Evaluating the Indonesia’s defense industry policy (2018–2023):  A Balanced Scorecard study of PT Pindad

Mohadib Mohadib ,Andriansyah  Andriansyah ,Achmad Farid Wadjdi ,Taufiqurokhman Taufiqurokhman ,Bambang Soetono Bambang Soetono ,Evi Satispi

doi:10.24294/jipd11291

Home - JIPD - Volume 9 - Issue 4

Submit to JIPD

Journal Browser

Volume | Year

Issue

• Current lssue

View All

News and Announcements

View All

Evaluating the Indonesia’s defense industry policy (2018–2023): A Balanced Scorecard study of PT Pindad

Mohadib Mohadib

Andriansyah Andriansyah

Achmad Farid Wadjdi

Taufiqurokhman Taufiqurokhman

Bambang Soetono Bambang Soetono

Evi Satispi

Journal of Infrastructure Policy and Development 2025, 9(4); https://doi.org/10.24294/jipd11291

Submitted：09 Jan 2025

Accepted：13 Feb 2025

Published：22 Dec 2025

Download PDF(659.89KB)

XML

Abstract

This study evaluates the effectiveness of Indonesia’s defense industry policy from 2018 to 2023, focusing on PT Pindad, a pivotal state-owned defense enterprise. Using a Balanced Scorecard (BSC) framework, the study assesses PT Pindad’s performance across financial, customer, internal process, and learning and growth perspectives. The findings reveal strengths in financial stability (Current Ratio at 115.57% in 2023) and customer satisfaction, but challenges in Return on Investment (ROI), which fell from 6% in 2022 to 5.46% in 2023, signaling a need for further internal improvements. A mediation analysis using Shape-Restricted Regression indicates that Research and Development (R&D) serves as a crucial mediator, enhancing the impact of strategic alliances and technology transfer on PT Pindad’s self-reliance, with R&D showing a positive coefficient of β = 0.53 (p < 0.01). The systematic literature review complements these findings, underscoring the role of technology transfer, human capital development, and strategic partnerships as essential components for strengthening PT Pindad’s self-reliance and global competitiveness. Recommendations are made to enhance policy effectiveness by fostering robust technology transfer mechanisms, increasing investment in human capital, and expanding strategic partnerships. This research contributes to the literature on defense industry policies by providing a comprehensive evaluation framework that informs future policy decisions.

