Proceeding UGEFIC 2021

ISSN : 2654-8879
PROCEEDING
UG ECONOMICS FACULTY
INTERNATIONAL CONFERENCE 2021
Digital Innovation “Seizing Opportunities and
Minimizing Threats During and After
The Covid-19 Pandemic”
December 14th-15th 2021
Campus F8 - Universitas Gunadarma

Depok – Indonesia 16424
PROCEEDING
UG ECONOMICS FACULTY
INTERNATIONAL CONFERENCE 2021
Digital Innovation “Seizing Opportunities and
Minimizing Threats During and After
The Covid-19 Pandemic”

Depok – Indonesia 16424
ISSN : 2654-8879
Copyright @2021 by Gunadarma Publications
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Depok, 16424
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PROCEEDING
UG Economics Faculty
International Conference 2021
Digital Innovation “Seizing Opportunities and Minimizing
Threats During and After The Covid-19 Pandemic”

Depok– Indonesia 16424
Cover: Evans W.W. & Team
Copyright @2021 by Gunadarma Publications
ISSN : 2654-8879
Co Host :
Sponsors :
Scientific Board
1. Prof. Dr. E.S. Margianti, SE., MM, Gunadarma University, Jakarta, Indonesia
2. Prof. Suryadi H.S., Ssi., MMSI, Gunadarma University, Jakarta, Indonesia
3. Prof. Dr. Alexandru Stratan, National Institute for Economic Research, Republic of
Moldova
4. Prof. Dr. Didin Mukodim, Gunadarma University, Jakarta, Indonesia
5. Ir. Toto Sugiharto, M.Sc., Ph.D, Gunadarma University, Jakarta, Indonesia
6. Prof. Dr. Ercan Uygur, Turkish Economic Association, Ankara, Turkey
7. Prof. Dr. Euphrasia Susy Suhendra, Gunadarma University, Jakarta, Indonesia
8. Prof. Dr. Budi Hermana, Gunadarma University, Jakarta, Indonesia
9. Prof. Dr. Dharma Tintri Ediraras, SE., Ak., MBA, Gunadarma University, Jakarta,
Indonesia
10. Y. C. Paya HSU, Ph.D, Duy Tan University, Da Nang, Viet Nam
11. Dr. Ing. I Made Wiryana, M.Sc., Gunadarma University, Jakarta, Indonesia
12. Dr. Peni Sawitri, SE., MM, Gunadarma University, Jakarta, Indonesia
13. Iman Murtono Soenhadji, Ph.D, Gunadarma University, Jakarta, Indonesia
14. Dr. Imam Subaweh, SE., MM, Ak., CA, Gunadarma University, Jakarta, Indonesia
15. Dr. Misdiyono, SE., MM, Gunadarma University, Jakarta, Indonesia
16. Dr. Himanshu Dutt, DMI Finance Ltd., New Delhi, India
17. Prof. Dr. Ikramov Murat Akramovic, Tashkent University of Economy, Uzbekistan
Editorial Board
1. Dr. Sri Murtiasih
2. Dr. Emmy Indrayani
3. Dr. Sundari, SE., MM
4. Dr. C. Widi Pratiwi
5. Dr. Winda Widya Areistya., S.Kom., MMSI
6. Dr. Supiningtyas Purwaningrum
Foreword from
The Rector of Universitas Gunadarma
Indonesia
Assalaamu’alaikum warahmatullahi wabarakatuh.

First of all, on behalf of Gunadarma University, I would like to welcome all speakers and
participants of the UG Economics Faculty International Conference 2021 in Campus F8
Gunadarma University, Depok, Indonesia, as well as all the participants who joined in Zoom
Room of the Conference. The topic of this conference is “Digital
Innovation: Seizing Opportunities and Minimizing the Threats During and After the Covid-
19 Pandemi” and this topic is one of the current issues mainly in the global economy as it
has challenged the economy during the New Era After the Pandemic.
As one of the leading private ICT-based university in Indonesia, Gunadarma University

always strives to deliver excellence in its educational system with respect to its teaching,
research as well as knowledge exchange and collaboration. As we all know, Digital
transformation has been giving a strong influence on the world economy, especially when
the pandemic is happening. The widespread adoption of digital solutions has brought
breakthrough changes to the economy which caused organizations tofundamentally change
the business processes, products, services and way of thinking as well as restructuring to
survive.
In this case, Digital transformation can be seen as a major organizational change-driven built
or triggered by public technology, changing the way business is conducted. The strategies
that make up the achievements thatmany countries have so far may not have the same effect
in the future because of changes in international integration and digital technology
development.
As the pace of discovery accelerates and global competition intensifies, universities are
embracing collaboration in its research climate as part to improve the academic experience
and creating cultures where innovative thinking is inspired and nurtured.
History has told us that those who prepare for the seismic shifts in work activities will have
an immense opportunity to flourish. From this perspective, Universitas Gunadarma
recognized its critical role in helping the future workforce adapt to these disruptive
technologies, ensuring that the new economy works for everyone. Held as part of the
Universitas GUNADARMA endeavor to improve the research climate, respectively, the UG
Economic Faculty International Conference 2021 is a yearly event that provides an ideal
academic platform for researchers to present the latest research findings and describe
emerging innovations and directions in economics.
On this occasion, I would like to also highlight my highest appreciation to our Keynote
Speakers, HE. Ulugbek Rozukulov, the Ambassador of the Republic of Uzbekistan to
Indonesia, and Mr. Zainudin, AK., MM., QIA CFE, CA, Director of Participation of BPJS
Ketenagakerjaan (Worker Social Security Program) and also Mr.Saurabh Mittal, PhD,
M.Phil, MCA, as an faculty member in Analytics and Digital Marketing at Fortune Institute
of International Business, New Delhi, India, Dr Imam Subaweh, SE., MM, AK, CA, Head
of Accounting Study Program of Gunadarma University, Prof. Kirk Chang, BSc, PGCE,
MSc, PhD, Cpsychol, CSci, AFBPsS, SFHEA, FCIPD, PRSA as Director for the Center of
Innovation, Management and Enterprise, Royal Docks Schools of Business and Law -
University of East London and also Prof. Dr. Obidjon Khamidov, Rector of Bukhara State
University, Uzbekistan. Furthermore, my greatly appreciation for the tremendous support
given by sponsors, committees, participants and all parties that can not be mentioned one by
one for going above and beyond to support and make sure The UG Economic Faculty
International Conference 2021 to happen.
In my final remarks, I sincerely hope you will enjoy two days of exciting debate and
networking. Goodluck for all speakers and presenters and thank you for your participation.
Wabillahi taufik wal hidayah wassalaamu’alaikum warahmatullahi wabarakatuh.

.
Jakarta, 14st December 2021
Prof. Dr. E.S. Margianti, SE. MM

Rector of Universitas Gunadarma
Acknowledgment
Assalamualaikum wr wb.
Thank to Allah SWT for His blessing without which the Proceeding of UG Economic
Faculty International Conference Digital Innovation "Seizing Opportunities and
Minimizing Threats During and After The Covid-19 Pandemic" would have not been
able to be published. This is the fifth proceeding published annually. The International
Conference was arranged virtually due to meet the health protocols of the Covid-19
pandemic. This activity presented two keynote speakers H.E. Ulugbek Rozukulov (The
Ambassador of the Republic of Uzbekistan to Indonesia) and Zainudin, Ak, MM, QIA,
CFE, CA (Director of Membership of BPJS Ketenagakerjaan). In addition, two
competent speakers Prof. Kirk Chang, BSc, PGCE, MSc, PhD, Cpsychol, CSci, AFBPsS,
SFPHEA, FCIPD, FRSA (Director for the Centre of Innovation, Management and
Enterprise, Royal Docs School of Business and Law, University of East London,
University Way, London, United Kingdom) and Prof. Dr. Obidjon Khamidov (Rector of
Bukhara State University, Uzbekistan) were invited.
In the conference 2021, 54 articles in the fields of Digital Economic and New Business
Model, Digital Marketing, Insurance, Taxes, Digital Accounting, Behavior Finance,
Environmental Economics, Sharia Economics, and Economics were presented to provide
insights and solutions to improve the economic development negatively impacted by the
Covid-19 pandemic.
We would like to express our gratitude that our ideas were positively responded by the
speaker and participants from such different countries as Indonesia, Uzbekistan, Vietnam,
Italy, United Kingdom and Malaysia. Our gratitude hereby specially goes to:
1. Prof. Dr. E.S., Margianti, SE., MM, the Rector of Gunadarma University
2. Prof Suryadi Hs., SSi., MMSI, the Vice Rector II
3. Ir. Toto Sugiharto, MSc. Ph.D, the Dean of Economic Faculty
4. Prof. Dr. Euphrasia Susy Suhendra
5. The Speaker
6. The moderator
7. The presenter
8. The reviewers
9. The organizing committee
We are equally thankful for the great support and sponsorship from PT. Bank DKI, BPJS
Ketenagakerjaan, EQUITY Sekuritas Indonesia and AAMAI. We are thanks for Taskent
Branch.University, Bukhara State University, Tashkent State Economics, and STIE Nusa
Megar Kencana, as the Co Host. We certainly acknowledge the possible mistakes or
imperfection in either the presentation or the content of the book which may result from
our limited knowledge and capacity. Accordingly, constructive suggestion and correction
are welcome. We expect that this work will contribute much to the improvement of our
scientific knowledge and insight.
Wassalaamu’alaikum warahmatullahi wabarakatuh.
December 2021
Editor
Proceeding UG Economic Faculty-International Conference
Gunadarma University – Campus F8 Dec 14th -15th 2021 ISSN: 2654-8879
Table of Content Abstract
NO Title Page
1. Book Tax Differences Analysis On Profit Growth In Companies Listed On The 1-9
LQ45 Index
Cindy Agustina, Henny Medyawati
2. The Effect Of Profitability, Leverage, Sales Growth And Company Size On Tax 10-17
Avoidance On Manufacturing Companies In The Food And Beverage Sub Sector
Listed On The Indonesia Stock Exchange, 2017-2019
Aghnia Aula Nisa, Silvia Avira, Sakinah
3. Far Audits: Alternative Approach Facing The Challenges Of Internal Audit 18-22
During The Pandemic Covid-19
Vermita Effendi, Dharma Tintri Ediraras, Cecilia Erly Istia, Lince Afriyenny
4. The Effect Of Tax Incentives, Use Of E-Filing, And Tax Sanctions On 23-30
Individual Taxpayer Compliance During Covid-19 Pandemic
Vidia Indah Puspitasari, Beny Susanti, Dewi Putrie Lestari
5. Impact Of PSBB Literacy And Distance Learning On Accounting Lecturer 31-42
Performance During The Covid-19 Pandemic
Desi Pujiati, Estiningsih, Sariyati, Sundari
6. A Bibliometric Analysis of Shariah Accounting Standards 43-51
Mulyadi, Elza Kusuma Devi, Mega Oktaviany
7. Factors Affecting The Quality Of Company Earnings LQ45 On IDX 2015-2020 52-63
Period
Nihmarulloh Aji Prabowo, Caecilia Widi Pratiwi, Ary Natalina
8. Forest Sustainability As The Impact Of Innovation And Business Strategy Forest 64-72
Management Units In Java Island, Indonesia
Rachmat Pudjo Hartanto
9. Analysis Of The Investment Effect (Sukuk, PMDN, And PMA) And Inflation 73 -80
Towards Economic Growth In Indonesia On Pre And During Covid-19
Pandemic In The Islamic Economic Perspective
Indah Royani, Peni Sawitri

10. Factors Affecting The Murabahah Financing Selection Decision: Evidence From 81-93
BMT Berkah Madani
Zia Julita, Peni Sawitri
11. Analysis Of Factors Affecting Taxpayer Compliance At The Pratama Cileungsi 94- 104
Tax Service Office
Arini Suryaningtyas, Armaini Akhirson
12. The E-Readiness Approach To Measuring The Level Of Adoption Readiness 105-116
E-Marketplace For MSMEs In Bengkulu Province
Arifah Hidayati
13. Analysis On Online Shopping Sites And E-Commerce In Indonesia: Customer 117-124
Shopping Enjoyment And Behavior During Covid-19 Pandemic To Increase
Sales Volume Of MSMES
Gesty Ernestivita, Subagyo
Table Of Content xi
ISSN: 2654-8879 Gunadarma University – Campus F8 Dec 14th -15th 2021
NO Title Page
14. The Difference In Trust Of E-Wallet On Ovo Users And Go-Pay Users 125-130
Widad Pratiwi, Malida Nurfitri, Dindiasuvi Auliannisa, Indah Mulyani
15. The Influence of Competence and Work Culture On The Supervision 131-136
Performance of Member of the Indonesian House of Representatives
Commission V
Muhammad Ali, Maulana, Novita Wulandari
16. The Effect Of Consumer Perception On Attitudes And Its Impact On Online 137-151
Purchase Intention
Anisah, Didin Mukodim, Emmy Indrayani
17. The Effect Of Hedonic Shopping Motives, Visual Merchandising, And Sales 152-160
Promotion On Impulse Buying On Tokopedia Users
Febrina Awalia, Lana Sularto
18. E-Commerce, Prices, Sales Promotions And Trust In Customer Satisfaction 161-171
Online Shop Zalora In Indonesia
Tanti Arfianti Dewi, Irfan Ardiansyah, Desti Dirnaeni, Christera Kuswahyu
Indira
19. The Effect Of Promotions, Service Features, And Ease Of Use On Interest In 172-184
Using Shopeepay E-Wallet During The Covid-19 Pandemic
Febrita Alfelia, Lana Sularto
20. The Effect Of Online Customer Review And Online Customer Rating On 185-194
Purchase Decisions Through E-Commerce Shopee In Kab. Tangerang
Tia Chisca Anggraeni, Diah Aryati, Oktaviani Saputri
21. Effect of Brand Equity of Indonesian TV News Channel on Intention to 195-203
Re-Watch: Mediating Effects of Social Interaction and Attitude
Cahyawati Diah, Peni Sawitri
22. The Role Of Financial Leverage, Return On Asset (ROA), And Earning Per 204-217
Share (EPS) On Initial Return (Case Study : Companies Listed On IDX With
Initial Public Offering In The Period Of 2017-2019)
Fajar Akbar Ahmadi, Emmy Indrayani
23. Impact of Fiscal Decentralization and Independence on Community Welfare 218-229
through Local Government Performance
Silvi Afira, Sundari, Radi Sahara
24. Comparisonal Analysis Of Financial Performance Before And During The 230-236
Covid-19 Pandemic
Nur Ainun Anisa, Sri Rahmawati, Ekaning Setyarini
25. The Effect Of Inflation And Unemployment Rate On Economic Growth In Java 238-240
Island For The 2017-2020 Period
Yossy Rosalinda, Cicilia Erly Istia
26. Food Price Clustering 241-248
Emirul Bahar
xii Table Of Content

NO Title Page
27. The Relationship Between Coworker Social Support And Turnover Intention 249-255
On Millennial Employees
Khairunnisa Hutagalung, Siti Qori Almira, Era Ayu Amelia, Euphrasia Susy
Suhendra
28. Impact Of Tax Aggressiveness, Incentive Tunneling, And Bonus Mechanism On 256-267
Transfer Pricing Decisions On Manufacturing Companies Listed On The
Indonesia Stock Exchange (Study Of The Covid-19 Pandemic)
Febriliani Rahayu, Dharma Tintri Ediraras, Istichanah
29. The Effect Of Price, Product Quality And Service Quality On Customer Loyalty 268-276
Through Sociolla Customer Satisfaction
Febby Dwi Elnanda, Komsi Koranti
30. Analysis Of The Success Factors Of MSMEs Business Performance During The 277-284
Covid-19 Pandemic: A Principal Component Analysis
Mufid Suryani, Nida Nusaibatul Adawiyah
31. Implications For The Success Of Community Based Tourism To Levels 285-300
Community Welfare: Study Of Nglanggeran Tourism Village Before And In
Post Covid-19 Pandemic
Dhiana Ekowati, Winanto Nawarcono
32. The Effect Of Economic Value Added (EVA) And Market Value Added 301-309
(MVA) On Stock Prices On Go Public Companies Listed On The Indonesia
Stock Exchange (Study Of The Covid-19 Pandemic)
Ida Rohani, Beny Susanti, R. Supriyanto, Dharma Tintri Ediraras
33. Analysis Of Business Feasibility Of Carrrier Bag Innovation With Table 310-327
Features In Tampan Sub-District Pekanbaru City Riau Province
Rossi Septy Wahyuni, Prameswari Rizcha Julianda, Jeremia Aruan
34. The Effect Of Electronic Service Quality Factors On Customer Satisfaction In 328-337
Mobile Banking During The Covid-19 Pandemic
Fitrah Nur Islamiah, Lies Handrijaningsih, Anisah, Angga Putri Ekanova
35. Comparative Analysis Of Financial Performance Of ASEAN Countries For 338-349
2016-2020 Period
Irmawati, Maria Magdalena P.D, Dharma Tintri Ediraras
36. The Influence Of Viral Marketing, Brand Ambassador, Product Reviews And 350-358
Trust On Purchase Decisions On The E-Commerce Shopee Platform During The
Covid-19 Pandemic
Fitri Rahmawati, Lies Handrijaningsih, Septi Mariani
37. The Effect Of Internal Locus Of Control On Saving Behavior In Millennial 359-365
Generations Employee
Bella Christianty, Dheandra Arumdita Maulia Putri, Hanna Efrata Anggraeni,
Euphrasia Susy Suhendra
38. Factors Affecting The Payable Income Tax Of Automotive And Components 366-374
Subsector Manufacturing Companies In Indonesia
Yosi Hestiana, Toto Sugiharto
Table Of Content xiii

NO Title Page
39. Differences In Environmental Performance Ratings, Media Disclosures, And 375-381
Profitability To Disclosure Of Corporate Social Responsibility In Basic
Materials Sector Companies Listed On The Indonesia Stock Exchange For The
Period 2010-2020
Venna Mellina, Armaini Akhirson
40. The Effect Of Trust, Perceptions Of Ease Of Use And Risk Perceptions On 382-393
Interest In Using Digital Fund Wallet During The Covid-19 Pandemic
Assyifa Mell Aurora, Paya Y.C. Hsu, Caecilia Widi Pratiwi, Jessica Barus
41. The Influence Of Return On Assets, Return On Equity, Net Profit Margin, And 394-403
Earnings Per Share On Stock Prices: Empirical Study On Registered Banking
Subsector Companies In Indonesia Stock Exchange Period 2016-2020
Syafa Najmi Laila, Toto Sugiharto
42. Financial Management Behavior of Millennial Workers in Bekasi City During 404-411
the COVID-19 Pandemic
Cindy Audria, Dewi Kusuma Tanjung Sari, Gita Tri Rahayu, Desti Dirnaeni
43. The Effect Of Financial Performance On Stock Prices In Go Public Companies 412-421
Listed On The Indonesia Stock Exchange (Study Of The Covid-19 Pandemic)
Annisa Zhafirah, Cicilia Erly Istia, Eliya Isfaatun, Dharma Tintri Ediraras
44. Performance Of JII Index And LQ45 Index During The Covid-19 Pandemic In 422-427
Indonesia Period Case October 2020 - October 2021
Riskayanto, Tika Intan Saputri
45. The Influence of Competence and Work Culture On The Supervision 428-433
Commission V
46. The Determinant Factors Of Happiness At Work On Employees 434-439
Nur Aini Afanin, Realita Sereen Previarzya, Rizky Wicaksono, E. Susy
Suhendra
47. Indonesia, A New Emerging Country And Its Relationship With Italy 440-461
Cristina de Silva, Valentina Meliciani,, Emmy Indrayani
48. Of Business Concepts And Strategies - Before, During And After Covid-19 462-472
Pandemic
Nabsiah Abdul Wahid
49. Implemention Of Digital Transformation In The State Of Development And 473-479
Effective Functioning Of Special Economic Zones As A New Model Of
Business Sectors
Khamida Tulaeva
50. The Determinants Of Capital Expenditure Allocation: An Empirical Evendence 480-489
From The Province Of Banten Indonesia
Ines Pusparani, Toto Sugiharto
51. The Effect Of Perceived Usefulness, Perceived Ease Of Use And Trust On 490-499
Intention To Use: Empirical Study On Digital Wallet Application Owners In
The Region Jabodetabek
Elin Maulani, Toto Sugiharto
xiv Table Of Content

NO Title Page
52. The Effect Of Customer Satisfaction And Customer Trust On Customer 500-518
Retention Through Switching Cost On Tokopedia Marketplace Users In Bekasi
Regency
Dewi Apriyani, Teddy Oswari, Melvi Yansi, Ira Widarti
53. Influence Of Factors Affecting Go-Pay Use Decisions On Go-Jek Application 519-525
Features With Perceived Trust As Intervening Variables In The Covid-19
Pandemic
Waseso Segoro, Zainul Arif Hidayat Lubis
54. Impact Of The Covid-19 Pandemic On The Financial Performance Of 526-536
Companies Listed At The Indonesia Stock Exchange
Dinda Yulyana, Dini Andriyani, Dharma Tintri Ediraras
Table Of Content xv
ISSN: 2654-8879 Gunadarma University –Campus F8 Dec 14th -15th 2021
Book Tax Differences Analysis On Profit Growth In Companies Listed

On The LQ45 Index
1
Cindy Agustina, 2Henny Medyawati
1,2
Economics Faculty of Universitas Gunadarma
Jl. Margonda Raya No.100, Depok 16424, West Java
cindyagtt@gmail.com, henmedya@staff.gunadarma.ac.id
Abstract
This study aims to analyze the effect of book-tax differences as proxied by permanent differences
and temporary differences on the company's profit growth. This research was conducted on
companies listed on the LQ45 Index for the 2015-2019 period. The data used are financial reports
from the Indonesia Stock Exchange and company websites. The research method used in this study
is multiple linear regression analysis, with data testing including normality test, heteroscedasticity
test, multicollinearity test, and autocorrelation test. The results of the study show that permanent
differences and temporary differences affect profit growth. Simultaneous test results show that
permanent differences and temporary differences simultaneously affect profit growth. This shows
that the amount of difference between accounting profit and fiscal profit or book-tax differences will
make the company's fiscal correction more and more so that it can affect the company's profit growth
in the coming period.
Keywords : book tax differences, permanent differences, profit growth, temporary differences
JEL Codes: O44, P17
INTRODUCTION
Profit is the excess of income over expenses that occur during an accounting period. The profit
figure is very important in financial statements because it can be used as a basis for determining the
amount of taxation, a tool for controlling the allocation of a country's economic resources, an
indicator of the efficiency of the use of funds embedded in the company which is manifested in the
rate of return, the basis for increasing prosperity, measuring management performance, the basis for
compensation, bonuses and dividend distribution (Chariri & Ghozali, 2007). Profit information is
needed by decision makers and can be used as an indicator in assessing company performance,
besides that profit can also be used to predict profit growth in subsequent periods. Good profit growth
indicates that the company has good finances, and will increase the value of a company. This will
affect the investment decisions of investors who will invest their capital into the company because
investors expect to get a high rate of return on the capital that has been invested in the company. The
information contained in the book-tax differences can affect the company's profits in future periods
and can be used as a tool for evaluating company performance so that it can affect the company's
profit growth and can assist investors in determining the quality of earnings and company value
(Brolin & Rohman, 2014). Some companies manipulate earnings in reporting their earnings, to make
the company's management performance look good in the eyes of the owners. If the profit figure is
suspected by the public as the result of management engineering, then the profit figure is considered
to have low earnings quality and is less persistent (Hanlon, 2005).
Book tax differences are differences in the amount of accounting profit and taxable profit,
which are caused by differences in the basis for their preparation. The commercial income statement
is prepared based on Financial Accounting Standards to assess the company's performance while the
fiscal financial statements based on the provisions of the Taxation Laws are used to calculate the
corporate tax payable. The difference in the basis for the preparation of the financial statements
results in differences in the calculation of the profit (loss) of an entity which will ultimately lead to
a different amount of profit between accounting profit and fiscal profit or known as book-tax
differences (Zain, 2008). Information about the difference between accounting profit and fiscal profit
can be used to predict the company's performance in the future. Book tax differences give rise to
Agustina, Medyawati 1
permanent differences and temporary differences. Permanent differences or permanent differences
are the results of differences in treatment of income and expenses, where income and expenses are
recognized by Financial Accounting Standards, but not recognized by the provisions of the Taxation
Laws and Regulations. This difference results in commercial profit and fiscal profit as the basis for
calculating the tax payable (Waluyo, 2008). Such income and expenses must be removed from the
commercial income statement to obtain taxable profit for a period. Temporary differences or time
differences are the results of differences in the timing of the recognition of income and expenses that
are temporary and result in delays or anticipation between Financial Accounting Standards and Tax
Provisions. Temporary differences will result in a shift in the timing of the recognition of income
and expenses to other periods and will result in changes in future fiscal profit periods. These changes
can increase (future taxable amount) or decrease (future deductible amount) when assets are
recovered or liabilities are paid off (Waluyo, 2008).
The permanent difference will affect the taxable profit in the current year when the difference
is recorded. Fiscal-corrected temporary differences will become deferred tax income consisting of
deferred tax assets and deferred tax liabilities that can increase or decrease the company's tax burden
in the future (Kodriyah & Artiwiya, 2016). A positive fiscal correction is a reduction in costs and/or
an increase in revenue recognized in the commercial income statement which will result in a fiscal
increase. Fiscal profit will be used as taxable income for the company. According to Windarti and
Sulistiani (2015), permanent and temporary differences affect the company's net profit because of a
positive correction that will increase fiscal profit. The greater the taxable profit, the greater the tax
burden paid, and as a result, the company's net profit will decrease. On the other hand, a negative
correction will reduce fiscal profit so that the tax burden paid will be smaller. The results of research
by Febiyanto and Cahyonowati (2014) show that the difference in the effect on profit growth is due
to the sample being dominated by items that will be added back in the fiscal reconciliation, namely
expenses that cannot be deducted or losses of subsidiaries, and are non-recurring so that they have a
negative relationship to growth. profit.
The Indonesian government is very strict in regulating income and expenses that are
recognized and not recognized according to taxation. The calculation method used by the company
is also different, namely based on Financial Accounting and Taxation Standards. This makes the
components of permanent differences and temporary differences have an effect as a deduction and
addition to fiscal profit that will be used as taxable income for the company. The greater the
difference between accounting profit and fiscal profit, the more positive and negative fiscal
corrections that can affect the company's profit growth in the coming period. The greater the tax
burden will make the company's profit in a period decrease and vice versa if the tax burden is smaller
it will make the company's profit in a period greater.
This study uses companies listed on the LQ45 Index for the 2015-2019 period. In general, the
reasons for using companies listed on the LQ45 Index and the research period from 2015 to 2019 are
explained in the following description. The LQ45 index represents 45 issuers that have gone through
a selection process, namely companies with high liquidity with relatively high-profit growth. This
condition is a consideration in choosing companies in the LQ45 index group. 2015 was chosen as
the initial year of the study because, in 2015, the Indonesian stock market fell. After all the domestic
economy was unable to meet expectations. Based on data released in 2015 the performance of LQ45
issuers in the first quarter weakened because total revenue only grew 2.57% (Sukirno, 2015). The
Composite Stock Price Index until April 2015 fell 0.37 percent. One of the pressures came from
foreign market players who took stock-off actions as a barrier for the IDX index to move higher
again, due to the plan to normalize the benchmark interest rate by The Federal Reserve as the United
States central bank. In September 2019, the JCI also experienced a decline, shares in the LQ45 Index
played a role in suppressing the performance of the Indonesian stock market. This is due to the
unfavorable domestic political situation after hundreds of thousands of students held demonstrations
to reject the ratification of the Draft Law (RUU) of the Criminal Code (RKUHP), Land Bill,
Manpower Bill, and Correctional Bill in various parts of Indonesia. This has captured the attention
of investors and raised concerns about the conduciveness of business activities in Indonesia. The
anxiety of market participants was exacerbated by global political conditions in the United States
and the United Kingdom (Ayuningtyas, 2019). However, at the close of stock trading at the end of
2019, several stocks that were constituents of the LQ45 index experienced an extraordinary gain of
2 Agustina, Medyawati
4.07%, or better than the JCI which was only 2.18%, foreign funds to the domestic stock market
(Muamar, 2019).
The slowdown in economic growth affects the realization of state tax revenues, this is because
there is a positive relationship between economic growth and tax revenues. Increased economic
growth will encourage an increase in tax revenue and vice versa. Taxes are the main source of state
revenue and have an important role in the survival of the state. Companies are corporate taxpayers
that contribute to state revenues, including companies listed on the LQ45 Index of the Indonesia
Stock Exchange.
The greater the company's fiscal profit, the greater the tax burden, which results in the
company's net profit decreasing, and vice versa. The bigger the difference between accounting profit
and fiscal profit (book-tax differences), the more fiscal corrections or fiscal reconciliations can affect
the company's profit growth in the coming period because of the many permanent and temporary
differences that occur. Based on the background that has been described, the purpose of this study is
to analyze the effect of book-tax differences proxied by permanent differences and temporary
differences on the profit growth of companies listed on the LQ45 Index of Indonesia Stock Exchange
for the 2015-2019 period. The benefit of this research for investors is as material for consideration in
making investment decisions, namely considering book-tax differences as measured by permanent
differences and temporary differences to assess the company's profit growth in the future period. The
more temporary differences and permanent differences, the more fiscal reconciliation will be. Thus,
it will have a greater impact on profit growth. The contribution of this research is to enrich the
research results in the form of a research model related to the analysis of the effect of temporary and
permanent differences on profit growth.
LITERATURE REVIEW
Agency theory is the relationship between the agency structure of management (agent) and
the owner (principal) who commits to behaving cooperatively, but with different goals and different
risk-taking behavior (Ikhsan & Suprasto, 2008). Agency theory arises because there are individuals
in the company who act for their interests which makes them ignore the interests of the company or
the desires and goals between the principal and the opposite agent. Agency theory leads to agency
relationships between owners (principals) who give orders to workers (agents). The freedom of
management in maximizing the company's profits will lead to the interests of the management
themselves but at the cost to the owners of the company, this causes this separation to have a negative
side. Book tax differences are the difference between the amount of accounting profit and taxable
profit. According to Suandy (2008), the difference in income and expense recognition between
commercial and fiscal accounting causes differences in calculating the amount of taxable income.
This difference is due to differences in the rules used, commercial profit and loss statements are
prepared based on Financial Accounting Standards while fiscal financial statements are based on the
provisions of the Taxation Laws and Regulations. The two financial statements have different
objectives, commercial financial statements aim to assess the company's economic performance as
useful information in decision making, while fiscal financial statements aim to calculate corporate
tax payable. Commercial financial statements will generate net income before tax or accounting
profit, while fiscal generates taxable income or taxable income. The causes of differences in
commercial financial statements and fiscal financial statements are due to differences in accounting
principles, differences in accounting methods and procedures, differences in income and expense
recognition, and differences in the treatment of income and expenses (Resmi, 2009).
Permanent differences are the result of differences in treatment of income and expenses
where income and expenses are recognized by Financial Accounting Standards, but not recognized
by the provisions of the Taxation Laws. According to Suandy (2008), permanent differences are
differences caused by differences in revenue and expense recognition between accounting standards
and tax regulations. Permanent differences that occur due to differences in the recognition of income
and expenses are in (Zain, 2008): (1) Article 4 paragraph 3 of Law Number 36 of 2008 Income Tax
Law; (2) Article 9 paragraphs 1 and 2 of Law Number 36 the Year 2008 of the Income Tax Law; (3)
Article 18 of Law Number 36 of 2008 Income Tax Law. The results of Putri and Sary's research
(2017) show that permanent differences have a negative effect on profit growth, temporary
differences have a positive effect on profit growth. Permanent and temporary differences with the
control variable Return on Assets (ROA), Operating Cash Flow have a simultaneous effect on profit
growth.
According to Harnanto (2003), temporary differences are differences between the tax base
of an asset or liability and the carrying value of the asset or liability which will result in an increase
or increase in future taxable amount or taxable temporary differences or a decrease in taxable profit.
future periods (future deductible amount or deductible temporary differences), when the carrying
amount of the asset is recovered or the carrying amount of the liability is settled or settled.
If an income, costs, and expenses have been recognized by the commercial but not yet
recognized by the fiscal, and vice versa. Temporary differences will also cause a shift in the timing
of the recognition of income, costs and expenses to the next period or other periods. Windarti and
Sulistiani's research (2015) shows that temporary, permanent and cash flow differences affect profit
growth. However, Return on Assets (ROA), Firm Size (Size) as control variables have no significant
effect on the company's profit growth. Suptiana, Pratomo and Nurbaiti (2016) show that permanent
differences, temporary differences and operating cash flows together affect earnings persistence.
Partially, only operating cash flow affects earnings persistence. Mubarok (2017) in his research uses
a moderating variable, namely company size. The results showed that permanent differences and
temporary differences moderated by firm size had affected profit growth.
Profit growth is an increase in profits generated by the company from one period to the next.
The profit growth generated by the company will be used by the owners or shareholders as
information in every decision-making so that effective and efficient decisions are obtained by
following the interests of the owners. Good corporate profit growth reflects that the company's
performance conditions are also good, if the economic conditions are good in general the company's
growth is good (Utari, Purwanti & Darsono, 2014). Brolin and Rohman (2014) examine the effect of
temporary and permanent differences on profit growth with the control variables Return on Assets
(ROA), firm size, operating cash flow and deferred tax. The study explains that permanent differences
do not affect profit growth because permanent differences are absolute differences that have no
meeting point or counterbalance and only affect the amount of profit for the current period. Temporary
differences have a positive effect on profit growth, this is because companies with a larger number
of temporary differences will have greater profit growth. The control variable used by ROA affects
profit growth, but company size, operating cash flow and deferred tax even show that it does not
affect profit growth.
Martani and Persada (2010) show that only the utilization of tax losses and company size
significantly affect the book tax gap in Indonesia. The results of earnings persistence show that
permanent and temporary book tax gaps significantly affect earnings persistence. The results also
show other factors that affect earnings persistence, such as operating cash flow and accruals. Fadlilah
(2013) examines the effect of temporary and permanent differences on profit growth. The research
shows that there is a significant negative effect between the variables of temporary differences on
profit growth. There is no significant effect between variables Permanent differences on profit
growth. Fadhila and Hardiningsih (2019) also researched permanent differences and temporary
differences, plus the control variables Return on Assets (ROA) and Size. The study concluded that
the temporary difference had a negative effect on profit growth. Permanent Difference has a negative
effect on profit growth. ROA has a positive effect on profit growth and size does not affect profit
growth. Based on the description of the results of previous studies, the hypothesis is that there is an
effect of permanent differences and temporary differences on profit growth in LQ45 companies for
the 2015-2019 period.
RESEARCH METHOD
The object of research is the financial statements of companies listed on the LQ45 Index of
the Indonesia Stock Exchange (IDX) for the 2015-2019 period which were obtained from the official
website of the Indonesia Stock Exchange (www.idx.co.id). The reasons for choosing the research
year, 2015-2019, have been explained in the previous section. The population in this study are
companies listed on the Indonesia Stock Exchange (IDX) for the 2015-2019 period. Sampling was
carried out by purposive sampling, namely, sampling was carried out to select subjects based on
specified criteria. The criteria used in this study include (1) Companies listed on the Indonesia Stock
Exchange (IDX) during the 2015 – 2019 period; (2) Companies that are included in the LQ45 Index
during the period February 2015–January 2020; (3) Companies that have complete information
needed regarding the calculation indicators used as variables in the study. The sources used are
financial report data obtained through media browsing on the website (www.idx.co.id), related
company websites and websites (www.sahamok.net) to obtain data on companies listed on the LQ45
Index of the Indonesia Stock Exchange (IDX) during the period 2015 - 2019. The data in this study
uses the natural logarithmic (Ln) equation, so that the assumption of normality for the data used is
fulfilled. This is because the data of each company is different and even has a large difference, which
can lead to extreme values. Therefore, to overcome these problems, the data is transformed into a
natural logarithmic form (Ghozali, 2016). Profit can be used as an indicator to measure the company's
operational performance, because the information on the amount of profit in the financial statements
can be evaluated and used to estimate the return that investors get on their investment in a company,
and can be useful for interested parties.
Table 1. Variable Operations
No. Variable Measurement Description Unit References

1 Profit Growth NIit − NIi(t − 1) ∆𝑁𝐼= profit growth million Kodriyah
∆NI = NIi(t − 𝑁𝐼i𝑡= company net profit i Rupiah (2016)
in the year t
1)
𝑁𝐼i(𝑡−1)= company net
profit i in the year t-1
2 Permanent Permanent Permanent Differences in Million Rosanti and
Difference
difference Financial Statement
Total asset Rupiah Zulaikha
Records
(2013)
3 Temporer Temporer Temporary Differences in Million Rosanti and
Difference Difference the Notes of Financial
Total aset Rupiah Zulaikha
Statements
(2013)
In this study, the analytical method used is multiple linear regression analysis which aims to examine
the effect of the independent variable on the dependent variable. The regression equation in this
study, as follows:
ΔNIit = β0 + β1Temporerit + β2Permanenit + εi
RESULT AND DISCUSSION

The results of descriptive statistics show that the permanent difference has the lowest
(minimum) value of -0.09720 obtained by the Indonesian Telecommunications Company (Persero)
Tbk. in 2016. The result of the permanent difference that has been divided by the total assets of
Telekomunikasi Indonesia (Persero) Tbk. tends to be lower because it has a permanent difference
value that is very unequal to the value of other companies, this is shown in the number of permanent
differences contained in TLKM's 2015-2019 financial statements recorded minus to trillions of
rupiah but followed by high total assets. The maximum (largest) value is 0.01347 from Indofood
Sukses Tbk. in 2016, this was due to the number of permanent discrepancies in the financial
statements increased by 2 times from 2015 amounting to Rp. 592,750 to Rp. 1,139,877 in 2016.
Temporary Difference has a minimum (lowest) value of -0.02867 from Indocement Tunggal Prakarsa
Tbk. in 2016, this was due to the depreciation of fixed assets including finance lease assets which
increased by 38% from 2015. The maximum (largest) value was 0.01353 from AKR Corporindo
Tbk. in 2015. The high value of temporary differences was due to the profit on sales of fixed assets
and the allowance for impairment losses on trade receivables which increased significantly from
2014.
The profit growth variable shows the minimum (lowest) value of -0.55965 from AKR
Corporindo Tbk. in 2019. The maximum (largest) value is 0.60157 from Indocement Tunggal
Prakarsa Tbk. in 2019. Overall this variable has an average value (mean) of -0.04443 and a standard
deviation of 0.23368. More details on profit growth in LQ45 companies for the 2015-2019 period
can be seen in Figure 1.
Profit Growth
0,64
0,44
0,24
0,04
-0,16
-0,36
2015 2016 2017 2018 2019

AKRA ICBP INDF INTP JSMR
KLBF MNCN SCMA TLKM UNVR
Figure 1. Companies of LQ45 Profit Growth in the period 2015-2019
The results of the One-Sample Kolmogorov-Smirnov test showed that the residual data were
normally distributed. This can be seen in the significance test of the Kolmogorov-Smirnov value of
0.200 or the asymp value. Sig. (2tailed) >5% or 0.05. The results of the multicollinearity test show
that the tolerance value is 0.971 > 0.1 and the VIF value is 1.030 < 10, so it can be concluded that
there is no multicollinearity between the independent variables in the regression model. The results
of the autocorrelation test show that the Asymp value. Sig. (2-tailed) > 0.05 or 0.703, it can be
concluded that there is no autocorrelation symptom. The results of the heteroscedasticity test show
that the points in the scatterplot image spread randomly and do not form a pattern, so there is no
heteroscedasticity in the regression model, so the model is feasible to use. The next stage after the
test on the data is completed is a simultaneously variable test, namely the F test. Based on the output,
it is known that the calculated F value is 6.063, while the F table value is 3.19 or smaller than F
arithmetic, it is concluded that the permanent difference (X1) and the temporary difference (X2)
affect profit growth (Y). This research model is feasible to be used as a model to analyze the effect
of permanent differences (X1) and temporary differences (X2) on profit growth (Y). Next step is
estimation using multiple linear regression. The estimation results with multiple linear regression
equations are as follows:
Y = 5,623 + 0,818 Permanenit + 0,453 Temporerit + εi

The next stage is the t test or known as the partial test, with the results as shown in Table 1 below.
Table 1. T Test Result
Coefficient t Sig.
C 5.623 6.494 0.001
Ln_permanen .818 9.969 0.000
Ln_temporer .453 4.240 0.008
It is seen that both permanent differences and temporary differences affect profit growth. Next
is the coefficient of determination which is used to find out how much the independent variable's
ability to explain the dependent variable is. The coefficient of determination (R2) obtained is 0.937
or 93.7% which indicates that the ability of permanent differences and temporary differences can
explain profit growth of 93.7% and the remaining 6.3% can be explained by other variables not
included in this study.
The Effect of Permanent Differences on Profit Growth

Based on the results of the estimated multiple regression analysis and partial test (t statistical
test) it shows that the permanent difference (X1) has a significant effect on profit growth in
companies listed on the LQ45 Index for the 2015-2019 period. This result is in line with previous
research conducted by Windarti and Sulistiani (2015) and Desinda (2019) which showed that
permanent differences affect profit growth. Permanent differences form the book-tax differences
(Rosanti & Zulaikha, 2013), permanent differences can affect profit growth, this is due to fiscal
reconciliation or positive and negative fiscal corrections. The test results show that the permanent
difference has a positive coefficient which explains that there is a positive relationship between the
permanent difference and growth. This is in line with research by Jackson (2009) which suggests that
permanent differences are positively related to profit growth, indicated by a negative relationship
between permanent differences and the company's tax burden. The components of the company's
permanent differences in this study are dominated by items that are corrected negatively, such as
income that has been subject to final tax and income that is not an object of tax, this is because tax
regulations in Indonesia are very strict in regulating recognized and unrecognized expenses and
income. according to tax. The negative fiscal correction will cause the fiscal profit to decrease and if
the fiscal profit decreases, the tax burden paid will decrease and the company's profit growth will be
higher. This shows that the higher the permanent difference with negative correction, the lower the
tax burden in the next period, which means that net income or profit growth in the next period will
be higher.
Effect Temporary Differences on Profit Growth

Based on the results of the multiple regression analysis tests and the partial test (t statistical
test) it shows that the temporary difference (X2) has a significant effect on profit growth in companies
listed on the LQ45 Index for the 2015-2019 period. The results of this test are in line with previous
research conducted by Furqani, Imamah and Faisol (2018) and Daniati (2013) which explained that
temporary differences affect profit growth because these temporary differences can lead to the
amount of tax that will be added or deducted at certain times. which will come. This study shows
that the temporary difference component is dominated by negative fiscal corrections which cause the
fiscal profit to be smaller than accounting profit and causes an increase in deferred tax liability which
is sufficient to affect the company's income tax expense. The smaller the income tax burden paid, the
greater the net profit generated by the company so that this amount will affect the company's profit
growth. Temporary differences with negative corrections will make the corrected amount reduce the
calculation of current tax expense, but the fiscal correction will result in deferred tax expense. This
resulted in the number of temporary differences that previously could reduce income tax through
current tax expense, but will be written off through additional income tax in the form of deferred tax
expense (Fitri, 2014).
Temporary differences are the temporary differences in the timing of the recognition of
income and expenses due to differences in recording policies. The existence of arrangements for the
treatment of tax effects due to differences in accounting and taxation principles is regulated in the
Statement of Financial Accounting Standards or PSAK No. 46 concerning "Accounting for Income
Taxes", which aims to resolve differences in the timing of the recognition in the disclosure of
commercial financial statements, using the assets and liabilities approach. PSAK No.46, one of them
describes the recovery of the carrying value of assets recognized on the company's balance sheet or
the settlement of the carrying amount of liabilities recognized on the company's balance sheet.
Recovery of assets and settlement of these liabilities will make the tax burden paid in future periods
become larger or smaller, therefore the company must recognize deferred tax liabilities or deferred
tax assets.
CONCLUSION AND SUGGESTION

Following the purpose of this study, based on the results of data processing, it can be
concluded that temporary differences and permanent differences in companies listed on the LQ 45
Index for the 2015-2019 period affect profit growth, either partially or simultaneously. Investors are
expected to consider the book tax differences proxied by permanent differences and temporary
differences as a measuring tool to assess the profit growth generated by the company in the future
period. The limitation of this study is that it only uses two dependent variables, namely temporary
differences and permanent differences. Further research can add variables of firm size, liquidity and
ROA, as well as companies in other sectors such as the manufacturing sector.
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The Effect Of Profitability, Leverage, Sales Growth And Company Size

On Tax Avoidance On Manufacturing Companies In The Food And
Beverage Sub Sector Listed On The Indonesia Stock Exchange,
2017-2019
Aghnia Aula Nisa, 2Silvia Avira, 3Sakinah
1
1,2,3
Economics Faculty of Universitas Gunadarma,
Jl. Margonda Raya No. 100, Depok 16424, Jawa Barat
1
aghniaaula.n@gmail.com, 2silvi@staff.gunadarma.ac.id, 3kinaukhti@gmail.com
Abstract
National development is an activity that takes place continuously and has the aim of increasing the
prosperity and welfare of the people. Tax is a mandatory financial charge or some other type of levy
imposed upon a taxpayer by a governmental organization in order to fund various public
expenditures.Tax is one of the biggest contributor to national income. Tax avoidance is a transaction
effort made by companies to reduce the value of taxes while still following the applicable tax
regulations. This study aims to determine the effect of profitability, leverage, sales growth and
company size on tax avoidance. The population in this thesis is the food and beverage sub-sector
companies listed on the Indonesia Stock Exchange (BEI) in 2017-2019. The sampling technique used
purposive sampling method with certain criteria in order to obtain 12 companies. The data used is
secondary data through the website www.idx.co.id. The data analysis technique used in this research
are double linear regression were processed useing SPSS in version 22. The results of this study
indicate partially Profitability, Leverage and Company Size have a positively affected on Tax
Avoidance, while Sales Growth have a negatively affected on Tax Avoidance. Simultaneously, it
shows that Profitability, Leverage, Company Size and Sales Growth have a positively affected on
Tax Avoidance.
Keywords: Profitability, Leverage, Sales Growth, Size, Tax Avoidance.

JEL Codes: H26, O11, O17,
INTRODUCTION
The manufacturing industry sector is the mainstay sector that drives the Indonesian economy.
Besides the positive growth every year, the manufacturing industry sector also provides a large
investment boost (kemenperin.go.id). Even during the current Covid-19 pandemic, the government
continues to be committed to maintaining the manufacturing industry in the context of national
economic recovery. This industry is considered capable of rising faster than other sectors and again
becoming a mainstay sector that drives the economy for Indonesia
Dyreng et al. (2008) define tax avoidance as a form of activity that will result in reduced
corporate taxes through a decrease in income before tax. Tax avoidance is mostly done by companies
because tax avoidance is considered as an act that does not violate the law. The company seeks to
minimize its tax burden in a way that does not violate the law. Taxable income will be kept as low
as possible compared to pretax financial income.
National development is a renewal activity that takes place continuously and has the aim of
increasing the prosperity and welfare of the people. To realize this goal, funding is needed. Tax is
one of the biggest contributor to national income, 84.4% of national income comes from tax revenues.
This can be seen from the realization of tax revenues in 2019 Indonesia Government Budget
(Anggaran Pendapatan dan Belanja Daerah- APBN) is Rp 1,786.4 trillion rupiah of the total
national revenue is Rp 2,165.1 trillion rupiah. Manufacturing industries were the biggest contributors
to tax revenue in indonesia. One of the manufacturing industry sectors that shows its influence is
food and beverage sub-sector this sub-sector contributes taxes of up to Rp 56.60 trillion in 2019 and
has a growth of 7.99% which exceeds the national economic growth of 5.02%.
Based on UU No. 28 of 2007 tax is a mandatory contribution to the state owned by an
10 Nisa, Avira, Sakinah

individual or entity that is coercive under the law. Taxes are the biggest contributor for national
income, while for the companies, taxes is not only one of their responsibility to a government but
also as a burden for the company. so that companies always want to pay taxes in a minimum rate.
This difference in interests resulted in the government having to tighten regulations so that
national operational activities run smoothly as expected. according to Mardiasmo (2018) companies
can do two ways to reduce the amount of tax paid, tax avoidance and tax evasion. Tax avoidance is
a transaction effort made by companies to reduce the value of taxes while still following the
applicable tax regulations and tax evasion is a efforts to reduce the value of taxes by taking actions
that are not in accordance with the tax law and potentially subject to sanctions for violating the law
or criminal acts of fiscal, or criminal.
There is an indication of the company in doing tax avoidance can be seen from the profit.
Profitability is one of indicator that reflects the company's ability to earn profits and is also a picture
of the company's financial performance in generating returns on asset management, companies with
high profit levels indicate the higher the tax avoidance by the company therefore profitability is
included in one of the indicators of the policies used by companies in tax avoidance
According Kimsen, Imas Kismanah, Siti Masitoh (2019), funding policy is an indication of
the company in doing tax avoidance. One of the funding policies taken by the company is leverage.
Leverage is the level of debt used by the company in conducting funding. In relation to taxation,
companies with high debt levels indicate the higher the tax avoidance by the company, therefore
leverage is included in one of the indicators of the policies used by companies in tax avoidance.
Sales growth is a factor that has a tendency to influence tax avoidance. Because companies
with sales levels that continue to increase every year result in large profits and result in large tax
payments, so companies do tax avoidance (Aprianto, M., & Dwimulyani, S, 2019)
Another factor that affects the occurrence of tax avoidance is the size of the company. Based
on Permata, A. D., Nurlaela, S., & Wahyuningsih, E. M. (2018), company size is a scale that can
classify companies into big and small companies according to various ways, for example, company
size based on the company's total assets owned, stock market value, the average level of sales, and
the number of sales. companies with big size indicate the higher the tax avoidance by the company,
therefore company size is included in one of the indicators of the policies used by companies in tax
avoidance.
Based on the background that has been described, the researcher is motivated to test further
regarding tax avoidance with the aim of analyzing The Effect of Profitability, Leverage, Sales
Growth and Company Size on Tax Avoidance in Food and Beverage Sub-Sector Manufacturing
Companies Listed on the Indonesia Stock Exchange in 2017-2019
LITERATURE REVIEW AND HYPHOTESIS DEVELOPMENT

Agency Theory
Agency theory is a contractual relationship that occurs between the principal and the agent.
Agency theory occurs when the owner (principal) employs a person (agent) to provide a service for
the delegation of authority given in making several company operational decisions.The relationship
between agency theory and tax avoidance is because taxes from the tax authorities are a source of
income that can potentially influence and increase state revenues. management as agent wants an
increase in compensation through high profits while the principal wants to reduce tax costs through
low profits. So, in order to bridge this agency problem, aggressive tax avoidance behavior arises in
order to optimize the two interests so that agency conflicts can affect the level of aggressive tax
treatment (Rusydi and Martani, 2014).
Tax Avoidance
According to Waluyo (2016) definition of tax avoidance is compulsory contribution from the
person, to the government to depray the expenses incurred in the common interest of all, without
reference to special benefit conperred. Tax is a mandatory financial charge or some other type of
levy imposed upon a taxpayer by a governmental organization in order to fund various public
expenditures. The taxation system is vital for the national economy to run the government and
manage the affairs of a state. Tax function according to Mardiasmo (2018) includes: (1) budgetair,
taxes serve as a source of funds for the government to finance its expenses (2) regulerend, taxes
Nisa, Avira, Sakinah 11

function as a tool to regulate or implement government policies in the social and economic fields.
Tax management is a comprehensive effort carried out by a tax manager that matters relating
to taxation of the company or organization can be managed properly, efficiently and economically,
so as to provide maximum contribution to the company. Tax management means planning affairs in
such a manner, that makes tax obligation managed properly. Taxes are the biggest contributor to
national income, while for companies, taxes are a burden that will minimized company’s net income.
Companies always want to pay taxes in minimum rate. The company’s interest in doing tax avoidance
were based on the tax avoidance practice is not to breaking the laws but to minimize the company’s
tax liability/ tax burden. Low tax liability favored by companies as it maximized the wealth of
shareholders which create a positive look in the investor’s perception, but tax avoidance practices
could lead into asymmettic information given to the investors.
Tax avoidance Pohan (2013) is carried out legally and safely for taxpayers because it does not
conflict with tax provisions. According to Mardiasmo (2018) defines that tax avoidance practice is a
legal deducting attempt by applying the tax policies optimally, one of those is by using some certain
costs allowed to reduce the income tax. The more type of costs allowed to become subtractor, the
lesser the company’s tax liability. This grey area in taxation law, such as whether a type of cost
allowed or not to become subtraction element would result uncertainty in the future (Dyreng, Hanlon,
& Maydew, 2008; Guenther, Matsunaga, & Williams, 2017).
The different perception between the goverment and the companies on whether a liability is
deductible or not. When a company were too aggressive in doing tax avoidance impact to the future
tax uncertainty rate would become. This uncertainty could lead into future higher tax liability.
Companies that doing tax avoidance considered to be not transparent because they didn’t provide the
profit information.
The Effect Of Profitability On Tax Avoidance

Profitability is a description of the company's financial performance in generating a return on
asset management known as Return On Assets (ROA). The relationship between profitability and
tax avoidance according to Dewi and Setiawan (2016) states "When the profit earned increases, the
amount of income tax burden will increase in accordance with the increase in company profits so
that companies are likely to do tax avoidance to avoid the amount of tax burden." Based on research
conducted by Maria Qibti Mahdiana and Muhammad Nuryatno Amin (2020) stated that profitability
has an effect on tax avoidance.
H1: Profitability has an effect on Tax Avoidance
The Effect of Leverage on Tax Avoidance

Leverage is a financial ratio that describes the relationship between the company's debt to the
company's capital. This ratio can see the extent to which the company is financed by debt or external
parties with the company's ability described by capital. Leverage is in line with the trade off theory.
The company's funding decision can be an illustration of tax avoidance related to the effective tax
rate, this is because there are tax regulations related to the company's funding structure policy. From
this description, it can be concluded that the high leverage hypothesis results in higher tax avoidance,
which is indicated by the lower percentage level of ETR which is a proxy for tax avoidance
approaching 0%. Based on research conducted by Maria Qibti Mahdiana and Muhammad Nuryatno
Amin (2020) stated that leverage has an effect on tax avoidance.
H2: Leverage has an effect on Tax Avoidance
The Effect of Sales Growth on Tax Avoidance

Sales growth reflects the investment success of the past period and can be used as a prediction
of future growth. Good sales growth within a company will make the size of the company bigger.
The larger the size of the company, the greater the total assets in the company. This situation will
make it difficult for companies to make tax savings through tax planning and tend to do tax
avoidance. Based on research conducted by Bella Nadya and Dyah Purnamasari (2020) stated that
sales growth has an effect on tax avoidance.
H3 : Sales Growth has an effect on Tax Avoidance

The Effect Of Firm Size On Tax Avoidance

Large companies carry out more complex transactions than small companies. So this allows
companies to take advantage of existing loopholes to take tax avoidance actions. Based on research
conducted by Deanna Puspita and Meiriska Febriant (2020) stated that company size has an effect
on tax avoidance.
H4: Firm Size has an effect on Tax Avoidance
Based on research background, the research model are presented in the figure below
Profitability (X1)
Leverage (X2)
Tax Avoidance (Y)
Sales Growht (X3)
Size (X4)
Figure 2.1 Research Model
RESEARCH METHOD
Research Object
The object of research used in this study is Profitability, Leverage, Sales Growth, Company
Size and Tax Avoidance with the research unit being a food and beverage manufacturing company
listed on the Indonesia Stock Exchange in 2017-2019.
Population and Population Sampling Procedures

The population in this study are food and beverage sub-sector manufacturing companies listed
on the Indonesia Stock Exchange (IDX) in 2017-2019 with a total of 31 companies by using
purposive sampling method, as presented in the following table:
Table 1 Sampling Criteria

Description Number of Companies
IDX-listed Food and Beverage sub-sector

31
manufacturing company
Food and beverage sub-sector manufacturing
companies that are not listed on the IDX in (3)
2017-2019
Companies that do not present complete audited
(4)
financial statements during 2017-2019
Companies that experienced a decline in sales
(10)
during 2017-2019
Companies that have negative pre-tax income (2)
Number of sample companies 12
Total number of sample data 36

Types and Sources of Data

Sources of data used in this study is secondary data, which is research data obtained indirectly
from the source. The source used to obtain secondary data is the annual report of food and beverage
sub-sector manufacturing companies listed on the Indonesia Stock Exchange in 2017-2019 which
have been published on the IDX homepage, namely www.idx.co.id.
Operational Definitions and Measurement of Variables

This study uses the variables summarized in the following table:
Table 2 Operasional Variable

No Variable Name Variable Measurement Scale
𝐸𝑇𝑅
Income Tax Expense
1 Tax Avoidance = Ratio
Earning Before Tax
Profitability Net Profit

2 𝑅𝑂𝐴 = Ratio
Total Asset
Leverage Total Debt
3 𝐷𝐴𝑅 = Ratio
Total Asset
Sales− Salest−1
4 Sales Growth SG = Ratio
Salesnt−1
5 Size 𝑆𝐼𝑍𝐸 = 𝐿𝑛 (𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡) Ratio
RESULTS AND DISCUSSION

The data in this study have fulfilled all the classical assumption tests which consist of
normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test. The result of
hypothesis test shown in the table below
Table 4. Hypothesis Test Result

COEFFICIENTSA
Model t Sig.
1 (Constant) -3.265 .003
ROA -2.265 .031
DER -2.081 .046
GROWTH -1.017 .317
LN 5.673 .000
a. Dependent Variable: ETR
Based on the result above, it is concluded that profitability (ROA) Sig. dependent variable
value is 0.031 shows that sig. value < α (0.05), can be assumed that there is a positive impact of tax
avoidance to the profitability. Profitability is an important factor in the imposition of income tax for
companies, because profitability is an indicator of companies in achieving profits. Agency theory
will spur agents to increase company profits. When profits increase, the tax burden will also increase.
So the company will tend to do tax avoidance.
The second hypothesis, leverage Sig. dependent variable value is 0.046 shows that sig. value

< α (0.05), can be assumed that there is a positive impact of tax avoidance to the leverage. Leverage
is the level of debt used by the company in conducting funding. In relation to taxation, companies
with high debt levels indicate the higher the tax avoidance by the company. Companies that use debt
in the composition of financing will cause interest expenses to be paid. The more revenue/income
that classified into revenue aside from taxation object or the more expenses classified as non
deductible expense. Law no. 36 of 2008 about deductible expense, loan interest expense is a
deductible expense, that will have an impact on a decrease in taxable profit which will ultimately
reduce the amount of tax expense payments. company.
The third hypothesis, sales growth Sig. dependent variable value is 0.317 shows that sig. value
> α (0.05), can be assumed that there is a negatif impact of tax avoidance to the company’s growth.
This shows that the higher or lower the value of sales growth doesn’t affect the company's decision
to avoid tax. Companies that have an increase or decrease in sales growth have the same obligation
to pay taxes and will be subject to sanctions if they violate tax provisions.
To test last hypothesis, size Sig. dependent variable value is 0.000 shows that sig. value < α
(0.05), can be assumed that there is a positive impact of tax avoidance to the company’s size.
Company size is a scale that can classify companies into large and small companies according to
various ways, for example, company size based on the company's total assets owned, stock market
value, the average level of sales, and the number of sales . Companies with large sizes have more
complex transactions and more be able to take advantage of loopholes in tax avoidance, such as
companies with bigger assets that are more capable and stable in generating profits. Bigger profits
will have an impact on increasing the amount of tax burden so that companies will tend to practice
tax avoidance.
Based on the results of the hypothesis test above, it can be explained as follows :
Profitability Affects Tax Avoidance

This shows that the higher the profitability ratio produced by the company, the higher the
occurrence of tax avoidance practices. Profitability is an important factor in the imposition of income
tax for the company, because profitability is an indicator of the company in achieving profit. Agency
theory will spur agents to increase company profits. When profits increase, the tax burden will also
increase. So the company will tend to do tax avoidance.
The results of this study are in line with research conducted by Maria and Nuryanto (2020),
Wastam (2018), Deanna and Meriska (2017) which show ROA has no effect on tax avoidance.
However, this research is not in accordance with the research conducted by Noviari (2017) and
Siregar and Widyawati (2016).
Leverage Affects Tax Avoidance

This shows that the higher the leverage ratio owned by the company, the higher the tax
avoidance practice. Companies that use debt in the composition of financing will incur interest
expenses that must be paid. In the tax regulation number 36 of 2008 concerning Income Tax, loan
interest expense is a deductible expense, namely a cost that can be deducted from taxable income so
that it will have an impact on a decrease in taxable profit which will ultimately reduce the amount of
tax expense payments. company.
The results of this study are in line with the research of Maria and Nuryanto (2020), Apriyanto
and Dwimulyani (2019) which show that leverage has an effect on tax avoidance. However, this
research is not in accordance with the research conducted by Denna and Meriska (2017),
Sales Growth Affects Tax Avoidance

This shows that the higher or lower the value of sales growth does not affect the company's
decision to avoid tax. Companies that have an increase or decrease in sales growth have the same
obligation to pay taxes and will be subject to sanctions if they violate tax provisions.
The results of this study are in line with the research of Wastam (2018), Denna and Meriska
(2017) which show that sales growth has no effect on tax avoidance. However, this research is not in
accordance with the research conducted by Maria and Nuryanto (2020), Dewinta and Setiawan
(2016).

Company Size Affects Tax Avoidance

This shows that the larger the size of the company, the higher the practice of tax avoidance.
Companies with large sizes have more complex transactions so that they are better able to take
advantage of loopholes in carrying out tax avoidance actions, such as companies with large total
assets that are more capable and stable in generating profits. Large profits will have an impact on
increasing the amount of tax burden so that companies will tend to practice tax avoidance.
The results of this study are in line with those conducted by Deanna, Puspita (2017) which
shows that company size has an effect on tax avoidance. However, this study is not in accordance
with the research conducted by Amanda, Siti, and Endang (2018).

According to the result of the research, it has concluded that the profitability, leverage and size
have positively affected tax avoidance at Food And Beverage sub sector listed on the Indonesia Stock
Exchange. On the other hand Size sales growth doesn’t affect the company's decision to avoid tax
This research’s result can be used as consideration for companies in deciding to conduct the
tax avoidance practice. Companies hopefully can see the impacts/ consequences of doing the tax
avoidance practise to the company’s risk and future tax rates volatility in effort to keep the investor’s
interest in doing safe investment in the company.
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Seminar Nasional Pakar (pp. 2-14).
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Profitabilitas, Leverage, dan Pertumbuhan Penjualan terhadap Tax Avoidance. E-Jurnal
Akuntansi Universitas Udayana. Vol.14.3. Maret 2016 : 1584-1613.
Dyreng, S., Hanlon, M., & Maydew, E. L.(2008). Long-Run Corporate Tax Avoidance. The
Accounting Review, Vol. 83 No.1, hal. 61-82.
Guenther, D.A., Matsunaga, S.R., & Williams, B.M. (2017). Is Tax Avoidance Related to Firm
Risk?. The Accounting Review, Vol. 92 No. 1, Hal. 115-136.
Hanlon, Michelle dan Shane Heitzman. (2010). A Review Of Tax Research. Journal of Accounting
and Economics 50. pp. 127-178.
Kasmir. (2016). Analisis Laporan Keuangan. Jakarta: PT Raja Grafindo Persada.
Kimsen, K., Kismanah, I., & Masitoh, S. (2019). Profitability, Leverage, Size Of Company Towards
Tax Avoidance. JIAFE (Jurnal Ilmiah Akuntansi Fakultas Ekonomi), 4(1), 29-36
Mardiasmo. (2018). Perpajakan Edisi Revisi Tahun 2018. Yogyakarta: Penerbit Andi.
Mahdiana, Maria Qibti dan Muhammad Nuryatno Amin. (2020). Pengaruh Profitabilitas, Leverage,
Ukuran Perusahaan, Dan Sales Growth Terhadap Tax Avoidance. Vol 7 ISSN : 2339-0832
Nadya, Bella dan Dyah Purnamasari. (2020). The Effect of Sales Growth and Leverage on Tax
Avoidance Empirical Study of Coal Sub-Sector Mining Companies Listed on the Indonesia
Stock Exchange in 2014-2018. Jurnal AKSI. Vol 5. No 2: 89-95.
Noviari, N. (2017). Pengaruh Likuiditas, Leverage, Intensitas persediaan dan Intensitas Aset Tetap
Pada Tingkat Agresivitas Pajak Wajib Pajak Badan . E-Jurnal Akuntansi Universitas Udayana:
Vol.13.3 Desember 2015: 973-1000.
Permata, Amanda Dhinari. Siti Nurlaela dan Endang Masitoh W. (2018). Pengaruh Size, Age,
Profitability, Leverage dan Sales Growth Terhadap Tax Avoidance. Jurnal Akuntansi dan
Pajak. 19 No.01
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Jakarta: PT Gramedia Pustaka Utama.
Puspita, Deanna dan Febrianti, Meiriska. (2017). Faktor-Faktor Yang Mempengaruhi Penghindaran

Gunadarma University – Campus F8 Dec 14th -15th 2021 ISSN:2654-8879
Pajak Pada Perusahaan Manufaktur Di Bursa Efek Indonesia. ISSN 1410-9875. Jurnal Bisnis
dan Akuntansi. Vol 19. No 1: 38:46.
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Tax Avoidance. Simposium Nasional Akuntansi XVII. pp. 1-19.
Undang-Undang No 28 Tahun 2007 Tentang Ketentuan Umum dan Tata Cara Perpajakan
Undang-Undang No 36 Tahun 2008 Tentang Pajak Penghasilan
Waluyo. (2016). Perpajakan Indonesia 1 & 2. Edisi 6. Penerbit Salemba Empat. Jakarta
Wastam Wahyu. (2018). Pengaruh Profitabilitas, Leverage, dan Pertumbuhan Penjualan Terhadap
Tax Avoidance. Jurnal Riset Manajemen dan Bisnis (JRMB) Fakultas Ekonomi UNIAT. Vol.
3, No. 1.

Far Audits: Alternative Approach Facing The Challenges Of

Internal Audit During The Pandemic Covid-19
1
Vermita Effendi, 2Dharma Tintri Ediraras, 3Cecilia Erly Istia, 4Lince Afriyenny
Postgraduate Program, Gunadarma University
Jl. Margonda Raya No. 100, Depok 16424, West Java
1
vermitaeffendi@student.gunadarma.ac.id, 2dharmate@staff.gunadarma.ac.id,
3
cecilia_ei@staff.gunadarma.ac.id, 4lince@staff.gunadarma.ac.id
Abstract
Remote auditing has been going on for several years, but COVID-19 has driven innovation in
auditing activities. The internal auditor's audit profession is to optimize remote technology to face
the challenges of the remote audit process as well as offer strategies to overcome every part of the
audit assignment process. This study aims to determine the effect between the role of remote auditing
and the challenge of remote auditing on the quality of internal audit. Samples were taken by random
sampling method, namely by distributing questionnaires in the form of lists and written statements.
Respondents who answered the questionnaire instrument submitted were internal auditors who
worked in Jakarta. This research was conducted from September to December 2021. The variables
used in this study were the role of remote audit (X1), remote auditing challenge (X2), and internal
audit quality (Y). Overall analysis and preparation of variables were carried out with the help of
SPSS 21.0. The results of the study indicate that the Remote Audit Role and Remote Audit
Challenges simultaneously affect the Quality of Internal Audit. While the role of Remote Audit does
not affect the Quality of Internal Audit.
Keywords: Remote Audit, Remote Audit Role, Remote Audit Challenges, Internal Audit Quality
JEL Codes: M42
INTRODUCTION
The COVID-19 pandemic that has hit the world has caused quite complex impacts in various
sectors of life, especially health, economic and social impacts. This crisis also has an impact on the
accounting profession, especially auditors because they cannot work separately from the surrounding
environment, and the greater the uncertainty associated with the business environment, the greater
the challenges faced in carrying out its various functions.
Several industrial companies continue to operate by implementing the COVID-19 prevention
protocol in accordance with government policies. Among them by issuing a circular containing a
work from home policy for employees of the Ministry of Finance. Working from home (work from
home) with the remote audit method is beneficial because the auditor can work more flexibly.The
remote auditing process is the best alternative that can be used for the current situation. This is mainly
because most companies have restricted travel to only critical business functions. This has been done
by various countries in the world (Olivia, 2020).
An audit process for the reliable presentation of financial statements remains a necessity for
many companies. The existence of worldwide travel restrictions, together with the need to conduct
audits in accordance with regulations/laws or the urgent need to conduct audits have brought back
discussion and attention to internal audit efforts to find alternatives to the traditional audit process
using face-to-face methods. This statement is supported by research (Deloitte, 2020; KPMG,
2020a,b) which shows that prudent decision-making and procedures, which are followed to deal with
the crisis of the spread of the COVID-19 virus in the world, such as physical distancing and the
application of remote work systems, have many effects in the field of accounting, and the most
important of these effects is the increase and exacerbation of the severity of the risks associated with
the use of electronic accounting information systems in business enterprises, as a result of the
increase in the number of users of information systems. Internal auditors must consider how this
pandemic is affecting their organization, how to help, and how to remain relevant to audit quality by
bringing new value to the work (Fatmasari, 2020).
18 Effendi, Ediraras, Istia, Afriyenny

The studies added that the extraordinary circumstances and conditions resulting from the
spread of the COVID-19 virus also led to an increased risk of electronic information systems being
hacked due to weak and ineffective internal control procedures. Thus, it poses a threat to the security
and confidentiality of data and increases the possibility of exposure to loss or distortion, and reduces
the quality of information system output. Therefore, audit activities must evaluate the adequacy and
effectiveness of control procedures over the information system.
This study aims to analyze the influence of Remote Auditing's Role on Internal Audit Quality
during the COVID-19 pandemic, analyze the influence of Remote Auditing challenges on Internal
Audit Quality during the COVID-19 pandemic, and analyze the Remote Auditing Role and Remote
Auditing Challenges affect Internal Audit Quality during the pandemic. COVID-19.
LITERATURE REVIEW
Internal audit (internal audit) is an examination carried out by the company's internal audit
department, on the company's financial statements and accounting records as well as compliance
with predetermined top management policies and compliance with government regulations and
applicable professional bond provisions (Agoes, 2017).
The role of internal audit activities in crisis management. While business continuity and crisis
management have been prevailing topics for several years now, the COVID-19 outbreak has brought
these areas to the forefront of doing business (Deloitte, 2016). Organizations that have effective crisis
management programs prove to be more resilient, flexible, and efficient. Internal audit has an
important role to play in these challenging times. Many companies struggle to cope with the
challenges we face today, in part because of the limited attention paid to business continuity in the
past.
Remote audits are partly carried out through a combination of remote and on-site procedures,
remote auditing departments must follow auditing standards when using technological tools to access
the required evidence. This is an effective way of verifying compliance with the requirements of the
standard that requires documentary evidence. A limited series of interviews or other visual evidence
will also be collected remotely. The on-site audit section is intended to verify conclusions from
remote audits and perform additional verification of issues that cannot be detected through the remote
audit process (Iso-Iec Standards, 2018).
Whereas, full remote audits are conducted entirely remotely using technology to gather the
information necessary to ensure compliance with the Standards. Where onsite verification is not
realistically possible in the current audit cycle, a full remote audit will be required. It should follow
auditing standards when using technological mechanisms and tools to access the necessary evidence,
including interviews using appropriate sampling techniques (Iso-Iec Standards, 2018).
RESEARCH METHODS
The objects of this research are Remote Audit Role (X1), Remote Audit Challenge (X2), and
Internal Audit Quality Audit (Y). The research unit is the internal auditor of a Public Accounting
Firm (KAP) surveyed as the person in charge of providing assurance and consulting services, as well
as preparing audit reports in Jakarta. This research is quantitative, conducted by a survey company
located in Jakarta. The type of data used in this research is primary data. The data collection technique
was a closed interview using a questionnaire containing statement items measured on a Likert scale
of 1-5 with the lowest score of 1 and the highest score of 5.
The data analysis tool in this study uses a regression analysis technique whose calculations
use SPSS version 21.0. Regression is used to measure the effect of the independent variable on the
dependent variable. There are 2 types of regression analysis, namely simple linear regression and
multiple linear regression. This study uses multiple linear regression because the independent
variable used is more than one variable. Multiple regression analysis techniques used in this study
include instrument testing, descriptive statistics, classical assumption test, hypothesis testing and
statistical testing.
The following are the stages of determining the sample based on the criteria set in the study
as follows:
Effendi, Ediraras, Istia, Afriyenny 19

Table 1. Sampling Stage

No Criteria Amount
Data obtained 688
1. Auditor working in Jakarta. (-)
2. Auditors who can use the ATLAS app (-)
3. Auditor who has worked at least 2 years (600)
4. Auditor who has CA/CPA/CISA/QIA/Ak certification. (1)
Amount of research data 87
Source: Data Processed by Author, 2021
The following is a table of operationalization of variables that have been set for use in research:

Variable Variable Concept Dimension Indicator Scale
KIA Internal audit is an Internal strongly agree (5)
(Y) examination Audit Quality agree (4)
to financial statements, neutral (3)
accounting records, as well do not agree (2)
as compliance with policies strongly disagree (1)
management, compliance
with regulations
government and the
provisions of the applicable
professionalties (Agoes,
2018).
PRE The audit should assess Role very important (5)

(X1) changes, whether temporary Remote important (4)
or permanent, in the Audit neutral (3)
organization's control not important (2)
environment, with a very unimportant (1)
particular focus on
automated business controls
(Agoes, 2018).
TRA Inability to access location, Challenge strongly agree (5)

(X2) timeliness of receiving Remote agree (4)
information, lack of face-to- Audit neutral (3)
face interaction (Agoes, do not agree (2)
2018). strongly disagree (1)
Source: Data Processed by Author, 2021

The object of research used in this study is an internal auditor who worked in Jakarta during
the COVID-19 pandemic. The object of this research is using purposive sampling method. Based on
the predetermined criteria, the data that can be used are 87 of the 689 data obtained.
Statistical analysis can be used to show how much data is used in research and what is the
maximum value, minimum value, average value, and standard deviation of each variable, the
minimum value, maximum value, average value and standard deviation value are each described in
Table 3 as follows:

Table 3. Descriptive Statistical Analysis Results

N Minimum Maximum mean Std. Deviation
PRA (X1) 87 15.00 35.00 27.34 5.79
TRA (X2) 87 10.00 30.00 23.12 4.96
KAI (Y) 87 6.00 30.00 23.16 5.43
Valid N 87
Source: SPSS 21.0 Data Processing Results
Based on the results of descriptive statistical analysis, it can be concluded that the Remote
Auditing Role (PRA) variable from the 87 data used in this study has a value ranging from 15.00 to
35.00. The average is 27.34 and the standard deviation is 5.79. The standard deviation which is
smaller than the mean value indicates a small distribution of data variables. The Remote Auditing
Challenge (TRA) variable from 87 data used in this study has a value ranging from 10.00 to 30.00.
The average is 23.12 and the standard deviation is 4.96. The standard deviation which is smaller than
the mean value indicates a small distribution of data variables. The Internal Audit Quality (KAI)
variable from the 87 data used in this study has a value ranging from 6.00 to 30.00. The average is
23.16 and the standard deviation is 5.43.
Partial test results (t test) can be done by looking at Table 4 as follows:
Table 4. Partial Test Results (t Test)

Model t Sig.
(Constant) -.993 .323
1 PAI (X1) .145 .885
TRA (X2) 10,781 .000
Based on the results of data processing, sig. t count of 0.885 (p-value 0.05) means that the
Role of Remote Audit (PRA) has no effect on the Quality of Internal Audit (KAI), meaning that the
first hypothesis, namely the Role of Internal Audit (PAI) affects the Quality of Internal Audit (KAI)
is rejected. . However, in this study, it can be said that the inspection and evaluation of organizational
activities indirectly tend to have no effect on the Quality of Internal Audit (KAI). This is why the
Remote Auditing (PRA) role does not affect the Internal Audit Quality (KAI), because the inspection
and evaluation of organizational activities does not affect the Internal Audit Quality (KAI).
Based on the results of data processing obtained the value of sig. t is 0.000 (p-value < 0.05).
This shows that the Remote Auditing Challenge (TRA) has an effect on the Quality of Internal Audit
(KAI), so the second hypothesis is accepted. In this study, technology-based activities were applied
to review remote audit quality during the COVID-19 pandemic, but many internal auditors were not
ready to use it. The higher the Remote Auditing Challenge (TRA) level, the higher the risk, which
causes auditors to seek to improve the Quality of Internal Audit (KAI).
Simultaneous Test (Test F) can be done by looking at Table 5 as follows:
Table 5. Simultaneous Test Results (F Test)

Model F Sig.
1 Regression 391,944 .000b
Based on the results of data processing, the value of the multiple linear regression equation
and the F test resulted in a significance level of 0.000 (p-value <0.05). So that the results of the first
hypothesis test, namely that there is a simultaneous influence between the Role of Remote Audit
(PRA) and Challenges of Remote Auditing (TRA) on the Quality of Internal Audit (KAI) can be
Effendi, Ediraras, Istia, Afriyenny 21

accepted. So it can be seen that First, the role of Remote Auditing (PRA) can be used to perform
remote audits better. However, its role needs to be adapted to the challenges faced during the remote
audit process. Because remote auditing roles and challenges are related to Remote Audit Quality.
Second, the higher the Remote Auditing Challenge (TRA) level, the higher the internal audit effort
in improving and maintaining the Quality of Internal Audit (KAI).
CONCLUSIONS AND SUGGESTIONS

Based on the testing and discussion of the role of Remote Auditing (PRA) it does not affect
the Quality of Internal Audit (KAI) on the internal auditors of the Public Accounting Firm (KAP)
surveyed as the person in charge of providing assurance and consulting services, and preparing audit
reports in Jakarta. The Challenge of Remote Auditing (TRA) affects the Quality of Internal Audit
Audit (KAI) on the internal auditors of Public Accounting Firms (KAP) surveyed as those in charge
of providing assurance and consulting services, and preparing audit reports in Jakarta. The role of
Remote Audit (PRA) and Remote Auditing Challenges (TRA) affects the Quality of Internal Audit
(KAI) of the internal auditors of the Public Accounting Firms (KAP) surveyed as responsible for
providing assurance and consulting services, and preparing audit reports in Jakarta.
REFERENCES
Agoes, Sukrisno, 2017. Auditing: Practical Guidelines for Examination of Accountants by Public
Accountants, Book 1, Edition 5. Jakarta: Salemba Empat.
Deloitte .2016. Dealing with the Ignorance: Crisis Management and the Role of Internal Audit.
Available in:www.Deloitte.com.
Deloitte .2020a. Internal Audit Considerations in Response to COVID-19. Available at
:www.Deloitte.com
Deloitte .2020b. Delivering remote internal audits responding to COVID-19. Available at
:www.Deloitte.com
Fatmasari, Ayu. 2020. How Auditors Should Respond to the Impact of the Covid-19 Pandemic on
Audits. Available at :www.setjen.kemenkeu.go.id
ISO ISO 19011:2018. Guidelines for auditing management systems. Iso-Iec Standards 2018.
Olivia, S., Gibson, J. and Nasrudin, R. 2020. “Indonesia in the Time of COVID-19”. Bulletin of
Indonesian Economic Studies, 56(2). PP 143–174

The Effect Of Tax Incentives, Use Of E-Filing, And Tax Sanctions On

Individual Taxpayer Compliance During Covid-19 Pandemic
1
Vidia Indah Puspitasari, 2Beny Susanti, 3Dewi Putrie Lestari
1,2
34
Computer Science And Information Technology Faculty of Universitas Gunadarma
1
vidiaindahp@gmail.com, 2bsusanti@yahoo.com 3dewi_putrie@staff.gunadarma.ac.id
Abstract
This study aims to analyze the effect of tax insentives, application of e-filing, and tax sanction on
individual taxpayer compliance during the covid-19 pandemi. The analysis of this study was
conducted by looking at the influence of each independent variable including tax incentives,
application of e-filing, and tax sanctions on the dependent variable of individual taxpayer
compliance. The research sampling technique used convenience sampling. The sample used in this
study was 257 respondend with method of data collection were using a questionnaire. The data of
this study were tested using multiple linear regression analysis and hyphesis testing with SPSS
windows ver.24 for software tools. The results of the study stated that tax insentives, application of
e-filing and tax sanction patially had a positive significant effect on individual taxpayer compliance.
And the result for tax insentives, application of e-filing, and tax sanction simultaneously had a
positive significant effect on individual taxpayer compliance.
Keywords : Application of E-Filing, Tax Incentives, Taxpayer Compliance, Tax Sanctions

JEL Codes: F38, H20
INTRODUCTION
In 2020 Indonesia experienced an outbreak of Corona Virus Disease or known as Covid-19.
In fact, not only Indonesia but all countries in the world are experiencing the effects of this disease
outbreak. Then the government issued a regulation where Indonesia had to implement social
distancing or maintain social distance to avoid crowds and physical distancing, namely maintaining
a minimum physical distance of 2 meters since early March 2020 (Hadiwardoyo, 2020). The
regulation causes disruptions that can have an impact on the Indonesian economy. According to Selvi
and Alief (2020) the increasingly uncertain economic sector, since the implementation of work from
home for some government and private agencies even until most shopping centers are closed, the
economy will automatically weaken. The private sector requires to close its business and lay off
some of its workers because of the lack of income so that they are unable to pay for operational
activities and employee salaries.
The government decided to resume various tax incentives. These various fiscal policies are
channeled through the National Economic Recovery (PEN) program in 2021, which includes a tax
incentive budget. This policy is given to ease the public or business actors who are taxpayers, in the
face of an unstable economy due to the COVID-19 pandemic (CNBC, February 2021). The
incentives provided are related to PPh article 21 borne by the government, PPh Final PPh 23 which
is borne by the government for MSMEs, exemption of imported goods or PPh article 22, there is also
a reduction in income tax installment rates or PPh article 25, and final PPh construction services
(PMK 9/PMK.03/2021). The collection system in Indonesia adheres to a self-assessment system,
meaning that taxpayers play an active role in calculating, paying, and reporting taxes through the
government's official online administration system.
The government implementing this system demands an active role from the community in
carrying out tax obligations. In the midst of the COVID-19 pandemic, the Directorate General of
Taxes is making efforts in reporting activities for individual taxpayers online through e-filing. The
purpose of submitting SPT through E-Filing is expected to be used easily by the public so that they
can report their taxes which can be accessed anytime and anywhere without having to come to the
Puspitasari, Susanti, Lestari 23

Tax Service Office.
To overcome taxpayers who have not complied with their tax obligations, tax sanctions must
be applied. Taxpayers will fulfill their tax obligations if they view that tax sanctions are a burden and
will harm the taxpayer more. Tax obligations must be fulfilled by every taxpayer, but not all of these
obligations are fulfilled voluntarily by taxpayers, for this reason, tax sanctions are needed through
law enforcement actions so that they can provide justice and legal certainty so that taxpayers are
obedient, obedient and disciplined in paying and reporting taxes. . Where this sanction is given as a
guarantee that the general provisions and procedures for taxation must be complied with.
Based on the description above, the author is interested in conducting research on matters that
affect individual taxpayer compliance by putting it in scientific writing entitled “Influence Of Tax
Incentives, Use Of E-Filing, And Tax Sanctions On Taxpayer Compliance Of Personal Persons
During The Covid-19 Pandemic”
Research Puprose
This study aims to analyze this condition:
1. Effect of tax incentive on individual taxpayer compliance;
2. Effect of the use of E-Filing on individual taxpayer compliance; and
3. Effect of tax sanctions on individual taxpayer compliance.
LITERATURE REVIEW
Tax
According to Rule number 16 year 2009 about general requirement and tax procedures article
1, tax is mandatory contribution to nation which is owed by individual or organizational which is
coersive based on the law, with no direct compensation and is used for the needs of the nation for the
greatest prosperity of the people. Besides, according to Resmi (2014), tax is the prestation which is
unilaterally forced by and owed to ruler (according to the generally established norms), without any
contraprestations and is solely used to cover expenses – general expenses.
Taxpayers Compliance
Tax complinance is the conditions where taxpayers complie and fulfil their tax obligaions to
pay, report, and fulfil their right of tax. According to Rusyidi (2018) in Dewi (2020), tax collection
system in Indonesia adhere to self assesment, which means it is the system which give full authority
to taxpayers in measure, pay, and report their tax debt theirself. In order to make this system to run
effectively and smoothly, this thrust should be balanced with law enforcement efforts and strict
supervision of taxpayer compliance in carrying out their tax obligations.
Tax Incentive
Tax incentive is an offer form goverment through tax benefits in certain activities such as
money contributions for quality activties (Dewi, 2020). In general, tax incentives can be interpreted
as certain provisions in tax laws and regunations with generally affected on reducing the amount of
tax which should be paid to nation. Below is the variations of tax incentives in 2021 according to
Regulation of Finance Minister number 9/PMK.03/2021:
1. Income tax incentives (Tax income art. 21)
2. Tax incentive for MSME (final tax income in Peraturan Pemerintah Nomor 23 Tahun 2018)
3. Final income tax incentives for construction services.
4. Income tax art. 22 import exemption
5. Incentive stallment payment income tax art. 25
6. Value added tax incentive
Income tax art. 21 Incentive Borned by Goverment

Income tax art. 21 regulate about tax imposition on individual taxpayers which is get by
employers where this employers have to cut their employee’s income tax wich is recieved by them.
Income tax art. 21 incentive’s regulation which is provided by the goverment is in the form of income
24 Puspitasari, Susanti, Lestari

tax art. 21 incentive borned by the goverment, which means that this income recieved or earned by
taxpayer employees will still be dedujcted in accordance with the regulations of income tax art. 21
by the employer. However, it will be borned by the goverment accoring to cerain criteria, which is:
(Sitohang, 2020)
1. Has business field classification code (Kode Klasifikasi Lapangan Usaha – KLU)
2. Has been established as KITE company.
3. Has NPWP
4. Has yearly fixed and measured gross income is not more than Rp 200.000.000,00 (two hundred
milion Rupiah) or monthly income is not more than Rp 16.600.000,00 (sixteen milion and six
hundred Rupiah).
5. Income tax art. 21 should be paid in cash by employer.
6. Income tax art. 21 boned by goverment is not measured as taxable income.
E-Filing
According to Winarsih et al (2020), E-Filing or can be called electronic filing system is the
use of system in tax administrative which use to report tax return online implemented by Direktorat
Jenderal Pajak. The implementation of E-Filing system is hoped to make taxpayers easier to submit
their tax return as it can be done anytime and anywhere so that it can save costs and time used by
taxpayers for calculating, filling and submitting their tax return.
Tax Sanctions
Sanctions is the action such as penalty to someone who ruin the rule. In tax, sanctions is
important as the tax collection system in Indonesia adhere to self assesment system. The intend of tas
sacntion is to pay taxces on time. Tax compliance is closely related to their perception n assessing
the tax itself, so that perpectives and understandigs of Taxation activity may wary.
RESEARCH METHOD
Object of study
The object of this study are individual taxpayers who has job as jobholder where lived in
Bekasi City. This objcects are selected according to certain criteria which must be met.
Population
Population is the generalization area consist of objects/subjects who have certain qualities and
caracteristic determined by the researcher to be studied then the conclution was drawn (Sugiono,
2018). Population used in this study are individual taxpayers who work as jobholder.
Sample
Sample is part in amount of population taken according certain criteria so that it can represent
the population. The procedure preformed in the sampling technique is non-probability sampling
methode where the amount of population cannot be known for sure and cannot give same probability
to every member to be taken as samples. In this study, this sample technique preformed with
Convenience Sampling. This technique is the sampling technique which is taking only easier
elements. The selection of this element is completely depend on the assessment of the researcher so
that the researcher is free to determine the easiest element.
Type and Source of Data

This study uses quantitative datas. Quantitative datas in this study are individual taxpayers and
response from the questions in quisionare which has been quantitatifed. The source of data used in
this study are primary data. Primary data is data obtained drectly from the object in question which
is carried out through qoestionnaire media. The questionnaires were distributed via Google Form
link which was distributed via whatsapp and other online media.

Methods
Insentif pajak
H1
(X1)
H2 Kepatuhan Wajib
Penggunaan E-
Filing (X2) Pajak
H3
Sanksi Pajak (X3)
H4
Picture 1. Model of study
Source: writer (2021)
Hypotesis
The hypotesiss of this study are:
H1: Tax Incentive significantly effect on individual tax compliance;
H2: The use of E-Filing significantly effect on individual tax compliance;
H3: Tax Sanction is significantly effect on individual tax compliance; and
H4: Tax incentive, the use of E-Filing and Tax Sancton is stimulantly and significantly effect on
individual tax compliance
Technique of Analysist
The technique of analysist in this study is quanttative analys with multiple linear regression
analysis. The analysist of data in this study done with the help of SPSS version 24.0 (Statistical
Program for Social Science) program.

There were 254 questionnaires obtained from google form. Researchers found 7 answers
to the questionnaire that did not meet the criteria. So the total questionnaires that can be
processed further are 257 questionnaires (264-7 = 257).
Multiple Linear Regression Analysis

Multiple linear regression equation is used to determine the effect of the independent
variable (X) on the dependent variable (Y). The following are the results of the multiple linear
regression test which can be seen in the following table:
Table 1. Multiple Linear Regression Analysis Test and T . Test

Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 12.714 1.418 8.967 .000
Insentif Pajak .316 .093 .196 3.409 .001
E-Filing .137 .059 .140 2.329 .021
Sanksi Pajak .444 .059 .442 7.559 .000
a. Dependent Variable: Kepatuhan Wajib Pajak

Based on table 1 and taking into account the regression model and the results of multiple
linear regression, it can be obtained the equation of variables that affect taxpayer compliance, then
the multiple linear regression equation can be explained as follows:
Y = 12.714 + 0.316X1 + 0.137X2 + 0.444X3 + e
Based on the regression equation, it is known that the regression coefficients of Tax Incentives,
Use of E-Filing, and Tax Sanctions can be explained as follows:
1. Constant Value (a)
The constant value is 12.714 which means that if the independent variables are assumed not to
change (constant) then the Y value will remain at 12.714.
2. Tax Incentive Coefficient (β1)
The X1 coefficient value is 0.316, meaning that if there is an increase in the tax incentive
variable by 1 unit while the other independent variables remain, the taxpayer compliance (Y)
will increase by 0.316.
3. E-Filing Usage Coefficient (β2)
X2 coefficient value of 0.137 means that if there is an increase in the use of e-filing variable by
1 while other variables remain, taxpayer compliance will increase by 0.137.
4. Tax Sanction Coefficient (β3)
The X3 coefficient value is 0.444, meaning that if there is an increase in the tax sanction variable
by 1 while the other variables remain, the taxpayer compliance will increase by 0.444.
T Test (Partial)
The t significance test basically shows how far the influence of one independent variable
individually in explaining the dependent variable. The t significance test with a significance level of
5% (0.05) then if the value of sig <0.05 it can be said that Ha is accepted. Based on table 1, the
following results are obtained:
The Effect of Tax Incentives on Individual Taxpayer Compliance

From the results of the SPSS output with a significance level of 0.05 and the test results in a
sig value of 0.001 <0.05, which means that the hypothesis is accepted (H1 is accepted) this shows
that the Tax Incentive (X1) has a positive effect on individual taxpayer compliance (Y). Taxpayers
understand that the PPh Article 21 DTP tax incentive policy is intended for employees affected by
the COVID-19 pandemic with the aim of reducing the tax burden.
Taxpayers feel the direct benefit that the provision of these incentives can help the taxpayer's
economy where their income will not be deducted and will receive full income. The benefits that are
felt directly by taxpayers from the provision of Article 21 income tax incentives are expected to
increase awareness of the importance of paying taxes.
The results of this study are in line with the research conducted by. Latief et al (2020) which
states that the tax incentive policy has a positive effect on taxpayer compliance. His research shows
that if the tax incentives provided by the government can provide motivation and state awareness of
taxpayers towards their compliance in fulfilling their tax obligations.
The Effect of E-Filing Use on Individual Taxpayer Compliance

The SPSS output results show a sig value of 0.021 <0.05, resulting in the hypothesis H2 being
accepted. This shows that the use of E-Filing (X2) has a partial effect on Taxpayer Compliance (Y).
Offline services during this pandemic are limited to being transferred online, therefore this e-filing
can be a solution for taxpayers. By understanding the SPT reporting procedure through E-Filing, this
has the impact that taxpayers feel that it is easy to report their taxes so that taxpayers are willing to
report their taxes on time. Taxpayers feel that tax reporting through e-filing can save costs and energy
because it can be done independently anywhere and anytime. This convenience can affect the level
of taxpayer compliance.
This research is supported by research by Syafruddin (2021) which states that the
implementation of e-filing has a significant effect on taxpayer compliance. Submission of SPT
through E-Filing is considered to make it easier for taxpayers to submit tax activities because it can
be done quickly, anytime and anywhere as long as it is connected to the internet network. According

to Avianto's research (2016), the interest of taxpayers is high enough to use e-filing services because
it is more practical, easy, fast and efficient.
The Effect of Tax Sanctions on Individual Taxpayer Compliance

From the results of the SPSS output, it shows that the sig value is 0.000 <0.05, which means
that the H3 hypothesis is accepted. This shows that Tax Sanctions (X3) have a partial effect on
Taxpayer Compliance (Y). This situation explains that when the taxpayer understands the existence
of tax sanctions given by the tax authority for taxpayers who violate or commit fraud in carrying out
their tax obligations, it will result in a psychological impact on the taxpayer in which the taxpayer
feels that the existence of this tax sanction will be a burden for the taxpayer. tax. By understanding
the existence of this tax sanction, it is hoped that it can encourage taxpayers to carry out their tax
obligations in accordance with the provisions of the applicable law.
This is in line with research conducted by Nurkumalasari (2020) that the imposition of strict
tax sanctions can make taxpayers feel afraid and always burdened by existing sanctions. This
means that the stricter the tax sanctions, the more taxpayer compliance will increase.
F Test (Simultaneous)
This F test is intended to test all independent variables simultaneously or jointly affect the
dependent variable in the multiple linear regression model. The hypothesis is accepted if the value
of sig < 0.05 or the calculated f value is greater than the f table value.
Table 2. F . Test Results

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 1000.969 3 333.656 63.689 .000b
Residual 1325.421 253 5.239
Total 2326.389 256
b. Predictors: (Constant), Insentif Pajak, E-Filing, Sanksi Pajak
Based on table 4.16 shows that the results of the F test produce a calculated f value of 63,689
and a sig value of 0.000. The f table value (α = 0.05; df = 255) is 111, which means that in this study
f count > f table, which is 43.621 > 2.68 and the significance value of f (0.000) < 0.05 significance.
The Effect of Tax Incentives, the Use of E-fling, and Tax Sanctions have a simultaneous
effect on individual taxpayer compliance
This means that the hypothesis H4 is accepted and the test is proven to be significant. So it can
be stated that any changes that occur in the independent variables, namely tax incentives, the use of
e-filing and tax sanctions simultaneously (together) affect the compliance of individual taxpayers. It
can be concluded that the greater the benefits of PPh 21 DTP tax incentives that are felt directly by
taxpayers, the taxpayers will also voluntarily fulfill their tax obligations. This also applies to the use
of e-filing which states that the convenience provided by the DGT can improve taxpayer compliance
in reporting taxes so that taxpayers can report taxes on time. The same is the case with tax sanctions
where awareness and understanding of the existence of substantial sanctions by taxpayers can affect
taxpayer compliance, because taxpayers consider these sanctions to be a burden, therefore taxpayers
will try to avoid these tax sanctions by reporting taxes. in a timely manner.
Coefficient of Determination Test

The coefficient of determination test is used to test the percentage of variable variation that
can be explained by the variation of the independent variable. The results of the coefficient of
determination test will be presented in the following table:

Table 3 Coefficient of Determination Test
Model Summary
Adjusted R Std. Error of
Model R R Square Square the Estimate
1 .656a .430 .424 2.289
a. Predictors: (Constant), Insentif Pajak, E-Filing, Sanksi
Pajak
Based on table 4.17, it can be seen that the Adjusted R Square column produces a value of
0.424 or 42.4%. This means that the independent variables, namely tax incentives, the use of e-filing,
and tax sanctions are able to explain the relationship and their effect on the dependent variable,
namely taxpayer compliance by 42.4%. While the remaining 57.6% is influenced by other variables
outside the study.

Based on the results of the research and discussion described in the previous chapter, the
following conclusions can be drawn:
1. Tax incentives show a significant effect on the level of compliance of individual taxpayers. This
shows that taxpayers feel direct benefits from the provision of PPh 21 tax incentive policies
provided by the government for people affected by COVID-19 in the form of additional
taxpayers' economy.
2. The use of E-Filing has a significant effect on the level of compliance of individual taxpayers.
This shows that taxpayers find it easy to use e-filing for filling and reporting annual tax returns
during the covid-19 pandemic.
3. Tax sanctions show a significant effect on the level of compliance of individual taxpayers. This
shows that the existence of tax sanctions can encourage taxpayers to comply because taxpayers
will consider tax sanctions as a burden if they violate tax provisions.
4. The results of the study show that the variable tax incentives, the use of e-filing, and tax
sanctions have a simultaneous and significant positive effect on individual taxpayer compliance
during the pandemic.
Suggestion
Based on the results of the research that has been described and the conclusions obtained, there
are several suggestions that the author conveys in connection with further research, namely:
1. For taxpayers
For taxpayers, it is expected to increase awareness of the importance of carrying out tax
obligations and make good use of the facilities provided by the government and the Directorate
General of Taxes, which in the future are expected taxpayers to voluntarily carry out their tax
obligations.
2. For further researchers
For further research, it is expected to add other variables such as tax knowledge, economic level
of taxpayers, tax rates and other variables that can affect taxpayer compliance.
REFERENCES
Andrew, Richard and Dian PS. (2021). PMK 86/2020 Incentives in the Covid 19 Pandemic: Does It
Affect MSME Taxpayer Compliance in Surabaya. Journal of Accounting and Taxes.
(online) Vol 21 No 2. 349-366.
Avianto, Gusma Dwi, S.M Rahayu, and Bayu Kanishka. (2016). Analysis of the Role of E-Filing in
the Context of Improving Compliance with Reporting Annual Tax Returns for Individual
Taxpayers (Study at the South Malang Pratama Tax Service Office). Taxation Student
Journal. Vol. 9 No 1
Dwi Kartiko, and Nafis. (2020). Tax Incentives in Responding to the Impact of the Covid-19
Pandemic on the Tourism Sector. Journal of Taxes and State Finance. Vol II. No 1; 124-137.

Direktorat Jenderal Pajak. Nomor SE-18/PJ/2006 tentang Key Performance Indicator (KPI). (2006).
Retrieve from https://perpajakan.ddtc.co.id/peraturan-pajak/read/surat-edaran-direktur-
jenderal-pajak-se-18pj-2006).
Erica, Deny, dkk. (2020). Procedure for Calculation of Article 21 Income Tax Incentives During the
Covid-19 Pandemic In Indonesia. Journal of Economics & Management, Bina Sarana
Informatika University. Vol 18 No. 2.
Friana, Hendra. (2020). Covid-19 Presses Economy, State Revenue Is Predicted to Drop 10%.
Retrieved form https://tirto.id/covid-19-tekan-perekonomian-pendapatan-negara-diprediksi-
turun-10-eKdb)
Hadiwardoyo, W. (2020). National Economic Losses Due to the Covid-19 Pandemic. Baskara:
Journal of Business and Entrepreneurship. Vol 2 No 2; 83–92.
Mardiasmo. (2018). Taxation Latest Edition. Yogyakarta: Andi
Nushka, Dhuratun. Nur Diana and Diyani Sudaryanti. (2021). The Effect of Giving Tax Incentives
Amid the Corona Pandemic on the Compliance Level of Individual Taxpayers in Reporting
Tax Returns (SPT). Journal of Accounting Research. Vol 10 No 06.
Padyanoor, Aswin. (2020). Indonesia's Tax Policy Responding to the Covid-19 Crisis: Benefits for
Taxpayers. Accounting journal. Vol 30 No 9; 2216 – 2230.
Resmi, S. (2014). Tax Theory and Cases. Edition 8. Jakarta: Salemba Empat.
Selvi, and Alief Ramdhan. (2020). Study of Policy on Giving Tax Incentives in Overcoming the
Impact of Corona Virus in Indonesia in 2019. Scientific Journal of Accounting Science. Vol 3
No. 1; 96-100.
Sugiono. (2018). Quantitative Methods, and R&D. Bandung: Alfabeta, CV.
Winarsih, Enandg, Asyarif Khalid, and Forene Yenjeni. (2020The Effectiveness of the Use of E-
Filing in Order to Improve Compliance in Reporting Annual Tax Returns for Individual
Taxpayers. Journal of Accounting Science. Vol.2 No 1

Impact Of PSBB Literacy And Distance Learning On Accounting

Lecturer Performance During The Covid-19 Pandemic
1
Desi Pujiati, 2Estiningsih, 3Sariyati, 4Sundari
1,2,3,4
1
desi.dihaza@gmail.com 2estisabit@gmail.com, 3ragilranti670@gmail.com,
4
soendarisantoso@gmail.com
Abstract
Pembatasan Sosial Berskala Besar (PSBB) policy, the implementation of education is carried out
online. Learning Media is carried out online demanding innovation and creativity of lecturers.
Lecturer literacy regarding PSBB rules and conducting distance learning has an impact on lecturer
performance during the COVID-19 pandemic. The purpose of this study was to analyze the impact
of PSBB literacy and distance learning on the performance of accounting lecturers in Depok City
during the COVID-19 Pandemic. The data used is primary data with data collection techniques using
a questionnaire with a Likert scale. The sampling technique used is probability with simple random
sampling technique. The analytical tool used is SEM through PLS 3.0. The results showed that the
literacy ability of accounting lecturers regarding understanding and compliance in implementing
PSBB had an effect on the implementation of distance learning. The implementation of distance
learning carried out by accounting lecturers using e-learning and innovation affects the performance
of accounting lecturers to conduct teaching, research and community service. PSBB literacy
implemented through distance learning can improve the performance of accounting lecturers.
Keywords : PSBB, Distance Learning, Accounting Lecturer Performance

JEL Codes: L25, I23, I28
INTRODUCTION
The world of education during the COVID-19 pandemic experienced changes in online
learning patterns, especially universities. The prohibition of holding face-to-face meetings directly
switches online. (SE Kemendikbud Dikti No. 1 of 2020). One of the government's efforts to prevent
the spread of COVID-19 is Pembatasan Sosial Berskala Besar (PSBB) policy. Restrictions on
activities as referred to in paragraph (1) in PP No. 21 of 2020 and Permenkes No. 9 of 2020 must
still consider the needs of education and work productivity.
PSBB literacy is important for lecturers in conducting distance learning. PSBB understanding
and compliance for lecturers to conduct face-to-face learning directly switches to distance learning.
References regarding online learning in higher education are available at the 2019 Kemenristekdikti
National Working Meeting. The higher education strategy for the current generation refers to the
Minister of Research, Technology and Higher Education No. 51/2018 to be held as a higher education
strategy to answer the challenges of RI 4.0. This is a challenge for lecturers, especially accounting
lecturers, namely courses that require skills in processing accounting and non-accounting
information into a report.
Distance learning during the COVID-19 pandemic is a challenge for lecturers. Lecturers must
conduct distance learning with the ability to use online media as a face-to-face room. Distance
learning innovation by making virtual space a means of planning, management, communication and
even a liaison between lecturers and students.
The distance learning media used at the Tarbiyatut Tholabah Islamic Institute varies, such as:
training on the use of Google Classroom with the aim of providing skills for all lecturers to operate,
and face to face with available video features (Google Meet), other applications such as Zoom and
WhatsApp Applications selected according to the agreement of lecturers and students (Nafilatur,
2020). Mobile devices as a supporting tool in the implementation of online learning that can be
accessed at any time and place to obtain information (Gikas and Grant, 2013). Mobile technology
Pujiati, Estiningsih, Sariyati, Sundari 31

has major benefits for educational institutions in the implementation of distance learning (Korucu
and Alkan, 2011). Social media can be used as online learning media such as Facebook and Instagram
(Kumar and Nanda, 2018).
The Study Program (Prodi) is a unit of educational and learning activities in the type of
academic, professional and vocational education that has a curriculum and learning method
(Permendikbud, 2020). Accounting study program is one of the ten largest study programs in
Indonesia in both PTN and PTS. The following is Figure 1. regarding the data for the ten largest
study programs in Indonesia according to Indonesian Higher Education Statistics (2019).
Figure 1.: Most Study Programs in Indonesia
The accounting study program is in second place, which is one indicator of the second largest
number of accounting lecturers in Indonesia. PSBB literacy that is understood and obeyed by
lecturers is a challenge in implementing distance learning to create accounting lecturer performance.
During the COVID-19 pandemic, reporting on the performance of lecturers fulfilling the
achievements of the Tri Dharma of Higher Education was carried out remotely.
The form of the Tri Tri Dharma of Higher Education in the form of education and teaching for
a lecturer is able to carry out work programs, provide learning, guide research, test and make reports
online. Research and development is carried out remotely, namely conducting and producing
scientific research. Community service during the COVID-19 pandemic is designed remotely that
contributes to coaching / counseling according to scientific competence and making reports and
evaluating the results of the implementation of abdimas.
Literacy regarding the understanding and compliance of PSBB in the implementation of
distance learning (PJJ) carried out by accounting lecturers has an impact on lecturer performance.
The challenge of using learning is carried out remotely, accounting lecturers are required to be able
to switch face-to-face online. The ability to use virtual media for accounting lecturers is a challenge
to innovate in ICT-based distance learning which has an impact on the performance of accounting
lecturers.
This study aims to analyze the impact of PSBB literacy and distance learning on the
performance of accounting lecturers in Depok City during the COVID-19 Pandemic. The benefit of
this research is that it can be used as a reference for the success of socializing the PSBB policy.
Educators, especially accounting, support policies for the spread of COVID-19 by implementing e-
32 Pujiati, Estiningsih, Sariyati, Sundari

learning. As an evaluation material for the Ministry of Research and Technology in distance learning
policies in the implementation of the Tri Dharma of Higher Education with online Lecturer
Performance Reports. The contribution of this research is the development of similar research on the
performance of lecturers during the pandemic with the policy of Pembatasan Sosial Berskala Besar
(PSBB), especially accounting lecturers in e-learning.
LITERATURE REVIEW
Permenkes No. 9 of 2020 Large-Scale Social Restrictions are restrictions on certain activities
of residents in an area suspected of being infected with Corona Virus Disease 2019 (COVID-19) in
such a way as to prevent the possible spread of Corona Virus Disease 2019 (COVID-I9. PP No. 21
of 2020, scope Large-Scale Social Restrictions, at least one of which is school holidays, must still
consider educational needs. Perwal No. 22 of 2020, restrictions on the implementation of learning
are changed by learning at home/in each place through distance learning. West Java Governor
Regulation No. 27 of 2020 Article 6 point a During the PSBB, the person in charge of the educational
institution is obliged to ensure that the learning process continues and the rights of students to obtain
education are fulfilled.
According to the Policy on Distance Education and E-Learning in Indonesia (Kemenristek,
2016): Distance education is a teaching and learning process that is carried out remotely through the
use of various communication media (Permendikbud No. 109/2013). The principles of Distance
Education are: 1) There is a separation between educators and students across space and time so that
more emphasis on independent learning, 2) ICT-based learning interactions using various ICT
learning resources and other media., 3) Organized systematically in one organization according to
applicable rules, 4) Limited face-to-face meetings are possible.
Stages and indicators of achieving Lecturer Workload (BKD) and Lecturer Performance
Report (LKD). The implementation of Tri Dharma is calculated in credits in one semester with
indicators of achievement of teaching education, research, community service and supporting
lecturers' academic activities which are descriptive of the lecturer's real performance
(Kemeristekdikti, 2019). This refers to the National Standards for Higher Education regarding the
Tri Dharma of Higher Education as stated in Permendikbud No. 3 of 2020.
PSBB Literacy
Knowledge as the main resource regarding organizational understanding. Organizational
understanding is measured through the ability to create and manage knowledge dynamically for
organizations to improve performance (Suzana and Marcelo, 2018). People's compliance actions as
individual controls are influenced by knowledge, attitudes, and practices (KAP) towards COVID-19
(Zhong et al., 2020).
The development of hypotheses during the COVID-19 pandemic regarding knowledge is one
form of implementation of PP No. 21 of 2020. Knowledge is developed with literacy regarding PSBB
in addition to understanding and complying with but also being able to measure the ability of
accounting lecturers to implement PSBB and limit all teaching activities. , research and community
service.
H1. PSBB literacy affects the implementation of distance learning
Distance Learning
Distance learning is learning that is planned in a room with a different location and when the
learning process does not occur face-to-face between the teacher and the learner (Zainal et al., 2020).
Online learning is the ability to carry out any type of learning interaction using the internet network
with accessibility, connectivity, flexibility. (Ali and Afreni, 2020). Distance learning with the use of
virtual learning is believed to be able to provide convenience as a communication medium to avoid
physical contact in order to prevent the transmission of COVID-19 (Niken, 2020). Distance learning
in this study is to design learning programs and implement e-learning by using e-learning as a face-
to-face online learning medium.
The distance learning process is by using a variety of learning resources: 1) there must be a
straightforward learning design and the implementation rules are made, 2) the location is different
from the students if they use learning resources 3) The educators and the participants are separated

by using the learning mode, 4) Creating independent, structured, and guided learning, 5) The use of
ICT creates learning interactions, 6) Teaching materials in the form of e-learning and innovation
combined with other teaching materials, 7) ICT-based learning can be accessed at any time.
The development of the hypothesis during the COVID-19 pandemic distance learning in this study
refers to the Distance Education Policy of the Ministry of Research, Technology and Higher
Education (2020). ICT-based distance learning used in this study is the ability of accounting lecturers
to design learning programs and carry out e-learning learning by utilizing online face-to-face media.
H2. Distance learning has an effect on the performance of accounting lecturers.
Lecturer Performance
Lecturer performance is a real behavior that a lecturer produces as work performance
according to his function as academic educators (Lilis and Purwantoro, 2020). The development of
a hypothesis on the performance of accounting lecturers during the COVID-19 pandemic refers to
Permendikbud No. 3 of 2020 and the existence of PP Policy No. 21 of 2020 PSBB. The Tri Dharma
of Higher Education in this research is to create and implement a work program according to the plan
in education and teaching. Research and development produces research and scientific works and
actively participates in scientific seminars and meetings. Community service makes research from
the implementation of research results (journals/grants).
The performance of accounting lecturers is to carry out the Tri Dharma of Higher Education
by reviewing every semester on a per lecturer basis. The work plan must be made by the lecturer as
a basis for implementing learning for one semester (Sri, 2011). The performance of education and
teaching implementers using various learning methods, research implementation performance,
community service performance at the Faculty of Teacher Training and Educational Sciences, State
University of Palangka Raya (Joni and Indra, 2018). Lecturer performance assessment uses elements
from the Tri Dharma of Higher Education to produce reliable and professional lecturers in their fields
(Lilis and Purwantoro, 2020).
H3. The Impact of PSBB Literacy through Distance Learning affects the performance of accounting
lecturers
The research model in this study is to describe the framework of thinking about the PSBB
literacy that is implemented affecting the implementation of ICT-based distance learning and having
an impact on the performance of lecturers, especially accounting lecturers.
Distance
Learning
Literacy Lecturer
PSBB Performance
Figure 2. Research Model
RESEARCH METHOD
Selection and Data Collection
This study uses a population at universities in Depok City with an analytical unit for
accounting lecturers registered with the Ministry of Education and Culture reference data (2021) with
the link https://reference.data.kemdikbud.go.id/index51.php?kode=026600&level=2. The number of
universities and accounting lecturers in Depok City is presented in Table 1 below.

Table 1. Name of University and Number of Accounting Lecturers
University Name Number of Accounting

Lecturers
Indonesia University 45
Gunadarma University 81
Bina Sarana Informatika University 23
STEI SEBI 12
Politeknik Negeri Jakarta 7
STIE Fajar 20
STIE GICI 6
Institute STIAMI (Perpajakan) 12
TOTAL 206
Determination of the sample is done by simple random sampling. Simple Random Sampling
is the taking of sample members from the population that is carried out randomly without regard to
the strata that exist in the population (Sugiyono (2017). Data collection uses a questionnaire filling
method using a Likert scale. This scale is a scaling method that is widely used in phenomena The
variables measured using a Likert scale include: PSBB Literacy, Distance Learning and Lecturer
Performance Questionnaires distributed online using gform with the link
https://forms.gle/ANb6rhpyC3wx4yuVA Time of distribution on the 1st to July 4, 2021. The
questionnaire was made with instructions for filling out the questionnaire in a straightforward and
simple manner so as to make it easier to fill out answers and obtain complete data.The respondent
data that was successfully processed were 69 respondents from a total of 206 Depok city accounting
lecturers with a percentage of 33.49%.
Operational Measurement and Definition of Research Variables

This study uses latent variables with PSBB literacy and distance learning as independent variables,
while the performance of accounting lecturers is the dependent variable. The measurement of latent
variables uses a Likert scale from a scale of 1 to 5. The operational definitions and indicators of
research variables and indicators are as follows.
Table 2. Operational Definition of Research Variables

variabel Definisi Indikator
PSBB Literacy Perceptions of accounting Understanding
According to PP No. 21 of lecturers regarding Obedience
2020. understanding and compliance Implementation
(Suzana and Marcelo, 2018), and implementation of PSBB
(Zhong et al., 2020). implementing regulations
Distance Learning Perceptions of accounting PJJ's understanding
Ali and Afreni, (2020) and lecturers regarding the PJJ Inovasi Innovation
(Niken, 2020). importance of using ICT for
innovation in distance learning
Accounting Lecturer Perceptions of accounting Education and Teaching
Performance Lecturer lecturers regarding lecturer Research and development
Performance Report performance on the elements Community dedication
(Kemeristekdikti, 2019). of the Tri Dharma of Higher
Joni and Indra (2018), Lilis Education
and Purwantoro (2020).

Data Analysis Method

Descriptive analysis
Respondents in this study are accounting lecturers who have characteristics. These
characteristics were obtained from filling out research questionnaires on demography. The
results of the demographic tabulation of respondents to describe the characteristics of
respondents who were studied by quantitative methods by obtaining percentages as descriptive
analysis.
Inferential statistical analysis.

Inferential analysis is used to analyze the effect between the independent variable and the
dependent variable. There are two stages of the PLS (Partial Least Square) model as the basis for the
analysis tool. PLS has two models, namely: a measurement model and a structural model, which
measures the relationship between latent variables based on theoretical studies.
The measurement model or outer model uses convergent validity to obtain indicator values that
reflect the variables. The indicator value is seen from the correlation of the item score with the
construct score. Furthermore, discriminant validity is assessed based on cross loading measurements
with constructs or other methods by comparing the value of the square root of average variance
extrated (AVE). The next stage is composite reliability which can be measured by means of internal
consistency and Cronbach's Apha (Ghozali, 2014).
Table 3. Parameter Value of Outer Model

Stages of Validity and Reliability Parameters of Outer Model Value
Test
AVE Outer Loading ≥ 0.50
discriminant validity ≥ 0.5
composite reliability ≥ 0.5
The Structural Model or Inner Model is obtained by the path research model which becomes
the hypothesis. The value used is the significance of the structural path parameter coefficients, Stone
–Geisser Q-square test for predictive relevance and t-test. Values for the dependent variable using
R2-square.
Table 4. Parameters of Inner Model Value
Between Effect Size Prediction

endogenous latent Relevance
variables
Q2 is getting
R2 is good (0.67) The bigger F2, the closer to 1, then
R2 moderate (0.33) bigger the effect the model can be
R2 is weak (0.19) predicted based
on the data
The loading factor used as a hypothesis testing tool is obtained from the Critical ration
(CR) value, namely t-count compared to t-table. The significance result is obtained from the CR
> T-table with the provision that p is less than 0.05, on the other hand, if it is greater than 0.05,
it is not significant.

Descriptive Analysis Results
Characteristics
Descriptive analysis of the characteristics that were successfully processed through the
calculation of data tabulation. Characteristics that reflect the ability of accounting lecturers in
responding to questionnaire answers. Following are the results and descriptive analysis of the

characteristics of accounting lecturers in the city of Depok based on the perceptions of 69 accounting
lecturers.
Table 5. Characteristics of Respondents

No Respondent profile Criteria Amount Composition
1. Gender Male 26 37,68%
Female 43 62,32%
2 Age < 35 Year 13 18,84%
35 – 45 Year 18 26,09%
45 – 60 Year 37 53,62%
> 60 Year 1 1,45%
3. Years of service < 5 Year 1 1,45%
5 – 10 Year 15 21,74
11 – 15 Year 4 5,8%
>15 Year 48 71,01%
4. Functional Professor 1 1,45%
Head Lector 3 4,35%
Lector 38 55,07%
Expert Assistant 24 34,78%
Tenaga Pengajar 3 4,35%
5. Educational level S2 33 47,83%
S3 36 52,17%
6. Subjects taught Financial Accounting 17 24,64%
Management Accounting 7 10,15%
Public sector accounting 3 4,35%
Tax accounting 7 10,15%
auditing 12 17,39%
Introduction of accounting 10 14,49%
Accounting information system 8 11,59%
Accounting Theory 5 7,24%
Table 5 describes the profile of the accounting lecturer respondents in this study,
predominantly female sex composition with a percentage of 62.32%. Respondents' age ranges from
below 45 years to above 60 years with a percentage of 53.62%. The working period of accounting
lecturers above 15 years has a percentage of 71.01%. Functional positions on average are in Lector.
Dominant education level is S3. The characteristics of the respondents in this study describe; 1) the
ability of accounting lecturers to understand and comply with PSBB regulations, 2) the ability to
conduct distance learning using the internet as a learning innovation, 3) Have experience in teaching,
research and community service as an indicator of lecturer performance.
The subjects taught by respondents tend to be spread evenly in accounting courses (Financial
Accounting, Management Accounting, Public Sector Accounting, Tax Accounting, Auditing,
Introduction to Accounting, Accounting Information Systems, Accounting Theory. This illustrates
the characteristics of respondents supporting the research sample, namely the analyst unit accounting
lecturer.
Data Quality Analysis

Analysis of the data quality of the PLS 3.0 application is in the outer model measuring the
reflective model of all indicators in the research variables. PSBB literacy has 6 (six) research
instruments which are reflected in the indicators of understanding, compliance and implementation
of PSBB. There are 3 Distance Learning Instruments that describe the ability of innovation in e-
learning learning. Lecturer performance refers to the Tri Dharma of Higher Education which is
represented by 4 instruments. The results of the outer model or measurement model are as follows.

Table 6. Validity and Reliability Test Results of Research Indicators

Indikator Uji Validitas Loading Factor Cronbach AVE Information
Alpha
KD_1 0.801 0,83 0,836 0,664 Valid & reliabel
KD_2 0.678 0,845 Valid & reliabel
PJJ_1 0.915 0,932 0,906 0,725 Valid & reliabel
PJJ_2 0.847 0,929 Valid & reliabel
PJJ_3 0.794 0,79 Valid & reliabel
PSBB_1 0,692 < 0,7 0,861 0,785 Tidak valid
PSBB_2 0.775 0,819 Valid & reliabel
Based on Table 6, it can be explained that the indicators in this study are valid and reliable.
The resulting research instrument has a loading factor value of more than 0.7 as evidence that this
instrument can reflect the variables of PSBB Literacy, Distance Learning and Lecturer Performance.
There is one instrument of the PSBB literacy variable that has a loading factor value of less than 0.7,
so the instrument is not included when processing data in structural model analysis. The following
is the output of PLS 3.0 which describes the research measurement model presented in Figure 3
below.
Distance Learning
Literacy PSBB
Figure 3. PLS Algorthm Measurement Model (2021)

Figure 3 shows the latent variable loading factor value > 0.7, and distance learning R square
value 0.243 and lecturer performance 0.100. It can be explained that each variable can be represented
by indicators and research instruments. PSBB literacy is one of the variables that makes distance
learning successful. The impact of PSBB Literacy with the implementation of distance learning can
improve lecturer performance.
Inferential statistical analysis.

This inferential statistical analysis was conducted to test the research hypothesis using PLS
3.0. the specification of the inner model or structural model using the R-square Q-square value and
for the performance construct of accounting lecturers. . The calculation results of R-square and Q-
square are as follows:
Table 7. R-square and Q-square

Variable Score R2 Q2 Information
Distance Learning 0,243 0,167 Moderate
Lecturer Performance 0,100 0,050 Weak
Based on Table 7 shows that 24.3% of the rise and fall of distance learning is determined by
the literacy level and the implementation of distance learning contributes to the performance of
lecturers by 10%. The structural goodness test can be seen in the value of Q2. If the value of Q2 > 0
means that the research model has predictive relevance. Table 8 shows that PSBB literacy has a
moderate impact on distance learning and distance learning has a weak impact on lecturer
performance. The following is Figure 4 which shows the results of the inner model as a structural
model of research.
Distance Learning
Literacy PSBB
Figure 4: Structural Model

The results of the hypothesis compare the results of P Value less than 0.05 as follows:
Table 8. Results of Research Hypotheses

Path Original Sample Standard T P-Value
Sample Mean Deviasi Statistik
Literacy PSBB --> Distance 0,493 0,5 0,103 4,766 0,000
Learning
Distance Learning --> Lecturer 0,317 0,341 0,075 4,215 0,000
Performance
Literacy PSBB --> Distance 0,156 0,179 0,061 2,565 0,011
Learning ---> Lecturer Performance
Table 8 shows that PSBB literacy has an original sample variable value of 0.493 with a
significance below 0.05, so the first hypothesis is accepted, namely PBB literacy affects Distance
Learning. The second hypothesis is accepted that Distance Learning has an effect on lecturer
performance. It is proven by P-Value below 0.05. accounting lecturer. Furthermore, PSBB literacy
for accounting lecturers through distance learning can improve the performance of accounting
lecturers. The third hypothesis is accepted with a positive original sample of 0.156 and a significance
of 0.011.
The PSBB policy written in PP No. 21 of 2020 The Scope of Pembatasan Sosial Berskala
Besar (PSBB) shows that the PSBB literacy for accounting lecturers can be understood, complied
with and implemented. The understanding and compliance of accounting lecturers regarding UN
regulations issued during the Covid-19 pandemic was able to limit online teaching activities. The
benefits of understanding PSBB by accounting lecturers to reduce the spread of the Covid-19 virus.
This result is in line with Niken (2020) that distance learning using virtual learning is believed to be
able to provide convenience as a communication medium to avoid physical contact in order to
prevent the transmission of COVID-19.
The form of PSBB Literacy implementation is by limiting teaching activities using effective
media, all seminar/workshop activities using effective media, all research activities using effective
media and all community service activities using effective media. PSBB literacy of accounting
lecturers has an effect on Distance Learning. This is in line with research by Zhong et al., (2020) that
people's compliance actions as individual controls are influenced by knowledge, attitudes, and
practices towards COVID-19.
Accounting lecturers during the COVID-19 pandemic have the ability to use e-learning
learning media. Distance Education and e-Learning Policy in Indonesia (Kemenristekdikti, 2016).
This can be proven by e-Learning learning by using e-learning as a substitute for face-to-face directly.
During the pandemic, accounting lecturers are required to have systematic planning skills. This
systematic planning is carried out by the media used requires distance learning innovation. The
development of innovation in the implementation of courses requires the ability to use the internet
as a substitute for face-to-face media. Distance learning affects the performance of accounting
lecturers. This is proven by the use of technology as a tool: 1) distance learning process, 2) research
and development using various sources, 3) Planning and implementation of abdimas also uses
distance learning media. This is in line with the research of Ali and Afreni (2020) that teachers have
the ability to carry out any type of learning interaction using the internet network with accessibility,
connectivity, flexibility.
The performance of accounting lecturers has increased with the PSBB literacy and the
implementation of e-learning. The performance of accounting lecturers is able to carry out work
programs according to the plan. During the COVID-19 pandemic, a work program that uses
technology media is needed, which requires virtual collaboration with campuses and students as
monitoring. This is in line with Sri's research (2020) that a work plan must be made by the lecturer
as a basis for implementing learning for one semester. The COVID-19 pandemic period in research
and development performance with PSBB Literacy through e-learning learning (searching for data,
processing and submitting online) resulted in research and scientific work. Accounting lecturers are
increasingly actively participating in scientific seminars and meetings both as presenters and
participants without being constrained by time and place, which are conducted online. Servant

activities of accounting lecturers are able to make research from the implementation of research
results (journals/grants). This proves that PSBB literacy through the implementation of distance
learning improves the performance of accounting lecturers. This is in line with the research of Suzana
and Marcelo (2018) that organizational understanding is measured through the ability to create and
manage knowledge dynamically for organizations to improve performance. Joni and Indra (2018)
that the performance of education and teaching implementers using various learning methods,
research implementation performance, community service performance for lecturers

Conclusion
The literacy of accounting lecturers regarding PSBB has an effect on distance learning.
Distance learning carried out by accounting lecturers through e-learning learning innovations affects
the performance of accounting lecturers. The form of PSBB Literacy implementation is realized by
the ability of accounting lecturers in the implementation of distance learning to improve lecturer
performance.
Suggestion
This study has limitations on the use of the unit of analysis for accounting lecturers with the
acquisition of a location in Depok City. Suggestions for further research are expected population
distribution at the national level.
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A Bibliometric Analysis of Shariah Accounting Standards

1
Mulyadi, 2Elza Kusuma Devi, 3Mega Oktaviany
1,2,3,
1
mulyadi.sef@gmail.com, 2elzamadev24@gmail.com, 3megaoctaviany@staff.gunadarma.ac.id
Abstract
This study aims to find out the development map and trend of Shariah accounting standards published
by well-known journals with the theme of Islamic Economics and Finance. The data analyzed were
more than 78 indexed research publications. Descriptive statistical methods were used, and a
bibliometric analysis was conducted using the R Biblioshiny to find out the bibliometric map. The
results show that the number of publications on the development of Shariah accounting standards in
Islamic economics and finance research has increased significantly. The results showed that the most
types of documents were journal articles. The most popular author is by Hussainey K, and the most
popular keyword topics are Islamic, accounting, financial, bank, and finance. This study provides an
overview of trends in the most popular keywords, journals and authors in articles on the topic of
Shariah accounting standards, thus providing information for researchers focused on research in the
field of Shariah accounting standards. In the end, this theme has the potential to continue to be
developed.
Keywords: Shariah Accounting Standards, Bibliometrics, R

JEL Codes: M41, P51, R10
INTRODUCTION
Islamic Finance is mainly practiced in developing countries, although recent
developments in the industry have seen its services enter developed countries (IFSB,
2015). Thus, the soaring growth of Islamic finance, covering 60 countries from 14
jurisdictions, simultaneously increases the complexity in its size and operations (Shabsigh
et al., 2017). While Islamic finance assets are small compared to the global financial
industry, their broad scope and inclusive goals require additional regulations and standards
that can accommodate uniformity across regions. The principles of Islamic financial
transactions emerge from the main source of Sharia and differ from conventional global
practices. Islamic finance operates within the confines of the prohibition against interest,
gambling, excessive speculation, and complex derivatives, among others. The basis of this
regulation is previous sources such as the Qur'an, Sunnah, Ijma, and Qiyas (Maghrebi,
Mirakhor, & Iqbal, 2016). Adherence to the basic principles underlying the Islamic financial
system requires that its products and services take into account many social and
environmental considerations. For example, Islamic finance provides sufficient protection
for those who cannot afford a loan contract; as such, any transaction involving the payment
or receipt of interest is null and void. Consequently, the system aims to protect not only
human beings but also the environment through investments that are socially and
environmentally responsible.
In addition, Islamic finance has a comprehensive structure linking contractual
relationships together with binding standards. That is, it consists of elements of recording
transactions, corporate and individual functions, transactional and exchange moral ethics, all
of which are combined with accountability that has inter-relationships to achieve a
sustainable Islamic financial system (Aliyu, Hassan, Yusof, & Naiimi, 2017a; Aliyu, Yusof,
& Naiimi, 2017b). Apart from the existing provisions of Shariah financial decisions, the
complexities of modern business and the dynamic changes in human nature necessitate the
Mulyadi, Devi, Oktaviany 43

establishment of a standing body to establish further Shariah compliant regulations. Prior to

the advent of modern Islamic financial standards bodies, conventional institutions had
established such institutions to complement best practice.
Historically, the countries that set financial standards bodies were not far from the US,
EU, and Japan. However, the role of developing and developing countries has recently
required that other regulations be made not only regarding financial stability but also
inclusiveness and economic development (Jones & Knaack, 2017). This goal is in
accordance with the basic guidelines of the Islamic financial system which emphasizes
institutional and welfarist schools which are closer to the Ismaili and Chapra model (Aliyu
et al., 2017a; Hassan & Aliyu, 2018). The former prioritizes maximizing corporate value
through institutional viability and solvency which are an integral part of financial stability,
while the latter expands its contribution to improving people's welfare. Consistent with the
goals that guide the establishment of Islamic finance within institutions, standard setters
must balance goals beyond financial stability and reporting, they must uphold the maqasid
goals of focusing on improving the welfare of society. The welfare of society should be a
priority for the Islamic finance industry as it aims to achieve the goals of Sharia (Ahmed,
Mohieldin, Verbeek, & Aboulmagd, 2015; World Bank and Islamic Development Bank
Group 2017). Similarly, Islamic finance standards are required to include not only an
intermediary role focused on increasing stability, but also to add other conditions and
provide guidance that will increase inclusivity and mobilization of resources towards
economic development (Shabsigh et al., 2017).
Thus, the provision of standards that respond to global changes is accommodated in
the core principles of Islamic financial regulation compiled by the Islamic Financial Services
Board-IFSB (IFSB, 2015). Furthermore, recent global financial trends are not only focused
on stability and health, but also include factors that have the potential to improve people's
welfare, with a target of transforming the world by 2030 (United Nations, 2015). At the same
time, Islamic finance is widely imitated by developed and developing countries that need
additional standards to develop their economic conditions. Therefore, in accordance with the
context of Islamic finance, maqasid and jurisdictions that practice it prioritize inclusiveness
which aims to improve people's welfare. It is imperative to provide a proactive standard in
encouraging Islamic regulatory and supervisory authorities to address the prospective
challenges that the industry may face due to the high volume of expansion. These prospective
challenges are closely identified as challenges related to financial stability, risk assessment,
and the ability to overcome financial crises (IFSB, 2015).
LITERATURE REVIEW
The perspective on financial standards is related to the channels for recording,
reporting, and interpreting financial transactions in accordance with national, regional or
global standards. This can bring harmonization of standing to certain standards and allows
comparison of accounting reports in different locations. The use of a common format and
language makes it easier for professionals in the profession to understand and make
judgments about financial activities. Contemporary global financial standard setting bodies
issue standards beyond those related to the recording of transactions. Currently, there are
standards regarding financial stability and institutional soundness, trade, and product
exchange, among others. The rapid growth of Islamic finance in institutions has attracted the
attention of regulators, practitioners and investors to ensure that the system will not be
excluded from certain regulations and standards to maintain good practice (Hassan & Aliyu,
2018; Hassan, Aliyu, & Hussain, 2019). The differences between the modes of action of
business transactions found in the Islamic and conventional financial systems necessitate the
former to pursue complementary standards to guide its transactional dealings. As a result,
44 Mulyadi, Devi, Oktaviany

Mohamed Ibrahim (2007, pp. 1e10) asserts that Islamic standard setters review conventional
international guidelines and accept those according to Sharia and develop others as deemed
necessary for financial institutions.
The Islamic Development Bank initiated the establishment of Islamic financial
reporting standards at its annual meeting in 1987 and was supported by existing Islamic
banks (Abdel Karim, 1990). Furthermore, in 1991, a standard setter called the Financial
Accounting Organization for Islamic Banks and Financial Institutions (FAOIBFI) was
formed through representatives of practicing accountants and Sharia scholars (Abdel Karim,
1995). FAOIBFI was formed and later became the Accounting and Auditing Organization
for Islamic Financial Institutions (AAOIFI). The contextual values of Islamic financial
standards are sourced from fiqh muamalat, because every relationship is allowed except for
those that are prohibited. The Islamic financial transaction code provides ethical guidelines
that make relationships fair and transparent. In this case, whether ceramic standard makers
have sharia scales that consider international standards before adopting, adapting, or
developing standards that can replace the issued standards, based on the global context.
METHODOLOGY
Bibliometric mapping is a research topic in the field of bibliometrics (Borner et al.,
2003). Two aspects of bibliometrics that can be distinguished are the construction of the
bibliometric map and the graphical representation of the map. In the bibliometric literature,
the greatest concern is with the construction of bibliometric maps. Research related the effect
of differences on similarity measures (Ahlgren et al., 2003), and they were tested with
different mapping techniques (Boyack et al., 2005).
The graphical representation of bibliometrics has received less attention. Although
there are some researchers who seriously study problems related to graphical representation
(Chen, 2003). Most articles published in the bibliometric literature rely on simple graphical
representations provided by computer programs. This study uses published data in the form
of papers sourced from the Scopus database with the theme of halal tourism research. From
the search results obtained 93 articles that have been published.

Thematic evolution
Figure 1: Thematic evolution of article sharia accounting standards

The themes used in the research papers are constantly changing, especially from papers
that have been recently published when compared to papers that have been published for a
long time. The evolution of the theme is shown in the image above. Although the theme of
this research is Islamic accounting, this data shows several sub-themes that are widely used.
The left side shows several themes that are widely used from 2010 to 2016, there are 5
themes listed with different sizes depending on the quantity of use of these themes. The
theme "banking" ranks first, followed by the themes "bank” and “shariah.".
The second part of the middle section presents several themes that were widely used from
2017 to 2019. Several themes that emerged during this period were an evolution of the
previously used themes and were related in their content, for example the 'Islamic' theme
emerged as a form of revolution from the 'Islamic' theme. and 'standards', this shows that the
research using the extension theme is an extension of the previous research on banking,
banking and shariah. In this section, the most widely used themes are banking, banking and
shariah.
The third or right section shows the most frequently used themes in the period between
2020-2021. There are 8 themes listed, of which the 3 themes are evolutions of the themes
that emerged in the previous period, namely the â€˜financial, empirical, and AAoIFI themes
which are extensions of several themes shown by colorful plots.
Word Growth
Figure 2: Word growth of article on sharia accounting standards

In this study, the words that occur frequently are also translated into a development
curve each year with an annual incidence value. Where these results show the average
number of occurrences of words in data collection studied in the theme of Shariah
accounting standards in Islamic economics and finance research per year. The picture above
shows that the majority of words that appear frequently have started to develop and have
been used since 2015 which tends to increase. The highest increase was achieved by Islamic
banks in 2021, and it tends to continue to increase every year. Meanwhile, according to
AAOIFI, Islamic finance, Islamic banking and corporate governance have increased from
2018 to 2021.

Top Author’s Production Over the Time
Figure 3: Top author’s production over the time of article on sharia accounting standards
Moreover, productivity can not only be measured in journals but specifically for
authors. Where in the picture above shows the productivity of several top writers during the
research period, namely from 1990 to 2020. This productivity is indicated by a red line since
the author published his research until the last year the author published his research. In
addition, the circle on the red line shows the number of papers published according to the
applicable year.
The picture above presents an overview of authors who have written research related
to Shariah accounting standards in Islamic economics and finance research for a long time
or recently. The author, who has long published research related to Shariah accounting
standards in Islamic economics and finance research, namely Hussaney K from 2015 to
2018 has been productive in writing which has increased every year. In addition, writers
who have a long track record are occupied by Shafiz Z who wrote from 1990 to 2017, and
Zakaria N from 2013 to 2020.

Source growth
Figure 1: Source growth of article on sharia accounting standards
This study also discusses the development of journals that are sources of research on the
theme of Shariah accounting standards in Islamic economics and finance research. The
curve above shows the development of the annual appearance of each journal from 2010 to
2021. Where the curve illustrates that research with the theme of Shariah accounting
standards in Islamic economics and finance research tends to experience growth in
publication. From the curve above, it can also be seen that several journals have begun to
develop since 2015 and continue to increase, such as the journal of Islamic accounting and
business research, but in the last few years they have continued to decline, such as the
International Journal of Islamic and Middle Eastern Finance and Management.
Three Fields Plot
Figure 5: Three fields plot of article on sharia accounting standards
The Three Fields Plot image above is an image consisting of 3 elements, namely the name
of the publication journal, a list of author names and the theme / topic used. The three

elements are connected by a gray plot that is intertwined with each other. Starting from the
name of the journal, then each journal displays authors who often contribute to its
publications, then each author presents topics that they often use for research conducted
with the theme of Shariah accounting standards in Islamic economics and finance research.
The size of the rectangle represents the number of publications associated with each of these
elements.
From the picture above, it is known that in the first element there are 10 journals
indexed in the Three Fields Plot which publish papers with the theme of Shariah accounting
standard. The top journal that publishes the highest number of papers with the theme of
Shariah accounting standards in Islamic economics and finance research in the journal of
Islamic marketing and business research which is depicted by a dark blue rectangle
connected to several authors, namely Shafi Z, Ahmed Mu Abdurrahman Ar, El halaby s ,
and Hussainy K.
Next, go to the second element in the center of the image, which shows the author's
name. Where there are several authors who are connected to previous journals such as Shafi
who is connected to the journal of Islamic marketing and business research. In addition, the
author will also be associated with frequently used topic keywords on the right of the image.
Where in this study there are 20 top researchers registered in this plot. The size of the
rectangle indicates the quantity of each research publication from each author. As for in this
study, the authors publish more themes of Shariah accounting standards in Islamic
economics and finance research, namely Zakaria N, Shafi Z, Ahmed Mu Abdurrahman Ar,
El halaby S, and Hussainey K depicted with light pink, dark pink, purple, pink rectangles.
light brown, dark brown and purple.
Finally, the third element that describes the research topic is on the right of the image.
Each topic is connected to an author who has written extensively on the related topic. From
the image results, there are 18 keyword topics listed. Of the many topics that arise, the word
Islamic is a word that often appears marked by a dark pink rectangle. Furthermore, the word
financial is in the second position which is often used by almost all writers with a dark
purple rectangle. While institution is in the third position which is often used by almost all
writers with a dark yellow rectangle. This illustrates that the words Islamic, accounting, and
finance themselves are closely related to research on the theme of Shariah accounting
standards in Islamic economics and finance research.
Findings
In research with the theme of halal food, it was found that words that are often used in
research articles such as Islamic, accounting, financial, bank, and finance are very closely
related to the theme of Sharia accounting standards. The establishment of the IFI was
originally an act of response to the Sharia prohibition of paying and receiving riba (interest).
Therefore, transactions at IFI are intended to be accountable to God which turns into acts of
worship to seek rewards in this world and in the hereafter (Haniffa and Hudaib, 2010). In
this regard, for these IFIs to survive in this dynamic and competitive industry, a high level
of public trust is essential as stakeholders expect the operations to be Shariah compliant, so
the task of reporting transparently becomes important (Archer and Karim, 2007). Therefore,
in regulating and supervising LKI, the decisive thing to look for is standard accounting
methodologies to regulate various types of internationally acceptable Islamic banking
financing patterns or schemes.
Furthermore, the researchers found countries that focus on the development of the
Sharia accounting standard sector, it can be seen from the number of studies that majority
found that Malaysia and the United Kingdom were countries that focused on developing the
Sharia accounting standard sector. This can be seen from the Malaysian Government having

established Bank Islam Malaysia Berhad in 1993 and Bank Muamalat Berhad in 1999. Years
later have seen expansion in the Malaysian industry where foreign Islamic banks such as
Kuwait Finance House, Al-Rajhi Banking & Investment Corporation and Qatar Islamic
Bank, joined the market and domestic banks established Islamic subsidiaries such as Islamic
bank RHB and Islamic bank Hong Leong. Currently, IFIs are not only competing with
conventional banks in Muslim countries but this industry has expanded to Western countries
such as the United States, Britain and Australia (Haron and Wan Azmi, 2008). The history
of the development of accounting standards in the UK can be divided into several stages;
First, the transformation period during the 18th - 19th century; Second, the formation of the
first accounting profession and its subsequent development (1853-1855); Third,
Convergence to IFRS (2005).
CONCLUSIONS
The study was conducted to determine the development of research on Shariah
accounting standards in Islamic economics and finance research during the period 2010 to
2021. A total of 78 documents used in this study indicate that research with the theme of
Shariah accounting standards has increased every year. The writer who often conducts
research using Shariah accounting standards, namely Hussainey K, has consistently
researched this theme during his research. While the keywords that are often used in TSR
research are Islamic, accounting, banks and financial. So that in its development research on
the Shariah accounting standard model is growing and cannot be separated from research on
Islamic economics and finance. Therefore, this research with the theme of Shariah
accounting standard needs to be developed considering the limited research that discusses
the theme of Shariah accounting standard extensively in Islamic economics and finance
research.
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Factors Affecting The Quality Of Company Earnings

LQ45 On IDX 2015-2020 Period
1
Nihmarulloh Aji Prabowo, 2Caecilia Widi Pratiwi , 3Ary Natalina
1,2,3
Jl. Margonda Raya No. 100, Kode Pos:16424, Pondok Cina, Depok, Jawa Barat
prabowoaji846@gmail.com, widi@staff.gunadarma.ac.id, arynatalina71@gmail.com
Abstract
Earnings quality is an indicator of the quality of financial information. The high quality of financial
information comes from the high quality of financial reporting. Earnings quality can be affected by
several factors including institutional ownership, investment opportunity set, accounting
conservatism, and firm size. The purpose of this study was to analyze the effect of institutional
ownership, investment opportunity set, accounting conservatism, and firm size on earnings quality.
Methods of data analysis using multiple linear regression analysis test. The data used in this study
uses the LQ45 index list for the 2015-2020 period, and 12 samples have been collected. The sampling
technique used was purposive sampling technique. The test tool used is SPSS version 26 application
software. The results show that partially institutional ownership, accounting conservatism, and firm
size affect earnings quality, but the investment opportunity set variable has no effect on earnings
quality.
Keywords: Investment Opportunity Set, Institutional Ownership, Accounting Conservatism,

Earnings Quality, Firm Size.
JEL Code: E,66, M14, Q56,
INTRODUCTION
Business developments and the enactment of the Industrial Revolution 4.0 have a broad impact
on company competition in earning profits. An ineffective company management system will have
a bad impact on the quality of the company's financial statements. The poor quality of financial
reports can be found from the misstatement of financial statements that are cases of fraud, for
example in the case of PT.XX in a net profit report of US$ 809,846 (Rp 11.49 billion) where the
company should be at a loss, and has an impact on investors (Banjarnahor) , 2019). Profit is used to
estimate the success or failure of a business to achieve the company's operating goals. Good earnings
quality refers to the income that is best reported at this time, and can predict the company's
performance in the future (Indrarini, 2019). Quality earnings reflect the absence of reporting of fraud
or data in the financial statements by the management, or the absence of earnings management.
Earnings management is an attempt to alter, hide and delay financial information. Fisher and
Rosenzweig (2013: 43) explain that earnings management are managers' actions to increase
(decrease) current period profits from a company they manage without causing an increase or
decrease in the company's long-term economic profits. The increase in quality earnings is also
supported by the existence of a corporate governance mechanism that relates to institutional parties
as supervision of company performance. Good company performance will produce a quality profit
value in the financial statements. Hadi and Andayani (2014) explain that the mechanism of good
corporate governance is directed at ensuring and supervising the system in an organization and is
expected to control agency value so that the role of management does not interfere with the value of
quality earnings. institutional investors are considered capable of being an effective supervisory
mechanism in every decision taken by the company's management. Large institutional ownership has
the ability to closely monitor earnings management, so that the profits presented in financial reports
are of high quality (Rusdiyanto, Susetyorini, & Elan, 2019).
In addition, the quality of earnings is also influenced by the set of investment opportunities
here in after referred to as IOS. IOS will also grow a quality level of profit so that investors are sure
to invest in companies every period. IOS is an investment opportunity made by investors to seek
profits in the form of profits as well as dividends and capital gains in the company to grow in the
52 Prabowo, Pratiwi, Natalina

future. IOS is used as the basis for determining the classification of investment value to measure the
value of profits in the company in the future. The lower the level of investment opportunity, the lower
the return and the quality of the company's earnings, so that the profits of the company are of low
quality. In this study, IOS uses a market to book value of equity ratio (mbve) proxy. The MBVE
proxy in measuring the value of earnings is still quite low due to the determination of investment
opportunities by investors in the capital market which is still less effective in investing so that the
profit value becomes less qualified in the company (Kurniawan et al., 2020).
The variety of prudence of expert accountants, especially internal and external auditors in
making financial statements, is very necessary for companies to be careful when making profit values
in income statements and other financial data that are publishing financial statements on the
Indonesian stock exchange and financial services authorities, so that large companies can implement
good corporate financial performance. Accounting conservatism is one of the principles used in
accounting, and is seen more as a guideline to be followed in extraordinary situations, and not as a
general rule to be applied in all situations of the company in generating real profit values in the
income statement in the financial statements. Conservatism calculation uses Givoly and Hayn model
proxies to assess high quality earnings with accounting conservatism diversity. The existence of
accounting conservatism in a company is more effective where conservatism will protect investors
from mis-analyzing the company's profit information, in order to avoid investing mistakes
(Kurniawan et al., 2020).
Company size is the company's ability to manage its business by looking at total assets, how
many employees are employed, and how much income the company earns in one accounting period
(Hasan & Gusnardi, 2018). The larger the size of the company is directly proportional to the quality
of earnings. Companies that have large total assets, the quality of their earnings will also be higher,
because large companies tend not to manipulate earnings (Rahmawati, 2019).
The LQ345 index list is a list of companies containing 45 companies with the most liquid
shares on the Indonesia Stock Exchange. With a high level of liquidity, companies included in LQ45
are bona fide companies, and are known as bluechip stocks (Gumanti, 2011). In this study,
manufacturing companies that are included in LQ45 shares, 2015-2020 will be used.
LITERATURE REVIEW
Based on the existing research framework, this research is derived into a hypothesis that
contains related research and the basic theories below:
The Effect of Institutional Ownership on Earnings Quality

In theory, when the agency explains that one or more people (principal) costs or more agencies
to provide a service, and then delegates authority in the agency in making decisions to agents, while
the theory explains that stakeholders who have dependents on the company who initially focused on
economic indicators, then was responsible for financial reports. Signal theory also explains that
investment activities are associated with positive signals from company shares that can provide
opportunities for investors to invest their capital so that it can be done easily. knowing all types of
profits and company performance with high-quality profit levels. Institutional ownership is
considered to have the ability to reduce the actions of corporate management who are selfish and try
to carry out earnings management actions by increasing intense supervision within the company.
Institutional parties as the highest shareholders in large companies have the ability to intervene in
management performance in such a way. High institutional share ownership can have an influence
on the process of preparing financial statements so that the quality of earnings has a responsive power
that can give a positive reaction to other interested parties such as local investors and capital market
players. The research results obtained by the researchers in this discussion partially explain
ownership. Institutional ownership affects earnings quality in line with research conducted by
researchers Sillin, et al (2018) which shows that institutional ownership will have a significant effect
on earnings quality, and research conducted by researchers Indah Aurelia, et al (2020) which shows
that institutional ownership has a positive and negative effect on earnings quality. significant to
earnings quality. Based on the discussion above, the hypothesis test obtained is as follows:
Ha1: Institutional Ownership Affects Earnings Quality
Prabowo, Pratiwi, Natalina 53

Effect of Investment Opportunity Set on Earning Quality

This theory explains that this theory basically concerns financial reporting activities that are
used by companies to provide positive and negative signals in investment opportunities to
shareholders, investors, and stakeholders. The application of the theory can be seen with the positive
application that companies that have high IOS are also assessed by investors, so investors will be
interested in investing in the hope of obtaining greater returns in the future. The application of signal
theory can be seen from the application that investment opportunities in large and medium-sized
companies have not yet implemented the investment opportunities needed by investors and issuers
and investment opportunities are still low due to several factors, namely investment knowledge by
investors is still minimal about stocks. good and quality companies, unstable economic conditions,
company conditions in the financial statements are still well reported, companies are listed on the
IDX, investors and other company shareholders are only after a profit, namely capital gains and
dividends, investors are only after profit value qualified to invest in shares, the company is also less
well known by the public and other investors. The results obtained by the researchers in this
discussion partially explain that the investment opportunity set has no effect on earnings quality in
line with research conducted by researchers Elan Kurniawan and Siti Nur Aisyah (2020) explaining
that the investment opportunity set has no significant effect on earnings quality, and research that
conducted by researcher Erikson Simamora (2014) explains that the Investment Opportunity Set does
not have a significant effect on earnings quality. Based on the discussion above, the hypothesis test
obtained is as follows:
Ho2: Set of Investment Opportunities Has No Effect on Earnings Quality
The Effect of Conservatism on Earnings Quality

In theory, it explains that the signal theory has the concept of caution by accountants and
company leaders in the accuracy and supervision of management in financial information and
company business risks that will be given to investors who use financial statements, so that investors
are not wrong in handling company profit information. The application of the theory can be seen by
the application that the existence of accounting conservatism in a company will be more effective
and efficient. Variety of Prudence in recording and recording in the financial statements presented
by the company's management in improving the company's performance from quality earnings
assessments with financial standards and operational standards made by large companies.
Accounting conservatism is a factor that affects the quality of earnings in improving the company's
performance and financial performance of the big company. The results obtained by the variables in
this discussion partially explain that accounting conservatism affects earnings quality in line with
research conducted by researchers Sri Ayem and Elisabeth Elen Lori (2020) explaining that
accounting conservatism has a significant effect on earnings quality, and research conducted by
researchers Elan Kurniawan and Siti Nur Aisah (2020) explain that accounting conservatism has a
significant effect on earnings quality. Based on the results of the analysis of the discussion above,
the hypothesis test is as follows:
Ha3 : Accounting Conservatism Affects Earnings Quality
The Effect of Firm Size on Earnings Quality

The agency theory explains that agency theory has a contractual relationship in decision
making between the principal (the owner) and another person (the agent). While signal theory and
stakeholders are interconnected in monitoring and measuring large companies that have good levels
of company assets in providing high-quality profit value information in financial statements, and
stakeholders using financial statements by looking at quality earnings information. The application
of agency theory, signals and stakeholders can be seen with the use of large companies that also have
good profit values, so that investors trust large companies more than they expect to earn profits.
Investors have confidence in large companies, because large companies are considered to be able to
always improve company performance by improving the quality of their earnings. A large company
with a high total asset size must be careful about the actions of the company's management in carrying
out the company in presenting financial reports and presenting high-quality profits that are used in
analyzing the company's performance by other financial parties and getting company profits every
year in the form of dividends and capital. gain by the investors. Large companies with high amounts

of assets can pay all types of corporate debt on time and all lending activities with others. The results
obtained in this discussion partially explain the effect of company size on earnings quality in line
with research conducted by researchers Halimatus Sadiah and Maswar Patuh Priyadi (2015)
explaining that company size has a significant effect on earnings quality, and research conducted by
researcher Syawaluddin. , et al (2019) explain that company size affects earnings quality. Based on
the results of the analysis of the discussion above, the hypothesis test is as follows:
Ha4: Firm Size Affects Earnings Quality
RESEARCH METHOD
Quantitative research methods are systematic scientific research on parts and phenomena and
their relationships. Quantitative methods are very important by the deductive hypothetical paradigm
which is an approach that starts with the theory of how variables work and creates a hypothesis that
can be tested (Sugiyono, 2017). The data used in this study is secondary data. Secondary data is data
obtained or collected from various existing sources (Rinaldi & Mujianto, 2017). Secondary data
based on time collection using time series data. Time series data is data collected from time to time
on one object with the aim of describing its development. Secondary data sources can be obtained
from various sources such as e-book references, reference books, audited consolidated financial
statements and annual (annual) financial report) from LQ45 companies during the 2015-2020 period
on the IDX company website, a list of LQ45 company stock indexes, national and international
journals in related research. Non-probability sampling is a sampling technique where each member
of the population does not have the same opportunity or opportunity as the research sample (Syafani
& Harahap, 2019). The sampling technique in this study used purposive sampling method. Purposive
sampling method is a sample selection technique based on certain criteria with the aim of providing
maximum information. This technique is carried out if the population is too large and far apart, and
there are several considerations (Bahri, 2018).
Quantitative Data Analysis Techniques
The test data analysis technique in this study is multiple linear regression analysis. Multiple
linear regression analysis was used to examine the effect of institutional ownership, investment
opportunity set, accounting conservatism, and firm size on earnings quality in LQ45 firms during the
2015-2020 observation period. So first it must be tested in SPSS by looking at the classical
assumption test to ensure whether the multiple regression model used meets the multiple linear
regression criteria or there are no problems in the normality, multicollinearity, autocorrelation, and
heteroscedasticity tests, and using statistical tests that are used to see the results of calculating values.
the company is low and high or average, hypothesis testing using partial test (t-test), simultaneous
test (F-test), coefficient of determination test, and correlation coefficient test

Overview of Research Objects
The object of this research is a company listed on the Indonesia Stock Exchange (IDX) and
included in the LQ45 Index list for the period 2015 to 2020. Sampling using the purposive sampling
method obtained 12 companies that met the criteria in the sample selection.
Descriptive Statistical Analysis

Statistics are used to view the description and description of a data seen from the maximum,
minimum, average (mean), and standard deviation. The results of secondary data collection regarding
institutional ownership, regulating investment opportunities, accounting conservatism, company
size, and profits in LQ45 companies that publish annual financial statements and consolidated
financial statements for the period 2015 to 2020.

