The role of good project governance in PPP project for toll road infrastructure in Indonesia

Laode Nusriadi ,Ilya Avianti ,Nanny Dewi Tanzil ,Danang Parikesit

doi:10.24294/jipd.v8i4.3259

Home - JIPD - Volume 8 - Issue 4

Submit to JIPD

Journal Browser

Volume | Year

Issue

• Current lssue

View All

News and Announcements

View All

The role of good project governance in PPP project for toll road infrastructure in Indonesia

Laode Nusriadi

Ilya Avianti

Nanny Dewi Tanzil

Danang Parikesit

Journal of Infrastructure Policy and Development 2024, 8(4), 3259; https://doi.org/10.24294/jipd.v8i4.3259

Submitted：10 Nov 2023

Accepted：03 Jan 2024

Published：11 Apr 2024

Download PDF(542.09KB)

Cite

XML

Abstract

The use of infrastructure as a catalyst for Indonesia’s economic growth faces significant challenges. One example is the construction projects, which have not reached the intended goal and have led to an increase in investment cost compared to the original plan. Additionally, the interaction between the government and companies involved in toll-road construction projects under the public-private partnerships (PPP) mechanism has yet to produce good quality project governance and expected project performance. This study aimed to find empirical data on the determination of project intellectual capital and project ownership structure through good project governance on toll-road project performance in Indonesia. This study adopted a quantitative approach that involved data collected through a survey conducted among toll-road projects from 2015 to 2019. The data was analyzed with Structural Equation Modeling Partial Least Square (SEM-PLS). The results showed that project intellectual capital and project ownership structure significantly affected good project governance. Good project governance Practices significantly affected project performance. Project intellectual capital and project ownership structure influenced project performance through the mediation of good project governance. Conversely, two hypotheses were not supported by the data, i.e., the effect of project intellectual capital and project ownership structure on project performance. The findings of this research contributed to the literature regarding the implementation of collaborative governance in PPPs toll road development projects in Indonesia by providing a framework and assessment tools, which could be valuable for researchers and policymakers in analyzing and evaluating the governance and performance of toll road construction PPP projects.

Keywords

References

Abednego, M. P., & Ogunlana, S. O. (2006). Good project governance for proper risk allocation in public–private partnerships in Indonesia. International Journal of Project Management, 24(7), 622–634. https://doi.org/10.1016/j.ijproman.2006.07.010

Alfen, H. W. (2009). Public-Private Partnership in infrastructure development: Case studies from Asia and Europe. Weimar.

Alves, S. (2012). Ownership structure and earnings management: Evidence from Portugal. Australasian Accounting, Business and Finance Journal, 6(1), 57–74.

Anderson, C. W., & Campbell, T. L. (2004). Corporate governance of Japanese banks. Journal of Corporate Finance, 10(3), 327–354. https://doi.org/10.1016/s0929-1199(03)00029-4

Ansell, C., & Gash, A. (2007). Collaborative Governance in Theory and Practice. Journal of Public Administration Research and Theory, 18(4), 543–571. https://doi.org/10.1093/jopart/mum032

Ansell, C., Torfing, J. (2016). Handbook on Theories of Governance, 1st edition. Edward Elgar Publishing.

Bontis, N., Chua Chong Keow, W., & Richardson, S. (2000). Intellectual capital and business performance in Malaysian industries. Journal of Intellectual Capital, 1(1), 85–100. https://doi.org/10.1108/14691930010324188

Bronzetti, G. (2011). Intellectual Capital reporting practices in the non-profit sector. Virtus Interpress.

Cadbury, A. (2002). Corporate Governance and Chairmanship A Personal View. https://doi.org/10.1093/acprof:oso/9780199252008.001.0001

Campos, M. L., Morini, C., Moraes, G. H. S. M. de, & Inácio, E. (2018). A performance model for Public–Private Partnerships: the authorized economic operator as an example. RAUSP Management Journal, 53(2), 268–279. https://doi.org/10.1016/j.rausp.2017.07.002

Cao, Z., Lumineau, F. (2014). Revisiting the interplay between contractual and relational governance: A qualitative and meta‐analytic investigation. Journal of Operations Management, 33–34(1), 15–42. Portico. https://doi.org/10.1016/j.jom.2014.09.009

Chen Goh, P., & Pheng Lim, K. (2004). Disclosing intellectual capital in company annual reports: Evidence from Malaysia. Journal of Intellectual Capital, 5(3), 500–510. https://doi.org/10.1108/14691930410550426

CIMA. (2003). Understanding corporate value: managing and reporting intellectual capital. CIMA, Chartered Institute of Management Accountants, pp. 1–28.

