75 ARTICLE Asia-Pacific Management and Business Application 6 (2) 75-88 ©UB 2017 An Exploratory Study on the Relationship of University of Brawijaya Public Governance and Ease of Doing Business Malang, Indonesia http://apmba.ub.ac.id

Sofik Handoyo*

Faculty of Economics and Business, Universitas Padjadjaran, Bandung, Indonesia

Abstract Purpose of the study is to explore the relationship of the practice of good public governance in governmental institutions on the performance of the government in terms of its ease of doing a business. The motivation of the study was driven by the fact that each country has different easy of doing business performance even though they are located in the same region. Furthermore, massive competition among countries to attract foreign capital inflow is justification that the research is relevant to be conducted. Easy of doing business is a fundamental factor that determines foreign investor regarding their investment decision. The study examines whether good public governance practice in governmental institutions will have positive implication to government performance in terms of its ease of doing business. The study applied exploratory research design, in which two independent variables were examined. Public governance and easy of doing business performance are two independent variables as an object of the investigation. Indicators namely public accountability, effectiveness government, control of corruption, political stability, regulatory quality and rule of law are a representation of the public governance independent variable. Governance index namely World Governance Index was used for the purpose public governance measurement. Meanwhile, Easy of doing business performance was measured using Index released by World Bank. The total sample was involved including 188 countries of World Bank members. The data was analyzed using bivariate correlation. The findings indicate that all indicators of public governance show positive and significant correlation with ease of doing a business performance. The correlation magnitude shows that majority of public governance indicators have a strong correlation (r > 0.6, p<0.01). Meanwhile, political stability shows moderate correlation ( r = 0.584, p<0.01). The result implies that if the government adopts good public governance principles in public administration, it may have the positive impact on government performance in terms of ease of doing business.

Keywords Ease of doing business; Foreign Direct Investment; Governance; World Governance Index Received: 28 September 2017; Accepted: 19 October 2017; Published Online: 29 December 2017 DOI: 10.21776/ub.apmba.2017.006.02.2

*Corresponding author Email: [email protected] Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 ISSN : 2252-8997 76 Sofik Handoyo

Introduction principles such as flexibility, guidance, During the last decade, good governance communication, and persuasion has become a topic of great interest rather than rigid traditional “control among scholars and public sector and command” approaches (OECD, managers, especially starting from the 2011). Public governance is important premise that good governance influences for investors as basic requirement economic prosperity (Knack and regarding country risks. Stability of the Keefer, 1995, Ngobo and Fouda, 2012, government is needed for investment Mauro, 1995). Good public governance planning both medium and long-term. has been identified by academicians, Public Governance by many scholars donor institutions, policymakers and is closely associated with the easiness civil society organization as a pivotal of doing business (Bota Avram, 2014, factor for national development (World Ngobo and Fouda 2012, Çule and Fulton Bank Institute, 2009). Constructing (2013) and poor public governance good governance is the never-ending is believed as a major problem of process and the nation build with good economic development (Ngobo and governance principles is believed Fouda (2012). Good governance can lead the state toward economic leads to a transparent environment prosperity for conducting public affairs, being a promoter of free-market policies, justice, The country with a simple procedure and the rule of law (Ngobo and Fouda, in terms of doing business will attract 2012). Good governance implies fair investor both local and international to regulatory frameworks, accountability, spend their capital in the business sector. and transparent policymaking, all these The role of government in streamlining factors having direct influences on procedure of doing business is very economic activity (Bota-Avram, 2014). crucial. In order to increase easiness of doing a business performance, the Public sectors and private sectors government and the public sector have symbiosis mutualism in terms of must put a major concern on efforts in motivation in achieving their objectives simplification of business regulations efficiently. Private sector expects that that inhibit activities of doing business public sector supports them by facilitating or opening new business (Bota-Avram, regulatory that friendly to business 2014). Effective governments should organization and clean bureaucracy from properly answer to citizen needs, corrupt behavior (Bota-Avram, 2014). promote politically neutral managers, The rationale of public governance and develop a framework of pro- influencing the business environment business policies (Andrews, 2008). is based supposition that control toward corruption is expected to drive economic Public governance, in general, is related performance through reducing high-cost to the making of the public decision economy (Çule and Fulton (2013). and its implementation (OECD, 2011). The countries that practice Academician, bureaucrats, and business good public governance usually adopt profession are inconclusive that FDI inflows are determined by the host