Keywords

References

1. Ahumada, J. M. (2023). Bringing freedom back to developmentalism: Industrialisation as national independence. Cambridge Journal of Economics, 47(6), 1037–1056.
2. Andari, D., Agustina, I. L., Mariana, C., Nur, A. (2019). Measurement of Company Performance Pt. Pindad (Persero) by Using Balanced Scorecard. International Journal of Innovation, 6(12).
3. Anu, S., Hadisancoko, R. E., Suwito, S. (2023). Defense Economic Strategy in Creating the Independence of the Indonesian Defense Industry (Case Study of the Independence of the Chinese Defense Industry). Jurnal Penelitian & Pengabdian Masyarakat Indonesia, 2(1), 266–275.
4. Arsita, S. A., Saputro, G. E., Sarjito, A. (2021). Implementation of Trade-off, Local Component, and Offset Policy Pt. Pindad (Persero) in Supporting the Defense Economy. Journal of Economics, Management and Trade, 42–52.
5. Bae, S. J., Lee, H. (2020). The role of government in fostering collaborative R&D projects: Empirical evidence from South Korea. Technological Forecasting and Social Change, 151, 119826.
6. Bienkowska, J., Sikorski, C. (2024). Integrating qualitative and quantitative methods: Abalanced approach to management research. Eastern Journal of European Studies, 15(1), 345–360.
7. Bozeman, B. (2000). Technology transfer and public policy: A review of research and theory. Research Policy, 29(4–5), 627–655.
8. Carvache-Franco, O., Carvache-Franco, M., Carvache-Franco, W., Bustamante-Ubilla, M. A. (2022). The Relationship between Human-Capital Variables and Innovative Performance: Evidence from Colombia. Sustainability, 14(6), 3294.
9. Chen, Y., Wang, Y., Hu, D., Zhou, Z. (2020). Government R&D subsidies, information asymmetry, and the role of foreign investors: Evidence from a quasi-natural experimenton the shanghai-hong kong stock connect. Technological Forecasting and Social Change, 158, 120162.
10. Corsi, A., De Souza, F. F., Pagani, R. N., Kovaleski, J. L. (2021). Technology transfer oriented to sustainable development: Proposal of a theoretical model based on barriers and opportunities. Scientometrics, 126(6), 5081–5112.
11. Craiut, L., Bungau, C., Bungau, T., et al. (2022). Technology Transfer, Sustainability, and Development, Worldwide and in Romania. Sustainability,14(23), 15728.
12. DeVore, M. R. (2021). Armaments after autonomy: Military adaptation and the drive for domestic defence industries. Journal of Strategic Studies, 44(3), 325–359.
13. Dwiguna, A. R., Subroto, A., Sanusi, A. (2022). Competitive Analysis of the National Defense Industry: Prospects and Challenges Post Revision of Law Number 16 of 2012 concerning the Defense Industry (Indonesian). Jurnal Manajemen Strategi Dan Aplikasi Bisnis, 5(1), 43–58.
14. Habsari, T. N. (2022). PT Pindad’s Strategy towards Defense Industry Independence. International Journal of Social Science and Human Research, 5(2).
15. Hua, Z., Zhao, Y., Liu, Y. (2024). Research on Knowledge Sharing and Innovation Capacity Enhancement of Heterogeneous Research Institutes under the Construction of Knowledge Mapping. Applied Mathematics and Nonlinear Sciences, 9(1), 20241460.
16. Joos, L., Keim, D. A., Fischer, M. T. (2024). Cutting Through the Clutter: The Potential of LLMs for Efficient Filtration in Systematic Literature Reviews. Computer Science.
17. Kaplan, R. S., Norton, D. P. (1996). The balanced scorecard: Translating strategy into action. Harvard Business School Press.
18. Kishimoto, S. (2024). Stable licensing schemes in technology transfer. Journal of Public Economic Theory, 26(1), e12664.
19. Li, X., Li, B., Xing, R. (2024). Technology licensing contract design considering royalty transparency and demand information asymmetry with downstream co-opetition. Expert Systems with Applications, 238, 122183.
20. Liu, D., Fu, N., Wang, G., Su, L. (2024). Past, present, and future of international joint ventures. Journal of Business Research, 176, 114568.
21. Martín-Gómez, A. M., Pineda-Ganfornina, M., Ávila-Gutiérrez, M. J., et al. (2024). Balanced Scorecard for Circular Economy: A Methodology for Sustainable Organizational Transformation. Sustainability, 16(4), 1464.
22. Matthews, R., Anicetti, J. (2024). The role of defence countertrade in Chinese geoeconomic diplomacy. Journal of Strategic Studies, 1–31.
23. Nem Singh, J. T. (2023). Recentring industrial policy paradigm within IPE and development studies. Third World Quarterly, 44(9), 2015–2030.
24. Patty, J. W. (2024). Working Towards Policy: A Theory of Organizational Implementation and Management. Journal of Public Administration Research and Theory, 34(1), 53–66.
25. Praditya, E., Maarif, S., Ali, Y., et al. (2023). Indonesian Defense Industry Policy in Changes. International Journal on Recent and Innovation Trends in Computing and Communication, 11(11), 518–527.
26. Safdari Ranjbar, M., Fatemi, M. (2022). Toward a balanced framework for innovation assessment in public and mission-oriented organizations: Evidence from defense industries. Innovation: The European Journal of Social Science Research, 1–26.
27. Sarjito, A. (2023). Evaluation of the Impact of Foreign Investment on the Indonesian Defense Industry (Indonesian). Jurnal EBI, 5(2), 1–10.
28. Sarjito, A. (2025). Evaluating Indonesia’s National Defense Policy in Shaping an Effective Area Denial Strategy. Journal of Political Issues, 6(2), 124–134.
29. Satria, Y., Yunanto, S. (2024). Diplomacy Cooperation between Indonesia and South Korea in Defense Equipment Procurement (2019–2022) (Indonesian). HUMANUS: Jurnal Sosiohumaniora Nusantara, 1(3), 485–501.
30. Schaefer, K. J., Hennemann, S., Liefner, I. (2024). Give us ideas! Creating innovativeness through strategic direction of reverse technology transfers. The Journal of Technology Transfer.
31. Schiff, D. S. (2023). Looking through a policy window with tinted glasses: Setting the agenda for U.S. AI policy. Review of Policy Research, 40(5), 729–756.
32. Shi, S., Wang, X. (2024). Analysis of human capital effects introducing Bayesian quantile regression in the process of industrial structural upgrading. PLoS One, 19(7), e0304730.
33. Soares, J., Letens, G., Vallet, N., et al. (2022). The defence performance measurement framework: Measuring the performance of defence organisations at the strategic level. Defence Studies, 22(1), 99–122.
34. Sohrabi, C., Franchi, T., Mathew, G., et al. (2021). PRISMA 2020 statement: What’s new and the importance of reporting guidelines. International Journal of Surgery, 88, 105918.
35. Tereshchenko, E., Salmela, E., Melkko, E., et al. (2024). Emerging best strategies and capabilities for university–industry cooperation: Opportunities for MSMEs and universities to improve collaboration. A literature review 2000–2023. Journal of Innovation and Entrepreneurship, 13(1), 28.
36. Wadjdi, A. F., Tambayong, J., Sianturi, E. M. (2023). Enhancing national defense capabilities through collaborative programs: Insights and policy recommendations for Indonesia. Insights into Regional Development, 5(3), 10–23.
37. Yang, C., Niu, Z., Gao, W. (2022). The time-varying effects of trade policy uncertainty and geopolitical risks shocks on the commodity market prices: Evidence from the TVP-VAR-SV approach. Resources Policy, 76, 102600.
38. Yang, Z., Xia, C., Zhao, S., Fu, D. (2022). Chinese Defense Industry Reforms and Military Firm Performance: Evidence from the Civil—Military Integration Strategy. Defence and Peace Economics, 1–16.

Previous
article in this issue

Next
article in this issue