or
use the services of that company
again. Various research shows that 25
per cent of total consumer purchases
tinged discontent, but less than 5
percent pealngan dissatisfied willing to
do most of their complaints, which
were directly switch suppliers (Kotler,
et al., 2004). Efforts to get a great
suggestion from customers are also
difficult to realize with this method.
Moreover, if the company does not
provide reciprocity and adequate
follow-up for those who have toiled
'thinking' (contribute ideas) to the
company. It is worth remembering also
that box suggestion / complaint empty
can not necessarily be interpreted that
all customers have been satisfied.
CONCEPTUAL FRAMEWORK
RESEARCH
In Figure 1, a researcher displays
the proposed conceptual model, name-
ly a few things determinant consumers'
willingness to make complaints. The
three variables: Customer Satisfaction,
Quality of Service Bank, and the image
of the Bank as independen.Variabel
endogenous variables, namely the
Customer Complaints. We include this
construct in the model because their
effects are expected.
Customer Complaint
139
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
RESEARCH HYPOTHESIS
a. Banking relationship with the
customer service quality complaint
Baker, Meyer, and Chebat (2013)
found that customer experience negati-
ve emotions with service failure and
usually do not respond verbally, and
can make a complaint to a third party.
Quality of service is a mutli-
dimensional concept, which includes
five main dimensions, namely
reliability, responsiveness, assurance,
empathy, and tangibles (Parasuraman,
et al., 1988). Reliability here is the
ability of banks to provide excellent
service to its customers is the ability
and attitude of employees in providing
services, responding to customer
complaints and complaints relating to
transactions that have been carried
out. Therefore, it can be hypothesized:
H1. The higher banking service quality,
the lower the customer complaint
b. Image bank relationship with the
customer complaint
Within the framework of reducing
the number of customer complaints,
need to improve the bank's image in
the eyes of its customers. Weiwei
(2007), stated that the Corporate
Image (corporate image) is an
impression owned by the customer
against the company, which has two
components, namely the functional and
emotional. Functionally related to the
real attribute that can be measured,
while emotionally related to
psychological factors which includes
feelings and attitudes toward the
company, in the sense that the
company's image is the consumer
response to the total supply and is
defined as the sum of beliefs, ideas,
and challenges that are common to
companies. It is associated with the
name of the business, architecture,
products or services, tradition,
ideology, and the impression of quality
communicated by each person who
interacts with the customers of the
bank. Thus the corporate image
(corporate image) that comes to mind
Markonah, Achm ad Sudiro, Surachm an and Mintarti Rahayu
is when consumers hear the name of
the company or its products.
Therefore, it can be hypothesized:
H2. The higher the lower the image
bank customer complaint
c. Relationships customer satisfacti-
on with customer complaint
The banking industry should be
appropriately manage complaints from
customers to achieve customer satis-
faction and minimize retention. Manrai
and Manrai (2007) showed that dissa-
tisfaction is one reason why customers
switch to another bank. When custo-
mers feel the bank did not properly
handle their complaint, they filed a
complaint with the regulatory body of
the bank, it is a complaint to a third
party according to the classification
Singh (1998). Therefore, it can be
hypothesized:
H3. The higher the customer
satisfaction (customer satisfaction), the
lower complaints from customers
(customer complaint).
RECOMMENDATION
This study is expected to be
obtained from the data and processed
to determine the results and impact of
the relationship between variables. For
future studies it is advisable to add
another as a mediating variable so it
can be analyzed a significant impact
on customer complaints. For instance
variables associated with loyalty, and
Customer Relationship so that the
impact will be more real managerial.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

EFFECT OF WORK FAMILY CONFLICT AND FAMILY WORK

CONFLICT TOWARDS JOB STRESS OF FEMALE LECTURERS IN
UPN VETERAN JATIM

Resi Permanasari
Bowo Santoso
Management Department UPN Veteran Jawa Timur

Abstract: UPN Veteran Jawa Timur is a new state university that must adapt to
changes in the existing management system. Some policy rule changes including
the complexity of the work at the faculty. This could make conflict between the
responsibilities at work and family life (work family conflict and family work conflict)
which in turn lead to job stress. This study aims to examine the influence of work
family conflict and family work conflict towards job stress among female lectures in
UPN Veteran Jawa Timur. Sample used female lecturers who becomes official in
UPN Veteran Jawa Timur. Data analysis used multiple regression analysis. The
results showed that work family conflict influence on the job stress (sig. 0.006) and
family work conflict influence on work stress (sig, 0.048). The results of this study
encourage the institutions to be able to create policies that can reduce the work
family conflict and family work conflict in order to reduce job stress and increase
job performance.

Keywords: work family conflict, work family conflict, job stress.

In 2016 Indonesia will enter becom ing public university should

MEA era which entail consequence
in m ore com petitive business
world. Not just com petition with
other business player in Indonesia
but also with other business player
from MEA m em ber countries.
Education world would also experi-
ence m ore com petitive nature since
hum an resources used in this
discipline would com pete with
those from other country. This
would create higher dem and in
em ployees perform ance due to
stricter com petition. One exam ple
related with education world in
Indonesia that should be capable in
grasping the opportunity and
challenge due to MEA is higher
education in Indonesia. Com petiti-
on in higher education would lies in
its hum an resources, the existing
facilities and high quality of higher
education m anagem ent. Moreover
with other new higher education
establishm ent in Indonesia.
One of the new public higher
education is UPN Veteran Jawa
Tim ur. UPN Veteran Jawa Tim ur
that has alm ost two year in
also adapt in system and m anage-
m ent change that used to be
handle by foundation but now has
been shifted to becom e state-ow-
ned higher education. Several
regulation and procedures has
becom e the target of change inclu-
ding hum an resources performance
that should be im proved. Hum an
resource is an im portant factor that
should be well m anaged since
higher education is one of the
service industry whereas people
factor (hum an resources) is an
im portant factor to deliver customer
satisfaction (students). Role of
hum an resource is highly im portant
thus its perform ance would be
assessed and continously im pro-
ved. Hum an resources is highly
valuable asset for every organi-
zation. This was due to the role of
hum an resource in creating higher
productivity within organization.
Task done by an em ployee within
higher education institution has
becom e m ore diverse.
Multi-various and com plex
work im posed on lecturers

Resi Permanasari and Bowo Santoso 144

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
particularly for fem ale lecturer and
those who has position in higher
education institution has invoke
conflict between role responsibility
on work and life. If work and life
was once considered to be separa-
ted field from one another, thus
organization would act as if work-
ing world is everyting, this view is
no longer relevant nowadays. An
em ployee would be expected to be
able to balance both work and life
dem ands. Conflict occurs in both
roles within fam ily and work is
known as work fam ily conflict. Work
fam ily conflict is the greatest obsta-
cle for a lecturer particularly for
fem ale lecturer since in Indonesia
there is beliefs that wom an has
larger responsibility in her dom estic
life com pared to her life outside the
house (work). Most wom an would
also feel that their role in their
fam ily is their social identity.
This conflict would em erge
when a wom an perform their m ulti-
ple role as a wife, a par ent, and a
worker. This conflict would appear
when there was pressure on all or
several roles at the sam e tim e
(Greenhaus and Bautelli, 1985).
This conflict m ight bring negative
im pact toward the success on
im plem enting those roles. Main
source of work fam ily conflict faced
by working wom an is her effort to
m eet the need in her work and her
fam ily dem and. Effort to m eet these
dem and would be highly influenced
by her own ability to m eet the need
of the fam ily or, vice versa, role
fulfillm ent in the fam ily would be
affected by one’s ability to m eet the
need on the job. Dem and in m ana-
ging roles between fam ily and work
becom e a critical challenge for
individual and organization and be-
com e increasingly im portant topict
in organization behavior also in
hum an resources field (Ratnasari,
2005). Study concerning the cause
and consequence of conflict in
fam ily and work roles has been
Resi Permanasari and Bowo Santoso
done and refers to role’s pressure
which caused conflict between
fam ily and work is inappropriate
thus participation in one role would
becom e harder due to participation
in other roles. Conflict between
work and fam ily would bring negati-
ve result, either in work or in
fam ily. Moreover, if there is increa-
sing responsibility for a wom an, it
would encourage m ore roles con-
flict in fam ily and work and induce
loss for organization such as burn-
out, perform ance decline and work-
related stress.
W ork-related stress experi-
enced by a worker could bring
negative effect toward organiza-
tion’s perform ance. A fem ale lectu-
rer with higher position would have
higher work-related stress when-
ever there was conflict between her
role in her fam ily and her work.
This m ight be triggered by working
clim ate and changing in working
condition, in this case, shifting UPN
Veteran Jatim into state-owned
university. W ith status as state-
owned university, som e of the
regulation and policies also its
working com plexity would be diffe-
rent and tend to be higher. There-
fore, this study would be conducted
under the heads effect of work
fam ily conflict and fam ily work
conflict toward work-related stress
of fem ale lecturer in UPN Veteran
Jatim .
Proble m Formulation
1. Does work fam ily conflict has
effect toward work-related
stress of fem ale lecturer in
UPN Veteran Jatim ?
2. Does fam ily work conflict has
effect toward work-related
stress of fem ale lecturer in
UPN Veteran Jatim ?
145
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
LIT ERAT URE REVIEW
Work Family Conflict and Family
Work Conflict
W ork-Family Conflict (WFC) is
one of interrole conflict where
pressure or unappropriateness in
role exist between role on the job
and role on the fam ily (Greenhaus
& Beutell, 1985 in Rom aniali,
2007). Thus it can be said that
work fam ily conflict occurs when
participation in fam ily role and work
role is not com plem entary to one
another.
Frone, Russell & Cooper
(1992) define work fam ily conflict
as role conflict occurs in
em ployees, whereas in one side,
fem ale should do their work on the
job and on the other side they
should pay attention to their fam ily,
thus it is hard to differentiate
between whether it is work that
disturb fam ily or fam ily that disturb
work. W ork disturbing fam ily m eans
that m ost tim e and attention was
given to com plete the task on the
job thus she didn’t have enough
tim e for her fam ily. On the contrary,
fam ily would disturb work m eans
that m ost tim e and attention was
given to do fam ily m atters thus it
would disturb work.
Tim e dem and from roles in
work and fam ily, pressure on one
work that would create im pact to
other role, good habit on one role
cannot be im plem ented on other
role. W ork fam ily conflict is
som ething that should be paid
attention to within organization
given that there is higher dem and
for the com pany to understand the
life of fam ily and work that has
been experiencing changes and
that was not easily separated as
before.
W ork fam ily conflict
acc ording to Schabracq, W innubst
& Cooper (2003) in Raharjo (2009)
describe three conflict types
related with dilem m a of wom an
Resi Permanasari and Bowo Santoso
roles between her household and
work, that are:
a. Tim e-based conflict, that is
conflict occurs due to tim e used
to m eet the need of one role
cannot be used to m eet the
need of other role, such as
dividing tim e, energy and
opportunity between work and
fam ily roles.
b. Strain-based conflict, it refers
to existence of strain or
em otional situation resulted by
one role and m aking it hard for
one person to m eet her need in
other role.
c. Behavior-based conflict, that is
conflict occurs when
expectation of behavior in one
role is different with
expectation of behavior in other
roles.
Fam ily work conflict (FW C)
defined as type of conflict created
due to fam ily influencing her
responsibility on the job.
Em ployees incapable in
dealing with work fam ily conflict
and fam ily work conflict would feel
work-related stress due to faced on
two difficult option which are fam ily
or work. On one side, em ployee
would like to im prove her
perform ance on the job but on the
other side they should also pay
attention to their fam ily. This has
encourgae em ployee to think that
she could arrange tim e on hand so
that she could deal with work fam ily
conflict and fam ily work conflict.
Em ployees that succeed in
dealing with both conflict would
attain great opportunity to keep
growing and succeeding in
m aintain harm ony between fam ily
interest and work-related interest.
Job Stre ss
Stress is a dynam ic condition
where an individual would confront
an opportunity, obstacles or
dem and related with what she
146
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
wants and its result would be
perceived as uncertain and
im portant (Robbin, 2002).
Robbin identified three fac -
tor set involved in this such as
environm ent, organization, and in-
dividual that acts as potential
sources of stress, described below:
a. Environm ent factor: Change in
business cycle would create
econom y uncertainty. If econo-
m y has shrunk, people would
worry about their condition.
Political threat and political
change would also cause and
increase stress. Technology
uncertainty would also other
factor that induce stress.
b. Organizational factor: There
are lots of factor within organi-
zation that could caused stress.
Pressure to avoid m istakes or
to accom plish task in lim ited
period of tim e, also excess
work load can induce work-
related stress. Task dem and
would also factor related with
som eone’s job. Lack of social
support from peers and poor
interpersonal relationship could
induce stress, particularly
am ong those with high social
needs.
c. Individual factor: Generally
speaking, individual would only
work about 40 or 50 hours per
week. Experience and proble-
m s faced by people outside of
work (on the rem aining 120
hours per week) can be
influencing their job.
Re lationship of Work Family
Conflict and Family Work
Conflict toward Job Stre ss
Fem ale worker would view
that work and fam ily are both
im portant things for them thus
Resi Permanasari and Bowo Santoso
when there was problem in one
role, either related with the work or
the fam ily, it would affect the other
role. According to Seery et al.
(2008) in Dham ayanti (2013) work
fam ily conflict is two way construct
that describe two different type of
conflict which are work-fam ily
conflict (job disturbing fam ily life)
and fam ily-work conflict (fam ily
dis turbing work responsibility).
Conceptually, these two conflict is
inter-role conflict. In general it can
be said that work-fam ily conflict
would affect the fam ily life such as
in its fam ily satisfaction and
perform ance in the fam ily. W hile
fam ily-work conflict would affect on
work dissatisfaction, lateness, and
low perform ance.
Beauregard (2006) suggest
that organization m ight be m ore
interested in how far does fam ily
life has its influence over work life.
Issues regarding work and fam ily
conflict has becom e organization’s
interest since studies has proved
that work fam ily conflict has
influence over em ployee’s lower
perform ance (Yavas et al., 2008).
Higher work challenge entail higher
benchm ark for work achievem ent,
thus it would create higher work-
related stress. If stress has
reached its peak, another addition
of work challenge would no longer
increase work perform ance, but it
will lowered work perform ance
(Raharjo, 2009).
Hypothe sis:
(H1): W ork fam ily conflict has
positive significan effect
toward work-related stress
(H2): Fam ily work conflict has
positive significant effect
toward work-related stress
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Work Family Conflict (X1)
Family Work Conflict (X2)
Figure 1. Conce ptual Frame work
RESEARCH M ETHOD
T ype of Study
This study is a quantitative
study with survey m ethod. This
study used prim ary data obtained
directly from respondent by fill-in
questionnaire of closed-ended qu-
estions. Survey design type of this
study is explanatory type by descri-
bing causal relationship between
variables through hypothesis test -
ing based on concept developm ent
and data collection.
Population and Sample
Population
Population is a com plete
group elem ent that com m only take
form s in people, objects, transacti-
ons or events where we have inte-
rest to study them or to m ake them
object of study (Kuncoro, 2003 in
Raharjo, 2009). Population used in
this study is fem ale lecturer in UPN
Veteran Jawa Tim ur.
Sample
Sam ple is part of population
with certain characteristic under
study and perceived to be repre-
senting whole population (Subagyo,
2000). Sam ple collection technique
by non probability sam pling m eans
that not every elem ent in popula-
tion study has the opportunity to
becom e sam ple. Sam pling m ethod
used in this study is purposive
sam pling. Sam ple determ ination
would consider specific criterion
m ade for the subject in accordance
with study objectives. Criteria used
in this study is fem ale lecturer in
UPN Veteran Jawa Tim ur with
Resi Permanasari and Bowo Santoso
Work-related Stress
(Y)
restriction on fem ale lecturer who
also held m anagerial position in
UPN Veteran Jatim .
W om en is vulnerable to
conflict com pare to m en (Grandey
et al., 2005 in Dham ayanti, 2013).
Rule of thum bs concerning sam ple
size is m inim um 30 and less than
500 (Sekaran, 2006). Based on the
above consideration, author would
like to obtain about 40 sam ple of
fem ale lecturer in UPN Veteran
Jawa Tim ur.
Data Source s
a. Prim ary Data
This data consist of data taken
from respondent based on answer
on questionnaire. Data consist of
study variables tested in accord
with the existing fram ework such as
work fam ily conflict, fam ily work
conflict and work-related stress
variables am ong fem ale lecturer in
UPN Veteran Jawa Tim ur.
b. Secondary Data
This data was taken from related
sources consist of data from
literatur review such as study
journals, literature, reference,
previous study, internet and other
inform ation that m ight be used as
reference to support study
concerning work -fam ily conflict and
fam ily -work conflict also effect of
work-related stress in fem ale
lecturer in UPN Veteran Jawa
Tim ur.
Data Colle ction T e chnique
a. Questionnaire
Questionnaire used in this
study was separated into two parts.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
First parts would include
description of respondent. Second
part of this questionnaire would
consists of questions item s from
each variables used in the study
such as work -fam ily conflict, fam ily-
work conflict, supervisor fairness
and work-related stress variables
for fem ale lecturer in UPN Veteran
Jawa Tim ur.
b. Literature Study
Literature study was used to
found out literature over
developm ent of hum an resources
m anagem ent along with its theories
to support proposed hypothesis.
Ope rational De finition and
M e asure me nt
a) W ork Fam ily Conflict (W FC) is
an inter-role conflict whereas
dem and, tim e allocation, strain
and behavior created by the job
would disturb fam ily-related
responsibility. W FC was m ea-
sured using indicators adapted
from Carlson, Kacm ar and
W illiam s (2000). Questions
item would be m easured by
Likert scale 1-5 (strongly
disagree until strongly agree).
b) Fam ily W ork Conflict (W FC) is
an inter-role conflict whereas
dem and, tim e allocation, strain
and behavior created by the
fam ily would disturb work-
related responsibility. FW C was
m easured using indicators
adapted from Carlson, Kacm ar
and W illiam s (2000). Questions
item would be m easured by
Likert scale 1-5 (strongly
disagree until strongly agree)
c) W ork-related stress is strain
condition that would affect
em otion, thinking process and
som eone’s condition. It was
m easured using indicator adap-
ted from Netem eyer (2004).
Question item s would be
m easured by Likert scale 1-5
(strongly disagree until strongly
agree).
Resi Permanasari and Bowo Santoso
Data Analysis T e chnique
Validity T e st
Validity test was used to test
how far does a m easurem ent tool
could reveal the appropriateness of
m easurable sym ptom s (Sekaran,
2000). Instrum ents with high validi-
ty would be able to explain rese-
arch problem as in real situation.
Validity test in this study was done
using product m om ent correlation
analysis. Data could be processed
by using product m om ent correla-
tion analysis if r calculated > r table
values, thus item would be
considered valid.
Re liability T e st
Reliability is index that
showed how far does a m easure-
m ent tool could be trusted and how
far does m easurement stay consist-
ent if m easurem ent was repeated
for sim ilar sym ptom s. Therefore,
reliability would encom pass two
things which are m easurem ent
stability and m easurem ent internal
consistency (Sekaran, 2000). In-
strum ent would be said reliable if
its Cronbach Alpha coefficient re-
sult lies between 0.8-1.0 cate-
gorized good reliability, 0.6-0.79
categorized acceptable and if this
value was below 0.6 it categorized
poor (Sekaran, 2000).
M ode l T e sting
Normality T e st
Norm ality test is statistical
test used to found out whether this
study data is norm ally distributed
or not (Sulaim an, 2004). Norm ality
test was used to found out whether
in regression m odel, disturbance
variable or residual has norm al
distribution. One way to check its
norm ality is by using Norm al
Probability plot. W ith this plot, each
observation value would be paired
with expectation value in norm al
distribution.
Norm ality would be m et if
points (data) is collected near
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
straight lines. Furthermore, norm a-
lity test was also conducted by
using Kolm ogorov Sm irnov, where
calculation was done by looking at
statistic significance resulted from
the calculation, if significance >
0,95, it m eans that data is norm ally
distributed.
M ulticolline arity
One assum ption in regression
m odel is that there is no
m ulticollinearity between explana-
tory variables in regression m odel.
Multi-colinearity is perfect relation
or certain relation am ong several or
all explanatory variables in regres -
sion m odel. If in there was m ulticol-
linearity, it m eans that m odel has
large standard thus coefficient
cannot be predicted accurately.
One way to figured out whether
there was m ulticollinearity or not is
by looking at tolerance value and
variance inflation factor (VIF) value
with rule of thum b if VIF > 10 it
m eans there was m ulticollinearity.
He te rosce dasticity
Heteroscedascity test aim ed
to test whether there was variance
difference from residual of one
observation to other observation
within a regression m odel. Heteros-
cedasticity: Variance from residual
of one observation to another
observation has difference varian-
ce. If it is the sam e then it called
hom oscedasticity. Good regression
m odel has no heterosc edasiticity.
Detection of heteroscedasticity:
a. From scatter plot residual: if
there is certain pattern (such
as dots/points that describe
certain and regular form (wavy,
spread and then converge)
b. If there is no clear pattern,
dots/points spread over 0 in Y
axis, there was no heterosce-
dasticity.
c. In linear regression, residual
value should not have any
relationship with X variable.
Resi Permanasari and Bowo Santoso
This could be identified by
calculating rank Spearm an cor -
relation between residual with
all independent variable.
Autocorre lation
Autocorrelation test could be
done to found out whether there
was correlation or not between
successive disturbance error. To
detect it, we could use Durbin
W atson tes t (D-W test) with criteria
as follows:
If du< dw <4- value: there was no
correlation
If dl<<dw<du or 40du <dw<4-dl
value: it cannot be concluded
If dw<dl or dw> 4-dl value: there
was autocorrelation
Hypothe sis T e sting
This study used Multiple
Linear Regression Analysis to test
effect of work fam ily conflict and
fam ily work conflict toward work-
related stress.
Regression equation:
Y1 = a + b1X1 + b2X2 + ei
Y1 = dependent variable
a = constant
b1-b2 = regression coefficient of
independent variable
X1-X2 = independent variable
ei = error standard
RESULT AND DISCUSSION
Re sponde nt De scription
Author used respondent sam -
ple of fem ale lecturer that hold
m anagerial position in UPN Vete-
ran Jawa Tim ur. Based on questi-
onnaire sent over 40 fem ale lectu-
rer in UPN Veteran Jawa Tim ur, 32
questionnaire was accepted while
the rem aining 8 questionnaire was
not fully com pleted and did not
returned to the author.
Analysis and Discussion
Validity T e st Re sult
Validity test in this study was
done using product m om ent
correlation analysis. Data can be
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processed using product m om ent Validity T e st of Work-related

correlation analysis if value of r Stre ss Variable
calculated > r table, thus item
considered valid. T able 4.4
Validity T e st Re sult of Work-
Validity T e st of Work Fam ily re late d Stre ss
Conflict Variable Question Correlation Table Assessment
Item Coefficient value
(r ) of r
T able 4.2 Y1_1 0.463 0.349 Valid
Validity T e st Re sult of Work Y1_2 0.590 0.349 Valid
Y1_3 0.487 0.349 Valid
Fam ily Conflict Variable Y1_4 0.742 0.349 Valid
Question Correlation Table Assesment
item Coefficient value Source: primary data
(r ) of r
X1_1 0.431 0.349 Valid Based on the table above, it is
X1_2 0.664 0.349 Valid
X1_3 0.614 0.349 Valid known that all question item as
Source: primary data indicator of work-related stress has
value of r calculated larger than r
From table 4.2 above, it is table and signific ance value < 0,05.
known that all question item as This result is based on correlation
indicator of work fam ily conflict coefficient higher than product
variable has value of r calculated > m om ent r table value of 0.349 with
r table. This result is based on n=32, thus all question item is valid
correlation coefficient that is higher and can be used for subsequent
than product m om ent r table value test.
of 0.349 with n=32 and significance
of 5%. Therefore, it can be said Re liability T e st
that all indicator used in this study Measurem ent toward reliabili-
has good validity. ty of question would use Cronbach
Alpha Coefficient with result as
Validity T e st of Fam ily Work follows:
Conflict Variable
T able 4.5
T able 4.3 Re liability T e st Re sult
Validity T e st Re sult of Fam ily Variables R Alpha Result
Work Conflict Variable X1 0.763 Reliable
Question Correlation Table Assessment X2 0.737 Reliable
Item Coefficient value
(r ) of r Y 0.647 Reliable
X2_1 0.353 0.349 Valid Source: primary data
X2_2 0.579 0.349 Valid
X2_3 0.397 0.349 Valid
From Table 4.5 above, it is
Source: primary data known that all variables used in
this study has r alpha value larger
From table 4.3 above, it is than 0.6 thus question item s can be
known that all question item as used in subsequent test.
indicator of fam ily work conflict has
value of r calculated > r table and Classical Assumption T e st
significance value < 0,05. This re- M ulticolinearity T e st
sult is based on higher correlation Detection of m ulticollinearity
coefficient from product m om ent r was done using collinearity
table value of 0.349 with n=32, thus diagnostic shown in Table 4.7.
it can be said that all indicator in
this study has good validity.

Resi Permanasari and Bowo Santoso 151

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T able 4.7. Statistic M ulticolline arity T e st using Collinearity

Coefficientsa

Unstandardized Standardized
Coefficients Coefficients Correlations Collinearity Statistics
Model B Std. Error Beta t Sig. Partial Tolerance VIF
1 (Constant) ,049 2,035 -,024 ,981
x1=WFC ,419 ,203 ,320 2,068 ,048 ,359 ,798 1,253
X2=FWC ,759 ,254 ,461 2,984 ,006 ,485 ,798 1,253
a. Dependent Variable: y=stres kerja

Source: primary data

Based on the table above, it is observation to another observation

known that VIF value of variables is has different variance, but if it is
sm aller than 10. It indicated that the sam e then it is known as
there is no m ulticollinearity hom oscedasticity. Good regression
sym ptom between independent m odel has no heteroscedasticity.
variable of this regression m odel. One way to test heteroscedasticity
VIF value for W ork Fam ily Conflict is by calculating rank Spearm an
(X1 ) is 1.253 and Fam ily W ork correlation between residual with
Conflict (X2 ) is 1.253. Precondition all independent variables.
for m ulticollinearity is VIF ( Variance Heteroscedasticity test in this study
Inflation Factor) value > 10. is using rank Spearm an correlation
between residual with all
Heteroscedasticity T e st independent variables and its
Heteroscedasticity occurs analysis result is shown in Table
when variance from residual of one 4.8.