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 An Exploratory Study on the Relationship of Public Governance and Ease of... 77 country’s factors such as bureaucracy, effectiveness, control of corruption, rule regulatory, efficient legislatures and of law, regulatory quality and political transparent judiciaries, (Alemu, stability. Most studies conclude that 2013). Many governance studies public governance had a positive impact have proved that the quality of public on Foreign Direct Investment (FDI) and governance has a positive relationship easiness of doing business. However, with effectiveness economic resources detail information about attributes of allocations, which finally influence public governance affecting FDI and the stimulation of economic growth easiness of doing business is still not and the competitiveness of business revealed clearly. environment. Literature and Hypothesis (Price et al, 2011. It implies that Development institutions are important for economic growth (Keefer and Knack (1997). Public Accountability and Ease of Research findings revealed that the Doing Business government institutions played an Public accountability refers to important role in the economic success government capacity to respond society and growth in East Asia (Rodrik, in terms of political process, civil 1997). Good governance increases FDI liberties, and political rights (Bota- inflows (Globerman et al, 2006) and all Avram, 2014). It covers participation governance indicators indicated to have of the citizens in terms of selecting a positive and significant influent toward the government (Alemu, 2013). Public the level of FDI inflows (Bissoon, 2012). accountability reflects the involvement of the citizen in running the government Good Public governance institutions through their voice in general election. have the capacity to facilitates The government, as representative of the benefits for private sectors to grow. citizen, therefore must be accountable Tax incentive, fair legal system, and to a citizen for every policy taken. The property right protection are kind of countries with high score index voice outcome produced by good public and accountability indicate that those governance practice that can foster countries are countries that put a weight business organization (Johansson the democracy. 2001). Good public governance practice encourages investment environment Public accountability facilitates friendly and at the end will generate economic investment climate (IADB, 2001, growth Globerman and Shapiro (2003). Siddharthan, 2009). Research findings by Differences in Growth and productivity Globerman & Shapiro (2002) and Méon, across countries are determined by its P.G. and K. Sekkat (2007) indicated governance infrastructure (Kaufmann, that public accountability contributes Kraay, Zoido, Lobaton, 1999b). positively to rising FDI inflows. One of the crucial factors that determine World Bank defines determinants of the magnitude of FDI inflows is a public governance into indicators namely simplification of investment procedures. public accountability, government Since there is a logical relationship