Table 1. Descriptive Statistical Analysis
(Source: SPSS Researcher Descriptive Statistical Data Processing Version 26, 2021)
Classical Assumption Test

Normality Test
Figure 2. Normality Test (P-P Plot)

(Source: Data Processing of P-P Normality Test Results Srandardized Residual Regression
Plot SPSS Version 26, 2021)
Figure 2. above in the normality test using the normal graph method P-P Plots Of Regression
Standardized Residual that the points spread around the line and follow the diagonal line sticking
together, which means the residual value is normally distributed.
Multicollinearity Test
Table 2. Multicollinearity Test (Tolerance and VIF Values)
(Source: Multilinearity Test Result Data Processing (Tolerance and VIF Value)
SPSS Version 26, 2021)

Based on table 2. above, the multicollinearity test research shows that the Institutional
Ownership variable shows a tolerance value of 0.767 > 0.10 and a VIF of 1.304 < 10, the Investment
Opportunity Set shows a tolerance value of 0.840 > 0.10 and a VIF of 1.190 < 10, Conservatism
Accounting shows a tolerance value of 0.827 > 0.10, and a VIF of 1.209 < 10, and Company Size
shows a tolerance value of 0.693 > 0.10 and a VIF of 1.209 < 10 in this test there are no symptoms
of multicollinearity in this study.
Autocorrelation Test
Table 3. Autocorrelation Test (Durbin Watson Test)
(Source: Results of Autocorrelation Test Data Processing (Durbin Watson Test)

Based on Table 3. above, the Durbin Watson value (DW count) is 1,243. The criteria that have
been determined, then the Criterion formula -2 DW 2 = -2 1.243 2, so it can be ascertained that there
is no autocorrelation test.
Heteroscedasticity Test
Figure3. Heteroscedasticity Test (Spread Plot)

(Source: Heteroscedasticity Test Results Data Processing (Scatter Plot Test)
Based on Figure 3. the scatter plot test above, it can be seen that the points spread randomly,
do not form a certain or irregular pattern and the points also spread above and below the number 0
on the Y axis. Heteroscedasticity.


Table 4. Coefficient of Determination Test (Adjusted R Square)
(Source: SPSS Determination Coefficient Test Results Data Processing Version 26, 2021)
Based on table 4. the results of the coefficient of determination test (𝐴𝑑𝑗𝑢𝑠𝑡𝑒𝑑 2), the amount
of the adjusted value (adjusted R square) in the multiple regression analysis model of this study was
obtained at 0.403. This test is used as a percentage of 0.403 x 100% = 40.3% earnings quality
variables can be explained by the independent variables are institutional ownership, investment
opportunity set, accounting conservatism, and firm size. While the remaining 0.597 x 100% = 59.7%
is influenced by other variables that are not included in this study.
Correlation Coefficient Test

Table 5. Correlation Coefficient Test (R)
(Source: Data Processing of SPSS Correlation Coefficient Test Results Version 26, 2021)
Based on table 5. Correlation coefficient test results (R), the adjusted value (Multiple
Correlation R) in the multiple regression analysis model of this study was obtained at 0.661. This
test is used as a percentage of 0.661 x 100% = 66.1% has a close relationship between institutional
ownership, investment opportunity set, accounting conservatism and firm size on earnings quality.
While the remaining 0.339 x 100% = 33.9% is influenced by a close relationship with other variables,
and is not included in this study.
Simultaneous Test (F Test)

Table 6. Simultaneous Test (F Test)
(Source: Simultaneous Test Results Data Processing (F Test) Version 26, 2021).

Based on table 6. the simultaneous results show the test value >𝑈𝑗𝑖 = 12,984 > 2,510 and < =
0.000 < 0.05 means that institutional ownership, investment opportunity set, accounting
conservatism, and firm size simultaneously affect earnings quality. The results of the research
analysis are in line with research conducted by (Sadiah, 2015), (Syawaluddin et al., 2019), (Ayu et
al., 2020), (Aurelia et al., 2020), (Ayem & Lori, 2020), (Kurniawan1 et al., 2020) and (W. Pratiwi,
2021).
Table 7. Multiple Linear Regression Analysis
(Source: Data Processing Results of SPSS Multiple Linear Regression Analysis

Version 26, 2021)
From the results of multiple linear regression analysis in table 8., the regression equation is made as
follows:
KL = -12,017 + 0,019 KI + 0,039 IOS + 2,656 KNSV AKUN + 0,365 UKP + ε
Partial Test Hypothesis (t Test)

The Result of Hypothesis Testing 1: Institutional Ownership Affects Earnings Quality.
The results showed that the value test > value test = 2.117 > 1.996 and the value < value =
0.038 < 0.05, then 1 was rejected and H𝑎1 was accepted, meaning that institutional ownership had a
partial effect on earnings quality. Institutional ownership is the ownership of company shares owned
by the government, insurance companies, foreign investors, and banks in an LQ45 company. The
existence of a high institutional share ownership, the supervision carried out on the company will
increase so that the company will generate quality profits. Institutional ownership is one tool that can
be used to reduce agency conflict. Institutional investors who already have shares in the LQ45
company show a positive signal that is informed to other institutional investors that there is financial
performance in a good financial report and presents high-quality earnings in the LQ45 company's
financial system. Other institutional investors who have received positive signal information on
financial performance and high-quality earnings in the company's financial system will immediately
invest in shares and get profits from investment returns in the form of dividends and capital gains in
LQ45 companies. The results of this research analysis are in line with research conducted by (Silin
et al., 2020), (Aurelia et al., 2020), (Rosiana Dewi et al., 2021), and (W. Pratiwi, 2021). While the
analysis of research results is not in line with research conducted by (Murniati et al., 2018), and
(Rahmawati, 2019).
The Result of Hypothesis Test 2: The Investment Opportunity Set Has No Effect on Earnings
Quality.
The results of this study indicate that the value test> value test = 1.250 <1.996 and value>
value = 0.216> 0.005 then 2 is accepted and H𝑎2 is rejected, meaning that the investment opportunity
set does not partially affect earnings quality. Therefore, the set of investment opportunities does not

become the center of attention of investors in making investment decisions in the company, at the
same time investors do not really consider the value of the company's IOS in making decisions to
invest in the capital market, but pay more attention to the value of quality earnings in the company
in the period concerned. Investors who are motivated in their investment are not to get long-term
profits but short-term profits. If the profit is not of good quality, it will have a bad impact on investors
in making investment decisions. The higher the IOS value, the company's management will increase
the value of discretionary accruals which will cause a decrease in earnings quality. By reducing the
number of purchases and sales of shares in the capital market in a security, mutual funds and others,
this can lead to reduced capital entering the company. Then the less efficient capital cannot be used
in the company's operational activities, it can cause the profit to be not qualified. The results of the
research analysis are in line with research conducted by (Murniati et al., 2018), (Abbas et al., 2020),
and (Kurniawan1 et al., 2020). While the analysis of research results is not in line with research
conducted by (Sadiah & Priyadi, 2015), (Agustina et al., 2017), (Zubaidah & Nasrizal, 2018), (Ayem
& Lori, 2020), and (Devita Sari, 2020 ).
The Result of Hypothesis Test 3: Accounting Conservatism Affects Earnings Quality.

The results of this study indicate that the test value > test value = 5,346 > 1,996 and the value
< value = 0.000 < 0.05 then 3 is partially rejected and H𝑎3 is accepted in accounting conservatism
that has a proportional effect on earnings quality. Accounting conservatism is a precautionary
principle in recording and presentation of financial statements, namely so that the company
immediately recognizes quality assets and profits, but as soon as possible recognizes losses and debts
that are likely to occur. Accounting conservatism is considered as the owner of the company as being
able to increase information asymmetry and produce higher quality financial reports, because this
principle can prevent companies from increasing profits so that profits and total assets displayed in
financial statements are not greater. The profit expected by investors, the general public, issuers, and
stakeholders in the financial statements is quality earnings without any earnings management
practices. Accounting conservatism applied in LQ45 companies can play a role in reducing or
minimizing agency conflicts and limiting agency conflicts opportunistic actions taken by company
management. If the LQ45 company has good earnings quality without any adjustments from the
company's management, then the profit is a positive signal that investors will respond well. The
signal becomes good news that can reduce information asymmetry and agency conflict. Large
companies in LQ45 apply the principle of accounting conservatism in maintaining earnings in
financial statements so that they will continue to grow and have quality in the future, which will
reflect the actual performance of the company. The results of the research analysis are in line with
research conducted by (Yudawan Putra et al., 2016), (Zubaidah & Nasrizal, 2018), (Kurniawan &
Suryaningsih, 2019), (Kurniawan1 et al., 2020), and (Ayem & Lori, 2020). While the analysis of the
results of this study is not in line with research conducted by (Delhosh & Sadeghi, 2017), (Murniati
et al., 2018), and (W. Pratiwi, 2021).
The Result of Hypothesis Test 4: Firm Size Affects Earnings Quality.

The results of this study indicate that the test value > test value = 6,103 > 1,996 and the value
< value = 0.000 < 0.05 then 4 is rejected and H𝑎4 is accepted, meaning that the size of the company
has a partial effect on earnings quality. Company size is a categorized company Large sizes will
present financial reports that contain quality profit data in financial data. The size of the company is
related to the quality of earnings, the greater the effort to improve financial performance. In addition,
large LQ45 companies can also affect market response and are usually paid more attention by
investors, other issuers, financial institutions, the general public, and other stakeholders so that
companies must be careful in reporting financial statements, so as not to pose a risk in reporting
conditions. its financial performance. Companies with large agency costs have good relations with
other companies, which can provide advantages compared to other small companies. Large
companies that have a number of quality assets, revenues, and profits that bring positive signals for
the company for investors, other issuers, the general public, and other stakeholders to invest their
capital by investing in LQ45 companies. LQ45 companies with large total assets have a greater
opportunity to optimize all existing assets in the company and reduce borrowing costs from other
companies in order to carry out business activities optimally and comprehensively. The results of

this research analysis are in line with research conducted by (Sadiah & Priyadi, 2015), (Wicaksono,
2015), (Tambun et al., 2017), (Syawaluddin et al., 2019), (Rahmawati & Retnani, 2019), and (Ardi,
2020). Meanwhile, the analysis of research results is not in line with research conducted by
(Kusmuriyanto & Agustina, 2014), (L.S.W.I.R.D. Pratiwi, 2016), (W. Pratiwi, 2021), and (Rosiana
Dewi et al., 2021).
CONCLUSION
Based on the discussion in this study, it can be concluded as follows:
1. Partially the variables of Institutional Ownership, Accounting Conservatism and Firm Size
Affect Earnings Quality. While the Investment Opportunity Set variable has no effect on
Earnings Quality.
2. Simultaneously the variables of Institutional Ownership, Investment Opportunity Set,
Accounting Conservatism, and Firm Size Affect Earnings Quality.
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Forest Sustainability As The Impact Of Innovation And Business Strategy

Forest Management Units In Java Island, Indonesia
Rachmat Pudjo Hartanto

Fakultas Ekonomi dan Bisnis Universitas Padjadjaran
Jl. Dipati Ukur No.35, Kota Bandung, Jawa Barat 40132, Jawa Barat
erpeha07@gmail.com
Abstract
Management of forest resources at the upstream level in Java Island is the longest management in
Indonesia. Innovation and business strategies are needed as a way of adapting to the business
environment, limited forest area, economic growth, and population in Java. Sustainability of forest
resources is important for global climate change solutions and business sustainability. The
relationship between innovation and business strategy on the sustainability of forest resources in
Forest Management Unit/Kesatuan Pemangkuan Hutan (FMU/KPH) in Java has never been studied
before. This study uses a quantitative method through a survey of all FMU leaders, with verification
analysis and hypothesis testing on problems. The analysis is carried out in the form of variables of
the influence of independent innovation and business strategy on the dependent variable of forest
resource sustainability. Sustainable forest management practices in Java have been recognized
through certification with mandatory (national) and voluntary (international) schemes. The results
showed that innovation had no significant effect on the sustainability of forest resources at the
upstream level, while the strategy had a significant effect on the sustainability of forest resources.
Simultaneously, innovation and business strategy have a significant effect on the sustainability of
forest resources in Java.
Keywords : forest, FMU, Java, innovation, sustainability.

JEL Codes: Q23, L14
INTRODUCTION
Forests are one of the most important terrestrial ecological systems because their ecosystem
functions and services affect people's welfare, biodiversity conservation, climate system regulation,
carbon sequestration and reduction of global warming (Prăvălie, 2018). Much forest management is
still unsustainable, especially in tropical and subtropical areas due to limited legislation, regulations
and incentives that prioritize sustainable forest management (FAO, 2021). This condition requires
adaptation from the manager as a solution for the sustainable use of forest products and resources.
The role in proactive climate change solutions is not only a corporate responsibility, but also
a business strategy for a potential competitive advantage (Porter and Reinhardt, 2007; Lash and
Wellington, 2007). However, adaptation to climate change in the forestry sector is still lacking
compared to mitigation, and in general it is still reactive (Keskitalo et al., 2015).
The decreasing ability of forest resources to meet the quantity of production of forest products;
environmental quality and conditions; biodiversity; supply of food, energy, air; increase the real
economic value of forest land; and factors preventing global climate change; be a challenge for the
responsible manager.
Forests have several interrelated functions. Economic function, as a producer of timber forest
products, non-timber forest products, and environmental services. FAO (2018) reports that in 2018,
global production and trade of all major wood-based products recorded the highest values in the
production and import of logs, sawn timber, wood-based panels, wood pulp, charcoal and pellets
since 1947.
The social functions of the forest are for aesthetics, existence, emotional attachment,
recreational values, moral and spiritual values, cultural values, job opportunities, subsistence needs
and health of people living around forests. In the forests of Java Island there are +6,807 surrounding
villages with a population of +45.4 million people or +30% of the total population of Java Island,
64 Hartanto
+60% work as farmers, average land ownership <0.50 hectares/family, and dominant included in the
category of poor people (Ministry of Environment and Forestry (KLHK), 2015). For formal workers,
countries with significant forest area (Brazil, United States, Russia, India, Japan, Germany,
Indonesia, Italy, Malaysia and China) only absorb +13.7 million formal workers or +0.4% of the total
workforce. work. However, the number of informal workers is still high, especially in developing
countries, possibly due to rampant logging (ILO, 2020).
For environmental functions, forests are important ecosystems in the water and oxygen cycle,
soil and water conservation, and biodiversity conservation. According to a United Nations report
(2019), the current global species extinction rate is very high compared to the average for the last 10
million years. In addition, there has been an almost 47% reduction in the area and condition of global
ecosystems from natural baseline estimates, and continues to decline by 4% every decade. In the
management of forest resources, the preservation of economic, social and environmental functions
is a top priority in dealing with deforestation that occurs almost globally.
The number of forestry companies still operating in Indonesia tends to decline. This decline
can indicate that the attractiveness of business in this sector is decreasing, which is presumably due
to the decreasing potential of forest resources. The number of companies holding business permits
for utilization of natural timber forest products/Ijin Usaha Pemanfaatan Hasil Hutan Kayu-Hutan
Alam (IUPHHK-HA) or forest concession rights/Hak Pengusahaan Hutan (HPH) in Indonesia in
2009 amounted to 304 companies and became 274 companies in 2019 (BPS, 2019). As for companies
holding business permits for utilization of timber forest products from plantation forests/Ijin Usaha
Pemanfaatan Hasil Hutan Kayu-Hutan Tanaman (IUPHHK-HT) or plantation forests/Hutan
Tanaman Industri (HTI) did not increase significantly, in 2009 there were 206 companies, and in
2019 there were 303 companies (BPS, 2019).
The contribution of the Forestry sector to the Gross Domestic Product (GDP) in Indonesia in
the 70s to 90s reached +2.7%. In the 2000s the contribution of the Forestry sector to GDP tended to
decline, in 2011 the contribution to GDP was +0.7%, and to +0.6% in 2019 despite increasing in
value (BPS, 2019). Meanwhile, Indonesia's competitiveness in the forestry sector was ranked third
out of 22 exporters and importers of the wood processing industry in 2017. The indicators are: (1).
Market share (market share); (2). Trade competitiveness (trade competition); (3). comparative
advantage (revealed competitive advantage); (4). Relative trading advantage (Huyen Vu, 2019).
The percentage of forest area in Java Island is +23.57% of the land area, or +3.040 million
hectares with a land cover of +2.8 million hectares. Meanwhile, these resources must support a
population of +151.6 million people or almost 60% of the total population of Indonesia (BPS, 2019).
The problem of deforestation is a threat to the sustainability of forest resources, generally due
to the conversion of forest areas to land for purposes other than the forestry sector, as well as the
development of urban and agricultural infrastructure. The rapid economic and population growth on
the island of Java increases the need for land to fulfill it. The average deforestation in Java from 2013
to 2018 was +2,981 hectares/year (Ministry of Environment and Forestry/Kementerian Lingkungan
Hidup Kehutanan (KLHK), 2019).
Insecure control over concession areas, limited resources, conflict, limited access to capital,
unclear regulatory authorities, and corruption have stimulated research and development that has led
to improved rural economies around the forest (Spilsbury, 2002).
Melo et al, (2017), stated that the potential of the forestry sector (economic, social and
environmental) is a business model based on the sustainable use of resources, with efficient processes
and activities, through a low-cost subcontracting model (cost leadership) and needs to be
strengthened from technical, economic, environmental and social aspects. There is a relationship
between a company's innovation response and business strategy, and there is a new type of
ambidexterity, namely market-driven exploitation that requires alignment of certain aspects between
business strategy and innovation in the pulp and paper industry (Onufrey and Bergek, 2021). Forestry
businesses contribute to community welfare and innovation, in line with the Sustainable
Development Goals (SDGs) (including tackling climate change and conservation of terrestrial
ecosystems), through local management (Macqueen et al., 2018).
Hartanto 65
LITERATURE REVIEW
Most of Java's forests have been deforested in previous eras, the remaining forests are mostly
in highlands or on steep slopes that cannot be used for agriculture (Higginbottom, 2019). Sustainable
forest management (SFM) systems, in the form of protocols and certifications, have developed
significantly in standardizing forest resource management practices globally (Kadam et al., 2021).
Pek et al., (2017) stated that business models as tools are an integral part of innovation and
successful business strategies for small-scale forest owners. Social innovation is needed for
sustainable development by internalizing environmental conservation and social values, including
exploration, cross-sector collaboration, changing boundaries, new business models and reshaping
modernity (Diepenmaat, 2020).
Through collaboration, the innovation process according to the results of important research
is carried out in the forestry sector (Strebova et al., 2019). Although Hansen et al., (2015), stated that
Forestry is a conservative and isolated field, limited in knowledge transfer, and limited in investment
for innovation.
Innovation is goods, services, and ideas that are considered new (Kotler, 2012), including the
development of new products and the development of new markets (Schubert and Tavasolli, 2019).
The source of innovation, change, and its symptoms indicate the success of the opportunity, so it is
necessary to know and apply the principles of innovation to succeed (Drucker, 2006).
In overcoming complex social problems and meeting their needs, social innovations are
carried out which are new activities and services to maximize social values (Phills et al., 2008;
Mulgan et al., 2007). Most innovations are in the form of production processes or new methods to
reduce costs (Tushman and Nadler, 1986; Porter, 1990; Damanpour and Gopalakrishnan, 1998;
Roberts, 1999).
Within the Strategic Business Unit (SBU), the business portfolio strategy (Hofer and Schendel,
1978), is one of the most critical strategic issues. Thus, development strategies, growth strategies,
profit strategies, market concentration and asset reduction strategies, turnaround strategies, and
liquidation or divestment strategies are developed. The focus of the strategy is being able to compete
in a particular industry or product market segment.
Business strategy is an organization's competitiveness in the business environment according
to its industry (Parnell, 2011) so that organizations that are able to formulate and implement
appropriate innovation strategies between internal conditions and the business environment will be
able to increase competitiveness. Wheelen et al., (2015), stated that business strategies can be
competitive (according to Porter's competitive strategy), and/or cooperative in which the alliance
process increases specialization, and the ability of partner organizations or firms in large alliances
(Mowery et al., 1996) . The increasing need for a cooperative strategy is caused by the challenges:
(1). Global competition, to open up markets in other countries; and (2). Technology competition, to
take advantage of the latest technology in the information age. A more experienced management
team needs to be selected to support the success of this strategy (McGee et al., 1995).
As a sector that produces and uses renewable natural resources, forests and forestry industries
should have an important role in creating a green economy and increasing environmental
sustainability (Toppinen et al., 2014).
The aim of sustainable forest management is to maintain a balance between economically
viable conditions, both ecologically and socially acceptable (Salwasser et al., 1993). Forestry
business contributes to community welfare and innovation, which is in line with the Sustainable
Development Goals (SDGs), including tackling climate change and ecosystem conservation, through
local management (Macqueen et al., 2018).
Sustainable forest management is an effort to achieve a balance of economic, social and
environmental values of all forest types, this is contrary to the conventional view of forest
management which only focuses on productivity (Soler et al., 2021). The main objective of
conventional forest management is to obtain maximum productivity which refers to the harvesting
of a single tree species (Puettmann et al., 2015). Meanwhile, sustainable forest management (SFM),
which is a developing and dynamic concept, is to maintain and increase the economic, social and
environmental value of all types of forests, for the benefit of present and future generations (FAO,
2020). The concept of High Conservation Value Forest (HCVF) was developed by the FSC in 1999,
then adopted in other certification schemes (HCV Resource Network, 2013), as it aims to maintain,
66 Hartanto
enhance conservation values and functions that grow according to experience, and new knowledge.
Based on the literature above, the proposed models were developed as follows:
Innovation
Sustainable Forest
Resources
Business
Strategy
The proposed hypothesis :

Ha 1: Innovation affects sustainable forest resources
Ha 2: Business strategy affects sustainable forest resources
Ha 3: Innovation and business strategy simultaneously affect sustainable forest resources
RESEARCH METHOD
This research was conducted with a quantitative approach to data collection and analysis. The
unit of analysis is the entire Forest Management Unit (FMU) in Java Island as many as 57 (fifty
seven) units. The observation unit is the leader of the entire Forest Management Unit (FMU) until
2020, including interviews with selected sources. The population of this research is the entire Forest
Management Unit (FMU) operating in Java. The number of FMUs in each Province are: (1). Central
Java : 20 FMUs; (2). East Java : 23 FMUs; (3). West Java : 13 FMUs; and (4). Banten : 1 FMU.
Because the total FMU is only 57 units, the primary data collection using a questionnaire is carried
out on all members of the population (census).
The construct of innovation in this research are: 1). New production processes to reduce costs
(indicators: new activities in production that can reduce costs, new batches in production that can
reduce costs, and new flows of production that can reduce costs), 2). Significant changes for
commodities/products (indicators: substitute, adapt, modify, eliminate, put another use and reverse).
The cobstruct of business strategy are: 1). Competitive strategy (indicators: cost leadership,
differentiation, and cost focus), and 2). Cooperative strategy (indicators: collusion and strategic
alliances).
The constructs of forest resource sustainability are: 1). Forest benefits (indicators: fulfillment
of operational, social and environmental costs, optimization of local forest products, reduction of
waste and prevention of forest resource damage, economic strengthening of communities around
forests, maintenance of value of forest services and resources, and suitability of harvesting levels),
2). Environmental impacts (indicators: protection of rare, threatened and endangered species,
maintenance of ecological functions and values, protection of existing ecosystem representations,
protection of damage to soil, standing stands and water resources, handling of chemicals, non-organic
waste, and liquid waste, handling exotic species, handling biological control substances and
genetically modified organisms, and handling forest conversion), 3). Implementation of high
conservation value forest (HCFV) (indicators: identification of high conservation value forest area,
effectiveness of consultation on HCVF management plans, and monitoring of protection of high
conservation value forest area), 3), Plantation forest implementation (indicators: understanding of
plantation forest objectives, composition of diversity, suitability of forest plant species, restoration
of natural forest, management of plant pests and diseases, and monitoring of environmental and
social impacts of plantation forests).
Data analysis was carried out using the SEM variant procedure using SEM PLS. SEM offers
path analytic capabilities with latent variables (Chin and Newsted, 1998). The measurement model
is carried out to produce an assessment of the validity and discriminant validity, while the structural
model is a model that describes the hypothesized relationships. The PLS method is more robust so
that the model parameters do not change much when a new sample is taken from the total population.
Hartanto 67
According to Chin and Newsted (1998), PLS can even be used for data with a small amount even up
to 30 (thirty) samples. Meanwhile, the simultaneous test in this study was carried out through the F
test with SPSS.

Convergent validity test using Average Variance Extracted (AVE), shows the ability of each
indicator to explain latent variables quite well. The AVE value provides evidence of convergent
validity (Fornell and Larcker, 1981) where the AVE threshold value is >0.5 (Hair et al., 2006).
Table 1. AVE, and CR (Test Results)
Variable Cronbach's Alpha rho_A Variance Extracted
(AVE)
Innovation 0.902 0.907 0.671
Sustainable forest 0.894 0.897 0.613
resources
Business strategy 0.913 0.920 0.623
From the results of all the reliability tests above, in the form of Cronbach's Alpha, Composite
Reliability, and rho A values, all latent variables in this study are reliable. From the test results using
the SmartPLS version 3 application, the AVE value for each variable is > 0.5, so it is concluded that
the indicators that are maintained can measure each variable validly. The results of the discriminant
validity test based on the Fornell-Larcker criteria indicate a relationship between variables and other
variables and between variables and the variables themselves. The results of the Discriminant
Validity Test (Fornell-Larcker) show that each indicator in the variable itself is greater than the value
of each indicator which is the same for other variables. So it can be stated that the discriminant
validity has been confirmed and valid.
From the results of the evaluation using the SmartPLS version 3 application, the R2 value for
the variable of forest resource sustainability was 0.267. So that the endogenous variable of forest
resource sustainability can be explained by 26.7% by the exogenous variable of innovation and
exogenous variable of business strategy.
The results of the Q2 Predictive Relevance Evaluation (Predictive Sample Reuse or Q square)
with the blindfolds procedure have a good observation value. The results of the Standardized Root
Mean Square Residual (SRMR) test show a value of 0.085, which means that the Fit model and the
Normed Fit Index (NFI) are 0.735.
The results of the hypothesis test show that all the supported hypotheses are as follows:
Table 2. Original Samples, Sample Mean, TStat and P-Value (Test Results)
Variable influence Original Sample Std T P-Value
samples (0) Mean Statistics
Innovation sustainable 0,077 0,081 0.106 0,727 0.467
forest resources
Business strategy 0,464 0,480 0,095 4,886 0.000
sustainable forest resources
While the results of the F test with SPSS obtained a value greater than the F table so that there
is a simultaneous influence of innovation and business strategy on sustainable forest resources.
The results of this study indicate that innovation in the form of new production processes to
reduce costs and significant changes in commodities/products can be carried out in the forestry
industry sector, especially at the upstream level. Internal factors such as organization, human
resources, corporate culture, corporate strategy, and company organizational structure as well as
external factors such as market, level of competition, and business environment can be factors that
trigger the implementation of forest resource management innovations. Including Government
support in reform, sustainable forest management, and increasing competitiveness will affect the
progress of the industrial sector. Simultaneously, innovation and business strategy have a significant
68 Hartanto
effect on the sustainability of forest resources at FMU in Java, so a business strategy that includes
innovative practices is important.
To encourage innovation in the forestry industry sector, a more systematic cross-sectoral
interaction is needed between the institutional system of the forestry sector and other sectors.
Consistency in implementing regulations, as well as internal technical and financial capabilities in
the long-term management of FMUs are important for business continuity and development and
forest resource sustainability.
The decline in forest cover area, the very small real economic value of forest areas, and high
population growth require innovation and the right business strategy by FMU in Java. Managers must
be inclusive in business through innovative and systemic solutions, as well as the development of
sustainable shared value creation in the value chain, including with stakeholders and communities
around forests. This condition requires innovation and business strategies in managing forest
resources in order to be sustainable
The business strategy in the form of developing a cooperative and competitive strategy for
each FMU in Java has been adapted to the existing physical conditions, site and social environment.
The development of business strategies may differ in each FMU according to the existing business
environment.
Preservation of forest resources in the form of consistent application of the principles of
sustainable forest resource management, namely: Maintaining forest benefits, reducing
environmental impacts, protecting forests with high conservation value (HCVF); and implementation
of plantation forest should be carried out by FMUs in Java.
Adaptation to the dynamics and developments of the business environment in the forestry
sector is important through innovation and business strategies according to recognized sustainability
standards. With the above conditions, in the management of Java's forests, innovation and business
strategies are needed in the preservation of forest resources.
Meanwhile, the business strategy has a significant effect on the sustainability of forest
resources, because the cooperative and competitive strategy was adopted by FMU. Sustainable forest
management is a competitive advantage of FMUs. Hart et al. (2000) stated that sustainable forest
management practices need to be accommodated in the main strategy, a business model based on
sustainable resource use, requires a process cost leadership strategy and activity efficiency (Melo et
al., 2017), adaptation and contextual approaches are needed to resolve conflicts between
implementation of sustainable forest management and application of economic standards (Song,
2004).
The dominant business strategy carried out by FMUs is a cooperative strategy because the
management of forest resources in Java requires cooperation from stakeholders to realize long-term
plans, especially for the production of timber forest products and non-timber forest products. Efforts
to improve innovation, business strategies, and forest resource sustainability have been carried out
by FMUs, through certification of sustainable forest resource management with mandatory (national
standards) and voluntary (international standards) schemes.
The cooperative strategy for managing forest resources in Java is characterized by
relationships and interactions involving 3 (three) main elements of the network environment, namely:
Network members, resources, and activities (in a network perspective), with partners. The
cooperative relationship with partners is carried out through certain activities, such as sharing
knowledge, resources and other capabilities in accordance with their authority.
From the business ecosystem perspective, it is hoped that increased cooperation and
coordination between ecosystem members, government, and industry can increase productivity,
efficiency, and innovation. In addition, mapping, classification, and identification of stakeholder
values in the Circular Economy (CE) needs to be carried out to provide a comprehensive view of the
business ecosystem, and integrate stakeholders in the business decision-making process (Bertassini
et al., 2021).
Simultaneously, innovation and business strategy have a significant effect on the sustainability
of forest resources. In Java, the sustainability of forest resources can be achieved, although the
outputs of product innovation, business processes and processes cannot be replaced. Previous studies
have stated that innovation in the forestry sector is mostly oriented towards additional forms of
innovation, and process innovation to reduce the cost of managing forest resources.
Hartanto 69
The business strategy has a significant effect on the sustainability of forest resources, through
the dominant cooperative strategy. One of the competitive strategies is carried out through
Sustainable Forest Management (SFM) certification. The forestry industry sector must have a
business model based on sustainable use of resources, so that the process of activities carried out
becomes more efficient and effective through strengthening technical, economic, environmental and
social aspects.
Sustainability is the main thing in forest management, from maintaining the supply of wood
as the main commodity, to other commercial forest products with the principle of sustainable yields,
and most importantly the preservation of forest ecosystems.
CONCLUSIONS AND SUGESTION

At FMUs in Java, innovation and business strategy simultaneously have a significant effect on
the sustainability of forest resources. Partially, innovation does not significantly affect the
sustainability of forest resources, because the development of new environmental
commodities/services has been carried out, but the main commodity products as the mainstay of
income sources have remained the same, for decades. So that there is still sustainability of the results
from the extraction of forest resources at FMU, even though product, process and business process
innovations have not had an impact. The main commodity of KPH studied was +66.67%, which was
wood forest products, the rest were non-timber forest products.
The dominant innovation is in the form of tree breeding but has not been able to replace
existing commodities. Other innovations such as social innovations in order to deal with the impact
of population growth around managed forests need to be developed. The negative interaction of the
community towards the forests managed by FMUs during the 1998 economic crisis subsided after
the joint community forest management/Pengelolaan Hutan Bersama Masyarakat (PHBM) system
was developed, even the government is currently developing the Social Forestry program.
The researcher limits the problem in this study to the industry under study, namely the forestry
sector, according to part A, division 01-03 with a description of agriculture, forestry and fisheries
where the business orientation of global forest resource management is currently shifting from
forestry and production to meet market needs, stakeholders. interests, and services; and the scope of
the research includes the management of forest resources at the upstream level located in Java, with
certain characteristics, as well as environmental and social conditions that have been discussed
previously. The unit of analysis in this study is FMUs in Java.
It is necessary to develop further research from this research related to social innovation,
Corporate Social Responsibility (CSR), community culture, regulations, market trends, and people's
welfare, especially in forest resource management. The results of this research are expected to
contribute to research on innovation, business strategy, and forest resource sustainability in the
upstream forestry industry sector.
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72 Hartanto
Analysis Of The Investment Effect (Sukuk, PMDN, And PMA) And

Inflation Towards Economic Growth In Indonesia On Pre And During
Covid-19 Pandemic In The Islamic Economic Perspective
1
Indah Royani, 2Peni Sawitri
1,2
1
indahroy123@gmail.com, 2peni@staff.gunadarma.ac.id
Abstract
Economic growth is a long-term economic problem in a country. In Islam, economic growth is an

overall activities in the production sector which is closely related to distribution justice. Economic
growth in Indonesia during 2015 to 2020 tends to fluctuate with a positive growth, even though in
2020 it began to decline due to the global economic crisis, that is the COVID-19 pandemic. This
research was conducted to analyze the investment effect (sukuk, PMDN, and PMA) and inflation
towards economic growth in Indonesia pre and during COVID-19 pandemic in an Islamic economic
perspective. This study uses secondary data with time series taken in the monthly from 2015 to 2021
through the relevant official institutions consisting of the Statistics Indonesia (BPS), the Financial
Services Authority (OJK) and Bank Indonesia (BI) and using the multiple linear regression method
assisted by the Microsoft Excel 2010 program and SPSS version 24 software. The results of the study
showed that the sukuk and inflation variables in pre-COVID-19 pandemic affected economic growth
in Indonesia. Whereas, during COVID-19 pandemic, the sukuk and inflation variables did not affect
economic growth significantly in Indonesia. PMDN and PMA variables pre and during COVID-19
pandemic affect economic growth in Indonesia.
Keywords : Economic Growth, Inflation, Investment, PMA, PMDN, Sukuk

JEL Codes : D25, E31, F43
INTRODUCTION
One of a country's economic problems in the long term is economic growth. This economic
growth will indicate how much the efficiency of the existing resources in the economy to make goods
and services in a territory (Rahardja, 2008). There is an impact of policy of economic can be a
benchmark in measuring the success of economic development. This means that the role of the
government is very significant in planning the economic growth in gathering funds for investment
needs so that economic growth can rise (Setianingsih, 2020).The following is a graph of the rate of
economic growth in Indonesia 2015-2021:
Economic Growth in Indonesia

2015-2020
6,00
4,00
2,00
0,00
-2,00 2015 2016 2017 2018 2019 2020
-4,00
Graph 1 Economic Growth Rate In Indonesia 2015-2020
Source: Statistics Indonesia
Royani, Sawitri 73
Based on the graph 1, the data is obtained from the Statistics Indonesia (BPS) indicate that the
rate of economic growth in Indonesia counted from 2015 to 2020 fluctuated. Counted from 2015 to
2018, the data of economic growth in Indonesia indicates an excalation every year. However, there
was a drastic drop counted from 2019 to 2020.
Economic Growth in Indonesia

2020-2021
2,97
Quarterly I Quarterly II Quarterly III Quarterly IV Quarterly I

-0,74
2020 2020 2020 2020-2,19 2021
-3,49
-5,32
Graph 2 Economic Growth Rate In Indonesia 2020-2021

Source: Statistics Indonesia
If it is seen in graph 2 above, it indicates that the economy in Indonesia have a significant
contraction. In 2020 the second quarter, the rate of economic growth of Indonesia was at the lowest
base of -5.32. This can occur because of the Corona Virus Disease-2019 (COVID-
19) pandemic which has appeared since the early of 2020.
The COVID-19 pandemic that first appeared in Wuhan at the end of December 2019 spread
to several countries in Asia and shook the whole world (Junaedi & Salistia, 2020).This gives a
significant impact on global trade and investment. According to Koshle, et al (2020) who researched
the impact of the Corona virus on businesses in India, they found that the trade sector caused a loss
of no less than USD 348 million due to the economic slowdown and the consequences of the policies
set (Rosita, 2020). Many countries adopt a preventive measures by restricting all activities through
social distancing including in educational, economic and human mobility (Salim et al., 2020). In
Indonesia, the first COVID-19 case was discovered on March 2, 2020 and currently on July 30, 2021,
in the distribution map of COVID-19, there were 3,331,206 confirmed cases.
In the development of developing countries almost oftentimes confront troubles related to the lack
of available funds to support the development process. Allah SWT., has delivered His people to seek
sustenance as in the Quran Surah Al-Mulk verse 15
۟ ُ‫ُوا فِى َمنَا ِك ِب َها َو ُكل‬
ُ ‫وا مِ ن ِر أزقِِۦه ۖ َوإِلَ أي ِه ٱل ُّنش‬
‫ُور‬ ۟ ‫وًل فَٱ أمش‬ َ ‫ه َُو ٱلَّذِى َجعَ َل لَ ُك ُم أٱْل َ أر‬
‫ض ذَلُ ا‬
Meaning: " It is He who made the earth for you easy to explore, so explore in all directions
and eat some of His sustenance. And to Him you (return after) resurrected ." (Surat al-Mulk [67]:
15). In this verse has the meaning that Allah SWT always give us a way to get the sustenance and
seek the sustenance in all over the world while still adhering to the provisions of Islamic law
(Krismaranti, 2020).
In order to realize prosperity on earth, it will be closely related to economic activities. In the
perspective of Islamic economics, the appropriate and recommended economic activity is through
business and investment activities (Ardi, 2018). Together with the times development of the Islamic
economic system is also rising, this support people to carry out economic activities in accordance
with Islamic economic principles (Setianingsih, 2020). Sukuk is one of the factors that affect the
economic growth in the Islamic economic system. Sukuk is a financing new form that is developing
in line with the Islamic economy development (Setianingsih, 2020). Moreover, another source of
economic growth is investment. Investment is divided into two, namely Domestic Investment
(PMDN) and Foreign Investment (PMA). To achieve the economic growth, it can effort to maintain
stable development and rises an investment in a country (Setianingsih, 2020). In addition to
investment, inflation is one of the macroeconomic indicators can also affect economic
74 Royani, Sawitri
growth. Inflation is used to see or measure the stability of economy of a country. The high inflation
can have a negative impact on economic activity (Setianingsih, 2020).
LITERATURE REVIEW
Economic Growth
Economic growth is one of the macro-economic troubles in the long term (Hidayat, 2020). In
the Islamic perspective, economic growth is a comprehensive activity in the production that is closely
related to justice of distribution. Basically, Islamic economics perspective that economic growth is a
part of economic development. The continuous growth of the correct factors of production can
contribute to prosperity. In addition, in Islam prosperity can be maximized if the economic resources
can be allocated properly (Triyanto, 2018).
Investment
Investment is part of national income, which will affect the measurement of national
income. This will be carried out by opening new business sectors that will rise output and
employment opportunities, so as to improve the prosperity of people (Hidayat, 2020). Opinions about
the importance of investment in supporting the development of developing countries began with the
discovery of the growth model after World War II, namely in the 1950s and 1960s by several
development experts such as Rostow and Harrod-Domar. According to Rostow, any attempt to take
off requires the mobility of domestic and foreign savings with a view to creating sufficient investment
to accelerate economic growth (Sari et al., 2016). The level of investment has a positive relationship
with economic growth. Investment can be used by the government for capital development which
can later be realized into various projects to support development activities in a certain area (Adi &
Syahlina, 2020). The purpose of investment in an Islamic economic perspective is essentially to get
the advantages (greatest benefit for mankind) (Hidayat, 2020). Economic growth cannot be separated
from the role of economic actors, namely the government, the private sector and the community
(Patrimurti & Septiani, 2020).
1. Sukuk
In the DSN-MUI Fatwa Number 32/DSN-MUI/IX/2002 concerning Islamic bonds, it is stated
that "Islamic bonds are long-term securities based on Islamic principles issued by Issuers to
Islamic Bond holders which require the Issuer to pay income to Islamic Bond holders in the
form of profit sharing/margin/fee as well as repaying bond funds at maturity”.
2. Domestic Investment (PMDN)
In Law no. 25 of 2007 states that domestic investment is an investment activity to conduct
business in the territory of the Republic of Indonesia carried out by Indonesian citizen
individual, Indonesian business entities, the Republic of Indonesia, or the regions conducting
investment activities in the territory of the Republic of Indonesia (Setianingsih, 2020).
3. Foreign Investment (PMA)
In Law no. 25 of 2007 states that foreign investment is an investment activity to conduct
business in the territory of the Republic of Indonesia carried out by foreign citizen individual,
foreign business entities, and/or foreign governments conducting investment activities in the
territory of the Republic of Indonesia (Setianingsih, 2020).
Inflation
Inflation in general can be interpreted as a rate increase of prices for goods and services in
general and continuously for a certain time (Putri, 2019). Economic conditions can be overheated if
the inflation rate is high. This indicates that the economic condition have a demand for products that
exceeds its supply capacity. The high level of inflation will affect the reduction in the real income
level obtained by investors on their investment (Rofii; & Ardyan, 2017). There is a rise in the
inflation rate indicates an economic growth, but in the long term a high inflation rate will have a
negative impact. The high rate of inflation will cause the price of domestic goods to be more
expensive when compared to the price of imported goods (Putri, 2019). Meanwhile, in the
perspective of Islamic economics, inflation is classified into two, namely: (a) Natural inflation, is
inflation caused by scientific causes, where a person has no control over it (prevents). (b) Human
error inflation, is inflation caused by mistakes made by humans (Firdhaus, 2020).
Royani, Sawitri 75
RESEARCH METHOD
The type of research used in this paper is quantitative research. Quantitative research is a
research method used to measure data in the form of a numerical scale (numbers), then this research
will be analyzed statistically. While the type of data used in this study is secondary data with a time
series taken in the monthly time series from 2015 to 2021. This year's range is taken to look in the
long term (2015-2019) where in that year has not the COVID-19 pandemic occurred. While in 2020-
2021 the COVID-19 pandemic has occurred.
Sources of data used in this study are as follows:
1. Data on economic growth in billions of rupiah is obtained through the Official Gazette of
Statistics on the website of the Statistics Indonesia for the period 2015-2021
2. Corporate sukuk data obtained from Sharia Sukuk Statistics on the website of the Financial
Services Authority for the period 2015-2021
3. Data on domestic investment (PMDN) and investment foreign capital (PMA) in billions of
rupiah is obtained through Investment Realization on the website of the Statistics Indonesia for
the period 2015-2021
4. Inflation data in percent form is obtained through the website of Bank Indonesia for the period
2015-2021
The data analysis method used in this research is to use multiple linear regression
models. Regression analysis is a study that discusses the dependence of the dependent variable with
more than one independent variable. Regression analysis is commonly used for forecasting purposes
(Firdhaus, 2020). This classical assumption test is very important in terms of regression analysis
which consists of normality, autocorrelation, heteroscedasticity and multicollinearity. In addition,
the classical assumption test is used to complete the statistical test consisting of the t test and
determination.

Multiple Linear Regression Model Before the Pandemic
The following can be seen from the results of the multiple linear regression model test before
the COVID-19 pandemic using SPSS 24, the results obtained are:
GDP = 577402,344 + 0.416X1 + 8,487X2 + 25,773X3 + -3341,947X4 + ɛ
Statistical Test (t Test) Before the Pandemic

Table 1 t-Test Before The Pandemic
Model Unstandardized Coefficients Standardized t Sig
B Std. Error Coefficients
Beta
(Constant) 577402,344 7963,892 72,503 .000
Sukuk ,416 ,183 ,048 2,270 .027
PMDN 8,487 ,219 ,911 38,803 .000
PMA 25,773 2,858 ,052 9,018 .000
Inflasi -3341,947 354,399 -,077 -9,430 .000
Source: Outpus SPSS 24
Based on the table of t-test results before the pandemic COVID-19 above, it shows that the
sukuk, PMDN, PMA and the inflation variable has a significance effect on economic growth in
Indonesia.
Statistical Test (R2 Determination) Before the Pandemic

Table 2 Determination Test Before The Pandemic
Model R R Square Adjusted R Std. Error the
Square Estimate
1 ,999a ,998 ,998 2458,760
76 Royani, Sawitri
According to the table can be seen that the dependent variable (economic growth) together can
be explained by the independent variables (sukuk, PMDN, PMA and inflation) of 99.8 percent. While
the remaining 0.2 percent is explained by other variables outside the variables studied.
Multiple Linear Regression Model During a Pandemic

The following can be seen from the results of the multiple linear regression model test during
the COVID-19 pandemic using SPSS 24, the results obtained are:
GDP = 98308,447 + -1.129E-9+ -8,419X2 + 95,476 X3 + 181,934X4 + ɛ
Statistical Test (t Test) During Pandemic

Table 3 T Test During a Pandemic
Model Unstandardized Coefficients Standardized t Sig
B Std. Error Coefficients
Beta
(Constant) 98308,447 48371,799 2,032 .077
Sukuk -1,129E-9 ,000 -5,19 -1,934 .089
PMDN -8,419 3,292 -2,775 -2,668 .034
PMA 95,476 31,010 3,422 3,079 .015
Inflasi 181,934 1044,748 ,050 0,174 .866
Based on the table of t-test results during the pandemic above, it shows that the sukuk and
inflation variables have no effect on economic growth in Indonesia. while the PMDN and PMA
variables have a significant effect on economic growth in Indonesia.
Statistical Test (R2 Determination) During a Pandemic

Table 4 Determination Test During a Pandemic
Model R R Square Adjusted R Std. Error the
Square Estimate
a
1 ,969 ,939 ,908 4098,898
According to the table can be seen that the dependent variable (economic growth) together can
be explained by the independent variables (sukuk, PMDN, PMA and inflation) of 90.8 percent. While
the remaining 9.2 percent is explained by other variables outside the variables studied.
The Effect of Sukuk on Economic Growth in Indonesia

Based on the test results with multiple linear regression analysis showed that sukuk before the
COVID-19 pandemic had a significant effect on economic growth in Indonesia. This is indicated by
a significance probability value of 0.027 < 0.05. The results of this study are in line with Sumiyati et
al., (2020), which states that sukuk have a positive and significant effect on GDP. The effect of sukuk
on GDP is due to funding from the issuance of corporate sukuk. Where when a company issues debt
securities or sukuk, the company will get income when the sukuk has been sold. With the addition
of these funds, it will increase the production capacity of the company concerned. The increase
in output will encourage economic growth. This can also be seen in the data on corporate sukuk at
the Financial Services Authority that during the last 5 years the issuance of sukuk has continued to
increase. Meanwhile, during the pandemic, the sukuk variable had no significant effect on economic
growth in Indonesia. This can be seen from the significance probability value of 0.089 > 0.05. The
results of this study are in line with Putri (2019), which states that sukuk have no effect on economic
growth.
Royani, Sawitri 77
Sukuk
33000
32000
31000
30000
29000
28000
27000
Sukuk
December
June
July
January
October
November
March
May
August
March
April
September
February
2020 2021
Graph 3 Development of Sukuk in Indonesia in 2020-2021
Source: Financial Services Authority
This can be seen in graph 3 above, it shows that that during the pandemic, from March 2020
to March 2021, the development of sukuk fluctuated despite the COVID-19 pandemic.
The Effect of Domestic Investment (PMDN) on Economic Growth in Indonesia

Based on the test results with multiple linear regression analysis, it shows that domestic
investment (PMDN) before and during the pandemic has a significant effect on economic growth in
Indonesia. It is shown that the PMDN variable before the pandemic has a significance probability
value of 0.000 < 0.05 and during the pandemic it has a significance probability value of 0.034 <
0.05. The results of this study are in line with Setianingsih (2020), which states that in the short and
long term PMDN has a positive and significant impact on economic growth in Indonesia. With this
PMDN, it can help the government in achieving development goals. In addition, this also shows
stable economic growth supported by investment. And with this domestic investment, it can reduce
the use of products from abroad. And domestic capital in the long term can create new jobs. In
addition, according to Krismaranti (2020), the economic impact of this domestic investment can save
foreign exchange; reduce dependence on foreign products; encourage industrial progress; and
contribute as well as efforts in employment.
The Effect of Foreign Investment (PMA) on Economic Growth in Indonesia

Based on the test results with multiple linear regression analysis shows that foreign investment
(PMA) before and during the pandemic has a significant effect on economic growth in Indonesia. It
is shown that the PMA variable before the pandemic has a significance probability value of 0.000 <
0.05 and during the pandemic it has a significance probability value of 0.015 < 0.05. The results of
this study are in line with Setianingsih (2020), the economic impact of foreign investment is expected
to help finance development, economic growth, transfer of technology, expand knowledge, increase
skills and expertise of human resource workers in Indonesia.
The Effect of Inflation on Economic Growth in Indonesia

Based on the test results with multiple linear regression analysis showed that inflation before
the pandemic had a significant effect on economic growth in Indonesia. This is indicated by a
significance probability value of 0.000 < 0.05. The results of this study are in line with Setianingsih
(2020),which states that in the short term and long term inflation has a negative and significant
relationship to economic growth in Indonesia. This means that if inflation increases, economic
growth will decrease. This increase in inflation will affect people's decisions in consumption,
production and investment. Meanwhile, based on the results of multiple linear regression analysis,
the inflation variable during the pandemic did not have a significant effect on economic growth in
Indonesia. This can be seen from the significance probability value of 0.0866 > 0.05. The results of
this study are in line with Nofitasari et al., (2017), which states that inflation has no significant effect
78 Royani, Sawitri
on economic growth in Jambi province. High inflation rates can reduce economic growth. This can
affect people in consuming, producing and investing, so that a company's income will decrease and
economic growth will also decline.

CONCLUSION
Based on the discussion of the results of data analysis using the multiple linear regression
method regarding the effect of investment (sukuk, PMDN and PMA) and inflation on economic
growth in Indonesia before and during the COVID-19 pandemic in the perspective of Islamic
economics, it can be concluded as follows:
1. The sukuk variable before the COVID-19 pandemic had a significant effect on economic growth
in Indonesia. Meanwhile, during the COVID-19 pandemic, the sukuk variable had no significant
effect on economic growth in Indonesia.
2. Domestic investment variables (PMDN) before and during the COVID-19 pandemic had a
significant effect on economic growth in Indonesia.
3. The variable of foreign investment (PMA) partially before and during the COVID-19 pandemic
had a significant effect on economic growth in Indonesia.
4. The inflation variable partially before the COVID-19 pandemic had a significant effect on
economic growth in Indonesia. Meanwhile, during the COVID-19 pandemic, the inflation
variable did not significantly affect economic growth in Indonesia.
In the perspective of Islamic economics, investment is a muamalah activity that is allowed and
recommended. Because in investing the assets we have become more productive. This can improve
people's living standards in meeting their needs and become a lesson for humans to avoid wasteful
nature. While inflation in the perspective of Islamic economics is classified into two, namely: natural
inflation (inflation caused by scientific causes, such as natural disasters) and human error inflation
(inflation caused by mistakes made by humans such as corruption and poor administration). bad,
excessive taxes and printing money with the aim of attracting excessive profits). And economic
growth in Islam is not only about increasing welfare, but also paying attention to aspects of justice
and equitable distribution.
SUGESTION
Based on the discussion that has been described above, the factors that are expected to affect
economic growth in Indonesia in the period before the COVID-19 pandemic consist of sukuk, PMDN
and PMA as well as inflation. However, during the COVID-19 pandemic, it turned out that the factors
that affected economic growth in Indonesia were only domestic investment and foreign investment,
this could happen due to limited space for movement such as available data. So that future researchers
can investigate further, such as adding the post-pandemic data period.
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80 Royani, Sawitri
Factors Affecting The Murabahah Financing Selection Decision:

Evidence From BMT Berkah Madani
1
Zia Julita 2Peni Sawitri
1,2
Jln. Margonda Raya No. 100, Depok 16424, Jawa Barat
1
ziajulita01@gmail.com 2peni@staff.gunadarma.ac.id
Abstract
Murabahah financing is a sale and purchase contract which is one of the financing products in Baitul
Maal wat Tamwil (BMT). This financing is very beneficial for micro, small and medium enterprises
(MSMEs) who are affected by the COVID-19 pandemic so that they have capital for business
continuity to be run. new business opportunities to reduce unemployment and increase economic
growth. The purpose of this study was to analyze the effect of member knowledge, service quality,
location, and margin level on the decisions in choosing murabahah financing at BMT with a case
study on BMT Berkah Madani. The population in this study is the owners/operators of MSMEs in
Depok City who are members and have chosen murabahah financing products at BMT Berkah
Madani. The size of samples used in this study were 73 respondents. The sampling method in this
study is non-probability sampling with accidental sampling technique. Multiple linear regression
analysis was performed to test the hypotheses. The results showed that partially (T test) the variables
of member knowledge, service quality, location, and margin level had an effect on the decision of
MSMEs actors in Depok City in choosing murabahah financing at BMT Berkah Madani.
Keywords: Baitul Maal wat Tamwil, knowledge of members, location, margin level, murabahah
financing decisions, service quality.
JEL Code : G21, P45,
INTRODUCTION
Indonesia is a country with the largest population reaching 270.20 million people in 2020, this
population increased by 32.56 million people compared to 2010 (BPS, 2020). The large population
has a positive impact on Indonesia's economic growth. Economic growth is supported by many
factors, in Indonesia one of the factors that drive the economy is the growth of small businesses
known as Micro, Small and Medium Enterprises or MSMEs. MSME is a productive business activity
owned byindividuals or business entities in accordance with the criteria set out in Law no. 20 of
2008.
120,00%
96%
100,00% 91%
80,00% 73%
57,80% 60,30%
60,00%
37,30%
40,00%
20,00%
0,00%
2018 2019 2020
GDP Labor
Source: Asosiasi UMKM Indonesia (2021)

Figure 1 Contribution of MSMEs to GDP and Labor
MSMEs are one of the factors that play an important role in the economy in Indonesia,
especially their contribution to employment and Gross Domestic Product (GDP). Based on Figure 1,
it shows that the contribution of MSMEs to the national GDP and employment in the last two years
Julita, Sawitri 81
has increased. However, in 2020, the contribution of MSMEs to GDP decreased to 37.3%, equivalent
to IDR 4,235 trillion. Meanwhile, in 2019, the contribution of MSMEs was able to reach 60.3% of
GDP or Rp. 8,400 trillion (Asosiasi UMKM Indonesia, 2021). This is because in March 2020,
Indonesia experienced a pandemic caused by a virus known as Corona Virus Disease 2019 or
COVID-19. This has a very significant impact on the Indonesian economy, including the business
continuity of MSME actors. Based on the results of the data collection of the affected MSME actors,
as many as 87.5% of the COVID-19 pandemic and only 12.5% were not affected by the pandemic,
thus making the contribution of MSMEs to GDP decreased (Kemenkop dan UKM, 2021).
The COVID-19 pandemic has caused several problems faced by MSME actors, such as
problems with capital 51.09%, marketing 34.72%, raw materials 8.59%, employment 1.09%,
transportation distribution 0.22%, and other 3.93%. These problems have caused MSME actors to
not be able to survive in the midst of the COVID-19 pandemic, so that many MSME actors went out
of business or went bankrupt (Kemenkop dan UKM, 2021).This happened to MSME actors in Depok
City, due to the COVID-19 pandemic, 30.5% of MSMEs in Depok City experienced a decrease in
domestic demand and 48.6% experienced a temporary closure. The problem that made MSME actors
in the city of Depok temporarily closed, as a result of the lack of capital they had to run their business
in the midst of the COVID-19 pandemic. The difficulty of capital is the main obstacle felt by MSME
actors in Depok City, while capital is the main factor in developing a business (Dinas Koperasi dan
UKM, 2021). Sharia Microfinance Institutions (LKMS) such as Baitul Maal wat Tamwil or known
as BMT are an alternative for MSME actors in Depok City in meeting their business capital in the
midst of the COVID-19 pandemic. BMT has the main goal of being able to help alleviate the
economic problems faced by Muslims in order to achieve benefit (Musdiana & Herianingrum, 2015).
50 42 43
40 34
30
30 22 21
20 14 16 15 16
11 10 13
8 7
10 54 4 2 4
1 1
0
Cooperative National Cooperative Sharia
Source : Dinas Koperasi dan UKM (2021)

Figure 2 Number of Cooperatives in Depok City
Based on Figure 2, the number of cooperatives in Depok City is 323 units, with the number of
national cooperatives being 256 units, while the number of sharia cooperatives or BMTs is 67 units.
When viewed from the percentage of the number of cooperatives in Depok City, it is 79%, while the
percentage of sharia cooperatives is only 21%. Where the number of sharia cooperatives in Depok
City, the largest is in the Cimanggis subdistrict, which is as many as 15 sharia cooperatives. One of
the BMTs in the Cimanggis sub-district which has been established for 16 years and is still actively
operating distributing financing for MSME actors during the COVID-19 pandemic is BMT Berkah
Madani (Dinas Koperasi dan UKM, 2021).
BMT Berkah Madani is a microfinance institution that operates according to sharia principles.
The purpose of establishing BMT Berkah Madani is to become the best and nationally leading sharia-
based financial institution in providing solutions for the poor, micro and small entrepreneurs in a
sustainable manner based on sharia principles such as amanah, fathonah, tabligh, and shiddiq.
Financing and products at BMT Berkah Madani can make it easier for customers who are MSME
actors to get capital. One of the financings at BMT Berkah Madani which is intended for MSME
actors is murabahah financing. Murabahah financing is a sale and purchase contract of goods in
which the profit agreed upon between the seller and the buyer is added. According to Ajija, Hudaifah,
Wasiaturrahma, Sulistyaningsih, A'yun, Mukti, & Azzizah (2018), murabahah financing payments
82 Julita, Sawitri
can be paid in cash and deferred or in installments, according to the financial capabilities of members.
Murabahah financing chosen by BMT Berkah Madani members is used for the needs of
purchasing goods, either in the form of capital goods, production equipment, raw materials,
inventory, as well as for the needs of consumptive goods. The basis for the law of murabahah
contracts is found in the Al-Quran Surah An-Nisa (4): 29, Allah SWT says:
‫َّللا كَانَ ِب ُك ْم َرحِ ي ًما‬ َ ُ‫ع ْن ت ََراض مِ ْن ُك ْم ۚ َو ََل تَ ْقتُلُوا أ َ ْنف‬
َ َّ ‫س ُك ْم ۚ ِإ َّن‬ َ ‫َيا أ َ ُّي َها الَّذِينَ آ َمنُوا ََل تَأ ْ ُكلُوا أ َ ْم َوالَ ُك ْم َب ْي َن ُك ْم ِب ْالبَاطِ ِل ِإ ََّل أ َ ْن تَ ُكونَ ِت َج‬
َ ً ‫ارة‬
Meaning: "O you who believe, do not eat each other's wealth in a vanity way, except by way
of commerce that applies with mutual interest between you. And do not kill yourselves; Verily, Allah
is Most Merciful to you” (Q.S An-Nisa: 29).
In this verse it is explained that Allah SWT has allowed and justified buying and selling
transactions on a consensual basis by way of commerce. Where commerce that is in accordance with
sharia and does not contain elements of usury and haram will provide benefits both in the world and
in the hereafter. MSME actors in making a decision to choose to use an item or service are of course
based on their needs. According to Sari (2018), a decision is defined as a problem-solving process
that starts with a background problem, problem identification, and conclusions until a
recommendation is given. Recommendations will be used as a guide in making a decision. Many
factors can influence a member's decision to choose a murabahah financing product, such as the
member's knowledge of the product. Members' knowledge of the products and services offered will
influence their decision to choose murabahah financing. Another factor that can influence decisions
in choosing murabahah financing products is service quality. Because the quality of service is very
important so that a company or organization is able to survive and still gain the trust of customers
and members.
The next factor that influences the decision to choose a murabahah financing product is
location. Place or location is one of the keys to access in an effective marketing strategy. Because
the strategic location and easily accessible by customers in choosing a product can attract someone's
interest to make a decision to choose a product. The level of margin also affects the decision of the
customer or member in choosing murabahah financing. Seeing the number of MSME actors in Depok
City who find it difficult to develop their business due to the lack of capital during the COVID-19
pandemic, 48.6% of Depok City MSME players experience temporary closure. Even though there is
a BMT Berkah Madani that can help MSME actors by providing murabahah financing to develop
their business. So this shows that there is still a lack of decisions by Depok City MSME actors in
choosing murabahah financing at BMT (Dinas Koperasi dan UKM, 2021).
BMT Berkah Madani should not only focus on the financing products offered. However, also
on other factors that can make decisions for MSME actors in Depok City in choosing murabahah
financing at BMT Berkah Madani. This should be investigated regarding the factors that can increase
and influence the decisions of BMT Berkah Madani members as MSME actors in choosing
murabahah financing. In an effort to maintain MSME actors who lack capital to be able to run their
business in the midst of the COVID-19 pandemic. So that it can reduce unemployment, increase
economic growth, and increase market share for BMT.
Based on the description above, it can be a motivation for conducting research on the factors
that are expected to influence the decision on murabahah financing in Baitul Maal wat Tamwil such
as member knowledge, service quality, location, and margin level that can influence the decisions of
MSME actors in Depok City.
LITERATURE REVIEW
Murabahah Financing
According to Ajija et al., (2018), murabahah is an agreement or contract between the bank and
the customer in the form of financing the purchase of an item needed by the customer. Murabahah
comes from the word ribhu or profit, which is a sale and purchase transaction in which the financial
institution informs the amount of the profit. The financial institution acts as the seller, while the
customer as the buyer.
According to Law no. 21 of 2008, a murabahah contract is a financing contract for an item by
setting the purchase price to the buyer and the buyer paying it at a higher price as a margin or profit
agreed by both parties between the seller and the buyer. From the above understanding, murabahah
Julita, Sawitri 83
financing is a contract or agreement in a sale and purchase transaction between the financial
institution and the customer where the party providing the financing will benefit from the agreed
selling price.
Consumer Behavior
According to Halim, Kurniullah, Butarbutar, Efendi, Sudarso, Purba, & Novela (2021),
consumer behavior or consumer behavior is a study that studies how an individual makes a decision
to spend available resources (time, money, and effort) to get goods or services consumed. Another
understanding of consumer behavior is the study of the processes that occur in an individual or group
of buying, choosing, using, or discontinuing a product, service, idea or experience in order to fulfill
certain satisfactions or desires.
Member's Decision in Choosing Murabahah Financing

According to Sari (2018), decision making is a process to choose one action from various
alternatives in order to achieve the desired result. Choosing a decision is also defined as a form of
alternative selection from two or several existing alternatives in order to determine the direction and
goals to be achieved. An example of this alternative could be a creative endeavor, a place to gather
thoughts, feelings and knowledge to carry out an action.
From this opinion, it can be concluded that decision-making begins with a decision or problem-
solving process that is formed from the background of the problem, identification, to conclusions
that produce a recommendation which will be used as a reference in decision making. To make a
decision, someone will go through a process of identification.
According to Setiadi (2019), when described in the form of a chart the decision-making
process is as follows:
Figure 3 Decision Making Process

Factors Affecting Members' Decisions to Choose Murabahah Financing Member Knowledge
According to Romdhoni & Sari (2018), knowledge is knowledge obtained after conducting a research
on a particular object. A simple understanding of knowledge is a capacity to perform an action. So
knowledge is information or data that has been known after looking for information on a particular
object. Member knowledge is all information owned by members about products and services, as
well as other knowledge related to these products and services. Members' knowledge of the products
and services offered will influence their decision to choose financing.
Service Quality
According to Nurlaeli (2017), service is a process in meeting needs through an activity carried
out by other people directly. Service is an activity offered by individuals and organizations to
consumers, which is intangible and cannot be owned. Service quality is how far the difference
between reality and the expectations of customers or consumers for the services they have received.
Service quality is very important in order to be able to survive and still win the trust of customers
(Guspul & Ahmad, 2014).
Location
According to Septi & Al Haq (2018), location is a place where a business or business activity
84 Julita, Sawitri
is carried out. Another definition of place or location is one of the keys to access in an effective
marketing strategy. A strategic place that is easily accessible by customers in buying and selling
activities (murabahah) is a representation of the basic principle of Islam that humans as
representatives of Allah SWT on earth must manage existing resources in a fair way. The place where
the members who do the financing, namely the BMT, must be easily accessible. The context is easy
to reach in this case not only physically, but also in terms of comfort, ease of obtaining information,
and the availability of adequate transportation facilities.
Margin Level
According to Maisaroh (2017), margin or profit is a percentage that is set annually, where the
calculation of margin is determined on a daily or annual basis. Customers or financing members
make payments in installments or installments. In general, customers have greater attention in
conducting murabahah financing transactions for determining margins. This is because, with a
margin, customers can estimate a reasonable price for the goods to be purchased from the Islamic
microfinance institution. Margin is the final cost obtained from the addition of the cost of goods
provided by the supplier.
Margin is very different from interest, because margin is obtained from a contract that has been
carried out by both parties based on the principle of justice. The setting of this margin level depends
on the type of goods, the image of the partner, and the measuring instrument used. In sharia there is
no argument that explains the maximum limit for determining the margin on murabahah financing,
so that if it exceeds this amount, it is considered haram.
Research Model
In this research, a research model can be made that can be used as a theoretical basis in this
research. The research model can be described as follows:
Figure 4 Research Model
This research consists of independent variables and dependent variables. The independent
variables used in this study were member knowledge, service quality, location, and margin level.
While the dependent variable is the murabahah financing decision.
Research Hypothesis
H1 : Member’s knowledge affects murabahah financing selection decision.
H2 : Quality service affects murabahah financing selection decision.
H3 : Location affects murabahah financing selection decision.
H4 : Margin level affects murabahah financing selection decision.
RESEARCH METHOD
Research subject
This research was conducted on members of BMT Berkah Madani as Micro, Small and
Medium Enterprises (MSMEs) who chose murabahah financing at BMT Berkah Madani.
Population and Sample

The population of this study were all members of MSMEs in the city of Depok who chose
Julita, Sawitri 85
murabahah financing at BMT Berkah Madani, with a total population of 275 members. To determine
the sample size of a population in this study using the Slovin formula. According to Bungin (2017),
the formula for calculating the sample size with the slovin formula is as follows:
N
n=
N (d)2 + 1
Where :
n : Number of samples sought
N : Total population
d : Precision value (determined in this study at 90% or = 0.1)
With a population of 275 members who choose murabahah financing at BMT Berkah Madani.
So, the formula for calculating the sample size is as follows:
N
n=
N (d)2 + 1
275
n=
275 (0,1)2 + 1
n = 73
Based on the above calculations, with a population of 275 MSME members in Depok City who chose
murabahah financing at BMT Berkah Madani, the sample size obtained was 73 respondents.
Data Types and Sources

The type of research used in this research is research with quantitative methods. In quantitative
research, the data required is data in the form of quantity represented by numbers (numeric). The
theory used in quantitative research will identify the relationship between variables. In this study, the
data used are primary data. Primary data is a source of data that is directly obtained from the first
data source at the research location or research object (Bungin, 2017). The primary data in this study
were obtained through a questionnaire or questionnaire which was distributed directly to the
respondents.
Method of Collecting Data

In this study, the data collection used is by using a questionnaire. The questionnaire method
consists of a series or list of statements that are systematically arranged related to the variables in the
study. The questionnaire framework used in this study is based on a Likert scale.
Research Variable
The variables used in this study are:
1. Independent Variable
The independent variables used in this study are Member Knowledge (X1), Service Quality (X2)
, Location (X3), and Margin Level (X4).
2. Dependent Variable
The dependent variable used in this study is the Murabahah Financing Decision (Y).
Variable Operational Definition

Operational variables of research conducted in this study, as follows:
86 Julita, Sawitri
Table 1 Definition of Operational Variables

Variable Indicator Scale
Member Knowledge (X1)
Likert
Member knowledge is all According to Notoatmodjo in
information owned by members (Nasir, Mukhlis, & Miskarina,
about products and services, as well 2016):
as other knowledge related to these 1. Know
products and services. 2. Comprehension
3. Application
4. Analysis
5. Synthesis
6. Evaluation
Services Quality (X2)
Service quality is an activity According to Tyas & Setiawan Likert
offered by organizations or (2012):
individuals to consumers or the 1. Tangibles
result of comparisons made by 2. Reability
customers between the 3. Responsiveness
expectations for the services they 4. Assurance
receive and the customer's 5. Emphaty
perception when something has
clearly been received.
Location (X3)
Location is the place where a According to Tyas & Setiawan Likert
business or business activity is (2012):
carried out. Place or location is one 1. Access.
of the keys to access in an effective 2. Visibility.
marketing strategy. 3. Traffic.
4. Parking lot.
5. Environment
Margin Level X4)
Margin rate is a percentage set by According to Asiyah dalam Likert
the company on a daily or monthly Maisaroh (2017):
basis. 1. Funding composition.
2. Level of competition.
3. Financing risk.
4. Type of customer.
5. Economic conditions
6. Expected profit rate BMT.
Murabahah Financing Decisions (Y)
Financing decisions are individual According to Setiadi (2019): Likert
activities that are directly involved 1. Recognition of needs.
in making decisions to finance the 2. Information search.
products offered. 3. Evaluation of alternatives
4. Purchase decision.
5. Post-purchase behavior.
Sources : Processed By Researchers (2021)
Data Analysis Method

In this study, the data analysis model was used to examine the influence of member knowledge,
service quality, location, and margin levels on murabahah financing decisions at BMT Berkah
Madani using multiple linear regression analysis.
Julita, Sawitri 87

Validity and Reliability Test
Based on the calculation of the results of the validity test of each statement item on the
dependent and independent variables, the results > rtable of 0.361. So it can be concluded that all
statement items for each variable are valid to be used as a variable measuring instrument. Based on
the calculation of the reliability test results for each variable, the value of Cronbach's Alpha > 0.60.
Thus, it can be concluded that the statements in this questionnaire are very reliable or consistent.
Classic assumption test

Normality Test
Based on the results of the normality test using the One-Sample Kolmogorov-Smirnov Test,
the Asymp level value. Sig (2-tailed) of 0.200 > 0.05. So it can be concluded that the data in the test
is normally distributed.
Based on the results of the multicollinearity test, it shows that the VIF results for each variable
are < 10 and the Tolerance value for each variable has a value > 0.1. It can be concluded that between
the variables of member knowledge, service quality, location, and margin level, there is no
multicollinearity.
Heteroscedasticity Tests
Based on the results of the heteroscedaticity test, it can be seen that the significance value of
the member knowledge variable (X1) is 0.258, the service quality variable (X2) is 0.936, the location
variable (X3) is 0.990, the margin level variable (X4) is 0.646, where each variable has a significant
value. > 0.05. So, it can be concluded that there is no heteroscedasticity.
Multiple Liar Regression Modeling

To be able to prove the hypothesis that has been determined in this study, multiple linear
regression was used. The results of this multiple linear regression test will show whether there is an
influence between member knowledge, service quality, location, and margin level on the decisions
of MSME actors in choosing murabahah financing at BMT. The results of multiple linear regression
can be seen in the following table:
Table 2 Multiple Linear Regression Modeling

Unstandardized Coefficients
Model B Std. Error
(Constant) 3,328 ,919
Member Knowladge (X1) ,110 ,045
Service Quality (X2) ,237 ,061
Location (X3) ,243 ,057
Margin Level (X4) ,214 ,053
Source : Output SPSS Vertion 25 (2021)
Based on the results of data processing, the multiple linear regression equation model is as
follows:
KPM = 3.328 + 0.110 X1 + 0.237 X2 + 0.243 X3 + 0.214 X4 + e
From the multiple regression equation model described above, it can be interpreted as follows:
1. Constant (α) The constant value of 3.328 states that if the member's knowledge variable (X 1),
service quality (X2), location (X3), and margin level (X4) is equal to 0, then the value of the
murabahah financing decision variable (Y) is 3.328.
2. Member Knowledge Regression Coefficient (b1) The regression coefficient value for the member
knowledge variable is 0.110. This shows that if the knowledge value of members increases, the
value of murabahah financing decisions will increase by 0.110.
88 Julita, Sawitri
3. Service Quality Regression Coefficient (b2) The regression coefficient value for the service
quality variable is 0.237. This shows that if the value of service quality increases, the value of
murabahah financing decisions will increase by 0.237.
4. Location Regression Coefficient (b3) The regression coefficient value for the location variable is
0.243. This shows that if the value of the location increases, the value of the murabahah financing
decision will increase by 0.243.
5. Margin Rate Regression Coefficient (b4) The regression coefficient value for the margin level
variable is 0.214. This shows that if the value of the margin rate increases, the value of the
murabahah financing decision will increase by 0.214.
Hypothesis testing
t Test
T test is used to be able to find out whether partially each independent variable has a
significant effect or not on the dependent variable. Individually, it is done by comparing tcount with
ttable. If tcount > ttable at a significant level = 5%, it means that the variables used have an effect on
financing decisions. Based on the results of SPSS calculations, the following results are obtained:
Table 3 t test results

Coefficientsa
Standardize
Unstandardized d
1 (Constant) 3,328 ,919 3,620 ,001
Member Knowladge ,110 ,045 ,172 2,458 ,017
(X1)
Service Quality (X2) ,237 ,061 ,288 3,863 ,000
Location (X3) ,243 ,057 ,311 4,223 ,000
Margin Level (X4) ,214 ,053 ,291 4,012 ,000
Source: SPSS Multiple Linear Regression Analysis Output (2021)
Based on the table above, it can be seen that each independent variable on the dependent
variable can be explained as follows:
1. Member Knowledge Variable
Based on the results of the T test, it can be seen that the tcount value for the member knowledge
variable is 2.458 with a significance level of 0.017. By using a significance limit of 5%, it means
that the p-value <0.05 is 0.017 <0.05 and the t-table value is 1.995. This shows that tcount >
ttable, which is 2,458 > 1,995, which means that H1 is accepted. So, the variable knowledge of
members affects the decision of MSME actors in Depok City in choosing murabahah financing
at BMT Berkah Madani.
2. Service Quality Variable
Based on the results of the T test, it can be seen that the tcount value for the service quality
ttable, which is 3.863 > 1.995, which means that H2 is accepted. So, the service quality variable
influences the decisions of Depok City MSME actors in choosing murabahah financing at BMT
Berkah Madani.
3. Location Variables
Based on the results of the T test, it can be seen that the t-value for the location variable is 4.223
with a significance level of 0.000. By using a significance limit of 5%, it means that the p-value
<0.05 is 0.000 <0.05 and the t-table value is 1.995. This shows that tcount > t-table, which is
4.223 > 1.995, which means that H3 is accepted. So, the location variable influences the decision
of the Depok City MSME actors in choosing murabahah financing at BMT Berkah Madani.
Julita, Sawitri 89
4. Variable Margin Rate

Based on the results of the T test, it can be seen that the t-statistic value for the margin level
ttable, which is 4.012 > 1.995, which means that H4 is accepted. So, the margin level variable
affects the decisions of Depok City MSME actors in choosing murabahah financing at BMT
Berkah Madani.
Coefficient of Determination (R2)

The coefficient of determination test is used to determine how much the independent variable's
contribution ability affects the dependent variable. The calculation results obtained for the R2 test are
as follows:
Table 4 R2 Test Results

(Coefficient of Determination)
Model Summaryb
Mode Adjusted R Std. Error of the
l R R Square Square Estimate
a
1 ,926 ,857 ,848 ,742
Sources : Output SPSS Vertion 25 (2021)
Based on the results of the table above, it shows that the Adjusted R Square value is 0.848.
This means that 84.8% of the dependent variable on the decision of MSME actors in choosing
murabahah financing is explained by the variables of member knowledge (X1), service quality (X2),
location (X3), and margin level (X4). While the remaining 15.2% (100% - 84.8%) was explained by
other variables that were not included in this study.
Discussion
1. The influence of member knowledge on the decision to choose murabahah financing
Based on the results of the data analysis, the member's knowledge variable has a significant
value of 0.017 < 0.05. This shows that the member's knowledge variable has a significant
influence on murabahah financing decisions. Thus, hypothesis one states that members'
knowledge is able to influence decisions in choosing murabahah financing. This is because the
decision of members in choosing murabahah financing is strongly influenced by the knowledge
and understanding of members related to murabahah financing products. With the characteristics
of respondents based on the last level of education who chose murabahah financing at the high
school level so that they have good knowledge and understanding related to sharia financing.
Therefore, member knowledge can influence murabaha financing decisions. The results of
this study are in accordance with previous research conducted by Lukytta et al., (2020) in which
the results of his research stated that the member's knowledge variable influenced the decision
to choose murabahah financing.
2. The influence of service quality on the decision to choose murabahah financing
Based on the results of data analysis, the service quality variable has a significant value of
0.000 < 0.05. This shows that the service quality variable has a significant influence on
murabahah financing decisions. Thus, hypothesis two states that service quality is able to
influence decisions in choosing murabahah financing. This is because the decision of members
in choosing murabahah financing is strongly influenced by the quality of service that is friendly
and responsive.
Therefore, service quality can influence murabahah financing decisions. The results of this
study are in accordance with the results of previous research conducted by Septi & Al Haq
(2018), in which the results of the study stated that the service quality variable influenced the
decision to choose murabahah financing. However, this study is different from the results of
research conducted by Murningsih & Yunadi (2013), where the results of his research stated that
the service variable had no effect on the decision to choose a financing product.
90 Julita, Sawitri
3. The influence of location on the decision to choose murabahah financing

Based on the results of data analysis, the location variable has a significant value of 0.000
< 0.05. This shows that the location variable has a significant influence on murabahah financing
decisions. Thus, hypothesis three states that location is able to influence decisions in choosing
murabahah financing. This is because members' decisions in choosing murabahah financing are
strongly influenced by locations that are easily accessible using public transportation and have
smooth road access. Therefore, location can influence murabaha financing decisions.
The results of this study are in accordance with previous research conducted by Nadira &
Susianto (2020), in which the research results stated that the location variable had an effect on
the decision to choose murabahah financing. However, this study is different from the results of
research conducted by Septi (2018), in which the results of his research stated that the location
variable had no effect on members' decisions to take financing.
4. The influence of the margin level on the decision to choose murabahah financing
Based on the results of data analysis, the margin level variable has a significant value of
0.000 < 0.05. This shows that the margin level variable has a significant influence on murabahah
financing decisions. Thus, the fourth hypothesis states that the level of margin is able to influence
the decision in choosing murabahah financing. This is because the decision of members in
choosing murabahah financing is strongly influenced by the set margin level that is not
burdensome and affordable, this is in accordance with the amount of financing received and the
income of the members. Therefore, the level of margin can influence the decision of murabaha
financing.
The results of this study are in accordance with previous research conducted by Aini
(2015), in which the results of his research stated that the margin level had an effect on the
decision to choose murabahah financing. However, this study is different from the results of
research conducted by Furwanti (2020), in which the results of his research state that the margin
level variable has no effect on customer decisions in using murabahah financing products.

Conclusion
Based on the results of research that has been carried out on the influence of member
knowledge, service quality, location, and margin level on the decisions of MSME actors in Depok
City in choosing murabahah financing at BMT Berkah Madani. Then the following conclusions can
be drawn:
1. Knowledge of members influences the decisions of Depok City MSME actors in choosing
murabahah financing at BMT Berkah Madani.
2. The quality of service affects the decisions of MSME actors in Depok City in choosing
murabahah financing at BMT Berkah Madani.
3. Location influences the decision of MSME actors in Depok City in choosing murabahah
financing at BMT Berkah Madani.
4. The level of margin affects the decision of MSME actors in Depok City in choosing murabahah
financing at BMT Berkah Madani.
Implication
The decision on murabahah financing at Baitul Maal wat Tamwil with a case study at BMT
Berkah Madani is influenced by the variables of member knowledge, service quality, location, and
margin level. If BMT wants to improve murabahah financing decisions, then what must be
considered is the location, namely the place where a business or business activity is carried out.
Because location is one of the keys to access in an effective marketing strategy. So that location
becomes the most dominant variable in influencing the community as MSME actors to make a
decision to choose murabahah financing at BMT.
Suggestion
Based on the results of the research that has been concluded above, the researchers provide
several suggestions that can be useful for interested parties, some of these suggestions include:
Julita, Sawitri 91
1. For Baitul Maal wat Tamwil (BMT)

Based on the research that has been done, it is hoped that BMT Berkah Madani can provide
understanding to MSME actors regarding murabahah financing products so that their knowledge
of Islamic products and finance is better. The BMT must also improve the quality of service, a
comfortable and safe location or place in order to improve members' decisions in choosing
murabahah financing products at BMT. In addition, the set margin level must focus on the
benefits that accompany the nominal so that it is not burdensome and meets the expectations of
members. Of course this can attract the interest of MSME actors to decide to choose murabahah
financing at BMT.
2. For the Government
Based on the research that has been carried out, it is hoped that the Government can regulate
and issue regulations that are able to maintain the optimal condition of Islamic microfinance,
such as during the COVID-19 pandemic. In addition, the Government is expected to be able to
disseminate information regarding the role and products owned by BMT so that it can make the
public more familiar with BMT and be able to improve the decisions of MSME actors in
choosing financing at BMT to meet their business capital needs during the COVID-19 pandemic.
3. For Further Researchers
The limitations of this study can be used as a reference for further researchers to complete
it. Further researchers can add other factors that can influence the decision of MSME actors to
choose murabahah financing or other financing products available at BMT such as reputation or
image, financing disbursement procedures, promotions, and so on. The object of this research is
only carried out on one LKMS, namely Baitul Maal wat Tamwil, further research can add two
BMT objects to see comparisons in order to provide better research results.
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Julita, Sawitri 93
Analysis Of Factors Affecting Taxpayer Compliance At The Pratama

Cileungsi Tax Service Office
1
Arini Suryaningtyas, 2Armaini Akhirson
1,2
Jl. Margonda Raya No.100, Pondok Cina, Depok 16424
1
arini.suryaningtyas6@gmail.com, 2armaini@staff.gunadarma.ac.id
Abstract
This study aims to determine the partial and sumultaneous effect of tax understanding, taxpayer
awareness, service quality, issuance of warning letters and forced letters, tax avoidance, and tax
sanctions on taxpayer compliance. The sampling technique in this research is using purposive
sampling method. The data source used is primary data by distributing questionnaires to 100
taxpayers registered at KPP Pratama Cileungsi. To determine the effect of independent variables
using t test and F test. The method of data analysis is multiple regression analysis. The results of the
study indicate that simultaneously the independent variables, tax undestanding, tax awareness,
service quality, issuance of warning and forced letters, tax avoidance, and tax sanction have
asignficant effect on the dependent variable, taxpayer compliance with adjust R square level of 0.556
or 55.6%. Partially, the variables of tax understanding, taxpayer awareness, service quality, and tax
sanctions affect taxpayer compliance. While the variables inssuance of warning letters and forced
letters and tax avoidance have no effect. Thus, tax officer can mantain service quality or improve
service more optimally to increase taxpayer compliance. Key words: Taxpayer compliance, tax
understanding and taxpayer awareness, service quality, issuance of warning letters and forced letters,
tax avoidance and tax sanctions.
Keyword : Tax Understanding, Taxpayer Awareness, Service Quality, Issuance of Reprimand

Letters and Compulsory Letters, Tax Avoidance, Tax Sanctions, Taxpayer Compliance
JEL Codes : D9, G18, H21
INTRODUCTION
State revenue is revenue that the country for a year and used to finance needs. The largest state
revenue in Indonesia comes from tax revenues. Taxes are a source of state revenue to finance all state
expenditures. Tax revenue can be influenced by the condition of a country's economic growth.
Realization of state revenues in Indonesia since 2019-2020 has decreased significantly. The country's
significant decline was caused by the receipt of Natural Resources. Furthermore, the cause of the
significant decline in state revenues also occurred in domestic tax revenues. The decline in income
tax revenues in 2020 decreased by approximately Rp. 101,886,2 billion from tax revenues in 2019.
The decline does not rule out the possibility that the level of taxpayer compliance will also decrease.
Taxpayer compliance can be seen from the timeliness in submitting or reporting tax returns,
taxpayers not having tax arrears, and so on. The realization of the compliance level for submitting
the Annual income tax return in Q4 2020 has not yet reached the target. There is still a difference of
2.37% or as much as 450,580 SPT that has not been reported by the Taxpayer. The obstacle that
makes the compliance target for the submission of the Annual Taxpayer SPT has not been achieved
is of course because the Taxpayer is still very dependent on direct face-to-face consultation with
employees and supervision has not been carried out optimally. The target for submission of the
Annual SPT and realization of compliance The submission of the Annual SPT according to the DGT
is shown in Table 1.
Table 1. Achievement of compliance with the submission of the Annual Income Tax Return
(PPh) in 2020
No Target Realization Difference
1. 80% 77,63% 2,37%
(15.205.435 SPT) (14.754.855 SPT) (450.580 SPT)
Source: DGT Performance Report 2020
94 Suryaningtyas, Akhirson
The applicable tax collection system in Indonesia, namely the self-assessment system, requires
taxpayers to actively participate in fulfilling their tax obligations. Tax conditions that require
taxpayers to be active in fulfilling their taxes require high taxpayer compliance. According to Siti
Kurnia Rahayu (2017: 196), taxpayer compliance can be influenced by taxpayer awareness, service
quality, quality in law enforcement, and so on.
Awareness and understanding of taxation is not only owned by tax officers. However,
taxpayers are also expected to have awareness and understanding of tax regulations. By having
awareness and understanding of taxation, taxpayers tend to be obedient and obedient taxpayers to
fulfill their tax obligations. In addition, the problem of dependence of taxpayers on tax officers will
also be reduced. The influence of tax understanding and taxpayer awareness has been carried out by
research by Ahmad Nurkhin, Ine Novanty, Muhsin, Sumiadji (2018) entitled "The Influence of Tax
Understanding, Tax Awareness, and Tax Amnesty Toword TaxPayer Compliance". The results of
research conducted by Ahmad Nurkhin, et al. revealed that the understanding of taxation has a
positive and significant influence and is a variable that has a stronger influence on taxpayer
compliance.
In addition to taxpayer awareness and understanding of taxpayers, the quality of service tax
officers can also affect the level of taxpayer compliance. According to Pandji Santoso (2008:55), the
service of the tax officer is an effort on how the tax authorities or tax officers serve consumers/service
users, so that the services provided will be able to foster a sense of trust, consumers feel they are
getting attention and their needs are satisfied. This is supported by previous research conducted by
Pertiwi (2016) entitled "The Influence of Taxpayer Awareness and Tax Employee Services on
Taxpayer Compliance at the Temanggung Regency Primary Tax Service Office in 2015" revealed
that taxpayer awareness and tax employee services affect compliance Taxpayer. However, the results
of this study are different from the research conducted by Siti Masruroh and Zulaikha (2013), entitled
“The Effect of TIN Benefit, Taxpayer Understanding, Service Quality, Tax Sanctions on Taxpayer
Compliance”. Siti and Zulaikha's research states that service quality partially has not significant
effect on taxpayer compliance.
The government, represented by the Directorate General of Taxes, in handling taxation, will
not remain silent if the taxpayer does not pay off his tax debts or is in arrears on his taxes. Issuance
of warning letters and forced letters is one of the efforts of tax officials in improving taxpayer
compliance in carrying out their obligations to pay and report their taxes to the government through
the local Tax Service Office. The results of a previous study conducted by Nila, Dewi, Ratna, and
Renil (2018) with the research title "The Influence of Tax Collection with Warning Letters and
Forced Letters on Taxpayer Compliance at the Padang Satu Tax Service Office" states that the
variable of tax collection with a warning letter and forced letters have a positive and significant effect
on taxpayer compliance at the Padang Satu Tax Service Office (KPP).
Tax avoidance is a form of resistance carried out by taxpayers and is a way of paying taxes
legally by reducing the amount of tax owed without violating tax regulations or it can be said that
taxpayers can find and use the weaknesses of tax regulations. Tax avoidance action does not rule out
the possibility of affecting the level of taxpayer compliance in carrying out their tax obligations. This
is because the act of tax avoidance is closely related to the taxpayer himself.
The imposition of sanctions is also necessary to provide a deterrent effect for taxpayers who
violate their tax obligations. The imposition of sanctions on taxpayers is expected so that taxpayers
do not repeat mistakes and act in accordance with regulations. Based on previous research conducted
by Susmita (2016), firmness in tax sanctions turned out to have a positive and significant effect on
tax compliance. However, the research results are different from the research conducted by Asbar
(2014) and Ningsih (2016) that tax sanctions have no effect on taxpayer compliance.
Currently, there are 38,787 registered taxpayers at KPP Pratama Cileungsi, consisting of
29,361 Individual Taxpayers and 9,426 Corporate Taxpayers. The Cileungsi Primary Tax Service
Office is the most active office in West Java III Region. The addition of the number of taxpayers and
the activity of the Cileungsi Pratama Tax Service Office is one of the factors that makes researchers
willing to conduct a research entitled "Analysis of Factors Affecting Taxpayer Compliance at the
Cileungsi Pratama Tax Service Office".
Suryaningtyas, Akhirson 95
LITERATURE REVIEW
Compliance can be defined as the obedient, obedient nature of every citizen to the applicable
laws and regulations. Taxpayer compliance is the fulfillment of tax obligations carried out by
taxpayers in contributing to the current state development. The notion of taxpayer compliance can
also be defined as a condition in which the taxpayer fulfills all of his tax obligations and exercises
his taxation rights (Abdul Rahman, 2010:32). According to Rahayu (2017: 196), the factors that can
affect taxpayer compliance are:
1. The condition of a country's tax administration system
2. Quality of tax services provided to taxpayers
3. Quality of tax law enforcement
4. Quality of tax audits
5. High and low tax rates set
6. Willing and awareness tax
7. Behavior Taxpayer
Indicators tax compliance by Simanjuntak (2012: 103) can be seen from the aspect:
1. Timeliness of reporting of tax returns submitted on time according to the prevailing regulations,
2. The Income Taxpayers who are willing to pay the liability installments Income tax (VAT) in
accordance with the If applicable,
3. The imposition of sanctions which are payment of tax arrears determined based on the Tax
Assessment Letter (SKP) before maturity.
According to Mardiasmo (2011: 50) the understanding of taxpayers is an understanding of the
tax collection system in Indonesia and all kinds of applicable tax regulations. Understanding of
taxation is an internal factor that encourages taxpayers to carry out their tax obligations. Research
conducted by Widayati and Nurlis (2010), several indicators of taxpayers knowing and understanding
tax regulations, among others:
1. Obligation to have a Taxpayer Identification Number (NPWP).
2. Knowledge and understanding of the rights and obligations as a Taxpayer.
3. Knowledge and understanding of tax sanctions.
4. Knowledge and understanding of the calculation of income tax that must be paid which of course
includes PTKP, PKP, and tax rates.
Taxpayer awareness can arise when the taxpayer has a good view and assessment of the
implementation of state functions by the government. A good assessment of the implementation of
state functions by the government will thrill and move people to comply with their obligations in
paying taxes. Indicators that can be used in measuring the level of awareness of taxpayers according
to Liana Ekawati (2008:77) if the taxpayer:
1. Knowing the existing tax laws and regulations that apply,
2. Knowing and understanding the function of taxes for state financing
3. Understand that tax obligations must be carried out in accordance with the provisions The
applicable laws include the General Taxation Law, Government Regulation of the Republic of
Indonesia Number 36 of 2017 concerning the Imposition of Income Tax.
Service quality is the most important thing in a job. There are 5 aspects of quality service,
namely aspects of reliability, assurance, tangible, empathy, responsiveness. According to Rahayu
(2017: 63) tax services are service products from special government agencies authorized to deal
with tax issues, namely, the Directorate General of Taxes. The criteria for assessing the service of
tax employees/officers in Thomas Sumarsan's book entitled Tax Review and Tax Planning Strategy
(2012:6) are as follows:
1. Commitment,
2. Integrity and honesty,
3. Knowledge and expertise,
4. Communication, and
5. Comfort level.
Issuance of warning letters and forced letters is one of the efforts of tax officials in increasing
taxpayer compliance in carrying out their obligations. A warning letter is a letter issued by a tax
official to reprimand or warn a taxpayer to pay off his tax debt. A warning letter is issued if the tax
debt listed in the SPT, SKPKB, or SKPKBT is not immediately repaid after 7 (seven) days from the
one month due date from the date of issuance of the warning letter. A forced letter is an order to pay
tax debts and tax collection costs borne by taxpayers who have a tax payment debt to the state. A
forced letter is issued if the tax insurer does not pay off the tax debt and has received a warning letter
or warning letter or other similar letter. The time for the issuance of the forced letter is done when it
has passed 21 (twenty one) days since the issuance of the warning letter or warning letter and the tax
guarantor has not/has not paid off his tax debt.
Tax avoidance is one form of active resistance carried out by taxpayers. taxpayers will look
for and use the weaknesses of tax regulations. According to Rahayu (2017: 202), tax evasion is
generally carried out by taxpayers because it has a specific purpose, namely to suppress or minimize
the amount of taxes that must be paid. Tax avoidance indicators according to Ferry Halimi and
Waluyo (2019), the causes of tax avoidance behavior are as follows:
1. Lack of Knowledge about Taxes
2. Attitudes of tax officials Taxation
3. Systems and implementation Tax
Sanctions are a deterrent so that taxpayers do not violate tax norms. Tax sanctions are also a
guarantee that the provisions of tax laws (tax norms) will be complied with and/or complied with by
taxpayers. Tax sanctions occur due to violations of tax laws and regulations, where the greater the
violation committed by a taxpayer, the more severe the sanctions will be. Indicators of tax sanctions
according to Adam Smith in Siti Kurnia Rahayu (2010:63) are:
1. Sanctions given to taxpayers must be clear,
2. Tax sanctions arenot arbitrary, there is no tolerance,
3. Sanctions should be balanced,
4. Sanctions should be given immediate deterrent effect.
Research Framework
Figure 1. Research Framework
RESEARCH METHODS
Object Research
The object of research in this paper is taxpayer compliance which is influenced by tax understanding,
taxpayer awareness, service quality of KPP Pratama Cileungsi officers, issuance of forced letters and
warnings, tax avoidance, and sanctions imposed on Taxpayers if they violate their tax obligations.

The population of this study is 29,361 taxpayers at the Tax Service Office (KPP) Pratama Cileungsi.
With the slovin formula, the determination of the number of samples in this study was 100
respondents. The sampling technique in this study was done by purposive sampling. This is because
the population and samples taken have certain criteria.
Types and Sources of Data

The type of data used is quantitative data. The source of data in this research is primary data obtained
from the answers to questionnaires distributed to taxpayers.
Data collection procedures

Data collection can be done with data collection tools such as questionnaires. The questionnaire
contains several Taxpayer identities and statements related to related phenomena or problems.
Questionnaires for this research were created and distributed online via google form. Data collection
procedures are also carried out by using variable measurements with a Likert measurement scale.
Identification of Variables
The variables used in this study are the dependent variable (Y) and the independent variable (X). The
dependent or dependent variable (Y) of this study is taxpayer compliance. While the independent or
independent variables (X) are understanding of taxation, awareness of taxpayers, service quality,
issuance of warning letters and forced letters, tax avoidance, and tax sanctions.
Analysis Techniques
The analytical technique used is quantitative analysis which is expressed by numbers and the
calculations use standard methods assisted by the Statistical Package Social Science (SPSS) program
as a tool to produce multiple analysis results. To produce a good model, the results of multiple
analysis require classical assumption testing. The data analysis methods of this research are
descriptive statistical analysis, instrument test analysis, classical assumption test analysis, multiple
linear regression, and hypothesis testing analysis.

Multiple Linear Regression
Multiple linear regression analysis was used to determine the direction and how much influence the
independent variable had on the dependent variable. The results of linear regression analysis are
presented in Table 2.
Table 2. Results of Multiple Linear Regression

Coefficientsa
1 (Constant) 1.124 1.967 0.571 0.569
Pemahaman Perpajakan 0.248 0.132 0.184 1.883 0.043
Kesadaran Wajib Pajak 0.303 0.118 0.274 2.574 0.012
Kualitas Pelayanan 0.341 0.088 0.336 3.895 0.000
Surat Teguran dan Surat Paksa -0.071 0.102 -0.075 -0.695 0.489
Penghindaran Pajak -0.039 0.091 -0.043 -0.428 0.669
Sanksi Perpajakan 0.253 0.097 0.215 2.611 0.011
Source: Data processed with SPSS Version 25.0
Based on the table above, it can be seen that a multiple linear regression equation for taxpayer
compliance is as follows:
KpWP = 1.124 + 0.248 PP + 0303 + 0341 KWP KP - PStSp 0071 - 0039 0253 PhP + SP
From the regression equation above it can be concluded positive coefficient of 1,124. It can
be interpreted that if the understanding of taxation, taxpayer awareness, service quality, issuance of
warning letters and forced letters, tax avoidance, and tax sanctions are considered fixed, then
taxpayer compliance will increase by 1,124 units. The regression coefficient value of tax
understanding (X1) is 0.248 with a positive coefficient sign which indicates the relationship between
tax understanding and taxpayer compliance is unidirectional. This can be interpreted that for every 1
unit increase in the taxpayer's understanding of taxation, the taxpayer's compliance will increase by
0.248 with the assumption that the coefficients of other independent variables have a fixed or constant
value. The regression coefficient value of taxpayer awareness (X2) is 0.303 with a positive
coefficient sign which indicates the relationship between taxpayer awareness and taxpayer
compliance in the same direction. This means that for every 1 unit increase in taxpayer awareness,
taxpayer compliance will increase by 0.303 with the assumption that the coefficients of other
independent variables have a fixed or constant value. The regression coefficient value of service
quality (X3) is 0.341 with a positive coefficient sign which indicates the relationship between service
quality and taxpayer compliance is unidirectional. This means that for every 1 unit increase in service
quality, taxpayer compliance will increase by 0.336 with the assumption that the coefficients of other
independent variables have a fixed or constant value. The regression coefficient issuance of warning
and forced letter (X4) of -0071 with a negative coefficient signs that indicate the opposite relationship
between the issuance of the warning letter and the letter forced the taxpayer compliance. This can be
interpreted that every time there is an increase in warning letters and forced letters by 1 unit, the level
of taxpayer compliance decreases by 0.071 with the assumption that the coefficients of other
independent variables have a fixed or constant value. Tax evasion regression coefficient (X5) of -
0.039 with a negative coefficient signs that indicate the opposite relationship between tax evasion
with tax compliance. This means that for every 1 unit increase in tax avoidance, the level of taxpayer
compliance will decrease by 0.039 with the assumption that the coefficients of other independent
variables have a fixed or constant value. The value of the tax sanctions regression coefficient (X6) is
0.253 with a positive coefficient sign indicating the relationship between tax sanctions and taxpayer
compliance is unidirectional. This can be interpreted that for every 1 unit increase in taxpayer tax
sanctions, the level of taxpayer compliance will increase by 0.253 with the assumption that the
coefficients of other independent variables have a fixed or constant value.

The F test is used to test the significance of the regression coefficients together. The test was
carried out using a significant level of 0.05 (α=0.5%). In this study, the ANOVA table was used to
test the significant effect of tax understanding, taxpayer awareness, service quality, warning letters
and forced letters, tax avoidance, and tax sanctions together on taxpayer compliance. The F test
results are presented in Table 3.
Table 3. F Test Results
ANOVAa
Sum of Mean
Model Squares df Square F Sig.
1 Regressio 463.029 6 77.171 21.672 .000b
n
Residual 331.161 93 3.561
Total 794.190 99
a. Dependent Variable: KepatuhanWajibPajak
b. Predictors: (Constant), SanksiPerpajakan, KualitasPelayanan,
PenghindaranPajak, PemahamanPerpajakan, KesadaranWajibPajak,
SuratTegurandanSuratPaksa
Source: Data processed with SPSS Version 25.0, 2021
Based on the table above, it can be seen that the calculated F value is 21,672 with a significant
level of 0.000. The F table value is obtained from the degree of freedom df (residual) which is 2.19
at the 5% confidence level (α=0.5%). Because the calculated F value is greater than F table (21.672
> 2.19) with a significant level of 0.0000 < 0.005, it can be said that H0 is rejected and Ha is accepted.
This means that the independent variable simultaneously has a significant influence on the dependent
variable, namely taxpayer compliance.

Coefficient of Determination
The coefficient of determination (R²) measures how far the model's ability to explain variations
in the dependent variable is. The value of the coefficient of determination is between zero and one.
The higher the value of Adjust R Square , the better the independent variable in explaining the
dependent variable. The results of the Coefficient of Determination Test in this study are presented
in Table 4.
Table 4. Results of the Coefficient of Determination Test (R²)

Model Summary
Std. Error
Adjusted of the
Model R R Square R Square Estimate
1 .764a 0.583 0.556 1.887
a. Predictors: (Constant), Sanksi Perpajakan , Kualitas
Pelayanan , Penghindaran Pajak , Pemahaman
Perpajakan , Kesadaran Wajib Pajak , Surat Teguran dan
Surat Paksa
Source: Data processed with SPSS Version 25.0, 2021
Based on the table above, the effect of taxpayer compliance has an Adjust R Square of 0.556
or 55.6%. This shows that the ability of the independent variable studied in explaining the dependent
variable, namely taxpayer compliance is 55.6%. While the remaining 46.1% is influenced by other
variables outside the regression model studied.
Discussion
The Effect of Tax Understanding on Taxpayer Compliance
Based on the results of the t-test obtained and the significance level of the tax understanding variable,
namely tcount of 1.883 with a sig t value of 0.043 <0.05, it can be said that tax understanding has a
significant effect on taxpayer compliance. This is because the more taxpayers have an understanding
of taxation, both NPWP ownership, rights and/or obligations, as well as the calculation of PTKP, tax
rates and tax sanctions, the taxpayers will be obedient to carry out their tax obligations. The results
of this study are in line with research from Ahmad Nurkhin, Ine Novanty, Muhsin, Sumiadji (2018)
which reveals that understanding taxation has a positive and significant effect on taxpayer
compliance.
Effect of Taxpayer Awareness on Taxpayer Compliance

Based on the results of the analysis of the T test (partial test) obtained, namely the t-count of 2,574
with a sig t value of 0.012 < 0.05, it can be said that taxpayer awareness has an influence on taxpayer
compliance. Taxpayers who know and understand taxation have been regulated in the General
Provisions of Taxation Law, taxes are the largest source of income for state development, Taxpayers
carry out tax obligations according to established procedures, and Taxpayers always lend other
records/documents for a smooth audit of course. will greatly affect the Taxpayer to be aware of
fulfilling and carrying out his tax obligations. The results of this study are supported by previous
research conducted by Ahmad Nurkhin, Ine Novanty, Muhsin, and Sumiadji (2018) entitled The
Effect of Tax Understanding, Taxpayer Awareness, and Tax Amnesty on Taxpayer Compliance
stating that taxpayer awareness and perception of tax amnesty proven to have a positive and
significant effect on taxpayer compliance.
Effect of Service Quality on Taxpayer Compliance

Based on the results of the t-test (partial test) obtained t-count of 3.895 with a sig t value of 0.000
<0.05, it can be said that service quality has a significant effect on taxpayer compliance. If the tax
officer serves, assists, and directs the taxpayer to be responsive, kind, polite, friendly, and smiling, it

makes the taxpayer comfortable in fulfilling his tax obligations. This certainly increases taxpayer
compliance. The results of this study are in line with previous research conducted by Ferry Halimi
and Waluyo (2019) which states that tax services have a positive and significant effect on the
compliance of individual taxpayers registered at KPP Pratama Jakarta Setiabudi Dua. In addition, the
results of this study are also in line with research conducted by Pertiwi (2016) with his research
entitled The Effect of Taxpayer Awareness and Tax Employee Services on Taxpayer Compliance at
the Temanggung Regency Primary Tax Service Office in 2015 which states that taxpayer awareness
and tax employee services effect on taxpayer compliance.
Effect of Issuance of Reprimand Letters and Compulsory Letters on Taxpayer Compliance

Theresults of the T test (partial test) for the effect of issuing warning letters and tax letters obtained
t-count of -0.695 with a sig-t value of 0.489 > 0.05, it can be said that the issuance of warning letters
and letters coercion has no significant effect on taxpayer compliance. This is because if the Taxpayer
has a tax deficiency and does not pay it and then does not report or update his new residential address,
a warning letter and a forced letter will still be issued and given to the old residential address. Thus,
the issuance of warning letters and forced letters does not affect the taxpayer's compliance in
fulfilling their tax obligations. The results of this study are not in accordance with the research
conducted by Pandapotan Ritonga (2012) entitled The Effect of Tax Collection with Forced Letters
on Taxpayer Compliance at the Pratama Tax Service Office of Medan Timur that tax collection with
forced letters has a significant effect on taxpayer compliance.
Effect of Tax Avoidance on Taxpayer Compliance

Theresults of the T test (partial test) on tax avoidance obtained t-count of -0.043 with a sig t value of
0.669 > 0.05. It can be said that tax avoidance has no significant effect on taxpayer compliance. This
is because the taxpayer does not reduce the amount of tax owed, the tax officer always reminds the
taxpayer to fulfill his tax obligations, the taxpayer does not feel discrimination or the tax rate imposed
is too high, and so on. The results of this study are not in accordance with research conducted by
Shinung Sakti, Kertahadi, and Siti Ragil Handayani (2016) which states that partially the tax
avoidance variable has an insignificant effect and the tax sanctions variable has a significant effect.
Simultaneously, the variables of tax avoidance and tax sanctions have a significant effect on taxpayer
compliance at KPP Pratama Tegal.
The Effect of Tax Sanctions on Taxpayer Compliance

The results of the T-test obtained are t-count of 2.611 with a sig t value of 0.011 < 0.05. It can be
said that tax sanctions have a significant effect on taxpayer compliance. Tax sanctions have a
significant effect, meaning that the existence of strict and clear tax sanctions can encourage taxpayers
to fulfill their tax obligations. In addition, the tax sanctions imposed can prevent and prevent
taxpayers from violating other tax norms and regulations. The Taxpayer is of the opinion that he
agrees that the tax sanction must be given clearly, firmly or with zero tolerance, and must be in
accordance with the violation or error committed by the Taxpayer who commits it. The results of this
study are in accordance with previous research conducted by Ferry Halimi and Waluyo (2019) that
the application of tax sanctions has a positive and significant effect on taxpayer compliance.
The Effect of Tax Understanding, Taxpayer Awareness, Service Quality, Warning Letters and
Forced Letters, Tax Avoidance, and Tax Sanctions on Taxpayer Compliance
Based on the tests that have been carried out, the calculated F value is 21,672 with a significant level
of 0.000. The F table value is obtained from the degree of freedom df (residual) which is 2.19 at the
5% confidence level (α=0.5%). Because the calculated F value is greater than F table (21.672 > 2.19)
with a significant level of 0.0000 < 0.005. Thus it can be said that H0 is rejected and Ha is accepted.
This means that the independent or independent variables have a significant effect simultaneously
on the dependent variable, namely taxpayer compliance. Furthermore, based on the results of the
coefficient of determination test, the taxpayer compliance variable produces an Adjust R Square
value of 0.556 or 55.6%. This shows that the ability of the independent variables studied to explain
the taxpayer compliance variable is 55.6%. While the remaining 44.4% is influenced by other
variables outside the regression model studied. These variables include the quality of tax audits,

taxpayer behavior, and others.

CONCLUSIONS AND RECOMMENDATIONS
Based on the results of the analysis and discussion of the factors that affect taxpayer
compliance at the Cileungsi Pratama Tax Service Office, it can be concluded that the understanding
of taxation has a positive and significant effect on taxpayer compliance. This shows that the
understanding of taxation owned by the Taxpayer affects the Taxpayer's compliance. The more
taxpayers understand taxation, the more taxpayer compliance will increase. Taxpayer awareness has
a positive and significant effect on taxpayer compliance, this shows taxpayer awareness also affects
taxpayer compliance in fulfilling their tax obligations. Therefore, taxpayers must be made aware to
continue to carry out their tax obligations in order to help the state to continue national development.
Service quality has a positive and significant effect on taxpayer compliance, this shows that service
quality also affects taxpayer compliance in fulfilling their tax obligations. The higher the quality of
services provided to taxpayers, the higher the compliance of taxpayers. Issuance of warning letters
and forced letters shows a negative relationship to taxpayer compliance as indicated by the coefficient
value obtained. Thus, the increasing number of warning letters and forced letters received by
taxpayers, the compliance of taxpayers in fulfilling their tax obligations can be said to decrease. Tax
avoidance shows a negative relationship to taxpayer compliance which is shown because of the
coefficient value obtained. This shows that tax avoidance has a negative effect on taxpayer
compliance. Thus, it can be said that the more tax evasion by taxpayers increases, the taxpayer's
compliance in fulfilling their tax obligations decreases. Tax sanctions have a positive and significant
effect on taxpayer compliance, this shows that tax sanctions also affect taxpayer compliance in
fulfilling their tax obligations. The stricter the tax sanctions imposed on taxpayers, the compliance
of taxpayers not to commit violations will also increase. And the variables of tax understanding,
taxpayer awareness, service quality, warning letters and forced letters, tax avoidance, and tax
sanctions have an effect on taxpayer compliance. The variables of tax understanding, taxpayer
awareness, and service quality have a positive influence. While the variables of warning letters and
forced letters, as well as tax avoidance have a negative influence on taxpayer compliance.
Based on the results of the research and discussion that has been carried out, the authors can
provide suggestions as follows: tax officers can work more optimally to improve taxpayer
compliance by continuing to provide tax socialization, provide services and instructions that are
clear, good, polite, friendly, and of high quality and provide reminders to Taxpayers to always update
Taxpayer information in fulfilling their tax administration and obligations. So that taxpayer
awareness and compliance continues to increase, tax revenue increases, tax officers can provide
firmness and clarity in the imposition of sanctions to taxpayers so that taxpayers do not commit
violations, such as not paying taxes or manipulating or minimizing the amount of tax payable that
must be paid which can detrimental to the state and the Tax Office. And for further research who are
interested in doing research/writing in the same field or topic, they can search for and use variables
that are not used in this study, so that new results can be found that will increase taxpayer compliance.
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The E-Readiness Approach To Measuring The Level Of

Adoption Readiness E-Marketplace
For MSMEs In Bengkulu Province
1
Arifah Hidayati
Universitas Prof. Dr. Hazairn, SH
arreefa.fe@gmail.com
Abstract
The purpose of this study was to analyze the readiness of e-marketplace adoption by MSMEs in
Bengkulu Province. The method used is the e-readiness method using six indicators, namely
Awareness, Human Resources, Business Resources, Technology Resources, Commitment and
Governance. The research sample is MSMEs located in Bengkulu Province and have criteria that
have or are still using e-marketplace technology. Data was collected through purposive sampling
method. Variables were tested through Structural Equation Modeling (SEM) using SmartPLS
Software. The measurement results show that e-readiness affects the level of readiness to use
information technology facilities to sell their products through e-marketplaces. Based on the
indicators used, The results show that the value of the awareness indicator is 3.54, the value of the
governance indicator is 2.94, the value of commitment is 2.97, the value of business resources is
3.82, the value of human resources is 2.61, and the value of technology resources is 2.32, the value
of the adoption rate is 3.11. The results of the study indicate that the value obtained is at a level that
is quite ready to adopt e-marketplace
Keywords: e-readiness, e-marketplace adoption, level of readiness, Bengkulu province SMEs

JEL Codes: M15, J11, L25
INTRODUCTION
The development of information technology today has led to cultural changes in everyday
life. The rapid development of information technology has provided many conveniences for
business people, governments and the user community in all aspects of life. Although in general the
development of this industry is not very satisfactory, it has contributed greatly to the economic
development of Bengkulu Province. The main factors hindering industrial development include:
competition, economic policy, prices, capital and management policies, and mastery of technology,
including mastery of information and communication technology in business development.
Another problem faced by MSMEs today is marketing difficulties (Sulistyorini, 2014).
Currently, international trade entrepreneurs face two main challenges, namely market
access and increasing competitiveness. Utilization of information technology in product marketing
is to expand market access. E-commerce is one way for MSMEs to market their products in
addition to expanding market access. Small and medium enterprises must see the benefits of e-
commerce in order to integrate with the era of globalization that they must face (Prabowo, 2014).
The adoption of e-commerce has brought enormous benefits to business people (Sevtian, 2011).
Currently, many MSMEs in Bengkulu Province have used the internet for electronic marketing.
However, because the transactions carried out cannot be guaranteed, the obstacles faced are the
many cases of fraud and low consumer confidence in e-marketing.
Along with the increase in the number of cases, solutions are needed to increase customer
trust in transactions through online marketing. Increasing customer trust can use the e-marketplace
model. The e-marketplace model allows joint accounts and third parties to provide guarantees for
successful transactions. Consumer concerns about fraud and non-delivery of goods can be avoided.
Simultaneously, with the existence of a joint account tool, business reliability will be higher. The
majority of industries that are developing in Bengkulu Province are micro and small industries, for
different business sectors. Through the use of technology, especially information technology
among micro and small industries, it is hoped that industrial development in Bengkulu Province
can be improved more effectively.
Hidayati 105
Before implementing this e-marketplace model, it is necessary to conduct a study to
determine the level of readiness of business actors in this case small and medium enterprises in
Bengkulu province. One way to test this level of readiness is to use information technology (Dada,
2006) using the e-readiness test method.
There are not many MSME actors in Bengkulu Province who use internet technology and
are still focused on conventional marketing. Only a small part have started to use internet and
website technology as a tool for their business and marketing activities
Based on a preliminary survey (Pujani, 2008) it was found that knowledge and interest in
using internet technology, especially among MSMEs in Bengkulu Province, was still low. This is
suspected to be a lack of access to information about the use of the internet and understanding of
business models electronically (e-business or e-marketplace) and the practice of using these
technologies in the business world, especially MSMEs in Bengkulu Province. In addition, it was
also found that the e-marketplace site was not developed as a means of online marketing media for
MSME products in Bengkulu Province. Therefore, the diffusion of the use of internet technology in
business activities is very important to increase the company's capabilities through the use of this
information technology.
Currently, MSMEs in Bengkulu Province are trying to market their products using the
internet and e-marketplaces. Here we will research how ready these small industries are in
marketing their products using the internet and e-marketplaces.
Several previous studies (Molla and Licker in Pujani, 2011) have stated that in order to use
the E-marketplace, it is necessary to measure how ready the company is electronically from the
external and internal aspects of the company. The majority of researchers conduct research on e-
readiness in 8 developed countries and for the level of one country. Meanwhile, there are not many
studies that measure e-readiness at the company level in developing countries such as Indonesia. So
that this study will be very useful for the company and local government levels. Therefore, by
involving several micro and small entrepreneurs (MSMEs) in Bengkulu Province, it is necessary to
carry out e-readiness research activities, especially internal e-readiness as a process of developing
the use of the internet and e-marketplaces among entrepreneurs and also to assist the Bengkulu
Provincial government to improve regional economy.
LITERATURE REVIEW
E-marketplace is an online marketplace (usually B2B) where buyers and sellers exchange
goods or services. Buyers can find as many suppliers as possible according to the required
conditions, so they can get them according to market prices. At the same time, suppliers/sellers can
identify companies that need to sell products/services (Pavlou and Gefen, 2012).
Need to complete the company's e-readiness measurement process to use the e-
marketplace. The degree of e-readiness is the degree of readiness of the country, the economy, and
the degree of readiness to benefit from the use of information and telecommunications technology
(ICT).
According to Lai and Weng (2010), what is meant by preparation is the concept of change,
namely the concept of development and movement. The concept of preparation involves not only
physical maturity, but also a combination of emotional stress and situations caused by the learning
environment and the results of new operations. Readiness to change becomes an important measure
of enthusiasm in implementing e-business.
E-commerce activities are considered as a social system, where workers are the most
important aspect. Therefore, it is necessary to know how to help employees accept certain changes
in e-commerce in the organization. Therefore, understanding that employees are ready to
understand the use of e-commerce in the company is very important for the success of the e-
commerce operation itself. Therefore, research by Lai and Ong (2010) puts forward the concept of
change to measure worker readiness for e-commerce using technical factors, structure, and tasks
described in the construction of benefits, security, collaboration, and certainty.
Some indicators of e-readiness, for example the number of telephone lines per 100 people
or the percentage of GDP of ICT infrastructure. Therefore, the status of e-readiness can usually be
explained within the scope of a country (Dada, 2011). However, Molla and Licker (2005) point out
that e-readiness needs to be measured not only at the macro (national) scale but also at the micro
106 Hidayati
(enterprise) scale, such as the manager's role, commitment, and available resources in the
organization. The "8C" can be used to measure the readiness to use e-commerce, namely:
connectivity, content, community, business, capacity, culture, cooperation and capital (Rao, 2003).
In this study, the research model uses the model developed by Molla and Licker (2005). The
structure to be developed consists of six factors of internal/organizational readiness (KI). Internal
preparation includes awareness, commitment, human resources, technology, business resources,
and governance
RESEARCH METHOD
This research will be conducted using quantitative methods as explanatory research in field
survey research. To conduct this quantitative study, a field survey was conducted to obtain a data
base of MSMEs in Bengkulu Province. Depending on the expression of the question to be
answered different objects and methods will be used for this research. This study will determine
and measure the readiness of e-marketplace adoption among MSMEs in Bengkulu Province.
Identification of respondents using purposive sampling method to identify respondents.
The resource persons are small and medium enterprises in Bengkulu Province which are spread in
several places, namely Bengkulu City, Kepahiang Regency and Rejang Lebong Regency. The
MSMEs that become objects are as follows:
a. Bengkulu City: Bengkulu Traditional Food SMEs (ND Stores), sand painting SMEs
b. Kepahiang: snacks SMEs (A5 and Bunga), Coffee SMEs (Rafindo Coffee, Bukit Coffee,
Kepahiang Coffee, BJ Coffee)
c. Rejang Lebong Regency: Snacks SMEs (JJ Cake n Cookies, Sari Gizi), Palm Sugar SMEs
(Sari Aren, UD Mawar), Coffee SMEs (AA Coffee Cup, Kaba Mountain Coffee)
The measurement of the level of readiness with the e-readiness model uses the following
indicators:
a. Awareness(concern)
b. Governance (governance)
c. Concern
d. Business resources
e. Human Resources
f. Technology resources
g. Adoption (Molla and Liker, 2005)
The assessment of each indicator uses a Likert scale as shown in table 1 below:
Table 1.
Level of readiness indicator measurement scale
No Scale Information
1 Score 5 Strongly agree
2 Score 4 Agree
3 Score 3 Just agree
4 Score 2 Do not agree
5 Score 1 Strongly disagree
DISCUSSION
This questionnaire was distributed to respondents in March 2021 to MSMEs who have used
e-commerce in Bengkulu Province in marketing their products. From the results of the
questionnaires distributed, the demographic characteristics of the respondents were obtained as
follows:
Hidayati 107
Respondents by Age Group

Table 4.1
Respondents by Age Group
Age Group Frequ Percentage

ency (%)
Less than 25 years old 0 0
25-35 years old 22 26,40
36-45 years old 39 46,60
46-55 years old 20 23.60
56-65 years old 3 3.60
Total 84 100
Source: Processed from questionnaires using SPSS
From the results of the distributed questionnaires, it was found that the majority of
respondents aged 25-45 years (73%) with a frequency of 61 people were the ones who accessed the
internet the most. While those aged >46 years only access the internet as much as 27.2% with a
frequency of 23 people.
Respondents by Education
Table 4.2
Respondents Based on Education
Education Frequency Percentage (%)
SD 1 1.2
Junior High School 11 13.1
Senior High School 47 56.0
Diploma 15 17.9
Bachelor 10 11.9
Total 84 100
It can be seen from table 4.2 that the majority of the educational backgrounds of MSME
owners in Bengkulu Province who use the internet and use e-commerce are in the range of
education levels from elementary to high school. This is indicated by the total percentage of 70.3%
with a frequency of 59 people. While the rest have undergraduate and diploma backgrounds with a
percentage of 29.8% and a frequency of 25 people.
Respondents based on Internet-savvy Employees
Table 4.3
Respondents Based on Employees Who Understand the Internet
Employees Who Understand the Frequency Percentase (%)
Internet
There is not any 16 19
1 person 52 61.9
2-3 people 12 14.3
4-5 people 3 3.6
>5 people 1 1.2
Total 84 100
Based on table 4.3 above, the results show that the majority of MSMEs in Bengkulu
Province on average only have one employee who understands the internet. This can be seen from
108 Hidayati
a total of 84 respondents, as many as 68 respondents or 61.9% only have one employee who
understands the internet. Even as many as 16 respondents or MSMEs who were questioned, did not
have employees who understood the use of the internet. Very few MSMEs have more than one
employee who understands the internet, only 19.1% with a frequency of 16 people. There are even
MSMEs whose employees do not understand the internet at all, as many as 16 people or 19%.
Respondents Based on Average Internet Access

From Table 4.4 we can see that MSMEs can be said to be routine in accessing the internet, at
least once a day. A total of 34 MSMEs regularly access the internet or 40.5%. However, this figure
is smaller than the number of MSMEs that only access one to three times a week, which is 50
MSMEs or 59.5%.
Table 4.4
Respondents Based on Average Internet Access
Average Internet Use Frequency Percentase (%)
1 x a day 34 40.5
1-3 x a week 33 39.3
1 x a week 17 20.2
1-3 x a month 0 0
1 x month 0 0
Total 84 100
Respondents Based on the Purpose of Accessing the Internet
Table 4.5
Respondents Based on the Purpose of Accessing the Internet
Purpose of Accessing the Internet Frequency Percentage (%)

Communication 25 29.8
E-mail 10 11.9
Friendship (friendster/facebook) 3 3.6
Looking for Raw Materials and Business 46 54.8
Information
Games 0 0
Total 84 100
In table 4.5 above, it can be explained that MSMEs access the internet to be able to get
information about raw materials and businesses and communicate, this can be seen from the total
percentage of 84.6%. While the rest access the internet for email, make friends on social networks,
or just to play games.
Respondents Based on Opportunities to Market MSME Products Through the Internet

Table 4.6
Respondents Based on Opportunities to Market MSME Products Through the Internet
Opportunity Frequency Percentase
Not Promising At All 4 4.8
Not Promising 3 3.6
Do not know 6 7.1
Promising 37 44.0
Very promising 34 40.5
Total 84 100
Hidayati 109
Based on the data above, it can be concluded that MSMEs are aware of the opportunities in
marketing products via the internet are very promising, this can be seen from the percentage of
84.5% with a frequency of 71 people saying that e-commerce is very promising.
Respondents Based on Constraints to Marketing MSME Products Through the Internet
Table 4.7
Respondents Based on Constraints to Marketing MSME Products Through the Internet
Constraint Frequency Percent
(%)
Insufficient funds 9 10.7
Unprepared workforce 13 15.5
Inadequate telecommunications infrastructure 2 2.4
Lack of knowledge of running a business online 60 71.4
Consumers who are not able to use the internet 0 0
Total 84 100
Table 4.7 explains that the obstacle faced by respondents in marketing MSME products via
the internet is the lack of knowledge of running a business online. A total of 60 respondents said
the same thing or 71.4%
Readiness Analysis Of E-Marketplace Application

The next section will explain the results of the analysis of readiness for e-marketplace
adoption in small and medium-sized businesses in Bengkulu Province through the e-readiness
method. The level of readiness is measured using several indicators based on awareness,
governance, commitment, business resources, human resources, technical resources, and the level
of adoption (Molla and Licker, 2005). The results of measuring the readiness of MSME e-
marketplace adoption can be explained as follows:
Awareness
Table 4.8
Respondents' Responses to Awareness Indicators
No Statement mean
1 Concern and desire to run a business electronically or computerized 3.87

2 Concern and desire to run a business using the internet system 4.06
Concern for competitors who run their business electronically or computerized 3.88
3
Concern for competitors who run their business using the internet system 3.90
4
5 Knowledge of suitable electronic business models 2.63
Knowledge of the model of running a business using an internet system that fits
3.08
6 the organization
Understand the opportunities and threats in running a business electronically or
3.11
7 computerized
Understanding the opportunities and threats in running a business using the
3.62
8 internet system
110 Hidayati
No Statement mean
Understand the benefits of doing business electronically or computerized for the

3.24
9 organization
Understand the benefits of doing business using the internet system for
3.82
10 organizations
Understand the positive and negative impacts of running a business electronically
3.62
or computerized in doing business in an industrial environment
11
Understand the positive and negative impacts of running a business using the
12 3.64
internet system in doing business in an industrial environment
13 Understanding of the failure to do business electronically or computerized for the 3.48
organization whether to fail / lose in competing
14 Understanding of failure in running a business using the internet system for the 3.54
organization whether to fail / lose in the competition
Average 3.54
Based on table 4.8, it can be seen that for the Awareness indicator, the average respondent
has a majority answer range, which is between disagreeing to agreeing with statements related to
the awareness indicator. However, the tendency of respondents' answers is between moderately
agree and agree, this can be seen from the average frequency of these answers, which is 26.64 and
25.64. The tendency of the response to this governance indicator is in significant direction because
the average score is 3.54.
The statement with the lowest average score, which is only 2.63, lies in the knowledge of the
appropriate model of running an electronic business. This means that respondents have a fairly low
perception of this statement. This statement has a response that tends to lead to the negative
because the majority of respondents answered disagree to quite agree. While the statements that
received a positive response from respondents were concern and desire to run a business using the
internet. This is indicated by the acquisition of the largest average score, which is 4.06 with a range
of answers agreeing to strongly agreeing. This means that the majority of respondents have a high
desire to do business using internet services.
Governance
On the Governance indicator, the average respondents answered quite agree and agree to the
statements on this indicator. This can be seen in table 4.9 with the average frequency of 31.43 and
21.57 respectively. The tendency of the response to this governance indicator is in a less significant
direction because the average score is only 2.97.
The statement with the largest average score of 3.36 is about the ability to analyze the
possibility of changes from within the organization, suppliers, partners and consumers through the
implementation of e-marketplaces. While the statement of the existence of a matrix to assess the
impact of e-marketplace initiatives has the lowest average score of 2.48. This means that
respondents' awareness of changes in business environmental conditions as a result of the
implementation of e-commerce is quite high, but respondents do not understand the usefulness of
the matrix to assess the impact of e-commerce implementation.
Hidayati 111
Table 4.9
Respondents' Responses to Governance Indicators
No Statement mean
1 Roles, responsibilities, and accountability are clear in e-commerce initiatives 3.00
2 E-commerce accountability is born through on-going responsibility 2.98

3 Decision-making authority has been clearly assessed for e-marketplace 3.23
initiatives.
4 Analyzing the possibility of organizational change, suppliers, partners and
consumers through the implementation of e-marketplace 3.36
5 We follow a systematic process to manage change due to e-marketplace
implementation 2.89
6 We have a metric to assess the impact of e-commerce initiatives 2.48
7 All employees at all levels support e-commerce initiatives 2.65

Average 2.94
Commitment
Based on table 4.10 it is found that the majority of respondents answered quite agree and the
average of the second largest answers was agree, with the average frequency of answers
respectively 28 and 23.67. Table 4.12 also explains the statement with the highest average score of
3.75 for the statement that the respondent's organization has a vision and mission to run a business
electronically. The statement with the lowest response was about the success of the initiative to run
a business using the internet system. The average score of this statement is 2.97.
Table 4.10
Respondents' Responses to Commitment Indicators
No Statement mean
1 Our organization has a Vision/Mission about running a business 3.75

electronically
2 The organization has a vision/mission about running a business using the 3.51
internet system
3 The organization's vision of running a business electronically is 3.29
understood by the entire organization
The organization's vision of running a business using the internet system 3.21
4 is understood throughout the organization
5 The initiative to run a business electronically has been successful 2.48

6 The initiative to run a business using the internet system has been 2.55
successful
7 All initiatives to run a business electronically have been successful 2.42
8 The initiative to run a business using the internet system has been 2.40
successful
9 The leadership is enough to help the initiative and implementation of 3.13
running a business electronically
Average 2.97
112 Hidayati
Business Resources
Table 4.11
Respondents' Responses to Business Resource Indicators
No Statement mean
1 Employees are quite open and trust each other. 4.17

2 Communication is quite open in our organization. 4.08
3 Organizations have a culture/habit to share information with each other. 4.12
4 The organization has a policy to support the growth of initiatives to 3.60
conduct business electronically or computerized.
The organization has a policy to help grow initiatives to run a business 3.57
5 using an internet system.
6 Failure can be tolerated by the organization. 3.62
7 Organizations are quite capable of dealing with change 3.61
Average 3.82
Table 4.11 shows the respondents' perceptions of the statements that explain the Business
Resource Indicators. The average score of respondents' answers is 3.82, meaning that the majority
of respondents answered "quite agree and agree". In addition, many respondents also answered
"strongly agree" to the statements on this Business Resources indicator. This means that
respondents' perceptions are more positive for this indicator. In addition, from Table 4.11 it can be
seen that the statement with the highest average score of 4.12 means that the organization has a
culture to share information with each other. This means that the majority of respondents said that
their organization or the MSMEs they manage do have a culture or habit of sharing information.
Human Resources
Table 4.12
Respondents' Responses to Human Resources Indicators
No Statement
mean
1 The majority of employees have a computer background. 2.32
2 The majority of employees have limited use of computers. 2.90
Average 2.61
Statements that represent indicators of Human Resources have a balanced response. This
can be seen from the even distribution of answers from respondents to the two statements that
explain the Resource indicator. These two statements have different perceptions. Statement one is
positive while statement two is negative. So based on the average respondents' answers, which can
be seen in table 4.12, it can be concluded that even though the employees do not have a computer
background, they do not face difficulties in just using computers or internet technology.
Hidayati 113
Technological Resources
Table 4.13
Respondents' Responses to Indicators of Technological Resources
No Statement mean
1 Have enough experience in using the internet. 3.08
2 Sufficiently able to deal with rapid environmental changes 3.57
3 The organization has used the internet well. 2.98
4 Have internet bandwidth channel. 2.43

5 Has a fairly flexible system. 2.74
6 Have an information system in accordance with consumer needs. 2.96
Average 2.97
Respondents' responses to the statements of the technology resource indicator are not very
significant. This can be seen from table 4.13, based on the table it is explained that the average
respondent's answers only answered quite agree. Although those who answered agreed and strongly
agreed, the majority, but not as many as those who answered quite agreed. It can be seen from table
4.13, the highest average is those who answer quite agree that is equal to 25.5.
The statement with the highest average score is the one that describes the respondent's
ability to adapt to rapid environmental changes. This is shown by the average score for this
statement which is 3.57. The lowest average score is 2.43 on the statement that the respondent does
not have an internet bandwidth channel.
Adopt
Table 4.14
Respondents' Responses to Adoption Indicators
No Statement mean
1 Adoption in running a business electronically 2.32
Average 2.32
Table 4.14 shows the respondents' perceptions of the statements describing the Adoption
Indicators. This can be seen from the existence of as many as 65 respondents who stated that they
were ready to run MSMEs by adopting e-commerce. While the rest, there were 19 respondents who
stated that they were not ready to run MSMEs using the internet and electronics.
DISCUSSION
This study aims to test the readiness to use e-readiness as a marketing tool, which includes
variables of awareness, governance, commitment, business resources, human resources, and
technical resources for the use of e-marketplaces by MSMEs in Bengkulu Province.
Hypothesis test results
1. Awareness has no positive and significant effect on the level of readiness to use e-
marketplaces. This is possible because MSMEs still do not understand the importance of using
e-marketplaces in winning business competition. This is in line with the results of research by
114 Hidayati
Molla and Licker (2005) which shows that awareness does not affect the level of use of e-
marketplaces.
2. Governance has a significant positive effect on the level of readiness to use e-marketplaces.
The governance model is a model used by MSMEs to manage operations, strategies, and
business strategies related to the use of e-marketplaces. The existence of a clear form of
governance makes small, medium and micro businesses use e-commerce more highly. This is
the same as that found by Molla and Licker (2005). They found that the governance model
used influenced the institutional use of e-marketplaces.
3. Commitment has no significant positive effect on the level of readiness to use e-marketplaces.
This is possible because although MSMEs have a clear vision and strategy regarding the use
of e-marketplaces, MSME owners have not succeeded in initiating the use of electronic media,
the internet or computers by their employees in their business operations.
4. Business Resources have a significant effect on the level of readiness to use e-marketplaces.
Business Resources are one of the important factors in the use of e-marketplaces for MSMEs.
This is evident in MSMEs that have used e-marketplaces, they already have very adequate
Business Resources.
5. Human resources have no significant effect on the level of readiness to use e-marketplaces.
Digitization is actually not determined by computer background, nor is it determined by the
ability of MSME employees to operate computers. For micro, small and medium enterprises to
be willing and able to use e-marketplaces, it takes more than just computer and internet
capabilities.
The technological resources owned by MSMEs have no significant effect on the level of
readiness to use e-marketplaces. This can be seen from the minimal use of internet bandwidth
channels and other technology MSMEs that use e-marketplaces. Therefore, among the three types
of resources that become indicators, only one type of resource will affect the use of e-commerce by
micro, small and medium enterprises, namely business resources. Meanwhile, the readiness of
human resources and technology has not affected the use of e-marketplaces by MSMEs.
CONCLUSION
This study measures the analysis of readiness for e-marketplace adoption through an e-
readiness approach for MSMEs in Bengkulu Province. This study involved 84 questionnaire
respondents. The data was tested using SEM and SmartPLS. From the results of data processing, it
was found that internal e-readiness had a positive effect on the readiness of e-marketplace
adoption.
Based on the discussion that has been carried out, it can be seen that the level of readiness
for the adoption of the MSME e-marketplace in Bengkulu Province is quite ready based on the
level of awareness, governance, commitment, business resources, human resources and
technological resources
Research implications
The results of the study indicate that the role of Business Resources greatly influences
MSMEs in adopting e-marketplaces. It can be seen that there is a need for MSMEs for a culture or
habit of open communication in the organization so that a sense of mutual trust arises between
owners and employees and also between employees. There is also a need for the ability of MSMEs
to face rapid business changes, while in terms of business resources, there is still a lack of policies
from MSMEs that can foster initiatives to run businesses digitally.
This study provides important implications for MSME managers to be motivated to become
technology-based MSMEs so that business ventures are more effective and efficient and able to
reach unlimited markets in various different places. Generally, MSMEs are aware of the
opportunities of using e-marketplaces in their business, but are generally constrained by limited
funds and human resource capabilities that still need to be improved. The follow-up to measuring
the level of readiness is that the Bengkulu Provincial Government is expected to make
recommendations to develop an e-marketplace that can be used by MSMEs to do on-line
marketing.
Hidayati 115
Limitation And Continuous Study

This research was only conducted on a few MSMEs located in Bengkulu City, Kepahiang
District and Rejang Lebong District, so this study could not generalize MSMEs as a whole in
Bengkulu Province. It is hoped that in future research, other researchers will reach out more to all
MSMEs that use the internet as a medium for conducting trade transactions.
There are many other factors that might influence the level of readiness for e-marketplace
adoption in MSMEs, this study only looks at the influence of readiness internally. It is hoped that
further research will create a more complex model in explaining other factors that can affect the
level of readiness for e-marketplace adoption
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Lai, JY and Ong, CS (2010) Assessing and Managing Employees for Embracing Change: A
Multiple-Item Scale to Measure Employee Readiness for E-Business. Technovation, 30,
76-85.
Measure Employee Readiness for E-Business.Technovation, 30, 76-85
Molla, A. and Licker, P. (2005), Perceived E-Readiness Factors in E-Commerce Adoption: An
Empirical Investigation in a Developing Country, International Journal Of Electronic
Commerce, 10, 1, 83-110.
Pavlou, A. and Gefen, D. (2012). Building effective online market places with institute based trust.
Information Systems Research, 15, 37-59
Prabowo, Hartiwi, (2014). Analysis of Trust in C2c E-Commerce on Purchase Decisions and Its
Impact on Repurchase at Kaskus. Binus Business Review vol.5 no.1
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readiness/
116 Hidayati
Analysis On Online Shopping Sites And E-Commerce In Indonesia:

Customer Shopping Enjoyment And Behavior During Covid-19
Pandemic To Increase Sales Volume Of MSMES
1
Gesty Ernestivita, 2Subagyo
Economic and Business Faculty of Universitas PGRI Nusantara Kediri
Jl. KH.Achmad Dahlan 76, Kediri
gesty@unpkediri.ac.id, subagyo@unpkediri.ac.id
Abstract
The presence of COVID-19 has changed new habits in society. Many changes and changes in
consumer behavior have occurred after the emergence of the pandemic. Changes in today's
consumers certainly occur because of the behavior of changing conditions that force them to adapt
to these conditions. This is because consumers also need time to readjust to their old habits and
behaviors. The purpose of this study is the enjoyment and shopping behavior of customers to
maximize sales of MSME products on various digital and e-commerce platforms in Indonesia. In
this study the approach used is a qualitative approach. The type of research used is
ethnomethodological research. Data were collected by interviewing and providing questionnaires to
entrepreneurs and customers of online shopping and e-commerce sites in Indonesia. In checking the
validity of the data using the triangulation method. The results of this study indicate that most of
the customers who enjoy their screen time on shopping or e-commerce sites when there is a sales
flash or scrolling in the testimonial column, and most of them make a lot of impulse purchases
when shopping online.
Keywords : Shopping Enjoyment, Customer Behaviour, MSMEs

JEL Codes: G41, M31
Introduction
The emergence of a global disaster in the form of the COVID-19 pandemic, whether we
realize it or not, has changed our behaviour as consumers in many ways. One of them is people's
shopping behaviour. Online retailers such as Amazon, Tokopedia, Shopee and so on are gaining
tremendous profits along with the surge in online shopping transactions during the pandemic. This
clearly marks the number of consumers who do or switch to online shopping during the pandemic.
The demands of physical distancing make people have to do any activity from home.
Including shopping activities. Thus, the consumption level of the Indonesian people is increasing
due to the amount of time they spend on online shopping platforms. This condition gives rise to a
demonstration effect. People are psychologically affected because they see a lot of storefronts and
transactions for products or goods that are widely available in various market places or online
shops. In addition to the demonstration effect, the increase in consumption during the pandemic is
also due to the fact that the public as consumers are increasingly spoiled with various conveniences
in terms of transactions from the payment and delivery process. In addition, the psychological
situation is saturated because it has to limit the space for interaction with the outside world. The
pattern, he continued, has a psychological effect that makes consumers not only buy based on their
needs but are also affected by the situation in the online market. As a result, they buy goods beyond
their reasonableness and need or are more driven by the desire factor.
The product categories purchased by Indonesian consumers before and after the COVID-
19 pandemic were very different. The results of the Global Consumer Insights 2020
PricewaterhouseCoopers (PwC) survey entitled "Before and After the Covid-19 Outbreak" revealed
that the pandemic and the social distancing measures implemented have caused fundamental
changes in the way consumers work, communicate, eat, and maintain their health. Consumers have
adapted in the way they shop with the social distancing rules imposed due to the corona virus. It
has affected consumers in all aspects of life, including buying daily necessities. The increase in the
amount of consumption can be seen in the chart below:
Ernestivita, Subagyo 117

Figure 1. Buying Behaviour due to COVID-19 lockdown

Source: Katadata.com (2021)
We can see from the picture above that the increase in public consumption is in food
services, education and various types of entertainment. It can be said that shopping enjoyment and
behaviour have a strong enough influence on consumptive patterns. Not infrequently many
incidents of impulse buying in the community when making a purchase.
MSMEs who are struggling to face a crisis due to the pandemic, can take advantage of this
phenomenon to conduct sales activities through various online shopping sites, social media and e-
commerce which are flooded with visitors. Especially MSMEs that sells food beverages and
groceries product. This is an opportunity for MSMEs to increase their sales volume in the midst of
the pandemic crisis.
Shopping enjoyment makes people forget the priority of needs, affected by promotions on
various digital platforms by sellers. The analysis of consumer shopping enjoyment can be a
reference for MSMEs business to look for gaps to reap the maximum profit in the midst of
increasing consumer impulsive buying activities. Shopping Enjoyment or shopping pleasure is
defined as the pleasure obtained from the shopping process (Beatty and Ferrell in Kwek et al.,
2010). Shopping pleasure is identified into three types of constructs, which include escapism,
pleasure, and arousal. Escape is reflected in the enjoyment that comes from engaging in activities
that are interesting to the point that it offers an escape from the demands of the everyday world.
Pleasure is the degree to which a person feels excited, happy, or satisfied in online shopping, while
arousal is the extent to which a person feels aroused, active, or alert during online shopping
(Menon and Khan in Kwek et al., 2010). Consumers who fall into the shopping enjoyment category
will achieve their pleasure by spending time browsing the products they want (Seock and Bailey,
2011).
Not only shopping enjoyment, but customer behaviour analysis is playing role in
increasing sales volume of MSMEs. According to Ajzen (1991) Theory of Planned Behavior (TPB)
explains that consumer behavior is shaped by attitudes, subjective norms, and perceived behavioral
control (PBC) that form intentions. Intentions then influence how a person behaves. This theory
forms the basis of the current study that analyzes the influence of intention on online buying
behavior. This model was developed by Ajzen to enhance the predictive power of Theory of
Reasoned Action (TRA), by adding the PBC variable. This theory describes that attitudes,
subjective norms, and PBC together form intentions and behavior. By knowing consumer behavior
when shopping, MSMEs can determine actions such as promotional activities, so as to maximize
sales.
This study aims to analyze customer shopping enjoyment and behavior to maximize sales of
MSMEs products on various digital and e-commerce platforms in Indonesia.
118 Ernestivita, Subagyo

LITERATURE REVIEW
Shopping Enjoyment Theory
Shopping Enjoyment or shopping pleasure is defined as the pleasure obtained from the
shopping process (Beatty and Ferrell in Kwek et al., 2010). Shopping pleasure is identified into
three types of constructs, which include escapism, pleasure, and arousal. Escape is reflected in the
enjoyment that comes from engaging in interesting activities to the point that it offers an escape
from the demands of the everyday world. Pleasure is the degree to which a person feels excited,
happy, or satisfied in online shopping, while arousal is the extent to which a person feels aroused,
active, or alert during online shopping (Menon and Khan in Kwek et al., 2010).
Consumers who fall into the shopping enjoyment category will achieve their pleasure by
spending time browsing the products they want (Seock and Bailey, 2011). Seock and Bailey also
use a good mood as a measure of shopping enjoyment. A good or positive mood can be in the form
of feelings of like, good and happy (Peter and Olson, 2013). Many shoppers buy things they find
attractive, even though they don't need them yet. This often happens to women who like to shop.
Impulse buying occurs when consumers see a certain product or brand, then consumers become
interested in getting it, usually because of an attractive stimulus from the store (Utami, 2010).
According to Mowen and Minor (2001) in Gultekin and Ozer (2012) the definition of impulse
buying is an act of buying that is carried out without having previous problems or intentions or
buying intentions formed before entering the store. In essence, impulse buying can be explained as
a choice that appears immediately when he sees an item that catches his attention.
Theory of Planned Behaviour

According to Ajzen (1991) Theory of Planned Behavior (TPB) explains that consumer
behavior is shaped by attitudes, subjective norms, and perceived behavioral control (PBC) that
form intentions. Intentions then influence how a person behaves. This theory forms the basis of the
current study that analyzes the influence of intention on online buying behavior. This model was
developed by Ajzen to enhance the predictive power of Theory of Reasoned Action (TRA), by
adding the PBC variable. This theory describes that attitudes, subjective norms, and PBC together
form intentions and behavior.
The three intention-forming variables in the TPB are explained respectively as follows:
a. Attitude: a person's positive or negative evaluation of a behavior. The concept is the degree to
which behavior is judged positive or negative.
b. Subjective norms: a person's perception of a certain behavior, where this perception is
influenced by the judgment of those around him who are considered influential, such as
parents, partners, friends, and mentors.
c. Perceived behavioral control (PBC): the perception of how easy or difficult it is to perform
certain behaviors. PBC is determined by the presence of factors that can facilitate or hinder a
person's ability to perform the behavior. PBC is conceptually related to self-efficacy
developed by Bandura (1977) in social cognitive theory.
TPB is one of the behavioral theories with high predictive power, and is used to predict
human behavior in all fields. Studies that quite often utilize this theory are in the field of marketing
(buying behavior, advertising, public relations), behavior in new environments such as online, and
in new issues such as environmentally friendly products, health (public education), and
entrepreneurial behavior.
attit
ude
Perc
eived
Beha Figure. 2 Theory of Planned Behaviour
vioral Source: George (2004)
Contr
ol
METHODOLOGY
In this study the approach used is a qualitative approach. The type of research used is
ethnomethodology research. Ethnomethodology is a study whose inductive truth is merely the truth
of knowledge, therefore the study of this methodology is secular. In this study, the researcher is an
active instrument that acts as a data collector and collects data in the field. While other data
collection instruments other than humans are in the form of documents and other supporting tools
and their nature is to support the validity of research results, but the instrument is only as a support.
According to Sugiyono (2019), in qualitative research, the researcher acts as a human instrument,
which is to select informants as data sources, determine the focus of the research, collect data,
assess the quality of the data that has been collected, analyze the data, interpret the data and then
make a conclusions based on what was found in the field. Based on the literature review, there are
qualitative research stages, including: the pre-field stage, the process stage in the field, the data
analysis stage, the conclusion stage and finally the result reporting stage. To determine the validity
of the data, several techniques are needed to check the validity of the data. In checking the validity
of this research data using the triangulation method
DISCUSSION
Description of Informants
All informants in this study have met the 5R criteria (relevance, recommendation, rapport,
readiness, reassurance) and do not mind to be named, while the informants of this study are as
follows:
Table.1 Informants Description
NAME MSMES CODE AGE INFORMATION
Anik Wahyu F&B AW 50 Informant 1

Ana Anggraini Handicraft AA 35 Informant 2
Vici F&B VC 38 Informant 3
Yusna Handicraft YN 28 Informant 4
Source: Researcher (2021)
Information about all informants in the study are as follows:

1. Anik Wahyu (AW)
Mrs. Anik Wahyu is an MSMEs entrepreneur in the food and beverage sector. Selling since
2005 with superior products of dry sponge. Mrs. Anik Wahyu is 50 years old. The business
that Mrs. Anik is more likely to be an offline business. Since the pandemic, her business has
started to switch to an online business because the current situation requires some shops to be
closed due to the lockdown, so Mrs. Anik began to explore online business.
2. Ana Anggraini (AA)
Ana Anggraini is an MSME entrepreneur in the handicraft sector. Selling since 2009 with
superior products of women's accessories. Ana is 35 years old. Ana often participates in expos
and exhibitions held in various cities to promote her handicrafts. Since the pandemic, the expo
has been cancelled. So, I started to change my business strategy by selling on e-commerce
sites.
3. Vici (VC)
Vici is an MSMEs entrepreneur in the food and beverage sector. Has a small restaurant with a
typical rural menu. Vicki is 38 years old. Vici sells on the side of the road with unloading
tents. Due to government regulations regarding the rules for opening a business during the
pandemic, Vici innovated by using applications such as Grab and Gojek Indonesia to open
online delivery services.
4. Yusna (YN)
Yusna is an MSME entrepreneur in the handicraft sector. Selling superior products of Ikat
Weaving fabrics typical of the City of Kediri. Yusna is 28 years old. Yusna has a gallery

selling collections of handmade Ikat fabrics. However, the government's policy regarding the
prohibition of opening outlets during the pandemic made Yusna switch his business online in
order to continue to survive in the midst of the pandemic.
The data from the research results in this study were obtained through in-depth interviews
conducted by researchers starting in June 2021. Since the informants are not English speaking, the
interview is in Bahasa Indonesia and translated to English by the researchers.
Question 1:
Why you choose “being online” for your business?
AW: “Saya memilih merambah bisnis online karena bisnis online lebih luas target pasarnya” (I
chose to explore online business because online business has a wider target market)
AA: “Saya mulai menjalankan bisnis online agar bisnis saya tidak stuck selama pandemic”
(I started running an online business so that my business wouldn't get stuck during the
pandemic)
VC: “Saya harus melakukan bisnis secara online agar bisnis saya terus berlangsung selama
pandemic” (I have to do business online to keep my business going during the pandemic)
YN: “Saya melakukan bisnis secara online untuk meningkatkan penjualan saya, karena jaman
pandemi untuk berjualan offline sangat susah, karena terbatas distribusi” (I do business
online to increase my sales, because during the pandemic it is very difficult to sell offline,
due to limited distribution)
Question 2:
What is the behavioral change in your customer when you move from offline to online?
AW: “Pembeli saya makin banyak dan beragam, bahkan saya bisa memperluas bisnis saya sampai
ke luar negeri” (My buyers are getting more and more diverse, even I can expand my
business to foreign countries)
AA: “Pelanggan saya lebih sering melakukan impulse buying karena saya rajin melakukan
promosi di akun social media saya” (My customers often do impulse buying because I am
diligent in doing promotions on my social media accounts)
VC: “Setiap hari saya mendapatkan orderan dalam jumlah besar, karena sejak menjadi online
produk makanan saya menjadi viral” (Every day I get orders in large quantities, because
since becoming online my food products have gone viral)
YN: “Pembeli saya merasa lebih mudah melakukan transaksi secara online karena bisa belanja
dari rumah” (My buyers find it easier to make transactions online because they can shop
from home)
Question 3:
Is the sales volume increase after “being online”?
AW: “Sejak pandemic, saya beralih ke bisnis online justru volume penjualan saya meningkat
hingga 31% dan market pun juga luas, saya menggunakan platform Tokopedia dan Shopee”
(Since the pandemic, I switched to an online business, in fact my sales volume increased by
31% and the market was also wide, I used Tokopedia and Shopee to sell my product)
AA: “Penjualan saya meningkat, karena banyak pembeli impulse buying karena saya juga sering
memposting testimoni pembelian sehingga calon konsumen lain juga menjadi tertarik untuk
membeli, dan hal ini pemicu menigkatnya penjualan saya. Tokopedia dan Shopee sangat
membantu” (My sales have increased, because there are many impulse buying buyers
because I also often post purchase testimonials so that other potential customers also become
interested in buying, and this triggers my increased sales. Tokopedia and Shopee is helpfull)
VC: “Sejak masuk di aplikasi gojek dan grab, pesanan nasi di warung saya meningkat, dank arena
viral, banyak sekali yang melakukan pesanan dalam jumlah besar untuk berbagai acara”
(Since entering the Gojek and Grab applications, the order for rice at my stall has increased,
and because it's gone viral, lots of people have placed orders in large quantities for various
events.)
YN: “Penjualan saya meningkat 15% sejak berjualan online, jumlah konsumen baru pun
meningkat, tidak hanya konsumen lama yang melakukan pembelian ulang, konsumen baru

berdatangan dari berbagai wilayah di Indonesia” (My sales have increased by 15% since
selling online, the number of new consumers has also increased, not only old consumers who
make repeat purchases, new consumers come from various regions in Indonesia).
From the results of the interview above, it is evident that sales of MSMEs after conducting
marketing activities through various digital and e-commerce platforms are able to increase their
sales even up to 30%. Using a digital platform for buying and selling will make it easier for
MSMEs to reach a broad target market, be able to compete with products from big brands. There
are many free digital platforms in Indonesia such as Tokopedia and Shopee, with the number of
users experiencing a drastic increase since the beginning of the pandemic, very dense visitor traffic
and even reaching tens of millions of visitors per day is an opportunity for MSMEs to increase their
sales. Researchers also conducted interviews with consumers who are active online shopping site
users to serve as a reference that a consumer's shopping enjoyment and behavior that has shifted
since the pandemic and the lockdown policies in various countries were implemented has proven to
be a major reason for MSMEs to be able to increase their sales volume.
Table 2. Informants Description
NAME STATUS CODE AGE INFORMATION
Vega Anastacia Worker VG 26 Informant 1

Angga Dwiki Student AG 24 Informant 2
Eny Housewife EN 56 Informant 3
Question 1:
Are you enjoy doing online shopping?
VG: “Saya sangat enjoy berbelanja online, saya bisa memilih banyak produk, dan justru sering
sekali saya melakukan pembelian tidak terencana saat membeli online, karena banyak sekali
promo dan flashsale, sehingga menjadi suatu kesenangan saat berbelanja online” (I really
enjoy shopping online, I can choose many products, and in fact I often make unplanned
purchases when buying online, because there are so many promos and flash sales, so it
becomes a pleasure when shopping online)
AG: “Saya hamper setiap hari online untuk mengecek promo dan produk-produk UMKM yang ada
di platform belanja online, bahkan saya sangat sering melakukan pembelian produk melalui
e-commerce meskipun lokasi penjual berada di kota yang sama dengan saya, karena saya
lebih enjoy melakukan pembelanjaan produk melalui online karena lebih banyak promo dan
banyak penawaran menarik” (I go online almost every day to check promos and MSME
products on online shopping platforms, in fact I very often buy products through e-
commerce even though the seller's location is in the same city as me, because I prefer to shop
for products through e-commerce. online because there are more promos and many
interesting offers)
EN: “Sebagai ibu rumah tangga, sejak pandemic saya kesusahan dan ketakutan untuk berbelanja
ke toko atau warung, sehingga saya beralih melakukan segala jenis aktifitas belanja secara
online. Saya merasa lebih nyaman dan aman bertransaksi online, saya bisa lebih leluasa
memilih produk, saya tidak terbatas waktu untuk melakukan pembelanjaan. Saya bisa
melakukan pembelian kapanpun saya memiliki waktu” (As a housewife, since the pandemic I
have had difficulty and fear to shop at shops or stalls, so I have switched to doing all kinds of
shopping activities online. I feel more comfortable and safe transacting online, I can more
freely choose products, I am not limited in time to make purchases. I can make purchases
whenever I have time)

Question 2:
Are there any differences between shopping conventionally and using online shopping sites or e-
commerce platform?
VG: “Sangat banyak perbedaan. Salah satunya harga produk yang dijual online biasanya lebih
murah dan banyak promo menarik. Saya lebih senang berbelanja online karena saya bisa
lebih leluasa dalam berbelanja, saya menggunakan screentime saya mayoritas untuk
berselancar di situs e-commerce mencari berbagai produk meskipun saya tidak
membutuhkannya” (So many differences. One of them is that the prices of products sold
online are usually cheaper and have lots of interesting promos. I prefer to shop online because
I can shop more freely, I mostly use my screentime to surf e-commerce sites looking for
various products even though I don't need them.)
AG: “Saya merasa lebih boros saat melakukan pembelanjaan online, karena saya bisa
menghabiskan waktu berjam-jam untuk mengikuti berbagai promo, saya bisa leluasa melihat
produk-produk UMKM dari berbagai toko digital. Karena saat melakukan pembelian
konvensional saya terbatas oleh waktu dan tidak bisa membandingkan toko satu dengan
lainnya sehingga terkadang saya justru tidak melakukan pembelian karena terbatasnya
produk yang saya lihat” (I feel more wasteful when shopping online, because I can spend
hours participating in various promos, I can freely see MSME products from various digital
stores. Because when I make conventional purchases, I am limited by time and cannot
compare stores with one another, so sometimes I don't make purchases because of the limited
products I see.)
EN: “Saya lebih leluasa berbelanja online, bahkan saya berbelanja kebutuhan sehari-hari seperti
sayur dan daging juga melalui situs belanja kebutuhan rumah tangga. Berbelanja lebih cepat
dan bisa diantarkan kerumah sehingga lebih efisien waktu, saya bisa melakukan kegiatan lain
sambal menunggu belanjaan saya dating. Transaksi lebih mudah dengan cashless, tidak perlu
membawa uang tunai dalam jumlah tertentu, karena pandemic sekarang ini membuat saya
juga jarang keluar rumah untuk pergi ke ATM mengambil fresh money” (I am more free to
shop online, I even shop for daily necessities such as vegetables and meat as well as through
household needs shopping sites. Shopping is faster and can be delivered to my house so that it
is more time efficient, I can do other activities while waiting for my groceries to arrive.
Transactions are easier with cashless, no need to carry a certain amount of cash, because the
current pandemic makes me rarely leave the house to go to the ATM to get fresh money)
From the description of the results of interviews with informants who are active users of
online shopping and e-commerce sites, it can be concluded that shopping pleasure plays a role in
increasing impulsive buying. Consumers are heavily influenced by promos and flash sales, which
makes them decide to buy products that they don't really need. So, this can be used by MSMEs to
see the pleasure side of consumer shopping, namely through attractive promotions, implementing
flash sales and diligently posting various post-purchase testimonials so as to persuade potential
buyers to make a purchase.
People's shopping behavior today prefers cashless transactions, so e-commerce sites are very
suitable for MSMEs to make sales, because e-commerce as a third party that brings together sellers
and buyers, is able to facilitate consumers to transact with various types of online transactions at
various types of banks or P2P lending even provides credit facilities and paylater.
CONCLUSIONS
The pleasure of shopping for consumers when using online shopping sites and e-commerce
is proven to have an influence on increasing sales volume in MSMEs according to the results of
interviews with informants. MSMEs experienced an increase in sales of up to 30%. This happens
because with the pleasure of shopping, the level of consumer impulse buying also increases,
supported by the provision of promotions, flash sales and posting of various post-purchase
consumer testimonials.
People have a shift in shopping behavior, they use their screen time more to open various
shopping and e-commerce sites, follow various promos on shopping and e-commerce sites. Thus,
this also triggers a lot of impulse buying. MSMEs take advantage of this phenomenon to increase

their sales during a pandemic that forces them to innovate business, one of which is by taking the
opportunity of the current shift in people's spending behavior.
From the conclusion, we get a practical implication that MSMEs will experience an increase
in sales volume when using various online selling platforms, making good use of their features, and
recruiting human resources who are able to operate various up-to-date digital platforms.
SUGGESTIONS
For MSMEs, studying consumer shopping pleasure can be a benchmark in formulating
sales strategies. As described by informants who are active users of shopping and e-commerce
sites, they stated that attractive promotions were able to make them not think long about making a
purchase.
For further researchers, further research can focus more on seeing how much influence the
various promotions carried out on e-commerce shopping sites have on the impulsive buying of
MSME consumers. Research can be done quantitatively by using a questionnaire as a tool to collect
data.
REFERENCES
Ajzen, I. 1991. The Theory of Planned Behaviour. Journal of Organizational Behavior and Human
Decision Processes 50(1):179-211.
Bandura, Albert. 1977. Social Learning Theory. Prentice-Hall, Inc., New Jersey.
George, J.F. 2004. The theory of planned behavior and Internet purchasing. Journal of Retailing
(78): 91-99.
Gulteki, B. and Ozer,L., 2012, The Influence of Hedonic Motives and Browsing On Impulse
Buying. Journal of Economics and Behavioural Studies 4(3): 80-189 March.
Katadata. 2021. COVID-19 trigger four big change consumer behavior. (translated from Bahasa
Indonesia. https://katadata.co.id/happyfajrian/brand/605a31cf8e81f/pandemi-covid-19-
memicu-empat-perubahan-besar-perilaku-konsumen. June 25th, 2021. (15:10).
Kwek et al. 2010. Investigating the Shopping Orientations on Online Purchase Intention in the e-
Commerce Environment: A Malaysian Study. Journal of Internet Banking and Commerce
15(2).
PWC. 2020. Global Consumer Insight 2020. https://www.pwc.com/id/en/industry-
sectors/consumer-industrial-products-services/consumer-insights-survey.html. June 25th,
2021. (15:30).
Seock and Bailey. 2011. Analisys of Clothing Website for Young Customer Retention Based on a
Model of Customer Relationship Management via The Internet. Doctoral Dissertation:
Virginia Polytechnic Instituse and State University.
Sugiyono. (2019). Metode Penelitian Kuantitaif, Kualitatif and R&D . Bandung: Alfabeta.
Utami, C.W. 2014. Strategi dan Implementasi Oprasional Bisnis Ritel Modern di Indonesia.
Salemba Empat. Jakarta.

