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Risk management and organisational performance in the Indonesian public sector: An empirical study

Efriani, Tio Novita (2022) Risk management and organisational performance in the Indonesian public sector: An empirical study. PhD thesis, Murdoch University.

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Abstract

Issues surrounding the real benefits of risk management and the factors that can support successful risk management systems in the public sector are still relevant topics discussed by accounting scholars. However, most risk management research in the public sector focuses on the experiences of developed countries. To fill this gap in the literature, this quantitative study uses a survey to investigate the relationship between risk management systems and organisational performance in public sector organisations in Indonesia, a developing country. It concurrently explores transformational leadership, internal audit activities, public service motivation and business process improvement as elements that may influence the original relationship between risk management systems and organisational performance on these organisations. A final sample of 202 usable questionnaires was obtained and analysed using Partial least squares (PLS) path modelling to test the hypotheses using SmartPLS 3.0 software. PLS path analysis involved a main analysis of all usable samples and an additional multigroup analysis.

Empirical evidence in this study suggests that transformational leadership and internal audit activities significantly influence risk management systems. Risk management system, in turn, significantly influences organisational performance through the mediating effect of business process improvement. Public service motivation serves as a mediator for the relationship between risk management system and business process improvement. However, the mediation effect of public service motivation is weak. The results of multigroup analysis revealed that organisation size does not moderate any paths in the model. Perceived risk management budget sufficiency significantly moderates the relationship between transformational leadership and risk management system and the relationship between risk management system and organisational performance. Perceived uncertainty level significantly moderates the relationship between risk management system and business process improvement.

Thus, this study expands the discussion related to the complex relationship between a risk management system and organisational performance in a developing country’s public sector. The findings of this study provide practical implications for leaders and risk management practitioners in the public sector, particularly in the Indonesian context. This study also measured the risk management system and public service motivation as second-order formative constructs; these are considered new to the existing literature.

However, the structured questionnaire used in this study restricted the depth of data collected; the use of a cross-sectional design limited the ability of this study to extensively examine the cause-and-effect relationships that can be identified in a longitudinal design. Nevertheless, these limitations are justifiable because the hypotheses of this study required answers for scope, rather than depth. Further, the use of moderating variables, which are examined in multigroup analysis, strengthened the cross-sectional design in this study.

Item Type: Thesis (PhD)
Murdoch Affiliation(s): Business
Supervisor(s): Trireksani, Terri, Alam, Manzurul and Djajadikerta, H.
URI: http://researchrepository.murdoch.edu.au/id/eprint/65683
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