T able 4.8
He te rosce dasticity T e st
Correlations

Unstandardiz
ed Residual
Spearman's rho x1=WFC Correlation Coef f icient -,040
Sig. (2-tailed) ,828
N 32
X2=FWC Correlation Coef f icient -,148
Sig. (2-tailed) ,418
N 32
Unstandardiz ed Residual Correlation Coef f icient 1,000
Sig. (2-tailed) .
N 32

Source: primary data

Based on Table 4.8 above, it fam ily conflict (X1 ) variable =

is known that variable for work 0,828>0,05 and fam ily work conflict
fam ily conflict (X1 ) and fam ily work (X2 )=0,418>0,05. Thus it can be
conflict (X2 ) DID NOT has concluded that all var iable is freed
significant correlation between from heteroscedasticity.
residual and its independent
variables, thus from this analysis Non Autocorre lation T e st
result it can be concluded that all Autocorrelation occurs when
study variables with sig value in there is correlation between
unstandardized residual colum n is disturbance error in t period with
worth m ore than 0,05. For work disturbance error in t-1 period

Resi Permanasari and Bowo Santoso 152

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

(previous period). This study used while otherwise if D-W num ber is
autocorrelation detection by above +2, it is said that there is
calculating am ount of Durbin autocorrelation (negative) and if
W atson num ber, that is if D -W this value stand between -2 until
num ber is below -2, it is said that +2, it is said that there is no
there is autocorrelation (positive) autocorrelation.

T able 4.9
Durbin Watson Value
Mode l Sum m aryb

Adjusted Std. Error of Durbin-

Model R R Square R Square the Estimate Wats on
1 ,669a ,447 ,409 2,277 1,966
a. Predictors: (Constant), X2=FWC, x1=WFC
b. Dependent Variable: y=stres kerja

Source: primary data

Based on Table 4.9, it is table. dL value=1,039, dU=1,428,

known that Durbin W atson value is 4-dU=2,961 and 4-dL=2,512, thus
1.966. This result showed that Durbin W atson value in output
there is no autocorrelation result is in no autocorrelation
sym ptom (based on norm al region. This can be identified with
condition), if com pared with its curve in Figure 4.1.
korelasi positif

daerah daerah
korelasi negatif
ada auto

keragu keragu
ada auto

raguan Tidak ada autokorelasi raguan

positif dan tidak ada
autokorelasi negatif

0 dL dU 4 - dU 4 - dL 4
Figure 4.1Curv e

M ultiple Linear Re gre ssion analysis. This analysis aim ed to

Analysis T e st Re sult found out the effect of independent
Data analysis was done in variables toward dependent
this study using regression variables.

T able 4.10
M ultiple Re gre ssion Re sult
Coefficientsa

Unstandardized Standardized
Coefficients Coefficients Correlations Collinearity Statistics
Model B Std. Error Beta t Sig. Partial Tolerance VIF
1 (Constant) ,049 2,035 -,024 ,981
x1=WFC ,419 ,203 ,320 2,068 ,048 ,359 ,798 1,253
X2=FWC ,759 ,254 ,461 2,984 ,006 ,485 ,798 1,253
a. Dependent Variable: y=stres kerja

Source: primary data

Resi Permanasari and Bowo Santoso 153

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Based on m ultiple regres -
sion analysis test result in Table
4.10, it is known that work fam ily
conflict variable has positive effect
toward work-related stress with
significance level 0.048 (<0.05).
W hile in m ultiple regression test
result for fam ily work conflict it has
positive effect toward work-related
stress with significance level about
0.006 (<0.05).
Discussion
This study confirm ed previo-
us study result done by Raharjo,
2009 which suggest that work
fam ily conflict and fam ily work
conflict are variables that influence
the existence of work-related
stress. Several things that could
affects conflict were work pressure,
lots of task dem and and lack of
fam ily togetherness. Unbalance for
the above three could trigger the
conflict and finally propelled work-
related stress in em ployees.
Based on testing result
toward respondent, it is known that
work fam ily conflict has effect
toward work-related stress of
fem ale lecturer in UPN Veteran
Jawa Tim ur. Result of this study
also sim ilar with those done by
Netem eyer in 2004 which suggests
that work fam ily conflict variable
individually has positive and signifi-
cant effect toward job stress
variable. W ork fam ily conflict could
occurs due to heavy work load in
the office and brought consequen-
ce in lack of responsibility for the
fam ily. W ork fam ily conflict would
occurs when work and fam ily
dem and was absolutely cannot be
run in parallel for certain things.
Result of this study confirm -
ed previous study done by Dham a-
yanti (2013) that fem ale would
experience stress at work when
there was problem in her working
environm ent that would cause
problem in her fam ily life. Though
study done by Dham ayanti (2013)
Resi Permanasari and Bowo Santoso
was done in banking industry but in
education disclipine, particularly in
UPN Veteran Jawa Tim ur, this was
no different. Fem ale lecturer in
UPN Veteran Jawa Tim ur has
experience work fam ily conflict
which eventually would affect her
attendance, turnover, lowering per -
form ance and lowering her working
health either physically psychologi-
cally and thus induce work-related
stress.
Feeling guilty because she
has to leave her fam ily, fam ily role
perceived to be non m axim um and
other fam ilial problem s would
induce work fam ily conflict in
fem ale lecturer in UPN Veteran
Jawa Tim ur. This work fam ily con-
flict and fam ily work conflict would
increase work-related stress in
fem ale lecturer.
Those things m entioned
above was also discovered in
fam ily work conflict test result that
affect work-related stress of fem ale
lecturer in UPN Veteran Jaw a
Tim ur. Fam ily work conflict has
significant effect toward job stress
or work-related stress. It was
presum ed that this occur due to
lack of understanding from fam ily
with job responsibility of respon-
dents. Fam ily was supposed to
understand and aware of responsi-
bility possessed by respondents,
thus during im plem enting her task
and responsibility concerning the
job it would not be disturbed by her
task and responsibility at hom e.
Continuous conflict would
not only lowering her perform ance
but also could induce work-related
stress with im pact toward unbalan-
ce physical and psychological
condition as reaction toward over-
bearing intensity pressures.
Results in this study is
carrying consequence that institu-
tion should try yto im prove factors
which cause work-related stress
that is work -fam ily conflict. Several
steps that could be taken are by
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
paying attention and appreciating /
respecting tim e allocated by em plo-
yees for her fam ily. Assessment for
fem ale lecturer with other m anage-
rial position should be based on
perform ance basis since perfor -
m ance-based assessm ent would
affect am oung of bonus received,
periodical pay raise and opportu-
nity to participate in prom otion test
for higher position. Thus all fem ale
lecture in m anagerial position
would give m ost of her tim e and
effort to achieve the target of
perform ance-based assessm ent.
Definite steps in the future to
reduce work fam ily conflict and
fam ily work conflict should be
im m ediately dealt with since both
conflict could affect work dissatis -
fac tion shown by lateness and
work-related stress. Higher work-
related stress would affect em plo-
yee’s perform ance (Yaves et al.,
2008). W ork-related stress in
certain points would cause m ore
job achievem ent but if its already
reaching its peak it m ight reduct
job achievem ent and eventually
reduce em ployee’s perform ance in
particular and reduce institution’s
perform ance in general (Raharjo,
2009).
CONCLUSION
Result of this study has
proved that all hypothesis proposed
is statistically proven and carrying
significant effect. Study hypothesis
showed that work fam ily conflict
variable has positive effect toward
work-related stress variable, and
that fam ily work conflict has positi-
ve effect toward work-related
stress variable. Based on this study
result, it give em pirical im plication
in em ployees developm ent particul-
arly those already m arried with
children, that is by paying attention
toward interaction m anagem ent
between work and fam ily dom ain.
Condition of m arried wom an with
children that has several
Resi Permanasari and Bowo Santoso
responsibility on their job would
highly affecting wom an
perform ance on both dom ains. If
she cannot handle her work fam ily
conflict and fam ily work conflict
that occurs, it is very likely that
work-related stress and lower
perform ance would happen in near
future. Role of institution and
organization in this regard is highly
critical so that work fam ily conflict
and fam ily work conflict faced by
fem ale em ployees could be well
m anaged. This study has its
several lim itations that could be
im proved in subsequent studies,
those lim itation were as follows:
1. Study sam ple was only lim ited
on fem ale lecturer while stress
phenom enon could also occurs
in non functional em ployees
(structural) that has m ore work-
ing hours and not as flexible as
those of lecturer.
2. This study only has 32
respondents and this num ber is
not yet encom passing all fem a-
le lecturer in UPN Veteran Ja-
wa Tim ur. Tim e lim itation and
respondent’s full activities has
becom e one of the cause in
lim ited am ount of respondents
in this study.
3. It is expected that subs equent
studies could developed and
explore m ore antecendents af -
fecting work fam ily conflict and
fam ily work conflict.
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Kepemimpinan, Kepuasan Kerja Karatepe, 2008, Attitudinal and
Dan Motivasi Terhadap Kinerja. Behavior Consequences of Work
JRBI. Vol 1. No 1. Hal: 63-74. Family Conflict and Family Work
Netemeyer G Richard, Maxham III Conflict: Does Gender Matter?
James G and Pullig Chris.2004. International Journal of Service
Work Family Conflict, Job Stress, Industry Management, Vol 19,
and Customer Service No 1,pp 7-31
Performance, Mc Intire School of

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

EXPLORING COMPARATIVE LOW COST CARRIER SERVICE

QUALITYAND FULL SERVICE AMONG IN EUROPE,
USA, TURKEY AND MALAYSIA

Setiyo Purwanto
Armanu
University of Brawijaya

Abstract: The authors analyzed between the Low-Cost Carriers (LCCs) strategy
and Full-Service Carriers (FSCs) implementation in airline industry which be
observed in Europe, USA, Middle East (Turkey) and Asia (Malaysia). In Europe
Airlines, implementation LCCs to increase on time performance and solve problem
the delay time issue in air port rather than FSCs is choice, in US Airlines was
comparing the Cost Carrier between LCCs and FSCs, in Turkey Airlines was
comparing the Cost Carrier between LCCs and Service Network Carriers (FSNC)
and how impact in the market share, in Malaysia Airlines, LCCs was
implemented by AirAsia to competitive pressure in price predatory based on the
Sun Tzu Art of War philosophy. The uniqueness of this articles were mentioning
about (1) implementation low cost strategic in global airline industries, (2) using
various analysis tools and (3) the low cost strategic was using in various goals.
This study highlights that the conditions for rationality and success in this
business game depends greatly upon the efficiency and intelligence of the line
management and believe that the ability to control these Low Cost airlines will
provide healthy competition.

Keywords Low cost carriers (LCCs), full-service carriers (FSCs), competitive price,
Airlines.

The global airlines industry represents a positive externality for an

represents the epitome of challenge for
academic researchers. In difficult stra-
tegic choices and challenging market
realities for airline companies around
the world. "The Asia Pacific has the
potential to grow to a similar level as
North America and Europe," Joost van
der Heijden, senior airline marketing
director at Airbus SAS, said in an
interview.
Driving much of the region's
growth would be economic powerhou-
ses China and India, where air travel
demand is soaring at rates not seen
in any other part of the world. Air-
bus's view of the LCC market in Asia
Pacific is consistent with the most re-
cent study by the Centre for Asia Pa-
cific Aviation (Capa), the Sydney-
based aviation research and consul-
tancy firm.
In Europe airline find that LCCs
contribute to a reduction of delays for
airlines and flights landing at the ob-
served airport. The presence of LCCs
airport. Airport management may the-
refore consider the proactive increase
of LCCs market share in their long-
term business strategies.
In US airline Industry, show cost
reductions of 10 percent for FSCs and
22 percent for regionals/charters, and
cost increases of 8.5 percent for
LCCs from 1993 to 2014. In compe-
titive pressure from LCCs has contri-
buted to increased efficiency and the
threat of bankruptcy for full-service
(sometimes referred to as legacy)
carriers. For instance, in the last 13
years, each of the three largest U.S.
full-service carriers has declared bank-
ruptcy. Tsoukalas Belobaba, and
Swelbar (2008) point out that bank-
ruptcy and the threat of bankruptcy has
allowed full-service carriers (FSC) to
negotiate more favorable labor con-
tracts, resulting in cost reductions.
Turkey airline research, analyzed
competition in Turkish air transport
market between FSNC and LCC in civil

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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
aviation market using two companies.
The SWOT analysis, that is an impor-
tant support tool for decision-making,
and is commonly used to syste-
matically analyze organizations inter-
nal and external environments. In
implementation result find Turkey‟s
largest LCC and fastest growing
airline, Pegasus is the second largest
domestic airline and the third largest
international carrier from Turkey.
In Malaysia Airline, finding reveal
that the competitive pressure has
leaded to price predatory. Air Asia offer
the low cost carrier has been created
since of 2008, Fare prices and reflect a
direct competition for larger market
share. AirAsia faced a massive com-
petitive threat an effective result. For
the first time in the history of aviation
industry in Malaysia, the full service
airline has launched a “zero fare”
campaign to sell surplus seats on
domestic and regional flights with the
aim to stimulate the consumer market.
The incumbent low cost airline, Air-
Asia, chose to compete directly with
the full service airline by launching its
own “sub zero fare” campaign.
Those articles mentioned about
low cost implementation strategic in
global airline industries. The unique-
Low cost strategic implementation in aviation companies with different
goals
Setiyo Purwanto and Arm anu
ness of this articles are (1) mentioning
about low cost strategic implemen-
tation in aviation companies (2) using
various analysis tools in those rese-
arch (3) the low cost strategic imple-
mentation in various goals. This cha-
nges were influenced by global market
competition, formulation of strategic
alliances, mergers and acquisitions
among competitors, etc.
LITERATURE REVIEW
A variety of strategies to control
costs and to generate revenues, there
are four basic types of carriers today,
with carriers in each category em-
ploying similarities in the general busi-
ness model employed (Leick & Wen-
sveen, 2014). These include: (1) Full-
Service Carriers (FSCs) often referred
to as network carriers or legacy car-
riers e providing frequent service using
a hub and spoke network; (2) low-cost
carriers (LCCs) providing point-to-point
service, often using less congested
secondary airports; (3) regional carri-
ers (RCs) serving as feeders to the
FSCs, and often not ticketing passe-
ngers; and (4) charter carriers (CCs)
providing unscheduled service for va-
cation packages (Leick & Wensveen,
2014).
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Europe Airline
Many of applied works studying
on-time performance are based on
data from the United States, typically
from the U.S. Bureau of Transportation
Statistics. Mazzeo (2003), for example,
sampled 50 U.S. airports in January,
April and July 2000 to study the effect
of airline market concentration on flight
delays. Similar results are obtained by
Prince and Simon (2015), who find a
worsening on-time performance of
incumbents at U.S. airports post entry
or even in cases of an entry threat of a
LCC, such as Southwest Airlines.
Fares of FSCs and LCCs on
certain (competing) routes converge,
the main competitive advantage a-
mong carriers for attracting passe-
ngers is the quality dimension, measu-
red in on-time performance (Rupp
and Sayanak, 2008). Low-cost car-
rier competition and airline service qu-
ality in Europe are investigating whe-
ther a higher presence and more ef-
ficient operations of low-cost carriers
(LCCs) can increase the service qu-
ality in terms of on-time performance
of all the flights landing at an airport.
They have problem with delay time for
airlines and flights landing at the
observed airport.
US Airline
To increased competition betwe-
Setiyo Purwanto and Arm anu
en LCCs and FSCs in recent years.
For example, using slightly different
carrier definitions, Leick and Wens-
veen (2014) find that LCC share of
U.S. traffic increased from 16% in
2000 to 25% in 2007, while Hus-
chelrath and Muller (2012) find that
LCC share increased from about
10% in 1995 to about 32% in2009.
Henrickson and Wilson (2016) find
convergence in the probabilities of
FSCs and LCCs serving the same
types of airports and routes over the
1993 to 2013 period.
In the US airline industry low
cost carriers implemented to com-
pare cost and productivity changes of
full-service carriers (FSCs), low-cost
carriers (LCCs) and „other‟ carriers
classified as regional or charter firms.
Turkey and Pegasus Airline
The new liberalization in 2003
has another significant particularity as
well. The aviation not only liberalized
the market but also lifted some
additional taxes on domestic air
transport and reduced airport service
charges in airports run by General
Directorate of State Airports.
In Turkish Airline Market a
competitiveness among Full Service
Network Carriers and Low Cost
Carriers airline companies getting
increased. Many strategic approaches
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
to its operations distinguish the LCC
strategic model from the FSNC tra-
Companies pursue different
strategies in order to cope with this
intensive competition. Many of them
adapt well-known business strategies:
cost leadership, differentiation focused
low-cost and differentiation into their
business strategies. In airline market,
especially Low-Cost Carriers (LCC)
getting a strong challenge for tra-
ditional Full Service Network Carriers
(FSNC) in competition.
Finally, the purpose of LCCs
implementation strategy in Turkish air
transport market was comparing influ-
ences between FSNC and LCC.
Malaysia Airline (Air Asia Airline)
Low cost implementation stra-
tegy in Malaysia Airline was purpose to
examine the nature of price setting
behavior of low cost airlines and evalu-
Sun Tzu‟s five factors
philosophical has emphasized on the
“Generalship”. This principle has been
supported by Hitt et al. (2001) who
states that human capital drives the
company performance. Their finding is
congruent with Collings and Mellahi
(2009), who posit that the skills and
abilities of talented employees repre-
Setiyo Purwanto and Arm anu
ditional strategic model have summa-
rize that below in Table 2
ate financial performance. Price wars
is the fact in aviation industry. reveal
that the competitive pressure has lea-
ded to price predatory. Based on the
Sun Tzu Art of War philosophy, that
"How to win the battle without fight".
The conditions for rationality and suc-
cess in this business game depends
greatly upon the efficiency and intel-
ligence of the line management and
believe that the ability to control the
price war between these two low cost
airlines will provide healthy compe-
tition. They compare the Sun Tzu five
factors in the war and the business,
they stress that the secrets of success
in battlefield and business should base
on Sun Tzu‟s five factors which are
morality, climate, terrain, generalship
and doctrine (Table 1)
sent a major source of competitive ad-
vantages.
The art of Sun Tzu warfare
highlights that the secrets of suc-
cess in battlefield need effective stra-
tegic planning. In the operational re-
ality, low cost airlines in Malaysia fa-
ced with the many challenges such as
governmental control and interference,
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the competitiveness in business, the 2008 to 2010, the rivalry is reflected in

rising of operating cost and more
demanding customers. Therefore, the
survivals of the airlines depend greatly
upon the sustainable strategies to
remain (Sengpoh, 2012). Generally,
these two rival airlines have operated
from the same origin to a number of
identical destinations from the year
the fare offering because the service
package that they offer to customers is
very similar. The trend of the fare
pattern demonstrates that a firm
responds to the aggressive pricing of
the competitors by pricing more ag-
gressively itself.

DATA
Population and sample observation
Europe Airline

The sample 100 European observations at 15-min intervals for

airports located in 76 metropolitan
areas of diverse sizes in 19 countries
on both a daily and flight-by-flight
basis during the period from April
2011 to December 2012. And
constructed a panel dataset at the
flight code level comprising about 3.5
million observations. The frequency of
late or early arrival flights in the
sample. Interestingly a substantial
number of flights are recorded as
arriving early and late about 10%
within the range of 15–30 min, and
almost 40% for flights landing up to 15
min early and late.