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 78 Sofik Handoyo between public governance, FDI and regulation will slow down business investment procedure. Formulation of responsiveness, divert resources and can the hypothesis is: potentially hamper business initiation. The quality of regulation was found Hypothesis 1: The higher public significantly influence the investment accountability Index, the higher of ease climate (OECD, 2011). Formulation of of doing business performance will be the hypothesis is: Regulatory Quality and Ease of Doing Hypothesis 2: The higher regulatory Business quality index, the higher ease of doing Regulatory quality refers to how the state business performance will be. manages the rules for general interest including business activities among Rule of Law and Ease of Doing private sector organization (Rhodes, Business 1997. It includes government capability A country with high rule of law index to provide regulations that drive has characteristic that its society have business organization growth (World confidence about law enforcement by Bank Institute, 2009). High regulatory the government. It is indicated with quality prevents the maters that are the condition such as effective and identified as a barrier to growth such as predicted of the judiciary system and government control toward price, lack of the law enforcement (Bota-Avram, financial access and complex regulation 2014). Rule of law is very important (Bota Avram, 2014). Regulatory quality for the company that is doing business is determined by government efforts in in the certain country. Without any rule eliminating market policies that are not of law enforcement, they will face any in favor of business organization such kind of uncertainty or risk regarding as market controls, limitation on capital their business. Piracy of product is an movement and government intervention, example of common threats faced by the (Fazio and Talamo, 2008). Quality business organization. They need some of regulations, credible government assurance that their product innovations institutions, and public accountability are protected by rule of law. Innovations are identified as fundamental factors that growth can be enhanced if rule of law influence success of economic growth that regulates protection of intellectual (Kray and Tawara, 2010) and Bota properties right is enforced (Alemu Avram, 2014) 2013) Clarity and certainty of the regulation Rule of law of the country will be a are considered by businesses fundamental factor considered by foreign organization regarding its investment investor regarding long-term orientation decision (OECD, 2011). Government investment (Hoff and Stiglitz, 2005). regulations which support the creation The country with rules of law more of a business-friendly environment, favorable to business entities will get innovation and competitiveness can more priority from venture capital to enhance business performance (OECD, invest their money. Good governance 2011). Meanwhile, poor government must necessarily ensure a framework

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 An Exploratory Study on the Relationship of Public Governance and Ease of... 79 of good rules that clearly establish and Societal issues emerge when the clarify property rights, rules that are normative function of government and meant to enhance the predictability of economic institutions is not properly economic interactions between various working (Kooiman, 1999). The effective contractual partners (Bota Avram, government provides a high quality of 2014). İnvestor confidence about rule public service, simple bureaucracy and of law of the country is believed as a credible (Alemu 2013). The capability to most important aspect that influences implement policies that are beneficial to investment decision (OECD, 2011). A society including business organization study by Johnson et al (1998) shows is the outcome of effective government that the unofficial economy is positively (Rammal and Zurbruegg, 2006) and influenced by the existence of more its important determinants of foreign corruption and when the rule of law is investment inflow (OECD, 2011). Sedik weaker. Formulation of the hypothesis (2012) who studies on MENA countries is: found that FDI inflows are positively and significantly influenced by the Hypothesis 3: The higher rule of law government effectiveness. Formulation index, the higher ease of doing business of the hypothesis is: performance will be. Hypothesis 4: The higher effectiveness Effectiveness Government and Ease of government index, higher performance Doing Business of ease of doing business will be. Government effectiveness refers to the capability of the government in providing Political Stability and Ease of Doing good or excellent public services with Business sufficient sources of economic input. Political stability promotes confidence Quality of public services is the main to attract foreign direct investment indicator to measure government to the host country (Alemu, 2013). effectiveness (World Bank Institute, Political stability refers capability of 2009) In achieving the effective the government to maintain conducive government, it will be determined by domestic political situation and protect factors such as civil servants competency, the government in power from the the degree of bureaucracy, independent potential threat of unconstitutional public services form political influence political movement (Bota Avram, and the government credibility (Bota 2014). The influence of political factors Avram, 2014). Effective government in the process of governance should enables to attract foreign investors not be ignored. The domestic political due to simplification of bureaucracy, situation will determine the orientation procedures and time needed to complete and priority of the country in terms of all activities regarding investment management of the government. (IADB, 2001; OECD, 2002). Effective government is important for the business Stasavage (2002) found that there organization because it can lead to a is a strong correlation between the reduction of transaction cost. existence of political stability and the foreign investment inflows. Political