Coles, J. W., McWilliams, V. B., & Sen, N. (2001). An examination of the relationship of governance mechanisms to performance. Journal of Management, 27(1), 23–50. https://doi.org/10.1177/014920630102700102

Dalwai, T., & Mohammadi, S. S. (2020). Intellectual capital and corporate governance: an evaluation of Oman’s financial sector companies. Journal of Intellectual Capital, 21(6), 1125–1152. https://doi.org/10.1108/jic-09-2018-0151

Dobrowolski, Z., Wereda, W., Saczy Ń Ska-sokóŁ, S. (2015) Relationship Management in a Public-Private Partnership. Hyperion International Journal of Econophysics & New Economy, 8(2), 510–519.

Franks, J., & Mayer, C. (1997) Corporate Ownership and Control in the U.K., Germany, and France. Journal of Applied Corporate Finance, 9(4), 30–45. doi: 10.1111/j.1745-6622.1997.tb00622.x

Goel, P. (2018). Implications of corporate governance on financial performance: an analytical review of governance and social reporting reforms in India. Asian Journal of Sustainability and Social Responsibility, 3(1). https://doi.org/10.1186/s41180-018-0020-4

Gompers, P., Ishii, J., & Metrick, A. (2003). Corporate Governance and Equity Prices. The Quarterly Journal of Economics, 118(1), 107–156. https://doi.org/10.1162/00335530360535162

Halim, Y. R., & Wijaya, H. (2020). Pengaruh Modal Intelektual Terhadap Kinerja Perusahaan Dengan Manajemen Risiko Perusahaan Sebagai Moderasi. Jurnal Akuntansi Keuangan dan Bisnis, 13(2): 78–87. doi: 10.35143/jakb.v13i2.3654

Hall, R. (1993). A framework linking intangible resources and capabiliites to sustainable competitive advantage. Strategic Management Journal, 14(8), 607–618. Portico. https://doi.org/10.1002/smj.4250140804

Hashim, H., Che-Ani, A. I., & Ismail, K. (2017). Public Private Partnership (PPP) project performance in Malaysia: Identification of issues and challenges. International Journal of Supply Chain Management, 6(2): 265–275.

Ho, S. P., & Tsui, C. W. (2009). The Transaction Costs of Public-Private Partnerships: Implications on PPP Governance Design. https://doi.org/10.13140/2.1.3298.8962

Hodge, G. (2005). Public-private partnerships: the Australasian experience with physical infrastructure. The Challenge of Public–Private Partnerships. https://doi.org/10.4337/9781845428082.00021

Huynh, N., Le, Q. N., & Tran, Q. T. (2024). Firm-level political risk and intellectual capital investment: Does managerial ability matter? International Review of Financial Analysis, 91, 103020. https://doi.org/10.1016/j.irfa.2023.103020

Hyväri, I. (2006). Project management effectiveness in project-oriented business organizations. International Journal of Project Management, 24(3), 216–225. https://doi.org/10.1016/j.ijproman.2005.09.001

Ismail, N., & Sinnadurai, P. (2012). Corporate governance quality and ownership concentration type: Evidence from Malaysia. 2012 IEEE Symposium on Business, Engineering and Industrial Applications. https://doi.org/10.1109/isbeia.2012.6422881

Jatiningsih, D., Yadiati, W., Sukmadilaga, C., & Rosdini, D. (2023). The role of psychology capital, knowledge sharing and commitment toward managers’ performance in manufacturing company. Decision Science Letters, 12(3), 477–486. https://doi.org/10.5267/

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405x(76)90026-x

Jerzy Henisz, W. (Vit). (2006). Governance issues in public private partnerships. International Journal of Project Management, 24(7), 537–538. https://doi.org/10.1016/j.ijproman.2006.07.012

Larcker, D., & Tayan, B. (2011). Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences, 1st edition. Pearson Education, Inc.