US Airline

Setiyo Purwanto and Arm anu 161

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These descriptive statistics
provide a useful overview of cost
determinants, additional insight into
differences between the different
groups of airlines and productivity
changes within each group might be
obtained by examining individual
characteristics. This study uses
individual airline Form 41 financial
Setiyo Purwanto and Arm anu
reports and T-100 traffic data
reported by large certificated U.S. air
carriers to the U.S. Department of
Transportation for the years 1993 -
2014.
Turkey Airline
There are 15 airline companies
operating in the Turkish civil aviation
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
sector, 3 of which are cargo com-
panies. The number of airline aircraft
rose from 349 in 2011 to 370 in 2012,
with a 6,1% increase. Of those
346 are passenger aircraft and 24 are
cargo aircraft. The total seat capacity
There are 15 airline companies
Turkish civil aviation, and 3 cargo
companies. Aircraft no. from 349 in
2011 to 370 in 2012 = 6,1% increase.
Those 346 are passengers aircraft and
24 are cargo aircraft. Total seat
capacity of the airline fleet is 65.208,
and the load capacity for the cargo
aircraft is 1.152.013 kgs. In 2012, 2
new domestic and 21 new international
destination points were launched. Total
flight destinations from 7 to 49 for
the domestic flights, and from 15 to
192 for the international flights pro-
vided by 6 companies. Turkish Airlines
(THY) served 49,5% of the market.
Pegasus (PGT) 25,5%, SunExpress
(SXS) 9,7%, Onur Air (OHY) 8,2%,
AtlasJet (KKK) 5,9% ve Borajet (BRJ)
1,1 % share of the market. Low-cost
carriers have 20% of domestic seats
and 53% of international seats in
Turkey (Jan-2013 to Oct-2013). The
biggest foreign LCCs operating to
Turkey is TUIfly, with only around 6%
of the capacity of Pegasus, followed by
Monarch and Easy Jet.‟
Setiyo Purwanto and Arm anu
of the airline fleet is 65.208, and the
load capacity for the cargo aircraft is
1.152.013 kgs. Airline companies and
the fleet structure are presented in
Table 1
Malaysia Airline
AirAsia low cost airline is
unique because it has transformed
itself from a regional operator that
incurred heavy loses to a profitable
low cost airline. Since 2001, it has
been expanding drastically. Firefly and
MAS Wings, which are the subsidiaries
of Malaysian Airline System (MAS)
Berhad have become a threat to
AirAsia in the domestic market. Lara
News (2013) reveals that AirAsia
Berhad has declared its financial
results for the year ended 31
December 2012 with a profit after tax
of RM1.88 billion and for the full
financial year ended 31 December
2012, there was 11% increase in
revenue at RM5 billion with a net
operating profit of RM858.23 million.
AirAsia equipped with a fleet of
72 aircrafts, flies to over 61 domestic
and international destinations with 108
routes and it operates over 400 flights
daily from hubs located in Malaysia,
Indonesia and Thailand. AirAsia has
flown over 55 million guests and during
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
a five year period, its revenue has
increased more than 300% from
RM330mil to RM1603 mil. The passe-
nger has increased nearly 90% com-
pared to the year 2003 and 2007, profit
has also increased significantly by
98% from RM3.5mil to RM 278mil
compared to year 2003 and 2007,
Depreciation and Amortization (EBIT-
DA) it has indicated a dramatically in-
creased by 80% from 95 mil to 490mil,
the second quarter which ended June
30 (2008) plunged 95% to RM9.
42million from RM185 million
Firefly and Mas Wing, sub-
sidiaries of Malaysian Airline System
(MAS), For the full financial year of
2009 and 2010 ending at March, the
Japanese carrier was reported to in-
cur a loss of RM6.59 billion (USD 2.2
billion) (Andrew, 2010). And the ef-
fects of the stiff competition in the
duopoly market structure in Malaysia
has forced Malaysian Airline,AirAsia
and AirAsia X entered into a Compre-
hensive Collaboration Framework
Agreement in the year
2011, a key aspect of the
agreement was to explore the co-ope-
ration on a broad range of areas.
Nevertheless, this cross-ownership
agreement between Malaysia Airlines
(MAS) and AirAsia has officially been
terminated by the year 2012 (flight
global).
Thousands of jobs have been cut
and more than 30 unprofitable routes
have been terminated. For the full
financial year of 2009 and 2010 en-
ding at March, the Japanese carrier
was reported to incur a loss of RM6.59
billion (USD 2.2 billion) (Andrew, 2010)
METHODE
Research Methodology
According to the paper by
Bimrose, Barnes, and Brown (2005),
the process used for this literature
review is highly systematic and com-
prises a number of distinct phases:
Searching: Identifying the potentially
relevant studies
Setiyo Purwanto and Arm anu
Screening: the application of
predetermined inclusion and exclu-
sion criteria derived from the review
question to report titles, abstracts and
full texts. Data-extraction: the in-depth
examination of studies, meeting the
pre-determined inclusion and exclusion
criteria, to assess the quality of the
study and extract evidence in sup-
port of the in-depth reviews
Synthesis: the development of a
framework for data analysis and iden-
tification of key themes.
Reporting and dissemination:
presentation of the review findings.
This process was conducted in three
steps, namely:
(1) journal identification,
(2) keyword identification and search,
(3) article thematic analysis.
Each step is described in further
detail below.
Journal Identification
The journals to be included in
the sample were identified. To do this,
we used as a reference the paper by
Tight (2012). This study analyzed
the articles published in 4 journals
that focus on Low-Cost Carriers
(LCCs) strategy and Full-Service
Carriers (FSCs) during the years 1993
to 2014. The approach for this study
extensive searches of relevant low
cost journals which are published in
English. We did this for three main
reasons.
1. Such articles are reviewed, which
tends to ensure that they are of
a certain minimum quality.
2. These articles are also normally
research-based-that is, they in-
volve some empirical data collec-
tion and analysis and/or critical
reflection related to the issues
addressed.
3. Analysing only specialized LCCs
journals keeps the analysis more
focused.
The 4 journals selected inclu-
de published in Europe (Germany),
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USA, Turkey and Malaysia:
1. Low-cost carrier competition and
airline service quality in Europe
2. A comparative analysis of cost
change for low-cost, full-service,
and other carriers in the US air-
line industry
3. Competition between Full Service
Network Carriers and Low Cost
Carriers in Turkish Airline Market
4. The Competitive Pricing Behavior
of Low Cost Airlines in the Per-
spective of Sun Tzu Art of War
Keyword Identification And Search
In the next phase, we develo-
ped a search strategy. According to
the method followed by Hart (2006),
we looked for specific code words.
Titles that were considered to address
low cost contained at least one of the
following words: Low cost carriers
(LCCs), full-service carriers (FSCs),
competitive price, Airlines. With these
terms, we searched the databases on
the following categories: article titles,
keywords and abstracts. When these
criteria were clear, introduction of the
articles were also analyzed to
determine the subject matter of the
article according to these terms
(Bimrose et al., 2005). Introductions
to special issues were kept in the
data set, because they make a
substantial contribution to the
literature (Tight, 2012).
Each empirical research paper
was subjected to a thorough review,
using a standard framework to extract
key information about the purpose;
design, sampling, methodology, find-
ings and implications of the study.
Thematic Analysis
For the purposes of analysis and
reporting, we used “thematic analysis”,
derived through an aggregative and
interpretative approach, (Hemsley-
Brown & Oplatka, 2006).
In stage one, four different main
themes were identified in all papers:
The first theme was composed of
papers aimed at investigating
Setiyo Purwanto and Arm anu
whether a higher presence and
more efficient operations of
low-cost carriers (LCCs) can
increase the service quality in
terms of on-time performance of
all the flights landing at an
airport.
The second theme was comparing
cost and productivity changes of
full-service carriers (FSCs), low-
cost carriers (LCCs) and „other‟
carriers classified as regional or
charter firms.
The third theme analyzed competition
in Turkish air transport market
between FSNC and LCC in civil
aviation market by using two
companies.
The last theme was examining the
nature of price setting behavior
of low cost airlines and evaluate
their financial performance.
The second stage involved a
preliminary analysis of all articles
and the identification of initial
categories and review process.
Stage three, this process resulted in
different categories to identify,
explore patterns and trends in
publication outlets to create the
type of research conducted.
Finally, we analysed the content of the
articles included in our database
to provide guidance on the topic,
identifying the main areas of
interest in the literature, and
finding new paths for research.
Discussion and Implications for
Future
The purpose of this study has
been to provide a review of the litera-
ture on low-cost implementation stra-
tegy differences between low-cost car-
riers (LCCs) and full service carriers
(FSCs) in observation during the range
period from 1993 to 2014.
In Europe Airline has a problem
with on time performance of landing
(aircraft arrival) on airport. At the
several reports in the aviation industry
document the most punctual airlines,
ranking them in descending order by
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
an on-time performance indicator,
such as the percentage of flights
delayed less than 15 min. The impact
of airline delay can have detrimental
effects for both passengers and
airlines. Then did some researches
what caused of flight delay from .
Bureau of Transportation Statistics.
Mazzeo (2003), for example, sampled
50 U.S. airports in January, April and
July 2000 to study the effect of airline
market concentration on flight delays.
He finds that on monopoly routes the
prevalence and duration of flight
delays is significantly greater. A more
recent study by Greenfield (2014)
comes to similar conclusions by
analyzing the top 100 airports in the
U.S. serving most arrivals and
departures.
Then they investigated whether
a different composition of competing
carrier types - full-service carriers
(FSCs) versus LCCs -serving an
airport, might impact the on-time
performance of all the flights landing at
such an airport. In their research,
covers 23,402 flight codes, 3270
routes and 100 airports for a total of
3,486,376 observations. Sample pe-
riod includes daily observations from
April 16th, 2011 to December 23rd,
2012. Applying panel data fixed effect
techniques and controlling for the most
cited factors affecting airline on-time
performance, they find that a stronger
presence of LCCs at the airport of
LCCs
1. Carriers had fares that were 50 percent 1. Provides frequent service to a wide-
lower than those set by the CAB, and
they were profitable (Bailey, 2002).
2. Operating a point-to-point network,
allowing the carrier to realize savings in
ground crew, maintenance, gates and
other airport expenses from not having
to accommodate a number of arrivals at
approximately the same time to facilitate 2. Travelers have a number of choices for
connections
3. A uniform airline fleet, allowing the
carrier to realize savings in buying parts, 3. Provide service to a large number of
in maintenance, and in training costs
(employees specialize in one type of
aircraft)
Setiyo Purwanto and Arm anu
origin has a positive and statistically
significant effect on the on-time
performance of the flights.
The finding of this are LCCs
contribute to a reduction of delays for
airlines and flights landing at the obser-
ved airport
In US Airline, during the com-
petitive pressure in aviation carrier
services industry, LCCs has contri-
buted to increased efficiency and the
threat of bankruptcy for full-service
(sometimes referred to as legacy)
carriers. For instance, in the last 13
years, each of the three largest U.S.
full-service carriers has declared bank-
ruptcy.
On the other hand, Borenstein
(2011) argues that the cost difference
between LCCs and full-service carriers
has not converged in recent years,
with costs adjusted for average flight
distance remaining 40 percent higher
for FSCs in com-parison to LCCs
over the last decade. This study ex-
plores recent cost changes of pro-
ductivity in density, firm size, move-
ment characteristics, technical change,
and input prices for LCC and non-LCC
carriers.
The took almost all airline in-
dustryin US with airline form 41 finan-
cial reports and T-100 traffic data
reported by large certificated U.S.
air carriers to U.S. Department of
Transportation for 1993 s/d 2014 about
638 observations and 61 carriers.
FSCs
variety of destinations, and provides a
number of ancillary services, including
complementary beverages, in-flight
entertainment, airport lounges, and
assigned seating (Gillen, 2006;
Huschelrath & Muller, 2012; Leick &
Wensveen, 2014).
flight times, and can arrive at many
destinations without switching airlines.
origin-destination pairs, with frequent
service has been the development of
the hub-and-spoke system (Borenstein,
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
4. Serving smaller, secondary airports,
where airport charges are often lower
and where there is less congestion, 4. Passengers benefit from the increased
resulting in faster turnaround of planes
5. No-frills service or unbundling of
services, including unreserved seating,
no free food/beverages, no free 5. Offers refundable tickets, serves a
baggage, no in-flight entertainment
6. plane configurations that have more
seats per plane and non-reclining seats,
allowing the carrier to carry more
passengers on a given flight
7. Simplified yield management, with
fewer classes of passengers, resulting
in savings in analytics
8. Using fewer employees per aircraft;
and (8) using non-union labor. In
addition, these carriers have used
innovations to increase revenues.
Then the result of comparing
service above are reductions of 10%
for FSCs and 22% for regionals/
In Turkey Airline, competitive-
ness among airline market companies
getting increased. Companies pursue
different strategies in order to cope
with this intensive competition. Many
of them adapt well-known business
strategies: cost leadership, differen-
tiation focused low-cost and diffe-
rentiation into their business strate-
gies. In airline market, especially
Low-Cost Carriers (LCC) getting a
strong challenge for traditional Full
Setiyo Purwanto and Arm anu
1992; Gillen, 2006; Bailey, 2002; Pels,
2008; Peteraf & Reed, 2008).
frequency of service and the wider
array of destinations accessible without
switching airlines.
large number of airports, and carries
passengers together that are
traveling to different destinations, this
can be extremely complex.
charters, and cost increases of 8.5%
for LCCs from 1993 to 2014.
Service Network Carriers (FSNC) in
competition.
Turkish Civil Aviation, there are
15 airline companies, 3 of which are
cargo companies and Pegasus Airli-
nes with 75 are firm orders. Those
are 346 passengers aircraft and 24
are cargo aircraft. The total seat capa-
city of the airline fleet is 65.208, and
the load capacity for the cargo aircraft
is 1.152.013 kgs.
Focused at competition between
LCC and FSNC in Turkish civil aviation
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
market by using two companies
SWOT analysis, that is an important
support tool for decision-making, and
As a result of rapid develop-
ments in the country's civil aviation
activities (flight, passenger and cargo
traffic growth; increases in manufac-
turing, and maintenance-repair- over-
haul activities; new airports and busi-
ness developments, etc.), the sector
needs qualified personnel therefore,
the number of institutions in higher
education within the framework of civil
aviation sector has increased quotas.
Turkey‟s geographical location is
such that short/medium-haul destina-
tions overall account for 88% of inter-
national seats. This has also been a
significant driver of THY‟s (Turkey Air-
line) successful strategy to position its
Istanbul hub to compete on the inter-
national transfer markets. The country
is attractively geographically positi-
oned, located only three hours flight
time from 50 different countries and its
unique position.
In Malaysia Airline, price wars
are the fact of today‟s aviation in-
dustry. They seeks to examine the
nature of price setting behavior of
low cost airlines and evaluate their
financial performance. The findings
reveal that the competitive pressure
has leaded to price predatory.
Setiyo Purwanto and Arm anu
is commonly used to systematically
analyze organizations internal and
external environments.
Sun Tzu Art of War (Chapter
3) highlights that "...Hence to win
100% in every single battle is not
supreme excellence; supreme excel-
lence is winning the war without
fighting”. The battle avoidance theory
is one of the important theories that
embedded in this philosophy. Sun Tzu
emphasize leadership requires five
qualities trustworthiness, intelligence,
humaneness, courage and discipline.
In the year 2008, AirAsia in
Malaysia chose to compete directly
with the full service airline by launching
its own “sub zero fare” campaign and
faced a massive competitive threat an
effective assault. There some 72 air
crafts, flies to over 61 domestic,
international destinations with 108
routes. It operates over 400 flights
daily from hubs located in Malaysia,
Indonesia and Thailand that was ob-
served. The sample was taken over
400 flights daily and flown over 55
million guests that was observed
Malaysia airline used “Granger
Causality Test” to test the relationship
between ticket price and airlines. The
pair regressions equations were
estimated to identify the causality
effects. The test assumes that the
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
information relevant to the prediction of
the causality.The relationship between
the ticket price of the two airlines in 6
domestic market routes has been
examined and further observe the
causality pattern that lead to identify
the price leader. Data have been
collected in two duration periods for 60
days each. The two set of primary
data have been collected from the
airlines‟ websites from (13 November
to 11 January 2010) and (23April to 21
Jun 2010).
The result of low cost airlines
has a powerful presence and signi-
ficant impact on airlines‟ industry.
Healthy competition will ensure the
customers who purchased the ticket
for travelling.
Limitations and Future Research
Also, the present paper has its
limitations. The fact that this study has
been restricted to low cost carrier
journals and not consider professio-
nal publications may be a possible
limitation. Future research could be
added few objectives journals that
provide a broader research on low
cost carriers with various cases.
Another limitation of the study is
related to the methodological decision
with respect to the selection of code
words to find out those articles
related to low cost carriers. In the near
future, this limitation could be solved
by means of using more number of
code words (such as customer,
behavior, market share).
Moreover, this study can serve
as a springboard for other research.
For example, similar studies that look
at segmentation and market share
inform the percentage customer
responses if low cost and full service
carrier implemented in the same
airport areas with different site and
gives a choice to the passenger We
are aware of limitations caused by
focusing on low cost journals only.
Research on low cost carrier can be
explored to expand business in future.
Setiyo Purwanto and Arm anu
CONCLUSIONS
The analysis differential of low
cost carrier strategy that implemented
in airline industry has similarity res-
ponse in the market needs, even be
compared with full service carriers.
Currently, low cost strategy will be
basic needs for customer behavior
and it is not meaning fare cheap only,
but there must be many customer
advantages.
Customer has many choices for
aviation environment, they face to hy-
per competition situation. Airline car-
rier services must to think hard to re-
duce cost and give excellent service
to customer. The globalization busi-
ness with high technology information
that can be help to make many ap-
plication services without human con-
tact, they must take a challenge to
sustain their business forward.
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THE INFLUENCE OF SOCIAL CAPITAL, INTELECTUAL CAPITAL AND

ENVIRONMENT DYNAMISM TOWARD
EMPLOYESS PERFORMANCE

Anwar Hamdani
I Gusti Putu Diva Awatara
STIE AUB Surakarta

Abstract: The purpose of this research to analysis of the influence of social capital,
intelectual capital and environment dynamism toward employees performance.
This research including research survey conducted in Mediun Enterprises in Solo
city. Technique the sample collection with the methods census that all a member of
the population used as sample. Sample in this research was all management of
Medium Enterprises who total about 55 managers. Methods of data collection in
this study are a survey method using a questionnaire. This technique is used to
collect primary data. The analysis of the research was using multiple linier
regression. Based on the analysis results showed the social capital, intelectual
capital and environment dynamism has positive effect toward employees
performance.

Keywords: social capital, intelectual capital, environment dynamism, employee

performance

Social capital is now considered analysis become the focus of rese-

as a suitable context to develop human
and physical capitals and to attain
success (Faghihi, 2006). It has been
developing through the disciplines of
social sciences, economy and recently
in political sciences. The emphasis on
social capital, particularly in economic
arena, is mainly placed in terms of the
role it plays in developing human,
economic and environmental capitals
(Alavi, 2003). In the realm of economic
development, it is principally concer-
ned with the limited influence of eco-
nomic perspective in reaching sustain-
able development goals. Social capital
is a new concept developed recently to
address economic investigations in
modern societies (Tajbakhsh, 2003).
Social capital often interpreted
differently. The researchers said social
capital is community level attribute,
although researchers which treats
social capital oriented the approach on
an individual (Glaeser et al, 1999 ).
This means that social capital will be
concept that has meaning highly ela-
stic or wonderfully elastic term (Adler &
Kwon, 2002).
The diversity definition social
capital arises from the difference in the
archers. Narayan and cassidy (2001)
having focus on the macro analysis ,
divide social capital into several
dimensions that includes: group cha-
racteristics, generalized norms, toge-
therness, everyday sociability, network
connections, volunteerism, trust.
In general, social capital is the
glue that brings and holds communities
together (Cohen & Prusak, 2001). It
refers to networked ties of goodwill,
mutual support, shared language, sha-
red norms, social trust, and a sense of
mutual obligation that people can de-
rive value from. Subsequently, social
capital is in relation to value gained
from being constituent of a network. By
being a member of a group, people ga-
in access to resources that non-mem-
bers do not have. These resources ra-
nge from example, access to potential
career moves, and access to resour-
ces in entrepreneurial start-up proces-
ses, to access to cooperative services
in developmental countries.
The organizational knowledge is
more important than organizational
property, a fact which points out to the
significance of intangible assets and of
the intellectual capital, in particular. It is

Anwar Hamdani and I Gusti Putu Diva Aw atara 171

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
in this line that Bohlander and Snell
(2007) and Sumedrea (2013) link the
intellectual capital with firm‟s welfare
and efficiency, the former being appro-
ached as a key driver for orga-
nizational progress.
The knowledge that forms intel-
lectual capital can be viewed as being
created through two generic proces-
ses: combination and exchange. In the
context of combination we often see
new knowledge evolve through incre-
mental change to previous knowledge.
We may also see a more radical cha-
nge from existing knowledge when a
dramatic innovation takes place. Both
of these learning events come from
simply combining elements of know-
ledge that were previously unconnec-
ted or finding a new way to combine
elements that had some previous as-
sociation. Exchange is often the key
facilitator of this combination. Ex-
change allows different parties the op-
portunity to combine, reframe, and
understand different experiences and
unique perspectives. Exchange is not
limited to a simple passing of an ele-
ment from one person to another. New
knowledge and understanding can
result from a more dynamic activity
such as social interaction and coac-
tivity. Often making the connection oc-
curs when a previously unknown ele-
ment becomes known as happens in
social interaction when one element
surfaces and another rises in response
to the first.
An additional factor in the
development of Intellectual Capital is
the dynamic nature of knowledge. As
we learn more what we know changes.
This dynamic nature reflects the value
of interaction that allows both the
primary exchange and the opportunity
for analysis of the ramifications of
combinations that have been deve-
loped.
LITERATURE REVIEW
Social Capital
Social capital can perhaps be
best thought of as the human element,
Anwar Hamdani and I Gusti Putu Diva Aw atara
such as learning, trust, and innovation,
which is created and enhanced during
interpersonal interactions. Robert Put-
nam‟s best selling book, Bowling
Alone: The Collapse and Revival of
American Community, provides a view
of social capital at a community and
national level. He
observes that the term social
capital “ … turns out to have been
independently invented at least six
times over the twentieth century, each
time to call attention to the ways in
which our lives are made more
productive by social ties (McGrath &
Spark, 2006).
Nahapit and Goshal (1998) from
an organizational point of view,
describe social capital as the sum of
actual and potential resources existing
within, accessible via, and produced
from the relationship network of an
individual with a social unit. They view
social capital as one of the key
organizational capabilities and assets
which can be of much help to organi-
zations in knowledge creation and sha-
ring, and in giving them a sustainable
organizational advantage relative to
other organizations. They assign diver-
se aspects of social capital to three
classes of structural capital, relational
(customer) capital, and cognitive
capital which are treated in the
following paragraphs.
In economic view, social capital
can be considered as a type of impor-
tant capital in any organization or so-
ciety. Specifically, social capital is an
interdisciplinary field currently found a
niche in several fields of humanities. It
provides a significant bridge between
economy, sociology and political scien-
ces, which addresses social values,
particularly public relations to achieve
common goals at the macro-level
through adopting a new perspective
(Shahrabi, 2012).
Intelectual Capital
Intellectual capital is charac-
terized as the kind of knowledge con-
vertible into value and is identified in
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
the form of practical experiences, orga-
nizational technology, customer relati-
onship and professional skills used to
achieve competitive advantage (Edvin-
sson & Sullivan, 1996). Intellectual ca-
pital includes all knowledge-based re-
sources producing value for the orga-
nization as the total knowledge of
employees and applied knowledge of
organization members (Roos & Roos,
1997).
According Rahimnia & Najminia
(2014) intellectual capital is a concept
which suggests immaterial capital
creates more value than material
capital does, hence through expansion
of employee relations, creativity, and
innovation organizations can produce
more value. Intellectual capital refers to
organizational or individual knowledge
resulting in sustainable competitive ad-
vantage in organization and is pro-
duced by combining abilities of all em-
ployees. In other words, intellectual ca-
pital is defined as strategic asset of or-
ganization the use of which will result
in differentiation of its goods and servi-
ces from other organizations.
The intellectual capital as a
prominent research interest has been
consolidated by several authors‟ major
contributions. In this point, Bratianu
and Orzea (2013) have underlined
some of the most important studies
which supported the advent and deve-
lopment of the new research field. Bra-
tianu (2007) posits, the intellectual ca-
pital issue has known different ap-
proaches over time, Johnson et al
(2011) bringing forward a dynamic
view on the organizational intangible
assets. Assumed either as a stock or
as a flow, the intellectual capital has
set itself up as a source of competitive
advantage, stimulating the organiza-
tion‟s change and adaption in a ver-
satile and hard to predict environment
(Halawi et al, 2005).
Environment Dynamism
Organizational scholars from
diverse research disciplines agree that
in today‟s dynamic environment, or-
Anwar Hamdani and I Gusti Putu Diva Aw atara
ganizations need to be ambidextrous -
aligned and efficient in their mana-
gement of today‟s business demands,
while also adaptive enough to be able
to meet the demands of the envi-
ronment they are likely to encounter
tomorrow (Raisch & Birkinshaw, 2008).
While structural ambidexterity embo-
died in dual structures has been sug-
gested as means of negotiating the
environmental uncertainty long back,
there is a growing recognition and evi-
dence that the organizational pro-
cesses and systems can create the ne-
cessary context (contextual ambidex-
terity) that provides an alternative,
which may be equally valuable but mo-
re difficult to imitate, mode of creating
organisational ambidexterity (Gibson &
Birkinshaw, 2004).
Recent advances in dynamic
capability literature identify a firm‟s
ability to achieve “value enhancing
orchestration of assets” as one of the
micro-foundations of dynamic ca-
pabilities of firms. According to this
perspective, firms build long-run sta-
keholder value through sensing, se-
izing, and transformational activities
that help firms combine and recon-
figure specialized and cospecialized
assets to meet changing market de-
mands (Teece, 2007). Similarly, from
the perspective of the real options
theory, an organization is viewed as a
set of resources that generate
“strategic choices” and “allow prefe-
rential access to future opportunities”
(Bowman & Hurry, 1993). The dynamic
process of organisational change is
depicted as a sequential option chain;
each investment conferring preferred
access to a subsequent investment
opportunity that helps the firm to
exploit opportunities and guard against
downside risks in an uncertain
environment. In this perspective too,
the process involves sense making,
proactive learning, and appropriate
exercise of managerial choices aided
by the organizational systems and
processes (McGrath et al., 2004).
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
Dynamic environments are cha-
racterized by unpredictable and rapid
change, which increases uncertainty
for individuals and firms operating with-
in them. Uncertainty is the difference
between projected and actual out-
comes, and results from the limited
availability of information for decision
making. Due to high levels of uncer-
tainty, decision makers working in dy-
namic environments tend to suffer from
greater information processing bur-
dens. As a result, these individuals are
likely to experience high levels of
stress and anxiety. This effect can be
partially mitigated by distributing deci-
sion making responsibilities across top
management teams (Ensley et al,
2006).
RESEARCH METHOD
This research including research
survey conducted in SME‟s in Solo
city. Sample in this research was all
management of SME‟s who total about
55 manager. Technique the sample
collection with the methods census that
all a member of the population used as
sample (Ghauri and Gronhaug, 2010).
Social Capital is a three dimen-
sional phenomenon which Adler and
Kwon (2000) described to be the
shared networks, norms and beliefs of
a group of individuals. Social Capital is
nostrum; „it‟s not what you know, but
whom you know that matters‟ (Fine,
2003). All forms of social relations can
build social capital, be they informal or
formal relations. Social Capital pro-
vides individuals with resourceful (e.g.
enhanced communication, networking
and better access to resources)
relationships that go a long way to pre-
dict organisational performance.
Scales measuring intellectual
capital dimensions were drawn from
existing literature. Human capital and
organizational capital were measured
drawing from Subramanian & Youndt
(2005). The four items of the scale for
human capital were used to measure
the extent to which an individual per-
ceives the stock of knowledge and
Anwar Hamdani and I Gusti Putu Diva Aw atara
knowing capability of his/her profes-
sional practice of reference. On the
other hand, social capital was mea-
sured using eight items gauging the
degree to which an individual per-
ceives the overall pattern of con-
nections of his/her network of relations
and the quality of his/her personal
relationships (Subramanian & Youndt,
2005).
Environmental dynamism has
been studied in the extant literature in
terms of both objective and perceptual
measures. In process-oriented studies
like the present one, firm environment
has often been examined through the
perceptual lens of the managers be-
cause of certain inherent advantages
(Aragon-Correa & Sharma, 2003). A
multi-item 7-point Likert-type scale was
developed following the standard scale
development protocol. Since each firm
was expected to build only the „re-
quired flexibility‟ as perceived by the
managers of the firm (Volberda, 1998).
The scale on employee perfor-
mance had 10 items and included
dimensions such as customer orien-
tation and quality consciousness. The
scale on operating performance had
10 items relating to cost, quality, and
cycle time of operations, and the scale
on financial performance had 5 items
covering revenue growth, profitability,
operating cost efficiency, market share
growth and overall financial perfor-
mance.
Methods of data collection in this
study are a survey method using a
questionnaire. This technique is used
to collect primary data. The analysis of
the research was using multiple linier
regression.
ANALYSIS AND DISCUSSION
Analysis
The Statistical Package for
Social Sciences Software (SPSS) was
used to analyse the data. The analysis
was conducted quantitative methods
were also employed to estimate the
contribution of social capital, intelectual
capital and environment dynamism
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
toward employees performance using
multiple linier regression analysis. The
Table 1. The results of testing hypotheses
Variable
Social capital Employees performance
Intelectual capital Employees performance
Environment dynamism Employees
performance
F test = 143.045
2
R = .888
Note: **p < .05; ***p < .01
Sources: data analysis, 2016
According to the table 1, showed
that hypothesis testing results indicate
that social capital, intelectual capital
and environment dynamism significant
positive effect on the employees per-
formance with a significance level of
1%.
Discussion
According to the aforementioned
discussions on the economic and so-
cial aspects of social capital, we would
now consider the dimensions of social
capital from different viewpoints to
reach a comprehensive model in the
end. We would delineate the evolution
of social capital dimensions as follows:
Dimensions of social capital as re-
presented by Lina and Van Burn: de-
pendence and trust, dimensions of
social capital as represented by Na-
hapit and Foushal: structural, com-
municative and cognitive, dimensions
of social capital as represented by
Bourdieu: group or network size and
capital volume in each network, di-
mensions of social capital as repre-
sented by Sabouri: mutual commit-
ment, expectations and trust; commu-
nicative canals; and executive norms
and guarantees, dimensions of social
capital as represented by Kennedy
group: trust, political participation, civil
participation and leadership, informal
social ties, forgiveness and volun-
teering morale, religious participation,
justice in civil participation and diversity
of sociability and friendships, dimensi-
ons of social capital as represented by
Anwar Hamdani and I Gusti Putu Diva Aw atara
results of the testing of hypotheses in
this research was:
Coefficient t test Sig Statement
.194*** 3.019 .004 Significant
.285*** 3.701 .001 Significant
.579*** 8.773 .000 Significant
.
Lackly: structural networks and quality,
dimensions of social capital as re-
presented by Aston: quality of social
relations (norms) and structure of
social relations (networks).
Intellectual capital is predomina-
ntly a product of the interaction bet-
ween the three mentioned elements,
since human capital alone is not able
to create such difference unless it is
combined with the other two elements.
In the following, each feature or dimen-
sion is handled separately. If the com-
pany managing of efficient source of
intellectual power (physical capital, hu-
man capital and structural capital) ow-
ned the company would provide results
inflated indicated of the improving per-
formance of employees.
The environmental dynamism
would help the managers to ask right
questions to make an accurate as-
sessment of the need for human re-
sources in the context of likely changes
in both macro and micro environments
in which the firm is operating. Secon-
dly, the human resources value chain
deciphered by this study inform the
managers that financial performance of
the firm can be impacted by the human
resources system of the firm only
through the prior achievement of rele-
vant human resources outcomes (e.g.,
customer orientation of employees),
followed by causally related opera-
tional outcomes (e.g., customer satis-
faction level). Thus, the managers sho-
uld be aware that to achieve superior
financial performance they have to
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
work up through this causal chain and
there is likely to be some inevitable de-
lay between adoption of some human
resources initiatives before they show
up as improvements in firm level ope-
rational and financial outcomes. Also,
overall improvements in firm level per-
formance are quite often the result of
not one but a bundle of interdependent
human resources practices which rein-
force one another to produce synergis-
tic effects.
CONCLUSION
The results of the research which
examined the analysis of the influence
of social capital, intelectual capital and
environment dynamism toward emplo-
yees performance and the implications
on the firm value are as follows the
social capital, intelectual capital and
environment dynamism has positive
effect toward employees performance.
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MODEL OF DEVELOPMENT COMPETENCE ENTREPRENEURSHIP

FOR SME’S PRACTITIONERS LIVING IN THE FLOW OF RESERVOIR
GAJAH MUNGKUR WONOGIRI BASED THE VALUE OF A
CHARACTER AND LOCAL WISDOM

Anggoro Panji Nugroho

Agus Utomo

Abstract: The research aims to analyze model of development small and medium
enterprises (SME’s) practitioners in perspective the value of a character and local
wisdom. The purpose of specific this research, understand a strategic values
character and keraifan local to the influence of economic in building social life,
economic, and SME’s practitioners based local knowledge. Subject research is
SME’s practitioners living in fringe channel reservoir Gajah Mungkur still preserve
the value of a character based local wisdom. The kind of research is research and
development. Steps research started survey and need assessment for the sme
practitioners, the value of a character local development, media the implementation
of the model, action and evaluation. The research carried out in this area Wonogiri
district especially along or fringe the flow of reservoir gajah mungkur for the SME’s
was conducted over six months, that is april -- september 2015. Technique data
collection use observation, interview, demontration and simulation. Data analysis
using a technique integrated between the quantitative approach with the program
Lisrel (linear structural relations) and qualitative with interactive model. The results
of research is: obtained basic data potential of the village in the study areas that is
concerned with the problems and other supporting the implementation of the
development of the soul and competence entrepreneurship for the poor through
the value of a character; can be obtained data the base of a figure the prevalence
of the number of people sme practitioners; conducted need asessment from the
community SME’s practitioners the development of the value of a character and the
local wisdom, who have been caught and identification; prepared model of soul
and entrepreneurship competence for the community group SME’s through the
value of a character; prepared team instructors and the executor of the soul a
program to develop entrepreneurship and competence for the SME’s practitioners
through the value of a character; provide opportunities a less number is more than
50 SME’s practitioners to appraise increase the development of soul and
competence entrepreneurship through guidance the value of a character and local
wisdom; can increase development soul and competence entrepreneurship
through guidance the value of a character for the sme practitioners; creating a
entrepreneurship through guidance the value of a character for the SME’s
practitioners living fringe the flow of reservoir Gajah Mungkur.