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 80 Sofik Handoyo

Stability is a fundamental factor that regulations are frequently found as ensures sustainability of MNCs staying motive among corrupt bureaucrat to in the certain country and attracting charge business institutions (Alam, Foreign Direct Investment (IADB, Mian, and Smith, 2006). 2001). The investor will consider the sustainability of business for long term. Pervasive corruption causes business İt is, therefore, political stability of organization suffers inefficient economy the country is a fundamental factor as and ambiguity feeling about the future consideration among foreign investor return. A higher fiscal burden and a (Fazio and Talamo, 2008). MNCs avoid high level of corruption are strongly doing business in the country with the associated with larger unofficial high profile of political risk and tend to economies (Friedman et al. (2000). move to a country with stable political Combating corruption, reducing condition (Meyer, 2005). A study by complex bureaucracy and providing Amal et al (2010) indicated that stability efficient government are a fundamental of political condition of the country has aspect that determines FDI inflows a positive and significant correlation (Méon and Sekkat, 2005). The effects of with FDI inflows. Formulation of the corruption are significant on economic hypothesis is: growth and investment (Mauro, 1995). It effects on public investment cannot be Hypothesis 5: The higher political ignored while they are quite significant stability index, the higher of ease of (Tanzi and Davoodi,1997). Corruption doing business performance will be influences negatively the attractiveness for international investors (Wei, 2000). Control of Corruption and Ease of Formulation of the hypothesis is: Doing Business Hypothesis 6: The higher control of Corrupt behavior in governmental corruption index, the higher easy of institutions harms not only state finances doing business performance will be but it also causes business organization facing high-cost economy (Alemu, Methodology 2013). Corrupt bureaucrats usually use their power to charges the business The exploratory research approach was organizations with unregulated various used in this study. A limited similar costs. By reducing red tape and corruption study previously conducted and lack of behavior in government institutions it can firm theory as a basis for justification the enhance FDI (Vittal (2001). Corruption proposed hypothesis are consideration in governmental institutions can reduce of using exploratory research design. national competitiveness ass well There are two independent variables business organization in that country involved in this study namely public (OECD, 2011). İmpact of corruption governance and ease of doing a business in government bureaucracy is similar performance. to excessive taxes charged to a business Measurement of Public governance organization that leads to the hesitation variable referred to World Bank of the foreign investor. Bureaucratic Organization. World Bank defined

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 An Exploratory Study on the Relationship of Public Governance and Ease of... 81

Public Governance into six indicators sample was involved in this study is 188 namely public accountability, regulatory countries of 214 countries. The research quality, rule of law, the effectiveness used Purposive sampling method in of government, political stability terms of determining the samples. and control of corruption. Those six The consideration of using purposive indicators of public governance in this sampling method is representation and research was treated as sub independent matching data. The data must represent variables of Public Governance.World five continents. Furthermore, the data of Governance Index (WGI) released WGI and Easy of Doing Business must by World Bank was used to measure be fit in terms of the year of investigation. Public Governance Variable. WGI is stated in intervale scale range from The analysis used descriptive statistics -2.5 (minimum) to +2.5 (maximum). approach along with bivariate correlation The higher WGI index is indicating the analysis. Purpose of using descriptive better Public Governance Practice. statistic is to understand basic features of the data such as minimum value, Meanwhile, variable ease of doing maximum value, mean and standard business performance was measured deviation. Meanwhile, bivariate using Distance to Frontier (DtF) correlation analysis was intended to score released by World Bank. The understand the association between distance to frontier score benchmarks two variables that stand independently. economies with respect to regulatory The using of bivariate correlation was best practice, showing the absolute also addressed to justify whether the distance to the best performance on each proposed hypotheses are accepted or Doing Business indicator (World Bank, not. Due to the data is on interval scale 2018). Distance to Frontier is stated in categorization, Pearson correlation was intervale scale range from 1 (minimum) used in this research to 100 (maximum). The higher score of Distance to Frontier index, it indicates Results that the country has the higher easy of doing a business performance. Descriptive Statistic World Governance Indicator released by This research used secondary data World Bank is stated in interval range, namely Worldwide Governance Index it scales from the minimum value of (WGI) and Easy of doing business index -2.5 (Worst) to +2.5 (best). Information measured using Distance to Frontier in Table shows that public governance (DtF) score. The data is both released by attributes of 188 countries as a sample of World Bank Organization. The data is the research are at under moderate value an open publication and it was collected ( WGI=0) It is indicated by an average of from the website of World Bank. The mean value equal to -0.0534. Mostly, the data is the publication of WGI and Dtf countries that are indicated having WGI for the year of 2015. The sample of the above average are countries with high study is countries listed as a member Gross Domestic Product. Interestingly, of World Bank Organization. The total most of them are Scandinavian countries.