The Difference In Trust Of E-Wallet On Ovo Users And Go-Pay Users

1
Widad Pratiwi, 2Malida Nurfitri, 3Dindiasuvi Auliannisa, 4Indah Mulyani
1,2,3,4
Psychology Faculty of Universitas Gunadarma
Jl. Margonda Raya No. 100, Depok 16424, Jawa Barat, Indonesia
1
widadpratiwi1@gmail.com, 2malidanurfitri@gmail.com, 3dindiasuvi17@gmail.com,
4
indah_mulyani@staff.gunadarma.ac.id
Abstract
The pandemic that occurred in 2020 around the world required all transactions to be done cashless,
so the use of e-wallet is one way out in minimizing the spread of COVID-19. In Indonesia, there
are several e-wallets that are most often used, namely Ovo and Go-Pay. In the use of e-wallet, user
trust is very important to note. So this study aims to see the difference in user trust towards Ovo
and Go-Pay e-wallet users in the millennial generation. The research method used is quantitative
with a trust scale of Delgado-Ballester, Munuera-Aleman, & Yague-Guillen (2003). The
respondents of this study found 82 people with 41 users each on Ovo and Go-Pay. In taking the
sample using purposive sampling technique and data processing using the Independent Sample T-
Test. This study concludes that there is no difference in trust between Ovo and Go-Pay users
because both e-wallet users find similarities in usability and perceived ease of use.
Keywords : Trust; E-wallet; Ovo; Go-Pay; Millennial Generation

JEL Codes: G41, M3, O12
INTRODUCTION
The Covid-19 pandemic has led to a digital transformation in every aspect of life, including
in the economic field. Social restriction regulations are implemented to reduce the spread of the
Covid-19 virus, giving rise to new lifestyles such as the stay at home lifestyle, virtual lifestyle, and
touchless transactions. This new lifestyle is applied in almost all aspects of life, such as education,
health, office activities, to transactions. This encourages economic behaviours, namely consumers,
producers, and the government to change product marketing patterns from physical patterns to
digital marketing patterns to avoid touching or physical contact. (Adhi, Setyawati, & Suwandari,
2021).
One of the digital economic activities that are familiar with the daily life of the millennial
generation (individuals aged 19-39 years) is e-payment. Transactions with e-payments are also
known as cashless, where individuals can avoid physical cash completely and minimize physical
contact. In addition, cashless also provides benefits such as adequate facilities, security, and
convenience (Kee et al., 2021). There are so many advantages of the cashless system that
encourage millennials to use it (Rif'ah, 2019). Tiara and Usman (2019) also explain one of the
factors that make millennials prefer to use digital wallets because they have the opportunity to get
cashback and bigger discounts.
It is necessary to use e-wallet to implement cashless in every transaction (Saha, 2021).
According to a survey from Sharing Vision Telematics Research Institute (2021), Gopay (81%)
and Ovo (71%) are the most popular digital wallet applications. In conclusion, the most popular
digital wallet that is widely used in Indonesia is Gopay. The reasons are varied, such as simple,
time efficient, offering so many promos, no need to come to the bank, and safety. Most transactions
are used for food delivery and online transportation payments. (Asianto, 2021).
In the context of using an e-wallet, trust becomes a very important issue because the
exchange relationship is based on privacy and security (Hong & Cha, 2013). Research conducted
by Dermiasih and Setiawan (2021) shows that trust can make individuals feel comfortable in using
an e-wallet so that they will use it again. The use of e-wallet will increase along with increasing
individual trust in service providers and the technology used by e-wallet providers (Sinha, 2016).
Meutia (2015) also explains that a high or low level of trust indicates the level of system quality
and user participation.
Pratiwi, Nurfitri, Auliannisa, Mulyani 125

The different characteristics of Ovo and Go-Pay in terms of features, privacy, and security
levels will build different trusts among users. Differences in individual trust in using Ovo and Go-
Pay e-wallets are very important for the user’s convenience and security. This study aims to
empirically test the difference in trust between Ovo users and Go-Pay users, e-wallet with the most
users in Indonesia. The results of this study are expected to be input for the development of
features, privacy, and security levels of the two types of e-wallet (Ovo and Go-Pay) in an effort to
encourage the advancement of the digital economy in Indonesia.
LITERATUR REVIEW
Trust has been defined as willingness of a party to be vulnerable to the actions of another
party based on the expectation that the other will perform a particular action important to the
trustor, irrespective of the ability to monitor or control that other party (Mayer et al., 1995). Singh
and Sinha (2020) also explain trust as an emotional state that encourages a person to trust others,
which is based on behaviour that satisfies others. Nguyen, Lecrec, and LeBlanc (2013) said trust is
the level of reliability that a person has to a party in a certain exchange relationship. The definition
of trust is related to consumer expectations regarding the capacity of a company to fulfil its
obligations. Trust also enables a company to develop and maintain loyalty from its customers.
Tiara & Usman (2019) explained that in the use of digital wallets there is a trust held by
consumers. There are several indicators contained in the trust. Mayer, Davis, & Shoorman (1995)
explained that there are three factors that shape a person's belief, namely ability, kindness
(benevolence), and integrity. Ability refers to the competence of the seller to satisfy the consumers
in terms of provision and services to secure the transaction. Kindness (benevolence) refers to the
willingness of sellers to satisfy the customers not only want a high profit only. Integrity (integrity)
refers to the behaviour of sellers in doing business. Yan and Yang (2012) indicate that trust has a
significant effect on usage intention. Something that affects user’s trust are structural assurance,
ubiquity, perceived ease of use and perceived usefulness in using mobile payment. Kord et al.
(2011) said the dimensions of trust in a payment application include knowledge, experience,
familiarity, personality, protection of private data.
Nelloh, Santoso, and Slamet (2019) describes the results of research conducted, that trust has
a greater role in determining an individual's intention to use an e-wallet. The results show that e-
wallet users pay attention to information quality and perceived security perceptions to gain trust.
Thus, it is necessary to improve the quality, reliability, and update of information regarding e-
wallet. In addition, it is also necessary to increase security protection which refers to
personalization to gain more trust from e-wallet users.
Phuong et al. (2020) describes the results of research conducted, that payment security and
feedback mechanisms affect trust positively. Payment security and trust has an impact on the use of
e-wallet, which will make individuals reuse the e-wallet. Trust also has an important influence on
the satisfaction of its users.
Based on the explanation above, the hypotheses in this study is that there is a difference in
trust between OVO users and Go-Pay users.
RESEARCH METHOD
This research is a quantitative method using a Likert scale questionnaire as data collection
techniques model consisting of five responses ranging from strongly disagree to strongly agree.
This study modifies the brand trust scale, which amounts to 12 items from Delgado-Ballester,
Munuera-Aleman, & Yague-Guillen (2003). The scale reliability score shows Cronbach's Alpha
coefficient of 0.85.
This research also uses purposive sampling to collect samples, where the technique of
determining the sample is with certain criteria. The criteria are people with age that is ranging from
19 to 39 years and actively using e-wallet (41 Ovo users and 41 Go-Pay users) during the covid-19
pandemic.
The data analysis technique used in this study is the Independent Sample T-test using SPSS
to see if there is a difference in trust between Ovo users and Go-Pay users.
126 Pratiwi, Nurfitri, Auliannisa, Mulyani


The respondents of this study consisted of 39 men and 43 women. Respondents also consist
of millennials aged 19-39 years, with the number of respondents using e-wallet which can be seen
in the table below
Table 1. Result of Demographic

Demograhic Ovo (n) Go-Pay (n)
Gender
Male 17 22
Female 24 19
Based on table above, male respondents who use Ovo are 17 users, while male respondents
who use Go-Pay are 22 users. Then, for female respondents who use Ovo, there are 24 users, while
female respondents who use Go-Pay are 19 users.
Results based on the Independent Sample T-test analysis, it was found that sig (2-tailed)
showed a number greater than 0.05, namely 0.985. This shows that there is no difference in trust
between respondents in using Go-Pay or Ovo. Thus, the hypotheses in this study is rejected. The
results can be seen below.
Table 2. Result of E-wallet User

Case Processing Summary
E_wallet Cases
Valid Missing Total
N Percent N Percent N Percent
Total Go- 41 100.0% 0 0.0% 41 100.0%
Pay
Ovo 41 100.0% 0 0.0% 41 100.0%
Table 3. Result of Independent Sample T Test

Independent Samples Test
Total
Equal variances Equal variances
assumed not assumed
Levene's Test for F 4.588
Equality Sig. .035
of Variances
t-test for Equality t .019 .019
of Means df 80 74.243
Sig. (2-tailed) .985 .985
Mean Difference .024 .024
Std. Error Difference 1.257 1.257
95% Confidence Interval Lower -2.477 -2.479
of the Difference Upper 2.525 2.528
Table 4. Result of Mean E-wallet User

E-wallet Mean
Ovo 47.88
Go-Pay 47.90
There is no difference in the level of trust between Ovo and Go-Pay users, this can be seen
from the e-payment features provided by Ovo and Go-Pay, where the features used by Ovo and

Go-Pay have similarities in payments, both use barcodes. In addition, generally, Ovo and Go-Pay
are used to order food or pay for transportation online which are the biggest daily activities carried
out by most millennials. So that respondents have the same perception of the two types of e-wallet.
This is in line with research conducted by Susilo et al. (2019) which explains in his research that
there is no gap for Ovo and Go-Pay users. This is also in accordance with the opinion of Yan and
Yang (2012) where the perception of user convenience will affect the trust that users have where in
this study users experience convenience in making payments using an e-wallet. Nelloh, Santoso,
and Slamet (2019) also said that the perceived security perception can generate trust from its users,
where the barcode feature provided by these two e-wallets gives users a sense of security. This is
also in line with the opinion of Phuong et al. (2020) where security features will affect the level of
user trust.
The average yield for Ovo users is 47.88, while the average yield for Go-Pay users is
47.90. It can be seen that the level of trust between the two e-wallet users is not much different.
This is in accordance with research conducted by Hermawan and Paramita (2020) where there is no
difference in trust between Ovo and Go-pay users. Trust affects customer preferences in using an e-
wallet. This explains that the level of trust between the two users who are not much different
ultimately encourages them to choose the type of e-wallet that they think is the most comfortable to
use. These two e-wallet users find similarities in perceived usability and ease of use. Rif'ah (2019)
said that the millennial generation has confidence in e-wallet because there are advantages that
individuals get from e-wallet, such as safer transactions, avoiding counterfeit money, practicality,
and efficiency.
Trust is an important component in the use of e-wallet. Ovo and Go-Pay service providers
need to maintain the level of user trust given that high levels of trust have an impact on increasing
customer desire or intention to use e-wallet continuously resulting from perceived ease of use and
perceived benefits (Priyono, 2017; Widiartini & Yasa,, 2017; Yan & Yang, 2012).
There is no difference in trust between Ovo and Go-pay users, also because of the high
trust between the two e-wallet users. Nurhayati (2019) in her research explains that there is a
perceived positive influence between trust and the use of online banking, where the more
individuals trust online banking, the more often it will be used. This is in accordance with the
opinion expressed by Nguyen, Lecrec, and LeBlanc (2013) that trust can also develop and maintain
customer loyalty. Meanwhile, Do & Do (2020) explained that the convenience of using an e-wallet
can build trust so that users do not have a risk perception of using an e-wallet.

The purpose of this study was to see the difference in trust in using Ovo and Go-Pay. The
results showed that there is no difference in trust in using Ovo and Go-Pay. This is because both of
the e-wallet have similarities in features that make no difference in user’s trust.
Based on the results of this study, it is recommended to build better security for e-wallet
service providers such as Ovo and Go-Pay to increase user’s trust. In addition, it is expected that
the e-wallet will continue to develop and innovate. Furthermore, this study only focuses on user’s
trust in Ovo and Go-Pay. For further research it is recommended to add another e-wallet with other
variables such as security, satisfaction, or loyalty.
REFERENCES
Adhi, B. W., Setyawati, S. M., & Suwandari, L. (2021). The effect of trust, perceived benefit
perception and religiosity in the continuity intention of OVO - digital wallet services.
International Sustainable Competitiveness Advantage, 11(1), 744-752.
Asianto, D. P. A. (2021). Survei: gopay pimpin pasar e-money. Retrieved from:
https://www.suarakarya.id/detail/127144/Survei-GoPay-Pimpin-Pasar-E-Money
Darmiasih, M., & Setiawan, P. Y. (2021). Continuance usage intention and its antecedents on using
OVO e-wallet application in Denpasar. International Research Journal of Management, IT
and Social Science, 8(1), 35-46. DOI 10.21744/irjmis.v8n1.1104
Do, N. B., & Do, H. N. T. An investigation of generation Z’s intention to use electronic wallet in
vietnam. Journal of Distribution Science, 18(10), 89-99.
https://doi.org/10.15722/jds.18.10.202010.89

Hermawan, V. K. & Paramita, E. L. (2020). Trust dan perceived usefullness dan pengaruhnya
terhadap preferensi konsumen dalam menggunakan e-wallet. Jurnal Ekobis: Ekonomi,
Bisnis, dan Manajemen, 10(2), 223-236. DOI: 10.37932/j.e.v10i2.131
Hong, I. B., & Cha, H. S. (2013). The mediating role of consumer trust in an online merchant in
predicting purchase intention. International Journal of Information Management, 33(6), 927-
939. https://doi.org/10.1016/j.ijinfomgt.2013.08.007
Kee, D. M. H., Nuha, N., Hidayu, N., Sobbah, N., Aqilah, N., & Zayani, N. A. (2021). The impact
of using cashless payment during the covid-19 pandemic: A case study of Maybank.
International Journal of Accounting Finance in Asia Pasific, 4(2), 107-117.
https://doi.org/10.32535/ijafap.v4i2.1118
Kord, B., Yaghoubi, N. M., Khani, R. Y., & Esmaeali, M. J. (2011). Trust and e-commerce: Study
of customer’s behavior. Interdisciplinary Journal of Contemporary Research in Business,
2(11), 596-605.
Mayer, R. C., Davis, J. H., & Shoorman, F. D. (1995). An integrative model of organizational trust.
The Academy of Management Review, 20(03), 709-734.
https://doi.org/10.5465/amr.1995.9508080335
Meutia. (2015). Building trust: A solution to increase user’s satisfaction on e-money adoption. The
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Nelloh, L. A, M., Santoso, A. S., & Slamet, M. W. (2019). Will users keep using mobile payment?
It depends on trust and cognitive perspective. Procedia Computer Science, 161, 1156-1164.
https://doi.org/10.1016/j.procs.2019.11.228
Nguyen, N., Leclerc, A., & LeBlanc, G. (2013). The mediating role of customer trust on customer
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kemudahan penggunaan terhadap pengguna online banking pada mahasiswa universitas
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continuance intentions towards e-wallet usage: The emergence of mobile payment
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elektronik go-pay. Jurnal Siasat Bisnis, 21(1), 88-106.
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Sharia Economics, 2(1), 1-14.
Saha, R. (2021). Digital payments usage during covid19 pandemic with special reference to e-
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comparative study of factors affecting user acceptance of go-pay and OVo as a feature of
Fintech application. Procedia Computer Science, 161, 876-884.
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http://dx.doi.org/10.14257/ijunesst.2015.8.1.11

The Influence of Competence and Work Culture On The Supervision

Commission V
1, 2, 3
Tamansiswa Palembang University
Email:maulana_57@ymail.com
Abstrack
Supervision is the main function of members of the House of Representative. Supervision

performance is influenced by many factors including competence and work culture. This study was
conducted with the aim of analyzing the influence of competence and work culture on the
performance of the supervision of members of Commission V DPR-RI, either simultaneously or
partially. All 60 members of Commission V DPR-RI were used as respondents in this study. Data
were collected from respondents using a questionnaire that had been tested for validity and
reliability. Multiple linear regression analysis was performed to test the research hypothesis. The
results of the study indicate that simultaneously and partially competence and work culture
significantly influence the supervision performance of members of Commission V DPR-RI. The
influence of these variables was improving the supervision performance. The influence of
competence on supervision performance is stronger than work culture.
Keywords : Influence, Competence, Work Culture, Performance

JEL Codes : F66, J01, J30
INTRODUCTION
Each member of the DPR RI is assigned by their respective factions to work within the
Commission. Currently, the duties of members of the House of Representatives Commission V
include Legislation (formation of laws), Budgeting (budget), and Supervision. In addition to
carrying out the above, they will also carry out a feasibility and suitability assessment as well as
select and approve several things that are included in their respective duties and responsibilities.
Duties and responsibilities of course must be carried out properly, because it is a great mandate
from the people. The seriousness of the DPR members must also be demonstrated and proven by
good performance, not only by theories, because good performance will certainly have a good
impact on the welfare of the community.
Table. 1 Number of Members of the Indonesian House of Representatives

Commission V Period 2019 - 2024
Based on Educational Competence and Expertise.
Ali, Maulana, Wulandari 131

From the observations based on the table above, there are 54 members of the Indonesian House of
Representatives Commission V with 22 people with Strata 2 educational competence, 24 people
with Bachelor's Degree, 1 person with Diploma, and 7 Senior High School members with 47 non-
technical skills and 7 civil engineers. /Architecture. Based on the educational background and
expertise above, it is illustrated that the suitability of the field of expertise that must be possessed
by the members of the board in this commission V, of course, will affect their performance
PROBLEM STATEMENT
There are actually three main objective of the study (which uses linear regression analysis)
including:
1. Analyzing the simultaneous influence of independent variables,
2. analyzing the partial influence of independent variables, and
3. to identify the strongest variable in influencing the dependent variable
LITERATURE REVIEW
Competence
Gordon in Sutrisno (2011) explains several aspects contained in the concept of competence as
follows:
a. Knowledge, or awareness in the cognitive domain.
b. Understanding (understanding).
c. Ability/skills.
d. Value.
e. Attitude.
Work Culture
In carrying out the company's business activities, work culture is the main goal in changing
the attitudes and behavior of the human resources department to improve performance, as well as
making strategic efforts to answer various business challenges in the future.
According to Moeljono (2013), the dimensions used to measure work culture are as follows.
a. Honesty means, first of all, acting consistently in carrying out work and working for the
company in accordance with organizational values and guidelines, as well as professional
ethical norms. The indicators are: behavior that is consistent with values and behavior with
professional ethics.
b. Second, professionalism is the level of formal education and professional training that workers
must receive for a particular job. Employees can work effectively and efficiently. An
organization is a professional organization if its employees require special training and
sufficient training experience to fill a position in the organization.
c. Third, satisfaction means meeting needs by providing the best service, taking into account the
benefits of the company, skilled workers, friendly and service-oriented staff, and superior
technology.
d. Fourth, exemplary in hard work and smart work, and building harmonious vertical and
horizontal relationships are examples of commendable human behavior.
Performance
Individual performance in an organization affects the performance of the organization.
Therefore, cohesion in an organization affects the achievement of both individual and
organizational performance. Achieving the goals and success of a company is very difficult to
achieve without good performance at all levels of the organization.
Performance can be interpreted as the result of someone doing it over a certain period of time. This
can be measured by how far the work achievement criteria have been previously determined
(Veithzal, 2005:97). Performance Employees are measured not only to get work performance,
promotion to position or salary increase, rank and class, but more than performance improvements
that can be made by institutions or organizations in improving employee performance.
132 Ali, Maulana, Wulandari

In the view of Whittaker and Simons (2000: 5), performance measurement is to test the
extent to which the conditions that have been targeted from the beginning are compared with the
expected results. As in Yuwono's view (2004: 23) says "performance measurement is an
assessment of a series of activities carried out to find out the strengths and weaknesses of
employees." After the performance measurement is completed, the results will become feedback
for the institution or company so that in the future it can be used for improvements to existing
weaknesses.
Figure 1. Framework
RESEARCH METHODS
Research design
The research design used is causality research, which is to find out how big the X variable is
against the Y variable, namely the influence of Competence (X1) and Work Culture (X2) as on
performance (Y) within Commission V of the DPR RI.

The subjects of this survey were all members of the RI VDPR Commission, as many as 60 people.
Samples were extracted from the entire population using a saturated sampling technique. (Umar,
Husein, 2004).
Multiple Linear Regression Test

This study uses a multiple regression analysis model which is processed with the Statistical
Package for Social Sciences (SPSS) 17.0 program. This model was chosen because researchers
want to know how competence and work culture affect the performance of the House of
Representatives Commission V supervision simultaneously, jointly, or partially (each).
Furthermore, to determine the effect of the ability and communication variables on the dependent
variable (performance), using the statistical analysis method, namely the multiple linear regression
analysis method.
The mathematical models of multiple linear regression are:

Y = a + b1X1 + b2X2 + e
RESEARCH RESULT
Multiple Regression Analysis Results

From the results of the analysis carried out, the following regression equation was obtained:
Y= 10.048 + 0.401X1 + 0.068X2
From the regression function estimation formula above, we can see that the constant value
obtained is 10.048. The value of the regression coefficient representing the competency variable
(X1) is obtained with b1 = 0.401. This shows that the change in competence is in units, and if the
independent variable from the other independent variables remains, the employee's performance
changes in direct proportion to 0.401 units. worth.
Furthermore, the regression coefficient value that represents the work culture variable (X2)
is obtained with b2 = 0.068. This means that changes in work culture are a single unit, and
employee performance changes proportionally. This is 0.068 units for the other independent
variables. Assumed a fixed value.
Simultaneous F Test Results
The F test is used to compare , which is used as a reference to show whether a variable is
related, and , which is a variable that has a variable relationship. For the value of Ftable, the value
of Der table is 3,159 because the statistical table F has df 1 = the number of variables 1 or 31 = 2
and df 2 = nk1 or 6021 = 57 (k is the number of independent variables).
Based on the results of data processing in Table 4.9 above, the Fcount value is 49,504 and a
significance of 0.000. Because Fcount > Ftable (49.504 > 3.159), it can be concluded that Ho is
rejected and Ha is accepted. In other words, the ability variable (X1) and work culture (X2)
together affect performance (Y)
DISCUSSION
1. The coefficient of determination (R2) obtained from data processing is 0.493 or 49.3%. This
value gives an understanding that the Competency Variable contributes 49.3% to the
performance, while the remaining 50.7% is influenced by other variables not examined.
2) The Influence of Work Culture on Performance
Based on the results of the hypothesis testing conducted, the t count results on the Work
Culture variable (X2) of 2.156 and a significance value of 0.034. Due to the tcount value on
the Work Culture variable (X2) the value is greater than the ttable value and the significant
value of the Work Culture variable (0.034 <0.05), it can be concluded that Ha is accepted and
Ho is rejected, or in other words it is stated that the Work Culture variable ( X2) partially also
has a significant effect on performance (Y). The coefficient of determination (R2) obtained
from data processing is 0.321 or 32.1%. This value gives an understanding that the Work
Culture Variable contributes 32.1% to performance, while the remaining 67.9% is influenced
by other variables not examined.

3) The Influence of Competence and Work Culture on Performance

Based on the results of the Simultaneous F test on the processed data, the Fcount value is
49,504, with a significant 0.000. Where the value of Fcount is greater than Ftable (49.504 >
3.159) with a significance of 0.000 < 0.005. Thus, it can be concluded that Ho is rejected and
Ha is accepted, which means that the Competence Variables (X1) and Work Culture (X2)
together have an effect on Performance (Y). The coefficient of determination (R2) obtained
from data processing is 0.670 or 67.0%. This value gives an understanding that the
Competence and Work Culture Variables contribute 67.0% to performance, while the
remaining 33% is influenced by other variables not examined.
CONCLUSION
The results of the multiple linear regression analysis indicates that competence and work
culture simultaneously and partially influence the supervision performance of members of the
Commission V DPR-RI in significant way. The effect of these variables was to increase
supervision performance. Competence was identified to have a stronger influence towards
supervision performance
SUGGESTION
Based on the conclusions above, the authors provide the following suggestions:
1. It is necessary to hold training for members of the DPR whose competence is considered not
good enough
2. A good work culture needs to be optimized, so that a good working atmosphere can be
established
3. The need for supervision related to performance, in order to be able to assess the extent to which
the duties and responsibilities have been carried out
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The Effect Of Consumer Perception On Attitudes

And Its Impact On Online Purchase Intention
1
Anisah, 2Didin Mukodim, 3Emmy Indrayani
1.2.3
Faculty of Economics, Gunadarma University
Jl. Margonda Raya No.100, Depok 16424, West Java
anisah@saff.gunadarma.ac.id, didin@staff.gunadarma.ac.id, emmy@staff.gunadarma.ac.id
Abstract
The Covid-19 pandemic issuing has in the Indonesian government large-scale social restrictions
and social distancing policies at stopping the spread of the corona virus. The policy is in a
pandemic situation where people rely on online activities to buy necessities. Increasing the use of
the internet to buy products and services online, accompanied by several obstacles faced by
consumers. The purpose of this study was to analyze the direct and indirect effects of perceived
benefits, perceived risk, and perceived ease of use on online purchase attitudes, and their impact on
online purchase intentions. The sampling technique used is the purposive sampling method with the
sample criteria for being online shopping. The object of research is consumers who buy products
online. The results of the questionnaire were analyzed using descriptive and verification techniques
through validity tests, reliability tests, classical assumptions, and path analysis. Based on the results
of hypothesis testing, online shopping attitudes are influenced by perceptions of benefits,
perceptions of risk, and perceived ease of use. Online shopping intentions are influenced by
perceptions of benefits, perceptions of risk, perceived ease of use and online shopping attitudes.
Keywords: perceived benefits, perceived risk, perceived ease of use, online purchase attitudes,
online purchase intentions
JEL Codes: D12, M31
INTRODUCTION
Understanding of the internet is to communicate globally, openly and can connect computer
networks through various types of communication devices such as telephones and satellites. The
initial phase of the internet was a computer network that was formed only for military purposes, but
over time the internet can now be enjoyed by all people. The existence of the internet has benefits
in people's lives to add insight and knowledge, communicate quickly, the shopping process is easy,
a vehicle for entertainment, finding job vacancies and sharing anything becomes faster and easier.
The role of the internet has a positive impact such as reducing the distance and time so that they
can do activities, and strengthen relationships between humans. All aspects of human life are
affected by the development of information technology and internet, telecommunications, one of
which is the business sector. Benefit The internet online business is to facilitate transactions
between sellers and buyers who are in different areas. Building and implementing an e-commerce
system is not an instant process, it requires a transformation of business strategies and systems. As
technology evolves and demand increases, new marketing concepts emerge. The trend shift from
conventional shopping by visiting physical stores in various locations for shopping digitally.
Consumers can buy anything, anytime, anywhere right from the palm of their hand. Online stores
thrive because they are supported by various factors, including low internet costs, high smartphone
penetration in the community, increasing reliable logistics systems, and reliable payment systems.
Benefit The internet online business is to facilitate transactions between sellers and buyers who are
in different areas.
Building and implementing an e-commerce system is not an instant process, it requires a
transformation of business strategies and systems. As technology evolves and demand increases,
new marketing concepts emerge. The trend shift from conventional shopping by visiting physical
stores in various locations for shopping digitally. Consumers can buy anything, anytime, anywhere
right from the palm of their hand. Online stores thrive because they are supported by various
Anisah, Mukodim, Indrayani 137

factors, including low internet costs, high smartphone penetration in the community, increasing
reliable logistics systems, and reliable payment systems. Benefit The internet online business is to
facilitate transactions between sellers and buyers who are in different areas. Building and
implementing an e-commerce system is not an instant process, it requires a transformation of
business strategies and systems. As technology evolves and demand increases, new marketing
concepts emerge. The trend shift from conventional shopping by visiting physical stores in various
locations for shopping digitally. Consumers can buy anything, anytime, anywhere right from the
palm of their hand. Online stores thrive because they are supported by various factors, including
low internet costs, high smartphone penetration in the community, increasing reliable logistics
systems, and reliable payment systems. it requires a transformation of business strategies and
systems. As technology evolves and demand increases, new marketing concepts emerge. The trend
shift from conventional shopping by visiting physical stores in various locations for shopping
digitally. Consumers can buy anything, anytime, anywhere right from the palm of their hand.
Online stores thrive because they are supported by various factors, including low internet costs,
high smartphone penetration in the community, increasing reliable logistics systems, and reliable
payment systems. it requires a transformation of business strategies and systems. As technology
evolves and demand increases, new marketing concepts emerge. The trend shift from conventional
shopping by visiting physical stores in various locations for shopping digitally.
Consumers can buy anything, anytime, anywhere right from the palm of their hand. Online
stores thrive because they are supported by various factors, including low internet costs, high
smartphone penetration in the community, increasing reliable logistics systems, and reliable
payment systems. The trend of online shopping increases the growth rate of the e-commerce
industry in Indonesia, with e-commerce applications, relationships between companies and other
external entities can be done quickly, intensely, and cheaply than conventional. E-commerce
according to Laudon and Laudon (2012) the use of the internet and the web in business transactions
facilitates commercial transactions, and saves time and space. Some of the obstacles that
consumers face when shopping online include lack of trust between sellers and buyers, misuse of
consumer information, difficult websites to understand, and loss of goods during the delivery
process. This causes consumers to cancel their intention to make purchases online. Fishbein, and
Ajzen (1975) social influence is a person's perception that most people ask to think whether or not
someone should perform a behavior on a question. Kim, et al (2008) risk perception is the
subjective belief of consumers who feel a loss in seeking the desired outcome. Davis, Bagozzi, RP,
and Warshaw (1989) perceived ease of use states that the system requires effort to contain simple
intellectual and physical effort.
Ikechukwu, Daubry and Chijindu (2012) state that attitude is an expression of consumers'
inner feelings that reflect positively or negatively towards objects. Mowen and Minor (2007)
shopping intention is the determination of consumers to take an action such as buying a product.
The above description is the background of the research with the title “The Influence of Perceived
Benefits, Perceptions of Risk, and Perception of Ease of Use Attitudes and Their Impact on Online
Purchase Intention ". The formulation of the problem in this research is ?
1. Do perceived benefits, perceived risk and perceived ease of use affect online purchase
attitudes?
2. Do perceived benefits, perceived risk, perceived ease of use and online purchase attitudes
affect L online purchase intentions?
3. Do online purchase attitudes affect online purchase intentions?
4. Do perceived benefits, perceived risk and perceived ease of use affect online purchase
intentions with online purchase attitudes as an intervening variable?
Based on the background above, the purpose of this study was to analyze the direct and
indirect effects of perceived benefits, perceived risk, and perceived ease of use on online purchase
attitudes, and their impact on online purchase intentions. The limitation of this research problem
focuses on independent variables such as perceived benefits, perceived risk, and perceived ease of
use on online purchase intention variables and online purchase attitudes as intervening variables.
Data collection using a questionnaire via a Google form. The research sample was 178 respondents
138 Anisah, Mukodim, Indrayani

with the respondent's criteria being that they had made online purchases at the marketplace. The
research period was carried out in August 2021 - October 2021
LITERATURE REVIEW
The theoretical framework of this research uses the Technology Acceptance Model theory,
Theory of Planned Behavior, and five variables consisting of perceived benefits, perceived risk,
perceived ease of use, online shopping attitudes, and online shopping intentions. This behavioral
information system looks more from the point of view of psychological science on aspects of
individual behavior in relation to the use of an information system.Technology Acceptance
Model(TAM) is used to predict information related to technology such as online, it can describe the
acceptance of information technology and individual attitudes between applying technology.
Technology Acceptance Model (TAM)postulates that it is the perception of innovation that plays a
role in the development of attitudes that will ultimately result in system utilization behavior Davis
(1989). Theory of Planned Behavior (TPB) which was developed by Ajzen in 1991 is another
theory on behavioral information systems, this theory is also a development of the Theory of
Reasoned Action by adding a construct of perceived behavioral control. So that the variables that
affect the intention in this theory are attitudes, subjective norms, and perceived behavioral control.
The Theory of Planned Behavior is designed to explain various kinds of individual behavior and
has proven successful in predicting and describing various individual behaviors, not only in the
field of technology.
Shopping online has many advantages, namely consumers feel comfortable, save time, do
not need to travel and wait to make payments. The online shop is open around the clock and can be
accessed anytime and anywhere. Hoffman and Novak (1996) show that interactivity is a key
distinguishing feature between marketing communications on the internet and mass media.Wu
(2003) perception of benefits is the consumer's need or desire for profit when shopping online.
Perceived benefits of online shopping according to Forsythe et al (2006) are consumers' subjective
perceptions of the benefits of online shopping. Perceived benefits as consumer beliefs that it is
better to shop online, andshows that perceived benefits have a positive effect on intentions to use e-
commerce systems Kim, et al (2008). Risk as an individual's subjective estimate to get the
consequences of losses in receiving a desired outcome Pavlou (2001). According to Nazar and
Syahran (2008), risk perception is the level of uncertainty that must be borne by consumers when
conducting online transactions. Perception of risk refers to the sense of uncertainty experienced by
consumers when deciding to make a purchase through an online company, Gurung (2006).
Jaturarith (2007) perceived ease of use is defined as the extent to which a person believes
that using a particular technology will be free of effort. Applied to the context of online shopping,
ease of use refers to the consumer's belief that buying via the internet will involve little effort, and
it is easy to use the internet as a shopping medium.According to Buton-Jones and Hubona (2005)
the ease of learning and becoming skilled in the use of technology, and interfaces on online
shopping sites, as determinants of technology ease of use. Chen (2009) attitude towards behavior as
a positive or negative assessment of performing that behavior. Attitude towards internet purchases
refers to the degree to which consumers have favorable or unfavorable ratings (internet purchase
ratings). Attitudes towards internet shopping are positively related to internet buying behavior. A
positive attitude towards internet purchases significantly increased the intention to use the internet
for shopping. Nasri and Charfedding (2012) also found a positive relationship between attitudes
towards online purchasing behavior.
Intention is a combination of consumer beliefs and attitudes towards a product. Hewette
andMoney (2002) stated that purchase intention is an estimate of what product to buy. According to
Mowen and Minor (2007), purchase intention is the determination of the buying process to take an
action such as buying a product. Engel et al (2008) purchase intention is formed from trust in the
product, as well as attitudes towards purchasing actions and is influenced by internal factors and
external factors.Hsu, Bayarsaikhan (2012) stated that the perception of benefits has a positive
impact, the perception of risk has a negative impact on online shopping attitudes. Consumer
innovation, perceived benefits, perceived risk have indirect effects on online shopping intentions.
Lim and Ting (2012) consumers' intention to shop online is determined by their attitude towards
online shopping. The effect of perceived ease of use and perceived benefits for online shopping

sites on consumer attitudes towards online shopping. Jain, Goswami, Bhutani (2014) perceived
risk, perceived convenience, perceived benefit, and perceived ease of use affect online shopping
attitudes.
Mahardhika and Saino (2014) the factors that influence purchase intention at Zalora online
store are as follows: personality factor, benefit perception factor, involvement factor, situation
factor, lifestyle factor, trust factor. Udayana and Ramadhan (2019) Perceived usefulness has a
positive effect on attitude and purchase intention. Perception of ease of use has a positive effect on
attitude and purchase intention. subjective norm has no effect on attitude and purchase intention.
perceived ease of use, perceived usefullness, and subjective norm together have a positive effect on
attitude. Aribowo and Nugroho (2013) Simultaneously trust and risk affect interest. Fuad, Sangen,
and Albushari (2018) Perceptions of convenience, perceptions of usefulness affect attitudes, while
attitudes and perceptions of usefulness affect intentions, perceptions of risk have no effect on
attitudes. Leeraphong and Mardjo (2013) perceived risk, trust, subjective norm, past online
shopping experience affect purchase intention. Javadi, Dolatabadi, Nourbakhsh, Poursaeedi, and
Asadollahi (2012) Financial risks and non-delivery risk have a negative effect on online shopping
attitudes, while product risks, convenience risk, infrastructure variables and return policy have no
effect on online shopping attitudes. Referring to the number of studies that have been carried out,
the results of this study will underlie the models and hypotheses in the research as follows:
This study will discuss the effect of perceived benefits, perceived risk, perceived ease of
use on online shopping attitudes and online shopping intentions. This research is the result of
developing a model Davis (1989) Technology Acceptance Model, Theory of Planned Behavior
Ajzen (1991),Hsu and Bayarsaikhan (2012), Lim and Ting (2012), ain, Goswami, and Bhutani
(2014),Mahardhika and Saino (2014), Udayana and Ramadan (2019)in their research they examine
the determinants of attitudes and behavior in online shopping
H1 : Perception of benefits influence on online shopping attitudes.

H2 : Perception of risk has an effect on online shopping attitude.
H3 : Perceived ease of use affects shopping attitudes on line.
H4 : Perceived benefits affect online shopping intentions.
H5 : Perception of risk affects the intention to shop online.
H6 : Perceived ease of use affects online shopping intentions.
H7 : Attitude to shop online has an effect on intention to shop online.
H8 : Perceived benefits affect online shopping intentions with online shopping attitudes
as an intervening variable.
H9 : Perception of risk affects online shopping intention with online shopping attitude as an
intervening variable.
H10 : Perceived ease of use affects shopping intentions online with attitude online shopping as
an intervening variable
METHODOLOGY
The object of the research is all the variables to be studied, including perceived benefits,
perceived risk, perceived ease of use, online shopping attitudes, and online shopping intentions.

Research respondents are all people who personally make online shopping transactions. This study
was to examine the effect of perceived benefits, perceived risk, and perceived ease of use on online
shopping attitudes and their impact on online shopping intentions. The population in this study are
all internet users who have made online shopping transactions in Indonesia. The sampling
technique according to Solimun (2008) is the size of the sample for Structural Equation Modeling
(SEM), one of which is 5 to 10 times the number of parameters in the model. This study uses 24
indicators, so a minimum sample of 5 x 24 = 120 respondents is required. The number of samples
in this study were 178 respondents. Collecting data by sending questions to be filled out by
respondents themselves, is done by distributing a questionnaire form containing statements,
distributing questionnaires to prospective respondents by accessing the questionnaire using email
or by linking the online questionnaire address:https://bit.ly/3DgCkhA. The variables in this study
consisted of perceived benefits, perceived risk, perceived ease of use, online shopping attitudes,
and online shopping intentions. In making it easier to measure and understand research variables, it
is necessary to operationalize variables as a basis for researchers in preparing research instruments.
The analytical tools used forji validity is used to measure the validity or validity of a
questionnaire. The questionnaire was measured, and can be said to be valid if the statement on the
questionnaire is able to reveal something that will be measured by the questionnaire Ghozali
(2016). Measuring the questionnaire on all validitarian indicators, and it is said when the
respondent consistently answers the questionnaire from time to time. Before performing multiple
linear regression analysis, it is necessary to first test the classical assumptions including: normality
test, multicollinearity test, and heteroscedasticity test. Statistical t test is used to show how far the
influence of the independent variable individually (partial) in explaining the variation of the
dependent variable. The F statistical test shows whether all the independent variables included in
the model have a simultaneous (simultaneous) effect on the dependent variable. The coefficient of
determination (R2) test is used to measure how far the model's ability to explain the variation of the
dependent variable is. Ghozali (2016) path analysis is an extension of multiple linear analysis or
path analysis, also known as the use of regression analysis to estimate causality between
predetermined variables. Path Diagram Noor (2014) path diagram can be used to calculate the
direct effect and indirect effect of the independent variable (independent) on a dependent variable
(dependent). The path diagram in this study is as follows: The coefficient of determination (R2) test
is used to measure how far the model's ability to explain the variation of the dependent variable is.
Ghozali (2016) path analysis is an extension of multiple linear analysis or path analysis, also
known as the use of regression analysis to estimate causality between predetermined variables. Path
Diagram Noor (2014) path diagram can be used to calculate the direct effect and indirect effect of
the independent variable (independent) on a dependent variable (dependent).
The path diagram in this study is as follows: The coefficient of determination (R2) test is
used to measure how far the model's ability to explain the variation of the dependent variable is.
Ghozali (2016) path analysis is an extension of multiple linear analysis or path analysis, also
known as the use of regression analysis to estimate causality between predetermined variables. Path
Diagram Noor (2014) path diagram can be used to calculate the direct effect and indirect effect of
the independent variable (independent) on a dependent variable (dependent). The path diagram in
this study is as follows: Ghozali (2016) path analysis is an extension of multiple linear analysis or
path analysis, also known as the use of regression analysis to estimate causality between
predetermined variables. Path Diagram Noor (2014) path diagram can be used to calculate the
direct effect and indirect effect of the independent variable (independent) on a dependent variable
(dependent). The path diagram in this study is as follows: Ghozali (2016) path analysis is an
extension of multiple linear analysis or path analysis, also known as the use of regression analysis
to estimate causality between predetermined variables. Path Diagram Noor (2014) path diagram
can be used to calculate the direct effect and indirect effect of the independent variable
(independent) on a dependent variable (dependent).
The path diagram in this study is as follows:

Figure 2.Research Path Chart
Based on the figure can be formulated into the form of a structural equation, namely:
Z = PZX1 + PZX2 + PZX3 +Є
Y = PYX1 + PYX2 + PYX3 + PZY +Є
X1 : Perceived benefits
X2 : Perceived risk
X3 : Perceived ease of use
Z : Online purchasing attitudes
Y : Online purchasing intention
P : Path coefficient
Є : Other factors that influence online purchasing attitudes and online purchasing
intention
PZX1 : Path coefficient that describes the magnitude of the direct effect of perceived
benefits towards online purchasing attitudes
PZX2 : Path coefficient that describes the magnitude of the direct influence of
perceived risk towards online purchasing attitudes
PZX3 : Path coefficient that describes the magnitude of the direct effect of perceived
ease of use towards online purchasing attitudes
PYX1 : Path coefficient that describes the magnitude of the direct effect of perceived
benefits on online purchasing intention
PYX2 : Path coefficient that describes the magnitude of the direct influence of
perceived Risk on online purchasing intention
PYX3 : Path coefficient that describes the magnitude of the direct effect of perceived
ease of use towards online purchasing attitudes
PYZ : The path coefficient that describes the magnitude of the direct influence online
purchasing attitudes towards online purchasing attitudes
DISCUSSION
The respondents of this research are consumers who have purchased products online.
Consumer data is obtained by distributing questionnaires through the Google Forms application
which is accessed at the linkhttps://bit.ly/3DgCkhA. Dissemination of questionnaires via e-mail,
whatsapp groups, twitter and Instagram. The period for filling out the questionnaire is August 2021
- October 2021. The characteristics of respondents explored, namely gender, age, occupation,
income, and length of shopping period can be seen in Table 1.

Table 1. Characteristics of Respondents
Source: Research data (2021)
Validity Test and Reliability Test
In this study, the reliability test of 30 respondents was conducted first. Tests to determine
whether the questionnaire is reliable or not. The results of data processing for validity and
reliability tests can be seen in Table 2. and Table 3.
Table 2. Validity Test Results

Table 2. and Table 3. show that the statement items used are able to obtain consistent data in
the sense that if the statement is submitted again, relatively the same results will be obtained.
Classic Assumption Test Results

Multiple linear regression model can be said to be a good regression model if it meets the
classical assumptions which include normality test, multicollinearity test, and heteroscedasticity
test.
Table 4.
Normality Test Results Model I and Model II
Table 4. shows the results of the Kolmogorov-Smirnov test with the Asymp value. Sig in both
models is greater than 0.05, it can be concluded that the data tested in this study is normally
distributed and can be used in research.
Table 5.
Multicollinearity Test Results Model I and
Model II

Table 5. the results of the calculation of the tolerance value > 0.10 and the VIF value < 10,
so that the regression model does not have multicollinearity problems and is feasible to use.
Figure 3. Heteroscedasticity Test Results Model I and Model II

Figure 3. It can be concluded that there is no symptom of heteroscedasticity and the

regression model is feasible to use because there are similarities in residual variance with other
observers.
Regression Analysis Substructure I .

The results of the calculations on the partial regression test of substructure I are as follows:
Table 6. Partial Substructure I Regression Test Results
Table 7. Simultaneous Substructure I Regression Test Results

Table 8. Results of the Coefficient of Determination of Substructure I
Substructure Regression Analysis II

Based on the calculations that have been carried out, it can be seen that the results of the
calculations on the partial regression test of substructure II are as follows:
Table 9. Partial Substructure II Regression Test Results
Table 10. Simultaneous Substructure II Regression Test Results
Table 11. Results of the Coefficient of Determination of Substructure II

Table 12. Results of Testing Effects Between Exogenous Variables and Endogenous Variables
Table 12. All coefficients of influence between variables can be formulated in the form of structural
path analysis below,
The path diagram and its coefficients can be seen in Figure 5.
Figure 5. Diagram and Path Coefficient

Calculation of Direct, Indirect and Total Effects

The direct effect, indirect effect and total effect of endogenous and exogenous variables are as
follows:

Table 13. Calculation of Effect between Variables
Based on the results of the above calculations, it can be described as follows:
The Effect of Perceived Benefits, Perceived Risk, and Perceived Ease Of Use on Online
Purchasing Attitude
This is in line with research Hsu, Bayarsaikhan (2012), Jain, Goswami, and Bhutani (2014)
and Mengli (2011). The results of the partial test (t test) in Table 6. show the value of sig < 0.05
that perceived benefits, perceived risk, and perceived ease of use effect on online purchasing
attitude. This means that the increased benefits, risks and ease of use of the application perceived
by consumers will affectonline purchasing attitude. Simultaneously based on Table 7.
showsperceived benefits, perceived risk, and perceived ease of use together have an effect on
online purchasing attitude. This is supported by the sig value of 0.000< 0.05. Based on Table 8, the
adjusted R Square value is 0.706. Percentage of influenceperceived benefits, perceived risk, and
perceived ease of useaffect online purchasing attitude by 70.6%, while the remaining 29.4% is
influenced by other variables outside the study. Table 13. shows that the three consumer
perceptions areperceived benefits, perceived risk, and perceived ease of use have a direct effect on
online purchasing attitude.
Effect of Perceived Benefits, Perceived Risk, Perceived Ease Of Use, and Online Purchasing
Attitude on Online Purchasing Intention
This is in line with research by Lintong (2018), Nurmalia and Wijayanti (2018), and
Nurfiyah, Mayangky, Hadianti, and Riana (2019). Based on Table 9. Stating a partial relationship
between endogenous and exogenous, where the value of sig < 0.05 that perceived benefits,
perceived risk, perceived ease of use, online purchasing attitude affect online purchasing intention,
meaning increased benefits, risk of ease of use of applications that perceived by consumers, as well
as a positive attitude will affect online purchasing intention. The simultaneous influence can be
seen based on Table 10. It shows that perceived benefits, perceived risk, perceived ease of use,
online purchasing attitude together have an effect on online purchasing intention. This is supported
by the existence of a sig value of 0.000 < 0.05. The adjusted R Square value in Table 11. is 0.653.
The percentage of the influence of perceived benefits, perceived risk, perceived ease of use, online
purchasing attitude affects online purchasing intention by 65.3%, while the remaining 34.7% is
influenced by other variables outside the study. Table 13. shows that perceived benefits, and online
purchasing attitude have a direct effect on online purchasing intention, while perceived risk the
effect on online purchasing intention through online purchasing attitude is 0.207 but it is still
smaller than the direct effect, so to increase consumer intention involves attitude. The results of the
calculation of the direct influence of perceived ease of use on online purchasing intention of 0.243,
the indirect effect of perceived ease of use on online purchasing intention of 0.403 and the total
effect of 0.646 which means that the direct influence value is smaller than the indirect influence
value. So it can be concluded that online purchasing attitude can mediate the effect of perceived
ease of use on online purchasing intention

CONCLUSIONS
The conclusion of the research shows that perceived benefits, perceived risk, and perceived
ease of use on online purchasing attitudes partially and simultaneously, and the three consumer
perceptions have a direct effect on online purchasing attitudes. Perceived benefits, perceived risk,
perceived ease of use, and online purchasing attitude towards online purchasing intention partially
and simultaneously. Perceived benefits and online purchasing attitude have a direct effect on online
purchasing intention, and online purchasing attitude has a role in mediating the relationship
between perceived risk, perceived ease of use and online purchasing intention. The results of the
research carried out support several previous studies including; Mengli (2011), Lintong (2018),
Hsu, Bayarsaikhan (2012), Nurmalia and Wijayanti (2018), Jain, Goswami, and Bhutani (2014),
and Nurfiyah, Mayangky, Hadianti, and Riana (2019).
Suggestions for further research are to examine several other variables in order to find out
the factors that can influence consumer attitudes and intentions in purchasing online. The
implications for online shopping business people, to realize the benefits, and reduce the risk of
shopping online, the online shopping site ensures that the products sold are of appropriate quality.
In addition, business people are increasing security in online shopping so that consumers feel more
comfortable transacting online. The implication for regulators is that the government has issued
regulations to protect consumers and online shopping businesses. There are still consumers who do
not know about this protection, so the government needs to socialize the existing rules. Lack of
socialization raises concern among online shopping consumers.
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Anisah, Mukodim, Inrayani 151

The Effect Of Hedonic Shopping Motives, Visual Merchandising, And

Sales Promotion On Impulse Buying On Tokopedia Users
1.
Febrina Awalia, 2.Lana Sularto
Ekonomic Fakulty of Universitas Gunadarma
1.
febrinaawalia0402@gmail.com, 2.lana@staff.gunadarma.ac.id
Abstract
The purpose of this study was to analyze the effect of hedonic shopping motives, visual
merchandising, and sales promotion on impulse buying by Tokopedia users and to determine which
variables had the most influence on Tokopedia users. Impulse buying to Tokopedia users. The
method of analysis in this study using qualitative primary data, the test phase carried out: validity
test, reliability test, normality test, heterokedasitas test, multicollinearity test, multiple linear
regression analysis, and the coefficient of determination (R2). The data used in this study used a
questionnaire instrument and the sample in this study was 100 respondents. The sampling method
in this study is non-probability sampling using Cochran techniques, and the testing tool used is
SPSS. The results of this study indicate that the hedonic shopping motive and sales promotion
variables have a partial effect on impulse buying, while the visual merchandising variable does not
have a partial effect on impulse buying. The hedonic motives, visual merchandising, and sales
promotion variables influence impulse buying simultaneously.
Keywords : Hedonic Shopping Motives, Impulse Buying, Sales Promotion, Visual Merchandising
JEL Codes : M31, M37, M51
INTRODUCTION
Market growth in Indonesia continues to increase every year. Shopping online is not new
anymore but has become a daily habit. Millions of users in Indonesia make online purchases to buy
groceries, clothes, baby equipment, household appliances, books, electronics and more. The
number of users who shop online is increasing during the Covid-19 pandemic. Users choose to
shop online in addition to minimizing exposure to Covid-19 because shopping online is quite
practical.
The growth in the use of marketplaces in Indonesia is inseparable from infrastructure and
digital developments. Marketplace is an alternative for consumers to search and buy products. In
2020, the use of the marketplace increased to 88%. In Q4 users or visitors to the Tokopedia site
increased, in Q3 Tokopedia had 86.3 million website visits, increasing to 114 million in Q4
(www.sirclo.com).
Hedonic shopping motives are exercises done to get pleasure for yourself which can be fulfilled by
visiting commercial centers or online shops that have provided accommodation in shopping.
Hedonic behavior will encourage customers to make impulse buying when shopping at commercial
centers (Purnomo and Riani, 2018).
Tokopedia uses a system that influences purchase motivation, especially visual
merchandising and sales promotion. As pointed out by (Jain, Sharma, and Narwal, 2012) Visual
merchandising is a method of showing stock that can stand out and can be displayed to buyers.
Practically, the overall visual appearance of Tokopedia applies visual merchandising which makes
Tokopedia attractive and invites buyers who are expected to view the Tokopedia
site and make purchases. In addition to carrying out visual merchandising procedures,
Tokopedia also directs sales promotions to effectively win the competition between marketplaces
to gain marketing driving force.
Sales promotion is one technique to increase purchase motivation. According to Belch and Belch
(2015) sales promotion is a promotional movement that provides increased sales, traders and
buyers with the main goal of animating transactions quickly.
152 Awalia, Sularto

From the behavior of someone looking for fun, Tokopedia uses visual merchandising and sales
promotion strategies so that it can arouse buyers to make spontaneous purchases (impulse buying).
As pointed out by Kharis (2011) impulse buying is a buying movement that is identified with the
environment and limited opportunities for shopping. Impulse buying is another type of buyer
buying behavior according to buying conditions that are not explicitly stated (Utami, 2017).
Based on the brief explanation above, the author is interested in conducting a research entitled "The
Effect of Hedonic Shopping Motives, Visual Merchandising, and Sales Promotion on Impulse
Buying on Tokopedia Users".
The limitation of the problem in this study was adjusted to be chosen by the author, because of the
scope of the problem regarding Hedonic Shopping Motives (X1), Visual Merchandising (X2),
Sales Promotion (X3) against Impulse Buying (Y) on Tokopedia users by distributing
questionnaires to Tokopedia users. whose number is not known with certainty with a sample of 100
respondents conducted in February 2021 to April 2021. The questionnaire will be tested using the
validity, reliability and multiple linear regression test methods.
The problem objectives of this research are:
1. To find out whether partially Hedonic Shopping Motives affect Impulse Buying on
Tokopedia users.
2. To find out whether Visual Merchandising partially affects Impulse Buying on Tokopedia
users.
3. To find out whether Sales Promotion partially affects Impulse Buying on Tokopedia users.
To find out whether simultaneously Hedonic Shopping Motives, Visual Merchadising, and Sales
Promotion have an effect on Impulse Buying on Tokopedia users
LITERATURE REVIEW
Hedonic Shopping Motives
Hedonic shopping motives are someone's urge to shop for pleasure after buying a product. There
are six categories of hedonic shopping motivation, namely Adventure Shopping, Social Shopping,
Gratification Shopping, Idea Shopping, Role Shopping, and Value Shopping (Purnomo & Riani,
2018).
Visual Merchandising
Visual merchandising is an attractive product presentation technique and attractive design to
display merchandise or products (Jain, Sharma & Narwal, 2012). Visual merchandising is related to
how products are communicated visually to attract consumers' attention in order to influence
consumers to buy the product (Trifiyanto, 2019).
Sales Promotion
According to Kotler & Keller (2016) sales promotion is a collection of intensive tools, mostly short
term, designed to stimulate faster and larger product purchases by consumers. Marketing activities
that provide added value to salespeople, distributors and customers with the aim of stimulating
sales quickly (Belch & Belch, 2015).
Impulse Buying
Consumer behavior to buy something based on emotions related to spontaneous and unplanned
purchase decisions. Impulse buying according to Mowen and Minor (2013) is a buying activity
carried out without any intention to buy.
Awalia, Sularto 153

Hedonic
shopping
Motives
H1
(X1)
Visual
Merchandising Impulse Buying
H2
(X2) (Y)
Sales Promotion H3
(X3)
H4
METHODOLOGY
Population Sampling Procedure.
The sample is part of the number and characteristics possessed by the population (Sugiyono, 2017).
The sampling technique uses non-probability sampling by considering certain criteria. The criteria
are:
1. Have used or are still using the Tokopedia marketplace with a minimum of 2 uses.
2. Aged 17 years and over.
3. Domiciled in Greater Jakarta.
Then to determine the number of samples from the unknown population, then in determining the
sample the Cochran formula is used as follows (Sugiyono, 2017):
= 96,04
n = Number of samples
z = Normal distribution level at 5% significance level (1.96)
p = 50% chance of correct
q = 50% chance of being wrong
moe = Margin of Error Max, is the maximum error rate for sampling that can still be tolerated by
10%.
So, based on the above calculations, a sample of 96.04 can be taken. To make it easier for
researchers, the sample taken is 100 respondents.
Analysis Techniques.
The data analysis technique used in this research is descriptive analysis, validity test, reliability
test, classical assumption test, multiple linear regression analysis, hypothesis testing, and
coefficient of determination (adjusted R2).
Validity test.
Validity test is used to determine whether the research is valid or not. The validity test uses Pearson
correlation analysis, the decision to know whether an instrument is valid or not (Ghozali, 2016).
154 Awalia, Sularto

Reliability Test.
According to Ghozali (2016), reliability testing is a tool to measure a questionnaire which is an
indicator of a variable or construct. If someone's answers to questions are consistent or stable over
time, the questionnaire can be said to be reliable.
Classic assumption test.

The classical assumption test is carried out to ensure that the regression line equation obtained is
linear and valid to be used to find forecasts using the normality test and multicollinearity test.
Multiple Linear Regression Analysis.

Multiple linear regression analysis was used to measure the strength of the relationship between
two or more variables, also showing the direction of the relationship between the independent and
dependent variables (Ghozali, 2016).
Coefficient of Determination Test (R2).

The coefficient of determination test (R2) aims to measure how far the model explains the variation
of the dependent variable (Ghozali, 2016).
DISCUSSION
Validity test
In this study 100 respondents is the number of samples used as n, then the value of df is 98
with a significant level of 5% so that the r table is 0.197. Questions are declared valid if r count >
0.197.
The variable instrument of this study is said to be an instrument that has a high level of
validity because all question items for each variable have a calculated r value greater than the r
table value (0.197) which means the questionnaire item in this study is valid.
Reliability Test
Table 1. Reliability Test Results

Variable Cronbach's Alpha Results
Hedonic Shopping Motives 0.891 Reliable
Visual Merchandising 0.749 Reliable
Sales Promotion 0.815 Reliable
Impulse Buying 0.917 Reliable
Based on the results of the reliability test which can be seen in table 1, it shows that all
independent variables (hedonic shopping motives, visual merchandising, and sales promotion) and
the dependent variable (impulse buying) have a Cronbach alpha value (α) > 0.60 which can be said
to be reliable, meaning that the instrument is reliable. used reliably.

Normality test
Figure 2. Normality Test Results
Awalia, Sularto 155

From the graph shown in Figure 2, it can be seen that the normality test is normally
distributed. This can be seen from the points that spread following the direction of the diagonal line
so that the regression model used to research the effect of hedonic shopping motives, visual
merchandising, and sales promotion on impulse buying meets the assumption of normality.
Table 2. Multicollinearity Test Results
From table 2, it can be seen that the three independent variables of this study have a
tolerance value of more than 0.10 and a VIF of less than 10. So it can be said that there are no
symptoms of multicollinearity between the independent variables.
Figure 3. Heteroscedasticity Test Results
Based on Figure 3, it can be seen that there are no points with a certain pattern and are
scattered below the number 0 on the Y axis so that it shows that this research model does not occur
heteroscedasticity.

Based on the output above, the multiple regression equation for impulse buying can be formulated
as follows:
Y = 8.054 + 0.544 HSM + 0.001 VM + 0.441 SP
Y = Impulse Buying
HSM = Hedonic Shopping Motives
VM = Visual Merchandising
SP = Sales Promotion
156 Awalia, Sularto

From the multiple linear regression equation above, it can be said that:
1. The constant value (α) of 8.054 states that if the value of the hedonic shopping motives (X1),
visual merchandising (X2), and sales promotion (X3) variables is 0, then the value of impulse
buying (Y) will be the same as the constant value ( ) which is 8.054. It can be said that the
dependent variable without the independent variable is positive.
2. The hedonic shopping motives (X1) multiple regression coefficient value is 0.544. This means
that if each increase is one unit, then impulse buying will increase by 0.544.
3. The value of the multiple regression coefficient of visual merchandising (X2) is 0.001. This
means that if each increase is one unit, then impulse buying has increased by 0.001.
4. The value of the multiple regression coefficient of sales promotion (X2) is 0.441. This means
that if each increase is one unit, then impulse buying will increase by 0.441.
T Test (Partial)
Table 3. T-Test Results
Based on table 3, the results of the t-test in this study can be explained as follows:
1. Hedonic shopping motives (X1) on impulse buying (Y)
The results of testing the effect of hedonic shopping motives on impulse buying showed
significant results. This can be seen from the significant value of the hedonic shopping
motives variable with a value of 0.000 <0.05 and a tcount of 8.466 > ttable 1.985. So Ho is
rejected, Ha is accepted, so the hedonic shopping motives variable has a significant effect on
impulse buying.
2. Visual merchandising (X2) on impulse buying (Y)
The results of testing the effect of visual merchandising on impulse buying showed significant
results. This can be seen from the significant value of the visual merchandising variable with a
value of 0.993 > 0.05 and a tcount of 0.008 < ttable 1.985. So Ho is accepted, Ha is rejected,
so that the visual merchandising variable has no significant effect on impulse buying.
3. Sales promotion (X3) against impulse buying (Y)
The results of testing the influence of sales promotion on impulse buying showed significant
results. This can be seen from the significant value of the sales promotion variable with a
value of 0.017 < 0.05 and a t value of 2.422 > 1.985 t table. So Ho is rejected, Ha is accepted
so that the visual merchandising variable has a significant effect on impulse buying.
Table 4. F-Test Results
Awalia, Sularto 157

From the results of the f-test calculation in table 4, it can be seen that the f-count value is
59,084 with a significant level of 0.000 <0.005. It is concluded that simultaneously hedonic
shopping motives, visual merchandising, and sales promotion have a significant effect on impulse
buying.
Coefficient of Determination Analysis (R2)
Table 5. Determination Test Results
Based on the results of the determination test in Table 5, it shows that the R2 value of 0.638
as seen from the Adjusted R Square column has a strong correlation between the independent
variable and the dependent variable. This shows that the independent variables (hedonic shopping
motives, visual merchandising, and sales promotion) are able to influence impulse buying for
Tokopedia users.
CONCLUSIONS
Based on the data that has been collected and has been tested by obtaining the results that
have been described in Chapter IV, then some conclusions are obtained to answer the research
objectives based on the formulation of the problem. The following are the conclusions of the
research results:
1. Partially Hedonic Shopping Motives affect impulse buying for Tokopedia users. Because the
results of the t test produce tcount greater than ttable.
2. Partially Visual Merchandising does not affect impulse buying for Tokopedia users. Because
the results of the t test produce tcount smaller than ttable.
3. Partially Sales Promotion affects impulse buying for Tokopedia users. Because the results of
the t test produce tcount greater than ttable.
4. Based on the F test, the hedonic shopping motives, visual merchandising and sales promotion
variables simultaneously affect impulse buying for Tokopedia users.
Because from the results of the F test the resulting significant level is smaller than the
significant level specified in the F test. Based on the results of partial data analysis through the T
test calculation, impulse buying is influenced by hedonic shopping motives and sales promotion.
Impulse buying is not influenced by visual merchandising. And based on the results of
simultaneous data analysis, the three independent variables (hedonic shopping motives, visual
merchandising, and sales promotion) affect the dependent variable (impulse buying). Some
consumers prefer shopping and hunting for products that provide attractive promotions such as
discounted prices, giving shopping coupons and giving cashback. But some other consumers feel
that consumers shop not based on the appearance provided by the Tokopedia website or
application. So the implication of this research is to provide the best service for consumers who
have hedonic shopping behavior. Tokopedia must maintain a marketing strategy through sales
promotion or even add strategies such as providing cashback offers without a minimum purchase
so that consumers make spontaneous purchases (impulse buying).
Based on the conclusions above, the suggestions proposed are as follows:
1. Based on the research results, hedonic shopping motives and sales promotion are dominant
variables and significantly influence impulse buying. Hedonic shopping motives and sales
promotions need to be optimized so that these factors can play a good role in encouraging
158 Awalia, Sularto

consumers to make impulse buying, so as to increase buying and selling transactions at

Tokopedia.
2. For further researchers who will discuss the same problem, they can develop this research by
including and adding other independent variables that can affect impulse buying behavior.
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160 Awalia, Sularto

E-Commerce, Prices, Sales Promotions And Trust In Customer

Satisfaction Online Shop Zalora In Indonesia
1
Tanti Arfianti Dewi, 2Irfan Ardiansyah, 3Desti Dirnaeni, 4Christera Kuswahyu Indira
1,2,3,4
Ekonomic Fakulty of Universitas Gunadarma
1
, tanti_adewi@staff.gunadarma.ac.id, 2Irfan.a@staff.gunadarma.ac.id,
3
destidirnaemi@staff.gunadarma.ac.id, 4Christera@staff.gunadarma.ac.id
Abstract
Indonesia is one of the countries that businessmen, particularly in the fashion industry. The
growing public interest in fashion drives ZALORA to provide products from well-known
companies that fulfill people's lifestyle needs. As such, the purpose of this study was to
determine the effect of e-commerce, price, promotion, and trust on consumer satisfaction at
ZALORA's Indonesian online store. The method employed in this study is primary data collection
used of non-probability sampling techniques to distribute online questionnaires to 100
respondents. Purposive sampling was used to collect data. Multiple linear regression tests, the T
test, and the F test are employed as analytical tools. The findings of this study indicate that e-
commerce, price, promotion, and trust all have a partial and concurrent effect on customer
satisfaction with ZALORA's online shop in Indonesia.
Keywords: e-commerce, price, trust, customer satisfaction and promotion

JEL Codes: D01, M21, M31
INTRODUCTION
The Internet's development has been accelerating in recent years both globally and in
Indonesia; the Internet is not only a means of locating and exchanging information; it has also
resulted in innovations in online buying and selling, commonly referred to as e-commerce, with the
existence of e-commerce in Indonesia. has shifted some people's shopping habit from offline to
online, and consumers are increasingly turning to online media as a convenient way to obtain
things in comparison to shopping at physical stores.
The proliferation of e-commerce enterprises in Indonesia and the variety of services available
give consumers complete flexibility in deciding which online store to visit for purchasing and
selling transactions. The proliferation of e-commerce corporations and companies demonstrates
that the Indonesian market is extremely promising; this is because the Indonesian public is
becoming more interested in e-commerce services. In Indonesia, e-commerce does not just offer
everyday items; it also sells everything from fashion to entertainment. However, the focus of this
research will be on e-commerce in the context of fashion.
Fashion is one of the supporting appearances; individuals will feel more confident if they
appear to others to be attractive and well-dressed. All brands, from those that are new to the
community to those that are popular, strive to give the greatest products possible from the brands
they own. Clothing, shoes, sandals, wallets, and accessories are all available. To advertise these
products more effectively and to make them more accessible to potential clients, fashion
entrepreneurs not only build offline stores but also online stores and cooperate by opening
merchants in various forms of e-commerce.
The following is the ranking data for e-commerce sites selling fashion products in Indonesia
from 2019 to 2021, according to IPrice data:
Dewi, Ardiansyah 161

Table 1. Ranking Of E-Commerce In Indonesia

Q3 2021 Period Fashion Category
Sumber: Iprice, 2021
According to Table 1, the number one ranking is held by e-commerce Zalora, which has the
highest number of site visitors (2,550,000), the AppStore ranks fourth, and the PlayStore ranks
eighth. Tees took the final position with a total of 24,700 site visitors. However, the ranking of the
most downloaded applications on the AppStore and PlayStore has not yet entered the top ten.
ZALORA was founded in 2012 in Singapore and specializes in online fashion shopping,
which is booming throughout Asia, particularly in Indonesia. Fashion products targeted at the
Indonesian market share are suited to the tastes and preferences of each country, including
Indonesia. On the ZALORA website, customers may choose from over 500 local and worldwide
brands offering men's and women's fashion, including apparel, shoes, accessories, sports
equipment, and Muslim clothing. Thus, ZALORA has established itself as the leading online
fashion destination in Indonesia, and the brand has goals to continue growing (ZALORA, 2021).
The enormous population of Indonesia compels ZALORA, which has its head office, to
pursue market share in that country, where the populace is consumptive. Due to Indonesia's
expanding fashion trend, ZALORA aims to capture market share in both children's and adult
fashion. Additionally, the e-commerce site guarantees that the things it sells are 100% authentic
from well-known brands, ensuring that the products they sell are of the highest quality.
E-role commerce's as a provider of sales services benefits both vendors and buyers. For
sellers, e-commerce eliminates the need to open expensive rental stores, enables them to provide
their products to customers without incurring additional costs for product advertising, and enables
products to reach buyers throughout Indonesia and even abroad. Existing technical advancements
make E-commerce a desirable shopping destination for customers; purchasing online makes
customers feel content because they do not have to spend more money to purchase a single item;
so, buyers feel satisfied while shopping via e-commerce. This supports Sidharta and Suzanto's
(2015) research showing e-commerce influences customer satisfaction.
The price supplied through these services is lower than the price offered in an offline store;
this is because merchants must factor in the cost of manufacturing the product, employee salaries,
and shop rental, among other things. Customers will be delighted if they receive a product of
comparable quality to the pricing. Customers will be content if they receive a high-quality product
at an affordable price. This is consistent with the findings of Fadilah (2015), who discovered that
pricing influenced customer happiness. However, this contradicts Merkeawati et al(2021) finding
that price has no effect on consumer satisfaction.
Not only is e-commerce a service provider, but it is also responsible for advertising
merchants' products. Typically, service providers give promotions in the form of flash sales,
adverts in their column, free shipping, and discounted prices. Attractive promotions will entice
customers to make a purchase. This is consistent with the findings of Susanti (2016), who found
that promotion influences consumer satisfaction. However, this contradicts Merkeawati et
al(2021) finding that price has no effect on consumer satisfaction.
E-commerce is a trusted place for both sellers and customers; with the presence of these
service providers, clients will feel confident and secure when purchasing these products.
Advertised products will get more trust as a result of the presentation of detailed and clear product
162 Dewi, Ardiansyah

photographs, as well as product explanations included in the description, which provide customers
with further information about the product prior to making a purchase. Thus, as the consumer
receives the product, there will be a sense of satisfaction because the goods received meet the
customer's expectations. This is consistent with the findings of Wiludjeng and Daniarsa (2013),
who found that trust had an effect on consumer satisfaction. However, this contradicts Merkeawati
et al's (2021) research, which found that price has no effect on trust or customer satisfaction.
As a result, if e-commerce can be one of the providers of purchasing services for customers
with competitive rates, promotions, and the ability to be trusted by customers, it will almost surely
make customers feel more satisfied than if they had to shop. straight to the offline business, which
will incur additional fees for travel and other expenses. Thus, the goal of this study is to determine
the effect of e-commerce, price, sales promotion, and trust on customer satisfaction in an online
store, both partially and simultaneously ZALORA.
Based on the purpose of this study, it is hoped that it can provide input to the company in
order to improve the quality of e-commerce applications. Offering more affordable prices for
customers to reach the lower middle class to the upper class. Promotions given, especially
regarding discounts or cashback, can also influence customers to buy, and if the price offered is in
accordance with what they expect, the customer will be satisfied. Customer trust in the company is
one of the pillars of a company so that it continues to run its business, because trust between
customers and sellers can make a business continue to run. Therefore, with customers giving all
their trust to the seller regarding the products offered and the delivery system of goods in
accordance with the promised time, of course, it is a special satisfaction for customers. Customer
satisfaction is a top priority for all businesses, whether in the sale of products or services. A good
management system for a company will certainly have a good impact on increasing sales, therefore
whether it is good in terms of e-commerce, prices, promotions also trust and other things, they
really need to be considered in order to provide satisfaction to customers
LITERATURE REVIEW
E-commerce
The term e-commerce emerged in the 1990s as a result of an effort to change the paradigm of
buying and selling transactions and payments away from traditional means and toward digital
electronic forms enabled by computers and internet networks. Initially, electronic commerce
referred to the use of electronic transactions for business purposes, such as electronic ordering.
Then it evolved into a legitimate activity known as e-commerce.
According to Jony Wong (2010), e-commerce is the process of purchasing, selling, and
marketing goods and services via electronic systems such as television, radio, and computer
networks, as well as the internet. E-commerce incorporates some common features that offline
business transactions do not, including (Hidayat, 2008):
1. Products: Many types of products can be sold through the internet such as computers, books,
music, clothes, toys, and others.
2. A place to sell products (a place to sell): the place to sell is the internet, which means you must
have a domain and hosting.
3. How to receive orders: email, telephone, sms and others.
4. Payment method: Cash, check, bank draft, credit card, internet payment (eg paypal).
5. Shipping method: delivery can be done via package, salesman, or downloaded if the product
being sold allows it (eg software).
6. Customer service: email, online form, FAQ, telephone, chat, and others.
Price
Kotler and Keller (2012) define price as the amount of money charged for a particular
product. Prices are set in a variety of ways by companies. Prices are frequently established by top
management in small companies. Pricing is typically handled by divisional or product line
managers in big enterprises. Even in these companies, top management defines broad pricing
objectives and rules and frequently approves lower management's price proposals. Morrisan (2010)
defines the price dimension as:

1. Product quality
2. Level of competition
3. Promotional activities
Promotion
Kotler and Armstrong (2012) define sales promotion as a collection of short-term incentives
designed to encourage the purchase or sale of items or services. Sales promotions can be made
available to both intermediary consumers and salespeople. Sales promotions are classified into four
distinct categories, including the following:
1. Discount. is a reduction of a certain amount of money from the usual price for a certain period.
2. Coupon. Refers to a certificate that provides a price discount or special benefit only to the
holder of that coupon.
3. Gift. A gift refers to a gift to a buyer.
4. Points. The point system converts a certain amount of money which can later be used as cash.
Trust
The basis of any business is trust. If two or more parties trust one another, a business
transaction will occur. This trust cannot just be recognized by other parties/business partners; it
must be established from the ground up and be able to be proven. Trust has been viewed as a
catalyst in a variety of transactions between sellers and buyers, allowing for the expected level of
consumer satisfaction (Yousafzai et al., 2003). According to Gurviesz & Korchia (2011), there are
3 (three) elements to trust:
1. Ability
The term "ability" refers to the competence and characteristics of actors (sellers, employees,
etc.) engaged in the provision of services to their customers. In other words, consumers expect
service providers to ensure their satisfaction and security when doing transactions. Competence,
experience, and scientific ability all fall under the category of ability.
2. Integrity
Integrity is a behavioral commitment made by service providers to conduct business in a way
consistent with the promises made to consumers. This determines whether the
institution/company is trusted by its consumers. Integrity is quantifiable in a variety of ways,
including fairness, fulfillment, loyalty, honesty, dependability, and reliability.
3. Benevolence
Virtue is a service provider's commitment to ensuring consumer satisfaction. The company must
prioritize client satisfaction in addition to profit maximization. Benevolence includes
characteristics such as attentiveness, empathy, confidence, and acceptance.
Customer Satisfaction
According to Kotler and Keller (2012), customer satisfaction refers to a person's sense of
pleasure or dissatisfaction following a comparison of the product's performance (results) to the
expected performance (or results). Customer Satisfaction Dimensions, the factors that influence
customer satisfaction can be determined by the size or dimensions of customer satisfaction, that is:
1. Stay loyal
Satisfied consumers are more likely to remain loyal. Consumers who are satisfied with the
products they consume are more likely to make further purchases from the same manufacturer.
2. Buy the products offered
The desire to purchase additional products or foods given as a result of a desire to replicate
positive experiences and avoid negative ones.
3. Recommend products
Satisfaction is a motivation for communication through positive word of mouth. This can take
the form of making suggestions to other potential consumers and extolling the virtues of the
product and the company that produces it.
4. Willing to pay more
Consumers frequently consider price as a benchmark for satisfaction; when the price is higher,
they believe the quality will be higher as well.

5. Give feedback
Even when consumers are satisfied, they constantly want more, and therefore they will give
feedback or suggestions to ensure that their wants are achieved.
Research Model
Based on the theoretical study, the research model contained in this study is as follows:
E-commerce (X1)
Price (X2)
Promotion (X3) (Y)
Trust (X4)
Hypothesis
Based on the research model in Figure 1 above, the hypotheses in this study are as follows:
H1 : E-commerce affects online shop customer satisfaction ZALORA in Indonesia.
H2 : Price influences customer satisfaction at the ZALORA online shop in Indonesia
H3 : Promotion influences customer satisfaction of the ZALORA online shop in Indonesia
H4 : Trust influences online shop customer satisfaction ZALORA in Indonesia
H5 : E-commerce, price, promotion, and trust affect simultaneously on customer satisfaction of
the ZALORA online shop in Indonesia.
RESEARCH METHOD
This study used quantitative approach, analyzing survey data statistically and using
descriptive inferential statistics, which is research conducted through systematic data collection
with the purpose of answering the study's hypothesis.
Research object
The object of this research is the ZALORA online shop, with the subjects being visitors to
the ZALORA website.
Operational Variable
The variables used include e-commerce, price, promotion and trust as independent variables
that will affect customer satisfaction as the dependent variable. The following is a table of
operational variables:
Table 2. Operational Variables

No. Variable Description Indicator Scale
E-commerce is a place 1. Ease of operating the
for buying, selling and website
marketing a product or 2. Search information
service through an quickly
electronic system (Wong, 3. Easy to use site
E-commerce 2010). 4. Able to provide good
1. Ordinal
(X1) information
5. Interest in visiting the site
6. Ease of interacting with
customer service
7. Easy to register

No. Variable Description Indicator Scale

Price is the amount of 1. Affordable price
money charged for a 2. Price according to quality
2. Price (X2) particular product (Kotler 3. Price Competitiveness Ordinal
& Keller, 2012) 4. Price is taken into
consideration
Promotion is a variety of 1. Giving shopping vouchers
short-term incentives to without minimum
encourage the purchase requirements
Promotion or sale of a product or 2. Shopping with vouchers
3. service (Kotler & 3. The number of promo on Ordinal
(X3)
Armstrong) offer
4. Promotional price
Trust is a business 1. Product consistency

transaction that will occur 2. Product reputation
between two or more 3. Trust in terms of
parties if each party can promotion
trust each other 4. Product quality is good
(Yousafzai et.al, 2011). 5. High level of security
4. Trust (X4) 6. The condition of the Ordinal
product reaches the
customer
7. Competent product
8. The facilities provided
have good competence
Customer satisfaction is a 1. Satisfied with the service

feeling of pleasure or 2. Seller’s ability in product
disappointment of information
someone that will arise 3. Product guarantee
Satisfaction after comparing 4. The speed of customer
5. Ordinal
(Y) performance with the service in interacting
results received in 5. Safety in shipping
accordance with customer
expectations (Kotler &
Keller, 2012).

The population for this study was all 2,550,000 visits to the ZALORA website as tracked by
Iprice. The overall sample size in this study was 100 respondents, based on the total population.
Using Slovin with a 10% error rate, the total sample size was determined to be 100 respondents.
Data Acquisition
The study used a non-probability sampling technique, in which members of the population
selected for sampling were not given equal opportunity. Purposive sampling was used, which
entails establishing certain criteria, such as female or male gender, ZALORA website users for at
least one month, at least 22 years of age, respondent's income, and respondent's province of
residence. The method utilized to distribute online questionnaires via Google Forms, namely
sending links to respondents via e-mail and short messaging (Whatsapp), is intended to reach all
respondents in Indonesia. The study period is March – June 2021.

Research Instrument Test

Validity test
Validity test is the validity of an instrument, an instrument is said to be valid if the result of
the r-count value is greater than the r-table (Sugiyono 2016).
Reliability Test
The term "reliability" refers to the degree to which data or findings are consistent and stable.
From a quantitative standpoint, data is said to be reliable if two or more researchers conducting
research on the same object produce the same data, or if multiple researchers conducting research
at different times produce the same data, or if a group of data when divided into two identical
groups produces the same data (Sugiyono,2016).
Data Analysis
Classical assumption test aims to provide certainty that the regression equation obtained has
accuracy in estimation, is unusual and consistent. The classical assumption test used in this study
is as follows:
1. Normality test is a test of the normality of the distribution of the dependent variable and the
independent variable in the regression model. A good regression model must have a normal
data distribution or statistical data spread on the diagonal axis of the normal distribution graph.
2. Multicollinearity test is a situation where some or all the independent variables are highly
correlated.
3. The heteroscedasticity test aims to test whether, in the regression model there is an inequality
of variance from the residual of one observation to another observation. If the variance from
the residual of one observation to another observation remains, it is called Homoscedasticity
and if it is different, it is called Heteroscedasticity.
Goodness of fit
The F statistical test is used to determine whether the regression model can be used to predict
the dependent variable. If the value of calculated F > table F and significance probability < 0.05,
then the regression model can be used to predict the dependent variable.
T-test (Partial test)

The t-test is used to determine the significance of each independent variable's constants, namely if
e-commerce, price, promotion, and trust all have a different effect on the dependent variable,
namely customer satisfaction, using the following criteria:
a. If Sig. < 0,05 it means that the independent variable partially affects the dependent variable.
b. If Sig. > 0,05 it means that the independent variable partially has no effect on the dependent
variable.
Coefficient of Determination Test (R2)

The coefficient of determination test shows the percentage effect of all independent variables on
the dependent variable. The coefficient of determination formula can be addressed as follows:
Discussion
Validity Test Results
The results of the validity test can be seen in the following table::

Source : Data processed, 2021

According to the results in Table 2, the r-count value for each indicator is greater than the r-
table, indicating that the questionnaire is valid for research usage.
Reliability Test Results

While, the results obtained in the reliability test can be seen in the following table::
Source: Data processed, 2021

As can be seen from Table 3, the Croanbach alpha value is more than 0.60. As a result, the
questionnaire's indications can be used and considered reliable.

Classic Assumption Test Results

Based on study conducted using the classical assumption test using the method of normality
test, multicollinearity test and heteroscedasticity test, the results obtained that all data have met the
requirements for passing the classical assumption test. This is proved by the results of the
normality test showing the p-plot spreads around a straight line following the direction of the
diagonal curve, which can be said that the research data is normally distributed. The
multicollinearity test has a tolerance value > 0.10 and a VIF value < 10, so it can be concluded that
there is no multicollinearity between the independent variables in this study. While the results of
the heteroscedasticity test obtained a scatterplot image that there is an unclear pattern and the
points are spread out, then the calculation can be declared to have passed the heteroscedasticity
test.
Hypothesis Test Results

Goodness of fit
Based on study that has been done to determine whether or not a regression model is
feasible in predicting the dependent variable using the ANOVA test. The results can be seen in the
table below :
Table 7. Simultaneous Test Result

ANOVAa
Sum of
Model Squares Df Mean Square F Sig.
1 Regression 921.380 3 316.794 79.591 .000b
Residual 379.970 96 3.874
Total 1281.361 99
a. Dependent Variabel: Kepuasan
b. Predictors: (Constant), Kualitas_Layanan, CRM, Promosi

In Table 7, it is known that the significance probability is less than 0.05. This indicates that
the independent variable used in this study is a real explanator of the dependent variable and also
shows that the regression model is feasible to be used in this study.
T test (Partial)
Partial test is used to determine the independent variable's effect on the dependent variable,
then t-table must be bigger than t-count. According to the research, the t-table value is 1.985, and
the t-count value is as follows:
Table 6. Partial Test Results

Coefficientsa
Model B Std. Error Beta T Sig.
1 (Constant) 1.959 1.415 1.323 .099
E-commerce .209 .077 .187 2.554 .012
Harga .386 .088 .457 4.387 .000
Promosi .179 .072 .173 2.074 .085
Kepercayaan .420 .071 .700 8.452 .000
a. Dependent Variabel: Kepuasan
E-commerce on Customer Satisfaction

Based on the table above, it can be seen that e-commerce has an effect on customer
satisfaction, so Ha is accepted. ZALORA strives to provide the best quality to its customers,
whether in terms of services provided in e-commerce in the form of ease of operating the

ZALORA website, ease of finding the products needed, very clear product descriptions, ease of
communicating with customer service if there are difficulties, and easy to register. The results of
this study are in accordance with a study conducted by Iwan and Boy Suzanto (2015), which states
that e-commerce has an effect on customer satisfaction.
Price to Customer Satisfaction

Based on the table above, it can be seen that the price has an effect on customer satisfaction,
so Ha is accepted. The prices of the products offered by ZALORA are in accordance with the
brands found at each merchant, for the products with well-known brands of course usually are at
high prices, but ZALORA tries to provide good offers in terms of affordable prices, product
quality is in accordance with the price offered, product price competition with other e-commerce
that sells similar products so that customers can consider buying products from ZALORA e-
commerce. The results of this study are not in accordance with a study conducted by
Merdekawati et al (2021) which states that price has no effect on consumer satisfaction.
Promotion on Customer Satisfaction

Based on the table above, it can be seen that promotion has an effect on customer
satisfaction, so HA is accepted. Promotions are needed by customers, because with promotions,
customers will know what products will be sold at affordable prices. ZALORA strives to meet the
needs of these customers by giving vouchers in the form of discounted prices, so that the price of
products that were initially expensive become cheaper because of the discounted price. This is in
accordance with the results of a study conducted by Wiludjeng (2013) which states that trust has
an effect on customer satisfaction.
Trust on Customer Satisfaction

Based on the table above, it can be seen that trust has an effect on customer satisfaction, so
HA is accepted. If the trust given implemented properly, it will be mutually beneficial for both
parties, therefore ZALORA strives to provide good service so that customers have faith by using
ZALORA e-commerce to meet their needs, including the products offered are consistent with good
product quality, each product has a good reputation in the minds of customers, a high level of
security, and pays attention to the condition of the product being safe until it reaches the customer.
Based on this, customers are satisfied because in terms of e-commerce, prices, promotions and
trust, what they get is in accordance with what they expect. The results of this study are not in
accordance with a study conducted by Merdekawati et al (2021) which states that trust has no
effect on consumer satisfaction.
Determination Test
The coefficient of determination is used to measure the extent to which the independent
variable can account for the dependent variable. The coefficient of determination can be
determined by examining the value of Adjusted R square. The following table summarizes the
findings of the coefficient of determination test:
Table 8. Determination Test Results

Model Summaryb
Adjusted R Std. Error of the
Model R R Square Square Estimate Durbin-Watson
1 .723a .538 .593 1.918 2.291
a. Predictors: (Constant), jumlah_Promosipenjualan, jumlah_kualitasWebsite, jumlah_Harga
b. Dependent Variable: jumlah_kepuasanpelanggan

As shown in Table 8, the Adjusted R Square value is 0.593, indicating that e-commerce,
prices, promotions, and trust influence consumer satisfaction by 59.3%, while the remaining 40.7%
is influenced by factors not addressed in this study including brand image, service quality, product,
and advertisement
CONCLUSION
According to the research, e-commerce, price, promotion, and trust all have a partial and
simultaneous effect on customer satisfaction at ZALORA's online store in Indonesia. Thus, if the
e-commerce side can create a positive and attractive impression on the ZALORA website, if the
prices are reasonable and in line with the products offered, if promotional offers such as
discounted prices or free shipping attract customers, and if ZALORA can be trusted as an e-
commerce that provides quality products and protects customer data, customers will naturally feel
satisfied when shopping on the ZALORA website for their fashion needs.
Suggestion
Suggestions made in this study include the expectation that the company will improve its
service, particularly in dealing with customer complaints. While the ZALORA website has a chat
option for customers to submit complaints, the service's abundance of pop-up menus leaves some
new customers perplexed, as they essentially want to communicate directly with customer care. In
terms of pricing, ZALORA competes well with other e-commerce platforms. While ZALORA
guarantees that the products they sell are authentic, some merchants join competing e-commerce
platforms, resulting in a significant price differential. As a result, it is envisaged that ZALORA's
prices will be competitive with those of other e-commerce platforms. Similarly, with the promo
pricing presented, it is hoped that additional discounts and free shipping promotions will be added
in the future. Trust from the public can be earned by including a product review column on the
ZALORA website, where other consumers can read reviews from past buyers regarding the
merchant's product quality, allowing customers to have greater confidence in the merchant's
products.
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Kualitas Pelayanan, Kepercayaan, Dan Harga Terhadap Kepuasan Konsumen Berbelanja
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ISBN: 979-26-0266-6, 525-531
Wong, J. (2010). Internet Marketing for Beginners. Jakarta: Elex Media Komputindo.

The Effect Of Promotions, Service Features, And Ease Of Use On

Interest In Using Shopeepay E-Wallet During The Covid-19 Pandemic
1
Febrita Alfelia, 2Lana Sularto
Ekonomics Fakulty of Universitas Gunadarma
1
febritaalfelia@gmail.com, 2lana@staff.gunadarma.ac.id
Abstract
The purpose of this study was to analyze the effect of promotions, service features and ease of use
on interest in using Shopeepay's E-Wallet during the Covid-19 pandemic and to find out which
variables were the most dominant on interest in using Shopeepay's E-Wallet during the COVID-19
pandemic, either partially or simultaneously. The analytical method used in this research is validity
test, reliability test, and classical assumption test which consists of 3 basic assumptions, namely
normality, multicollinearity, and heteroscedasticity. After that, the multiple linear regression test, f
test, and t test were performed, and the coefficient of determination was tested. Respondents who
were tested were purposive who were interested in using Shopeepay's E-Wallet during the Covid-
19 pandemic. The data used in this study used a questionnaire instrument, and the valid data
collected were 100 respondents. The sampling method in this study is non-probability sampling
with purposive sampling technique. The testing tool used is SPSS 25. The results showed that
partially promotions and service features had an effect on interest in using Shopeepay E-Wallet,
while ease of use had no effect on interest in using. Simultaneously promotions, service features
and convenience affect the interest in using the Shopeepay E-Wallet during the Covid-19 pandemic
and the most dominant variable on interest in using is the service feature variable
.
Keywords : service features, convenience, interest in using, promotion
JEL Codes: D23, F65, M51
INTRODUCTION
The development and growth of technology to date continues to progress rapidly. This
requires that each individual must work hard to continue to innovate in order to create something
quality and easy to use. Various digital innovations that exist today show that society is
contributing to the development of an increasingly modern era. One of the innovations currently
developing in the field of financial services is Financial Technology. The development of financial
technology brings benefits to consumers, business actors, and the national economy, but on the
other hand has potential risks which if not mitigated properly can disrupt the financial system. At
the beginning of 2020, Indonesia was shocked by the outbreak of the corona virus (Covid-19)
which began to threaten public health. WHO since March 2020 has declared the corona virus that is
spreading as a global pandemic. The government has implemented several policies and regulations
to anticipate and reduce the number of corona virus sufferers in Indonesia and have been carried
out in all regions. These include providing social distancing policies by maintaining a minimum
distance of one meter from other people, not doing activities outside the home without any
important business, conducting online school activities at home and implementing work at home or
work from home.
Restrictions on payment by cash have caused people to switch to using electronic money to
reduce physical contact between buyers and sellers. Cash, paper or coins, can be a medium for
disease transmission. Make sure to maintain cleanliness when transacting with cash regularly,
prioritize payment transactions using electronic / non-cash money (covid19.go.id, 2020). One of
the most popular electronic money providers in Indonesia, namely PT Airpay International
Indonesia, received a permit on August 8, 2018 by Bank Indonesia. PT Airpay International
Indonesia itself has electronic money products with the ShopeePay trademark. ShopeePay is a
172 Alfelia, Sularto

wallet and electronic money service feature that functions as a payment method and to store
refunds (Irvindya, 2019).
The development of Shopeepay cannot be denied that there are problems in the use of these
products and will have an impact on the interest in using them for consumers. Moreover, many
similar products have emerged from other competing companies. Problems that arise when using
Shopeepay such as discount vouchers cannot be used. The nominal transaction that I spent was not
deducted by the value of the voucher I bought (Gimulya, 2020). In addition to the promotion factor,
the service feature factor is also a determinant of interest in using. Even though it has quite a
variety of service features, there are problems that often occur such as Top Up failed and the
balance does not enter Shopeepay. The top up occurred in almost all banks, some users reported
being unable to add balances such as through BCA and BNI (Bestari, 2021). Another factor is
convenience, the process of paying top ups and bills still requires quite a long confirmation time.
For transaction security, please wait for 4 hours to confirm the order is received (shopee.co.id, nd)
When compared to OVO when making top up payments and bills on Tokopedia, researchers have
experienced firsthand the convenience of making top up payments up credit at Tokopedia using
OVO, which is the confirmation time in real time. Therefore, researchers will examine the effect of
promotions, service features, and ease of use on interest in using the Shopeepay e-wallet during the
Covid-19 pandemic.
Research Objectives :
In accordance with the formulation of the problem as described above, the objectives of this
research are:
1. Analyzing the effect of Promotion on Interest in Using Shopeepay's E-Wallet during the Covid-
19 pandemic
2. Analyzing the effect of Service Features on Interest in Using Shopeepay E-Wallet during the
Covid-19 pandemic
3. Analyzing the effect of Ease of Use on Interest in Using Shopeepay's E-Wallet during the
Covid-19 pandemic
4. Analyzing the effect of Promotions, Service Features, and Ease of Use on Interest in Using
Shopeepay's E-Wallet during the Covid-19 pandemic
LITERATURE REVIEW
Covid-19 (coronavirus disease 2019) is a virus caused by a new type of corona virus, namely
Sars-CoV-2, which was first discovered in Wuhan, China on December 31, 2019. Covid-19 can be
transmitted after a person has close contact with an infected person when expelling droplets (fluid
that comes out when coughing, sneezing or when talking), not through the air. The shape of Covid-
19 when viewed through an electron microscope (respiratory fluid/throat swab) and the shape of
Covid-19 is redefined as a virus that has a crown (padk.kemkes.go.id, 2020).
Interest in Using : According to (Jogiyanto, 2007) interest is the desire to perform a certain
behavior. Someone will do a person's self-awareness of objects, problems or circumstances that
have a relationship with him, which means that interest must be seen as awareness. According to
(Kotler & Keller, 2012) interest is a user behavior where users have a desire to choose a product
based on their own experience in choosing, using and consuming or even wanting a product.
Promotion : According to (Kotler & Keller, 2016) Promotion is an activity that conveys the
advantages of a product and persuades target consumers to buy the product. Companies use
advertising, sales promotion, sales force, and public relations for messages designed to capture
consumers' attention and interest. Therefore, through promotion, marketers hope that their products
will be more attractive to consumers. Meanwhile, according to (Tjiptono & Diana, 2020)
promotion is a marketing activity designed to disseminate information, influence, convince or
remind and persuade them to be willing to accept, buy, be loyal to the products provided by the
related company.
Service Features : Features are a means to complete basic functions, most products can be
offered by varying features. Companies can identify and select the right new features by surveying
recent buyers and then calculating a comparison of customer value to company costs for each
potential feature. Companies must also consider how many people want each feature, how long it
Alfelia, Sularto 173

will take to introduce it, and whether competitors can easily copy it. To avoid “feature fatigue,”
companies must also carefully prioritize the features covered and find clear ways to provide
information about how consumers can use and benefit from features. Whereas a Service is any
action or performance that one party can offer to another that is essentially intangible and does not
result in any ownership. (Kotler & Keller, 2010). Service features can also assist technology users
in making decisions to use or not to use them (Rithmaya, 2016).
Ease of Use : According to (Jogiyanto, 2007) ease of use is defined as the extent to which a
person believes that using a technology will be free from effort. If someone thinks that the
information system is easy to use then he will use it. Conversely, if someone thinks that the
information system is not easy to use then he will not use it. According to (Rahadi, 2007) the
intensity of use and interaction between the user (user) and the system can also indicate ease of use.
The system that is used more often indicates that the system is more familiar, easier to operate and
easier to use by its users.
Previous Research
According to research conducted by (Alghifari & Madiawati, 2020) shows that there is an
influence between the promotional variables on the interest in using Go-pay in Bandung. These
results reflect that the higher the promotion carried out, the higher the level of interest in use.
According to research conducted by (Abrilia & Sudarwanto, 2020) shows that service features have
an influence on interest in using e-wallet in the DANA application. This result reflects that the
higher the service features provided, the higher the level of interest in using it. According to
research conducted by (Atriani et al., 2020) shows that the convenience variable affects the interest
in using the Ovo Digital Wallet in Mataram City. This result reflects that the higher the
convenience provided, the higher the level of interest in using it.
Research Framework
Research Hypothesis
The hypothesis in this study is as follows:
H1 = Promotion has an effect on Interest in Using Shopeepay's E-Wallet during the Covid-19
pandemic.
H2 = Service Features affect Interest in Using Shopeepay E-Wallet during the Covid-19
pandemic.
H3 = Ease of Use affects Interest in Using Shopeepay E-Wallet during the Covid-19
pandemic.
H4 = Promotions, Service Features, and Ease of Use affect Interest in Using Shopeepay's E-
Wallet during the Covid-19 pandemic.
METHODOLOGY
The type of research conducted by the researcher is associative research. While the approach
in this study is a quantitative approach because the direction and focus of this research is a
theoretical test or hypothesis testing, in which each stage prioritizes the measurement of formulas,

the use of questionnaire instruments, and statistical data. Quantitative research aims to find
relationships that explain the causes in measurable facts, show variable relationships and analyze.
Data/Variable Used
The data used in this study is primary data. Primary data is data collected by the researcher
himself. In this study, data was collected using a structured questionnaire filled out by respondents
through Google forms who are Shopeepay E-Wallet users, both those who have used it and those
who still use it, domiciled in Greater Jakarta. A variable is a research attribute determined by the
researcher or which is the focus of the researcher to study and draw conclusions. In this study there
are 3 independent variables (X) and 1 dependent variable (Y).
The research variables used in this study are as follows:
1. Independent variable / independent variable (X)
In this study, the independent variables or independent variables are promotion (X1), service
features (X2), and ease of use (X3).
2. Dependent variable / dependent variable (Y)
In this study, the dependent variable or dependent variable is interest in using (Y).
Data collection
The method of data collection in this research is to use a questionnaire. Questionnaire is a
method of collecting data by researchers by providing a list of written statements that are used to
obtain information from respondents (people who have used or are still using Shopeepay are
domiciled in Greater Jakarta). The score level used in this study is to use a Likert scale.

According to (Sekaran & Bougie, 2013) the population is a group of people, events, or
interesting things and then the researcher wants to investigate and make an opinion. In this study,
the population is all people who have used or are still using Shopeepay, who are domiciled in
Jabodetabek. It is hoped that the results obtained in this study can be more effective and in
accordance with the objectives of the researcher. According to (Efferin et al., 2008) the sample is
part of the population taken through certain ways which also have certain characteristics. The
sampling method used in this study is a non-probability sampling method because it does not
provide equal opportunities for each element or member of the population to be selected as a
sample. Meanwhile, to determine the number of samples taken by purposive sampling technique in
which the determination of the sample is carried out with certain considerations or has certain
criteria. The criteria are:
1. People who have used or are still using Shopeepay.
2. Age 17 years or older.
3. Domicile in Jabodetabek.
In this study the number of the population taken is not known with certainty, so in this study the
formula used (Purba, 2006).
Analysis Tools Used

Validity test : Validity test is a measure that shows the levels of validity or validity of an instrument
(Arikunto, 2006). The questions in the questionnaire are a measuring instrument that must measure
what is the purpose of the research so that the validity of each question item in the questionnaire
must be measured. A valid or valid instrument has high validity. On the other hand, an instrument
that is less valid means it has a low score (Taniredja & Mustafidah, 2012). Reliability Test :
Reliability test is used to determine the consistency of measuring instruments that use
questionnaires. The goal is to assess whether the measurements used remain consistent if the
measurements are repeated.
Classic assumption test : 1. Normality Test : The data normality test is a test of the distribution of
the data to be analyzed, whether the distribution is under the normal curve or not. The approach
used to test the normality of the data, namely the graph method and the One-Sample Kolmogorov-

Proce eding UG Economic Faculty-International Conference
Smirnov test method. 2. Multicollinearity Test : The multicollinearity test aims to test whether the
regression model found a correlation between independent variables (Ghozali, 2016). 3.
Heteroscedasticity test : Heterooxidity is the residual variance that is not the same in all
observations in the regression model. A good regression model is when there is no heterooxidation
problem, because heterogeneity causes the estimation or estimator to be inefficient and the
coefficient of determination value will be high (Bahri, 2018).
Multiple Linear Regression Analysis : In this research, the model used is multiple linear
regression analysis. Multiple linear regression analysis is an analysis that connects two or more
independent variables with the dependent variable (Bahri, 2018). So multiple analysis must have at
least 2 independent variables. The formula for multiple linear analysis:
Y = α + β1X1 + β2X2+…+ βnXn + ⅇ
Coefficient of Determination (R2) : The coefficient of determination measures the model's ability
to explain the variation of the independent variable on the dependent variable or it can also be said
as the proportion of the influence of all independent variables on the dependent variable (Bahri,
2018).
Hypothesis testing : Hypothesis testing is a measuring tool that produces a decision to accept or
reject the hypothesis. The hypothesis is rejected does not mean concluding that the hypothesis is
wrong, possibly due to evidence that is inconsistent with the hypothesis. The hypothesis is accepted
as a result of insufficient evidence to reject it and does not conclude that the hypothesis is always
large.
1. t test (Partial) : The t test is used to test whether the independent el variable has an effect on
the dependent variable. The test uses a significance level of 0.05 and 2 sides.
2. F test (simultaneous) : The F statistic test is a simultaneous test (overall or together).
Simultaneous test to test whether Product Quality and Price variables have an effect on
repurchase intention
DISCUSSION
Respondents Characteristics
Most of the respondents are domiciled in Tangerang by 77%, with female gender by 80%,
and on most were aged 17-24 years by 77%. Most respondents earn Rp. 1,000,000 to Rp. 3,000,000
for a month by 52%, and they were mostly students at 66%.
Validity test
In this study, the validity test will be used with the help of the SPSS (Statistical Package for
Social Sciences) version 25 program and then compare the calculated r value in the statistical item
table with the r table. If r in the corrected item total correlation column > r table, then the
instrument or question items are considered valid. The value of r table at a significance level of
0.05 and the number of data (n) as much as 100 is 0.196. From the results of the validity test
calculations, obtained data stating that the indicator given to 100 respondents found the value of
Corrected Item-Total Correlation (r count) is greater than 0.196 (r table) which means it is valid, so
it can be continued to the next study.
Reliability Test
To find out that the questionnaire was reliable, a questionnaire reliability test was carried out
with the help of the SPSS version 25 computer program

Variable Cronbach's Alpha Results
Promotion 0.872 Reliable
Service Feature 0.950 Reliable
Ease of Use 0.956 Reliable
Interest in Using 0.885 Reliable

Table 1 shows that each Cronbach's Alpha for the variables of promotion, service features,
ease of use and interest in using is > 0.70 then it is said to have high or reliable reliability. That is,
the question items used for this study have consistent results if used many times.
Normality test
Figure 2. Normality Test Results
From the results above, it can be seen that the points on the Normal P-P Plot of Regression
Standardized Residual chart follow the diagonal line and spread around the diagonal line, so it can
be concluded that the data is normally distributed.
Collinearity Statistics
Model Tolerance VIF
1 (Constant)
total_x1 .658 1.520
total_x2 .326 3.068
total_x3 .280 3.573
From the table it can be seen that for the promotion variable (X1) the tolerance value is
0.658 > 0.1 and the VIF is 1.520 < 10. For the service feature variable (X2), the tolerance value is
0.326 > 0.1 and the VIF is 3.068 < 10. For the ease of use variable (X3). ) tolerance value is 0.280
> 0.1 and VIF is 3.573 < 10. So it can be concluded that the data does not occur multicollinearity
and is included in good data.
Heteroscedasticity test is used to test a data whether there is an inequality of residual
variance from one observation to another. Good data will not occur heteroscedasticity.
Figure 2. Heteroscedasticity Test Results

It can be seen from the figure 2 that the points on the graph are irregular or have no type of pattern.
So it can be concluded that the data belongs to good data or data that does not have
heteroscedasticity.
Table 3. Multiple Linear Regression Test Results

Coefficientsa
1 (Constant) 2.321 1.240 1.872 .064
total_x1 .246 .059 .297 4.193 .000
total_x2 .372 .076 .493 4.901 .000
total_x3 .117 .080 .159 1.465 .146
From table 3, it can be concluded that:

1. The constant value of 2.321 means that the independent variable is in the same direction as the
dependent variable. If Promotions, Service Features and Ease of Use are increased by one unit,
there will be an increase in Interest in Using.
2. Promotion variable (X1) has a positive influence on Interest in Using (Y) of 0.246. A positive
coefficient value means that it has a unidirectional relationship and has a contribution to the
Interest in Using variable (Y) and if the Promotion variable (X1) is increased by one unit, it
will increase the Intention to Use variable (Y) by 0.246 with the assumption that the other
independent variables from regression model is fixed.
3. Service Feature Variable (X2) has a positive influence on Interest in Using (Y) of 0.372. A
positive coefficient value means that it has a unidirectional relationship and has a contribution
to the Interest in Using variable (Y) and if the Service Feature variable (X2) is increased by
one unit, it will increase the Interest in Using variable (Y) by 0.372 with the assumption that
the other independent variables of the regression model is fixed.
4. The Ease of Use Variable (X3) has a positive influence on Interest in Using (Y) of 0.117. A
positive coefficient value means that it has a unidirectional relationship and has a contribution
to the Interest in Using variable (Y) and if the Ease of Use variable (X3) is increased by one
unit, it will increase the Interest in Using variable (Y) by 0.117 with the assumption that the
other independent variables of the regression model is fixed.
Hypothesis testing
Table 4. t test results
Coefficientsa
Coefficients Coefficients t Sig.
Model B Std. Error Beta
1 (Constant) 2.321 1.240 1.872 .064
total_x1 .246 .059 .297 4.193 .000
total_x2 .372 .076 .493 4.901 .000
total_x3 .117 .080 .159 1.465 .146
The results of the t-test (partial) based on the calculation results obtained are as follows:
1. Partial Hypothesis Testing on Promotional Variables on Interest in Using. In the table, the
significant value of the Promotion variable is 0.000 <0.05, then H0 is rejected and H1 is

accepted, as well as for t-count of 4.193 > 1.660, then H0 is rejected and H1 is accepted. It can
be concluded that there is a significant influence between Promotional Variables on Interest in
Using Shopeepay's E-Wallet during the Covid-19 Pandemic.
2. Partial Hypothesis Testing on Service Feature Variables on Interest in Using. In the table, the
significant value of the Service Features variable is 0.000 < 0.05, then H0 is rejected and H1 is
accepted, as well as for t-count of 4,901 > 1,660 then H0 is rejected and H1 is accepted. It can
be concluded that there is a significant influence between Service Feature Variables on
Interest in Using Shopeepay E-Wallet during the Covid-19 Pandemic.
3. Partial Hypothesis Testing on Ease of Use Variables on Interest in Using. In the table, the
significant value of the Ease of Use variable is 0.146 > 0.05, then H0 is accepted and H1 is
rejected, as well as for t-count of 1.465 < 1.660, then H0 is accepted and H1 is rejected. It can
be concluded that the Ease of Use Variable has no significant effect on Interest in Using the
Shopeepay E-Wallet during the Covid-19 Pandemic.
F Test (Simultaneous Test)

Table 5. F . Test Results
ANOVAa
Model Sum of Squares Df Mean Square F Sig.
1 Regression 1018.481 3 339.494 68.909 .000b
Residual 472.959 96 4.927
Total 1491.440 99
In the table, the significant value is 0.000 <0.05, then H0 is rejected and H1 is accepted and
for F-count is 68.909 > 3.12, then H0 is rejected and H1 is accepted. It can be concluded that
Promotions, Service Features and Ease of Use have a significant effect on Interest in Using
Shopeepay's E-Wallet during the Covid-19 Pandemic.
Table 6. Coefficient of Determination Results

Model Summaryb
Adjusted R Std. Error of
Model R R Square Square the Estimate
1 .826a .683 .673 2.220
In the table, it can be seen that the Adjusted R Square value is 0.673. Which means that the
variation of the dependent variable (interest in using) which can be explained by the independent
variable (promotion, service features and ease of use) is 67.3%. While the remaining 32.7% is
influenced or explained by other variables such as security, trust, and social influence.
Dominant Variable
In determining the independent variable that has the most influence on the dependent
variable. This can be done by comparing the beta coefficient between one variable and another.
The independent variable with the most dominant influence on the dependent variable is the
variable that has the largest regression coefficient. Based on the results of the Multiple Linear
Regression test, we can see that the service feature variable is the variable that has the largest beta
coefficient. This means that the service feature variable has a more dominant influence compared
to other variables on the variable of interest in using. Therefore, the better the level of service
features provided by Shopeepay, the greater the reaction to interest in using the Shopeepay E-
wallet.

The Effect of Promotion on Interest in Using Shopeepay's E-Wallet during the Covid-19
Pandemic
Based on the results of multiple linear regression analysis and t-test as described above,
hypothesis 1 testing results that promotion (X1) has a unidirectional or positive and significant
effect on interest in using Shopeepay E-Wallet during the Covid-19 Pandemic. Where this can be
seen through the significant value of the Promotion variable of 0.000 <0.05, and the t-count of
4.193 > 1.660. Then H0 is rejected and H1 is accepted. This means that the promotion variable
partially has a positive and significant effect on the interest in using the Shopeepay E-Wallet during
the Covid-19 Pandemic. Based on these results, it can be concluded that expanded promotions such
as advertisements displayed are attractive and easy to remember, diverse (cashback, discounts, free
shipping), in collaboration with social media platforms to advertise products, often Shopeepay
product advertisements are seen when needed can be the cause of creating interest in using . So that
the higher the level of Shopeepay promotions, the higher the interest in using respondents to
Shopeepay's E-Wallet during the Covid-19 Pandemic. The results of this study are supported by
previous research conducted by (Alghifari & Madiawati, 2020) where promotion has an influence
on interest in using.
The Influence of Service Features on Interest in Using Shopeepay's E-Wallet during the
Covid-19 Pandemic Based on the results of multiple linear regression analysis and t-test as
described above, hypothesis 2 testing results that the service feature (X2) has a unidirectional or
positive and significant effect on interest in using Shopeepay's E-Wallet during the Covid-19
Pandemic. Where this can be seen through the significant value of the service feature variable of
0.000 < 0.05 and the t-count of 4,901 > 1,660. Then H0 is rejected and H1 is accepted. This means
that the service feature variable partially has a positive and significant effect on interest in using
Shopeepay E-Wallet during the Covid-19 Pandemic. Based on these results, it can be concluded
that perceived service features such as touch id and face id features, diversity of payment services
(electricity, credit, cable TV, PBB, PDAM), diversity of top up features (bank transfer, alfamart,
indomaret), code scan feature QR in offline merchant payment transactions can be the cause of
creating interest in using. So that the higher the level of Shopeepay service features, the higher the
interest in using respondents to Shopeepay's E-Wallet during the Covid-19 Pandemic. The results
of this study are supported by previous research conducted by (Abrilia & Sudarwanto, 2020)
showing that service features have a positive and significant influence on interest in using e-wallet.
The Effect of Ease of Use on Interest in Using Shopeepay's E-Wallet during the Covid-19
Pandemic
Based on the results of multiple linear regression analysis and t-test as described above,
hypothesis testing 3 obtained the result that ease of use (X3) had no unidirectional or positive and
significant effect on interest in using Shopeepay E-Wallet during the Covid-19 Pandemic. Where
this can be seen through the significant value of the ease of use variable of 0.146 > 0.05 and t-count
of 1.465 < 1.660 then H0 is accepted and H1 is rejected. This means that the ease of use variable
partially does not have a positive and significant effect on interest in using the Shopeepay E-Wallet
during the Covid-19 Pandemic. Based on these results, it can be concluded that users do not pay
much attention to the level of convenience of Shopeepay. Perceived ease of use such as display
easy to read, flexible to use. does not require a lot of effort to interact, is easy to learn, the system is
not complicated, can operate according to needs, cannot be the cause of the creation of interest in
using it. This shows that the higher or lower the convenience will not affect the interest in using the
Shopeepay E-Wallet, because users think that currently the E-Wallet is flexible to use along with
the rapid development of technology. The results of this study are not supported by previous
research conducted by (Atriani et al., 2020) showing that the convenience variable affects the
interest in using.
The Effect of Promotions, Service Features and Ease of Use on Interest in Using the
Shopeepay E-Wallet during the Covid-19 Pandemic Simultaneously Based on the results as
described above, testing hypothesis 4 shows that the significant value is 0.000 <0.05 and for the F-
count of 68.909 > 3.12, then H0 is rejected and H1 is accepted. This means that simultaneously
Promotions, Service Features and Ease of Use have a significant effect on Interest in Using

Shopeepay's E-Wallet during the Covid-19 Pandemic. So if promotions, service features and ease
of use are improved, it can be the cause of creating interest in using Shopeepay's E-Wallet during
the Covid-19 Pandemic.
CONCLUSIONS
Based on the results and the previous discussion, the following conclusions can be drawn:
1. Promotion has an effect on Interest in Using Shopeepay's E-Wallet during the Covid-19
pandemic.
2. Service features affect Interest in Using Shopeepay E-Wallet during the Covid-19 pandemic.
3. Ease of Use has no effect on Interest in Using Shopeepay's E-Wallet during the Covid-19
pandemic.
4. Promotions, Service Features, and Ease of Use affect Interest in Using Shopeepay's E-Wallet
during the Covid-19 pandemic.
Various findings in this study that provide empirical support for the theories that have been
presented in Literature Review, include:
1. The results of this study support previous research conducted by (Alghifari & Madiawati,
2020) where promotion has an influence on interest in using. Thus, if the promotion is
expanded, such as advertisements that are displayed attractively and easy to remember,
various (cashback, discounts, free shipping), in collaboration with social media platforms to
advertise products, Shopeepay product advertisements are often seen when needed can be the
cause of increasing interest in using.
2. The results of this study support previous research conducted by (Abrilia & Sudarwanto,
2020) where service features have an influence on interest in using. Thus, if the quality of the
service features is improved such as the touch id and face id features, the diversity of payment
services (electricity, credit, cable TV, PBB, PDAM), the diversity of the top up features (bank
transfer, alfamart, indomaret), the QR code scan feature in offline merchant payment
transactions can be the cause of increasing interest in using.
3. The results of this study do not support previous research conducted by (Atriani et al., 2020)
where ease of use has no effect on interest in using. Perceived ease of use such as display easy
to read, flexible to use. does not require a lot of effort to interact, is easy to learn, the system is
not complicated, can operate according to needs, cannot be the cause of the creation of interest
in using it. This shows that the higher or lower the convenience will not affect the interest in
using the Shopeepay E-Wallet, seen from the demographic results of respondents economic
growth in Tangerang is one of the fastest. From the results of respondents based on gender,
women like shopping activities so that transactions that support convenience in E-Wallet
especially for online shopping during this pandemic have become routine for most women.
From the results of respondents based on age, 17-24 years are included in the millennial
generation where this generation is most sensitive to technological developments and is
accustomed to using smartphones in everyday life, From the results of respondents based on
income, Rp. 1,000,000–Rp. 3,000,000. in accordance with the number of respondents aged 17-
24 years who can easily absorb technological developments and the results of respondents
based on work, namely students and students where as active smartphone users, of course,
currently think that E-Wallet is flexible to use along with the rapid development of
technology.
Based on the conclusions as described above, the suggestions that can be submitted are:
Based on the results of the study, promotion and service features become variables that have a
significant influence on the variable of interest in using. Therefore, companies must increase the
frequency in promoting advertisements displayed on social media or through the Shopee
application directly so that it is easier for people to remember Shopeepay products and various
Shopeepay E-Wallet features, especially on the QR code scan feature, shopeepay needs to provide
knowledge in the form of tips or tricks. tutorial on using the QR code scan feature that is easy for
users to understand so that it has an increasing interest in using Shopeepay's E-Wallet during this
pandemic. Especially those who will re-examine the Shopeepay E-Wallet case study in order to

further develop other independent variables outside this research such as security, trust, and social
influence.
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The Effect Of Online Customer Review And Online Customer

Rating On Purchase Decisions Through E-Commerce Shopee In
Kab. Tangerang
1
Tia Chisca Anggraeni, 2Diah Aryati, 3Oktaviani Saputri
1,3
Management Study Program, Faculty of Economics, Gunadarma University
2
Accounting Study Program, Faculty of Economics, Gunadarma University
1
tia.chisca@staff.gunadarma.ac.id 2diah_aryati@staff.gunadarma.ac.id2
3
oktavianisaputri532@gmail
Abstract
The purpose of this study was to analyze the effect of Online Customer Review and Online
Customer Rating partially and simultaneously on Purchase Decisions at Shopee E-commerce
in Tangerang Regency. The population in this study are all consumers who use Shopee in
Tangerang Regency. The sample in this study were all 100 customers who used Shopee in
Tangerang Regency. This research is a quantitative research. The type of data obtained in
this writing is primary data, namely the author obtains data using a questionnaire. The
analytical method used in this research is Test Validity, Reliability, Normality,
Multicollinearity, Heteroskodastisitas, Multiple Linear Regression with the sampling method
in this study is non-probability sampling with purposive sampling technique. The tool used is
SPSS. The results of this study indicate that the online customer review and online customer
rating variables have a direct effect on purchasing decisions and the most dominant variable
on purchasing decisions is the online customer review variable.
Keywords : Online Customer Review, Online Customer Rating, Purchase Decision

JEL Codes: D01, L23
INTRODUCTION
The increasingly rapid technology in this modern era causes a shift in human behavior,
especially in terms of shopping. If in the past when we wanted to shop, we had to come
directly to the store we were looking for, now we no longer need to leave the house, just with
a smartphone and an internet connection, we can already order the items we need. The
existence of an online shop is very helpful for humans in meeting their needs. What's more,
there are now many innovations from the Online Shop. Now it is also developing with the
name E-commerce and Marketplace. Although both are online shopping applications, all
three have differences. According to (http://teknonisme.com) Online Shop or so-called
online shop, the interaction between sellers and buyers is direct without intermediaries
through chat either from Line, BBM or Whatsapp. With this online shop, buyers can ask
about prices or any questions related to products to sellers and can even negotiate about
prices. E-commerce is a direct shopping system, where the buyer simply selects the desired
item on a website, then clicks the "buy" button and transfers the listed price. While the
Marketplace is a virtual market where sellers and buyers meet and carry out various types of
transactions. Here people process transactions by exchanging goods and services to make
money. Transactions in the internet world are defined as e-commerce (Turban, E. 2012). then
click on the “buy” button and transfer the stated price. While the Marketplace is a virtual
market where sellers and buyers meet and carry out various types of transactions. Here
people process transactions by exchanging goods and services to make money. Transactions
in the internet world are defined as e-commerce (Turban, E. 2012). then click on the “buy”
button and transfer the stated price. While the Marketplace is a virtual market where sellers
and buyers meet and carry out various types of transactions. Here people process transactions
by exchanging goods and services to make money. Transactions in the internet world are
defined as e-commerce (Turban, E. 2012).
Anggraeni, Aryanti, Saputri 185

Figure 1. E-commerce with Largest Visitors

Source : http://databoks.katadata.co.id/
However, with the large variety of products provided by Shopee, there are problems
faced by consumers. Based on the results of the author's research, both through the
application website and also searching on the internet, several customers found that the
services provided by Shopee in filtering products were quite disappointing because there
were still many counterfeit products and also products that did not match the original
products shown in the picture before buying. In addition, the increasing number of Shopee
users also has an impact on the length of delivery of goods to consumers. Many consumers
complain that their goods are received late because the delivery time is longer than promised
(MediaKonsumen.com, February 2019).
Figure 2. Top E-commerce in Indonesia

Source : https://iprice.co.id/trend/
Shopee is a marketplace-based e-commerce platform that is the first mobile-based

online shopping platform in Southeast Asia and Taiwan. It was first launched in December
2015 simultaneously in 7 countries such as: Indonesia, Singapore, Malaysia, Thailand,
186 Anggraeni, Aryanti, Saputri

Vietnam, Philippines, and Taiwan. Shopee is a platform specifically tailored to the needs of
the Southeast Asian market, which makes the online shopping process easy, secure and
flexible, through a strong payment system and logistics support system.
According to Chen and Xie (2008) the growth of e-commerce has made customer
reviews the main source of information for customers, retailers/sellers, as well as
manufacturers. On the one hand, customer reviews and customer ratings contributed by
customers in online shops will provide information for potential consumers, thereby reducing
their sense of uncertainty about the product. In addition, customer rating is one of the
important and mandatory features besides product reviews or user reviews. Customer rating
is very important for recommender systems in e-commerce in order to provide quality
recommendations for a product personally. However, users may lack motivation to do this
rating by reason of why they should bother reporting their experience to others, In addition,
this rating can only be given if we have tried and bought the item (Su and Khoshgoftaar
2009). The workings of these reviews are similar to the way word of mouth works where the
control cannot be done so that research on this matter is certainly very useful for business
people.
From the problems that have been described, it can be concluded that the topic of
Online Customer Reviews (OCR) is very interesting to discuss and is currently being widely
researched around the world. If previously research was conducted in countries such as
America and China, it would be very interesting if many hypotheses were tested in countries
such as Indonesia. In addition, previous research was only limited to movie reviews, book
reviews or hotel bookings. Therefore, this research will be conducted on an online
marketplace in Indonesia. The online marketplace itself is an online mall in which it contains
online shop vendors who sell there.
Based on the formulation of the problem above, the research objectives are as follows:
1. Does online customer review affect purchasing decisions through Shopee?
2. Does rating affect purchasing decisions through Shopee?
3. Do online customer reviews and ratings affect purchasing decisions through Shopee?
LITERATURE REVIEW
E-commerce is about selling online or the ability to transact online. This includes
retail, online banking and shopping – which involve transactions where shoppers actually
buy and shop. (Chaffey, 2013). Some suggest that e-commerce includes all online
transactions such as responding to an inquiry or searching an online catalog. E-commerce is
divided into several categories such as B2C (business-to-consumer), B2B (business-to-
business), C2C (consumer-to-consumer), C2B (consumer-to-business). Online shop and
online marketplace is one part of e-commerce based on the understanding of e-commerce
itself from the ability to conduct transactions online.
E-Marketplace
According to Bakos (1991) e-marketplace is defined as an inter-organizational
information system that allows participating buyers and suppliers to exchange information
about prices and products offered. The company operating the system is referred to as an
intermediary where market participants are buyers and sellers, independent third parties, or a
consortium of companies. In general, online shops and online marketplaces are no different.
Online Customer Reviews (Ocrs)

Online Customer Reviews (OCRs) are a form of Word of Mouth Communication in
online sales (Filieri, 2014), where prospective buyers get information about products from
consumers who have benefited from these products. As a result, consumers are easier to find
comparisons with similar products sold to other online sellers, this is because of the rapid use
of digital marketing so that it provides benefits to consumers, namely consumers do not have
to visit different sellers directly (Yasmin et al, 2015) .
Chevalier & Mayzlin (2006) in Lee (2014), show that people can take the number of
reviews as an indicator of product popularity or the value of a product that will affect the

willingness to buy a product. However, it does not necessarily mean that more reviews and
ratings mean the product will definitely be purchased by customers. Many factors become
the decision to buy a product for customers.
Online Customer Rating

Rating are customer opinions on a scale. A popular rating scheme for rating on Shopee
is by giving a star. The more stars you give, the better the seller's rating (Lackermair et al,
2013). Usually rating is one way to provide feedback by consumers to sellers (Dellarocas,
2003). This rating is another type of opinion given by many people and becomes the average
evaluation of the rating buyers on the different features of the product or seller's service
(Filieri, 2014) and is a representation of consumer opinion with a specific scale (Lackermair,
2014). et al, 2013).
We define rating as an assessment by users of a product's preference for their
experience referring to the psychological and emotional state they experience when
interacting with a virtual product in a mediated environment (Li et al. 2003).
Buying decision
Schiffman and Kanuk (2008) explain that purchasing decisions are the selection of
two or more alternative options, meaning that the condition for a person to be able to make
decisions must be available several alternative choices. Purchase decision is a form of
consumer behavior in using or consuming a product.
RESEARCH METHODOLOGY
The focus of this research is on the variableOnline Customer Reviews and Online
Customer Ratings as the independent variable (independent) andBuying decision (Y) as the
dependent variable (dependent). The object of this research is Shopee Users. Data collection
uses a questionnaire instrument, the sampling technique is non-probability sampling
technique. The method used is purposive sampling with certain considerations in
determining the sample.
Figure 1. Research Hypothesis
H1: There is an effect of online customer review on the Purchase Decision on E-

Commerce Shopee.
H2: There is an effect of online customer rating on the Purchase Decision on E-Commerce
Shopee.
H3: There is a joint influence of online customer review and online customer rating on
purchasing decisions on E-Commerce Shopee

Analysis tools used

1. Test Instrument
The instrument test was used to test the instruments contained in the questionnaire. This
test is carried out using validity and reliability tests which are described as follows:
Results Validity test

To see whether or not a statement with a significance (α) is used is 5%. In table r, it
is known that df = (N-2), N is the number of samples or respondents. The number of values
N = 100, then df = (N-2) = (100-2) = 98, with a significance value of 0.05, the r table value is
0.1966. A data is said to be valid if Rcount > Rtable. The results of the validity test using
SPSS version 25 can be seen in the following table:
Table 1
Statement Instrument Validity
Variable No Rcount Rtable (5%) Information
(X1) 1 0.679 0.1966 Valid
Online Customer 2 0.722 0.1966 Valid
Reviews 3 0.824 0.1966 Valid
4 0.670 0.1966 Valid
(X2) 1 0.872 0.1966 Valid
Online Customer 2 0.855 0.1966 Valid
Rating 3 0.841 0.1966 Valid
4 0.841 0.1966 Valid
(Y) 1 0.754 0.1966 Valid
Buying decision 2 0.697 0.1966 Valid
3 0.796 0.1966 Valid
4 0.818 0.1966 Valid
5 0.821 0.1966 Valid
6 0.776 0.1966 Valid
Source: Questionnaire processed with SPSS 25
In the instrument validity table above, it is known that all statement items are
declared valid because the entire value of rcount for each statement item is greater than
Rtable, which is 0.1966.
Reliability Test
Reliability is data to measure a questionnaire which is an indicator of a variable or
construct. Reliability tests were conducted to determine the consistency of respondents'
answers in answering statements that measured the Online Customer Review, Online
Customer Rating and Purchase Decision variables.
Table 2
Reliability Test
Variable Cronbach Sig level. Alpha Information
alpha
Online Customer Reviews (X1) 0.695 0.6 Reliable

Online Customer Rating(X2) 0.874 0.6 Reliable
Purchase Decision (Y) 0.867 0.6 Reliable

In the table above, the value of Cronbach's Alpha variable Online Customer Reviews
of 0.695, Online Customer Ratingof 0.874, and the Purchase Decision variable of 0.867. So
it can be said to be reliable because it has a Cronbach Alpha value greater than 0.6.

Normality test
The normality test aims to test whether in the regression model, the dependent
variable, the independent variable or both have a normal distribution or not.
Figure 4. Normality test

From the picture above, it can be seen that the points spread around the diagonal line,
and the spread follows the direction of the diagonal line, so it can be said that the data is
normally distributed and the proposed regression model can be used to conduct research on
factors that influence purchasing decisions.
Table 3
Coefficientsa
Standardiz
ed
Unstandardized Coefficient Collinearity
Coefficients s Statistics
Toleran
Model B Std. Error Beta T Sig. ce VIF
1 (Constant) 5,700 1,761 3.237 .002
Online Customer .950 .168 .573 5.664 .000 .446 2,241
Reviews (X1)
Online Customer .239 .113 .214 2.111 .037 .446 2,241
Rating (X2)
a. Dependent Variable: Purchase Decision (Y)
Based on the results of the table above, there is no multicollinearity or perfect

correlation between the independent variables, namely Online Customer Review and Online
Customer Rating because the tolerance value is greater than 0.10 and the VIF (Variance
Inflation Factor) value is less than 10.00.

Test Heteroscedasticity
Figure 5. Heteroscedasticity Test

From the picture above, it can be seen that the points that spread randomly do not
form a certain clear pattern, and are spread both above and below the number 0 (zero) on the
Y axis, so there is no heteroscedasticity.

Table 6
Coefficientsa
Unstandardized Standardized Collinearity
Coefficients Coefficients T Sig. Statistics
Toleran
Model B Std. Error Beta ce VIF
1 (Constant) 5,700 1,761 3.237 .002
Online Customer .950 .168 .573 5.664 .000 .446 2,241
Reviews (X1)
Online Customer .239 .113 .214 2.111 .037 .446 2,241
Rating (X2)
Based on the table of multiple linear regression results above, the multiple regression
equations for online customer reviews and online customer ratings on purchasing decisions
are as follows:
Y = a + b1X1 + b2X2 + e
Y = 5,700 + 0.950X1 + 0.239X2 + e
Information:
Buying decision :Y
constant : 5,700
Online Customer Review Coefficient : 0,950
Online Customer Rating Coefficient : 0,239
Online Customer Reviews : X️
Online Customer Rating : X️
From the above equation, it can be seen that:

1. The constant of 5,700 states that if there are no Online Customer Review (X1) and Online
Customer Rating (X2) variables, then the level of consumer decisions in purchasing
Shopee products in Kab. Tangerang is 5,700.

2. The coefficient value of Online Customer Review is 0.950. This means that the
relationship between the Purchase Decision variable (Y) and the Online Customer
Review variable (X1) is positive. This means that if the value of Online Customer Review
increases by 1 unit with the assumption that other variables are considered constant, the
purchase decision will increase by 0.950.
3. The regression coefficient value of Online Customer Rating is 0.239. This means that the
relationship between the Purchase Decision variable (Y) and the Online Customer Rating
variable (X2) is positive. This means that if the Online Customer Rating variable
increases by 1 unit with the assumption that the other variables are considered constant,
the purchase decision will increase by 0.239.
T Test (Partial)
Table 7. T Uji test
Coefficientsa
1 (Constant) 5,700 1,761 3.237 .002
Online Customer .950 .168 .573 5.664 .000
Reviews (X1)
Online Customer .239 .113 .214 2.111 .037
Rating (X2)
Based on the table above, it can be seen that the Online Customer Review and Online
Customer Rating variables affect the Purchase Decision. For more details can be explained
per variable as follows:
1. Hypothesis Testing the Effect of Online Customer Reviews on Purchase Decisions
Given the value of Sig. for the influence of the Online Customer Review variable (X1)
on purchasing decisions (Y) is 0.000 <0.05 and the t-count value is 5.664 > t-table is
1.984. So it can be concluded that there is an influence of Online Customer Review
(X1) on purchasing decisions (Y).
2. Hypothesis Testing the Effect of Online Customer Rating Variables on Purchase
Decisions
Given the value of Sig. for the influence of Online Customer Rating (X2) on purchasing
decisions (Y) is 0.037 <0.05 and the t value is 2.111 > t table is 1.984. So it can be
concluded that there is an influence of Online Customer Rating on Purchase Decision.
Table 8
F Uji test
ANOVAa
Sum of
Model Squares df Mean Square F Sig.
1 Regression 1306.530 2 653.265 60,884 .000b
Residual 1040,780 97 10,730
Total 2347.310 99
b. Predictors: (Constant), Online Customer Rating (X2), Online Customer Review (X1)
Based on the table above, it is known that the significance value of Online Customer
Review and Online Customer Rating, which means having a good regression model on

purchasing decisions is 0.000 <0.05 and the value of f arithmetic is 60.884 > f table 3.94 so it
can be concluded that the hypothesis is accepted which means that there is an influence of
Online Customer Review and Online Customer Rating simultaneously on purchasing
decisions.
Coefficient of Determination (R²)

Table 10
Coefficient of Determination (R²)

Model R R Square Square Estimate
1 .746a .557 .547 3.276
a. Predictors: (Constant), Online Customer Rating (X2), Online Customer
Review (X1)
b. Dependent Variable: Purchase Decision (Y)
The results shown in the table above are known to have an R2 value of 0.547, this
means that the effect of Online Customer Reviews and Online Customer Ratings
simultaneously to the purchase decision is equal to 54.7%. While the remaining 45.3% can
be explained in other variables not included in this study such as product quality and price
CONCLUSION
Based on the results of research and discussion of the Effect of Online Customer Reviews
and Online Customer Ratings on Purchase Decisions through Shopee E-commerce, it can be
concluded as follows:
1. Online Customer Review partially influences the Purchase Decision on Shopee E-
commerce.
2. Online Customer Rating has a partial effect on Purchase Decisions on E-commerce
Shopee.
3. Online Customer Review and Online Customer Rating have a significant simultaneous
effect on Purchase Decisions at Shopee Ecommerce 5.2 Suggestions Based on the
conclusions obtained in this study.
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Effect of Brand Equity of Indonesian TV News Channel on Intention to

Re-Watch: Mediating Effects of Social Interaction and Attitude
1
Cahyawati Diah, 2Peni Sawitri
1
Gunadarma University, cahyawati@staff.gunadarma.ac.id
2Gunadarma University, peni@staff.gunadarma.ac.id
Abstract
Various news programs on commercial TV in Indonesia provides choices of TV channels in

accordance with the people’s interests and needs. The difference in assessment on these TV
programs resulted in each TV channel to have its own audience. This study aims to analyze TV
Brand Equity as a determinant of Intention to Re-Watch with Social Interaction and Attitude to TV
News Program as mediating variables. Three adopted predictors from TV Brand Equity Models are
Entertainment, Ideology, and Localization. The research model was tested by the Structural
Equation Model which includes Confirmatory Factor Analysis (CFA) to test the measurement
model and Structural Equation Test to test 8 research hypotheses. Respondents were 532 audiences
from 11 TV channels in Indonesia, consisting of one government TV and 10 Private TV. Ideology
and Localization have a very significant effect on Social Interaction and Attitude to TV News
Program while Entertainment only has a significant effect on Social Interaction. Furthermore,
Social Interaction and Attitude has a highly significant effect on Intention to Re-Watch. Generally,
the results of this study indicate that the distribution of consumption levels on 11 TV channels in
Indonesia in accordance with the audience's perception of TV Brand Equity exists. Compared to
the elements of Entertainment and Localization, the similarity of ideology is the most influential
determinant for the audience in choosing TV channels.
Keywords : TV Brand Equity; Social Interaction; Attitude to TV News; Intention to Re-watch

JEL Codes: D71, D91
INTRODUCTION
Watching television is one of the most dominant and common choices of recreational
activities in the world (Király et al., 2017). However, nowadays there is a broad debate about the
future of television as an impact of technological and market changes (Enli & Syvertsen, 2016).
Television news is still an important and widely used source of news but if television news
providers do not react to the decline in traditional television viewing and the rise of online video
then traditional television is not in accordance with current demands (Nielsen & Sambrook, 2016).
According to Ala-Fossi & Lax (2016), a number of recent reports show that estimated life
expectancy of traditional free television for the public is no more than 15 years. The challenge of
traditional television obsolescence is due to the development of various new technology platforms.
Changes in the technology paradigm shift customer preferences (Gimpel, 2013) . OECD (2013)
states that new technologies and the dynamic effects of convergence are changing the way
consumers access audio-visual content. Even consumers can produce their own content and widely
distribute it through the Internet (Gluck & Sales, 2008). The use of smartphones, laptops, tablets
and various wireless equipment by consumers plays a more tangible role in the video ecosystem
(Gimpel, 2013). Digital platform companies will be a major obstacle in the future TV and video
markets (Boehm et al., 2018).
Gluck & Sales (2008) states that new technologies have changed the entertainment
experience and provided viewers with more entertainment choices so that they have more control
over what they watch than ever before. Television networks face a decline in viewers which
influences their content (Sales, 2009). Consumers do not want to access subscription channels that
are broadcast at certain times but at the time they themselves chose (Curwen & Whalley, 2008). In
addition to facing changes in consumer behavior, traditional television also faces competition from
fellow TV broadcast providers, including alternative programs such as cable television (Napoli,
Diah, Sawitri 195

2004). Television viewers are increasingly being offered greater viewing choices and the
competition to attract them is getting tougher (Macdonald, 2015). Bakshi & Mishra (2017) stated
that resource alignment and efforts in building brand equity can develop better customer
engagement so that they can compete effectively. This research will examine and analyze the
influence of the three brand equity constructor, namely localization, entertainment, and ideology,
on behavior and social interaction and its impact on the Intention to Re-Watch news programs on
TV.
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LITERATURE REVIEW
Curwen & Whalley (2008): Television is a device that can spread to various platforms, most
of which are commonly fixed cables but also point-to-multipoint, terrestrial or via satellite. Shim &
Park (2015) mentions that TV content can now be viewed from a new perspective, namely TV
content as a source of information. According to Napoli (2004), the characteristics of each TV
station can influence the quantity of information program they provide including financial
resources as one of the factors. Recent developments show that traditional or terrestrial TV stations
face challenges in the digitization era. According to Abzug (2011), the global crisis in the
advertising industry, which is largely related to the impact of the internet, changed the media
industry business model, content production and distribution, and audiences who consumed the
content, along with TV content. Gimpel (2013) states that the video entertainment sector faces
significant changes when there are technological innovations, consumer behavior shifts, and new
business models. The highly dynamic TV market is characterized by the emergence of new market
offerings, the emergence of digital players that disrupt TV with old business models, and rapid
changes in consumer needs.
Jennes & Broeck (2014) states that commercial television is governed by a market
mechanism that consists of two sides, specifically the viewers behavior and the television industry
dynamics that influence each other. According to Zhang & Chen (2017) who researched TV
programs in China, the media always plays a major role in disseminating information, advocating
morality, and clarifying policies. Boehm et al. (2018) state that high content relevance for national
viewers supports TV station's market position superiority. As part of mainstream media, TV plays
an important role in developing a system of values, especially among the younger generation (Haq
& Rahman (2015)). The younger generation does not fully agree with their parents' views, therefore
it is only natural that there are differences of opinion between the two generations (Ozdogan &
Altintas, 2010). Nielsen & Sambrook (2016) affirms that the decline in the number of viewers
among young people is far more prominent, both for watching television in general and for
television news in particular. Consequently, television news quickly losing viewers from most of
the population. As reported by Sales (2009), the crisis of television networks, which caused by the
declining number of viewers, affects the development of contents, especially in four areas
specifically the brand integration, planned program, variable length programming, and the narrative
sophistication. Thus, media professionals need to work hard in growing and maintaining the
credibility of TV shows from the audience perspective(Yale et al., 2015).
Definition of brand equity is "an intangible competitive advantage that permits an economic
cost advantage in marketing future products or services" Reynolds & Phillips (2005), with several
measurements that resembles the term brand equity namely customer satisfaction, brand loyalty,
196 Diah, Sawitri

and brand meaning. According to Bakshi and Mishra (2017), television channels depend on its
viewers quality and loyalty. Drinkwater & Uncles (2007) states that a success perception of a TV
program brand had the effect of increasing the brand equity of the program. Bakshi & Mishra
(2017) examines brand equity in the context of TV programs. Their research results suggest that
ideology and localization have a stronger impact on brand equity compared to other factors such as
credibility, entertainment, and packaging. TV users perception is determined by several
heterogeneous factors, such as utility and social interaction (Shin & Kim, 2015). As explained by
Abzug (2011), one of the main trends in the television industry is the behavior of watching TV
intermingled with shopping behavior. Television branding can develop a unique personality that
reflects public culture (Macdonald , 2015).
METHODOLOGY
The research method used is a survey with questionnaires distributed online within one week
in November 2018. The respondents were viewers of 12 traditional TV stations in Indonesia,
managed by both private and government companies. The questionnaire consisted of three parts,
which are the respondent's demographics, TV watching behavior, and perceptions about the
television news programs chosen to be watched. The respondents' demographics include age,
gender, education, profession, and income. TV viewing behavior covers the length of watching TV
in one day, the period of watching TV and frequently watched TV programs. Perception of news
programs on television is the main research variable. The three exogenous variables which
constitute brand equity are entertainment, localization, and ideology measured by the perceptions
of TV viewers. These three determinants are adapted from Bhaksi & Mishra (2017).
The three items used to measure Entertainment are: (1) News in my chosen TV news
program has entertainment, (2) I watch TV news program because it has entertainment in it, and
(3) Without entertainment in the news I would not choose that TV news program. Localization is
measured by three items, namely: (1) I prefer TV news program because it has local news, (2)
Local news is important for me in choosing TV news program, and (3) My TV news program has
more of local news than others. The three items used to measure Ideology are: (1) My chosen TV
news program matches my ideology, (2) I watch TV news program because it has similar political
views, and (3) TV news program gives me news which are similar to my world beliefs.
The two mediator variables used in the research model are social interaction and attitude.
Social Interaction is adapted from Kiraly (2017) which is measured by three items, namely: (1) I
discuss what’s going on in TV news programme with my acquaintances, (2) TV news programme
are often discussed topics at my workplace/school, and (3) I talk about TV news programme with
my family. Attitude to Use variable is taken from Liou, 2015 with three items, specifically: (1)
Watching TV news programme is good idea, (2) Watching TV news programme is beneficial to
me, dan (3) Watching TV news programme is a positive idea. The last endogenous variable is
Continuous Intention adapted from Liou (2015) with three items, i.e.: (1) I will watchTV news
programme in the future, (2) I intend to watch TV news programme as much as possible, dan (3) I
will strongly recommend others to watch TV news programme. The scale used for these items are a
5-point Likert Scale.
Hypothesis testing used the Structural Equation Model (SEM) consists of two stages,
namely measurement model analysis and structural model analysis. Measurement model analysis
uses Confirmatory Factor Analysis by measuring Average Variance Extracted (AVE) and
Composite Reliability. Hypothesis testing is based on the structural model analysis after testing its
model compatibility beforehand
DISCUSSION
Respondents Profile
Respondents were 532 audiences of 11 TV channels in Indonesia, consisting of one
government TV and 10 Private TV. Respondents who are married were 112 people (21.1%) and the
majority of respondents were 299 university students (56.2%). Comparison of viewing duration
between women and men is presented in figure 1. Most respondents watch TV between 0 to 2
hours, and the percentage of men who watch more than 2 hours is higher than women. Comparison
of time length in watching TV based on gender is shown in Figure 2. Most of the respondents
Diah, Sawitri 197

watched TV during the prime time between 6:00 p.m. to 9:00 p.m. Male audience commonly watch
before midnight and even before morning. The type of TV program being watched is presented in
Figure 3.
Figure 1. Watching duration by gender Figure 2. Watching time by gender
Figure 3. Comparison of TV watching frequency on various types of TV programs
Programs on lifestyle and sports are the two most popular types of TV shows, while
programs that are rarely watched by most respondents are economy. Based on descriptive statistical
analysis, these differences depend on demographic characteristics and other individual attributes.
The increasing number of television stations has caused various news programs to be fragmented
based on the characteristics of their respective viewers (Manero, Uceda & Serrano, 2013). The
percentage of male viewers who watch politic, economy and science news is higher than women.
The most watched TV shows by women are lifestyle programs, while men watch more sports. Haq
& Rahman (2015) states that various literature studies show that young men and women have
different tastes and preferences for various types of TV programs, which in turn affects the impact
of consumer socialization.
This type of shows tends to be fragmented into three groups, namely: infotainment and
lifestyle, sport, as well as politics, economy, and science. Television audience fragmentation, which
198 Diah, Sawitri

was once immense and extensive, can now see TV programs through a variety of new devices that
allow the TV to be watched regardless of time and place (Abzug, 2011). Enli & Syvertsen (2016)
mention that digital devices increase audience fragmentation which consequently makes watching
TV becomes more individualized where viewers are free from show’s schedule and have show
choices that are in line with personal characteristics, freedom on watch hours, and can use any
digital device to watch TV. In this research, the program fragmentation on traditional TV can be
related to the characteristics of this research’s respondents which shows that 245 people (46.1%)
respondents subscribe to TV cable and 143 people (26.9%) respondents access mobile TV via
smartphones.
Measurement Model
The first stage of the Structural Equation Model analysis is to test the measurement model
using Confirmatory Factor Analysis (CFA) and utilizing parameters such as Cronbach Alpha,
Average Variance Extracted (AVE), and Composite Reliability (CR). The measurement model of
this research can be seen in Figure 4.
Figure 4. Measurement Model
The Measurement Model testing is based on the Cronbach alpha, AVE, and CR values that
calculated based on the loading factor for each question item in one latent variable. The full CFA
results are presented in Table 1.
Table 1. Confirmatory Factor Analysis

No. Variable Item Mean S.D. Loading Cronbach α AVE CR
1. Localization LO1 3.237 0.8461 0,747
LO2 3.335 0.8619 0,900 0.775 0.6152 0.8256
LO3 3.342 0.8434 0,691
2. Entertainment EN1 3.981 0.8480 0,676
EN2 3.812 0.9440 0,937 0.817 0.5777 0.7990
EN3 3.297 1.0243 0,631
Diah, Sawitri 199

3. Idiology ID1 3.348 0.9613 0,733

ID2 2.863 0.9733 0,660 0.766 0.5255 0.7679
ID3 3.276 0.9669 0,777
4. Social SI1 3.440 0.8516 0,896
Interaction SI2 3.455 0.8392 0,883 0.798 0.6208 0.8240
SI3 3.598 0.8808 0,529
5. Attitude AT1 3.741 0.7668 0,758
AT2 3.929 0.7330 0,859 0.868 0.6962 0.8726
AT3 3.861 0.7759 0,881
6. Continous CI1 3.372 0.8790 0,737
Intention CI2 3.201 0.8867 0,722 0.762 0.5168 0.7623
CI3 3.372 0.8726 0,697
The CFA results by using the Average Variance Extracted and Composite Reliability values
indicate that the measurement model has relatively high reliability and validity. The reference to
CFA parameter is from Hair et al. (2014) which states that the ideal value for loading factor is
greater than or equal to 0.7 and AVE is greater or equal to 0.5.
Structural Model
Before hypothesis testing, the compatibility of the structural model, which shows the
relationship between latent variables, is tested with several Goodness of fit parameters. The results
show that goodness of fit of the structural model is satisfactory with Relative value of 2=3.067;
GFI=0.925; NFI=0.911; RFI=0.890; IFI=0.938; TLI=0.923; CFI= 0.938, and RMSEA=0.062. The
conclusion of the model suitability refers to Davcik et al. (2014) which states that if the value of
Goodness-of-fit index (GFI) and Comparative fit measures (CFI, IFI, TLI, RNI, RFI, and NFI) is
greater or equal to 0.9, the empirical model is acceptable. Hypothesis testing based on structural
models analysis shown in Figure 5. Hypothesis testing to determine the significance, magnitude of
influence, and relationship direction based on the results of statistical tests presented in table 2.
Ideology has a significant effect on social interaction and attitude in a positive direction. The
localization of news programs on TV also has a significant effect on the positive direction with
social interaction and attitude. Entertainment only has a significant effect on social interaction but
its influence on attitude is not proven. Continuous intention is influenced significantly by attitude
and social interaction with positive direction. The influence of the three determinants in this
research is generally in accordance with the research of Bakshi & Mishra (2017) which states that
localization, ideology, credibility and entertainment are variables that influence brand equity based
on the audiences' perceptions of TV news channels. The results of this research support the
research of Bakshi & Mishra (2017) which shows that the content factors influence the brand
equity of television programs that reflect the social conditions of the developing market. The
choice of news program shows what is expected by the public and the program choices can be part
of social discussion.
200 Diah, Sawitri

Figure 5. Structural model
Table 2 Statistical Testing Result

Hyphotesis Estimate S.E. C.R. P Remark
Effect of Idiology on Social Interaction 0.220 0.057 3.867 *** Supported
Effect of Idiology on Attitude 0.313 0.051 6.129 *** Supported
Effect of Localization on Social Interaction 0.206 0.061 3.386 *** Supported
Effect of Localization on Attitude 0.290 0.054 5.372 *** Supported
Effect of Entertain on Social Interaction 0.131 0.058 2.260 0.024 Supported
Effect of Entertain on Attitude 0.035 0.050 0.690 0.490 Rejected
Effect of Attitude on Continous Intention 0.500 0.047 10.700 *** Supported
Effect of Social Interaction on Continous
0.272 0.038 7.089 *** Supported
Intention
One implication derived from the results of this research is that the development of programs
on a TV station is not limited to the number of audiences, but also to build a strong brand that can
distinguish it from other TV stations (Moriones et al., 2015). The variety in providing local news is
also one of the determinants in building brand equity. Diversity in offering local news can be
caused by the characteristics and strategies of each TV channel. For example, Napoli (2004)
mentions that TV stations that also have relations to newspaper ownership in the corporation
structure provide more local news and news on public interest than TV stations that are not
affiliated with newspaper publishing. Additionally, stations that have a larger market share tend to
provide more local news.
The results of this research also support the research of Drinkwater & Uncles (2007) which
shows that the suitability of brand equity will enhance brand image. The image enhancement can
be measured by the intention to continue watching news programs as a result of localization,
ideology, and entertainment elements that reflect the needs and characteristics of each audience
personalities. Most of the respondents in this research were young people who currently studying in
a university. The choice or interest in the news program type also shows differences within
respondents who are not students. This descriptive analysis is in accordance with the statement
from Pashootanizadeh & Khalilian (2018) that television is a medium that is very popular among
the younger generation that needs to be observed specifically by TV channels. According to Abzug
(2011), the involvement or segmentation of viewers is one of the main trends that TV stations need
Diah, Sawitri 201

to address. The strategy that can be done is related to fragmentation or segmentation of viewers in
the current digitization era, as expressed by Sales (2009), especially brand integration, provision of
online content, provision of online and offline content, acquisition of digital content sites,
experiments with various video formats or shows, and programs adjustments with technological
developments and consumer behavior.
CONCLUSION
Two of the three brand equity factors have a significant effect on social interaction and
attitude, while entertainment only has a significant effect on social interaction. The results of this
research indicate that entertainment aspects are a subject of conversation in social interactions after
a respondent watched news programs on TV. The sustainability of watching news on TV is largely
determined by social interactions and perceptions of the news program which includes good ideas
and benefits from the program. The benefits and ideas obtained from a news program will
determine how the news audience can continue watching the program. If the usefulness of the
program is informed to other prospective viewers through social interaction, it is expected that the
news program will become more popular. The increasing popularity of TV programs can be seen
from TV ratings that show the popularity of certain channels or programs (Yeh, 2015).
Several topics for further research include moderation factors that might be the reason why
the entertainment variable does not affect attitude. The moderating roles potential must be
explored, such as audience involvement, as well as news programs level of consumption and
loyalty associated with the type of media such as mobile TV, cable TV, and various other new
platforms (Drinkwater & Uncles, 2007). This research also has not looked further at the influence
of audience demographics which is likely to affect the relationship of the 5 variables in the
structural model. Most of the respondents in this study were classified as young or teenagers.
According to Haq & Rahman (2015), adolescent demographics appear as a different market
segment so that researchers and marketing practitioners need to adjust their marketing strategies
with these segments. Other respondents' data obtained from this research are accessing TV from
mobile devices, especially through smartphones. Associated with the development of this new
platform, Gluck & Sales (2008) states that the TV stations have to adjust their content with the new
realities of audiences who watch TV via mobile, sporadic watch behaviors, TV shows that can
touch the audience, coverage of activities, as well as other specific audience patterns.
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Diah, Sawitri 203

The Role Of Financial Leverage, Return On Asset (ROA), And Earning

Per Share (EPS) On Initial Return (Case Study : Companies Listed On
IDX With Initial Public Offering In The Period Of 2017-2019)
1
Fajar Akbar Ahmadi, 2Emmy Indrayani
1,2
Economic Faculty of Universitas Gunadarma
Jln. Margonda Raya No.100, Depok 16424, Jawa Barat
1
fajarakbarahmadi@gmail.com, 2emmyindra@gmail.com,
Abstract
This research purpose to examine the role of Financial Leverage, Retur On Asset (ROA), and
Earning Per Share (EPS) on Initial Return either partially and simultaneously on IPO companies
listed in IDX in the period of 2017-2019. This research uses quantitative data, namely secondary
data obtained from financial statements that have been published by companies on the Indonesia
Stock Exchange with analysis techniques used, namely multiple linear regressions with classic
assumption tests. The samples used in this study are companies that conducted IPOs on the IDX in
the period 2017-2019. Sampling techniques are purposive sampling, and the number of samples
obtained amounted to 42 companies. The results showed that partially Earning Per Share (EPS)
had a negative effect on Initial Returns. Partially, Financial Leverage and Return On Asset (ROA)
have no effect on Initial Return. Simultaneously, Financial Leverage, Return On Asset (ROA),
Earning Per Share (EPS) have an effect on Initial Return
Keywords : financial leverage, return on asset, earning per share, initial return, ipo
JEL Codes: L10, L25, P33
INTRODUCTION
In running a company or business entity, of course, requires funding or capital. To obtain
such funding or capital, the company can obtain it from the owner's own capital, debts, grants,
funding from other parties or investors, and so forth. The main capital in forming a company or
business entity is usually sourced from the owner's capital. However, along with the development
of the era, these sources of funding are not necessarily able to meet every need for company
expenditure or financing, especially for companies that are developing, of course, require a larger
additional capital from other parties.
The capital market becomes one of the containers or places where issuers obtain capital
from other parties. The capital market can help bring together issuers who need funds to develope
their business and investors who will make funding or investments with the aim of obtaining profit
or profit in the future, such investments can be made by individual investors, companies or other
institutions (for example, can be government institutions). In Indonesia there is only one capital
market that operates and is recognized, namely Indonesia Stock Exchange (IDX).
In order to get investment from the capital market, of course the company must first be
listed as an issuer on the capital market. One of the requirements to become an issuer in the capital
market, the company must to be a public ownership company or go public. The issuer's status of
going public can give the right to carry out the offering stocks at the Initial Public Offering (IPO)
Issuers that have made an Initial Public Offering (IPO) will raise funds from the public or
other institutions. IPO is the early stage to determine the survival of public companies. Therefore,
the IPO is expected to make the company's prospects better. The ipo implementation process is
determined in capital market law number 8 of 1995 so that the ipo implementation process is legal
and binding for companies and investors. The duration of initial public offering (IPO) is more than
one working day and less than five working days. After the Initial Public Offering (IPO) period
ends, the company's shares will begin trading in the secondary market or through the Stock
204 Ahmadi, Indrayani

Exchange. The price and number per share offered at the IPO are usually higher than the face
value and the number of shares traded on the primary market.
After the stock is traded in the primary market to the secondary market for some time, it
turns out that there are stocks that have performed well or called value stock and poor
performance called purely value. Issuers that own stocks with good performance (value stock), of
course, will increase the value of the shares since the shares were first traded. This increase in
value is called the initial return.
According to Emilia, Sulaiman, Lucky & Sembel (2008) initial return is the difference
between the IPO price and the current price of the shares listing on the exchange. Stocks that have
been traded on the Stock Exchange have different nominal units with their trading movements
adjusted based on the 4 relatively high nominal value of the shares indicating a small percentage
of initial return even though nominally have the same value. The implementation of the initial
return of a company consists of underpricing and overpricing. Underpricing mean the stock price
at offering is higher than the price at secondary market. While overpricing mean the stock price at
offering is lower than the price at secondary market.
From several previous studies that examined the initial return in Indonesia, there are
several events that often occur after the company trades shares on the Stock Exchange, including
the stock price on the stock exchange at the close of the first day is higher than the share price
when offered during the IPO (Wiguna & Yadnyana, 2015). At the time of the IPO, investors
generally have only limited information, for example from the disclosure of prospectus that
displays detailed information and material facts related to the issuer's public offering, consisting of
financial and non-financial information. The most reliable explanation for describing the condition
of the company is the financial statements. Financial statements are able to present company data
to be used as analytical materials for investors, including to know the possibility of getting an
initial return.
Investors can measure the initial return by calculating the value of the company. The
value of the company is determined using financial ratios and the size of the company is obtained
from the financial statement. The financial statement information obtained by stakeholders is very
reliable to reveal the financial condition of an company. Financial statements are able to provide
qualitative and quantitative information about the company to creditors, debtors and company
investors. The more things described in the financial statement, the better the image of the
company in the eyes of investors, because it has shown information related to the state and
condition of the company. Clear, correct and timely information, able to help investors to analyze
about 5 the stock well, so that investors do not get caught up in adverse conditions in the future.
Doing stock investments is very promising for investors to get a large profit, with a relatively high
level of risk.
Analyzing the position or financial state of a company using ratio analysis method can
show the level of financial performance of the company. The profit earned by the company can
reflect the operational capabilities of the company that can be known by calculating the
profitability ratio. Earning Per Share (EPS) is one part of the profitability ratio used to show the
division of profit per share (Nadia & Daud, 2017). As well as other profitability ratios are
Financial Leverage and Return On Asset (ROA).
In this case, investors must have benchmarks to find out what risks will be received when
investing in an issuer. Therefore, information on profitability ratios should be explored. whether the
calculation of the profitability ratio from the ratio of Financial Leverage, Return on Assets, and
Earning Per Share can affect the Initial Return of shares. Therefore, the authors are interested in
researching the problems related to the three ratios in companies that carry out IPOs from 2017 to
2019. With this background, the author takes the title “The Role of Financial Leverage, Return On
Asset (ROA), and Earning Per Share (EPS) on Initial Return (Case study: Companies listed on IDX
with Initial Public Offering in the period of 2017-2019”.
Ahmadi, Indrayani 205

LITERATURE REVIEW
Capital Market
The place or means for the establishment of capital and the accumulation of funds aimed
at increasing the participation of the community in supporting the sustainable development of a
country is called the capital market. The definition of capital market stated in Law No. 8 article 1
point 14 dated November 10, 1995 constitutes all activities related to public offerings and
securities trading, public companies related to the securities issued, as well as institutions and
professions related to securities.
Then, another definition of capital market (capital market) described by Fahmi & Hadi
(2009:41) states that the capital market is a place where various parties, especially companies to
sell stock and bonds, with the aim of the sale will be used as additional funds or strengthen the
company's capital. While according to Martalena & Malinda (2011:2) in (Efnita & Syaifullah,
2019) the capital market consists of the word market and capital.
The conclusion of the above definition is that the capital market is a place for sellers and
buyers to meet of short-term and long-term securities instruments of a public company or other
institution that will be used by funds to strengthen the development of a company and improve the
economy of a country.
The legal basis of the capital market was issued on November 10, 1995, regulated by law
number 8 of 1995 article 1 point 14 relating to the capital market. Then there are several other
regulations and laws established to protect the common interest in investing in the capital market.
Here are other rules and laws in place (Rahmah, 2019):
1. Government Regulation Number 45 of 1995 concerning the implementation of activities in
the capital market.
2. Government Regulation Number 46 of 1995 concerning Investigation Procedures in the
Capital Market Sector.
3. Law No. 8/1997 on Company Documents.
4. Law No. 25/2003 on Money Laundering Crimes.
5. Law No. 24/2004 on government bonds.
6. Law No. 25 of 2007 on investment.
7. Law No. 40/2007 concerning LimiteLiability Companies.
8. Law No. 19 of 2008 concerning State Sharia securities.
9. Law No. 21 of 2011 concerning Financial Services Authority
Trading in the capital market can be divided into two types of markets, namely:
1. Primary Market The primary market is the first place where stock are sold by issuers to
investors. The selling price of the stock for the first time is determined based on the
agreement between the issuer and the underwitter and the broker-dealer (Aniwati, 2016).
2. Secondary Market The secondary market is a place to trade tock between investors and
issuers that have been listed on the stock exchange. Price determination that occurs in the
secondary market is determined based on the market mechanism of the price pull between
demand and supply. In this case it can be concluded that, if there is a higher demand for
securities, then the stock price will also be higher, as well as better (Aniwati, 2016).
Stock Investment
Stocks are a sign of having the company. Therefore, when a person buys stocks of a
company, then the person has become the owner of a portion of the company's assets, the owner of
the stocks named as the shareholder of the company. So the shareholder can be a private person
(individual) or an Institution that owns the company's shares and acquires all the rights of the
company's shareholders.
The definition of shares according to Subekti (2007) shares is a sign of the participation or
ownership of a person or entity in a company or Limited Company. Another definition according
to Haryani & Serfianto (2010), shares (share/stock) is one of the most commonly traded capital
market instruments because shares are able to provide an attractive profit or advantage. So it can
be concluded that, shares are securities instruments that are commonly traded on the capital

market, and the securities that are owned can be an identity for these shareholders (Hariyani &
Serfiano, 2010).
From the stock sheet, it has a value or price that we can differentiate into three types:
a. Nominal Price
The price stated on the certificate of stock at the price specified by the company for each
share traded. Nominal pricing affects the dividend distribution to be given by the issuer.
b. Primary Price
The price of stock listed on the exchange for the first time. The share price in the primary
market is determined based on the agreement between the issuer and the underwriter. From
the deal, reflects the share price to be sold to the public in the initial market.
c. Market Price
The price is determined by the demand and supply between investors. The pricing occurs
after the stock are listed on the exchange. The market price reflects the state of the price in
the secondary market where the transaction is no longer implied by issuers and underwitters.
But there is no denying that market prices are likely to occur due to negotiations between
investors and issuers even though it is less likely to happen. Market prices are always
announced every day through newspapers and other media
In investing in stocks, investors will gain profit or loss. When the investor gains a profit,
two events will appear. Usually the profit can be in the form of dividends from the issuer or profits
in the form of a rise in the share price (capital gain). A portion of the profit earned by the company
then given to investors called dividends. While capital gain, is the difference in the selling price of
shares with the purchase price of shares, reflected from the profit earned when the value of the
share sale price is greater than the purchase price of shares. Apart from making a profit,
shareholders can also get a loss. There are several risks of loss that will be faced by investors,
namely not getting dividends and also getting capital loss on the contrary. In this case the
company cannot pay dividends because the company suffers a loss, while capital lo=ss can occur
when shareholders or investors sell shares at a selling price that is cheaper than the share purchase
price, this can happen because the shareholder wants to prevent losses. which is getting bigger in
the future.
Initial Publiv Offering

Initial Public Offering according to Hartono & Ali (2002) is an offering of shares in the
primary market conducted by companies that want 13 to go public. While in Law No. 8 of 1995
concerning capital market, the meaning of going public is a stock offering activity (other
securities) conducted by issuers (stock issuing companies) to the public based on the procedures
stipulated in the Capital Market Law and its implementation regulations. The term go public is
used when the company first sells its shares. After carrying out the Initial Public Offering (IPO),
the issuer will receive funding from the public and the funding is used to finance the company's
operational activities, in order to restore the company's current capital structure (Nadia & Daud,
2017).
The objectives or benefits of the company follow the initial public offering are (Erlina &
Widyarti, 2013):
1. Increase the company's capital. In this case, the funds that have entered from the investor to
the company will be able to help the company’s funding condition to improve the company's
performance.
2. Allows company owners to diversify their business by selling shares to the public in order to
benefit from price increases.
3. Easier for businesses to purchase other companies that are in going bankrupty 4. Company
value. It occurs because of the bargaining of securities in the capital market. If the company
performs well it will automatically increase its share price.
Initial Return
Initial return is a profit that can be obtained by shareholders because there is a difference
in the price of shares purchased in the primary market is smaller than the selling price of the

shares in question in the secondary market (Filayati & Soekotjo, 2018). While initial return
according to (Emilia et al., 2008) is the difference between the IPO price and the price when the
shares are in secondary market. It can be concluded that the initial return is the profit that will be
obtained by the investor, from the difference in the initial offer share price (IPO).
The percentage difference between the share price in the primary market and the
secondary market can be used as a benchmark for obtaining the amount of initial return.
Therefore, the securities owner will get an initial return when an underpricing occurs. Stocks
owners are eagerly awaiting underpricing to get an initial return. However, it is inversely
proportional to the opinion of the issuer who does not agree with the existence of underpricing,
because this incident causes the company to bear losses due to less than optimal funding received
from the public.
Financial Leverage
The definition of financial leverage according to Sartono (2008:263) in (Aulia, 2013) is
the use of fixed-cost sources of funds in the hope that it will provide additional benefits greater
than its fixed expenses so as to increase the profits available to shareholders (Aulia, 2013).
Another definition of financial leverage according to Hanafi &Halim (2016) in (Emma
Afriani & Asma, 2018) is the level of measuring how far the company needs to run with loan
funds / debts, as well as the ability to pay off its debts with equity capital of the company.
The concept of financial leverage is to determine the return on fixed costs of the source of
funds or debts at its costs and thus interpret the company's performance in the form of shareholder
wealth (Faisal et al., 2017). The conclusion from the above statement, financial leverage is a
source of loan funds provided with debt, in this case if this ratio is high enough then the company
finances its needs with debt / financial leverage is quite high as well. 19 Theoretically according to
Kim, Krinsky, and Lee (1993) in (Wiguna & Yadnyana, 2015) financial leverage can signal
investors of stock risk and reflect the ex-ante uncertainty of a company. Issuers with high levels of
financial leverage will focus more on IPO proceeds to finance their debts, rather than continuing
investment activities to create new expansions (Andhi Wijayanto, 2010).
The higher the value of financial leverage, the higher the risk of such a company.
Companies often fix or improve the ratio of financial leverage, it is because financial leverage
information becomes important for the consideration of investors before investing in a company
(Emma Afriani & Asma, 2018).
Return On Asset
The rate of return on assets is a term for return on assets (ROA). Profitability ratio is a
ratio that shows how effectively the company operates in order to generate profits, one part of the
calculation of the profitability ratio, namely return on assets (ROA) (Sari, 2020). According to
(Wahyusari, 2013) ROA is a profitability ratio measured by comparison of after-tax income with
total assets multiplied by 100%.
Whle according to (Nadia & Daud, 2017) the ratio used to assess the effectiveness of the
company's activities to obtain profits is called return on assets. The conclusion is Return On Asset
(ROA) or asset return is the ratio of profitability used to show / assess the effectiveness and
operational activities of the company to obtain profit.
Earning Per Share

According to Widoatmojo (2007:102) in (Aulia, 2013) Earning Per Share (EPS) is the
ratio between after-tax income and the number of shares outstanding, so it can be known that
(Amyulianthy & Ritonga, 2016) EPS can assess how much potential revenue we will receive, just
as we become investors. The definition from Darmadji & Hendy (2005) in (Ariska & Sumiati,
2015) Earning Per Share (EPS) is a ratio that determines how much profit an investor gets from
per share he owns. While Earnings per share (EPS) according to Prastowo & Juliaty (2002) in
(Nadia & Daud, 2017) is the amount of profit that becomes the right for each holder of one
common share.. Thus, from the definition, it can be concluded that earning per share (EPS) is

profit after tax compared to the number of shares outstanding to determine the profit share of each
share / unit of shares.
Research Hyphotesis
H1 = Financial Leverage affects Initial Returm
H2 = Return On Asset (ROA) affects Initial Return
H3 = Earning Per Share (EPS) affects Initial Return
H4 = Financial Leverage, Return On Assets (ROA) and Earning Per Share (EPS) simultaneously
have an affect on Initial Return
RESEARCH METHOD
The research method is the research procedure and technique. Between one study and
another, the procedures and techniques will be different. This chapter can be divided into several
sub-chapters, but you do not need to include the numbering.
The research object used in this research is the company that conducted the IPO period
2017-2019 and has been listed on the Indonesia Stock Exchange (IDX). The research object used
in this research is the company that conducted the IPO period 2017-2019 and has been listed on
the Indonesia Stock Exchange (IDX).
The sample of this study amounted to 102 from companies that made initial offers (IPOs)
and recorded in IDX from 2017-2019. Sampling techniques using purposive sampling method.
Purposive sampling method is a method of data collection with certain criteria specified. The
criteria used to determine the samples in this study are as follows:
1. The companies whose financial statements do not suffer losses.
2. The Company have a complete financial statement and have a reliable financial record
history for 3 consecutive years.
3. The Companiy that are underpriced, which is a company that show the share offering price at
the time of the IPO is significantly lower than the closing price of the first day in the
secondary market.
4. The Company Have complete data on the prospectus for analytical purposes, such as
financial performance information.
Information Total Company

Companies conducting IPO for the period 2017-2019 144
Companies was excluded due to losses (23)
Companies are excluded because it does not have a (9)
complete financial statement
The company was excluded due to overpricing (10)
The number of companies ued as reseach ssamples
102
With The Sample Criteria above, there have 102 companies to be a sample.