Keywords: entrepreneurship, community development; SME’s practitioners;

value of a character; local wisdom.

Industrialization in the wonogiri to ship supported good. This can only

be marked with growing of business
life promising future development by
relying on the value of a character, so
prosecuted the ability
entrepreneurship good. For it, the
SME’s in the wonogiri worth noting its
ability to compete for activity and work
in industrialization demanded the
advancement of science and tech-
nology and skills special entrepreneur-
won by the development of life and
entrepreneurship competence for the
sme practitioners through coaching the
of value of a character based local.
Previous researchers have
implemented a variety of research ac-
tivities concerned with the develop-
ment of soul and entrepreneurship
competence for the sme practitioners
through the development based of the

Anggoro Panji Nugroho and Agus Utomo 178

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
value of a character and local wisdom.
Researchers interested the theme of
research that is concerned with the
premises. Build soul and entre-
preneurship competence for the sme
practitioners through guidance the
value of a character based the local
wisdom for this reason: this research
activity follow up previous studies, help
the poor in an effort to approach
education nation character based the
local wisdom for the sme practitioners
living within the banks of a channel or
fringe of reservoir Gajah Mungkur
Wonogiri.
The research purposes know
testing model of life and entrepre-
neurship competence for the SME’s
practitioners living on the outskirts of
the stream reservoir Gadjah Mungkur
through the value of a character based
local knowledge; the planting in the
implementation of the development of
competence soul and entrepreneurship
for SME’s practitioners who lives on
the outskirts of the stream reservoir
through Gadjah Mungkur value
character based local wisdom; know
the effectiveness of model of life and
entrepreneurship competence for the
SME’s practitioners living on the
outskirts of the stream reservoir of
Gajah Mungkur through the value of a
character and local wisdom;
development lives and
entrepreneurship competence for the
sme practitioners living on the outskirts
of the stream reservoir Gadjah
Mungkur through the value of a cha-
racter and local wisdom a good SME’s
and professional, residents and a
citizen who has the manners of a
sublime; as people will formed the
nature of character responsible, dis-
cipline, and honest in managing
SMES’s and institution in which they
working.
REVIEW LITERATURE
Patel (2005) entrepreneurship is
a process create something new and
afraid to take risks and reap. The
Experts agree that what is meant by
Anggoro Panji Nugroho and Agus Utomo
entrepreneurship related to three be-
havior that in: creative, commitment
(highly motivated and full respon-
sibility) and afraid to take risks and fa-
ilure. Entrepreneurship is the process
of innovation and creation. The entre-
preneur is innovators and creators
(Kao, 1991). The entrepreneur is in-
novators (Hisrich & Peters, 2003).
Entrepreneurship is an acronym for
creative: energetic, insight broad, in-
novative, business plan, aggressive,
tenacious, supel, enthusiastic, frugal,
enthusiastic, negosiatif. Buchari (2006)
entrepreneurial term derived from a
entrepreneur translated into english to
the meaning of between taker or go
between.
Drayton et al (2007) configura-
tion character in the context of the to-
tality of psychological processes and
sosial-kultural it can be grouped in: if
the spiritual and emotional develop-
ment, intellectual development, sports
and a kinesthetic physical and kines-
tetic development, and affective and
creativity development.
Bygrave (2004) universally vari-
ety of character formulated as values
with based on pillars: peace, respect,
cooperation, freedom, happinnes, ho-
nesty, humility, love, responsibility,
action, simplicity, tolerance and unity.
Sudarto (2007) philosophical
character raised namely: mahayu
hayuning saliro (how life to improve the
quality of self); mahayu hayuning
bongso (how fighting for countries);
mahayu hayuning bawana (how to
build welfare in the world).
RESEARCH METHOD
The research test model of
competence entrepreneurship for
SME’s practitioners living along the
reservoir Gadjah Mungkur Wonogiri
based on the value of a character and
local wisdom. The cycle stages of R &
D of Borg and Gall (1989)8. This model
tested in teoritik empirical and in the
field after discovered model in a
tentative manner through the prelimi-
nary study. Design research and deve-
179
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
lopment (R & D) Borg and Gall (1989)
give a reference to the researchers for
performing research and development.
The variables involved in this
research include: lives and entre-
preneurship competence, the local
character values. Reference three vari-
ables of development and competence
entrepreneurship for the poor who live
fringe reservoir of Gajah Mungkur
through the development of local
character values, namely preserve lo-
cal knowledge, prepared a model that
position hypothetic intensity service;
model consisting of sub variabel: com-
petence entrepreneurship; consisting
of sub variable: confidence and an initi-
ative; motive trying to; people entre-
preneurship; know what is going to
happen; ability to handle finances; the
ability to regulate time; the plan; give
satisfaction to customers; strategy
know how to compete; pillars the value
of a character; consisting of sub vari-
able: peace; appreciate; cooperation;
honesty; humility; affection; respon-
sibility; simplycity and tolerance.
The subjects of the study: the
poor SME’s practitioners live fringe of
reservoir channel Gajah Mungkur thro-
ugh the development of the value of a
character local; government officials
(the office for cooperatives, office of
industry and trade, chapter) associated
with sme practitioners; the institution
college, various non-government orga-
nizations and association that handles
SME’s practitioners.
The research carried out in the
district wonogiri especially fringe the
reservoir of Gajah Mungkur in the vil-
lage of Sendangijo on Selogiri Wono-
giri. Chosen this area preliminary ba-
sed on the study found a lot the SME’s
practitioners problematic still preserve
the character and local knowledge to
development. The research was con-
ducted over six months begin april until
october 2015.
The kind of data and methods
used: data collection, identification and
need assessment of the poor SME’s
practitioners live fringe the reservoir
Anggoro Panji Nugroho and Agus Utomo
Gajah Mungkur through the value of a
character local with survey, obser-
vation and interview; data a matter for
instructors model arranged of a work-
shop with government agencies rela-
ted, a team of experts, community lea-
ders and researchers; data on the abi-
lity of implementing instructor model
gathered by the survey, interviews and
observation; data on the design im-
plementation operational model, obta-
ined through interviews and obser-
vation; the data about the effectiveness
of the application of the development
of life and competence entrepreneur-
ship for the poor live fringe the reser-
voir Gajah Mungkur through the deve-
lopment of local character values; wo-
uld be collected by using the method
survey, tests, observation and the
interviews.
The data have been collected
edited, and then processed through a
computer. Data analysis using inte-
grated techniques between the quan-
titative approach with program Lisrel
(linear structural relations) and quali-
tative with interactive model.
RESULT AND DISCUSSION
The Model of competence
entrepreneurship for SME’s practiti-
oners living along the reservoir of
Gajah Mungkur Wonogiri based on the
value of a character local wisdom and;
some research has done: the
importance of education and sociali-
zation values in achieving civil society
of the character and morals; educa-
tional model anti corruption for college
students in college in achieving a good
citizen; the importance of education
multicultural marriages in society
compound; relations orientation
cultural values and education for the
left. The survey was conducted help
the poor in an effort to consider
entrepreneurship character values.
The build lives and community
competence insightful local entrepre-
neurship wonogiri is not easy, easier
deliberation and said than it. This is
reflected in the existence of obstacles
180
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
in building culture entrepreneurship.
The entrepreneurship is key principles
in how to build characteristic tough,
creative, innovative, smart, indepen-
dent, and can take advantage of op-
portunities have therefore cultural
development entrepreneurship to cross
fields and not just think business.
The steps of development en-
trepreneurship includes several stage
as follows: the collection of information;
planning; develop the product of pre-
lude; testing the field prelude; the revi-
sion of the main product; testing on
centre court; revision operational pro-
ducts; testing the field operational;
revision final product; the spread and
implementation.
CONCLUSIONS
The researh showed that:
obtained basic data potential of the
village in the study areas with regard to
the problems and the development of
supporting lives and entrepreneurship
competence for the poor through
community character values; can be
obtained basic data the prevalence of
the number of people SME’s prac-
titioners; can be done need asessment
of the SME’s practitioners development
through the value of a character and
local wisdom; prepared model of life
and entrepreneurship competence for
the group SME’s through the value of a
character; prepared team instructors
and implementation development pro-
grams lives and entrepreneurship com-
petence for the SME’s practitioners
through the value of a character; pro-
vide opportunities a number of appro-
ximately fifty the SME’s practitioners to
improve the lives and entrepreneurship
development competence through the
value of a character and local wisdom;
the improve the lives and entrepre-
neurship development competence
through the value of a character for the
SME’s practitioners; creating a training
Anggoro Panji Nugroho and Agus Utomo
entrepreneurship through the value of
a character for SME’s practitioners li-
ving fringe of reservoir Gajah Mungkur.
REFERENCES
Patel, V. G.. Entrepreneurship Deve-
lopment Programme in India and
Its Relevance Developing Coun-
tries, Entrepre-neurship Develop-
ment Institute of India, Ahme-
dabad, in Louck. (2005) Training
Entrepreneurs for Small Busi-
ness Creation.
Kao, John. Entrepreneurship, Crea-
tivity & Organization, Harvad Bu-
siness School. (1989). Prentice
Hall. Englewood. New Jersey
Hisrich & Peters. It’s not an exact sci-
ence: teaching entrepreneurship
in Northern Ireland, Journal of
Education & Training, 48(5).
(2003). pp. 322-335
Buchari. Kewirausahaan Sekolah Berba-
sis Kreativitas dan Inovasi, (2006).
Direktorat Tenaga Kependidikan
Departemen Pendidikan Nasional,
Jakarta
Drayton B., Hanlon, D. and King, W.
Some research perspectives on
entrepreneurship education,
enterprise education and educa-
tion for small business manage-
ment: a ten-year literature revi-
ew, International Small Business
Journal, Vol. 15 No. 3. (2007).
pp. 56-77.
Bygrave, W.D. The Portable MBA in
Entrepreneurship, John Willey
& Sons, Inc. (2004). New York.
Sudarto, T. “Pengembangan nilai-nilai
luhur budi pekerti sebagai karak-
ter bangsa” dari file/H./Pengem-
bangan%20Nilai-nilai%20Luhur
% 20 Budi% Pekerti. Diakses
tanggal 12 Maret 2010.
Borg R Walter, Gall Mredith D, (1989),
Educational research, an intru-
duction, Routledge, New York
181
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

CSR FOR SUSTAINABILITY: ETHICS FOR FOOD MANUFACTURING

IN INDONESIA FOCUS ON NON-TAYYIB FOOD ADDITIVES

Listian Indriyani Achmad

Noermijati
Rofiaty
Dodi Wirawan Irawanto
University of Brawijaya

Abstract: The purpose of this study is, firstly, to look at the theoretical basis of
corporate social responsibility through the ethics involved in the production process
of food in Indonesia. Indonesian people are predominantly Muslims and are con-
cerned about halal and tayyib food consumption. The second purpose of this study
is to find the literature data on hazardous substances in food products. This paper
uses a qualitative approach to explore references and existing literature on corpor-
ate social responsibility, islamic ethics in food production, and the definition of halal
and tayyib, in Islamic religious scripture. Though halal seems to be followed by the
companies that produce food, according to Islamic ethics, tayyib should not be
separated from halal. The concept of tayyib has been corrupted by harmful or
potentially harmful additives put in food by food production companyes. Companies
wanting to be sustainable need to realize that the changing business environment
is giving ethical responsibilities equal status with economic responsebilities. This
study only investigates the theories of Corporate Social Responsibility in food pro-
duction ethics as it should be, considering the external environment, and studies
hazardous substances in food, but does notdirectly conduct an investigation of the
production process. This paper will add more information to the literature of
Strategic Management especially about corporate social responsibility in the ethics
of production, particularly in the food industry. Today, big companies just assume
that if they are producing halal food that that will be enough, without seeing that
they also need to emphasize that substances that are not tayyib should not be
included in food product manufacturing. Review of Literature

Keywords: Strategic Management, Corporate Social Responsibility, Business

Ethics, Halal, Tayyib, Food Production

A Muslim always has to be sure unclean, bad). Even though we have

that the food he/she consumes is halal
and tayyib. Halal means it doesn‘t
contain harmful substances, najis
(blood, urine, wine, pig, carrion, etc.),
or dubious substances . Tayyib means
wholesome, healthy, hygienic, nutriti-
ous, pure, clean, good. Saying of
Prophet Muhammad: “Verily Allah is
pure. He doesnt accept but what is
pure”
In March 2016, shockingly, we
heard about a street vendor in the
National Monument area in Jakarta
who had been using sewage water to
make sweet tea he sold. Ethically, he
has violated the halal principle
(because the water contains najis) and
also violated the tayyib principle (enda-
ngering health, unhygienic, impure,
article 9 of Regulation No. 11 of Health
on Hygiene for Public Businesses,
because of the lack of inforcement of
this law, this abuse is still happening.
The impact of the small traders
as in the case above is not so
widespread and massive, because
relatively few customers. Let's see if
the offense is committed by large
corporations.
It was reported that 22 dairy
plants in China deliberately used
melamine as a food additive in baby
milk products. This caused tens of
thousands of infants to become ill,
more than 6240 cases of kidney stones
in infants, and 3 infant deaths.
The author inputted the following
keywords into a search engine, and

Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto 182
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
found some interesting things to study.
The keys word were "Big companies
put toxic chemicals to their food
products".
The first four results were:
1. Save Institute: there are more than
3,000 chemicals intentionally added
to food supplies by major corpor-
ations.
2. Natural News (health site in the US)
questioned why the US government
was allowing chemical additives to
be added to very popular cereals.
3. Jake Anderson of Anti Media listed
the names of the top ten major food
companies that incorporate hazard-
ous materials into products.
4. Contains writings about a report
from the Institute of Medicine and
the National Research Council stat-
ing that Americans are sicker and
die younger than other people in
wealthy nations, and called for
health advocacy and consumers to
challenge the food industry to stop
the use of potentially toxic
substances.
Then to get indonesian search
results, the author searched using
bahasa key words "bahan kimia
berbahaya dalam makanan produksi
perusahaan besar” (―harmful chemicals
in food production of large enterp-
rises‖). Here are the top 4 results
related to food products made by large
corporations:
=halal = tayyib
Some foods may be lawful (halal), but not tayyib (Arif and Ahmad, 2011).
Many journals consentrated on halal but give little emphasize to tayyib.
Here are some examples:
No Title (Year)
1. Effective Halal Supply Chains (2007)
2. Restaurant Managers‘ Perspectives
Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto
1. The types of sweeteners, flavorings,
preservatives, and artificial dyes
that are added to food products.
2. POM states that 60 percent of food
sold in kindergarten and elementary
school contains harmful substan-
ces.
3. Toxic chemicals are often eaten by
humans that affect the body at the
cellular level.
4. Several case studies of ethical
violations by various types of enter-
prises that produce food consumed
by the majority of children.
From the results above, it appe-
ars that companies that produce food
add dangerous chemical substances
and the number of companies is
significant.
In Indonesia, food manufacturers
are required to have a halal certificate
for their products. This means we can
be assured that the product have
consistent halal status from raw
material to processing, packaging and
distribution (Hakim, 2015), but most
manufacturers forget one thing that is
also very important because people
rarely speak about these matters; that
their product should be tayyib too.
Here is the data from the N-gram that
shows that since the year 1800 to
2000, more people are talking about
halal than tayyib.
Researcher
M. Tieman
on Halal S.Z.S. Marzuki, Hall C.M.,
183
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

Certivication (2012) Ballantine P.W.

3. Malaysian Standard MS 1500: 2004 Halal Food- Z.M. Janis
Production, Preparation, Handling and Storage-
General Guidelines (2004)
4. The Importance of a Standardized Islamic RiccaRahman Nasaruddin,
Manufacturing (IMP) for Food and Pharmaceutical Maizirwan Mel, Faizah
Productions Fuad, Irwandi Jaswir,
Hamidon Abd. Hamid
5. Managing Halal Quality in Food Service Industry S.S. Fun
6. The Importance of a Standardized Islamic R.R.Nasaruddin, Fuad F,
Manufacturing Practice (IMP) for Food and Mel M, Jaswir I.
Pharmaceutical Productions (2012)
7. Taping into the World Halal Market: Some Z.Zakaria
Discussions on Malaysian Laws and Standards
(2008)
8. Halal Certification: An International Marketing S.Shafie, Othman M.N.
Issues and Challenges (2006)
9. Intention to Halal Products in the World Markets M.R Ramezani, Hanzaee
(2011) K.H.
10. Positioning Malaysia as Halal-Hub: Integration Role N.M.N. Muhammad, Isa
of Supply Chain (2009) F.M., Kifli B.C.
11. Quality Assurance in Halal Food Manufacturing in H.A. Talib, Ali K.A.M.,
Malaysia: A Preliminary Study (2008) Jamaludin K.R.
12. The Competitiveness of Halal Food Industry in A.M. Bohari, Cheng W.H.,
Malaysia: A SWOT-ICT (2013) dan Fuad N.
13. Issue of Halal Food Implementation in Malaysia Mohd Aliff Abdul Majid,
(2015) Izhar Hafifi Zainal Abidin,
Hayati Adilin Mohd Abd
Majid, Chemah Tamby
Chik
14. Halal Science: An Introduction (2015) Reki Wicaksono Ashadi
15. A Value Stream Mapping for Supporting Set Aside Heti Handayani Hidayat
Halal Food on International In-Flight Meal Service dan Taufik Djatna
(2015)
16. A Supply Chain Approach toward Halal (2015) Marco Tieman dan Mohd
Ridzuan Darun
17. Information System Development on Halal Supply Dwi Purnomo, Totok
Chain Traceabillity (Case Study: Supply Chain of Pujianto, Rizal Maulana
Beef Meat Balls) (2015)
18. A Framework for the Development of Halal Food Norizah Mohamad, Chris
Products in Malaysia (2014) Backhouse
19. Food Quality Standards in Developing Quality Sazelin Arif and Ridzwan
Human Capital: An Islamic Perspective (2011) Ahmad
20. Consumer Disconfirmation of Expectation and S.S.A. Salam, Othman M
Satisfaction with SMEs Halal food Products in
Klang Valley, Malaysia: A Theoretical Framework.
(2014)
Many more jurnals

In the Qur'an, the terms halal body. Why should enterprises also pay
and tayyib are consistently paired. This attention to making their food products
indicates that they should not be tayyib? This study will look from the
separated, and should be kept toget- standpoint of ethics at the
her; i.e. food must not only be lawful implementation of food production of
but also to be safe, and good for the

Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto 184
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
companies that market their products
in Indonesia.
The halal concept and production
is studied in many international jour-
nals, but the tayyib concept is studied
very little in most journals. From
preliminary research conducted by the
author, on about 100 food products in
the market, more than 80% contained
food additives that are not tayyib.
Theoretical Background and Litera-
ture Review
In the book Strategic Manage-
ment Concepts and Cases, the author
states that dissemination of information
via the Internet increases of the
knowledge the diferences between
responsible companies and irrespon-
sible ones.
J. David Hunger and Thomas L.
Wheelen in Essentials of Strategic
Management: Concepts of Social
Responsibility declare that beyond just
making a profit, private companies
have a responsibility to the community
. gement, social responsibility, business
Corporate Social Responsibility
(CSR) has become an integral part of
corporate strategy. CSR is open and
transparent business practices based
on ethical values and respect for
employees, communities, the natural
environment. The purpose of CSR is to
deliver the value of sustainability in
society and also to the stakeholders.
Corporate Social Responsibility
(CSR)
CSR is a concern by the compa-
ny on matters such as community
involvement, products and processes
that are socially responsible, and
concern about the environment and
employee relations (Ortiz-Martinez and
Crowther 2006).
According to Archie Carroll
(1991), a pyramid of CSR starts with a
base of economic responsibility,and
continues with the legal, ethical, and
discretionary responsibility. However,
what is ethical or discretionary in
Carroll‘s model is becoming increasi-
Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto
ngly necessary today because of the
changing business environment which
is giving ethical responsibility equal
status with economic and legal res-
ponsibilities. (Werther and Chandler,
2006)
Bendixen and Abratt (2007) state
that how multinational companies have
been criticized for their unethical acti-
ons in some situations that could ad-
versely affect their reputation.
Business ethics
―if a business is not based on
ethical ground, it is of no benefit to the
society, and will, like all other unethical
combination, pass into oblivion‖ C. Max
Killan.
Does the realm of strategic
management really pay attention to
business ethics? Taysir and Pazarcik
(2013), found through analysis of the
content of 908 articles published bet-
ween the years 1998-2010, that there
were only 25 articles focusing on the
relationship between corporate mana-
ethics and corporate performance.
That means that the science of strate-
gic management does not care much
about this important relationship.
We can define ethics as a norm-
ative science of how humans should
live in a society a science that asses-
ses whether an action is good or bad,
right or wrong. (William Lillie, 1971).
Ethics means the accepted prin-
ciples about what is considered good
or bad that govern the action of
individuals, workers, or organizations.
―Business ethics are the accepted
principles of right or wrong governing
the conduct of business people‖. An
ethical strategy follows these ethical
principles.
Ethics in business means ‗taking
the right course‘. All factors in busin-
ess, i.e production, Business proces-
ses, and the behaviour of the company
to the customers and the societies in
which it operates should be ethical.
The existence of different
cultures has an impact on business
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practices. Crucial factors in Cross
Cultural Management is the conside-
ration of different cultures and sensiti-
vities.
There are many interrelated
components of culture. those most
likely to matter in international mana-
gement are language, social structure,
religion, values and manners.
Most ethical system are a
product of religion. Religion shapes
attitudes and behavior towards impor-
tant things such as employment,
consumption, or individual responsibi-
lity (Hill, 2013 p.109). Religion plays an
important role in many societies, with
the effect being different from country
to country. (Griffin/Pustay 2013, hal.
122).
Business Ethics in Islam
In Islam, the basic rule in
business is honesty and fair dealing. A
businessman must be someone who
has high ethical the principles (Kaliffa
2003). Islamic business principles are
the principles and values based on
Islamic sources.
According to Islamic teachings,
the business can not be done if one of
the parties suffers a business loss or
one of the party is greedy (Hussnain,
2011).
Islamic Ethics in Food Production
Companies that produce food
and market it in a country that is
predominantly Muslim should pay
attention to Islamic ethics, especially
islamic ethics of food production and
consumption. Halal food productions
means halal and tayyib food produc-
tion from raw material through distribu-
tion.
Halal products have a huge
market that encompasses the world.
57 countries in the world have the
majority Muslim. World wide Muslim
population exceeds 1.5 billion people.
A good example of the rapid
growth of halal products is the rapid
rise in annual sales of halal food
throughout Russia which is increasing
Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto
between 30% and 40% annually
(Tartarstan Halal Standard Commit-
tee).
‖Halal is defined as anything that
is considered permissible and lawful.
Traditionally applied to food, halal in
linguistics is known as ―halla‖, which is
to be or become lawful, legal, licit,
legitimate, permissible, permitted, allo-
wable, allowed, admissible, un-prohi-
bited, unforbidden. The concept is late-
ly expanded to all goods and services:
cosmetics, clothing, pharmaceutical,
financial and tour packages. On the
other hand, tayyiban that is rooted from
‗tayyib‘, provides meaning to wholeso-
meness, which signifies quality, clean-
liness, safety and nutritionals. Islam
restricts al-khabith, the products that is
bad, imperfect, decayed and harmful
because it provides injurious[injury] to
one‘s physical health, affect the
character and spiritual minds, which
lead a man to a corrupt deeds‖.
O mankind, eat from whatever is
on earth [that is] lawful and good and
do not follow the footsteps of Satan.
Indeed, he is to you a clear enemy.
2:168 O you who have believed, eat
from the good things which We have
provided for you and be grateful to
Allah if it is [indeed] Him that you
worship. 2:172 And eat of what Allah
has provided for you [which is] lawful
and good. And fear Allah , in whom
you are believers. 5:88
Unity of the concepts of halal and
tayyib is extremely important for
Muslims in choosing the food that will
be consumed. This is due to the
reason that what is allowed to be
consumed in Islam (halal), may not be
good (ghayr tayyib) or may be dubious
in that the food may be a bit stale,
unhygienic, not well prepared, or
dangerous and toxic (Saifuddeen,
2001).
Implementing ethics in
production with regard to halal and
tayyib is a part of the responsibility of
the company to the consumer and the
community and is conducive to corpo-
rate sustainability.
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Sustainability
To be sustainable for a company,
means to stay profitable in it‘s
operation for a great length of time.
Sometimes most people think that
following ethics is contra productive to
sustainability. Companies that concern
for their profit alone, and keep doing
business as usual, may ended up not
in a good shape.
CSR
CSR
FINDINGS
About Halal
Halal means in accordance with
Islamic law (Arif and Ahmad, 2011). In
reference to food, it is the dietary
standard, as prescribed in the Qur'an
(the Muslim scripture). The opposite of
halal is haram, which means unlawful
or prohibited. Halal and haram are
universal terms that apply to all facets
of life. These terms are commonly
used in relation to food products, meat
products, cosmetics, personal care
products, pharmaceuticals, food
ingredients, and food contact
materials. While many things are
clearly halal or haram, there are some
things which are not clear. Further
information is needed to categorise
them as halal or haram. Such items
are often referred to as mashbooh,
which means doubtful or questionable.
In general every food is considered
halal in Islam unless it is specially
prohibited by the Qur'an or the Hadith .
By official definition, halal foods are
those that are:
a) Free from any component that
Muslims are prohibited from consu-
ming according to Islamic law
(Shariah).
b) Processed, made, produced, man-
ufactured and/or stored using
utensils, equipment and/or machi-
Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto
To reach sustainable developm-
ent, we need ethics, to save our
civilisation and the intelligent life of
earth.
Sustainability is ―[Development ]
that meets the needs of the present
without compromising the ability of
future generations to meet their own
needs.‖ The Brundtland Report
HALAL
TAYYIB
SUSTAINABILIT
Y
ETHICS
nery that have been cleansed ac-
cording to Islamic law. Muslims eat
to maintain a strong and healthy
physique in order to be able to
contribute their knowledge and
effort for the welfare of the society.
Muslims are supposed to make an
effort to obtain the best quality
nutritionally. It is mentioned in a
Hadith that the prayer of a person is
rejected by Allah if the food
consumed is prohibited (haram).
All foods are considered halal
except the following (which are haram):
Alcoholic drinks and intoxicants, Non-
Halal Animal Fat, Enzymes* (Microbial
Enzymes are permissible), • Gelatine*
- from non-Halal source (fish gelatine is
Halal), L-cysteine (if from human hair),
Lard, Lipase* (only animal lipase need
be avoided), Non-Halal Animal
Shortening, Pork, Bacon / Ham and
anything from pigs, Unspecified Meat
Broth, Rennet* (All forms should be
avoided except for plant / microbial /
synthetic - rennet obtained from halal
slaughtered animal is permissible),
stock* (a blend of mix species broth or
meat stock), Tallow* (non-Halal
species), Carnivorous animals, birds of
prey and certain other animals, Foods
contaminated with any of the above
products(*May be consumed if derived
from Halal animals.)
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About Tayyib
Tayyib is a concept that relates
to security, food contents, aesthetics
and halal products. Tayyib is described
as good food, which contain
ingredients that are allowed by Islamic
law (Majid et al, 2015)
By law, tayyib means something
that does not harm the body and
reasonable minds (according to Ibn
Kathir),…and not being considered
haram (Imam Malik and Imam al-
Tabari)
Tayyib means wholesome,
healthy, hygienic, nutritious, pure,
clean, good. Islam forbids al-khabith,
products that are bad, imperfect,
decayed and harmful because they
endanger one‘s physical health.
Tayyib means having nutritional
quality that is a foundation of good
health.
Many food additives are harmful
to body / health. Here are the names of
non-tayyib substances:
TBHQ or Tertiary Butylhydro-
quinone, is a chemical preservative
which is a form of butane. TBHQ
reduces what is referred to as oxidative
deterioration in foods it is applied to --
in other words, it acts as preservative
by delaying the onset of rancidness. It
is also used in cosmetic and baby
skincare products, varnish, lacquers
and resins. It is used in the stabilisation
process of explosive compounds.
In a study published in the June
15, 2014 edition of Food Chemistry,
―Tert-butylhydroquinone (TBHQ) was
tested for potential cytotoxicity and
genotoxicity upon A549 lung cancer
cells and Human Umbilical Vein
Endothelial Cells (HUVEC)….TBHQ
dose- and time-dependently decreased
the growth of A549 and HUVEC cells.‖
TBHQ caused cytotoxicity. ―Also,
single strand DNA breaking has been
observed through comet assay
technique. In addition, morphology of
DAPI stained cells and DNA
fragmentation assay using gel
electrophoresis showed clear
fragmentation in the chromatin and
Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto
DNA rings within the nucleus of cell‘s
treated TBHQ.‖ (Eskandani, et al.,
2013). Gharavi N, El-KadiA (2005)
found that TBHQ may promote
carcinogenicity.
Hirose, Masao, et al. (1993)
found that high doses of ―TBHQ
significantly elevated the incidences of
esophageal papillary or nodular (PN)
hyperplasias [enlargement, often as an
initial stage in the development of
cancer] and papillomas, [small wartlike
growths] as well as forestomach-
papillomas.‖
BHA, Butylated hydroxyanisole,
is a synthetic chemical added to
chewing gum, butter, cereals, snack
foods and beer. It can also be found in
food packaging, cosmetics, rubber
products and petroleum products.
―Low doses of BHA exert a significant
cytotoxic effect, associated with loss of
mitochondrial function. As the
concentration of BHA was increased,
morphological alterations in critical
subcellular targets such as lysosomes,
mitochondria and actin cytoskeleton,
were observed. In parallel, BHA
induced an irreversible loss of cell
proliferative capacity, preceding
apoptosis induction. Thus, the dose-
dependent activity of BHA on Vero
cells appears to be cytotoxic as well as
cytostatic.‖ (Labrador,et al., 2006)
BHA is classified by the U.S.
Department of Health and Human
Services as ―reasonably anticipated to
be a human carcinogen.‖ This
synthetic chemical can be replaced by
safer antioxidants like vitamin E, and
safer processes packaging that do not
use BHA. (Race, 2009). The
European Commission lists BHA as a
potential endocrine disruptor. (Ministry
of Environment and Food of Denmark)
―BHA affects liver and kidney
functions which is worrying if the
same applies, to any extent, in
humans as it is the liver that
detoxifies BHA within the body and
the majority is excreted in the urine
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so it also has to be dealt with by the
kidneys.‖ (Race, 2009)
BHT (Butylated hydroxytoluene),
BHT administration increases the
susceptibility of rasH2 mice to lung
carcinogens. (Umemura, et al., 2001).
Animal studies have identified a
number of other problems. For
example: BHT caused lung damage
and increased the incidence of liver
tumours in mice. (Metcalfe, 2003).
Kahl and Kappis found that in
high dosages, ―specific toxic effects to
the lung have only been observed with
BHT….BHA induces in animals
tumours of the forestomach, which are
dose dependent, whereas BHT
induces liver tumours in long-term
experiments….All published findings
agree with the fact that BHA and BHT
are tumour promoters.‖ (Kahl and
Kappis, 1993) ―Long-term exposure to
BHT can result in functional and
histological changes of lungs, liver,
kidneys and thyroid.‖ (Race, 2009)
Potassium Sorbate, Mamur,
Sevcan, DenizYüzbaşıoğlu, Fatma-
Ünal, and Serkan Yılmaz, 2010,
found that potassium sorbatesig-
nificantly increases the chromoso-
mal aberrations and sister-
chromatid exchanges. ―Following
treatment of the isolated
lymphocytes for 1 h, significant PS
(potassium sorbate)-induced DNA
strand breaks were observed, at all
concentrations….Potassium
sorbateis clearly seen to be
genotoxic to the human peripheral
blood lymphocytes in vitro.‖
(Mamur, et al, 2009)
Kitano, et al. (2002) state that
―potassium sorbate, ascorbic acid
and ferric or ferrous salts (Fe-salts)
are used widely in combination as
food additives‖, and determined to
learn whether ―the strong reactivity
of PS and oxidative potency of
ascorbic acid in the presence of Fe-
salts might form toxic compounds in
Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto
food during its deposit and
distribution.― They found that
―ascorbic acid and Fe-salt oxidized
Potassium sorbate and the
oxidative products caused
mutagenicity and DNA-damaging
activity.‖
Monosodium Glutamate (MSG)
,Monsodium Glutamate is a man-made
additive, and is approximately 78
percent free glutamic acid, 12.2%
sodium, and 9.6% water. ―Glutamate
and aspartate are neurotransmitters
found normally in the brain and the
spinal cord. And even though they are
two of the most common transmitter
chemicals in the brain and spinal cord,
when their concentrations rise above a
critical level they can become deadly
toxins to the neurons containing
glutamate receptors and to the nerve
cells connected to these neurons. This
latter point is especially important.
What it means is that excessive
glutamate will not only kill the neurons
with the receptors for glutamate but it
will also kill any neurons that happen to
be connected to it, even if that neuron
uses another type of receptor.‖
(Blaylock, 1998, p. 38-39)
―Both glutamate and aspartame
can cause neurons to become
extremely excited and, if given in large
enough does, they can cause these
cells to degenerate and die. It is for
this reason that the nervous system
carefully controls the concentration of
these two amino acids in the fluid
surrounding the neurons (called the
extracellular space). It does this by
several methods, the most import of
which is a system designed to remove
any excess glutamate from this
extracellular space. This is
accomplished by a special pumping
system that transfers the excess
glutamate back into surrounding glial
cells. Glial cells surround the neurons
and supply them with energy. This
pump acts like a bilge pump on a ship.
If the pump fails, the ship fills up with
water and sinks. Normally, the
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glutamate clearing system is very
efficient. This is one possible reason
why experimentally it takes higher
doses of MSG to fatally damage the
neurons of adult animals than infant
animals—the adult glutamate system
may be more competent. But, even
small doses can damage these
neurons without actually killing them.
―While this pumping systems is
very effective, it requires an enormous
amount of cellular energy (in the form
of the energy molecule ATP, or
adenosine triphosphate) for its
operation. It is sort of like the old-time
fire brigade, where a line of people
hoisted buckets down a human chain
to put out a fire. It required a lot of
energy on the part of the people
making up the bucket brigade. If they
ran out of energy, the fire would rage
out of control. The same thing happen
when energy production is reduced in
the brain: the protective pumps begin
to fail and glutamate begins to
accumulate in the space around the
neuron, including the area of the
synapse. If the energy is not restored,
the neurons, in essence, will burn up—
they are literally excited to death.
―Within fifteen to thirty minutes
after being exposed to high doses of
MSG, neurons suspended in tissue
culture are seen to swell like balloons.
Under the microscope, you can see
degeneration of the small structures
within the cell, called organelles, and
also clumping of the chromatin of the
nucleus. Within three hours, these
neurons are not only dead, but the
body‘s defense mechanisms begin to
haul away the debris. Under
experimental conditions using animals,
this degenerative reaction is seen
when MSG is either ingested in the
diet, injected into the abdominal cavity
or applied directly to the neurons in
tissue culture or into the brain by way
of cannula or tube.
―But when lower doses of MSG
were used, scientists discovered
something very strange and different.
Most of the neurons after thirty minutes
Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto
appeared to be not only unharmed, but
perfectly normal in every way. Then,
suddenly, two hours following the
exposure, long after the MSG had
been removed, the neurons began to
die. It was as if a clock had been set
so that the neurons would all commit
suicide at the same time. Within 18 to
24 hours after exposure to MSG, all of
the neurons were dead. But during
that initial two hour period the cells
appeared to be perfectly healthy.
―It became obvious to scientists
that these two reactions, the acute and
the delayed, must have different
mechanisms of action. The acute
reaction closely resembled neuron
injuries caused by a sudden influx of
sodium to the inside of the cell. This
rapid movement of salt into the cell‘s
interior would literally suck water inside
and cause it to balloon and die. To
test this hypothesis, scientists added
MSG to a culture of sensitive neurons,
but they removed the sodium from the
bath medium. They found that no
matter what concentration of MSG they
used, the cells would not die during
that critical two hour period. It was
concluded that MSG kills neurons by
allowing excess sodium, and thus
water, to enter the cell.
―Yet removing the sodium had no
effect on the delayed reaction. After
two hours, the neurons still died. From
earlier studies, scientists knew that
sodium entered cells by a special
microscopic channel or pore that was
controlled by special triggering
chemicals. Apparently glutamate
acted as a trigger that opened the
sodium channel on the cell membrane.
This led them to consider another
channel that might explain the delayed
reaction. They repeated the
experiment, but this time they removed
calcium from the tissue medium.
Anxiously they waited. Two hours
passed and the neurons still appeared
healthy. Twenty-four hours later they
were still perfectly normal. Calcium, it
appeared, was the culprit. Apparently
glutamate opened a special channel
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designed to allow calcium to enter the Protein Extract, Sodium Caseinate,

neuron, and it was calcium that Calcium Caseinate, Yeast Extract,
triggered the cell to die.‖ (Blaylock, Textured Protein, Autolyzed Yeast,
1998, p. 39-42). Hydrolyzed Oat Flour, The following
The following additives always additives frequently contain MSG: Malt
contain MSG (Monosodium extract, Malt flavoring, Bouillon Broth,
Glutamate): Hydrolyzed Vegetable Stock, Flavoring, Natural Flavoring,
Protein, Hydrolyzed Protein, Plant Seasoning. (Blaylock, 1998, p. 255)
Substance Use in Products Effects on the human body
Name
1. TBHQ A petroleum byproduct Causes cytotoxicity, DNA strand
(Tertiary similar to butane used as breaking,and fragmentation in the chromatin
Butylhydroquin a preservative and DNA rings within the nucleus of cells
one) TBHQ reduce oxidative (Eskandani et al., 2014).
damage to food products. May promote carcinogenicity Gharavi and El-
Commonly used in chips, Kadi (2005).
fast food (chicken naget, Causes esophageal papillary or nodular
etc.) enlargements(often an initial stage of
cancer) and papilloma (Masao et al., 1993).
2. BHA Synthetic chemical fat Low doses of BHA exert a significant
(Butylated preservative to prevent cytotoxic effect, with loss of mitochondrial
Hyroxyanisole) spoilage. function. Increased dose cause irreversible
Usually used in cereals, loss of cell proliferative capacity. BHA is
crisps, bread, chewing cytotoxic and inhibits cell growth and
gum, snacks, etc. multiplication.
Potential endocrine disrupter (European
Commission)
Reasonably anticipated to be a human
carcinogen (U.S. Department of Health and
Human Services)
3. BHT Synthetic preservative Increases susceptibility to lung carcinogens.
Butylhydroxyto Commonly used in instant (Umemura et al., 2001)
luene soups, rice products, Caused lung damage and increased the
fortified cereals, etc. incidence of liver tumours(Metcalfe et al.,
2003), (Kahl and Kappis, 1993)
Long-term exposure to BHT can result in
functional and histological changes of lungs,
liver, kidneys and thyroid.
4. Potassium Preservative inhibitor of Significantly increases chromosomal
Sorbate fungi and yeast. aberrations; induces DNA strand breaks;
Commonly used in Genotoxic to human lymphocytes (Mamur et
cheese, wine, yogurt, al., 2010).
dried meat, dried fruit, Causes mutagenicity and DNA-damaging
grilled foods. activity (Kitano, et al., 2002)
5. MSG Synthetic additive. An excitotoxin that causes neurons(brain
(Monosodium Added to most fast food, cells) to become very excited/very active and
Glutamate) many processed and incorporate large amounts of calcium into the
packaged foods. cell. If neurons cannot pump the excess
Is also in other additives: calcium out, they die. Neurons are not
Hydrolyzed vegetable replaced by the body. (Blaylock, 1998) (Choi,
protein, hydrolyzed 1990) (Nairn, 1985)
protein, vegetable protein
extract, sodium caseinate,
calcium caseinate, yeast
extract, etc.
Table made by the author

Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto 191
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
CONCLUSION
A responsible business is one
that acknowledges that it cannot be
perfect; that abstains from painting
warm, happy, friendly, on-your-side
images when its behaviour is to the
contrary; that is forthcoming about the
challenges everyone knows it faces;
that explains why profit without
exploitation is so difficult but how,
nonetheless, is determined to transition
from business-as-usual to something
fairer and more sustainable.
According to Indonesian law,
putting hazardous material into food is
against Health Law No. 36 (2009),
Food Law No. 18 (2012), Law of Food
Hygiene and Food Safety No. 28
(2004), Health Minister Regulation No.
033 (2012) about Food Additives,
Decree of The Head of the National
Drug and Food Control Agency
(BPOM) No. HK.005.52.4040 (2006)
Section on Food.
Internationally, putting hazardous
material into food would be against
Codex Alimentarius Commission
(CAC), and Joint Expert Committee for
Food Additive, European Commision
(EC).
Although there are differences in
regulations between countries (for
example: BHT is forbidden in some
countries, but permissible in
Indonesia), companies should really be
responsible to the consumers by
reading the available research on
harmful food additives. For instance,
MSG is allowed in Indonesian law to a
quantitative limit, but there are so
many international research journals
indicating that MSG is dangerous even
in a small amount.
The reason large corporations
use potentially dangerous chemicals is
to make the product seem more tasty
or last longer, in order to make a
greater profit.
While it is not yet easy to
persuade businesses to embrace a
wholly ethical approach – large
businesses certainly – it is definitely
becoming much easier than previously.
Listian Indriyani Achmad, Noerm ijati, Rofiaty and Dodi Wirawan Irawanto
Companies wanting to be sustainable
need to realize that the changing
business environment is giving ethical
responsibilities equal status with
economic responsibilities.
“Unless you are truly values-
driven in the future as a business,
you’re going to be in trouble”-Michael
Solomon, Director of Profit Through
Ethics.
Our suggestion for future
research: there is a wide open
opportunity to study Corporate Social
Responsibility and ethics with regards
to tayyib food, with an emphasize on
harmful food additives.
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ANALISA MODAL INTELEKTUAL TERHADAP KINERJA KEUANGAN

BANK SYARIAH PERIODE 2011 – 2015

Preatmi Nurastuti
Program Studi Manajemen STIE Pelita Bangsa

Abstract: Since the 1990s, the attention to intellectual capital as an intangible

asset management practices (intangible assest) has increased dramatically.
(Harrison and Sullivan, 2000). Intellectual capital has a very important role and
strategic in the company, referring to the technology and knowledge. The economic
development driven by technology and knowledge indirectly force the company to
change its business strategy based on the resources of the physical nature be
based on knowledge. One approach used in the assessment and measurement of
intangible assest is intellectual capital / IC / intellectual capital has become the
focus of attention in various fields, good management, information technology,
sociology, and accounting. (Petty and Guthrie, 2000; Sullivan and Sullivan, 2000).
The emergence of "new economy", which is principally driven by the development
of information technology and science, also has sparked growing interest in
intellectual capital. (Petty and Guthrie, 2000; Bontis, 2001). One area that attracted
the attention of both academics and practitioners are associated with the use of
intellectual capital as one of the instruments to determine the value of the
company. Intellectual capital can be an important factor that is able to help the
company in the value-added in order to gain a competitive advantage through the
creation of new innovations. Along with the increasing competition among banking
companies due to the free market and globalization, ultimately requires banking
companies to change the way they run their business. In order to continue to
survive, the banking company had to quickly change the strategy of the business
based on labor (labor-based business) to a business based on knowledge
(knowledge based business), so that the main characteristics of the company into a
knowledge-based company. The development of new economy driven by
information and knowledge, it brings an increased attention to the intellectual
capital as a tool to determine the value of the company purpose of this study is to
determine empirically the relationship of intellectual capital on the financial
performance of Islamic Bank for the period 2011-2015. This study uses secondary
data Islamic Bank's financial statements published by Bank Indonesia during the
years 2011-2015. This study examined the relationship through the panel data and
fixed effect regression model. Value Added Intellectual Methods coefficient (VAIC
™) is used as a measure to assess the performance of intellectual capital while the
analysis of financial performance using the indicators ROA. The findings indicate
that the performance of intellectual capital as the Value Added Intellectual
Coefficient (VAIC), Value Added Capital Coefficient (VACA), Value Added Human
Capital (VAHU), Structural Capital Value Added (STVA) has a significant positive
effect on financial performance.

Keywords: Resources Intangible, Intellectual Capital, ROA, VAIC, Bank Syariah in

BEI

Preatmi Nurastuti 196

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ANALISIS PORTOFOLIO OPTIMAL PADA INDEKS JII

MENGGUNAKAN METODE SINGLE INDEKS MODEL

Adibah Yahya

Abstract: This study aimed to analyze the optimal portfolio by using the Single
Index Model. The portfolio is making of investments in stocks in more than one
company or several companies. This stock investments can be made in companies
that have listed on the stock exchange, the company either conventional or sharia
company. The model assumes that the return of the index securities are sensitive
to changes in various factors or indices. The type of research used in this paper is
a descriptive study. Islamic economic development of the past few years, inspire
researchers to take a case study on the company's shares are listed in JII (Jakarta
Islamic Index). Of the population of 30 companies listed in JII, based judgment
sampling where the conditions are shares of companies that consistently logged in
or registered in JII and has a good financial performance in the period January
2013 - in May 2015. There are 21 shares of companies that consistently came in
and Registrations are ultimately the research sample. Data collection methods
used are field observation method to obtain secondary data. The quantitative
method used is single index model. Based on the single index model, there are
seven companies are included in the optimal portfolio AKRA, ASRI, BSDE, INDF,
KLBF, LPKR and UNVR. The proportion of funds that BSDE shares with 53.08%
weight percent, further ASRI, KLBF, INDF, UNVR, AKRA and the smallest weight
is LPKR. To be able to construct an optimal portfolio, required three conditions,
namely ER positive, and the positive ERB ERB value must be greater than Cut off
point. From the combination of the company's stock 7 will yield rate of return of
0.0040, or 0.4%. Risk model single index is calculated by using the beta, the
optimal portfolio is derived beta value of 0.2468

Keywords: Optimal Portfolio, Single Index Model, JII

Adibah Yahya 197

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IMPLEMENTATION OF RICE IMPORT STRASTEGI CIRCULATION IN

EAST TIMOR UNIVERSITY DILI EAST TIMOR

Alfredo dos Santos

University Dili East Timor

Abstract: This research focused on the implementation strategy of handling

distribution of imported rice in East Timor. The aim is to measure the magnitude of
the amount of rice imported into the Timor Leste and anticipation strategy to
improve local rice production. Design / methodology / approach - in this study using
qualitative research method with a descriptive approach. Descriptive approach can
be interpreted as a troubleshooting procedure to portray / depict the condition /
state of the subject / object of research (a person, institution, community and others
) at this time based on the facts that appear or as it is, thus, a descriptive qualitative
study is an effort to disclose an event or state of the subject / object and solve the
problems faced at the present time based on the facts that appear or as the actual
situation. The findings show that the amount of imported rice entered to the market
in Timor Leste is very large, so as to reduce the chance of local rice development. It
is also influenced by the intervention of bureaucrats in the process of rice imports to
gain personal advantages.

Keyword: Rice Import

Alfredo dos Santos 198

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EXPERIENTIAL KNOWLEDGE IN SMALL FIRM

INTERNATIONALIZATION

Sri Palupi Prabandari

Ding Xiu Hao
Huazhong University of Science and Technology

Abstract: This Global Trade Era open a big opportunity for Indonesian Small firm
to go internationalize. Some got success, but some failed. According to the new
venture theory of internationalization, new ventures that internationalize are
distinguished by their manager’s/founder’s special capacities and experiences that
allow t hem to recognize opportunities that are unseen by others, that is, their
entrepreneurial knowledge. Entrepreneur with experiential knowledge develop a
position the firm in a particular market, and their engagement in that specific
market gradually increases. This literature review will compare the previous
research about experiential knowledge in small firm internationalization and
propose a fit model for Indonesian’s INV's (International New Venture).

Keywords: knowledge, experiential knowledge, internationalization

Sri Palupi Prabandari and Ding Xiu Hao 199

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EFFECT OF AIRLINE CUSTOMER SERVICE PERFORMANCE,

QUALITY EXPERIENCE AND BRAND LOYALTY IN INDONESIA

Kuwat Riyanto
Armanu Thoyib
Achmad Sudiro
Ainur Rofiq
University Of Brawijaya (UB) Malang, Indonesia

Abstract: The purpose of this study was to investigate the effect of the
performance of the customer service airline on the quality of experience and brand
loyalty as well as the proposed model of the aviation industry and tourism in
Indonesia. Given that Indonesia is a country that consists of thousands of islands
flights superior service will attract more tourists to the International and Domestic.
This study is based on a quantitative approach using the proportional method of
sampling to determine the minimum sample size for the national airline less than
the international flight. Some of the criteria considered in choosing the airline in
Indonesia. It is based on the experience of customers who have used airline. This
study can only be generalized to the community in which the group studies the
target has been determined. Given that the study only examined the customer
airline and tourism in Indonesia. And limited study population limit that context. This
study will identify the relationship between perceived value and customer visits.
The influence of the dimensions of the performance of services to the loyalty of the
brand has not been studied in the aviation industry in Indonesia. From a practical
or managerial perspective, this research will help managers airlines to give serious
experience in handling and developing strategies Pemasran in the aviation
industry.

Keywords: Performance Airlines Customer Service, Quality of Experience, Brand

Loyalty.

