Performance Measurement and Accountability in Indonesian Local Government
Total Page：16
File Type：pdf, Size：1020Kb
School of Accounting Curtin Business School Performance Measurement and Accountability in Indonesian Local Government Rusdi Akbar This thesis is presented for the Degree of Doctor of Philosophy of Curtin University July 2011 Declaration To the best of my knowledge and belief this thesis contains no material previously published by any other person except where due acknowledgement has been made. This thesis contains no material which has been accepted for award of any other degree or diploma in any university. Signature :..................................... Date : 4 July 2011 ii Dedication Love begins at home "My home is my heaven" (The Prophet Muhammad) This thesis is dedicated to my family members: Elin – Almer – Arrania iii Abstract Performance measurement and accountability in the management of public sector programs have long been seen as central factors in public management research globally. For more than two decades, in many developed countries, heightened interest in performance measurement in government organisations has held tremendous promise for both academics and practitioners. Despite the global trend, there has been little research on performance measurement and accountability in Indonesia. This paucity exists even though regulations have been in existence for more than a decade requiring government organisations to prepare and submit an ‗accountability of performance report‘ as a crucial component of Indonesia‘s public sector reform. This thesis investigates the implementation of performance measurement systems in Indonesia during the first wave of public sector reform. Specifically, it examines factors affecting the development and use of performance indicators in Indonesian local government (ILG). Employing a mixed research methodology, the thesis utilises a combination of a nation-wide survey and follow-up in-depth interviews with local government senior officials who are responsible for preparing performance reports. Specifically, the study explores the experiences and perceptions of government officials regarding the development and use of performance indicators and accountability practices in Indonesian local governments. The research findings contribute not only to the academic literature but also to practical public policy. The results indicate that metric difficulties, technical knowledge, management commitment, legislative requirement, and organisational capacity all have an effect on the development and use of performance indicators and accountability practices in ILG. Legislative requirement and management commitment have the strongest influence. The more contextual reasons and motivations behind the implementation process were also investigated and are illustrated in this thesis. For this purpose, institutional theory was used as the theoretical framework to better explain and understand the issues. The findings revealed that institutional isomorphism did contribute to the process of decision making. All three institutional components of isomorphism— iv coercive, mimetic and normative pressures—were found in ILG with coercive pressure found to be the strongest influence. The findings of this research have academic implications for scholars in public sector management and practical implications for many different parties, namely: 1) central government; 2) local government; 3) government auditors; and 4) universities. The findings provide an overview of performance measurement and accountability practices in a local government context. Specifically, this thesis provides important evidence regarding factors influencing the development and use of performance indicators, as well as factors hindering the implementation of performance measurement systems. In addition, it reveals the influence of isomorphic pressures in the implementation of performance measurement systems in Indonesia. Results revealed in the thesis are useful in evaluating the success or failure of the past implementation process. More importantly, the findings will be essential in helping to determine current and future policies and to ensure their continued success. This thesis provides analyses on the results of a decade of reform efforts in the area of public sector performance measurement and accountability in Indonesian local governments. With the recently-launched bureaucratic reform marking the second wave of reform (2010-2025) to improve Indonesian government, a reform effort that includes for the first time the vice-president‘s office, research into performance measurement and accountability practices in the first wave of reform (1999-2009) is especially timely. In summary, the significant contributions this thesis makes to performance measurement and accountability literature are threefold. Theoretically it provides a relevant exemplar regarding the application of institutional theory on performance measurement research in a developing country. Methodologically it contributes to the increasing use of mixed-method research. Analytically it provides evidence of the use of partial least squares as a relevant analytical tool. Further, this thesis paves the way for future research in the relatively unexamined area of public sector performance measurement and accountability in Indonesia. v Acknowledgement Proclaim (or read) in the name of thy Lord who created. Created man out of a leech-like clot: Proclaim and thy Lord is most bountiful, Who taught (the use of) the pen, Taught man what he knew not. (Al-Alaq: 1-5) First of all, I would like to say thank you to Allah the Almighty for the countless blessings given to me and my family, not only during my doctoral journey but also throughout our entire lives. Without the blessings of Allah everything I do in this world is simply meaningless. Many people have played a role directly or indirectly in the completion of this thesis and hence deserve recognition and appreciation. I would like to thank my supervisors Associate Professor Dr Robyn Pilcher and Dr Brian Perrin for their excellent supervision; they provided invaluable guidance throughout my doctoral study. My appreciation also goes to Professor Alistair Brown, Professor John Neilson and Professor Greg Tower for their guidance during the early stage of my thesis. Many thanks also to Joanne Boycott (administrative support) and Fay Rola-Rubzen (Higher Degree by Research Academics Coordinator) of the Curtin Business School. Their assistance has made my day-to-day doctoral journey easier. I would like to express my appreciation to Professor Dr Mardiasmo for providing an endorsement letter in support of my survey and for his invaluable assistance in accessing important data regarding local governments from the Ministry of Finance Database. I am also very grateful to Dr Akhmat Makhfatih and the staff at Magister Ekonomika Pembangunan (MEP) Universitas Gadjah Mada (UGM) Yogyakarta, Indonesia, for their assistance during the period of conducting my pilot testing, and also to the Dean of the Faculty of Economics and the Rector of UGM for their support during my field research in Indonesia. vi Many thanks to all the MEP students who gave up their precious time to participate as respondents during the pilot test. Your constructive feedback and contributions were much appreciated. My thanks also go to all the Indonesian local government (ILG) officials who were directly involved in my research as respondents during both the survey and the interview process. Without your participation and commitment the completion of this thesis would not have been possible. Your contributions are very much appreciated. This is also an excellent opportunity to thank all my family members both in Java and Kalimantan Island. Gratitude is especially directed to my mother, Moetni (1939– 1989) who was a loving support. Her noble heart was reflected in her sincere and pure smiles, which used to soothe my heart and will stay with me forever. To my father (Moedjelan), father-in-law (Abu Tauhied), and mother-in-law (Siti Aisyah) who have been very supportive with their encouragement and prayers for me in pursuing my doctoral degree, I offer my warmest thanks. Finally, I thank and dedicate this thesis to my soul mate, Laeli Nisfi Makiyatul Burhani. Together with our two gorgeous children—Al Ameer Muhammad Rusel Akbar and Arrania Rusel Akbar— she has been the ultimate source of support for my studies and in my life. As a result of her understanding and steadfast commitment, as a wonderful wife and full-time mum to our two highly demanding children, I have been able to work on and finally finish this thesis. No words can describe her struggle and sacrifice during the years I devoted to my doctoral journey—the toughest years of our life together. Truly, from the depths of my heart, I thank my beloved family for being at my side and for serving as my spirit and inspiration in my doctoral journey and in life, and I will continue to do so. I love you. vii T able of Contents Declaration ................................................................................................................... ii Dedication ................................................................................................................... iii Abstract ....................................................................................................................... iv Acknowledgement....................................................................................................... vi List of Appendices ...................................................................................................