Secondary data is data that is summarized from various existing sources. The author
obtains data based on:
a. http://www.idx.co.id. From the website, we can obtain data collections of companies that
carried out IPOs from 2017-2019.
b. Esmart BNI Securities application. From this application, we can obtain data sets regarding
the sample company's financial statements, to find Financial Leverage, ROA, and EPS.
c. Stockbit application. From this application to help the author get the primary price data and
the closing price of the first day the company conducted an IPO to find Initial Returns.

Dependent Variables
Initial return is the profit obtained by investors due to the difference in the share price in
the primary market at the time of the IPO with the corresponding share price on the first day in the
secondary market (Handayani, 2008). Investors really like underpricing where the share price on
the first day of the IPO is lower than the offer price of its shares. Initial Return is calculated by
formula (Hartono, 2000 in Sardju, 2011):
Note :
IR = Initial Return
Po = Primary Price
P1 = Closing price on the first day in the secondary market
Independent Variables
Financial Leverage
The High Financial Leverage value indicates that the financial risk or risk of failure of the
company to repay the loan will be higher, and vice versa. Because the higher the financial
leverage of a company, the greater its initial return (Daljono, 2000; Kim et al, 1995). To obtain
FL, using the Debt To Equity Ratio (DER) formula is (Sardju, 2014):
Return On Asset (ROA)

This ratio can show the effectiveness of the company's operational activities in earning profit, by
comparing after-tax income with total assets. When the sale of stocks increases then the share
price will increase as well. The formula for obtaining Return On Asset (ROA) is (Hayati &
Isynuwardhana, 2014):
Earning Per Share (EPS)

This ratio is used to analyze risk and compare the company's earnings per share with other
companies (Sulistio, 2005 in Nadia & Daud, 2017). The higher the EPS the higher the share price,
the higher the return obtained by investors. The formula for determining Earning Per Share (EPS)
is as follows (Ardiansyah, 2003):
Data Analys Technique

Data analysis techniques in this study using descriptive statistical tests, testing data using
the classical assumption test which consists of normality test, heteroscedasticity, autocorrelation.
and multicollinearity. Next do the test multiple linear regression according to Ghozali (2013) is
important to do so that can find out the state of the variables independent as a predictor and for
know the direction of the relationship between variables, which can show the influence /
relationship positive or negative. Next carry out model feasibility testing using the F-significant
test (F-test) and test the coefficient of determination (R2). Final researchers conducted hypothesis
testing with perform statistical t test (t test).

Note :
Y = Initial Return
a = Constant
b1 = Regression coefficient of FL
X1 = FL
b1 = Regression coefficient of ROA
X2 = ROA
b1 = Regression coefficient of EPS
X3 = EPS
e = Error

Descriptive Statistics Analysis
Before the test is conducted, a statistical description is first presented that shows the
distribution of data obtained. Descriptive statistics aim to provide an overview or description of
the data analyzed including the maximum value, minimum value, mean, and standard deviation.
Variables in this study are FL, ROA, EPS, and IR. The results of descriptive statistical analysis are
presented in table 1 below:
Tabel 1
Result of Statistics Descriptive Analysis
The results of descriptive statistics analysis of companies, PT Fuji Finance Indonesia Tbk
became the sample company with the lowest FL value of 0.0022 or 0.2%, while PT Kota Satu
Properti Tbk became the sample company that had the highest FL value of 3,4487 or 344%. The
minimum value of ROA 0.0002 owned by PT Ayana Land International Tbk (NASA) and PT
Nusantara Almazia, Tbk (NZIA). The maximum value of ROA 0.0615 is owned by PT Hensel
Davest Indonesia Tbk (HDIT). The minimum value of EPS 0.0000 owned by PT Ayana Land
International Tbk (NASA) and PT Nusantara Almazia, Tbk (NZIA). The maximum value of EPS
0.0132 is owned by PT Satyamitra Kemas Lestari Tbk (SMKL).

Normality Test
The normality test aims to test whether in the regression model, disruptive or residual
variables have a normal distribution. If residual data is not normally distributed then statistical
conclusions become invalid or biased and if a significance value of > 0.05 is obtained, then it can
be concluded that the data is distributed normally. Normality test results can be seen in table 2
below:

Tabel 2
Results of One Sample Kolmogorov Smirnov Test
In the table One-Sample Kolmogorov - Smirnov Test, the normality test can be seen in
Assymp. Sig (2-tailed). From the results of the normality test, the Asymp value was obtained. Sig
(2-tailed) of 0.75 and these results indicate that the significance value is > 0.50 of the desired
degree of error. Thus the research data in the regression model is normally distributed as indicated
by the magnitude of the Asymp significance value. Sig (2-tailed) is above 0.50, which is 0.75.
Multicolinearity Test
The multicolinearity test aims to test whether the regression model found any correlation
between independent variables. A good regression model should not occur correlation among
independent variables. To detect the presence or absence of multicolonierity can be seen from the
value of tolerance and variance inflation factor (VIF). There is no multicolinearity problem if the
VIF value > 10 and tolerance Value > 0.10, then there is no multicolinearity. Multicolinearita test
results can be seen in table 3 below:
Tabel 3
Result of Multicolinearity Test
Based on the above test results, it can be seen that the Tolerance value of the three
variables above is more than 0.10 and VIF is less than 10. So it can be concluded that there is no
multicollinearity between the independent variables.
The results of the heteroscedasticity test are in Figure 1 below:

Figure 1
Scatterplot Graph
From the result of figure 1 above, that the data points do not form a certain pattern and
the data spreads above and below the number 0 axis Y. This means that there is no problem of
heteroscedasticity
The results of the autocorrelation test can be seen in table 4 below:
Tabel 4
Result of Autocorrelation Test
From the results of the above analysis, it is obtained that the DW value of the statistic is
1.844, the number of independent variables is, k = 3, with total sample, n = 42, the value of DW
Tableup is 1.662 and 2.338 (4-DW Tableup), The results shows DW arithmetics between DW
Tableup and (4-DW Tableup), 1.662 < 1.844 < 2.338, it can be concluded that there is no
autocorrelation problem.

The results of testing multiple linear regression analysis can be seen in table 5 below:
Table 5
Result of Multiple Linear Regression

Based on table 5 it is known that the relationship between independent and dependent
variables produces an equation as follows:
From the equation of multiple linear regression can be concluded as follows:

1. The value of the constant variable (a) has a positive value of 0.624, it means that if Financial
Leverage (X1), ROA (X2), EPS (X3) are 0 (Zero), the initial return will increase by 0.624. This
means that the possibility of investors getting an initial return will be higher.
2. The regression coefficient value of the Financial Leverage variable (X1) is positive at 0.04. This
shows that FL has a positive relationship with Initial Return, meaning that each FL increase by
1% will increase the Initial Return by 0.04, assuming the coefficient value of other variables is
constant. This means that if financial leverage produces a higher value, the higher the
probability of an investor getting an initial return.
3. The regression coefficient value of the ROA variable (X2) is positive at 0.491. This shows that
ROA has a positive relationship with Initial Return, This means that each ROA increases by 1%
will increase Initial Return by 0.491 units, assuming the coefficient value of other variables is
constant. This means that if the ROA produces a higher value, the higher the probability of an
investor getting an initial return.
4. The regression coefficient value of the EPS (X3) is negative at -2,486. this indicates that EPS
has a negative relationship to Initial Return, meaning that each EPS increases by 1% lowering
the Initial Return by 2,486 assuming the coefficient value of other variables remains. This
means that if eps generate lower value, the higher the probability of an investor obtaining an
initial return.
Hyphotesis Test
T Test (Partial)
The following are the results of the t test with the calculated t value in table 6 below:
Table 6
Result of T Test
a. Testing of Financial Leverage

The test result of The Financial Leverage variable obtained a calculated t arithmetics of 1,068
< t table of 2.024, with a significant value of 0.292. The significant value of the variable is
greater than the significant level a = 0.05, so Ho hypothesis is accepted and the alternative
hypothesis (Ha) is rejected. The receipt of Ho means that Financial Leverage has no effect on
initial return.
b. Testing of Return on Asset (ROA)
The test result of the ROA variable obtained a calculated t arithmetics of 1,166 < t table of
2.024, with a significant value of 0.251. The significant value of the variable is greater than
the significant level a = 0.05, so the zero (Ho) hypothesis is accepted and the alternative
hypothesis (Ha) is rejected. With the receipt of Ho means roa has no effect on initial return
c. Testing of Earning Per Share (EPS)

The test results on the EPS variable obtained the t arithmetics of -2.762 < -t table, value -
2.024, with a significant value of 0.009. The significant value of this variable is smaller than
the significant level a = 0.05, so the null hypothesis (Ho) is rejected and the alternative
hypothesis (Ha) is accepted. By receiving Ha, it means that EPS has an effect on Initial Return.
F Test (Simultaneosly)
The following are the results of test F in table 7 below:
Table 7
Result of F Test
Based on the results of the table above with the test criteria can be known that the value of
F arithmetics > F table with a value of 3,568 > 3,240 and significant < 0.05 (0.023 < 0.05), then Ha
accepted and Ho rejected. so that it can be concluded that Financial Leverage, Return On Asset
(ROA), Earning Per Share (EPS) simultaneously have an affect on Initial Return.
Determination Coefficient Test (R2)

The following are the results of determination coefficient test in table 8 below:
Table 8
Result of Determination Coefficient Test
From the table 8 above, the value of Adjusted R Square (R2) is obtained from the test
which is 0.158. This value can be said that the effect of financial leverage, return on assets, and
earnings per share on the initial return of companies conducting IPO is 0.158 or 15,8%. So it can be
concluded that the variables financial leverage, return on assets, and earnings per share can explain
an initial return of 15,8%.
DISCUSSIONS
Financial Leverage no Effect on Initial Return
Fl has no effect because investors consider IPO companies tend to have a high value, can
be seen in table 1 the average company has a FL value of 124%, this value is quite high because it
is feared that the IPO results are used to pay debts and it provides a negative signal for investors so
that fl information is less responded by investors (Erlina & Widyarti, 2013). This is in line with
research conducted by Fitriani Sardju (2014). in the capital market. Andhi Wijayanto (2010),
Misnen Ardiansyah (2004), and Kharisma Zuliardi & Rini Setyo Witiastuti (2020) who showed
that FL had no effect on initial return.
Return On Asset (ROA) no Effect on Initial Return

It does not affect ROA because investors tend to lack confidence in the ROA information
presented by the company (Prawesti & Indrasari, 2016). The high is ROA also not necessarily

because of the profit from the company's operations, but it can also be due to the receipt of other
income such as from investments. In other words, the excessively high ROA value can be
influenced by macroeconomic conditions such as the increase in foreign exchange rates, so
investors become doubtful about the company's ability to generate profits (Sardju, 2014). This is in
line with research conducted by Andhi Wijayanto (2010), Misnen Ardiansyah (2004), Saifudin
&Alisa Meriani (2017), Meigia Nidya Sari (2020), Rizka Nadia & Rulfah M Daud (2017), and
Yunilma Meihindri & Hardilla Restu Illahi (2016), who stated that this ratio has no effect on Initial
Return.
Earning Per Share (EPS) affect on Initial Return

The negative impact of EPS because investors will not be easily fooled by the
determination of the value of the initial share price as determined by the underwriter. It can be seen
from table 1 that the companies with the lowest EPS were obtained by PT Nusantara Almazia, Tbk
and PT Ayana Land International which received the smallest EPS of 0.0000 but received an initial
return of 69.7% and 69.3% respectively, while the companies with the lowest EPS were has the
third largest EPS, namely PT Golden Flower Tbk, which received a value of 0.0120 and an initial
return of 49.7%, so that with the EPS information the information asymmetry will be lower so that
the purchase of the initial share price on the secondary market does not follow the offer made by
the underwriter which results in low underpricing or small initial stock returns (Erlina & Widyarti,
2013). This is in line with research conducted by Iin Puji Erlina & Endang Tri Widyarti (2013),
Andhi Wijayanto (2010), and Misnen Ardiansyah. (2004), which states that this ratio has a negative
and significant effect on Initial Return.
Finnacial Leverage (FL), Return On Asset (ROA), Earning Per Share (EPS) Simultaneously
have an affect Initial Return.
Based on the simultaneous F test analysis using SPSS version 25, it was found that the
value of F arithmetics > F table with a value of 3.568> 3.240 and significant < 0.05 (0.023 <0.05),
then Ha is accepted and Ho is rejected. So it can be concluded that Financial Leverage, ROA, EPS
simultaneously have an affect on Initial Return. In other words, all independent variables
simultaneously are significant explanatory variables to the dependent variable.

Conclusion
This study aims to see to what extent The Role of Financial Leverage, Return On Assets
(ROA), Earning Per Share (EPS), on Initial Returns in companies that conduct IPOs on the
Indonesia Stock Exchange 2017-2019 period. Based on the results of the analysis that has been
carried out, the following conclusions can be drawn:
1. The role of Financial Leverage has no effect on Initial Return in companies that conduct IPOs on
the Indonesia Stock Exchange 2017-2019 period
2. The role of Return On Asset (ROA) has no effect on Initial Return in companies that conduct
IPOs on the Indonesia Stock Exchange 2017-2019 period.
3. The role of Earning Per Share (EPS) has a negative effect on Initial Return in companies that
conduct IPOs on the Indonesia Stock Exchange 2017-2019 period.
4. Financial Leverage, Return On Asset (ROA), Earning Per Share (EPS) simultaneously affect the
Initial Return in companies that conduct IPOs on the Indonesia Stock Exchange 2017-2019
period.
Suggestion
Based on the above conclusions, the researcher realizes that this research is still far from perfect,
for that researchers provide suggestions for further research, if interested in conducting research in
the same field can increase the number of research samples, the time period of the study so that the
greater the opportunity to obtain information about the variables. which is better for an effective
and accurate assessment and using other statistical analysis tools so that the results obtained are
better and using other variables that are thought to have an effect on Initial Return such as Return
On Equity (ROE), Price to Earning Ratio (PER), Book Value per Share (BVPS). For investors, can

be a consideration in investing in IPO companies and can consider the variable to get the expected
initial return.
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Impact of Fiscal Decentralization and Independence on Community

Welfare through Local Government Performance
1
Silvi Afira, 2Sundari, 3Radi Sahara
1,2,3
Economic Faculty of Universitas Gunadarma
Jln. Margonda Raya 100 Pondok Cina Depok
silviaavira13@gmail.com, soendarisantoso@gmail.com, radiisahara@gmail.com
Abstract
Fiscal decentralization is a strategic step for the Indonesian government to welcome the era of
economic globalization by strengthening the regional economic base to reduce the gap between Java
and outside Java. The consequence is that the delegation of authority followed by budget allocations
from the provincial government to the district/city government should be able to improve the
performance of local governments which in turn have an impact on the welfare of the community
through the management of regional potentials and improvement of services to the community. The
purpose of this study was to analyze the effect of fiscal decentralization and independence on
community welfare through local government performance. The data used is secondary data in the
form of reports on budget realization and regional expenditure revenues. The selected local
governments are 27 district/city governments with an observation period of 2019 and 2020. The
conclusion in this study is that Fiscal Decentralization and Independence have no effect on Local
Government Performance. Fiscal Decentralization and Independence have an influence on
Community Welfare. Fiscal Decentralization and Independence have an effect on Community
Welfare through Local Government Performance.
Keywords : fiscal decentralization, independence, local government performance, community

welfare
JEL Codes : H75, H87, I18
INTRODUCTION
Regional autonomy has resulted in significant changes in the management
of regional finances and community welfare . The law that becomes the main basis in the
implementation of regional autonomy , namely Law no. 32 of 2004 and Law no. 33 of 2004 opens
opportunities and encourages regional heads to be able to increase their regional wealth for the
welfare of their people.
The regional autonomy policy begins with the development gap and the level of welfare
between regions on the island of Java and outside Java as well as between West Indonesia and East
Indonesia. This difference in this gap can result in regional governments experiencing very high
progress, but there are also regional governments experiencing setbacks.
Good local government financial performance can improve the welfare of the local
community. Improving the welfare of the community will not run well if there is no financial support
for development activities and the provision of public services. Improved financial performance can
improve people's welfare (Christy and Adi, 2009).
The two objectives of the decentralization policy are economic goals and political
goals. Through decentralization, the economic goal to be achieved is to realize the welfare of the
community, while the political goal of decentralization is to create a democracy in regional
government with direct accountability of regional heads to constituents in the region. (Tasrin et al,
2015)
West Java Province has the highest population compared to other provinces in Indonesia
with a population of 48,274,162 people. (BPS 2020) besides that, it also includes regions that have a
fairly high financial independence. A high level of independence is expected to be in line with a high
level of welfare. The independence of districts/cities in the province of West Java is shown in Figure
1.
218 Afira, Sundari, Sahara

Figure 1. Independence of West Java Regency/City
Figure 1. shows that, there are still areas with a low level of independence in West Java, such
as Ciamis Regency, Garut Regency, Indramayu Regency, Kuningan Regency and Tasikmalaya
Regency.
The government's performance measure can be seen from the Human Development Index
(IPM), which is measured using three dimensions, namely longevity and healthy life, knowledge and
a decent standard of living. The General Allocation Fund (DAU) from the central government to the
regions also pays attention to the HDI as one of the basis for its allocation . The HDI of West Java
Province is in the high category and is ranked 10th nationally (BPS, 2021). West Java HDI for the
last three years can be seen in Table 1.
Table 1
Human Development Index
County / City 2018 2019 2020
West Java province 71.30 72.03 72.09
Bogor 69.69 70.65 70,40
Sukabumi 66.05 66.87 66.88
Cianjur 64.62 65.38 65.36
Bandung 71.75 72.41 72.39
Garut 65.42 66.22 66.12
Tasikmalaya 65.00 65.64 65.67
nice 69.63 70.39 70.49
Brass 68.55 69.12 69.38
Cirebon 68.05 68.69 68.75
Majalengka 66.72 67.52 67.59
Sumedang 70.99 71.46 71.64
Indramayu 66.36 66.97 67.29
Subang 68.30 68.69 68.95
Purwakarta 69.98 70.67 70.82
Karawang 69.89 70.86 70.66
Bekasi 73.49 73.99 74.07
West Bandung 67.46 68.27 68.08
Pangandaran 67.44 68.21 68.06
Bogor city 75.66 76.23 76.11
Sukabumi City 73.55 74.31 74.21
Bandung 81.06 81.62 81.51
Afira, Sundari, Sahara 219

County / City 2018 2019 2020

Cirebon City 74.35 74.92 74.89
Bekasi city 81.04 81.59 81.50
Depok City 80.29 80.82 80.97
Cimahi City 77.56 78.11 77.83
Tasikmalaya City 72.03 72.84 73.04
Banjar City 71.25 71.75 71.70
Source: BPS (2020)
Based on Table 1, there are 3 (three) local governments which have very high human
development status, namely the city of Bandung, the city of Bekasi and the city of Depok, while
other areas are included in the high and medium development status. Districts/Cities in West Java
Province do not have HDI with low status. The COVID-19 pandemic in 2020 affected the welfare of
the people of West Java province, this can be seen from the poverty rate in West Java which has
increased from 6.82% in 2019 to 8 ,43% (BPS, 2020).
The above phenomenon makes researchers interested in conducting research to analyze how
the influence of Fiscal Decentralization and Independence on Community Welfare through Local
Government Performance. The researcher adds the variable of local government performance,
because the success of regional financial performance will certainly affect the performance of local
governments, which will improve the welfare of the people in the region.
LITERATURE REVIEW
Agency Theory
In Agency Theory, there are two parties who make an agreement or contract, namely the
party who receiving the authority called the agent and the party giving the authority called
the principal (Halim 2007). The agency problem involves government officials who are elected as
the giver of authority , while the agent who receives the authority is the community. Government
officials are parties who provide services to the community, have more information and thus can
make decisions or policies that are only for the benefit of the government, but ignore the interests
and welfare of the community. To minimize these problems, local governments must be able to
present financial reports in a transparent and accountable manner.
According to Torres et al . (2012), the implementation of performance management from
principals to agents cannot be fully explained by agency theory such as in cases that are not required
this is because the decision to implement performance management is taken by the local government
as an agent and not by the central government as the principal .
Fiscal Decentralization
In Law Number 32 of 2004, decentralization can be defined as the delegation of authority from
the Central Government to autonomous regions to be able to regulate and administer government
affairs according to the Unitary State of the Republic of Indonesia system. (Law no. 32/2004). There
are two general variables that are often used to measure fiscal decentralization, namely regional
expenditures and revenues
The concept of fiscal decentralization can be interpreted that local governments receive
authority from the central government to explore sources of income, the right to obtain transfer funds
from the central government and determine routine expenditures and investments. Regulations on
the budget are also determined by the regional government in addition to that, fiscal decentralization
is the delegation of part of the fiscal or state financial responsibilities from the central government
to regional governments, either provincial, district or city (Rasbin, 2016).
Akai and Sakata (2002), in measuring fiscal decentralization, use the revenue approach. The
indicator of fiscal decentralization from the revenue approach is measured by the ratio of
district/city government revenues to provincial government revenues, with the formula:

Regency/city government revenue

Fiscal Decentralization = Provincial government revenue
x 100 %
Independence
The ability of local governments to carry out their own financing of government activities,
development, and provide services to people who have contributed to government revenues by
paying taxes and levies is referred to as regional independence (Halim 2016). The measure used to
measure independence is seen from the independence ratio obtained from the comparison between
Regional Original Income divided by Total Regional Income, the greater the value of the
independence ratio indicates that the regional government has a high ability to obtain its own
income. The greater the PAD ratio, the greater the regional independence, conversely, the greater the
transfer ratio, the smaller the level of regional independence in funding regional expenditures.
Regional Original Income

Independence = Total Income
x 100 %
Local Government Performance

The Provincial Government and Regency/Municipal Governments prepare Local Government
Implementation Reports in the form of performance accountability information which is then
submitted by the Minister of Home Affairs to the Minister of State Apparatus Empowerment and
Bureaucratic Reform as an evaluation of local government performance accountability which is
commonly called Regional Government Implementation Performance Evaluation or Evaluasi
Kinerja Penyelenggaraan Pemerintah Daerah (EKPPD). The process of collecting and analyzing data
systematically on the performance of local government administration using a performance
measurement system based on the submitted EKPPD. Furthermore, from the results of the
implementation of regional governments nationally , a ranking is carried out by the central
government. The ranking results are in the form of scores and performance status of government
administration. (Permendagri number 18/2020). This study uses a performance score of government
administration based on the Performance Accountability Report of Government Agencies or
Laporan Akuntabilitas Kinerja Instansi Pemerintah (LAKIP).
Public Welfare
Community welfare indicators can be shown from human progress based on several aspects
of the assessment, namely from the aspect of average life expectancy, average length of schooling,
literacy rate and overall welfare. This indicator is known as the Human Development Index (HDI)
or the Human Development Index (HDI), which was first issued by the United Nations Development
Program (UNDP).
Success in efforts to build the quality of life of the community can be seen from the HDI,
including to determine development ratings in a region. HDI is also used to measure government
performance and as a basis for determining the General Allocation Fund. (BPS, 2021)
HDI is a very useful tool in measuring the level of welfare between countries and
regions (Todaro, 2006) . This study uses the Human Development Index as an indicator of
community welfare by referring to research by Badrudin (2012) based on data from the Central
Statistics Agency.
Research Propositions and Hypotheses

1. The Effect of Fiscal Decentralization on Local Government Performance
Lindaman et. al (2002) explained the decentralized revenue and expenditure variables to see
the decentralization variable and the human development index to see basic human needs. Local
governments will be more aware of the wants and needs of the community through fiscal
decentralization . A good governance structure should be able to protect and serve the needs of the
community. The indicators of success in government organizations are not measured by retained
earnings, but are seen from the quality of service and efficiency in the use of available
funds. Increased growth, better equity, and the quality of public services can be improved through
fiscal decentralization . The first hypothesis formulated is:
H1 : Fiscal Decentralization Affects Local Government Performance

2. The Influence of Independence on Local Government Performance

According to Mardiasmo (2002), it is necessary to measure the administration of
government. Measurement aims to improve the performance of local government administration,
assist in the allocation of resources in making decisions and improve communication to create public
accountability. Measurement of local government financial performance is carried out, among
others, by the independence ratio. The higher the independence, the greater the regional financial
capacity to finance government spending in running the government.
A large PAD reflects high independence, the region should have a high performance
score. If a large PAD turns out to be a low implementation score , the Regional Government must
evaluate the performance in the administration of its administration. Local governments with high
PAD are required to better manage and utilize their wealth for service to the community (Sudarsana
and Rahardjo, 2013). The hypotheses formulated in this study are:
H2: Independence affects the performance of local governments
3. The Effect of Fiscal Decentralization on Community Welfare

Fiscal decentralization according to Rasbin, (2016) is the delegation of authority to regions to
receive transfers from a higher central government, from the central government to the level of
government below it, namely the province, district or city. Growth, better equity, and better quality
of public services as well as public welfare can be encouraged by fiscal decentralization. The welfare
of the people in Indonesia can be improved, among others, by the existence of fiscal decentralization
(Siddik, 2009). A study conducted by Faridi (2011) examines the spatial dependence, direct and
indirect effects of fiscal decentralization on economic growth as an indicator of the welfare of the
provincial community in Pakistan from 1972 to 2009 showing that income decentralization has a
positive effect, while expenditure decentralization has a negative effect on provincial performance
and welfare. Public. The hypotheses formulated in this study are:
H3 : Fiscal Decentralization Affects Community Welfare
4. The Influence of Independence on Community Welfare

Community welfare is one of the responsibilities of the local government, to be able to make
it happen, the local government must be able to manage all the resources that become the potential
of the area optimally, effectively and efficiently. Regional potential can be in the form of natural
resources, human resources and financial resources.
Regional financial performance and services to the public who have paid taxes and levies as a
source of income needed by the region can be factors that can affect the achievement of people's
welfare. (Achmat Subekan, Azwar 2014). The hypotheses in this study are:
H4 : Independence affects the welfare of society
5. The Influence of Local Government Performance on Community Welfare

An area can be financially strong because it depends on how its financial management is
done. Regional financial management has a very large influence on the fate of a region. Economic
growth to reduce unemployment and poverty levels can be driven by local financial management
which is carried out with the principle of value for money, namely economically, efficiently and
effectively. as well as participation, transparency, accountability and justice which will certainly
improve the welfare of the community. The hypotheses in this study are:
H5 : Local Government Performance has an effect on Community Welfare
6. The Effect of Fiscal Decentralization and Independence on Community Welfare through

Bahl (2000) states that the competition to be the best between local governments must be
driven by decentralization . This can be seen from the better public services. which in turn can
improve people's welfare, the hypothesis in this study is:
H6 : Fiscal Decentralization and Independence have an effect on Community Welfare through

Based on the description of the relationship, there is a link between fiscal decentralization,
independence, local government performance and community welfare. The research model in this
research study is shown in Figure 2.
Fiscal
Decentralization
Local Government
Public welfare
Performance
RESEARCH METHODS
Object of research
The object of research in this study is fiscal decentralization, independence, local government
performance and community welfare. The research unit is the district/city government of West Java
province for the period 2019 – 2020

The data used in this study is secondary data in the form of annual reports from district/city
government budgets, sourced from the Directorate General of Fiscal Balance of the Ministry of
Finance (DJPK Kemenkeu), Human Development Index sourced from the Central Statistics Agency
(BPS), Local Government performance scores sourced from reports Government Agency
Performance Accountability (LAKIP). Data for the 2019 and 2020 observation periods.
Method of collecting data

This research was conducted through observations of district/city governments in West Java
with the aim of providing empirical evidence on the causal relationship between Fiscal
Decentralization and Independence on Community Welfare through Local Government
Performance. The series of research activities started from a literature review in the form of journals
and textbooks. The research continued with data collection and data processing as needed. This
research design consists of two stages, namely descriptive analysis and verification analysis of the
formulated hypothesis.
Population
The population determined is all local governments at the district/city level in West Java as
many as 27 local governments consisting of 19 districts and 8 cities.
Variables and Measurements

The variables used are Fiscal Decentralization, independence, local government performance
and community welfare. Details of the variables and their measurement indicators are presented in
Table 2.

Variable Indicator Measurement Scale
Fiscal Decentralization Regency/city government revenue Ratio
Provincial government revenue
x 100
Independence Regional Original Income Ratio

Total Income
x 100 %

Variable Indicator Measurement Scale

Local Government Local Government Performance Score Ratio
Performance
Public welfare Human Development Index Ratio
Data analysis method

Descriptive analysis was used to determine the minimum, maximum and average values of the
research data. Verificative statistical analysis is used to verify the research hypotheses that have been
developed. The analytical tool used is SPSS for data processing. After testing the classical
assumptions, then testing the hypothesis to test the effect of fiscal decentralization and independence
on welfare either directly or indirectly or through the performance of local governments.
Regression analysis was conducted to examine the effect of the independent variable on the
dependent variable. The regression coefficient explains how big the contribution of the value of the
independent variable is. The higher the regression coefficient, the greater the contribution of changes
to the dependent variable.
The multiple regression model formulated in this study involves independent variables,
namely fiscal decentralization, independence, while the dependent variable is community welfare
with local government performance as an intervening variable.
The classical assumption test used in linear regression with the Ordinary Least Squared (OLS)
approach consists of linearity, autocorrelation, heteroscedasticity, multicollinearity and normality
tests. Basuki (2016). In panel data regression, not all tests need to be performed. Multicollinearity
indicates a correlation between independent variables. Multicollinearity can occur in the regression
model if there are independent variables that are strongly correlated with one another. One way to
detect the occurrence of multicollinearity in the regression model is to analyze the Variance Inflation
Factor (VIF) value. The model is free from multicollinearity problems , if the value of the variance
inflaction vector (VIF) < 10.
Hypothesis test
This study uses four main variables, namely fiscal decentralization, independence, local
government performance and community welfare. The test is carried out using a structural equation
with the following formulation:
The first stage, examines the effect of fiscal decentralization and independence on local
government performance
LGP = ꞵ1FD + ꞵ3Id + δ1……………………………. (1)
The second stage, examines the effect of fiscal decentralization, independence and local
government performance on people's welfare
PW = ꞵ4FD + ꞵ5Id + ꞵ6LGP+ δ2.……………………..……(2)
The third stage, examines the direct and indirect effects of fiscal decentralization and
independence on people's welfare through local government performance
PW = ꞵ8FD.LGP + ꞵ9Id.LGP+ δ……………………..……(3)
Description :
FD : Fiscal Decentralization
Id : Independence
LGP: Local Government Performance
PW : Public welfare

This study uses district and city data in the province of West Java. Descriptive analysis was
conducted to provide general information about the variables used in this study in all 27 district/city
governments during the two-year observation period with 54 units of analysis.

Variable Descriptive Analysis

Table 3. Descriptive statistics
N Minimum Maximum Average
DF 54 1.96 22.58 8.93
Kd 54 7.52 51.78 23.18
KPD 54 2.30 3.19 2.94
KM 54 65.36 81.62 71.64
Source: processed data
The fiscal decentralization variable has an average value of 8.93, the area with the lowest fiscal
decentralization is Banjar city in 2020 and the highest is Bogor district in 2019. High fiscal
decentralization indicates an indication of high tax and levy revenues and low balancing funds, while
decentralization The low fiscal level indicates that the region relies on balancing funds from the
provincial government.
The independence variable has an average value of 23.18 with the lowest independence being
Tasikmalaya district in 2019 and the highest being Bekasi city in 2020. High regional financial
performance means that district/city governments have a high level of independence, because they
can run the government by relying on income. independently without relying on the provincial
government.
The local government performance variable has an average value of 2.94 with the lowest
performance score being Karawang district in 2020 and the highest being Sukabumi city in 2019.
The performance of local governments with a score indicator based on LAKIP given by the Ministry
of Home Affairs is an evaluation of each other's performance. regional government.
The community welfare variable has an average value of 71.64 with the lowest Human
Development Index being Cianjur district in 2020 and the highest being the city of Bandung in 2019,
The higher the Human Development Index, the more prosperous the people in the area should be,
however it needs to be further improved by reducing the poverty level or the number of poor people
in the area.

The data normality test is one of the classical assumption tests. The normality test of the data
is carried out to determine whether the data to be tested is data that has a normal distribution. Based
on the output results (in the attachment), it can be seen that the data in this study are normally
distributed.
To find out the perfect relationship between the independent variables in the regression model
or to find out whether the regression model found a correlation between the independent variables, a
multicollinearity test was used. Based on the output results (in the attachment), it can be seen that
there is no multicollinearity problem in the regression model of this study, because the VIF value is
less than 10
Hypothesis Test Results

The test was conducted to see the effect of the variables of Fiscal Decentralization and
Independence on the Performance of Local Governments, the variables of Fiscal Decentralization,
Independence and Performance of Local Governments on Community Welfare and the effect of
Fiscal Decentralization and Independence on Community Welfare through Local Government
Performance. Table 4 is the result of testing the direct influence between the variables studied
Table 4. Hypothesis Test Results

Estimate SE CR P Label
KPD <--- DF -,005 ,006 -,856 ,392 par_1
KPD <--- Kd ,002 ,002 ,993 ,321 par_2
KM <--- KPD 3,463 1,869 1,853 ,064 par_3

Estimate SE CR P Label
KM <--- DF -,250 ,088 -2.853 ,004 par_5
KM <--- Kd ,340 ,033 10,381 *** par_6
Source: AMOS analysis results
Based on Table 4, there are 2 influential variables, namely Fiscal Decentralization on

Community Welfare and Independence on Community Welfare. The results of testing the
relationship of the independent variable to the dependent variable directly are as follows
Fiscal Decentralization Affects Local Government Performance

The results of the hypothesis test state that the P value is 0.392 > 0.05 , which means that fiscal
decentralization has no effect on the performance of local governments. The greater fiscal
decentralization does not have an impact on the performance of district/city local governments. The
results showed that fiscal decentralization could not improve the performance of local
governments. With different district/city revenues, it turns out that it has not been able to show an
increase in performance in providing services to people who have paid taxes and levies as a source
of income for their own region. The results of the study are in line with the research of Mursito (2004)
which states that indicators in measuring fiscal decentralization have not shown performance in the
implementation of regional autonomy
Independence affects the performance of local governments

Based on the hypothesis test, it turns out that independence has no effect on the performance
of local governments, as can be seen from the P value which is greater than 0.05. Local governments
that show a good level of independence should have improved performance in that area. The
performance of local government administration can be successful if the regional independence is
good and is supported by reliability in reporting .
Of the 27 district/city governments in West Java, there are still several regions that have scores
below 3 or are at level 2, although the level of independence is quite high, such as Bekasi district,
while Ciamis district with lower independence managed to occupy level 3.
Fiscal Decentralization Affects Community Welfare

The results of the hypothesis test show a prob value of 0.004, smaller than 0.05 which states
that fiscal decentralization has an influence on people's welfare. This is in line with the opinion of
Badrudin (2012) which states that the government through fiscal decentralization has an important
role to be able to maintain domestic security and defense, administer justice, and provide goods that
are not prepared by the private sector, such as road and dam infrastructure which are all related with
the indicator of community welfare, namely the Human Development Index. Fiscal decentralization
is able to affect the welfare of the people in most districts/cities in West Java, which have high fiscal
decentralization, the better the level of community welfare.
Independence affects Community Welfare

Based on the hypothesis test conducted, the results obtained stating that independence has an
effect on people's welfare, it can be seen from the P value which is smaller than 0.05. Independence
has a positive relationship with well-being. The higher the independence will have an impact on the
higher welfare as well.
Regional governments can optimize the authority to manage sources of income in their regions
properly, so that the realization of Regional Original Income can be achieved and increased. High
Regional Original Income will improve the welfare of the community which is the goal of regional
development. The results of this study are in line with the results of the research by Decta
(2013), which proves that the comparison between Original Regional Income to total Regional
Income has a significant positive effect on HDI.
Local Government Performance Affects Community Welfare

The results of the hypothesis test show that the prob value of 0.064 is greater than
0.05. This shows that the performance of the local government does not affect the welfare of the

community. Regional government performance Transparent and accountable local financial

management should be able to reduce the number of unemployed and reduce poverty levels which
will certainly improve the welfare of the community. The impact of good financial management is
an increase in the provision of public services and can improve people's lives
In 2020, the performance scores of several districts/cities in West Java decreased, such as
Garut, Majalengka, Purwakarta, Bandung, Cirebon, Sukabumi and Cimahi districts, while the HDI
in Majalengka, Purwakarta, Bandung, Cirebon, Sukabumi and Cimahi districts experienced an
increase. .
The Effect of Fiscal Decentralization and Independence on Community Welfare through Local
Government Performance
The results of testing the hypothesis of the effect of fiscal decentralization and
independence on people's welfare through regional financial performance can be seen in Table 5.
Table 5.
Indirect Effects of Fiscal Decentralization and Independence on
Community Welfare through Local Government Performance
Local
Fiscal
independence Government
Decentralization
Performance
Local Government
,000 ,000 ,000
Performance
Public welfare -,018 ,021 ,000
Source: AMOS analysis results
Based on Table 5. it can be seen that the performance of local governments can explain the
effect of fiscal decentralization and independence on people's welfare. The effect of fiscal
decentralization on people's welfare through local government performance is â€“0.18 and the
magnitude of the influence of independence on community welfare through local government
performance is 0.21.
With fiscal decentralization, local governments must be able to improve the management and
reporting of government finances, so that local governments are required to manage their financial
reporting in an accountable and transparent manner which will later be examined by external
auditors.
The regional government has the authority to optimize the achievement of independence so
that it can continue to increase, so that the welfare of the people as a regional development goal can
be achieved.
CONCLUSIONS
Conclusion
The results of the analysis on the effect of fiscal decentralization and independence on people's
welfare through the performance of district/city governments in West Java province, can be
concluded as follows:
1. Fiscal decentralization has no direct effect on local government performance
2. Independence has no direct effect on local government performance
3. Fiscal decentralization directly affects people's welfare
4. Independence directly affects the welfare of society
5. Local government performance does not directly affect the welfare of the community
6. Fiscal decentralization and independence affect people's welfare through local government
performance.

Implication
The empirical implications of the results of this study are further research by adding research
units, namely all local governments in Indonesia and extending the observation period, namely all
provinces or city/district governments throughout Indonesia in order to develop research in the field
of public sector accounting.
The practical implication of the results of this study is that local governments should increase
local revenue by taking into account the potential of the area, besides that it can further increase the
use of information technology to be more efficient in the use of funds in the Regional Revenue and
Expenditure Budget.
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Comparisonal Analysis Of Financial Performance Before And During

The Covid-19 Pandemic
1
Nur Ainun Anisa, 2Sri Rahmawati, 3Ekaning Setyarini
1,2,3
Jln. Margonda Raya No. 100, Depok 16424, West Java
1
nurainunannisa1@gmail.com 2 rahma@staff.gunadarma.ac.id
3
eqanienk@staff.gunadarma.ac.id
Abstract
This study aims to determine the company's financial performance before and during the Covid-19
pandemic by using the ratio of NPM, QR, TATO, and ROA. The data used in this study is financial
data derived from the annual reports of companies in the pharmaceutical sub-sector on the Indonesia
Stock Exchange in 2019 and 2020. The analytical tool used is the Wilcoxon Rank Test using SPSS
23. The sample in this study uses a pruposive sampling technique. This technique is used for sampling
from the population determined by the criteria determined by the researcher, so 9 pharmaceutical
companies listed on the Stock Exchange are the samples in this study. This study compares the values
of NPM, QR, TATO, and ROA before and during the Covid-19 pandemic. Based on the different
Wilcoxon Rank Test, it was found that H01 and H03 were accepted, which means that the NPM and
TATO values did not have a significant difference between before and during the Covid-19
pandemic, but H02 and H04 were rejected, which means that the QR and ROA values have
significant differences. between before and during the Covid-19 pandemic. When compared to the
average value before the Covid-19 pandemic, there was generally a decrease in NPM, QR, TATO,
and ROA in pharmaceutical sub-sector companies listed on the IDX.
Keywords : Financial Performance, Covid-19 Pandemic, NPM, QR, TATO, ROA

JEL Codes: G11, L11, L25,
INTRODUCTION
The COVID-19 pandemic that is currently engulfing the world is one of the emergency
events related to the non-economic environment of the capital market which has had a tremendous
impact on global stock prices and in Indonesia. Markets around the world are registering an
unprecedented and far greater decline compared to previous outbreaks of infectious disease to hit
the world(Baker, et al., 2020) (Lyócsa, Baumöhl, Výrost, & Molnár, 2020).
The existence of the Covid-19 pandemic event not only poses a threat to health but also to economic
growth in a country. However, the slowdown in the economic system has been felt, especially in
the industrial, tourism, trade, transportation and investment sectors. It is unavoidable as well as with
Indonesia, the increase in positive cases of Covid-19 has an effect on the stock market (iNews.id
06 2020).
Since the announcement of confirmed cases of Covid-19 in early March 2020, various indices
on the Indonesia Stock Exchange (IDX) have continued to decline and reached their lowest values
at the end of March.(Purnamaningrum & Ariyanti , 2020). As a result of the COVID-19 pandemic
causing weak economic activity as well as changing the economic system in all countries, besides
the impact faced by each country varies from one country to another. This virus has a positive
impact on companies engaged in health, hygiene and food products. This is because sales turnover
in the industry has increased. Meanwhile, the negative impact experienced by companies in the
banking sector is due to the large number of foreign capital attracting investment so that the sector
suffers losses(Spirit, 2020).
The impact of the COVID-19 virus pandemic was also felt by several large companies in
Indonesia, where the financial services authority (OJK) mapped out a number of sectors that became
potential losers and winners due to the COVID-19 pandemic. Sectors that have the potential to
become winners are MSMEs, logistics services, telecommunications services, electronics, food and
beverages, pharmaceutical chemicals, medical devices and textiles. Meanwhile, the sectors with
230 Anisa, Rahmawati, Setyarini

potential losers are the tourism, construction, land-sea-air transportation, mining, finance and
automotive sectors(Kristyana, 2020).
To determine which company's shares to buy and when to make a sale/purchase transaction,
investors need to conduct a securities analysis. There are three approaches to analyzing and
selecting stocks, namely fundamental analysis, technical analysis, and informational analysis.
Fundamental analysis based on the mindset of stock price behavior is determined by changes in
behavioral variations of the basic variables of company performance. If the company's performance
is good, the business value will be high. To ensure that the company's performance is in good or
bad condition, it can be done by analyzing financial ratios.
Financial ratio is a number that shows the relationship between an element with other
elements in the financial statements. This ratio will be able to explain or give an overview to the
analyst about the good or bad financial position of a company, especially if these numbers are
compared with the comparison ratio figures used as a standard.(Munawir, 2010).
LITERATURE REVIEW
Relationship between Financial Ratios and Financial Performance
According to (Warsidi & Scouts, 2000) aFinancial ratio analysis is an instrument of
performance analysis in companies that defines various financial relationships and indicators, aiming
to be able to show related changes in financial conditions or operating performance in the past and
help describe trends in these patterns of change, in order to show any risks and opportunities. attached
to the company concerned. So, to assess the company's financial condition and performance, a ratio
can be used which is a comparison of the numbers in the financial statement headings. Financial
Ratio Analysis is one of the most popular and widely used tools. Although the Ratio calculation is
just a simple arithmetic operation, the results require difficult interpretation(Herry, 2018)From the
statement above, it can be seen that financial ratios and financial performance have a close
relationship. There are many financial ratios and each ratio has its own function.
Signal Theory
According to (Fahmi, 2012) signaling theory is a theory that discusses the rise and fall of
market prices, so that it will have an influence on investors. This theory explains how investors have
the same information as company managers about the company's prospects, but in reality company
managers have better information than outside investors.(Affinanda, 2015). Signal theory explains
the problem of market information asymmetry. It is concluded that the signal theory is a theory that
discusses the ups and downs of market prices and provides the same asymmetric market information
to investors and company managers about the company's prospects.
Although developed in the labor market, signal theory is a general phenomenon that can be applied
in any market with information asymmetry, including the mood market. Information asymmetry in
the capital market can occur because the company has more information than the company's external
parties.
Covid-19 pandemic
Covid-19 is a new type of virus that emerged in God, China. The virus is then transmitted
between humans through the air, respiratory fluids, through hands or solid surfaces. A simple term,
reported from The Sun, Covid-19 is an abbreviation of Corona (CO), Virus (VI), Disease (D) and
2019 (19), where the Covid-19 virus first appeared in the city of Wuhan in in 2019. The World Health
Organization (WHO) has finally designated Covid-19 as a virus that is spreading throughout the
world.
The Covid-19 pandemic is an emergency event that has had a tremendous impact on capital
markets around the world. (Baker, et al., 2020) stated that the impact of the Covid-19 pandemic on
the capital market was much greater than the previous outbreak.
Research result (Rifa'i, Junaidi, & Kartika Sari, 2020)shows that there is a significant difference in
the JCI before and after the Covid-19 pandemic. Based on the results of research from(Mangindaan
& Manossoh, 2020)shows that there is a significant difference between the average share price of
PT. Garuda Indonesia before and after the announcement of the first case of the Covid-19 pandemic.
Findings (Kefi, Taufik, & Sutopo, 2020)conducted a study which showed that there were significant
Anisa, Rahmawati, Setyarini 231

differences in the stock returns of JCI and LQ 45 between before and after the Covid-19 pandemic.
In line with research(Sodikin & Sahroni, 2016) shows that there is no significant difference in the
company's financial performance using the ROE (Return on Equity) ratio two years before and two
years after the acquisition was made.
On research (Destyana, 2021) that there are significant differences in the financial performance of
the telecommunications sector listed on the Indonesian stock exchange during the pandemic
Hypothesis
Based on the theoretical basis, previous research, and framework, the hypothesis proposed by
the researcher is as follows:
H0: There is no significant difference in NPM (Net Profit Margin), QR (Quick Ratio), TATO (Total
Assets Turnover), ROA (Return on Assets) between before and during the Covid-19 pandemic
Ha: NPM (Net Profit Margin), QR (Quick Ratio), TATO (Total Assets Turnover), ROA (Return on
Assets) have significant differences between before and during the Covid-19 pandemic.
RESEARCH METHOD
The type of data used in this research is descriptive quantitative research.
The secondary data in this study were obtained from the company's financial report data sourced
from the Indonesia Stock Exchange website through the www.idx.co.id website. In this study, the
data used are financial reports for 1 year during the COVID-19 pandemic and 1 year before the
Covid-19 pandemic, namely financial reports in 2020 and 2019.
The population of this study are all companies that are included in the pharmaceutical industry
listed on the Indonesia Stock Exchange. The pharmaceutical industry is a company in the form of a
legal entity that has a license to carry out production activities and distribute drugs and medicinal
ingredients, including narcotics. The population included in the pharmaceutical sector is listed on the
Indonesia Stock Exchange.
The sample used in this research is purposive sampling. Purposive sampling is a sampling
technique by determining certain criteria(Sugiyono, 2017). The criteria in selecting the sample are
as follows:
1. Pharmaceutical companies listed on the Indonesia Stock Exchange.
2. Companies that issue financial statements for the period 2019 and 2020.
3. Companies that present complete data according to the variables studied.
The analytical tool used is the Wilcoxon Rank Test.

The results of the analysis of financial data, including the analysis of Net Profit Margin,
Quick Ratio, Total Asset Turnover, Return On Assets before and during the Covid 19 pandemic
in Pharmaceutical companies on the Indonesia Stock Exchange for the 2019-2020 period.
Descriptive Statistics Test

Table 1. Descriptive Statistics
N Minimum Maximum mean Std. Deviation
NPM Before Covid-19 9 .03780 9.25500 2.6170700 3.51125665
QR Before Covid-19 9 .60817 3.46562 2.0153600 1.02726352
TATTOO Before
9 .51221 1.29876 .9351011 .28772473
Covid-19
ROA Before Covid-19 9 .04879 8.68400 4.0444478 3.91170005
NPM After Covid-19 9 .00001 .28003 .0895756 .08310245
QR After Covid-19 9 .53592 3.11155 1.6071622 .93022271
TATTOO After Covid-
9 .51177 1.77646 .9544267 .38158501
19
ROA After Covid-19 9 .00001 .24263 .0872744 .07665278
Valid N (listwise) 9

Based on the data in table 1, it can be explained about the results of descriptive statistics for
all variables used in the study
this, namely:
1. NPM (Net Profit Margin), this ratio is used by the company to measure the percentage
comparison of net profit with sales. For the NPM variable before the Covid-19 pandemic the
minimum value was 0,0378 with a maximum value of 9,255. While the average is in the
number2,61707 and the standard deviation of 3.51125665. This means that the company's net
profit from sales shows a good value with an average of 2.61707.
2. NPM (Net Profit Margin) at the time of the Covid-19 pandemic the minimum value0.00001 with
a maximum value of 0,28003. While the average is in the number0.0895756 and the standard
deviation of 0.0830245. From this data, it can be concluded that NPM has decreased, this
indicates that the Covid-19 pandemic has a negative impact on the company. It can be seen from
the average value of the comparison of net income with sales that it decreased from 9.255 to
0.0895756. The decline occurred due to the closure of import routes for raw materials for
medicines and medical devices andthe company's ability to make profits decreases during the
pandemic.
3. QR (Quick Ratio), this ratioshows the company's ability to pay short-term obligations with
current assets without taking into account the value of inventories. For the QR variable before
the Covid-19 pandemic the minimum value was 0.60817 with a maximum value of 3.46562
whereas the average is in the number 2.01536 and standard deviation of 1.02726352. This shows
the company's ability to pay obligations that are positive, namely:2.01536.
4. QR (Quick Ratio) at the time of the Covid-19 pandemic the minimum value0.53592 with a
maximum value of 3.11155 while the average is at 1.6071622 and the standard deviation of
0.93022271. From this data, it can be concluded that QR has decreased, this indicates that the
Covid-19 pandemic has a negative impact on the company. It can be seen from the average value
of the company's ability to pay short-term obligations decreased from2.01536 to 1.6071622. The
decline occurred because the company's ability to make profits decreased so that the company's
ability to pay short-term obligations decreased during the pandemic.
5. TATO (Total Assets Turnover), this ratio can measure sales results based on all assets owned by
a company. For the TATO variable before the Covid-19 pandemic the minimum value was
0.51221 with a maximum value of1.29876 whereas the average is in the number 0.9351011 and
the standard deviation of 0.28772473. This means that the company's sales are at a good value
with an average0.9351011.
6. TATO (Total Assets Turnover) at the time of the Covid-19 pandemic the minimum value0.51177
with a maximum value of 1.77646 while the average is at 0.9544267 and the standard deviation
of 0.38158501. From this data, it can be concluded that TATO has increased, this indicates that
the Covid-19 pandemic has had a positive impact on the company. It can be seen from the
average value of sales results based on all assets owned by the company, which has increased,
although it is not large0.9351011 to 0.9544267. The increase was due to the growth in the
pharmaceutical and traditional medicine sectors driven by an increase in demand for products
that are believed by the public to be able to maintain and increase endurance.
7. ROA (Return on Assets), this ratio measures the company's ability to generate profits from the
total assets used by the company. For the ROA variable before the Covid-19 pandemic the
minimum value was 0.4879 with a maximum value of 8,684 whereas the average is in the number
4.0444478 and the standard deviation of 3.91170005. This means that the company's ability to
generate good value profits on average4.0444478.
8. ROA (Return on Assets) at the time of the Covid-19 pandemic the minimum value0.00001 with
a maximum value of 0.24263 while the average is at 0.0872744 and the standard deviation of
0.07655278. From this data, it can be concluded that ROA has decreased, this indicates that the
Covid-19 pandemic has a negative impact on the company. It can be seen from the average value
of the company's ability to generate profits from the total assets used by the company experienced
a very significant decrease from4.0444478 to 0.0872744. The decline occurred because 90% of
raw materials for medicines and medical devices were still imported, so during a pandemic the
company had to bear the burden of bringing in raw materials, which increased 3 to 5 times.

Shapiro-Wilk . Normality Test
Table 2. Tests of Normality

Kolmogorov-Smirnova Shapiro-Wilk Conclusion
Statistics df Sig. Statistics df Sig.

NPM Before Covid-19 .304 9 .016 .761 9 .007 Abnormal
QR Before Covid-19 .140 9 .200* .940 9 .579 Normal
TATTOO Before Covid-19 .144 9 .200* .923 9 .416 Normal
ROA Before Covid-19 .280 9 .041 .802 9 .021 Abnormal
NPM After Covid-19 .241 9 .140 .849 9 .073 Normal
QR After Covid-19 .177 9 .200* .898 9 .243 Normal
TATTOO After Covid-19 .205 9 .200* .910 9 .313 Normal
ROA After Covid-19 .149 9 .200* .922 9 .407 Normal
*. This is a lower bound of the true significance.
a. Lilliefors Significance Correction
Source: Data processed, 2021.

Based on the data in the table above, it can be seen the value of Sig. for NPM data before the Covid-
19 pandemic was 0.007. And the value of Sig. for ROA data before the Covid-19 pandemic was
0.021. This indicates that the data for these two groups are not normally distributed, because the
value of Sig. for the NPM data group before the Covid-19 pandemic, it was 0.007 smaller than the
criteria, namely Sig. 0.007 < 0.05 and the ROA data at the time of the Covid-19 pandemic was 0.021
which was smaller than the criteria, namely Sig. 0.021 < 0.05. Based on this assumption, hypothesis
testing will be carried out using a non-parametric approach, namely the Wilcoxon Rank-test test
technique.
Wilcoxon Rank Test
Table 3. Test Statistics

NPM After QR After TATO After ROA After
Covid-19 - Covid-19 - QR Covid-19 - Covid-19 -
NPM Before Before Covid- TATO Before ROA Before
Covid-19 19 Covid-19 Covid-19
Z -1.362b -2.429b -.770b -2.429b
asymp. Sig. (2-tailed) .173 .015 .441 .015
a. Wilcoxon Signed Ranks Test
b. Based on positive ranks.
Based on the data in the table above, it is known that the value of Zcount in the NPM data is -1.362
and the value of Sig. of 0.173. The value of Zcount on QR data is -2.429 and the value of Sig. of
0.015. The value of Zcount in TATO data is -0.770 and the value of Sig. of 0.441. The value of
Zcount on the ROA data is -2.429 and the value of Sig. of 0.015. The criteria used are as follows
(Santoso, 2016) ;
If the value of Sig. > 0.05 then H0 is accepted
If the value of Sig. < 0.05 then Ha is accepted
In the output table above, it can be concluded as follows:
1. In the NPM data the value of Sig. of 0.173 > 0.05 according to the criteria, then the hypothesis
that there is no significant difference in financial performance with NPM before and during the
Covid-19 pandemic in pharmaceutical companies in Indonesia is accepted.

2. In the QR data the value of Sig. of 0.015 < 0.05 according to the criteria, then the hypothesis
that there is a significant difference in financial performance with QR before and during the
3. In the TATO data the value of Sig. of 0.441 > 0.05 according to the criteria, then the hypothesis
that there is no significant difference in financial performance with TATO before and during
the Covid-19 pandemic in pharmaceutical companies in Indonesia is accepted.
4. In the ROA data the value of Sig. of 0.015 < 0.05 according to the criteria, then the hypothesis
that there is a significant difference in financial performance with ROA before and during the
This study aims to determine whether there are significant changes in the financial
performance of the pharmaceutical sub-sector companies before and during the Covid-19 pandemic
with the variables NPM (Net Profit Margin), QR (Quick Ratio), TATO (Total Asset Turnover), and
ROA ( Return on Assets). This study uses data obtained on the Indonesia Stock Exchange website in
the 2019 - 2020 period, the following conclusions will be drawn:
1. In 2019 before the Covid-19 pandemic in Indonesia, on average pharmaceutical companies on the
Indonesia Stock Exchange had an NPM value of 2,61707. Meanwhile, in 2020, the average
pharmaceutical company on the Indonesia Stock Exchange has an NPM value of 0.0895756. This
indicates that there are significant differences in the financial performance of pharmaceutical
companies on the Indonesia Stock Exchange before and during the Covid-19 pandemic in line
with the findings. (Destyana, 2021).
Indonesia Stock Exchange had a QR value of 2.01536. Meanwhile, in 2020, the average
pharmaceutical company on the Indonesia Stock Exchange has a QR value of 1.6071622. This
companies on the Indonesia Stock Exchange before and during the Covid-19 pandemic.
In 2019 before the Covid-19 pandemic in Indonesia, on average pharmaceutical companies on the
Indonesia Stock Exchange had a TATO value of 0.9351011. Meanwhile, in 2020, the average
pharmaceutical company on the Indonesia Stock Exchange has a TATO value of 0.9544267. This
indicates that there is no significant difference in the financial performance of pharmaceutical
companies on the Indonesia Stock Exchange before and during the Covid-19 pandemic.
Indonesia Stock Exchange had an ROA of 4.0444478. Meanwhile, in 2020, the average
pharmaceutical company on the Indonesia Stock Exchange has an ROA of 0.0872744. This
companies on the Indonesia Stock Exchange before and during the Covid-19 pandemic, in line
with the results of this study.(Destyana, 2021)
It was concluded that the impact of the Covid-19 pandemic was unavoidable, so companies
must be creative in seeking profit as the company's main goal. This can be achieved by utilizing
various business segments within the company other than the main business segment. For companies
that have a stable size and scope of business prior to the Covid-19 pandemic, they must also think
about alternative ways of surviving during the Covid-19 pandemic. For investors, please note that
the impact of the pandemic on companies going public is an impact that occurs globally. This needs
to be observed by investors so that mass panic does not occur so as to minimize investors making
wrong decisions.
REFERENCES
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Kristyana, H. (2020, June 29). OJK Map Potential Losers and Winners Sector Due to Covid-19.
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Munawir. (2010). Financial Statement Analysis. Yogyakarta: Liberty.
Purnamaningrum, E., & Ariyanti, V. (2020). Using Google Trends to Find Out the Intervention of
the COVID-19 PANDEMI on the Stock Market in Indonesia. Economics Magazine, Vol. 25
(1), ISSN No. 1411-9501, 93-101.
Rifa'i, MH, Junaidi, & Kartika Sari, AF (2020). The Effect of the COVID-19 Pandemic Event on
the Composite Stock Price Index. E-JRA Vol. 09 (06), , 41-53.
Rohmah, SN (2020). Are there business opportunities amid the economic downturn due to the
COVID-19 coronavirus? Law and Justice Bulletin, Vol. 4(1), ISSN:2338 4638, 63-74.
Santoso, S. (2016). Parametric Statistics, Concepts and Applications with SPSS. First Printing. .
Jakarta: PT Elex Media Komputindo, Gramedia.
Sodikin, S., & Sahroni, N. (2016). Analysis of Financial Performance and Market Performance
Before and After (Case at PT. Agung Podomoro Land Tbk). Journal of Management
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Sugiyono. (2017). Research Methods quantitative, qualitative and R&D, . Bandung: Alphabeta.
Warsidi, B., & Scouts, A. (2000). Evaluation of the Usefulness of Financial Ratios in Predicting
Future Profit Growth: An Empirical Study on Companies Listed on the JSX. Journal of
Accounting, Management and Economics, Volume 2 (1).

The Effect Of Inflation And Unemployment Rate On Economic Growth

In Java Island For The 2017-2020 Period
1
Yossy Rosalinda, 2Cicilia Erly Istia
1,2
1
yossyrosalinda@gmail.com,2 ciciliaistia6@gmail.com
Abstract
In general, the success of a country in overcoming various problems that occur in the country's
economy can be seen from macro and micro economics. One of the important indicators in
measuring and determining the level of success of the economy is economic growth. The
economic growth of a country can be influenced by several factors, namely natural resources,
human resources, social and cultural aspects, and government administration. This study aims
to analyze the effect of Inflation and Unemployment Rate, partially or simultaneously so that it
can be seen which variables have an influence on Economic Growth in Java Province for the
2017-2020 period. The research population used was 6 provinces and the research sample was
3 provinces with purposive sampling method. This research method uses quantitative methods
with testing techniques, namely multiple linear regression analysis. The analytical tool used in
this study is the IBM SPSS Version 25. The type of data in this study is secondary data derived
from reports on inflation, unemployment, and economic growth as well as regional government
financial reports. The results of this study indicate that partially the variables of Inflation and
Unemployment have a significant effect on Economic Growth in Java Province for the 2017-
2020 period.
Keywords : Inflation, Unemployment Rate, Economic Growth.

JEL Codes: E24, P24, R11
INTRODUCTION
In general, the success of a country in overcoming various problems that occur in the
country's economy can be seen from the country's macro and micro economies. One of the
important indicators in measuring and determining the level of success of the economy is
economic growth. Macroeconomics explains that the overall economic condition of a country is
related to economic growth. Economic growth shows the extent to which economic activity
generates state revenue in a certain period. Economic growth is defined as the development of
activities in the economy that causes goods and services produced in the community to increase
and the prosperity of the community to increase (Sukirno, 2011). With good economic growth,
it is expected that people's income per capita can experience a significant increase. The
economic growth of a country in a certain period does not always run well, sometimes there are
problems that must be faced by the country in restoring economic growth. One of the developing
countries, namely Indonesia, seeks to maintain and improve the stability of economic growth
and reduce the unemployment rate so that the rate of inflation can be overcome. Inflation is a
general and continuous increase in the price of goods (Sukirno, 2011). The unemployment
problem faced by Indonesia is not over. The government seeks to mitigate and encourage
business continuity. Indonesia experienced an increase in the number of unemployed when the
Covid-19 outbreak began to increase. So that many workers in Indonesia who work formally
become informal workers due to the impact of covid-19. In addition, the government created a
pre-employment card program, expanded the workforce through entrepreneurship training so
that affected workers could survive during the current pandemic situation. Investment is an
important indicator in balancing the country's economy. Factors that can affect economic growth
include inflation and unemployment.
Rosalinda, Istia 237

LITERATURE REVIEW
Inflation is the tendency of prices to rise continuously (Julius, 2011). The factors that
cause inflation include supply factors and the resulting increase in inflation prices (cost push
inflation), inflation due to cost push inflation, and inflation due to expectations (M. Natsir,
2014). Partially, inflation and unemployment have a significant effect on economic growth (Aziz
Septiatin, Mawardi, and Muhammad Ade Khairur Rizki, 2016). In determining the rate of
inflation, it is necessary to know the indicator that needs to be considered which is called the
consumer price index (CPI). So the formula used to calculate the inflation rate is (M. Natsir,
2014):
Unemployment can occur as a result of the high level of change in the workforce that is
not matched by the existence of a fairly wide job field and the absorption of labor which tends
to be small in percentage (Setiawan, 2013). The factors that influence the increase or decrease
in the rate of economic growth in a country include natural resources, organization, capital
accumulation, technological progress and the division of labor and production scale (Sukrno,
2011). Below is the formula for calculating the rate of economic growth (Central Bureau of
Statistics):
RESEARCH METHOD
The type of data used in this study is secondary data in the form of reports on inflation,
inflation rates, and economic growth for the province of Java for the 2017-2020 period which
comes from the official website of the Central Statistics Agency (www.bps.go.id). In this study,
the independent variables used included inflation (INF), and the unemployment rate (PENG),
while the dependent variable used was economic growth (GDP). The population of this study is
one of the islands scattered in Indonesia, namely Java Island which consists of 6 provinces. The
research sample used was 3 provinces on the island of Java using purposive sampling method.

Based on table 1 above, it shows that the results of Adjusted R Square on the coefficient
of determination test are 0.828 or 82.8%. These results indicate that the percentage above comes
from the influence of the independent variables, namely inflation (X1), Unemployment (X2),
and ROI (X3) on the dependent variable, namely economic growth (Y) of 82.8%. While the
remaining 17.2% is influenced by other variables that are not included and explained in the
linear regression model.
Table 1
Coefficient of Determination Test Results (R2)
Model Summaryb
1 ,935a ,875 ,828 1,74987
a. Predictors: (Constant), ROI (X3), INF (X1), PENG (X2)
b. Dependent Variable: PDB (Y)
Source: Processed secondary data and output results of SPSS Version 25 (2021)
238 Rosalinda, Istia

Table 2
T Test Results (Partial)
Coefficientsa
1 (Constant) 3,819 3,292 1,160 ,279
INF (X1) 2,026 ,836 ,409 2,422 ,042
PENG (X2) -1,658 ,393 -,868 -4,223 ,003
a. Dependent Variable: PDB (Y)

Based on table 2 above, it can be described as follows: Determining the Hypothesis:

H1: Inflation has a significant effect on economic growth
H2: Unemployment has a significant effect on economic growth
Inflation (X1) has a significant value of 0.042 <0.05. Then H1 is accepted so that partially,
inflation has a significant effect on economic growth in Java for the 2017-2020 period. This is
because the inflation rate in the province of Java during the 2017-2020 period as a whole had an
inflation rate below 10% in a year. The inflation rate is categorized as moderate inflation. A low
and stable inflation rate can add to regional and national economic growth. The effect of inflation
on economic growth in a country has an important role in regulating the amount of money in
circulation to the exchange rate of the rupiah against foreign currencies. As a result of the high
inflation rate can reduce the purchasing power of consumers.
The results of this study are in line with previous research (Aziz Septiatin, Mawardi,
Mohammad Ade Khairur Rizki, 2016) in this study the results showed that inflation had a
significant effect on economic growth in Indonesia in the 2011-2015 period.
Unemployment (X2) has a significant value of 0.003 < 0.05. Then H2 is accepted so that
partially, unemployment has a significant effect on economic growth in Java for the 2017-2020
period.
This is because this study analyzes the unemployment rate using an open unemployment
approach where when economic growth increases it can only be enjoyed by some people in an
area. This is because each period in each Java province has a moderate to high unemployment
rate. Therefore, an increase in economic growth is followed by a high unemployment rate. There
are several factors that can cause the unemployment rate to rise, including companies absorbing
more foreign workers and the resources used by large companies starting to switch to using
advanced technology that is more effective and efficient.
The results of this study are in line with previous research (Aziz Septiatin, et al., 2016) in
this study the results obtained that unemployment had a significant effect on economic growth
in Indonesia in the 2011-2015 period.
Table 3
F Test Results (Simultaneous)
ANOVAa
Sum of Mean
Model Squares df Square F Sig.
1 Regression 171,544 3 57,181 18,674 ,001b
Residual 24,496 8 3,062
Total 196,040 11
a. Dependent Variable: PDB (Y)
b. Predictors: (Constant), ROI (X3), INF (X1), PENG (X2)
Rosalinda, Istia 239

Based on table 3 above, it shows that the value of Sig. that is 0.001 < 0.05. This means
that simultaneously inflation and unemployment have a significant effect on economic growth
in Java for the 2017-2020 period.

Based on the results and analysis of the discussion above, the following conclusions can
be drawn:
1. Inflation has a significant effect on economic growth in Java for the 2017-2020 period.
2. The unemployment rate has a significant effect on economic growth in Java for the 2017-
2020 period.
Based on the conclusions that have been given, the following are suggestions that can be
put forward and provide useful benefits for readers and future researchers, namely adding or
changing the number of new variables such as poverty rates, and increasing the number of
different samples such as using Provinces in Indonesia with criteria new and increase the number
of different year periods or years that have an impact on a country's economy to be used in future
research. So that it can give the results of new influences and innovations and developments on
previous research.
REFERENCES
Aziz Septiatin, Mawardi, Muhammad Ade Khairur Rizki. 2016. Pengaruh Inflasi dan Tingkat
Pengangguran Terhadap Pertumbuhan Ekonomi di Indonesia. Jurnal Kajian Ekonomi. Vol.2,
No.1; 50-65.
Latumaerissa, Julius R. 2011. Bank dan Lembaga Keuangan Lain. Jakarta: Salemba Empat.
Natsir, Muhammad. 2014. Ekonomi Moneter dan Kebanksentralan. Jakarta: Mitra Wacana Media.
Setiawan, Dwi Endah Kusrini. 2010. Ekonometrika. Yogyakarta: Andi.
Sukirno, Sadono. 2012. Makroekonomi Teori Pengantar Edisi Ketiga. Jakarta: Rajawali Pers.
240 Rosalinda, Istia

Food Price Clustering

Emirul Bahar
Technology Industri of Universitas Gunadarma
baharemirul2020@gmail.com
Abstract
The purpose of this paper is to try to group food prices using 2 clustering algorithms, namely k-
Means and Louvain, and to compare the performance of the two algorithms. The method used is a
match between workflow and modeling simulation. The workflow modeling simulation consists of
preprocessing, setting parameters of algorithm, output analysis, and getting insight data. As a result,
each algorithm produces 3 clusters with different conditions. In the visual Silhouette of k-Means,
there is only 1 cluster that has some data in the negative range of values, namely cluster1, while in
the Silhouette of Louvain there are 2 clusters where some of the data is in the negative range, namely
clusters 1 and 2. This is reinforced by the output numerical value on 3 parameters, namely Mean,
Median, and Shapiro-Wilk p, all Silhouette Coefficients values in Louvian are negative. So it can
be concluded that the k-Means algorithm has a higher performance than Louvian in this case.
Keywords : k-means, louvian, cluster, silhouette coefficients, performance

JEL Codes : E31, O13
INTRODUCTION
In the Law of the Republic of Indonesia Number 7 of 1996, there are two important terms
regarding food, namely the food system and food security. The food system is defined as everything
related to regulation, guidance, and supervision of activities or food production and distribution of
food until it is ready for human consumption.
One of the crucial problems of the food system is the price aspect of the food itself, because
it is related to the purchasing power of the people as the main consumers of food ingredients, apart
from the food and medicine industry.
Food grouping based on price is a very important systematic effort so that it can become one
of the government's instruments in making food price policies so that it does not burden the
community or the supply chain of food procurement and distribution to consumers.
One such systematic effort is through the application of the Clustering technique which is a
part of Machine Learning technology, particularly the Unsupervised Learning method.
The purpose of this paper is to try to group food prices using 2 clustering algorithms, namely
k-Means and Louvain, and to compare the performance of the two algorithms.
LITERATURE REVIEW
Data is not always in ideal conditions for analysis, therefore special techniques are needed for
data analysis so that it becomes information and knowledge. One of the commonly used techniques
is clustering, this technique divides by partitioning a group of data into several groups. The data are
grouped into clusters based on the similarity of features, and characteristics that are different from
other clusters.
Clustering method is a data mining technique used to analyze data by means of unsupervised
learning. This technique will divide the data into sub data that have been grouped based on the
similarity of the relationship. Clustering can make data groups based on the similarity of data types
into one group and separate and separate them from data that has differences with other data groups.
Bovo et al (2013) used several algorithms from the unsupervised learning method, namely
Fold Cross Validation combined with Expectation maximization hierarchical clustering, Simple K-
means, X-means which were used for e-learning training. Maheswari et al (2014) used Greedy
clustering using belief
Bahar 241
Function for Collage website log. Furthermore, Mlynarska et al (2016) conducted research on Time
series clustering with dynamic time warping which was used as A year of Moodle active computer
science course College Dublin
In this paper we focus on the use of two types of algorithms, namely the partition algorithm
proposed by Han et al (2012) and modularity proposed by Blondel et al (2008), to classify food
prices.
Algoritma Partisi & Modularitas

K-Means Clustering is a method that belongs to the algorithm group Partitioning Clustering.
The steps of the K-Means method are as follows: (Srivastava, 2009)
1. Determine the value of k as the number of clusters you want to form.
2. Generate initial k centroids (cluster center points) randomly.
3. Calculate the distance of each data to each centroid using the correlation formula between two
objects (Euclidean Distance).
4. Group each data based on the shortest distance between the data and its centroid.
5. Determine the position of the new centroid ( kC ) by calculating the average value of the data
in the same centroid.
𝟏
𝑪𝒌 = (𝒏 ) ∑ 𝒅𝒊 ..............................................................................................(1)
𝒌
Where nk is the sum of commodity prices in cluster k and di is food commodities in cluster k.
6. Return to step 3 if the position of the new centroid with the old centroid is not the same.
Modularity is a widely used objective function to measure the power of dividing a network
into communities (Newman, 2004), and is normalized between -1 to 1. Modularity is defined as
1 𝑘1 𝑘𝑗
𝑄(𝐶) = 2𝑚 ∑𝑖∈𝑉 ∑𝑗∈𝑉 (𝐴𝑖𝑗 − ) 𝛿(𝐶𝑖 , 𝐶𝑗 ) ………………………………(2)
2𝑚
where Aij represents the elements of the adjacent matrix, ki is the total degree of node i, Ci is the
label of the community to which node i is assigned and (Ci, Cj ) is the Kronecker delta symbol.
Modularity attempts to measure how many internal edges within the community are compared to
expected, with a random network preserving node degrees.
Louvain's algorithm is a greedy modularity maximization algorithm, and is known as one of
the fastest and most efficient community detection algorithms (Han, 2012). The input is a graph G
= (V, E) where V and E are the set of nodes and edges. Community detection is done by dividing
the graph G into clusters C = {V1, V2, ... ,Vx} and each Vi a set of nodes, called community.
Algorithm Performance Comparison

Comparison of performance between the two existing algorithms, the Silhouette Coefficient
parameter is used, which is used to see the quality and strength of the cluster, how much whether an
object is placed in a cluster. This method is a combination of cohesion and separation methods. The
stages of calculating the Silhouette Coefficient are as follows:
1. Calculate the average distance of a commodity price, say i, with all other commodity prices in
one cluster (Al-Zoubi, 2008).
1
𝑎(𝑖) = |𝐴|−1 ∑ 𝑗 ∈ 𝐴, 𝑗 ≠ 𝑖 𝑑(𝑖, 𝑗) .…………………………………………(3)
where j is the price of other commodities in a cluster A and d(i,j) is the distance between the
prices of commodity i and j.
2. Calculate the average distance from the price of commodity i to all commodity prices in other
clusters, and take the smallest value (Al-Zoubi, 2008).
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1
𝑑(𝑖, 𝐶) = |𝐴| ∑ 𝑗 ∈ 𝐶 𝑑(𝑖, 𝑗)…………………………………………………(4)
where d(i,C) is the average distance of commodity i price with all objects in other cluster C,
where A C (Han et al, 2012).
𝑏(𝑖) = min 𝐶 ≠ 𝐴 𝑑(𝑖, 𝐶) …………………………………………………(5)
3. The value of the Silhouette Coefficient is: (Hanet al, 2012).

𝑏(𝑖)−𝑎(𝑖)
𝑠(𝑖) = max (𝑎(𝑖),𝑏(𝑖))…………………………………………………………(6)
The silhouette coefficient value is in the range of -1 to 1. The closer the silhouette coefficient
is to 1, the better the grouping of data in one cluster. On the other hand, if the silhouette coefficient
is close to -1, then the data grouping in one cluster is getting worse. While the value is close to zero,
it indicates that there is data that lies on the border between the 2 clusters.
RESEARCH METHOD
The clustering process requires a modeling simulation, because clustering is a part of machine
learning that demands machine learning through processing a lot of data by one or more algorithms.
The modeling simulation to be carried out needs to start with the creation of a workflow so that the
process runs smoothly and accurate and valid output is obtained, as shown in picture 1. The structure
of the worklow begins with preprocessing, assuming that the dataset has been successfully inputted.
Preprocessing consists of two main sub-processes, namely feature selection and filtering of missing
data. In this modeling simulation, there are 32 features consisting of 31 features of numeric data
type and only 1 feature that is categorical (date) so that feature selection needs to be carried out,
namely removing 1 feature so that only 31 features will be processed by the algorithm.
The data processed are the prices of 31 different types of food in Indonesia and recorded from
September 2019 to January 2020 with a total of 97 data lines, which were obtained from the website
www.kaggle.com. The data unit is Rp/kg.
Next, filtering is carried out which usually consists of 3 main processes, namely: missing
solution data, outliers data handling, and data normalization. If the missing solution is not found at
all, then the rest of the two filtering processes do not need to be done again.
The process of setting the parameters of the algorithm is very important because it will
determine the quality of the output that can be understood and measured to determine the comparison
of the performance of the two algorithms. Furthermore, it will also determine the success of getting
data insight.
After data processing by an algorithm assisted by Orange Data Mining software is completed,
3 types of analysis output are displayed, namely descriptive statistics, sillhouette coefficients, as
well as visualization which is usually in the form of graphs that are easy to understand and interesting
to look at.
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Figure 1. Workflow of Modeling Simulation
The display of the modeling simulation structure can be seen in figure 2, which is the display
format of the Orange Data Mining software. The structure refers to the workflow that has been
created previously. Each block diagram in the structure is called a widget.
Picture 2. Modeling Simulation Structure
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Based on the Descriptive Statistics Table widget, descriptive statistics are obtained for all
food commodities along with several statistical parameters, as shown in table 1. One of the most
important parameters to ensure is the missing parameter. It turns out that there is no missing data on
each of the food ingredients that are inputted and the dispersion value is relatively small, which is
below 0.2 with the highest value of around 0.17. This indicates that further data is processed by both
algorithms.
Based on the mean parameter, the highest mean food price is found in the type of Quality 1
Beef, which is Rp. 121179 per kilogram, and the lowest was in Rice Quality below II worth Rp.
10326 per kilogram.
Table 1. Food Price Descriptive Statistics

NO. KOMODITI PANGAN Mean Median Dispersion Min. Max. Missing
1 Bawang Merah 29092.8 27950 0.174174 22500 37600 0
2 Bawang Merah Ukuran Sedang 29092.8 27950 0.174174 22500 37600 0
3 Bawang Putih 32052.6 31800 0.029136 31000 35350 0
4 Bawang Putih Ukuran Sedang 32052.6 31800 0.029136 31000 35350 0
5 Beras 11750.5 11750 0.003204 11700 11850 0
6 Beras Kualitas Bawah I 10703.1 10700 0.0051 10650 10900 0
7 Beras Kualitas Bawah II 10326.3 10350 0.004617 10250 10450 0
8 Beras Kualitas Medium I 11811.9 11800 0.00277 11700 11900 0
9 Beras Kualitas Medium II 11614.4 11600 0.004004 11500 11750 0
10 Beras Kualitas Super I 13084 13100 0.002487 13000 13200 0
11 Beras Kualitas Super II 12607.2 12600 0.0018 12550 12700 0
12 Cabai Merah 41361.9 42750 0.131014 31100 53100 0
13 Cabai Merah Besar 41357.2 42000 0.114954 32000 50400 0
14 Cabai Merah Keriting 41753.1 42450 0.146256 30900 56250 0
15 Cabai Rawit 50432.5 53700 0.145064 36850 61300 0
16 Cabai Rawit Hijau 44374.7 47450 0.143656 32600 51350 0
17 Cabai Rawit Merah 57354.6 61050 0.152651 41450 71400 0
18 Daging Ayam 33418 33950 0.041339 30050 35200 0
19 Daging Ayam Ras Segar 33418 33950 0.041339 30050 35200 0
20 Daging Sapi 118196 118150 0.002052 117200 118950 0
21 Daging Sapi Kualitas 1 121719 121700 0.002095 120650 122550 0
22 Daging Sapi Kualitas 2 112859 112850 0.002769 111900 113650 0
23 Gula Pasir 13820.1 13800 0.010136 13700 14350 0
24 Gula Pasir Kualitas Premium 14843.8 14850 0.003755 14750 15000 0
25 Gula Pasir Lokal 13060.3 13050 0.017599 12850 13900 0
26 Minyak Goreng 13307.7 13200 0.014699 13100 13850 0
27 Minyak Goreng Curah 11631.4 11350 0.042111 11150 13000 0
Minyak Goreng Kemasan
28 Bermerk 1 14438.7 14400 0.006416 14300 14700 0
Minyak Goreng Kemasan
29 Bermerk 2 13627.8 13600 0.007008 13500 13900 0
30 Telur Ayam 24460.3 24250 0.043357 22900 26350 0
31 Telur Ayam Ras Segar 24460.3 24250 0.043357 22900 26350 0
Furthermore, based on the Silhouette Plot of k-Means and Silhouette Plot of Louvain widgets,
a visual output is shown as shown in pictures 3 and 4. Both of them give rise to 3 clusters with
different compositions. In Picture 3 (k-Means), cluster 1 appears, 2,3 with 54, 11, and 32 data,
respectively. Meanwhile in Picture 4 (Louvain) clusters 1,2,3 appear with 27, 33, and 37 data
respectively. It appears that the two complete clusters display as many as 97 data according to the
number of rows of data available. The striking difference actually occurs on the left side of the two
graphs, namely in picture 3 (k-Means) there is only a row of data with negative values, namely in
Bahar 245
cluster 1, while in picture 4 (Louvain) there are 2 clusters with negative values, namely clusters 1
and 2. This negative value is in accordance with the previous theory, indicating that the data
grouping in one cluster is getting worse. In other words, the Louvain algorithm based on visual
output tends to have lower performance than k-Means.
Picture 3. Silhouette of k-Means
Picture 4. Silhouette of Louvain
Based on the statistical data in table 2, it also strengthens the previous indications generated
visually. It can be seen that for 3 parameters, namely Mean, Median, and Shapiro-Wilk p, all
Silhouette Coefficient values in Louvian are negative. These numerical values confirm visually that
it is valid that the k-Means algorithm has a higher performance than Louvian in this case.
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Table 2. Descriptive Statistics of Silhouette Coefficient
CLUSTER k-MEANS LOUVAIN
N C1 32 32
C2 11 3
C3 54 54
Mean C1 0.412 0.429
C2 0.612 -0.226
C3 0.602 0.357
Median C1 0.542 0.566
C2 0.678 -0.235
C3 0.624 0.418
Standard deviation C1 0.321 0.244
C2 0.215 0.0426
C3 0.0969 0.197
Shapiro-Wilk p C1 < .001 < .001
C2 < .001 0.651
C3 < .001 < .001

Food prices were grouped using 2 clustering algorithms, namely k-Means and Louvain, as
well as the performance comparison of the two algorithms was successfully carried out through
workflow compatibility and simulation modeling, which inputted 31 numeric data features with 97
data lines available.
In the visual Silhouette of k-Means there is only 1 cluster which has some data in the negative
range, namely cluster1, while in the Silhouette of Louvain there are 2 clusters with some data in the
negative range, namely clusters 1 and 2. This is reinforced by the numerical output. on 3 parameters,
namely Mean, Median, and Shapiro-Wilk p, all Silhouette Coefficient values in Louvian are
negative. So it can be concluded that the k-Means algorithm has a higher performance than Louvian
in this case.
Furthermore, for further research, various scenarios can be carried out both in terms of
algorithms and data types. Algorithms can be added to more than 2 or one of the existing algorithms,
replaced with other algorithms that are still included in the unsupervised learning method.
Meanwhile, on the data side, it is better to mix numeric and categorical data, which is still possible
to be processed by several choices of clustering algorithms.
REFERENCES
Al-Zoubi, Moh’d Belal, Mohammad al Rawi, 2008, An Efficient Approach for Computing
Silhouette Coefficients, Journal of Computer Science.
Blondel, V. D., Guillaume, J.-L., Lambiotte, R., & Lefebvre, E. (2008). Fast unfolding of
communities in large networks. Journal of Statistikal Mechanics: Theory and Experiment,
10008(10), 6.
Bovo A, Sanchez S, Heguy O, Duthen Y. Clustering moodle data as a tool for profiling students.
2013 2nd Int Conf E-Learning E-Technologies Educ ICEEE 2013. 2013;4(3): 121–6.
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Han, Jiawei., Micheline Kamber, Jian Pei, 2012, Data Mining Concepts and Techniques, USA :
Morgan Kaufmann.
Maheswari BU, Sumathi P. A new clustering and preprocessing for web log mining. Proc - 2014
World Congr Comput Commun Technol WCCCT 2014. 2014;25–9.
Młynarska E, Greene D, Cunningham P. Time series clustering of Moodle activity data. CEUR
Workshop Proc. 2016;1751:104–15.
Newman, M. E. J., & Girvan, M. (2004). Finding and evaluating community structure in networks,
Phys. Rev. E., 69, 026113.
Srivastava, Ashok., Mehran Sahami, 2009, Text Mining Classification, Clustering, and
Applications, USA : Taylor and Francis Group, LLC.
248 Bahar
The Relationship Between Coworker Social Support And Turnover

Intention On Millennial Employees
1
Khairunnisa Hutagalung, 2Siti Qori Almira, 3Era Ayu Amelia, 4E. Susy Suhendra
1,2,3
Psychology Faculty of Universitas Gunadarma, 4 Economics Faculty of Gunadarma University
Margonda Raya street no.100, Depok 16424, West Java
1
khairunnisahutagalung@gmail.com, 2stqori.almira@gmail.com,
3
eraayuamelia12345@gmail.com, 4susys@staff.gunadarma.ac.id
Abstract
The world of work is currently dominated by the millennial generation who are often dubbed the
“job hopper” because they tend to have the desire to change places of work that called turnover
intention to fulfill career development and gain a lot of experience. To reduce turnover intention is
through coworkers social support. Respondents in this study were 85 employees of the millennial
generation aged 21-30 year-old. The sampling technique used purposive sampling. Turnover
intention was measured using TIS-14 by Jacobs and Roodt (2007); coworker social support was
measured based on the type of social support developed by Sarafino and Smith (2011). The results
showed that coworker social support had a very significant negative relationship with turnover
intention (p<0.01).
Keywords : Coworker Social Support, Millennial Employee, Turnover Intention.

JEL Codes : J54, P20, Z13
INTRODUCTION
On average, employees in today's companies are filled with young people who are starting to
replace the older generation because they have entered retirement (Papavasileiou & Lyons, 2015).
Meanwhile, the phenomenon that occurs in companies today is precisely the tendency for employees
to leave their jobs in search of better alternative jobs. This can cause internal disturbances to the
company such as large costs if it has to go through the process of recruiting, selecting and training
new employees (Clercq et al., 2020). As for the behavior related to the desire of employees to look
for jobs that they think are better in career development, most of them are carried out by the younger
generation, who are now known as the millennial generation (Soedira, Husniati, & Rialmi, 2021;
Wolor et al., 2020).
The millennial generation is a term for those born between 1980 and 2000. The most prominent
characteristics of this generation are having a good work-life balance, being ambitious, competent in
the use of technology, being creative, preferring teamwork, and focusing on what they do. worked
on (Wolor et al., 2020; Priherdityo, 2017). However, the millennial generation is often said to be a
"job hopper" in a career. They like to change jobs for less than two years if they do not feel
comfortable, both in terms of the work environment, the facilities provided, and the salary
(Priherdityo, 2016; Apriyono, 2017). They are also considered to have no loyalty to the company,
are considered to be more arrogant, impatient, naive, have weak communicative abilities so that they
are more difficult to communicate with, and have low fighting power. This characteristic is inversely
proportional to the characteristics of the previous generation (Wolor et al., 2020; Yap & Badri, 2020;
Priherdityo, 2017).
Accounting firm Deloitte conducted a survey in London which showed that 43% of 10,000
millennials plan to leave their jobs within two years (Imanuel, 2021). The majority of the millennial
generation will always be open to every new career opportunity with a plan to stay in the workplace
for only one year (Yuswohady, 2019). This is reinforced by the results of a study by Gallup (2016),
which states that 21% of millennials admit to changing workplaces in less than one year. Based on
this phenomenon, it is known that the millennial generation is prone to turnover intention.
Turnover intention according to Meyer (in Tedja & Sijabat, 2021) is a deliberate and conscious
desire to leave the organization in search of job opportunities in other organizations. According to
Kartika, turnover intention is mostly found in new employees with new tenures and because in the
Hutagalung, Almira, Amelia, Suhendra 249

first years of work, employees are still difficult to adjust to the existing work environment and
conditions (Dianriasning, 2018). In addition, the low fighting power of employees also contributes
to increasing turnover intention, so that employees are considered easier to give up on tasks
(Priherdityo, 2017).
One way to increase employee retention to reduce turnover intention is through strengthening
ties among coworkers. Steps that can be taken are providing coworker support by paying attention
to both emotional support and task support (Self, Gordon, & Gosh, 2020). Coworker support is
defined by Kmieciak (2021) as individuals' beliefs about how their coworkers can provide benefits
in the form of emotional or instrumental assistance. While social support it self refers to the process
by which social relationships can promote health and well-being (Cohen, 2000). Having coworker
support in the workplace certainly has a beneficial impact on employee behavior. For example, such
as withholding employee behavior and support in the form of sharing knowledge (Kmieciak, 2021).
The relationship between coworker social support and turnover intention can be seen from
several previous studies. One of them is a study conducted by Lobburi, et al (2012), the results of
which are known that it is not only workplace social support such as supervisors and coworker
support that affect turnover intention, but non-workplace social support such as family and friends
also play a role in preventing individuals from intending to out of their jobs. Furthermore, a meta-
analysis conducted by Tews, Michel, & Ellingson (2014) found that coworker support contributed
significantly to turnover intention. The study also explained that emotional support has a negative
relationship with turnover intention, while instrumental support has a positive relationship with
turnover intention. In addition, Clercq et al. (2020), from the results of his research it was found that
coworker support has a relationship with turnover intention. This shows that the higher the coworker
support obtained by the employee, the lower the employee's turnover intention, and vice versa.
Based on the explanation described above, it is known that the employee's turnover intention
can affect the company's productivity. In addition, previous research rarely explains the correlation
between coworker support and turnover intention in millennial generation employees. Therefore, this
research is important to be investigated in order to enrich knowledge with the subject of the millennial
generation as the differentiator.
LITERATURE REVIEW
Turnover Intention
Sager et al. (1998) defines turnover intention as a mental decision intervening between an
individual’s attitude regarding a job and the stay or leave decision and that can be regarded as an
immediate antecedent to stay, or leave. There are three turnover cognitions, the first is thinking of
quitting, an employee considering leaving the organization. Next is the intention to seek, an employee
decides to look for work outside the organization. And the last cognition is intention to quit, the
employee decides to leave the organization at some point in the future. Turnover intention is a
measurement of employees plan to leave their positions/organization or organization’s plans to
remove employees from their positions and replace them (Mbah et al., 2018).
While reviewing the socio-psychological perspectives of employees intention to stay or quit
an organisation, a substantial body of literature indicated that the intention to quit an organisation
may be a significant response to stress factors arising out of incongruence between an individual’s
psychological perception about his/her job environment on the one hand and his/her needs and
aspirations on the other, mediated by an individual’s attitudinal facets such as level of involvement
and satisfaction with his/her job responsibilities (Biswas, 2010; Mobley 1982).
According to Jacobs and Roodt (2007), there are three aspects of employee turnover intention,
namely: (1) Personal aspect, is a related aspect of each individual such as the individual's special
interest in work; (2) Organization, the organizational aspect is the most influential aspect in the
turnover intention of employees. Organizational aspects include salaries, organizational systems,
organizational culture, and the situation in the organization; (3) Characteristics of work, this aspect
is relates to personal standards, values, expectations regarding the type of work that employees do.
Coworker Social Support

Sarafino and Smith (2011) defines that social support refers to actual actions performed by
others that is call received support and also refers to someone sense or perception that comfort,
250 Hutagalung, Almira, Amelia, Suhendra

caring, and help is available if they needed that is call perceived support. The APA Dictionary of
Psychology (2015) defines that social support is to provide help and comfort to others, usually to
help deal with biological, psychological, and social stressors, furthermore support may result from
any interpersonal relationship on a person’s social network, one of them is from colleagues. Noller,
Feeney and Paterson (2007) affirm that colleagues at work can provide social support. Cambridge
Business English Dictionary (2021) defined coworkers as a person who you work with, particularly
a person with a similar job or level of responsibility. So, coworkers social support is assistance from
coworkers that is received and felt by individuals so that they feel comfort, care, and feel helped
when they needed.
Types of Social Support (Sarafino & Smith, 2011) including the following: (1) Emotional or
esteem support conveys empathy, care, concern, positive regard, and encouragement to the person;
(2) Tangible or instrumental support includes direct assistance. For example, when a person pays or
lends money or helps with chores during stress; (3) Information support includes advice,
direction/instructions, suggestions, or feedback about a person's behavior; (4) Companionship
support refers to the ability of others to spend time with them, creating the feeling of belonging to a
group of people who share interests and social activities.
Relationship Between Coworker Social Support and Turnover Intention

Workers around the world believe that there are many companies out there that can provide
more benefits, such as job security, career development, experience, or anything else that allows
them to avoid their current job. So it is not uncommon to find employees who leave the company
and look for new opportunities elsewhere (Lobburi et al., 2012). The cause of an employee resigning
from a company is certainly supported by various reasons as previously mentioned, and one of them
is in the form of good or bad coworker support felt by employees (Ngestreini & Budiono, 2021). The
existence of good coworker support can allow employees to feel comfortable (Clercq et al., 2020).
Sometimes, employees feel they lack the competence to be able to do a good and appropriate job. So
they think that it seems better to leave the job and leave the company voluntarily (Kmieciak, 2021).
Having coworker support, either by providing comfort or providing guidance, can raise self-
esteem and trigger positive feelings for employees to be more energetic in overcoming challenges at
work (Clercq et al., 2020; Singh, in Kmieciak, 2021) In general, perceived workplace social support
from supervisors and coworkers can create a pleasant work atmosphere, so that it can reduce the
intention to move and can even lead to the desire to stay longer. As a result, employees will certainly
feel more satisfied with their work (Lobburi et al., 2012; Clercq et al., 2020).
Here are some studies that link coworker support with turnover intention. In their research,
Ducharme, Knudsen, & Roman (2008) found that coworker support has a significantly inverse
relationship with exhaustion and turnover intention. Either directly or indirectly through exhaustion,
coworker support is able to prevent employees from leaving work and looking for work elsewhere.
In line with this study, Self, Gordon, & Gosh (2020) also stated that there was a negative relationship
between coworker support and turnover intention. Research conducted by Kmieciak (2020) also
shows that coworker support has a negative relationship with voluntary turnover intention of
employees. Meanwhile, Ngestreini & Budiono, (2021) state that coworker support has a significant
negative effect on employee turnover intentions. If the higher the coworker support felt by the
employee, the lower the turnover intention will be. Employees who feel the support of their
coworkers are good, can increase their retention and motivation at work.
Based on the description above, the researcher concludes that the provisional assumptions in
this study are:
H1: There is a relationship between coworker social support and turnover intention in millennial
generation employee
RESEARCH METHOD
Data collection Procedure
The respondents are millennial xxx employees aged 21-41 years. The data collection process
was carried out using an online system (google form) which was carried out for two days, from
November 30, 2021 to December 1, 2021. The scale used in this research consisted of the
demographics of the participants, Turnover Intention Scale, and Coworkers Social Support Scale.

Participants were voluntary and anonymous but knew the reasons for the research attached to each
questionnaire. So that participants believe that the responses will be used. for research purposes only.
Sample
This study uses a purposive sampling technique, which is a form of non-probability sampling
in which the researcher determines the individuals to be included in the research sample based on
various criteria that may include specific knowledge of the research problem, or capacity and
willingness to participate in research (Jupp, 2006). In total, there were 87 participants, however, the
researcher had to abort 2 participants because they did not meet the criteria, so the total participants
in this study were 85 millennials aged 21-30 years.
Measurement
Turnover Intention
This study uses the Turnover Intention Scale 14 (TIS 14) which was adapted from Jacobs and
Roodt (2007). Consists of 14 items with favorable and unfavorable items and uses a Likert scale with
a range of 1 (strongly disagree) - 4 (strongly agree). Developed by Jacobs and Roodt (2007) with
three main aspects, namely personal, organizational, and characteristic aspects. Cronbach's alpha for
this scale is 0.913.
Coworker Social Support

This study uses the Coworkers Social Support Scale from research conducted by Hanifah
(2018). Consists of 24 items with favorable and unfavorable items and uses a Likert scale with a
range of 1 (strongly disagree) - 4 (strongly agree). The aspect of social support developed by Sarafino
and Smith (2011) with four types of support, namely, emotional or esteem support, tangible or
instrumental support, informational support, and companionship support. The Cronbach’s alpha for
this scale was 0,94.
Data Analysis Technique

The IBM Statistical Package for the Social Sciences version 23 (IBM SPSS 23) was used to
analyse the data in this research. The hypothesis test to see the relationship between coworker social
support and turnover intention in millennial generation employees using the bivariate correlation
analysis technique with the Product Moment Pearson method.

Demographic Data
The calculation results of Mean Empiric (ME), Mean Hipotetic (MH) and Standard Deviation
Hipotetic (SDH).
1. Gender
Based on the results of the empirical mean calculation of turnover intention, it is known
that both men (19,67) and women (19,57) have the same level of turnover intention, i.e. in the
low category. According to Kismono, Rosari and Suprihanto (2013) this is due to a strong
intention to work. In addition, it is possible that both men and women set aside gender roles in
which men are said to be more responsible for generating income than women. The relatively
similar knowledge related to working conditions and self-readiness to face various working
conditions can be one of the factors causing low turnover intention.
Coworker support for women and men are both in the high category range with an
empirical mean of 78,95 for women and 82,29 for men.
2. Age
Based on the results of the empirical mean calculation of turnover intention, it is known
that the respondens with in the range age 21-25 year-old has a mean value 19,28 in the low
category. Meanwhile, respondents with an age range of 26-30 year-old have a mean value
of 21,69 in the medium category.
Coworker support for respondens with 21-25 year-old and 26-30 year-old are both in the
high category range with an empirical mean of 80,00 for 21-25 year-old and 78,54 for 6-30 year-
old.

3. Period of Work
Based on the results of the calculation of the empirical mean in the category period of
work, it can be seen that the turnover intention rate in the millennial generation is low to
moderate. Turnover intention in respondents with a working period of less than 1 year has a
mean value of 18,50 in the low category. Meanwhile, 1-3 years of service has a mean value of
19,81 in the low category. Furthermore, the highest turnover intention is seen in employees
who have worked for more than three years (SD. 21,78). This is a different finding from
previous research conducted by Bal, Cooman, and Mol (2011), where it is said that the level of
turnover intention will be higher if the employee's period of work is still relatively short. The
researcher concludes, the difference in findings is because this study uses the millennial
generation as research participants, where one of the characteristics of the millennial generation
according to Gallup (2016) is making work the meaning of life.
Meanwhile, for coworkers' social support, all participants tend to have high coworkers'
social support. Coworkers with 1 year of service less than 1 year have a mean value of 80,83
in the high category. Meanwhile, coworker support with 1-3 years of service has a mean value
of 78,50 in the high category. Meanwhile, coworkers support with a working period of more
than 3 years has a mean value of 84,33 in the very high category. This can be interpreted that
the period of work does not guarantee that employees will get better social support from their
coworkers.
Reliability
After eliminating 6 items from TIS-14 with poor DDI values (< 0,25), Croncach's Alpha value
obtained was 0,830 (p > 0,7), which means that the turnover intention scale used in this study is
reliable. For the coworker social support scale, the Croncach’s Alpha value obtained is 0,920 (p >
0,7), which means that the coworkers social support scale used in this study is reliable.
Assumption Test
Normality
Turnover intention data is not normally distributed with a significance value of 0,000.
Coworker social support data is normally distributed with a significance value of 0,063.
Linearity
Based on the results of the linearity test, a significance value of 0,00 (p < 0,05) was obtained.
With these results, it can be concluded that the variables of coworker social support and turnover
intention are linear.
Hypothetical Test
Based on the correlation results, we can conclude that the hypothesis proposed in this research
(H1) is accepted with a value of sig.0,00 (p < 0,05) that there is a very significant relationship
between coworker social support and turnover intention. It is also known that the direction of the
relationship between two variables is negative (-0,476). So there is a very significant negative
relationship between coworker social support and turnover intention for millennial generation
employees.
Table 1. Correlation
CSS TI
CSS Pearson Correlation 1 -.476**
Sig. (2-tailed) .000
N 85 85
TI Pearson Correlation -.476** 1
Sig. (2-tailed) .000
N 85 85
**. Correlation is significant at the 0.01 level (2-tailed).

In this research, we want to see the relationship between coworker social support and turnover
intention in millennial employees. Turnover intention is an individual's intention to change positions
or leave his job on a voluntary basis. Coworkers social support is assistance from coworkers that is
received and felt by individuals so that they feel comfort, care, and feel helped when they need it.
Turnover intention can affect company’s productivity, therefore turnover should be reduced or
eliminated, that is through the coworkers' social support. This research was found that between
coworker social support and turnover intention had a very significant relationship in a negative
direction (sig. 0,000; -0.476), means that the higher coworker social support the lower turnover
intention, vice versa.
From this study, it is also known that the turnover intention of millennial employees is in the
very high category or level, this is related to millennials who really like to change jobs for less than
two years if they do not feel comfortable, both in terms of the work environment, the facilities
provided, and the salary (Priherdityo, 2016; Apriyono, 2017) and it’s also supported by the results
of a study by Gallup (2016) that 21% of millennials admit to changing workplaces in less than one
year, so this is what can make the level of turnover intention in millennial employees are very high.
So it takes coworker social support to reduce turnover intention in order not to interfere company
productivity.

Based on data analysis conducted by Pearson correlation test, it can be concluded that the
hypothesis is accepted. The results showed that there was a very significant negative relationship
between coworker social support and turnover intention in millennial generation employees, with a
significance value of 0.000 (p < 0.01). The results also show that the higher level of coworker social
support received by employees, the lower level of employee turnover intention, and vice versa.
Suggestions for further researchers are expected to be able to deepen research by involving certain
fields of work.
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Impact Of Tax Aggressiveness, Incentive Tunneling, And Bonus

Mechanism On Transfer Pricing Decisions On Manufacturing
Companies Listed On The Indonesia Stock Exchange (Study Of The
Covid-19 Pandemic)
1
Febriliani Rahayu, 2Dharma Tintri Ediraras, 3Istichanah
Department of Accounting, Economics Faculty of Gunadarma University
1
febrilianirahayu02@gmail.com, 2dharmate@staff.gunadarma.ac.id,
3
istichanah@staff.gunadarma.ac.id
Abstract
Transfer Pricing or transfer pricing was originally a price attached to valuing a product to be
exchanged between members of the company in the same group to maximize the profits they earned,
but transactions between members of the company can result in setting an unreasonable selling price
because the forces in the market are not happen properly.The emergence of the Covid-19 pandemic
outbreak not only had an impact on public health, but also forced the cessation of economic activity
in almost all countries. The Covid-19 pandemic is the greatest danger to the world economy, causing
a financial crisis. On a business scale, this crisis is predicted to have a negative impact on the
company's operating income, which in turn will also affect the transfer pricing analysis. This study
aims to examine and analyze the impact of tax aggressiveness, tunneling incentives, and bonus
mechanisms on transfer pricing decisions in manufacturing companies listed on the Indonesia Stock
Exchange (study during the Covid-19 pandemic). The population in this study were all
manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the Covid-19
pandemic in 2019 and 2020, amounting to 186 companies. The sample in this study amounted to 84
companies that have been determined using purposive sampling method. The type of data in this
study is secondary data which is the company's financial statements. The analytical technique in this
research is logistic regression analysis. The results of this study indicate that tax aggressiveness and
tunneling incentives have an impact on transfer pricing decisions, while the bonus mechanism has
no impact on transfer pricing decisions. Meanwhile, based on the results of the simultaneous test,
this study shows that tax aggressiveness, tunneling incentives, and bonus mechanisms
simultaneously have an impact on transfer pricing decisions.
Keywords : Tax, Tunneling Incentive, Bonus Mechanism, Transfer Pricing

JEL Codes: B21, H23, H25
INTRODUCTION
The rapidly growing economic sector, which takes place without knowing national
boundaries, occurs due to the influence of globalization. As a result, global economic growth is
characterized by large companies doing business between countries. Many national companies are
now turning into multinational companies which are characterized by companies establishing
subsidiaries and branch companies in various countries (Refgia et al., 2017). Multinational
companies apply transfer prices to maximize global revenue by minimizing taxes to affiliates that
have low or zero taxes (Amidu et al., 2019).
The transfer pricing case occurred in PT Adaro Energy (ADRO), namely PT Adaro was
indicated to carry out transfer pricing with its subsidiary in Singapore, namely Coaltride Service
International Pte. Ltd in 2009-2017. In this case, PT Adaro sells coal to an affiliated company. The
Directorate General of Taxes (DGT) found evidence that products transferred to Singapore were
sold at prices below the market price of US$125 million or less than they should be in Indonesia.
Then by Coaltride Service International Pte Ltd, it was resold to buyers at market prices (Ivander,
2019).
There are several reasons or factors for multinational companies to do transfer pricing. One of
256 Rahayu, Ediraras, Istichanah

them is tax reasons. The purpose of transfer pricing is to outsmart the company's profits so that the
taxes paid and dividends distributed are low. This proves that tax motivation has a high role in
influencing the company's decision to transfer pricing (Noviastika et al., 2016).
Another factor that can influence a company's decision to transfer pricing is tunneling
incentive. Tunneling Incentive is the behavior of management or majority shareholders who transfer
company assets and profits for their own benefit, but the costs are borne by minority shareholders.
Examples of tunneling incentives are not distributing dividends, selling assets or securities from
companies they control to other companies they own at prices below market prices, and choosing
family members who do not meet the qualifications to occupy important positions in the company
(Saifudin & Putri, 2018).
In addition to taxes and tunneling incentives, another factor that can influence a company's
decision to transfer pricing is the bonus mechanism. The bonus mechanism is one of the strategies
or motives for calculation in accounting whose purpose is to maximize the receipt of compensation
by the board of directors or management by increasing the company's overall profit (Santosa &
Suzan, 2018).
The Organization for Economic Co-operation and Development (OECD) recommends that
each country complement each country's domestic laws with rules regarding transfer pricing. The
OECD specifically publishes the OECD Transfer Pricing Guidelines for Multinational Enterprises
and Tax Administrations, often referred to as the OECD Guidelines. The OECD Guidelines are a
guide for multinational companies and tax authorities in solving transfer pricing problems.
At the end of 2019, the whole country was shocked by the emergence of a new virus, namely
Covid-19. The emergence of this virus came from a group of cases of human pneumonia in Wuhan
City, Hubei Province, China. The virus then spread to all countries, one of which was Indonesia. On
March 11, 2020, the World Health Organization (WHO) declared Covid-19 a Global Pandemic. The
WHO decision was issued when the corona virus has spread in 118 countries and infected more than
121,000 people in Asia, Europe, the Middle East and America (www.kompas.com, 2021).
The Covid-19 pandemic not only has an impact on public health, but has also forced the
cessation of economic activity in almost all countries. The Organization for Economic Co-operation
and Development (OECD) has also warned that the Covid-19 pandemic is the greatest danger to the
world economy, causing a financial crisis. On a business scale, this crisis is predicted to have a
negative impact on the operating income of multinational companies, which in turn will also affect
the transfer pricing analysis of affiliated transactions
THEORETICAL FRAMEWORK
Agency Theory
According to Anthony et al. in (Tunjung Tri Rahayu, Endang Masitoh, 2020) Agency theory is a
contractual relationship between the principal (shareholder) and agent (company management) with
the assumption that each individual is motivated by the satisfaction of his or her own interests,
resulting in a conflict of interest from the principal (shareholder) with agent (company management).
Positive Accounting Theory

Positive Accounting Theory according to Watts & Zimmerman in (Prananda & Triyanto, 2020) is an
accounting theory that has the aim to explain (to explain) and to predict (to predict) accounting
practices that are carried out. The purpose of explaining here is to prepare reasons for the accounting
practices that are carried out to be observed, then the purpose of predicting is that accounting theory
can predict phenomena that cannot be observed before (Wardiyah, 2016).
Tax
According to Law Number 28 of 2007 Article 1 Paragraph (1) concerning General Provisions and
Tax Procedures (UU KUP), what is meant by Tax is a mandatory contribution to the state owed by
an individual or entity that is coercive under the law, by not receiving direct compensation and being
used for the purposes of the state for the greatest prosperity of the people.
Tax Aggressiveness
Rahayu, Ediraras, Istichanah 257

According to Danny and Darussalam in (Midiastuty et al., 2016) there is no clear definition of tax
planning, tax avoidance and tax aggressiveness. According to Frank in (Rohmansyah & Fitriana,
2020) aggressive tax action is an action that aims to manipulate the company's taxable profit through
tax planning, either using legal (tax avoidance) or illegal (tax evasion) methods.
Tunneling Incentive
According to Aharony et al. in (Ayu et al., 2017) Tunneling Incentive is an act of transferring the
company's assets and profits for the benefit of the controlling shareholder who controls the minority
shareholder. According to Hartati in (Tania et al., 2019) Tunneling Incentive is a behavior of the
majority shareholder who transfers the company's assets and profits for their own benefit, but
minority shareholders share the costs they incur.
Bonus Mechanism
According to Hartati in (Santosa & Suzan, 2018) The Bonus Mechanism is one of the strategies or
calculation motives in accounting whose purpose is to maximize the receipt of compensation by the
board of directors or management by increasing the company's overall profit.
Transfer Pricing
According to (Pohan, 2018) Transfer Pricing is a calculated price for the delivery of goods,
services, or other intangible assets from one company to another company that has a special
relationship, in conditions based on the principle of fair market prices.
Covid-19 Pandemic
The Covid-19 pandemic is an event that spreads the 2019 coronavirus disease throughout the
world. This disease is caused by a new type of coronavirus called SARS-CoV-2. On December 1,
2019, Covid-19 was first discovered in Wuhan City, Hubei Province, China. Starting from the case
of pneumonia in Wuhan, China.
On March 11, 2020, the World Health Organization (WHO) declared Covid-19 a Global
Pandemic. The WHO decision was issued when the corona virus has spread in 118 countries and
infected more than 121,000 people in Asia, Europe, the Middle East and America
(www.kompas.com, 2021).
Research Framework
The following is a research framework model that describes the impact of the independent variable
on the dependent variable.
Figure 1. Research Framework Model
Hypothesis
The hypotheses to be tested are:
H1 : Tax aggressiveness has an impact on transfer pricing decisions
H2 : Tunneling Incentive has an impact on transfer pricing decisions
H3 : Bonus mechanism has an impact on transfer pricing decisions
H4 : Tax Aggressiveness, Tunneling Incentive, and Bonus Mechanism simultaneously have an
impact on transfer pricing decisions

RESEARCH METHODS
Object of Research
The object in this study is a manufacturing company listed on the Indonesia Stock Exchange
(IDX) during the Covid-19 pandemic in 2019 and 2020 by publishing the company's financial
statements.
Population and Research Sample

The population in this study were all manufacturing companies listed on the Indonesia Stock
Exchange (IDX) during the Covid-19 pandemic in 2019 and 2020. Manufacturing companies listed
on the Indonesia Stock Exchange (IDX) during the Covid-19 pandemic in 2019 and In 2020 there
were 186 companies and the companies that were used as samples in this study were 84 companies.
The sample in this study is a company that has met certain criteria. This research uses purposive
sampling method. Purposive sampling method is a sampling method with certain considerations. The
sample selected in this study is a sample with certain criteria as a basis for consideration.
Research Variable
1. Independent Variable
• Tax
Tax variables in this study are proxied by using the Effective Tax Rate (ETR). The Effective
Tax Rate (ETR) is calculated by comparing the tax burden to pre-tax profit (Agustina, 2019).
The Effective Tax Rate (ETR) is formulated as follows:
Tax Expense
Effective Tax Rate (ETR) =
Pre-Tax Profit
• Tunneling Incentive
The Tunneling Incentive variable in this study is proxied by the percentage of foreign share
ownership equal to or more than 20% (twenty percent). The criteria for a concentrated
ownership structure are based on the Capital Market Law no. IX.H. 1, which explains that the
controlling shareholder is a party who owns 20% or more equity shares or securities.
Statement of Financial Accounting Standards (PSAK) No. 15 also states that the shareholder
has a significant influence with a percentage of 20% or more. Foreign Share Ownership can be
measured by:
Highest Proportion of Foreign Shares Ownership
Foreign Share Ownerships =
Total Outstanding Shares
• Bonus Mechanism
The Bonus Mechanism variable in this study is proxied by using the Net Profit Trend Index
(ITRENDLB). Net Profit Trend Index (ITRENDLB) is calculated by comparing net income
in year t to net income in year t-1 (Refgia et al., 2017). The Net Profit Trend Index
(ITRENDLB) is formulated as follows:
Net Income in Year t
Net Profit Trend Index =
Net Income in Year t-1
2. Dependent Variable
• Transfer Pricing
Transfer Pricing is measured using a nominal scale with a dichotomous approach that refers
to previous research conducted by (Santosa & Suzan, 2018). Dichotomous approach, namely
by looking at sales transactions to parties who have a special relationship. The dichotomous
approach is carried out by using a dummy variable, which means that the value of the variable
is limited to 0 and 1 as follows:
Value 0 : The company does not sell to related parties.
Value 1 : The company sells to related parties.

Analysis Techniques Descriptive Statistics

According to (Sugiyono, 2019) Descriptive Statistics are statistics used to analyze data by
describing or describing the data that has been collected as it is without intending to make conclusions
that apply to the public or generalizations.
Descriptive Statistics is a descriptive technique that provides an overview or description of a
data that can be seen from the number of samples, minimum value, maximum value, average value
(mean), and standard deviation.
Logistics Regression Analysis Regression Model Feasibility Test

The Regression Model Feasibility Test was conducted to measure the level of conformity
between the regression model used in the study and the empirical data. The testing technique known
as the Hosmer and Lemeshow Test uses the Chi-Square Distribution Test as its parameter. The
significance probability results obtained will be compared with a significance level (α) of 5%. The
hypothesis to assess the feasibility of the regression model is as follows:
H0: There is no difference between the model and the data
Ha: There is a difference between the model and the data
The basis for the decision making of Hosmer and Lemeshow Test is as follows:
a. If probability > 0,05 (H0 is accepted)
b. If probability < 0,05 (H0 is rejected)
Overall Model Feasibility Test

The Feasibility Test of the Overall Model is used to determine whether the model fits the data,
both before and after the independent variables are entered into the model. There are 2 values,
namely the value of -2 Log Likelihood (-2LL) at the beginning (Block Number = 0) and the value
of -2 Log Likelihood (- 2LL) at the end (Block Number = 1). If there is a decrease in the value of
Log Likelihood (-2LL), then the results show that the regression model is good or in other words the
hypothesized model fits the data.

The Coefficient of Determination Test is a test carried out to find out how much the
independent variable is able to explain and have an impact on the dependent variable. The magnitude
of the coefficient of determination in the logistic regression model is indicated by the value of
Nagelkerke R Square. The Nagelkerke R Square value can be interpreted as the R Square value in
multiple regression.
If the Nagelkerke R Square has a small value, then the small value means that the ability of
the independent variables in explaining the variation of the dependent variable has limitations. If
the value of Nagelkerke R Square has a value close to one, then the value close to one means that the
independent variables in explaining the variation of the dependent variable have and provide almost
all the information needed to predict the variation of the dependent variable.
Model Classification Analysis Test

Classification Analysis Test Model is used to predict the possibility of companies in making
transfer pricing decisions from the existence of sales to related parties. To find out the Model
Classification Analysis and the results of the correct and incorrect estimation values, it can be seen
in the Classification Table.
The column table explains the two predictive values of the dependent variable, namely to
transfer pricing or not to transfer pricing. Meanwhile, the row table explains the actual observed value
of the value of the dependent variable, namely to transfer pricing or not to transfer pricing.
Logistics Regression Analysis Test

Logistics Regression Analysis is an analytical tool used to measure how far the impact of
independent variables (taxes, tunneling incentives, and bonus mechanisms) on the dependent variable
(transfer pricing).

The logistic regression model used to test the research hypothesis is as follows:
Description:
𝑝
𝐿𝑛 (1−𝑝) = Transfer Pricing
Value 0 : The company does not sell to related parties.
Value 1 : The company sells to related parties.
α= Constant
β1 – β = Regression Coefficient
ETR = Tax
TI = Tunneling Incentive
ITRENDLB = Bonus Mechanism
ℇ = Error Coefficient
Hypothesis Testing Partial Test

Partial test was conducted to find out whether all independent variables (tax, tunneling
incentive, and bonus mechanism) which were included in the model had a partial impact
(respectively) on the dependent variable (transfer pricing). The significance level used in this test is
5%. The basis for making partial test decisions are as follows:
a. If the significance value (Sig.)
< 0,05 then H0 is rejected or Ha is accepted. So that the independent variable partially has an
impact on the dependent variable.
b. If the significance value (Sig.)
> 0,05 then H0 is accepted or Ha is rejected. So that the independent variable partially has no
impact on the dependent variable.
Simultaneous Test
Simultaneous test was conducted to determine whether all independent variables (taxes,
tunneling incentives, and bonus mechanisms) which were included in the model had a simultaneous
(together) impact on the dependent variable (transfer pricing). The significance level used in this test
is 5%. The basis for simultaneous test decision making is as follows:
a. If the significance value (Sig.)
< 0,05 then H0 is rejected or Ha is accepted. So that the independent variables simultaneously
have an impact on the dependent variable.
b. If the significance value (Sig.)
> 0,05 then H0 is accepted or Ha is rejected. So that the independent variables simultaneously
have no impact on the dependent variable.

The results of the descriptive statistics in this study can be seen in Table 1 below.
Table 1
Descriptive Statistics Test Results
Based on Table 1 above, it is known that the results of descriptive statistical tests carried out
on 84 manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the Covid-19

pandemic in 2019 and 2020, the total data (N) was 168 data. The data results include the minimum
value, maximum value, average value (mean), and standard deviation of each independent variable/
independent variable, namely taxes, tunneling incentives, and bonus mechanisms and the dependent
variable/bound variable, namely transfer pricing.
Test Data
Regression Model Feasibility Test
The results of the Feasibility Test of the Regression Model in this study can be seen in Table
2 below.
Table 2
Regression Model Feasibility Test Results
Based on Table 2 above, the Chi-square value is 4.404 with a probability number of 0.819
which is greater than 0.05 (probability > 0.05), then H0 is accepted. It can be concluded that
this regression model is suitable for further analysis, because the results obtained are that there is no
difference between the model and the data or it can be said that the model is acceptable because it
fits the observational data.
Overall Model Feasibility Test

The results of the overall model feasibility test in this study can be seen in Table 3 below.
Table 3
Overall Model Feasibility Test Results
It can be seen in Table 3 above, namely the table of the results of the overall model feasibility
test at the beginning (block number = 0). Then what will be compared with the results of the overall
feasibility test of the final model (block number =
1) in Table 4 below.
Table 4
Overall Model Feasibility Test Results
Based on the two tables above, the next step will be to compare the results of the overall model
feasibility test at the beginning (block number = 0) with the results of the overall model feasibility
test at the end (block number = 1), the results of which will be seen in Table 5 below.

Table 5
Comparison of Initial -2LL Value With Final -2LL
-2 Log Likelihood (-2LogL) at start 209,467
-2 Log Likelihood (-2LogL) at end 205,086
Based on Table 5 above, it can be seen that the comparison results between the value of -2 Log
Likelihood (-2LL) at the beginning (Block Number = 0) with a value of - 2 Log Likelihood (-2LL)
at the end (Block Number = 1). The value of -2 Log Likelihood (-2LL) at the beginning (Block
Number = 0), where the model only includes a constant of 209.467 and a value of -2 Log Likelihood
(-2LL) at the end (Block Number = 1) involving independent variables (tax, tunneling incentive, and
bonus mechanism) of 205,086. It can be said that the regression model is good or in other words the
hypothesized model fits the data if the value of -2LL decreases.

The results of the Coefficient of Determination Test in this study can be seen in Table 6 below.
Table 6
Coefficient of Determination Test Results
Based on Table 6 above, it is known that the Cox & Snell R Square value is 0.472 and the
Nagelkerke R Square value is 0.650 or 65% which means that 65% of transfer pricing transactions
can be affected by tax variables, tunneling incentives, and bonus mechanisms. Meanwhile, the
remaining 35% can be affected by variables outside the study, such as company size, good corporate
governance, intangible assets, exchange rate, leverage, profitability and others.
Model Classification Analysis Test

The results of the Model Classification Analysis Test in this study can be seen in Table 7
below.
Table 7
Model Classification Analysis Test Results
Based on Table 7 above, it shows that 85.3% of companies do transfer pricing and 62.7% do
not do transfer pricing. Overall, the model with independent variables (tax, tunneling incentive, and
bonus mechanism) obtained a statistic of 72.2%.
It can be concluded that the predictive value of the observation that performs transfer pricing
is 115, while the results of the observation are 90 with a classification accuracy of 85.3%. Then, the
predicted value of observations that do not carry out transfer pricing is 53, while the results of the
observations are 23 with a classification accuracy of 62.7%.
Logistics Regression Analysis Test

The results of the Logistics Regression Analysis Test in this study can be seen in Table 8 below

Table 8
Logistics Regression Analysis Test Results
Based on Table 8 above, it can be concluded that the logistic regression equation is as follows:
The above logistic regression equation can be explained as follows:

a. Constant Value
The constant value of 1.776 indicates that the independent variables (taxes, tunneling incentives,
and bonus mechanisms) are considered constant or equal to zero.
b. Tax Coefficient
The magnitude of the tax coefficient of 0.16 indicates that the direction of the positive
relationship (one way) between taxes and transfer pricing decisions in companies. Thus, these
results indicate that for every increase in the tax variable by 1 unit, the transfer pricing decision
in the company will also increase by 0.16 units.
c. Tunneling Incentive Coefficient The magnitude of the
tunneling incentive coefficient of 1.666 indicates that the direction of the positive relationship
(one way) between the tunneling incentive and the transfer pricing decision of the company.
Thus, these results indicate that for every 1 unit increase in the tunneling incentive variable, the
transfer pricing decision of the company will also increase by 1,666 units.
d. Bonus Mechanism Coefficient The magnitude of the
coefficient of the bonus mechanism of -0.035 indicates that the direction of the relationship is
negative (opposite direction) between the bonus mechanism and the transfer pricing decision of
the company. Thus, these results indicate that for every increase in the bonus mechanism
variable by 1 unit, the transfer pricing decision in the company will decrease by 0.035 units.
Hypothesis Testing Partial Test

The results of the partial test in this study can be seen in Table 9 below.
Table 9 Partial Test Results
Based on Table 9 above, it shows that the results of the logistic regression analysis test can
be tested for the following hypotheses:
1. Tax
Based on the significance value (Sig.) owned by the tax, which is 0.032 and smaller than 0.05 or
(0.032 <0.05), it means that the significance value is below the alpha value, which is 0.05. So that
H1 is accepted or it can be said that taxes have an impact on transfer pricing.
2. Tunneling Incentive
Based on the significance value (Sig.) owned by the tunneling incentive, which is 0.045 and
less than 0.05 or (0.045 <0.05), it means that the significance value is below the alpha value,
which is 0.05. So H2 is accepted or it can be said that tunneling incentive has an impact on transfer

pricing decisions.
3. Bonus Mechanism
Based on the significance value (Sig.) which is owned by the bonus mechanism, which is 0.739
and greater than 0.05 or (0.739 > 0.05), it means that the significance value is above the alpha
value, which is 0.05. So H3 is rejected or it can be said that the bonus mechanism has no impact
on transfer pricing decisions.
Simultaneous Test
Simultaneous test results in this study can be seen in Table 10 below.
Table 10 Simultaneous Test Results
Based on Table 10 above, it shows that the significance value (Sig.) is 0.045 and is smaller
than 0.05 or (0.045 < 0.05), meaning that the significance value is below the alpha value, which is
0.05. So H4 is accepted or it can be said that tax aggressiveness, tunneling incentive, and bonus
mechanism simultaneously have an impact on transfer pricing decisions.
Discussion
1. Impact of Tax Aggressiveness on Transfer Pricing Decisions
The tax variable has a regression coefficient value of 1.168 with a significance value
of 0.032 and less than 0.05 or (0.032 <0.05) meaning that the significance value is below the
alpha value of 0.05. So, it can be concluded that in this study the H1 hypothesis is accepted or it
can be said that tax aggressiveness has an impact on transfer pricing decisions.
This is due to high tax rates, which can result in higher tax burdens borne by the company,
therefore the company chooses other alternatives such as transfer pricing to minimize the tax
burden to be paid.
2. Impact of Tunneling Incentive on Transfer Pricing Decisions
The tunneling incentive variable has a regression coefficient value of 1.666 with a
significance value of 0.045 and less than 0.05 or (0.045 < 0.05) meaning that the significance
value is below the alpha value of 0.05. So, it can be concluded that in this study the H2 hypothesis
is accepted or it can be said that tunneling incentives have an impact on transfer pricing decisions.
This shows that the greater the ownership, the greater the largest shareholder to tunnel
incentives through transfer pricing. This is because tunneling incentive is one of the behavior of
management or shareholders who transfer company assets related to their personal interests, but
the transfer fee is charged to minority shareholders.
3. Impact of Bonus Mechanism on Transfer Pricing Decisions
The bonus mechanism variable has a regression coefficient value of -0.035 with a
significance value of 0.739 and greater than 0.05 or (0.739 > 0.05), meaning that the significance
value is above the alpha value of 0.05. So, it can be concluded that in this study the H3 hypothesis
is rejected or it can be said that the bonus mechanism has no impact on transfer pricing decisions.
This is because if the board of directors has the motive of wanting to get a bonus and the
board of directors dares to carry out transfer pricing transactions in order to increase profits for
the company, then this is very unethical considering that there is a much greater interest, namely
maintaining the value of the company in the eyes of the public and the government by presenting
reports. financial statements that are closer to reality and can be used for more important decision-
making purposes for the company in the future.
4. Impact of Tax Aggressiveness, Tunneling Incentive, and Bonus Mechanism on Transfer
Pricing Decisions

The variables of tax, tunneling incentive, and bonus mechanism simultaneously on transfer
pricing decisions have a significance value of 0.045 and less than 0.05 or (0.045 > 0.05) meaning
that the significance value is below the alpha value of 0, 05.
So, it can be concluded that in this study the hypothesis H4 is accepted or it can be said that
tax aggressiveness, tunneling incentives, and bonus mechanisms simultaneously have an impact
on transfer pricing decisions.

Conclusions
Based on the results of research and discussion on the impact of tax aggressiveness, tunneling
incentives, and bonus mechanisms on transfer pricing decisions in manufacturing companies listed
on the Indonesia Stock Exchange (IDX) during the Covid-19 pandemic in 2019 and 2020, the
following conclusions can be drawn:
1. Tax Aggressiveness has an impact on transfer pricing decisions for manufacturing companies
listed on the Indonesia Stock Exchange (IDX) during the Covid-19 pandemic in 2019 and 2020.
2. Tunneling Incentives have an impact on transfer pricing decisions for manufacturing companies
3. Bonus Mechanism has no impact on transfer pricing decisions for manufacturing companies
4. Tax Aggressiveness, Tunneling Incentives, and Bonus Mechanisms simultaneously have an
impact on transfer pricing decisions for manufacturing companies listed on the Indonesia Stock
Exchange (IDX) during the Covid-19 pandemic in 2019 and 2020.
Implication
Based on the conclusions above, the implications of this research are as follows:
1. Tax Aggressiveness has an impact on transfer pricing decisions. This means that the higher the
tax rate in a country, the higher the tax burden that must be borne by the company. Therefore, the
company chooses other alternatives such as transfer pricing to minimize the tax burden to be paid.
2. Tunneling Incentives have an impact on transfer pricing decisions. This can be interpreted that the
greater the share ownership, the greater the majority shareholder to conduct tunneling incentives
through transfer pricing.
3. Bonus Mechanism has no impact on transfer pricing decisions. This can be interpreted that if the
directors have a motive of wanting to get bonuses and the directors dare to carry out transfer
pricing transactions to provide increased profits for the company, then this is very unethical
considering that there is a much greater interest, namely maintaining the value of the company in
the eyes of the public and the government.
Suggestions
Based on the results obtained in this study, the researchers convey some suggestions for this
research as follows:
1. For Companies
It is hoped that the results of this study can increase the company's supervision through the audit
committee or director commissioner to be more tightened, especially on the company's internal
control in supervising the use of transfer pricing to create justice for the company's shareholders.
2. For Academics
It is hoped that the results of this study can add insight and knowledge about transfer pricing for
readers as well as add references and can contribute to the development of science in the field of
accounting, especially regarding taxation. It is hoped that the results of this study can also be
further developed for further researchers by adding other independent variables such as company
size, good corporate governance, intangible assets, exchange rate, leverage, profitability and
others. And further researchers can use samples of companies in different sectors.

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The Effect Of Price, Product Quality And Service Quality On Customer

Loyalty Through Sociolla Customer Satisfaction
1
Febby Dwi Elnanda, 2Komsi Koranti
1,2
Economic Faculty of Universitas Gunadarma,
Jln. Margonda Raya 100, Pondok Cina, Depok, Jawa Barat 16424
1
elnandafebby@gmail.com, 2komsi@staff.gunadarma.ac.id
Abstract
The development of technology globally brings significant changes in online-based business.The

rise of online business has resulted in high competition between companies in seeking customer
satisfaction and loyalty. The purpose of this study was to analyze the effect of price, product
quality and service quality on loyalty through Sociolla's customer satisfaction. The study used
primary data collected through valid and reliable questionnaires. The sampling of 150 samples was
carried out by purposive sampling, namely Sociolla users in Jabodetabek. Data testing was carried
out using SEM-AMOS, consisting of tests of validity, reliability, normality, outliers, goodness of
fit, and hypotheses. The results of the study prove that product quality and service quality have a
significant effect on customer satisfaction. On the other hand, price has no effect on customer
satisfaction. Likewise, the customer satisfaction factor has no effect on Sociolla's customer loyalty.
Keywords : customer loyalty, customer satisfaction, price, product quality, service quality
JEL Codes: G41, P22, P24,
INTRODUCTION
The development of science and technology globally affects all aspects of the business
world. The next impact is the growing development of electronic or e-commerce-based
businesses. The need for health and beauty factors is a major need, especially for women. This
factor is an opportunity for beauty e-commerce to attract consumers, with a variety of products
offered.
Sociolla is a beauty e-commerce that provides beauty products from various brands,
ranging from cosmetics, skin care, body care, perfume, hair care to beauty tools. Based on the
Indonesian beauty e-commerce map (https://databoks.katadata.co.id), Sociolla ranks first
based on 646,990 monthly web visitors.
The determinants of business success, including by providing appropriate prices to
consumers. Price is the amount of money spent for a product or service, or the amount of value that
consumers exchange for the benefits, ownership, or use of a product or service (Kotler &
Armstrong, 2016). Customer satisfaction can be achieved through product quality, where the
products offered have selling points that are not owned by competitors (Nela, 2013). Another factor
that determines customer satisfaction is service quality (Kasmir, 2017). Quality of service in
accordance with consumer expectations, will be able to satisfy consumers at the time of transaction,
thus encouraging consumers to make repeat purchases. Customer loyalty can be formed from
perceived satisfaction (Hurriyanti, 2015), namely feelings of pleasure or disappointment that arise
after using these services. Customer feelings will be felt after comparing the performance or
product results with the expected results.
Thungasal & Hotlan's (2019) research results show that price has a significant influence on
customer loyalty through customer satisfaction. Product quality is also a determining factor in
achieving customer satisfaction. This is also proven in the research of Putri, Srikandi & Sunarti
(2018) that product quality has a positive effect on customer satisfaction and customer loyalty.
Satisfactory service quality plays an important role in attracting consumers, by providing quality
service in accordance with expectations, consumers will feel satisfied when the transaction occurs
and encourage consumers to make repeat purchases. Service quality is proven to have an influence
268 Elnanda, Koranti

on customer loyalty through customer satisfaction (Thungasal & Hotlan (2019). Customer
satisfaction will then contribute to the creation of customer loyalty. Customer loyalty can be
formed from satisfaction, namely feelings of pleasure or disappointment that arise after using these
services (Hurriyanti, 2015). Customers will feel happy and disappointed after comparing the
performance or product results in mind with the expected results. This statement is supported by
Andreas' research (2016), the results prove that customer satisfaction can be a good mediation in
creating customer loyalty. Kartika's research results (2018) proves the influence of product quality
on consumer satisfaction, service quality on consumer satisfaction and consumer satisfaction on
consumer loyalty.
This research was conducted based on the analysis of the results of previous studies and
observe various interesting facts from customers about online shopping. The research aims to
observe the effect of price, product quality and service quality to loyalty through customer
satisfaction Sociolla. The findings of this study are expected to be useful for practitioners for
broadening insight in the application of marketing. The contribution of this research is to provide
information as a basis for consideration to decision maker in doing development e-commerce based
business. This research was conducted based on the analysis of the results of previous studies and
observe various interesting facts from customers about online shopping. The research aims to
observe the effect of price, product quality and service quality to loyalty through customer
satisfaction Sociolla. The findings of this study are expected to be useful for practitioners for
broadening insight in the application of marketing. The contribution of this research is to provide
information as a basis for consideration to decision maker in doing development e-commerce based
business
LITERATURE REVIEW
Price is often used by consumers as an indicator of the value between perceived benefits
and the price of an item or service. If the price set by the company does not match the benefits of
the product, then the level of customer satisfaction can decrease, and vice versa. If the perceived
value of consumers is higher, it will create customer satisfaction. Based on research conducted by
Achmad & Noermijati (2013) proves that price has a positive effect on customer satisfaction.
H1: Price has a significant effect on Sociolla's customer satisfaction.
Customers can assess the quality of the product which is determined based on the
characteristics of the product or service, if the customer is satisfied or dissatisfied with consuming
the product. Thus, if the level of product quality produced is higher, it will have an impact on
increasing customer satisfaction. The results of the study (Syarif, 2016) have proven that the
relationship between product quality can provide a significant relationship to increasing consumer
satisfaction.
H2: Product quality has a significant effect on Sociolla's customer satisfaction.
Service quality is a work process in improving and maintaining continuous quality
improvement from the production process, to the services produced by the company (Panjaitan &
Yuliati, 2016). Service quality can motivate customers to commit to certain products and services
to improve company performance. To maintain service quality, customer satisfaction is one of the
important factors in retaining customers in accordance with market needs.
Several research results found the relationship between service quality and customer
satisfaction has a strong relationship. Research from Nur, Rachma & Slamet (2019) proves that
service quality has a positive and significant effect on customer satisfaction.
H3: Service quality has a significant effect on Sociolla's customer satisfaction.
By providing aspects that are in accordance with consumer expectations, satisfaction will
occur when the transaction occurs. Based on the customer satisfaction, it will then create customer
loyalty. Based on research conducted by Sudarti & Atika (2012) that satisfied customers will
strengthen relationships with customers and become the basis for repeat purchases and the creation
of loyalty. According to Irawan & Japrianto (2013) customer satisfaction has a significant effect on
customer loyalty. Thus customer satisfaction is important to note so that satisfied customers will be
encouraged to be loyal (Hijjah & Ardiansari, 2015).
H4: Customer satisfaction has a significant effect on Sociolla's customer loyalty.
Elnanda, Koranti 269

RESEARCH METHODS
Types of research
This type of research is descriptive associative which reveals the extent of the influence of
price, product quality and service quality on customer loyalty through Sociolla's customer
satisfaction. The subjects in this study were users who had or still used the Sociolla application in
the Jabodetabek area. A total of 150 samples were taken by purposive sampling, with the criteria of
respondents using the Sociolla application at least 1 time and living in the Jabodetabek area.
Determination of the number of samples is 5-10 times the number of indicators (Ferdinand, 2014).
Meanwhile, according to Hair, Anderson, Tatham & Black (2010), if the sample size is too large, it
will be difficult to get a suitable model and a sample size of 100-200 respondents is recommended.
So in this study it was decided to use 150 samples. This study uses primary data collected through
questionnaires via google form to users of the Sociolla application. The feasibility of the
questionnaire was first tested with validity and reliability tests.
Operational Definition
There are five types of variables involved in this study, including:
1. Price variables, indicators: affordable, according to quality, according to benefits, competitive
2. Product quality variables, indicators: according to specifications, features, aesthetics, perceived
quality
3. Service quality variables, indicators: tangibles, reliability, responsiveness, assurance, empathy
4. Customer loyalty variables, indicators: repeat, retention, referral
5. Customer satisfaction variables, indicators: perceived quality, conformity of expectations,
customer ratings
Data Analysis Technique

The data analysis technique used in this research is Structural Equation Modeling (SEM)
analysis using the Structural Analysis of Moment (AMOS) program. to answer the problem
formulation that allows solving research problems can be processed properly. The advantage of this
statistical technique is due to its ability to confirm the dimensions of a multivariate concept with
dependent, independent and mediator variables. Another advantage is its ability to measure the
effect of theoretical relationships (Ghozali, 2014).
Tests carried out in this study include:
1. Validity test used confirmatory factor analysis (CFA).
The indicator is declared valid, if the critical ratio (CR) of the regression weight is > 2.0 with
probability (P) < 0.05
2. The reliability test is intended to test whether the instrument can measure without error and the
results are always consistent. The instrument is reliable if construct reliability > 0.7. While the
reliability of 0.6 - 0.7 is still acceptable
3. The normality test is declared to have passed the 0.06 significance level if the skewness value is
2.58 - 2.58 and kurtosis < 7
4. Outlier test is done through Mahalonabis Distance test, using x2 value in degrees of freedom
equal to the number of indicators at level p < 0.001.
5. The model feasibility test is carried out based on the goodness of fit criteria from Ferdinand
(2014):
a. Chi square statistic (x2) with cut off value p > 0.05 or p > 0.10
b. Significanced probability (P) with cut off value 0.05
c. Root mean square error of approximation (RMSEA) is 0.03 - 0.08
d. Goodness of fit index (GFI) is worth between 0 (poor fit) to 1.0 (perfect fit).
e. Adjusted goodness of fit index (AGFI) is recommended 0.90.
f. The minimum sample discrepancy function degree of freedom (CMINDF) with relative X2
value < 2.0 or 3.0
g. Tucker lewis index (TLI) recommended 0.95
h. Comparative fit index ranges from 0 - 1. The recommended CFI: 0.95 to measure the level of
acceptance of the model

6. Hypothesis testing was carried out using CR values: 1.96 and P: 0.05. If the probability value >
0.05 is obtained, then the hypothesis is accepted.
7. Test of Direct and Indirect Effects
The intervening variable is a variable that influences the relationship between the independent
variable and the dependent variable. Calculation of direct and indirect effects can be calculated
based on the standardized effect value.