Kuwat Riyanto, Armanu Thoyib, Achm ad Sudiro,and Ainur Rofiq 200

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MARKETING MIX ANALYSIS OF INFLUENCE SUCCESS OF SMALL

AND MEDIUM ENTERPRISES (SMEs) IN THE FIELD OF CULINARY
JABABEKA CIKARANG BEKASI DISTRICT

Nur’Aeni

Abstract: The success of national development is inseparable from the role of the
world and Empowerment Enterprises. Private business world consists of small
businesses (micro) and large enterprises. All of these business entities have the
same role in the national development, which is to realize the Indonesian People's
Welfare, Public Revenue Increases, reducing unemployment and so forth. SMEs or
SME is a type of business that is still on a small scale to medium businesses that
benefit from not more than 200 million. SMEs themselves drive the state's
economy because employment mostly to small and medium enterprises of this
kind. Very many examples of SME businesses that can be run in our country, one
of which has a very promising potential is the SME business in the culinary fiel d.
Food is a basic human needs. So long as the man is still in need of food, food-
related businesses will never deserted. The process in the fulfillment of human
needs and desires that is the marketing concept. Starting from the fulfillment of the
product (product), pricing (price), delivery (place), and promote their goods (Philip
Kotler). SME is a form of community that founding a small business on the initiative
of a person. On July 4, 2008 has been designated Law No. 20 of 2008. According
to the Ministry of State Minister of Cooperatives and Small and Medium Enterprises
(Menegkop and SMEs), that is a Small Business (UK) is a business entity that has
a net worth of Rp 200 million, not including land and buildings, and has annual
sales of USD 1 billion. Meanwhile, Medium Enterprises (FME) is a business entity
owned Indonesian citizens who have a net worth greater than Rp 200,000,000 s.d
Rp10,000,000,000, excluding land and buildings. SMEs are growing in Kota
Jababeka Cikarang dominated by industrial company . Apart from that SMEs are
growing and continue to grow in Kota Jababeka Cikarang is Culinary Food. Where
in Kota Jababeka Cikarang factory building dominated by large companies
appeared to save the culinary spots that can not be underestimated. The food was
very varied with a very affordable price for in Cikarang.

Keyword: Small and Medium Enterprises in the field of Culinary, Business

Success, Marketing mix with 4P.

Nur’Aeni 201
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UNDERSTANDING SPECTATOR LOYALTY: DOES EMOTION AND

CULTURE PLAY IMPORTANT ROLES?

Radityo Putro Handrito

Maastricht School of Management, The Netherland

Abstract: Spectator's attendance has been accepted as one indicator of loyalty.

Understanding dimension of loyalty is important for sport organization t o predict
spectator future intention. Revenue (ticket, merchandise, concession, sponsorship)
and loy alty can be generated from spectator satisfaction. Determinants of spectator
satisfaction has been explored in recent years and sport quality is one of generally
accepted as it is cause. Recent study of relationship among sport quality, spectator
satisfaction, and spectator loyalty also proposed role of emotion as mediating effect
for satisfaction. This study tend to examine role of culture on those relationship
based on phenomena on Indonesian Football League. As a country that has long
history of football and vast geographical area, Indonesia is well known as biggest
basic spectator of football among South East Asia region. Preliminary research
found that culture of society and emotional connection between spectator also
influencing how spectator assessing team performance. Future researc h will be
conducted by survey and SEM to confirm relationship among sport quality,
emotion, culture, satisfaction, and loyalty.

Keywords: sport quality, emotion, culture, satisfaction, loyalty, spectator

Radityo Putro Handrito 202

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CHARACTERISTICS OF GENDER AS A RISK MODERATING EFFECT

PERCEPTION OF STOCK ON THE DECISION TO PURCHASE AND
SALE OF SHARES OF COMMON STOCK (STUDY INVESTOR
PALEMBANG CITY SOUTH SUMATRA)

Yuliani
Fakultas Ekonomi Jurusan Manajemen Universitas Sriwijaya

Abstract: The decision of investors to take advantage of capital market institutions

as a place for investment and classified in financial assets. The decision to sell and
buy shares of a financial asset is very strategic decision for investors because it is
associated with the chances of return to be earned. The investment decision on a
financial asset that an investor in this context is the individual investor is something
interesting to study. Growth in the number of investors Palembang continues to
increase every year a phenomenon that financial literacy in the financial sector,
especially in the capital markets improved. Implementation methods stock trading
in the Indonesia Stock Exchange (IDX) use the facility Jakarta automated Trading
System (JATS) to enable investors to make an order to buy or sell common shares
directly in the capital market. The purpose of this study provide empirical evidence
about the risk perception of investors in Palembang in the purchase and sale of
common shares, discovered the role of gender as a moderating characteristics
between risk perception and purchasing decisions, and the sale of common shares
in the Indonesian capital market. The samples were 100 investors selected by
purposive criteria as an investor and make the purchase and sale of common stock
through online trading. Data collection during March-May 2016 were carried out by
investors meet directly after confirmation of respondents are willing to fill out a
questionnaire, after the data is collected and then proceed to complete the
verification if the data is inputted and processed. Data analysis techniques with
Partial Least Square. The findings of the research that the perception of risk for
investors Palembang include risk averse, risk moderate and risk taker significantly
influence purchasing decisions and sales of common shares while the role of
gender as a moderation in this study was found to be significantly strengthen or
weaken the effect of each risk perception of investors in make the purchase and
sale of ordinary shares. Gender roles are not significant indicates that
characteristic only as a potential moderating variable between perceived risk and
keputusn purchase and sale of ordinary shares.

Keywords: Risk Perception, Gender, Decision Purchase and Sale of Common

Stock

Yuliani 203
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EFFECT OF INDIVIDUAL AND INVOLVEMENT OF WORK

CHARACTERISTICS MEDIATED JOB SATISFACTION
ORGANIZATIONAL COMMITMENT OF THE DEPARTMENT
OF MARINE AND FISHERIES PORVINSI CENTRAL JAVA

Tri Wahju Wirjawan

Fakultas Ekonomi dan Bisnis Universitas Brawijaya Malang

Abstract: The purpose of this research is to find solutions and the right way to
increase job satisfaction and organizational commitment in the Marine and
Fisheries Agency of Central Java province. Identify the role of individual
characteristics factors and job involvement on job satisfaction and organizational
commitment is important to immediately do so quickly and precisely knowable
factors that significantly or not significantly affect the job satisfaction and the
organizational commitment. The scope of this research is the individual
characteristics as independent variables {Xl), work engagement as an independent
variable (X2) to job satisfaction (Y1) and organizational commitment (Y2). This
research approach applies research type explanation (explanatory research), using
survey methods, the research seeks to explain the influence of factors individual
characteristics and job involvement on job satisfaction and organizational
commitment. The hypothesis in this study contains allegations of influence that
affect job satisfaction and organizational commitment can be formulated as follows:
H1: the individual characteristics of positive significant effect on job satisfaction of
employees at the Office of Marine and Fisheries Agency of Central Java Province
H2: work engagement positive significant effect on job satisfaction of employees at
the Office of Marine and Fisheries Agency of Central Java province H3: the
individual characteristics of positive significant effect on organizational commitment
of employees at the Office of Marine and Fisheries Agency of Central Java
province H4: work engagement positive significant effect on organizational
commitment of employees at the Office of Marine and Fisheries Province of Central
Java. Results of testing the effect of independent variables on the dependent
variable are individual characteristics significantly influence job satisfaction, work
engagement significant effect on job satisfaction, individual characteristics
significantly influence organizational commitment, job involvement significant effect
on organizational commitment job satisfaction significantly influence organizational
commitment, influence the characteristics individual against organizational
commitment is mediated by job satisfaction meaning that individual characteristics
that increase was followed by an increase in employee satisfaction will lead to
increased organizational commitment, would be higher if the effect of individual
characteristics on the organizational commitment was preceded by an increase in
job satisfaction. Effect of job involvement on organizational commitment is
mediated by job satisfaction meaning that the increased involvement of labor
followed by an increase in employee satisfaction will lead to increased
organizational commitment or in other words the organizational commitment of
employees at the Department of Marine and Fisheries of the Province of Central
Java will be higher if the effects of job involvement the organizational commitment
was preceded by an increase in job satisfaction.

Keyword: Individual Characteristics, Work Engagement, Job Satisfaction,

Organizational Commitment.

Tri Wahju Wirjawan 204

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STRATEGY OF DEVELOPMENT ON CORE COMPETENCIES IN

IMPROVING COMPETITIVENESS OF COCOA IN MAMUJU REGENCY
WEST SULAWESI PROVINCE

Maat Pono
Mursalim
Faculty of Economics and Business, Hasanuddin University, Makassar
Palmarudi Mappigau
Faculty of Animal Husbandry, Hasanuddin University, Makassar

Abstract: The purpose of this study was to design model and development
strategy of core competencies cocoa. 0Research activities initiated by revealing the
root causes for the development of competitiveness cocoa, identify and establish
the criteria or the priority factors that determine the competitiveness of cocoa, and
finally to design a model of the pattern of development of core competencies in
improving the competitiveness of commodity cocoa in Mamuju district, West
Sulawesi. The respondents of this study consisted of government, businesses,
universities, NGOs, and the private sector. The method of analysis using
descriptive statistics and AHP. The results showed that there are three leading
sectors namely plantation, manufacturing, and trading and services. Three leading
commodities and their respective weights are cocoa (0.4385), palm oil (0.1820),
and paddy rice (0.1550). Then, development of Cocoa must involve stakeholders
(governments, universities, NGOs, associations and private) through programs and
activities that are coordinated and integrated.

Keywords: strategy, core competencies, competitiveness, cocoa, Mamuju, West

Sulawesi Province

Maat Pono, Mursalim , and Palmarudi Mappigau 205

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

DETERMINE AND ANALYZE THE INFLUENCE OF THE MARKETING

STRATEGY SERVICE QUALITY CUSTOMER SATISFACTION AND
ITS IMPACT ON CUSTOMER LOYALTY IN PRIVATE SCHOOLS
IN SOUTH TAMBUN

Wanti Aprilia

Abstract: The purpose of this study was to determine and analyze the influence of the
Marketing Strategy Service Quality Customer Satisfaction and its impact on customer
loyalty in Private Schools in South Tambun, Knowing and analyzing the effect of the
Marketing Strategy Service Quality Customer Satisfaction and its impact on customer
loyalty Private Schools in South Tambun. This research was conducted in a Private School
in South Tambun using survey method with path analysis techniques. The population in this
study is 170 people, while the research sample numbering 68 people, selected using
proportionate stratified random sampling technique. The analysis showed that the
significant effect of service quality on customer satisfaction, so the first hypothesis was
supported in this study. This means that service quality will influence positively on
customer satisfaction positive effect indicates the higher the quality of service of the
respondents it will result in high customer satisfaction, conversely the lower the quality of
service of the respondents will result in customer satisfaction Low Customer satisfaction is
directly have a significant impact on customer loyalty. The analysis showed that the
significant effect of customer satisfaction on cus tomer loyalty, so the hypothesis 2 was
supported in this study. This means that customer satisfaction will influence positively on
customer loyalty. The positive influence of the higher customer satisfaction indicates that
the respondents will result in high customer loyalty, conversely the lower the customer
satisfaction of the respondents would result in low customer loyalty. The analysis showed
customer satisfaction mediates the effect of service quality on customer loyalty, so the
hypothesis 3 is supported in the research this. This means that service quality can be
indirect effect on customer loyalty through customer satisfaction

Keywords: Marketing Strategy, quality of service, Customer Satisfaction, and Customer

loyalty

Wanti Aprilia 206

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

DEVELOPING A MODEL OF ENTREPRENEURSHIP INTENTIONS TO

REDUCE YOUTH EDUCATED UNEMPLOYMENT (CASE STUDY OF
STUDENTS IN TADULAKO UNIVERSITY, PALU)

Harnida W. Adda

Abstract: The increasing rate of unemployment among well-educated youths

(college graduat es) is one of t he trends in employment sector in Indonesia these
days. Due to the large number of graduates, companies in Indonesia are unable to
accommodate and reduce the unemployment rate. Youths’ reliance on the formal
employment makes the situation even worse in some regions, including in Palu,
Cent ral Sulawesi. Developing strategies to increase self-reliance, creativity,
initiative, and innovations in business among university graduates in order to
reduce dependence on formal labor sector is the main concern of this study. There
is a need to enhance awareness to build and strengthen the intention of students
to be independent. Developing entrepreneurship intention is believed to reduce
educated unemployment rate among youths to some extent. Apart from providing
work independency, entrepreneurship is also contributing to building sustainable
development, creating jobs, generating renew ec onomic growth, and advancing
human welfare. This research expects to design and develop a model that can
inspire c ollege students to improve their ent repreneurial intentions. By applying a
survey method wit h quantitative and qualitative descriptive approach based on
secondary data and primary data include questionnaires, interviews, and
observations, this study aims to identify the interest of entrepreneurship amongst
students, test and analyze the impleme ntation of Student’s Entreprene urship
Intention Model entrepreneurship education, gender stereotypes, need for
achievement, and self-efficacy of students, and last but not least, to produce a
model of Student Entrepreneurs hip Int ention referring to the Theory of Planned
Behaviour, which is developed based on the characteristics of students in Palu.
Methods of data analysis is descriptive by implementing Partial Least Square (PLS )
to explore indicators that contribute to the development of intentions and
entrepreneurial behavior of Tadulako University students as the unit of analysis.

Keyword: Entrepreneurship Intentions, Youth Educated Unemployment

Harnida W. Adda 207

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

THE EVIDENCE OF LEADERSHIP BEHAVIOR BASED ON LOCAL

CULTURE: BANYUMAS CASE STUDY

Adi Indrayanto
Management Study Program, Universitas Jenderal Soedirman, Purwokerto

Abstact: The theory of leadership styles that employed by managers to influence

subordinates todays is increase. Research of Indrayanto et al. (2015), describes
that the leader with a personality that demonstrate leadership based on local
culture will be able to provide clearer instructions and more detailed that makes
subordinates more happy and more easy to understand their duties. Leader’s
personality who reflect the local culture can be attributed to a participatory
leadership style in the situational approach of leadership theory by Hersey-
Blanchard, in which the leaders with this style encourage workers to share ideas
and the ideas and maintain open communication (Northouse, 2012). Several
studies have explored and discovered the existence of a positive relationship
between the participation of organizations and antecedents that describe the
higher the level of participation in the process of working to increase engagement
and organizational commitment, team empowerment, employee participation in
decision-making (Lines and Selart, 2013). Through these processes, assumptions
and attitudes that are given among employees show an important role in the
formation of attitudes towards change (Lines, 2005). In line with this opinion, Antoni
(2004) found that the employee's willingness to participate and their real
participation is a project setting is positively related to their attitude towards change
and their perceptions of supervisor support. This research will try to explore
evidence of a leadership style that is based on the participation of the local culture
in the organization. The evidence to be presented is a form of exploration of their
kind participation leadership style unique and distinctive by its local traditions. This
study will explore local culture of Banyumas. The analytical tool employed in this
study is confirmatory factor analysis that will be examine the model and prove the
existence of leader behavior is influenced by the local culture.

Keywords: Leadership, participative, organization, behavior, and Banyumas.

Adi Indrayanto 208

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

LABOR PRODUCTIVITY IMPROVEMENT BASED VOCATIONAL

TRAINING, COMPENSATION, AND FUTURE WORK
(STUDY IN PT. MITRATANI DUA TUJUH JEMBER)

Dwi Rizky Dhian Pangestu

Nurul Qomariah
Yusron Rozzaid
Prodi Manajemen FE Unmuh Jember

Abstract: This study aims to determine the impact of job training, compensation
and tenure on work productivity in PT. Mitratani Dua Tujuh Jember, East Java. This
study used two kinds of variables, independent variables and the dependent
variable. The independent variables used were job training, compensation and
tenure, while the dependent variable is labor productivity. The study population
was all employees of PT. Mitratani Dua Tujuh Jember which amounted to 92
people. The sampling method using saturated sample or census. Validity and
reliability test used to detect a measuring tool used. The method of analysis using
multiple linear analysis. The results showed that job training, compensation factors,
and working life can increase the productivity of employees at PT. Mitratani Dua
Tujuh Jember.

Keywords: Work Productivity, Job Training, Compensation, Tenure.

Dw i Rizky Dhian Pangestu, Nurul Qomariah, and Yusron Rozzaid 209

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

ANALYZE THE SENSITIVITY (ERC) STOCK PRICE MOVEMENT

(STOCK RETURN) TO THE PROFIT AND LOSSES INFORMATION ON
THE COMPANY’S MANUFACTURING IN INDONESIA

Elsye Fatmawati

Abstract: The aim of this study was to analyze the sensitivity (ERC) stock price
movement (stock return) to the profit and losses information on the company’s
manufacturing in Indonesia Stock Exchange. The object of this study is a company
engaged in manufacturing sector industry’s since 2008 to 2010 and companies
reported financial statement have been EPS value information and inform to public
in April of each year, the sample of this study consist of 110 companies and the
statistical methods use are simple correlation and simple regression linier analysis.
The result of this study provide the result that the company or companies that have
negative earnings have high levels of correlation and sensitivity level (earnings
response coefficient) is weak compared to companies that have positive earning
for stock returs, the result support previous studies , particularly research on the
Stock Security Indonesia.

Keyword: Analyze The Sensitivity, Erc, Stock Price Movement, Stock Return,
Profit, Losses Information , And Company’s Manufacturing

Elsye Fatmaw ati 210

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

ROLE OF BANKING AND FISCAL TOWARD SUCCESS

MICRO, SMALL

Hedwigis Esti Riwayati

Ubud Salim
Gozali Maski
Nur Khusniyah Indrawati
PDIM Universitas Brawijaya Jakarta

Abstract: The small and medium enterprise sector has been widely accept ed as a
means of achieving economic growth and poverty eradication in the world. But the
meaning of a small and medium enterprises still differ across countries and for
different sectors in the same country. Small and medium enterprises play a role in
economic development and job creation in a country. This study aims to develop a
model relating to banking and fiscal role towards the success of small and medium
businesses with Corporate Social Responsibility as a moderating variable. This
research is descriptive obtained from previous research. The factors identified in
this study relates to the issue of funds on small and medium enterprises. The
problems and constraints faced by small and medium businesses, including:
government policy, the issue of the guarant ees required by banks, technology
development and high lending rates. This research result ed in a model that deals
with banking, taxation, partnership and success of small and medium business es.

Keywords: banking, fiscal, Corporate Social Res ponsibility, the success of small
and medium businesses.

Hedwigis Esti Riw ayati, Ubud Salim, Gozali Maski, and Nur Khusniyah Indrawati 211
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

MEASURING SME’S PERFORMANCE: ISLAMIC HUMAN CAPITAL

AND ENTREPRENEURIAL ORIENTATION

Hujjatullah Fazlurrahman
Hafid Kholidi Hadi
Anang Kisyanto
Universitas Negeri Surabaya

Abstract: This paper measuring SME’s performance use two independent

variables. first variable is human capital and second variable is entrepreneurial
orientation as moderating variable. This study will explore and discuss the uses
performance theory. It is a causality study which uses simple regression with
moderating variable for data analyzing. The samples of this research are SME’s in
Sidoarjo and Sampling method used judgement sampling the sample size are 30.
This research contrasts Islamic human capital, entrepreneurial orientation to
measuring SME’s Performance without considering other variabel. This paper
suggests contribution to board of director SME’s to make decision and policy.

Keywords: Islamic human capital, entrepreneurial orientation, SME’s, and

Performance

Hujjatullah Fazlurrahman, Hafid Kholidi Hadi, dan Anang Kisyanto 212

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

ANALYSIS VARIABLES AFFECTING PREPARATION OF BUDGET

BASED PERFORMANCE IN JAYAPURA

John Agustinus
Graduate School of Economics Jayapura Port Numbay

Abstract: In order to improve the quality of financial management, the government

should strive to achieve a successful implementation of the use of performance-
based budgeting. This study aimed to analyze the influence of the commitment of
all components of the organization, the improvement of the administration, with
adequate resources, awards (reward) and sanctions (punishment) against
performance-based budgeting simultaneously and partially. The population in this
study are all working units in the scope of Jayapura city government which
amounted to 37 units and the Head SKPD and Head of Planning each SKPD the
sample in this study amounted to 74 people. To test the hypothesis of the influence
of the commitment of all components of the organization, the improvement of the
administration, with adequate resources, awards (reward) and sanctions
(punishment) to budgeting based on performance simultaneously and partially
used F test and t test with a method of multiple linear regression analysis through
SPSS 20.0. The research proves that simultaneous factor commitment of all
components of the organization, the improvement of the administration, with
adequate resources, awards (reward) and sanctions (punishment) positive and
significant impact on the performance-based budgeting. Partially factor
commitment of all components of the organization, improving administration and
sanctions (punishment) positive and significant impact on the performance-based
budgeting. Based on the discussion of the research results, it can be concluded
that the simultaneous factor of leadership and commitment of all components of the
administration system improvement organizations, sufficient resources, rewards
(reward) and sanctions (punishment) significantly affects the performance-based
budgeting. Partially factor administration system improvement and adequate
resources, clear appreciation positive and significant effect on the performance-
based budgeting. But the leadership and commitment of all components of the
organization and sanctions and no significant positive effect on the performance-
based budgeting, but all independent variables have a positive effect on the
dependent variable.

Keyword: adequate resources, awards (reward), sanctions (punishment), and

performance-based budgeting

John Agustinus 213

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

CREATING SHARED VALUES THROUGH CONTRACT FARMING

SYSTEM (A CASE OF UNILEVER INDONESIA)

Kartika dewi Sri Susilowati

State Polytechnic of Malang

Abtract: This is a post-positivist paradigm phenomenologyc-interpretive research,

which was conducted with a purpose to evaluate the benefits to farmers from
participating in contract farming of Unilever Indonesia. Data were collected by
conducting in-depth interviews with key informants involved in the project eg.
academicians, NGO, financial institutions, farmers, women/wives of farmers and
Unilever Foundation. Contract farming is an intermediate production and marketing
system that spreads the production and marketing risks between companies and
farmers. The main purpose of this contract farming is basically to assure a
continuous supply of black soybean (the main ingredients of soy sauce -Bango-
one of the flagship products of Unilever) with a quantity, quality and price in
accordance to company’s standards. The result of evaluations of the contract
farming indicated that the major advantages of the contract for black soybean
farmers are in reducing risk. They receive an assurance that their products will be
purchased by Unilever at harvest, at the price agreed upon at the beginning of the
contract. The participation has also provided some other benefits to farmers in
terms of improved credit and technology, improvements in risk management,
increased family employment opportunities and, indirectly, empowerment of
women and development of a successful commercial culture. This contract, has
also provided benefits to Unilever such as a good corporate image, a continuity
supply of black soybeans and reduce transaction cost. However, analysis of the
survey also indicated that the contract only provide significant impact on
productivity of larger farmers rather than smaller farmers.

Keywords: contract-farming, Unilever Indonesa, black soybeans

Kartika dewi Sri Susilowati 214

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

USE OF SOCIAL MEDIA AND CONTENT MARKETING

AMONG STUDENTS SMARTPHONE USERS
IN MALANG RAYA

Koko Nakulo Djatikusumo

Politeknik Negeri Malang

Abstract: Since the Internet boom and followed by social media boom in the last
decade, the community, especially among the students more closely connected to
each other through the medium of ICT (information and communication
technology). The continued development of the ICT technology opens vast
business opportunities with the use of ICT. This study is a replication of the study
aims to test models Parihar and CEM (Customer Experience Management), which
was first developed by Parihar to be tested by the conditions in Indonesia,
especially in the city of Malang Raya which is very well known as a city of
education with a number of colleges of national and international repute. Model
CEM version 1.0 is developed with a focus on the orientation of the company that
is also known as a model centric company while the CEM version 2.0 were tested
in this study are customer oriented and became known as customer centric
models. This study is eskplanatori and by spreading the questionnaire to all
students at the College in the city of Malang. With a total sample of 500 students
from 750 questionnaires distributed by category sample 500 students active users
of social media oriented to the productive use of the Internet. The results of this
study clearly illustrate the increasing use of social media being as a way to
communicate and interact between users of social media, especially in terms of
business and trade traksaksi online as well as cash and carry. The results of this
study not only have implications for the students active users of social media, but
also for academics, businessmen ICT in this case is the mobile operator and the
government through the FSA (Financial Services Authority) and BI (Bank
Indonesia) in order to establish a regulation providing security assurance wi thin
traksaksi based electronics and estuary is to inspire the students as a whole in
order to foster the entrepreneurial spirit by utilizing the good and right way
communication devices owned. This study gives a real contribution to the
development direction of electronic-based transactions and understanding of the
students in the use of technological devices to business content and practice of
marketing in social media.

Keywords: ICT, marketing, technology, customer, management

Koko Nakulo Djatikusumo 215

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

FINANCIAL DISTRESS AND CAMEL RATIO CASE STUDY

SYARIAH BANKING

Lisa Kustina
Emmelia Tan
STIE Pelita Bangsa

Abstract: The purpose of this research is to analyze the effect of the CAMEL ratio
to predict syariah Bank’s financial distress. Capital adequacy, Asset quality,
Management quality, Earning, Liquidity and sensitivity to market are the CAMEL
ratio. Camel rating based on financial statements of the bank and camel rating also
is a US Supervisory rating of the bank’s overall condition. The rating of Camel ratio
is from 1 to 5 with 1 being strongest and 5 being weakest. Banks with a rating of 1
are considered most stable. Banks with a rating of 2 or 3 are considered average.
Banks with a rating of 4 or 5 are considered below average. The sample of this
research are all syariah banking in Indonesia. There are 11 syariah banks from
Bank of Indonesia website for the period 2011 to 2015. The sample are Bank BCA
Syariah, Bank BNI Syariah, Bank BRI syariah, Bank Jabar Banten Syariah, Bank
Maybank Syariah, Bank Muamalat Indonesia, Bank Panin Syariah, Bank Bukopin
Syariah, Bank Syariah Mandiri, Bank Syariah Mega Indonesia, and Bank Victoria
Syariah. The components of Camel rating are capital adequacy 20%, Asset quality
20%, management 20%, earnings 15%, liquidity 10%, and sensitivity to market risk
is 10%. The purpose of the camel rating is to identify banks overall condition about
the strengths and weaknesses regarding financial, operational, managerial. This
research analyzed using logistic regression.