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 82 Sofik Handoyo

Top ten of highest WGI in this research sample involved in this research is in New Zealand ( 1.87), Switzerland heterogeneous in terms of variation of (1.80), Norway (1.77), Finland (1.77), WGI index. The high standard deviation Sweden (1.75), Denmark (1.72), can be also interpreted that the data is Luxembourg (1.72), Netherland (1.66), a representation of population (normally Canada ( 1.64) and Singapore (1.60). distributed). There are 79 countries Meanwhile, the countries identified (42%) with WGI score between 0 to as the lowest WGI index is majority +2.5 and 99 (58%) countries with WGI characterized as under developing score between 0 to +2.5. The distribution countries and countries familiar with of WGI score is dominated by countries conflict. Top ten of the worst WGI score with WGI performance below average is South Sudan (-1.88), Syrian Arab (WGI=0). It implies that practice of Republic (-1.84), Libya (-1.81), Central good public governance globally is still African Republic (-1.61), Sudan (-1.61), underdeveloped. Referring to top ten of Republic Yemen (-1.59), Eritrea (-1.56), highest WGI score performance and top Democratic Republic Congo (-1.54), ten the worst WGI score performance, Afghanistan (1.49) and Iraq (1.47). efforts to improve economic condition and avoid conflict both internal and Standard deviation as depicted in Table external may be one of the solutions to 1 indicated that the value is relatively improve public governance index level. high (0.96688). It implies that the

Table 1. Descriptive Statistic of Public Governance and Ease Doing Business Std. No Variables N Minimum Maximum Mean Deviation 1 Public Accountability 188 -2.04 1.70 -0.0210 0.96283 2 Effectiveness Government 188 -2.17 2.25 -0.0513 0.97849 3 Regulatory Quality 188 -2.24 2.26 -0.0295 0.95686 4 Control of Corruption 188 -1.83 2.29 -0.0674 0.97960 5 Rule of Law 188 -1.99 2.07 -0.0535 0.96065 6 Political Stability 188 -2.94 1.49 -0.0976 0.96286 AVERAGE -0.0534 0.96688 7 Easeof doing business 188 26.40 86.70 60.2879 13.07213

World Bank developed ease of doing identified that performance of ease of business index using Distance to doing business is on a moderate level. Frontier (Dtf) interval scale from 0 Meanwhile, standard deviation indicates (worst) to 100 (best). Information on high-level (13.07213). It implies from Table 1 shows that ease of doing that the variation value of ease of doing the business of 180 countries has a business is relatively high. High standard mean value equal to 60.2879. It can be deviation means that the samples have

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 An Exploratory Study on the Relationship of Public Governance and Ease of... 83 heterogeneity in terms of ease of doing Correlation Analysis a business performance. It implies that Bivariate correlation analysis was the countries included in the research applied in order to understand the have characteristic both in extremely degree of the relationship between two good and extremely bad in terms of their independent variables. Summary of ease of doing a business performance. bivariate correlation results is presented in table 2 as follows:

Table 2. Correlation Matrix No Variable 1 2 3 4 5 6 7 1 Public Accountability 1 2 Government Effectiveness 0.681* 1 3 Regulatory Quality 0.701* 0.935* 1 4 Control Corruption 0.754* 0.907* 0.868* 1 5 Rule of Law 0.763* 0.944* 0.929* 0.953* 1 6 Political Stability 0.709* 0.676* 0.633* 0.747* 0.736* 1 7 Easiness Doing Business 0.606* 0.865* 0.881* 0.744* 0.816* 0.584* 1 *Correlation is significant at the 0.01 level (1-tailed).