Lestari, N. P., & Juliarto, A. (2017). The Effect of Ownership Structure Dimensions on Manufacturing Company Performance (Indonesian). Diponegoro Journal of Accounting, 6(3), 1–10.

Madiwe, J. (2014). Ownership structure, inside ownership and firm performance. In: 2ndIBA Bachelor Thesis Conference. pp. 1–12.

McDermotti, P., & Khalfan, M. (2012). Achieving Supply Chain Integration within Construction Industry. Construction Economics and Building, 6(2), 44–54. https://doi.org/10.5130/ajceb.v6i2.2983

Monks, R. A. G., & Minow, N. (2011). Corporate Governance, 5th edition. John Wiley & Sons Ltd.

Müller, R., & Turner, R. (2007). The Influence of Project Managers on Project Success Criteria and Project Success by Type of Project. European Management Journal, 25(4), 298–309. https://doi.org/10.1016/j.emj.2007.06.003

Nguyen, T., Locke, S., & Reddy, K. (2015). Ownership concentration and corporate performance from a dynamic perspective: Does national governance quality matter? International Review of Financial Analysis, 41, 148–161. https://doi.org/10.1016/j.irfa.2015.

Nor, F. M., Shariff, F. M., & Ibrahim, I. (2010). The Effects of Concentrated Ownership on The Performance of The Firm: Do External Shareholdings and Board Structure Matter? (2010). Jurnal Pengurusan, 30, 93–102. https://doi.org/10.17576/pengurusan-2010-3

Nusriadi, L., Avianti, I., & Tanzil, N. D. (2023). The Collaborative Governance Elements Contributing to Implementing Public-Private Partnerships: A Systematic Literature Review. Journal of Namibian Studies: History Politics Culture, 33. https://doi.org/1

OECD. (2001). Good Governance in the 21St Century: Future Studies. OECD. doi: 10.1142/9789813147584_0016

Permatasari, Y. I., Hardjosoekarto, S., & Salomo, R. V. (2019). Institutional Transformation of Public Private Partnership to Ensure Low Transaction Costs: Case Study of Infrastructure Provision at the Ministry of Public Works and Housing of the Republic

Purnomo, H. (2018). Intellectual Capital Approach for a Better Corporate Governance of Sharia Banking. Iqtishadia—Jurnal Kajian Ekonomi dan Bisnis Islam, 11(1), 105–128. https://doi.org/10.21043/iqtishadia.v10i2.2863

Puspito. (2011). The Effect of Ownership Structure on Company Performance with Capital Structure as Moderator (Study on Food and Beverage Companies Listed on the IDX) (Indonesian). Jurnal Riset Manajemen & Akuntansi, 2(3), 84–113.

Putra, R. D., Mulyani, S., Poulus, S., & Sukmadilaga, C. (2022). Data quality analytics, business ethics, and cyber risk management on operational performance and fintech sustainability. International Journal of Data and Network Science, 6(4), 1659–1668.

Ramadonal, M., & Lukviarman, N. (2010). Corporate Ownership and Firm Performance. In: Proceeding International Conference on Business and Economics (ICBE), p. 13.

Roehrich, J. K., Kalra, J., Squire, B., & Davies, A. (2023). Network orchestration in a large inter‐organizational project. Journal of Operations Management, 69(7), 1078–1099. Portico. https://doi.org/10.1002/joom.1237

Rostiyanti, S. F., Tamin, R. Z., Soekirno, P., & Nur Bahagia, S. (2012). Performance Measurement Framework of Public Private Partnership System (Indonesian). 11(2), 117–127.