Validity test
Table 1. Regression Weight CFA

Estimate Estimate
X1.1 <--- price 1,000 X3.1 <--- service quality 1,000
X1.2 <--- price ,965 X3.2 <--- service quality 1,016
X1.5 <--- price 1,070 X3.5 <--- service quality 1,145
X1.6 <--- price 1,047 X3.6 <--- service quality ,844
X1.7 <--- price ,933 X3.7 <--- service quality ,779
X2.1 <--- product quality 1,000 X3.9 <--- service quality ,808
X2.2 <--- product quality 1,082 X3.10 <--- service quality ,836
X2.3 <--- product quality 1,073 Y.1 <--- customer loyalty 1,000
X2.8 <--- product quality ,833 Y.6 <--- customer loyalty 1,115
Z.1 <--- customer satisfaction 1,000
Z.4 <--- customer satisfaction ,965
Z.5 <--- customer satisfaction ,954
Source: Processed data
Based on data processing in Table 1 shows that each indicator or variable dimension has
good results with a loading factor/estimated value > 0.5 (Ghozali, 2014). Based on the
confirmatory factor analysis of this construct, the research model can be used for further analysis
without modification or adjustment.
Reliability Test
Table 2. Reliability Test
Variable Construct Reliability
price 0,7170
product quality 0,6652
service quality 0,7435
customer loyalty 0,6868
customer satisfaction 0,6855
Based on the data in Table 2, the construct reliability value that is still acceptable is between
0.6 - 0.7. Thus it is stated that the research instrument has good reliability.

Normality test
Table 3
Normality test
Variable skew kurtosis Variable skew kurtosis Variable skew kurtosis
Z.1 -1,628 2,512 X2.1 -,993 ,499 X1.8 -,899 ,551
Z.2 -,993 ,499 X2.2 -,723 ,039 X1.7 -,888 2,606
Z.3 -1,793 2,437 X2.3 -,989 ,201 X1.6 -1,109 3,000
Z.4 -1,338 2,285 X2.4 -,853 ,101 X1.5 -,755 -,316
Z.5 -1,287 1,888 X2.5 -1,364 1,384 X1.4 -,784 -,230
Z.6 -,787 ,195 X2.6 -1,063 ,526 X1.3 -,701 -1,292
Y.6 -,996 ,453 X2.7 -1,178 1,629 X1.2 -,754 1,010
Y.5 -,644 -,331 X2.8 -1,099 2,460 X1.1 -,712 1,392
Y.4 -,253 -1,026 X3.1 -1,593 2,342
Y.3 -,648 ,023 X3.2 -1,224 1,182
Y.2 -,641 -,081 X3.3 -1,037 ,846
Y.1 -,718 -,205 X3.4 -1,130 1,009
Based on the data in Table 3, the skewness value < 2 and the kurtosis value < 7. These two
values entered the normality test criteria which showed that the data was normally distributed
(Santoso, 2015). Thus the research data can be analyzed using the Equation Modeling Structure.
Outlier Test
According to Hancock & Mueller (2010) the mahalanobis distance test is calculated using
the chi-square value at the degrees of freedom of 38 (number of questions) at the level of p < 0.001
using the CHIINV (0.001.38) = 70.702 formula. Based on the results of the Outlier test, it was
found that the observation data that has a mahalonabis distance value greater than 70,702 are
observations numbered 117, 63, 7, 51, 99, 76, 114, 98, 65. If there is no special reason to exclude
cases that indicate an outlier , then the case should still be included in the next analysis (Ferdinand,
2014).
Goodness of Fit Test
Figure 1. Goodness of Fit Test

(Source: Processed data )

Table 4. Index goodness of fit test
Goodness of Fit Indeks Cut-off Value result description

Chi-Square Expected small 236,297 Poor Fit
Signification ≥ 0,05 0,000 Poor Fit
RMSEA ≤ 0,08 0,064 Fit
GFI ≥ 0,90 0,866 Marginal Fit
AGFI ≥ 0,90 0,827 Marginal Fit
CMIN/DF ≤ 2,00 1,607 Fit
TLI ≥ 0,95 0,928 Marginal Fit
CFI ≥ 0,90 0,938 Fit
Hypothesis testing
The results of hypothesis testing in this study are presented in Table 5.
Table 5. Hypothesis testing
Estimate S.E. C.R. P
customer satisfaction <--- price, -,108 ,161 -,669 ,503
customer satisfaction <--- product quality ,733 ,320 2,294 ,022
customer satisfaction <--- service quality, ,338 ,171 1,971 ,048
customer loyalty <--- customer satisfaction ,047 ,079 ,597 ,550
1. H1: Price has no effect on customer satisfaction Sociolla

Based on the results of data processing in table 5, the effect of price on customer
satisfaction has a CR value of -0.491 with P: 0.503. Both of these values indicate results that do
not meet the requirements, namely CR 1.96 and P 0.05. So that hypothesis 1 cannot be accepted,
that the price has no effect on customer satisfaction for Sociolla users.
In this case, Sociolla users consider that price is not the main thing to consider, because
many other factors make them feel satisfied with the use of this application. Respondents
consider that prices vary according to the product selected in the Sociolla application. However.
the price is not in accordance with the quality and benefits offered for the field of beauty and
health.
These results do not support Rosyihudin's (2020) research conducted in Gresik Regency, which
states that there is an effect of price on customer satisfaction with a significant value of 0.000.
2. H2: Product quality affects customer satisfaction Sociolla
The effect of product quality on customer satisfaction has a C.R value: 4.11 and P: 0.022.
Both values meet the requirements of C.R 1.96 and P 0.05, so hypothesis 2 is accepted, which
states there is an influence between product quality on customer satisfaction.
A total of 49.16% of respondents agreed that product quality variables affect Sociolla's
customer satisfaction. The quality of the product is considered satisfactory by the respondents
because it is in accordance with the aspects of the price offered, the standard of product
feasibility, the promised quality and packaged safely.
These results support Saragih's research (2019) at the Shopee online store in the city of
Medan, that product quality has a significant influence on customer satisfaction. Based on the
results of this data processing, it is concluded that the product quality at Sociolla is in
accordance with what customers want. The higher the level of product quality, the higher the
level of customer satisfaction produced.
3. H3: Service quality affects customer satisfaction Sociolla
The effect of product quality on customer satisfaction has a value of C.R: 1.971 and P:
0.048. Both values meet the requirements of C.R 1.96 and P 0.05 so that hypothesis 3 is
accepted, which states that there is an influence between service quality and customer
satisfaction.
Based on the results of the questionnaire as much as 49.26% of respondents agreed that the
service quality variable has an effect on Sociolla's customer satisfaction. Respondents feel that

the Sociolla application can be trusted to provide quality services and help make transactions
easier for users. The Sociolla has a variety of products that users need. Another advantage is
that products are made to order, on time delivery, and responsive customer service is available.
The results of this study support the results of research by Dwijaya & Siagian (2018),
which states that there is an influence of service quality on customer loyalty in the city of
Surabaya with a t statistic of 7.920. In this case, users feel that many aspects provided by
Sociolla are in accordance with their expectations, such as comfort, responsibility and security
so as to create customer loyalty. With a high standard of service quality will result in high
satisfaction and use of services more often so as to create loyalty.
4. H4: Customer satisfaction has no effect on customer loyalty Sociolla
Based on the results of data processing, the C.R value: 0.597 with P value: 0.550, for the
effect of customer satisfaction on customer loyalty. This value is not eligible, so that hypothesis
7 cannot be accepted which states there is no effect between customer satisfaction on customer
loyalty.
Satisfaction when standing alone does not significantly affect loyalty, but there are many
other factors to consider. These factors include: orders must be as expected, product quality is
maintained, product authenticity, safe and reliable, many sources of information that can be
accessed. The item with the lowest score was "I will find out more about Sociolla". The
possibility of customers getting information about other applications that are considered more
interesting, so the satisfaction obtained from Sociolla does not make them loyal.
The results of this study are different from the research conducted by Kartika (2018) conducted
at Suzana Corner Surabaya, which states that customer satisfaction has a significant effect on
customer loyalty.
Direct and indirect relationship test

In this study there are three variables that have a direct influence on the customer loyalty
variable (Y) and there are three variables that have a direct influence on the customer satisfaction
variable (Z). The results of the standardized direct effect test show that the variable that has the
largest direct influence on customer loyalty is the service quality variable (X3), which is 0.679 and
the variable that has the largest direct influence on the customer satisfaction variable (Z) is the
product quality variable (X2), namely of 0.744.
Table 6. Standardized Direct Effect

X3 X2 X1 Y Z
.679 -.226 .425 .000 .000
.343 .744 -.109 .048 .000
Based on the results of the standardized indirect effect test (table 7), there are three variables
that have an indirect effect on the customer satisfaction variable (Z). The variable that has the
greatest indirect effect to the customer satisfaction variable (Z) is the quality of service (X3),that is
equal to 0.033.
Table 7. Standardized Indirect Effect
X3 X2 X1 Y Z
Y .000 .000 .000 .000 .000
Z .033 -.011 .020 .000 .000

CONCLUSIONS AND IMPLICATIONS

Conclusions
Results Based on the research and discussion that has been carried out, several conclusions
can be drawn:
1. Price has no significant effect on Sociolla's customer satisfaction.
2. Product quality has a significant effect on Sociolla's customer satisfaction.
3. Service quality has a significant effect on Sociolla's customer satisfaction.
4. Customer satisfaction has no significant effect on Sociolla's customer loyalty.
Implications
Based on the research results, the implications are formulated as follows:
Sociolla application users feel that the product ordered is in line with expectations. Users feel that
Sociolla is able to maintain product quality, provide maximum service at a good price. Thus
customer satisfaction will increase. Users feel comfortable with the Sociolla application and
provide feedback or suggestions for improvement, will use the product in the future. If consumers
are satisfied, it will be able to increase loyalty to the use of the Sociolla application.
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terbesar-pada-kuartal-iv-2020. Diakses: 02 Desember 2021 jam 23:22 wib.

Analysis Of The Success Factors Of MSMEs Business Performance

During The Covid-19 Pandemic: A Principal Component Analysis
1
Mufid Suryani, 2Nida Nusaibatul Adawiyah
1, 2
1
mufid.sef@gmail.com, 2adawiyahnida@gmail.com
Abstract
The research model includes entrepreneurial orientation, product innovation, business network
capabilities through the adoption of ICT on business performance. It was obtained that 253
respondents were surveyed, namely business actors or MSMEs in the West Java Region using a
sampling technique, namely; Purposive Sampling. Validity tests, reliability tests and Principal
component analysis are used to process and analyze data. Based on the results of the analysis of the
validity and reliability tests that of the 5 variables with 59 statement items obtained from 253
respondents, the correlation coefficient was above 0.5, therefore it was declared valid, while the
reliability test obtained the Cronbach's Alpha (α ) value of 0.961, this is shows very high reliability,
so it can be concluded that all statements of this research instrument are reliable and accountable.
There are 12 main component factors that affect the performance of MSMEs through entrepreneurial
orientation, innovation and business network capabilities as well as Information and Communication
Technology (ICT) adoption during the Covid-19 pandemic in West Java. This study is still a
preliminary study so it must be continued with a larger sample size and statistical descriptive analysis
in the form of a frequency measure for interpretation of the results.
Keywords : Entrepreneurship Orientation, Product Innovation, Business Network Capability, ICT

Adoption, and Business Performance
JEL Codes : L21, L23,L26,
INTRODUCTION
The coronavirus or Covid-19 pandemic has hit various industrial sectors. SMEs cannot be
separated from the bad impact of the Covid-19 pandemic. The negative impact due to the Covid-19
outbreak has hampered MSME business growth where MSME business movements that require
showrooms or promotions are hindered by physical distancing and the existence of the Large-Scale
Social Restriction (PSBB) movement which is considered to be able to accelerate the response and
prevention of the spread of Covid-19. increasingly widespread in Indonesia. According to the Deputy
for Business Restructuring of the Ministry of Cooperatives and Small and Medium Enterprises in
June 2020, there were 185,184 MSMEs or business actors affected by Covid-19 in Indonesia.
Meanwhile, in August 2020 there were an additional 300,000 more business actors or MSMEs who
reported being affected by Covid-19 in Indonesia.
According to data from the JABAR KUK service in September 2020, out of 4.9 million
MSMEs or business actors in West Java, there were 37,000 MSMEs or business actors affected.
The ability of Micro, Small and Medium Enterprises needs to be empowered and developed
continuously by trying to reduce the obstacles experienced by Small and Medium Enterprises, so that
they are able to make a maximum contribution to improving the welfare of the community.
According to research by Kaur & Mantok (2015) which proves that three dimensions of
entrepreneurial orientation, namely proactive attitude, risk-taking (decision making), and innovation
affect business performance measured by subjective performance. Supported by research by Uddin
& Bose (2015) with four variables of entrepreneurial orientation, namely innovation, proactiveness,
risk-taking, and autonomy, which are proven to have an effect on business performance. This shows
that small businesses that want to improve their performance must have a strong entrepreneurial
orientation.
Previous research Putro & Ilmaniati, (2018), proposed a conceptual model that links the
knowledge-sharing variable with the variables it influences, namely MSME innovation and
Suryani, Adawiyah 277

roceeding UG Economic Faculty-International Conference
performance. The study also proposes that the factors that influence the knowledge sharing variable
consist of five dimensions, namely trust, organizational culture, organizational structure, employee
attitudes, and motivation, which are measured through 19 items. This study aims to create a new
grouping for the antecedent factors of knowledge sharing variables (tacit and explicit) so as to
simplify the knowledge sharing relationship model in subsequent studies. This study will use the
MSME unit in West Java as the object of research.
LITERATURE REVIEW
Entrepreneurship Orientation
Utami (2012), suggests that entrepreneurial orientation is a process, practice, and decision-
making activity that leads to new entry. Entrepreneurial orientation emerges from the perspective of
strategic choice which states that the opportunity for new entry to succeed is highly dependent on the
performance of the goal.
Indicators of entrepreneurial orientation in this study were proposed by Lee & Tsang (2001)
where entrepreneurial orientation consists of elements; need for achievement, internal locus of
control, self-reliance, and extroversion.
Another opinion about indicators of entrepreneurial orientation was put forward by Lumpkin
& Dess (1966), finding that there are 4 (four) indicators to measure entrepreneurial orientation,
namely innovative, risk-taking, proactive, competitive aggressiveness.
Arief, Thoyib, Sudiro, & Rohman (2013) research, states that entrepreneurial orientation is
significantly positively related to company performance. Mahmood and Hanafi. Research(2013),
confirms that entrepreneurial orientation has a positive and significant effect on business
performance.
Product Innovation
Creating new products that can meet the needs and desires of consumers so that buying interest
arises for these products, which are expected to be realized through purchasing decisions (Nugroho,
2003). Research by Ahmed & Shepherd (2010), states that product innovation is not only limited to
objects or goods produced, but also includes attitudes to life, behavior, or movements towards the
process of change in all forms of community life.
Utaminingsih's research (2016), proves that Product Innovation has a significant effect on
marketing performance. Sittharam & Hoque Research (2016), revealing technological advances will
improve business performance. Regarding challenges, the majority of respondents view competition
as the main challenge. Almost all respondents stated that crime and corruption affect business
performance. Competition was the only factor among the internal and external factors studied which
revealed a significant relationship with the performance of SMEs in KwaZulu-Natal.
Business Networking Capability

Acs, Audretsch,, & Lehmann (2013), stated that business network capability is the
development of a company's ability to collaborate and manage mutually beneficial business
relationships.
Lukiastuti's research (2012), has found that Business Network Capability has a positive effect
on performance. Sharpened by research according to Zulfikar & Novianti(2018), shows that Business
Network Capability has a significant effect on business performance. Huda & Syamsinirwani's
Research(2019), resulting in that Entrepreneurship Network has an effect on the performance of
MSMEs in Bima City, while Exploration Learning has no effect on MSME Performance in Bima
City.
Adoption of Information and Communication Technology (ICT)

Rusman, (2011) defines information and communication technology (ICT) as a medium or
tool in obtaining knowledge from one person to another. Furthermore, the Ministry of Research and
Technology states that information and communication technology (ICT) as part of science and
technology (IPTEK) is generally all technologies related to the retrieval, collection, processing,
storage, dissemination and presentation of information.
278 Suryani, Adawiyah

According to Asmani (2011), Information and Communication Technology has several main
components that support information and communication technology including computers (computer
systems), communication, and skills how to use them.
Business Performance
Performance is a multidimensional concept and the relationship between entrepreneurial
orientation and performance can depend on the indicators used to assess performance (Lumpkin &
Dess, 1996).
Principal component analysis (PCA)

PCA is generally an a priori research that does not refer to previous theories or evidence, but
this research still provides an overview of previous research studies that are directly related to this
research. However, the previous studies listed are not sufficient to establish a strong model. Research
with the paper title "Developing Conceptual Model for The Effectiveness of Knowledge Sharing in
Business Innovation for Indonesian MSMEs Performance" proposes a model of the relationship
between knowledge sharing variables and performance variables which are also mediated by
business innovation variables, the research is aimed at MSME research units in Indonesia. Although
more emphasis on the relationship of knowledge sharing variables to business performance and
innovation, knowledge (tacit and explicit) into a conceptual model consisting of five factors based
on research by Zubair et al. (2014) and Gazor et al. (2012) namely: (1) trust; (2) organizational
culture; (3) organizational structure; (4) employee attitude; and (5) motivation method. The study
has not explained further about the items that will be used to measure the five precursor factors of
sharing knowledge. Zubair et al (2014) research and Gazor et al (2012) research is almost the same
research, namely about testing the relationship between the forming factors (predecessors) of the
knowledge sharing variable. Both studies use five factors as a form of knowledge sharing in
organizations with a total of twenty items used to measure these five factors. The difference between
the two studies is in the research unit studied, Zubair et al. (2014) used pharmaceutical companies as
research units, while Gazor et al. (2012) used banking institutions as research units.
RESEARCH METHOD
Principal component analysis (PCA) is a multivariate technique that analyzes data in which
observations are made on several interrelated manifest variables, the purpose of this method is to
extract important information from the data and describe it as a new set of orthogonal variables called
principal components, and to display pattern of similarity of observations (Abdi & Williams 2010).
This research was conducted in the area of West Java, namely business actors or MSMEs in
the area and was carried out randomly by choosing one of the sampling techniques. This study uses
a purposive sampling technique where respondents are taken or randomly selected with the
provisions that have been adjusted. The source of the data used in this study comes from the object
of research data from SMEs in West Java. The types of data are; Primary Data, this study uses
primary data collected by individuals directly on business actors or MSMEs by distributing
questionnaires or questionnaires
This study targets a sample population of approximately 253 respondents with adjusted criteria
in sampling. Respondents are business actors or MSMEs in the West Java region.
The software used in this study is SPSS 23. The testing stages carried out in performing PCA
are:
1. Testing the KMO value to see the adequacy of the sample as a whole
2. Bartlett's test to determine whether there is a correlation between variables
3. Testing the value of the anti-image correlation matrix to see the adequacy of the sample for each
variable
4. Model improvement with variable elimination (if needed)
5. Principal component analysis (PCA)
6. Interpretation of PCA results


Demographics
Based on gender, the results showed that female respondents were 48% and male respondents
were 52%. Based on the characteristics of the age of the respondents, it shows that the majority of
respondents are aged 21-30 years as many as 186 people, while at least 6 people have an age of more
than 60 years. Based on the characteristics of the education level, it shows that the most respondents
with the latest high school education level are 206 people, while the least with the latest doctoral
education level are 2 people. Based on the characteristics of the type of business, it shows that the
most respondents are culinary businesses by 55%, fashion and accessories businesses by 21%. The
least types of business are handicrafts and ornamental fish by 3%. Based on the respondent's business
ownership, the status of own/own capital is 86%, family business is 11% and partner/cooperation is
3%. Based on the amount of business capital, most respondents with a capital under Rp. 50 million
by 85%, while the least respondents with capital above Rp. 100 million at 3%.
Validity and Reliability Test

The test results show that the 5 variables with 59 statement items obtained from 253
respondents produce a correlation coefficient above 0.5, so it can be concluded that 59 statement
items for the 5 latent variables in this study are valid, in other words this shows that all items in this
research instrument can measure ddeterminants of sustainability and entrepreneurial growth With the
support of ICT during the Covid-19 pandemic: Empirical Study of MSMEs in West Java.
Furthermore, the reliability test can be seen in table 1. The following;
Table 1. Reliability Test Results of Research Instruments
Cronbach's Alpha
Cronbach's Based on
N of Items
Alpha Standardized
Items
,961 ,963 59
Source: SPSS 25 data processing results, 2021
Based on Table 1 above, the value of Cronbach's Alpha (α) is 0.961. This shows very high
reliability, so it can be concluded that all statements of this research instrument are reliable and
accountable.
Data Sufficiency Test

The main component factor analysis begins with a data adequacy test with Kaiser Meyer Olkin
and a roundness test with Bartlett that must be met so that PCA can proceed.
Table 2. KMO Test and Bartlett's Test
Kaiser-Meyer-Olkin Measure of
,903
Sampling Adequacy.
Approx. Chi-
9449.51
Bartlett's Test of Square
Sphericity df 1711
Sig. 0
Based on Table 2, the KMO-MSA number is 0.903 and Bartlett with a significance of 0.0000,
it can be concluded thatAll variables of this study can be predicted and analyzed further with
insignificant relative error.

Principle Component Analysis

Based on Table 3. The total variance explained, the results obtained were formed by 12 factors
as the main components. The number of components formed is known through the Initial
Eigenvalues. The Initial Eigen-values show the importance of the factors of each variable in
calculating the variance of the overall variables analyzed. Component shows the number of factors
or the number of latent variables. The number of factors formed is seen in the Initial Eigenvalues
which are equal to or greater than one (  1).
Table 3. Total Variance Explained
Initial Eigenvalues
Component Total Variance Cumulative
1 18,981 32.172% 32.172%
2 4.016 6.806% 38.978%
3 2,916 4.943% 43.921%
4 2,241 3.798% 47,719%
5 1,700 2.882% 50.601%
6 1,646 2.790% 53.391%
7 1.555 2.635% 56.026%
8 1,423 2.413% 58.438%
9 1,352 2.292% 60.730%
10 1,177 1.994% 62.724%
11 1.164 1.973% 64.697%
12 1.079 1,829% 66.525%
Extraction Method: Principal Component Analysis.
It is concluded that the first 12 main components have been able to explain the diversity of the
data by a cumulative percentage of 66.525%. Then the manifest variables are obtained which group
together to form a factor. The total variance explained or component matrix shows the distribution
of the variables in the eight formed factors, but the results of this matrix need to be rotated first to
clarify the variables included in certain factors. In the matrix, the numbers listed in each column are
called loading factors which show the correlation between a variable and each of the factors formed.
Each manifest variable is grouped into components according to the largest number of loading factors
so that 12 new main components are produced by loading variables.
Table 4. New Factors PCA Results
Component
No
1 2 3 4 5 6 7 8 9 10 11 12
1 x1.5 x2.2 x1.1 y1.1 x1.22 x3.1 y1.10 x1.13 x1.19 x2.1 x1.10 y1.11
2 x1.16 x3.4 x1.2 y1.2 y2.1 x3.2 y2.5 x1.17 x1.20 x2.2 x1.12
3 x2.4 x3.5 x1.3 y1.3 y2.2 x3.3 y2.6 x1.18 x1.21 x2.3
4 x2.5 x3.6 X1.4 y1.4 y2.3 x3.7 y2.7 x1.22
5 x2.6 x3.8 x1.7 y1.5 y2.4
6 x2.7 y1.1 x1.8 y1.6
7 x2.8 y1.7 x1.10
8 x2.9 y1.8
9 y1.9
Source: Data processing results, 2021
Component 1
This component is the most influential component among other components. These
components include statements on X1.5, X1.16, X2.4, X2.5, X2.6, X2.7, X2.8, X2.9. This is

indicated by the eigenvalue of this component which is the highest, namely18,981. Based on the
clustered variables in component 1. This aspect is the most dominant aspect for all factors with a
total diversity of 32.172%.
Component 2
This component is the second most influential component among other components. These
components include statements on X2.2, X3.4, X3.5, X3.6, X3.8, Y1.1, Y1.7, Y1.8, Y1.9. This is
indicated by the eigenvalue of this component which is the 2nd highest, namely4.061. Based on the
variables grouped in component 2. This aspect is the second most dominant aspect for all factors
with a total diversity of 6.806%.
Component 3
This component is the 3rd component that is influential among other components. These
components include statements on X1.1, X1.2, X1.3, X1.4, X1.7, X1.8, X1.10. This is indicated by
the eigenvalue of this component, namely2,916. Based on the variables grouped in component 3.
This aspect is the 3rd dominant aspect for all factors with a total diversity of 4.943%.
Component 4
This component is the 4th component that is influential among other components. These
components include statements at Y1.1, Y1.2, Y1.3, Y1.4, Y1.5, Y1.6. This is indicated by the
eigenvalue of this component, namely2,241. Based on the variables grouped in component 4. This
aspect is the 4th dominant aspect for all factors with a total diversity of 3.798%.
Component 5
components include statements on X1.22, Y2.1, Y2.2, Y2.3, Y2.4. This is indicated by the eigenvalue
of this component, namely1,700. Based on the variables grouped in component 5. This aspect is the
5th dominant aspect for all factors with a total diversity of 2.882%.
Component 6
components include statements on X3.1, X3.2, X3.3, X3.7. This is indicated by the eigenvalue of
this component, namely1,646. Based on the clustered variables in component 6. This aspect is the
Component 7
components include statements at Y1.10, Y2.5, Y2.6, Y2.7. This is indicated by the eigenvalue of
this component, namely1,555. Based on the variables grouped in component 7. This aspect is the 7th
dominant aspect for all factors with a total diversity of 2.635%.
Component 8
components include statements on X1.13, X1.17, X1.18, X1.22. This is indicated by the eigenvalue
of this component, namely1,423. Based on the variables grouped in component 8. This aspect is the
Component 9
components include statements on X1.19, X1.20, X1.21. This is indicated by the eigenvalue of this
component, namely1,423. Based on the variables grouped in component 9. This aspect is the 9th
Component 10
components include statements on X2.1, X2.2, X2.3. This is indicated by the eigenvalue of this
Component 11
components include statements on X1.10, X1.12. This is indicated by the eigenvalue of this
Component 12

This component is the smallest component with an eigenvalue that is1.079 with a total
diversity of 1.829%.

Based on the results of the analysis of the validity and reliability test that of the 5 variables
with 59 statement items obtained from 253 respondents, the correlation coefficient was above 0.5 so
that it was declared valid, while the reliability test obtained the Cronbach's Alpha (α) value of 0.961,
this indicates very high reliability. So it can be concluded that all statements from this research
instrument are reliable and can be accounted for. There are 12 main components that affect the
performance of MSMEs through entrepreneurial orientation, innovation and business network
capabilities as well as Information and Communication Technology (ICT) support during the Covid-
19 pandemic in West Java.
The results of the study are in line with previous research by Putro & Ilmanati, (2018), who
proposed a conceptual model that links the knowledge-sharing variable with the variables it
influences, namely the innovation and performance of MSMEs. This study also suggests that the
factors that influence the knowledge sharing variable consist of five dimensions, namely trust,
organizational culture, organizational structure, employee attitudes, and motivation, which are
measured through 19 items.
This research is basically explanatory quantitative research, but it is still in the early stages
of testing the instrument with a relatively small sample size because the primary data collection was
obtained by visiting MSMEs in West Java Province. This research is continued by collecting data
from the target population that has been determined, namely a minimum of 590 respondents (10 x
the number of manifest variables), who meet the criteria of the sample frame and descriptive
statistical data analysis techniques and verification hypothesis testing with structural equation
models.
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Gunadarma University – Campus F8 Dec 14th-15th 2021 ISSN: 2654-8879
Implications For The Success Of Community Based Tourism To Levels

Community Welfare: Study Of Nglanggeran Tourism Village Before And
In Post Covid-19 Pandemic
Dhiana Ekowati, 2Winanto Nawarcono
1
STIE Nusa Megarkencana Yogyakarta – Indonesia

1
2
Doctoral Degree in Economics - Gunadarma University Jakarta - Indonesia
1
dhianaekowati@gmail.com, 2wnawarcono@gmail.com
Abstract
Community based tourism is a tourism development approach that emphasizes local communities in
the form of providing opportunities in tourism management and development that leads to
community empowerment through a more prosperous life, including a more equitable distribution of
the benefits of tourism activities for local communities. This research was conducted in the tourist
village of Nglanggeran Gunung Kidul Yogyakarta, as a tourist village with various awards received
by the tourist village of Nglanggeran, it is expected to be able to provide positive implications for
community members, improve community welfare, generate economic benefits by increasing local
participation with the aim of improving the welfare of the surrounding community. The results
showed the value of the Community Welfare Index of the Nglanggeran tourism village on the average
value of the Social Dimension Indicators of 85.7%, the Economic Dimension Indicators an average
of 75.2%, while the Democracy Dimension Indicators 80%, the overall achievement of the overall
welfare dimension. IKraR in Nglanggeran tourism village is 80.3%. The result of obtaining a score
of 80.3 indicates that the level of welfare in the Nglanggeran tourist village is very high with a range
(76-100) categorized as very high. The success of the Nglanggeran tourism village is able to provide
positive implications for the surrounding community, especially being able to improve the welfare
of the community. In any sense, the activities carried out by the tourist village involve the
surrounding community and the results are enjoyed not only by the manager but by the whole
community.
Keywords : Implications, Success Community Based Tourism, Welfare, Tourism Village Nglanggeran
JEL Codes: L83, I12
INTRODUCTION
Community-based tourism is a form of tourism that provides opportunities for local
communities to control and engage in tourism management and development, communities that
are not directly involved in tourism businesses also benefit. Thus community-based tourism is a
tourism development approach that emphasizes local communities (whether or not directly
involved in the tourism industry) in the form of providing opportunities (access) in tourism
management and development which leads to political empowerment through a more democratic
life, including in sharing benefits from tourism activities that are more equitable for local
communities.
Tourism village is a rural area that has certain characteristics which are then potentially
developed to attract visitors. The characteristics of the village are processed and packaged more
attractive to become a tourist destination. Every tourist village offers a variety of interesting things
that become its advantages. Nglanggeran Tourism Village offers a variety of new knowledge and
insights about local culture and traditions and their natural beauty. Nglanggeran tourism village
is rich in Javanese culture and people will not hesitate to teach tourists, especially foreigners who
have no knowledge of Javanese culture, how citizens uphold their traditions and rituals. Through
Nglanggeran tourism, invites tourists to enjoy the beautiful value of harmony between humans,
the environment and nature.
In 2017, Nglanggeran ancient volcanic tourism village, Patuk Subdistrict, was awarded the Best
Indonesian Tourism Village I and received the 2017 ASEAN Community Based Tourism
Ekowati, Nawarcono 285

(CBT) Award, which was submitted in Singapore, Friday, January 20, 2017. It should have
been with various awards received by Nglanggeran tourism village was able to provide positive
implications for the surrounding community, especially being able to improve community welfare.
In any sense the activities carried out by village tourism involve the surrounding community and
the results are enjoyed not only by the manager but by the entire community.
Honggang, Sofeld, & Jigang (2009), define community-based tourism as a community that
benefits through tourism, which allows people to enter the existing mass tourism market to gain
economic benefits, regardless of whether community members are directly or indirectly involved in
tourism activities. . So do not let the existence of tourist villages only provide unilateral benefits for
investors or managers, but the existence of these tourist villages can improve the welfare of the
surrounding community. The highest welfare level according to the community welfare index
(IKraR) in the Special Region of Yogyakarta is in Sleman Regency, while the lowest welfare level
is in Gunung Kidul Regency. But it is far better than the national average.
LITERATURE REVIEW
Community Based Tourism
Definition of Community Based Tourism (CBT), namely: the form of tourism that provides
opportunities for local communities to control and engage in tourism management and development,
communities that are not directly involved in tourism businesses also benefit, require empowerment
political and democratization and distribution of benefits to disadvantaged communities in the
countryside. Research conducted by López-Guzmán (2011), shows that the growing community-
based tourism is a consequence of tourists seeking to find new destinations. This facilitates the creation
of certain tourism products that enable local people to generate wealth for themselves, given that
tourism is a complementary economic activity. Therefore, tourism initiatives of diverse communities
were created with the aim of ensuring that the wealth generated through tourism has a direct impact
on the local population. Ekowati & Nawarcono (2018), conducted research on the use of resources
through community-based tourism in the tourist village of Pentingsari. The results showed that there
were potential resources that could continue to be utilized optimally without destroying the resources
themselves, always prioritizing mutual cooperation, participation and cooperation in the community.
Community, as well as transparency in financial matters between managers and the community. The
friendly attitude, kinship, high responsibility of the tourism village manager, and always maintaining
cohesiveness both between managers and with the surrounding community are one of the successes
of the Pentingsari tourist village.
The definition of community-based tourism according to Beeton (2006), aims to create a
sustainable tourism industry, focusing on local communities in terms of tourism planning and
development. Pongponrat & Pongquan (2007), stated that community-based tourism was developed
as a form of tourism that aims to empower local communities to become independent, where decision-
making involves the community, supports community rights and obligations, and helps communities
to increase their income and standard of living in their own way. Simpson (2008), states that the
definition and interpretation of community-based tourism is centered on the questions: ownership,
management, control and evaluation of tourism activities. According to Dixion et.al (2013), the
concept of economic impact is that local communities can benefit if expenditures from non-local
residents are included in addition to the local economy. Brandano (2015), explains that there is a
positive relationship between tourism and the economic growth of a country in terms of both the short
and long term. Tourism activities viewed from the economic aspect are that the development of
sustainable tourism is able to provide community welfare, additional community income from the
tourism sector and ensure long-term economic stability and benefits for all stakeholders. Ekowati &
Nawarcono (2019), conducted a study on the Social Impact of Community-Based Tourism in
Dolandeso Boro, the results showed that the existence of Dolandeso provided many positive social
impacts for the community, including: there was an increase in community income in line with the
increase in the number of tourist visits to tourist villages, homestay owners get a share, some of the
profits are given to the village treasury, from a physical point of view, the residents' houses are cleaner,
mothers are involved in cooking groups, the community is involved in training, if the community does
not have a homestay they are still involved in tourism activities as security, guides, documentation,
welcoming guests.
286 Ekowati, Nawarcono

Tourism Village
Tourism village is a rural area that has several special characteristics to become a tourist
destination. In this region, the population still has a tradition and culture that is still relatively
original. In addition, several supporting factors such as typical food, agricultural systems and social
systems also color a tourist village area. Beyond these factors, natural and environment that is still
original and maintained is one of the most important factors of a tourist destination.
Besides various uniqueness, the tourist village area must also have various facilities to
support it as a tourist destination. These various facilities will make it easier for tourist village
visitors to carry out tourism activities. Facilities that should be owned by tourist village areas
include transportation, telecommunications, health, and accommodation facilities. Especially for
accommodation facilities, tourist villages provide lodging facilities in the form of tourist lodges
(home stay) so that visitors also feel the original rural atmosphere.
Implications
According to the large Indonesian dictionary, the implication/impact is a strong influence
that brings consequences, both negative and positive. Society is a collection of individuals and
groups that form complex social organizations. In these social organizations there are social values
and norms that function as rules for behaving and interacting in people's lives. The existence of a
change in society due to social impacts depends on the condition of the community itself which
experiences social change. In other words, the social impact that occurs is not always a progress.
In fact, it can also be a setback of society. The speed of change for each region varies depending on
the support and readiness of the community to change. Differences in these changes can result in
the emergence of social jealousy, which must be avoided.
Public Welfare
Community welfare in the economic development paradigm is an integral part. This is because
economic development is said to be successful if the level of public welfare is getting better.
Community welfare is a condition that shows the state of life of the community which can be
seen from the standard of living of the community (Badrudin, 2012). According to the Indonesian
Central Bureau of Statistics (2000), that to see the level of household welfare in a region there are
several indicators that can be used as measurements, namely: (1) Level of family income; (2)
Composition of household expenditure by comparing expenditures for non-food food; (3) Level of
family education; (4) Level of family health, and; (5) Housing conditions and facilities owned
in the household. The Central Bureau of Statistics Indonesia (2000) states that to measure the level
of household welfare in an area there are several indicators that can be used as measurements,
including: 1. The level of family income; 2. The composition of household expenditure by comparing
expenditure on food and non-food; 3. Family education level; 4. The level of family health, and; 5.
Housing conditions and facilities owned by the household. Whereas Todaro and Smith (2003)
suggest that the welfare of the lower middle class can be represented by the level of people's
lives. The level of life of the community is characterized by the alleviation of poverty, better levels
of health, the acquisition of higher levels of education, and the level of productivity of the
community.
Many approaches to measuring welfare levels are based solely on economic indicators.
Community welfare indicators can be measured by using the People's Welfare Index (IKraR)
developed by the Coordinating Ministry of People's Welfare of the Republic of Indonesia. The
People's Welfare Index (IKraR) is an instrument or measure of people's welfare by calculating not
only the economic aspects of society, but also including economic, social, and political welfare.
Referring to the welfare boundaries used, the measurements are also set into three-dimensional
forms, namely: the economic dimension, the social dimension, and the political dimension, which
are then described with democracy and governance. After the formulation of the concept of welfare
has been produced, then what is measured will be determined, and how to measure it. 3 (three)
dimensions of the IKraR formation, can be described as follows:

IKraR
Social Dimension Economic Dimension Dimensions of Democracy

and Governance
Figure 2.1. Forming Dimension IkraR
a. Social Dimension
Measuring justice in meeting basic needs, improving accessibility, and reducing social inequality
in the community.
b. Economic Dimension
Measuring the fairness of ownership and accessibility of the community towards economic
resources to achieve their welfare.
c. Dimensions of Democracy and Governance
Measuring the progress of democratic development that guarantees the right of the community to
participate in the entire development process independently without discrimination.
With the People's Welfare Index (IKraR), policy choices will be clearer through analysis of each
indicator used in each dimension of well-being.
RESEARCH METHODS
Research Place
This research was conducted in the Nglanggeran Tourism Village, Patuk District, Gunung
Kidul Regency, Special Region of Yogyakarta. Tourism Village which covers nature tourism, we
use as a sample. This study focused on the implications of the success of community-based tourism
in the tourist village of Nglanggeran. We hope that this research can create a tourism village
that can adopt the resources of the surrounding community and can attract tourists to visit, so that
it can improve the welfare of the surrounding community.
Types and Data Sources

In this study using primary data. According to Sugiyono (2017), primary data is data that can
be directly and immediately obtained from the source, observed, and recorded for the first time. In
this study the primary data used was sourced from the management of tourist villages, local
communities and tourists in the Nglanggeran Tourism Village, Patuk District, Gunung Kidul
Regency,Special Region of Yogyakarta. Primary data is done through interviews, and
questionnaires. This study does not prioritize the quantity of respondents but the quality of
respondents so that the data obtained in the questionnaire has a high value of objectivity in
accordance with the knowledge, understanding, beliefs of individuals about the object of attitude
(cognitive) because of experience.
Types of Research
This study aims to find answers to questions that relate to the implications of the success of
community- based tourism in Nglanggeran Tourism Village, Gunung Kidul District,Yogyakarta.
This study uses qualitative methods, because qualitative is more easily adapted to reality, presenting
directly the nature of the relationship between researchers and respondents, and this method is more
sensitive and more able to adapt to the patterns of value faced. This research emphasizes his analysis
on the process of deductive and inductive inference and analysis of the dynamics of the
relationship between observed phenomena, using scientific logic. This study deals with the
implications of the success of community-based tourism in the Nglanggeran tourism village
which will be analyzed by deductive and inductive inference.
Method of collecting data

The data collection method that the researchers did was to use the IKraR questionnaire
which was distributed to 81 people consisting of 27 tourist village managers and 54 community

members. The researcher also added village data and information regarding the condition of the
infrastructure, economy and social conditions of the village.
Data Analysis
In qualitative research, the analysis is not based on calculations in the form of quantitative or
number, but in the form of statements. The process of data analysis and interpretation is an ongoing,
repetitive and continuous effort. The analysis process in examining resource utilization through
community-based tourism is not only done at the end of data collection or on its own, but
simultaneously has also begun to take place during the data collection process while observing how
resources are utilized through community-based tourism during interviews. The analysis used in this
study is descriptive, which aims to describe systematically and accurately. This research attempts
to describe the situation or event that occurred. Then compiled, explained and analyzed. Data in
the form of speech, writing and behavior obtained from observations on the management of tourist
villages, local communities and tourists in the Nglanggeran Tourism Village in Patuk District,
Gunung Kidul Regency,Special Region of Yogyakarta.

Implications of the Success of Community Based Tourism on the Community Welfare
Level of the Nglanggeran Tourism Village Before Covid 19 Pandemic
Nglanggeran tourism village is a tourism village located in Patuk District, Gunung Kidul
Regency, Special Region of Yogyakarta. Since 1999, village love has been instilled, a sense of
belonging and fostered pride in their village. Nglanggeran tourism village was established in
2011, and the Tourism Village Management Agency was formed. The existence of Nglanggeran
tourist village is very much felt by the community. At the beginning of the establishment of
Nglanggeran tourist village, it only relied on Purba Nglanggeran Volcano as a tourist attraction. To
add tourist destinations in Nglanggeran, in 2012, the manager made Embung. Nglanggeran Embung
is a pond-like building at an altitude of about 500 meters above sea level. Nglanggeran Embung is
an artificial mini lake built in the hills near the ancient Nglanggeran volcano ecotourism. This
embung has an area of about 70x70 m² with a depth of up to 3 meters. Nglanggeran Reservoir
was in augurated by Sri Sultan Hamengkubuwono X on February 19, 213. The source of water
that fills the Nglanggeran Dam comes from a spring located on the slopes of Nglanggeran Purba
Volcano. Nglanggeran embung is pure water conservation, where the reservoir is a rainwater
reservoir.
Nglanggeran tourism village always tries to provide new things from the tourist destinations
offered. From the start, which only relied on Ancient Volcano, then it developed from the
Nglanggeran embung, Nglanggeran Fruit Garden, Kedung cage Waterfall, Nglanggeran Chocolate
Griya, Local Cultural Arts and Cultural Kirab. Nglanggeran Fruit Garden uses an area of 20 hectares
around the embassy with the Sultan Ground status of the Yogyakarta Palace. The construction of
the Nglanggeran fruit garden uses grants from the provincial government of Yogyakarta Special
Region and is self-supporting by the surrounding communities that manage it. The existence of the
Nglanggeran Fruit Farm is specifically for the cultivation and production of durian and longan fruit.
Nglanggeran durian, which is starting to be considered by durian lovers because of its distinctive
taste and not inferior to Menoreh durian or local durian around Jogja. Nglanggeran also has Kedung
Kandang Waterfall, or what is known as Kedung Kandang Waterfall, located in Nglanggeran village,
located hidden away in Nglanggeran village. Kedung cage is a small waterfall that drips onto a
jagged hill surrounded by lush green fields.
One other innovation from the Nglanggeran tourist village is the Nglanggeran Griya Coklat
which is conducted by the people of Nglanggeran village, which is a combination of elements from
the Farmers Group, Purbarasa Culinary Group, Pokdarwis Nglanggeran and village youth. Cacao
plantations are carried out by farmer groups, in which management involves all parties. Cacao
planting also receives support from IOM (International Organization Migration) or International
Organization for Migration (IOM). IOM realizes that the biggest economic support in Nglanggeran
village is cacao. IOM is the main intergovernmental organization in the field of migration. IOM
is dedicated to advancing humane and orderly migration for the common good, carried out by
increasing understanding of migration issues, assisting the government in addressing the challenges

of migration, promoting social and economic development through migration, and upholding the
dignity and welfare of migrants, including their families and communities . Assistance from IOM is
in the form of cacao seeds, cacao seed planting and cacao plant maintenance. The establishment of
Nglanggeran Chocolate Griya is an innovation in processing cocoa from upstream to downstream
carried out by village communities in collaboration with the Forestry and Plantation Office
(Dishutbun) of Gunungkidul Regency, Research Institute for Natural Materials Technology - LIPI
Yogyakarta and Bank Indonesia Yogyakarta branch office. Nglanggeran Brown House was
inaugurated on December 2, 2016 by Sri Sultan Hamengkubuwono X. The establishment of
Nglanggeran Chocolate Griya is an innovation in processing cocoa from upstream to downstream
carried out by village communities in collaboration with the Forestry and Plantation Office
(Dishutbun) of Gunungkidul Regency, Research Institute for Materials Technology Alam - LIPI
Yogyakarta and Bank Indonesia Yogyakarta branch office. The biggest segment of cocoa is tourists
as much as 40%, while 60% is sold in stores sold in the government, such as Mirota Batik, Bakpia
25, Yogyakarta Scrummy and several other shops. The products produced by Nglanggeran
Chocolate Griya are chocolate powder, chocomix, chochomix bar, dodol cacao, salted banana,
geo milk etawa, cashew sale, coated salts, chocolate chips, and cassava salute.
Nglanggeran tourism village also prioritizes Local Culture Arts, where tourists are taught
about Javanese culture, how its residents uphold their traditions and rituals. Tourists are also
taught to upload about local manners, how to greet others, communicate gestures and many
other things. How the Javanese treat and communicate with their parents is different from how
they treat and communicate with people of the same age or younger. Tourists will also be taught
how to learn to play karawitan, a set of musical instruments that produce charming traditional music.
In addition to Javanese culture, there is Jatilan or Kuda Lumping, which is a traditional magical
dance that is often performed by local people using a weaving horse from bamboo known as braids.
And there is the Batik Mask Workshop, where tourists can make their own masks painted with
intricate batik designs. One of the interesting things in the Nglanggeran tourist village is the
existence of the Nglanggeran Purba Volcanic Ecotourism Area Carnival followed by participants
from the hamlets around the Nglanggeran Purba Volcano area and several art groups in
Gunungkidul district. Nglanggeran Purba Volcano Culture Kirab is held every year with the main
goal of introducing natural volcanic areas and attracting tourists to visit this place.
The concept of Nglanggeran tourism village is Community Based tourism (CBT) or
community-based tourism, from the community by the community and to the community. In its
management the tourist village involved 8 (eight) community groups, namely the Farmers
Group, Purbarasa Culinary Group, Pokdarwis Nglanggeran, Karang Taruna, Security Groups,
Homestay Groups, Pengrawit Groups. The current number of managers of the Nglanggeran tourist
village is 54 (fifty four) people scattered in various community groups. The existence of
Nglanggeran tourism village is very beneficial for the Nglanggeran community, namely the
existence of additional income, increased income and a large sense of ownership from the community
over their village. Another impact of the existence of the Nglanggeran tourist village is that it is
not only beneficial for Nglanggeran village, but also other villages around Nglanggeran. Other
benefits of the existence of Nglanggeran tourist village are:
Environmental Aspects
The initial concept of the establishment of Nglanggeran tourist village was to preserve
the ecosystem. Ecosystem is an ecological system that is formed due to inseparable reciprocal
relationships between living things and their environment. In order for the ecosystem to be
maintained, the community must do environmental conservation. Environmental conservation, is
the use, management of natural resources including animals, water, land, air, renewable minerals or
not. The Nglanggeran community is now beginning to realize the importance of always protecting
the ecosystem, not only now but also in the future. How to maintain and manage the environment
to be maintained, and the community always makes various efforts and careful management
of the environment and resources.

Social Aspects
The establishment of Nglanggeran tourist village has made the level of urbanization decline.
Before there was the existence of Nglanggeran tourist village, most people preferred to be
Indonesian Workers (TKI) rather than working in their villages, because it was felt that becoming
Indonesian Workers (TKI) was more promising when viewed from the income side compared to
if they continued to work in their villages . At present, the Nglanggeran community prefers to
work in their village rather than become Indonesian Migrant Workers (TKI). Many of the former
Indonesian Workers (TKI) who opened businesses in the village such as restaurants, homestays,
beauty (ecospa), culinary, and so on. Development of the Nglanggeran tourist village has made
divorce rates decline. 80% (eighty percent) of homestay owners are local people, the management of
homestays together with family members, making this condition make the family harmony
relationship closer and closer, the sense of belonging, eating together between tourists living in with
family members also participate contribute to the sense of togetherness.
Economic Aspects
The existence of Nglanggeran tourist village is able to provide additional income and
increase income through the activities carried out. The increase in income was obtained through
homestay businesses, restaurants, photography services, eco-services (sales of ginger packaging
products, ginger packaging, temuireng packaging). If all this time mothers have only been involved
in cooking groups, there is now business development for young mothers through creative economic
efforts in the manufacture of cosmetics and beauty treatments, where young women do the
management.
The average visitor of Nglanggeran tourist village 80% (eighty percent) of tourists is the
archipelago (Indonesia), while 20% (twenty percent) are foreign tourists. In 2014, in its
development, the manager of the Nglanggeran tourist village had felt the turmoil with the
existence of this tourist village. This is due to an increase in the number of tourists and an increase
in tourist village income that is not balanced with environmental pollution carried out by tourists.
Damage to the ecosystem is careless garbage disposal, air pollution, and vandalism. This is a
problem when the damage to the ecosystem cannot be controlled by managers and the
community. To overcome this, the solution made by the manager was to reduce the number of tourist
visits to the tourist village of Nglanggeran. If in the past most visitors were individuals now
visitors began to be directed by groups or organizations or institutions. The policy decision on the
number of visitors in groups is able to reduce the damage to the ecosystem, because the regulations
to maintain the ecosystem can be directly conveyed from the group leader to each of its members.
In 2017, the number of village visitors decreased by almost 50%, compared to 2016. This
was due to changes in the reservation system and e-ticketing development. In 2017, the Nglanggeran
tourist village began to use the website www.gunungapipurba.com, the existence of the website
greatly helped the Nglanggeran tourism village in promoting the activities and potential of the
Nglanggeran culture and nature. The change in the reservation system and the development of e-
ticketing, makes it more convenient, not many people come because tourists can make reservations
for visits in Nglanggeran wherever and whenever they are. For the e- ticketing reservation and
development system, Nglanggeran tourist village cooperates with tour guides, these activities
include picking up at the station or airport, live in the tourist village of Nglanggeran, city tour, and
take tourists back.
Tourism village managers routinely hold meetings between managers and tourist village
groups through Forkum (communication forum) 2 (two) weeks, and with the community every
35 (thirty five) days. This meeting activity is routinely carried out so that there is always the
development of new activities and things that become the attraction of tourist villages to tourists, and
that the existence of Nglanggeran tourism village can be more beneficial for the community.
Tourism village managers always emphasize that the existence of tourist villages is from the
community by the community and for the community. Village tourism is not only beneficial for
managers but the existence of tourist villages must be beneficial and improve community welfare,
these objectives are always emphasized by the manager.

Implications of the Success of Community Based Tourism on the Nglanggeran Tourism Village
Community Welfare Level, with IKraR indicators
Community Based Tourism is a form of tourism that provides opportunities for local
communities to control and be involved in tourism management and development activities, while
people who are not directly involved in tourism businesses also benefit. Community-based
tourism as tourism that takes into account environmental, social and cultural sustainability
aspects. Community-based tourism is a tool for community development and environmental
conservation. Or in other words community-based tourism is a tool to realize sustainable tourism
development.
Community Based Tourism is realized in the form of Tourism Village. Tourism villages
should aim to try to reduce rural poverty as well as to promote rural development through the
involvement of local communities in tourism, as well as to reduce alienation of local communities
with investors (Mbaiwa 2003, 14). According to Mearns (2003) the involvement of local
communities in tourism as an alternative way of giving direction to development to improve public
health, education and quality of life without sacrificing their natural resources. So do not let the
existence of tourist villages only provide unilateral benefits for investors or managers, but the
existence of these tourist villages can improve the welfare of the surrounding community.
One tourist village that is considered successful in implementing the principle of
Community Based Tourism is the Nglanggeran tourism village. Nglanggeran tourism village is
considered successful in applying the principles of community-based tourism in managing its
activities. The principles of Community Based Tourism are embodied in two approaches, namely:
the first approach which tends to be associated with a formal planning system that emphasizes the
potential benefits of ecotourism. The second approach, tends to be associated with the term
participatory planning which is more concerned with more balanced provisions and arrangements
between controlled development and planning. This approach places more emphasis on sensitivity to
the natural environment in the impact of ecotourism development.
The achievements of Nglanggeran Tourism Village from the principle of Community Based
Tourism are able to contribute to social welfare to the community, involve the management of the
community, maintain and improve the quality of the environment, encourage interactive
participation between local communities and visitors (tourists), provide travel services quality
tours and guides. Included in maintaining the quality of food drinks, accommodation and
performance of friendly tour operators (FTO). In 2017 Nglanggeran Purba Volcano Tourism Village,
Patuk, was awarded the Best Indonesian Tourism Village I and received the 2017 ASEAN
Community Based Tourism (CBT) Award, which was handed over in Singapore, Friday, January
20, 2017. It should have been with various awards received Nglanggeran tourism village is able to
provide positive implications for the surrounding community, especially being able to improve
community welfare. In any sense the activities carried out by village tourism involve the surrounding
community and the results are enjoyed not only by the manager but by the entire community.
The highest welfare level according to the community welfare index (IkraR) in the Special Region
of Yogyakarta is in Sleman Regency, while the lowest welfare level is in Gunung Kidul Regency.
But Gunung Kidul district is far better than the national average.
Welfare is a concept that can be seen from many perspectives. Most experts see welfare from
an economic point of view. But along with the times, prosperity is not enough if only seen from
an economic perspective. Recent developments as well as various studies reveal that the high
economic growth of a country does not mean that the people of the country are prosperous. By
considering the current context and also the Indonesian context, the welfare perspective used in the
IKraR is viewed from two perspectives, namely: sectoral and in full.
What is meant by sectoral welfare is the fulfillment of basic rights by individuals
(individuals), not by the community or by the state. For example, the fulfillment of the right to
food, clothing. In other words, if an individual can fulfill his own basic needs, then he can be said
to be prosperous. While complete well-being is the fulfillment of basic rights by the community or
state, and cannot be only by individuals. For example, the fulfillment of the right to clean water
(clean water must be provided by the state). In other words, if a community can fulfill their
basic needs (which they cannot fulfill themselves), then the community in that community can
be said to be prosperous. In addition, well-being is also viewed from a period of time. Based on time

span, welfare can be seen from two sides, namely: At present, namely seeing welfare as a process
to improve the quality of life and the future, namely welfare is seen as the ultimate goal, namely
a dignified and sovereign life.
IKraR which is an instrument for measuring the quality of people's welfare in a holistic
manner, has the following uses: First: Measuring the achievement of inclusive development, namely
development that relies on improving the quality of welfare of the poor (pro poor), siding with the
creation of business opportunities and employment (pro job), siding with the sustainability of
ecosystems and / or inter-generational environments (pro enveronment), and relying on economic
growth that guarantees an increase in people's welfare, coherent with decreasing unemployment,
ensuring environmental sustainability and justice for all (pro growth). Second: To be a guide for the
government and regional government in development planning, both in determining the target,
development goals, and determining the budget allocation and location of development priorities.
By referring to the 3 dimensions of IKraR and 22 indicators, the Government and Regional
Government will be easier and more precise in determining the target of achievement, priority,
target, location and budget allocation for development in a holistic, integrated, and in accordance
with the characteristics of the region and or region.
Third: To be the foundation and/or background to increase the participation of development
stakeholders, business communities, civil society, political communities and the international
community in the overall development process of Indonesia in a holistic manner, integrated with
development policies, and sustainable.
In this study, researchers used the public welfare indicator measured by using the People's
Welfare Index (IkraR) developed by the Coordinating Ministry of People's Welfare of the Republic
of Indonesia. The People's Welfare Index (IKraR) is an instrument or measure of people's welfare
by calculating not only the economic aspects of society, but also including economic, social, and
political welfare. With the People's Welfare Index, policy choices will be clearer through analysis
of each indicator used in each dimension of well-being. The researcher analyzed descriptively
whether with the existence of Nglanggeran tourism village, the level of community welfare
increased by being analyzed through economic dimensions, social dimensions and political
dimensions. From the 22 Indicators of the People's Welfare Index, researchers only used 19
indicators that were adjusted to the research the researchers did.
Data Processing Method

The researcher analyzes all indicators that fall into the Dimensions of Justice in Economics,
Social Justice, and Democracy and Governance. The strengths of the relationship are expressed by
interpretation of the specified value intervals which are usually expressed in very low categories (0-
25), low (26-50), high (51-75) and very high (76-100). IKraR values range from 0 to 100. Based on
interviews, discussions and questionnaires with managers, the community, the researchers
formulated an assessment of several dimensions of assessment, as follows:
Table Calculation (IkraR) of Nglanggeran Tourism Village
Dimensions of
Indicator of the Social Indicator of the Economic
Value Value Democracy and Value
Dimension Dimension
Governance Indicator
Electricity Access 100 Own Home Ownership 91 Information Access 70
Access Health 92 Working Age> 15 Years 80 Sense of security 90
Recreation 68 Access to The Bank 50 Civil Liberties 80

School Duration> 15 Years
100 Education Cost Ratio 75 Political Rights 80
Old
Health Cost Ratio to Total
Use of Social Security 72 80
Expenditures
Life expectancy> 40 years 85

Dimensions of
Indicator of the Social Indicator of the Economic
Value Value Democracy and Value
Dimension Dimension
Governance Indicator
Access to Clean Water 98
Access to Sanitation 99
Per capita expenditure>
63
GK
Income Equity Level 80
Average per Dimension 85.7 75.2 80
IKraR 80.3
Explanation: Indicator of the Social Dimension

Access to Electricity
One hundred percent (100%) of the Nglanggeran tourist village area has been facilitated
by electricity. Electricity is an important element in economic development. In addition to its
function in increasing economic productivity, electricity also has functions related to other fields
both in terms of education, health, and also access to communication. Electricity is an important
benchmark in measuring the level of people's welfare because it is a 'basic capital' in developing
businesses and fulfilling the basic rights of citizens and becoming an important source of energy in
supporting all community activities. The existence of Nglanggeran tourist village has a positive
impact on the community, access to electricity has reached all areas of the tourist village of
Nglanggeran. With the access of electricity in all villages, people can develop their potential
both in the economic aspect and increase their knowledge by using modern information and
communication media.
Average School Length

One hundred percent (100%), the Nglanggeran community attends education to senior high
school. This shows that the existence of Nglanggeran village is able to improve people's welfare.
The higher the level of education of the population of a nation, the better the quality of the
nation in managing its potential and resources. Education is an important measure in assessing
the quality of human resources owned by a nation, and is used to see the welfare of a nation. The
average length of school describes the number of years used by residents aged 15 years and over
in formal education (calculated by considering the highest diploma and / or class that has ever been
/ is being occupied).
Access to Health
Ninety-two percent (92%) of the Nglanggeran community utilize health services. Health
indicators are one of the important aspects in the development of the quality of the population of a
nation. The Nglanggeran community is given convenience in accessing health services, including
in terms of costs. In this indicator, measuring the number of people who can access health services
for treatment in the last 6 months. More and more people can access health services, indicating that
the level of affordability of the population in health services is getting better, and vice versa.
Access to health is measured based on the percentage of residents who have been outpatient in
the past 6 months. Outpatient treatment is the activity or effort of household members who have
health complaints to check themselves and get treatment by visiting modern or traditional health
service places without staying, including bringing health workers to the homes of household
members.
Recreation (Sports and Art)

Sixty eight percent (68%), the Nglanggeran community uses leisure time to carry out
recreational activities. This shows that the level of community welfare is increasing, because the
tertiary needs of the community are fulfilled. Community needs consist of 3 (three) main aspects,
namely primary, secondary, and tertiary needs. Recreation can be classified as a tertiary need that

can be fulfilled if the primary and secondary needs have been fulfilled. Recreational indicators are
measured by the percentage of households that carry out traveling activities for recreational purposes
(vacation, sports / arts).
Social Security
Seventy-two percent (72%) of the Nglanggeran tourist village community utilize health
services provided by the government. Social security is one form of social protection organized by
the state so that citizens can fulfill basic basic needs. One important social security and related to
meeting basic needs is the right to gain access to health services. Social security measured by the
percentage of households that receive social security (Jamkesmas, health cards, poor letters
(SKTM), others). This percentage is derived from the presence/absence of household members who
have received free health services for the past 6 months. Public Health Insurance (Jamkesmas) is
a social assistance program for health services for the poor throughout Indonesia. The target of this
program is that the people are very poor, poor, and close to the poor / unable. A Health Card is a card
issued by the Ministry of Health with the intention of helping the poor (unable). This health card
is used for medical treatment at Government health facilities (hospitals and health centers) free of
charge. One family has one health card which contains a list of family members and each family
member can use it. Poor Letter / Non-Capable Certificate (SKTM) is a letter issued by the village
/ kelurahan with the intention of obtaining fee relief for the population. While regional health
insurance (Jamkesda) is a social assistance program in the field of health provided by the local
government to the poor in the region.
Life Expectancy Aged 40 Years or More

Eighty-five percent (85%), the Nglangeran community has an expectation of life above 40
(forty) years. Life expectancy is one of the welfare indicators that is widely used to see the success
of a country in providing health services to improve the quality of life of its population. The level
of life expectancy at Nglanggeran shows an increase from year to year. In this indicator also takes
into account the infant mortality rate, maternal mortality, and death caused by other causes.
Access to Clean Water

Ninety-eight percent (98%), the Nglanggeran community already has clean water supply.
Water is the main source of life that is not only used as drinking water, but also various other
needs. Clean water is defined as water that is safe and healthy for human consumption, tasteless,
and odorless, colorless, and does not contain heavy and toxic metals. Clean water referred to here
is a household that uses drinking water from branded bottled water, refilled water, meter plumbing,
retail plumbing, drill wells / pumps with a distance to the nearest shelters / feces inja 10m, wells
protected by distance to nearest shelter / feces inja 10m, or protected springs with distance to the
nearest shelters / feces ≥ 10m. The indicator used is the number of households that use clean water
as drinking water.
Access to Sanitation
Ninety-nine percent (99%), the Nglanggeran community already has its own sanitation. This
shows that the level of community welfare is increasing. One key to preventing infectious diseases
is to seek good sanitation. Good sanitation is also one of the keys to quality of life and quality of
public health. Access to basic sanitation in Indonesia is still quite low, especially for people living
in rural areas. The indicator used in measuring access to sanitation is latrine ownership. Latrine
ownership is the number of households that have toilet facilities that are used by themselves (if
defecation facilities are only used by the respondent's household) or are used together (if a defecation
facility is used by the respondent's household along with several houses certain stairs).
Population Above The Poverty Line

Sixty-three percent (63%) of the Nglanggeran community live above the poverty line. The
poverty line (GK) of the Indonesian population in March 2018 is Rp. 401,220 / capita / month. This
means that the number is the minimum income limit that must be met to obtain living standards,
both for food and non-food needs in an area. If it is below this number, it is categorized as poor.

The poverty line consists of food GK of IDR 294,806 / capita / month plus non-food GK of IDR
106,414 / capita / month. One measure of population welfare is the ability to meet minimum basic
needs. The more people can fulfill these minimum basic needs, the better the welfare level of the
population, and vice versa. Although the concept of measuring population welfare or poverty
is often debated, at a certain point it is agreed to take measurements on aspects of basic needs. In
the measurement carried out by IKraR, the number of poor people is one indicator that shows the
inability of the economy in fulfilling basic food and non-food needs measured in terms of
expenditure. So that someone is said to be poor if the average per capita monthly expenditure is
below the poverty line.
Income Equity Level

With the existence of Nglanggeran tourist village has a positive impact on the community.
Eighty percent (80%) tourist village communities get additional income from various activities held
by Nglanggeran tourism village. This shows that there is no imbalance or gap in the income
distribution of the population. The more equitable distribution of income to the entire population,
the more inequality or inequality they have, the opposite.
Indicator of the Dimensions of Economic Justice

The Number of Residents Who Own a House
Ninety-one percent (91%) of the Nglanggeran tourist village community already have their own
homes. The indicator here is to measure what percentage of the population lives in his own house, by
not seeing the quality of the house owned based on the criteria of a healthy home. Home indicators
are important because in addition to being a basic means to fulfill the right to feeling safe and
comfortable, a house can also be considered as an asset to obtain other economic resources. Besides
that home ownership is an important prerequisite for fulfilling basic social needs such as identity,
education, health, and so on. In the IKraR calculation, this indicator of home ownership uses the
Susenas indicator that measures the percentage of residents who own their own homes (if the
residence at the time of enumeration actually belongs to the household head or one household member.
Houses purchased in installments through bank loans or a house with a lease purchase status is
considered to be its own house).
Number of People Aged 15 Years and Over Who Work

Eighty percent (80%), Nglanggeran people over the age of 15 have worked. This shows that
the unemployment rate in the tourist village of Nglanggeran is relatively low. In accordance with
the provisions of the International Labor Organization (ILO) that the age limit for a child to be
allowed to work is 15 years. Therefore, the indicator of the number of working citizens is
determined to be over 15 years old. Indicators of the population that work are important considering
that by working the people will get income to fulfill their daily needs.
Availability and Access to the Bank

Only about fifty percent (50%) of the Nglanggeran community have taken advantage of
banking access. This shows that there are not so many people accessing capital through banking.
Actually, access to capital is not only available from bank institutions, but also non-bank
institutions such as cooperatives and good revolving fund programs initiated by the Government
and Non-Government. The indicators used are the availability and ease of accessing capital from
banks. In principle, the greater people's access to capital sources, the greater the opportunity to
increase their income and fulfill their basic needs. In this IKraR calculation, the indicator from the
Susenas used is the percentage of households that receive credit (business loans received by
household members in the last year from the enumeration period originating from a bank program
other than People's Business Credit) from the bank.
Level of Household Expenditure for Education

In this indicator it measures how much expenditure that must be spent by citizens to get
education can be known the level of welfare of citizens. Seventy-five percent (75%) of the
Nglanggeran community spend most of their income on education costs. This shows that the

Nglanggeran community has increasingly understood the importance of the level of education in
life. The greater the costs that must be incurred by citizens to get education, the less opportunities
that will be obtained and will hamper efforts to improve people's welfare. Getting education is
one of the citizens' rights that must be fulfilled by the State. With good education citizens will have
a wide opportunity to achieve a dignified and sovereign life. In this IKraR calculation, the Susenas
indicator used is the proportion of household expenditure for education costs (fees for educational
purposes such as tuition / tuition fees, registration, contributions, scout activities, stationery, and
course fees, including photocopies of books / lessons school) against the total household expenditure
per month.
Level of Public Expenditure on Health

Eighty percent (80%) of the Nglanggeran community are able to incur additional costs to
maintain health. This shows that the Nglanggeran tourism village community is increasingly
concerned about health. The level of citizens' expenditure on health is important to measure because
the higher the costs that must be incurred by citizens to improve health, the smaller the purchasing
power of the people to obtain it. Health is a basic and absolute need that must be fulfilled by
citizens. Health is very influential on the level of welfare because it has direct implications for the
physical and social life of citizens. As a result, welfare will be difficult to achieve because people
cannot easily access health. In the IKraR calculation, the Susenas indicator used is the proportion
of household expenditures for health costs (costs incurred for health care such as hospital fees, health
centers, doctors, medicines, antenatal care, family planning costs, childbirth costs, immunization
for children under five) and others) to the total household expenditure per month.
Indicators of the Dimensions of Justice in Democracy and Governance

Access to Information
Seventy percent (70%) of the Nglanggeran community utilize information access. Indicators
of the right to information (access to information) are very important because with information
that is easily accessible, the community will find it easier to obtain data regarding their rights and
obligations as citizens to utilize these rights and obligations in improving and achieving their
level of welfare. Through adequate information it is expected that the community can increase its
capacity and can create and utilize opportunities created by the results of development. In
accordance with the availability of data available at the Central Bureau of Statistics (BPS), the
indicator used to measure the level of access to information is the percentage of households that have
accessed the internet (if someone takes time to access the internet, so he can use or enjoy internet
facilities such as: search for literature / references, search / send information / news, communication,
e-mail / chat, etc.) in the last 3 months. This indicator of access to the internet is important
because currently the use of the internet network and information technology is one of the
benchmarks for the success of development in more developed countries. In addition, the internet
also reflects the progress of infrastructure in a region, both software and supporting infrastructure.
Security
In the context of welfare, a sense of security is an indicator that is very important because it
will ensure that citizens can achieve and fulfill their basic needs for a dignified and sovereign life.
Ninety percent (90%) of the Nglanggeran village area can be said to be a safe area, both from
physical and non-physical crimes. By definition, security or human security can be interpreted as
the rights of all the people that must be created and provided by the state. This sense of security
includes being safe from security disturbances, conflicts, crime, disasters and so on. In addition,
opportunities and access to social and economic resources will only be created if the security
conditions support and are sustainable. In this IKraR calculation the measured indicator is the
level of security of citizens from crime, namely the percentage of occurrences of crimes reported to
the Police. The indicators of the Susenas used are the percentage of the population (household
members) who are victims of crime (someone or property that has experienced or been exposed to
crime or business / attempted crime over the past year. The intended crime is all crimes and
violations that can be threatened with punishment under the Criminal Code, limited to the personal
person and property, such as murder, abuse, kidnapping or deprivation of liberty, theft with or without

violence, arson, destruction, embezzlement, fraud, rape, humiliation, narcotics, sale of children, and
defamation) for the past year.
Civil Liberties Aspect

The level of civil liberties in the tourist village of Nglanggeran reaches eighty percent (80%).
The right to civil liberties is an indicator of measuring the level of people's welfare which can
illustrate how open and guaranteed the public expresses his opinion and how much the constitution
of regional officials guarantees the right to freedom of expression and participation in the entire
development process. Civil liberties are important indicators to measure the level of people's
welfare, especially if it is associated with a goal or form of welfare, namely a dignified and sovereign
society. In this context the freedom of the people to express and participate in development to
guarantee the fulfillment of basic needs is the core of the principle of democracy that must be
realized. Welfare needs to be measured by the freedom of citizens to live and develop their lives
because economic justice and social justice can only be realized if the freedom of citizens to
understand and use freedom is guaranteed. Of course the freedom referred to here is not
interpreted as a freedom that denies social responsibility. A mature democracy occurs when the
applied freedom adheres to social responsibility or freedom that respects social responsibility.
Aspects of Political Rights

The freedom of the Nglanggeran community to channel political rights reaches eighty
percent (80%). Indicators of the political rights of citizens can be measured through the level of
citizen political participation in procedural democracy both in determining policies, legislation and
in the election process. That is, the measurement of people's political rights is not limited to the
electoral process, but also includes political rights that are used as well as possible as a principle in
living democracy in Indonesia. In this context what is expected is the occurrence of conditions in
which the State guarantees the political freedom of citizens and citizens to use these political rights
as well as possible in determining policies that relate to their lives. In other words, political rights
are not only manifested in the context of choosing and being elected in elections, but more broadly
how political rights are used as well as possible as a principle in living democracy in Indonesia.
The average achievement of the overall community welfare dimension (IKraR) in the
Nglanggeran tourist village is 80.3%. The result of obtaining a score of 80.3 indicates that the level of
welfare in the Nglanggeran tourist village is very high, where if an area has a value in the range (76-
100) it is categorized as very high. The success of the Nglanggeran tourism village is able to provide
positive implications for the surrounding community, especially being able to improve the welfare of
the community. In any sense, the activities carried out by the tourist village involve the surrounding
community and the results are enjoyed not only by the manager but by the whole community.
Implication Community Based Tourism In Nglanggeran Tourism Village In Post Covid-19

Pandemic
The COVID-19 pandemic has brought changes to the world in general and Indonesia in
particular. The world is faced with various challenges that were never imagined before. Various
efforts have been made by the government to inhibit the spread of the COVID-19 virus, but until
now the pandemic still exists. The COVID-19 pandemic, hampers economic activity, has an impact
on the level of community welfare and increases the poverty line. The village atmosphere, which is
quiet from tourist visits during the pandemic, has now become the new normal in the context of a
tourist village. Cancellation of visits by potential tourists to tourist villages results in significant losses
that have an impact on the economy and welfare of tourist villages. This is because people who work
and are active in tourist villages have lost their jobs. The labor-intensive program organized by the
government which was intended for people who previously contributed to tourism activities had only
been absorbed by 30%. The independence of tourist villages began to dim and was tested during the
pandemic. Tourism villages that previously had a lot of income from tourism activities now have to
rearrange strategies to be able to survive with the independence that has been formed. One of the
sources of strength that becomes the advantage of a tourist village is that the community's main
livelihoods are not lost, namely in the agricultural, plantation, farm, handicraft, fishery and self-
employed sectors.

The Nglanggeran tourist village has so far received a turnover of billions of rupiah from tourist
visits, which have been significantly affected by the COVID-19 pandemic and have closed access to
tourist destinations for tourists since March 23, 2020. Although the management of tourist villages is
not the main source of income for people in Nglanggeran, it is not It is undeniable that the income of
the Nglanggeran tourism village community is reduced because the income from the management of
the Nglanggeran tourist village is much larger. The Nglanggeran community feels the paralysis of the
tourism village economy, especially for community members who depend on income from businesses
that are directly related to the tourist village, such as home stay managers, transportation services,
selling souvenirs. Since the pandemic until now, the entire community has carried out the " Aksi
Reresik Wisata Jogja” (Jogja Tourism Resurge Action) which is a community service activity to clean
up the tourist destination environment and the home environment. The community returned to
farming, gardening, and animal husbandry. The pandemic period is also used to improve the
supporting facilities of tourist destinations and increase the capacity of human resources for managing
tourist villages. One of the activities that are optimized for tourist villages during the pandemic is to
maintain good relations with tourism bureaus, travel agencies and communities outside the village
through social media and virtual tours of the Nglanggeran tourist village which are open to the general
public. This virtual tour that lasts for two hours provides the experience of exploring the itinerary of
all tourist destinations in the tourist village of Nglanggeran, which should only be explored for two
days if done offline.
In July 2020, the Nglanggeran tourist village began to prepare itself to receive tourist arrivals,
with a health protocol to prevent the transmission of COVID 19, the readiness of human resources
and equipment. This is also supported by the entire Nglanggeran community who participates in the
implementation of the new normal. Although the Nglanggeran tourist village has started to open
tourist destinations and enforce a new normal, tourism activities have not yet been implemented
because they are still looking at existing developments. Live in or homestay activities that involve
many people are temporarily suspended. As part of the new normal, the Nglanggeran tourist village
has compiled a Standard Operating Procedure (SOP) for managing tourist villages and has imposed
restrictions on tourist visiting hours. This SOP includes setting up activities that involve many people
but still following health protocols, for example by preparing hand washing stations at several
destination points, providing a firing temperature gauge (thermo gun), keeping distance signs when
purchasing tickets, and providing masks. The Nglanggeran tourist village implements Cleanliness,
Health and Safety (CHS), which is to provide facilities to support health protocols, limit tourist visits
to a maximum of 500 people/day, utilize information and communication technology for ticket
reservations and payments, and implement physical distancing. During the trial of opening tourist
destinations, only seven of the sixteen tour packages were opened as a recovery effort, including for
tour packages that are not high risk and do not have physical contact between communities, such as
sunrise and sunset packages and comparative study packages. All accommodation supporting the
tourist village is still closed so that tourists cannot stay at the Nglanggeran tourist village. Although
the impact cannot be measured quantitatively, various strategies have been carried out by the
Nglanggeran tourist village to restore public trust, in an effort to restore the glory and independence
of the tourist village, because it requires awareness and responsibility of all communities, complying
with health protocols and spreading positive messages related to the new normal of tourism in
Indonesia. Nglanggeran in particular and Indonesia in general.
In 2021, despite the COVID-19 pandemic, the Nglanggeran tourist village won the title of
World's Best Tourism Village 2021 from the United Nations World Tourism Organization (UNWTO)
which was announced Thursday, December 2, 2021 in Madrid, Spain.
CONCLUSION AND SUGGESTIONS

The results showed that the IKraR value of the Nglanggeran tourism village had an average
value of 85.7% for the Social Dimension Indicator, an average of 75.2% for the Economic Dimension
Indicator, and 80% for the Democracy Dimension Indicator. The average achievement of the overall
community welfare dimension (IKraR) in the Nglanggeran tourist village is 80.3%. The result of
obtaining a score of 80.3 indicates that the level of welfare in the Nglanggeran tourist village is very
high, where if an area has a value in the range (76-100) it is categorized as very high. The success of
the Nglanggeran tourism village is able to provide positive implications for the surrounding

community, especially being able to improve the welfare of the community. In any sense, the
activities carried out by the tourist village involve the surrounding community and the results are
enjoyed not only by the manager but by the whole community. We hope that the success of
community-based tourism in the Nglanggeran tourist village can be a driver of development and
community welfare, to continue to be creative and innovate to build a sustainable tourism village.
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The Effect Of Economic Value Added (EVA) And Market Value Added
(MVA) On Stock Prices On Go Public Companies Listed On The
Indonesia Stock Exchange (Study Of The Covid-19 Pandemic)
1
Ida Rohani, 2Beny Susanti, 3R. Supriyanto, 4Dharma Tintri Ediraras
1,2,4
Department of Accounting, 3Department of Computer, Universitas Gunadarma
idarohani732@gmail.com1, bsanti,supriyan,dharmate@staff.gunadarma.ac.id2,3,4
Abstract
The stock price is the price that occurs in the capital market and is one indicator of the success of a
company. The emergence of the Covid-19 pandemic has an impact on changes in stock prices. This
study aims to examine and analyze the effect of Economic Value Added (EVA) and Market Value
Added (MVA) on stock prices in publicly traded companies listed on the Indonesia Stock Exchange
during the Covid-19 pandemic, either partially or simultaneously. The data used in this research is
secondary data in the form of an annual financial report, and this research was conducted during the
Covid-19 pandemic, starting from 2019 to 2020. The sampling method used the purposive sampling
method, and obtained 74 companies. The data analysis technique in this study used multiple linear
regression. The results showed that EVA had no effect on stock prices, while MVA had no effect on
stock prices. Simultaneous test shows that EVA and MVA have an effect on stock prices with a
coefficient of determination (R square) of 0.392. This means that 39.2% of the dependent variable,
namely the stock price is influenced by the independent variables, namely EVA and MVA, while the
remaining 60.8% is influenced by other factors.
Keywords : Covid19, economic value added, market value added, stock price, public entity, Indonesia
stock exchange.
JEL Codes: E44, F62, L25
INTRODUCTION
In the current economic situation, every company will always need funds to encourage the
success of a company and realize the company's survival in the future. One way for companies to
obtain funds is to offer ownership of the company to the public or the public through the capital
market. So it can be concluded that the capital market has an important role in supporting the
economy of a country. Through the capital market, investors can invest in several companies by
buying securities issued or traded in the capital market. The investment field that is in great demand
by domestic and foreign investors in the capital market is in the form of shares of companies that
have gone public.
The development of stock prices in the capital market has always been an interesting thing to
analyze and research. The stock price is the price that occurs in the capital market and is one indicator
of the success of a company. Increases and decreases in stock prices can be influenced by supply and
demand in the capital market. When a company has a lot of demand for company shares, this results
in an increase in the share price. When the company's stock price rises, investors or potential investors
believe that the company is successfully managed properly, so this can increase the value of the
company and have the opportunity to get more investment from investors or potential investors.
At the end of 2019, the whole world was shocked by the emergence of a new virus, namely
Covid-19. The emergence of this virus came from a group of cases of human pneumonia in Wuhan
City, Hubei Province, China, then spread throughout the world, one of which was in Indonesia. On
March 11, 2020, the World Health Organization (WHO) declared Covid-19 a global pandemic. In
Indonesia itself, it was first confirmed cases of COVID-19 on Monday, March 2 2020. Along with
the spread of this virus, it can be said that the government's handling is still not optimal, it can be
seen from the increase in the number of cases exposed to Covid-19 as of April 25, namely the total
cases. The number of positive cases reached 8,607 people, there were additional cases of 396 people.
Rohani, Susanti, Supriyanto, Ediraras 301

The Covid-19 pandemic not only has an impact on public health, but also has an impact on the
decline in economic conditions in all sectors. This decline was due to the fact that when the PSBB
was implemented, all economic activities stopped. One of the economic impacts during this pandemic
can be seen from the development of stock prices in all sectors of publicly traded companies listed
on the Indonesia Stock Exchange from 2019 to 2020.
Table 1. Stock Price Development Go Public Companies Listed on the IDX
Quarter IV Quarter I Quarter II Quarter Quarter

Sector
2019 2020 2020 III 2020 IV 2020
Agriculture 1524,459 928,458 1027,523 1137,468 1497,945
Mining 1548,622 1184,094 1223,952 1332,023 1915,555
Basic and Chemical Industry 978,172 580,262 721,665 709,511 920,968
Various Industries 1223,853 733,027 867,124 820,297 1081,051

Goods and Consumption
2052,654 1659,138 1800,897 1828,954 1832,109
Industry
Property, Real Estate and
503,879 338,441 322,04 340,617 396,892
Building Construction
Infrastructure, Utilities and
1137,554 805,434 883,179 785,945 1001,019
Transportation
Finance 1354,661 989,674 1059,593 1039,763 1333,176
Trade, Services and Investment 769,832 602,272 606,136 631,209 766,373

Source: data processed by the author, IDX (2021)
Based on the table above, it shows that from 2019 to 2020, stock prices in all sectors of publicly
traded companies listed on the Indonesia Stock Exchange have changed every quarter. Changes in
stock prices in several sectors experienced fluctuations of increase and decrease, such as in the basic
and chemical industry sector, the various industrial sector, the infrastructure sector, utilities and
transportation, as well as the financial sector. Changes in stock prices can be influenced by many
factors, this is due to the nature of stocks that are very sensitive to changes that occur both changes
in currency market conditions, financial performance and changes in the domestic political situation
(Putra and Sibarani, 2018).
A company's financial performance can be measured in various ways. In addition to calculating
the ratio, one of which is based on performance on value. The company is said to have succeeded in
creating added value for the owners of capital if the Economic Value Added (EVA) and Market Value
Added (MVA) are positive, this is because the company is able to make a rate of return that exceeds
the cost of capital and the company is successful in maximizing shareholder wealth followed by an
increase in price. share. However, if the Economic Value Added (EVA) and Market Value Added
(MVA) are negative, this is because the company's rate of return is lower than the cost of capital level
and the company is not successful in maximizing shareholder wealth followed by a decrease in share
prices (Rahayu and Dana, 2017).
Economic Value Added (EVA) is a method for measuring financial performance based on the
added value of a company so that it can be directly related to the prosperity of shareholders. Economic
Value Added (EVA) takes into account the company's financial performance by reducing the profit
after tax with the capital owned. In a previous study conducted by Khendra dan Bangun (2021) found
the result that Economic Value Added (EVA) had an effect on stock prices. This is because the
company is able to make a rate of return that exceeds the cost of capital and the company has
succeeded in maximizing shareholder wealth followed by an increase in share prices. Meanwhile,
research conducted by Rosmawati (2018) found that Economic Value Added (EVA) had no effect
302 Rohani, Susanti, Supriyanto, Ediraras

on stock prices. This is because companies that do not have economic value added which causes the
Economic Value Added (EVA) is not used as a basis for consideration in buying stock prices.
In addition to the Economic Value Added (EVA) method, Market Value Added (MVA) is also
a method for measuring financial performance by calculating how much a company is worth to
investors. Market Value Added (MVA) is the difference between the market value of a company's
equity and its book value as presented in the statement of financial position, the market value is
calculated by multiplying the share price by the number of shares outstanding. Previous research
conducted by Utami and Darmawan (2019) found that Market Value Added (MVA) had an effect on
stock prices. Meanwhile, research conducted by Andika and Witiastuti (2017) found that Market
Value Added (MVA) had no effect on stock prices.
Based on this background, it turns out that there are some differences in the results of the
research that cause a research gap so that the author wants to do further research. This further study
aims to: (1) to test and analyze the effect of Economic Value Added (EVA) on stock prices in publicly
traded companies listed on the Indonesia Stock Exchange during the covid-19 pandemic (2) to test
and analyze the effect of Market Value Added (MVA) to stock prices in publicly listed companies
on the Indonesia Stock Exchange during the covid-19 pandemic (3) to test and analyze the effect of
Economic Value Added (EVA) and Market Value Added (MVA) simultaneously on stock prices in
go public companies listed on the Indonesia Stock Exchange during the COVID-19 pandemic. So
that it can provide benefits to academies, companies, and investors.
LITERATURE REVIEW
Signal Theory (Signalling Theory)
Brigham & Houston (2018) state that signal theory is an action by a company to provide
instructions to investors on how to view the company's prospects. Signaling theory is a theory that
discusses the ups and downs of prices in the market such as stock prices, bonds and so on, so that it
will have an influence on investor decisions (Fahmi, 2014).
Capital Market
Capital Market Law Number 8 of 1995 defines the capital market as activities related to public
offerings and securities trading, public companies related to the securities they issue, as well as
institutions and professions related to securities. The capital market according to Hartono (2017: 29)
is a meeting place between buyers and sellers with the risk of profit and loss. The capital market is a
means for companies to increase their long-term needs by selling or issuing bonds. According to
Samsul (2015: 57) the capital market is a place or means of meeting demand and supply for financial
instruments for the long term, generally more than 1 (one) year.
Stock Price
The stock price is the price that occurs in the capital market and is one indicator of the success
of a company. According to Tandelilin (2017: 341) stock prices are a reflection of investors'
expectations of the factors of income, cash flow, and the rate of return required by investors, of which
these three factors are also strongly influenced by macroeconomic conditions of a country and global
economic conditions. Hartono (2017: 160) defines stock as the price in the stock market which is
determined by market participants based on the demand and supply of the shares concerned in the
stock market.
Economic Value Added (EVA)

Economic Value Added (EVA) is a method for measuring value added financial performance
so that it can be associated with the prosperity of a company. Economic Value Added (EVA) can
reveal how a company creates value for its owners. Economic Value Added (EVA) is the difference
between operating profit after tax (NOPAT) and capital expense for the product period from the
company's cost of capital and capital invested at the beginning of the period.
Economic Value Added (EVA) also describes the actual increase or decrease in the value of
the company, which of course is of special interest to capital owners about whether the company can
generate profits and losses on the invested capital (Widasari and Hanifah, 2018). Economic Value
Added (EVA) Calculation Steps:

Table 2. Economic Value Added (EVA) Calculation Steps
EVA Components Formula

NOPAT Net Profit After Tax + Interest Expense
WACC [(D x rd) (1 - t) + (E x re)]
IC (Total Debt and Equity) – Short Term Debt
EVA Nopat – (WACC x IC)
Source: data processed by the author, 2021
Market Value Added (MVA)

Market Value Added (MVA) as a method to measure a company's financial performance by
calculating how much added value a company has to investors. According to Nugroho (2018) Market
Value Added (MVA) is the difference between the market value and the amount of equity capital
provided by investors. According to (Brigham and Houston 2018:98), Market Value Added (MVA)
is the difference between the market value of a company's equity and its book value as presented in
the statement of financial position, the market value is calculated by multiplying the share price by
the number of shares outstanding.
Husnan (2015) explains that the prosperity of shareholders can be maximized by maximizing
the difference between the stock market value and the total equity provided to the company by the
shareholders. The higher the Market Value Added (MVA) value, the higher the added value of capital
submitted to investors, so that investors' interest in the company's shares increases.
According to (Husnan, 2017:68) Market Value Added (MVA) can be calculated through the
formula:
MVA = Stock market value – Paid-in own capital
MVA = (Number of shares outstanding x Share price) – Total Equity
Covid-19 Pandemic
The Covid-19 pandemic is an event that spreads the 2019 coronavirus disease throughout the
world. This disease is caused by a new type of coronavirus called SARS-CoV-2. On December 1,
2019 Covid-19 was first discovered in Wuhan City, Hubei Province, China. Starting from a case of
pneumonia in Wuhan, China. Pneumonia is a lung disease that causes inflammation of one or two air
sacs in the lungs. Covid-19 was found to infect wild animals suspected of being bats and snakes that
have been transmitted to humans, then the spread is transmitted from humans who have been infected
with Covid-19 to humans, the infection is through saliva and close contact with those infected with
Covid-19 (WHO, 2020).
RESEARCH METHODS
Research Object
The objects used in this study are Economic Value Added (EVA), Market Value Added
(MVA) and stock prices. The research unit is a publicly listed entity or company on the Indonesia
Stock Exchange and the unit of analysis in this study is the annual report of each company during the
Covid-19 pandemic, starting from 2019 to 2020.
Population and Research Sample

The population used in this study is all entities or companies that have gone public and are
listed on the Indonesia Stock Exchange during the Covid-19 pandemic, which is from 2019 to 2020.
The sampling technique in this study was carried out using a purposive sampling technique. selected
by setting certain considerations or criteria, so that companies that do not meet the criteria will not
be used as samples.

The data used in this study is quantitative data. Sources of data used in this study is secondary
data. The data source in this study is the annual report on publicly traded companies listed on the

Indonesia Stock Exchange, and this research was conducted during the Covid-19 pandemic, from
2019 to 2020. The annual report was obtained from the Stock Exchange website. Indonesia (IDX)
with the website address www.idx.co.id and from the official websites of each company. And
www.sahammok.net to see a list of go-public companies listed on the Indonesia Stock Exchange
(IDX) during 2019-2020.
Data Collection Technique

Data collection techniques in this research is to use documentation techniques and literature
study. Documentation is a technique of collecting data obtained through the necessary documents or
data, namely the published annual financial report, which will then be forwarded to the recording and
calculation process. In addition, literature study is a technique used by conducting library research
and understanding various library sources that contain discussions about research, as well as reading
books related to research such as books on stocks and previous research journals.
Analysis Techniques
The analysis technique used is multiple linear regression model by first performing descriptive
statistical tests and classical assumption tests. The tool used to use the multiple linear regression
model is the SPSS (Statistical Product and Service Solution) Version 25 program.
The hypotheses tested in this study are:
H1 : Economic Value Added (EVA) has an effect on stock prices
H2 : Market Value Added (MVA) has an effect on stock prices
H3 : Economic Value Added (EVA) and Market Value Added (MVA) simultaneously affect stock
prices

Descriptive Statistics
The stock price variable has a maximum value of 10.88 while the minimum value is 3.91. The
standard deviation of this variable has a value of 1.25919, where this value indicates a lower number
than the mean, which is 7.2171.
The Economic Value Added (EVA) variable shows the lowest value of 31663.71 while the
highest value is 3080614.53. Standard Deviation has a value of 558286.53, where this value indicates
a higher number than the mean value, which is 496923.53.
The Market Value Added (MVA) variable shows the minimum value of 22.89 while the
maximum value of 33.38. The standard deviation has a value of 2.02, where this value indicates a
number lower than the mean, which is 28.66.

The results of the classical assumption test that have been done previously show that the data
used is normally distributed, i.e. the Asymp value is obtained. Sig. (2-tailed) of 0.091 which is greater
than 0.05 (0.091 > 0.05), there is no multicollinearity symptom that can be seen from EVA and MVA
has a Tolerance value greater than 0.1, namely 0.586 and the value of the inflation factor variable (
VIF) which is smaller than 10 which is 1.707, there is no autocorrelation symptom, namely the DW
value is 2.055 which is greater than the value (du) = 1.7588 and less than (4-du) = 2.2412 and there
is no heteroscedasticity symptom that can be seen from there is no clear pattern and the points spread
above and below 0 on the Y axis. It can be concluded that the data used in this study has met the
requirements for using multiple linear regression models.

Based on the results of the classical assumption test that has been done previously, it can be
concluded that the data used in the study has met the requirements for using multiple linear regression
models. Multiple linear regression analysis is a test used to determine how much influence Economic
Value Added (EVA), Market Value Added (MVA) has on stock prices. The following is a summary
of the test results:

Table 3. Summary of Test Results

Stock price
Independent Partial Test Simultaneous Test
Test results
Variable (t test) (F test) Conclusion
Hypothesis
Nilai sig. Nilai sig.
EVA 0,350 H1 No effect
Rejected
MVA 0,000 H3 Take effect
Accepted
EVA, MVA 0.000 H4 Take effect
(Simultaneously) Accepted
Coefficient of 39,2% 60,8%
Determination
Value (R2)
From the test results above can be presented as follows:
The Effect of Economic Value Added (EVA) on Stock Prices

Based on the results of statistical tests indicate that the variable Economic Value Added (EVA)
has no effect on stock prices. This can be interpreted that the Economic Value Added (EVA) cannot
be used as a basis or benchmark for determining considerations in buying stock prices.
Judging from the data in this study, it shows the results of 74 go public companies listed on
the Indonesia Stock Exchange (IDX) during the Covid-19 pandemic, there is 1 company, namely PT
Phapros Tbk which does not have economic added value because the rate of return generated is lower
than the rate of return. If the return demanded by investors or the company's performance has failed
to meet investor expectations, the company cannot create added value because the available profits
do not meet the expectations of fund providers, especially shareholders. This can be seen from the
value of operating profit after tax (NOPAT) which is lower than the weighted average cost of capital
multiplied by the invested capital. And also PT Phapros Tbk experienced a decline during the Covid-
19 pandemic starting from 2019-2020.
This makes one of the factors that indicate Economic Value Added (EVA) is not used as a
basis for consideration in buying stock prices. The results of this study support the research of Putra
and Sibarani (2018) that Economic Value Added (EVA) has no effect on stock prices. This further
strengthens that investor preferences in Indonesia still do not see the Economic Value Added (EVA)
as a signal and benchmark for investors in investing their capital.
The Effect of Market Value Added (MVA) on Stock Prices

Based on the results of statistical tests indicate that the Market Value Added (MVA) variable
has an effect on stock prices. This can be interpreted that the Market Value Added (MVA) can be
used as a basis for determining considerations in buying stock prices.
Judging from the data in this study, the results of 74 publicly traded companies listed on the
Indonesia Stock Exchange (IDX) during the Covid-19 pandemic obtained results in the same
direction between the Market Value Added (MVA) value and stock prices. This can be seen from the
increase in Market Value Added (MVA) in general due to the increase in stock prices. The increase
in stock prices was caused by the increase in the number of earnings per share and company profits.
The decrease in Market Value Added (MVA) is generally caused by a decrease in stock prices and
an increase in invested capital. The decline in share prices was caused by a decrease in the amount
of earnings per share. Meanwhile, the increase in invested capital was caused by an increase in total
debt such as short-term bank loans, trade payables, tax payables and other loans, then an increase in
total equity such as retained earnings and other components of equity. It can be concluded that the
higher the Market Value Added (MVA) of a company, the greater the market value for investors, so
that the share price of the company will increase. However, if the MVA value is smaller or lower
then the stock price will also decrease. These results support research from Utami and Darmawan

(2019), and Natalia et al (2020) that Market Value Added (MVA) has an effect on stock prices. So
(Market Value Added (MVA) can be used as a signal and benchmark for investors in investing their
capital.
The Effect of Economic Value Added (EVA) and Market Value Added (MVA) simultaneously
on Stock Prices
Based on the results of statistical tests show that Economic Value Added (EVA) and Market
Value Added (MVA) simultaneously affect stock prices. This can be interpreted that if the value of
EVA and MVA increases, it will attract the desire of investors to invest their capital, so that it will
increase stock prices. However, Economic Value Added (EVA) and Market Value Added (MVA) do
not dominate or are relatively small in the increase or decrease in stock prices. Because the results of
the coefficient of determination show the value of Adjusted R Square <50%, which is 39.2% (0.392),
which means the influence of the independent variables Economic Value Added (EVA) and Market
Value Added (MVA) on stock prices is 39.2% and the rest 60.8% is explained by other variables not
used in this study such as retention ratio, proportion of independent commissioners, ROE, ROA,
NPM, TATO, CSR, traditional performance measurement, liquidity, DER, and EPS. To run a
company, managers also need parties other than company management. These parties include
investors, creditors, suppliers, as well as customers and regulators. Therefore, the market response to
the company is very dependent on the signals issued by the company (Husnan, 2012). These results
support the research of Putra, K. K., & Sibarani, M. (2018) Economic Value Added (EVA) and
Market Value Added (MVA) simultaneously affect stock prices.
CONCLUSION
Based on the results of data analysis and data discussion that has been described in previous
chapters regarding Economic Value Added (EVA) and Market Value Added (MVA) to stock prices
in publicly listed companies on the Indonesia Stock Exchange, the authors can draw the following
conclusions: : (1) EVA has no effect on share prices in publicly listed companies on the Indonesia
Stock Exchange during the COVID-19 pandemic, (2) MVA affects share prices on publicly listed
companies on the Indonesia Stock Exchange during the COVID-19 pandemic. 19, (3) EVA and MVA
simultaneously affect stock prices.
IMPLICATION
Based on the above, the implications of this study are as follows: (1) empirically indicates that
the model in this study provides a relatively small contribution because the Adjusted R Square value
obtained is <50%, which is 39.2% and the rest is 60, 8% is explained by other variables that are not
used in this study, partially Economic Value Added (EVA) has no effect on stock prices. While
Market Value Added (MVA) has an effect on stock prices, (2) Theoretically shows that investors still
do not see Economic Value Added (EVA) as a signal and a benchmark for investing their capital.
Meanwhile, (Market Value Added (MVA) can be used as a signal and benchmark for investors in
investing their capital, (3) Practically indicates that companies that have low Economic Value Added
(EVA) and Market Value Added (MVA) values continue to seeks to improve the company's ability,
investors who are interested in investing should be able to use Market Value Added (MVA) as a
benchmark for determining considerations in buying stock prices, and the regulator of the Financial
Services Authority (OJK) is able to supervise investments that occur on the Indonesia Stock
Exchange (IDX). especially in the companies used in this study.
SUGGESTION
Based on the results of research that has been done by the author, the authors provide the
following suggestions: (1) for companies it is expected to apply EVA and MVA calculations to assess
the success of the company and can be used in making company decisions. Especially for those who
have low or low average EVA and MVA, continue to strive to be able to increase their ability to earn
profits, one of the efforts that can be done is to make efficiency in the use of operational costs, (2)
for investors who are interested in investing should can make MVA as a benchmark for determining
considerations in buying stock prices, because based on this study these variables have an influence
on stock prices compared to EVA. (3) for further research, it is recommended to increase the year of

observation, and add the independent variable retention ratio, proportion of independent
commissioners, ROE, ROA, NPM, TATO, CSR, traditional performance measurement, liquidity,
DER, and EPS, and pay attention to the following factors: other external factors such as political
conditions, inflation, exchange rates, interest rates so that it will get better research results.
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Analysis Of Business Feasibility Of Carrrier Bag Innovation With Table

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Rossi Septy Wahyuni, 2Prameswari Rizcha Julianda, 3Jeremia Aruan
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Departement Teknik Industri, Teknologi Industri Faculty of Universitas Gunadarma
Jl. Margonda Raya No. 100, Pondok Cina, Depok 16424
rossysw@staff.gunadarma.ac.id1, prameswari_rizcha@staff.gunadarma.ac.id2,
Jeremiaaruan9@gmail.com3
Abstract
Increasingly complex customer demands and the increasing number of new products that have
emerged, then each company must be able to compete to create innovative products quickly so that the
company can increase its competitive advantage. The choice of carrier bag is because there are still
requests or consumer complaints about certain work or certain jobs that require a base when in the
mountains and its usefulness makes it easy to carry out activities when using a carrier bag. The
number of companies that do not know in advance whether the business they are running has met the
necessary aspects in the business fulfillment criteria, so an alternative solution is needed to determine
the feasibility of their business, namely by using business feasibility solutions, namely methods that
concern the necessary aspects such as market aspects, technical aspects, management aspects and
financial aspects. Based on the market aspect, the increase / increase in students in universities in
Tampan sub-district will have an impact on market demand in the future. Based on technical aspects,
the carrier bag innovation product convection business with table features is deemed feasible because
the requirements for each criterion in the technical aspect have been met. Based on the management
aspect, the carrier bag innovation product convection business with table features is feasible to be
implemented because the criteria from every aspect can be met. This requirement shows that the
convection business of carrier bag innovation products with table features can fulfill the planning
function, the organizing function, the personnel arrangement function, and the control function, where
the four functions are factors that support the determination of management aspects. Based on the
calculated financial aspects of the analysis, it shows that there is a positive difference between the PV
of Proceeds and the PV of Outlays. The PV of Proceeds is greater than the PV of Outlays, so the NVP
value for the convection of carrier bag innovation products with table features is positive and is> 0.
Also obtained for the return of business capital for the bag convection, carrier bag innovation product
with a table feature based on the calculation of the payback period is 4 years 7 months 28 days.
Keywords: Business Feasibility, market aspect, technical aspects, management aspect, calculated
financial aspects
JEL Codes: J11, O32
INTRODUCTION
The development of science and technology (IPTEK) continues to progress and increase every
year. In addition, the number of businesses that have sprung up, both small and large, has an impact
on intense competition between entrepreneurs, especially competition between similar businesses.
This causes businesses that apply the marketing concept to know in advance about consumer
behavior and the factors that influence their decisions. One way to achieve the goals of a business is
to know what needs consumers want and provide the expected satisfactions more effectively and
efficiently than competitors.
The development of the times is slowly demanding that business competition in the industrial
world is getting tighter, accompanied by many businessmen who are involved in today's business
world. Population growth which is increasing every year also causes the need to increase as well.
Due to the increasing competition in the global market, increasingly complex customer
demands and the increasing number of new products emerging, every company must be able to
compete to create innovative products quickly so that the company can increase its competitive
advantage. The choice of carrier bag is because there are still consumer requests or complaints
310 Wahyuni, Julianda, Aruan

against certain workmanship or certain jobs that require a base when on the mountain and uses that
make it easier to carry out activities when using a carrier bag. In meeting the needs of the community,
which is increasing every year, a business must really consider all aspects of meeting the needs of
the community. However, sometimes a business does not know whether the business being carried
out is feasible or not feasible to run when viewed from the required aspects. Therefore, alternative
solutions are needed in meeting consumer needs, including using the completion of business
feasibility, which is a research method involving various aspects, both from market and marketing
aspects, management aspects, technical aspects and financial aspects. Proposed completion of
business feasibility is used to make a decision whether a project or business can be carried out or
postponed and even not implemented. Therefore, the researcher decided to take the theme of this
research entitled: “Analysis Of Business Feasibility Of Carrrier Bag Innovation With Table Features
In Tampan Sub-District Pekanbaru City Riau Province”.
RESEARCH METHODS
The research flow chart is a framework consisting of research steps that are arranged and
sorted based on the sequence of stages starting from the beginning to the end of the process of a
research that is used as a reference in research. Here is a picture 3.1 Diagram Alir Penelitian
Picture 3.1 Diagram Alir Penelitian
This research was conducted in the convection business of carrier bag innovation products
with table features located in Tampan District, Pekanbaru City, Riau Province. The selection of this
location was based on considerations because the bag convection business is one of the most popular
bag convection businesses in the Tampan sub-district area. The time of this research was carried out
for 7 months, starting from February to August 2020.
The research conducted by the researcher is a research on business feasibility in the convection
business of carrier bag innovation products with table features located in Tampan District, Pekanbaru
City, Riau Province.
The definition of management aspect is an integrated framework for analyzing decision-
making problems in business governance with regard to how to allocate existing resources efficiently
in the context of implementing the business concerned.
The definition of the financial aspect is the need for projected funds in investment to establish
a business that will generate profits or profits for investors.
RESULTS
Settlement of Market Aspects
Wahyuni, Julianda, Aruan 311

The market aspect is an important aspect that is considered by business actors to compete for
consumers in a business competition. The role of market aspect analysis in running a business in a
business feasibility study is the main variable that must get the attention of business people. With
this market aspect, business owners can find out and estimate the number of consumers who will
become customers, namely by knowing the number of students at universities in the Tampan district,
calculating the trend of increasing students, knowing the increasing trend of university students.
universities in Tampan sub-district, calculating effective demand, and marketing strategies for bag
convection business.
Tabel 4.1 Total Students at Universities in Tampan District
Based on table 4.1 above, it can be seen that the number of students in the 2015/2016 academic
year at Riau University with a total of 34546 students, Sultan Syarif Kasim State Islamic University
(UIN SUSKA RIAU) with 29678 students, Riau School of Economics ( STIE Riau) with 5669
students, Hangtuah College of Health Sciences (STIK Hangtuah) with 3310 students, Pekanbaru
College of Technology (STT Pekanbaru) with 2504 students. The 2016/2017 academic year at the
University of Riau with 35212 students, Sultan Syarif Kasim State Islamic University (UIN SUSKA
RIAU) with 29821 students, Riau College of Economics (STIE Riau) with 4800 students, School
Hangtuah College of Health Sciences (STIK Hangtuah) with 3559 students, Pekanbaru College of
Technology (STT Pekanbaru) with 2571 students. The 2017/2018 academic year at the University of
Riau with 35021 students, Sultan Syarif Kasim State Islamic University (UIN SUSKA RIAU) with
30121 students, Riau College of Economics (STIE Riau) with 5896 students, School Hangtuah
College of Health Sciences (STIK Hangtuah) with 3735 students, Pekanbaru College of Technology
(STT Pekanbaru) with a total of 2438 students. The 2018/2019 academic year at Riau University
with 35350 students, Sultan Syarif Kasim State Islamic University (UIN SUSKA RIAU) with 30645
students, Riau Economics College (STIE Riau) with 6015 students, School of Economics Hangtuah
College of Health Sciences (STIK Hangtuah) with 3635 students, Pekanbaru College of Technology
(STT Pekanbaru) with 2245 students. The 2019/2020 academic year at the University of Riau with a
total of 35721 students, Sultan Syarif Kasim State Islamic University (UIN SUSKA RIAU) with a
total of 28360 students, Riau College of Economics (STIE Riau) with a total of 6135 students, School
of Hangtuah College of Health Sciences (STIK Hangtuah) with 3789 students, Pekanbaru College of
Technology (STT Pekanbaru) with 2623 students. Based on the total number of students in
2015/2016 up to the 2018/2019 academic year, the number of students at the University of Riau,
Riau College of Economics (STIE Riau), Hangtuah College of Health Sciences (STIK Hangtuah),
Pekanbaru College of Technology ( STT Pekanbaru) and Sultan Syarif Kasim State Islamic
University (UIN SUSKA RIAU) from 2018/2019 to 2019/2020 experienced a decline in students.
The total number of students in the Tampan sub-district as a whole from 2015 to 2020 is 383399
students.

Calculating the Trend of Increasing Student

To find out the market aspects of the convection business of carrier bag innovation products
with table features, it is necessary to analyze market aspects by calculating the increase in student
trends at universities in the Tampan sub-district, namely :
Tabel 4.2 Number of Students at Riau University
Tabel 4.3 Calculation of Trend Number of Students at Riau University
Tabel 4.4 Number of Students of Sultan Syarif Kasim State Islamic University
Tabel 4.5 Calculation of Trend Number of Students at Sultan Syarif Kasim State Islamic
University

Tabel 4.6 Number of Students at the Riau School of Economics
Tabel 4.7 Calculation of Trends in the Number of Students at the Riau School of Economics
Tabel 4.8 Number of Students of STIK Hangtuah
Tabel 4.9 Calculation of Trend Number of Students of STIK Hangtuah
Tabel 4.10 Number of Students of STT Pekanbaru

Tabel 4.11 Calculation of Trend Number of Students at STT Pekanbaru
Increasing Student Trends in Universities in Tampan District

Based on the calculation of the results of the trend of increasing students in the Tampan sub-
district, it can be seen that the total trend of increasing students in the 2015/2016 academic year up to
the 2019/2020 school year
Tabel 4.12 Total Number of Students at Universities in Tampan District
Tabel 4.13 Calculation of the Trend of Total Students at Universities in Tampan District
∑𝑌 383399
𝑎= 𝑛
= 5
= 76679,8
∑ 𝑋𝑌 3769
𝑏 = ∑ 𝑋2 = 10
= 376,9
Based on the above calculation, the equation the annual trend for universities in Tampan sub-
district is
Y’ = a + bX
Y’ = 76679,8 + 376,9 (X)
Where Y' is the demand every year, the unit X = 1 year and the origin is in 2017/2018 when the
value of X = 0 . So that the trend value for the 2015/2016 academic year to 2019/2020 becomes:
Y’ 2015/2016 = 76679,8 + 376,9 (-2) = 75926
Y’ 2016/2017 = 76679,8 + 376,9 (-1) = 76302,9

Y’ 2017/2018 = 76679,8 + 376,9 ( 0) = 76679,8

Y’ 2018/2019 = 76679,8 + 376,9 ( 1) = 77056,7
Y’ 2019/2020 = 76679,8 + 376,9 ( 2) = 77433,6
The trend of increasing the total number of university students in the Tampan sub-district for
the 2020/2021 academic year based on the above calculations can be seen, as follows :
Y’ = 76679,8 + 376,9 ( 3) = 77810,5
So, from the results of the calculation of the trend of the total number of students, it is
estimated that the number of students at universities in the Tampan sub-district in the 2020/2021
school year is 77811 people (an increase in the number of students). From the results of the
calculation of the trend of the total number of students at universities in the Tampan sub-district as
a whole from 2015/2016 to the 2019/2020 school year and 2020/2021 there is an increase in students
every year and this means that the total number of students at universities universities in the Tampan
sub-district will always increase in the following years.
Increasing Student Trends in Universities in Tampan District

From the results of the calculation of the trend of the total number of students at universities
in the Tampan sub-district of 77811 people, the estimated number of consumers who will become the
market share or market share for the convection business of carrier bag innovation products with table
features is :
Total market share = market share x Number of universities in Tampan
= 7782 x 5
= 38910 people
So the market share for the convection business of carrier bag innovation products with table
universities in Tampan features is 38910 people. And to find out the effective demand, the judgment
method is used, by estimating the percentage of students who will become visitors or consumers of
the convection business of carrier bag innovation products with table features, which is 5%, it will
obtain an effective demand of:
Effective request = Market share x 5%
= 38910 x 5%
= 1946 people
So the effective demand for the convection business of carrier bag innovation products with
table features is 1946 people, which will be expected to become consumers of the carrier bag
innovation product convection business with table features in accordance with the bag quota available
in the carrier bag innovation product convection business with table features. If seen from the results
of the calculation of the trend of increasing the number of students at universities in the Tampan sub-
district for the 2019/2020 school year of 77434 and the 2020/2021 school year of 77811 which
increased by 377 people, then the establishment of a bag innovation product convection business a
carrier with a table feature in the Tampan sub-district is declared to be feasible to build in terms of
the market aspect.
Marketing Strategy for Bag Convection Business

Based on the environmental conditions of the bag convection business in the handsome sub-
district, it can be seen in this case that the convection bag business condition against competitors is
very high. Therefore, the strategies used by the bag convection business in attracting consumer
interest include :
1. Advertise the existence of a bag convection business to attract consumer interest.
2. Provide discounts for purchases of more than 3 products.
3. Provide facilities that are different from those of competitors.

Figure 4.1 Carrier Bag Products with Table Features
Settlement of Technical Aspects

The technical aspect is an aspect that functions to assess the readiness of a business in carrying
out its activities by assessing the accuracy of the location, production area, layout and technology
readiness. With the technical aspect, business owners can find out whether the establishment of a
carrier bag innovation product convection business with a table feature is feasible or not, by:
Location selection
Figure 4.2 Bag Convection Business Locations
Based on the location selection, there are three areas that are alternatives for choosing a
business location, including the Tampan sub- district, Rumbai sub-district, and Sukajadi sub- district.
In the selection process from several alternative locations, qualitative methods will be used to
determine which alternative locations should be chosen. The conditions or considerations that must
be carried out in this study are as follows :
1. Identify factors related to the business location selection process, namely :
a. Raw Material Supply
In the process of making a carrier bag with a table feature, the main raw material needed is
waterproof canvas where there are enough distributors for the material for the three alternative
locations and other materials are also available.
b. Water and electricity supply
The availability of water and electricity as the necessities of daily life and energy supply is also

very necessary in the operation of the company. Environmental and social circumstances One of
the factors that also needs to be considered in determining the location of the business is how the
environmental and social conditions around the location, this relates to the community, for
example the availability of labor, environmental calm regulations, and so on.
c. Ease of transportation
Because for now the marketing focus is in the Tampan sub-district, Rumbai sub- district, and
Sukajadi sub-district as the main market share. Availability of good inter-city connecting road
facilities and the degree of proximity of the city to the purpose of marketing. The main
transportation is land transportation, therefore road access is an important factor to consider.
2. Determination of the weight of the influential criteria
The weighting of each of the identified factors or criteria is based on the degree of importance.
The weighting criteria can be seen below:
Criteria
- Raw Material Supply
- Water and electricity supply
- Environmental and social conditions
- Ease of facilities and transportation
3. Giving value for each alternative location analyzed. The score matrix (0-10) of each factor and
alternative locations can be shown in the following table :
Table 4.14 Score Matrix
- Location 1 for the Tampan district

- Location 2 for Rumbai sub-district
- Location 3 for Sukajadi sub-district
4. Multiplying the weight of each of the above factors by the score of each alternative location.
Table 4.15 Weight and Score Matrix
Based on the multiplication of the weights of each of the factors above, the values obtained
from each alternative location can be seen in the table below :

Table 4.16 Assessment of Alternative Locations
From the results of the total calculation of the multiplication table of alternative location
assessments, the selection of alternative locations that are considered good is the alternative location
that has the largest total value, so that the best location according to the analysis is location 1, namely
the Tampan sub-district area.
Determination of the layout (Layout) Business.

Consideration of the layout of the convection business of carrier bag innovation products with
table features arranged based on :
Environmental security in the convection area of carrier bag innovation products with table
features, meaning that security is an important priority that will be considered in order to create a
calm, comfortable, and conducive atmosphere both between consumers and consumers and between
consumers and the surrounding community. This security has been realized because of the
availability of facilities owned by the carrier bag innovation product convection business with table
features equipped with CCTV.
Optimizing the use of space, meaning that the utilization of the location and place is expected
to be optimal in helping the smooth process of providing services to consumers. The use of space is
realized because it can be seen from consumer demand for the desired product, so that the bag
convection business is organized and arranged so well and efficiently, it aims to meet the level of
need required so as to facilitate the service process in the bag convection business.
Minimizing costs, meaning that an orderly layout can prevent additional costs and problems
that are expected to arise. This can be seen in the absence of building or building rentals, because the
bag convection business is a carrier bag innovation product with a table feature built on privately
owned land.
Supporting technology, meaning that the technology used is able to have a positive impact on
consumers as well as service that is gradual so as to create smoothness for the fulfillment of consumer
needs in the bag convection business, carrier bag innovation products with table features. The
technology used by the convection business itself includes CCTV, and so on.
Identify Business Strengths and Weaknesses

In establishing a carrier bag innovation product convection business with table features,
business people must have considered the aspects or factors that influence the establishment of the
bag convection business. In setting up a bag convection business, there must be strengths or
advantages contained in it, the following are the advantages and disadvantages of a bag convection
business, namely:
a. Advantages of Bag Convection Business
• Strategic business location and easily accessible to consumers.
• There are many shops and universities around the business location.
• Have a spacious business space.
• Has superior facilities than competitors.
b. Disadvantages of bag convection
• Security facilities are only equipped with cctv facilities
In this case, the bag convection business of carrier bag innovation products with table features
is feasible when viewed from the technical aspect, because all the consideration factors have

been met by the bag convection business of carrier bag innovation products with table features.
Completion of Management Aspects

The management aspect is a vital aspect in a business. Because a business that is running may
fail if the management and organization do not run well. The management process itself also has
rules so that a business can run better and more easily. The rules themselves can be clearly illustrated
through the following management functions :
1. Planning
In this planning stage, what needs to be known is the types of work needed so that business
activities can run properly and effectively. In order to avoid wasting labor costs, in the bag
convection business, the carrier bag innovation product with a desk feature, only consists of 5
permanent employees in order to work optimally which consists of :
a. Operators : 5 people.
The five operators are expected to be able to handle all the demands needed by consumers, if
the convection business experiences an increase in demand.
2. Organizing
To support and expedite service activities in running a bag convection business, carrier bag
innovation products
Figure 4.3 Organizational Structure of Bag Convection Business
3. Personnel Preparation
Some of the criteria that must be met by employees to hold positions in the bag convection
business of carrier bag innovation products with table features, among others :
a. Operator
- Men aged 20-45 years
- Honest and responsible
- Master the field of sewing
- Needed who are not married
- Physically and mentally healthy
- Passion in work
In carrying out each of his work, every employee is obliged to receive a reward or salary from
every work he does. The salary provision aims to encourage employees to work well in serving
consumers, while the salary given by the carrier bag innovation product convection business with a
desk feature to employees every month is as follows:
a. Operators: Rp 1.600.000
b. The operator's salary costs consist of :
• For meal a day = Rp 10.000, a month = Rp 10.000 x 24, Meal a month = Rp 240.000
• Cost of Salary per day = Rp 50.000, Monthly Salary = Rp 50.000 x 24 = Rp 1.200.000
• Overtime expense = Rp 100.000
• Transportation costs = Rp 60.000
• Salary expense = Rp 240.000 + Rp 1.200.000 + Rp 100.000 + Rp 60.000 = Rp 1.600.000
So based on the above costs, it can be concluded that the cost of the operator's salary in the
convection business in a month is Rp 1.600.000.

4. Control
Human resources are one of the supporting factors for the success of a business so that the
service in the bag convection business is a carrier bag innovation product with a table feature. This
is because employees are the executor of all business activities. Business owners will pay attention
to their employees with the aim that employees are satisfied so that they can work optimally. To
achieve the control objectives in the bag convection business of carrier bag innovation products with
table features, the following things are carried out: provide salary bonuses on major holidays, such
as holiday allowances and Christmas allowances.
In this case, the bag convection business of carrier bag innovation products with a table feature
is feasible when viewed from the management aspect because the above factors can be fulfilled by
the carrier bag innovation product bag convection business with table features.
Completion of Financial Aspects

In reviewing the financial aspect, the method used is the net present value method where the
net present value method is the method used to determine the present value of an investment with
the sum of all cash flows received from the business. Therefore, it is necessary to know how much
funds are needed, the estimated costs incurred, as well as the estimated income that will be obtained
by the bag convection business of carrier bag innovation products with table features for the next
five years.
Fund Needs
The funds needed to set up a bag convection business for carrier bag innovation products with
table features in the Tampan sub-district are categorized as investment funds in establishing the bag
convection business. In this case, the funds used are own funds without loans from other parties. The
amount of funds required can be seen in the following table:
Table 4.17 Funding Needs in Establishing a Bag Convection Business
Net Cashflow
Estimated Income
To estimate income, it is necessary to know in advance the estimated number of consumers
who visit the bag convection business every day with an effective time of 10 hours per day, after
knowing the number of consumers / customers every day, it can be estimated that the minimum sales
income is IDR 700,000, details of income data daily sales are as follows :
( Average bag price Rp 150.000 ) x 4 people = Rp 600.000
( Average bag price Rp 100.000 ) x 1 people = Rp 100.000
Assumed daily income = Rp 700.000 per day, and it can be estimated that for a total of 1
month's work the income earned by the convection business is Rp. 21,000,000 and for a total work
of 1 year, it is Rp. 252,000,000. And income for 5 years is expected to increase by 10% every year.
The results of the income calculation can be seen in the following table :

Table 4.18 Gross Revenue of Bag Convection Business
Estimated costs
Operational Cost
Operational costs are costs incurred to carry out the activities of a company or a business. In
this case, the operational costs incurred by bag convection include the cost of raw materials,
electricity costs, and salary costs. These costs are needed to meet business needs for 1 month or even
1 year. The following is an explanation of the operational costs of the bag convection business:
Raw Material Cost

In producing a carrier bag product, there are important things that must be provided to support
the carrier bag production process, namely the materials used to produce carrier bags. The materials
used are waterproof canvas and multiplex wood with a length of 50 cm and a width of 15 cm.
Physically canvas material has strong fabric fibers and the durability can be said to be very good, so
it is not uncommon for some convection workers to use this material for all terrain and weather. The
size of the wood will be adjusted to the length and width of the carrier bag so that it is suitable to be
attached to the bag when carried by the consumer. The following is the amount of raw material costs
in the bag convection business every year and it is estimated that it will increase by 10% every year
:
Table 4.19 Cost of Raw Materials for Bag Convection Business
Electricity cost
The cost of electricity in the bag convection business for a full month is Rp. 1,500,000 and can
be reduced if the electricity consumption in the bag convection is low, so the estimated electricity
cost for 1 year of using the bag convection business is Rp. 18,000,000. The cost of electricity in the
bag convection business is expected to increase by 10% from the first year's cost for each year in the
next five years. In this case the cost of electricity used to meet the equipment and supplies of the bag
convection business every year can be seen in the following table :
Table 4.20 Electricity Cost for Bag Convection Business

Salary expense
Bag convection has 5 operator employees who directly handle consumer demand for bag
products, both in carrier bags with table features. The cost of the operator's salary in the bag
convection business for 1 full month for 1 operator is IDR 1,600,000, the salary incurred by the bag
convection business for 5 operators for 1 full month is IDR 8,000,000, so the estimated salary cost
for 1 year bag convection business is Rp. 96,000,000. Salary costs at bag convection are expected to
increase by 10% from the first year's cost for each year in the next five years. In this case the salary
costs used to meet the needs of operators in the bag convection business every year can be seen in
the following table :
Table 4.21 Salary Cost of Bag Convection Operators
Non-Operational Costs
Non-operational costs are costs or company expenses that do not have a direct relationship
with the main activities carried out by a company.
In this case, the non-operational costs of the bag convection business include other costs that
are not always needed, such as maintenance costs and repair costs for the machine facilities used.
These costs are required if one day the facilities owned are depreciated according to their economic
life. These costs are summarized for 1 year and are expected to increase by 10% from the first year
costs for each year in the next five years. The following is an explanation of the non-operational costs
of the bag convection business:
Table 4.22 Non-Operational Costs of Bag Convection Business
Depreciation Expense
Depreciation costs or depreciation costs are the consequences of using the assets of a business
that usually experience a decline in quality. The calculation of depreciation expense in this bag
convection business research uses the straight-line method. Assets or assets that depreciate in bag
convection are the facilities owned by bag convection such as the machines used, if at any time the
facilities owned are depreciated according to their economic life. These costs are summarized for 1
year and are expected to increase by 10% from the first year costs for each year in the next five years.
The following is an example of the calculation to obtain depreciation expense :
Acquisition cost
Depreciation = Economic age
120.000.000
Depreciation = 10
Depreciation = 12.000.000

The amount of depreciation or depreciation costs for bag convection business facilities every
year starting from 2021 to 2025 can be seen in the following table :
Table 4.23 Cost of Depreciation of Bag Convection Businesses
Cost Profit/Loss
Based on the income data and costs obtained and incurred, the next step is to make an estimate
of the loss or profit of the convection business revenue from 2021 to 2025. To see whether the
convection business makes a profit or loss, see the following table :
Table 4.24 Cost of Profit/Loss of Bag Convection Business in 2021-2025
Based on Article 2 paragraph 1 Government Regulation of the Republic of Indonesia No. 46

of 2013 concerning income tax on income from business received or obtained by taxpayers who have
a certain gross turnover, final income tax is imposed on personal and corporate taxpayers with a
turnover of less than 4.8 billion rupiah in 1 year. So if the effort to get a turnover for 1 year is not
more than 4.8 billion, it will be subject to final income tax. For self-employment tax, a rate of 1% is
imposed from the total income that the entrepreneur receives for 1 month. Referring to the regulation,
the taxes that will be borne by the bag convection business are :
Tahun 2021
Pajak : 1% = 0,01 x Rp 252.000.000 = Rp 2.520.000
Tahun 2022
Pajak : 1% = 0,01 x Rp 277.200.000 = Rp 2.772.000
Tahun 2023
Pajak : 1% = 0,01 x Rp 304.920.000 = Rp 3.049.000
Tahun 2024
Pajak : 1% = 0,01 x Rp 335.412.000 = Rp 3.354.120

Tahun 2025
Pajak : 1% = 0,01 x Rp 368.953.200 = Rp 3.689.532
Referring to the estimated income, estimated costs, and estimated profit/loss, the net cash
inflow can then be calculated using the following formula:
Net Cash = Total Net Income + Depreciation
The results of the calculation of net cash inflows can be seen in the following table :
Table 4.25 Net Cash Inflow for Bag Convection Business in 2021-2025
Calculate the NPV Value

In calculating the future value of the bag convection business, the net present value method is
used where this method is used to calculate the difference between the present value of expenses and
the present value of revenues. In calculating the nvp value of the bag convection business, the
discount factor that has been required by the owner of the capital is 1%. The value of the NVP of the
bag convection business can be seen in the following table:
Based on the NVP calculation table above, it appears that the PV of proceeds is greater than the
PV of Outlays. Thus, it means that the Net Present Value (NVP) of the bag convection business is >
0 and is positive. The excess of PV of proceeds over PV of Outlays is Rp. 100,987,701 (one hundred
million nine hundred eighty-seven thousand seven hundred and one rupiah). Thus, the bag convection
business is feasible when viewed from the financial aspect because the results of the NVP calculation
are positive.
Calculating Payback Period

One of the methods used to determine the feasibility of a business is to use the payback period
method. Payback period is the analysis needed to calculate the period (years) required to recover or
cover the initial cost. Payback period analysis calculate net cash flow in the projected year. The
following is net cash flow data every year that is used to see how long the payback period is for the
convection business investment in bag innovation products, carrier bags with table features :
Initial investment = 375.000.000
Net Cash Flow First Year = 80.480.000
Net Cash Flow Second Year = 88.528.000
Net Cash Flow Third Year = 97.380.800
Net Cash Flow Fourth Year = 107.118.880
Net Cash Flow Fifth Year = 117.830.768
To find out more clearly the initial investment value and net cash flow received by the bag
convection business, carrier bag innovation products with table features can be seen in the table
below:

Table 4.27 Value of Initial Investment and Net Cash Flow of Tas Convection Business
𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒
𝑝𝑎𝑦𝑏𝑎𝑐𝑘 𝑝𝑒𝑟𝑖𝑜𝑑 = 𝑛𝑒𝑡 𝑐𝑎𝑠ℎ𝑓𝑙𝑜𝑤
× 1 𝑦𝑒𝑎𝑟
375.000.000
𝑝𝑎𝑦𝑏𝑎𝑐𝑘 𝑝𝑒𝑟𝑖𝑜𝑑 = 80.480.000
× 1 𝑦𝑒𝑎𝑟
𝑝𝑎𝑦𝑏𝑎𝑐𝑘 𝑝𝑒𝑟𝑖𝑜𝑑 = 4,6595 𝑦𝑒𝑎𝑟𝑠
𝑝𝑎𝑦𝑏𝑎𝑐𝑘 𝑝𝑒𝑟𝑖𝑜𝑑 = 4 𝑦𝑒𝑎𝑟𝑠 + (0,6595 × 12 𝑚𝑜𝑛𝑡ℎ𝑠)
𝑝𝑎𝑦𝑏𝑎𝑐𝑘 𝑝𝑒𝑟𝑖𝑜𝑑 = 4 𝑦𝑒𝑎𝑟𝑠 + 7 𝑚𝑜𝑛𝑡ℎ𝑠 + (0,914 × 30)
𝑝𝑎𝑦𝑏𝑎𝑐𝑘 𝑝𝑒𝑟𝑖𝑜𝑑 = 4 𝑦𝑒𝑎𝑟𝑠 + 7 𝑚𝑜𝑛𝑡ℎ𝑠 + 28 𝑑𝑎𝑦𝑠
So it can be concluded that the return on investment for the bag convection business of carrier
bag innovation products with table features based on the calculation of the payback period is 4 years
7 months 28 days.
CONCLUSION
1. From a market perspective
Based on the market aspect, after analyzing and discussing the data, there are several things
that can be found. Based on the market aspect, it can be found that there is an increase in students
every year, especially in 2020/2021 and this means that the total number of students at universities
in the Tampan sub-district will always increase in the following years. The increase/addition of
students at universities in the Tampan sub-district will have an impact on market demand in the
future.
2. From a technical point of view
Based on the technical aspect, the convection business carrier bag innovation products with
table features are declared feasible to be implemented because the requirements for every aspect
in the technical aspects can be met. This requirement indicates that the technique used to meet the
desired requirements such as environmental safety, selection of business alternatives, optimization
of space use, minimizing costs, and supporting technology have been met.
3. From a management perspective
Based on the management aspect, the convection business of carrier bag innovation
products with table features is feasible because the criteria for each aspect can be met. This
requirement shows that the convection business of carrier bag innovation products with table
features can fulfill the planning function, organizational function, personnel arrangement
function, and control function, in which the four functions are factors that support the
determination of management aspects.
4. From a financial perspective
Based on the financial aspect, the calculated analysis shows that there is a positive
difference between the PV of Proceeds and PV of Outlays. The PV of Proceeds is greater than the
PV of Outlays so that the NVP value of the convection business of carrier bag innovation products
with table features is positive and has a value of > 0. Also obtained for the return of business
capital for bag convection products, carrier bag innovations with table features based on the
calculation of the payback period, is 4 years 7 months 28 days.

SUGGESTION
Achieving the maximum possible profit is a goal that all companies or businesses want to
achieve. This is what underlies the emergence of the desire to establish a convection business for
carrier bag innovation products with table features in the Tampan sub-district, Pekanbaru city, Riau
province. After doing research on all aspects of considerations that affect the convection business of
innovative carrier bag products with table features, it is feasible to carry out based on aspects of
considerations that affect the business. Despite the limitations of this study, there are some
suggestions that need to be made. In order for the convection business of carrier bag innovation
products with table features to achieve the expected goals, there are conditions that must be met.
Therefore, there are some suggestions that can be concluded as follows :
1. The convection business of carrier bag innovation products with table features must always strive
to improve business performance and performance in order to create maximum profit.
2. It is better if the products that are produced and produced are sold out immediately, because if
there is stock it will increase operational costs thereby reducing profits
3. The discount factor on the financial aspect in calculating NVP (Net Present Value) is still an
assumption, because a bank's interest rate can change every year.
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Universitas Sumatra Utara. Medan.
Dede M. F . 2008. Metode Analisis Kelayakan Investasi Rencana perluasan jaringan pada PT.
Telkom (Persero) cabang Malang. Skripsi.
Husnan, S. dan Muhammad S. 2000. Studi Kelayakan Proyek. Edisi 4, UUP, AMP YKPN. Kasmir&
Jakfar. 2003. Studi Kelayakan Bisnis. Cetakan ke Delapan. Jakarta: Kencana.
Mulyadi, 1993. Akuntansi Manajemen : Konsep, Manfaat dan Rekayasa. Edisi 2. Cetakan 1.
Yogyakarta : STIE YKPN.
Njo Anastasia. 2001. Analisis Investasi Untuk Pengambilan Keputusan Investasi Pada
Pengembangan Lapangan Golf dan Perumahan Citra Raya. Skripsi Kecamatan Deli Serdang.
Skripsi Universitas Sumatra Utara. Medan.
Riyanto, Bambang. 1992. Dasar-dasar Pembelajaran Perusahaan. Edisi 3. Cetakan 16. Yogyakarta.
Yayasan Bakti Penerbit Gajah Mada. Sugiyono. 2011. Metode Penelitian Kombinasi (Mixed
Methods). Bandung: Alfabeta.
Supriyono, R.A. 1991. Akuntansi Manajemen 3 : Proses Pengendalian Manajamen. Edisi 1. Cetakan
3. Yogyakarta : STIE YKPN-BPFE UG
Syafrul, Auliya. 2010. Analisis Kelayakan Usaha Pembuatan Yoghurt Di Perusahaan Dafarm
Kecamatan Ciampea Kabupaten Bogor. Bogor : Departemen Agribisnis Fakultas Ekonomi
Dan Manajemen Institut Pertanian Bogor.

The Effect Of Electronic Service Quality Factors On Customer

Satisfaction In Mobile Banking During The Covid-19 Pandemic
1
Fitrah Nur Islamiah, 2Lies Handrijaningsih, 3Anisah, 4Angga Putri Ekanova
1
fitrah.2407@gmail.com, 2lieshandrijaningsih@staff.gunadarma.ac.id,
3
anisah@staff.gunadarma.ac.id, 4angga_putri@ staff.gunadarma.ac.id
Abstract
The development of the use of electronic service transactions during the Covid-19 pandemic
continues to increase. The development of mobile banking applications is faster than other digital
bank transaction features in providing services for mobile banking customer satisfaction. The
purpose of this study was to analyze the influence of electronic service quality factors on customer
satisfaction variables partially or simultaneously and to find out which variables were the most
dominant on mobile banking customer satisfaction variables during the Covid-19 pandemic. The
data collection method used in the study was the dissemination of questionnaires. The sampling
method in this study was non probability sampling with purposive sampling techniques and obtained
samples from 100 respondents. The analysis test stages used are validity tests, reliability tests,
classical assumption tests (normality tests, heteroskedasticity tests and multicollinierity tests), some
linear regression tests, hypothesis tests (t tests and f tests) and determination coefficient tests with
the help of IBM SPSS Stastistics applications. The results showed that the efficiency of mobile
banking features and the fulfillment of mobile banking features had a partial effect on mobile banking
customer satisfaction, while the reliability of mobile banking features and the privacy of mobile
banking features had no effect on mobile banking customer satisfaction. Variables of feature
efficiency, feature fulfillment, feature reliability and feature privacy have a simultaneous effect on
mobile banking customer satisfaction. The most dominant variable of mobile banking customer
satisfaction is the efficiency variable of mobile banking features.
Keywords: customer, efficiency, fulfillment, privacy, reliability

JEL Codes: E71, G41, O33
INTRODUCTION
Technological advances that are increasingly sophisticated in the era of globalization are
familiar. Transactions using the internet network greatly facilitate people with a wide reach,
affordable costs, the operation of the system for 24 hours and facilitate close communication to users.
The development of the internet is very influential on economic development. Efforts to create
convenience in marketing activities require a superior strategy for the company in order to influence
the market by looking for business opportunities in the form of products and services that allow the
company to produce better quality than before and its rivals.
Electronic money is physical fractional money with face value that has been stored in the form
of electronic or digital data. Bank Indonesia on August 14, 2014 has launched the National Non-Cash
Movement (GNNT). The goal is to increase understanding and awareness of the public, government
agencies and actors to use electronic money payment tools in conducting financial transactions.
Mobile banking or m-banking can be used through applications installed by customers. Mobile
banking service is astilah used to conduct balance check transactions, account transactions, payment
of funds transfer between accounts, bank account mutations, savings interest rate information,
deposits, credit, bill payments and foreign exchange rates through mobile device facilities and others
through mobile banking application devices in mobile phone.
The development of mobile banking applications are faster than other bank digital transaction
features by providing efficient, fulfillment, reliability and privacy services on mobile banking
features to achieve customer satisfaction. efficiency is the input components used such as time,
328 Islamiah, Handrijaningsih, Anisah, Ekanova

energy and cost can be calculated its use and have no impact on waste or meaningless expenditure,
Adisasmita (2014). Fulfillment is the actual performance of the company in contrast to what is
promised through the website,including the accuracy of service promises, such as availability of
product stock and delivery of products in accordance with the promised time, Jain and Kumar (2011).
Reliability is the ability of a company that provides services in accordance with what is
promised accurately and reliably reflected by punctuality, equal service for all consumers without
errors, sympathetic attitude and high accuracy, Rosalia and Purnawati (2018). Privacy is the
regulation governing the collection, use and disclosure of information, Richards and Hartzog (2016).
Customer satisfaction is the feeling of pleasure or disappointment that a person gets from comparing
the performance (results) of the perceived product and its expectations, Tjiptono and Diana (2017).
The enactment of physical distancing and the call for self-isolation or known as stay at home
causes limited wiggle room and has an impact on daily activities. Government policy that each
individual reduce transactions in place directly makesthe community begin to switch witha positive
response to make online transactions to meet the needs. As the needs and behavior of customers begin
to switch to using electronic service transactions. The Covid-19 pandemic has changed the interaction
patterns and lifestyles of people who began to rely on electronic money to transact online to meet
their dailyneeds. The factors that influence the quality of electronic services on mobile banking
customer satisfaction are efficiency variables, fulfillment variables, reliability variables and privacy
variables in mobile banking features.
Based on the description described, the goal to be achieved in this study is to know and analyze:
1. The effect of efficiency variables on customer satisfaction variables in mobile banking during the
Covid-19 pandemic.
2. The effect of fulfillment variables on customer satisfaction variables in mobile banking during the
Covid-19 pandemic.
3. The effect of reliability variables on customer satisfaction variables in mobile banking during the
Covid-19 pandemic.
4. The effect of privacy variables on customer satisfaction variables in mobile banking during the
Covid-19 pandemic.
5. The effect of efficiency variables, fulfillment variables, reliability variables and privacy variables
together on mobile banking customer satisfaction variables during the Covid-19 pandemic.
6. Knowing the variables that have the most influence on customer satisfaction variables in mobile
banking during the Covid-19 pandemic.
LITERATURE REVIEW
Marketing
Marketing according to Kotler and Keller (2017),"marketing is meeting needs profitability, the
meaning of the phrase is marketing is the thing that is done to meet every consumer's needs in ways
that benefit all parties".
Consumer Behavior
According to Kotler and Keller (2017),"the study of how individuals, organizations and groups
act in buying, selecting and using product and service ideas in satisfying consumers' needs and
desires".
Quality of Service
Quality of service according to Tjiptono and Candra (2016),"a measure of how well the level
of service provided is able to meet customer expectations. The main factors that affect the quality of
service, namely expected service and perceived service. Services received or felt in accordance with
the expected then the quality of service is perceived as ideal quality, conversely if the services
received are lower than expected then the quality of service is perceived poorly".
Quality of Electronic Service

The quality of electronic services according to Laurent (2016), "a comprehensive assessment
and evaluation of the quality of service delivery to consumers in the virtual market".
Islamiah, Handrijaningsih, Anisah, Ekanova 329

Efficiency
Efficiency according to Jain and Kumar (2011), "posits is one of the dimensions of quality
electronic service which includes the ability of customers to access websites, the ability to search for
products and information related to those products and leave the site concerned with minimal effort".
Indicators for measuring efficiency variables, Ardiyanto (2019) are:
1. On target
2. On time
3. Achieving goals
4. Maximize output
5. Maximize input
Fulfillment
According to Zafar, Zaheer, Rahman and Rehman (2011), "service commitments such as
providing sufficient products to meet customer desires and make the services of the waiter are always
available as in the promised time".
Indicators for measuring fulfillment variables, Tjiptono and Chandra (2017) are:
1. Delivery of orders
2. Availability of items that can be fulfilled
3. Have stock supplies
4. Deliver the product at the promised time
Reliability
According to Lupiyoadi (2018), "the company's ability to provide services as promised
accurately and reliably. Performance should be in line with customer expectations which means
punctuality, same service for all customers without errors, a sympathetic attitude and with high
accuracy"
Indicators for measuring reliability variables, Tjiptono (2011) are:
1. Carefulness in serving
2. Have a clear standard of service
3. The ability of employees to use tools in the service process
4. Employee expertise in using tools in the service process
Privacy
According to Jain and Kumar (2011),"one of the dimensions of electronic service quality that
includes assurance and the company's ability to maintain the integrity of customer data".
Indicators for measuring privacy variables, Kinasih and Albari (2012) are:
1. Legal guarantees for consumer data protection.
2. Collection of consumer personal data necessary for website activity
3. Agree with the consumer in terms of dissemination of information
4. Convenience provided to consumers when providing information
5. The company's website cares about the personal data of consumers
Satisfaction
Kotler and Keller (2017) "factors that can affect customer satisfaction, namely product quality,
price, quality of service, emotional factors (Emotional factors), costs and convenience".
Indicators for measuring satisfaction variables, Kotler and Keller (2017) are:
1. Product quality, customers will feel satisfied if the results of their evaluation show that the product
they use is quality
2. Price, products of the same quality but setting a relatively cheap price will give high value to its
customers
3. Servicequality (Service quality)customers will feel satisfied if they get good service or in
accordance with their expectations
4. Emotional factor (emotional factor)customers will feel proud and get confidence that others are
amazed at him when using a particular brand product

5. Cost and Convenience, customers who do not need to spend extra biaya or waste time to get a
product, tend to be satisfied with the product
Customer
Customers according to Al-Arief (2010),"a person or legal entity who has an account either a
deposit account or a loan on the part of the bank".
Bank
Banks according to the Law of the Republic of Indonesia No. 10 of 1998 on Banking, "banks
are business entities that collect funds from the community in the form of deposits of funds issued to
the community in the form of credit and or other forms in order to improve the standard of living of
many people".
Mobile Banking
Mobile banking according to Febrianta (2016),"good offers and opportunities for banks both
lower costs, add customers to save and easy transaction services".
Pandemic Covid-19
A new type of coronavirus discovered in humans that appeared in Wuhan City, Hubei
Province, China in December 2019 and was designated a pandemic by the World Health Organization
(WHO) on March 11, 2020 was later named Severe Acute Respiratory Syndrome Corona virus 2
(SARS-COV2) and causes Coronavirus Disease - 2019 (Covid-19).
Similar studies that have a relationship with this study as a reference in writing. Research by
Febrianta and Indrawati (2016), The results of the variable efficiency of mobile banking features
partially and simultaneously have a positive and significant effect on the variable of mobile banking
customer satisfaction. Trisnawati and Fahmi (2017), The results of the variable fulfillment of mobile
banking features partially and simultaneously have a positive and significant effect on the variable
of mobile banking customer satisfaction.
Imelda and Huwaida (2019), The results of the reliability variable of the mobile banking
feature partially and simultaneously have a positive and significant effect on the variable of mobile
banking customer satisfaction. Trisnawati and Fahmi (2017), the results of the privacy variable of
the mobile banking feature partially and simultaneously have a positive and significant effect on the
variable of mobile banking customer satisfaction.
RESEARCH METHOD
The data used in this study is primary data. This type of research is associative research that
connects the independent variables so that it can be seen its effect on the dependent variable. The
approach used in this research is a quantitative approach with a descriptive approach.
The population of this study is mobile banking users who have made transactions during the
Covid-19 pandemic. The sampling technique used is non-probability sampling and purposive
sampling because it does not provide equal opportunities for each element or member of the
population to be sampled.
Z2
n=
4(moe)2
1,962
n=
4(0,1)2
n = 96,04 ≈ 100
Information:
n : Number of samples
Z : Confidence rate in sample determination of 95% = 1,96
Moe : The maximum tolerable margin of error or error, set at 10%
The result of the number of samples taken at least 96,04 then the study took a sample of 100
respondents.

The data used in this study uses multiple linear regression to determine the effect of the
independent variables, namely the efficiency variable (X1), fulfillment variable (X2), reliability
variable (X3), privacy variable (X4) mobile banking features and analysis variable, namely customer
satisfaction variable. (Y) on mobile banking.

Multiple linear regression is performed when the number of independent variables is at least
two, which aims to measure the strength and direction of the relationship between the mobile banking
customer satisfaction variable with mobile banking feature efficiency variable, mobile banking
feature fulfillment variable, mobile banking feature reliability variable, and mobile banking feature
privacy variable. The following in Table 4.9 show the results for the linear regression analysis test:
Table 4.9 Multiple Linear Regression Test Results
Coefficientsa
Coefficients Coefficients Collinearity Statistics
Std.
Type B Error Beta T Sig. Tolerance VIF
1 (Constant) 4.953 1.471 3.367 .001
Efficiency .530 .074 .604 7.168 .000 .539 1.855
Fulfillment .313 .112 .270 2.806 .006 .413 2.422
Reliability .032 .121 .027 .268 .789 .379 2.638
Privacy .000 .068 -.001 -.006 .995 .547 1.827
a. Dependent Variable: Customer Satisfaction
Source: SPSS processing results (2021)
Table 4.9 of the regression equation formula for multiple linear regression tests is as follows.
Y = 4,953 + 0,530 X1 + 0,313 X2 + 0,032 X3 + 0,000 X4 + e
a) The constant value of 4,953 indicates a positive constant value and shows that if the efficiency
variable (X1), fulfillment variable (X2), reliability variable (X3) and privacy variable (X4) of
mobile banking features are considered constant, it is estimated that the variable customer
satisfaction (Y) of mobile banking during the period of Covid-19 pandemic is 4,953.
b) The regression coefficient value of the efficiency variable (X1) is 0,530 with a positive
coefficient value. These results indicate that if the response to the mobile banking feature
efficiency variable increases, the mobile banking customer satisfaction variable during the
Covid-19 pandemic will increase.
c) The regression coefficient value of the fulfillment variable (X2) of 0,313 with a positive
fulfillment variable increases, the mobile banking customer satisfaction variable during the
d) The regression coefficient value of the reliability variable (X3) of 0,032 with a positive
reliability variable increases, the mobile banking customer satisfaction variable during the
e) The regression coefficient value of the privacy variable (X4) of 0,000 with a positive coefficient
value. These results indicate that if the response to the mobile banking feature privacy variable
increases, the mobile banking customer satisfaction variable during the Covid-19 pandemic will
increase.

Hypothesis Test
T Test
Partial tests are used to test the influence between factors—the quality of electronic service
on customer. Partial tests qualify if (df) = n – k – 1 or (df) = 100 – 4 – 1 = 95 (n is the number of
respondents and k is the number of free variables) then the t-table is known to be 1,985and if the
significance value < 0,05 then has an effect. In the coefficient table is generated as follows.
Table 4.10 Partial Test Results
Coefficientsa
Type B Std. Error Beta t Sig.
1 (Constant) 4.953 1.471 3.367 .001
Efficiency .530 .074 .604 7.168 .000
Fulfillment .313 .112 .270 2.806 .006
Reliability .032 .121 .027 .268 .789
Privacy .000 .068 -.001 -.006 .995
1. The t-value of the efficiency variable is 7,168 > 1,985 and the significance value 0,000 < 0,05,
which means Ho is rejected and Ha is accepted, then the efficiency variable affects the customer
satisfaction variable. In conclusion, the efficiency variable of mobile banking features is a
consideration for mobile banking customer satisfaction during the Covid-19 pandemic.
2. The t-value of the fulfillment variable is 2,806 > 1,985 and the significance value 0,006 < 0,05
which means Ho is rejected and Ha is accepted, then the fulfillment variable affects the customer
satisfaction variable. In conclusion, the fulfillment variable of mobile banking features is a
3. The t-value of reliability variable is 0,268 < 1,985 and significance value 0,789 > 0,05 which
means Ho is accepted and Ha is rejected, then, then the reliability variable has no effect on the
customer satisfaction variable. In conclusion, the reliability variable of mobile banking features
is not a consideration for mobile banking customer satisfaction during the Covid-19 pandemic.
4. The t-value of the privacy variable is -0,006 <, 1,985 and significance value 0,995 > 0,05 which
means Ho is accepted and Ha is rejected, then the privacy variable has no effect on the customer
satisfaction variable. In conclusion, the privacy variable of mobile banking features is not a
Test F
Simultaneous test is used to test the accuracy of the model (Goodness of fit) which shows
whether all the independent model variables used have a joint effect on these variables. Simultaneous
testing meets the requirements if (df) = n – k – 1 or (df) = 100 – 4 – 1 = 95 (n is the number of
respondents and k is the number of variables) then the known f-table is 2,47 and if the value
significance < 0,05 then it has an effect. Table 4.11 shows the results of simultaneous testing as
follows.
Table 4.11 Simultaneous Test Results
ANOVAa
1 Regression 359.942 4 89.985 41.478 .000b
Residual 206.098 95 2.169
Total 566.040 99
b. Predictors: (Constant), Efficiency, Fulfillment, Reliability, Privacy

Table 4.11 Simultaneous test results show that data processing in the service quality factor
table has an f-value of 41,478 > 2,47 and significance value of 0,000 < 0.05 which means Ho is
rejected and Ha is accepted, then the efficiency variable mobile banking features, the fulfillment
variable mobile banking features, the reliability variable mobile banking features, and the privacy
variable of the mobile banking feature has an effect on the variable of mobile banking customer
satisfaction. These results can be seen by the creation of a good electronic service quality factor on
the electronic service quality variable which can provide an overview of customer satisfaction
variables in using mobile banking together.

The coefficient of determination is the proportion of variability in one data based on a
statistical model. The coefficient of determination meets the requirements if the value of the
coefficient of determination is close to zero, this indicates the ability of the mobile banking feature
efficiency variable, the mobile banking feature fulfillment variable, the mobile banking feature
reliability variable, and the privacy variable of the mobile banking feature to explain the very limited
variation of the customer satisfaction variable mobile banking. The value of the coefficient of
determination that is getting closer to one indicates that the electronic service quality factor variable
provides almost all of the information needed to predict variations in the mobile banking customer
satisfaction variable. Based on Table 4.12 shows the results of the coefficient of determination as
follows.
Table 4.12 Coefficient of Determination result
Model Summaryb
Model R R Square Adjusted R Square Std. Error of the Estimate

a
1 .772 .596 .579 1.572
a. Predictors: (Constant), Efficiency, Fulfillment, Reliability, Privacy
b. Dependent Variable: Customer Satisfaction
Based on Table 4.12 shows the results of data processing in the table that the R² value is 0,579
or 57,9%. The results showed that the electronic service quality factors were the efficiency variable
of the mobile banking feature, the fulfillment variable of the mobile banking feature, the reliability
variable of the mobile banking feature, and the privacy variable of the mobile banking feature, which
can affect the variable satisfaction of mobile banking customers by 57,9%. The remaining 57,9%,
namely 100% – 57,9% = 42,1% which is the contribution of the influence of variables outside of the
studied electronic service quality factors, such as trust variables, speed variables, security variables,
accuracy variables, insurance variables, response variable, comfort variable, comfort variable and so
on.

Conclusion
Based on the results of data analysis, research and discussion that have been carried out
regarding the effect of efficiency variables on mobile banking features, fulfillment variables on
mobile banking features, reliability variables on mobile banking features and privacy variables on
mobile banking features as independent variables on mobile banking customer satisfaction variables
as follows.
1. The Efficiency variable has an effect on the variable satisfaction of mobile banking customers
2. The fulfillment variable has an effect on the variable satisfaction of mobile banking customers
3. The reliability variable has no effect on the mobile banking customer satisfaction variable during
the Covid-19 pandemic.
4. The Privacy variable has no effect on the mobile banking customer satisfaction variable during
the Covid-19 pandemic.