In this research, the examination of country will also have a high score for correlation procedure is one way other public governance indicators. and it refers to positive direction. The most convincing correlation The consideration of using one-way among public governance indicators correlation analysis is due to availability is between rule of law and control of sufficient literature that can be used as corruption ( r=0.953, p<0.01). The the basis for justification of relationship second is a correlation between rule between two independent variables, of law and government effectiveness in this case, public governance and (r=0.944, p<0.01) and the third is the ease of doing business. The correlation correlation between regulatory quality results between independent variables and government effectiveness ( r=0.935, as depicted in table 2 show that between p<0.01). Based on top three highest public governance indicators have a correlation magnitude between public strong correlation each other (r > 0.6, governance indicators, it implies that the p<0.01). things related law and regulations are fundamental factors in order to achieve The result indicates that public good public governance. governance indicators are an integral part of public governance variable and Hypothesis Testing have linearity in terms of its relationship. If the country has a high score in certain There are six hypotheses proposed in indicator of public governance, in that this research. All hypotheses proposed

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 84 Sofik Handoyo are summarized in Table 3. The to reveal a causal relationship between hypotheses are basically predicting that good public governance practice on ease good public governance practiced by the of doing a business performance. country will have a positive impact on the performance of the country in terms Based on information depicted in Table of its ease of doing business. Design of 3, it shows that all proposed hypotheses the research is exploratory, therefore, are supported. All public governance the hypotheses are only discovering a indicators are positively and significantly correlation between two independent associated with ease of doing a business variables. The research is not intended performance.

Table 3. Summary of Hypothesis Testing Pearson Conclusion Hypothesis Correlation of Proposed Coefficient Hypothesis H1: Public accountability has positive and significant 0.606* Supported correlation with ease of doing business performance H2: Effectiveness government has positive and significant 0.865* Supported correlation with ease of doing business performance H3: Regulatory quality has positive and significant correlation 0.881* Supported with ease of doing business performance H4: Control of corruption has positive and significant 0.744* Supported correlation with ease of doing business performance H5: Rule of law has positive and significant correlation with 0.816* Supported ease of doing business performance H6: Political stability has positive and significant correlation 0.584* Supported with ease of doing business performance *. Correlation is significant at the 0.01 level (1-tailed).

The magnitude of the correlation However, in general, public governance indicates strong correlation (r > 0.6) indicators overall are a reliable except for hypothesis 6. There is a instrument for predicting ease of doing note for correlation between political a business performance. It is supported stability and ease of doing a business by statistics correlation results that all performance. Even though the public governance attributes, except correlation is positive and significant, for political stability, indicate a strong however, the degree of correlation is correlation with ease of doing a business relatively moderate (r = 0.584, p<0.01). performance (r > 0.6, p<0.01). It implies that that political stability as an indicator of public governance has The results of correlation analysis as no explanatory power in predicting presented in Table 3 implies that there ease of doing a business performance. is linearity between the practice of good public governance with ease of doing a

