The Effect of Internal Control System and Good Governance on Employee Performance: Moderated by Leadership Style
Keywords:
Internal Control System, Good Governance, Leadership Style, Employee PerformanceAbstract
This study aims to analyze the effect of the internal control system and good governance on employee performance, as well as the role of leadership style as a moderating variable of the influence of the government's internal control system and good governance on employee performance. The research population is the employees of the Regional Secretariat of the Konawe Kepulauan Regency, totaling 55 people. The study's sample size used the census technique so that the research sample amounted to 55 respondents. The data collection technique was done by distributing questionnaires. The research model is intervening, by testing directly and indirectly through moderating variables. Thus, the data were analyzed using Warp PLS. The results of this study indicate that: the internal control system has a positive but not significant effect on employee performance, good governance has a positive and significant effect on employee performance, and the internal control system moderated by leadership style has a negative and significant effect on employee performance, good governance is moderated by leadership style. Leadership has a positive and significant effect on employee performance. Thus, the local government of Konawe Kepulauan Regency needs to examine and evaluate the internal control framework and the efficiency of various work units so that all work units can carry out their duties in accordance with existing regulations. In addition, the management must carefully assess the level of expected risk and try to manage risk at certain points to implement performance-based budgeting and improve services to the community.
References
Abiodun, E. A. (2020). Internal Control Procedures and Firm’s Performance. International Journal of Scientific & Technology Research, 9(2), 6407–6415.
Adegboyegun, A. E., Ben-Caleb, E., Ademola, A. O., Oladutire, E. O., & Sodeinde, G. M. (2020). Internal control systems and operating performance: Evidence from small and medium enterprises (SMEs) in Ondo state. Asian Economic and Financial Review, 10(4), 469–479.
ALAWAQLEH, Q. A. (2021). The effect of internal control on employee performance of small and medium-sized enterprises in Jordan: The role of accounting information system. The Journal of Asian Finance, Economics and Business, 8(3), 855–863.
Almakhadmeh, A. (2014). The Effectiveness of Internal Control Systems in Enhancing the Level of Job Performance as Perceived by the Staff of Jordan Social Security Corporation. European Journal of Business and Management, 227–236.
Angkasah, L., Adolf, H., Wibowo, G. D. H., & Asikin, Z. (2017). Bureaucratic reform in the perspective of State Administration Law. Mediterranean Journal of Social Sciences, 8(5 S1), 35.
Arifah, D. (2012). Agency Theory Practices for Public and Non-Public Entities. Achievement.
Aswar, K. (2019). Financial performance of local governments in Indonesia. European Journal of Business and Management Research, 4(6).
Bachtiar, I. H. (2013). Utilization of Information Technology and Internal Control Systems on Accountability of Procurement of Goods and Government Services.
Bass, B. M. (1985). Leadership: Good, better, best. Organizational Dynamics, 13(3), 26–40.
Bass, B. M. (1999). Current developments in transformational leadership: Research and applications. The Psychologist-Manager Journal, 3(1), 5.
Bass, B. M. (2000). The future of leadership in learning organizations. Journal of Leadership Studies, 7(3), 18–40.
Bass, B. M., & Avolio, B. J. (1993). Transformational leadership and organizational culture. Public Administration Quarterly, 112–121.
Bass, B. M., & Riggio, R. E. (2006). Transformational leadership. Psychology press.
Burns, G., & Martin, B. N. (2010). Examination of the Effectiveness of Male and Female Educational Leaders Who Made Use of the Invitational Leadership Style of Leadership. Journal of Invitational Theory and Practice, 16, 30–56.
Burns, J. (1978). Leadership. Leadership Quarterly, 2(1).
Chang, Y.-T., Chen, H., Cheng, R. K., & Chi, W. (2019). The impact of internal audit attributes on the effectiveness of internal control over operations and compliance. Journal of Contemporary Accounting & Economics, 15(1), 1–19.
Dirks, K. T., & Ferrin, D. L. (2002). Trust in leadership: meta-analytic findings and implications for research and practice. Journal of Applied Psychology, 87(4), 611.
Dong, M., Mahfudnurnajamuddin, M., Semmaila, B., & Latief, B. (2019). Contributions Of Human Resources Development, Leadership Style, Organizational Commitment, And Work Motivation On Good Governance And Police Officer Performance (Study Of Police Officer In South Sulawesi Regional Police). European Journal of Business and Management Research, 4(6).
Ejoh, N., & Ejom, P. (2014). The impact of internal control activities on financial performance of tertiary institutions in Nigeria. Journal of Economics and Sustainable Development, 5(16), 133–143.
Ergeneli, A., Gohar, R., & Temirbekova, Z. (2007). Transformational leadership: Its relationship to culture value dimensions. International Journal of Intercultural Relations, 31(6), 703–724.
Fernando, L., & Surjandari, D. A. (2021). The impact of internal control, cultural control, incentives, and work discipline on employee performance (Case study in PT Lestari Jaya Raya). Annals of Management and Organization Research, 2(3), 209–223.
Gilang, A., Fakhri, M., Pradana, M., Saragih, R., & Khairunnisa, R. (2018). Good corporate governance towards employee performance at Indonesian energy company. International Journal of Business and Economic Affairs, 3(2).
Grant, A. M. (2012). Leading with meaning: Beneficiary contact, prosocial impact, and the performance effects of transformational leadership. Academy of Management Journal, 55(2), 458–476.
Gunawan, H., Haming, M., Zakaria, J., Djamareng, A., & Jamali, H. (2017). Effect of organizational commitment, competence and good governance on employees performance and quality asset management. Center for Open Science.