Keywords: Financial distress, CAMEL Ratio, Syariah Banking

Lisa Kustina and Emmelia Tan 216

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

ENTREPRENEURIAL MARKETING: STUDI LINTAS BUDAYA DENGAN

PENDEKATAN THEORY OF PLANNED BEHAVIOUR

Mokhamad Arwani
Mochamad Edris
Faculty of Economics Universitas Muria Kudus Central Java Indonesia
Armanu Thoyib
Faculty of Economics and Business Universitas Brawijaya, East Java Indonesia
Marthin Nanere
Faculty of Business Economic and Law La Trobe University Australia

Abstract: The purpose of this study is to describe, Bachelor's Competitiveness,

and the scope of demographics in shaping attitudes, subjective norms, and
behavior control in shaping the entrepreneurial intention, which in turn will have a
entrepreneurial marketing. Samples of this study were all students of business,
State Universities and private universities final level in Central Java. non-probability
sampling technique of this research are used by purposive sampling. Methods of
data analysis using SEM with AMOS software assistance. The results of this study
showed that the students were supportive social environment to become an
entrepreneur and have a good knowledge in terms of entrepreneurship, it will tend
to have a strong intention to start his own business. entrepreneurial marketing is
also important to have students to be more confident in doing business. Students
who have a marketing strategy and a positive or negative attitude towards
entrepreneurship as well as the perception that they are able or unable to face
difficulties in entrepreneurship.

Keywords: Entrepreneurial marketing, Theory of Planned Behavior and Intention

of Entrepreneurship

Mokhamad Arwani, Mochamad Edris, Arm anu Thoyib, and Marthin Nanere 217
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

THE ROLE OF LEADER CHARACTERISTICS AND COGNITIVE

SOCIAL CAPITAL ON THE PERFORMANCE OF MICRO ISLAMIC
FINANCIAL INSTITUTION

Nurita Andriani
Univeristy of Trunojoyo, Madura

Abstract: This study highlight the role of leader characteristics in Islamic Micro
Finance Institutions (MIFI) and the cognitive aspect of social capital on MIFI that
managed the Islamic school on the performance economic activity of MIFI. This
study aims to determine the role of leader characteristics toward performance
economic activity of MIFI and that determine the cognitive aspect of social capital
in improving the MIFI that perform the financial activity based on the principles of:
Siddiq (honest), Tabligh (Communicative), Amanah (Believe) and Fatonah
(Profesional). The social capital of the Islamic institution that exist among the
school due the functions of the cognitive aspects of the norms, trust, solidarity and
integrity. Besides, the output of this capital aspects of this study will perform the
ideas and the expectations to generate the collective finance profit that will produce
the collective behavior collective. Furthermore, the main aspect of the Islamic micro
finance in this study is willing to do the profit of mutually beneficial collective action
(MBCA) that facilitates the mutually beneficial services. The data gather from the
various Islamic boarding school in Pamekasan, East of Java that manage Micro
Islamic Financial Institution. To conduct the data, quantitative data method is
appropriate in this study, meanwhile the purposive sampling technique that
requiring in this study analyzed by using SEM program. The results of this study
show that characteristics of a leader is charismatic of “kiai” t hat main role to
increased the impact of economic activity performance of MIFI, and that the social
capital in community found as an interaction with “Darul Ulum” Islamic Boarding
School that main role of MIFI that increased the impact of economic activity
performance of Islamic Boarding School in Pemekasan, East Java. Thus, the
cognitive aspect of social capital will impact to the increasing of institutions, such
performance as, siddiq, tabligh, amanah and fatonah (the performance of
economic activity). Cognitive social capital of solidaritas greatest influence on the
performance of economic activity.

Keywords: Characteristic of leader, Cognitive aspect of Social Capital, The

Performance of Economic Activity, Mutual Beneficial Collective Action (MBCA)

Nurita Andriani 218

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

"PERCEPTION ON RISK AND THE RISK PREVENTION STRATEGY

(PHENOMENOLOGY STUDY ON MUSLIM ENTREPRENEURS OF
KELOMPOK PAHAM QUR’AN INDONESIA"

Nur Khusniyah Indrawati

Ubud Salim
University Of Brawijaya

Abstract: Risk is inherent in daily life of both for individuals and business entities.
This study aims is to understand and explore perception on, situations which
underlies the emergence of risk, and risk management strategy as facing risky
situation. The setting of this research took Muslim Entrepreneurs of Kelompok
Paham Qur’an Indonesia. This research used post-positivistic paradigm and
involved four informants. The data was analysed by using phenomenology. The
research results showed that the informants have different comprehension on risk
with a continuum that tends to perceive positive aspects for self-ablutions. It was
based on the belief that there every problem is solvable; besides, there is a notion
that everything takes place on both individuals and business matters implies either
on of three meanings, namely whether it is as a trial, a test, or as punishment to
purify a person or a business. Thus, it makes the occurring risks are handled by
taking the best effort to solve the problems and devoting the results absolutely to
Alloh. Situation that can trigger the emergence of risks can be grouped into three
themes: (1) spiritual and moral aspects, (2) quality of products and services
aspects, and (3) resources utilization aspects. Under these situat ions, Muslim
Entrepreneur of Kelompok Paham Qur’an Indonesia used three keys of risk
management strategy, like: (1) implementing Qur'anic management, (2) building
network, and (3) effective and efficient resources utilization through employee
involvement program.

Keywords: Situations for emerging risk, risk management strategy, Qur’anic

management, network, employee involvement

Nur Khusniyah Indrawati and Ubud Salim 219

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

THE IMPACT OF KNOWLEDGE MANAGEMENT ORIENTATION,

INNOVATION AND MARKET ORIENTATION ON CREATIVE INDUSTRY
PERFORMANCE

Ananda Sabil Hussein

Mintarti Rahayu
Nadiyah Hirfiyana Rosita
Faculty of Economics and Business University of Brawijaya

Abstract: This study aims to determine the effect of Knowledge Management

Orientation, innovation and market orientation on creative industry performance.
One hundred and fifty questionnaires were distributed through self-administered
survey, while only one hundred and four questionnaires were usable for the further
analysis yielding 70% response rate. Partial Least Squares SEM was employed to
analyse the data. The results of inner and outer model evaluation were conducted
prior the Hypotheses tests to make sure the conceptual model built was robust.
Upon the completion of Hypotheses test, Knowledge Management Orientation
does not have a significant effect on creative industry performance. However, it has
significant direct effects on both market orientation and innovation. In addition, the
finding of this study shows that innovation was the only determinants of creative
industri performance. On the completion of research objectives, this study provides
both theoretical and empirical contributions. For theoretical standpoint, this study
provides a comprehensive conceptual model to explain the relationship among
KMO, innovation, market orientation and creative industry performance. In addition,
since this study put the notion of KMO into a hierachical order, this study explains
that organizing memory, knowledge sharing, knowledge absoprtion and knowledge
receptivity are the dimensions of KMO. For practical standpoint, this study provides
an insight for creative industry practitioners to improve the performance by
emphasizing on KMO.

Keywords: KMO, innovation, market orientation, performace, and creative

industry.

Ananda Sabil Hussein, Mintarti Rahayu, and Nadiyah Hirfiyana Rosita 220
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

ORIENTATION EFFECT OF ENTREPRENEURSHIP AND

ENTREPRENEURIAL CHARACTERISTICS OF ENTREPRENEURIAL
MOTIVATION, COMPETENCE AND PERFORMANCE OF BUSINESS

Siti Aisyah
Jannati Tangngisalu
Herman Sjahruddin
STIE YPBUP Makassar

Abstract: This study was designed to test and analyze empirically the mediating
role of entrepreneurship motivation and competence in explaining the effect of
entrepreneurial orientation and entrepreneurial characteristics of the business
performance of SMEs in Makassar City Manager. Convenience sampling technique
is used with a total sample of 117 Manager. Results of analysis using PLS Warp
5.0. provide evidence that the motivation of entrepreneurs proven as mediation
sebahagian (partial mediation) while the competence to act as pemediasi full
(complete mediation) in explaining the effect of entrepreneurial orientation and
entrepreneurial characteristics on the performance of the business.

Keywords: entrepreneurial orientation, entrepreneurial characteristics, motivation,

competence, business performance

Siti Aisyah, Jannati Tangngisalu, and Herm an Sjahruddin 221

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

STRATEGY FOR CREATING ENTREPRENEURIAL INTENTION OF

STUDENTS BASED CURRICULUM PERSONALITY AND
ENTREPRENEURSHIP (STUDY ON STUDENTS FACULTY ECONOMIC
IN STATE UNIVERSITY OF SURABAYA)

Srisetyo iriani
Monica Tiarawati

Abstract: Public awareness of continuing education colleges is increasing it is marked by

the increasing number of universities in Indonesia, namely 4443 by students of 5,138,102
people (PDDikti, 2016). This competition requires colleges to design a strategy through
external and internal factors in producing graduates who have entrepreneurial spirit and be
entrepreneurs. Given the high unemployment of the intelligentsia one of them caused by
many college graduates who become job seeker and not oriented towards job creator.
Therefore, colleges as marketers implement entrepreneurship curriculum in order to
develop a business idea in starting a business and through personality / personality is
expected to push the idea. The purpose of this study to analyze the influence of
entrepreneurship curriculum and personality in building entrepreneurial intentions of
students study at the faculty of Economics, University of Surabaya. This research approach
is descriptive quantitative with multiple regression analysis techniques. Variables measured
by indicators of entrepreneurship curriculum objective component, content, media, strategy
and learning process. Variable personality / personality measured by indicators Need for
achievement, the locus of control and self-efficacy, while variable entrepreneurial
intentions measured by indicators of employment as entrepreneurs, bold risk, the desire for
business information and is not happy to depend on others. Its population is students of
management force in 2012 with a sample of 110 respondents. The data collection is done
by spreading the questionnaire enclosed, open questions and interview the students and
lecturers of entrepreneurship courses. The results showed that there is a positive influence
entrepreneurship curriculum and type of personality (personality) in building the
entrepreneurial intentions of students, and his greatest contribution is the personality /
personalities. This has become a very interesting discussion, remember the co urage of
students in choosing a profession entrepreneur means demanding high degree of
independence, efforts to work hard, dare to risk and always spirit to move forward. These
characteristics are reflected in the Need For achievement (his desire to move forward), the
locus of control (control of the environment) and self-efficacy (belief in a will his ability)
that exist within the student. It can be concluded that, although the college has prepared
entrepreneurship curriculum and the learning process optimally turns contribution is very
small in membangaun intentions of students to be entrepreneurs. But the greatest role lies in
the personality of the student.

Keyword: Entrepreneurial Intention, Curriculum Personality, and Entrepreneurship

Srisetyo iriani and Monica Tiarawati 222

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CREATIVE DESTRUCTION AND COMPETITIVENESS OF SMALL AND

MEDIUM-SIZED ENTERPRISES: CHALLENGES AND OPPORTUNITIES
FOR INCUMBENT AND NEW ENTRANT FIRMS

Stefanus Yufra M. Taneo

Doctoral Student of Management Science, University of Brawijaya

Abstract: Product life cycle more and more become shorten due to creative
destruction in which certain product and process are replaced by a new ones that
better quality and more efficient. Creative destruction increases productivity as a
basis for competitiveness, especially small and medium-sized enterprises (SMEs)
that plays an important role in the national economy. Unfortunately, studies of
creative destruction have been emphasized on corporate and technology-based
companies such as Google and Apple. It is limited study of creative destruction on
SMEs. This article will fill the gap by analyzing and propose the relationship
between creative destruction and competitiveness of SMEs. More specifically, this
article will analyze challenges and opportunities for incumbent and new entrant
firms into an industry. A conceptual framework will be proposed based on
competence and market. Incumbent firms will improve individual and firm
competency to build on existing knowledge and skills. Incumbents can also sustain
innovation to reinforce the established product performance trajectories by giving
existing customers something more of better in the performance attribute. Thus,
incumbents reinforce the competitive position since they exploit their existing
competences and increase barriers to entry. In contrast, new entrant firms
fundamentally change the knowledge and skills required to develop and produce a
product, therefore make existing knowledge obsolete. New entrant firms can build
on disruptive innovation imply a different performance attributes than those
provided by mainstream technologies and valued by existing customers. Over time,
disruptive innovation will improve and make it performance-competitive in the
mainstream market, even displace the established technology.

Keywords: creative destruction, competitiveness, SMEs, competency, disruptive

innovation.

Stefanus Yufra M. Taneo 223

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

ANALYSIS OF TOURISM DEVELOPMENT STRATEGY

DISTRICT OF BEKASI

Surya Bintarti

Abstract: Provision of local attractions will help increase the productivity of the
local community. Increased productivity in relation to travel is through the level of
happiness This study uses descriptive study using a qualitative approach. Source
data used are primary data and secondary data. The technique of collecting data
through observation, interviews and documentation. Data analysis data reduction,
data presentation, and conclusion. Respondents were selected based proportabel
Stratefied Random Sampling, this is because the type of population is very hitrogen
and cluster sampling, ie selecting the respondent amounted to a very broad data is
that throughout the district. Types of random sampling taken was multistage
random sampling, namely the election of members of the sample is done in stages
(Supranto, 2008).

Keyword: Attractions, fasilities, Infrastructure, Transportation, hospitaly,

productivity, and economic outcomes

Surya Bintarti 224

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

FORMATION OF CHARACTER BASED ON ENTREPRENEURSHIP

THROUGH THE NATION MEDIA STORIES FOR CHILDREN PRIMARY

Uke Prajogo
STIE Malangkucecwara

Abstract: Currently social violence a serious problem that occurred in Indonesia.

Unemployment is a root of a number of problems that occur at this time. On the
other hand, the paradigm of Indonesian society that being an employee /
employees are more prominent than the independent entrepreneurship is still
strong and has been entrenched for generations. The paradigm must be changed,
based on the employee / employees to be based entrepreneurship. If the people of
Indonesia have had the entrepreneurial spirit, automatically they are no longer
looking for work, but instead create employment. To obtain maximum results,
growing efforts based entrepreneurial paradigm of thinking needs to be done as
early as possible. One of the actions to realize these efforts is through the
formation of national character-based entrepreneurship through media stories and
a book-talk. The main thing that underlies this thinking is the craze in general,
children in the story. This study was developed based on the model proposed
development R2D2 Wills (1995) with some modifications. Results modifications
include the identification phase, design phase, test phase experts, and the stage of
trials conducted on a small scale and large scale. Stories and booktalk generated
to develop the values of entrepreneurship performed by considering (1) the
structure of the story according to the development of cognitive, language, and
child psychology; (2) the values of entrepreneurship can be developed through the
selection of leaders and units of events leading to a positive perceptions, interests,
competence and creativity of children towards entrepreneurship; (3) selection of a
variety of language that can provide opportunities for children to develop language
skills; and (4) the arrangement of display that encourages reading and the growth
of a child's imagination. The development of entrepreneurial values in the story is
done through the development of units of events with the following characteristics:
(1) presents a number of units of the events in the story to develop the values of
entrepreneurship in young children; (2) presents a problem-solving strategies that
faced the characters in stories so that these strategies can be adopted, adapted, or
dikreasikan to develop entrepreneurial values in children; (3) presented a number
of new knowledge through a variety of events faced figure to improve mental
picture of the child; (4) presents a wealth of new information; and (5) shows the
expectations of leaders to achieve a better life to motivate children to always use
the thinking skills they have learned. Book talk is developed in the form of a
number of questions serves as a guide for students, teachers or parents to convey
the values of entrepreneurship that exist in children's literature. Questions were
developed to encourage the emergence of a response in t he form of facts,
comprehension, application, analysis, synthesis, and evaluation.

Keywords: entrepreneurship, national character, story, book-talk, elementary

school age children

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CAPITAL MARKET REACTION TOWARD GOVERNMENT’S DECISION

TO DEATH PENALTY OF DRUG CRIME IN INDONESIA (CASE OF
DEATH PENALTY IN THE FIRST WAVE, SECOND WAVE AND THIRD
WAVE ON LQ 45 INDEX INDONESIA STOCK EXCHANGE)

Uswa Alhamid
Ubud Salim
Sumiati
Management Department, University of Brawijaya, Malang, Indonesia

Abstract: Indonesian capital market is included as emerging market that still

vulnerable to the economic and non-economic phenomenons. This paper focus on
event study about capital market reaction to death penalty event in Indonesia
during two periods in 2015 and one period in 2016. The purpose of the research is
to discover whether there is any empirical evidence about reaction of capital
market in Indonesia toward government’s decision to death penalty on drug
crime by using abnormal return and trading volume activity indicators.
Population in this research is stocks which listing in Indonesian Stock Exchange
during observation period with sample of LQ45 index. Data used in this research
consists of daily stock prices and daily share trading volume during the five
days before event and after the event, with using paired sample t-test method. This
research have found that there is no significant average abnormal return
before death penalty and after death penalty for three periods of observation. On
the other hand, there is significant result before death penalty and after death
penalty for trading volume activity. This result describe that information of death
penalty can not increase stock price and tendency high selling of the stock.
This paper concludes with some brief arguments, consist of positive and
negative impacts on the death penalty event. Death penalty is a bad news
information for investors especially foreign investor who are majority in Indonesia
Stock Exchange, but on the other hand this news proves the government's
seriousness in combating drug trafficking in Indonesia.

Keywords: Capital market reaction, Death penalty, Drug Crime, Indonesia

Stock Exchange, LQ45 Index

Usw a Alhamid, Ubud Salim , and Sum iati 225

 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

STRATEGY COMPETITIVENESS OF TOURISM DESTINATIONS IN THE

DISTRICT OF BEKASI

Surya Bintarti
University of Brawijaya Jakarta
Ubud Salim
Ananda Sabil Husein
Mintarti Rahayu
University of Brawijaya Malang

Abstract: The tourism sector has been recognized kemiskin able to reduce the
number of people and be able to facilitate development in the area sutau or less
developed and emerging (hunting organization International, 2011). Usefulness
and significance of tourism increasingly high for some developing countries are
closely linked to the role of labor in encouraging the achievement of the millennium
development goals (MDGs) are the primary in terms of employment and poverty
reduction, gender and women's empowerment and the relationship between jobs
and environmental sustainability. As we know that at this time the tourism sector
and creative economy sector is a creator of high foreign exchange, for example, in
2013 tourism knowledge creating foreign exchange of US $ 10.054 billion, this
amount increased by sebebsar US $ 9.12 billion in 2012. The increase in foreign
exchange earnings is not only come from an increase in the number of tourists
macanegara from 8.0 million in 2010 and to 8.8 million in 2011, but it also comes
from an increase in average spending of US $ 1.133 in 2012, to US $ 142 in 2013,
it this means that the increase in the quantity of foreign exchange, followed by
improving the quality of tourism, which in the meantime the economic sector
exports accounted for much higher than the value of its imports. Creative economy
mencantat trade surplus during the period 2010 to 2013 with a value of Rp 118 T
suplus sebesart, where this means that the foreign exchange contribution of the
creative economy sector reached 11.89 billion USD, resulting in total sector of
tourism and creative economy toppling foreign exchange sebebsr 21 95 billion
USD, or it can be said that the tourism and creative economy accounted for
11.04% in foreign exchange beloved country of the Republic of Indonesia
(Kemenparekraf, 2014) the foregoing shows that the provision of local attractions
will help increase the productivity of the local community. Increased productivity in
relation to travel is through the level of happiness. People who traveled will tend to
be happier (Liu, 2013), and happiness have positive impact on productivity
improvement of society (Cropanzano and Wright, 2001), because psychologically,
with traveled will increase the happiness of society and also lowers stress levels.
Even in research Andereck and Nyaupane (2013), traveled in the open air will
improve the quality of life of a person who would also greatly affect the productivity.
Based on reports Annual Performance tourism office Bekasi District shows that the
role of the tourism and economic kretaif contributes very low on the economy of the
District of Bekasi Regency and beradasarkan emotion Work compiled shows that
that there are only five (5) tourism is favored to be fostered from the 12 (twelve )
tourism potential owned. It is not comparable with the rate of growth of industry in
Bekasi Regency, namely of the number of 4026 industry in the years 2012 to 4500
in the year 2016, which is definitely an increasing number of industry was followed
by the increase in urbanization either from within or from outside country. The
interest of researchers doing this study is an underlying research findings related to
the competitiveness of tourist destinations, based on previous research that there
is still research the context of the State very broad and context are very narrow that
only a single object, so that the freshness of this study is to "use regional context
that is particularly in the Bekasi district. The uniqueness tourist attraction owned by
the market opportunities that are owned also by the region, namely the large
number of immigrants who work in the industry in the region Bekasi Regency. The
purpose of this study was to: 1) Mengeploritasi dimensions of what constitutes the

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competitiveness of travel distinasi in Bekasi; 2) Analyze how the competitiveness

strategy are applied in Bekasi Regency. This study used a qualitative approach
with fenomonologi analysis and data collection is done through interviews,
observation and documentation. The low number of tourists who visit the tourist
attraction owned by the District in Bekasi are not comparable with the beauty that is
owned by a potential tourist attraction and also not sebnading with the large
number of people / communities in the area of Bekasi, to the focus of research is
the "Strategy of Competitiveness Destinations Tourism in Bekasi regency, West
Java Propensi ". Here is an illustration of this study think the groove.

Keywords: Competitiveness, Tourism Destinations, and Marketing Strategies

Surya Bintarti, Ubud Salim, Ananda Sabil Husein, and Mintarti Rahayu 227
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE

FORMATION OF CHARACTER BASED ON ENTREPRENEURSHIP

THROUGH THE NATION MEDIA STORIES AND BOOK-TALK FOR
PRIMARY SCHOOL CHILDREN

Uke Prajogo
STIE Malangkucecwara

Abstract: This study aims to produce stories and book-talk as a medium for the
formation of national character-based entrepreneurship for elementary school age
children who have not been tested and tested experts. In II aims to produce stories
and book-talk as mentioned above which have been tested experts and tested on a
small scale or large scale. This study was developed based on the model proposed
development R2D2 Wills (1995) with some modifications. Results modifications
include the identification phase, design phase, test phase experts, and the stage of
trials conducted on a small scale and large scale.