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 An Exploratory Study on the Relationship of Public Governance and Ease of... 85 performance. The country that has a high In order to achieve a conducive index score of public governance, there environment for starting up business is a tendency to have also a high score of among private sector organization, the ease of doing a performance. It implies government institutions must provide that if the country is consistently applied clean government by eradicating the good practice of public governance, corruption practice in the bureaucracy. benefits such as ease of doing business Corrupt behavior among government performance will be obtained by the officials may lead to high transaction country. cost for the business organization. Avoidance of the potential foreign Conclusion investor and withdrawal existing investors are possibilities of the impact The findings of the research can be of corrupt government institutions. summarized that public governance has a positive and significant correlation with Regulatory quality provides a positive ease of doing a business performance. expectation for a business organization Overall, the magnitude of the correlation with regulations that encourage business between indicators of public governance growth through streamline bureaucracy, and easy of doing business performance complicate procedures. Rule of law gives is strong. However, the indicator of business organization confidence related public governance namely political legal certainty and law enforcement. stability shows the moderate magnitude Domestic political stability facilitates of correlation with ease of doing business business organization confidence that the performance. sustainability of business activities will not hamper by domestic political chaos. The practice of good public governance The government may be more focus on in governmental institutions may have administering business organization in an impact on country’s ease of doing a stable political condition. The effective business performance. The foundation of government gives benefits for business ease of doing business is a commitment organization in terms of quality of from government institutions to services and quickness. Lastly, public facilitates private sector organizations accountability gives a lesson to a with the friendly business environment. business organization that they have a Rules and regulations that are in favor responsibility to stakeholders. of the business organization, low-cost economy, simple bureaucracy are the Suggestion for next similar research, real output of practicing good public additional the time period of governance that relates to achievement investigations is necessary. İnvolving easy of doing a business performance. more countries with longitudinal data The findings are in line with the panel are necessary to be analyzed. İn basic of a theoretical framework that order to get more detail information implementation of good governance about the association between good principles in governmental institutions public governance practice and ease of will contribute to the creation of a doing a business performance, a case friendly business environment. study is encouraged to be conducted.

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 86 Sofik Handoyo

It is expected that comprehensive Notes on Contributor information about the impact of Sofik Handodoyo is a senior lecturer practicing good public governance on at Faculty of Economics and Business, easy doing business will be revealed. Universitas Padjadjaran. His research This research used an explorative scopes are Management Accounting, approach which concern about the Public Sector Organization, Risk relationship between two independent Management and Strategic Management. variables, therefore, upcoming research is suggested to use multiple regression analysis.

References Bissoon, O. (2012), “Can Better Andrews, M. (2008) ‘The Good Institutions Attract More Foreign Governance Agenda: Beyond Direct Investment (FDI)? Evidence Indicators without Theory’, from Developing Countries”, Oxford Development Studies, 36 International Research Journal (4), 379-407. of Finance and Economics, Euro journals publishing. Amal, M., Tomio, B.T., and R. Raboch, H. (2010), “Determinants of Cule, M. and Fulton, M.E. (2013). Foreign Direct Investment in ‘Corporate Governance and Latin America”, GCG: Journal of Subjective Well-Being’. Applied Globalization, Competitiveness, Economics Leters, 20 (4), 364-367. and Governability, 4 (3): 116–33. Fouda M. and Ngobo, P. (2012). ” Is Good Alemu, Aye Mengistu (2013). The Governance Good for Business? Nexus between Governance An Empirical Investigation among Infrastructure and the Ease African Companies”, Journal of of Doing Business in Africa. World Business, 47 (3), 435-449. International Journal of Global Friedman, E., Johnson, S., Kaufmann, Business, 6 (2), 34-56. D. and Zoido-Lobaton, P. (2000). Alam, Q., Mian, M.E.U. & Smith, ‘Dodging the Grabbing Hand: R.F.I., (2006). The Impact of Poor The Determinants of Unofficial Governance on Foreign Direct Activity in 69 Countries’. Journal Investment: The Bangladesh of Public Economics, 76 (3), 459- Experience. Network of Asia- 493. Pacific Schools and Institutes Fazio, G., Talamo, G.M.C. (2008), “How of Public Administration and Attractive is Good Governance Governance (NAPSIPAG) Annual for FDI?”. International Finance Conference 2005. Review, 9, Emerald Group Bota-Avram, Christina. (2014). Publishing Limited, 33-54. Transylvanian Review of Globerman, S., & Shapiro, D. (2003). Administrative Science. Governance Infrastructure and US Foreign Direct Investment.