HARDININGSIH, P., Udin, U., MASDJOJO, G. N., & SRIMINDARTI, C. (2020). Does Competency, Commitment, and Internal Control Influence Accountability? The Journal of Asian Finance, Economics and Business, 7(4), 223–233.
Hikmah, S. N., & Zuhriyah, E. (2017). Efektivitas Sistem Pengendalian Internal dan Kualitas Sumber Daya Manusia terhadap Keberhasilan Usaha Koperasi di Kabupaten Magelang. URECOL, 541–546.
Howell, J. M., & Avolio, B. J. (1993). Transformational leadership, transactional leadership, locus of control, and support for innovation: Key predictors of consolidated-business-unit performance. Journal of Applied Psychology, 78(6), 891.
Indra Bastian. (2006). Sistem Perencanaan dan Penganggaran Pemerintah Daerah di Indonesia. Jakarta. Salemba Empat.
Jatmiko, B., & Lestiawan, H. Y. (2016). Good governance government and the effect on local government performance (survey on Gunung Kidul district government of Indonesia). Repository Universitas Muhammadiyah Yogyakarta, 14(14), 981–997.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/https://doi.org/10.1016/0304-405X(76)90026-X
Judge, T. A., & Piccolo, R. F. (2004). Transformational and transactional leadership: a meta-analytic test of their relative validity. Journal of Applied Psychology, 89(5), 755.
Kumolo Tjahyo. (2015). Local Goverment Performance. Available from: Http://Www.Kemendagri.Go.Id/Media/ Pdf/p/r/Prajaaa.
Kurniawan, J., Sumarsono, T. G., & Triatmanto, B. (2021). The Influence of Internal Control Systems, Leadership Style on Field Employee Performance through Organizational Commitment.
(Kemenpan RI). (2013). Peraturan Menteri Pendayagunaan Aparatur Negara dan Reformasi Birokrasi (Permenpan RB) Nomor 20 Tahun 2013 Tentang Petunjuk Pelaksanaan Evaluasi Akuntabilitas Kinerja Instansi Pemerintah.
Lowe, K. B., Kroeck, K. G., & Sivasubramaniam, N. (1996). Effectiveness correlates of transformational and transactional leadership: A meta-analytic review of the MLQ literature. The Leadership Quarterly, 7(3), 385–425.
Lunenburg, F. C. (2012). Compliance theory and organizational effectiveness. International Journal of Scholarly Academic Intellectual Diversity, 14(1), 1–4.
Mahaputra, I. P. U. R., & Putra, I. W. (2014). Analisis faktor-faktor yang mempengaruhi kualitas informasi laporan keuangan pemerintah daerah. E-Jurnal Akuntansi, 8(2), 230–244.
Mardiasmo, M. (2006). Realization of transparency and public accountability through public sector accounting: A means of good governance. Journal of Government Accounting, 2(1), 1–17.
McColl-Kennedy, J. R., & Anderson, R. D. (2002). Impact of leadership style and emotions on subordinate performance. The Leadership Quarterly, 13(5), 545–559.
Ngabito, F. M. (2021). The Influence Of Good Governance Andtransformational Leadership Styles On The Performance Of Local Governments. Turkish Journal of Computer and Mathematics Education (TURCOMAT), 12(3), 4365–4375.
Nor, W. (2009). Desentralisasi dan Gaya Kepemimpinan Sebagai Variabel Moderating Dalam Hubungan Antara Partisipasi Penyusunan Anggaran dan Kinerja Manajerial. Media Riset Bisnis & Manajemen, 9(3), 217–240.
Olufunmilayo, A. A., & Hannah, O. O. (2018). Effect of Internal Control System on Employee Performance of Small-Scale Manufacturing Enterprises in Ondo State, Nigeria. Human Resource Research, 2(1), 48–60.
Putra, I. M. E. L., & Rasmini, N. K. (2018). Style of leadership and organizational culture as moderator of influence of competence and internal control system towards report quality. International Research Journal of Management, IT and Social Sciences, 5(3), 22–34.
Raheni, N. P. R., & Putri, I. A. D. (2019). Pengaruh Good Governance dan Budaya Organisasi pada Kinerja Aparatur Penyelenggara Pemerintahan Desa di Kota Denpasar. E-Jurnal Akuntansi, 28(2), 1295–1322.
Rahim, N. F. A., Ahmed, E. R., & Faeeq, M. K. (2018). Internal Control System and Perceived Operational Risk Management in Malaysian Conventional Banking Industry. Global Business & Management Research, 10(1).
Rhodes, R. A. W. (2000). Governance and public administration. Debating Governance, 54, 90.
Shintia, C. I. P., & Erawati, N. M. A. (2017). Pengaruh Kualitas SDM, Pemanfaatan Sistem Informasi, Pengendalian Intern dan Komitmen Organisasi pada Kualitas Laporan Keuangan. E-Jurnal Akuntansi, 21(2), 1186–1205.
Sri Mulyani. (2016). Report Local Goverment Performance. Available from: Http://Www.Antaranews.Com/ Berita/578122.
Sutinen, J. G., & Kuperan, K. (1999). A socio‐economic theory of regulatory compliance. International Journal of Social Economics.
Wiantara, I. W. W., & Yadnyana, I. K. (2020). The Influence of Application of Good Government Governance Principles and Tri Hita Karana Culture on Regional Government Performance. American Journal of Humanities and Social Science Research (AJHHSR), 4(8), 74–82.
Xu, L. C., Zhu, T., & Lin, Y. (2005). Politician control, agency problems and ownership reform: evidence from China. Economics of Transition, 13(1), 1–24.
Yukl, G. (2009). Leading organizational learning: Reflections on theory and research. The Leadership Quarterly, 20(1), 49–53.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 International Association of Management and Human Resource Development
This work is licensed under a Creative Commons Attribution 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License.