5. Efficiency variables, fulfillment variables, reliability variables, and privacy variables together
affect mobile banking customer satisfaction variables during the Covid-19 pandemic.
6. The most dominant variable or the most instrumental in explaining the mobile banking customer
satisfaction variable during the Covid-19 pandemic is the efficiency variable.
SUGGESTION
1. For the Bank
The Bank is expected to maintain and innovate on the electronic service quality variable as a
policy to provide satisfaction to mobile banking customers considering that the efficiency variable
of mobile banking features and the fulfillment variable of mobile banking features affect mobile
banking customer satisfaction. the company re-evaluated to improve and improve the variable quality
of electronic services, especially on the reliability variable of the mobile banking feature and the
privacy variable of the mobile banking feature which is still considered insufficient to meet the
variable of mobile banking customer satisfaction.
2. For Customers
A firm attitude must be taken by customers in seeking information about mobile banking
before using the application by considering all factors of the quality of electronic services.
3. For Academics
The next researcher that will take the same topic as this study is recommended to look for
other variables that can affect the selected variable. Thenew study is expected to produce a more in-
depth analysis by comparing mobile banking between different banks.
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Comparative Analysis Of Financial Performance Of ASEAN Countries

For 2016-2020 Period
1
Irmawati, 2Maria Magdalena P.D, 3Dharma Tintri Ediraras
1,3
Economics Faculty of Universitas Gunadarma, 2STIE Nusa Megarkencana
1,3
Jl. Margonda Raya No. 100, Depok 16424, Jawa Barat,
2
Jl. A.M. Sangaji, Cokrodiningratan, Kec. Jetis, Yogyakarta 55233
1
irmaw1715@gmail.com, 2mariastienus@gmail.com, 3dtediraras@staff.gunadarma.ac.id
Abstract
A country in general has a goal to be able to maintain stability, both for the state and society. The
impact of the Covid-19 pandemic has had a major impact on all countries in the world, including 10
countries in ASEAN that have experienced ups and downs in their respective countries. The big risk
is that debt to the state is the only way that must be taken to be able to stabilize the economic situation
of its population. All countries have tried their best to get out of this pandemic zone. This writing
aims to analyze financial performance in ASEAN countries due to the impact of the Covid-19
pandemic by using the Debt Ratio to GDP, Current Assets Ratio, Capital Adequacy Ratio, and
Efficiency Ratio, also through the Normality Statistics Test (Kolmogorov Smirnov), One-way of
ANOVA test, Paired Sample T-test¸ Wilcoxon test. The type of data used is secondary data in the
form of: Covid-19 background, profiles of ASEAN member countries, financial data of ASEAN
countries through their respective official data sites. Based on the results of the study, there are still
countries that are heavily affected by the Covid-19 pandemic. The author proposes that affected
countries are better able to use the allocation of funds that should be used for their own citizens, and
as much as possible overcome the problem by not being in debt to other countries. The state needs to
increase the level of income by increasing the amount of production in its own country because it is
to balance the expenditure allocation that will occur.
Keywords : ASEAN Countries, Covid 19, Financial Performance

JEL Codes : F37, F62, F66
INTRODUCTION
The rapid development of a country can affect stability in the region of the country. Each
country plays an important role in its region, so it is important for a country to maintain its stability.
The Southeast Asia region or better known as ASEAN, is a form of association for the countries of
the Southeast Asia region consisting of Indonesia, Malaysia, Singapore, Thailand, the Philippines,
Brunei Darussalam, Vietnam, Laos, Myanmar and Cambodia. These ASEAN countries were formed
on the basis of promoting cooperation in the economic, scientific and socio-cultural fields, in the fields
of political and security cooperation, as well as opening opportunities for underdeveloped countries
to develop and gain access to markets, technology and information from other countries. More
developed countries.
At the beginning of 2020, the world was shocked by the incidence of severe infections with
unknown causes, which began with a report from China to the World Health Organization (WHO)
that there were 44 severe pneumonia patients in an area, namely the City of Wuhan Prov. Hubei,
China to be exact on the last day of 2019 China. Initial allegations are related to a wet market that
sells fish, marine animals, and various other animals such as from animals such as bats, and other
vectors such as bamboo rats, camels and civets. On January 10, 2020, the cause was identified and
the genetic code was obtained, namely the new corona virus. Corona Virus Disease (Covid-19) in
2020 spread into a new type of virus (SARS-CoV-2) whose disease is called Coronavirus disease
2019 (COVID-19) and has infected 90,308 people as of March 2, 2020. The number of deaths reached
3,087 people or 6% of the number of patients who recovered were 45,726 people. Common
symptoms of this virus include fever, cough and difficulty breathing. Isolation measures have also
been carried out in several countries for patients who are proven to be infected with Covid-19 to
prevent wider spread.
338 Irmawati, Magdalena, Ediraras

According to data released by the World Health Organization (WHO), the number of
confirmed positive cases recorded in 224 countries as of August 29, 2021 was 214,468,601 cases,
and 4,470,969 cases died. Steps have been taken in various countries, starting from closing access to
and exiting Foreign Citizens (WNA) and Large-Scale Social Restrictions (PSBB). As a result of the
Covid-19 pandemic, which has resulted in economic and income crises in various countries in the
world, this is the main factor that must be faced by the government and is the first center of attention
that must be addressed quickly. Until now, many countries are still experiencing difficulties during
the pandemic, such as in a country with a lack of budget, minimal public income and inadequate
accommodation for a country. Various ways have been taken to stabilize the situation, such as the
existence of vaccines that have been held in several countries and there have been 4,953,887,422
doses recorded in order to narrow the movement of Covid-19.
Formulation of The Problem

1. Is there a difference between before and after the Covid-19 Pandemic in ASEAN Countries in
terms of the 2016-2020 Debt- to-GDP Ratio?
2. Is there a difference between before and after the Covid-19 Pandemic in ASEAN Countries as
seen from the 2016-2020 Current Asset Ratio?
terms of the 2016-2020 Capital Adequacy Ratio?
terms of the 2016-2020 Efficiency Ratio?
Research Purposes
1. To test and analyze the difference between before and after the Covid-19 Pandemic in ASEAN
Countries seen from the 2016-2020 Debt Ratio.
Countries seen from the 2016-2020 Current Asset Ratio.
Countries as seen from the 2016-2020 Capital Adequacy Ratio.
Countries in terms of the 2016-2020 Efficiency Ratio.
LITERATURE REVIEW
ASEAN
ASEAN was formed on August 8, 1967 in Bangkok, Thailand by the five founding countries,
namely: Indonesia, Malaysia, the Philippines, Singapore, and Thailand through the signing of the
Bangkok Declaration.
Government
The government is an organization that has the authority to make and implement laws and
regulations in a particular area. Meanwhile, government is all the affairs carried out by the state in
carrying out the welfare of its people, and not only carrying out executive duties, but also other tasks
such as legislative and judicial.
Financial statements
Government financial reports are a form of government accountability for the use of regional
finances in the context of implementing regional government autonomy and operations, it becomes
a performance benchmark to be accounted for at the end of each fiscal year (Bambang Supriyadi et
al 2017:21).
According to Bambang Supriyadi et al (2017:21), the general purpose of financial reporting is
to present information for decision making and to demonstrate the accountability of reporting entities
for the resources entrusted to the Financial Statements.
According to Bambang Supriyadi et al (2017:28-30), accounting principles and financial
statements are intended as provisions that are understood and adhered to by standard makers in the
preparation of accounting standards, by accounting and financial statement organizers in carrying
Irmawati, Magdalena, Ediraras 339

out their activities, as well as by users of financial statements in understanding reports, financial
statements presented.
Financial Performance Analysis

Financial performance analysis is basically carried out to assess performance in the past or in
the previous year by analyzing in order to obtain a financial position that represents the reality and
potential performance that will continue in an entity.
According to Mangkunegara (2016), the term performance comes from the word Job
Performance or Actual Performance (work achievement or actual achievement achieved by
someone). The definition of performance is the quality and quantity of work achieved by an
employee in carrying out his duties in accordance with the responsibilities given to him.
Financial Ratio
The use of state finances is very important to pay attention to. According to Harahap (2016:
190) Financial Statement Analysis is the breakdown of financial statement items (financial
statements) into smaller units of information and see the relationship that is significant or has
meaning between one another, both quantitative data and non-quantitative data. with the aim of
knowing more about the financial condition that is most important in the process of making the right
decision. The use of ratio analysis in the public sector, especially the APBN, has not been widely
used, so that in theory there is no unanimous agreement on the name and measurement rules.
There are several ways to measure the state's financial performance, one of which is by using
the Debt Ratio to GDP, Current Assets Ratio, Capital Adequacy Ratio, and Efficiency Ratio.
RESEARCH METHOD
Object of Research
The objects in this study are data on State National Income, State Income Production,
Construction and Property, Public and Government Finance Data, Demographics and Labor Market,
Domestic Trade and Household Consumption, State Inflation Rate, Foreign Trade, Trade Balance,
Statistics State Banking, Capital Markets, and State Budget Realization which are part of the
Financial Statements of the Central Government of 10 Countries in Southeast Asia (ASEAN)
including: Indonesia, Malaysia, Singapore, Thailand, Philippines, Brunei Darussalam, Vietnam,
Laos, Myanmar, and Cambodia. 2016-2020.
Population and Population Sampling Procedures

Population
The population used in this study is all countries in ASEAN including: Indonesia, Malaysia,
Singapore, Thailand, Philippines, Brunei Darussalam, Vietnam, Laos, Myanmar, and Cambodia.
Analysis Techniques
In order for this research to be carried out as expected, it is necessary to understand the various
elements that form the basis of a research contained in the research variables. The variable used in
this study is the State Government Financial Performance which includes several parameters in the
form of ratios, namely as follows:
1. Debt to GDP Ratio
Government debt is used for general financing (General Financing). Debt policy is a policy
that is consciously implemented in order to achieve the objectives of economic management. Debt is
also stated as a consequence of the state budget posture which is designed to be a deficit, in the
sample in this study was chosen intentionally based on considerations that only wanted to compare
the performance of 10 countries in ASEAN between before and after the Covid-19 pandemic.

The type of data in this study is to use quantitative data. The data needed is in the form of an
annual report for the 2016- 2020 period which is obtained through the official website of the
publication that contains macro and micro data from all countries, namely www.ceicdata.com.

Data Collection Procedure

The data in this study can be obtained through the official website of publications from all
countries, namely www.ceicdata.com from 2017-2020. In addition, other data and information were
obtained from journals and books. Referring to the type of data to be collected in this study, the data
collection technique used is the documentation technique, which state revenues are smaller than state
expenditures.
Ratio that describes the amount of debt obligations to production capacity in the country. This
indicator reflects a country's economic potential shown in GDP, as a measure of a country's economic
activity in repaying foreign debt.
Ratio that describes the amount of debt obligations to production capacity in the country. This
indicator reflects a country's economic potential shown in GDP, as a measure of a country's economic
activity in repaying foreign debt.
1. The debt-to-GDP ratio
A ratio can be seen as a criterion for checking the financial health of a country, where a ratio
above 50% indicates that foreign loans fix more than 50% of the National Income (Basri, 2016: 201).
The higher the ratio, the less likely a country will be able to pay its debts, this will make a country
default. This ratio is formulated as follows:
𝑻𝒐𝒕𝒂𝒍 𝑫𝒆𝒃𝒕
𝑫𝒆𝒃𝒕 𝒕𝒐 𝑮𝑫𝑷 𝑹𝒂𝒕𝒊𝒐 = 𝐆𝐃𝐏
𝑿 𝟏𝟎𝟎%
2. Current Asset Ratio

A ratio that describes how an agency fulfills its short-term obligations. The Current Assets
Ratio compares the current assets owned by the government with the amount of short-term debt at the
balance sheet date. If less than 2:1 is considered less good, because if current assets decrease for
example more than 50%, the total current assets will not be sufficient to cover current liabilities
(Bambang Riyanto, 2016: 26). This ratio is formulated as follows:
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕 𝑹𝒂𝒕𝒊𝒐 = 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔 𝑿 𝟏𝟎𝟎%
3. Capital Adequacy Ratio

The Capital Adequacy Ratio is an indicator of capital health to measure the adequacy of capital
owned by a country to support assets or generate risks, such as financing a country.
The Capital Adequacy Ratio is used to anticipate future risks, the greater the ratio, the greater
the resilience of a country in the face of income depreciation arising from problematic problems. This
ratio is formulated as follows:
𝑺𝒕𝒂𝒕𝒆 𝑪𝒂𝒑𝒊𝒕𝒂𝒍
𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑨𝒅𝒆𝒒𝒖𝒂𝒄𝒚 𝑹𝒂𝒕𝒊𝒐 = 𝑿 𝟏𝟎𝟎%
𝑹𝒊𝒔𝒌 𝑾𝒆𝒊𝒈𝒉𝒕𝒆𝒅 𝑨𝒔𝒔𝒆𝒕
4. Efficiency Ratio
The Efficiency Ratio can be calculated by comparing the costs incurred by the government to
obtain State Original Revenue with the realization of PAN revenues (Mahmudi, 2016:141). The
smaller the value in the ratio, the more efficient the performance of a country's government in
collecting State Original Income. This ratio is formulated as follows:
𝑺𝒕𝒂𝒕𝒆 𝑬𝒙𝒑𝒆𝒏𝒅𝒊𝒕𝒖𝒓𝒆 𝑹𝒆𝒂𝒍𝒊𝒛𝒂𝒕𝒊𝒐𝒏
𝑬𝒇𝒇𝒊𝒄𝒊𝒆𝒏𝒄𝒚 𝑹𝒂𝒕𝒊𝒐 = 𝑹𝒆𝒂𝒍𝒊𝒛𝒂𝒕𝒊𝒐𝒏 𝒐𝒇 𝑺𝒕𝒂𝒕𝒆 𝑹𝒆𝒗𝒆𝒏𝒖𝒆
𝑿 𝟏𝟎𝟎%
Table 1. Criteria For Assessment Of Financial Management Efficiency Ratio

Percentage of Financial Performance Criteria
>100% Not Efficient
90%-100% Less Efficient
80%-90% Quite Efficient
60%-80% Efficient
<60% Very Efficient
Source: Ministry of Home Affairs, Ministry of Home Affairs No. 690,900,327 Year 1996

Hypothesis Testing Normality Test

Normality test is a test conducted with the aim of assessing the distribution of data in a group
of data or variables, whether the distribution of the data is normally distributed or not. The
Kolmogorov Smirnov test is a normality test that is widely used, comparing the distribution of the
data (which will be tested for normality) with the standard normal distribution. If the significance is
below 0.05, it means that there is a significant difference.
One-Way ANOVA Test

One-way ANOVA is used if the one to be analyzed consists of one dependent variable and one
independent variable. A method for breaking down the total variance of data into components that
measure various sources of variability. Applicatively, ANOVA is used to test the mean of more than
two samples that are significantly different or not and to test the differences of three or more groups
based on one independent variable.
Paired Sample T-test (Parametric Test)

The T-Test was used to test the comparative hypothesis (difference test). Paired Sample T-
Test is used to determine whether or not there is a difference in the mean of two groups that are not
related (free) to one another, with the aim of whether the two groups have the same average or not
significantly, assuming data is normally distributed (Ghozali, 2018: 64). If the normality test is not
met, then the alternative that can be used is the Wilcoxon test which is a non-parametric statistical
analysis.
The assumption of this test is if the value of Sig. > 0.05 then there is no relationship between
variables, and if the value of Sig. <0.05 then there is a relationship between variables. If the value of
Sig. (2-tailed) < 0.05 then there is a significant difference between variables, and if the value of Sig.
(2-tailed) > 0.05 then there is no significant difference between variables.
Wilcoxon Test (Non-Parametric Test)

The nonparametric test in this study used the Wilcoxon Signed Rank Test to measure the
significance of the difference between the 2 groups of paired data but not normally distributed. The
Wilcoxon Signed Rank Test is an alternative test to the Paired Sample T-Test or if the data does not
meet the normal assumptions. If the value of the Wilcoxon statistic is critical, then H1 is accepted.

1. Normality Test (Kolmogorov Smirnov)
Table 2. Test of Normality Kolmogorov Smirnov

Ratio Statistic N Sig
Mean Before The debt-to-GDP ratio ,326 6 ,045
Pandemic (2016- Current Asset Ratio ,277 6 ,157
2019) Current Asset Ratio ,120 1 ,300
Efficiency Ratio ,380 10 ,650
Mean When The debt-to-GDP ratio ,380 6 ,006
Pandemic (2020) Current Asset Ratio ,256 6 ,200
Capital Adequacy Ratio ,123 1 ,260
Efficiency Ratio ,300 10 ,009
Based on the output, it is known that the significance value (Sig.) for all data on Kolmogorov-
Smirnov > 0.05 is only for the Current Asset Ratio, and the Capital Adequacy Ratio, it can be
concluded that the research data is partially normally distributed. Because the research data is
normally distributed, it can use parametric statistics (Paired sample t test) and Non- Parametric Test
on the Debt Ratio to GDP and Efficiency Ratio using the Wilcoxon Test.

2. One-Way ANOVA Test
Table 3. Country Descriptives

N Mean Std Deviation Std Error
Ratio Liabilitis 13 37,9954 34,94741 9,65493
Ratio Current Asset 14 29,3143 16,59348 4,43476
Capital Adequacy Ratio 16 16,5958 4,60562 1,16664
Rasio Effisiensi 20 144,5915 74,78270 16,72214
Total 63 68,7118 70,28068 8,85453
Source: Data processed by the author
Based on the output above, it is known that the average difference between the four ratios is
as follows: Debt to GDP Ratio of 57.9, Current Assets Ratio of 29.31, Capital Adequacy Ratio of
16.99, and Efficiency Ratio of 144, 7. Thus, descriptively it can be concluded that the highest average
ratio is the Efficiency Ratio, which is 144.7.
Table 4. ANOVA
Country Sum of Squares ɑt Mean Square F Sig
Between Groups 181503,565 3 60501,188 28,617 0,000
Within Groups 124737,655 59 2114,198
Total 306241,220 62
Based on the output results above, if the significance value is > 0.05 then the average is the
same, and if <0.05 then the average is different. Based on the results of the Anova output above, it is
known that the sig value is 0.000 < 0.05. So it can be concluded that the average of the four ratios is
"Different" significantly. Conclusion of One-Way Anova Test: The highest average is in the
Efficiency Ratio of 144.7 and the results of the Anova test show that the four ratios are significantly
different from one another.
3. Based on Calculation Debt to GDP Ratio

Debt to GDP Ratio
Table 5. Calculation of the Debt Ratio to GDP of ASEAN Countries for the 2016-2020 Period
Debt to GDP Ratio
Before the
After the
Country Pandemic (2016- Up/Down
Pandemic
2019)
Indonesia 29,43% 39,36% +9,93%
Malaysia 51,41% 62,15% +10,74%
Singapura 111,10% 150,23% +39,13%
Thailand 32,72% 44,92% +12,2%
Filiphina 39,99% 54,49% +14,5%
Brunei Darussalam - - -
Vietnam 53,55% 54,30% +0,75%
Laos - - -
Myanmar - - -
Kamboja 28,99% - -
Singapore is the highest point of increase among other member countries at 39.13%, followed
by the Philippines 14.5%, Thailand 12.2%, Malaysia at 10.74%, Indonesia 9.93%, and Vietnam at
0.75%. This shows that the higher the increase, there is a high probability that a country will default

but with the condition that the percentage of the default decreases, a country is required to increase
the capacity of production goods/services to cover the possibility of default, because the higher the
production level of a country, the higher the production rate. Generated, the debt to other countries
is getting lower/smaller because of the income from the transaction of selling goods/services
produced by the state so that a country is able to pay its obligations.
Current Asset Ratio
Table 6. Calculation of the Current Asset Ratio of ASEAN Countries for the 2016-2020
Period
Current Asset Ratio
Before the Pandemic After the
Country Up/Down
(2016-2019) Pandemic
Indonesia 16,63% 18,91% +2,28%
Malaysia 30,39% 30,98% +0,59%
Singapura 68,31% - -
Thailand 16,95% 16,33% (0,62%)
Filiphina 33,31% 35,54% +2,23%
Brunei Darussalam 49,90% 48,22% (1,68%)
Vietnam 12,22% - -
Laos - - -
Myanmar - - -
Kamboja 16,01% 16,70% +0,69%
Brunei Darussalam is at a declining point from before the pandemic and after the pandemic
by (1.68%), followed by Thailand at (0.62%), this shows that the two countries lack stability in
paying off their country's short-term obligations. Vice versa for countries whose graphs rose between
before the pandemic and after the pandemic, such as Indonesia, which rose by 2.28%, followed by the
Philippines by 2.23%, and Malaysia by 0.59%. Based on these results, the three countries whose
graphs increase between before and after the pandemic show that these countries are able to pay off
their short-term obligations, and it can be concluded that the current assets in these countries are
higher than their current debt.
Capital Adequacy Ratio
Table 7. Calculation of the Capital Adequacy Ratio of ASEAN Countries for the 2016- 2020
Period

Before the
After the
Pandemic
2019)
Indonesia 23,12% 23,89% +0,77%
Malaysia 17,89% 18,81% +0,92%
Singapura 16,83% 17,12% +0,29%
Thailand 18,55% 20,13% +1,58%
Filiphina 15,40% 17,07% +1,67%
Brunei Darussalam 19,94% 20,78% +0,84%
Vietnam 12,29% - -
Laos 11,49% 13,11% +1,62%
Myanmar - - -
Kamboja 5,50% - -

The highest country that is able to support financing in a country is the Philippines, which is
1.67%. The Philippines shows the capacity of a country in dealing with the Covid-19 pandemic,
before and after the Covid-19 pandemic the Philippines is still able to handle financing in a country,
especially as seen from the urgent situation from various parts of the world, all countries are
competing to rise due to the Covid-19 pandemic. 19. After the Philippines, Laos is the second highest
in Southeast Asia (ASEAN) at 1.62%, Thailand at 1.58%, Malaysia at 0.92%, Brunei Darussalam at
0.84%, Indonesia at 0.77%, and finally followed by Singapore 0.29%. This shows that these countries
have the capital that is able to support their country even though the world is being hit by an outbreak
of the Covid-19 disease.
Efficiency Ratio
Table 8. Calculation of the Efficiency Ratio of ASEAN Countries for the 2016-2020 Period
Efficiency Ratio
Before the
After the
Pandemic
2019)
Indonesia 119,67% 164,03% +44,36%
Malaysia 112,21% 124,81% +12,60%
Singapura 77,28% 150,52% +73,24%
Thailand 91,62% 122,82% +31,20%
Filiphina 105,23% 127,79% +22,56%
Brunei Darussalam 151,83% 301,37% +149,54%
Vietnam 112,17% 133,49% +21,33%
Laos 397,68% 141,25% (256,43%)
Myanmar 119,73% 134,98% +15,25%
Kamboja 97,80% 101,55% +9,75%
4. Based on Statistics Test

Debt to GDP Ratio
Test Statistics a
Z -2,201b
Asymp.Sig.(2-tailed ,028
a. Wilcoxon Signed Ranks Test
b. Based on negative ranks
If the value of Sig. (2-tailed) < 0.05 then there is a significant difference between variables,
and if the value of Sig. (2-tailed) > 0.05 then there is no significant difference between variables. In
conclusion, there is no significant difference in the average before the Pandemic (2016-2019) and at
the time After the Pandemic in 2020 in the Current Asset Ratio, Accept Ha.
The highest increase that occurred in Southeast Asian (ASEAN) countries was Brunei
Darussalam at 149.54%, this shows that Brunei Darussalam is less efficient in managing the
realization of spending in a country when the Covid-19 pandemic arrives, while income is far below
spending realization. Next, followed by Singapore at 73.24%, Indonesia at 44.36%, Thailand 31.20%,
Philippines 22.56%, Vietnam 21.33%, Myanmar 15.25%, Malaysia 12.60%, and Cambodia 9.75%.
Good news came from Laos, Laos showed its level of efficiency even during the Covid-19 pandemic.
Laos lowers the percentage rate by 256.43%, a sign that Laos is able to manage finances properly and
it can be said that the state's income is above the realization of its state expenditures.
Asymp Value. Sig. (2-tailed) shows < 0.05, i.e. 0.028, which means that there is a significant
difference in the Average Before the Pandemic (2016-2019) and after the Pandemic in 2020 in the
Debt Ratio to GDP, Reject Ha and shows that there is a difference from before and after the Covid-
19 pandemic.

Current Asset Ratio
t ɑt Sig.(2-tailed)
-,913 5 ,403
t ɑt Sig.(2-tailed)
-5,475 6 ,0002
The value of Sig. (2-tailed) < 0.05 then there is a significant difference between variables, and
if the value of Sig. (2-tailed) > then there is no significant difference between variables. In conclusion,
there is a significant difference in the average before the pandemic (2016-2019) and at the time after
the pandemic in 2020 in the Capital Adequacy Ratio, Reject Ha.
Efficiency Ratio
Test Statistic a
Z -1,784b
Asymp.Sig.(2-tailed ,074
Asymp Value. Sig. (2-tailed) shows > 0.05, i.e. 0.074, which means that there is no significant
difference in the Average Before the Pandemic (2016-2019) and after the Pandemic in 2020 in the
Debt Ratio to GDP, Accept Ha.

Conclusion
Based on the results of research and discussion on the Financial Performance of ASEAN
Countries for the 2016-2020 period, it can be concluded as follows:
1. Based on the calculation of the data shown in the Debt Ratio to GDP on average before the Covid-
19 pandemic (2016-2019) and after the Covid-19 pandemic (Year 2020) it rose significantly in
each country. Singapore is the highest point of increase among other member countries at 39.13%,
followed by the Philippines 14.5%, Thailand 12.2%, Malaysia 10.74%, Indonesia 9.93%, and
Vietnam at 0.75%. This shows that the higher the average increase from before the pandemic and
after the pandemic there is a high probability that a country will default and a country is required
to increase the capacity of production goods/services to cover defaults in that country, because
the higher the level of production of a country As a result, the debt to other countries will be lower
because of the income from the sale of goods/services produced by the state so that a country is
able to pay its obligations. Based on the Non-Parametric Statistical Test through the Wilcoxon
Test, it can be concluded that there are differences between before and after the Covid-19
pandemic.
2. Based on the calculation of the data shown in the Current Assets Ratio on average before the
Covid-19 pandemic (2016-2019) and after the Covid-19 pandemic (Year 2020) it went up and
down not simultaneously. The first point of decline was seen in Brunei Darussalam at 1.68%,
followed by Thailand at 0.62%. This shows that the two countries lack stability in paying off their
country's short-term obligations. On the other hand, Indonesia rose by 2.28%, followed by the
Philippines 2.23% and Malaysia 0.59%. This shows that the three countries are able to pay off
their short-term obligations, and it is concluded that the current assets in these countries are higher
than their current liabilities. Based on the Parametric Statistics Test through the Paired Sample T-
test, it can be concluded that there are differences between before and after the Covid-19
pandemic.
3. Based on the calculation of the data shown in the Capital Adequacy Ratio, the average before the
Covid-19 pandemic (2016-2019) and after the Covid- 19 pandemic (Year 2020) went up
simultaneously. The highest country that is able to support financing in a country is the
Philippines, seen from the percentage increase between before and after Covid-19 of 1.67%. The

Philippines shows the capacity of a country in dealing with the Covid-19 pandemic because it is
able to handle financing in its country, as can be seen from the urgent situation from various
countries in the world, all countries are still competing in dealing with Covid19. After the
Philippines, followed by Laos 1.62%, Thailand 1.58%, Malaysia 0.92%, Brunei Darussalam
0.84%, Indonesia 0.77%, and Singapore 0.29%. This shows that these countries have capital that
is able to support their own country even though the world is being hit by an outbreak of the
Covid-19 disease. Based on the Parametric Statistics Test through the Paired Sample Ttest, it can
be concluded that there are differences between before and after the Covid-19 pandemic.
4. Based on the calculation of the data shown in the Efficiency Ratio for the 2016-2020 period, the
level of efficiency in ASEAN countries is very diverse. In Indonesia, Malaysia, the Philippines,
Brunei Darussalam, and Myanmar, each year has a tendency to be inefficient. This inefficient can
be seen with an efficiency level above 100%. This inefficient tendency is a waste by the state,
which in calculating the allocation of funds from state revenues tends to be lower than spending
activities in the country so that the target is not optimal and inefficient. There is one country that
tends to be efficient, namely Singapore, in 2016 Singapore was in the Fairly Efficient category
and in 2017- 2019 Singapore was able to minimize state spending so that it was in the efficient
category. This can be proven that Singapore is able to manage finances in its country because of
the high income from the allocation of spending in the country. In 2020 Singapore experienced
more spending due to the impact of the very large and complex Covid-19 pandemic. Based on the
analysis of the average calculation of the Efficiency Ratio before the pandemic (2016-2019) and
after the pandemic (Year 2020) the highest increase was in Brunei Darussalam at 149.54%, this
shows that Brunei Darussalam is less efficient in managing the realization of spending in country
when the pandemic came and while the income was far below the actual expenditure. This is
followed by Singapore 73.24%, Indonesia 44.36%, Thailand 31.20%, Philippines 22.56%,
Vietnam 21.33%, Myanmar 15.25%, Malaysia 12.60%, and Cambodia 9.75 %, while for Laos, Los
shows its level of efficiency even though during the Covid-19 pandemic, it decreased the
percentage rate by 256.43%, this shows that Laos is slightly able to manage finances properly and
it can be said that the state's income is above the realization of its state expenditures. Based on the
Non- Parametric Statistical Test through the Wilcoxon Test, it can be concluded that there is no
difference between before and after the Covid-19 pandemic.
Suggestion
In the results of the research analyzed by the author, therefore the author tries to give advice
to countries in Southeast Asia which are members of ASEAN, that a country is said to be successful
and efficient if the country avoids debt squeezing, whatever the type of debt will be. impact on the
economy of a country in the future. If a country produces goods/services to be traded in the
international market/international trade, then the country gets more income which will later be used
for state capital so that the resulting output is greater than the current debt that must be paid by the
state. Some countries have low incomes, but it is important for a country to have a permanent law
that regulates local taxes and taxes in the country itself, because the levies and taxes will later be used
to support the activities of the people themselves, starting from development, facilities and
infrastructure, system national defense and security, as well as other stability.
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The Influence Of Viral Marketing, Brand Ambassador, Product Reviews

And Trust On Purchase Decisions On The E-Commerce Shopee Platform
During The Covid-19 Pandemic
1
Fitri Rahmawati, 2Lies Handrijaningsih, 3Septi Mariani
1,2,3
1
fitrirahmawatioktavia@gmail.com, 2lieshandrijaningsih@staff.gunadarma.ac.id,
3
mariani@staff,gunadarma.ac.id
Abstract
The purpose of this study was to examine the effect of viral marketing, brand ambassadors, product
reviews and trust on purchasing decisions on the Shopee e-commerce platform during the covid-19
pandemic. The population in this study are consumers who have made purchases on the Shopee e-
commerce platform. The sample used was 125 respondents. The sampling technique is the non-
probability sampling technique. The method used is purposive sampling. The data used is primary
data. The data collection technique used is to distribute questionnaires to consumers who have made
purchases on the Shopee e-commerce platform. The testing tool used is SPSS. The test phase carried
out is the validity test, reliability test, classical assumption test, multiple linear regression, t test, f
test, and the coefficient of determination. The results showed that the variables of viral marketing,
brand ambassadors, product reviews and trust partially and simultaneously influence purchasing
decisions on the Shopee e-commerce platform, and the most influential variable on purchasing
decisions is the product review variable.
Keywords: brand ambassador, product reviews, purchasing decisions, trust, viral marketing
JEL Codes: F64, G40
INTRODUCTION
Along with economic and technological growth in Indonesia, in this modern era there has been
a shift in consumer behavior from direct purchases in stores to online purchases. During the current
Covid-19 pandemic, the government has limited outdoor activities with the aim of breaking the chain
of spread of the corona virus which is currently affecting Indonesian citizens. Based on these
restrictions, people decide to make purchases through e-commerce sites, with online shopping sites,
consumers do not need to go to stores or shopping centers to get the desired item.
Shopee online shop is a buying and selling site or online market place that is currently widely
used by people from teenagers to adults. Shopee advertises various kinds of products through internet
or online social media, so when people see Shopee advertisements, many consumers will be
interested and then make transactions. Most consumers buy products such as clothes, makeup tools
and other accessory products. Shopee displays its advertisements almost every time it appears on
social media, in Shopee's advertisements it offers discounts, flash sales, cashback vouchers, free
shipping and quality goods.
The current Covid-19 pandemic that is hitting Indonesia, the government limits outdoor
activities, with these restrictions people will make purchases online or through e-commerce sites.
The number of users in Indonesia increased to 196.7 million as of the second quarter of 2020. Last
year, the number of internet users in Indonesia was only 171.2 million. This is known based on the
results of a survey conducted by the Association of Indonesian Internet Service Providers (APJII).
Based on the background of the problem above, the topic in this study is "The Influence of
Viral Marketing, Brand Ambassadors, Product Reviews and Trust on Purchase Decisions on the
Shopee E-commerce Platform During the Covid-19 Pandemic"
Based on the research background that has been stated previously, the formulation of the
problem in this study is as follows:
1. How does viral marketing affect purchasing decisions on the Shopee e-commerce platform?
350 Rahmawati, Handrijaningsih, Mariani

2. How does the brand ambassador influence purchasing decisions on the Shopee e-commerce
platform?
3. How do product reviews affect purchasing decisions on the Shopee e-commerce platform?
4. How does trust affect purchasing decisions on the Shopee e-commerce platform?
5. How do viral marketing, brand ambassadors, product reviews and trust affect purchasing
decisions on the Shopee e-commerce platform?
LITERATURE REVIEW
Consumer Behavior
According to Malau (2017), consumer behavior is behavior about individuals, groups, or
organizations and the processes they use to select, use, and dispose of products, services, experiences,
or ideas for satisfaction.
E-commerce
E-commerce is where a website provides or can conduct online transactions or is also a way
of shopping or trading online or direct selling that utilizes internet facilities where there is a website
that can provide "get and deliver" services. Laudon and Traver (2017) e-commerce is defined as a
commercial transaction involving the exchange of value carried out through or using digital
technology between individuals.
The types of E-commerce according to Pratama (2015) are:
1. Business-to-Consumer (B2C)
Is part of e-commerce that emphasizes the process of ordering, buying, and selling products or
services via the internet.
2. Business-to-Business (B2B)
Online interactions that occur between producers (companies, industries, households, providers
of goods and services) with distributors and retailers.
3. Consumer-to-Consumer (C2C)
This form of e-commerce provides a website where users can sell products and services on the
website.
4. Customer-to-Business (C2B)
A form of e-commerce in which consumers play an active role by informing internet audiences
about their needs.
Marketplace
Kamila and Rusda (2019) marketplace is an internet-based online media (web-based) where
business activities and transactions are carried out between buyers and sellers. Buyers can find as
many suppliers as possible with the desired criteria, so that they get according to market prices.
Viral Marketing
Viral marketing according to Glennardo (2018) is a marketing technique by utilizing the
advancement of electronic media to achieve a goal that marketers want to achieve.
According to Kaplan and Haenlein (2011) there are three dimensions or conditions that can
create and be used as benchmarks in viral marketing, namely:
1. Messenger
2. Message
3. Environment
Brand Ambassador
Brand Ambassador is an individual who is well-known (public figure) in the eyes of the public
for his achievements other than the products he supports Kertamukti (2015).
The indicator to brand ambassador Mudianto (2016) are:
1. Transparent
2. Suitability
3. Credibility
4. Attraction
Rahmawati, Handrijaningsih, Mariani 351

5. Power
Product Reviews
According to Mo (2015) product reviews are writings written by consumers in columns that
have been prepared by e-commerce that reflect the real quality of an item, such as color, inconsistent
specifications or high quality problems and a good experience after making a purchase.
According to Lackermair, Kailer, and Kanmaz (2013) there are four indicators in product
reviews, namely:
1. Awareness
2. Frequency
3. Comparisson
4. Effect
Trust
According to Kotler and Keller (2012) trust is a company's willingness to depend on business
partners. Trust depends on several interpersonal and inter-organizational factors such as competence,
integrity, honesty and kindness.
There are four indicators of trust adopted from Wijaya and Thio (2015), namely:
1. Reliability
2. Honesty
3. Concern
4. Credibility
Purchase Decision
Purchase decisions are several processes that will be followed by consumers when they want
to make a selection of an object to make a purchase either physically or services. Kotler and Keller
(2016) purchasing decisions are “Buying decision process all the experiences in learning, choosing,
using, and even disp losing of a product.”
Research Method
Object of research
The object of research according to Arikunto (2019) is a research variable, which is something
that is at the core of the problems of this research consisting of the independent variable and the
dependent variable, where the dependent variable is the purchase decision (Y). The independent
variables in this study are viral marketing (X1), brand ambassadors (X2), product reviews (X3), and
trust (X4), these variables are the object of this study. While the subject of this research according to
Arikunto (2019) in a study the research subject is something that has a central position because it is
in the research subject that the data about the variables studied are located and observed by the
researcher. Consumer subjects who have made purchases on the Shopee e-commerce platform in
Bekasi Regency.
Method of Collecting Data

The data collected in the study will be used to solve existing problems so that the data must be
truly reliable. The data collection method in this study used primary data types, using a questionnaire.
According to Sugiyono (2018), a questionnaire is a data collection technique that is carried out by
giving questions or written statements to respondents to be answered. Collecting data by giving
questions to respondents and respondents responding or responding to questions in the questionnaire.
This questionnaire is a closed questionnaire where in the questionnaire the answers are already
available so that respondents only have to choose. The questionnaire statements in this study were
adopted from the research of Firmansyah (2019), Wijayanto and Thio (2015), Leckemair, Kailer and
Kandamaz (2013), Kotler and Keller (2016), Kaplan and Haenlein (2011).
Population
According to Sugiyono (2016) the population is a generalization area consisting of objects or
subjects that have certain quantities and characteristics set by researchers to be studied and then

drawn conclusions. The population in this study are consumers who use the Shopee e-commerce
platform in Bekasi Regency.
Sample
According to Sugiyono (2018), the sample is part of the number and characteristics possessed
by the population. The sampling method used in this study is Non Probability Sampling, because it
does not provide equal opportunities for members of the population to be samples. Determination of
the number of samples taken by purposive sampling technique, because the determination of the
sample is done with certain considerations or have certain criteria. The considerations used in
selecting respondents are the public or consumers who have made purchases on the Shopee e-
commerce platform, Bekasi Regency.
Determination of the sample size in this study using the Rao Purba formula. According to
Sujarweni (2015) explaining that the Rao Purba formula is used when the total population is not
known for certain. Calculation of the number of samples using the Rao Purba formula in Sujarweni
(2015), as follows:
n= 𝑍2
4 (𝑀𝑜𝑒)2
Information :
n = Number of samples
Z = Normal distribution level at significant level 5% = 1.96
Moe = Margin of error or maximum error that can be correlated, set at 10% or 0.10
By using the above formula, the following calculation is obtained:
(1,96)2
n = 4 (0,10)2
n = 96,04
Based on the results of the calculations above, the number of respondents obtained is 96
respondents, so in this study will take a sample of 125 community respondents who make purchases
on the Shope e-commerce platform in Bekasi City.

Multiple linear regression analysis was used to determine the effect of viral marketing
variables, brand ambassadors, product reviews, trust, on purchasing decisions from each variable
increase or decrease, viral marketing, brand ambassadors, product reviews and trust. Based on
multiple linear regression estimation, it can be seen in table 3.1 as follows:
Table 3.1 Multiple Linear Regression Analysis Results

Standardize
Unstandardize Collinearity
d
d Coefficients Statistics
Model Coefficients
Std. Toleranc
B Beta VIF
Error e
1 (Constant) 3.415 3.015
Viral MarketingX1 .151 .057 .216 .923 1.083
BrandAmbassador .240 .067 .288 .978 1.023
X2
Product ReviewsX3 .362 .090 .320 .974 1.026
TrustX4 .278 .109 .212 .905 1.105
Source: SPSS data processing results, 2021
Based on table 3.1, the following multiple linear regression equation is obtained:
Y = 3,415 + 0,151X1 + 0,240X2 + 0,362X3 + 0,278X4

Information:
Y = Purchase Decision
X1 = Viral Marketing
X2 = Brand Ambassador
X3 = Product Reviews
X4 = Trust
From the regression model can be explained as follows:
1. The constant value of 3,415 states that the constant value is positive and shows that if the viral
marketing (X1), brand ambassador (X2), product reviews (X3) and trust (X4) variables are
considered constant, it can be estimated that the purchase decision (Y) at Shopee's e-commerce
platform is 2,424.
2. The viral marketing regression coefficient (X1) is 0.151 with a positive coefficient value. The
positive coefficient means that if the response to viral marketing increases, the purchase decision
to shop using Shopee e-commerce in the Bekasi Regency area will increase.
3. The regression coefficient value of the brand ambassador (X2) is 0.240 with a positive coefficient
value. The positive coefficient means that if the response to the brand ambassador increases, the
purchasing decision to shop using Shopee e-commerce in the Bekasi Regency area will increase.
4. The product review regression coefficient (X3) is 0.362 with a positive coefficient value. The
coefficient is positive, meaning that if the response to product reviews increases, the purchasing
decision to shop using Shopee e-commerce in the Bekasi Regency area will increase.
5. The value of the regression coefficient of confidence (X4) is 0.278 with a positive coefficient
value. The coefficient is positive, meaning that if the response to trust increases, the purchase
decision to shop using Shopee e-commerce in the Bekasi Regency area will increase.
Hypothesis test
T Test
The results of the t test can be seen in table 4.1 below:
Table 4.1 Partial Test Results (t Test)
Coefficientsa
Model Coefficients Coefficients t Sig.
B Std. Error Beta
1 (Constant) 3.415 3.015 1.133 .260
ViralMarketingX1 .151 .057 .261 2.636 .009
Brand ambassadorX2 .240 .067 .288 3.614 .000
Product ReviewsX3 .362 .090 .320 4.014 .000
TrustX4 .278 .109 .212 2.559 .012
a. Dependent Variable: Purchase DecisionY
1. The Influence of Viral Marketing on the Purchase Decision of the Shopee E-Commerce
Platform
The effect of viral marketing on purchasing decisions on the Shopee e-commerce platform
obtained a significance value of 0.205 > 0.05. With a t-count value of 2.636 > 1.979. These results
indicate that the viral marketing variable has an effect on purchasing decisions on the Shopee e-
commerce platform. This result is because consumers feel the content provided by Shopee is
interesting so that a purchase decision occurs.
Viral marketing affects purchasing decisions in deciding to buy products on Shopee e-
commerce due to several things, namely activeness in social media, having active chat groups on
social media, other consumer recommendations for Shopee online shopping, intensity of seeing
Shopee ads contained on social media. The interesting information and content displayed on Shopee
advertisements on social media as well as the distribution of reviews about Shopee on social media
make Shopee users interested in making purchasing decisions.

Viral marketing according to Glennardo (2018) is a marketing technique by utilizing the

advancement of electronic media to achieve a goal that marketers want to achieve. The concept of
how viral marketing works is like the spread of a virus, which is to reproduce itself. The results of
this study are not in line with previous research conducted by Hidayanti (2018) which explains that
purchasing decisions affect purchasing decisions.
2. The Influence of Brand Ambassadors on Purchase Decisions on the Shopee E-Commerce

Platform
The influence of brand ambassadors on purchasing decisions on the Shopee e-commerce
platform obtained a significance value of 0.205 > 0.05. With a t-count value of 3.614 > 1.979. These
results show that brand ambassadors have an effect on purchasing decisions on the Shopee e-
commerce platform. This result is because consumers feel that having a brand ambassador at Shopee
can attract consumers to buy a product at Shopee.
Consumers feel that Shopee has become an e-commerce platform that is trusted by many
people by providing good products and services, besides that the brand ambassador chosen by Shopee
makes consumers interested in purchasing decisions. This is because the brand ambassador reflects
a dynamic, modern and courageous soul so as to produce an attraction for the products offered.
According to Firmansyah (2019), a brand ambassador is someone who has a passion for the
brand and can influence or invite consumers to buy or use a product. The results of this study are in
line with previous research conducted by Srianto and Kuncoro (2019) which explained that brand
ambassadors influence purchasing decisions.
3. The Influence of Product Reviews on Purchase Decisions on the Shopee E-Commerce

Platform
The effect of product reviews on purchasing decisions on the Shopee e-commerce platform
obtained a significance value of 0.205 > 0.05. With a t value of 4.014 > 1.979. These results show
that product reviews have an effect on purchasing decisions on the Shopee e-commerce platform.
The results of this study indicate that product reviews are the most dominant variable for consumers
to make purchasing decisions. Product reviews are an important factor in Shopee e-commerce,
previous product reviews can be used as a reference for consumers to compare products in other
stores, with good product reviews it will improve purchasing decisions.
Positive product reviews given by previous consumers create a good impression for other
consumers who will make a purchase. Consumers will feel satisfied if the product to be purchased
has good product reviews. Without product reviews, consumers feel unsure about the products sold
on the Shopee e-commerce platform.
According to Mo (2015) product reviews are writings written by consumers in columns that
have been prepared by e-commerce that reflect the real quality of an item, such as color, inconsistent
specifications or high quality problems and a good experience after making a purchase. The results
of this study are in line with research conducted by Kuswanto and Vikaliana (2020) where in this
study product reviews have an influence on purchasing decisions because product reviews are
considered capable of helping consumers select products, but this research is not in line with research
conducted by Scientific and Krishermawan (2020). ) where the research product reviews have no
effect on purchasing decisions because consumers consider product reviews to be unhelpful in
choosing a product.
4. The Influence of Trust on Purchase Decisions on the Shopee E-Commerce Platform

The effect of trust on purchasing decisions on the Shopee e-commerce platform obtained a
significance value of 0.205 > 0.05. With a t value of 5.337 > 1.979. These results indicate that the
trust variable affects purchasing decisions on the Shopee e-commerce platform. This result is because
consumers feel that the quality of the products sold on Shopee e-commerce is as expected
Consumers feel confident or not afraid of losing their money to make transactions on the
Shopee application, because the seller offers honest information to consumers, this shows that the
high level of trust in Shopee makes consumers believe in shopping at Shopee e-commerce so as to
improve purchasing decisions.

Trust according to Jogiyanto (2019), trust is an individual's assessment after obtaining,

processing and collecting information which will then produce various judgments and assumptions.
Trust is a person's trust in another party in carrying out a relationship between the two parties after
the person submits various information obtained based on the belief that the party can fulfill the
obligations he expects. The results of this study are not in line with previous research conducted by
Sari and Oswari (2020) which explained that trust had no effect on purchasing decisions.
5. The Influence of Viral Marketing, Brand Ambassadors, Product Reviews and Trust on
Purchase Decisions on the Shopee E-Commerce Platform Simultaneously
The F test is a hypothesis test that is used to determine the effect of all independent variables
on the dependent variable simultaneously (simultaneously). The f test is done by comparing fcount
with ftable at a significance level of 5% and degrees of freedom (df) = n-k-1 or 125-4-1 = 120 (n is
the number of samples and k is the number of independent variables). The results of the f test can be
seen in table 5.1 below:
Table 5.1 F. Test Results
ANOVAa
Model Sum of Squares Df Mean Square F Sig.
1 Regression 56.442 4 14.11 10.35 .000b
Residual 163.606 120 1.363
Total 220.048 124
a. Dependent Variable: Purchase Decision
b. Predictors: (Constant), TrustX4, Viral MarketingX1, BrandAmbasadorX2, Product
ReviewsX3
Based on table 5.1 above using a 95% confidence level, alpha = 5% and degrees of freedom
(df) = nk-1 or 125-4-1 = 120 (n is the number of samples and k is the number of independent
variables), then f is obtained -table of 2.45. The results of statistical calculations show that the fcount
value is greater than ftable (10.350 > 2.45) and the significant value is less than 0.05 (0.000 < 0.05).
The results show that H0 is rejected and Ha is accepted, namely that simultaneously the variables of
viral marketing, brand ambassadors, product reviews and have an influence on purchasing decisions
on the Shopee e-commerce platform.

The coefficient of determination is used to measure how far the independent variables (viral
marketing, brand ambassadors, product reviews and trust) value in influencing the dependent variable
(purchase decisions). The result of the coefficient of determination is determined by the adjusted R
value which can be seen in the following table 6.1:
Table 6.1 Coefficient of Determination Results
Model Summaryb
1 .729a .531 .516 1.049
a. Predictors: (Constant), TrustX4, ViralMarketingX1,
BrandAmbassadorX2, Product ReviewsX3
b. Dependent Variable: Purchase DecisionY

Based on table 6.1, it can be seen that the coefficient of determination R (Adjusted R-squared)
produced is 0.516 or 51.6%. This means that viral marketing, brand ambassadors, product reviews
and trust have an effect of 42.7% on purchasing decisions on the Shopee e-commerce platform. While
the remaining 0.484 or 48.4% is influenced by other variables not included in this study such as
product quality and brand image.
CONCLUSIONS
1. Viral marketing affects purchasing decisions on the Shopee e-commerce platform.
2. Brand Ambassador influences purchasing decisions on the Shopee e-commerce platform.
3. Product reviews affect purchasing decisions on the Shopee e-commerce platform.
4. Trust affects purchasing decisions on the Shopee e-commerce platform.
5. Viral marketing, brand ambassadors, product reviews and trust together influence purchasing
decisions on the Shopee e-commerce platform.
6. The most dominant variable or the one that has the greatest contribution in explaining purchasing
decisions on the Shopee e-commerce platform is the product review variable.
Suggestion
1. For the next researcher
This research can be used as a reference for how the variables of viral marketing, brand
ambassadors, product reviews and trust affect purchasing decisions on Shopee e-commerce
consumers, so that they can be in line or support for further research. Researchers can also add
other variables such as security, brand image, price and others related to this research.
2. For readers
This research is expected to add insight and help readers to understand the advantages and
disadvantages of e-commerce Shopee. Consumers must be more careful in choosing e-commerce
for shopping various needs online in order to avoid risks that will cause harm to consumers.
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The Effect Of Internal Locus Of Control On Saving Behavior In

Millennial Generations Employee
1
Bella Christianty, 2Dheandra Arumdita Maulia Putri, 3Hanna Efrata Anggraeni,
4
Euphrasia Susy Suhendra
1,2,
Psikology Faculty of Universitas Gunadarma, 4Ekonomi Faculty of Universitas Gunadarma
1
bellachristianty9@gmail.com, 2dhea.arum26@gmail.com, 3efratahanna@gmail.com,
4
susys@staff.gunadarma.ac.id
Abstract
This study aims to empirically examine the influence of the internal locus of control on saving
behavior in the Millennial generation employees. The sample in this study used purposive sampling
with the criteria of individuals aged 21 to 39 years, working, and unmarried. In this study, the sample
amounted to 104 respondents. The data collection technique used an internal locus of control scale
compiled by Furnham (1986), while the saving behavior scale was compiled by Furnham (1984). In
testing the research hypothesis, linear regression analysis technique was used with the help of SPSS
version 24.00 for Windows. Based on the results of hypothesis testing, the internal locus of control
has a significant positive effect on saving behavior in the Millennial generation employees with a
significance of 0.000 (p <0.001), R of 0.508, and F of 35,478. The internal locus of control has an
influence of 25.8% on saving behavior in the Millennial generation employees, while 74.2% is
influenced by variables outside this study.
Keywords : internal locus of control, saving behavior, generation millenial employee

JEL Codes : D01, D14, G51
INTRODUCTION
Indonesia is a country with a large population, the millennial generation itself in the population
in Indonesia in 2020, occupies the second position with a percentage of 25.87% (Badan Pusat
Statistik, 2021). Millennials are individuals born between 1980 and 2000 (Smith and Nichols, 2015).
Indonesia is starting to be dominated by the millennial generation who are often the center of public
attention, because according to Andert (as cited in Smith and Nichols, 2015) this generation is
influenced by computers and a great acceptance of family and non-traditional values. A very
significant difference compared to the previous generation, especially in the use of technology,
makes people have more hope for the millennial generation. Currently, the millennial generation is
between 21 and 41 years old, which is the age that is in early adulthood.
In early adulthood, there is a transition from dependence to a more independent period,
especially economics (Putri, 2019). Thus, individuals must make adjustments to a new lifestyle
(Jahja, 2011). This makes the millennial generation, who has entered early adulthood, have a big role
and responsibility. Millennials are not only thinking about their future, but also the future of their
country. However, the reality is that Millennials in Indonesia spend up to 50 percent of their income
on food and beverages, body and beauty care, vacations and entertainment, and consumption of
digital screens (PT Bank UOB Indonesia, 2019). Hidayatullah, Waris, et. al (2018) say that the
Millennial generation tends to be more consumptive, happy to spend money to buy a product or use
the services that have been provided. The tendency of the millennial generation in consumptive
behavior has become a threat to saving behavior.
Saving behavior is a combination of the perception of future needs, saving decisions and
saving actions (Kamarudin and Hashim, 2018). According to Nyhus (2018), in psychology itself,
saving behavior is not only seen based on motives, but also sees individual differences. Saving
behavior also has important implications for individual welfare (Nyhus, 2018). This is in line with
the goal of saving, which is to enable a sustainable flow of consumption when incomes are reduced
(Webley, Burgoyme, et. al, 2001). So that individuals can fulfill their welfare not only in the present,
but also in the future. Someone who wants to act rationally in his future choices, he can choose to
Christianty, Putri, Anggraeni, Suhendra 359

act rationally in the present because of the belief that it will be an example of future behavior (Webley
and Nyhus, 2008). This means that there is a belief that everything that happens in the future is the
result of oneself, this is what is called an internal locus of control. According to Rotter (1990), the
internal locus of control is the individual who expects the results of behavior to depend on himself.
This is also in line with what was expressed by Ningsih, Widiyanto, et. al, (2018), there are internal
factors that influence saving behavior, namely knowledge perception, motivation, self-control, and
behavior. In addition, it was found that previous research related to the internal locus of control with
saving behavior.
Mondern (2009) saving is a plan for the future by setting aside financial resources for
unexpected events, this is supported by Mori (2019) statement which says that saving can help
provide for personal needs in the future. Saving can be done by refraining from buying something or
refraining from spending money for a period for consumption at a later date, Warneryd (1989). The
relationship between internal locus of control and saving behavior is explained in Herleni and
Tasman's research (2019) in the city of Bukittingi, West Sumatra showing that internal locus of
control has a positive and significant effect on personal finance management behavior in Small and
Medium Enterprises in Bukittinggi. Francis and Ambilikumar (2021) research on investors in Kerala,
India also shows that the internal locus of control affects the behavior of saving and investing.
Based on the description above, it is known that the internal locus of control has a significant
positive relationship to saving behavior, so it is very necessary to do research on "the effect of internal
locus of control on saving behavior in millennial generation employees". In addition, the reason for
doing this research is that researchers found limitations in previous studies related to this variable
which have not discussed how much direct influence the internal locus of control has on saving
behavior by using millennial generation employees as research subjects so that it becomes a gap for
researchers to conduct this research.
LITERATURE REVIEW
Internal locus of control and saving behavior are two different things that will be discussed in
each section. In this study, it will be seen how the influence of internal locus of control on saving
behavior and how much influence it has on millennial generation employees.
Internal Locus Of Control

The internal locus of control is the person who believes that it is himself who influences his
way of life (Hill, 2011). In line with this, Martin (2012) reveals that the internal locus of control is
people who have the belief that success or failure is largely the result of their own abilities and efforts,
such as behavior, perseverance, curiosity, and intelligence. Individuals with an internal locus of
control have several characteristics, is feeling greater personal well-being, displaying more
motivation, exhibiting superior cognitive function, being more successful in learning and academic
achievement, exhibiting more desirable social and socio-political behaviors, being more successful
at work and at work. economic activity, engage in healthier behaviors and live longer, are generally
happier in all aspects of life, and take responsibility for oneself and resist outside influences (Hill,
2011).
Furnham (1986) on dimensions in economic locus of control scale, internal economic locus of
control is one's belief that financial affairs are personal control. It is also related to perceptions of
personal control over positive outcomes such as getting rich. According to Rotter (1966), individuals
with an internal locus of control, which consists of, are more aware of environmental aspects that
provide useful information for their future behavior. According to Rotter (1966), individuals who
have an internal locus of control are more aware of environmental aspects that provide useful
information for their future behavior, take steps to improve environmental conditions, values skill or
achievement reinforcement more and is generally more concerned with his abilities; especially his
failures, and then be resistive to subtle attempts to influence him.
Saving Behavior
According to Werneryd (1999) Saving is intended as a rule that some consumption is
postponed to maintain a future life, saving money is considered important because it can bring
benefits in the future. Ranyard (2018) adds that saving is a variable that refers to the net worth of a
360 Christianty, Putri, Anggraeni, Suhendra

person's assets at a certain time during a period. Mori (2019) completes the notion of saving or setting
aside money means consuming less of a certain amount of resources in the present to consume more
in the future. Therefore, saving is a decision to defer consumption and store this deferred
consumption in some assets. Methods for saving can include setting aside money in a deposit
account, retirement account, investment fund or as cash.
There are five factors of saving behavior according to Furnham (1985), including:
pointlessness (believe that saving is futile because not believing that saving can make you rich),
benefits (applying the behavior of saving will bring benefits to the individual), wealth (oriented to
the future if you save from now you will feel safe in the future), denial (same as benefits, rejecting
poverty in the future by saving), investment (saving can be done by investing money in other forms
to get profits in the future).
Research Related to Internal Locus Of Control and Saving Behavior

The relationship between internal locus of control and saving behavior is explained in research
from Mien and Thao (2015) on the millennial generation in Vietnam showing the results that people
who have more external locus of control cause poorer financial management behavior so they have
low saving behavior. Research from Cobb Clark, Kassenboehmer, and Sinning (2016) strengthens
the results of research from Mien and Thao which shows that the internal locus of control has a
significant positive relationship to saving behavior in households when compared to the external
locus of control. Tend to carry out saving activities based on internal references or beliefs compared
to external references. Another study from Bucciol and Trucchi (2021) which was conducted using
a longitudinal survey method yielded the results that the influence of external locus of control was
direct, while the influence of the influence of internal locus of control was indirect, mostly driven by
saving motives. Tsuroyya and Nuryana (2021) research conducted on 186 students of the economic
education faculty of the State University of Semarang showed that the locus of internal control had
a positive and significant effect on financial management behavior one of which is saving behavior.
Hypothesis
Research from Yao and Cheng (2017) on the millennial generation in the United States shows
that the millennial generation tends to have higher saving behavior than other generations with the
aim of preparing retirement funds with an insight into financial management that encourages
millennials in the United States to have good saving behavior. tall. Another study by Formánková et.
al (2019) with 213 respondents consisting of Mendel University students, the Czech Republic,
showed that the millennial generation has a higher level of awareness to save than other generations
so that financial management is more well organized. Another finding from Asandimitra (2021) also
explains that the millennial generation has a high level of saving behavior as a result of the influence
of good financial literacy.
The results of research from Kusnandar and Rinandiyana (2018) explain that internal locus of
control has an influence on financial management in the millennial generation with results showing
that wise financial arrangements, one of which is by having storage behavior is a result of internal
locus of control, namely the generation of Millennials have good financial knowledge and self-
motivation to control themselves. This is supported by the results of research from Rachman and
Rochmawati (2001) which explains that internal locus of control has a significant influence on
financial management behavior, one of which includes storage behavior. Based on these literature,
the researchers formulates a hypothesis in this study:
H1. Internal locus of control has a significant effect on saving behavior in millennial generation
employees.
RESEARCH METHOD
Subjects
Sampling in this study, using non-probability sampling technique with purposive sampling
type. The sample in this study were 104 respondents who have a job and are not married with an age
range of 21-39 years. In all there were 73 females and 31 males. In all, 86 were between 21-24, 10

were between 25-28, 8 were between 29-32. The background of the research respondents were 2 from
elementary school, 28 from high school, 14 from diploma, 59 from undergraduate program, and 1
from master program. Their incomes ranged between under Rp1.000.000 to over Rp9.000.000 per
month: 21 earned less than Rp1.000.000 per month, 36 between earned between Rp1.000.000-
Rp3.000.000per month, 31 earned between Rp3.000.000-Rp6.000.000 per month, 9 earned between
Rp6.000.000-Rp9.000.000 per month, and 7 earned more than Rp9.000.000 per month.
Measurement
In this study, the purpose of this study was to examine the influence of internal locus of control
on saving behavior, so respondents were asked to fill in 2 different scales related to these two
variables.
1. Economic Locus Of Control Scale (Furnham, 1986)
The measuring instrument in this study uses an locus of control economic scale compiled by
Furnham (1986). This study only uses the internal dimension with a reliability of 0.72, because
this study only wants to see the internal locus of control. Consists of 7 items with responses on a
4-point Likert scale agree-disagree.
2. Scale Of Saving Behavior (Furnham 1985)
The scale of saving behavior uses the scale compiled by Furnham (1985). We only took 4 of the
5 dimensions, because the definition of the pointlessness dimension contradicts with the definition
of the benefits dimension, thus rejecting the saving behavior. The dimensions on the scale of
saving behavior are benefits, wealth, denial, and investment which consist of 14 items with a
reliability of 0.793 with responses on the 4-point agree-disagree Likert scale.
Data Analysis
In this study, in analyzing the data using a quantitative approach with linear regression analysis
assisted by the SPSS version 24.00 for windows program.

Result
After analyzing the data with linear regression analysis, in table 1 it can be seen that the
significance value is 0.000 (p <0.001) with an R of 0.508. This means that there is a very significant
positive influence on the internal locus of control on saving behavior in the millennial generation
employees. In table 1 it can also be seen that F is 35,478 with R Square of 0.258, meaning that the
internal locus of control has an influence of 25.8% on saving behavior in the millennial generation
employees, while 74.2% is influenced by other variables outside of this study.
Table 1. Test Result Of Hypothesis
Internal Locus of Control and Saving Behavior
Significant 0.000
F 35.478
R 0.420
R Square 0.716
Then based on table 2, it can be seen that the linear regression equation model is Y= 16,208 +
0.700x (Y= a + bx). So, if the value of the internal locus of control is 0, saving behavior is 16,208.
From the table it is known that B has a positive value of 0.700, so the linear equation regression
model is positive, the higher the internal locus of control, the higher the saving behavior of the
Millennial generation employees.
Table 2 Test Result Of Linear Regression Equation Model
Model
B Standard Error
Constant 16.208 2.366
Internal Locus of Control 0.700 0.118

DISCUSSION
Based on the results that have been described, the research hypothesis is accepted. There is a
significant internal locus of control influence on saving behavior in the Millennial generation
employees. In this study, the internal locus of control has a positive influence on saving behavior,
the higher the internal locus of control, the higher the saving behavior of the Millennial generation
employees. The internal locus of control has an influence of 25.8% on the saving behavior of the
Millennial generation employees, while 74.2% is influenced by variables outside this study. This is
in accordance with research conducted by Dilasari (2020) that individuals who have an internal locus
of control are more likely to have higher saving behavior than individuals who have an internal locus
of control.
Millennials generation employees are starting to master the working age in Indonesia and this
generation's familiarity with technology compared to previous generations has made people have
high hopes for the Millennial generation employees to be able to influence the country's economy.
The success of the Millennial generation employees will certainly have an impact on the country's
economic success. Millennials, who have also entered early adulthood, must adapt to new life
patterns and new social expectations, moreover individuals are required to let go of their dependence
and start being independent (Al-Faruq and Sukatin, 2020). Responsibility both from the generation
side and also from the side of human development, it is natural for the Millennial generation
employees to tend to worry about their welfare. However, the Millennial Generation employees,
based on a survey conducted by UOB Indonesia (2020), actually spends 50% of their income on
things that on average are not really needed. If this continues to happen, it will threaten the welfare
of individuals, the welfare of the state will also be threatened because of the consumptive behavior
of this Millennial generation employees. So saving behavior is very much needed in the Millennial
generation employees.
Septiana, Siswandari, et al (2018) also say that saving trains individuals to live frugally
through good financial management in ensuring the fulfillment of future needs. Saving behavior is a
combination of the perception of future needs, decisions to save, and the act of saving (Kamarudin
and Hashim, 2018). In improving saving behavior is influenced by internal and external factors. One
of the internal factors that influence saving behavior is the internal locus of control, individuals who
believe that behavior and actions, such as ability and effort will have an impact on what happens to
the individual himself (George and Jones, 2008). Hill (2011) also said that individuals who have an
internal locus of control will be more successful in work and economic activities. Rotter (1966) adds
that individuals with an internal locus of control will be more alert to aspects of the environment that
provide useful information for their future behavior.
Several studies have also been described above that the internal locus of control is related to
saving behavior. Like the research conducted, Schweichler (2013) that the internal locus of control
has a significant positive influence on financial management which includes saving behavior.
Therefore, it is very necessary to improve saving behavior through the internal locus of control in
the Millennial generation employees.

Conclusion
Based on research that has been conducted regarding the effect of internal locus of control on
saving behavior in millennial generation employees, the hypothesis is accepted with a significance
of 0.000 (p> 0.001). The higher the internal locus of control, the higher the saving behavior of
Millennial generation employees. Internal locus of control has an influence of 25.8% on saving
behavior in Millennial generation employees. With an internal locus of control, Millennial generation
employees can improve their saving behavior so that they not only provide personal welfare, but also
provide the country's economic welfare.
Suggestion
Based on the results of testing the data above, all indicators are significant on saving behavior.
The limitation of this research is that the number of respondents collected is only 104 respondents
with a small data collection period. So the sample is said to be small and it is recommended to have
a larger sample so that it will better represent each of the existing variables.

Based on some of the limitations that exist in this study, suggestions that can be given and
applied to further research are looking for more samples and extending the time of data collection in
order to get a lot of data that really represents a population. This research can be information that can
help other research processes with topics related to internal locus of control and saving behavior,
further research can also use other variables to examine saving behavior.
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Factors Affecting The Payable Income Tax Of Automotive And

Components Subsector Manufacturing Companies In Indonesia
1
Yosi Hestiana, 2Toto Sugiharto
1,2
Jl. Margonda Raya No. 100, Depok 16424 Jawa Barat
yosihestiana0@gmail.com and 2hart2862@gmail.com
Abstract
The primary source of state revenue used for supporting the national development program is tax.
One of the contributors to state revenue from the tax sector is corporate income tax. A number of
factors potentially affect corporate income tax, including income tax of public manufacturing
companies. This study aims at analysing the effect of operating costs, net profit margin, and current
ratio on corporate payable income tax either partially or simultaneously and determining the
dominant variables in automotive and component manufacturing companies listed on the Indonesia
Stock Exchange. This study used secondary data which include the studied variables summarized
from financial and annual reports of four automotive and component manufacturing companies listed
on the Indonesia Stock Exchange for the 2010-2019 period. Panel data regression analysis was
performed to test the proposed hypotheses. Results of the study revealed that operating costs, net
profit margin, and current ratio partially and simultaneously affect corporate income tax. These
variables positively affect corporate income tax. Operating costs was identified as the dominant
variable in affecting corporate income tax payable.
Keywords : corporate income tax; operating cost; net profit margin; current ratio.
JEL Codes : H20, O14
INTRODUCTION
Economic developments in Indonesia have experienced substantial improvement over the last
few years. A large amount of funding is required to maintain and to accelerate this improvement.
Tax has been recognized as the most important sources of state revenue which is dominated by
corporate income tax while other contributors to state revenue are non-tax state revenues (Ministry
of Finance, 2020). One type of tax levied by the central government is income tax. Based on Law
No. 36 of 2008 concerning Income Tax, it is a tax imposed on individuals or entities based on the
amount of income received or earned in one tax year. Therefore, corporate income tax is determined
by the amount of income from the company's activities.
Competitiveness amongst the automotive and components subsector in the current economic
conditions sharply increased both in the domestic market and in the global market. This was due,
among others, to the increase in investment which resulted in deepening the manufacturing structure
of the sector. This, accordingly, requires companies to be able to maintain or gain profits by
managing the company's performance properly. During the period of 2010-2019 the average growth
in operating costs, net profit margin and current ratio in the automotive and component subsectors
listed on the Indonesia Stock Exchange (IDX) is presented in the figure which follows.
366 Hestiana, Sugiharto

Figure 1. Average growth rates of operating cost, current ratio, and net profit margin of
automotive and component subsector manufacturing public companies in 2010-2019
(Source: Estimated from The Indonesia Stock Exchange, 2020)
As depicted in the figure, the average rate of growth of operating cost, current ratio and net
profit margin of automotive and component subsector manufacturing public companies varied
overtime. This fluctuation is due to a number of factors which include sales volume, income, accounts
payable, assets, salaries, advertising and promotions, as well as demand for vehicles. This
phenomenon is interesting and important to study because it is directly or indirectly related to tax
revenues obtained by the government.
In this regard, this study was conducted with the aim of analysing the effect of operating cost,
current ratio and net profit margin on corporate payable income tax, especially in public companies
that are included in the automotive and component manufacturing subsector. Results of the study
provide additional empirical evidence on factors that affect corporate tax payable of public
companies in automotive and components subsector.
LITERATURE REVIEWS
Corporate Payable Income Tax
According to Law No. 28 of 2007 article 1 paragraph 3 concerning General Provisions and
Tax Procedures, an entity is a group of people or capital which is a unit, whether conducting business
or not doing business, which includes limited liability companies, limited liability companies, other
companies, corporations, state-owned enterprises, or regionally-owned enterprises in whatever name
and form, firms, partnership, cooperatives, pension funds, partnerships, associations, foundations,
mass organizations, socio-political organizations, other organizations, institutions, and other forms
of bodies, including collective investment contracts and permanent establishments. Based on the
provisions of Article 16 of the Income Tax Law, Taxable Income (PKP) as the basis of calculation
to determine the amount of income tax payable for one tax year, is calculated by subtracting gross
income from deductible expenses and compensation for fiscal losses. In general, to calculate the
corporate income tax payable is as follows.
Operational Cost = Selling Cost + General Administration Fee (1)
The company in carrying out its business activities incur costs as a support, one of which is
operational costs. The higher the operational costs, the lower the corporate income tax payable, and
vice versa Widanto & Pramudianti (2021). This phenomenon is supported by the results of research
by Salamah, Pamungkas, and Yogi (2016), Anam and Zuardi (2018), Vindasari (2019), Puspitasari
and Amah (2019), Laksono (2019), Hantono (2016), Anggraini & Kusufiyah (2018) and
Dharmayanti (2018).
Net Profit Margin

Net profit margin is a ratio used to measure profits by comparing profit after interest and taxes
compared to sales (Kasmir, 2017). The higher the net profit margin, the better the company because
the profit earned by the company is higher, but this results in greater corporate income tax payable,
Hestiana, Sugiharto 367

and vice versa. This phenomenon is supported by the results of Puspitasari and Amah's research
(2019) indicating that partially net profit margin has an effect on corporate income tax. The formula
used to find the net profit margin is as follows.
Earning After Interest and Tax (EAIT)
Net Profit Margin = (2)
Sales
Current Ratio
The current ratio is a ratio used to measure the company's ability to pay short-term obligations
or debts that are due immediately when billed in their entirety (Kasmir, 2017). In other words, how
much current assets are available to cover short-term liabilities or debts that are due soon. In practice
it is often used that the current ratio with a standard of 200% (2:1) is sometimes considered a fairly
good or satisfactory measure for a company, meaning that with the results of such a ratio, the
company is at a safe point in the short term. The results of Puspitasari and Amah's research (2019)
indicate that partially the current ratio has an effect on corporate income tax. The formula used to
find the current ratio is as follows.
Current Assets
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = Current Liabilities
(3)
Corporate Income Tax Payable

According to Law Number 28 of 2007 Article 1 paragraph 3 concerning General Provisions
and Tax Procedures, an entity is a group of people or capital which is a unit, both those who do
business and those who do not do business, which includes limited liability companies, limited
liability companies, other companies, corporations. state-owned enterprises, or regionally-owned
enterprises in whatever name and form, firms, kongsi, cooperatives, pension funds, partnerships,
associations, foundations, mass organizations, socio-political organizations, other organizations,
institutions, and other forms of bodies, including collective investment contracts and permanent
establishments. Based on the provisions of Article 16 of the Income Tax Law, Taxable Income (PKP)
as the basis for calculating the amount of income tax payable for one tax year, is calculated by
subtracting gross income from deductible expenses and compensation for fiscal losses. In general,
to calculate the corporate income tax payable is as follows.
Corporate Income Tax Payable = Article 17 Rate X Taxable Income (PKP) (4)
Research Model and Hypothesis

Referring to the results of the literature review, both from a theoretical and empirical
perspective, as previously explained, the purpose of this study is to analyze the simultaneous and
partial effects of operating costs, net profit margins, and current ratios on corporate income tax
payable and identify variables that have a dominant influence on taxes payable corporate income. By
realizing these objectives, a research model along with the formulation of the hypothesis is developed
which is presented in the following figure.
Operating Cost
Net Profit Margin Corporate Income Tax

Payable
Current Ratio
The research hypotheses formulated based on the results of the theoretical and empirical
literature review presented in the previous section are as follows.
H1: Operating costs, net profit margin, and current ratio simultaneously affect the corporate
income tax payable.

H2: Operational costs affect the corporate income tax payable.

H3: Net profit margin affect corporate income tax payable.
H4: Current ratio affect corporate income tax payable.
RESEARCH MODEL
Data and Source of Data
The data used in this study is secondary data that is quantitative. Secondary data was obtained
from the Indonesia Stock Exchange (IDX) website through the www.idx.co.id website and the
company's official website in the form of audited financial reports and annual reports, then through
the https://www.sahamok.net/ website in the form of a list of manufacturing companies in the
automotive and component subsector listed on the Indonesia Stock Exchange (IDX).

The population in this study is the automotive and component manufacturing sub-sector
companies listed on the Indonesia Stock Exchange (IDX) for the period 2010-2019. The samples
used for this study were 4 companies, namely Astra International Tbk, Astra Otoparts Tbk,
Indospring Tbk and Selamat Sempurna Tbk. Purposive sampling method was applied inthis study.
Automotive and components subsector manufacturing companies which provides all studied
variables within the period 2010-2019 were selected as samples in this study.
Research Variables
In line with the research objectives, the variables in this study consisted of two groups of
variables, namely the dependent variable and the independent variable. The dependent variable in
this study is corporate income tax payable, while the independent variables in this study are operating
costs, net profit margin, and current ratio. In the following table, operational definitions of research
variables, indicators, measures and scales are presented.
Table 1. Operational Definition of Research Variables, Indicators, Measures and Scale
Variable Operational Definition Measures Scale

Operating costs are
Operating costs associated with Operating Cost = Cost of Sales + General
Ratio
Cost revenue-generating Administration Fee
activities.
Financial ratio used to
calculate the percentage
Net Profit Earning After Interest and Tax (EAIT)
of profit a company Net Profit Margin = Ratio
Margin Sales
produces from its total
revenue
Measures the capability
Current of a business to meet its 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Current Ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 Ratio
Ratio short-term obligations
that are due within a year
Term given to a business
Corporate
organization’s tax
Income Corporate Income Tax Payable = Article 17 Rate X
liability to the Ratio
Tax Taxable Income (PKP)
government where it
Payable
operates
Method of Statistical Analysis

The statistical analysis method applied in this study consisted of four types, namely (i)
descriptive statistical analysis, (ii) classical assumption test consisting of normality test,
multicollinearity test, autocorrelation test, and heteroscedasticity test, (iii) multiple linear regression
analysis.


Descriptive statistical analysis provides an overview of the distribution and data seen from the
arithmetic mean and standard deviation.

Classical assumption test using SPSS (Statistical Product and Service Solutions) software
version 26 which consists of normality test using Kolmogorov - Smirnov (KS) and Profitability Plot
(P-Plot), multicollinearity test using tolerance value approach and VIF (Variance Inflaction Factor)
value, autocorrelation test using Durbin-Watson, and heteroscedasticity test using scatterplot.

In accordance with the purpose of this study, namely to analyze the effect of operating costs,
net profit margin, and current ratio on corporate income tax payable based on the research model and
the formulated research hypothesis, the data obtained were analyzed using the multiple linear
regression analysis method. The regression line equation model in this study is as follows.
CTP = α + β1OP + β2NPM + β3CR + ε (5)
where: α is constant; CTP is corporate tax payable; OP is operating costs; NPM is net profit
margin; CR is current ratio; βi is regression coefficient of the i-th independent variable; ε is error
term.
RESULTS AND DISCUSSIONS

The results of descriptive analysis which include sample size, minimum value, maximum
value, arithmetic mean, standard deviation of all variables studied are presented in the following
table.
Table 2. Results of Descriptive Statistical Analysis
Standard
Variables n Min Max Mean
Deviation
Operating cost 40 88.00 24055.00 5061.18 8176.60
Net Profit Margin 40 0.00 0.18 0.10 0.05
Current Ratio 40 1.15 5.83 2.27 1.25
Corporate Tax Payable 40 2.00 7623.00 1415.88 2381.88
Source: Output Descriptive Statistics Analysis SPSS, 2021
The average value calculated for all research variables ranges from 5061,1750 (operating
costs), 0.1008 (net profit margin), 2.2700 (current ratio), and 1415,8750 (corporate income tax
payable) with a standard deviation of 8176 .60402 (operating expenses), 0.04649 (net profit margin),
1.25262 (current ratio), and 2381.88328 (corporate income tax payable). Based on the data in the
table, it can be concluded that all of the research variables, both independent and dependent variables,
have a calculated average value that is not much different.

There are four assumptions that must be met when using multiple linear regression analysis
consisting of normality test, multicollinearity test, autocorrelation test, and heteroscedasticity test.
The following describes the results of testing these four assumptions on the basis of the data obtained.
Normality Test
The normality test aims to test whether in the regression model, the independent variable and
the dependent variable have a normal distribution. In this study, the normality test was carried out in
two ways, namely the Kolmogorov-Smirnov test (K-S) and the profitability plot (P-Plot) whose
results are presented in the following table.

Table 3. Summary of Normality Test1
Test Type Method Significance Conclusion

Normality Kolmogorov-Smirnov (K-S) 0.200 Data normally distributed
Normality Profitability plot (P-Plot) Follow diagonal line Data normally distributed
1
Note: Depedent variable: Corporate tax payable
2
Independent variable: operating cost; net profit margin and current ratio
3
Normality exists when p > 0,05.
Source: SPSS Linear Regression Analysis Output, 2021
The results of the normality test in the table above show that the normality assumption is met.
In testing this normality assumption, all independent variables meet the requirements or assume a
linear relationship with the dependent variable.
The multicollinearity assumption was tested using the tolerance value and the VIF (Variance
Inflation Factor) value. The test results are presented in the following table.
Table 4. Summary of Multicollinearity Test
Tolerance
Independent variable VIF Conclusion
values
Operating Cost 0.909 1.100 No multicollinearity
Net Profit Margin 0.999 1.001 No multicollinearity
Current Ratio 0.910 1.098 No multicollinearity
1
2
Multicollinearity does not exist when values of VIF (1-10) and
tolerance (> 0,10)
The results of the multicollinearity test, as seen in the table above, show that there is no
multicollinearity phenomenon. This means that between the three independent variables there is no
similarity (similarity) which will result in a strong correlation between the independent variables.
The assumption of autocorrelation was tested using Durbin-Watson. The test results are
presented in the following table.
Table 5. Summary of Autocorrelation Test Results1
Test Durbin-Watson Criteria Results

Autocorrelation 0.939 (-2) to (+2) No autocorrelation
1
2
Autocorrelation does not exist when the value of Durbin-Watson between (-
2) and (+2)
The results of the autocorrelation test, as seen in the table above, show that there is no
autocorrelation phenomenon, so it can be concluded that the autocorrelation assumption is fulfilled.
In this study, the assumption of heteroscedasticity was tested using a scatterplot. The results
showed that there was no heteroscedasticity so that it can be ascertained that the assumption of
heteroscedasticity was fulfilled.


In this study, the formulated hypothesis was tested using multiple linear regression analysis.
All the necessary requirements, as discussed in the previous section, have been met. The results of
multiple linear regression analysis which include regression coefficients, both standardized and
unstandardized from all independent variables, level of significance, analysis of variance, and
coefficient of determination are presented and discussed in the following sections.
In the following table, the regression coefficients of all the independent variables studied
include their significance, the value of the coefficient of determination, the results of the analysis of
diversity and the F test the dependent variable.
Table 6. Regression Coefficient, Coefficient of Determination, F-test and Significance1
Coefficient
Model Unstandarized Standardized t Significance
(B) (Beta)
Constant -259.86 -6.882 0.000
Operating cost 0.279 1.006 106.21 0.000
Net Profit Margin 1276.35 0.048 5.327 0.000
Current Ratio 37.155 0.035 3.712 0.001
2
R 0.998
Adjudted R2 0.997
Uji F 0.000
1
Source: SPSS Linear Regression Analysis Output, 2021.
Based on the value of the regression coefficients that are not standardized (unstandardized) of
all the independent variables studied, the regression line equation model is obtained as follows.
CTP = -259,861 + 0,279BO + 1276,348NPM + 37,155CR (6)
where: CTP is corporate tax payable; OP is operating costs; NPM is net profit margin; CR is current
ratio.
The regression line equation model above can be interpreted and described as follows.
The constant value is negative at -259.861 meaning that if the independent variables, namely
operating costs, net profit margin, and current ratio are (0) then the dependent variable, namely
corporate income tax payable is -259.861. The regression coefficients for the three independent
variables are positive, namely operating costs (BO: 0.279), net profit margin (NPM: 1276.348), and
current ratio (CR: 37.155). This shows that if there is an increase of 1 unit in the three independent
variables, the dependent variable, namely corporate income tax payable, will increase with the
assumption that other variables are considered constant.
The obtained regression line equation (6) can be used to predict corporate income tax payable
based on the values of all independent variables because the results of the analysis of variance or the
F test show significance (p < 0.000). This means that the three independent variables studied, namely
operating costs, net profit margin, and current ratio simultaneously affect the corporate income tax
payable. Judging from the value of the coefficient of determination (Adjusted R2), it is known that
the operational costs, net profit margin and current ratio studied are able to explain the diversity in
the corporate income tax payable of 99.7 percent. Judging from the significance value on the results
of the t test (p < 0.05), operating costs, net profit margin and current ratio with a significance value
(p < 0.05) partially affect the corporate income tax payable.
Based on the results of the multiple linear regression analysis described above, it can be
concluded that operating costs, net profit margin, and current ratio simultaneously or partially affect
the corporate income tax payable and operating costs are the dominant variables in influencing the
corporate income tax payable.

DISCUSSION
The findings in this study are largely different from the results of previous studies, especially
when viewed from the partial effect of all independent variables, namely operating costs, net profit
margin, and current ratio on the dependent variable, namely corporate income tax payable. Operating
costs, in this study affect the corporate income tax payable. This finding is in line with the results of
research by Salamah, Pamungkas, and Yogi (2016), Anam and Zuardi (2018), Dharmayanti (2018),
Vindasari (2019), Puspitasari and Amah (2019), Laksono (2019), Hantono (2021) and Anggraini &
Kusufiyah (2020).
Meanwhile, the results of the study of Sumarta and Diamond (2021) showed different results.
Operational costs have an effect on lowering the corporate income tax payable. This is in accordance
with Law no. 36 of 2008 article 6 paragraph 1 concerning income tax explains that expenses that are
allowed to be deducted in calculating domestic taxpayers are costs that are directly or indirectly
related to business activities.
The same phenomenon occurs in the other two independent variables, namely net profit margin
and current ratio, which affect the corporate income tax payable. This finding is also in line with the
results of Puspitasari and Amah's research (2019) indicating that partially net profit margin and
current ratio have an effect on corporate income tax, while Nisa, Khanifah, and Alfie (2018) net
profit margin have no effect on corporate income tax payable. The higher the level of net profit
margin, the greater the profit earned. This is directly proportional to the corporate income tax
payable, the greater the profit, the greater the corporate income tax payable. Meanwhile, the research
results of Widanto and Pramudianti (2021) show that the current ratio has no effect on the corporate
income tax payable. A company that is able to meet its obligations on time means that the company
has larger current assets to cover short-term liabilities that are due soon. This can determine the
amount of corporate income tax payable because the corporate income tax payable is determined
based on the amount of income from the company's activities.
CONCLUSIONS AND IMPLICATIONS

Conclusion
Operational costs, net profit margin, and current ratio simultaneously affect the corporate
income tax payable. Thus, the variation in the amount of corporate income tax payable can be
explained based on the value or amount of operating costs, net profit margin, and current ratio.
Operating costs, net profit margin, and current ratio partially affect the corporate income tax payable.
The net profit margin and current ratio variables have an effect on increasing the corporate income
tax payable, while the operational cost variable has an effect on reducing the corporate income tax
payable and operating costs are the dominant variables in influencing the corporate income tax
payable.
Implication
Based on the conclusions described above, the variables operating costs, net profit margin, and
current ratio affect the corporate income tax payable, so managers must consider these three
variables, especially operating costs that have an effect on reducing the corporate income tax payable.
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Differences In Environmental Performance Ratings, Media Disclosures,

And Profitability To Disclosure Of Corporate Social Responsibility In
Basic Materials Sector Companies Listed On The Indonesia Stock
Exchange For The Period 2010-2020
1
Venna Mellina, 2Armaini Akhirson
1,2
Faculty of Economics Gunadarma University
1
vennamellina@gmail.com, 2armaini@staff.gunadarma.ac.id
Abstract
The study aimed to test the difference in the influence of environmental performance ratings, media
disclosures, and corporate profitability on corporate disclosure of social responsibility. This study used
a sample of basic materials sector companies listed on the Indonesia Stock Exchange for the period
2010-2020. The number of companies sampled by this study was 2 companies with observations for
11 years. Based on the purposive sampling method, the total sample of the study was 22 annual
reports. Hypothesis testing in this study uses the mann whitney test technique. From the results of
the study found that there was a difference in the influence of environmental performance ratings
obtained by the company and media disclosures issued by the company on the disclosure of social
responsibility made by the company, while for profitability there was no difference in the influence
on the disclosure of social responsibility made by the company.
Keywords: Environmental Performance, Media Disclosure, Profitability, Corporate Social

Responsibility
JEL Codes: G32, M14, O16
INTRODUCTION
The development of the corporate business world in the millennial era has now experienced
a rapid development. This can be seen from the many growth of companies in Indonesia. In 2016, the
Central Statistics Agency (BPS) has conducted an economic census, where from the census results it
was obtained that the number of companies in Indonesia was recorded as many as 26.7 million
companies. This figure increases compared to the results of the economic census in 2006, where
the number of companies was recorded as many as 22.7 million companies. This can be interpreted
that there has been an increase of 17.51% or as many as 3.98 million new companies in the last 10
years (El Haq, 2017). Therefore, with the increasing number of companies in Indonesia, the more
changes in demands within the company.
Over time, the demands within the company are no longer just profit-oriented, but the
orientation of the company begins to develop its improvement on three things, namely profit (profit),
people (society), and planet (environment) or commonly referred to as the concept of triple bottom
line (Efendi, 2019). According to Dr. Ana Sopanah, Head of Public Relations of IAI Komda Malang,
companies are required to not only pursue economic profits, but now the company must be oriented
to the concept of triple bottom line (Himawan, 2016). The triple bottom line concept is the forerunner
of the formation of corporate social responsibility programs (Rachman, Efendi, and Wicaksana,
2011).
Corporate social responsibility is a concept and action taken by the company as a sense of
responsibility to the social and environmental environment where the company is located (Rachman,
Efendi, and Wicaksana, 2011). In Indonesia, corporate social responsibility activities are an activity
that must be carried out by every company in providing transparency of information about its social
activities (Wardhani and Muid, 2017). The Government through Law No. 40 of 2007 on Limited
Liability Companies in Article 74 paragraph (1) explains that "companies that carry out their business
activities in the field and / or related to natural resources must carry out Social and Environmental
Mellina, Akhirson 375

Responsibilities". Then, the provisions regarding social and environmental responsibility are further
regulated through Government Regulation No. 47 of 2012 on Social and Environmental
Responsibility of Limited Liability Companies. Where, in article 2 it is explained that "Every
Company as a legal subject has social and environmental responsibilities".
Disclosure of corporate social responsibility describes the provision of information in a
mutually beneficial relationship between the company and the community and the environment
(Efendi, 2019). One company that can carry out corporate social responsibility disclosure activities
is the basic materials sector company. This is because in the basic materials sector contains various
types of industries that in the implementation of their activities related to natural resources. There are
various factors for companies to disclose their social and environmental responsibilities, including
environmental performance, media disclosure, and profitability.
Environmental performance aims to provide good environmental management to interested
parties in the company and the community, as a form of contribution and responsibility of the
company for the environment around it (Ramadhan, 2019). Media disclosure has an important role
as a means to increase transparency within the company, one of which is internet media. This is
because internet media is one of the effective media in communicating the company's social activities
(Sari, 2012 in Plorensia, 2015). Profitability has an important role in the disclosure of corporate social
responsibility. Profitability is a ratio to assess a company's ability to make profit in a given period
(Kasmir, 2017).
In its implementation, the application of corporate social responsibility has several obstacles,
such as in the case of environmental damage due to mining activities by PT. Aneka Tambang
(Antam) that cause sedimentation at Moronopo Beach, East Halmahera so that fishermen's income
on the coast decreases (Bratadharma, 2021). There is also a case of PT. Timah in 2020, which there is
environmental damage due to mining activities of PT. Timah that occurred in Mapur Village,
Riausilip Subdistrict, Bangka Regency, Bangka Belitung Islands Province, causing at least 100
hectares of land to be included in the mining business license (IUP) of PT. Timah is now in critical
and arid condition (Gunadha, 2020).
Based on the background description above, corporate social responsibility becomes one of
the media in disclosing information about the impact of the company's economic, social, and
environmental activities. Therefore, the purpose of this study was to analyze the difference in the
influence of environmental performance ratings, media disclosure, and profitability on corporate
social responsibility disclosure. The limitation of this research is the basic materials company
registered with the IDX for the period 2010-2020. This research is expected to contribute to the
development of models for the analysis of social responsibility that companies perform and the factors
that can influence them.
LITERATURE REVIEW
Grey et. Al,(1996) in Hadi (2011) argues that legitimacy is a system of corporate management
oriented towards society (society), individual governments, and community groups. Therefore, the
legitimacy of the community is a strategic factor in order to develop the company in the future.
Corporate social responsibility is a sustainability commitment of companies that run ethically and
have contributed to development to improve the quality of life of their workforce and families, as
well as the local community and the wider community (Hadi, 2011).
Deegan (2002) in Plorensia and Hardiningsih (2015) states that the disclosure of social
responsibility is viewed as a means used by corporate management in interacting with the wider
community to influence perception. In this study corporate social responsibility was projected with.
GRI-G4.
Environmental performance is a way for companies to pay attention to the environment as a
form of corporate responsibility and concern for the environment (Lako, 2011). In this study
environmental performance was projected using PROPER ratings. PROPER is a flagship program
of the Ministry of Environment that seeks to conduct supervision with public disclosure mechanisms
that provide incentives or disincentives to the person incharge of business and/or activities. PROPER
performance ratings are generally divided into five colors, that is gold, green, blue, red and black.
Media disclosure is a means used by companies in communicating social responsibility
activities to employees, customers and other interested parties, and in general to the entire
376 Mellina, Akhirson

community with communication media. Sari (2012) in Plorensia and Hadiningsih (2015) stated that
internet media is an effective medium in communicating corporate social responsibility to the public,
employees and other interested parties. In this study, media disclosure is projected by looking at the
activities of social activities disclosed by the company on the company's official website.
Kasmir (2017) states that profitability is a ratio to assess a company's ability to make a profit
or profit in a given period. In this study profitability is projected using ROA, where ROA describes
the company's ability to generate profits by utilizing assets owned by the company. ROA is calculated
by comparing net income after tax with the company's total assets.
Based on the background, objectives, and literature review that have been described before,
then this research model is as in figure 1 below.
Environmental
Performance Rating H1
(X1)
H2 Corporate Social
Media Disclose Responsibility
(X2) (Y)
H3
Profitability
(X3)
Figure 1. Research Models
Based on figure 1 and the description that has been outlined before, then the hypotheses that
can be developed in this study are:
H1: There is a difference in the environmental performance ratings that companies earn against the
disclosure of social responsibility made by the company
H2: There is a difference in the media disclosures that companies issue to the disclosure of social
responsibility made by the company
H3: There is a difference in profitability that companies earn against the disclosure of social
responsibility made by the company
RESEARCH METHOD
Population and Sample Determination Technique
The population in this study consisted of basic materials sector companies listed on the
Indonesia Stock Exchange (IDX) in 2010-2020 which amounted to 54 companies, with a sample of
2 companies. Sampling technique in this study is a purposive sampling technique, with sample criteria
including (1) Basic materials sector companies listed on the IDX and their shares actively traded
during 2010-2020; (2) Basic materials sector companies that publish and provide social disclosure
information on annual reports and sustainability reports during 2010-2020; (3) Basic materials sector
companies that participated in the PROPER program during 2010-2020; (4) Basic materials sector
companies that present financial statements in rupiah units; (5) Basic materials sector companies
belonging to the metal and mineral sub-industry.
Data Collection Technique

The data collection technique used in this study is to use documentation techniques consisting
of secondary data of annual reports as well as sustainability reports of basic materials sector
companies and company performance assessment reports (PROPER). In the annual report and
sustainability report of the basic materials sector company, the report has been published from 2010-
2020 on the official website of the Indonesia Stock Exchange and the company's official website, as
well as on the company's performance assessment report (PROPER) which is a company performance
rating report that has been published by the Ministry of Environment from 2010-2020 on the official
website of the Ministry of Environment.

Analytical Technique
The analytical technique used in this study is a different test analysis using the Mann Whitney
Test (U Test). The Mann Whitney test is part of a non-parametric statistic used to determine whether
or not there is an average difference between two unpaired or unrelated samples.
Mann Whitney Test decision-making:
1. If the value of Asymp.Sig. < 0.05, then the Hypothesis is accepted.
2. If the value of Asymp.Sig. > 0.05, then the Hypothesis is rejected.
Before testing mann whitney, you must first perform a normality test. The normality test aims
to find out whether the data is normally distributed or not, if the data is not normal then it can proceed
to the Mann Whitney Test (Non-Parametric Statistics).
On the basis of decision-making:
1. If sig. > 0.05 then the data is normal distribution
2. If sig. < 0.05 then the data is not normal distribution
RESULTS AND DISCUSSIONS

Normality Test Results
The Normality test aims to find out whether the data is normally distributed or not, as well as
to provide certainty of what tests should be used. This normality test is done with the help of SPSS
18 software.
Table 1. Normality Test
Shapiro-Wilk
Company
Statistics Df Sig.
Environmental Antam Company .625 11 .000
Performance Rating Timah Company .345 11 .000
Media Disclosure Timah Company .572 11 .000
Profitability Antam Company .895 11 .163
Timah Company .817 11 .016
Source: SPSS data results 18, 2021
Based on the data on table 1, sig. values are obtained for environmental performance ratings
of 0,000 (Antam) and 0,000 (Timah), media disclosure 0.000 (Timah). as well as profitability of
0.163 (Antam) and 0.016 (Timah) (sig. < 0.05), this shows that the value of the whole is smaller than
0.05 then it can be concluded that the data is not normal distribution. So that data processing can be
continued to the Mann Whitney Test.
Result of the Mann-Whitney Test (U- Test)

Mann Whitney's testing was conducted with the help of SPSS 18 Software to perform data
processing. The results of the Mann Whitney Test can be seen in table 2
Table 2. Mann-Whitney Test
Environmental Media
Profitability
Performance Rating Disclosure
Mann-Whitney U 27.500 16.500 48.000
Wilcoxon W 93.500 82.500 114.000
Z -2.598 -3.4644 -.821
Asymp. Sig. (2-tailed) .009 .001 .412
Exact Sig. [2*(1-tailed
Sig.)] .028a .002a .438a
Source: SPSS data results 18, 2021

Based on the data on table 2, the value of Asymp sig. (2-tailed) for an environmental
performance rating obtained of 0.009 (sig. < 0.05), it can be concluded that the hypothesis is accepted.
Thus it can be said that there is a differences in the environmental performance ratings obtained by
the company against the disclosure of social responsibility made by the company. Because there are
significant difference, it can be said that "there is a difference in the influence in the environmental
performance ratings that companies earn on the disclosure of social responsibility that they do".
Then, on the media disclosure of sig Asymp value. (2-tailed) obtained in table 2. as for 0.001
(sig. < 0.05), this indicates that the Hypothesis is accepted. Thus it can be said that there is a difference
in the media disclosures issued by the company to the disclosure of social responsibility made by
the company. Because there are significant differences, it can be said that "there is a difference in
influence in media disclosures issued by companies on disclosure of social responsibility made by
companies".
In table 2. profitability value of Asymp sig. (2-tailed) obtained by 0.412 (sig. > 0.05), this
indicates that the Hypothesis was rejected. Thus it can be said that there is no difference in
profitability earned or owned by the company against the disclosure of social responsibility made by
the company.
DISCUSSION
Environmental Performance Disclosure Against of Corporate Social Responsibility
The results showed that there was a difference in the environmental performance ratings
obtained by companies towards the disclosure of social responsibility made by the company. This
means showing that environmental performance assessed through rankings in the PROPER program
required by the Ministry of Environment annually to see and assess the quality of the company in
managing the environment for one period will affect a company in disclosing information on its
corporate social responsibility.
The results of this study are in line with research conducted by Hamzah and Rodiyah (2019),
which states that companies with good environmental performance as measured using PROPER have
great concern for society, the environment, and its workforce. This indicates that if the company
obtains a better environmental performance rating, the company will be wider and in the future also
in disclosing its corporate social responsibility. Because the company will have a better reputation
among other companies and also investors will be more interested in cooperation, and will make the
wider community know what activities have been done by the company.
Media Disclosures Against Corporate Social Responsibility Disclosure

The results showed that there was a difference in the company's media disclosures to the
company's disclosure of social responsibility. This means showing that media disclosure or
information made by the company related to its social activities on the company's official website
will affect the company in disclosing its corporate social responsibility.
The results of this study are in line with research conducted by Respati and Hadiprajitno (2015)
which states that by disclosing their social activities through the company's web, it will increase the
transparency of information within the company related to CSR activities carried out to the wider
community. This indicates that if the company discloses its social activities through the company's
official website, it will increase the transparency of information within the company related to social
responsibility activities carried out to the wider community and stakeholders.
Profitability To Disclose Corporate Social Responsibility

The results showed that there was no difference in profitability earned by the company
towards the disclosure of social responsibility made by the company. This means showing that
profitability projected by ROA in generating profits by utilizing assets owned by the company will
not affect the company in disclosing activities related to its social responsibility operations.
The results of this study are in line with research conducted by Irianti, Allolayuk, and Andriati
(2020) which states that companies (management) feel no need to disclose high social responsibility
when the company is having a high level of profitability. Conversely, at a time when profitability
levels are low, they expect the report's users will read the company's "good news" performance. This

indicates that if the company has high or low profitability, then there is no difference in the
disclosure of social responsibility that will be done by both Antam Company and Timah Company.

Based on the results of research that has been outlined in two companies from the basic
materials sector sampled by researchers, it can be concluded that there is a difference in influence in
environmental performance ratings obtained by companies, and media disclosures issued by
companies to disclosure of social responsibility made by companies. Then, there was no difference
in the influence in profitability that the company earned on the disclosure of social responsibility made
by the company.
Given that this research still has shortcomings and limitations, the next study is expected to
replace or add samples with other sectors, such as the property, agriculture or forestry sectors, and
can examine other factors related to corporate social responsibility.
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The Effect Of Trust, Perceptions Of Ease Of Use And Risk Perceptions

On Interest In Using Digital Fund Wallet During The Covid-19
Pandemic
Assyifa Mell Aurora1, Paya Y.C. Hsu2, Caecilia Widi Pratiwi3, Jessica Barus4
1,3,4
Universitas Gunadarma, 2International School Duy Tan University, Vietnam
1
assyifamell@gmail.com, 2payahsu@gmail.com, 3widi@staff.gunadarma.ac.id ,
4
jessica@staff.gunadarma.ac.id
Abstract
The purpose of this study is to analyze the influence of trust, perception of ease of use and partial
and simultaneous perception of interests using DANA digital wallets. The methods of data analysis
in this study test stage were conducted: validity test, reliability test, normality test, multicollinearity
test, heteroscedasticity test, multiple linear regression analysis, t test, f test and determination
coefficient (R2). The data used in this study used research instruments, namely online questionnaires
with google form, and valid data collected by 100 respondents. The sampling method in this study is
a non-probability sampling method and purposive sampling technique. The testing tool used is IBM
SPSS Statistics v26 software. The results showed that there is an influence of Trust, Perception of
Ease of Use, and Risk Perception on Interests Using DANA digital wallets. Each variable has a
partial and simultaneous positive and significant effect on interests using DANA digital wallets.
Keywords : Trust, Interest in Using, Perception of Ease of Use, Risk Perception.

JEL Codes : B26, E40, G32,
INTRODUCTION
Currently, the whole world has been exposed to an infectious disease called Coronavirus
Disease 2019 called Covid-19. This virus first occurred in the city of Wuhan, China in 2019. And
this virus spreads very quickly which has several symptoms such as fever, cough and mild respiratory
infections. Then the World Health Organization (WHO) has now determined that the Covid-19 virus
is a pandemic.
The Indonesian government has implemented Large-Scale Social Restrictions (PSBB) in
stages. This is intended to reduce the spread of the virus. In the face of the Covid-19 pandemic, people
must practice physical distancing or maintain a distance. Therefore, one way that can be done is to
apply a non-cash payment method, namely by using a digital wallet or E-wallet to reduce the risk of
being infected with the corona virus attached to money, credit cards or the hands of the person who
handed over and received the money.
Technological advances in this modern era have caused the use of technology to develop
rapidly to meet human needs in various aspects of life. Based on Dorfleitner, Hormuf, Schmitt, &
Weber (2017), Fintech is an industry that moves very quickly and dynamically because there are
many different business models.
Along with the widespread recognition of chip-based electronic money in the community,
many start-up companies have built fintech businesses so that they are called E-wallets. E-wallet is
an application or electronic wallet service that functions for transactions between users to make it
more accessible to the public. Transactions that can be done by E-wallet such as sending money to
friends or people around, paying for goods and services by limiting the amount of money contained
in the application. This technology is increasingly sophisticated and increasingly accessible to the
public to transact through online and offline payments.
The use of a number of digital services in Indonesia has increased during the Covid-19
pandemic, one of which is e-commerce. There are 69% of consumers who use this service more often
to buy their daily needs. Then there are 65% use of digital wallets as a means of purchasing
transactions. Furthermore, digital services in the health and education sectors have increased,
382 Aurora, Hsu, Pratiwi, Barus

respectively by 41% and 38%. Health services are widely used for consultations related to the corona
virus, while educational services are used to accompany learning activities at home. And the use of
application-based transportation services (ride hailing) fell by 73%. because consumers are using this
service less and less, due to the implementation of the PSBB. Based on data from a survey conducted
by Ipsos in Indonesia online, officially announcing the results of the latest survey, ShopeePay has
succeeded in occupying the position as the most superior digital wallet brand in Indonesia.
ShopeePay became the most used digital wallet during October with 34%, followed behind by OVO
with 28%, then GoPay with 17%, DANA with 14%, and Link Aja with 7%.
DANA E-Wallet is one of the new digital wallets in Indonesia. Before the DANA E-Wallet
there were other E-Wallets such as OVO, GoPay, LinkAja and so on. The DANA E-Wallet was first
launched on December 5, 2018, which was founded by Elang Sejahtera Mandiri including its
subsidiary PT. Elang Mahkota Teknologi Tbk (EMTEK) and a joint venture with Ant Financial.
DANA's e-Wallet is designed to make non-cash and non-card transactions digital, fast, and practical.
The DANA application makes easy steps for users to make transactions, namely buying, scanning
QR Codes, and receiving goods. The DANA application can also top up balances via Debit cards,
via bank transfers (Bank Mandiri, Bank BCA, Bank BRI, Bank CIMB Niaga, Bank BNI, Panin Bank,
Bank Permata, BTN, Bank Sinar Mas, Bank BTPN, and Maybank).
Trust is important in running a business today. In producing products and services, it must be
done as well as possible so that customers have the confidence to use their products and services.
And trust is also an important factor in developing online transaction services. According to (Wanadi,
2014) defines that trust will occur if a person has confidence in an exchange with a partner who has
integrity and can be trusted.
The ease of use perspective can convince users that the information technology to be applied
is easy and does not become a burden for them. Then Davis (in Rithmaya, 2016) defines Perception
of Ease as a measure by which future users perceive a system as barrier-free.
The use of E-wallet as a cashless payment tool is inseparable from various obstacles, both in
terms of use and risks. According to Sjoberg et al. (in Andriyano, 2014) risk perception is a subjective
assessment of the probability of the type that specifies the accident that occurred and how worried
about the consequences. The risk that consumers are worried about is one of the factors that influence
consumer interest somebody using e-wallet.
According to (Kotler and Keller, 2012) interest is something that arises after seeing the
stimulus from the product he sees. Meanwhile, interest in using is a condition where someone will
pay attention to a need in the activities to be carried out so that they will not pay attention to the next
process to be carried out (Chandra, 2016).
LITERATURE REVIEW
Financial technology
Financial technology or commonly called fintech can be interpreted as the use of information
technology developments to improve services in the financial industry. Based on Dorfleitner,
Hormuf, Schmitt, & Weber (2017), Fintech is an industry that moves very quickly and dynamically
because there are many different business models.
According to PBI Number 19/12/PBI/2017 concerning the Implementation of Financial
Technology, financial technology is defined as the use of technology in the financial system that
produces new products, services, technology and/or business models and can have an impact on
monetary stability, financial system stability, and/or efficiency. smoothness, security, and reliability
of the payment system.
Financial technology is classified into several types, namely:
1. Payment system
This type provides online payment system services through electronic money, e-commerce, e-
wallet and mobile payments.
2. Deposits, Loans and Capital Increase
This type of fintech service is a loan that can be funded by funds collected from several investors.
The most common fintech innovations in this field are crowdfunding, peer to peer lending
platforms, and payday loans.
3. Market Provisioning/Aggregators
Aurora, Hsu, Pratiwi, Barus 383

This type of Fintech provides product comparisons ranging from prices, features to the benefits.
4. Management Risk and Investment
The services provided by this type of fintech can be in the form of financial planning or advisory,
platforms, online trading and insurance.
Electronic Wallet or E-Wallet

According to Wijaya (2018), E-Wallet is an electronic media in the form of a server based and
is used as a digital payment instrument by using an internet connection first. E-Wallet is an
application or electronic wallet service that functions for transactions between users to make it more
accessible to the public. Transactions that can be done by E-Wallet such as sending money to friends
or people around, paying for goods and services by limiting the amount of money contained in the
application. Technology is increasingly sophisticated and more accessible to the public for online
and offline payment transactions. Electronic Wallet is defined as a part of electronic payment, does
not use media such as cards, and conducts transactions through electronic channels. Unlike a debit
card or credit card, the main components of an electronic payment system include: money transfer
applications, network infrastructure, rules and procedures governing the usability of the system.
Customers and sellers are the main players of the electronic payment system
Trust
Trust is important in running a business today. In producing products and services, it must be
done as well as possible so that customers have the confidence to use their products and services.
And trust is also an important factor in developing online transaction services. According to Fajarrati
(2010) trust refers to the customer's belief that the promises made by the company to customers can
be trusted and provide mutually beneficial actions to the company.
Verhagen (2007) indicator trust :
1. Reliable.
2. Have a good reputation
3. Provide security in transactions.
Perception of Ease of Use

The ease of use perspective can convince users that the information technology to be applied
is easy and will no longer be a burden for them. According to Davis (in Rithmaya, 2016) Perception
of convenience is a measure of which future users perceive a system as barrier-free. Perceived
convenience refers to an information technology system with individual trust so as not to bother a
large effort in using it.
The perception of ease of use according to Wildan (2019) has the following indicators:
1. The system is clear and easy to understand
2. It doesn't take much effort to use the system
3. Easy-to-use system
4. The system is easy to use according to what users want to do
Risk Perception
Sciffman and Kanuk (2015) define Risk Perception as the uncertainty faced by consumers
when they cannot predict the possible consequences of their purchase or use decisions. The more
capable consumers are in dealing with uncertainty and the consequences of the product or service,
the lower the risk perception of the product will be in the minds of consumers. Conversely, if
consumers are not able to anticipate the uncertainty and consequences generated by the product or
service, it will result in a higher risk perception of the product in consumers' minds.
Risk perception indicators according to (Pavlou, 2003) are as follows:
1. There are certain risks.
2. Loss.
3. Thought that was risky.

Interest in Using
Interest in using according to Chandra (2016) is a situation where someone will pay attention
to a need in the activities to be carried out so that they will not pay attention to the next process to be
carried out.
Interest measurement indicators using several of these studies refer to the opinions of Pavlou
(2012) namely:
1. Intend to use.
2. Used for the future.
3. Interest in the object of interest.
4. Tend to always use.
RESEARCH METHOD
Types of research
In this study, the variables that are connected are variables consisting of the Trust variable
(X1), the Perceived Ease of Use variable (X2), the Risk Perception variable (X3), and the Interest in
Using variable (Y1). The approach in this research is a quantitative approach.
Research data
In this study, the data used is primary data. Data was collected using a structured questionnaire
which was filled in directly using the google form by respondents or any DANA Digital Wallet users,
whether they have used it or are still using it. The data collection conducted by the researcher was
used to answer questions regarding interest in using the DANA Digital Wallet as seen from Trust,
Perception of Ease of Use and Perception of Risk.
Research variable
The research variables used in this study are as follows:
1. Independent variable / independent variable (X). The independent variable is a variable that can
affect the dependent variable. In this study, the independent variables or independent variables
are:
1) Trust (X1).
2) Perceived Ease of Use (X2).
3) Risk Perception (X3).
2. The dependent variable / dependent variable (Y). The value of the dependent variable can change
if the variable that affects it changes. In this study, the dependent variable or dependent variable
is Interest in Using (Y).

The population in this study are all users who have used or are still using the DANA Digital
Wallet.
Sample
The sampling method used in this study is a non-probability sampling method because it does
not provide equal opportunities for each element or member of the population to be selected as a
sample. Meanwhile, to determine the number of samples taken by purposive sampling technique.
According to Sugiyono (2017) purposive sampling is a sampling technique with certain
considerations. The criteria are:
1. Respondents have used or are still using DANA Digital Wallet.
2. Domiciled in Tangerang City.


Validity test
Table 1. Table of Validity Test Results
Statement
No. Variable R count R table Information
Items
X1.1 0.819 0.361 Valid
1.
Trust (X1) X1.2 0.828 0.361 Valid
X1.3 0.745 0.361 Valid
X2.1 0.704 0.361 Valid
Perceived
X2.2 0.750 0.361 Valid
2. Ease of Use
X2.3 0.640 0.361 Valid
(X2)
X2.4 0.803 0.361 Valid
Risk X3.1 0.598 0.361 Valid
3. Perception X3.2 0.788 0.361 Valid
(X3) X3.3 0.875 0.361 Valid
Y1.1 0.837 0.361 Valid
Interest in Y1.2 0.796 0.361 Valid
4.
Using (Y) Y1.3 0.857 0.361 Valid
Y1.4 0.859 0.361 Valid
Source: Results of SPSS v.26 data processing, 2021
Judging from the number of samples (n) = 30, the amount of df can be calculated as 30-2 =
28, with df = 28 and alpha = 0.05, we get r table = 0.361. A variable is said to be valid if the value
of r arithmetic > r table. So it can be concluded that all variables in this study are valid.
Reliability Test
Cronbach's Reliable
Variable Information
Alpha Value
Trust (X1) 0, 713 0.60 Reliable
Perceived Ease of Use (X2) 0.698 0.60 Reliable
Risk Perception (X3) 0.638 0.60 Reliable
Interest in Using (Y) 0.853 0.60 Reliable
Based on the results in the table above, it can be seen that the Cronbach's alpha value of each
tested variable is above 0.60. A variable is said to be reliable if the value of Cronbach's alpha > 0.60,
it can be concluded that all variables in this study are reliable.
Classical Assumption Test Normality Test

Normality testing in this study is used by looking at the normal probability plot which
compares the cumulative distribution of the actual data with the cumulative distribution of normal
data.

Figure 1. PP Plot
In the picture above shows the normal Probability Plot graph, it can be seen that the points
spread around the diagonal line, the distribution also follows the direction of the diagonal line or the
histogram graph shows a normal distribution. So it can be said that the regression model meets the
assumption of normality.
Multicollinearity test aims to test whether the regression model found a correlation between
the independent variables (independent).
Coefficientsa
Unstandardized Standardized Collinearity
Coefficients Coefficients Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 1,520 1,648 ,922 ,359
Trust ,727 ,102 ,556 7,142 ,000 ,780 1,282
Perception of ,256 ,073 ,272 3,486 ,001 ,780 1,282
Ease of Use
Risk ,164 ,073 ,154 2,235 ,028 ,999 1,001
Perception
a. Dependent Variable: Interest in Using
Based on the table above, it shows that the regression model does not experience
multicollinearity disorders. This is indicated by the tolerance value for the three independent
variables 0.10. Meanwhile, the calculation of the VIF value shows that all independent variables have
10. So it can be concluded that there is no multicollinearity between the independent variables in the
regression model.
The heteroscedasticity test aims to test whether in the regression model, there is an inequality
of variance from the residuals of one observation to another observation.

Figure 2. Scatterplot
Based on the picture above, it can be concluded that the points spread randomly up and down
the number 0 on the Y axis. This shows that there is no heteroscedasticity in the regression model,
so the regression model is feasible to be used for testing.

Multiple linear regression analysis aims to determine the effect of the independent variable on
the dependent variable. In this study, multiple linear regression analysis was used to test the
hypothesis of the effect of trust, perceived ease of use and perceived risk on interest in using together
through a multiple linear regression equation.
Table 4. Results of Multiple Linear Regression Analysis
Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
1 (Constant) 1,520 1,648 ,922 ,359
Trust ,727 ,102 ,556 7,142 ,000
Perception of Ease ,256 ,073 ,272 3,486 ,001
of Use
Risk Perception ,164 ,073 ,154 2,235 ,028
From the results of the above equation it can be seen that:

1. The constant value of 1.520 means that the variables of Trust (X1), Perceived Ease of Use (X2),
and Risk Perception (X3) are worth (0). Then Interest in Using (Y) will be worth 1.520.
2. The value of the regression coefficient on the Trust variable is positive at 0.727. This shows that
if there is an increase of one unit in Trust (X1), Interest in Using (Y) will increase by 0.727. The
positive coefficient means that there is a positive influence on the Trust variable which results
in an increase in Interest in Using.
3. The value of the regression coefficient on the Perceived Ease of Use variable is positive at 0.256.
This shows that if there is an increase of one unit in Perception of Ease of Use (X2), then Interest
in Using (Y) will increase by 0.256. The positive coefficient means that there is a positive
influence on the Perceived Ease of Use variable which results in an increase in Interest in Using.
4. The value of the regression coefficient on the Risk Perception variable is positive at 0.164. This
shows that if there is an increase of one unit in Risk Perception (X3), then Interest in Using (Y)
will increase by 0.164. The positive coefficient means that there is a positive influence on the

Risk Perception variable which results in an increase in Interest in Using.
Hypothesis testing
Partial Test (T Test)
Partial test aims to determine the effect of each independent variable (Trust, Perception of
Ease of Use, Perception of Risk) partially on the dependent variable (Interest in Using).
Table 5. Partial Test Results (T Test)
Coefficientsa
1 (Constant) 1,520 1,648 ,922 ,359
Trust ,727 ,102 ,556 7,142 ,000
Perception of ease ,256 ,073 ,272 3,486 ,001
of use
Risk Perception ,164 ,073 ,154 2,235 ,028
The results of the t-test analysis are as follows:

1. Hypothesis Testing the Effect of Trust on Interest in Using
From the results of the calculation of the data above, the value of tcount is 7,142 so that H0 is
rejected and Ha is accepted. Because tcount is greater than ttable7,142> 1,984 with rate significant
0.000 < 0.05. This shows that Trust (X1) partially has a positive and significant effect on Interest in
Using (Y) because consumers believe in the confidentiality provided by the DANA company and are
relied on as a non-cash payment instrument so that consumers have an interest in using the DANA
digital wallet.
Trust is the customer's belief that the promises made by the company to customers can be
trusted and provide mutually beneficial actions referring to the company. And trust is also an
important factor in developing online transaction services. DANA companies can guarantee security
in transactions and maintain the confidentiality of user data so that consumers choose the DANA
application because DANA can be relied on as a non-cash payment instrument. The higher the level
of trust, the higher the interest in using a digital wallet. This is evident from the results of the
questionnaire, that the respondent's response score is the largest in the item 1 statement of 449 which
states that I believe DANA can be relied on as a non-cash payment instrument.
This research is in accordance with the research of Syafitri (2020), Rodiah and Melati (2020).
And this research is not in accordance with the research of Atrianai, et al (2020), Pratama and Suputra
(2019), Achadi and Winarto (2020), Abrilia and Sudarwanto (2020). ), Rantung, et al (2020),
Purwanto, et al (2018), Hanafi and Toolib (2020), Karim, et al (2020), Ing Ing, et al (2021).
2. Hypothesis Testing the Effect of Perceived Ease of Use on Interest in Using

From the results of the calculation of the data above, the value of tcount is 3,486 so that H0 is
rejected and Ha is accepted. Because tcount is greater than ttable3,486> 1,984 with significant level
0.001 < 0.05. This shows Perception of Ease of Use (X2) partially has a positive and significant
effect on Interest in Using (Y) because consumers believe the DANA digital wallet is a technology
that facilitates payment access, by scanning a qr code and being able to top up balances, transactions
are carried out quickly and easily. easy. So that consumers are interested in using the DANA digital
wallet.
Perceived ease of use is the degree to which a person believes that a computer technology is
easy to learn and understand. Perceived convenience refers to an information technology system with
individual trust so as not to bother a large effort in using it. The DANA application makes easy steps
for users to make transactions, namely buying, scanning QR Codes, and receiving goods. The DANA

application can also top up balances via Debit cards, via bank transfers (Bank Mandiri, Bank BCA,
Bank BRI, Bank CIMB Niaga, Bank BNI, Panin Bank, Bank Permata, BTN, and Ban Sinar Mas,
Bank BTPN, Maybank, Bank Danamon) through the nearest agent (such as Alfamart, Alfamidi,
Dan+Dan, Ramayana, Robinsonmart, Bluemart, and Pegadaian), and through Oneklik. Because the
service features are considered easy and understandable, consumers use the DANA digital wallet as
an alternative transaction tool for making payments. This is evident from the results of the
questionnaire, that the respondent's response score is the largest in the 1st statement item of 441
which states that using DANA because its service features are very easy and understandable.
This research is in accordance with the research of Syafitri (2020), Atriani, et al (2020), Rodiah
and Melati (2020), Pratama and Suputra (2019), Rantung, et al (2020), Purwanto, et al (2018), Hanafi
and Toolib (2020). ), Karim, et al (2020), Ing Ing, et al (2021). And this research is not in accordance
with Achadi and Winarto (2020), Abrilia and Sudarwanto (2020). This is evident from the results of
the questionnaire, that the respondent's response score is the largest in the 1st statement item of 441
which states that using DANA because its service features are very easy and understandable. This
research is in accordance with the research of Syafitri (2020), Atriani, et al (2020), Rodiah and Melati
(2020), Pratama and Suputra (2019), Rantung, et al (2020), Purwanto, et al (2018), Hanafi and Toolib
(2020). ), Karim, et al (2020), Ing Ing, et al (2021). And this research is not in accordance with
Achadi and Winarto (2020), Abrilia and Sudarwanto (2020).
This is evident from the results of the questionnaire, that the respondent's response score is the
largest in the 1st statement item of 441 which states that using DANA because its service features
are very easy and understandable. This research is in accordance with the research of Syafitri (2020),
Atriani, et al (2020), Rodiah and Melati (2020), Pratama and Suputra (2019), Rantung, et al (2020),
Purwanto, et al (2018), Hanafi and Toolib (2020). ), Karim, et al (2020), Ing Ing, et al (2021). And
this research is not in accordance with Achadi and Winarto (2020), Abrilia and Sudarwanto (2020).
Rodiah and Melati (2020), Pratama and Suputra (2019), Rantung, et al (2020), Purwanto, et al (2018),
Hanafi and Toolib (2020), Karim, et al (2020), Ing Ing, et al (2021). And this research is not in
accordance with Achadi and Winarto (2020), Abrilia and Sudarwanto (2020). Rodiah and Melati
(2020), Pratama and Suputra (2019), Rantung, et al (2020), Purwanto, et al (2018), Hanafi and Toolib
(2020), Karim, et al (2020), Ing Ing, et al (2021). And this research is not in accordance with Achadi
and Winarto (2020), Abrilia and Sudarwanto (2020).
3. Hypothesis Testing the Effect of Risk Perception on Interest in Using

From the results of the calculation of the data above, the value of tcount is 2.235 so that H0 is
rejected and Ha is accepted. Because tcount is greater than ttable 2,235>1,984 with rate significant
0.028 < 0.05. This shows that Risk Perception (X3) partially has a positive and significant effect on
Interest in Using (Y) because if a consumer makes a transaction using a DANA digital wallet, the
consumer will know the risks such as: server disruption and transaction failure.
Perceived Risk is defined as uncertainty faced by consumers when they cannot predict the
possible consequences of their purchase or use decisions. Before using the DANA digital wallet,
consumers already know what the risks are, and if consumers make offline transactions, they must
maintain the process so they don't come into direct contact to reduce the spread of the covid-19 virus.
The higher the consumer understands the risk, the higher the consumer's interest in using the DANA
digital wallet. This is evident from the results of the questionnaire, that the respondent's response
score is the largest in the 1st statement item of 434 which states that I know that there are risks such
as: server disturbances and transaction failures, when making transactions using DANA.
This research is in accordance with the research of Rodiah and Melati (2020), Achadi and Hari
Winarto (2020), Ing Ing, et al (2021). And this research is not in accordance with the research of
Syafitri (2020), Atriani, et al (2020), Rodiah and Melati (2020), Pratama and Suputra (2019), Abrilia
and Sudarwanto (2020), Rantung, et al (2020), Purwanto, et al. (2018), Hanafi and Toolib (2020),
Karim, et al (2020).

Simultaneous test aims to determine whether there is a significant effect between all
independent variables simultaneously or simultaneously on the dependent. The results of the f test in
this study can be seen in the following table:

Table 6. Simultaneous Test Results (F Test)
ANOVAa
1 Regression 203.513 3 67,838 38,415 ,000b
Residual 169.527 96 1,766
Total 373,040 99
a. Dependent Variable: Y
b. Predictors: (Constant), X3, X1, X2
Based on the table above, the result of Fcount is 38,415 with value significance of 0.000. Then
it can be said that Fcount is38,415> Ftable (2.70) with a significance level of 0.000 <0.05. So it
shows H0 is rejected and Ha is accepted. This means that Trust (X1), Perception of Ease of Use (X2),
and Perception of Risk (X3) simultaneously have a significant effect on Interest in Using (Y).
Coefficient of Determination Test (R2)

The coefficient of determination (R2) essentially measures how much influence the
independent variables (independent) have on the dependent variable.
Table 7. Coefficient of Determination Test Results (R2)
Model Summaryb
Model R R Square
Square Estimate
1 ,739a ,546 ,531 1,329
a. Predictors: (Constant), X3, X1, X2
b. Dependent Variable: Y
Based on the table above, the Adjusted R Square value is 0.531. This shows that Trust,
Perceived Ease of Use, and Perceived Risk have an influence on Interest in Using by 53.1%. While
the remaining 46.9% is the contribution of other variables not included in this study. In other words,
Interest in Using is not only determined by Trust, Perceived Ease of Use, and Perceived Risk.

Based on the results of tests and research regarding the Effect of Trust, Perception of Ease of
Use and Perception of Risk on Interest in Using Digital DANA during the Covid-19 Pandemic
Period. Then the following conclusions can be drawn:
1. Trust partially affects the interest in using the DANA Digital Wallet.
2. Perception of Ease of Use partially affects the Interest in Using DANA Digital Wallet.
3. Risk Perception partially affects the Interest in Using the DANA Digital Wallet.
4. Trust, Perception of Ease of Use, and Perception of Risk simultaneously affect Interest in Using
DANA Digital Wallet.
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The Influence Of Return On Assets, Return On Equity, Net Profit

Margin, And Earnings Per Share On Stock Prices: Empirical Study On
Registered Banking Subsector Companies In Indonesia Stock Exchange
Period 2016-2020
Syafa Najmi Laila1, Toto Sugiharto2
Jln. Margonda Raya No.100, Depok, Jawa Barat 16424
1
syafanajmi19@gmail.com, 2hart2862@gmail.com
Abstract
Business in Indonesia continues to increase, triggering an increase in stock investment activities. One
of the sub-sectors that investors are interested in is banking. Investors need to have clear and
measurable benchmarks when investing in stocks. Identifying financial ratios is one approach in
making investment decisions. This study aims to analyze the effect of financial ratios which include
return on assets, return on equity, net profit margin, and earnings per share on stock prices, either
simultaneously or partially and identify the dominant variable. A total of 14 banks listed on the
Indonesia Stock Exchange for the 2016-2020 period were selected using the conditional sampling
method used in this study. Multiple linear regression analysis was used to test the research
hypothesis. The results showed that simultaneously all financial ratios had a significant effect on
stock prices. However, partially the variables that affect stock prices are return on equity, net profit
margin, and earnings per share. Return on equity has an effect on lowering stock prices, while net
profit margin and earnings per share have an effect on increasing stock prices. The variable that has
a dominant effect on stock prices is earnings per share.
Keywords : return on assets; return on equity; net profit margin; earning per share; stock prices.
JEL Codes : G21, I22
INTRODUCTION
Based on the Investment Coordinating Board (BKPM), investment realization in 2020 reached
IDR 826.3 trillion or grew by 2.1% from the previous year (http://ekonomi.bisnis.com). This is
triggered by the increasing business development in Indonesia that requires funding from the wider
community by providing an understanding of investment. Investors must have benchmarks and the
ability to know which companies are worth investing in and in what form the investment is. Investors
will be directed to the capital market to invest in companies that have gone public and publish their
financial reports to be viewed and assessed.
The capital market has a very big role for Indonesia because it can provide resilience to the
economy and describe the state of the business climate in Indonesia. There are many choices of
sectors to invest in, one of which is the financial sector, in which there is a banking sub-sector. In
encouraging domestic economic growth, the role of banking can never be missed because banking
as an intermediary institution thus becomes one of the factors triggering economic movement in all
sectors. The ratio of banking assets to Gross Domestic Product (GDP) was 55.01% at the end of 2019
(http://keuangan.kontan.co.id). The banking industry has a significant role in supporting economic
growth and creating equity (http://liputan6.com).
Banking companies will last a long time and will continue to grow by maintaining a balance
between maintaining liquidity with achieving profitability and fulfilling capital. Long-term
investments that are in great demand and slowly understood by investors are stocks. Stock is defined
as a sign of participation or ownership of a person or entity in a company or limited liability company.
Investors who will invest their funds in a company should know the performance of the
company. Investors can use financial statements as the main source of analytical information in their
investment decisions. The stock price as a reflection of the company's performance, because the
higher the stock price, the better the company's performance. The stock price is possible because it
394 Laila, Sugiharto

depends on the demand and supply between the stock buyers and the stock sellers (Darmadji and
Fakhruddin, 2012). This demand and supply occurs due to various factors, both from internal and
external factors. Internal factors include factors that are directly related to the company's internal,
such as company performance, dividend distribution, future prospects, debt and equity ratios.
Meanwhile, external factors include factors originating from outside the company, such as changes
in exchange rates, the rate of inflation, the emergence of political turmoil, and the state of socio-
economic factors of a country.
Financial statement analysis is used by investors to find out the company's strengths and
weaknesses. The analysis of the financial statements is carried out using the company's financial
ratios, where financial ratios are activities to compare the numbers in the financial statements by
dividing one number by another (Kasmir, 2012). In this study, the ratios used are return on assets,
return on equity, net profit margin, and earnings per share.
This study was conducted with the aim of analyzing the simultaneous and partial effect of
return on assets, return on equity, net profit margin, and earnings per share on stock prices and
identify the variables that have the most dominant influence on stock prices so that investors have
benchmarks when investing in baking sub-sector companies.
LITERATURE REVIEW
Stock Market
The definition of the capital market is a meeting between parties who have excess funds and
those who need funds by trading securities. The capital market can also be interpreted as a market
for trading securities which generally have a lifespan of more than one year, such as stocks, bonds
and mutual funds (Tandelilin, 2017). The capital market has benefits for issuers, investors,
institutions and governments (Sartono, 2014).
Stock, Stock Price and Its Determinants

Shares are part of ownership in a company where each share gives the owner one vote (Bodie
et al., 2014). Shares are proof of ownership of capital or funds in a company (Fahmi, 2014). The
stock price, in the meantime, is a very important factor for investors to pay attention to when they
want to invest because the stock price is a picture of the issuer's achievement. The better the issuer
makes a profit, the higher the share price, and vice versa. Stock price indicators tell a lot about what's
going on at the moment between buyers and sellers.
Price of stock of all public companies including banking is affected of various factors which
consists of both macroeconomic and microeconomic factors. Microeconomic include amongst other
things financial ratios such as return on assets, return on equity, net profit margin, and earnings per
share.
Financial Reports and Financial Ratios

Financial statements are a structured presentation of the financial position and financial
performance of an entity. This report displays the history of the entity which is quantified in monetary
value (PSAK No.1, 2015). The financial report is the responsibility report of the manager or company
leader for the management of the company entrusted to him, to parties outside the company
(Wahyudiono, 2014).
Financial ratios are comparisons between numbers or data contained in financial statements
by dividing one number by another (Kasmir, 2012). In addition, financial ratios are numbers obtained
from the comparison of a financial statement post with other items that have a relevant and significant
relationship (Harahap, 2011).
Financial ratio and its relationship with stock price

Return on assets
Return on assets is a ratio that shows the return on the amount of assets used by the company.
Return on assets is a ratio that shows the results of the total assets used in the company (Kasmir,
2014). The return on assets formula is as follows.
Laila, Sugiharto 395

Net Profit
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 (ROA) = Total Aset
(1)
Return on assets is the rate of return or profit generated on the management of the company's
assets or investments (Diaz & Jufrizen, 2014). The higher the return on assets value indicates that
the company is getting better at managing its assets so that the company is able to generate higher
profits. That way, investors are interested in investing in the company and it will increase the demand
and price of the company's shares.
Return on equity
Return on equity or profitability of own capital is a ratio to measure net profit after tax with
own capital. This ratio shows the efficiency of the use of own capital. The higher this ratio, the better.
This means that the position of the owner of the company is getting stronger, and vice versa (Kasmir,
2014). The return on equity formula is as follows.
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 (ROE) = Total Equity
(2)
High return on equity often reflects the company's acceptance of good investment
opportunities and effective cost management (Horne and Wachowicz, 2012). In other words, the
higher the return on equity value indicates that the company is getting better at managing its capital
into company profits. That way, the profits owned by investors will also increase. Increased profits
for investors make investors interested in investing in the company and increase the company's stock
price.
Net Profit Margin

Net Profit Margin is obtained by comparing operating profit with sales. The higher the value
of this ratio, it indicates that the profitability of the company is getting better so that investors are
interested in investing their capital (Kasmir, 2014). The net profit margin formula is as follows.
Laba Bersih
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 (NPM) = (3)
Penjualan
Net profit margin to calculate the extent to which the company's ability to generate net profit
at a certain level of sales (Hanafi and Halim, 2012). The higher the net profit margin value means
the company's ability to generate net profit from its sales level is also getting higher. The increase in
company profits makes the earnings per share of investors also increase. This good thing makes
investors more interested in investing in the company. The higher the investor's demand, the higher
the company's stock price.
Earning Per Share

Earning per share or earnings per share ratio or also called the book value ratio is a ratio to
measure the success of management in achieving profits for shareholders. A low ratio means that
management has not succeeded in satisfying shareholders, on the contrary, with a high ratio, the
welfare of shareholders increases (Kasmir, 2012). The formula for earnings per share is as follows.
Current Profit
Earning per Share (EPS) = Number of shares outstanding
(4)
Earning per share is a ratio that measures how much net income is for each share. The higher
the value of earnings per share, the higher the company's profits. The high profit of the company
allows an increase in the amount of dividends received by shareholders (Sumarsan, 2013). This good
thing will encourage investors to invest in the company. The increasing number of investors who
want to invest in the company makes the company's stock price increase.
Model and Research Hypothesis

Based on the results of a review of the theory and empirical evidence that describes a causal
relationship between financial ratios and stock prices, the following research model can be

developed.
Return on Assets (ROA)
Return on Equity (ROE)

Stock Price
Net Profit Margin (NPM)
Earning per Share (EPS)

Based on the results of a review of the theory and empirical evidence. Based on the research
model described in the previous section, the following research hypotheses can be formulated.
H1 : Return on assets, return on equity, net profit margin, dan earning per share simultaneously
influence stock price.
H2 : Return on assets influence stock price.
H3 : Return on equity influence stock price.
H4 : Net profit margin influence stock price.
H5 : Earning per share influence stock price.
RESEARCH METHODS
Data and Source of Data
This study uses quantitative data in the form of secondary data. In this study, the secondary
data used are summary data on the financial performance of the banking sub-sector companies listed
on the Indonesia Stock Exchange in 2016-2020 and the annual share prices of each company obtained
from the Indonesia Stock Exchange website (www.idx.co.id) and the official website of each
company.

The population in this study is the banking sub-sector companies listed on the Indonesia Stock
Exchange, amounting to 46 companies. This study takes a sample of banking sub-sector companies
listed on the Indonesia Stock Exchange during the observation period, namely the 2016-2020 period.
The sampling method used in this study uses a conditional sampling method with sampling criteria,
namely (i) banking sub-sector companies listed on the Indonesia Stock Exchange during the study
period, namely 2016-2020, (ii) banking sub-sector companies that have been listed until in 2015, (iii)
banking sub-sector companies that periodically issue financial reports and annual reports and have
complete data during the research period, namely 2016-2020, and (iv) banking sub-sector companies
that do not experience losses during the research period, namely 2016-2020.
Research Variables
The variables in this study consist of two variables, namely the dependent variable and the
independent variable. The dependent variable in this research is stock price. Stock prices tell a lot
about what's going on right now between buyers and sellers. The stock price is seen from the closing
price at the end of the annual financial statement period for the sample companies. The independent
variables in this study are the fundamental factors, namely return on assets, return on equity, net
profit margin, and earnings per share. Below are presented operational definitions of research
variables, measurements and scales.

Table 1. Research Variable: Definition, Measures and Scale
Variabel Operational definition Measures Scale

The share price is calculated
Stock Price from the closing price at the Closing Stock Price IDR
end of each year
Return on Net Profit
Comparison ratio between
Assets ROA = Ratio
profit after tax and total assets Total Asset
(ROA)
Return on Net Profit
Equity ROE = Ratio
profit after tax and total equity Total Equity
(ROE)
Net Profit Net Profit
Margin NPM = Ratio
profit after tax and total sales Total Sales
(NPM)
Earning Comparison ratio between Current Year Profit
per Share profit for the year and total EPS = Ratio
(EPS) shares outstanding Number of Shares Outstanding
Method of Analysis
The statistical analysis method used in this study consisted of three types, namely (i)
descriptive statistical analysis, (ii) classical assumption testing consisting of normality,
multicollinearity, heteroscedasticity, and autocorrelation, and (iii) research hypothesis testing.

Descriptive analysis is a statistic used to analyze data by describing or describing the data that
has been collected as it is without intending to make conclusions that apply to the public or
generalizations (Sugiyono, 2017). The descriptive statistical analysis described in this study are the
minimum value, maximum value, arithmetic mean, standard deviation and coefficient of variance.
Classical Assumption Tests

The basic assumptions that must be met in using multiple linear regression analysis using time
series data include normality, multicollinearity, heteroscedasticity, and autocorrelation. The
assumption of normality using the Kolmogorov-Smirnov Test, multicollinearity using the Variance
Inflation Factor (VIF) approach, heteroscedasticity using the Scatter Plot, and autocorrelation using
the Durbin Watson approach.

Testing with multiple linear regression analysis is used to test the hypothesis which states the
functional relationship between the independent variable (free) and the dependent variable (bound).
So, multiple linear regression analysis will be carried out if the number of independent variables is
at least two (Sugiyono, 2014). The equation model can be described as follows.
SP = α + β1ROA + β2ROE + β3NPM + β4EPS + e (5)

where: α is constant; βi is regression coefficient of the i-th independent variable; SP is stock
price; ROA is return on assets; ROE is return on equity; NPM is net profit margin; EPS is earning
per share; and e is error term.
RESEARCH RESULTS AND DISCUSSIONS

The results of the descriptive analysis which include the minimum, maximum, arithmetic
mean, standard deviation, and coefficient of variance of all the variables studied are presented in the

following table.
Table 2. Results of Statistical Descriptive Analysis
Standard Coefficient of
Variable n Minimum Maximum Mean
Deviation Variation (%)
ROA 70 0.07 3.13 1.54 0.72 46.75
ROE 70 0.73 18.3 10.19 4.29 42.1
NPM 70 0.81 45.54 19.24 10.05 52.23
EPS 70 1.46 1159 292 296.34 101.49
Harga
70 198 33850 4760.46 6796.35 142.77
Saham
Sources: SPSS Descriptive Analysis Output
The arithmetic mean of all research variables ranged between 1.54 (ROA) and 4,760.46 (stock
price) with a standard deviation between 0.72 (ROA) and 6,796.35 (stock price). Judging from the
value of the coefficient of diversity, the variable that has the highest level of diversity is stock price
(142.77%) and the variable that has the lowest level of diversity is ROE (42.1%).
Classical Assumption Tests

The basic assumptions that must be met in using multiple linear regression analysis using time
series data include normality, multicollinearity, heteroscedasticity, and autocorrelation. The
assumption of normality using the Kolmogorov-Smirnov Test, multicollinearity using the Variance
Inflation Factor (VIF) approach, heteroscedasticity using the Scatter Plot, and autocorrelation using
the Durbin Watson approach.
Normality
The normality test aims to test whether in the regression model, the independent and dependent
variables are normally distributed or not. (Ghozali, 2018). The data normality test uses the SPSS
Kolmogrov Smirnov statistic on the basis of probabilities (asymptotic significance), ie if the
probability x,y > 0.05, then the distribution of the population is normal, if the probability x,y < 0.05,
then the distribution of the population is not normal. The results of the normality test using the SPSS
Kolmogrov Smirnov statistical analysis are as follows:
Tabel 3. Summary of the Normality Test1,2
Test Type Method Significance Conclusion

Multivariate Kolmogorov-Smirnov 0.200 Data normally distributed
Normality
1
Notes: Dependent variable: Stock Price
2
Independent variabes: ROA, ROE,NPM EPS
3
Normality is proven if the significance level is greater than 0.05 (p > 0.05)
Source: SPSS One-Sample Kolmogorov-Smirnov Test Output
After retesting, the results of Asymp are obtained. Sig (2-tailed) of 0.200 which indicates the
value of sig (2-tailed) is greater than 0.05 or 0.200 > 0.05. It can be concluded that the data are
normally distributed and the regression model is feasible to use. To make it clearer in an easy way
whether the data is normally distributed or not, it can be done by looking at the P-Plot curve. If the
residual data is normal, then the line that describes the data will follow the diagonal line. The results
of the normality test of this study by looking at the P-Plot curve are as follows.
Multicollinearity
The multicollinearity test aims to test whether the regression model found a correlation
between the independent variables (Ghozali, 2018). If there is a correlation, it is called a
multicollinearity problem. Commonly used values are tolerance values > 0.1 or equal to and VIF

values < 10 or equal to. If VIF > 10 or if tolerance < 0.1, then there is multicollinearity in the
regression model. The results of the multicollinearity test of this study by looking at the VIF and
tolerance values are as follows.
Table 4. Results of Multicollinearity Test1
Independent Variable Variance Inflation Factor2 Conslusion

Return on Assets 9,663 No multicollinearity
Return on Equity 4,128 No multicollinearity
Net Profit Margin 8,077 No multicollinearity
Earning per Share 2,590 No multicollinearity
1
Note: Dependent variable is stock price
2
Multicollinearity not present if VIF values lie between 1 and 10
Source: SPSS Multicollinearity Test Output
Heteroscedasticity
The heteroscedasticity test aims to determine whether in a regression model there is an
inequality of variance from the residuals of an observation to another observation (Ghozali, 2018).
The way to detect it is to look at the graph plot between the predicted value of the dependent variable,
namely ZPRED as (X) and the residual SRESID as (Y). The analysis on the Scatterplot image which
states that there is no heteroscedasticity in the multiple linear regression model if there is no certain
pattern, such as the existing dots forming a certain regular pattern (wavy, widening then narrowing),
then it indicates that heteroscedasticity has occurred and there is no clear pattern, and the points
spread above and below the number 0 on the Y axis, so there is no heteroscedasticity. The results of
the heteroscedasticity test of this study by looking at the scatterplot image are as follows.
Figure 2. Results Heteroscedasticity Test

(Sumber: SPSS Heteroskedastisitas Test, 2021)
Based on Figure 2 on the residual Scatter Plot graph, it can be seen that there is no clear pattern.
The data in the form of points spread evenly above and below or around zero on the Y axis, so it can
be concluded that the regression model used does not occur heteroscedasticity and the
heteroscedasticity test is met.
Autocorrelation
The autocorrelation test is intended to test a situation where in the regression model there is a
relationship between variables or in other words there is a correlation between the residuals in period
t and residuals in the previous period (t-1). There are 3 autocorrelation criteria (Santoso, 2012),
namely a D-W value below -2 means that there is a positive autocorrelation, a D-W value between -
2 to 2 means that there is no autocorrelation, and a D-W value above 2 means that there is a negative

autocorrelation. The results of the autocorrelation test of this study as seen from the Durbin-Watson
value are as follows.
Table 5. Results Autocorrelation
Adjusted R Std. Error of the Durbin-

Model R R Square
Square Estimate Watson
1 0.895a 0.801 0.789 17.15218 1.485
a. Predictors: (Constant), EPS, ROE, NPM, ROA
b. Dependent Variable: stock price
Source: SPSS Autocorrelation Test, 2021
Based on table 5 above, it is known that the Durbin¬-Watson value is 1.485. Based on the
predetermined criteria, the value is between -2 to +2, it can be concluded that there is no
autocorrelation and it means that the autocorrelation test is fulfilled.
Results of Inferential Statistical Analysis: Multiple Linear Regressin Analysis

In this study, the formulated hypothesis was tested using the multiple linear regression
statistical analysis method. All the necessary requirements, as discussed in the previous section, have
been met. The results of multiple linear regression analysis which include regression coefficients,
both standardized and unstandardized from all independent variables, level of significance, analysis
of variance, and coefficient of determination are presented and discussed in the following sections.
The following table presents the regression coefficients of all the independent variables studied
along with their significance, the value of the coefficient of determination, and the results of the
analysis of variance—F test) between the independent variable and the dependent variable.
Table 6. Regression Coefficient, Coefficient of Determination, F-test and Significance1
Model Significance
B Beta
Constant 17.636 0.073
Return on assets -22.449 -0.190 0.272
Return on equity -14.857 -0.303 0.009
Net profit margin 11.499 0.366 0.023
Earning per share 4.331 0.954 0.000
R2 0.801
Adjudted R2 0.789
F-test 65.512 (p < 0.000)
Note: 1Dependent variable: stock price
Source: SPSS Multiple Linear Regression Analysis Output
Referring to the value of the regression coefficients that are not standardized (unstandardized)
of all the independent variables studied, as shown in the table above, the regression line equation
model is obtained as follows.
SP = 17,636 – 22,449*ROA – 14,857*ROE + 11,499*NPM + 4,331*EPS (6)
where: SP is stock price; ROA is return on assets; ROE is return on equity; NPM is net profit
margin; EPS is earning per share.
The constant (17.636) indicates that if the regression coefficient of all independent variables
is zero (0) then the stock price (HS) is 17.636. The regression coefficients for the four variables
studied are return on assets (ROA: -22.449), return on equity (ROE: -14.857), net profit margin
(NPM; 11.499), and earnings per share (EPS: 4.331). will be experienced by the dependent variable,
namely the stock price (HS) if the four independent variables change by one unit with the assumption

that the values of the other three independent variables are constant.
The obtained regression line equation (6) can be used to predict stock prices based on the values
of all independent variables because the results of the analysis of variance (ANOVA) or the F test
showed significant results (p < 0.000). This means that the four independent variables studied (return
on assets, return on equity, net profit margin, and earnings per share) simultaneously greatly affect
stock prices. The four variables are able to explain the diversity or variability that occurs in stock
prices whose magnitude is the same as the coefficient of determination (R2), in this case the adjusted
coefficient of determination (Adjusted R2) is 78.90% percent (0.789*100 percent).
Judging from the significance value of the independent variables, as shown in the fourth
column of the table above, from the four independent variables studied there are three variables that
partially affect stock prices. These variables are return on equity (p < 0.05), net profit margin (p <
0.05), and earnings per share (p < 0.05). The variable that partially has no effect on the independent
variable is return on assets (p > 0.05). Based on the standardized value (beta) (+0.954) the earning
per share variable has a dominant effect on stock prices.
DISCUSSIONS
The findings in this study are mostly different from the results of previous studies, especially
when viewed from the partial effect of all independent variables (return on assets, return on equity,
net profit margin, and earnings per share) on the dependent variable (stock price). Return on assets
in this study was found to have no effect on stock prices. Meanwhile, the results of Fahmi's research
(2020) which states that return on assets has a significant influence on stock prices. Many factors
cause these differences, some of which are the time of conducting the research and the line of
business of the company being studied.
Another phenomenon occurs in the independent variable return on equity. Return on equity in
this study was found to have a negative and significant effect on stock prices. Meanwhile, the
research results of Meilvinasvita et al. (2020) which states that return on equity has a positive and
significant effect on stock prices. Many factors cause these differences, some of which are the
implementation time, research and the company's line of business under study.
The next finding in this study is that net profit margin has a positive and significant effect on
stock prices. The results of this study are the same as the results of Bostani's research (2020) which
states that net profit margin has an effect on stock prices. Earning per share also has a positive and
significant effect on stock prices. The results of this study are the same as the results of research by
Febrianti and Nurhayati (2019) which states that earnings per share have an influence on stock prices.
In this study, investors assess that return on assets, return on equity, net profit margin, and
earnings per share can explain stock prices in banking sub-sector companies listed on the Indonesia
Stock Exchange in 2016-2020. In addition, other variables not mentioned in this study also have an
influence on stock prices.
CONCLUSION AND IMPLICATION

Simultaneously return on assets, return on equity, net profit margin, and earnings per share
affect stock prices. The diversity of the stock prices of banks listed on the Indonesia Stock Exchange
can be explained by the four variables and the stock prices of the banks can be predicted based on
the values of these four variables. Partially, there are three variables that affect stock prices, namely
return on equity, net profit margin, and earnings per share. Return on equity has an effect on lowering
stock prices, while net profit margin and earnings per share have an effect on increasing stock prices.
Banks listed on the Indonesia Stock Exchange that have high return on equity tend to have low stock
prices. On the other hand, banks with high net profit margins and earnings per share tend to have
high share prices. The variable that has a dominant influence on stock prices is earnings per share.
The practical implication of the results of this study is that stock prices occur because of
demand and supply from investors when assessing companies from financial statements. Investors
can judge from several financial ratios, such as return on assets, return on equity, net profit margin,
and earnings per share. Return on equity has a negative effect on stock prices indicating the higher
the value of return on equity, the lower the value of the stock price. stock price. The company is
expected to be better able to manage sales to earn profits to attract investors and the company is able
to generate higher profits so that the dividends distributed to investors are higher and attract investors'

interest.
REFERENCES
Bodie, Z., Kane, A., & Marcus, A. J. (2014). Manajemen Portofolio dan Investasi (Investment).
Jakarta: Salemba Empat.
Darmadji, & Fakhruddin, H. M. (2012). Pasar Modal di Indonesia. Jakarta: Salemba Empat.
Diaz, R., & Jufrizen. (2014). Pengaruh Return on Assets (ROA) dan Return on Equity (ROE)
terhadap Earning per Share (EPS) pada Perusahaan Asuransi yang Terdaftar di Bursa Efek
Indonesia. Jurnal Manajemen dan Bisnis, 14, 129-133.
Ekonomis Bisnis. (2021). “Kabar Baik! Realisasi Investasi Indonesia di 2020 Tembus 100 Persen
dari Target” https://ekonomi.bisnis.com/read/20210125/9/1347298/kabar-baik-realisasi-
investasi-indonesia-di-2020-tembus-100-persen-dari-target (diakses pada tanggal 03 Juni
2021)
Fahmi, I. (2014). Manajemen Keuangan Perusahaan dan Pasar Modal. Jakarta: Mitra Wacana Media.
Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 25. Semarang: Badan
Penerbit Universitas Diponegoro.
Hanafi, M. M., & Halim, A. (2012). Analisis Laporan Keuangan. Semarang: Badan Penerbit
Universitas Diponegoro.
Horne, J. C., & Wachowicz, J. M. (2012). Prinsip-Prinsip Manajemen Keuangan. Jakarta: Salemba
Empat.
IAI. (2015). Standar Akuntansi Keuangan (SAK) Per Efektif 1 Januari 2015. Jakarta: Dewan Standar
Akuntansi Keuangan Ikatan Akuntan Indonesia.
Kasmir. (2012). Analisis Laporan Keuangan. Jakarta: PT. Raja Grafindo.
______. (2014). Analisis Laporan Keuangan. Jakarta: PT. Raja Grafindo.
Kontan.co.id. (2020). “Peran Perbankan Penting Bagi Pertumbuhan Ekonomi”
https://keuangan.kontan.co.id/news/peran-perbankan-penting-bagi-pertumbuhan-ekonomi
(diakses pada tanggal 28 Maret 2021)
Liputan 6. (2018). “Kata Sri Mulyani soal Peranan Perbankan dalam Mendorong Ekonomi RI”
https://www.liputan6.com/bisnis/read/3526017/kata-sri-mulyani-soal-peranan-perbankan-
dalam-mendorong-ekonomi-ri (diakses pada tanggal 28 Maret 2021)
PT Bursa Efek Indonesia. (t.thn). www.idx.com (diakses pada tanggal 07 Juni 2021)

Financial Management Behavior of Millennial Workers in Bekasi City

During the COVID-19 Pandemic
1
Cindy Audria, 2Dewi Kusuma Tanjung Sari, 3Gita Tri Rahayu, 4Desti Dirnaeni
1,2,3
Psychology Faculty, 4Economics Faculty of Universitas Gunadarma
1
yunitacindyaudria@gmail.com, 2tanjungss.dk@gmail.com, 3gitatrirahayutri@gmail.com,
4
destidirnaeni@gmail.com
Abstract
The Covid-19 pandemic has encouraged millennial generation workers to be more intensive in
utilizing internet technology. This is reinforced by government policies that require workers in most
sectors to work from home. This condition fosters a new habit of millennial workers in using their
financial resources (i.e., shopping) both to fulfill their needs and wants, namely online shopping. The
ease of shopping online stimulates them to make purchases of goods that are more likely to fulfill
wants rather than needs. In relation to this phenomenon, this study was conducted with the aim of
descriptively analyzing the financial management behavior of millennial workers. A total of 100
respondents consisting of 37 men and 63 women with an age range between 21 and 40 years who
were selected using the purposive sampling method were involved in this study. Data obtained from
respondents using questionnaires that have been tested for validity and reliability. The results showed
that the financial management behavior of millennial workers during the covid-19 pandemic was in
the good category in the sense that the use of financial resources by millennial workers was aimed at
meeting needs, such as savings and investments, rather than fulfilling desires or wants.
Keywords : financial management behavior, millennials workers, pandemic covid-19

JEL Codes : G40, M54
INTRODUCTION
Since Covid-19 entered Indonesia, the government has implemented a work from home system
known as Work from Home to suppress community mobility and reduce the spread of the virus. This
causes workers to have to use technology to support their work. The existence of this technology
meets the needs of workers online, so there are many attractive offers offered by online shopping
applications through their smartphones that make workers buy certain goods without paying attention
to the need factor (Faramitha, Wahyudi & Desmintari, 2021).
According to the Badan Pusat Statistik (BPS), as many as 72.56% of the population of Bekasi
City are in the productive age of the total population of 3,084,000 people, thus making Patriot City
experience a demographic bonus. Where millennials are most often discussed in this era. Noble and
Schewe (2003) categorize demographic groups into 4 generations; namely the baby boomer
generation, generation X, millennial generation, and generation Z. Based on data from BPS, 35% of
the productive age population is the millennial generation of 874,282 people, and it is predicted that
in 2020 to 2030 the percentage will increase to 70% of the total population of Indonesia in their
productive age (Ali & Purwandi, 2017). The millennial generation is the generation born around
1980 to 2000 (Hidayatullah, Waris, Devianti, Sari, Wibow, & Made, 2018). So, it can be said that
this generation is someone who will be 21 to 40 years old as of 2021.
The millennial generation is used to up-to-date goods, is more concerned with desires than
fulfilling their main life needs, and often spends time in cafes or even buying clothes designed by
designers (Ningtyas, 2019). This is supported by the statement of DJKN (2021) where most of the
millennial generation tends to have a wasteful lifestyle, find it difficult to save, and do not care about
investment needs in the future. The millennial generation is also very active in using the internet
which also ultimately makes this generation the most consumptive generation. This consumptive
behavior will greatly affect their financial management behavior. Financial management behavior in
a person can be known from how they consume, what they consume.
404 Audria, Sari, Rahayu, Dirnaeni

Based on the description above, the emergence of financial management behavior is due to a
person's desire to fulfill his life needs, which is based on the level of income earned (Kholilah &
Iramani, 2013). This study aims to look at the description of financial management behavior in
millennial generation workers during the Covid-19 pandemic.
LITERATURE REVIEW
Financial Management Behavior
Financial Management Behavior is defined as a person's ability to manage his finances on a
daily basis, including planning, budgeting, checking, managing, controlling, searching, and storing
(Kholilah & Iramani, 2013). Dew and Xiao (2011) explain that four indicators that can explain
financial management behavior in a person, including; (1) consumption, namely expenditure to meet
needs; (2) cash flow management, namely managing finances owned (3) saving & investing, namely
setting aside income not to be consumed and (4) credit management, namely managing credit or
debit.
Research conducted by Sabri, Reza, and Wijekoon (2020) shows that female workers have
good financial arrangements, which is indicated by their ability to save and invest to manage their
finances wisely so that they have high financial arrangements. More than 80% of respondents have
good financial management behaviors, such as recording expenses, making monthly investments,
paying bills on time, and saving.
RESEARCH METHOD
Research Subject
The subjects in this study were millennial generation workers, totaling 100 people (37 men
and 63 women) aged 21-40 years and had worked for at least 6 months.
Measurement
This research instrument uses a Likert scale consisting of 5 responses ranging from Never to
Always. The Financial Management Behavioral Scale (FMBS) consists of 13 items adapted and
modified from Dew & Xiao (2011) with each r-table value greater than r-count, amounting to 0,1966.
Based on the reliability score in this study, the result was 0.82 and that was greater than Cronbach’s
alpha 0,60. The population in this study is the people of the city of Bekasi who are still productive,
amounting to 874,282 people, this figure is obtained from BPS data of the city of Bekasi, and the
sample in this study is aged 21-40 years. Based on this, to determine the sample in this study using
the Slovin method with an error of 10%, the results obtained were 100 respondents. This study uses
non-probability sampling data collection techniques in the form of purposive sampling, namely the
selected sample that includes certain characteristics or qualities. Characteristics of respondents in
this study include gender, age, last education, income and occupation. Data collection was carried
out through questionnaires distributed online via google form.
Results And Discussion

Description of Indicator Financial Behavior Scale
Savings And Investment Subscale
Table.1 Indicator of Savings and Investment Subscale
Savings and Investment (ME: 17.67)
Item ME
SI 8 3.36
SI 9 3.94
SI 10 3.92
SI 11 3.63
SI 12 2.82
Audria, Sari, Rahayu, Dirnaeni 405

Based on the results of data analysis, the savings and investment subscale has an empirical
score of 17.67 which is included in the high category. In this study, it was found that millennial
workers tend to save and invest their money by saving and setting aside the salary they get compared
to creating an emergency fund, saving for long-term goals, saving for retirement, or investing their
money in digital investment activities.
Insurance Subscale
Table.2 Indicator of Insurance Subscale
Insurance (ME: 6.07)
Item ME
I 13 2.16
I 14 1.94
I 15 1.97
Based on the results of data analysis, the Cash management subscale has an empirical mean
score of 6.07 which is included in the moderate category which tends to be low. It can be seen in this
study that it was found that millennial workers tend to use their money to buy health insurance
policies compared to property insurance policies and life insurance policies.
Cash Management Subscale

Table.3 Indicator Cash Management Subscale
cash management (ME: 6.75)
Item ME
CM 3 3.11
CM 4 3.64
Based on the calculation of the empirical mean, the Credit management subscale has a score
of 6.75 which is included in the high category. In this study, it was found that millennial workers
tend to manage their finances by using their money according to a budget compared to making
financial records.
Credit Management Subscale
Table.4 Indicator Credit Management Subscale
Credit Management (ME: 5.91)
Item ME
CeM 5 2.44
CeM 6 1.66
CeM 7 1.81

Based on the results of the empirical mean calculation, the Insurance subscale has a score of
5.91 which is included in the moderate category, which tends to be low. In this study, it was found
that millennial workers tend to manage their credit by paying off credit bills rather than using credit
to the maximum limit and choosing the minimum payment to make a refund.
Description of Respondent Data

Respondent data was obtained from questionnaires distributed to 100 workers through a
google form, with a table elaboration as follows:
Table. 5 Respondent Data
Percentage Number of
Respondent Data
Rate Respondents
Have you ever studied/know anything related to financial

management?
Yes 62% 62
No 38% 38
Total 100% 100
Gender
Man 37% 37
Woman 63% 63
Total 100% 100
Age
21-25 Years 47% 47
26-30 Years 22% 22
30-35 Years 21% 21
36-40 Years 10% 10
Total 100% 100
Last education
Senior High School 26% 26
Diploma 30% 30
Bachelor 39% 39
Master 5% 5
Total 100% 100

Income
< 2,000,000 6% 6
2,000,000 - 5,000,000 48% 48
5,500,000 - 10,000,000 36% 36
> 10,000,000 10% 10
Total 100% 100
Type of work
Civil servant 3% 3
Private sector employee 51% 51
Businessman 4% 4
TNI/POLRI 3% 3
Other 39% 39
Total 100% 100

Source: Google form (2021)
Based on the table, millennial generation workers who fill out Google form a lot them are
female by 63%; aged 21 to 25 years by 47%; 39% have undergraduate education; income 2,000,000
- 5,000,000 by 48%; working as private employees by 51%; have worked more than 3 years by 53%;
work in Jakarta locations by 61%.
Table. 6 Results of Respondent Data
Number of
Respondent Data ME
Respondents
Have you ever studied/know anything related to financial

management?
Yes 46.05 62
No 43.00 38
Total 44.89 Amount
Gender
Man 47.97 37
Woman 43.08 63
Total 44.89 100

Age
21-25 Years 46.91 47
26-30 Years 45.91 22
30-35 Years 43.67 21
36-40 Years 35,70 10
Total 44.89 100
Last education
Senior High School 44.77 26
Diploma 44.17 30
Bachelor 44.18 39
Master 55,40 5
Total 44.89 100
Income
< 2,000,000 6% 6
2,000,000 - 5,000,000 48% 48
5,500,000 - 10,000,000 36% 36
> 10,000,000 10% 10
Total 100% 100
Type of work
Civil servant 47.67 3
Private sector employee 43.88 51
Businessman 54.25 4
TNI/POLRI 43.33 3
Other 45.15 39
Total 44.89 100
Based on the results of the empirical mean calculation, financial management behavior in
millennial generation workers has an empirical mean value of 36.40 which is included in the medium
category which tends to be high. This shows that millennial generation workers have good financial
management behavior. Supported by research results from Sabri, Reza, and Wijekoon (2020) which
show that more than 80% of respondents have good financial management behavior, such as
recording expenses, making monthly investments, paying bills on time, and saving.
Descriptive analysis based on studying or knowing about financial management in millennial
generation workers has an empirical mean value of 46.05 which is included in the high category.
This shows that the millennial generation workers who have studied or know financial management

have better financial management behavior than those who have not studied or know financial
management.
Research conducted by Sabri, Reza, and Wijekoon (2020) also shows that female workers
have good financial arrangements, which is indicated by their ability to manage finances such as
saving and investing their money wisely so that they have good financial arrangements. However, in
this study, the results of the calculation of the empirical mean financial management behavior on
male millennial generation workers have the highest empirical mean value of 47.97 and are included
in the high category. These results indicate that the financial management behavior of male millennial
generation workers has higher financial management behavior compared to female millennial
generation workers.
Rizkiawati and Asandimitra (2018) state that the older one gets, the better one's financial
management behavior is. This is not in line with the results of our study which showed that
respondents in the age group of 21-25 years had the highest empirical mean of 46.91 and were in the
higher category than other ages.
The results of the research by Widiyati, Setianegara, Winarni, and Sunindyo (2020) show that
the millennial generation prioritizes passion for getting a job and gets bored easily with something
monotonous and less challenging. Then the descriptive analysis based on the work in this study
obtained the results of the calculation of the empirical mean financial management behavior for
individuals who work as entrepreneurs, which has the highest empirical mean value of 54.25 which
is included in the high category compared to other occupations.
Based on the descriptive analysis of the latest education, the results of the calculation of the
empirical mean of financial management behavior for individuals who took the last Masters’s
education have the highest empirical mean value of 55.40 and are included in the high category. This
shows that millennial generation workers who have taken master's education have good financial
management behavior. Paramita, Wahyudi, adn Desmitari (2021) state that the higher the individual's
education, the better his financial management behavior. Susanti, Ismunawan, Pardi, and Ardyan
(2017) also stated the same thing.
The results of the subsequent descriptive analysis based on income, the results of the
calculation of the empirical mean of financial management behavior for individuals with an income
of more than Rp. 10,000,000 have an empirical mean value of 50.90 and fall into the high category.
The results of this calculation indicate that the greater the income of the millennial generation, the
better the financial management behavior. This is in line with the opinion of Yusnia and Jubaedah
(2017) which states that the greater a person's income, the higher the responsibility related to their
finances.