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 An Exploratory Study on the Relationship of Public Governance and Ease of... 87

Journal of International Business Politics, 7(3), 207-227. Studies, 34 (1), 19–39. Mauro, P. (1995). ‘Corruption and Globerman, S., Shapiro, D and Tang, Growth’. Quarterly Journal of Yao. (2006), “Foreign Direct Economics, 110 (3), pp. 681-712. Investment in Emerging and Meon, P.G. and K. Sekkat. (2007). Transition European Countries”, “Revisiting the Relationship International Financial Review, 6, between Governance and Foreign 439-468. Direct Investment”, Brussels IADB (2001), “Competitiveness: The Economic Review – Cahiers Business of Growth: Economic Economiques De Bruxelles, 50 - and Social Progress in Latin N°1. America”, 2001 Report, Research Meyer, Klaus E (2005). Foreign Department, Inter-American Direct Investment in Emerging Development Bank, Washington Economies. Policy Discussion D.C, USA. Paper Emerging Markets Forum Johnson, S., Kaufmann, D. and Zoido- Templeton College Oxford. Lobatón, P. (1998). ‘Regulatory OECD (2011). Polıcy Framework for Discretion and the Unofficial Investment User’s Toolkıt. www. Economy’, American Economic oecd.org/investment/pfitoolkit. Review, 88 (2), 387-39. Price, R., Román, F.J. and Rountree, Johansson, D. (2001). The Dynamics B. (2011). ‘The Impact of Firm and Industry Growth: of Governance Reform on The Swedish Computing and Performance and Transparency’. Communications Industry. Journal of Financial Economics, Stockholm: Royal Institute of 99 (1), 76-96. Technology. Rammal, H., & Zurbruegg, R. (2006). Kooiman, J. (2003). Governing as The Impact of Regulatory Governance, London: Sage. Quality on Intra-Foreign Direct Kaufmann, D., Kraay, A. and Zoido- Investment Laws in the ASIAN Lobatón, P. (1999). ‘Aggregating Markets. International Business Governance Indicators’, World Review, 15 (4), 401-414. Bank Policy Research Working Rodrik, D. (2012). ‘TFPG Controversies, Paper No. 2195, The World Bank. Institutions, and Economic Kraay, A. and Tawara, N. (2010). ‘Can Performance in East Asia’, NBER Disaggregated Indicators Identify Working Paper Series. Governance Reform Priorities?’, Rhodes, R.A.W. 1997. “Understanding World Bank Policy Research Governance. Policy Networks, Working Paper No. 5254. Governance, Reflexivity and Knack, S. and Keefer, P. (1995). Accountability”. Buckingham: ‘Institutions and Economic Open University Press. Performance: Cross-Country Tests Stasavage, D. (2002). Private Investment Using Alternative Institutional and Political Institutions. Measures’, Economics and

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88 88 Sofik Handoyo

Economics and Politics, 14 (1), and Growth’, IMF Working Paper 41–63. No. WP/97/139. Stiglitz, Joseph E, and Hoff, 2005, Vittal, N. (2001). Corruption and the Economics, Fourth Edition, W.W. State. Harvard International Norton, New York. Review, 23 (3), 20-25. Siddharthan, N (2009), “Determinants, Wei, Shang-Jin, 2000, "How Taxing Constraints and Impact of Foreign is Corruption on International Direct Investment: India – China Investors?" Review of Economics Comparison”, in Manmohan and Statistics. 82 (1): 1-11. Agarwal (ed.), “India’s Economic World Bank Institute (2009). Future: Education, Technology, Governance Matter 2009: World Energy and Environment”, Esha Wide Governance Indicators 1996- Beteille Social Science Press, 2008. World Bank Organization. India. World Bank (2018). Distance to Tanzi, V. and Davoodi, H. (1997). Frontier and Ease of Doing ‘Corruption, Public Investment Business Ranking. World Bank Organization

Asia-Pacific Management and Business Application, 6, 2 (2017): 75-88