Roy, A. (2016). Corporate Governance and Firm Performance: A Study of Indian Listed Firms. Metamorphosis: A Journal of Management Research, 15(1), 31–46. https://doi.org/10.1177/0972622516629032

Rusmin, R., Evans, J., & Hossain, M. (2012). Ownership structure, political connection and firm performance: Evidence from Indonesia. Corporate Ownership and Control, 10(1), 434–443. Portico. https://doi.org/10.22495/cocv10i1c4art4

Sami, H., Wang, J., & Zhou, H. (2011). Corporate governance and operating performance of Chinese listed firms. Journal of International Accounting, Auditing and Taxation, 20(2), 106–114. https://doi.org/10.1016/j.intaccaudtax.2011.06.005

Savas, E. S. (2000). Privatization and Public-Private Partnerships, 2nd edition. Chatam House Publisher. Inc.

Shahzad, F., Baig, M. H., Rehman, I. U., et al. (2022). Does intellectual capital efficiency explain corporate social responsibility engagement-firm performance relationship? Evidence from environmental, social and governance performance of US listed firm

Shamsuddin, A. (2017). The Influence of Intellectual Capital Towards Corporate Governance Practices in Top 100 Asean Companies. International Journal of Business, Economics and Law, 13(1), 55–64.

Sharabati, A. A., Naji Jawad, S., & Bontis, N. (2010). Intellectual capital and business performance in the pharmaceutical sector of Jordan. Management Decision, 48(1), 105–131. https://doi.org/10.1108/00251741011014481

Shi, L., Xiong, S., & Dai, D. (2008). Ownership Structure and Contract Efficiency in BOT Projects. 2008 4th International Conference on Wireless Communications, Networking and Mobile Computing. https://doi.org/10.1109/wicom.2008.1776

Soheyli, F., Moeinaddin, M., & Nayebzadeh, S. (2014). The Relationship between Components of Intellectual Capital and Performance of Yazd Tile Companies. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1). http

Stewart, T. A. (1997). Intellectual Capital: The new wealth of organization, 1st edition. Crown Business.

Summary for Policymakers. (2014). Climate Change 2013—The Physical Science Basis, 1–30. https://doi.org/10.1017/cbo9781107415324.004

Thomsen, S., & Conyon, M. (2012). Corporate Governance Mechanisms and Systems. McGraw-Hill Higher Education.

Too, E., Le, T., Weaver, P., & Bourne, L. (n.d.). The Core Functions of Project Governance. EPiC Series in Education Science. https://doi.org/10.29007/bxg5

Turner, J. R., & Keegan, A. (2001). Mechanisms of governance in the project-based organization: European Management Journal, 19(3), 254–267. https://doi.org/10.1016/s0263-2373(01)00022-6

Vangen, S., Hayes, J. P., & Cornforth, C. (2014). Governing Cross-Sector, Inter-Organizational Collaborations. Public Management Review, 17(9), 1237–1260. https://doi.org/10.1080/14719037.2014.903658

Vrijhoef, R., & Koskela, L. (2000). The four roles of supply chain management in construction. European Journal of Purchasing & Supply Management, 6(3–4), 169–178. https://doi.org/10.1016/s0969-7012(00)00013-7

Wanna, J. (2008). Collaborative government: meanings, dimensions, drivers and outcomes. Collaborative Governance. https://doi.org/10.22459/cg.12.2008.01

Warsen, R., Nederhand, J., Klijn, E. H., et al. (2018). What makes public-private partnerships work? Survey research into the outcomes and the quality of cooperation in PPPs. Public Management Review, 20(8), 1165–1185. https://doi.org/10.1080/14719037.201

WEF, W. E. F. (2014). The global competitiveness report (Colombia) 2014-2015, World Economic Forum.

Xu, X., & Wang, Y. (1999). Ownership structure and corporate governance in Chinese stock companies. China Economic Review, 10(1), 75–98. https://doi.org/10.1016/s1043-951x(99)00006-1

Yuan, J. (2009). Selection of performance objectives and key performance indicators in public-private partnership projects to achieve value for money. Construction Management and Economics, 27(3), 253–270. https://doi.org/10.1080/01446190902748705

Zedan, H. I., & Abu Nassar, M. (2014). The Effect of Corporate Governance on Operating Performance of Jordanian Manufacturing Companies: Evidence from Amman Stock Exchange. Dirasat Administrative Sciences, 41(2), 465–481. https://doi.org/10.12816/0007483

Previous
article in this issue

Next
article in this issue