Conclusion
The purpose of this study is to examine descriptively the financial management behavior of
millennial generation workers during the covid 19 pandemic. The results of this study indicate that
the financial management behavior of millennial workers is in a good category. It was indicated by
financial management behavioral factors such as savings and investment and cash management and
also the insurance management and credit management factors which were in a good category.
Suggestion
Based on the limitations of this study, namely that it does not describe financial management
behavior that is associated with previous knowledge of financial management, it is recommended for
further researchers to complement the limitations of this study.
REFERENCES
Faramitha, A., Wahyudi., & Desmintari. (2021). Analisis perilaku manajemen keuangan pada
generasi millennial. Jurnal Inovasi, 17(1), 19-29.
Badan Pusat Statistik. (2021). Jumlah dan persentase penduduk bekerja dan pengangguran 2020-
2021. Retried From https://bekasikota.bps.go.id/statictable/2016/12/20/46/jumlah-penduduk-
menurut-kelompok-umur-dan-jenis-kelamin-.html

Noble, S. M., & Schewe, C. D. (2003). Cohort segmentation: An exploration of its validity. Journal
of Business Research, 56(12), 979–987.
Ali, H., & Purwandi, L. (2017). The Urban Middle-Class Millennials Indonesia: Financial and
Online Behaviour. Jakarta: Alvara Strategi Indonesia.
Hidayatullah, S., Waris, A., Devianti, R. C., Sari, S, R., Wibow, I, A., & Made, P. (2018). Perilaku
generasi milenial dalam menggunakan aplikasi go-food. Jurnal Manajemen &
Kewirausahaan, 6(2), 240-249.
Ningtyas, M. N. (2019). Literasi keuangan pada generasi milenial. Jurnal Ilmiah Bisnis dan Ekonomi
Asia, 13(1), 20-27.
Direktorat Jenderal Kekayaan Negara. (2021). Mengatur keuangan untuk generasi milenial. Diakses
dari https://www.djkn.kemenkeu.go.id/kpknl-banjarmasin/baca-artikel/14026/Mengatur-
Keuangan-Untuk-Generasi-Milenial.html.
Ramadhan, A. Y., & Asandimitra, N. (2019). Determinants of financial management behavior of
millennial generation in surabaya. Jurnal Minds: Manajemen Ide dan Inspirasi, 6(2), 129-144.
Dew, J., & Xiao, J.J. (2011). The financial management behavior scale: development and validation.
Journal of Financial Counseling and Planning, 22(1), 43-59.
Kholilah, N. Al, & Iramani, R. (2013). Studi Financial Management Behavior Pada Masyarakat
Surabaya. Journal of Business and Banking, 3(1), 69–80.
Sabri, M.F., Reza, T.S., & Wijekoon. (2020). Financial management, saving behavior, Investment
behavior and Financial well being of working women in the public sector. Majalah Ilmiah
Bijak, 17(2), 135-153.
Rizkiawati, N. L., & Asandimitra, N. (2018). Pengaruh demografi, financial knowledge, financial
attitude, locus of control dan financial self-efficacy terhadap financial management behavior
masyarakat surabaya. Jurnal Ilmu Manajemen, 6(3), 93-107.
Susanti, A., Ismunawan., Pardi., & Ardyan, E. (2017). Tingkat pendidikan, literasi keuangan, dan
perencanaan keuangan terhadap perilaku keuangan UMKM di Surakarta. Jurnal Telaah
Bisnis, 18(1), 45-56.
Widiyati, S., Setianegara, R. G., Winarni., & Sunindyo, A. (2020). Kajian financial management
behavior generasi millennial di kota semarang. Prosiding Seminar Hasil Penelitian dan
Pengabdian Masyarakat Polines, 3(1), 279-290.
Yusnia., & Jubaedah. (2017). Pengaruh pendapatan, lokus pengendalian dan pengetahuan keuangan
terhadap perilaku keuangan pelaku umkm kecamatan cinere. Ekonomi dan Bisnis, 4(2), 173-
196.

The Effect Of Financial Performance On Stock Prices In Go Public

Companies Listed On The Indonesia Stock Exchange (Study Of The
Covid-19 Pandemic)
1
Annisa Zhafirah, 2Cicilia Erly Istia, 3Eliya Isfaatun, 4Dharma Tintri Ediraras
1,2,4
Economics Faculty of Universitas Gunadarma, Depok Jawa Barat
3
STIE Nusa Megarkencana, Yogyakarta
1
azhafirah34@gmail.com, 2cicilia_ei@staff.gunadarma.ac.id, 3isfaatuneliya@gmail.com,
4
dharmate@staff.gunadarma.ac.id
Abstract
The company’s performance and stock prices are interrelated because if the stock price drops, it will
have an impact on the company’s performance which is considered bad by investors, resulting in a
decrease in stock purchases. Stock prices have an important value and become one of the indicators
of success for the company. The purpose of this study was to examine the effect of company
performance as measured by the Current Ratio, Debt to Assets Ratio, Return on Equity, and Price
Earning Ratio on Stock Prices in go-public companies listed on the Indonesia stock exchange during
the COVID-19 pandemic. The data used is secondary data in the form of annual financial reports for
the period 2019 to 2020. Using the purposive sampling technique, the sample is 107. The analysis
technique uses multiple linear regression. The results showed that partially the independent variables
Debt to Assets Ratio, Return On Equity, and Price Earning Ratio had a significant effect on stock
prices, while the Current Ratio had no effect on stock prices. Simultaneously the variables Current
Ratio, Debt to Assets Ratio, Return On Equity, and Price Earning Ratio have a significant effect on
stock prices.
Keywords : Stock Price, Campany Performance, COVID-19 Pandemic

JEL Codes : E44, F65, G14
INTRODUCTION
All parts of the world are surprised by the existence of a new viral event called Coronavirus
Disease 2019 or Covid-19. The COVID-19 pandemic is an infectious disease caused by a newly
discovered type of coronavirus. The virus originated in Wuhan, China, China in December at the end
of 2019. Indonesia announced the first influx of cases of the COVID-19 outbreak on March 2, 2020.
In this case, the Indonesian government encourages efforts and takes policies in handling the
COVID-19 virus. One of the government's efforts to suppress transmission or prevent the spread of
the COVID-19 virus is by implementing large- scale social restrictions (PSBB) to do physical
distancing, use masks, shut down schools, and work from home. Several sectors are considered to be
able to survive the conditions of the COVID-19 pandemic, namely pharmaceuticals and health tools,
where the sector provides vitamin needs, supplements to boost immunity, and medical devices that
are considered to support primary needs in the COVID-19 treatment period.
As for the growing manufacturing sector, according to HIS Markit research showed the
Purchasing Managers' Index (PMI) of Indonesian Manufacturing in January 2021 at 52,2. This is an
increase from December 2020 which recorded 51,3. According to the Head of Research, the issuers
of the manufacturing sector are trying to be able to stand back up and restore the condition of the
company with a high condition of infection. The issuers of the manufacturing sector must adjust the
supply produced to be at least stable for the future of manufacturing sector stocks. They only need to
wait for momentum and improvement in people's purchasing power. One of the health sectors
experiencing a rapid increase is due to people's changing lifestyles and being encouraged to be more
concerned about health so that the consumption of supplements, nutritious foods, and medicines has
increased. However, an investor needs to be careful about the stock price of the pharmaceutical sector
to avoid buying shares where the stock price has been overpriced (IDX, 2021).
According to Finance Minister Sri Mulyani, a number of business industries are considered
412 Zhafirah, Istia, Isfaatun, Ediraras

loss-making, but there are several industries that have the potential to experience positive growth in
the midst of the COVID-19 pandemic, namely pharmaceutical chemistry and medical devices, food
and beverage, and telecommunication services (Kontan, 2020). The capital market is a forum for
funding facilities for companies and other institutions, such as the government, that need funds from
the community for business development, the addition of working capital, and as a means for people
who want to invest. Companies whose shares are outstanding in the capital market are companies
that go public.
Investments that enter the capital market as additional capital for industry players to encourage
the growth of the company's performance. But stock prices are very volatile and variable according
to market conditions, so investors need to analyze the company's performance to determine which
company is the right time to invest in. The rise and fall of stock prices in the capital market has
become an interesting phenomenon to talk about in relation to the issue of the rise and fall of the value
of the company itself (Tambunan, et al., 2020). The stock price has important value and becomes one
of the indicators of success for a company, because when the stock price of a company is high, then
the company has the opportunity to get additional investment from investors because of the increase
in its stock price. Investor confidence is beneficial for the company because the more investors who
believe in it, the desire to invest in it will increase. The more demand, the higher the stock price of a
company.
The company's performance and the stock price show a positive relationship because the better
the financial performance of a company, the higher the profit will be obtained, so it will get profits
that can be enjoyed by shareholders. The company's success in achieving its goals is an achievement
for management. Therefore, the company's performance assessment is used as a benchmark for
success in management decision making (Sumarni, 2021).
A side from the impact of COVID-19 on the Indonesian economy, the capital market is affected
by the COVID-19 pandemic in which the stock price listed on the Indonesia Stock Exchange and the
company's performance are affected by the pandemic. The share price of every company affected by
the COVID-19 pandemic is experiencing fluctuations in the rise and fall of the stock price. The stock
price itself is one of the indicators for investors to assess the success of the company's management
in the future.
Analysis of a company's performance using financial ratios is able to provide the information
or answers that an investor wants before making investment decisions. A financial ratio is one of the
ratios used by investors to analyze the number of stocks to buy. The return on equity ratio provides
a measure of a company's level of effectiveness. A return on equity is a ratio to measure net income
after tax with its own capital. This ratio indicates the efficiency of using capital itself. Companies that
have a high ROE reflect the company's acceptance of good investment opportunities and cost-
effective management with low debt levels.
A current ratio is a ratio used to determine the company's ability to pay short- term debt. This
ratio is used to determine a company's ability to pay short-term debt. The higher the current ratio, the
greater the company's capacity to pay its short-term debt. This has an impact on the stock price, so
that investors' interest in investing in their companies increases.
The solvency ratio used in this study is the Debt to Assets Ratio. Debt to Assets Ratio used to
measure the ratio between total debt and total assets. A market value ratio is a ratio that describes the
conditions that occur in the market. This ratio shows that the stock price in the market with the income
of shares obtained on operational activities is compared. The stock price that is not in accordance
with the conditions in the market is taken into consideration by investors.
It can be concluded that at the beginning of the COVID-19 pandemic, several sectors of the
company were affected by this pandemic, not only in the scope of the economy but also in the capital
market, especially stocks, which were affected, although over time there was an increase in changes
in the stock price. Based on the description above, the researcher is interested in making a paper with
the title "The Effect of the Company's Performance on Stock Prices on Companies Going Public
Listed on the Indonesia Stock Exchange: Study of the COVID-19 Pandemic Period During the Period
2019–2020".
LITERATUR REVIEW
Signalling Theory
Zhafirah, Istia, Isfaatun, Ediraras 413

According to Brigham and Haustan, the signal is an action taken by the company to provide
guidance to investors about how the company's management views the company's prospects. The
disclosure of the information signals to investors that the company can have good or bad prospects
in the future (Ningrum, 2020). If the information has a good signal, then investors are interested in
trading stocks so that there will be changes in stock prices. Conversely, if the information shows a bad
signal, it can affect stock trading and stock prices.
Capital Market
The capital market is a market for various long-term financial instruments that can be traded
in the form of bonds, stocks, mutual funds, derivative instruments, or other instruments. A capital
market is a means to collect funds from the owners of excess capital (investors) or funds from the
public who want to invest their funds in various financial intrusions in the hopes of obtaining the
reward of funds or returns that will be obtained.
Stock Price
Shares are letters of ownership in the name of the shares he bought. Shares can be traded to
other parties. The advantages of stocks are capital gains and dividends. The stock price is an indicator
of the overall strength of the company, because if the stock price of a company continues to increase,
it shows the company and management have done well. The stock price is a reflection of the good or
bad performance of the company. If the company's performance is good and it has made good
achievements, it will certainly attract investors to invest in the company. The high-low stock price is
one of the indicators of the success or performance of a company (Astawinetu and Handini, 2020).
The stock price used usually uses the closing price that indicates the market price at the end of the
trade.
Company Performance
The company's performance is a measurement of the company's achievements as a result of
the management decision-making process in running the company's operations. If the company's
performance has improved, it can be seen from the magnitude of the company's activities in order to
generate the greatest profit. The company's success in achieving goals is an achievement for the
company's management, therefore the company's performance assessment is used as a benchmark for
success in management decision making (Sumarni, 2021).
Profitability
Understanding profitability according is a ratio to assess the company's ability to make a profit.
Return on Equity demonstrates the company's ability to generate net income on its own capital. So
The Return on Equity is important for shareholders and prospective investors because the higher this
ratio, the more efficient the use of its own capital is carried out by the company's management. If the
profit is generated more and more, then investors get a greater profit on the investments made
(Pratama, Azizah, & Nurlaily (2019). Based on the opinion that has been developed, it can be
concluded that the value of a high Return On Equity reflects the acceptance obtained by the company,
which has utilized capital from investors well to obtain a larger profit.
Liquidity
According to Anwar (2019), the liquidity ratio is a ratio that shows the company's ability to meet
its short-term obligations. That is, if the company is billed, it will be able to meet the debt, especially
debt that has matured. In this study, the ratio used is the Current Ratio where, according to
Rahmadewi & Abundanti (2018), a low current ratio will cause a decrease in the market price of the
stock price in question. Conversely, if the current ratio is too high, it is also not necessarily good
because, under certain conditions, many companies are unemployed funds that can eventually reduce
the company's profits.
Solvency Ratio
Solvency ratio or leverage ratio, is a ratio used to measure the extent to which a company's
assets are financed with debt, which means how much debt burden the company has incurred

compared to its assets (Cashmere, 2019). According to Anwar (2019), the solvency ratio is a ratio
that indicates the use of debt and the company's ability to pay debts. Debt to Asset Ratio is a
comparison between debt and company assets. So the large number of companies that have this ratio
is more at risk because of their growing liabilities, and conversely, the smaller the number of
companies that have this ratio shows that the company has a low ratio (Anwar, 2019). The use of high
debt by the company shows that the company needs additional funds to develop its business to get
more profits.
Market Value
This ratio shows how the market responds to the company. According to Saputra (2020), the
market ratio is a ratio that provides information on how much investors or shareholders appreciate
their company, such that investors want to buy the company's shares at a higher price than the book
value of the stock. A Price Earning Ratio (PER) is a comparison of the market price per share with
earnings per share. This figure shows the cost or absence of stock prices and investor confidence in a
stock. The higher the Price Earning Ratio, the more expensive the stock price and investor confidence
in the stock is higher.
RESEARCH METHODS
Research Object
The object of research in this study is the company's performance and stock price. The
company's performance is projected by Return on Equity, Current Ratio, Debt to Asset Ratio, and
Price Earning Ratio. The research unit is a go-public entity or company listed on the Indonesia Stock
Exchange, and the analysis unit in this study is their respective annual financial statements during the
COVID-19 Pandemic, starting from the period 2019 to 2020.
Population and Research Samples

The population used in this study is all entities or companies that have gone public and are
listed on the Indonesia Stock Exchange during the COVID-19 pandemic, which is from 2019 to 2020.
In this study, there were 716 issuers of companies going public that registered with the IDX in 2019
to 2020. Sampling techniques in this study were conducted using purposive sampling techniques.

The type of data used in this study is secondary data. Secondary data is a source of research data
obtained indirectly. The data source in this study was obtained from the annual report of go-public
companies listed on the Indonesia Stock Exchange (IDX), and this research was conducted during
the COVID-19 pandemic period from 2019 to 2020. The annual report is obtained from the Indonesia
Stock Exchange (IDX) website using the www.idx.co.id website address, as well as from the pages
of each company.
Analysis Techniques
The analytical techniques used in this study used SPSS. The data analysis stages used in this
study are descriptive statistics, the classical assumption test, multiple linear regression analysis, and
the hypothesis test using Test t and Test F. The tools used to use multiple linear regression models
are with the help of the SPSS (Statistical Product and Service Solution) Version 26 program.
The hypotheses tested in this study are:
H1: Current Ratio has an effect on Stock Prices
H2: Debt to Assets Ratio has an effect on Stock Prices.
H3: Return on Equity has an effect on Stock Prices
H4: Price Earning Ratio has an effect on Stock Price
H5: Current Ratio, Debt to Asset Ratio, Return On Equity, and Price Earning Ratio has an effect on
Stock Prices.

Descriptive Statistics
The current ratio variable has a drinking value of -0.85 and a maximum value of 3.19, with an

average value of 0.2485 and a standard deviation obtained by the current ratio variable of 0.37159.
The Debt to Asset Ratio (DAR) variable indicates that the lowest value held is -1.15 and the
maximum value is 2.71. The mean is -0.4053, with a standard deviation of 0.33216.
The Return on Equity (ROE) variable indicates that the lowest value held is-2.00 while the
maximum value obtained is 0.16, with an average value of return on equity of -1.0038 with a standard
deviation of 0.45115. The Price Earning Ratio variable shows a minimum value of -0.12 and a
maximum value of 4.14, with an average value of a Price Earning Ratio of 1.3537 with a standard
deviation of 0.60218. The variable stock price shows a minimum value of 1,70 while the maximum
value is 4.72 with an average value of the share price of 2.9825 and a standard deviation of 0.58051.
Classic Assumption Test

Normality Test
Table 1 One-Sample Kolmogorov-Smirnov Test
Unstandardizerd Residual
N 214
Normal Parametersa,b Mean .0000000
Std. Deviation .51468576
Most Extreme Absolute .036
Differences Positive .036
Negative -.030
Test Statistic .036
Asymp. Sig.(2-tailed) .200c,d
a. Test distribution is normal
b. Calculated form data
c. Lilliefors Significance Correction
d. This is a lower bound of the true significance
Source: SPSS version 26 (2021)
Based on the results of the normality test using the Kolmogorov Smirnov Test (KS) presented
in the table above, we obtained the Asymp value. sig. (2-tailed) of 0,200. which is greater than 0,05
(0,200 > 0,05). Thus, it can be concluded that the data in this study is normal distribution.
Multicollinerity Test
Table 2 Multicollinerity Test
Coefficientsa
Collinearity Statistics
Model Tolerance VIF
1 (Constant)
Current Ratio .775 1.290
DAR .781 1.280
ROE .971 1.030
PER .963 1.039
a. Dependent Variable : Stock Prices
Based on the results of the multicollinerity test shown in the table above it is known that the
value of tolerance and inflation factor (VIF) in the regression model, it is known that the value of
Tolerance Current Ratio is 0.775, DAR is 0.781, ROE is 0.971, and PER is 0.963. This result indicates
that the tolerance value is greater than 0.10. Then the VIF value for the current ratio is 1,290, the
DAR is 1,280, roe is 1,030, and the PER is 1,039, where the VIF value is smaller than 10. It can be
concluded that the variables in the study do not occur multicollinearity problems.

Heteroskedasity Test
Figure 1. Results Heteroskedasity Test

From the results of the heteroskedasity test shown in the figure above through the scatterplot
diagram it can be known that there is no clear pattern and the point spread above and below the
number 0 on the Y axis.
Runs Test
Table 3 Run Test
Unstandardized Residual
Test Valuea .01923
Cases < Test Value 107
Cases >= Test Value 107
Total Cases 214
Number of Runs 109
Z .137
Asymp. Sig. (2-tailed) .891
a. Median
From the results of the autocorrelation test using the Run Test, it can be known that the
magnitude of the Run Test value is 0.891. Where this indicates that the run test value is greater than
0.05 (0.891 > 0.05), it can be concluded in this study that there is no autocorrelation test.

Based on the results of classical assumption tests that have been done before, it can be
concluded that the data used in the study has been qualified to use multiple linear regression models.
Multiple linear regression analysis is a test to find out how much influence the current ratio, debt to
asset ratio, return on equity, and price earnings ratio have on stock prices. Here is a summary of the
test results:

Table 4 Multiple Linear Regression
Coefficientsa
Standardized
Model Coefficients T Sig.
B Std. Error Beta
1 (Constant) 3.185 .122 26.033 .000
Current Ratio .086 .109 .055 .794 .428
DAR .261 .121 .149 2.154 .032
ROE .501 .080 .389 6.251 .000
PER .284 .060 .294 4.708 .000
a. Dependent Variable: Stock Prices
From the results of the test above can be described as follows:
The Effect of The Current Ratio on Stock Prices

Based on the results of statistical tests showed that the Current Ratio (CR) variable had no
significant effect on the stock price. This can be interpreted that the Current Ratio (CR) variable
cannot be used as a consideration in determining the small share price of the company going public
during the Covid-19 pandemic listed on the IDX. If the company has a good current ratio value it can
be explained that the company has a guarantee of current assets to meet its obligations (Pratama,
Azizah, & Nurlaily, 2019).
The results of this study are in accordance with Fitriani & Hermanto (2020) that the high
current ratio value does not necessarily affect investor interest in investing, because the company
cannot manage current assets properly, so many current assets are unemployed that cannot be
optimized by the company which results in decreased investor interest to invest. With the decline in
investor interest it will affect the decline in stock prices. It can be said that in this case it means
investors do not see the Current Ratio as the basis of decision making to buy shares.
The Effect of Debt to Asset Ratio on Stock Prices

Based on the results of statistical tests, the hypothesis that a partially variable debt-to-asset
ratio has a significant effect on the stock price. This result is in line with research (Suharti & Tannia,
2020) and (Wahyuni & Budiarti, 2020) which states that, explaining that the higher the DAR of a
company, the lower the stock price of that company, because the greater the cost of debt can reduce
the company's profits. Decreased company profits will cause investor demand for stock prices to
decrease, which in turn will cause the stock price to decrease.
The value of DAR will affect investor interest so that it will affect the declining stock price
because the greater the value of debt to asset ratio shows the greater the cost of debt to be paid. But
according to Widjiarti & Anggraeni (2018) the use of debt that is too high will make investors do not
want to engage in the risk of debt burden suffered by the company.
The Effect of Return on Equity on Stock Prices

Based on the results of the hypothesis test, the partially variable return on equity ratio has a
significant effect on the stock price. These results are in line with the research of Pratama (2019),
Sudirman (2020), and Khoiri & Suwitho (2020). They explain that the ROE level has a positive
relationship with the stock price, so the greater the ROE, the greater the stock price, because the
magnitude of ROE gives an indication that the return that investors will receive will be high enough
that investors will be interested in buying the stock, which means it will potentially increase the stock
price.
The Effect of Price Earning Ratio on Stock Prices

The results of the price-earning ratio hypothesis statistical test have a significant effect on stock
prices. The results of this test are in line with Rahmadewi & Abundanti (2018), Saputra (2020), and
Wildatunjanah & Suparningsih (2019), explaining that the assessment of PER results shows that

investors pay attention to PER in making investment decisions to be able to buy shares or sell shares
of the company. If the PER value is lower, then the cheaper the company's shares are to buy and the
better the performance of the shares in generating net income for the company.
The Effect of Current Ratio, Debt to Asset Ratio, Return On Equity, and Price Earning Ratio
simultaneously on Stock Prices
Based on the results of statistical tests, it is evident that the variables current ratio, debt to asset
ratio, return on equity, and price earnings ratio simultaneously affect the stock price. This means that
the information issued by the company in the form of financial statements and processed into financial
ratios, including current ratio, debt to asset ratio, return on equity, and price earning ratio, can be used
as a direction or signal in the direction of investor decision-making in investing in stock prices. That
means that the roe level has a positive relationship with the stock price. If the PER value is lower,
then the company's stock price is cheaper to buy and the better the performance of the shares in net
income.
However, the current ratio, debt to asset ratio, return on equity, and price earnings ratio have
relatively little to do with the rise and fall in stock prices. Because the results of the coefficient of
determination show the value of adjusted R Square 50%, which is 0.199 (19.9%), the effect of current
ratio variables, debt to asset ratio, return on equity, and price earning ratio on stock prices is 19.9%
and the rest of 80.1% is explained by other variables not used in this study, such as DER variables,
EPS, PBV, Size, EVA, Inflation, Net Income, and Dividend Payout Ratio.

Based on the results of the data analysis and discussions that have been outlined in the previous
chapters regarding the company's performance and the stock price of the company going public listed
on the IDX, the author can draw the following conclusions:
1. During the COVID-19 pandemic period from 2019 to 2020, the current ratio (CR) has no
significant effect on the stock price of companies going public listed on the IDX.
2. During the COVID-19 pandemic period from 2019 to 2020, the debt to asset ratio (DAR) has a
significant impact on the stock price of companies listed on the IDX.
3. During the COVID-19 pandemic period of 2019 to 2020, the Return on Equity Ratio (ROE) has
a significant impact on the share price of companies going public listed on idx.
4. Price Earning Ratio (PER) has a significant effect on the stock price of companies going public
listed on the IDX during the pandemic period. COVID-19 is valid from 2019 to 2020.
5. During the COVID-19 pandemic period of 2019 to 2020, the Current Ratio, Debt to Asset Ratio,
Return on Equity Ratio, and Price Earning Ratio all have a significant impact on the stock price
of companies going public listed on the IDX.
SUGGESTION
Based on the results of the research and the conclusions that have been put forward, the advice
that researchers can convey to the next researcher is as follows:
1. For the company is expected to improve the company's performance every year in order to
increase the confidence of investors so that it is easy to obtain capital from outside the company
and is expected to pay attention to other factors that can trigger if there is a decline in the stock
price and can take steps to increase the confidence of investors so that it is easy to obtain capital
from outside the company and is expected to pay attention to other factors that can trigger if there
is a decline in the stock price and can take steps to increase the confidence of investors so that
it is easy to obtain capital from outside the company and is expected to pay attention to other
factors that can trigger if there is a decline in the stock price and can take steps to increase the
confidence of investors so that it is easy to obtain capital from outside the company and is
expected to pay attention to improving the company's financial situation.
2. For investors are expected to be able to pay attention to other factors in the company's financial
ratio before deciding to invest in the company so that in decision making investors can consider
well in order to bring future profits in the company
3. For further research is expected to use a wider scope and increase the research period and

increase the number of samples of companies so that the results of the research can be developed
benefits and should increase the use of financial ratios.
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Manag; Vol-2, Iss-6 (Jun, 2019): 307-317.)

Performance Of JII Index And LQ45 Index During The Covid-19

Pandemic In Indonesia Period Case October 2020 - October 2021
1
Riskayanto, 2Tika Intan Saputri
1,2
Universitas Gunadarma
Jln. Margonda Raya No. 100, Depok 16424, Jawa Barat.
1
riskayanto@staff.gunadarma.ac.id, 2tikaputri.sef@gmail.com
Abstract
This study aims to analyze the comparison of the JII Index and the LQ45 Index during the Covid-19
pandemic for the period October 2020 to October 2021 which are traded on the Indonesia Stock
Exchange. This research is descriptive research. Methods of data collection using the method of
documentation. While the data analysis tool uses Chartnexus. The results of this study indicate that
during the Covid-19 pandemic in Indonesia throughout October 2020 to October 2021, the shares
belonging to LQ45 experienced fluctuations and on average increased by 1.67%. Then sharia shares
incorporated in JII also experienced fluctuations and on average increased by 0.48%. Thus, it can be
concluded that on average, conventional stock indices experience deep fluctuations and tend to be
unstable compared to Islamic stocks. With the results of this study, it can provide a reference for
investors to choose and invest in Islamic stocks, because the transaction strength of Islamic stocks is
quite good. Where sharia stock transactions continue to increase and tend to experience stable
fluctuations even though economic conditions in Indonesia have decreased during the Covid-19
pandemic.
Keywords : Covid19 Pandemic, JII Index, LQ45 Index.

JEL Codes: G15, G18, Z10
INTRODUCTION
Coronavirus Disease 2019 or Covid-19 has become a global epidemic that has hit almost all
over the world. Everything related to business activities and activities in various countries had to be
stopped to prevent the spread of the virus. Various efforts have been made by the government, one
of which is the implementation of a large-scale social restriction (PSBB) policy. The effects of the
Covid-19 pandemic in Indonesia, apart from affecting public health conditions, are also suspected of
affecting financial performance, including the capital market in Indonesia. The capital market in
Indonesia before Covid-19 showed that the JCI tended to be stable before 2020. Based on Graph 1.1,
the JCI underwent a correction in January 2020 and peaked in February-March 2020 in Indonesia
starting to take positive victims of Covid-19, which has been increasing in number from time to time.
Graph 1.1 Composite Stock Price Index (JCI/RHS) for the period May 2019-May 2020
Source: idx.co.id, 2020
422 Riskayanto, Saputri

While facing challenging conditions, both nationally and globally, which have generally
experienced a decline, the Indonesian Islamic finance industry has achieved quite a proud
achievement. Based on the report from the Financial Services Authority (OJK), in 2019 the sharia-
based capital market in Indonesia recorded a positive performance. As stated that the International
Global Islamic Finance Award (GIFA) gave an award to the Indonesia Stock Exchange (IDX) for
the category of The Best Islamic Capital Market Award 2019. For the second time when the 2020
Covid-19 pandemic hit Indonesia, IDX again won the same award. This achievement can be assumed
as international recognition that IDX can maintain its achievements and prioritize consistency.
LITERATURE REVIEW
In the midst of economic shocks due to Covid-19 that hit Indonesia, the Islamic capital market
experienced growth. This interesting thing was conveyed by the head of the IDX's Islamic capital
market division, Irwan Abdalloh, on September 29, 2020 via metrotvnews youtube video broadcast.
It was stated that in terms of the number of investors, the frequency of transactions and the volume
of transactions carried out by Islamic investors actually increased. Although the performance of
Islamic market returns has decreased, the performance of Islamic investors has actually increased,
even if the volume and value of transactions are higher than in normal conditions in the same period
in the previous year.
Figure 1.1 Sharia Stock Development

Source: ojk.go.id, December 2020
In accordance with the decision of the commissioner board of the financial services authority
number KEP-63/D.04/2020 on November 23, 2020 that there was an increase in the list of sharia
securities from late 2019 to early 2020 when the Covid-19 pandemic occurred in Indonesia. The
Islamic capital market industry shows rapid development with the number of sharia shares up to
October 2020 increasing by 90.3%, from 321 shares to 457 shares. This amount is equivalent to
63.6% of the total shares listed on the IDX as shown in figure 1.1. Based on market capitalization,
Islamic stocks account for 51.4% of the total market capitalization. This means that the total market
capitalization of sharia shares is IDR 3,061.6 trillion of the total market capitalization of IDR 5,956.7
trillion. The percentage of transaction value for sharia shares reached 53.7%, transaction volume for
sharia shares was 56.9% and transaction frequency was 61.9% of the total stock transactions on the
IDX.
Graph 1.2 Composite Stock Price Index (JCI) October 2020-October 2021
Source: chartnexus, December 2021
Riskayanto, Saputri 423

Based on Graph 1.2, IHSG experienced another correction in July-August 2021 in Indonesia.
This happened because the number of positive Covid-19 victims began to increase from time to time
accompanied by the imposition of restrictions on community activities for emergency PPKM level 4
in Java-Bali.
With various background conditions that have been described, this study aims to analyze the
condition of the Islamic stock price index represented by the JII index and the conventional stock
price index represented by the LQ45 index.
RESEARCH METHODS
This research is descriptive research. The data used in this study is secondary data, based on
historical data on changes and developments in the JII Index and the LQ45 Index from October 2020
to October 2021, which were analyzed using the Chartnexust analysis tool. The stock price index
movement data will be observed and analyzed for changes and developments to find out which
indexes are positively and negatively affected by the Covid-19 pandemic.
Results And Discussion

The Covid-19 event has become a global epidemic that affects various fields, including in the
economic field where the capital market is in it. With the condition of the economic downturn in
Indonesia during the Covid-19 pandemic, this study will analyze how the impact on Islamic stock
transactions and conventional stocks in the capital market will be. The stock data used is the Islamic
stock index which is incorporated in the Jakarta Islamic Index (JII) and conventional stock which is
incorporated in Liquid 45 (LQ45).
Graph 1.3 Liquid 45 Index (LQ45) October 2020-October 2021

Table 1.1 LQ45 Index Progress (October 2020-October 2021)
Value Rp Chg +/-

Date Open Hight Low Close Chg %
Billion (point)
Oct 01, 2021 891 982 881 952 52,7 B 0,06846 65,1762
Sep 01, 2021 868 894 840 894 39,4 B 0,02995 26,7788
Aug 01, 2021 830 872 821 866 30,9 B 0,04337 37,5614
Jul 01, 2021 848 860 823 823 30,8 B -0,0295 -24,263
Jun 01, 2021 902 919 835 844 37,5 B -0,0643 -54,271
Mei 01, 2021 894 897 852 888 29,2 B -0,0067 -5,9597
Apr 01, 2021 903 915 873 893 31,4 B -0,0111 -9,8893
Mar 01, 2021 955 977 886 902 35 B -0,0555 -50,059
Feb 01, 2021 910 972 885 944 41,5 B 0,03736 35,2703
Jan 01, 2021 939 1030 907 911 68,4 B -0,0298 -27,165

Value Rp Chg +/-

Billion (point)
Dec 01, 2020 890 977 879 934 65,1 B 0,04944 46,1753
Nov 01, 2020 784 926 777 883 68,6 B 0,12628 111,501
Oct 01, 2020 745 798 741 790 38,9 B 0,0604 47,7181
Source: yahoo finance, data processed
Graph 1.4 Jakarta Islamic Index (JII) October 2020-October 2021

Table 1.2 JII Index Development (October 2020-October 2021)
Value Rp Chg +/-

Billion (point)
Oct 01, 2021 551 590 542 567 33,8 B 0,02904 16,4646
Sep 01, 2021 542 552 526 552 24,8 B 0,01845 10,1845
Aug 01, 2021 535 547 523 540 20,3 B 0,00935 5,04673
Jul 01, 2021 547 557 531 532 21,2 B -0,0274 -14,589
Jun 01, 2021 573 583 530 544 25,3 B -0,0506 -27,532
Mei 01, 2021 585 585 541 567 18,8 B -0,0308 -17,446
Apr 01, 2021 605 614 575 585 20,9 B -0,0331 -19,339
Mar 01, 2021 634 635 593 605 23,9 B -0,0457 -27,674
Feb 01, 2021 602 651 590 631 29,8 B 0,04817 30,397
Jan 01, 2021 633 679 598 601 51,7 B -0,0506 -30,382
Dec 01, 2020 600 664 592 630 44,8 B 0,05 31,5
Nov 01, 2020 542 623 536 597 43,2 B 0,10148 60,5812
Oct 01, 2020 522 553 521 545 28 B 0,04406 24,0134
Table 1.3 LQ45 and JII Stock Index Closing Prices (October 2020-October 2021)
Oct Sep Aug Jul Jun Mei Apr Mar Feb Jan Dec Nov Oct
Date 01, 01, 01, 01, 01, 01, 01, 01, 01, 01, 01, 01, 01,
2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2020 2020 2020
JII 567 552 540 532 544 567 585 605 631 601 630 597 545
LQ4
952 894 866 823 844 888 893 902 944 911 934 883 790
5

Table 1.3 is JII and LQ45 closing data from October 2020 to October 2021. The closing price
of the stock each month indicates the magnitude of the stock price at the time the exchange closes.
In Table 1.3 above it is known that the decline in the price of conventional shares incorporated in
LQ45 with a closing price of 844 in June. When compared to the previous month, the closing of 888.
While sharia shares are incorporated in JII, the price decline that occurred in June amounted to 544
where the previous month was estimated to close 567. That is, the decline in sharia stock prices is
smaller when compared to the decline in conventional stock prices. In this case, sharia stock
transactions can be said to be superior when compared to conventional stocks.
Table 1.4 Changes in Sharia Stock Index and Conventional Stocks Index During the Covid-
19 Pandemic in Indonesia (October 2020-October 2021)
JII LQ45
Month
Change % Change %
Okt-21 16,4 2,90% 65,1 6,84%
Sep-21 10,1 1,80% 26,7 2,99%
Agu-21 5,04 0,90% 37,5 4,33%
Jul-21 -14,5 -3% -24,2 -2,95%
Jun-21 -27,5 -5,00% -54,2 -6,43%
Mei-21 -17,4 -3,08% -5,9 -0,67%
Apr-21 -19,3 -3,30% -9,8 -1,11%
Mar-21 -27,6 -4,50% -50,05 -5,55%
Feb-21 30,3 4,80% 35,2 3,73%
Jan-21 -30,3 -5,06% -27,1 -2,98%
Des-20 31,5 5% 46,1 4,94%
Nov-20 60,5 10,10% 111,5 12,60%
Okt-20 24,01 4,40% 47,7 6,04%
Mean 3,17 0,48% 15,27 1,67%
To see how the trend of stock index changes observed, namely conventional stocks
incorporated in LQ45 and Islamic stocks represented by stocks in JII, can be seen in the following
image:
200
150
100
50
-50
-100
JII Perubahan JII % LQ45 Perubahan LQ45 %
Graph 1.5 Movement of Changes in Sharia Stock Index and Conventional Stocks Index
During the Covid-19 Pandemic in Indonesia October 2020-October 2021.

Based on the data contained in Graph 1.5, it can be seen that the LQ45 stock index decreased
in June and July, but contrary to the JII stock index which experienced a decline that was not as deep
as LQ45. Shariah shares incorporated in JII in June 2021 decreased by 5% and conventional shares
incorporated in LQ45 in the same month experienced a deeper decline of 6.43%.
Thus it can be concluded that Shariah shares can be said to be superior when compared to
conventional stocks during the Covid-19 pandemic in Indonesia. So that with statistical analysis can
be concluded that conventional stock indices experience deep fluctuations and tend to be unstable
compared to Islamic stocks.

Based on the analysis conducted in this study in the conditions of the Covid-19 pandemic and
social distancing policies in Indonesia have an influence on capital market conditions. Throughout
October 2020 to October 2021 the JII index and LQ45 index fluctuated. On average Shariah shares
increased by 0.48% and conventional stocks also increased by 1.67%. But in June and July 2021
Shariah shares incorporated with JII decreased by 5% and conventional shares incorporated with
LQ45 decreased by 6.43%. So that with statistical analysis can be concluded that conventional stock
indices experience deep fluctuations and tend to be unstable compared to Islamic stocks. With the
results of the study can provide advice to investors to choose and invest in Islamic stocks, because
the strength of Sharia stock transactions is quite stable.
REFERENCES
BEI (2021) IDX Monthly Statistics 2021, Indonesia Stock Exchange Reserch and Development
Division.
Financial Services Authority, www.ojk.co.id, 2020
Indonesia Stock Exchange, www.idx.co.id, 2021
Kusumawardana Venus, Dampak Positif & Negatif Pandemic Covid-19 Terhadap Kinerja Indeks
Sektoral Yang Terdaftar Di Bursa Efek Indonesia Desember 2019-Desember 2020, Jurnal
Akuntansi Indonesia, Vol 17, No 1, Februari 2021, P-ISSN: 1829-8532, E-ISSN: 2614-2252.
OJK (2020) Perkembangan Saham Syariah di Indonesia, Buku Perkembangan Pasar Modal Syariah.
Yahoo Finance, www.finance.yahoo.com, 2021
Yahoo Finance (2021) Indeks JII dan Indeks LQ45.

The Influence of Competence and Work Culture On The Supervision

Commission V
1, 2, 3
Tamansiswa Palembang University
Email:maulana_57@ymail.com
Abstrack
Supervision is the main function of members of the House of Representative. Supervision

performance is influenced by many factors including competence and work culture. This study was
conducted with the aim of analyzing the influence of competence and work culture on the
performance of the supervision of members of Commission V DPR-RI, either simultaneously or
partially. All 60 members of Commission V DPR-RI were used as respondents in this study. Data
were collected from respondents using a questionnaire that had been tested for validity and
reliability. Multiple linear regression analysis was performed to test the research hypothesis. The
results of the study indicate that simultaneously and partially competence and work culture
significantly influence the supervision performance of members of Commission V DPR-RI. The
influence of these variables was improving the supervision performance. The influence of
competence on supervision performance is stronger than work culture.
Keywords : Influence, Competence, Work Culture, Performance

JEL Codes : J24, L20,
INTRODUCTION
Each member of the DPR RI is assigned by their respective factions to work within the
Commission. Currently, the duties of members of the House of Representatives Commission V
include Legislation (formation of laws), Budgeting (budget), and Supervision. In addition to
carrying out the above, they will also carry out a feasibility and suitability assessment as well as
select and approve several things that are included in their respective duties and responsibilities.
Duties and responsibilities of course must be carried out properly, because it is a great mandate
from the people. The seriousness of the DPR members must also be demonstrated and proven by
good performance, not only by theories, because good performance will certainly have a good
impact on the welfare of the community.
Table. 1 Number of Members of the Indonesian House of Representatives

Commission V Period 2019 - 2024
Based on Educational Competence and Expertise.

Proceeding UG Economic Faculty-Internatio
From the observations based on the table above, there are 54 members of the Indonesian House of
Representatives Commission V with 22 people with Strata 2 educational competence, 24 people
with Bachelor's Degree, 1 person with Diploma, and 7 Senior High School members with 47 non-
technical skills and 7 civil engineers. /Architecture. Based on the educational background and
expertise above, it is illustrated that the suitability of the field of expertise that must be possessed
by the members of the board in this commission V, of course, will affect their performance
PROBLEM STATEMENT
There are actually three main objective of the study (which uses linear regression analysis)
including:
1. Analyzing the simultaneous influence of independent variables,
2. analyzing the partial influence of independent variables, and
3. to identify the strongest variable in influencing the dependent variable
LITERATURE REVIEW
Competence
Gordon in Sutrisno (2011) explains several aspects contained in the concept of competence as
follows:
a. Knowledge, or awareness in the cognitive domain.
b. Understanding (understanding).
c. Ability/skills.
d. Value.
e. Attitude.
Work Culture
In carrying out the company's business activities, work culture is the main goal in changing
the attitudes and behavior of the human resources department to improve performance, as well as
making strategic efforts to answer various business challenges in the future.
According to Moeljono (2013), the dimensions used to measure work culture are as follows.
a. Honesty means, first of all, acting consistently in carrying out work and working for the
company in accordance with organizational values and guidelines, as well as professional
ethical norms. The indicators are: behavior that is consistent with values and behavior with
professional ethics.
b. Second, professionalism is the level of formal education and professional training that workers
must receive for a particular job. Employees can work effectively and efficiently. An
organization is a professional organization if its employees require special training and
sufficient training experience to fill a position in the organization.
c. Third, satisfaction means meeting needs by providing the best service, taking into account the
benefits of the company, skilled workers, friendly and service-oriented staff, and superior
technology.
d. Fourth, exemplary in hard work and smart work, and building harmonious vertical and
horizontal relationships are examples of commendable human behavior.
Performance
Individual performance in an organization affects the performance of the organization.
Therefore, cohesion in an organization affects the achievement of both individual and
organizational performance. Achieving the goals and success of a company is very difficult to
achieve without good performance at all levels of the organization.
Performance can be interpreted as the result of someone doing it over a certain period of time. This
can be measured by how far the work achievement criteria have been previously determined
(Veithzal, 2005:97). Performance Employees are measured not only to get work performance,
promotion to position or salary increase, rank and class, but more than performance improvements
that can be made by institutions or organizations in improving employee performance.
In the view of Whittaker and Simons (2000: 5), performance measurement is to test the
extent to which the conditions that have been targeted from the beginning are compared with the

expected results. As in Yuwono's view (2004: 23) says "performance measurement is an

assessment of a series of activities carried out to find out the strengths and weaknesses of
employees." After the performance measurement is completed, the results will become feedback
for the institution or company so that in the future it can be used for improvements to existing
weaknesses
Figure 1. Framework
RESEARCH METHODS
Research design
The research design used is causality research, which is to find out how big the X variable is
against the Y variable, namely the influence of Competence (X1) and Work Culture (X2) as on
performance (Y) within Commission V of the DPR RI.

The subjects of this survey were all members of the RI VDPR Commission, as many as 60 people.
Samples were extracted from the entire population using a saturated sampling technique. (Umar,
Husein, 2004).
Multiple Linear Regression Test

This study uses a multiple regression analysis model which is processed with the Statistical
Package for Social Sciences (SPSS) 17.0 program. This model was chosen because researchers
want to know how competence and work culture affect the performance of the House of
Representatives Commission V supervision simultaneously, jointly, or partially (each).
Furthermore, to determine the effect of the ability and communication variables on the dependent
variable (performance), using the statistical analysis method, namely the multiple linear regression
analysis method.
The mathematical models of multiple linear regression are:

Y = a + b1X1 + b2X2 + e
RESEARCH RESULT
Multiple Regression Analysis Results

From the results of the analysis carried out, the following regression equation was obtained:
Y= 10.048 + 0.401X1 + 0.068X2
From the regression function estimation formula above, we can see that the constant value
obtained is 10.048. The value of the regression coefficient representing the competency variable
(X1) is obtained with b1 = 0.401. This shows that the change in competence is in units, and if the
independent variable from the other independent variables remains, the employee's performance
changes in direct proportion to 0.401 units. worth.
Furthermore, the regression coefficient value that represents the work culture variable (X2)
is obtained with b2 = 0.068. This means that changes in work culture are a single unit, and
employee performance changes proportionally. This is 0.068 units for the other independent
variables. Assumed a fixed value.
Simultaneous F Test Results
The F test is used to compare , which is used as a reference to show whether a variable is
related, and , which is a variable that has a variable relationship. For the value of Ftable, the value
of Der table is 3,159 because the statistical table F has df 1 = the number of variables 1 or 31 = 2
and df 2 = nk1 or 6021 = 57 (k is the number of independent variables).
Based on the results of data processing in Table 4.9 above, the Fcount value is 49,504 and a
significance of 0.000. Because Fcount > Ftable (49.504 > 3.159), it can be concluded that Ho is
rejected and Ha is accepted. In other words, the ability variable (X1) and work culture (X2)
together affect performance (Y)
DISCUSSION
1. The coefficient of determination (R2) obtained from data processing is 0.493 or 49.3%. This
value gives an understanding that the Competency Variable contributes 49.3% to the
performance, while the remaining 50.7% is influenced by other variables not examined.
2) The Influence of Work Culture on Performance
Based on the results of the hypothesis testing conducted, the t count results on the Work
Culture variable (X2) of 2.156 and a significance value of 0.034. Due to the tcount value on
the Work Culture variable (X2) the value is greater than the ttable value and the significant
value of the Work Culture variable (0.034 <0.05), it can be concluded that Ha is accepted and
Ho is rejected, or in other words it is stated that the Work Culture variable ( X2) partially also
has a significant effect on performance (Y). The coefficient of determination (R2) obtained
from data processing is 0.321 or 32.1%. This value gives an understanding that the Work
Culture Variable contributes 32.1% to performance, while the remaining 67.9% is influenced
by other variables not examined.
3) The Influence of Competence and Work Culture on Performance

Based on the results of the Simultaneous F test on the processed data, the Fcount value is
49,504, with a significant 0.000. Where the value of Fcount is greater than Ftable (49.504 >
3.159) with a significance of 0.000 < 0.005. Thus, it can be concluded that Ho is rejected and
Ha is accepted, which means that the Competence Variables (X1) and Work Culture (X2)
together have an effect on Performance (Y). The coefficient of determination (R2) obtained
from data processing is 0.670 or 67.0%. This value gives an understanding that the
Competence and Work Culture Variables contribute 67.0% to performance, while the
remaining 33% is influenced by other variables not examined.
CONCLUSION
The results of the multiple linear regression analysis indicates that competence and work
culture simultaneously and partially influence the supervision performance of members of the
Commission V DPR-RI in significant way. The effect of these variables was to increase
supervision performance. Competence was identified to have a stronger influence towards
supervision performance
SUGGESTION
Based on the conclusions above, the authors provide the following suggestions:
1. It is necessary to hold training for members of the DPR whose competence is considered not
good enough
2. A good work culture needs to be optimized, so that a good working atmosphere can be
established
3. The need for supervision related to performance, in order to be able to assess the extent to which
the duties and responsibilities have been carried out
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Danim, Sudarwan. 2008. Kinerja Staf dan Organisasi. Bandung: Pustaka Setia.
Dian Primanita Oktasari, Winda Widyanty, dan Aditya Fitriani. Pengaruh Kompetensi, Budaya
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Komisi, Badan Anggaran, dan Badan Akuntabilitas Keuangan Negara Dewan Perwakilan
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Terhadap Kinerja Karyawan Di PT. BPR Nusamba Kubutambaha. Jurnal Pendidikan
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Prawirosentono, S. 2012. Kebijakan Kinerja Karyawan. BPFE. Yogyakarta.

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The Determinant Factors Of Happiness At Work On Employees

1
Nur Aini Afanin, 2Realita Sereen Previarzya, 3Rizky Wicaksono, 4E. Susy Suhendra
1,2,3
Psychology Faculty Gunadarma University, 4Economics Faculty Gunadarma University
Margonda Raya Street No. 100, Depok 16424, West Java
1
afanin.aini@gmail.com, 2rrealitaserin@gmail.com, 3rizkyws123@gmail.com,
4
susys@staff.gunadarma.ac.id
Abstract
This review Happiness At Work (HAW) for employees. HAW is an important component of an
organization. There are few factors affecting HAW such as job satisfaction, work goal and work
environment. HAW is not only affecting employees’ development, but also the organization by
resilience and productivity. Moreover, this paper will have an overview of definitions, factors that
have an effect on happiness, the importance of happiness inside the workplace and exposure to
some of the outcomes of previous research so that it can be an input for further research,
remembering happiness is an essential domain specially in life inside the workplace. This paper
aims to provide to analyze the factor of HAW that can affect happiness in the workplace with
different types of positions and different employee environments
Keywords: Happiness, happiness at work, workplace happiness, employee

JEL Codes: I131, J28, L20
INTRODUCTION
Being happy is very important for the majority of people and happiness itself is known to
be the goal of most of the people (Diener, 2000). Happiness is a form of basic human emotion,
also one of the goals to be achieved in life for all humans. Happiness relates to how individuals
experience and value their lives as a whole (Veenhoven, 1984). Myers & Diener (1995) define
happiness as a more frequent positive experience than a greater number of negative experiences.
Meanwhile, Seliggman (2002) explains that the concept of happiness is neutrally subjective well-
being as a form of full satisfaction with life and the achievement of high enjoyment. In Indonesian
society, Sustainable Development Solutions Network (SDSN) and The Center for Sustainable
Development released the United Nations World Happiness Report 2021. Through these results, it
is known that Indonesia is ranked 82 from 149 countries in happiness aspect (Ray, 2021). The
previous survey by Badan Pusat Statistik (Central Bureau of Statistics) in 2017 showed Indonesian
society has increased the index of happiness significantly. According to Wulandari & Widyastuti,
(2014) someone who is happy shows satisfaction in the area of social relations and work.
Harter, Shmidt & Keyes (2002) defined happiness at work as a state where employees have
loyalty, job satisfaction, resilience and high productivity so they can adapt to an organization to
reach their own goal. Furthermore, Diener & Diener (2008) stated that happiness at work can be
explained as an enthusiastic feeling of employees towards work, employees are eager to come to
work, have good relationships with co-workers and show mutual dependence with people in other
fields. Employees are able to show good performance and are able to get along with colleagues
when needed. According to Aydin (2012) everyone seeks happiness in different ways. Happiness
affects many things. The measure of happiness itself is relative between individuals. Meanwhile,
Pryce-Jones (2011) explains that happiness in the workplace is a mindset that allows employees to
maximize their performance and reach their potential.
Herlinda (2017) stated that in a survey conducted by Job Street workers in Indonesia
showed the second highest level of happiness in Asean, there are several things that make workers
feel happy, the three main things are work location, company reputation and colleagues at the
company. In 2020, it is known that the happiness of workers in Indonesia decreased dramatically
during the covid-19 pandemic, this happened considering that there were changes in work patterns
and habits that forced workers to adapt (Tim, 2020). According to Salas-Vallina & Alegre (2018),
the dimensions of happiness are job satisfaction: ‘A pleasurable or positive emotional state
434 Afanin, Previarzya, Wicaksono, Suhendra

resulting from an appraisal of one’s job or job experiences’, organisational commitment:

identification with organisation’s goals, willingness to exert efforts towards these goals and a
strong desire to remain in the organisation and engagement: the behaviour by which people give
themselves to their work. There are many factors of happiness at work in previous research, for
example leadership, life satisfaction which also was conducted in employees.
Employees play an important role in the success of a company. Company progress depends
on the quality of the employees themselves (Rahmi, 2018). Happiness at work can increase
productivity and resilience towards work which can improve the organization and individual later.
The productivity is beneficial to the organization. The organization can reduce almost every cost in
their work needs. The organization also can get more revenue from time to time. Resilience is
important in critical times such as the pandemic Covid-19 that is happening. Employees can build
these benefits with the factors of happiness at work.
This paper aims to provide a systematic review and identify empirical evidence through
previous research to analyze the factors that can affect happiness in the workplace for any different
employees.
LITERATURE REVIEW
Happiness at work
Happiness at work according to Pryce-Jones (2011) is a mindset that allows individuals to
maximize performance and achieve their potential. Furthermore Harter, Shmidt & Keyes (2002)
define happiness at work as a condition in which employees appear to have high loyalty, job
satisfaction, endurance and productivity so that they are able to adapt the organization to achieve
its goals. Boehm and Lyubomirsky (2008), conclude that happy employees are more satisfied with
their jobs and report having more autonomy in their responsibilities. They perform better on
assigned duties and are much more likely to take on extra role duties such as supporting other
employees. They receive more social support from their co-workers and have a tendency to use
more cooperative strategies whilst interacting with others. Satisfied employees are less in all
likelihood to exhibit withdrawal behaviours, which includes absenteeism, and are much less likely
to be unemployed.
According to Salas-Vallina dan Alegre (2018) there is three dimensions of employees’
happiness at work i.e first is job satisfaction, that explain enjoyment or positive emotional state
resulting from an appraisal of one's job or work experience. Second is organizational commitment,
that shows identification of the organization's goals, the desire to put effort into the goals and stay
in the organization. The last is engagement, which shows bound or attachment by employees to
their works.
Pryce-Jones (2011) mentions that there are several factors that affect employee happiness at
work. Pryce-Jones’s (2011) happiness in the workplace is influenced by five factors referred to as
the '5C' namely contribution, conviction, culture, commitment, and confidence. Contribution is the
effort that has been made by the individual and how he perceives his efforts. The contribution
factor itself is divided into two, namely inside out and outside in. Conviction is described as a
belief that emphasizes individual motivation in various circumstances and pressures. The
conviction factor is composed of feeling motivated at work, resistance when in difficult times, how
individuals believe they have worked effectively and efficiently, and how individuals perceive that
their work has a positive impact on their environment. The cultural factor in question is how
individuals feel in accordance with the company's culture. Cultural factors are divided into liquid
elements and fixed elements. Liquid elements include how the individual enjoys his work, and
how the individual likes co-workers; while the fixed elements consist of how individuals respect
values at work, the fair work ethic that individuals have and how individuals are able to control
daily activities. Commitment is defined as how far individuals are involved in their work,
commitment consists of several elements including individuals doing something that is considered
valuable, has an interest in their work, believes in the company's vision, and feels a strong positive
emotional outburst. Confidence is the fifth factor that will influence what individuals do and how
individuals manage in the work environment, because it tells individuals that they are making the
right choices and doing the right things. Confidence speak of individuals in themselves and their
Afanin, Previarzya, Wicaksono, Suhendra 435

work. Confidence consists of the individual's ability to complete work tasks, have high self-
confidence, and understand the role of going backward-forward.
RESEARCH METHOD
The technique that the writers use is to examine literature to collect the data or sources that
are associated with the topic mentioned. Through this study, the writers appear in the theoretical
references which might be applicable to the cases or issues determined. The writers take the source
and reviews of several written resources from the books, journals, articles and all supporting
references that related to happiness at work for writing the papers. Some of the keywords used are
happiness at work, employee happiness, workplace happiness and factors influencing workplace
happiness. The output of this literature study is the collection of references that are relevant to the
problems studied.

Related to the determinant factors of happiness, it may be seen that many factors shape the
happiness in the workplace. From the opinion of some experts, it could be concluded that the
several factors that have an effect on work happiness consist of organization, personal and social
factors. From the organizational factors related to happiness are organizational culture, leadership,
task characteristics, positive feedback, rewards and employment opportunities. Moreover, the
personal factors that determine happiness at work are associated with the individual traits, job
satisfaction, self- belief, stress control, the employee motivation and engagement. The next
determinant of happiness at work from social elements may be social status, relationships with
different people and friendships. In addition to discussing the determinants of happiness at work,
the improvement of the study also has an impact on research within the workplace or organisation.
Happiness at work is seen to be one of the keys to success in an organization. There are few
studies which show consistency to predict happiness at work. Happiness at work journals
1. Chaiprasit and Santidhirakul (2011) conducted research in Thailand toward the employees
who work on the small and medium size businesses, it was found that the relationships,
quality of work life, and leadership had been the three major factors in predicting work
happiness. According to Chaiprasit and Santidhirakul, a good relationship will result in better
communication, unity and altruism amongst employees for that reason creating work
happiness. Moreover, the findings show that a good working environment will inspire the
realization of healthy physical and mental strength. Regarding the leadership, the leaders need
to pay attention to their employees, especially in phrases of communication, informing the
employees about their overall performance, giving advice, and paying attention to their
opinions and also build transparent two-way communication.
2. Moraes de Sousa and Porto (2014) conducted research factors such as person-organization fit,
organizational value contributes 25% to HAW and positive affect. The Fit-Autonomy model
from person-organization fit and the hedonic component of happiness (job satisfaction) and
not adhocracy, more related to autonomy. This reveals the strategic importance of the
environmental characteristic of opportunity for personal control (or autonomy). The
eudaimonic component of happiness at work (achievement) reached a higher explained
variance compared with the hedonic affective factor (positive affect). The attainment of
values (IO fit) has a closer conceptual relationship with achievement than with affective
experiences at work.
3. Januwarsono (2015) conducted research on factors such as individual characteristics,
organizational trust, job satisfaction, organizational culture, employee performance and
leadership behavior in employees of PT PLN (Persero) region of Indonesia. The results of this
study provide advice to the management of PT PLN (Persero) Region Suluttenggo that in
maintaining and improving happiness at work, it is necessary to consider the six determinants
of happiness at work with the main dimensions of each factor. The competency become a
major dimension of forming employee performance; harmonization in the workplace has
become a major dimension forming organizational culture; organizational trust with the
company commitment become a major dimension, job satisfaction with justice in promotions
become a major dimension, leadership behaviour with trustworthy leaders can be trusted

become a major dimension, and individual characteristics with the work interest become a
major dimension.
4. De Neve, Ward (2017) conducted research factors such as job satisfaction affects 24% of
HAW, life satisfaction, life evaluation and engagement in employees around the world. The
other factor is bosses and supervisors can play a substantial role in determining subjective
wellbeing. Leaders are the strong predictor for job satisfaction. The competence of leader can
affect and even controlling for individual fixed effects in a longitudinal analysis that follows
people who stay in the same job as their boss gains (or loses) competence over time
5. Rao, Lakshmi, and Goswami (2017) conducted a research that testing the level and influence
of three factors is derived extrinsic, intrinsic and work life issues of happiness at work. The
age as a factor of happiness at the work place is also a significant factor. The Organization has
to vary the inputs in extrinsic, intrinsic and work-life issues with the increase in the mean age
in the organization. The work-life issues are important during the early period of employment
and extrinsic are more important at advancing age.
6. Qaiser, Abid, Arya and Farooqi (2018) conducted research factors such as colleague support,
thriving and psychological contracts contribute to HAW. The presence of colleague support
can reduce employee ambiguity regarding their tasks while allowing them to learn and come
up with new ideas. At the same time, positive interactions between employees and their
colleagues ensures greater happiness at work. Psychological contract breach negatively
affects workplace happiness; however, thriving is an intervening variable of this relationship.
The negative impact of psychological contract breach on thriving at work. When employees
perceive a breach of contract, they are likely to feel less energetic and are reluctant to learn
and participate in new things. Extant research in human resource management has reported
that colleague support is an important factor that promotes positive employee attitudes;
strengthen teamwork, increase job satisfaction and innovative work. Another factor found is
the desire to grow, for employees they strive to learn new techniques and feel energetic at
work, as a result growing makes employees more satisfied with their jobs and this leads to
greater happiness at work.
7. Turan (2019) as a result of this research, Turkey public university staff happiness at
workplace, a number of factors have emerged that affect happiness at work. According to this
research findings, factors affecting happiness at work are personal factors (personality
characteristic, demographics); enviromental factors (working conditions, work environment);
factors related to attitudes towards work (employee liking his job, expectation from work);
and social factors (relationship with co-worker and managers). Although this research
findings that between academic staff and administration staff has a different factor affecting
workplace happiness.
8. Mroueh and De Waal (2020) conducted research factors such as high performance
organization in an insurance company. As part of the intended HPO transformation, a
company was executing a program called “One Big Family” with the goal to boost employee
happiness by introducing in-house activities to foster HAW. Part of the program was sharing
the achievements of the company widely and making each employee feel important and
valued.
9. Yap and Badri (2020) conducted research that found six chosen predictors are effective in
predicting happiness in the workplace among Malaysian millennials. From the results of the
study, it was found that workplace friendship, work-life balance, work autonomy, meaning at
work, transformational leadership, and gratitude had a contribution of 61.9% in determining
happiness. Meaning at work, transformational leadership, and work-life balance were found to
be among the three strongest predictors in this study.
10. Tei-tominaga, Takanishi (2021) conducted research factors such as perception of wage
adequacy, social capital in the workplace, ethical leadership and exclusive workplace climate
among staff in geriatric care facilities. Organizations can successfully develop their
employees’ ability by creating work environments where staff members feel supported by
their supervisors. If organizations have unclear requirements for managerial positions,
employees have greater feelings of happiness at work when their supervisors practice ethical
leadership.


To create employees’ happiness at work, they can pay attention to psychological factors,
hence the employee and organization can get the result of the benefits. This consists of a few
factors such as job satisfaction, engagement, work environment and work goal. These can affect
happiness in the workplace with different types of positions and different employee’s
environments. We suggest that employees increase happiness at work so they can get the benefits
for a long time that will benefit employees and the organizations itself.
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Indonesia, A New Emerging Country And Its Relationship With Italy
1
Cristina de Silva, 2Valentina Meliciani, 3Emmy Indrayani*
1,2
Luiss Guido Carli University, Rome, Italy, 3Universitas Gunadarma, Jakarta, Indonesia
1
cristina.desilva@studenti.luiss.it, 2vmeliciani@luiss.it, 3emmy@staff.gunadarma.ac.id *
Abstract
Indonesian growth has brought the country back to Asian successes. For decades, settled on a
structural slowness, governed with little dynamism, the country had seen the spectacular
developments of neighboring countries move away. Prisoner of a very long cold war, Indonesia had
progressed reduced rhythms, incoherent with the vastness of the territory, the industriousness of the
population, the immense endowment of natural resources. The significant development of the
Indonesian economy has attracted investors to invest and establish economic relations with
Indonesia. This is also the reason for the Italian government and business people to have economic
relations with, which have been built for a long time. This study provides a comprehensive
description of the development of Indonesia and its economic relationship with Italy. The research
method used is descriptive analytical method and case studies on several companies that carry out
bilateral business activities between Italy and Indonesia. Finally, the reasons to invest in Indonesia
concluded and there are many opportunities to work together between Italy and Indonesia to bring
a better future.
Keywords : Indonesia, Italy, economic relationship

JEL Codes : B22, L14, N10
INTRODUCTION
The economic rise of Indonesia
Indonesia is a diverse archipelago with more than 300 ethnic groups – recorded impressive
economic growth overcoming the Asian financial crisis of the late 1990s. Currently, Indonesia is the
fourth most populous country in the world, the world's 10th largest economy in terms of purchasing
power parity, and a member of the G-20. Furthermore, Indonesia has made great progress in reducing
poverty, which was close to half the population in 1999, to just 10 percent in 2020. (The World Bank,
2021)The 17,000 islands of the archipelago could not completely emancipate themselves from a
destiny that seemed to be marked. Yet the . Asian crisis of 1998 imposed a regime change and
accelerated the change. Since then the country has known, through a bumpy and sometimes
contradictory path, a season of reforms still in progress. A new demographic system has taken shape
and substance, the parliamentary dialectic has consolidated. At the same time, living conditions have
improved in a socio-economic self-supplying circuit.
Since 2011, Indonesia became part of the G20, becoming the leading Asian country. This
entry, certifies its strength and inclusion in the world of world powers, delivering history, resignation,
poverty and anti-historic reliance on raw materials. Furthermore, 10 years later on October 31, 2021,
the President of Indonesia, Bp. Joko Widodo has accepted the G20 presidency for 2022 on the G20
meeting in La Nuvola, Roma, Italia. This step gives Indonesia a new role, a global dimension that
will know growing dynamics. It should be considered that it achieves this result only after the
breakthrough that in the last decade has led to the consolidation of democratic political institutions.
Democracy has radically changed Indonesia.
Today it is a country projected into the young future, radically different from the model of
"guided democracy" interpreted in different ways by Sukarno and Suharto. Today, it represents the
fourth democracy in the world. Political stability emphasizes Indonesia's vibrant economy. Indonesia
is the third largest democratic country in the world, after India and the United States.
Indonesia is the fourth most populous country in the world. Apart from its considerable fiscal
and political transformation, Indonesia has also undergone considerable structural change in
demographic terms over the past decade. Of the 240 million people, over 50% are under 29, and the
440 De Silva,, Meliciani, Indrayani

same percentage lives in urban areas. This contributes to a dynamic participation in the labor market,
which grows by 2.3 million a year. A rapidly urbanizing population also provides labor reserves in
investment centers.
The data on macroeconomic fundamentals of the first half of 2011 confirm the excellent
recovery of the Indonesian economy and the recovery of growth to levels even higher than the crisis
of 2009, with a GDP of + 6.5% during the year 2011. It is therefore confirmed the resilience and
robustness of the first economy in Southeast Asia which, since 2004, has recorded steady growth
rates of over 5%, among the highest in the Asian area (in 2009, second only to China and India ).
The Indonesian GDP in 2010 reached a value of about 723 billion dollars compared to 540.3 billion
in 2009 (based on the Indonesian rupee data, without suffering the effect of the exchange rate on the
dollar, the increase was + 14.4%).
Economic development and combating poverty

Indonesia entered a rapid economic growth phase following the launching of its first five-year
development plan in 1969. Since then the country’s economy has undergone significant changes.
With an average real GDP growth of around 7 % annually during the pre-crisis period, Indonesia
holds its place with the other rapidly growing East Asian economies. Since it started from a very low
initial condition, however, its per capita income remain still far below neighboring countries in
absolute terms. In 1967, Indonesia’s per capita income was around USD 50 and it was one of the
poorest countries in the world (Agrawal, 1996). Hill estimates that between 1965 and 1991 the real
GDP per capita increased from 190 to 610, measured in 1991 USD, which constitutes growth of
4.6% annually. Since the late’60s, economic development in Indonesia can be divided into three
phases.
During three decades of economic development starting in the early ‘70s, the Indonesian
economy underwent substantial structural change. A notable aspect of this change was the reduction
in the importance of the agricultural sector in the Indonesian economy. The share of agriculture in
Gross Domestic Product and its share in employment fell significantly between 1971 and 2000.
However, it appears that the reduction in agricultural GDP share has been much faster than it
employment share. This is apparent from the declining ratio of GDP to employment share from 0.67
in 1971 to 0.38 in 2000, which reflects the comparably low productivity in the primary sector
(Orlandi, 2017).
Table 1. GDP and Employment Shares of Agriculture in Indonesia

from 1971 to 2015 (%)
1971 1980 1990 2000 2005 2010 2015

GDP 45 25 22 17 16 14 13
Employment 67 55 50 45 44 38 33
GDP Ratio to 0.67 0.45 0.44 0.38 0.36 0.37 0.39
Employment
Source: BPS, 2015
Despite a number of idiosyncratic flaws and important weaknesses, during the pre-crisis high
growth period Indonesia made substantial improvements in social development and poverty
reduction. Moreover, between 1973 and 1983, the gross enrolment rate for primary school increased
from 82% to 109% and for junior secondary enrolment school increased from 24% to 52%. In the
health sector, infant and child mortality rates fell, nutrition status improved, and average family size
declined.
In the late ‘90s, the Asian economy was hit by the AFC, one of the worst financial crisis in
modern history. Among the most prominent consequences of the AFC in Indonesia was the abrupt
escalations of the poverty rate, which increased from 17% in 1996 to 24% in 1999. Indonesia's
economic growth was getting better until 2018, indicated by a significant decrease in the poverty rate
from 2000 to 2018, as shown in Figure 1.
De Silva,, Meliciani, Indrayani 441

Source: Worldbank, 2020

Figure 1. The National Poverty Rate in Indonesia, 2000-2018 (%)
Figure 1. is represented a reversal in the poverty trend, which had continuously declined since
the official measurements of poverty initiated in 1976. This study used the secondary time series data
for Indonesia from 2000 to 2018. The data included poverty rate (% of poor population), economic
growth, and investment, in action, and Gini ratio. The data were taken from World Bank in 2021.
While Indonesia is on track to meet several of its Millennium Development Goals by 2015, it will
require a considerable effort to meet several others (reductions in child malnutrition and maternal
mortality rate) and to accelerate poverty reduction and address vulnerability. Aware of these
challenges, policymakers have introduced new social programs that provide more comprehensive
protection from economic risks and encourage local communities to invest in physical and human
capital (Sumarto, 2017).
Indonesia in globalization
Indonesia encountered globalization without asking for it, and without fully realizing it. The
country’s encounter to the international l arena coincided with the arrival of the first Europeans,
together when the Vereenigde Oost-Indische Compagnie was founded in the Netherlands in 1602,
and 17 years later conquered Batavia. The Netherlands’ appetite for the Asian archipelago matured
during its Golden Century and contributed to the country’s prosperity throughout the following
centuries.
In fact, Indonesia’s colonial era lasted almost 350 years, of the Crown until the tumultuous
years that led to its independence. The Indonesian archipelago had already been at the center of
maritime traffic with other territories. The geographic position that facilities the relationships and
interactions with the external world.
If modern globalization is characterized by the absence of physical and political barriers,
Indonesia is geographically exposed to contaminations. In fact, with 17,508 islands wind up like a
snake to the imaginary line of Equator. There are no obstacles to landing by foreign entities and it
would be impossible to conceive a thousand of miles long coastal defense line. The sea is rich in fish,
the land fertile, the climate mild, and the interior abundant with resources. In fact the country has
been called “Island of Spices” and has not acquired its official name “ Indonesia” until its
independence.
Indonesia was a latecomer to the era of strength to emerge from its long stall, during which it
vastly underperformed its economic and social potential. The third millennium is already witnessing
Indonesia finally transforming the economic potential into reality.
But Indonesia did not follow Japan’s successful economic model, nor that the four Asian
Tigers. The Asian economic model of rapid industrialization accompanied by integration into the
global economy has only marginally involved Indonesia.
While neighboring Asian countries were rebuilding their industrial sectors after the
catastrophe of war, Indonesia remained underdeveloped. The opening of borders to international

trade and the inflows of foreign investments transformed other Asian economies into regional
success stories. But Jakarta remained unable to transform its ambitions into reality.
Indonesia has not been able to create a solid industrial base that could transform raw materials
into higher value-add products. Although the country was able to achieve limited progress, the
industrial production did not take-off. The export sector was not able to create the currency inflows
as in other countries of the region, which then used these resources to finance new investments.
The production system did not generate national champions, or any strong brands that could
improve exports. The modern industries, as well as its entire service sector, did not register any major
improvements other than limited advancements linked to their integration with other more dynamic
regional economies. Most of the population dwelled in poverty, the infrastructure gap remained
enormous, agricultural labor was still manual and basic sanitary requirements were missing.
The reasons for this lag are diverse and inter-connected. The prevalent opinion attributes the
country’s persistent underdevelopment mainly to its political direction. In fact, the end of Sukarno’s
politics marked the end of the Non-Aligned Movement, which was conceived in Indonesia at the
Bandung conference of 1955. Indonesia, after, joined the American side in the cold war. The country
became the stronghold of US politics in the Asia Pacific region and the undisputed dominus of
ASEAN but it failed to generate enough momentum to emancipate itself from poverty and
underdevelopment.
If globalization has provided the background against which change became possible, the Asian
financial crisis of 1998 was the fuse. Indonesia fell into the social abyss because of the capital outflow
from Asia as well as the competitive currency devaluations. Inflation skyrocketed, the rupee
devalued by 30%, social tensions exploded, discrimination increased against Chinese minority, and
separatist conflicts re-emerged.
Having come close to the edge, Indonesia managed to gradually resurrect itself, helped by a
combination of factors. the intelligent use of the opportunities that a globalized world presented has
been the most effective factor. The country began attracting investments, helped by the return of
peace, as well as simpler and more transparent regulations.
Indonesia’s strengthening economy enabled the country to sustain the crisis triggered in 2008
by Lehman Brother’s bankruptcy. The low export dependency shielded the country’s produced
wealth from the destruction that other export-oriented countries experienced due to the contraction
of international demand. After two years of GDP growth exceeding 6 %, growth rates fall to 4.6%
in 2009 and to pre-crisis levels in 2010 and 2011. A balanced combination of import and export,
contributed to economic stability and to the re-launch of the economy.
For the first time, Indonesia’s economic growth rate exceeded that of neighboring countries.
Indonesia became one of the few countries among the G20 members, together only with China and
India, to register a positive GDP growth. Per- capita income reached 11.720 USD in 2016.
Political globalization appears to be more concrete. In the Democracy Index Report 2016 of
the Economist Intelligence Unit, Indonesia ranked 48th out of 167 countries, with its position
improving every year. in the positive side, civil freedoms are protected with a pluralist system with
high levels of participation. Government effectiveness and regular elections are also respected.
The transaction to democracy has certainly been the biggest achievement of modern Indonesia.
Taking the most successful wester systems as examples, Jakarta confirmed that democracy is the
road to development. It is not obstacle, but is it a trampoline. It is important because the Indonesia
had a capacity to extract from a state of underdevelopment.
Indonesia seems to be pursuing a different road, delivering a message of confidence to the
experiment of democracy. In its current period of transformation, the country must make unavoidable
choices: thriving for independence and prosperity, ending a path of sacrifices, ambitions for a destiny
that could have been much more luminous if it had not been influenced by foreign interference
(Orlandi, 2017).
Determinants of growth
The economic growth and the related political stability of the country contribute to
strengthening the confidence of international markets in the pursuit of a harmonious development in

the medium to long term, thanks also to the maintenance of prudent fiscal and monetary policies by
the central government of Jakarta (Confindustria Padova, Confindustria Vicenza, 2012).
In fact, Indonesia has embarked on a virtuous circle of solid macroeconomic foundations, a
progressive decline in the cost of capital, a tight control of inflation and a constant advancement of
reforms on the agenda. It may be surprising that, in terms of the overall economic dimension,
measured by total GDP in purchasing power parity, Indonesia has already reached the eighth
economic power in the world in 2015, having overcome the United Kingdom, the France and Italy,
fell to the 12th world position (see the table below).
Table 2. Ranking of the total GDP and population in the major world economies in 2015
Ranking of GDP Country GDP in PPP Population Ranking of population

EKS in % of USA (in millions)
1 China 108.7 1369 1
2 USA 100.0 322 3
3 India 43.1 1260 2
4 Japan 26.8 127 7
5 Germany 21.4 81 9
6 Russia 20.7 142 6
7 Brazil 17.7 207 5
8 Indonesia 15.8 252 4
9 UK 14.9 64 11
10 France 14.7 67 10
11 Mexico 12.4 122 8
12 Italy 12.1 62 12
Source: Conference Board, Total database (2016) (Valli, 2017)
In 2015, Indonesia had 15.8% of the US GDP, a level of over 30% higher than that of Italy.
Naturally, this is partly due to the huge and growing Indonesian population, the fourth in the world,
after China, India and the USA, which exceeded 260 million inhabitants in 2016.
With a population of this size, Indonesia has a large domestic market, over 50% of which lives
in urban areas and adopts a modern lifestyle. A wealthy and growing middle class contributes to the
formation of about 70% of GDP which affects private consumption.
Indonesia is experiencing the most promising season of its economic boom. The current reality
describes a country that has become the economic center of Islamic finance, rich in natural resources,
raw materials and able to make the most of its advantageous geopolitical position. Utopia, if only
one thinks about 1998 with the devaluation of the Indonesian rupiah whose exchange rate had risen
from 1 $ / 2,000 rupiah to 1 $ / 18,000 rupiah, with a negative variation of GDP in free fall (-13.5%)
(Confindustria Padova, Confindustria Vicenza, 2012).
Today, Indonesia has changed. It has become a nation aware of its role within the global
market dynamics, enterprising, solid and quick to take action, and for this reason compared with
charm to the "Dragon Komodo", one of the most characteristic animals of the ecosystem national.
Indonesia has numerous strengths that have allowed her to grow, such as:
• young and dynamic population;
• increasingly qualified workforce;
• abundance of natural resources;
• strategic geographical location and strong presence in the global market;
• strong incentives for economic development by the government.
The growth experienced by Indonesia, in recent years, has been mainly driven by domestic
consumption, rising middle class and investment, allowing Indonesia to depend less on the
performance of the international economy than other countries in the area (Confindustria Padova,
Confindustria Vicenza, 2012).
The Indonesian economy continued to expand at a robust pace in Q1 of 2018, lifted by strong
investment. Real GDP growth edged down to 5.1 percent in Q1 2018, slightly less than the 5.2
percent in Q4 2017.Higher global commodity prices spurred stronger investment, especially in

machine, equipment, and vehicles. As a result, gross capital fixed formation grew the fastest in more
than 5 years. Higher growth in machinery investment also led to a further pickup in imports, which
grew more than twice the pace of exports, and acted as a drag on growth.
The current account deficit narrowed in Q1, as the services trade deficit shrank sharply. The
current account deficit narrowed to 2.1 percent of GDP in Q1, from 2.3 percent of GDP in Q4 of last
year, partly on stronger foreign tourist arrivals. In 2017, Indonesia's GDP was $ 1.02 trillion and its
GDP per capita was $ 12.3 thousand.
Indonesia’s economic outlook continues to be positive, although more measured. As global
economic growth is projected to slow and trade flows moderate from recent highs, Indonesia’s GDP
growth is projected to still rise with stronger domestic demand from 5.1 percent in 2017 to 5.2 percent
in 2018 (World Economics, 2018).Indonesia is growing, with a pro-capita GDP of more than 5% in
2019.
Investments
The international perception of Indonesia is best interpreted in the past years, as demonstrated
by the continued appreciation of Indonesian sovereign debt by international rating agencies, such as
Moody's which rated the Baa3 country on 17 January 2011 and the same Fitch from BB + stable a
BBB in the course of 2011. Both agencies are positioning Indonesia only one step from the
achievement of the so-called "Investment Grade" (while for Standard and Poor's there are still two
promotions).
According to the Jakarta government, the goal was reached in 2011, thus favoring the
attraction of more foreign investments. The Japanese agency JCRA (Japan Credit Rating Agency)
awarded investment-grade to Indonesia on 24 August 2011. The Credit Market Analysis (CMA)
agency in London, on the other hand, surpassed Indonesia from the ranking of the ten bond issuers
sovereigns riskier.
The Indonesian number has improved by ten positions, from 54 (2009-2010) to 44 (2010-
2011) to the World Economic Forum Competitiveness Index (CGI). In addition to the positive
aspects (soundness of public finances, prudent monetary policies, soundness of the banking system),
the fund also highlights the major critical issues waiting to be resolved effectively, such as the
adaptation of infrastructure to the country's development capacity and the reduction of public
subsidies to fuels and electricity 3% of GDP), from finance primarily with the expansion of the basic
tax base (income tax is in fact only 15% of GDP). Equally, they are the control of inflationary risk
and the attention to the rise in basic prices, considered a priority in the Indonesian government's
agenda.
Overall, direct investments in Indonesia were considered a last determining factor, in 2011. In
fact, direct investments from abroad are above 2%, a line level with those registered before the 2008-
2009 crisis.
Among the economies located are Vietnam, with FDI equal to 9% of GDP in the last 3 years.
China, despite the fall in the Ide / GDP ratio recorded in recent years following sales on the labor
market and the acceleration of wages, the ratio remains 3%.
Investments grew faster by 6.1%. "The Economist" magazine published in September 2009 a
special insert dedicated to Indonesia called "Un'occasione d'oro", denoting the transition in just 10
years from a country on the brink of catastrophe to politically stable and solid democracy, with
economic growth second only to China and India. Il Sole 24 Ore has also dedicated a deepening to
Indonesia on January 24, 2011, entitled "The giant grows".
The economy of Indonesia, thanks also to the new political climate and the regulatory norm
for attracting investments, recorded an increase in foreign investments. The recent dynamics of
foreign direct investments in Indonesia, showed a lack of growth starting from the last quarter of
2009, which had registered the lowest moment following the fall following the 2008-2009 world
recession.
In 2011 the highest figure of all time was probably reached, also taking into account the 5.6
billion US dollars recorded between June and September, the highest quarterly figure since the series
began to be published in 2004. This data marks another record: within 2010, with 13.3 billion dollars.
These are data that put good intentions in foreign direct investment in Indonesia. The growth

continuing until 2020, showed in Figure 2. Indonesia has the highest project finance value compared
with other ASEAN countries.
Figure 2. International project finance values in ASEAN annual average 2015-2017 and
2018-2020 (billion dollars)
According to the conditions, therefore here are some reasons to Invest in Indonesia: (1) lower
competitiveness than China as a production base for international operators; (2) huge availability of
natural resources that continue to compare in the analysis and in the adjacent manufacturing sectors;
(3) to continue the demand for work at favorable economic conditions, a face of marked pressures
for the reduction of costs; (4) strong economic growth, low labor costs and progress achieved in
terms of political stability; (5) a vast and growing consumer base that will generate significant
investments in the trade sector.
Recently, foreign direct investment has represented a relatively small percentage of GDP, if
we compare this relationship with that of other countries in Southeast Asia. On the other hand, there
has been a definite recovery, and in 2011 foreign direct investments amounted to just over 2%, a
level in line with the highest levels reached before the 2008-2009 crisis. In absolute terms,
investments have grown significantly in recent years.
During 2009, Indonesia showed a marked growth, starting from a brilliant situation caused by
the negative international economic situation. In 2011, the highest figure of all time was reached,
also taking into account the 5.6 billion US dollars recorded between June and September, the highest
quarterly figure since the series began to be published in 2004. This figure follows a another record:
the one for the whole 2010, with 13.3 billion dollars. Analyzing in detail the FDI realized in the first
half of 2011, the value of investments in Indonesia was equal to 4,784.3 million dollars, for a total
of 1,456 projects.
Table 3. The ten most relevant sectors of investments in Indonesia in terms of attracting FDI,
both in terms of monetary value ( in million dollars) and %
SECTORS MILLIONS N. OF MARKET

PROJECTS SHARE
Mining sector 1,507.1 140 31.5%
Chemical and pharmaceutical 623.2 70 13.0%
Metals, machinery, electronics 546.5 133 11.4%
Transport, warehousing and 457.9 47 9.6%
communications

SECTORS MILLIONS N. OF MARKET

PROJECTS SHARE
Trade and maintenance 376.8 306 7.9%
Agricultural crops and plantations 305.7 83 6.4%
Food 367.6 95 5.6%
Paper and press 182.2 18 3.8%
Real estate 85.5 25 1.8%
Rubber and plastic 85.1 50 1.8%
Source: Bank of Indonesia, World Bank
Table 4. Development of activities in Indonesia from 2005 to 2010
2004 2005 2006 2007 2008 2009 2010 Average

Agriculture, forestry and
6.7 0.0 4.6 4.1 2.1 -1.1 2.1 2.7
hunting
Fishing 0.0 0.1 0.1 0.3 -0.3 0.2 0.4 0.1
Raw material extraction 5.9 14.7 6.5 27.5 38.7 26.7 13.5 19.1
Manifacturing 39.3 63.1 34.4 34.8 24.9 32.3 36.2 37.9
Electricity, gas and water 0.0 1.9 0.0 -0.9 -0.6 1.1 1.6 0.4
Buildings -0.8 1.6 1.7 2.8 0.3 0.1 -0.4 0.8
Wholesale and retail sale -10.1 0.7 7.6 3.1 12.4 1.5 19.4 4.9
Hotel and restaurants 0.0 0.0 0.1 -0.1 0.2 0.0 0.0 0.0
Transport and
10.7 4.6 12.1 8.6 1.4 36.9 18.7 13.3
communications
Financial intermediation 20.5 9.4 20.9 19.3 20.7 3.1 3.2 13.9
Real estate and commercial
-0.8 0.2 -0.3 -0.1 -2.2 -0.5 0.2 -0.5
activities
Other 28.6 3.6 12.2 0.5 2.3 -0.3 5.1 7.4
Total 100 100 100 100 100 100 100 100
Source: Bank of Indonesia, World Bank
As can be seen from the table above, the manufacturing industry continues to attract the largest
share of IDE, with around 30% of the total. Investment transactions in this sub-fund continue to
consist of greenfield operations. Investments in mining and extraction grew significantly in the years
between 2004 and 2008, largely coming from the US, attracted by the rise in the price of raw
materials.
The development of Indonesian deposits led the country to be one of the largest producers in
the world and this naturally occurred with the support of foreign capital.
The attraction of foreign capital in the distribution sector is a new phenomenon because until
2008 foreign investments were concentrated mainly in the manufacturing and extraction sectors. The
prospects for FDI are therefore positive, with increases on 2011 seen by the Bpkm (Council for the
coordination of investments in Indonesia) even higher than 20% despite the global economic crisis.
These optimistic prospects concern both the supply and the demand for investments from abroad.
Finally, the infrastructures are not adequate for the rapid growth of the country, particularly as
regards the energy grid, but we believe that the worst should have already been archived ", says
Alberto Boquin, Research Analyst of Brandywine Global, Legg Mason bond affiliate. The expert
says he is convinced that, thanks to a possible improvement in the current account, a better coverage
of the external liabilities of the companies and a confirmation of the current political leadership in
the upcoming elections in April, the yields of the bonds of Indonesia in 2019 they should be
interesting, thanks to good political and financial stability. In fact it represents the fourth democracy
in the world and the sixteenth economy.
Political stability, together with economic growth, have greatly increased the confidence of
the international markets that are financing Indonesian development in the medium to long term.

This is also due to the fact that the Indonesian government has initiated very prudent monetary and
fiscal policies.
The economy is expected to grow at a rate among the highest in the world. Since 2008,
Indonesian growth rates have always been very strong and it is since 2004 that every year Indonesia
has rates of more than 5% which were among the highest in the Asian economy. The internal market
is very large and is mainly represented by the middle class.
The country has a population of over 200 million and an average class of more than 45 million
people with a GDP per capita of around 3,000 euros. The population is very young and this represents
a driver of internal consumption that, together with investments, are the basis of growth. The high
domestic consumption and growth allow Indonesia to depend to a negligible extent on the global
economic trends.
Indonesia is also equipped with a highly evolved banking sector characterized by banks with
high levels of capitalization and quality assets. The Indonesian nation has low levels of public debt,
high financial ratings and high stock of foreign reserves. The Government has also launched a plan
for infrastructural reforms and development. The latter takes the name of Master Plan for the
Acceleration and Expansion of Indonesia's Economic Development 2011-2025 (MP3EI) launched
by President Yudhoyono in 2011 in order to accelerate economic development for the period from
2011 to 2025 (AREL, 2012).
An emerging nation led by digital sectors and technology
Over the next decade, Indonesia will become a nation full of mobile and digital devices. Today
there are more than 220 million mobile phone owners in the archipelago. The use of the internet has
become part of everyday life in people.
Growing at a rate of 20% per year, the number of those who have access to the Internet is
expected to reach 100 million by 2016, improving the internal connection in the country.
Environmental technologies could also significantly change the resources available on the market in
the coming years.
For example, Indonesia is home to 40% of the world's geothermal energy reserves. If fully
exploited, these could generate up to 24 Terawatt per hour in a year, equivalent to 70% of the annual
energy consumption in the city of Jakarta alone (Confindustria Padova, Confindustria Vicenza,
2012).
ITALY AND INDONESIA: ECONOMIC RELATIONSHIPS

Today the world looks to the east and it is therefore necessary to focus on Indonesia. In recent
years, the paradigm shift is impressive. The time has come for our country and Europe to implement
a specific and priority investment policy towards one of the great protagonists of the future in the
world. It represents the largest of the ten ASEAN countries in terms of size, population, GDP,
political and military weight. For years, a reform policy has been launched that successfully aims to
gain positions in a ranking that instead has relegated the country to the last places in Asia, that of per
capita income.
The focus attention is on an important mission: to describe the relationships between Italy and
Indonesia, that part of the world that today appears decisive, attention without which our country
risks a real marginalization, its confinement in a corner provincial and without a future.
Indonesia acquires particular importance thanks to Italian companies, the most attentive media
and the Italia-ASEAN association. The latter since its inception in October 2015, has dedicated
commitment, resources and attention to Jakarta, in its dual capacity as Indonesian capital and
ASEAN headquarters.
In the first section will be deepen the strong relationship that binds Italy and Indonesia, thanks
to the soil, the traditions, the cultures of the individual countries and again thanks to their look to the
future without abandoning their roots. This led to a real interconnection that allowed the two
countries to merge in order to make them more powerful on the international market. Thanks to their
coalition and the choice to invest in collaboration, the program entitled "Invest your talent in Italy"
was created, aiming at the internalization of Italian and Indonesian companies and attracting foreign
talents to Italy. Moreover, thanks to "High Level Dialogue in ASEAN-Italy Economic Relations",
the intent is to create an increasingly solid and effective platform to promote this economic
relationship.

In other hands, this research will focus on the relationship between Italy and Indonesia, in
terms of import & export, Italian industrialization in Indonesia, which companies have established
themselves in the last decade, and why it is important for Italy to invest in Indonesia. The two
communities geographically distant, inheritors and interpreters of their own historical path,
traditions, spirituality and art, tend to build up a relationship in terms of intersection, admiration and
curiosity towards the other country. Mythical and even romantic cognition that in Indonesia and
originates that heritage of consideration and admiration for our country, capable of giving life to a
strong and intense relationship.
On May 18, 2017, President Mattarella said he wanted to increase bilateral relations between
Italy and Indonesia, hoping that the first visit by the Indonesian president to Italy was an opportunity
to accelerate relations between the two countries. The most intense memory, writes Esti Andayani,
ambassador of the Republic of Indonesia in Italy, dates back to 60 years ago, when the Indonesian
roads were crowded with Piaggio and Vespa.
The case occurred from the recognition of Italy of the Republic of Indonesia on December 29,
1929, seen from the opening of an Indonesian representative office in Rome and an Italian in Jakarta.
The image of Italy in Indonesia is very good, even if a little misty deriving from the financial
crisis. Italy is appreciated for its wealth of art, cuisine, fashion and culture. Finally, even the terrorist
attacks have caused the Indonesians to dock in Italy. Our country remains one of the favorite tourist
destinations in Europe. For several years the Italian government has been looking with renewed
interest at the vast Indonesian market. Indonesia represents a key country for trade and investment
for the Italian system, accompanied by important reforms implemented by the Indonesian leadership
in favor of foreign investments, which have strengthened the relationship. (Orlandi, Italia e
Indonesia, 2017)
The Italian community in Indonesia is well above a thousand units, focusing mainly on Jakarta
and Bali. Expanding the number of companies present, which already see Pirelli, Telecom, Eni, Enel,
Piaggio. We must aim for 2012 as a year of relaunching Italo-Indonesian relations, through a series
of initiatives. An initiative that concerns the political sector from both a bilateral and a multilateral
point of view, including in the EU-ASEAN context. But political dialogue also extends to economic,
cultural and technological levels.
The success of Italian initiatives can’t be separated from a strong collaboration with local
environments. In particular, it is necessary to involve non-Italian potential stakeholders in its action.
The interest of the Italian brand is very strong and not a few exponents of the Indonesian community
have expressed interest in being involved in Italian initiatives. From a cultural point of view, there is
a strong synergy between Italy and Indonesia. Italian culture is very popular and there are great
expectations of our presence in this sector equal to expectations.
Investments in collaboration
Indonesia is a crucial Asian player. It is the fourth most populous country in the world, a
thriving democracy offering today a harmonious model of peaceful coexistence among different
ethnicities, religions and cultures. It shares such as a pluralism and tolerance and this has led two
countries to begin a fruitful series of Conferences on the interreligious dialogue.
Within the G20, it corporates on issues such as the fight against terrorism and violent
extremism, migration, the relaunch of the global economy, and the implementation of the 2030
Agenda for Sustainable development. On the issues, which are also priorities for us in the framework
on the Italian G7 Presidency, exchanges of views with Indonesian partners are particularly intense.
The bilateral relations are underpinned by the Joint Declaration for Global Partnership of 2012.
There are all-round cooperation that is strongly energized by Italian companies’ interests in sectors
such as infrastructure, manufacturing, the mechanic and component industry, as well as design and
fashion, which are in particular well appreciated by an expanding and cosmopolitan Indonesian
middle class. The investments are in cultural and academic collaboration, a synergy that is fostered
by the continuous effort of Embassy, the Italian cultural Institute, the Uni-Italia Office and a
university lecturer in Jakarta. Approximately 20 agreements between Italian and Indonesian
universities have already been signed and many Indonesian students have chosen Italy as a
destination for their students.

Indonesia is a pillar of the Association of South East Asian Nations and hosts its secretariat in
Jakarta. ASEAN counts over 630 million people, representing overall the 7th world economy, with a
GDP worth 2400 billion dollars; it can boast growth rates among the highest in the world, an
industrious and highly qualified workforce, and a fast growing middle class.
Italy welcomed the creation of ASEAN Economic Community in December 2015. This will
bring relevant benefits not only to Member States, but also to the Asian region as a whole and to the
global economy. Italy supports a strategic partnership between the EU and Asean, including by
working closely together in such formats as the East Asia Summit and the Asia- Europe Meeting.
The partnership, cooperation and free trade agreements, which are being finalized between the
EU and several ASEAN countries, are steps towards this goal. Indonesia is a priority country, within
ASEAN, as s designated by the Steering Committee for Internationalization and is included in the
program: “Invest you talent in Italy”. The objective is to support the internationalization of
companies and to attract foreign talent to Italy. Also, it creates the “High Level Dialogue in ASEAN-
Italy Economic Relations” in corporation with The European House-Ambrosetti, a solid and effective
platform to promote this economic relationship. In addition to the work carried out by the Ministry
of Foreign Affairs and International Cooperation, recognized the extraordinary commitment of the
Italy- ASEAN Association, which over time has been building “bridges” between Italy and ASEAN.
Import & Export

Italy is perceived as the home of lifestyle, good taste, and therefore associated with the quality
consumer product. We talk about design, fashion, food products, thought immediately falls on Italy,
the ideal place to turn an idea of a consumer good, into a quality product. A more careful analysis by
the United States, which is based mainly on mechanical products, with innovative technological
contents, innovative products that bring creative solutions, the result of modern and innovative Italian
technologies.
Indonesia takes a lot of consideration of these factors. In fact, our country has entered as the
ideal place for the production of luxury, in any sector. Our commercial presence and investments,
also in Indonesia, are traditionally guaranteed by industrial sectors, often sophisticated. Italy has
contributed to the development of Indonesia.
There are not many Italian companies that for many reasons have settled permanently in
Indonesia, establishing a solid and decades-long presence, restructured after the financial crises of
the 90s. Indonesia has strong macroeconomic giants, in fact many analysts and international
observers say that there may be significant opportunities that Italian companies can seize within it.
There are numerous companies that have created a platform capable of serving the Indonesian
market in the best possible way.
With a market share of slightly less than 1%, Italy is the fourteenth supplier country in
Indonesia. Italian imports, on the other hand, amount to 2.2% of the Indonesian total and Italy is the
13th customer country in Indonesia. Italy imports mainly raw materials and intermediate goods, such
as coal, palm oil, whose Italian demand is growing more and more.
On the export side, industrial sectors play a predominant role. Italian machinery, increasingly
sought after, can contribute to the creation of industrial and infrastructural projects that Indonesia is
carrying out. Almost a third of our total exports consist of products belonging to the different sectors
of instrumental mechanics, and the so-called export of steel tubes and profiles is becoming
increasingly important.
Other sectors that are relevant are telecommunications equipment, construction equipment,
technologies for creating energy, for holding water and protecting the environment. These are the
sectors that record a higher percentage of sales, despite the strong appreciation of the euro and a
fierce competition from the big giants such as China, Japan. It is essential that our Italian companies
understand the great opportunities that Indonesia offers (Arel, 2017)
\

Tables 6. Main exports & imports between

Indonesia and Italy
Italian exports Italian imports
Main goods Billion % Main goods Billion %
Bottling -washers 0.26 15.0 Palm oil 1.09 42.0
Chemical and drugs 0.10 6.0 Coal 0.53 11.0
Valves 0.09 5.8 Footwear 0.15 5.2
Rubber processing machines 0.06 3.1 Polyacetals 0.11 4.1
Direct injection engines 0.05 2.8 Batteries, electrical items 0.09 3.6
Tobacco processing 0.04 2.6 Wood, wooden forniture 0.07 2.6
Air pumps 0.04 2.6
rubber 0.07 2.6
Specialized machines 0.04 2.4 coffee 0.07 2.6
Heating machines 0.04 2.1 Textile fibers 0.05 2.2
Paper machines 0.03 2.0 Tin, aluminum, nickel 0.05 2.2
Steam turbines 0.03 1.7 Mollusk and fish 0.05 2.2
Cars, tractors and 0.03 1.7 Steam turbines 0.04 1.4
components
Source: The Observatory of Economic Complexity (OEC)
The food and wine sector is also very important. Italian cuisine lives a magical period
worldwide. In Indonesia, the growing interest in culinary tradition stimulates demand for new and
even niche products. There are numerous Italian products present in sales networks such as
Carrefour, or in specialized stores such as Ranch Market, Sogo Foodhall.
We also see, in the table below, how until 2011, imports and exports have evolved in the
interchange between Italy and Indonesia.
Table 7. Italy-Indonesia interchange (values in millions of euro)
Year Export Import Trade Balance

1991 267 306 -39
1992 278 440 -162
1993 387 588 -201
1994 536 676 -140
1995 632 825 -193
1996 880 744 -136
1997 829 828 1
1998 247 976 -729
1999 265 824 -559
2000 457 950 -493
2001 529 961 -432
2002 491 995 -504
2003 402 1066 -664
2004 490 1186 -696
2005 489 1227 -738
2006 589 1420 -831
2007 559 1447 -888
2008 618 1782 -1164
2009 499 1601 -1102
2010 633 2056 -1423
2011 809 2685 -1881
Source: Elaborazione di dati Istat e Banca d’Italia 2010. Values of current price

The promotion of Made in Italy in Indonesia

Italy and Indonesia are getting closer and closer. This statement well represents the evolutions
of a long-standing relationship between Italy and Indonesia. Even though the year 2017 is the 67 th
anniversary of the bilateral relations, only in recent years there has been an increasing mutual
attention between Italy and Indonesia. In fact, the visit to Jakarta in November 2015 by the President
of the Italian Republic, Sergio Mattarella, was a turning point. On that occasion, the President was
accompanied by the Minister of Economic Development. During this visit, an important bilateral
economic forum was organized by the Italian Trade Agency (ITA), which saw the participation of
over one hundred Italian delegates, all of whom were interested in the major infrastructure projects
launched by the Indonesian government.
There is now a growing awareness of the economic opportunities, that exist in Indonesia, both
in terms of trade and investments, and there is an appreciation for the strong efforts that the current
Indonesian government is making to increase the country’s competitiveness, improve the business
environment and open its economy to companies and foreign investors. If for many Italian
companies, especially small and medium sized, Indonesia represents a universe to discover, however,
this cannot be said for ITA. Acknowledging the potential of the country, it opened its office in Jakarta
in 1979, and has been following its subsequent development, giving support to our production system
in order for them to seize the opportunities that Indonesia was beginning to offer.
The composition of the Italian trade with Indonesia, despite certain fluctuations related mainly
to cyclical regional crises or global influences, has been largely stable through time due to the
substantial “complementarity” of two economies, in which there are practically no areas in direct
competition.
If in the ‘80s and ‘90s Italia imported from Indonesia mainly commodities for example oil,
coal, palm oil, rubber, timber) and basic industrial products (textiles, leather), in recent years we
continue to import raw materials or natural products. Similarly, regarding with Italian export, it is
the manufacturing industries and capital goods (machinery and equipment in all areas in the machine
tools sector) that have the lion’s share.
Italian export to Indonesia of capital goods, transport equipment, chemicals and metal still
constitute approximately 75-80% of Italian exports. The consumer goods and food sector, however,
are placed at approximately 5% each, far from the average percentage held by in these sectors in
many other markets.
The total trade between the two countries, mainly reflects the variations in Indonesian export,
while the Italian one remained almost stable over the last five years. For both flows, monetary values
are still far from what one can expect from countries with such dimensions and economic weight.
Today, there are about sixty companies registered by ITA in Jakarta that have made direct
investments through stakes in existing local companies or with new settlements and representative
offices. All other companies that have approached the country are, however, still at the stage of
simple exports agents, distributors or local importers. Between 2010 and the first half of 2015, 35%
of Italian investments in Indonesia have been in the manufacturing sector, another 35% in the mining
sector, 13% transport and logistics, 5% in the food sector, the rest in the industry trade and other.
Just under 80% of the investments are located on the island of Java, 13% on the island of Kalimantan,
5% in Bali.
There are more opportunities that the current economic scenario holds for Italian companies
for the coming years in Indonesia, it is necessary to turn briefly to the evolution of the opening of
the ITA Office in Jakarta. Since ‘70s, in fact, and for the period before the crisis of 1997-1998, the
manufacturing sector in Indonesia has been growing at a faster rate than that of GDP, to which it
contributed a share of an approximate 30%. Subsequently, the increase in price of commodities on
international markets has prompted Indonesia to rely on growth driven mainly by the wealth of raw
materials, both fossil and that of natural origin. This resulted in a drastic reduction over the last 15
years of the manufacturing industry’s contribution to national growth so that same economists have
come to speak of progressive de-industrialization of the country.
The fall of international prices of raw materials which occurred in the last two years, has put
in deep crisis this development model’s capability of ensuring a 5% annual average GDP growth. It
has also pushed the current government to rethink growth strategies, putting at the center of its
priorities the modernization and revitalization of manufacturing activities.

Indonesia launched a massive plan for infrastructure development through the identification
of more than 1000 projects of national interest, accompanied by the adoption of legislative measures
aimed at improving the climate for foreign investment. Therefore, great opportunities emerged for
Italian companies.
There are important opportunities for the Italian companies offering innovative technologies
in other areas of high priority for Indonesia. Worth mentioning are the sources of renewable energy
in light of the need for Asian countries to reduce heavy reliance on coal and to diversify energy
sources, with special attention to geothermal, solar, hydro, all areas where the Italian experience and
excellence are recognized.
The government program provides from renewable sources from the current 10.7 GW to 21.5
GW by 2019 with the objective to have domestic energy needs met by renewable sources of Enel
Green Power and Ansaldo Energia bear witness to Italian expertise. Always in reference to “green”
technology, there is great interest in the introduction of clean production processes. This segment
offers added opportunities both in terms of public works and luxury housing. The Indonesian
government in fact intends to develop the areas of wastewater and environmental remediation for
greater efficiency accompanied by an energy saving also involving the local public utilities.
Another booming sector in Indonesia, as result of economic growth, is that of medical
technologies and the entire health care industry as a whole.
Further growth opportunities for Italy derive from the machinery for the plastic and rubber
processing and the related petrochemical industry, machinery and equipment for agriculture and
fisheries, for food processing and packaging. Good opportunities also exist for Italian companies in
the automotive, auto components and accessories sector.
In the field of fashion and luxury, in the many upscale malls in Jakarta and other major
Indonesian cities, outlets of the most important brands, in recent years, have been opened, for
example Prada, Gucci, Bulgari, Roberto Cavalli, Armani, Ferragamo. The same can be said for the
food and catering industry with the opening of dozens of Italian restaurants in Jakarta, Bali, and in
some major Indonesian cities. There is also an increasing presence of Made in Italy food products in
stores of large retailers, especially the high-end boutiques and shops.
Since the opening of Italian office in Jakarta in 1979, much has been done and Indonesia has
become a significant market for Italy. The changes described above have made Indonesia a country
of great economic and demographic development globally. ITA took among the 14 largest markets
in its economic and commercial promotional strategy.
The governmental “Control Room” for the Italian internationalization, placed Indonesia
among those countries with high potential. It is also one of the priority markets for an integrated plan
of action which Made in Italy is to be promoted for the next three years and upon which focus on
investments and continuity of action.
The police areas identified are in line with the development priorities of the Indonesian
government. As detailed, Italian strengths are mainly machines and manufacturing, infrastructure
and construction, renewable energy, maritime and ship-building, med-tech, automotive and also
food. In addition to classical promotional activities, we are going to start the industrial cooperation
projects and technology partnership-type G-to-G. They provide, in collaboration with our industry
associations, the implementation at local training facilities of Technological Center equipped with
Italian machinery and equipment and supported by the assistance of Italian exports in the fields of
manufacture of leather goods and textile industries. The hope is that these technical assistance
activities will result in long-term trade agreements. At the same time, Italy would provide an
important contribution to the qualification and the elevation of the Indonesian finished products so
as to make them more competitive on international markets.
On January 1st 2016, the ASEAN economic community was formally established, a single
market with a GDP of 2.6 trillion dollars on the model of what happened in Europe in the ‘50s and
‘60s. It is a process of integration among the ten ASEAN members, aimed to the progressive
elimination of obstacles to the free movement of goods, services, people and capitals within the
Association. This process will put Indonesia in a position to be the engine and economic hub of the
entire area, offering Italian’s company free access to a market of over 620 billion people.
The Italian companies must, be able to intercept all the outlined changes and always be ready
for new challenges and opportunities. It is obvious that the sectors where a closer collaboration is

possible between Italy ad Indonesia are numerous. Italian economy is complementary, and this
characteristic must be regarded as a key factor in expanding all possible areas of collaboration in the
near future (Scannavini, 2017).
Italian industrialization in Indonesia

Even more important to explain the impetuous growth of the economic dimensions of the
country, was the strong rise in Indonesia, in the 2000s, of industry, some modern services and GDP
per capita, which rose by 12.7% of GDP per capita USA in 2000 to 20.2% in 2015. Even if indicators
such as GDP and GDP per capita are very rough and incomplete concepts to explain the level of
economic well-being of a country, they point out the large economic dimensions already reached by
Indonesia and the remarkable progress of its production system. This has also happened through
important structural transformations in the economy.
Not only has Indonesia registered, as almost always happens in emerging economies, a gradual
fall in employment in agriculture and a rise in employment in industry and services, but has also seen
a major change in the export structure. The latter were dominated until the beginning of the 2000s
by exports of natural resources and in particular of natural gas, crude oil, coal, wood, palm oil, rubber
and gold.
In the table below, it is possible to note the values referring to total trade, exports, imports and
the trade balance, in terms of oil and gas and non-oil & gas between Italy and Indonesia, over the
2013 to 2017 period.
Table 8. Italy Product Exports And Imports To Indonesia 2019
Export (US$ Import (US$

Product Group Thousand) (%) Thousand) (%)
All Products 1519405,19 100 2047856,53 100
Capital goods 944927,01 4,72 96625,94 62,19
Consumer goods 205995,11 38,45 787439,09 13,56
Intermediate goods 267971,02 50,81 1040590,61 17,64
Raw materials 77054,51 5,87 120228,14 5,07
Animal 2976,2 1,22 25027,35 0,2
Chemicals 148770,17 3,08 63095,56 9,79
Food Products 50624,49 4,41 90240,24 3,33
Footwear 7637,83 7,37 150900,1 0,5
Fuels 149,57 0,28 5722,31 0,01
Hides and Skins 39417,47 1,34 27459,81 2,59
Mach and Elec 897015,07 4,74 96986,83 59,04
Metals 67275,22 18,01 368797,01 4,43
Minerals 8972,98 0,03 540,05 0,59
Miscellaneous 71706,66 2,22 45415,37 4,72
Plastic or Rubber 41994,7 8,03 164351,39 2,76
Stone and Glass 27595,56 0,87 17798,8 1,82
Textiles and Clothing 32578,87 7,51 153723,76 2,14
Source: World bank, 2021
There were also exports of goods from the manufacturing industry: PCs, textiles and clothing,
furniture, footwear, etc., but on the whole they imported manufactured goods for a greater value than
they could export. In 2015, the structure of foreign trade changed greatly.
Indonesia had become a net importer of oil, both refined and crude, while maintaining an
important positive trade balance for natural gas and even more for coal, which is the main item of
exports. Indonesia also had strongly increased exports of palm oil, rubber and some of the gold and
other minerals. However, the Indonesian manufacturing industry recorded significant growth in the

2000s, even though the production of many medium or high technology goods, such as cars,
motorcycles and ITC products, is still dominated by foreign multinationals and in particular by
Japanese companies, South Korean, Chinese, US and Singapore.
The result is an intrinsic weakness of the Indonesian industry in these sectors. The most
advanced functions of the production cycle, such as management and strategic marketing, research
and development, production of the most sophisticated components and several spare parts, are often
carried out in the countries of origin of the multinationals, while in Indonesia we focus mainly on
assembly and production of the simplest components.
There are many small and medium enterprises, and some large ones, fully controlled by
Indonesian capital, but these operate above all in the sectors of primary transformation of natural
resources, or in the traditional sectors of industry (textiles, clothing, food, leather and leather etc.),
or in buildings, or in services (banks, telecommunications, commerce, tourism, etc.). The State has
maintained a significant presence in the oil sector, in the avionics and in communications. As we
said before, there are not a few Italian companies that for one reason or another have entered
Indonesia, finding fertile soil in order to exploit new opportunities.
To this end, it is important to remember the focus programs set out by the Indonesian
authorities and considered to be the driving force for the development of the country: energy,
transport, food, health, defense, technologies.
The total number of Indonesian companies held by Italian companies is about 115: in 61 the
Italian presence is a minority, while another 54 are subsidiaries, with the majority Italian
shareholding. In fact, after the Soekarno period (1948-1965), Indonesia returned to favoring foreign
investments, increasing the presence of Italian companies and banks. The Italian business presence
is articulated in Indonesia with representative offices, commercial offices, industrial investments.
The Italian presences can be expressed in two moments: a first moment until 1998, coinciding
in Indonesia with the end of the thirty years of the Soeharto presidency; a second moment from 1998-
2011, which affirms remarkable Italian companies. In the period up to 1998, there were 24 Italian
companies, including: (1) Eni, which managed the gas field together with Vico; (2) Ansaldo, whose
company operated in the energy sector, supplying a geothermal power plant; (3) Fiat, with its own
brand, has sold a large number of vehicles; (5) Pirelli, producer of radial tires for cars: (6) Perfetti
Indonesia, with a large plant for the confectionery industry.
In a second moment that goes from 1998 to 2011, other notable companies are affirmed
besides those already mentioned that continue their production, improving technology and
innovation: (1) Telecom is established in Jakarta (2) Piaggio, a motorcycle manufacturer; (3)
Generali, an insurance company that has achieved remarkable results in the ASEAN countries and
in particular in Indonesia; (4) Enel, which is creating significant projects towards the future to
improve the energy system in Indonesia.
Experimental case: Ansaldo

Ansaldo represents an important industrial company, founded in Sampierdarena (today a
district of Genoa) in 1853 with the name of Gio Ansaldo & C. limited partnership. In 1993 it joined
the Finmeccanica group. A company of great depth that has tried to grow through innovation and
expansion, so as to be able to reach new continents such as Asia and in particular Indonesia. The
Ansaldo Energy Group is an international player in the field of electricity generation, a player capable
of providing the industry with an integrated model, from key systems, to components (gas turbines,
steam turbines, generators, microturbines), to service support, up to the activities in the field of
nuclear energy. Ansaldo Energy is a 44.8% owned subsidiary of CDP Equity, of the Cassa Depositi
e Prestiti Group, a national promotion institution that has been supporting the Italian economy since
1850, and 40% of Shanghai Electric, a world leader in the production of machinery for generation
and mechanical equipment (Indonesia A. v., 2016).
The objective of Ansaldo is to revs up energy development in Indonesia. It is willing to offer
top technologies to customers in Indonesia, as its power market is expected to grow at a tremendous
rate. Ansaldo Energy has been active in Indonesia for over 20 years and has two recent installations
in the country. In 2015, Ansaldo Energy acquired two contracts for Indonesia worth 80 million euros.
To monitor the implementation of these activities and to better seize the future opportunities of a
market with promising prospects, Ansaldo Energy has recently opened a branch in Jakarta, in the

presence of the Italian Ambassador in Indonesia, Vittorio Sandalli. With this new headquarters the
Ansaldo Energy Group intends to take root even more in the South East Asian region. The Italian
company has in fact received the Notice to Proceed (communication of commencement of work) for
two contracts signed at the end of 2015, with a total value of approximately 80 million euros in
Indonesia.
The first contract concerns the supply of two AE94.2 gas turbines, two air-cooled generators
with related auxiliary systems for the 500MW Grati-Pasuran combined cycle plant in the eastern part
of the Island of Java. The Customer is Lotte E&C, a member of the consortium that won the
international public tender organized by PT PLN, the state's electricity company.
The second concerns the complete rehabilitation of a 30MW geothermal plant located in
Kamojang, where it replaces the existing turbine and generator, with a new building in the Genoa
plant for Indonesia Power, a subsidiary of PLN, in the western area of the Island of Java.
Aldo Canepa, new units sales, vice president Asia Pacific, Ansaldo Energy, said that there are
several market opportunities in Indonesia, and that the company’s major drive for their presence in
the country is the installation of gas and geothermal turbines. After having completed the two gas
turbines and the rehabilitation of the geothermal power plant, Canepa said that Ansaldo Energy, is
now working with different customers to develop new initiatives and then collect new business
opportunities from the field. In the geothermal space, Canepa said that the company is able to provide
a full range of geothermal turbines that generate 20MW up to 110MW. In fact, Ansaldo Energia
brings the geothermal total that has been installed in the region to 270 MW.
At present, it is exploring several partnerships with stakeholders across all power sectors,
which includes independent power producers (IPPs).
In particular, the company prides itself in its GT26 and GT36 turbines, which have a flexibility
and efficiency that can fit well in the Indonesian grid. According to Canepa, gas in Indonesia is
frequently used to fuel peaker power plants, and the GT26 and GT36 can perfectly operate with high
efficiency at full and partial loads.
Because of a unique sequential combustor technology, the GT26 and GT36 turbine offers low
emissions, a high turn-down capability, and high fuel flexibility. The high turn-down capability of
these turbines enlarge the emission-compliant operation window, and thus increases the options for
the power plant operator as compared to other combustion technologies. Ansaldo Energia partnered
with Shanghai Electric to deliver gas turbines to the wider Asian region, especially China.
Canepa said that they are also exploring other markets and identifying the best strategy for
expansion. Ansaldo Energy is involved in an integrated business model for turn key construction of
power plants, power generation equipment, manufacturing and services, and services related to
nuclear business. In Indonesia, the company’s representative office focuses on opportunities such as
for EPCs, OEMs, and related maintenance services with major state utilities like PLN, its subsidiaries
and IPPs now approaching the Indonesian market (Ansaldo, 2016).
Experimental case: Enel

Today, Indonesia's energy future passes to geothermal energy. The future is due to regulatory
factors and to the lack of awareness of the territory, two factors that have slowed down the long
exploitation of underground energy and investments in the sector.
"In Indonesia there is a strong increase in the demand for electricity, both due to the high rate
of economic growth, with an average annual increase of 5% in GDP, and to an increase in the
electrification rate" (Enel Green Power, 2018).
In 2014, Parliament passed a law, bureaucratic barriers and regulatory uncertainties, regulates
and promotes finding geothermal resources for electricity production. The country's commitment to
the use of energy is also characterized by the 2016-2025 National Energy Plan, with which the share
of renewables in the electricity mix is increased from the current 13% to 23% by 2025, with the
geothermal energy occupy a place in the foreground. Indonesia has the largest amount of geothermal
energy in the world. In fact we can see in the table below how resources and geothermal reserves are
developed in the various countries of Indonesia.

Table 9. Resources and geothermal reserves in Indonesia
Source: Directorate General of Mineral, Coal and Geothermal website (statistical data
as per 12 June 2009)
The future of Indonesia is deeply linked with Italy and in particular with Tuscany. It is a
“Larderello” that Enel Green Power manages the oldest geothermal complex in the world and in this
corner of the metalliferous hills in the province of Pisa is grown and developed the know-how that
are then exported to countries where the United States, Chile and all 'Indonesia.
The Enel Groups renewable energy division Enel Green Power (EGP), in consortium
with the Indonesian geothermal developer PT Optima Nusantara Energi (PT ONE), has been
awarded the right to hold the license to explore geothermal resources and develop the 55 MW
Way Ratai geothermal power project in the Way Ratai area, in Indonesia’s Lampung province,
following the tender launched by the Indonesian Ministry of Energy and Mineral Resources
in December last year. The project will be the first to be developed by Enel in the country,
marking the company’s entry into Indonesia’s renewables market. Enel will be investing up
to 30 million US dollars for the exploration phase of the project, which is part of the
investment program set by the Groups current strategic plan.
Indonesia is the largest economy in Southeast Asia and one of the world’s main
emerging markets. This award represents a first step forward for the growth of Enel’s
activities in the area, said Francesco Starace, CEO and General Manager of Enel.
The award is also the starting point from which Enel intends to build a solid platform for future
investment opportunities in the country. Is looking for exploiting the latest technology and solid
experience in the geothermal field, in collaboration with other partners, to contribute with an
ambitious energy plan in Indonesia, for a greater share of renewables in the energy portfolio of
countries.
Enel Green Power's first geothermal project in Indonesia has started the preparatory work for
the exploration phase: it can contribute to the transformation of the national energy mix and resolve
a paradox. With its 130 active volcanoes, the country has a very high potential for geothermal
resources and yet not all inhabitants have access to electricity.
Indonesia is the country with the highest number of volcanoes in the world: it has 150, of
which 130 are active. Thanks to its geological conformation, it has an immense geothermal potential
estimated at 29 GW, equal to 40% of world reserves, still largely untapped. 9% of the 260 million
inhabitants do not have access to electricity.
The Enel Green Power project for the development of geothermal energy will help to heal the
so-called energy gap by bringing access to electricity to a growing number of people. Leveraging the
latest technology and sound experience in geothermal energy, Enel can contribute to Indonesia's
ambitious Energy Plan, which fits into a broader plan to break down greenhouse gas emissions by
26% by 2020 and 29% by 2030. EGP and PT ONE will jointly establish and own a special purpose
vehicle (SPV) with the EGP and PT having the majority stake in the SPV.
In line with the tender rules, the energy produced by the geothermal power plant, which is
expected to generate around 430 GWh per year, will be sold to the national utility PLN under a 30-
year power purchase agreement (PPA).
Indonesia has a vast renewable energy potential, which is still largely unexploited; in particular
the country’s geothermal potential is estimated to be 24 GW, 40% of the world geothermal reserves.

Moreover, the country has a strong potential for growth in electricity demand and its low
electrification rate, with 27% of its 250 million population still without access to electricity. To 20%
from the current 12%. In fact, Francesco Starace, CEO and general manager of Enel, says:
"Indonesia is the largest economy in Southeast Asia and one of the largest emerging markets in the
world. This award is a first step for the growth of Enel's activities in the region”.
In Asia, Enel owns a majority stake in BLP Energy, one of India's leading renewable energy
players. A total of 172 MW which produces annually about 340 GWh. Currently in Indonesia, Enel
owns a minority stake in the mining company Bayan Resources. Recently, Enel signed a
Memorandum of Understanding (MoU) with Indonesian power utility PT PLN Lost to evaluate
possible cooperation opportunities on projects in electricity generation in Indonesia starting from the
joint assessment of the local market for renewables, conventional technologies and mini-grids.
Last year, Enel’s renewable energy division EGP signed an MoU with the Japanese company
Marubeni Corporation to cooperate in evaluating potential business opportunities in renewable
projects, mainly in the Asia-Pacific region, including Indonesia. Finally, this year Enel signed with
Marubeni another MoU to evaluate potential opportunities for the development of the gas sector in
the same region.
In 2015, thanks to the partnership with the Indonesian PT Optima Nusantara Energy,
specialized in the development of geothermal projects, has won the right to explore the geothermal
resources for the realization of the 55 MW project of Way Ratai following the public tender launched
by the Ministry Energy and mineral resources.
Way Ratai is the first project in the country that establishes Enel's entry into the Indonesian
renewable energy market. It is also a starting point from which Enel intend to build a solid platform
to create investment opportunities in the country in the future (ENEL STEPS INTO INDONESIAN
RENEWABLES MARKET WITH GEOTHERMAL TENDER AWARD, 2016).
Experimental case: Pirelli

PIRELLI & C. S.p.A. is an Italian multinational company, which operates in the automotive sector,
as a producer of tires, motorcycles, bicycles and cars. Founded in 1872, Pirelli is the fourth
operator in the world of tires by turnover. Since 1899, all Pirelli tires have been marked with a
distinct logo, they represent a five-pointed star inscribed in a circle and, for this reason, it is a
popular name "star tire brand".
Present in over 160 countries, a 2011 asset had 21 production sites on four continents and
employed around 34,000 employees. Pirelli is one of the leading manufacturers of very high-and
tires, thanks to its commitment to research and development, an area in which we invest
approximately 3% of total revenues annually (5.6 billion euros in 2011) and 7% in prices of Premium
segment, one of the highest levels of tire comparison, with the aim of constant improvement in terms
of performance, safety and containment of environmental impacts.
Present in sports competitions since 1907, Pirelli is the exclusive supplier of the Superbike
World Championship and prestigious single-brand championships, but above all of the Formula1
championship for the 2011-2013 three-year period. Turnover has grown considerably since 2009. As
we can see from the table, we note a significant increase in terms of turnover, operating performance
and number of employers (Pirelli, 2015).
Table 10. Economic and financial dates about Pirelli company from 2009 to 2016
(in millions of Euro)
Financial data 2009 2010 2011 2012 2013 2014 2015 2016
Revenue 4.067 4.848 5.655 6.072 6.164 6.018 5.962 6.058
Gross operating margin 453 629 807 1.064 1.080 1.168 1.242 1.183
Operating income 250 408 582 792 791 837.9 850.3 896.6
Net income (23) 4 441 398 306 319 (391) 147.6
Invested capital 3.818 3.281 3.727 4.427 4.455 4.273 4.089 10.224
Net assets 2.495 2.081 2.192 2.389 2.437 2.548 2.280 3.274
Employees 29.570 29.573 34.259 37.338 37.979 37.561 36.75 37.050
3

Source: Pirelli, 2017
Thanks to its large turnovers, Pirelli has managed to spread across Europe and also to other
continents such as Asia. Pirelli has signed various agreements with a new emerging country, namely
Indonesia.
The history of Pirelli in Indonesia was born in the early 90s, then a nascent market for Cars
and Trucks as well as for the Motorcycle sector, and it then went on to develop greatly in the
following 25 years. Let's talk about a huge country. From the Commercial activity in 2011 Pirelli
Tires, hereinafter "Pirelli", decides to move to Industrial activity in a country that reaches 240 million
inhabitants with a strong development of roads and transport, especially by road. Pirelli began to
study Indonesian soil in order to settle. Indonesia represents the second world producer of Natural
Rubber with almost 2.5 million tons produced.
In Indonesia, there are currently around 20 million 4-wheel vehicles circulating, of which
about half are cars with an increase in the last 2 years of around one million new vehicles. On the
other hand, around 60 million motorbikes of small displacement circulate, from 100 to 250 cc, with
an annual addition of about 8 million.
Thus, Pirelli has signed an agreement with PT Astra Otoparts, an Indonesian company leader
in the production of components for the automotive sector, destined for both the replacement channel
(REM) and original equipment (OEM), for the construction of a new Pirelli factory in Indonesia, for
the production of tires, motorcycles, bicycles and cars. The strategy was based on being able to
quickly reach production masses with 2 brands, Pirelli for Indonesia but above all for export, Astra
for the local market exclusively.
The agreement was signed - on the occasion of the visit to Italy by the Italian Minister of
Foreign Affairs, Giulio Terzi di Sant'Agata - by the Senior Vice President Moto Business of Pirelli,
Uberto Thun, and by the CEO of Astra Otoparts, Siswanto Prawiroatmodjo. The Minister of Foreign
Affairs Giulio Terzi of Sant’ Agata, the Indonesian Minister of Industry, M. S. Hidayat, the Minister
for Trade and Investment, Gita Wirjawan, and the Italian ambassador in Jakarta, Federico Failla,
attended the signing.
The agreement provides for the creation of a joint venture that will see Pirelli in a majority
position with 60% of the capital and Astra with the remaining 40%. Between 2012 and 2014 the total
investment by the joint venture resulted in revenues of around 120 million euros.
The start of construction of the factory, which was born near Jakarta, began in the fourth
quarter of 2012. It led to an extension of 25 hectares and the achievement of full operation, so as to
occupy 750 employees in 2016. The new factory immediately became operational starting from the
second half of 2013, with an expected production of around 2 million conventional tires in 2014,
which in 2016 reached 7 million total parts that were produced and sold.
In fact, 3 million were sold under Astra brands, while the remaining 4 million - equal to about
25% of all Pirelli motorcycle production in the world - with Pirelli brands (Pirelli and
Metzeler). With a view to its 'local for local' strategy, 20-25% of Pirelli-branded production at the
plant in Indonesia, was allocated to the original equipment and replacement channels in the Asia
Pacific area, whose motorcycle market has forecast growth of the average annual rate of 3.5% in the
period 2011-2014, while the remaining production was destined to all the countries in which Pirelli
operates with the exception of South America.
The new site has allowed Pirelli not only to strengthen its production capacity in motion -
which according to the business plan has grown to 16 million pieces in 2015 from 13 million pieces
in 2011 - but to have a direct presence in the greater economy of the ASEAN area, which, with a 250
million motorcycle fleet, represents the largest numerically-owned motorcycle market in the world.
Of these, 68 are related to Indonesia alone, whose motorcycle market is growing at a rate higher than
10% per year.
In fact, production will continue to grow over the next few years thanks to the direct
production presence in the country, which will also make it possible to benefit from the absence of
export duties on the markets of the ASEAN area, and to reduce the costs of procurement of raw
materials thanks to the strong presence local producer of natural rubber.
It was fundamental for Pirelli to strengthen relations in the Indonesian company, thanks to the
presence of high-level personnel and an excellent partner, who haven’t presented and hopefully will

not present problems. Pirelli is perfectly equipped to incentivize and increase the level of R&D in
Indonesia, which is well prepared and very open to the West for an even more prosperous future
development.
CONCLUSION
There are reasons to invest in Indonesia: (1) lower competitiveness than China as a production
base for international operators; (2) huge availability of natural resources that continue to compare
in the analysis and in the adjacent manufacturing sectors; (3) to continue the demand for work at
favorable economic conditions, a face of marked pressures for the reduction of costs; (4) strong
economic growth, low labor costs and progress achieved in terms of political stability; (5) a vast and
growing consumer base that will generate significant investments in the trade sector.
Finally, there are many opportunities that Indonesia offers to Italy, the rapid growth of the
country has decreed a strong inadequacy of the infrastructures and brought out the urgency of their
modernization, so Italian companies have been able to take advantage of the opportunity to give their
contribution thanks to good skills and solid experience in the field. This showed in detail analyses,
the interchanges, the imports & exports, and direct foreign investments between Italy and Indonesia.
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Of Business Concepts And Strategies - Before, During And After Covid-

19 Pandemic
Nabsiah Abdul Wahid
Graduate School of Business, Universiti Sains Malaysia,
Pulau Pinang, Malaysia.
nabsiah@usm.my
Abstract
Covid-19 has not left anyone untouched. As per experienced by the public at large, the sudden
changes in the global health, social, and economy that led to the humanitarian crisis and world
chaos are felt by the businesses in the marketplace too. As a business concept must be able to
show success, conducting a background market analysis on the wellness industry is necessary.
The analysis helps to identify whether there is real opportunity for services to grow in the
industry as well as to identify the real need of consumers that the business is targeting. The
review and process suggested by the 3Rs+1S involves re-evaluating the firm’s market offer
current position as perceived by customers in the marketplace. While the need may still be real,
delivering the need to the customers may not be realistic. To ensure consumers can get their
repetitive needs fulfilled, the review step requires businesses to find an efficient and suitable
way to deliver the customer’s needs satisfactorily and conveniently; any or even slight changes
that happen in the marketplace in the new normal era must be identified and considered.
Keywords: covid-19, business concept, strategies, 3Rs+1S

JEL Codes : M21, M31, M38
INTRODUCTION TO COVID 19 SCENARIO

About Covid 19
Everyone knows that the COVID-19 is caused by the coronavirus (SARS-CoV-2). It
started as an outbreak in 2019; then quickly accelerated and turned into a pandemic. The World
Health Organization declared COVID-19 as a global pandemic on March 11, 2020. The
pandemic effect continues to be massively felt particularly in global health and economy; the
two which very much affect’s people’s social freedom and quality of life.
COVID-19 has caused a humanitarian crisis globally. People find that their ‘normal’ lives,
livelihoods and the marketplace’s normal dynamicity are hugely compromised to the point of
death. The rapid increase of mortality rates in nations (before vaccines were found to combat the
pandemic) cause unbelievable psychological and behavioural panic (e.g., beyond belief anxiety,
inconsolable grief, unthinkable confusion, unimaginable anger) amongst members of the public.
No one could understand what and how the lifestyle they were familiar with once upon a time
collapses and changes so abruptly. No one was certain and could predict what would happen in
the collective social, health and economic future and on their own survivability to get through
the new phase of life. The world has become chaotic due to Covid-19! And it has not stopped
yet.
As for businesses in the marketplace

Covid-19 has not left anyone untouched. As per experienced by the public at large, the
sudden changes in the global health, social, and economy that led to the humanitarian crisis and
world chaos are felt by the businesses in the marketplace too. Consumer-focused businesses for
instance found themselves pressured very much by the slogan ‘Customers are kings’ on their
day-to-day operations; this is because their customers’ needs and wants must be fulfilled no
matter what the circumstances are. Any disruption on their customers’ well-being indicates that
their businesses will be disrupted as well. As such, these businesses know that they must react
462 Wahid
quickly and effectively to Covid-19 effects which disrupt the normal business operations and
dynamicity in the marketplace prior to the outbreak and pandemic.
Businesses find that many of the normal practices they apply prior to Covid-19 may no
longer be relevant and referred to. Covid 19 has pushed businesses in the marketplace including
their stakeholders into the ‘new normal’ (some refer new normal as ‘next normal’) era,
something which is unprecedented and unforeseen before. While their customers may grieve and
panic with the situation, businesses realize that they do not have such luxury to do so. Unless
they managed to come to terms with the Covid-19 reality quickly, resolve all issues brought by
Covid-19 to their firms fast, and acted upon them accordingly, they know that they will not
survive the crisis. One issue in particular that businesses must decide upon is on whether they
need to adopt and/or adapt to the new normal era.
New normal observed?

In this unprecedented reality, the marketplace is witnessing the perceived emergence of a
new era or the new normal for its stakeholders as stated earlier. What is new normal?
In general, Wikipedia describes new normal as a new state that people experience (in
regard to economy, society, etc.) following a specific crisis; it represents a different norms that
people go through prior to the start of the crisis; new normal examples include World War 1,
September 11 attacks, the 2007-2008 financial crisis and the Covid-19 pandemic
(https://en.wikipedia.org/wiki/New_normal accessed 13 October 2021). Similar definitions and
descriptions of new normal can be found in many literatures too. The question is, are we really
experiencing the new normal era as is defined by the literature? If yes, then, can we identify
specifically the different norms in this new normal era as compared to prior norms (normal era)?
As way to observe on whether we are really living a different norm as compared to the
normal lives prior to the pandemic, we can use one change example that governments have
implemented right after Covid-19 threat escalated. During the crisis, governments all over the
world find themselves enforcing strict policies to curb and minimize public travels through
newly created restricted movement order (RMO). This was not implemented in the normal living
era then. Everybody was free to go anywhere they like. While this policy is to curb Covid-19
spread, the restrictions and the travel bans have caused spill-over effects on the stakeholders and
the economy.
Many businesses have been tremendously affected; restaurants for instance are badly hit
when customers could not visit nor dine in as they do prior to the outbreak and pandemic due to
the RMO policy. Similarly, other service-related businesses such as spa businesses and
recreation are also hardly hit mainly because they are not considered prioritized businesses and
thus, their business premises are subjected to temporary closings. In short, both businesses and
consumers are badly affected by their government’s RMO policy. For those permitted to travel,
applying social distancing, wearing of face masks and continuous sanitizing have become
common practices and the basis of human interaction outside home. Non-compliance means they
are punishable by law.
While the governments try their best to curb the Covid-19 spread through various policies
and enforcements such as the RMO, the policies’ effects are spilling over other stakeholders in
the marketplace too such as end consumers. Because of the RMO enforcement, consumers find
that they have no choice but to change their buying behaviour which leans toward online
shopping. While the younger generations (e.g., Gen Y, Gen Z) are familiar to online shopping
as many are active online shoppers themselves, many other groups including the older adults
(OA) who are not familiar with it (as they are not online shoppers) find themselves trapped and
forced to adopt this ‘new’ shopping method. The OAs found that they are losing not only the
freedom to choose on alternative purchase methods available but also, they are required to learn
what online shopping is and on how to use it fast.
Wahid 463
The OAs
In brief, the OA refer to individuals who are older than other people in their society which
is why some literature refer to them as matured persons, senior citizens, and/or elderly persons;
being elderly, they demand society to treat them as older adults and with respect (Ismail &
Wahid, 2020). Although nations are seeing an increase in this segment over the years (some
nations are already experiencing being an aging society), the OA are often neglected by
businesses (Kovalenko, 2021), particularly the online businesses (Ismail & Wahid, 2020). The
OAs have been observed to be reluctant or passive consumers for online shopping in the normal
era. They found however, that they no longer can remain being passive online shoppers during
Covid-19 pandemic due to restrictions in travel movements, health, and safety (they are in the
high-risk group to be infected by the virus). Having to stay away from public places like retail
shops forces the OA to change their shopping behaviour; from brick-and-mortar retail, they now
must consider conducting their shopping through online as one of the limited options they have.
Today, OA shopping online is not a fad; according to Kovalenko (2021), this group has been
embracing online shopping at an accelerating rate following the Covid-19 outbreak. In the UK,
the OAs have been identified as the fastest growing groups of online shoppers during Covid-19;
and they will be the driving force in market growth in the short and medium term to match
current online shoppers led by both Generation Z and Millennial consumers (Mintel News,
2020).
It is important to note that even in normal era prior to Covid-19, consumers have
acknowledged the necessity of digitalization in their life and the urgent need to adopt the online
technology. Consumers realize that the need to adapt and adopt online technology that allows
them to shop, for instance, increases during Covid-19. Businesses also realized that they must
take advantage on the role played by technology-enabled platforms on consumers including
aging societies; for businesses that do, they find themselves benefiting from the strategy as their
customers continue to grow in numbers worldwide (the OA are also contributing to the growth
too). In short, some businesses find the change in customer’s buying behaviour (that lean toward
online shopping) benefiting them; they gain not only new customers, but product sales soar and
company’s profit is doubled or tripled (even more). As for other businesses that do not take the
advantage, they find themselves to lose existing customers fast and sales decline to the point of
going towards bankruptcy.
Switching to new normal?

From the examples on the observed changes described above, the question one need to ask
is are the changes indicate that the marketplace is already undergoing a restructuring process as
replacement for the current social, behavioural, and economic order? If yes, then, are these
changes and/or restructure represent a part of or the new normal itself that the marketplace is
switching to?
Before one can conclude on whether the marketplace is switching to a new normal era,
businesses must be able to answer and provide an overview to more questions as listed in the
following:
- How much has Covid-19 disrupt the normal dynamicity of the marketplace and its
stakeholders?
- What is the scale, speed, and impact of Covid-19 disruption or issues that businesses need
to tackle or resolve?
- Does this mean that past familiar remedial actions (normal practices) are no longer
relevant and should not be referred to?
- How has the situation changed the ‘normalness’?
- What is the magnitude of Covid-19 crisis that can be learned, possibly unlearned, and
relearned?
- What is new normal (what characterizes new normal) then? Is the new normal observed
follow how it is defined in the literature?
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From these questions, we can conclude that one cannot simply assume as to whether we
are already in the new normal era or going towards it. This is because even in the normal era,
changes can be observed to happen as well. For instance, the normal era has observed increasing
trend of people adopting to online shopping. Thus, can one safely argue that people are
experiencing or living the different norm than the ones they used to live during the normal era?
Does the escalating rate of online shopping adoption during pandemic justify the new normal
era? Similar dilemma exists when one wants to identify whether we are moving to post-new
normal era from the new normal. Until we can provide satisfactory answers to the listed
questions and carry out thorough analysis on the changes (fast-moving, severe, disruptive, new)
that take place in the marketplace environment can one paint a real scenario of the situation we
face, either globally or domestically.
ON BUSINESS CONCEPT
About business concept
The literature has acknowledged many descriptions on what a business concept is. Some
have provided brief and simple descriptions while others in detail and depth, but they all provide
similar understanding of the concept. BusinessDictionary.com, for instance, defines a business
concept as “an idea for a business that includes basic information such as the service or product,
the target demographic, and a unique selling proposition that gives a company an advantage over
competitors. A business concept may involve a new product or simply a novel approach to
marketing or delivering an existing product. Once a concept is developed, it is incorporated into
a business plan.”
For this paper, a business concept is referred to as a full-well-thought-out idea that helps
to establish or transform ‘a’ successful business. As a well-thought-out idea then, the concept
will help one to find answers to all the common 5Ws and 1H questions regarding ‘what’ the
business is about (market offer, e.g. product/service value), ‘who’ has needs for it (customer
segments), ‘where’ and ‘when’ would the business be relevant (marketing channels), ‘why’ is
the business valued (the unique selling proposition or the USP), and ‘how’ is it pushed or pulled
into the market effectively (business plan, business strategy, business model).
Illustrating a business concept using spa service in wellness tourism

To illustrate how a business concept works, let’s use an example of spa services from a
wellness tourism industry. As a business concept must be able to show success, conducting a
background market analysis on the wellness industry is necessary. The analysis helps to identify
whether there is real opportunity for spa services to grow in the industry as well as to identify
the real need of consumers that the business is targeting.
Is there real opportunity for spa business growth?

According to the Global Wellness Tourism Economy November 2018 report, in 2017, the
wellness tourism industry amounts to US$639.4 billion; it was identified as the fastest tourism
segment growing at twice the rate of the general tourism itself, at the rate of 6.5% annually
between 2015-2017 (Global Wellness Institute, 2018). The increasing trend continues as in 2020,
the global wellness tourism market size reaches US$683.5 billion in value (despite the industry
facing Covid-19 situation); it is expected to further grow at a CAGR of 7.10% during forecast
period 2021-2028; and that spa services are amongst the key services identified in this wellness
industry (https://www.mynewsdesk.com/us/medical-technology-news/pressreleases/wellness-
tourism-market-report-2021-covering-size-share-trends-growth-revenue-and-forecast-2021-to-
2028-3089479). Region-wise, the Asia Pacific region is the preferred destinations by wellness
travellers as it is projected to grow at 13.0% between 2017 and 2022 with value of $251.6 billion
(Global Wellness Institute, 2018). Malaysia (ranked 8th), Indonesia (ranked 7th), and Thailand
(ranked 3rd) represent significant destinations for wellness travellers in the Asia Pacific region
as they are listed in the Top 10 wellness tourism markets. Global market analysis carried out
Wahid 465
reveals several contributing growth factors for this industry; the rising number of health-
conscious people, rising consumers’ disposable income levels observed in developing regions
(e.g., China, India, Mexico), and promotional campaigns by various governments, for instance,
have been identified as drivers for increasing demand for various wellness activities including
spa services at popular wellness tourism destinations
(https://www.mynewsdesk.com/us/medical-technology-news/pressreleases/wellness-tourism-
market-report-2021-covering-size-share-trends-growth-revenue-and-forecast-2021-to-2028-
3089479).
The statistics and information on drivers all pointing to the continuous potential of the
wellness tourism industry (where spa services are offered) in the future, although the world is
experiencing Covid-19 pandemic.
Do spa services fulfil consumer’s real need?

The answer is yes for deeply concerned consumers on their wellness status. Mainly, such
consumers are willing to spend more on any activities that relate to their health and wellness
(https://www.visionresearchreports.com/report/sample/37033). History wise, people’s concern
for wellness can be traced back to ancient civilizations; various wellness services including spa
(e.g., water healing or therapies), thus, have been in the market since then. The fact that they are
still here today shows that it is continuing to create a real need for people with issues on wellness.
As such, offering spa services to consumers who are deeply concerned about their wellness is
considered a good business concept; mainly because it shows high potential for profitable
business.
Briefly, wellness refers to the overall sense of one’s well-being (body, mind, and spirit).
From a business practitioner’s perspective, wellness is a holistic approach comprising the
management of people’s well-being, beauty care, nutrition and relaxation that are provided in
spas. Spas are defined as places devoted to overall well-being through a variety of professional
services that encourage the renewal of mind, body, and spirit (International Spa Association,
2021). Examples of popular spa treatments today include body treatments (e.g., full body mud
mask, herbal body wrap, paraffin body wrap, full body massage, full body facial, body
tanning/bronzing, water therapy, spot treatment), face treatments (e.g., skin-care treatments –
exfoliation, steam moisturizers, masks, peels and massages; pampering facial), massages (e.g.,
hot stone massage, Swedish massage, Thai massage), nail treatments, pedicure and foot massage,
hair removal and medical treatment.
Apart from those who are concerned for health, other factors, namely, the modern fast
paced lifestyle, high level workforce stress, aging population, perceived failure of the current
medical system, scepticism of modern medicines, cultural beliefs, and government calls for
healthy population contribute towards individual consumer’s concern for wellness. Consumers
believe that their need to refresh, revive, and renew themselves in body, mind, and spirit is real,
and that the need is repetitive in nature. Consuming spa services would fulfil these needs. This
is how the wellness industry prospers.
As found in our study that focused on spa consumers and their evaluation of spa services
they consumed in Malaysia, those who have consumed spa services in the past have high
tendency to repeat their consumption at least once with the same provider. Many reasons were
cited by consumers for displaying repeat purchase behaviour and loyalty; these include:
- they truly enjoyed the services that they consumed earlier (e.g., “I like the service very much”,
“The services were fabulous”, “I enjoyed the whole time I was there”),
- they like being pampered (e.g., “I feel pampered, … treated like royals”, “My body deserves
to be pampered”, “No one does this to me at home”),
- they use the time spent (e.g., a session can be between 45 minutes to one hour) at the spa to
relax, and reward themselves after slaving tirelessly at their workplace (e.g., “I have worked
hard, … I deserve to be here”, “I just need to get away, clear my head … and this is the best
place I can be to relax”, “I claim this time for myself, (it is) not for anyone else”),
466 Wahid
- they like the created atmosphere (e.g., “This place provides me (with) calmness … I like the
atmosphere … it is different --- I find myself quickly calming myself, and my body loosens
up …”),
- they personally like the service provider (e.g., “I love her (referring to the provider) very
much”, “She is bubbly, and has caring personality … I feel like I have known her for a long
time, and I can talk to her on anything, … I can trust her”).
- they like the spa’s unique offer (e.g., “This place offers halal (spa) services… ”, “I can request
and consume services I want at the comfort of my home (referring to home spa package
offered)”).
As can be seen, the reasons cited above are in line with both the general definition of spa
services as well as from the practitioner’s point of view, which is to achieve the overall sense of
one’s well-being (body, mind, and spirit). The need to achieve well-being is real; and it is this
need that has helped to contribute towards the growth and popularity of the wellness industry
globally. However, despite given the royal treatment, some spa consumers (minority in number)
are found to be disloyal too. The disloyal represents those whose main concern is on worth, or
value of money spent to consume the service (e.g., “I will go to any spa that offers me services
with discount”, “… (it is) my money, I decide where I want it spent …”. “I do like it (referring
to “X” spa outlet), but it is just too expensive … (I) will wait for someone to belanja (treat) me
to go there again”), or that they are just adventurous (e.g., “I like to try new things … Swedish,
Thai, Turkish … whenever I have the chance”, “I go and visit (referring to the spa outlet) when
my BFFs recommends them … they are like me … sometimes we go together”, “ … to compare
services …” ). Disloyal group can also be due to situational factors such as the consumers have
no prior interest in spa services but was prompted to consume it (e.g., “I went because ‘Y’ (name
of the person was mentioned) gave me this as my birthday gift”, “I have a voucher”, “I won this
(from office fun gathering event) …, or else I would not have tried it at all”).
How to add value?