Keywords: entrepreneurship, national character, story, book-talk, elementary

school age children

Indonesia as the country with the
grace that is so abundant resource is
not yet able to be managed to produce
a fair and equitable prosperity for the
people. High unemployment is a
pressing problem to be immediately
addressed. The nation's competitive-
ness is an indicator of the success of a
developed nation. Indonesia is curren-
tly classified as a country that competi-
tiveness is very low, which is in the
order of 108 out of 168 countries.
Competitiveness is a barometer of the
lack of entrepreneurs in Indonesia with
a population of approximately 230
million.
According to data from the
Central Statistics Agency (BPS), the
number of unemployed in 2010
amounted to 10.43 million. The
unemployment rate in 2010 rose to 9%
from the year 2009 of 8.5%. While the
number of labor force in Indonesia in
2010 reached 111.48 million. The
condition affects the large social
problems such as violent crime,
vandalism, sexual crimes and mass
fights.
On the other hand, the paradigm
of Indonesian people who see that as
an employee / employees more "noble"
than the very strong independent
entrepreneurship. Paradigm makes
people think Indonesia has a low
mental independence, not creative,
tend to rely on others, and ultimately
the potential to again become a nation
that colonized in the economic and
industrial sectors.
Such conditions can not be
allowed to continue progress. Need
serious and immediate effort to change
the direction of the old paradigm into a
new paradigm that sees that entrepre-
neurship is more contextual and
profitable. One effort that can be done
is through the establishment of a
national character-based entrepreneur-
ship for elementary school age child-
ren. Elementary school age, ie 7-12
years, is the most effective age for
shaping the culture and character of a
person. The age is a golden period
(the golden period) the formation of
one's mindset, associated with its
development phase that are in the
concrete operational stage.
In this regard, in this research
will be the establishment of a national
character-based entrepreneurship for
elementary school age children. To
maximize results, remember the sub-
ject of his research are elementary
school age children, the attempt is
made through the use of media stories
and a book-talk. It is expected that the

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entrepreneurial spirit can be planted as
early as possible in children of
elementary school age.
METHOD
As noted earlier, this study aims
to develop children's story has the
potential to shape the character of the
nation-based entrepreneurship for ele-
mentary school age children. There-
fore, this study is a research develop-
ment. The development method used
is based on the model of R2D2
(recursive, reflective, design and deve-
lopment) proposed by Wills (1995) with
some modifications tailored to their
needs. The results of these modificati-
ons resulted in four stages of develop-
ment used in this study, namely (1) the
stage of identification, (2) the design
phase, (3) expert testing phase, and
(4) the pilot phase on a small scale and
large scale.
Phase identification in this study
is identical with the recursive and
reflective phase in the model R2D2. At
this stage of reflection on a series of
previous research (see Prajogo, 2008,
2009, 2010). Furthermore, the 'mark-
ing' in certain parts that are considered
relevant to the needs of this study.
Stage design is identical to the
design phase in the model R2D2. At
this stage, the preparation of children's
stories and a book-talknya. Formulati-
on based on a needs analysis obtained
at the stage of identification.
Stage of development on the
model of R2D2 embodied into two
phases in this research, namely
experts test phase and test phase of a
limited scale and large scale. At this
stage of testing expert test material
along with children's story book-talknya
to a number of relevant experts.
Table 1. Children's Story Writing Guide.
NO. ASPECTS INDICATOR
1. Fill a. Originality of the
idea
Uke Prajogo
Specialists may include children's lite-
rature experts and child psychology
experts. In the test phase testing mate-
rials to children on a small scale and
large scale. Limited scale tests con-
ducted at several elementary school
age children are considered to have
sufficient ability to think. Wide scale
testing conducted for elementary
school age children within the school in
three cities in East Java province.
RESULTS
Product Specifications
Children's story developed
through this study is the potential of the
children's story in the form of charac-
ter-based entrepreneurship for elemen-
tary school age children. At every
children's story written made book-talk.
With the book-talk that accompanies
each story of children who developed,
then the usefulness of the story for the
purpose of establishing the national
character-based entrepreneurship for
elementary school age children can be
maximized. Book-talk is a series of
questions, orders, instructions, directi-
ves, or consideration would direct the
child to find the values of entreprene-
urship in the stories they read. By
reading this story, slowly but surely, is
expected in children will form a strong
entrepreneurial character. Furthermo-
re, it is expected they will become a
nation that is noble and entrepreneurial
in order to become a major foundation
in the success of Indonesia Gold 2025.
Products produced children's
stories follow a series of guidelines
story writing predetermined, while the
guide can be seen in Table 1.
DESCRIPTORS
a. The story was developed with the
idea of an original and relevant to
children's lives.
b. The story was developed with the
original idea and contribute new
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information to broaden their horizons

in life for children.
c. The story was developed with the
original idea and provide alternative
solutions to problems in a child's life.
d. The story is developed with original
ideas and has thrust the emergence
of new ideas.
b. Actuality the idea a. The story was written with the idea
that the actual development of a
child's life today.
b. The story is written with ideas to
introduce the actual thinking in life
for children.
c. The story is written with ideas that
are relevant to the actual problems
faced by children.
d. Stories written thrust for children to
develop memamai perspective of
actual issue in the lives of children.
c. The usefulness a. Helpful written idea to form a
of the idea national character-based
entrepreneurship in elementary
school age children.
b. Helpful written idea to develop a new
paradigm that is contextual and
profitable entrepreneurship.
c. Helpful written idea to develop a
positive attitude as a member of
society.
d. Helpful written ideas to develop
social skills.
2. The structure a. Theme a. The theme clearly developed.
of a story b. The theme was developed with a
draw.
c. The theme is developed in one
piece.
d. Themes developed creatively.
b. People and a. Figures selected in accordance with
Characterizations the reality of children's lives.
b. The character is developed in
accordance with the child's ability to
think.
c. The character is developed in
accordance with the level of
psychological development of
children.
d. The character is developed in
accordance with the child's social
development.
c. Plot a. The story line is developed with the
events that are relevant to the child's
experience.
b. The storyline was developed setting
times and places that are relevant to
the child's experience.
c. The story line is developed with a
series of conflicts that

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d. Setting
3. Language a. The use of
vocabulary
b. The use of the
phrase
c. The use of
dialogue
a. Writing stories
exact
b. Correct use of
punctuation
Educational values of the charac-
ters in children's stories include: (1) the
character of the love of God and all his
creatures; (2) self-reliance, discipline,
and responsibility; (3) honesty / trust-
worthy, diplomatically; (4) respectful
and polite; (5) benefactors, like mutual
help and mutual cooperation / collabo-
ration; (6) confident and hardworking;
(7) leadership and justice; (8) good and
humble, and (9) of tolerance, peace
and unity.
Making Process
Making children's story through
the stages related to the implementa-
tion of the national strategic research,
while the stages are:
- Phase Identification:
At this stage, reflecting the
previous research and tagging of
parts that are considered import-
ant and relevant
- Selecting the topic of the story
Uke Prajogo
incomprehensible children.
d. Throughout the story with interesting
because there is the element of
surprise which opens new horizons
for the child's mind.
a. Setting the selected place easily
understood or imagined child.
b. Setting the place chosen to
introduce a variety of neighborhood
place for children.
c. Setting time been wearing, or the
hang of children at various units of
time.
d. Atmosphere that developed in the
story to support positive emotional
growth in children.
Vocabulary used in the story
development in accordance with the
development of children's vocabulary.
Variety and complexity of sentences
used in accordance with the
development of the child sentence.
Dialogue is developed according to
social-mental development of students.
spelling conducted with respect to the
accuracy of spelling.
Writing a story done by considering the
correct use of punctuation.
- Organizing the topic by the same
family
- Identify the value of entrepreneur-
ship in the story
- Stage Design:
- Create a story
- Develop a story becomes the story
- Develop book-talk
Product Overview
Products produced in this study
of a collection of stories and boo-talk
that accompanies each story. By
reading the stories produced are
expected to occur entrepreneurship
based character education process at
elementary school age children. The
resulting product has been tested, both
expert testing, testing on a limited
scale, as well as wide-scale trials.
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DISCUSSION
Production Process Stories
The production process produ-
ced 30 stories children's stories include
book-talk. The number of stories pro-
duced as many as 30 stories compiled
into six books. In addition, also pro-
duced book-talk that accompanies
each story developed. The existence of
book-talk is intended to help children in
exploring entrepreneurial values
contained in the story, either indepen-
dently or with the guidance of others,
so that the values of entrepreneurship
contained in the story can be
understood and interpreted correctly by
the child.
In the production process of the
story, there are several obstacles that
must be faced. These obstacles
Figure 1. Display a children's book and book-talk entrepreneurial education
before revision
As an illustration, the following
will describe one of the children's story
generated
MY LOST SHOES
Uke Prajogo
because the author has the story
coordinated difficulties per level
beginning and end of elementary age
and by type of material characteristics
of entrepreneurship that will be
presented. Thus, to amend the plan to
reverse the process of production
which was originally mapped material
is then manufactured into manufactu-
red first and then mapped per age level
early and late elementary and per type
of material characteristics of entrepre-
neurship. The effect of this change is
the resulting product is no longer a
story containing the value of entrepre-
neurship but being the story contains
some entrepreneurial values. Also, the
number of products to be reduced.
Here to see the product before
tested a children's book expert.
"Mom, where my shoes?"
Shouted Iqbal.
"Yesterday you put it in?"
Asked the mother.
"Iqbal put it at the front
door here, ma'am," said
Iqbal.
"Find out, Bal. Probably
around a table or a chair on
the porch, "she said.
Always missing. Yes, shoes Iqbal
was always missing when he was
about to put it on. He remembered, he
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put in at the front door of the house,
but why always missing? Iqbal himself
angry because his mother could not
help him find shoes. His sister who
was a toddler crying so hard that she
should calm her down first. He can be
late to school if you do not immediately
find her shoes.
After looking for him thither,
finally ditemukanlah shoes. Like the
mother said, her shoes under the table.
How could it move to the shoes under
the table? Though yesterday was
clearly placed in front of the door,
thought Iqbal. Ah, but it does not have
to think about, which is important shoe
found. Iqbal soon be saying goodbye
to his mother and ran to the school, to
be sure she was too late this time. And
he must be punished by Pak Anton,
Mathematics teacher was very
disciplined.
When home from school, Iqbal
instantly putting his shoes at the door
so that the next day is not difficult to
look. After removing your shoes, smell
the mother's hand, and kissed his
sister Kiki chubby cheeks, Iqbal ran out
of the house.
"Mother, Iqbal went to play
first," pamitnya
"Wait, Iqbal! Shoes should
not be placed haphazardly,
"she said.
But Iqbal did not listen to his
mother's advice. He was already far to
run and play with his friends. In the
afternoon he went home because it
was time to recite. When entered the
house, his shoes were gone, but he
did not realize it. Moreover, at that time
many of his neighbors who were
coming to his home to attend the
housewives were placed in his home.
Most of the mothers carrying children
under Kiki's age, and they are playing
in front of the door.
It was not until the next morning
Iqbal realized that his shoes were
missing again from the front door. And
unfortunately, this time he overslept. If
the shoes are already there, it's likely
Uke Prajogo
he's just a few minutes late. However,
the shoe was lost again, she'd be late
in a long time.
"Mother ... Where Iqbal
shoes?" Shouted Iqbal.
"Every morning you always
lose your shoes. You put it
where? "Asked the mother.
"At the door here, ma'am,"
said Iqbal hard.
"That's your fault. Shoes
should not be placed at
random, if you lost this way
alone the hassle, "mother's
advice.
"Yes, ma'am. Iqbal would
begin later in the day to
keep it carefully. Now
please help find her yes,
ma'am? Iqbal will be late
again if not immediately
find him, "pleaded Iqbal.
After her mother helped find, the
shoes were found in the interior patio
outside his home. Fortunately it does
not rain yesterday so the shoes were
not wet. According to the mother, the
shoes were placed at the door will
tersepak-kick by people who will enter
or exit the house, so that it can move.
Iqbal immediately ran to the school.
Home from school and would go
play, Iqbal almost forgot to keep his
shoes if not reminded by his mother.
Finally Iqbal thinks that his shoe was
put under the desk must not be
tersepak-football again, and never be
lost again. Yes, Iqbal decided to put
his shoes under the table because
apart from being lost, the table was
located on the terrace of the house so
it would be easy for him to pick it up
without having to go far away to her
room.
However, what happened was
surprising. The next day Iqbal shoes
were missing. Iqbal sad. After a long
search, the shoe was found under the
seat which is located quite far from the
table. According to his brother, Iqbal
pet cat yesterday named Mimi who
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removed his shoes. Definitely by Mimi
shoes are toys.
In order not to play Mimi, Iqbal
must find more ideas for storing shoes.
Of course, that every day he did not
lose the shoes again. This time Iqbal
decided to keep her shoes in a shoe
closet. He placed his shoes at the very
bottom and the easiest to pick the time,
that accumulate on the shoes her
sister. Since he put his shoes in that
place, never lost her shoe again. Now,
every morning she does not need to
shout to his mother to find her shoes.
He also no longer need to leave late to
school because her shoes were not
missing anymore.
However, one morning, Iqbal
surprised. His shoes were missing
again. Though already placed in the
shoe closet. He asked his mother who
was feeding her sister.
"Mother ... shoes Iqbal to
go?" Asked Iqbal.
"Again shoes. You're a big,
Iqbal Already the third
grade. Mother, you've been
telling you to store it
properly. Mother does not
know, my mother was busy
taking care of a younger
brother, "he said.
"Yesterday already Iqbal
put it in a shoe closet,
Mom, but lost," Iqbal said
almost in tears.
Iqbal had tried to ask his brother,
but his brother did not know. So did his
father. Iqbal had almost despaired, but
he still tried hard to find shoes. He
asked his brother also. With cadelnya
voice, her sister said that yesterday he
threw the shoes were piled on top of
her shoes.
"It's a sister shoes, shoes
besal sister throw into the
trash," the reason for his
brother.
Uke Prajogo
Mother just shook his head,
smiling. Iqbal ran into the kitchen to
see the shoes that have been
discarded the brother. Fortunately still
beside a dumpster.
Iqbal now realized he should not
be careless and should be
independent. Each object has its place
respectively. He should be able to
store the objects he owns in the right
places that are not easily lost. Although
it has been storing shoes in the shoe
cabinet, Iqbal must also consider who
wore place to store shoes, so as not to
interfere with other shoes. Since then,
Iqbal was not careless again. He
stores all the objects in the correct
place, and he never lost anything.
BOOK-TALK
1. Who was always losing his shoes
every morning?
2. Where the loss of shoes Iqbal?
3. Why shoes Iqbal was always
missing?
4. What advice to Iqbal's mother that
her shoes were not missing
anymore?
5. What are the ways Iqbal to save
his shoes?
6. Why in the end even though it is
saved in a shoe closet but still
lost?
7. What would you do with objects
(including shoes) do you have that
are not easily lost?
Children Stories Expert Test Results
After the production process
stories and book-talk is completed, test
expert to determine the feasibility of
children's literature produced media.
Event expert testing is done by
presenting expert children's stories and
a child psychologist. The existence of a
children's story expert is required to
test the feasibility of a children's story,
both from the aspect of material
content and display aspects.
Meanwhile, the presence of
psychologists is indispensable in the
evaluation and reflection of the results
of writing for children and booktalk-
231
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
based entrepreneurship. Child
psychologists can provide theoretical
and practical considerations for
product improvement or consideration
in writing the text of the new children's
story. Consideration is delivered from
the perspective of the psychology of
child development and child
psychology of language.
Assessment expert test covers
several aspects of the study. Section
studies the content aspect covers eight
aspects, namely (1) aspects of the
theme, (2) aspects of the identification
of the characters, (3) aspects of the
characterizations, (4) aspects of the
background, (5) aspects of the groove,
(6) aspects of language, (7) aspects of
a story standpoint, and (8) the aspect
of entrepreneurship. Section study
aspects of views covering six criteria:
(1) size paper is not difficult for children
to read, (2) the size of the letter
corresponding to the visual
development of the child, (3) the use of
colors appeal to children, (4) the use of
illustrations and images attract and
facilitate children understand the story,
(5) the use of illustrations and images
attract and encourage to develop the
entrepreneurial spirit, and (6) the use
of illustrations and images encourage
the emergence of responses that
reflect an entrepreneurial spirit.
Meanwhile, part of the study of the
psychology includes nine criteria: (1)
MY LOST SHOES
"Mom, where my shoes?"
Shouted Iqbal.
"Yesterday you put it in?"
Asked the mother.
Uke Prajogo
Whether the story is developed in
accordance with the experience of the
daily life of the child, (2) Whether the
story is developed to encourage the
growth of children's interest, (3)
Whether the story is developed to
encourage the growing understanding
of the physical environment of the
child, (4) Whether the story is
developed to encourage the
development of understanding of the
social environment of children, (5)
Whether the story is developed to
encourage the growth of
understanding of humans with the
variation of behavior and nature, (6)
Whether the story is developed can be
stimulants growth a positive character
in the future, (7) Whether the story is
developed to encourage the
development of an understanding of
character education, (8) Whether the
story is dikembangnya encourages
curiosity, and (9) Has the story
developed can be a stimulant growth of
values entrepreneurship.
Analysis per story performed by
the stories of children and child
psychology, including content analysis,
display, and psychological. Sample
analysis per story, for example on a
children's story titled "My shoes Lost"
series of children's stories in
entrepreneurship education for 4th
graders.
"Iqbal put it at the front
door here, ma'am," said
Iqbal.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
"Find out, Bal. Probably
around a table or a chair on
the porch, "she said.
Always missing. Yes, shoes Iqbal
was always missing when he was
about to put it on. He remembered, he
put in at the front door of the house,
but why always missing? Iqbal himself
angry because his mother could not
help him find shoes. His sister who
was a toddler crying so hard that she
should calm her down first. He can be
late to school if you do not immediately
find her shoes.
After looking for him thither,
finally ditemukanlah shoes. Like the
mother said, her shoes under the table.
How could it move to the shoes under
the table? Though yesterday was
clearly placed in front of the door,
thought Iqbal. Ah, but it does not have
to think about, which is important shoe
found. Iqbal soon be saying goodbye
to his mother and ran to the school, to
be sure she was too late this time. And
he must be punished by Pak Anton,
Mathematics teacher was very
disciplined.
When home from school, Iqbal
instantly putting his shoes at the door
so that the next day is not difficult to
look. After removing your shoes, smell
the mother's hand, and kissed his
sister Kiki chubby cheeks, Iqbal ran out
of the house.
"Mother, Iqbal went to play
first," pamitnya
"Wait, Iqbal! Shoes should
not be placed haphazardly,
"she said.
But Iqbal did not listen to his
mother's advice. He was already far to
run and play with his friends. In the
afternoon he went home because it
was time to recite. When entered the
house, his shoes were gone, but he
did not realize it. Moreover, at that time
many of his neighbors who were
coming to his home to attend the
housewives were placed in his home.
Uke Prajogo
Most of the mothers carrying children
under Kiki's age, and they are playing
in front of the door.
It was not until the next morning
Iqbal realized that his shoes were
missing again from the front door. And
unfortunately, this time he overslept. If
the shoes are already there, it's likely
he's just a few minutes late. However,
the shoe was lost again, she'd be late
in a long time.
"Mother ... Where Iqbal shoes?"
Shouted Iqbal.
"Every morning you always lose
your shoes. You put it where?
"Asked the mother.
"At the door here, ma'am," said
Iqbal hard.
"That's your fault. Shoes should
not be placed at random, if you
lost this way alone the hassle,
"mother's advice.
"Yes, ma'am. Iqbal would begin
later in the day to keep it
carefully. Now please help find
her yes, ma'am? Iqbal will be
late again if not immediately
find him, "pleaded Iqbal.
After her mother helped find, the
shoes were found in the interior patio
outside his home. Fortunately it does
not rain yesterday so the shoes were
not wet. According to the mother, the
shoes were placed at the door will
tersepak-kick by people who will enter
or exit the house, so that it can move.
Iqbal immediately ran to the school.
Home from school and would go
play, Iqbal almost forgot to keep his
shoes if not reminded by his mother.
Finally Iqbal thinks that his shoe was
put under the desk must not be
tersepak-football again, and never be
lost again. Yes, Iqbal decided to put
his shoes under the table because
apart from being lost, the table was
located on the terrace of the house so
it would be easy for him to pick it up
without having to go far away to her
room.
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 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
However, what happened was
surprising. The next day Iqbal shoes
were missing. Iqbal sad. After a long
search, the shoe was found under the
seat which is located quite far from the
table. According to his brother, Iqbal
pet cat yesterday named Mimi who
removed his shoes. Definitely by Mimi
shoes are toys.
In order not to play Mimi, Iqbal
must find more ideas for storing shoes.
Of course, that every day he did not
lose the shoes again. This time Iqbal
decided to keep her shoes in a shoe
closet. He placed his shoes at the very
bottom and the easiest to pick the time,
that accumulate on the shoes her
sister. Since he put his shoes in that
place, never lost her shoe again. Now,
every morning she does not need to
shout to his mother to find her shoes.
He also no longer need to leave late to
school because her shoes were not
missing anymore.
However, one morning, Iqbal
surprised. His shoes were missing
again. Though already placed in the
shoe closet. He asked his mother who
was feeding her sister.
"Mother ... shoes Iqbal to
go?" Asked Iqbal.
"Again shoes. You're a big,
Iqbal Already the third
grade. Mother, you've been
telling you to store it
properly. Mother does not
know, my mother was busy
taking care of a younger
brother, "he said.
"Yesterday already Iqbal
put it in a shoe closet,
Mom, but lost," Iqbal said
almost in tears.
Iqbal had tried to ask his brother,
but his brother did not know. So did his
father. Iqbal had almost despaired, but
he still tried hard to find shoes. He
asked his brother also. With cadelnya
voice, her sister said that yesterday he
threw the shoes were piled on top of
her shoes.
Uke Prajogo
"It's a sister shoes, shoes besal
sister throw into the trash," the
reason for his brother.
Mother just shook his head,
smiling. Iqbal ran into the kitchen to
see the shoes that have been
discarded the brother. Fortunately still
beside a dumpster. Iqbal now realized
he should not be careless and should
be independent. Each object has its
place respectively. He should be able
to store the objects he owns in the right
places that are not easily lost. Although
it has been storing shoes in the shoe
cabinet, Iqbal must also consider who
wore place to store shoes, so as not to
interfere with other shoes. Since then,
Iqbal was not careless again. He
stores all the objects in the correct
place, and he never lost anything.
BOOK TALK
1. What errors Iqbal always do every
day?
2. What happens every time Iqbal
made it carelessness?
3. How Iqbal solve the problem?
4. What do Iqbal effort to solve the
problem?
5. Though Iqbal shoes already
placed in a shoe closet, why shoes
Iqbal is still missing?
6. What is the attitude Iqbal know
that the shoes had been thrown by
his sister?
7. What lessons can you take from
the story of Iqbal and his shoes?
8. Way out what you can give them
to Iqbal to resolve the problem?
The above example, is an
example of a children's story based
entrepreneurial education has been
revised. The story above, raised the
values of entrepreneurship, such as
discipline, careful with the little things,
do not procrastinate, and strong-willed
independence. Based on the results of
expert testing children's story that has
been done, it can be seen from the
aspect of the story feasibility level
content, views, and psychological
231
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
story. First, the feasibility of the plot of
the content aspect, based on test
results demonstrate the feasibility level
experts story quite well. The eighth
aspect of the study of the content
aspect, the whole aspect of a positive
assessment and was considered to be
uplifting kemandrian children. Thus, no
need to revise the content aspect.
Second, the story of the aspects of
feasibility level display, based on test
results demonstrate the feasibility level
experts see the story quite well. Of the
six aspects of the assessment criteria
to see, there are a few notes for further
revisions, ie on the selection criteria to
see stories lay out images contrast
with the color of letters used, thereby
reducing the attractiveness of the
display and hard to read .In addition to
these aspects, other aspects received
a positive assessment and does not
need to be revised. Third, based on
test results of child psychologists has
been done, it can be seen that the
feasibility of the psychological aspects
of the story quite well. Of the nine
criteria of the study psychological
aspects, shows the overall aspect of a
positive assessment and the assessed
can foster positive character traits as
well as stimulants and growth of
entrepreneurial values.
Based on the analysis of expert
testing, it can be concluded that,
overall, children stories produced in
this study is quite ideal, but there are a
few notes from experts stories of
children and child psychologists.
Based on the results of expert testing
children's story, it can be concluded
that the whole story was produced
already quite ideal, but there are some
records that need to be considered,
among others, (1) the selection of
themes of most stories produced less
in line with the level of students (class)
of the destination, (2) on a children's
story high class, characterizations that
have less attractive and less complex
to instill positive character for children,
(3) criteria for the selection of
illustrations that do not encourage the
Uke Prajogo
emergence of responses that reflect
the entrepreneurial spirit, and (4) the
image selection lay out to see the story
contrasts with the color of letters used,
thereby reducing the attractiveness of
the display and hard to read. Note
expert children's story shows the
shortage of stories produced, so that
will be the basis for revising the
children's story. These experts test
results will be used as the material
improvement of a story book to be
produced. While based on the test
results of child psychologists has been
done, it can be seen that the feasibility
of the psychological aspects of the
story already classified baikdan shows
the overall aspect of a positive
assessment and the assessed can
foster positive character traits as well
as stimulants and growth of
entrepreneurial values.
Next display products tested after the
children's book expert.
Figure 2. Display a children's book
and book-talk entrepreneurial
education
after revised
Children Stories Expert Test Results
After the production process
stories and book-talk is completed, test
expert to determine the feasibility of
children's literature produced media.
Event expert testing is done by
presenting expert children's stories and
a child psychologist. The existence of a
children's story expert is required to
test the feasibility of a children's story,
both from the aspect of material
232
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
content and display aspects.
Meanwhile, the presence of
psychologists is indispensable in the
evaluation and reflection of the results
of writing for children and booktalk-
based entrepreneurship. Child
psychologists can provide theoretical
and practical considerations for
product improvement or consideration
in writing the text of the new children's
story. Consideration is delivered from
the perspective of the psychology of
child development and child
psychology of language.
Assessment expert test covers
several aspects of the study. Section
studies the content aspect covers eight
aspects, namely (1) aspects of the
theme, (2) aspects of the identification
of the characters, (3) aspects of the
characterizations, (4) aspects of the
background, (5) aspects of the groove,
(6) aspects of language, (7) aspects of
a story standpoint, and (8) the aspect
of entrepreneurship. Section study
aspects of views covering six criteria:
(1) size paper is not difficult for children
to read, (2) the size of the letter
corresponding to the visual
development of the child, (3) the use of
colors appeal to children, (4) the use of
illustrations and images attract and
facilitate children understand the story,
(5) the use of illustrations and images
attract and encourage to develop the
entrepreneurial spirit, and (6) the use
of illustrations and images encourage
the emergence of responses that
reflect an entrepreneurial spirit.
Meanwhile, part of the study of the
psychology includes nine criteria: (1)
Whether the story is developed in
accordance with the experience of the
daily life of the child, (2) Whether the
story is developed to encourage the
growth of children's interest, (3)
Whether the story is developed to
encourage the growing understanding
of the physical environment of the
child, (4) Whether the story is
developed to encourage the
development of understanding of the
social environment of children, (5)
Uke Prajogo
Whether the story is developed to
encourage the growth of
understanding of humans with the
variation of behavior and nature, (6)
Whether the story is developed can be
stimulants growth a positive character
in the future, (7) Whether the story is
developed to encourage the
development of an understanding of
character education, (8) Whether the
story is dikembangnya encourages
curiosity, and (9) Has the story
developed can be a stimulant growth of
values entrepreneurship.
Analysis per story performed by
the stories of children and child
psychology, including content analysis,
display, and psychological. Sample
analysis per story, for example on a
children's story titled "My shoes Lost"
series of children's stories in
entrepreneurship education for 4th
graders.
Results from Pilot Scale Limited and
Wide
Based on trial results on a limited
scale and comprehensive that has
been done, it can be seen from the
aspect of the story feasibility level
content, appearance, and the
effectiveness of book-talk. First, the
feasibility of the plot of the content
aspect, based on a limited scale trials
and extensive show the feasibility of
the story quite well. The eighth aspect
of the study of the content aspect, the
whole aspect of a positive assessment
and was considered to be uplifting
kemandrian children. Thus, no need to
revise the content aspect. Second, the
story of the aspects of feasibility level
display, based on a limited scale trial
results demonstrate the feasibility and
wide to see the story quite well. Of the
six criteria already see interesting
aspect of the study. Third, the
effectiveness of book-talk, children
respond well to the presence of book-
talk that had they not encountered the
stories they have read. By filling the
book-talk they were able to reflect and
take the wisdom of character education
233
 PROCEEDING 15TH ANNIVERSARY PDIM FEB UNIVERSITAS BRAWIJAYA INTERNATIONAL CONFERENCE
that exist in every story. In fact, they
enthusiastically discuss about
entrepreneurship plan they would do.
As a result of enthusiasm, they asked
the next series will be made.
Based on a limited scale trials
and comprehensive, it can be
concluded that, overall, children stories
produced in this study is quite ideal,
the children love story. After reading
the story and fill the book-talk children
inspired values of the characters within
the story. They want more variants so
that it can continue to obtain similar
readings.
CONCLUSION
Stories yng child is generated in
this study contains values-based
character education entrepreneurship.
The values of entrepreneurship based
character education will be embedded
include: (1) the character of the love of
God and all his creatures; (2) self-
reliance, discipline, and responsibility;
(3) honesty / trustworthy,
diplomatically; (4) respectful and polite;
(5) benefactors, like mutual help and
mutual cooperation / collaboration; (6)
confident and hardworking; (7)
leadership and justice; (8) good and
humble, and (9) of tolerance, peace
and unity.
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