Governance Dimensions and BUMDes Performance: Evidence from Rokan Hilir Regency

Abstract

Research aims:

This study aims to examine the effects of accountability, transparency, responsiveness, and the rule of law on the performance of Village-Owned Enterprises (BUMDes).

Design/Methodology/Approach:
This research employs a quantitative approach with an explanatory design. Primary data were collected through questionnaires distributed to 183 BUMDes managers in Rokan Hilir Regency and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM).

Research findings:

The findings reveal that all governance dimensions exert a positive influence on BUMDes performance. The rule of law emerges as the most dominant determinant, followed by responsiveness, accountability, and transparency. These results underscore that robust governance practices enhance organizational effectiveness and sustainability.

Theoretical contribution/Originality:

This study extends the good governance literature by integrating four governance dimensions within the context of BUMDes and reinforces the applicability of agency theory in village-based organizations.

Practitioner/Policy implication:

The findings encourage village governments and BUMDes managers to strengthen governance systems, particularly in terms of regulatory compliance, transparency, and responsiveness in managing village enterprises.

Research limitation/Implication:

This study is limited to a single region and specific variables. Future research is recommended to broaden the scope and incorporate additional variables.