A business concept is stronger and becomes more worthy when it has added value. One
way of how this can be achieved is when it is designed with a brand concept in place. Selecting
a suitable brand name that captures the essence of the various spa services it offers will add its
value. Thus, in brief, branding the spa “Warisan” (Tradition) or “Warisan Melayu” (Malay
Tradition) may be suitable to indicate the spa business identity that matches customer’s need for
Malay healings and related other types of therapy they look for.
So, a business concept is successful when

From this simple wellness spa business illustration, we can conclude that a business
concept (to provide and maintain individual’s wellness through spa services offered with Malay
traditional healings theme) is a successful concept when it is able to fulfill customer’s real needs
(the need to achieve overall sense of well-being when the body, mind and spirit are refreshed,
revived, and renewed when spa services are consumed) as it is positioned to survive and sustain
well into the future (repeat business to help solve or ease consumers’ wellness issue).
In addition, a business concept is successful only when it is supported with sizable customer
segment(s) with real need (in this case, for need to consume spa services to achieve wellness) in
the marketplace. To identify the opportunity size and a way to forecast its performance, spa
services providers must be able to answer these specific questions:
- How many people in the marketplace that need help to resolve their perceived wellness
problem?
- How many people can afford and enjoy the solution provided by spa services (e.g., luxury vs
economy; high end vs medium end)?
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- Is the market already filled with established player(s) that influence the market behavior and
market share (is the market considered blue or red ocean)?
- Is the market growing or shrinking (in short-, medium- and long-term)?
- Is there any change within the marketplace’s environment (e.g., due to Covid-19)?
STRATEGIZING FOR SURVIVABILITY IN NORMAL, NEW NORMAL AND POST

NEW NORMAL COVID-19
About business strategy

In general, a business strategy outlines firm’s actions and decisions in its business plans as to
achieve its goals and objectives. As such, it involves the functions and works of every firm’s department
(e.g., finance, HR, marketing, operation) in line with the set vision, mission, and goals of the company.
The significance of business strategy

A business strategy is significant for any organization mainly because it helps firm to identify
what key steps to take to reach its business goals through thorough planning. It also helps the firm to
identify and evaluate its strengths and weaknesses which would guide the firm to create or develop
suitable strategy that would further optimizes the firm’s strengths and compensate or eliminate its
weaknesses. In addition, it helps firm to allocate available resources effectively for planned business
activities making the firm to be more efficient. It allows firm to control the types of business activities
it wants to participate in according to its organizational goals. Through business strategy too,
competitive advantage can be achieved as firm capitalizes on its strengths and uniqueness.
Survivability in normal, new normal and post new normal eras

Remember that a business concept that works in normal situation may not work during
crisis. Thus, firms’ ability to identify new and innovative strategies will be very helpful to ensure
survivability for the firms in the marketplace, no matter they are operating in the normal, new
normal or post normal eras. Here, the generic formula of 3Rs+1S is used to show the business
cycle that firms will go through in their life cycle to ensure their survivability.
The 3Rs+1S cycle starts with a) businesses to review its current position -> b) to resolve
its new position -> c) to decide on resilience attributes to survive the new position -> d) to make
the strike strategy before the cycle starts again (go to a) for review).
3Rs+1S
Review business position is the first step to take. By reviewing, it means that businesses
will revisit, reassess, and reflect the current position they have. The second step is resolve – this
is where the firm decides and agree on the position it expects to compete in the marketplace.
This is followed by identifying the resiliency attributes the firm possess (currently) and to
change to those that the firms must have to ensure they can survive the marketplace. To ensure
resiliency, questions to ask include how flexible the firm is or how far can the firm flex and
adjust itself when issues arise in the marketplace. Once the strengths are identified, the last step
is to make the strike. This is when the firm enters or re-enters the marketplace; it establishes or
re-establishes itself to confidently compete at the marketplace position it has decided upon in
the second step (in b) resolve); the refined business concept (in c) resilient) would help the firm
to transform and prosper further. It is important for firms to then go back to a) review their
positions from time to time to ensure they monitor the firm’s well-being continuously to take
appropriate actions as they see fit (just like spa).
Examples of various and common strategies that firms can apply in the normal, new
normal and post new normal eras at any part of the 3Rs+1S cycle include:
- Pricing: Pricing is the most common strategy businesses apply as firms decide on whether
they will keep their prices low (this will help in attracting more customers and market share
with the masses) or give their products aspirational value by pricing them beyond what most
468 Wahid
ordinary customers could afford (e.g., applying brands that the upmarket customers cannot
resist). It is popular because this strategy shows direct impact on firm’s volumes of products
sold as well as on firm’s profit margins. Wrong pricing decisions made (e.g., the timing, and
market entrance state – market entry versus market re-entry) however can destroy firms
totally.
- Cross-selling: This strategy focuses on firm’s existing customers whereby they try to increase
the number of products sold per customer. Increased customer’s average cart size would help
firms to increase their profitability. The beauty of this strategy is that firms do not have to
spend extra money to acquire more new customers as their product sales are supported by the
ones they currently have.
- Create innovative product or service: This strategy can be expensive as R&D to create such
product or service not only involves money spent for research, but also on other matters such
as human talent and time. To date, the technology is the fundamental behind such creation.
- Increase sales from new products: This type of strategy involves introducing new products
into the market and updated products that can keep up with trends. Firm’s R&D is very much
involved in this strategy.
- Improve on current customer service: This is a good business strategy as customers expects
businesses to deliver quality customer service no matter the worth of the products or services
they consumer from firms. Companies can build a strong reputation for having exceptional
customer service. Common examples include creating an online support (through emails,
WhatsApp groups, FB, Instagram, twitter, etc.) or a more effective call centre through 4Ss
(provide solution, in speedy time, deliver service with soul, and satisfaction).
PART 4: CONCLUDING
It is important to ensure firms are marketing a viable business concept at all times. This is
because a very well positioned business concept is one that solves a key need for some niche in
the marketplace, both today and in future. Thus, there is no doubt that the concept should work
beautifully in normal period either today or in future. It is also important to note that an excellent
business concept may also continue to work in non-normal period, as long as firms continue to
follow the 3Rs+1S (Review -> Resolve -> Resilient -> Strike -> repeat cycle) formula. Given
the fast-moving changes that happen due to Covid-19 pandemic, it is worth for businesses to
take a moment to review and re-evaluate the scope of their current market offers to see if the
business concept is still relevant in the new normal era as per suggested by the first step in the
3Rs+1S formula.
It is important to note that many times, a good business concept will stay relevant far into
the future mainly because the concept was built upon customer’s repetitive needs rather than a
once off need. In other words, the need created by the market offer earlier (during normal era –
prior to Covid-19 pandemic) was a real need. Based on this, one can safely assume that the
concept’s life cycle should be able to survive during the new normal and may even continue to
post normal era as long as the strategy to market it is done correctly.
The review and process suggested by the 3Rs+1S involves re-evaluating the firm’s market
offer current position as perceived by customers in the marketplace. While the need may still be
real, delivering the need to the customers may not be realistic. To ensure consumers can get their
repetitive needs fulfilled, the review step requires businesses to find an efficient and suitable
way to deliver the customer’s needs satisfactorily and conveniently; any or even slight changes
that happen in the marketplace in the new normal era must be identified and considered. At this
point, it is possible that the market offer needs to be re-positioned and shifted accordingly. The
first step in the cycle would determine how businesses resolve its problem which is identified in
resolve - the second step suggested in the 3Rs + 1S. Thorough review would help businesses to
decide where they feel they can safely compete with other competitors. It is important to note
that firm’s decision and agreement on the position or ‘newly’ found position for their market
offers to compete does not mean that they are losing, but rather, they have found a golden
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opportunity where they can expect that they can win the competition in the marketplace. This
resolve step would help businesses to save time and effort to avoid the risk of failing. Resiliency
is the stage where firms find what their strengths are; the ability to be flexible for instance can
help firms to endure crisis that comes. Able to go through this step will help firms to make the
strike as they compete to stay in the position they perceive they should be until such times
whereby they have to re-evaluate the position (when the 3Rs+1S cycle is repeated). Importantly
the 3Rs+1S formula will help firms to decide whether they are still in the normal era, proceeding
towards new normal era, or are in fact already experiencing the new normal. Applying good and
workable strategies during any of these times would ensure not only survivability but resilient
standing.
In deciding the correct strategy to apply, businesses must take a note that no matter what,
there will be groups of consumers that still love to make their product purchase from the retail
outlets. Some of these consumers have very high purchasing power. The opportunity to be in
retail store allow consumers to interact and get the sense of the products they wish to have before
they make their purchase decision right there and then. The opportunity allows some consumers
to explore other products and brands available further and make comparisons before they decide
to buy. For some other consumers however, the ability to make sense of what they are buying
provided by being in the store experience may not lead them to direct purchase but one that can
either be brought forward into the future (purchase intention) or recommendations to others such
as their fellow friends and family members (promotion through positive word-of-mouth).
Kovalenko (2021) for instance observe how the need for consumers to shop in store arise for
certain products. So, while many firms are adding online shopping as the main method to sell
their products, they must not forget the power of retail outlet shopping.
Firms can take refuge when the new normal era shifts to post new normal stage; as this is
where businesses have the option to choose; one is to continue with the new and refined
strategies they have adopted; two, is to go back to the strategies applied during the normal era,
three, to adopt both options, or four, to review using the for 3Rs+1S formula and see whether
new strategies are specifically needed for the post new normal era. As reported by UNCTD
(2020), many experts predict that online shopping will continue for those who have started to do
so during Covid-19 restrictions period; mainly because they have not only gained high awareness
of the benefits online shopping brings them (e.g., convenience), but in the process, the
experiences provide them with increased knowledge (e.g., risks involved), interest and
confidence (with digital technologies) to shop through in the pandemic. As such, groups such as
the OA who have invest their time, effort, and money to understand what online shopping is and
how it works (e.g., devices needed, communication technology, channels, or platforms to make
purchase) may be continuing this method of shopping way past the new normal era (in post-
pandemic).
Kovalenko (2021) predicts that convenience will still be key motivation for senior
consumers to rely on online shopping provided there is no problem with distribution channels.
As he explains, the OA may keep purchasing products through online as they may feel
uncomfortable visiting public places even when travel restrictions are lifted. They may use the
experience and knowledge learned by starting to combine both online and in-store shopping by
using showrooming or webrooming. Studies show that women are more likely to buy groceries
online as they tend to eat home-cooked meals more frequently compared to other age and gender
groups (Mills at al., 2018) and this method of purchase can keep them from being infected.
Bhattarai’s (2021) study report how the 65-plus aged seniors show not only interest in
shopping online for organic and specialty food as well as cleaning antibacterial products more
than other age groups but were found to spend more on them (35%). This, according to
Kovalenko (2021) is early evidence that the OA is going to continue shopping online way into
the future not only for purchase of products but for services too. The OA for instance will
continue using online telehealth services after the pandemic subsides due to the convenience it
470 Wahid
provides them, they have higher number of chronic conditions compared to younger generations,
and that the services are more affordable than in-person doctor visits.
The US National Poll on Healthy Aging (2020) reports on how the number of older adults
using telehealth has rapidly increased from 4% in 2019 to 26% in 2020; it also predicts how
telehealth visits will be a standard part of healthcare services for American seniors (c.f.
Kovalenko, 2021). The OA has been observed to show interest in and started consuming online
entertainment (e.g., paid-for video, music streaming services). In the UK, those over 55s
constituted more than a third of new subscribers for music streaming services compared to 2019
(Loughran, 2020). While some consumers with little pre-pandemic online shopping experience
are predicted to reduce the level of their online consumption as soon as physical shops open
(Watanabe & Omori, 2020), still, Kovalenko (2021) believes that the COVID-19 induced
changes of how older adults shop to be irreversible. If online retailers build trust with the OA
and help to improve their shopping experience, the OA will stay interested in online shopping
in unprecedented numbers. Although they started because they were forced to but they can
decide to continue because it worked for them. So, as Kovalenko (2021) concludes, it is up to
the retail industry on whether they will stay or they go. In the case of spa consumers, the
attraction of post-new normal lies in the freedom to visit spa outlets as they can fulfil their needs
for wellness (to relax, revive, and renew themselves) when they consume the services at the spa
outlets. While the uplifted travel restrictions will bring back the numbers to the outlets, this can
also be the time whereby spa providers see that the expectations set by their customers to soar
high as they consider the providers can award them with all the things, they perceive they can
get. To ensure they can survive, sustain, and earn their customer’s loyalty, spa providers should
also apply and go through the 3Rs + 1S formula cycle.
Acknowledgement:
To the conference’s committee who had invited me to deliver the keynote speech; thank
you very much. I also acknowledge Tekun Nasional for providing fund for my team on the spa
services research.
REFERENCES:
Bhattarai, A. (2021). Baby boomers, to retailers’ surprise, are dominating online shopping.
https://www.washingtonpost.com/road-to-recovery/2021/01/21/baby-boombers-online-
shopping-pandemic/ accessed date 13 October 2021
BusinessDictionary.com
Global Wellness Institute (2018). 2018 Global Wellness Tourism Economy, November 2018,
https://globalwellnessinstitute.org/industry-research/global-wellness-tourism-economy/
accessed date 13 October 2021
International Spa Association (2021), https://experienceispa.com/?trk=profile_certification_title
accessed date 13 October 2021
Ismail, K. A. & Wahid, N. A. (2020). “A Review on Technology Readiness Concept to Explain
Consumer’s Online Purchase Intention”. International Journal of Industrial
Management 6 (June): 49-57. https://doi.org/10.15282/ijim.6.0.2020.5629.
Kovalenko, A. (2021). Older Adults Shopping Online: A Fad or a Trend?,
https://www.proudpen.com/wp-content/uploads/2021/05/Chapter-5.pdf accessed 13
October 2021.
Kovalenko, A. (2021). Older Adults Shopping Online: A Fad or a Trend?. In E. Mazaheri (Ed.),
The Impact of COVID19 On E-Commerce (pp.67-80). Proud Pen.
https://doi.org/10.51432/978-1-8381524-8-2_5
Loughran, J. (May, 2020). Music-streaming services booming in the over-55s.
https://eandt.theiet.org/content/articles/2020/05/music-streaming-services-booming-in-
the-over-55s/ accessed 13 October 2021
Wahid 471
Mills, S., Adams, J., Wrieden, W., White, M., & Brown, H. (2018). Sociodemographic
characteristics and frequency of consuming home-cooked meals and meals from out-of-
home sources: cross-sectional analysis of a population-based cohort study. Public Health
Nutrition, 21(12), 2255-2266.
Mintel. (July, 2020). Signed, sealed and delivered: UK courier express delivery services set to
record fastest annual growth for five years. https://www.mintel.com/press-centre/retail-
press-centre/signedsealed-and-delivered-uk-courier-and-express-delivery-services-set-to-
record-fastest-annualgrowth-for-five-years accessed 13 October 2021.
UNCTD. (October, 2020). COVID-19 has changed online shopping forever, survey shows.
https://unctad.org/news/covid-19-has-changed-online-shopping-forever-survey-shows
accessed 13 October 2021.
Watanabe, T., & Omori, Y. (2020). Online consumption during the covid-19 crisis: Evidence
from Japan. Covid Economics, 38(16), 218-252.
Wellness Tourism Market Report 2021 Covering Size, Share, Trends, Growth, Revenue, and
Forecast 2021 to 2028 – Press Release, https://www.mynewsdesk.com/us/medical-
technology-news/pressreleases/wellness-tourism-market-report-2021-covering-size-
share-trends-growth-revenue-and-forecast-2021-to-2028-3089479 accessed 13 October
2021.
https://en.wikipedia.org/wiki/New_normal accessed 13 October 2021
https://www.visionresearchreports.com/report/sample/37033 accessed 13 October 2021
472 Wahid
Implemention Of Digital Transformation In The State Of Development

And Effective Functioning Of Special Economic Zones As A New Model
Of Business Sectors
1
Khamida Tulaeva
Head of International collaboration department, Lecturer
Bukhara State University
tulaevakhamida@gmail.com
Abstract
Both Special Economic Zones (SEZs) and digital transformation have been successfully used as an
industrial policy tool in many countries. Today the new era to sustainability requires
environmental, social, economic success of any country. Efforts to create SEZs in the world began
in 1950s, and were stepped up through the establishment of a free economic zones to attract foreign
investments in industrialized countries. A number of state-run zones are now in existence. Little is
known, however, about how successful they have been. This paper aims to help fill this gap by
exploring the role of state-owned SEZs and utilizing digitalization for achieving new sustainable
business in Uzbekistan.
Keywords : special economic zones, developing economies, zone policy objectives, free trade
zones, direct investment, digital transformation
JEL Codes : F15, F23, F41
INTRODUCTION
The concept of special economic zones (SEZs) in their current form dates back to the
1950s, when they were popularly referred to as export processing zones (EPZs), and later as free
zones. Despite a proliferation of terminologies, the principle of the SEZ remains essentially
unchanged. An SEZ is a geographically defined and delimited space that has a series of location-
specific advantages. Their characteristics are distinct from those available to economic actors
located in the surrounding national or sub-national economy in which the SEZ is established. To
varying degrees the difference in location-specific characteristics within the SEZ’s perimeter and
outside it are of three types. First, they offer relief from customs duties and tax. Second, they offer
superior infrastructure, and/or privileged access to scarce inputs. Third, they have historically
offered reduced regulatory requirements, along with improved facilitation of compliance with these
regulations through streamlined administrative procedures. [1]
Special economic zones are widely used in most developing and many developed
economies. In these geographically delimited areas, governments facilitate industrial activity
through fiscal and regulatory incentives and infrastructure support. There are some 5,400 zones
across 147 economies today, up from about 4,000 five years ago, and more than 500 new SEZs are
in the pipeline. The SEZ boom is part of a new wave of industrial policies and a response to
increasing competition for internationally mobile investment. Today the use of technology is
necessary and requiring aspect of each system. Implementation of digital tools in SEZs is another
new and successful step in economy system.
Most zones offer fiscal incentives, relief from customs duties and tariffs; business-friendly
regulations with respect to land access, permits and licenses or employment rules; and
administrative streamlining and facilitation. Infrastructure support is another important feature,
especially in developing countries where basic infrastructure for business outside these zones can
be poor. [2]
Uzbekistan has the following factors and opportunities to attract foreign investment: large
reserves of minerals and fuel and energy resources, agricultural potential, scientific potential,
modern market infrastructure institutions, a wide network of commercial banks, a reliable
telecommunications network, tourism development opportunities, etc. A free economic zone is a
Tulaeva 473
specially designated area in Uzbekistan with clearly defined administrative boundaries and a
separate legal order, created to attract domestic and foreign capital, advanced technology and
management experience for the rapid socioeconomic development of the regions. [3]
Special economic zones have been unable to improve the infrastructure, human capital and
institutional framework of the economy as a whole and have been constrained by priorities that
conflict with economic consideration. It was a useful tool for developing countries. By upgrading
these resources and features within a confined area of, policy makers can overcome resource
availability bottlenecks and reduce the cost of major national or local upgrades. Apart from the
"planned" economic benefits expected from the SEZ, a successful SEZ is one in which the country
is "open to the business", especially with respect to first-world infrastructure and bureaucratic and
administrative efficiencies around the world.
The purpose of creating free economic zones in the Republic of Uzbekistan may be the
creation of conditions for the rapid growth of the economy of a particular territory or industry,
diversification of economic sectors, the introduction of new technologies and scientific and
technological progress through the large-scale attraction of domestic and foreign investments
aimed at creating modern export-oriented and import-substituting industrial production and
technical innovation complexes. In this regard, it is necessary to consider the existing potential and
prerequisites of the Republic of Uzbekistan for further assessment of the prospects for the creation
of free economic zones on the territory of the Republic. [4]
According to the head of state Sh. Mirziyoyev, “the consistent increase in investment, the
commissioning of modern production facilities are a decisive factor in the development of the
country's economy, the creation of new jobs, the implementation of important social programs, and
the most important thing is to further increase the level and quality of life of the population.”[5] In
addition, at the initiative of President Sh. Mirziyoyev, the State Program for the implementation of
the Action Strategy in five priority areas of development of the Republic of Uzbekistan in 2017-
2021 was adopted, which will take the country's economy to a new level. The third priority
direction of this strategy concerning the development and liberalization of the economy, in
particular, is the further strengthening of macroeconomic stability and maintaining high economic
growth rates, increasing its competitiveness, further strengthening the protection of rights and the
priority role of private property, stimulating the development of small businesses and
comprehensive and balanced socio-economic development of regions, districts and cities, the active
involvement of foreign investment in economic sectors and regions of the country by improving the
investment climate.
LITERATURE REVIEW
If defining the exact parameters of SEZs is difficult, distinguishing between different types
of SEZs can be similarly complex. Most SEZs derive from the concept of free zones (also called
free trade zones or commercial free zones), the defining characteristic of which is a separate
customs area. Free zones tend to be located next to seaports, airports or border corridors, hosting
mostly firms that provide warehousing, logistics and services. In most developed economies, the
free zone model has remained close to this original concept. Often, such zones have adjacent
industrial parks for businesses that rely on these services and on easy access to international
markets, but these adjacent areas generally do not fall under a distinct regulatory regime
themselves. In developing countries, in contrast, most SEZs are meant to attract investment in
diversified industrial activity and therefore tend to provide customs, fiscal and regulatory benefits
to all businesses in larger, integrated industrial free zones.
474 Tulaeva
Figure 1. SEZ scope and definitions: a matrix combining two perspectives.

Source: UNCTAD.
From a development perspective, as well as an investment policy perspective, zones that are
established as an integral part of industrial policy with active clustering efforts (i.e. the bottom half
of the matrix) are the more relevant. Although free trade zones (FTZs), which mostly focus on
logistics and warehousing services, are important – especially in developed countries – most
existing and planned zones in the developing world are integrated free zones that aim to attract
investment in industrial activity. Many zones that do not have a distinct regulatory regime are
established with clear industrial development objectives in mind. Government authorities, often at
the subnational level, as well as semi-public and private institutions, have brought enormous
innovations to the concept of zones, building specialized zones for science, start-up incubation,
R&D, biotech, greentech and many other purposes. Such zones can certainly be valid policy
options and alternatives to SEZs. Although it is impossible to provide an exhaustive catalogue of
these zones – national governments often do not keep statistics on initiatives of this kind – this
report includes them in the policy discussion where relevant. [6]
There are many types of SEZs. Basic free zones focused on facilitating trade logistics are
most common in developed countries. Developing economies tend to employ integrated zones
aimed at industrial development, which can be multi-industry, specialized or focused on developing
innovation capabilities. The degree and type of specialization is closely linked to countries’ level of
industrialization, following an SEZ development ladder (Table 1).
Table 1. The SEZ Development Ladder
The SEZ development ladder

Zone policy objectives Prevalent zone types
High-income • Provide an effi cient platform • Logistics hubs free zones only (not
economies for complex cross-border supply industrial free zones) • Innovation
chains and new industrial revolution
Tulaeva 475
The SEZ development ladder

Zone policy objectives Prevalent zone types
• Focus on avoiding distortions in objectives pursued through science
the economy parks without separate regulatory
framework, or though incentives not
linked to zones
Upper- • Support transition to services • Technology-based zones (e.g. R&D,
middleincome economy high-tech, biotech)
economies • Attract new high-tech industries • Specialized zones aimed at high
• Focus on upgrading innovation value added industries or value
capabilities chain segments
• Services zones (e.g. fi nancial
services)
Middle-income • Support industrial upgrading • Specialized zones focused on GVC-
economies • Promote GVC integration and intense industries (e.g. automotive,
upgrading electronics)
• Focus on technology • Services zones (e.g. business
dissemination and spillovers process outsourcing, call centres)
Low-income • Stimulate industrial • Multi-activity zones
economies development and diversifi • Resource-based zones aimed at
cation attracting processing industries
• Offset weaknesses in
investment climate
• Implement or pilot business
reforms in a limited area
• Concentrate investment in
infrastructure in a limited area
• Focus on direct employment and
export benefi ts
Source: UNCTAD
Since the late 1980s, the digital revolution has transformed the economy and society. First
came the development of a connected economy, characterized by mass take-up of the Internet and
the roll-out of broadband networks. This was followed by the development of a digital economy via
the increasing use of digital platforms as business models for the supply of goods and services.
Now the movement is towards a digitalized economy whose production and consumption models
are based on the incorporation of digital technologies in all economic, social and environmental
dimensions.
DISCUSSION
The expansion of the industrial Internet, smart systems, virtual value chains and artificial
intelligence in production processes is speeding up innovation and generating productivity gains,
with positive effects on economic growth. In addition, all this is driving the transformation of
traditional industries through automotive technology (autotech), agricultural technology (agritech)
and financial technology (fintech), among others. In particular, smart production models can bring
increased competitiveness with a smaller environmental footprint, as companies are using digital
tools to map and reduce their footprint in order to assess their impact on climate change and modify
their production processes. [10]
476 Tulaeva
Figure 2. Dimensions of digital development and the effects on society, the production sector
and the State
Source: Economic Commission for Latin America and the Caribbean (ECLAC)
This study aims to offer the use of the fifth generation of mobile networks to provide ultra-
reliable low latency (less than a millisecond), increased network security, massive machine type
communications and enhanced device energy efficiency. The roll-out of these networks will make
it possible to extend wireless broadband services beyond the mobile Internet to complex Internet of
things systems, with the low latency and high level of reliability needed to support critical
applications in all economic sectors. [11]
The 5G network enables the construction of intelligent factories and the use of technologies
such as automation and robotics, artificial intelligence, augmented reality, and the Internet of
Things at various stages of the value chain (Figure I.6). See). Real-time access to information for
decision-making along the entire value chain is a decisive competitive advantage in that resources
are used efficiently and requirements are better met. Cloud-based solutions allow you to better
integrate different stages of your chain. The same software can be used to design, simulate, and
implement configurations and instructions for the operation of physical production lines, improving
operational quality and flexibility. This type of solution replaces the traditional assembly process
and provides the flexibility to reconfigure production lines as products and demand change.
Today Uzbekistan has more than 20 SEZs dividing into four groups based on their scope of
activities. These are industry, pharmaceuticals, agriculture and tourism. In the pharmaceutical
industry there are 8 FEZ located in Surkhandarya, Tashkent, Namangan, Jizzakh, Syrdarya,
Andijan and Republic of Karakalpakstan.
Currently, a total of 69 investment projects have been implemented in the territories of the
SEZ for a total of $ 512.4 million, including with the participation of foreign direct investment in
the amount of $ 290.7 million. As a result, 4,719 jobs have been created. In 2017, the participants
Tulaeva 477
of the FEZ produced goods to the amount of 1.76 trillion. soums with an increase of 29.4%
compared with the previous year, including those exported - $ 42.8 million (an increase of 10.9%).
At the same time, the forecast parameters for production and export were fulfilled by 89.2% and
60.6%, respectively. To date, 244 projects have been launched with a total value of $ 1.527 billion
(including foreign investment - $ 413.9 million). As a result of project implementation, it is
planned to create 21,663 new jobs.
CONCLUSION
In many countries, the SEZ are utilized as a proving ground for working out the
components and instruments of financial arrangement, which then, at that point, spread to the
remainder of the country. Moreover, free financial zones are utilized to work with the entrance of
unfamiliar organizations to the market of Uzbekistan and through it to the business sectors of
adjoining nations. Accordingly, the commodity direction of the country's economy is invigorated,
there is a functioning exchange of advancements and experience of organizations in the global
market, expanding the seriousness of the economy and everyday environments of the populace.
The use of 5G network and other technological tools into SEZ will enhance successful
transformation of product chain. In production of goods in free economic zones the following steps
should be accomplish for achieving high efficiency.
- Process automation
- Plant digitalization Input/output monitoring
- Predictive analysis (demand, production capacity)
- Business-to-business platforms
- Component printing (replacement of steel)
- Traceability of the renewable origin of electricity generation
- Compliance with regulatory aspects of sustainability
- Resource exploitation including geolocation, meteorological information system, smart
management
- Innovation and design with fast prototyping, business-to consumer platforms
- Distribution including smart inventory management, online channels, digital logistics solutions
- Consumption of digital goods.
REFERENCES
Analytical report of the Institute of Forecasting and Macroeconomic Research "State and prospects
of development of free economic zones in the Republic of Uzbekistan", T., 2017. p. 18-19.
DIGITAL ECONOMY REPORT 2021 iii Cross-border data flows and development: For whom the
data flow, p: 22-44.
Economic Commission for Latin America and the Caribbean (ECLAC), Digital technologies for a
new future (LC/TS.2021/43), Santiago, 2021, p: 12-17.
Free Economic Zones In Uzbekistan As An Effective Form Of Socio-Economic Development Urol
Xamrayevich Safarov, Nurbol Maidanovich Karakulov, International Journal of Progressive
Sciences and Technologies (IJPSAT), 2021.
Features of the Creation And Functioning Of Free Economic Zones In Uzbekistan Kuzieva Nargiza
Ramazanovna, Ashurova Nasiba Batirovna, Kuziev Ravshan Ramazanovich, Turkish Journal
of Computer and Mathematics Education, 2021.
Message of the President of the Republic of Uzbekistan Sh. Mirziyoyev to the Oliy Majlis "On the
main results of the work carried out in 2017 and the priority directions of the socio-economic
development of the Republic of Uzbekistan in 2018" dated December 23, 2017.
Message from the President of the Republic of Uzbekistan Sh. Mirziyoyev to the Oliy Majlis "On
the main results of the work carried out in 2019 and priority areas of socio-economic
development of the Republic of Uzbekistan in 2020" dated January 25, 2020. //
http://uza.uz/posts/35179.
Law Of The Republic Of Uzbekistan On Special Economic Zones, Adopted by the Legislative
Chamber on December 9, 2019.
478 Tulaeva
Presidential Decree of the Republic of Uzbekistan of October 26, 2016 No. UP-4853 "On
additional measures to enhance and expand the activities of free economic zones".
Using special economic zones to facilitate development: policy implications Rajneesh Narula and
James X. Zhan, 2021.
World Investment Report 2019 Special Economic Zones, p: 136.
http://www.stat.uz – State Committee of Statistics of the Republic of Uzbekistan.
Tulaeva 479
The Determinants Of Capital Expenditure Allocation: An Empirical

Evendence From The Province Of Banten Indonesia
1
Ines Pusparani, 2Toto Sugiharto
Faculty of Economics Gunadarma University
Jln. Margonda Raya No.100, Pondok Cina, Depok 16424
Corresponding author: hart2862@gmail.com2
Abstract
Indonesia, in order to improve the welfare of its people, continues to implement equitable
development by implementing regional autonomy policies. This policy encourages local
governments, namely regencies/cities, to increase the revenue needed to finance development in the
form of capital expenditures in which local revenue, general allocation funds and special allocation
funds are the main sources. In this regard, this study was conducted with the aim of analyzing the
effect of local revenue, general allocation funds and special allocation funds on the allocation of
capital expenditures, either simultaneously or partially, and identifying the variables that have the
greatest influence on the allocation of capital expenditures. A total of four districts and four cities in
Banten Province were selected as samples in this study. The sample was selected using the full
sampling method. Data covering all research variables were collected from the eight samples for the
2015-2019 period. Multiple linear regression analysis was used to test the research hypothesis. The
results of the study show that simultaneously local revenue, general allocation funds, and special
allocation funds affect the allocation of capital expenditures. Partially, only local revenue has an
effect on the allocation of capital expenditures. This variable has an effect on increasing the allocation
of district/city capital expenditures in Banten Province.
Keywords : local revenue; general allocation fund; special allocation fund; capital expenditure.
JEL Codes: H72, H76, G28
INTRODUCTION
Indonesia is a developing country that always strives for development. Indonesia's national
development goal is to create a just and prosperous society. Based on the material and spirit of
Pancasila. Therefore, the government must try to increase revenue to support the success of
development. To balance this development, the central government delegates power to local
governments, which is called regional autonomy. This policy applies in Indonesia in accordance with
Law no. 22 of 1999 (revised into Law No. 32 of 2004 and Law No. 25 of 1999) concerning the
Functions of Regional Governments explicitly divides the functions of local government (executive)
and DPRD (laws), and empowers regions. Government The government manages its own
government and minimizes interference with the central government. Based on the differentiation of
these functions, it shows that between the legislature and the executive there is an agency relationship
(Halim, 2014). Law No. 32 of 2004 is a complement to Law No. 22 of 1999 concerning regional
autonomy.
Capital expenditure refers to expenditures that can benefit in the long term and increase the
assets or wealth of local governments (Halim, 2014). The allocation of capital expenditures is based
on regional needs, particularly public facilities and infrastructure, as well as increased investment
that can be directly accepted by the community. Local governments allocate funds in the form of
capital expenditure budgets in the Regional Revenue and Expenditure Budget (APBD) to add other
assets that can provide income for several accounting periods. In order to improve the welfare of
local communities, the central government continues to urge local governments to increase
district/city capital expenditures. In terms of governance, the APBD has become a guideline for
government activities. APBD includes local government revenues and expenditures. The Regional
Revenue and Expenditure Budget (APBD) is the annual financial plan of the regional government
which is discussed and agreed upon by the regional government departments and DPRD also
regulated in "Regional Regulations".
480 Pusparani, Sugiharto

In this study, Banten Province was chosen as the object because this province is an advanced
industrial area rich in natural resources, but economic growth, one of the indicators of the success of
the development program, is that the districts/cities in the region are very diverse—not yet fully
evenly distributed. For example, Tangerang Regency, which is included in the category of area that
is the center of industry and manufacturing, has a higher regional original income than other
regencies/cities. The disparity in local revenue between districts/cities has an impact on the amount
of development funds needed and must be provided by the central government, namely general
allocation funds and special allocation funds. The diversity of regional original income, special
allocation funds and general allocations has the potential to affect the amount of funds allocated for
capital expenditures which, in turn, will have an impact on regional economic growth. The extent to
which the three sources of regional development funds—original revenue, general allocation funds
and special allocation funds—affect the allocation of capital expenditures is the focus of this
research. The objective of this study, accordingly, is to analyse the effect of regional original revenue,
general allocation funds and special allocation funds on the allocation of capital expenditure of
dictricts/cities within the Province of Banten.
LITERATURE REVIEW
Capital Expenditure: Definition and Its Determining Factors
According to Halim (2014) capital expenditures are budgetary expenditures for the purchase
of fixed assets and other assets that provide income for more than one accounting period. Regional
expenditures are prioritized to ensure and improve the quality of life of the community, as well as
seek to fulfill regional obligations, which is reflected in the improvement of basic services, education,
provision of health service facilities, social facilities and proper public facilities, and the development
of social security. Analyzing expenditure standards, price standards, performance benchmarks and
minimum service standards set in accordance with statutory regulations.
Capital expenditure is included in the category of direct expenditure carried out by the
Regional Government concerned. Based on the Minister of Finance Regulation Number
91/PMK/06/2007, capital expenditure is a budget expenditure used in order to acquire and add fixed
assets or other assets in order to provide benefits for more than one accounting period for expenses
that exceed the time limit for capitalization of assets or other assets. set by the government. This
includes expenditures for maintenance costs that maintain or increase the useful life, increase
capacity and asset quality. The following formula is used to estimate capital expenditure.
Capital Expenditure = Land Expenditure + Equipment and Machinery Expenditure + Building and
Building Expenditure + Irrigation and Network Expenditure + Other Fixed
Assets Expenditure and Capital Expenditure for Public Service
Agencies …………….. (1)
Capital expenditure is one of eight local government expenditures in addition to personnel

expenditure, goods expenditure, interest expenditure, subsidy expenditure, grant expenditure, social
assistance expenditure, and unexpected expenditure (Directorate General of Fiscal Balance, 2021b).
The government spending is sourced from regional revenue which includes regional original revenue,
balancing funds (i.e., profit sharing funds, general allocation funds and special allocation funds), and
other legitimate revenue (Directorate General of Fiscal Balance, 2021c). Therefore, the amount of
local government expenditure, including capital expenditure, depends on regional income, especially
regional original revenue, general allocation funds and special allocation funds).
Regional Original Revenue

According to Halim (2014) regional original revenue (ROR) is all regional revenues
originating from regional original economic sources. Local revenue groups are separated into four
types of income, which include the followings.
1. Local Tax—local taxes are regional income derived from taxes. In the appendix, it can be seen
that the code for the revenue account is differentiated for the province and for the regency/city.
2. Regional Retribution—regional retribution is regional income derived from levies.
Pusparani, Sugiharto 481

3. Other valid PAD—this income is regional revenue that comes from others belonging to the
regional government.
Regional Original Revenue = Regional Taxes + Regional Levies + Separate Regional
Wealth Management Results + Other Legitimate ROR….
(2)
A number of studies have been conducted to examine the relationship between regional
original revenue and capital expenditures, including Bakhruddin (2018), Waskito, Zuhrotun &
Rusherlisyani (2019), Afisah (2020), Sulaiman (2020), Syafitri & Efrendi (2020), Jayanti (2020),
Maskudi (2020), Simbolon, Maksum & Abubakar (2020), Maheni & Maryono (2021), Sisilia &
Maryono (2021). The results of their research, except Waskito, Zuhrotun & Rusherlisyani (2019),
found the same phenomenon that regional original revenue in all areas studied had a positive effect
on capital expenditures. Regional governments i.e., districts, cities or provinces, that have high
regional original revenues are certain to have high capital expenditures.
General Allocation Fund

General Allocation Funds, hereinafter referred to as GAF, are funds sourced from APBN
revenues allocated for the purpose of equitable distribution of financial capacity among regions to
fund regional needs in the context of implementing decentralization. The total amount of GAF is
determined to be at least 26% (twenty six percent) of the Net Domestic Revenue stipulated in the
APBN. (Law No. 33 of 2004).
The data used in calculating DAU is obtained from the Government statistical agency and/or
Government agency authorized to publish reliable data. If data is not available, the data used is the
base data for the previous year's DAU (Darize, 2009).
General Allocation Fund = Basic Allocation (PNS Salary) + Fiscal Gap (Fiscal need
– fiscal capacity) (3)
Many researches on the effect of general allocation funds on capital expenditures have been
accompliseh. The results were mixed, some found that general allocation funds had an effect on
capital expenditures (i.e., Fahrunisah & Badjuri, 2017; Hairiyah, Malisan & Fakhroni, 2017; Priatna
& Purwadinata, 2019; Waskito et al, 2019; Sisilia & Harsono, 2021; Other researches discover the
opposite result that general allocation funds have no effect on capital expenditures (i.e., Zais, 2017;
Maulana, Masitoh & Dewi, 2020; Simbolon, Maksum & Abubakar, 2020).
Special Allocation Fund

Special allocation funds (SAF) are funds sourced from APBN revenues allocated to certain
regions with the aim of helping to fund special activities which are regional affairs and in accordance
with national priorities. The amount of DAK is determined annually in the APBN. Legal Basis for
Regulation of the Minister of Finance Number 06/PMK.07/2012 concerning the Implementation and
Accountability of Budget Transfers to Regions. The direction of DAK activities is in the fields of
education, health, road infrastructure, irrigation infrastructure, drinking water infrastructure,
sanitation infrastructure, village government infrastructure, border area facilities and infrastructure,
marine and fishery, agriculture, family planning, forestry, high-level regional facilities and
infrastructure, infrastructure trade, rural energy, housing and settlements, and land transport safety.
The Special Allocation Fund (SAF) is one of the central government's financial transfer
mechanisms to the regions, which aims, among other things, to increase the provision of regional
physical facilities and infrastructure according to national priorities and reduce the gap in growth
rates between regions and services between sectors. DAK plays an important role in the dynamics of
the development of basic service facilities and infrastructure in the regions because in accordance
with the principle of decentralization, responsibility and accountability for the provision of basic
public services have been transferred to local governments (Siahaan, 2016).
Many studies on the effect of special allocation funds on capital expenditures have been
completed. Not different from regional original revenues and general allocation funds, the research
was conducted in various regions in Indonesia. Research that finds that special allocation funds have
an effect on capital expenditures is Zais (2017), Priatna & Purwadinata (2019), Hairiyah et al. (2017),

Waskito et al. (2019), and Sisilia & Harsono (2021). Meanwhile, the research whose results prove
that special allocation funds have no effect on capital expenditure is Fahrunisah & Badjuri (2017).
Research Model and Hypotheses

Referring to the results of the literature review above, a research model was developed that
describes the causal relationship between local revenue, general allocation funds and special
allocation funds and capital expenditure allocations as shown in the following figure.
Regional Original
Revenue
General Allocation Capital

Fund Expenditure
Special Allocation
Fund
The following research hypotheses were developed based on the research model as shown in
figure 1 above.
H1: Simultaneously regional original revenue, general allocation fund and special allocation fund
influence capital expenditure.
H2: Original regional revenue influence capital expenditure.
H3: General allocation fund influence capital expenditure.
H4: Special allocation fund influence capital expenditure.
RESEARCH METHODS
The type of data used in this research is secondary data. Secondary data is data obtained indirectly
from the main source (districts/cities) which is used as the object of this research. The data used is
sourced from the 2015–2019 APBD Realization Report of Banten Province which was obtained from
the official website http://www.djpk.kemenkeu.go.id/.

Population is the total number of objects or (units/individuals) that have certain characteristics.
Population is a generalization area consisting of objects or subjects that have certain qualities and
characteristics determined by the researcher to be studied and then draw conclusions. The population
in this research is data on the Realization Report of the City and Regency Regional Revenue and
Expenditure Budgets in Banten Province which includes four cities and four regencies.
Research Variable
Operational definition of research variables, indicator, measurements and scale are depicted in the
following table.
Table 1. Operational Definition, Indicators, Measurement and Scale of Research Variables

Variables Definition Measurement Scale
Regional Original Regional income that is ROR = Regional Tax + Ratio
Revenue collected based on regional Regional Levies + Results
(ROR/PAD) regulations in accordance with of Management of
statutory regulations which separated Regional
includes: local tax; regional Resources + other valid
levies; results of regional wealth ROR

Variables Definition Measurement Scale

management; and other valid
ROR
General Allocation A number of funds allocated by GAF = Basic Allocation Ratio
Fund (GAF/DAU) the Central Government to each (salary of government
autonomous region consisting of officers) + Fiscal Gap
a province, regency or city in (fiscal need - fiscal
Indonesia which is held annually capacity)
to be used as development
funds.
Special Allocation Funds sourced from APBN SAF is basically a transfer Ratio
Fund (SAF/DAK) revenues allocated to certain that is specific for the
regions with the aim of helping purposes that have been
fund special activities which are set for that purpose there
regional affairs and in is no specific formula for
accordance with national SAF
priorities.
Capital Funds used by an organizatio to CE = Expenditure on Ratio
Expenditure (CE) acquire, upgrade, and maintain Land + Expenditure on
physical assets such as property, Equipment and
plants, buildings, technology, or Machinery + Expenditure
equipment. on Buildings and
Buildings + Expenditure
on Irrigation and
Networks + Expenditure
on other Fixed Assets and
Capital Expenditure for
Public Service Agencies
(BLU)
Method of Statistical Analisis

The statistical analysis method used in this study consisted of three types, namely (i) descriptive
statistical analysis, (ii) classical assumption test consisting of normality test, multicollinearity test,
heteroscedasticity test, and autocorrelation test, (iii) multiple linear regression analysis.

The presentation of descriptive statistics aims to see the description of the research data and the
relationships that exist between the variables used in this study.

Classical assumption test using SPSS software (statistical product and service solutions) version 26
which consists of normality test using Kolmogorov – Smirnov (KS) and profitability plot (P-Plot),
multicollinearity test using tolerance value and variance inflaction factor (VIF) approach ),
heteroscedasticity test using scotterplot, and autocorrelation test using Durbin-Watson (DW).

In accordance with the purpose of this study, namely to analyze the effect of local revenue, general
allocation funds, and special allocation funds on the allocation of capital expenditures.
CE = α + β1ROR + β2GAF + β3SAF + ℇ (4)
where: α: constant; CE is capital expenditure; ROR is regional original revenue; GAF is general
allocation fund; SAF is special allocation fund; βi is regression coefficient of the i-th independent
variables; ℇ is error term.


Sample size, minimum and maximum values, mean and standard deviation of research variables are
depicted in the following table.

Variable n Min. Max. Mean SD1 CV2
Regional original
40 111062 2872568 977685 827656
revenue 84.65
General allocation fund 40 514376 1222971 903305 251424 27.83
Special allocation fund 40 5065 492778 222217 143874 64.74
Capital expenditure 40 169833 1763560 677563 432400 63.82
1
Note: standard deviation; 2coefficient of variation (%)
Source: SPSS Descriptive Analysis Output (2021)
As shown in the table above, the average calculated for this research variable ranges from
222217 (SAF) to 977685 (regional original revenue). The variable that has a high level of diversity
is local revenue with a coefficient of diversity of 84.65%, while the general allocation fund is the
variable with the lowest level of diversity with a coefficient of diversity of 27.83%.The other two
variables—special allocation funds and capital expenditures—have relatively the same level of
variance with the coefficient of variance, 64.47% and 63.82%, respectively.
Classical Assumptions Test

Classical Assumption Test is a test used to determine the feasibility of the data to be analyzed. Several
tests that will be carried out include normality test, muticollinearity test, heteroscedasticity test and
autocorrelation test.
Normality test
According to Ghozali, (2016) the normality test aims to determine whether each variable is normally
distributed or not and to test whether in the regression model, the confounding or residual variables
have a normal distribution. The way to determine the normality of the data distribution is the
Kolmogrov Smirnov (K-S) and probability plot (P-Plot) whose results are presented in the table
below.
Table 3. Summary of Normality Test Results1,2

Test Type Method Significance Results
Kolmogrov Smirnov (K-S) 0.182 Normally distributed
Normalitas
Probability plot (P-Plot) Follow the diagonal lines Normally distributed
1
Note: Dependent variable is capital expenditure; 2Independent variables are regional original
revenues, general allocation fund and special allocation fund
Source: SPSS Normality Test Results (2021)
The results of the normality test in the table above show that the normality assumption is met.
In this normality test, it is known that all independent variables meet the requirements or assumptions
of a linear relationship with the dependent variable.
According to Ghozali (2016) the multicollinearity test aims to test whether the regression
model finds a correlation between the independent (independent) variables. To find out whether
multicollinearity occurs, it can be seen from the Tolerance and Variace Inflation Factor (VIF) values.
The test results are presented in the table below.

Table 4. Summary of Multicollinearity Test1

Independent Variables Tolerance VIF Results
Regional original revenue 0.961 1.04 No multicollinearity
General allocation fund 0.40 2.503 No multicollinearity
Special allocation fund 0.408 2.452 No multicollinearity
1
Note: Dependent variable is capital expenditure
Source: SPSS Multicollinerity Test Output (2021)
Based on the table above, it is known that the Tolerance value of the 3 independent variables is >
0.10 and the VIF value of the 3 independent variables is < 10, so it can be concluded that there is no
symptom of multicollinearity.
According to Ghozali (2016), the purpose of the heteroscedasticity test is to test whether there is an
inequality of variance and residuals from one observation to another in the regression model. The
method to detect the presence or absence of heteroscedasticity is to use the Glejser test method or
can be seen on the scotterplot. Based of the test results of the test it is indicated that there are no
symptoms of heteroscedasticity in the regression model, so the regression model in this study worth
using.
This test is used to determine the presence or absence of autocorrelation deviations, namely the
correlation that occurs between residuals in one other observation (Gunawan, 2005). The
measurement of the autocorrelation test in this study used the Durbin Watson statistical test (DW
test). The test results are presented in the image below.
Table 5. Summary of Autocorellation Test1.4

Test Durbin Watson Criteria Results
Autokorelasi 1.327 (-2) sampai (+2) No Autocorrelation
1 2
Note: Dependent variable is capital expenditure; Independent variables are regional
original revenues, general allocation fund and special allocation fund
Source: SPSS Normality Test Results (2021)
Result of test in the table above shows the results of the autocorrelation test, there is no
autocorrelation phenomenon, so it can be concluded that the autocorrelation assumption is fulfilled.

In this study, the formulated hypothesis was tested using multiple linear regression analysis.
As mentioned in the previous section, all the necessary requirements have been met. The results of
multiple linear regression analysis, including standardized and unstandardized regression
coefficients, level of significance, analysis of variance and coefficient of determination of all
independent variables, will be introduced and discussed in the following sections.
In the following table, the regression coefficients and all the independent variables studied
include their significance, the value of the coefficient of determination, the results of the analysis of
diversity and the F-test. Based on the value of the regression coefficient and the value of the
constants, a regression line equation model is obtained which describes the causal relationship
between the independent variables and the dependent variable.


Coefficient
Model t Sig.
Constant 79870.98 - 0.797 0.431
Regional original
0.485 0.928 16.455 0.000
revenue
General allocation fund 0.135 0.078 0.895 0.377
Special allocation fund 0.008 0.003 0.03 0.976
R2 0.890
Adjusted
0.881
R2
F-test 0.000
1
Note: Dependent variable is capital expenditure
Source: SPSS Multiple Linear Regression Analysis Output (2021)
Based on the value of the regression coefficients that are not standardized (unstandardized)
from all the independent variables studied, it is found that the value of the regression line equation
is as follows.
CE = 79870.98 + 0.485ROR + 0.135GAF + 0.008SAF (5)
where: α: constant; CE is capital expenditure; ROR is regional original revenue; GAF is general
allocation fund; SAF is special allocation fund.
The regression line equation model above can be interpreted and described as follows. The
constant value (α) is positive, which is 79870.98, meaning that if the value of regression coefficients
of all independent variables equal zero—independent variables do not exist—the resulting capital
expenditure allocation for each region is 79870.98. The regression coefficients of all independent
variable are positive i.e., 0.485 for regional original revenue, 0.135 for general allocation fund and
0.008 for special allocation fund. This means that all independent variables have positive influence
on capital expenditure where increase in the values of these variable will cause the value of capital
expenditures to increase.
The regression line equation obtained above (5) can be used to predict capital expenditure
based on the value of all independent variables because the results of the analysis of variance or the
F-test show significance (p < 0.000). This means that all independent variables studied
simultaneously affect the allocation of capital expenditures. Considering the value of the coefficient
of determination (Adjusted R2), it is recognized that the regional original income, general allocation
funds, and special allocation funds studied are able to explain the variation in capital expenditure
allocations up to 88.1%. Meanwhile, based on the significance value of the t-test results, only
regional original revenue that partially affects the allocation of capital expenditures.
Based on the results of multiple linear regression analysis described above, it can be concluded
that regional original revenue, general allocation funds and special allocation funds simultaneously
affect the allocation of capital expenditures. Partially, regional original revenue is the only variable
that affects the allocation of capital expenditures.
DISCUSSION
The findings of this study are similar with from the results of previous studies, either viewed
from the partial or simultaneous effect of all independent variables, i.e., regional original revenue,
general allocation funds, and special allocation funds on the dependent variable—capital expenditure
allocation. Regional original revenue in this study affects the allocation of capital expenditures. This
finding is in line with the results of research conducted by Jayanti (2020) which recognized that
regional original revenue significantly affects the capital expenditures of districts/cities within
Central Java Province in 2016-2018. The amount of local revenue is one of the determining factors
in determining the allocation of capital expenditures in districts/cities in Central Java Province. It is
also in accordance with Maheni & Maryono (2021) who discover that regional original revenue
affects capital expenditures of districts/cities within the same province in different period of time i.e.,

2017-2019. The finding is in accordance with the following studies such as Sulaiman (2020), Syafitri
& Efrendi (2020), Jayanti (2020), Maskudi (2020), Simbolon, Maksum & Abubakar (2020). The
increase in capital expenditures was due to the regional original revenue generated, this means that
the sources of funds used to finance capital expenditures is regional original revenue. The study that
discovers the opposite results is that of Waskito et al. (2020).
Finding of this study indicated that general allocation funds have no significant effect on the
capital expenditures. The finding is in line with previous research conducted by Simbolon et al.
(2020), Zais (2017) and Maulana et al. (2020) which discovered the general allocation funds was not
proven to have significant impact on the allocation of the capital expenditure of the district/cities.
Finding of Afnisah’s (2020) study is in accordance with finding in this study where general allocation
funds has no effect towards capital expenditure allocation in districs/cities within Provinces of North
Sumatera and East Java. This is also in accordance with previous research conducted by Maskudi
(2020) which indicates that the special allocation funds had no significant effect on the allocation of
capital expenditures in all provinces in Indonesia during 2016-2018. Studies that have different
findings include Fahrunisah & Badjuri (2017), Hairiyah et al. (2017), Priatna & Purwadinata (2019),
Waskito et al. (2019) and Sisilia & Harsono (2021). These studies foud that general allocation funds
provide contribution towards the capital expenditures.
Special allocation funds in this study was discovered to have no significant contribuation
towars the capital expenditures of distructs/cities with the Province of Banten. It is different from
studies of Zais (2017), Priatna & Purwadinata (2019), Hairiyah et al. (2017), Waskito et al. (2019),
and Sisilia & Harsono (2021), but similar with Fahrunisah & Badjuri’s (2017) study.
CONCLUSION AND IMPLICATIONS

Conclusion
Regional original revenues, general allocation funds, and special allocation funds
simultaneously affect the allocation of capital expenditures. This indicates that the variation in the
amount of capital expenditure allocation of districts/cities within Banten Province can be explained
by the three variables. The amount of capital expenditure allocation can be predicted based on these
three variables using the obtained regression line equation. The variable that partially affects the
allocation of capital expenditure is only regional original revenue. Districts/cities that have high
regional original revenue have the potential to have higher allocations of capital expenditures.
Implication
Capital expenditure allocations is recognized to be affected by regional original income,
general allocation funds and special allocation funds. Accordingly, in increasing the capital
expenditure allocation, districts/cities governments need to consider these three variables, especially
regional original revenue which is regocnized as the only variable that influence the capital
expenditure allocation of districts/cities in the Province of Banten.
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DOI: https://doi.org/10.32502/jab.v2i1.1167

The Effect Of Perceived Usefulness, Perceived Ease Of Use And Trust

On Intention To Use: Empirical Study On Digital Wallet Application
Owners In The Region Jabodetabek
1
Elin Maulani, 2Toto Sugiharto
1,2
Jln. Margonda Raya No. 100, Depok 16424 Jawa Barat
1
elinmaulani1@gmail.com
Corresponding author: 2hart2862@gmail.com
Abstract
In the era of Society 5.0 technology is an integral part of human life, including economic life, in the
form of a digital economy. As the country with the fourth most populous population in the world,
Indonesia has great opportunities for the development of the digital economy. One of them is a digital
wallet—a form of financial technology—which is an important component of digital business. This
study was conducted with the aim of analyzing the effect of perceived usefulness, perceived ease of
use, and trust on intention to use digital wallet, multiply simultaneously or partially, and to identify
the dominant variables in influencing intention to use digital wallet. Primary data which includes all
the variables studied were used in this study. Data were collected from 100 respondents who were
selected using a conditional sampling method by means of questionnaires that had been tested for
validity and reliability. Multiple linear regression analysis was applied to test the research ypothesis.
The results indicated that simultaneously perceived usefulness, perceived ease of use, and trust
significantly affect the intention to use digital wallets. Partially, the variables that influence the
intention to use digital wallets were perceived ease of use and trust. The effect of these variables was
to increase the intention to use digital wallets. The most dominant variable in influencing the
intention to use digital applications was trust.
Keywords: digital wallet; perceived usefulness; perceived ease of use; trust; intention to use.
JEL Codes: G23, G40, M20
INTRODUCTION
The development of increasingly advanced information and communication technology has
brought great changes in life. In the era of Society 5.0, the synergy between humans and technology
must be realized for human welfare, productivity and effectiveness that can be helped by technology.
As the fourth most populous country in the world, the market in Indonesia has excellent opportunities
for the development of the digital economy, one of which is financial services from financial
technology products.
Ashghar et al., (2020) stated that financial technology (fintech) is a financial service solution
that utilizes digital technology in its operations. Along with the rapid development of technology that
has encouraged the emergence of various innovations in the business world, especially in the field
of financial services, i.e., non-cash payment instruments that were initially only based on cards and
chips, now come with a server-based or commonly referred to as a digital wallet (e-wallet).
Users of digital wallets can make transactions more practically so that many people use it and it has
become a trend lately. The five best digital wallets in Indonesia in 2021 based on user ratings on the
Google Play Store is depicted in the figure below.
490 Maulani, Sugiharto

Figure 1. Best Five Digital Wallet in Indonesia 2021

(Source: goodnewsfromindonesia.id)
As shown in the figure, Dana obtained the highest rating digital wallet on the Google Play
Store with a rating of 4.6 (on a scale of 0-5). The second position is occupied by LinkAja with a
rating of 4.5. The third position is Gopay with a rating of 4.2. The next position was occupied by
Sakuku with a rating of 4.1. The last position is Ovo with a rating of 4.0. Digital wallet service is an
all-in-one payment application that is quite simple, safe and can be used for all financial transactions
of its users. Nowadays, making transactions using digital wallets is very often used by the public
along with the emergence of e-commerce and marketplaces in Indonesia.
In the TAM model it is stated that a person's intention to use a new technology is based on two
main variables, i.e., perceived usefulness and perceived ease of use, both of which mediate the causal
relationship of external factors on intention to use (Ashghar et al., 2020). In addition, other research
states that trust is a variable that affects someone in using a digital wallet (Kumala et al., 2020).
Referring to the importance of perceptions and beliefs on the intention to use digital wallet, this study
was conducted with the aim of analyzing both the simultaneous and partial effects of perceived
usefulness, perceived ease of use, and trust on intention to use and identify the variables that have
the most influence on intention to use digital wallet. At the same time, this research was carried out
considering that many societies, especially in large cities, already use digital wallets in their daily
lives, especially in the Greater Jakarta area.
LITERATURE REVIEWS
Perceived Usefulness
Rizky et al. (2018) states that the various perceptions adopted from the Technology
Acceptance Model (TAM) lead to the statement that perceptions are divided into two main constructs
which include the perceived usefulness and the perceived ease of use. Perceived usefulness is the
extent to which a person believes that using a technology will improve his or her job performance.
The indicatorsof the perceived usefulness referring to Davis' theory (Ashghar and Nurlatifah, 2020)
are as follows.
▪ Work more quickly. By using a certain information technology can speed up work or save work
time.
▪ Useful (Useful). The degree to which a person believes that the use of a particular technology
has benefits or benefits to be able to improve the person's work performance.
▪ Makes Job Ease. It is easy to learn and operate a technology in doing the job that someone wants
and can provide skills to make the job easier.
▪ Effectiveness. That the use of a certain technology will help a person to increase his daily
activities in doing a job
▪ Job Performance. By using a certain information technology can speed up work or save work
time.
Perceived Ease of Use

Widiyanti (2020) states that like any new technology, in general, a new technology will be
perceived as easy if the system is easy to understand, easy to use, easy to reach and practical in use.
Maulani, Sugiharto 491

Ease of use is defined as the extent to which a person believes that using a technology will be free
from effort. Ease of use is easy to learn, easy to understand, simple, and easy to operate.
The indicators of perceived ease of use according to (Chawla and Joshi, 2019) are as follows.
▪ Easy to learn, i.e., individuals who can learn a technology easily is a sign that the individual
considers the technology easy to use, on the other hand, if the individual is difficult to learn a
technology, the individual will consider the technology not easy to use.
▪ Easy to understand, i.e., individuals feel that a technology is easy to understand, so individuals
perceive the technology as easy to use.
▪ Effortless, i.e., individuals who feel that a technology can be done in a succinct manner, then the
technology is considered easy to use and vice versa if a technology cannot be done in a succinct
manner, then the technology is not easy to use.
▪ Easy to use, i.e., individuals who feel a technology is easy to use, then individuals will feel their
trust will increase in the technology, on the contrary if individuals feel a technology is not easy
to use, then the individual's confidence in a technology will decrease.
Trust
According to (Kotler and Keller, 2012), trust is the willingness of the company to rely on
business partners. Trust depends on a number of interpersonal and inter-organizational factors, such
as company competence, integrity, honesty and kindness.
The confidence indicators according to (Chawla and Joshi, 2019) are as follows.
▪ Ability, addressed to mobile service providers who have sufficient knowledge and ability to carry
out the provider's duties properly and correctly.
▪ Integrity, the mobile service provider keeps its promise.
▪ Benevolence, mobile service providers will care about the interests of users, not only care about
their own interests.
Intention to Use
According to Atriani et al. (2020), interest is something that arises after receiving a stimulus
from the product he sees, then there is interest in trying the product and finally the desire to buy and
be able to have the product arises.
According to Priambodo and Prabawani (2016), the indicators of intention to use are as follows.
▪ The desire to use is an interest in information systems so that curiosity and desire to use electronic
money products arise.
▪ Always try to use the effort made to continue to use electronic money.
▪ Continuing in the future is a habit, and comfort in using electronic money so that you feel like
continuing to use it for longer.
Research Model and Hypotheses

Based on the results of the literature review above, a conceptual model or research model can be
developed and presented below.
The research hypotheses formulated based on the results of the theoretical and empirical literature
review presented in the previous section are as follows.
H1 : Perceived usefulness, perceived ease of use and trust simultaneously affect intention to use.
H2 : Perceived usefulness affects intention to use.

H3 : Perceived ease of use affects intention to use.

H4 : Trust affects intention to use.
RESEARCH METHODS
Data Types and Source
The data used in this study is primary data collected from respondents through questionnaires
that have been tested for validity and reliability. Questionnaires were distributed to respondents using
google forms. Respondents are residents of the Greater Jakarta area who are the owners of at least
one of the five digital wallet applications studied, i.e., Dana, Ovo, Sakuku, Gopay, and Link Aja.

The population in this study are all community members in the Greater Jakarta area who are
owners of at least one of the following five digital wallet applications: Dana, Ovo, Sakuku, Gopay,
and Link Aja. The sample size or the number of respondents involved in this study were 100 owners
of the digital wallet application service who were selected using a purposive sampling technique or
conditional sampling. Data were collected from respondents using a questionnaire that had been
tested for validity and reliability.
Research Variables
In line with the research objectives, the variables in this study consisted of two groups of
variables, i.e., the dependent variable and the independent variable. The dependent variable in this
study is intention to use. The independent variables in this study were perceived usefulness,
perceived ease of use, and trust. In the following table, operational definitions of research variables,
indicators, and measurement scales are presented.
Tabel 1. Operational Definition, Indicator and Measurement Scale of Research Variables

Measurement
Variables Definition Indicators Reference
Scale
Perceived the extent to which a 1. Work more Likert 1-5 Ashghar et
Usefulness person believes that quickly al. (2020)
using a technology 2. Useful
will improve his or 3. Makes Job Easier
her job performance. 4. Effectiveness
5. Job Performance
Perceived Ease the system if 1. Easy to learn Likert 1-5 Chawla dan
of Use perceived easy to 2. Easy to understand Joshi
used if it is easy to 3. Effortless (2019)
understand, easy to 4. Easy to use
use, easy to reach
and practical in use.
Trust willingness of the 1. Ability Likert 1-5 Chawla dan
company or 2. Integrity Joshi
individuals to rely 3. Benevolence (2019)
on business
partners.
Intention to intention to try the 1. Desire to use Likert 1-5 Priambodo
Use product and finally 2. Always try to use dan
the desire to buy 3. Continue in the Prabawani
and be able to have future (2016)
the product arises.

Method of Statistical Analysis

The statistical analysis method applied in this study consisted of four types, i.e., (i) descriptive
statistical analysis, (ii) testing the reliability and validity of research instruments, (iii) testing classical
assumptions consisting of linearity, multivariate normality, multicollinearity, and heteroscedasticity,
and (iv) testing of research hypotheses.

Descriptive statistical analysis was conducted to describe the characteristics of all research variables.
The statistics—the characteristics of the sample—which are described in this study are the minimum
value, maximum value, arithmetic mean, standard deviation, and coefficient of variance.
Reliability and Validity

Testing the reliability (reliability) and validity (validity) of research instruments is carried out to
ensure that the data obtained and analyzed are reliable and believed to be valid—true and describe
the actual situation. In this study, reliability testing was carried out using Cronbach's alpha (alpha
coefficient), while for validity testing using Pearson's Correlation (Pearson correlation coefficient).

The basic assumptions that must be met in using multiple linear regression analysis using primary
data include multivariate normality, multicollinearity, and heteroscedasticity. The assumption of
multivariate normality was tested using the Kolmogorov-Smirnov Test, multicollinearity using the
Variance Inflation Factor (VIF) approach, heteroscedasticity using the Scatter plot.

In accordance with the purpose of this study, i.e., to analyze the effect of perceived usefulness,
perceived ease of use, and trust on intention to use and based on the research model and research
hypothesis formulated, the data obtained were analyzed using multiple linear regression analysis
methods. The regression line equation model in this study is as follows.
ITU = α + β1PU + β2PEOU + β3*TR + e (1)
where: α is constant; βi is the regression of the i-th independent variable; ITU is intention to uses;
PU is perceived usefulness; PEOU is perceived ease of use; TR is trust; and e is error term.

The results of the descriptive analysis which include the minimum, maximum, arithmetic
mean, standard deviation, and coefficient of variance of all the variables studied are presented in the
following table.

Variables n Min Maks Mean SD1 CV2 (%)
Perceived usefulness 100 2 5 3.84 0.87 22.81
Perceived ease of use 100 2 5 3.88 0.88 22.83
Trust 100 2 5 4.04 0.81 20.22
Intention to use 100 2 5 4.16 0.77 18.69
1
Note: standard deviation; 2coefficient of variation
Source SPSS Descriptive Statistical Analysis Output (2021)
The arithmetic mean of all research variables ranged between 3.84 (perceived usefulness) and
4.16 (intention to use) with a standard deviation ranged between 0.77 (perceived usefulness) and 0.88
(perceived ease of use). Considering the value of the coefficient of variation, the variable that has the
highest level of variability is perceived ease of use (22.83%) while the variable that has the lowest
variability is intention to uses (18.69%). Research variables, based on its related coefficient of
variability, are recognized to have relatively similar level of variability.

Reliability and Validity

The results of testing the reliability and validity of the questionnaire used in this study are
presented in table 2 below.
Table 2. Results of Validity and Reliability Test

Variable Indicator r1 Cronbach’s Alpha2
Perceived usefulness PU-1 0.691
PU-2 0.715
PU-3 0.731 0.756
PU-4 0.802
PU-5 0.618
Perceived ease of use PEOU-1 0.761
PEOU-2 0.797
PEOU-3 0.772 0.781
PEOU-4 0.780
Trust TR-1 0.809
TR -2 0.846 0.770
TR -3 0.827
Intention to use ITU-1 0.835
ITU -2 0.822 0.712
ITU -3 0.733
1
Note: r-table at alpha 5% and degree of freedom 98 is 0,197
2
Cronbach’s alpha > 0,600
Source: SPSS Reliability & Validity Test Output (2021)
As shown in the table above, all indicators and all variables studied have an r-statistic value
greater than the r-table value at a significance level (alpha) of 5 percent and a degree of freedom of
98 (n-2). This shows that the research instrument is declared valid. Cronbach's alpha values for all
the variables studied, as can be seen in the same table, ranged between 0.712 and 0.781 meaning that
the instrument used in this study is reliable.
Multivariate Normality
The second assumption or requirement that must be met is multivariate normality. This
assumption requires that the value of the error (error) or residual—the difference between the actual
value (intention to use) and the predicted value—which is not standardized must follow a normal
distribution. In this study, the multivariate normality test was performed using the Kolmogorov-
Smirnov normality test, the results of which are presented in the following table.
Table 3. Summary of Multivariate Normality Test

Test Method Significance3 Result
Multivariate Kolmogorov- Data normally
0.139
normality Smirnov distributed
1
Note: Dependent variable is intention to us; 2Independent variables are perceived
usefulness, perceived ease of use and trust; 3Normality exists if significance
is higher than 0,05 (p > 0,05)
Source: SPSS One-Sample Kolmogorov-Smirnov Test Output
The results of the normality test as shown in the table above show that the assumption of
multivariate normality—or normality—is fulfilled.
Multicollinearity
The multicollinearity assumption was tested using the Variance Inflation Factor (VIF) measurement
line. The test results are presented in the following table.

Table 4. Results of Multicollinearity Test

Independent Variable Variance Inflation Factor2 Results
Perceived usefulness 1.353 No multicollinearity
Perceived ease of use 1.517 No multicollinearity
Trust 1.459 No multicollinearity
1
Note: Dependent variable is Intention to uses
2
Multicollinearity does not exist if VIF lies between 1 and 10
Sumber SPSS Multicollinearity Test Output (2021)
The results of the multicollinearity test, as can be seen in the table above, show that there is no
multicollinearity phenomenon. This means that between the three independent variables there is no
similarity (similarity) which will result in a strong correlation between the independent variables.
Heteroscedasticity
In this study, the assumption of heteroscedasticity was tested using the scatter plot graph method, the
results of which are presented in the following figure.
Figure 3. Results of Heteroscedastisity Test

(Source: SPSS Heteroskedasticity Test Output, 2021)
In the regression analysis model that was built and analyzed in this study, as shown in the table
above, there was no heteroscedasticity phenomenon found. In other words, the standard deviation or
standard deviation of the predicted variable values confirmed by the values of all independent
variables is constant.
Inferential Statistical Analysis: Multiple Linear Regression Linier Analysis

In this study, the formulated hypothesis was tested using the multiple linear regression
statistical analysis method. All the necessary requirements, as discussed in the previous section, have
been met. The results of multiple linear regression analysis which include regression coefficients,
both standardized and unstandardized from all independent variables, level of significance, analysis
of variance, and coefficient of determination are presented and discussed in the following sections.
In the following table, the regression coefficients of all the independent variables studied
include their significance, the value of the coefficient of determination, and the results of the analysis
of variance—F test. Based on the value of the regression coefficient along with the constant value, a
regression line equation model is obtained which describes the causal relationship between the
independent variables and the dependent variable.


Coeficient
Significanc
Model Standardized t
Unstandardized (B) e
(Beta)
Constant 1.915 2.529 0.013
Perceived Usefulness 0.032 0.054 0.847 0.399
Perceived Ease of Use 0.162 0.240 3.584 0.001
Trust 10.15
0.613 0.668 0.000
2
R2 0.716
Adjusted R2 0.707
F-statistic 80.493 (0.000)
Note: Dependent variable is Intention to Use
Referring to the value of the regression coefficients that are not standardized (unstandardized)
of all the independent variables studied, as shown in the table above, the regression line equation
model is obtained as follows.
ITU = 1.915 + 0.032PU + 0.162PEOU + 0.613TR (2)
where: ITU is intention to use; PU is perceived usefulness; PEOU is perceived ease of use; TR is
trust.
The constant (1.915) indicates that if the regression coefficient of all independent variables
equals zero (0) then the intention to use (ITU) equals 1.915. The regression coefficients for the three
variables studied, i.e., perceived usefulness (PU: 0.032), perceived ease of use (PEOU: 0.162) and
trust (TR: 0.613) indicate the magnitude of change that will be experienced by the dependent
variable, i.e., intention to use (ITU) if the three independent variables changes by one unit assuming
the value of the other two independent variables is constant or constant.
The obtained regression line equation (2) can be used to predict intention to use based on the
values of all independent variables because the results of the analysis of variance (ANOVA) or F test
showed significant results (p < 0.000). This means that the three variables studied (perceived
usefulness, perceived ease of use, and trust) simultaneously greatly affect intention to use. These
three variables are able to explain the diversity or variability that occurs in the ntention to use which
is the same as the coefficient of determination (R2), in this case the adjusted coefficient of
determination (Adjusted R2) is 70.7 percent (0.707*100 percent).
Judging from the significance value of the independent variables, as shown in the table column
above, of the three independent variables studied there are two independent variables that partially
affect the intention to use. These variables are perceived ease of use (PKP) with a significance value
less than 0.05 (p < 0.001) and trust (K) with a significance value smaller than 0.05 (p < 0.000). Based
on the value and sign of the regression coefficient (+ 0.162) the perceived ease of use variable has
an effect on increasing intention to use. If the perceived ease of use increases by one unit and the
other two independent variables are constant—no change, intention to use will increase by 0.162,
i.e., from 1,915—when all independent variables are zero (0)—to 2.077. Based on the value and sign
of the regression coefficient (+ 0.613) the confidence variable has an effect on increasing intention
to use. If the confidence has increased by one unit and the other two independent variables are
constant—no change, intention to use it will increase by 0.613, i.e., from 1.915—when all
independent variables are zero (0)-to 2,528.
Based on the results of the multiple linear regression analysis described above, it can be
concluded that the intention to use—in this case the owner of the digital wallet application—is
simultaneously influenced by all the independent variables studied, i.e., perceived usefulness,
perceived ease of use and trust. The three independent variables are able to explain the diversity of
intention to use by 70.7 percent. Partially, of the three independent variables, there are two that affect
intention to use, i.e., perceived ease of use and trust.

DISCUSSIONS
The findings in this study are mostly different from the results of previous studies, especially
when viewed from the partial effect of all independent variables—perceived usefulness, perceived
ease of use, and trust in the dependent variable—intention to use. Perceived usefulness, in this study
was found to have no effect on intention to use. Meanwhile, the results of research by Priambodo
and Prabawani (2016) in Semarang, Yoganda and Dirgantara (2017) in Semarang, Kumala et al.
(2020) in Surabaya, Ardianto and Azizah (2021) in Surabaya showed different results. They in their
respective studies found that intention to use is influenced by perceived usefulness. Many factors
cause these differences, some of which are the research location, the time of the research, and the
digital wallet application being studied.
An interesting finding from this study, both from a theoretical and empirical point of view, is
that intention to use is strongly influenced (P < 0.000) by the level of trust of the owner of the digital
wallet application. The evidence that trust strongly influences intention to use supports the theory
that trust is an important factor influencing someone's use of a digital wallet. Kumala et al. (2020).
This finding is also in line with the results of research by Yoon (2015) in Korea and Andhika and
Suputra (2019) in Indonesia.
An interesting finding from this study, both from the point of view of In this study, the owner
of the digital wallet application considered that the digital wallet application service represented by
the two variables i.e., perceived ease of use and trust was good. The most dominant variable is trust,
so the owner of the digital wallet application is more concerned with the aspect of trust to be taken
into consideration in using the digital wallet application. Therefore, intention to use is highly
dependent on the owner's trust in using a digital wallet application.
CONCLUSION AND IMPLICATION

Simultaneously perceived usability, perceived ease of use, and trust have an effect on intention
to use digital wallet applications. This indicates that the diversity in intention to use digital wallet
applications can be explained by the three variables. Partially, the variables that influence intention
to use digital wallets are perceived ease of use and trust. These two variables have an effect on
increasing intention to use digital wallets. The most dominant variable in influencing intention to use
a digital wallet application is trust.
The practical implication of this research is that the Dana, LinkAja, Gopay, Sakuku, and Ovo
applications should maintain and increase trust so that intention to use these application users can
increase. This is because trust is the most powerful and dominant variable affecting intention to use.
However, companies must continue to pay attention to and improve other variables, especially in
terms of usability because it can help users make transactions faster, increase effectiveness, and help
improve user performance when using digital wallet applications.
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The Effect Of Customer Satisfaction And Customer Trust On Customer

Retention Through Switching Cost On Tokopedia Marketplace Users In
Bekasi Regency
Dewi Apriyani1, Teddy Oswari2, Melvi Yansi3, Ira Widarti4

1,2
3
Econonics and Business Faculty of Universitas Prof. Dr. Hazairin, SH
4
Computer Science And Information Technology Faculty of Universitas Gunadarma
(toswari@staff.gunadarma.ac.id2 , melviyansi215@gmail.com3)
Abstract
The development of technology and information is currently experiencing very rapid development. This
has an influence on consumer behavior who wants to get information quickly and accurately. Based on
a survey, the rapid development of technology has created business opportunities, namely a trading
system using internet media. The purpose of this study was to see the effect of customer satisfaction
and customer trust retention through switching costs on users of the Tokopedia marketplace in Bekasi
Regency. Sampling was determined by purposive sampling technique. With a questionnaire to 130
respondents. Then request data with Amos version 23 software to test the normality, validity and
reliability of the data as well as test the structural equation model. The results of this study are the
positive and significant influence of the customer satisfaction and customer trust variables on the
switching cost variable. The positive and significant effect of the variable customer trust and variable
switching costs on customer retention. Meanwhile, the customer satisfaction variable has a positive and
insignificant effect on the customer retention variable.
Keywords : customer satisfaction, customer trust, switching cost, customer retention
JEL Codes : P43, M31, G41
Introduction
The development of technology and information is currently experiencing very rapid
development. This has an influence on the behavior of consumers who want to get information quickly
and accurately. The media used to obtain information include newspapers, radio, television, internet,
and others. Of these various media, the internet is the fastest and most accurate medium, in providing
internet information that can be used by all people and can be used at any time. According to a survey
conducted by Hootsuite (We are social) a content management service site (content management) that
provides online media services connected to various social networking sites, internet users in Indonesia
in January 2020 amounted to 175, 4 million people with a percentage of 64% of the total population of
272.1 million people. The following is the result of a survey of internet users in Indonesia.
Source: Hootsuite (We are social), Internet Use

Figure 1. Results of the Survey of Internet Users in Indonesia 2020
500 Apriyani, Oswari, Yansi, Widarti

Based on the survey above, the rapid development of technology has created a business
opportunity, namely a trading system using the internet. The use of the internet for business transaction
activities is known as Electronic Commerce (E-commerce). E-commerce which is currently growing
rapidly in Indonesia is an e-commerce type of marketplace. Marketplace is an online place where sellers
can create accounts and sell their wares. One of the advantages of selling on marketplce is that sellers
do not need to create a personal website or online store. The seller only needs to provide a photo of the
product and upload it which is then accompanied by a description of the product. Furthermore, if there
are buyers who want to buy the products offered, the seller will be notified by the e-commerce system.
E-commerce types of marketplaces in Indonesia include Tokopedia.com, Shopee, Lazada,
Bukalapak.com, blibli.com, Zalora, and so on. One type of marketplace that is quite popular in
Indonesia today is Tokopedia.
Tokopedia is an Indonesian technology company with a mission to achieve economic equality
digitally. Since its founding in 2009, Tokopedia has transformed into a unicorn that is influential not
only in Indonesia but also in Southeast Asia. Tokopedia was officially launched to the public on August
17, 2009 under the auspices of PT Tokopedia which was founded by William Tanuwijaya and
Leontinus Edison on February 6, 2009. Since its official launch, PT Tokopedia has succeeded in
becoming one of the fastest growing Indonesian internet companies. The following is the data on
online store competition in Indonesia in the fourth quarter of 2019.
source : iprice,insights
Figure 2
Online Store Competition in Indonesia in 2019 fourth quarter
Based on the data above, iPrice summarizes the performance of e-commerce sites based on
the number of visitors in Indonesia. Tokopedia dominated the rankings in three quarters with the
highest traffic throughout 2019 while shopee managed to maximize sales periods such as 11.11 and
12.12 so that it became the website with the highest visits in the fourth quarter.
This phenomenon states that Tokopedia's level of customer retention is threatened. According to
Levitt in Tjiptono (2014), "essentially the main goal of every business is to create and retain customers".
If Tokopedia is only trying to attract new customers to replace customers who have moved, it is unlikely
that Tokopedia can grow and gain market share again. Developing long term relationships with
customers now has better value and is considered a more effective method to increase the profitability
of a company. Customer satisfaction (customer satisfaction), customer trust (consumer trust), and
switching costs (switch costs) are several factors in companies creating customer retention (customer
retention).
Research Problems and Research Questions

1. How does customer satisfaction affect switching costs on Tokopedia marketplace users in Bekasi
Regency?
2. How does customer trust affect switching costs on Tokopedia marketplace users in Bekasi
Regency?
Apriyani, Oswari, Yansi, Widarti 501

3. How does customer satisfaction affect customer retention on Tokopedia marketplace users in Bekasi
Regency?
4. How does customer trust affect customer retention on Tokopedia marketplace users in Bekasi
Regency?
5. How does switching cost affect customer retention for Tokopedia marketplace users in Bekasi
Regency?
Research Objectives
The aims of this research are as follows:
1. Analyzing the effect of customer satisfaction on switching costs on Tokopedia marketplace users in
Bekasi Regency.
2. Analyzing the effect of customer trust on switching costs on Tokopedia marketplace users in Bekasi
Regency.
3. Analyzing the effect of customer satisfaction on customer retention on Tokopedia marketplace users
in Bekasi Regency.
4. Analyzing the influence of customer trust on customer retention on Tokopedia marketplace users in
Bekasi Regency.
5. Analyzing the effect of switching costs on customer retention in Tokopedia marketplace users in
Bekasi Regency.
Literature review
Market and Consumer
The market is the final / organizational consumer who has needs and wants that are tangible as a
demand for a particular product. The final consumer consists of individuals and households who
purchase products for non-business consumption. Organizational consumers are called industrial
business consumers, and there are differences in scale between business and industrial consumers.
Understanding Marketing Management

A company cannot be separated from marketing activities, with good marketing management, the
company can run smoothly. Through the concept of marketing management, all company activities can
be arranged from the start of the production process to the stage where the goods are received by
consumers.
The definition of marketing management according to Kotler and Keller (2016) is as follows "Marketing
management as the art and science of choosing target markets and getting, keeping, and growing
customers through creating, delivering and communicating superior customer value". Another
understanding put forward by Ben M. Enis in Buchari Alma (2014) states that Marketing Management
is a process to increase the efficiency and effectiveness of marketing activities carried out by individuals
or by companies.
Kotler (2018), “defining customer satisfaction (customer satisfaction) depends on the perceived
performance of the product relative to buyer expectations. If performance exceeds expectations, the
customer feels very satisfied or happy. If performance matches expectations, the customer is satisfied.
If the product performance is far from expectations, the customer is not satisfied.
Meanwhile, according to Lovelock and Wirtz quoted by Fandy Tjiptono (2016) Satisfaction is
an attitude that is decided based on the experience gained. Research is needed to prove whether or not
there are previous expectations which are the most important part of satisfaction.
There are several methods for measuring the level of satisfaction according to Kotler quoted
by Fandy Tjiptono (2015):
1. Complaints and suggestions system A customer centered organization (Customer Centered)
provides extensive opportunities for its customers to submit suggestions and complaints. This
information can provide the company with bright ideas and enable it to react quickly and

responsively to problems that arise.

2. Ghost shopping
One way to get an idea of customer satisfaction is to hire some people to act or act as potential
buyers, then report their findings about the strengths and weaknesses of the company's products and
competitors based on their experience in purchasing these products. In addition, ghost shoppers can
also observe how to handle each complaint.
3. Lost customer analysis
Companies should contact customers who have stopped buying or who have changed suppliers to
understand why this is happening. Not only exit interviews are necessary, but monitoring the
customer loss rate is also important, an increase in the customer loss rate indicates the company's
failure to satisfy its customers.
4. Customer satisfaction surveys Generally, research on customer satisfaction is conducted by means
of survey research, either by post, telephone, or face-to-face interviews. The company will get
feedback and feedback directly from customers and also give a positive sign that the company pays
attention to its customers.
Customer Trust
According to Mowen and Minor in Donni Juni (2017) Trust is all the knowledge possessed by
consumers and all conclusions that can be drawn made by consumers about the object, its attributes and
benefits. According to Rousseau et al in Donni Juni (2017) Trust is a psychological area which is a
concern for accepting what is based on expectations of good behavior from others.
Mowen and Minor in Donni Juni (2017) state that there are three types of consumer trust, as
follows:
1. Object Attribute Trust
Knowledge of an object has a special attribute called object trust. Object attribute trust relates an
attribute to an object, such as a person, item or service.
2. Product Benefit Trust
Someone is looking for products and services that will solve problems in meeting their needs, in
other words, have attributes that will provide recognizable benefits.
3. Trust Benefit Object
The third type of trust is formed by associating objects and their benefits. Belief in object benefits is
a consumer's perception of how far certain products, people or services will provide certain benefits.
Switching Cost
Burnham et al., in Tjiptono (2014) define switching costs as "one time costs perceived or
associated by customers with the process of switching from one service or product provider to another".
Fornell in Tjiptono (2014) argues, "These kinds of costs are not only limited to economic costs, but can
include various kinds of costs, such as search fees, transaction fees, study fees, loyal customer discounts,
consumer habits, costs of emotional risk, cognitive effort, financial risk, social risk and psychological
risk”.
According to Tjiptono (2014), switching costs can be caused by product and market
characteristics related to the slow diffusion process of innovation. Product and market characteristics
include product complexity and service provider heterogeneity. Perceptions of such characteristics vary
between consumers within an industry, so switching costs also vary between consumers. Product
complexity reflects the consumer's perception of the level of difficulty experienced in understanding or
using a particular product. Products that have many choices or steps of use will usually be perceived as
complex and in turn consumers will be judged to have a higher switching cost.
Customer Retention
According to Schiffman and Wisenblit (2015) customer retention relates to turning individual
customer transactions into long-term customer relationships by keeping those customers with one

company rather than switching companies. Farquhar in Zangmo et al (2015) states that customer
retention is how to increase sales by satisfying and serving consumers, so that they keep coming back.
According to Singh and Khan (2012) customer retention is the activity of sales organizations in
making efforts to reduce customers who fail to be retained. Customer retention starts from the time the
company first makes contact with customers until the company can establish long-term relationships
with customers.
Research Framework
Figure 3. Framework
Hypothesis
Based on the research framework in Figure, the hypotheses in this study are:
H1: Customer satisfaction (X1) has a direct positive effect on switching costs (Z) on Tokopedia
marketplace users in Bekasi Regency.
H2: Customer trust (X2) has a direct positive effect on switching costs (Z) on Tokopedia marketplace
users in Bekasi Regency.
H3: Customer satisfaction (X1) has a positive influence, either directly or indirectly, on customer
retention (Y) on Tokopedia marketplace users in Bekasi Regency.
H4: Customer trust (X2) has a positive influence, either directly or indirectly, on customer retention (Y)
on Tokopedia marketplace users in Bekasi Regency.
H5: Switching cost (Z) has a direct positive influence on customer retention (Y) on Tokopedia
marketplace users in Bekasi Regency.
Research methods
This research was conducted on Tokopedia users or marketplace users in Bekasi Regency. The
object of research is the Tokopedia marketplace.
This study uses a questionnaire filled out by the respondents. According to Sugiyono (2010) a
questionnaire is a question or a written statement to the respondent to answer. This study uses an online
questionnaire using a google form which is distributed to Tokopedia respondents. This primary data
retrieval is to be investigated and to determine the effect of customer satisfaction, customer trust,
switching costs and customer retention. The primary data in this study were sourced from Tokopedia
users or marketplace users in Bekasi Regency.
Secondary data in this study were taken from literature studies in the form of related literature
and from companies as well as external data obtained from books, articles, internet and related journals
about customer satisfaction, customer trust, switching costs and customer retention.
The population in this study is the Tokopedia marketplace user or user in Bekasi Regency. The
sample that researchers took as many as 130 respondents.
Parth Diagram Analysis

Path Diagramis a theoretical model that has been built in the first step which will be described
in a path diagram making it easier for researchers to see the causality relationships that they want to
test. Causal relationships are usually expressed in the form of equations, but in SEM, causal
relationships are simply described in a path diagram and then the programming language will convert
the images into equations and equations into estimates. SEM modeling researchers will work with

"constructs" or "factors" namely concepts that have sufficient theoretical footing to explain various
relationships.
Structural Equation Model (SEM) Analysis

Structural equation modeling, is a statistical modeling technique that is highly cross-sectional,
linear and general. Included in this SEM are factor analysis, path analysis and regression.
Model Identification
Model identification is done by calculating the degrees of freedom (df). The formula according
to Santoso (2012) is as follows:
where:
p = number of manifest variables (observed variables) in a model;
k = number of parameters to be estimated.
Data Normality Test

The normality test of the data was carried out by calculating the overall distribution of the data
(multivariate). The test is done by calculating the critical ratio (cr) multivariate. The AMOS 23
program has presented the results of calculating the normality of the data as well as the details of the
distribution of the data. As for finding the value of cr is done in 2 stages, namely (Santoso, 2012):
a. Calculating multivariate standard error (se) :
where:
se = standard error;
N = number of samples;
p = number of indicators (manifest variables).
b. Calculates the multivariate cr.
The data is said to be normal when it is not skewed to the left or right and has an ideal sharpness.
The cut-off value that is generally used to assess normality according to Schumaker and Lomax in Latan
(2013) is the value of skewness and kurtosis ranging from 1.0 to 1.5 or the critical ratio (cr) must meet
the requirements of -2.58 < cr < 2.58.
Test the Measurement Model (Measurement Model)

The measurement model shows how the manifest variable (indicator) represents the latent
variable to be measured, namely by testing the validity and reliability of the latent variable through
confirmatory factor analysis. This study will test the construct validity by looking at the convergent
validity. Convergent validity will be obtained in SEM processing on AMOS 23 by looking at the factor
loading value or also called the lambda parameter (λ). A high factor loading value indicates that the
indicator converges at one point. Furthermore, in SEM, there is a value of squared multiple correlations,
namely the square of the correlation value between variables and their indicators. Furthermore, the value
is multiplied by 100%, the percentage results indicate whether the indicator can explain the construct
or not,

In addition to testing construct validity, construct reliability tests were also conducted. This test
seeks to prove the accuracy, consistency and accuracy of the instrument. The limit value used to assess
an acceptable level of reliability is 0.70, although that number is not a "dead" measure, meaning that if
the research is exploratory, then a value below 0.70 is still acceptable as long as it is accompanied by
valid empirical reasons. seen in the exploratory process. The formula used to calculate construct
reliability is as follows:
where :
a. Std. Loading is obtained directly from standardized loading for each indicator (taken from computer
calculations AMOS 23.) namely the lambda value generated by each indicator.
b. is the measurement error of each - each indicator. The measurement error is equal to 1 – indicator
reliability, which is the square of the standardized loading of each analyzed indicator.
Goodness of Fit (GoF) Model Conformity Test

After testing the measurement model and structural model, the next step is to test the overall
model based on the goodness of fit (GoF) value. GoF is an indication of the comparison between the
specified model and the covariance matrix between indicators or observed variables. If the resulting
GoF is good, then the model can be accepted and vice versa if the GoF produced is bad, then the model
must be rejected or modified (Latan, 2013).
Results
Characteristics of Respondents
Figure 4. Gender Characteristics of Respondents Figure 5. Characteristics of Respondent Age
Figure 6. Characteristics of Respondents' Income

Theory-Based Model Development
This study aims to examine the effect of customer satisfaction and customer trust on customer
retention through switching costs. The constructs to be studied will be described in the table below:

Table 1. Constructs and Indicators
Konstruk Indikator Item/ angket

Customer Satisfaction 4. Kesesuaian Harapan X1_1
5. Kemudahan Dalam Memperoleh X1_2
6. Kesediaan Untuk X1_3
Merekomendasikan X1_4
X1_5
X1_6
Customer Trust 5. Kehandalan X2_1
6. Kejujuran X2_2
7. Kepedulian X2_3
8. Kredibilitas X2_4
X2_5
X2_6
X2_7
X2_8
Switching Cost 4. Economic risk cost Z_1
5. Evaluation cost Z_2
6. Learning cost Z_3
Z_4
Z_5
Z_6
Customer Retention 7. Melakukan pembelian ulang di Y_1
marketplace Tokopedia. Y_2
8. Lebih mengutamakan Y_3
menggunakan marketplace
Tokopedia.
9. Tidak akan berhenti
menggunakan marketplace
Source: Primary Data and Secondary Data
Path Diagram Analysis
Figure 7. Part Diagram
From the pathdiagram above, it can be seen that there are exogenous constructs and endogenous
constructs which are described as follows:
1. Observed, endogenous variables (questionnaire item)
2. Unobserved, endogenous variables (dependent and intervening variables / CR and SC)
3. Unobserved, exogenous variables (independent variables / CS and CT)

Model Identification
After calculating the data, the results are obtained as shown in the image below:
Source: Data processed 2020

Figure 8. Model Identification Results
From the picture above, it is known that the value of degrees of freedom (df) or degrees of freedom
from the processed data is 224, which means that the path diagram model can be estimated. The path
diagram model is of the overidentified type which produces a positive number on degrees of freedom
(df) or degrees of freedom.
Data Normality Test

Table 2. Assessment Of Normality
Variable min max skew c.r. kurtosis c.r.
Y_3 2,000 5,000 -,872 -4,061 1,516 3,527
Y_2 1,000 5,000 -1,071 -4,984 1,376 3,203
Y_1 1,000 5,000 -1,283 -5,970 3,186 7,414
Z_1 1,000 5,000 -1,182 -5,502 ,862 2,007
Z_2 1,000 5,000 -1,327 -6,175 2,039 4,745
Z_3 1,000 5,000 -1,566 -7,290 3,030 7,051
Z_4 1,000 5,000 -1,398 -6,505 2,905 6,762
Z_5 1,000 5,000 -1,344 -6,254 2,034 4,735
Z_6 1,000 5,000 -1,237 -5,758 1,857 4,321
X2_1 2,000 5,000 -1,097 -5,106 1,831 4,262
X2_2 1,000 5,000 -1,389 -6,463 3,774 8,784
X2_3 2,000 5,000 -1,258 -5,858 1,919 4,466
X2_4 1,000 5,000 -1,626 -7,570 4,120 9,588
X2_5 1,000 5,000 -1,446 -6,729 3,124 7,271
X2_6 1,000 5,000 -1,595 -7,424 3,883 9,038
X2_7 1,000 5,000 -1,313 -6,111 3,700 8,612
X2_8 1,000 5,000 -1,570 -7,309 3,289 7,655
X1_6 2,000 5,000 -1,747 -8,133 2,705 6,296
X1_5 2,000 5,000 -,728 -3,388 ,416 ,968
X1_4 2,000 5,000 -1,087 -5,058 1,465 3,409
X1_3 2,000 5,000 -,697 -3,244 1,150 2,676
X1_2 2,000 5,000 -,872 -4,057 1,207 2,810
X1_1 2,000 5,000 -,881 -4,103 1,429 3,325
Multivariate 14,296 2,403
Based on the output results above, the multivariate normality test in this study gave a multivariate value
of 14,296 with a cr value of 2.403, so it can be concluded that the data are normally distributed in a
multivariate manner. So it is no longer necessary to evaluate outliers because the data are normally
distributed and there is no p1 or p2 value less than 0.05.
Test Measurement Model

Convergent Validity Test
Convergent validity is measured by determining whether each estimated indicator is validly
measuring the dimensions of the concept being measured. Santoso (2012) said that the estimate column
in the regression weights table shows the covariance value between the latent variable and the indicator.

Table 3. Regression Weights

Estimate S.E. C.R. P Label
X1_1 <--- X1 1,000
X1_2 <--- X1 1,022 ,107 9,549 *** Valid
X1_3 <--- X1 ,974 ,100 9,756 *** Valid
X1_4 <--- X1 1,224 ,115 10,620 *** Valid
X1_5 <--- X1 1,055 ,118 8,982 *** Valid
X1_6 <--- X1 1,089 ,120 9,042 *** Valid
X2_8 <--- X2 1,000
X2_7 <--- X2 ,857 ,062 13,812 *** Valid
X2_6 <--- X2 ,972 ,069 14,158 *** Valid
X2_5 <--- X2 ,928 ,069 13,369 *** Valid
X2_4 <--- X2 ,906 ,071 12,818 *** Valid
X2_3 <--- X2 ,939 ,070 13,438 *** Valid
X2_2 <--- X2 ,780 ,069 11,361 *** Valid
X2_1 <--- X2 ,804 ,066 12,120 *** Valid
Z_6 <--- Z 1,000
Z_5 <--- Z 1,078 ,094 11,499 *** Valid
Z_4 <--- Z ,970 ,088 10,983 *** Valid
Z_3 <--- Z 1,023 ,097 10,597 *** Valid
Z_2 <--- Z 1,030 ,096 10,705 *** Valid
Z_1 <--- Z 1,030 ,106 9,721 *** Valid
Y_1 <--- Y 1,000
Y_2 <--- Y ,951 ,110 8,660 *** Valid
Y_3 <--- Y ,891 ,088 10,077 *** Valid
Sumber : Data diolah 2020, Ket : P *** = 0,001
The table shows that all indicators are good and have a value of cr which is 2 times the standard
error value, the probability of each indicator is also less than 0.05. So that it can be ascertained that all
variable indicators have met the construct validity reference. The next step is to know the value of the
loading factor of each variable indicator. The loading factor value shows the position of the indicator
among other indicators in one variable. The loading factor value can be seen in the estimate column in
table 4.4 Standardized Regression Weights where the estimated value of all tested items is more than
0.5.
Table 4. Standardized Regression Weights
Before Model Respecific
Estimate
Z <--- X1 ,497
Z <--- X2 ,407
Y <--- X2 ,355
Y <--- X1 ,272
Y <--- Z ,379
X1_1 <--- X1 ,771
X1_2 <--- X1 ,790
X1_3 <--- X1 ,798
X1_4 <--- X1 ,863
X1_5 <--- X1 ,752
X1_6 <--- X1 ,764
X2_8 <--- X2 ,868
X2_7 <--- X2 ,872
X2_6 <--- X2 ,883
X2_5 <--- X2 ,861
X2_4 <--- X2 ,840
X2_3 <--- X2 ,863
X2_2 <--- X2 ,786
X2_1 <--- X2 ,816
Z_6 <--- Z ,825
Z_5 <--- Z ,839
Z_4 <--- Z ,817
Z_3 <--- Z ,799
Z_2 <--- Z ,808
Z_1 <--- Z ,756
Y_1 <--- Y ,830
Y_2 <--- Y ,699
Y_3 <--- Y ,778
Sumber : Data diolah 2020
Data Reliability Test

This test seeks to prove the accuracy, consistency and accuracy of the instrument. The following
is a table of construct reliability test calculations.

Table 5. Reliability Test on Construct

Customer Satisfaction and Customer Trust
Customer Satisfaction Customer Trust (X2)
(X1)
Variabel
Loading Loading
Error Error
Factor Factor
X1_1 0,771 0,406
X1_2 0,790 0,376
X1_3 0,798 0,363
X1_4 0,863 0,255
X1_5 0,752 0,434
X1_6 0,764 0,416
X2_1 0,816 0,334
X2_2 0,786 0,382
X2_3 0,863 0,255
X2_4 0,840 0,294
X2_5 0,861 0,259
X2_6 0,883 0,22
X2_7 0,872 0,24
X2_8 0,868 0,247
Sum of
loading 4,738 6,789
factor
Sum of error 2,25 2,231
Composite
0,909 0,954
Reliability
Table 6. Reliability Test on Construct

Switching Cost and Customer Retention
Customer Retention (Y) Switching Cost (Z)
Variabel Loading Loading
Error Error
Factor Factor
Z_1 0,756 0,428
Z_2 0,808 0,347
Z_3 0,799 0,362
Z_4 0,817 0,333
Z_5 0,839 0,296
Z_6 0,825 0,319
Y_1 0,830 0,311
Y_2 0,699 0,511
Y_3 0,778 0,395
Sum of
loading 4,844 2,307
factor
Sum of error 2,085 1,217
Composite
0,918 0,814
Reliability
The limit value used to assess an acceptable level of reliability is 0.70, although that number is
not a "dead" measure, meaning that if the research is exploratory, then a value below 0.70 is still
acceptable as long as it is accompanied by valid empirical reasons. seen in the exploratory process. The
following table is a summary of the calculation results of construct reliability:
Table 7. Summary of Construct Reliability Test Results

Variabel Construct Liability Keterangan
Customer Satisfaction (X1) 0,909 Reliabel
Customer Trust (X2) 0,954 Reliabel
Customer Retention (Y) 0,814 Reliabel
Switching Cost (Z) 0,918 Reliabel
In the table above, it can be seen that all variables in this study are declared reliable because all
variables have a construct reliability value of 0.7. So, according to the results of this construct reliability
test, all questions in these variables can be trusted or reliable which can then be continued to the next
analysis stage, namely the Goodness of Fit (GoF) model suitability test.

Goodness of Fit (GoF) Model Conformity Test

After estimating the confirmatory factor analysis, the next step in interpreting the results of the
confirmatory factor analysis is evaluating the overall fit of a model. The following are the results of the
overall fit test of the initial model on the research model in the following figure:
Figure 9
Initial Model Overall Fit Test
The goodness of fit value in the full model can be seen in the table below:
Table 8. Value of Goodness of Fit

On the Overall Fit Model Test
Goodness of Fit
Cut – Off Value Hasil Model Keterangan
Indices
Chi Square Diharapkan Kecil 400,474 Tidak Baik
Probabilitas ≥ 0,05 0,000 Tidak Baik
CMIN/DF ≤ 2,00 1,788 Baik
RMSEA ≤ 0,08 0,078 Baik
GFI ≥ 0,90 0,796 Tidak Baik
AGFI ≥ 0,90 0,749 Tidak Baik
TLI ≥ 0,95 0,922 Marginal
CFI ≥ 0,95 0,931 Marginal
The table above shows that 2 of the 8 index criteria have met the Cut-Off Value, while the other 6
index criteria have not met the minimum Cut-Off Value value so that the model will be re-specified
until it can reach the recommended cut-off value so that the model is fit.
Model Specification
In the initial overall fit test, it was found that the 6 goodness of fit index criteria did not meet the
cut-off value, namely chi-square, probability, GFI, AGFI, TLI, CFI. Calculations on AMOS have a
model respecification solution if the model being tested does not meet the recommended minimum limit
value. Respecification can be done by looking at the output of AMOS on the modification indices (MI).
This study went through three stages of model re-specification with each stage correlation
between latent variables/indicators/errors at the largest MI value. The following are the stages of model
specification in this study:
When opening the modification indices on the AMOS output, three relationships with the largest MI
are selected as shown in the following table:

Table 9. Modification Indices Covariances

Stage 1
M.I. Par Change
e19 <--> e20 23,383 ,150
e16 <--> e19 5,563 -,059
e16 <--> e17 12,692 ,082
e15 <--> e21 4,080 ,041
e13 <--> e14 4,367 ,036
e12 <--> e24 4,718 ,035
e12 <--> e16 9,976 ,061
e10 <--> e18 9,122 ,063
e10 <--> e12 4,655 ,034
e10 <--> e11 5,575 ,039
e9 <--> e14 4,117 -,031
e8 <--> X1 5,182 -,029
e8 <--> e25 5,660 ,029
e8 <--> e14 5,784 ,034
e8 <--> e13 4,484 ,032
e8 <--> e11 10,680 -,047
e7 <--> e20 4,588 ,054
e6 <--> X2 34,673 ,139
e6 <--> X1 21,492 -,083
e6 <--> e14 29,229 ,108
e6 <--> e8 12,464 ,061
e5 <--> X2 5,170 -,054
e5 <--> e9 4,151 ,038
e5 <--> e8 10,477 -,056
e4 <--> e14 4,344 -,035
e3 <--> e21 8,781 ,051
e2 <--> e12 4,237 ,035
e1 <--> e3 4,003 ,036
Respecification of the model is done by correlating or connecting the three relationships that have
the highest MI value. The following is the result of the re-specification of the first stage of the model:
Data Source processed 2020

Figure 10. Results of Phase 1 Model Respecifications
From the figure, it can be seen that the Chi-square, Probability, GFI and AGFI indexes still do
not meet the minimum value, so it is necessary to re-specificate the model by looking for the three
largest MIs.
In the following table, the largest MI values will be correlated to the model. The following are
the results of the respecification in the following figure. Results of Phase 2 Model Respecifications.


Stage 2
M.I. Par Change
e19 <--> e22 4,015 ,055
e18 <--> e19 5,134 ,056
e16 <--> e20 5,144 ,061
e16 <--> e19 5,345 -,053
e16 <--> e17 10,668 ,073
e14 <--> e15 4,018 ,033
e13 <--> e14 5,504 ,035
e12 <--> e24 5,245 ,037
e12 <--> e16 9,774 ,061
e11 <--> e15 4,131 -,040
e10 <--> e18 8,451 ,061
e10 <--> e12 4,802 ,034
e10 <--> e11 5,597 ,039
e8 <--> e25 6,160 ,030
e8 <--> e13 4,481 ,032
e8 <--> e11 11,226 -,048
e6 <--> e12 5,014 -,034
e6 <--> e8 4,078 ,027
e5 <--> e9 4,250 ,038
e5 <--> e8 8,720 -,050
e4 <--> e18 4,896 ,047
e3 <--> e21 9,389 ,052
e3 <--> e11 4,117 -,034
e2 <--> e12 4,386 ,036
The results of the respecification of the 2nd stage model can be seen in the image below:
Data source processed 2020

In the figure above, the results of the Respecification Model Phase 2 can be seen that the Chi-
square value is getting smaller, the probability value has increased to 0.010 but has not been able to
meet the specified cut-off value, for the GFI and AGFI indexes it has not yet reached the cut-off value.
so that the stage 3 model is respecified with the three largest MI values.
Because in the second stage there are several indexes that are still not fit, then the third stage is
carried out, which is to correlate the 3 largest MI values in the model, the largest MI values can be seen
in the table below:


Stage 3
M.I. Par Change
e16 <--> e20 6,465 ,063
e14 <--> e15 4,827 ,037
e13 <--> e14 5,952 ,037
e12 <--> e14 4,960 ,030
e11 <--> e15 4,170 -,039
e10 <--> e18 8,693 ,061
e10 <--> e12 7,310 ,041
e8 <--> e12 5,357 -,029
e6 <--> e12 5,488 -,035
e6 <--> e8 5,088 ,028
e5 <--> e9 5,063 ,041
e5 <--> e8 8,143 -,046
e4 <--> e18 4,252 ,043
e3 <--> e21 9,671 ,053
e2 <--> e12 4,565 ,036
The results of the stage 3 model respecification can be seen in the image below:
Data Source processed 2020

In the figure above, the results of the Respecification Model Phase 3 can be seen that the Chi-
square value is getting smaller, the probability value has increased to 0.106 and has met the specified
cut-off value, which is 0.05, while the GFI and AGFI indexes have not yet reached the cut value. -off
value.
Results of Model Respecification, it can be seen that the respecified model resulted in different
goodness of fit values. The following table shows the goodness of fit value from the results of the model
respecification that has been carried out.
Table 12. Value of Goodness of Fit
On the Overall Fit Model Test
Goodness Hasil
Cut – Off Hasil
of Fit Model Keterangan Keterangan
Value Respesifikasi
Indices Awal
Chi Square Diharapkan 400,474 Tidak Baik 241,214 Baik
Kecil
Probabilitas ≥ 0,05 0,000 Tidak Baik 0,106 Baik
CMIN/DF ≤ 2,00 1,788 Baik 1,122 Baik
RMSEA ≤ 0,08 0,078 Baik 0,031 Baik
GFI ≥ 0,90 0,796 Tidak Baik 0,866 Tidak Baik
AGFI ≥ 0,90 0,749 Tidak Baik 0,828 Tidak Baik
TLI ≥ 0,95 0,922 Marginal 0,988 Baik
CFI ≥ 0,95 0,931 Marginal 0,990 Baik

The table above shows that most of the index criteria used have a good value (although there are
still some requirements for the model test that are below standard, but the value is the value that is
closest to the standard) so that the research can be continued to the next stage.
Analysis of Direct Effects, Indirect Effects, and Total Effects

This analysis is used to see the strength of the influence between constructs, either direct effect,
indirect effect, or total effect. According to Ferdinand (2000) direct effect is the coefficient of all lines
with an arrow at one end. While the indirect effect (indirect effect) is the influence that arises through
an intermediate variable and the total effect (total effect) is the influence of various relationships.
The direct effect of this research model is as presented in the following table:
Table 13. Standardized Direct Effects – Estimates

X2 X1 Z Y
Z ,453 ,475 ,000 ,000
Y ,330 ,149 ,527 ,000
Sumber: Data diolah 2020
In this study, there are two variables that have a direct influence on the switching cost variable
(Z) and there are three variables that have a direct influence on the customer retention variable (Y). The
measurement results show that the variable that has the greatest direct influence on the switching cost
variable (Z) is the customer satisfaction variable (X1), which is 0.475 and the variable that has the
largest direct influence on the customer retention variable (Y) is the switching cost variable (Z), that is
equal to 0.527.
In this research model, the indirect effect between variables is also measured, namely there are
two variables that have an indirect effect on the customer retention variable (Y) as shown in the
following table. From these measurements, the variable that has the largest indirect effect on the
customer retention variable ( Y) is the customer satisfaction variable, which is 0.250.
Table 14. Standardized Indirect Effects – Estimates

X2 X1 Z Y
Z ,000 ,000 ,000 ,000
Y ,238 ,250 ,000 ,000
Because of the direct influence and indirect effect between variables in this research model, it is
necessary to measure the total effect. The results of measuring the total influence between variables are
as shown in the following table:
Table 15. Standardized Total Effects – Estimates

X2 X1 Z Y
Z ,453 ,475 ,000 ,000
Y ,569 ,399 ,527 ,000
Based on the measurement results, it is known that the variable that has the largest total effect on
the switching cost variable (Z) is the customer satisfaction variable (X1), which is 0.475 and the variable
that has the largest total effect on the customer retention variable (Y) is the customer trust variable,
namely of 0.569.

Hypothesis test
The results of testing the hypothesis proposed in this study can be seen in the table below
Regression Weights. The description is stated as follows:
Table 16. Regression Weights

After Model Respecification:
Standardized Keterangan
Estimate Estimates
S.E. C.R. P
Z<--- X1 0,606 0,475 0,129 4,702 0,000 Signifikan
Z<--- X2 0,436 0,453 0,091 4,802 0,000 Signifikan
Y<--- X2 0,280 0,330 0,087 3,222 0,001 Signifikan
Tidak
Y<--- X1 0,167 0,149 0,126 1,323 0,186
Signifikan
Y<---Z 0,464 0,527 0,121 3,851 0,000 Signifikan

Based on the results of the analysis, the conclusions of this study can be stated as follows:
1. Customer satisfaction (X1) has a direct positive effect on switching costs (Z) on Tokopedia
marketplace users in Bekasi Regency and the effect is significant.
2. Customer trust (X2) has a direct positive effect on switching cost (Z) on Tokopedia marketplace
users in Bekasi Regency and the effect is significant.
3. Customer satisfaction (X1) has a positive influence, either directly or indirectly, on customer
retention (Y) on Tokopedia marketplace users in Bekasi Regency and the effect is not significant.
4. Customer trust (X2) has a positive influence, either directly or indirectly, on customer retention (Y)
on Tokopedia marketplace users in Bekasi Regency and the influence is significant.
5. Switching cost (Z) has a direct positive effect on customer retention (Y) on Tokopedia marketplace
users in Bekasi Regency and the effect is significant.
Based on the results of the analysis and conclusions obtained in the discussion above, the authors
provide suggestions to the company or to further researchers in the form of:
1. With the results obtained that there is a positive relationship on all tested variables, the Tokopedia
marketplace must continue to pay attention to and improve customer satisfaction and customer trust,
namely by always seeking satisfaction responses from customers regarding the quality of products
and services provided by Tokopedia, as well as adjusting prices with benefits. , as well as paying
attention to the cost and convenience of customers in obtaining Tokopedia products and services.
2. There are insignificant results between customer satisfaction and customer retention, therefore
Tokopedia should choose the right strategy so that Tokopedia customer / user satisfaction is met in
order to build good customer retention.
3. Based on the results above, in the next research, new variables and/or indicators can be added to
enrich the model used in this study. Thus, the results of subsequent studies can be more perfect and
the conclusions obtained may differ or remain the same as the results of this study. If it is proven
that the results are the same, it means that the model used in this study has a high consistency to be
applied in Indonesia.
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Influence Of Factors Affecting Go-Pay Use Decisions On Go-Jek

Application Features With Perceived Trust As Intervening Variables
In The Covid-19 Pandemic
1
Waseso Segoro, 2Zainul Arif Hidayat Lubis
1,2
1
waseso@staff.gunadarma.ac.id, 2zainularifhidayatlubis@gmail.com
Abstract
The impact of Covid-19 can encourage the use of e-wallet to be more innovative in the
financial sector by implementing principles of consumer protection as well as risk management and
prudenceto maintain monetary stability, financial system stability, and an efficient, smooth, secure,
and reliable payment system. The development of financial technology on the one hand has proven
to bring benefits to consumers, business actors, and the national economy, but on the other hand, has
potential risks which if not properly mitigated can disrupt the financial system. This study aims to
analyze and determine the effect of perceived usefulness, perceived ease of useand, perceived
securityon the decision to use Go-Pay on the features of the Go-Jek application through the
perceivedtrust as an intervening variable. This research method uses purposive sampling as amethod.
The analytical tool in this study uses the intervening variable regression test through path analysis
which will be processed with SPSS 25 statistics through primary data obtained by distributing
questionnaires to people who live in the Bekasi City area intensively using Go-Pay on application
features Go-Jek. The results show that there is an effect of perceived usefulness, perceived ease of
use, and perceivedsecurity on perceivedtrust. These results also show the effect of perceived
usefulness, perceived ease of use, perceivedsecurity, and perceived trust on the decision to use Go-
Pay on the features of the Go-Jek application. Furthermore, these results show that theeffect of
perceived usefulness, perceived ease of use, and perceived security on the decision to use is direct,
not through trust.
Keywords : Decision to Use , Perceived Ease of Use, Perceived Security, Perceived Trust, Perceived
Usefulness
JEL Codes: D91, G41
INTRODUCTION
Background
The impact of Covid-19 can encourage the use of e-wallet to be more innovative in the financial
sector by applying the principles of consumer protection as well as risk and prudent managementto
maintain monetary stability, financial system stability, and an efficient, smooth, secure, and reliable
payment system. According to the survey results iprice.co.idin 2020, based on previous data, the
ranking of e-wallet in Indonesia is also dominated by local players. GOPAY, OVO, Dana, and
LinkAja are the 4 e-wallets with the highest number of monthly active users during the Q2 2019-Q2
2020. For applications with the most total downloads, the four players are GOPAY, OVO, Dana, and
LinkAja.
Segoro, Lubis 519

Source: iprice.co.id, 2020

Figure 1. Applications with the most total downloads
According to databoks.katadata.co.id in 2020 as many as 87% of respondents in thesurvey

DailySocial.idused Gojek's digital wallet, namely GoPay. This percentage is the highest among other
similar fintech. A total of 80.4% also use OVO and 75.6% use DANA for payments. Meanwhile,
respondents using ShopeePay and LinkAja were 53.2% and 47.5%, respectively.Then, only a small
percentage of respondents use Jenius, iSaku, DOKU, Paytren, Sakuku, and Uangku.
Source: databoks.katadata.co.id in DailySocial.id, 2020

Figure 2. Digital wallet user
520 Segoro, Lubis

LITERATURE REVIEW
Perceived Usefulness
Rahmatsyah (2011) perceived usefulness as a subjective probability of potential users using a
particular application to facilitate the performance of their work.
Perceived Ease of Use

Saputri (2015) defines perceived ease of use as the degree to which a person believes that the use
of technology is easy and does not require hard work from the wearer.
Perceived Security
Z Fahmi and Evanita, S (2019) security is a person's degree of confidence that the technology
used to transmit sensitive information such as consumer data and financial transactions is guaranteed
to be secure, or protected from all potential threats.
Perceived Trust
Maghfira (2018) trust is the level of confidence where a person's needs can be met, this makes a
sense of satisfaction with a product or service.
Decision to Use
Dien (2018) is a decision to end the thought process about a problem or problem to answer the
question of what must be done to overcome the problem, by choosing an alternative.
Research Framework
Perceived H1
Usefulness P4 e1 e2
(X1)
H5
P1
H6
Perceived Perceived H4 Decision to
P2
Ease of Use Trust P7 Use
H7
(X2) (Z) H2 (Y)
P3
P5
H3
Perceived P6
Security
(X3)
Hypothesis
H1 = Perceived usefulness variable has a significant effect on the decision to use go-pay on the
features of the Go-Jek application.
H2 = Perceived ease of use variable has a significant effect on the decision to use go-pay on the
features of the Go-Jek application.
H3 = Perceived security variable has a significant effect on the decision to use go-pay on the features
of the Go-Jek application.
H4 = Perceived trust variable has a significant effect on the decision to use go-pay on the features of
the Go-Jek application.
H5 = Perceived usefulness variable has a significant effect on the decision to use Go pay on the
features of the Go-Jek application through perceived trust as an intervening variable.
H6 = Perceived ease of use variable has a significant effect on the decision to use Go-pay on the
features of the Go-Jek application through perceived trust as an intervening variable.
H7 = Perceived security variable has a significant effect on the decision to use Go-pay on the features
of the Go-Jek application through perceived trust as an intervening variable.
Segoro, Lubis 521

RESEARCH METHODS
Research Objects
The object in this study is a people who live in the Bekasi City area intensively use Go-pay
onapplication features Go-jek
Types and Data Sources

The data used in this study arethe primary data obtained by distributing questionnaires to people
who live in the Bekasi City area intensively using Go-pay onapplication features Go-jek.
Research Variable
Variables used in this study consisted of three (variables,independent) is perceived usefulness
(X1), perceived ease of use (X2), and perceived security (X3), one intermediate variable
(intervening) is perceived trust (Z) and one dependent variable. (dependent) is the decision to use
(Y).
Population
According to AsepHermawan (2009) population relates to all groups of people, events, or
objects that are the center of attention of researchers to be studied. In this study, the population in
question is people who live in the Bekasi City area who intensively use Go-pay on the features of
theapplication Go-jek.
Sample
According to AsepHermawan (2009) the sample is a subset of the population. This includes a
number of selected members of the population. Thus, some elements of the population are samples.
The sample in this study is some people who live in the Bekasi City area intensively in using Go-pay
on the features of the application Go-jek.
However, it is difficult to know the number of users Go-pay , so to determine the research
sample size from the population, the formula according to Martaria (2019) in Rao Purba (2006), that
is:
𝑍2
𝑛=
4(𝑚𝑜𝑒)2
Description:
n : Number of samples
Z : The level of confidence in determining the sample is 95% = 1.96
moe : Margin of error or maximum error that can be tolerated, is set at 10% With the above
formula, the number of samples that can be taken are:
1,962
𝑛=
4(0,1)2
𝑛 = 96,04 ≈ 100
From the calculation of the formula above, the results are 96.04 rounded up to 100 respondents
who live in the Bekasi City area intensively in using Go-pay on the features of theapplication Go-
jek.

Table 1. Hypothesis Results
Hypothesis Statistical Test Results Meaning
H1 Perceived Tcount>Ttable Significant Users decide to use Go Pay because it

Usefulness → (2.874 > 1.985) Influence can make the work and time needed
Decision to Use Level faster in making personal payment
Significant: transactions so that it is useful
(0.005 < 0.05) without preparing cash for payment
on Go-Jek.
522 Segoro, Lubis

Hypothesis Statistical Test Results Meaning
H2 Perceived Tcount>Ttable Significant Users decide to use Go Pay because

Ease of Use → (3.060 > 1.985) Influence it is easy to understand and learn Go-
Decision to Use Level Pay such as making payment
Significant: transactions, top-ups , and transfer
(0.003 < 0.05) Go-Pay balances to fellow Go-pay
users so that Go-Pay is very flexible
to use.
H3Perceived Tcount>Ttable Significant Users decide to use Go Pay because

Security → (3.137 > 1.985) Influence it can protect information and
Decision to Use Level transaction payments through Go-
Significant: Pay so Go-Pay is very safe .
(0.002 < 0.05)
H4 Perceived Tcount>Ttable Significant Users believe in deciding touse Go-

Trust → Decision (2.453 > 1.985) Influence Pay because Go-Pay provides
to Use Level services according to what they
Significant: promise and the services they
(0.016 < 0.05) provide used as expected.
H5 Perceived Tcount<Ttable(1.6 There is no The higher or lower the benefit in

Usefulness → 8165 < 1.985) effect using Go Pay, the lower the level of
Decision to Use mediation user trust in deciding to use Go -Pay.
Go Pay (Direct)
throughPerceived
Trust
H6 Perceived Tcount<Ttable There is no Perception of convenience is not

Ease of Use → (1.75677 < effec used as a reason to believe in
Decision to Use 1.985) mediation deciding touse Go-Pay because if
through (Direct) the user has a perception of ease of
Perceived Trust use Go-Pay is not necessarily a trust
for users to decide. Because users
are aware of the perception of the
convenience they get when using
Go-Pay but don't necessarily trust
them first.
H7Perceived Tcount<Ttable There is no Users still do not pay attention to the

Security→ (1.78693 < effect level of security they get. Because
Decision to Use 1.985) mediation users are aware of the security
through (Direct) perception they get when they
Perceived Trust decide to rather use Go-Pay first
than trusting it.
Source: Researcher Processed (2021)
Segoro, Lubis 523

Conclusions
Conclusions that can be drawn from the previous discussion are:
1. Perceived usefulness variable has a significant effect on the decision to use Go-pay on the
features of theapplication Go-jek, which is a community domiciled in the Bekasi City area.
2. Perceived ease of use variable has a significant effect on the decision to use Go pay on the
features of theapplication Go-jek, which is a community domiciled in the Bekasi City area.
3. Perceived security variable has a significant effect on the decision to use Go-pay on the features
of theapplication Go-jek, which is a community domiciled in the Bekasi City area.
4. Perceived trust variable has a significant effect on the decision to use Go pay on the features of
theapplication Go-jek, which is a community domiciled in the Bekasi City area.
5. Perceived usefulness variables has no indirect effect on the decision to use Go-pay on the
features of theapplication Go-Jek, which is a community domiciled in the Bekasi City area
through perceived trust as an intervening variable.
6. Perceived ease of use variable has no indirect effect on the decision to use Go-pay on the features
of theapplication Go-Jek, which is a community domiciled in the Bekasi City area through
perceived trust as an intervening variable.
7. Perceived security variable has no indirect effect on the decision to use Go-pay on the features
of theapplication Go-jek, which is a community domiciled in the Bekasi City area through
perceived trust as an intervening variable.
Implications
Based on the results of this study, the implications of this research can be stated as follows:
1. Perceived usefulness variable affect decisions to use Go-Pay, so that companies can maintain
the benefits provided to users in using Go-Pay to develop User performance. Thus, it is hoped
that the company can improve Go-Pay in increasing user productivity and other benefits in using
Go-Pay in the future.
2. Perceived ease of use variable affect decisions to use Go-Pay that the company can retain users
the ease of transferring the balance of the Pay Users to Go-Gofellow-pay. However, respondents
still find many difficulties that occur, so it is hoped that the company can improve the ease of
understanding how to use Go-Pay.
3. Perceived security variable affectdecisions to use Go-Pay, so that companies can maintain user
security in protecting transactions through Go-Pay. Thus the company is expected to continue
to improve security in payments through Go-Pay, so the existing money (balance) of Go-Pay
will not be stolen or manipulated by parties who have no interest.
4. Perceived trust affects the decision to use Go-Pay, so the company can maintain user confidence
inability Go-Pay's to protect User data. Thus the company can also continue to increase user
confidence to believe that the services used on Go-Pay are in line with expectations.
5. Perceived usefulness, perceived ease of use cannot be mediated by perceived trust, so there is a
direct influence on usage decisions. This happens the higher or lower the utility does not affect
the level of trust, then users are aware of the convenience and security obtained when using Go-
Pay but do not necessarily trust it first. maintain that belief.
Suggestions
There are several suggestions that can be proposed, that is:
1. Go-pay is able to provide perceived usefulness to Go-pay users, so that using Go-pay can
develop user performance.
2. Go-pay is able to maintain perceived ease of use for users in transferring Go-Pay balances to
fellow Go-pay users.
3. Go-pay is able to improve user perceived security in protecting transactions through Go-Pay.
4. Go-pay is able to ensure user perceived trust in Go-Pay's ability to protect user data.
5. For further researchers, it is hoped that they can conduct research by using or adding
independent, dependent and other intervening variables, such as Risk, Usefulness, Credibility,
Interests, Attitudes, Satisfaction and many more. In addition, future researchers are expected to
524 Segoro, Lubis

use different research subjects from the author and expand the scope of research and samples
used, so that further research is expected to be able to contribute to the development of science
in the future. Then it is also hoped that further researchers in testing intervening variables can
use other analytical tools such as SEM (Structural Equation Modeling) analysis.
REFERENCES
Deni, Rahmatsyah. 2011. “Analisis Faktor-Faktor Yang Mempengaruhi MinatPenggunaan Produk
Baru (studi kasus: E-money kartu Flazz BCA)tahun 2011.” Tesis. Universitas Indonesia.
Fahmi, Z, dan Evanita, S. 2019. Pengaruh Iklan dan Perceived Security
terhadapMinatTransaksiPebayaranBerbasis e-Payment denganSikapsebagaiVariabel
Intervening pada Masyarakat di Kota Padang. Jurnal Kajian Manajemen Dan Wirausaha, 01,
83-96.
Genady, Dien Ilham. 2018. Pengaruh Kemudahan, Kemanfaat dan Promosi Uang Elektronik
Terhadap Keputusan Penggunaan Uang Elektronik di Masyarakat (Studi Kasus di Provinsi
DKI Jakarta). Skripsi Fakultas Ekonomi dan Bisnis UIN Syarif Hidayatullah Jakarta.
Hermawan, Asep. 2009. Penelitian Bisnis Paradigma Kuantitatif. Jakarta: Grasindo.
Maghfira. 2018. Faktor-Faktor Yang Mempengaruhi Penggunaan Sistem Pembayaran Go-Pay.
Skripsi Fakultas Ekonomi Universitas Islam Indonesia Yogyakarta.
Rao, Purba. (2006). Measuring Consumer Perception Through Factor Analysis. The Asian Manager
(February-March).
Rumahorbo, Martaria Yohana. 2019. Pengaruh Keamanan, Kemudahan, dan Promosi Terhadap
Keputusan Pembelian Pada Aplikasi Belanja Daring. Penelitian Ilmiah Fakultas Ekonomi
Universitas Gunadarma Jakarta.
Saputri, Ainun Fika Budi Aji. 2015. Pengaruh Keamanan, Kemudahan dan Risiko Kinerja terhadap
Keputusan Pembelian Secara Online di Tokopedia.com (Studi pada Pengguna Situs Belanja
Online Tokopedia.com). Skripsi Fakultas Ekonomi Universitas Negeri Yogyakarta.
Segoro, Lubis 525

Impact Of The Covid-19 Pandemic On The Financial Performance Of

Companies Listed At The Indonesia Stock Exchange
1
Dinda Yulyana, 2Dini Andriyani, 3Dharma Tintri Ediraras
1,2,3
Economic Fakulty of Universitas Gunadarma
1
dindayulyana@gmail.com, 2dini_a@staff.gunadarma.ac.id, 3dharmate@staff.gunadarma.ac.id
Abstract
The rapid spread of the Covid-19 outbreak requires companies to have better performance in order
to be able to maintain their existence. This study aims to examine financial performance as measured
by financial ratios for the period 2019 and 2020, before and after the announcement of the first case
of covid-19. Sampling was done by purposive sampling technique and obtained a sample of 175
companies. Hypothesis testing is done by using paired sample t-test. The results showed that in the
Liquidity Ratio, there was no significant difference in Net Worth (NW), in the Solvency Ratio, there
was no significant difference in Debt to Asset Ratio (DAR) and Debt to Equity Ratio (DER), in the
Profitability Ratio, there was no significant difference in Net Profit Margin (NPM) and Return on
Asset (ROA), but there was a difference. significant in Return on Equity (ROE), in Market Ratio,
there is no significant difference in Price Earning Ratio (PER) before and after the announcement of
the first case of covid-19 in companies listed on the Indonesia Stock Exchange
Keywords: Covid-19, financial performance, non financial public entities, Indonesia stock
exchange, paired sample t-test
JEL Codes : E44, F65, G14
INTRODUCTION
Multidimensional crisis caused by the spread of C19 which was first reported in Wuhan, China
in December 2019. The World Health Organization (WHO), states that Coronavirus is a virus that
infects the respiratory tract with the most common symptoms being fever, coughing, and fatigue but
there are also those who do not show any symptoms or are called asymptomatic people even though
they have been infected with the Covid-19 virus. Coronavirus is a zoonotic disease that can be
transmitted between humans and animals. The Indonesian government has made a policy to break
the chain of the spread of COVID-19, namely by urging all people to stay at home and implementing
Large-Scale Social Restrictions (lockdown). This government policy is certainly detrimental to the
Indonesian economy, where the impact of this policy is the cessation of economic activity in
Indonesia (Zulfikri, 2021).
The Organization for Economic Co-operation and Development (OECD) reports that the
COVID-19 pandemic has resulted in the threat of a major economic crisis marked by the cessation
of production activities in many countries, falling levels of public consumption, loss of consumer
confidence, and falling stock exchanges that ultimately lead to uncertainty (OECD, 2020). The global
economy also experienced negative growth in several countries such as the US, Japan, South Korea,
the European Union, Hong Kong, and Singapore, including Indonesia. The economic slowdown
certainly has an impact on economic growth. The COVID-19 pandemic has caused a domino effect
from health to social and economic problems, including business actors.The existence of the Covid-
19 Pandemic requires companies to have better performance in order to be able to maintain their
existence, one of which is due to increasingly fierce competition in the free market era. The success
of a company in dealing with this covid pandemic can be observed through financial performance.
(Wuryandani, 2020)
The growth rate for Indonesia's Gross Domestic Product (GDP) in Q1 2020 was recorded at
only 2.97% (year- on-year). The Ministry of Finance and Bank Indonesia previously had predicted
growth in the range of 4% -5% in Q1 2020. The GDP growth during COVID-19 was much lower
than predicted. On the expenditure side, the biggest contraction in GDP was recorded in household
526 Yulyana, Andriyani, Ediraras

consumption expenditure, which worsened by 2.84%, representing the largest contraction in

consumption since 1999. The sharp decline in consumer household spending can be attributed to at
least two things. First, it is caused by an increase in the number of unemployed, which directly
impacts decreasing income and household consumption expenditure. Second, it is caused by an
increase in uncertainty due to the Covid-19 pandemic. This increased uncertainty has led to a shift
in consumption to precautionary savings by households whose income has not been greatly affected
by this pandemic. However, not all sectors in the economy have heterogeneous impacts. According
to Modjo (2020), some of the sectors severely have affected such as the transportation sector (1.27%
from the previous 7.55%), the construction sector (-2.41%), and the manufacturing industry (-
1.47%). Various innovations that are more directed at the defense of people's welfare are needed
during the COVID-19 pandemic because, in the end, the people's purchasing power is better able to
help the economy move and save business growth, business profitability, and national economic
growth (Mohammed et al., 2021)
Many previous researchs done with heterogen results, for examples refered to Mitton (2002);
Lemmon, & Lins (2003); Baek, Kang & Park (2004) indicated that monetary crisis has significant
effect on corporate governance and financial performance of public companies in South East Asia
Countries, Korea and Asia. Futher Sufian & Habibullah (2010) stated that global financial crisis
has big impact on banking financial performance in Indonesia then Erkens, Hung & Matos (2012)
financial Crisis: Evidence from Financial Institutions Worldwide and Bricongne. Fontagné, Gaulier,
Taglioni & Vicard (2012) Financial turmoil in French.
Financial performance has an important role in determining the smooth running of the
company's activities. Financial performance evaluation is conducted with financial statement
analysis. To find out whether the company's financial condition and performance are good, the
calculation of financial ratios must be compared using previous years or using the industry average.
In this case, to assess the company's financial performance can use financial ratios. Financial ratios
are used by comparing the numbers contained in financial statement posts. So it will be known
performance measures using liquidity ratios, solvency ratios, profitability ratios, and market ratios.
Based on the description above, the purposes of this research is to analyse C19 pandemic impact on
public entities' financial performance in.
LITERATURE REVIEW
Signal Theory
Theory of Signal is invented by Ross (1973; 1977) explain that company managers who have
more good information about their company will tend to carry out these informations to potential
investors so that the company's stock price increases. The advantage of this is that entities that
provide relevance informations will difer them from entity that have bad news. By disclose the bourse
about their position, signals about prospect future performance given by entities whose past
inrelevance financial performance will not be trusted by the bourse.
Referring to Bini, Giunta, and Dainelli (2011), signaling theory emphasizes the relevance of
the entity's information to stekeholders. Signal theory shows the existence of information asymmetry
between the enyity and its stakeholder. Reasonable publishing financial reports transparancy.
Ching & Gerab (2017) stated that information published as an announcement will provide a
signal for investors in making investment decisions. If the announcement contains a positive value,
it is expected that the market will react when the announcement is received by the market. When the
information is announced and all market participants have received the information, market
participants first interpret and analyze the information as a good signal (good news) or a bad signal
(bad news). If the announcement of the information is a good signal for investors, there will be a
change in the volume of stock trading.
According to Musleh & Reyad. 2018, signaling theory emphasizes the importance of
information issued by the company on the investment decisions of parties outside the company.
Information is an important element for investors and business people because information
essentially presents information, notes or descriptions for past, current and future conditions for the
survival of a company and how the securities market will be. Complete, relevant, accurate and timely
information is needed by investors in the capital market as an analytical tool to make investment
decisions.
Yulyana, Andriyani, Ediraras 527

Finally, it can be concluded that signaling theory explains a good firm value can be a positive
signal and vice versa, a bad firm value can be a negative signal. This is because the motivation of
investors to invest is to make a profit, so that companies with bad value tend to be avoided by
investors. In other words, investors will not invest their funds in companies that have bad value.
Financial Performance of The Enterprise

The Enterprise's financial performance is a form of corporate achievement in the financial
aspects related to income and overall operating costs, debt structure, assets, and investment returns.
Discussions on financial performance are not limited to one-period discussions because stakeholders
will also pay attention to any changes (trends) in the company's financial performance, which include
changes in the statement of financial position, profit or loss, or cash flow. The company's financial
performance is very dependent on policies, strategies, and actions implemented by management to
realize organizational goals. Financial performance can be measured through financial statement
analysis in the form of interpretations of financial data summarized in financial reports as a first step
to meet the information needs of internal and external parties of the company (Rahmadia, 2020).
According to Subramanyam (2014), financial performance is a condition that reflects the financial
condition of a company based on predetermined goals, standards, and criteria.
Financial Ratio
Ruhani, Islam, Ahmad & Quddus (2018) explains that financial ratios are the values obtained
from comparing one item with another item in the financial statements with a relevant and significant
relationship. Financial ratio analysis is used to help evaluate a company's financial performance. The
use of ratios is the most effective way to measure the company's financial performance.
Subramanyam (2014) states that four things encourage the use of financial ratio models in financial
statement analysis: 1) being able to control the emergence of significant differences in numbers
between companies or at the same company in different periods, 2) making more comfortable to use
in statistical testing, 3) investigating theories related to financial ratios, and (4) being able to be used
as a measuring tool to test estimates or predictions of certain variables such as empirical bankruptcy.
Fraser and Ormiston (2016) suggest four categories of ratios used to analyze a firm's financial
performance. They are liquidity ratio that describes the company's ability to meet short-term
liabilities (debt), solvency ratio (leverage) that is used to measure the extent to which the company's
assets are financed with debt, activity ratio that is used to measure the effectiveness of the company
using its assets, and profitability ratio that is used to assess the company's ability to generate profits.
Liquidity Ratio
The liquidity ratio measures the company's ability to pay obligations that are due within one
year. One of the ratios commonly used to measure liquidity is the current ratio. The current ratio
(CR) is the ratio used to compare current assets to current liability. The current ratio is used to see
the current assets' ability to meet its current liabilities (Ruhani et al, 2018). A low current ratio value
illustrates a problem in liquidity. The current ratio can be said to be normal or on a safe scale if the
value is above100%, which means that current assets' value must be higher than the value of current
debt. The formula is current ratio = current assets/current debt (Fraser & Ormiston, 2016). Managers
will see the company's performance based on the profit from the operational activity carried out, in
which a high current ratio value is better. However, if the current ratio value is too high, it is also not
good because it shows the number of idle funds and reduces its ability to generate profits
(Subramanyam, 2014). The current ratio can assess the company's liquidity ability to manage its
assets to meet its short-term obligations and ensure that it can continue its business in the future
(Fraser &Ormiston, 2016). This ratio is calculated by comparing current assets to current liabilities.
Leverage Ratio
The leverage ratio measures the company's ability to pay off all of its obligations. This ratio
can be measured using the debt to equity ratio (DER). This ratio shows the issuer's capital structure
consisting of debt and equity (Ruhani et al, 2018). This ratio is used to assess the extent to which
company assets are financed with debt (Fraser & Ormiston, 2016). It can also represent the solvency
ratio showing the number of funds needed to cover all or part of the costs required. This ratio

determines the company's ability to pay off not only short-term debt but also long-term debt. The use
of short-term debt will affect liquidity, and long- term debt will affect solvency. This ratio will be of
concern to creditors, especially long-term creditors. The smaller the DER value, the better the
company's condition. Finaly, the company's amount of capital should be higher than the amount of
debt (). The formula for DER is total liabilities divided by total equities.
Profitability Ratio
The profitability ratio measures the company's ability to generate profits or measure the
efficiency of the company. The most commonly measured profitability ratio is the return on assets
(ROA) and retirn on euity (ROE). It is a ratio between net income after tax and total assets, which
shows the measure of asset productivity in generating profit (Ruhani et al, 2018 and Subramanyam,
2014). ROA and ROE analysis is often interpreted as economic profitability, which measures a
company's ability to generate profits in the past. This ratio is then projected into the future to see the
company's ability to generate profits in the future. ROA and ROE can be broken down into 3
components: net profit margin (NPM) whic formula is profit before ineterst and tax divided by total
sales, asset turnover and equity turnover. Profit margin is a measure of a company's efficiency, while
asset turnover reflects its ability to generate sales based on specific assets (Subramanyam, 2014).
The formula of ROA is the after-tax profit divided by total assets and ROE is the after-tax profit
divided by total equity.
Market Ratio
From an investor's point of view, it is important to see the difference between the market value
of the stock of a company, and its accounting value, or book value. To get a perspective on this
difference, we define the Market/Book ratio is total book value is divided by number of common
shares issued. The investors hunting for bargains like to see this ratio as small as possible. We
complete our list by including two more ratios, defined as follows: Price Earning ratio is market
price capitalization is divided number of common shares issued and Dividend yield ratio is dividend
per share id divided by parket price per share (Sutrisno, 2020).
A number of recent papers have studied firms’ performance during the 2008–09 crisis and
how various factors propagated the shocks. Claessens, et al. (2011) examine the performance of
public manufacturing firms in 42 countries and find that the crisis had a bigger negative impact on
firms with greater sensitivity on net profit. Also using cross-country data, Laevena and Valencia
(2011) find that the growth of firms more higher leverage especially debt to equity ration and more
positively affected by bank recapitalization and stimulus fiscal policies. Bricongne et al. (2012) using
a sample of French firms showed that the effect of crisis on large firms has been mainly at the
intensive net profit margin and has affected less the products being offered to export destinations.
Mitton, 2002; Lemmon and Lins, 2003; Baek et al .2004 that figure the characteristics of
GCG and their impact on the performance of firms during the crisis. In another work, Sufian and
Habibullah (2010) analysed the impact of financial crisis on Indonesian banks that other
conphrehensive income were positively related to bank profitability. Erkens et al. (2012) proved that
GCG had an significant impact on firm performance during the crisis through influencing firms’
financing policies. Also, their findings show that firms with more independent boards and greater
institutional ownership experienced impacted negatively on stock returns during the crisis period.
Liu, Manzoor, Wang, Zhang and Manzoor (2020) indicated that the stock markets in major
affected countries Japan, Korea, Singapore, the USA, Germany, Italy, and the UK etc. and areas fell
quickly after the virus outbreak.
In the following figure, a research framework is shown to prove whether there is a difference
in financial performance before and after the announcement of the first case of covid-19.

This study uses a paired sample t-test, which is used as a comparative test for testing reserach
hypothesis:
H01 = There is a difference in CR between before and after the announcement
H02 = There is a difference in DAR between before and after the announcement C19
H03 = There is a difference in DER between before and after the announcement C19
H04 = There is a difference in NPM between before and after the announcement C19
H05 = There is a difference in ROA between before and after the announcement C19
H06 = There is a difference in ROE between before and after the announcement C19
H07 = There is a difference in PER between before and after the announcement C19..
RESEARCH METHOD
The hypothesis of the influence of the COVID-19 on the financial performance of logistics
firms was empirically tested. The object of this research is the financial performance of companies
listed on the Indonesia Stock Exchange before and after the announcement of the first case of Covid-
19 in Indonesia. There are 4 (four) financial performances to be analyzed, namely Current ratio for
liquidity, DAR and DER for solvency, ROA and ROE for profitability and PER for market ratios.The
population in this study are companies listed on the Indonesia Stock Exchange for the 2019-2020
period. Purposive sampling was used as a sampling technique in this study, so a sample of 175
companies was obtained.The type of research used is quantitative research because the data used are
in the form of numbers. The data used is secondary data, namely the company's annual financial
report data sourced from the Indonesia Stock Exchange website (www.idx.co.id) and the official
website of the company concerned.
We collected annual financial position and profit and loss data period 2019 and 2020 for 175
entities listed at Indonesia stock exchange. Annual data for each company are drawn from the
financial position (balance sheets) and income statements were collected from website idx..co.id.
The relevant data or proxy of variables are available on an annual financial report. basis. The data
consist of detailed financial statements of the firms, which allow us to calculate the selected financial
indicators. Selected financial indicators have been calculated from raw accounting data. This study
did not using classical event study methodology, as the peak of COVID-19 is still unknown. After
the first day of the confirmed COVID-19 case in Wuhan, Cina, there is no evidence to show a direct
or immediate impact on financial performance of Public emntities in Indonesia stock exchange. Any
suggests that pool regression lessens estimation prejudice and multicollinearity, controls for discrete
heterogeneity and enables in ascertaining the time-variant association between dependent and
independent variables. On the vcontrary this study used a crossectional data in period 2019 - 2020
and all variable are independents.
The population tergeted in this study are companies listed on the Indonesia Stock Exchange
for the 2019-2020 period. Purposive sampling was used as a sampling technique in this study and
finaly number of sampls is 175 public entities as presented in Table 1 below.

Table 1. Number of Samples

Description Total
Public company listed on the IDX 716
Companies listed in 2020 (51)
Companies that do not publish a complete annual report in 2019 -
2020 (358)
Companies that use currencies other than rupiah (67)
Service and financial sector companies (65)
Number of samples 175
Source: IDX Data processed, 2021

Tabel 1. Descriptive Statistical Analysis
N Mean Std. Deviation

CR_before 175 3,28788 12,237557
CR_after 175 4,73415 30,967699
NPM_before 175 ,01281 1,226486
NPM_after 175 ,57359 8,305968
ROA_before 175 ,00483 ,467952
ROA_after 175 -,01977 ,424402
ROE_before 175 ,09521 ,727644
ROE_after 175 -,02015 ,565802
DAR_before 175 1,20967 7,169036
DAR_after 175 1,13535 6,347453
DER_before 175 1,24906 3,052775
DER_after 175 1,22233 1,996233
PER_before 175 221,61270 1340,412935
PER_after 175 2533,23234 30477,499061
Valid N (listwise) 175
Sumber : SPSS 25 output, 2021
Based on the data from table 1, it shows the results of descriptive statistical analysis that can
be concluded, namely Liquidity ratio with Variable Current Ratio (CR). The results of descriptive
statistics on the average mean value of the CR variable in 2019 before the announcement of Covid-
19 were 3.28788 compared to the Net Worth in 2020 of 4.73415. The results stated that CR increased
during the Covid-19 virus pandemic.
An economic crisis can make a company experience liquidity difficulties. The decline in
economic growth has an impact on decreasing people's purchasing power. As a result, many customer
receivables are uncollectible, reducing the company's cash. On the other hand, the economic crisis
also made many supplies pile up. When liquidity is measured using the current ratio, there will be an
increase in the liquidity ratio. The increase in the liquidity ratio is not a good condition. Previous
studies show indecisive results regarding the impact of an economic crisis on the current ratio. Baek
et al (2004) show that the changes or differences in the current ratio's average value were not
significant. However, (Liu et al, 2002) found different results by stating that the 1998 monetary
crisis caused a significant decrease in the current ratio value.

Profitability ratio with variable (NPM). The results of descriptive statistics on the average
value of the NPM variable in 2019 before the announcement of Covid-19 were 0.01281 compared to
the NPM in 2020 of 0.57359. The results show that NPM has increased during the Covid-19 virus
pandemic. Profitability ratio with variable (ROA). The results of descriptive statistics on the average
mean value of the ROA variable in 2019 before the announcement of Covid-19 was 0.00483
compared to the ROA in 2020 of -0.01977. The results state that ROA decreased during the Covid-
19 virus pandemic. Profitability ratio with variable (ROE). The results of descriptive statistics on the
average mean value of the ROE variable in 2019 before the announcement of Covid-19 was - 0.09521
compared to the ROE in 2020 of -0.02015. These results state that ROE decreased during the Covid-
19 virus pandemic. The economic crisis undoubtedly harmed the company's ability to generate
profits. The decline in people's purchasing power will reduce the company's demand for products or
services. In the short term, this decline in sales is not accompanied by a decrease in expenses, so that
the impact is to reduce company profits. The result shows that there is a decrease in the return on
assets of service companies during and after the monetary crisis in 1998. This is in line with Baek
(2004), stating that there was a decline in public companies' profitability on the Jakarta Stock
Exchange for all sectors during the crisis.
Solvability ratio with variables (DAR). The results of descriptive statistics on the average
mean value of the 2019 DAR variable before the announcement of Covid-19 was 1.20967 compared
to the 2020 DAR of 1.135354. The results show that DAR has decreased during the Covid-19 virus
pandemic. Solvability ratio with variables (DER). The results of descriptive statistics on the average
mean value of the 2019 DER variable before the announcement of Covid-19 was 1.24906 compared
to the 2020 DER of 1.22233. The result states that DER decreased during the Covid-19 virus
pandemic.
The economic crisis caused many companies to reduce their production activities due to the
decline in people's purchasing power activities and performance have decreased so that when
companies need loans, fund providers, such as banks and other financing institutions, are reluctant
to provide loans. Thus, the economic crisis tends to reduce the company's debt ratio. Previous studies
also reveal different results regarding the impact of the financial crisis on financial leverage.
Rahmadia (2020) prove that financial crisis cause firms debt ratio to decrease. However, Baek (2002)
show that there is no significant difference in DER value.
Market ratio with variable (PER). The results of descriptive statistics on the average mean
value of the 2019 PER variable prior to the announcement of Covid-19 were 221.61270 compared
to the 2020 PER of 2533.23234. The results stated that PER increased during the Covid-19 virus
pandemic.
Paired T-Test Resulted

Tabel 2 Paired Sample t-test resulted
Sig. (2-tailed)
Pair 1 CR_Before - CR_After 0,314
Pair 2 NPM_ Before - NPM_ After 0,377
Pair 3 ROA_ Before - ROA_ After 0,292
Pair 4 ROE_ Before - ROE_ After 0,048
Pair 5 DAR_ Before - DAR_ After 0,501
Pair 6 DER_ Before - DER_ After 0,891
Pair 7 PER_ Before - PER_ After 0,317
Sumber : SPSS output, 2021
Current Ratio = H01 accepted, dan Ha1 rejected.

Based on the paired sample t-test output table above, it can be seen that the liquidity ratio
proxied by the Current Ratio shows a significance value (0.314 > 0.05), so it can be concluded that
there is no significant difference before and after the announcement of the first case of COVID-19.
19 on the Current Ratio. This results support research (Dwiarti, Hazmi, Santosa and Rahman

(2021)), which states that the Current Ratio has no difference before and during the COVID-19
pandemic.
Net Profit Margin = H02 accepted, dan Ha2 rejected.

Based on the paired sample t-test output table above, it can be seen that the profitability ratio
proxied by Net Profit Margin shows a significance value (0.377 > 0.05), so it can be concluded that
there is no significant difference before and after the announcement of the first case of covid. -19.
These results support research (Elnahass, Trinh, Nguyen, Ngo and Tran, (2021), which states that
there is no difference between NPM before and during the COVID-19 pandemic..
Return on Asset = H03 accepted, dan Ha3 rejected.

proxied by Return on Assets shows a significance value (0.292 > 0.05), so it can be
concluded that thHere is no significant difference before and after the announcement of the first case
of covid. -19.
These results support research Elnahass, et al (2021) which states that there is no difference
between ROA before and during the COVID-19 pandemic. Different results were found in a study
in (Dwiarti et al (2021), which stated that there were differences in the ROA ratio before and after
the COVID-19 pandemic to the quarterly financial statements of LQ-45 companies on the Indonesia
Stock Exchange.
Return on Equity = H04 rejected, dan Ha4 accepted.

proxied by Return on Equity shows a significance value (0.048 < 0.05), so it can be concluded that
there is a significant difference before and after the announcement of the first COVID-19 case. 19.
These results support research (Esomar & Restia, 2021), which states that there are differences in
ROE before and during the COVID-19 pandemic. Different results were found in research in
(Hidayat, 2021), which stated that there was no difference in the ROE ratio before and after the
COVID-19 pandemic in Islamic commercial banks..
Debt to Asset Ratio = H05 accepted, dan Ha5 rejected.

Based on the paired sample t-test output table above, it can be seen that the solvency ratio
proxied by the Debt to Asset Ratio shows a significant value (0.501 > 0.05), so it can be concluded
that there is no significant difference before and after the announcement of the first case. covid-19.
These results support research (Dwiarti et al, 2021)), which states that there is no difference between
the Debt to Asset Ratio before and during the COVID-19 pandemic.
Debt to Equity Ratio = H06 accepted, dan Ha6 rejected.

Based on the paired sample t-test output table above, it can be seen that the solvency ratio
proxied by the Debt to Equity Ratio shows a significance value (0.891 > 0.05), so it can be concluded
that there is no significant difference before and after the announcement of the first case. covid-19.
These results support research (Golubeva, 2021), which states that there is no difference in DER
before and during the COVID-19 pandemic. Different results were found in research in (Esomar &
Restia, 2021), which stated that there were differences in the DER ratio before and after the COVID-
19 pandemic on the financial performance of service sector companies on the IDX..
Price Earning Ratio = H07 accepted, dan Ha7 rejected.

proxied by Return on Assets shows a significance value (0.292 > 0.05), so it can be concluded that
there is no significant difference before and after the announcement of the first case of covid. -19.
These results are different from research (Esomar & Restia, 2021), which states that there are
differences in PER before and during the COVID-19 pandemic.
Indonesia began to face the COVID-19 pandemic situation in mid-March 2020. Since March
16, 2020, the work from home (WFH) policy has begun to be applied. The first quarter of 2020 was
the initial stage of economic upheaval. In the second quarter, which was until the end of June 2020,

Indonesia could still use funding sourced from the state treasury that had been previously collected
through the largest tax revenue. However, if the COVID-19 pandemic cannot be resolved
immediately, the Indonesian economy will gradually weaken due to decreased income obtained
through tax revenue from the real sectors affected.
When the real sectors that absorb the most labor are no longer able to operate, the impact will
decrease people's income. The decline in people's income due to the economic crisis during the
COVID-19 pandemic will certainly impact the decrease in people's purchasing power so that sales
activity in the industrial sector will also decrease. The decline in sales value in the industrial sector
will certainly impact lowering profits and a decrease in cash inflows, which can help increase current
assets. Several components of current assets affected by sales activities are the cash component
resulting from cash sales and the value of trade receivables as a result of credit sales. When current
assets experience significant changes, this will ultimately affect the value of the current ratio.
A significant decrease in company profits and cash flows received from cash sales transactions
greatly impacts the company's ability to pay its debts due to cash unavailability in the form of cash
to make debt payments. Besides, the value of capital will decrease due to losses experienced by the
company due to decreased sales. Minimal income from sales will certainly reduce the company's
ability to cover all operational costs incurred to suffer losses. The result is in line with Bricongne et
al. (2012), showing that there were differences in financial performance, including the current ratio
before and after the monetary crisis. However, this study shows that changes or differences in the
average value of the current ratio are not significant. Regarding the DER value, BRahmani (2020)
states that an increase in the DER value indicated the decline in public companies' financial
performance listed on the Jakarta Stock Exchange during the crisis compared to before the crisis.
However, the results of this study show that there is no significant difference in DER value. The
difference between the results of this research and those conducted by Hidayat (2021) and Bricongne
et al (2012)can be caused by the influence of samples from all industrial sectors used in this study,
while the research conducted by Baek et al. (2004) was limited to the use of manufacturing sector as
the sample and the research conducted by Bricongne et al (2012)is limited to the use of 4 types of
industries only, such as food and beverage, automotive, property and real estate, textile. The use of
all industrial sectors in thi s study can lead to a decrease in the level of significance of differences
due to the presence of sectors that experience a decrease, which is offset by the presence of sectors
that experience an increase in the current ratio or DER with varying degrees of change. This research
was also carried out until the second quarter of 2020 financial reporting so that it has not been very
long since experiencing a crisis due to the COVID-19 pandemic.
The economic crisis due to the COVID-19 pandemic has a significant impact on firms’
profitability (ROA) and activity ratio (receivable turnover). When the company's profit decreases as
a result of decreased sales, it will certainly have an impact on the profitability. The decline in sales
will have an impact on the decline in profits if the company is still unable to reduce the company's
operating costs or other costs outside the operational costs which are also taken into account in the
company's profit value. The results of this research are supported by Bricongne et al (2012) having
said that same during global financial crisis decreased significantly. Elnahass, et al (2021) and
Dwiarti et al (2021) also states that there was a decline in the financial performance of global banking
and non bank financial sector in Indonesia during the C19 pandemic especially at the level of ability
to generate profits as indicated by a significant decrease in ROA and ROE. Regarding the firms’
activity ratio, as measured using receivable turnover, the results of this research show an increase in
the average value of receivable turnover, which means that a significant decrease in average
receivables accompanies a decrease in sales. A significant decrease in average receivables can be
caused by intensive collection from companies for outstanding receivables as a form of early
anticipation of an economic situation such as during the COVID-19 pandemic.

In the Liquidity Ratio, there is no significant difference in the Current Ratio (CR) before and
after the announcement of the first case of covid-19 in companies listed on the Indonesia Stock
Exchange. In Profitability Ratios, there is no significant difference in Net Profit Margin (NPM) and
Return on Assets (ROA). However, there are significant differences in and Return on Equity (ROE)
before and after the announcement of the first Covid-19 case in companies listed on the Indonesia

Stock Exchange. In the Solvency Ratio, there is no significant difference in the Debt to Asset Ratio
(DAR) and Debt to Equity Ratio (DER) before and after the announcement of the first case of covid-
19 in companies listed on the Indonesia Stock Exchange. In the Market Ratio, there is no significant
difference in the Price Earning Ratio (PER) before and after the announcement of the first case of
covid-19 in companies listed on the Indonesia Stock Exchange.
Having said that overall financial performance of public entities in Indonesia before and after
the announcement of the first case of Covid-19 but there was a difference in the Profitability Ratio
which was proxied by Return on Equity (ROE). This has happened because the public enterprises
still have been able to adapted with the conditions of the Covid-19 pandemic. These signed still
good news or positive for the stakeholder of the public entities in Indoensia.
Based on the results of research that has been done, some suggestions are proposed that future
research is expected to add a larger research period and research sample, and also use event study
data. For companies, it is expected that they can use their available resources as effectively as
possible so that they can improve the company's financial performance. In addition, the company
can evaluate the existing financial performance to be able to improve and improve the company's
financial performance.Investors are expected to be more careful and thorough in assessing the level
of financial performance of a company, they should pay attention to the company's financial ratios
to determine the financial performance and value of the company.
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ISSN : 2654-8879

Campus F8 - Universitas Gunadarma

December 14th-15th 2021

Campus F8 - Universitas Gunadarma

December 14th-15th 2021

Campus F8 - Universitas Gunadarma

Cover: Evans W.W. & Team

Copyright @2021 by Gunadarma Publications

Assalaamu’alaikum warahmatullahi wabarakatuh.

As one of the leading private ICT-based university in Indonesia, Gunadarma University

Wabillahi taufik wal hidayah wassalaamu’alaikum warahmatullahi wabarakatuh.

Prof. Dr. E.S. Margianti, SE. MM

Wassalaamu’alaikum warahmatullahi wabarakatuh.

Table of Content Abstract

Indah Royani, Peni Sawitri

xii Table Of Content

Table Of Content xiii

xiv Table Of Content

Book Tax Differences Analysis On Profit Growth In Companies Listed

Table 1. Variable Operations

No. Variable Measurement Description Unit References

RESULT AND DISCUSSION

2015 2016 2017 2018 2019

Figure 1. Companies of LQ45 Profit Growth in the period 2015-2019

Y = 5,623 + 0,818 Permanenit + 0,453 Temporerit + εi

The Effect of Permanent Differences on Profit Growth

Effect Temporary Differences on Profit Growth

CONCLUSION AND SUGGESTION

The Effect Of Profitability, Leverage, Sales Growth And Company Size

Keywords: Profitability, Leverage, Sales Growth, Size, Tax Avoidance.

10 Nisa, Avira, Sakinah

LITERATURE REVIEW AND HYPHOTESIS DEVELOPMENT

Nisa, Avira, Sakinah 11

The Effect Of Profitability On Tax Avoidance

The Effect of Leverage on Tax Avoidance

The Effect of Sales Growth on Tax Avoidance

12 Nisa, Avira, Sakinah

The Effect Of Firm Size On Tax Avoidance

Sales Growht (X3)

Figure 2.1 Research Model

Population and Population Sampling Procedures

Table 1 Sampling Criteria

IDX-listed Food and Beverage sub-sector

Nisa, Avira, Sakinah 13

Types and Sources of Data

Operational Definitions and Measurement of Variables

Table 2 Operasional Variable

Profitability Net Profit

5 Size 𝑆𝐼𝑍𝐸 = 𝐿𝑛 (𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡) Ratio

RESULTS AND DISCUSSION

Table 4. Hypothesis Test Result

14 Nisa, Avira, Sakinah

Profitability Affects Tax Avoidance

Leverage Affects Tax Avoidance

Sales Growth Affects Tax Avoidance

Nisa, Avira, Sakinah 15

Company Size Affects Tax Avoidance

CONCLUSION AND SUGGESTION

16 Nisa, Avira, Sakinah

Nisa, Avira, Sakinah 17

Far Audits: Alternative Approach Facing The Challenges Of

18 Effendi, Ediraras, Istia, Afriyenny

Effendi, Ediraras, Istia, Afriyenny 19

Table 1. Sampling Stage