How efficient and productive are co-operatives in Indonesia? Empirical evidence from data envelopment analysis
Article 33 of the 1945 Constitution of Indonesia positioned co-operative as a pillar and backbone of the national economy. To optimally function as the pillar and backbone of the economy, the co-operatives should be managed efficiently and productively. Considering their pivotal roles in the Indones...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
AECOOP Escuela de Estudios Cooperativos
2018-06-01
|
| Series: | Revista de Estudios Cooperativos |
| Subjects: | |
| Online Access: | https://revistas.ucm.es/index.php/REVE/article/view/60208 |
| _version_ | 1811253871121530880 |
|---|---|
| author | Ishak Hasan A. Azhari M. Shabri Abd. Majid |
| author_facet | Ishak Hasan A. Azhari M. Shabri Abd. Majid |
| author_sort | Ishak Hasan |
| collection | DOAJ |
| description | Article 33 of the 1945 Constitution of Indonesia positioned co-operative as a pillar and backbone of the national economy. To optimally function as the pillar and backbone of the economy, the co-operatives should be managed efficiently and productively. Considering their pivotal roles in the Indonesian economy, this study is aimed at empirically measuring efficiency and productivity of the co-operatives across 33 provinces nationwide. Three inputs (i.e., own capital, external financing, and board size) and one output (co-operative surplus) over the period 2010-2015 are analyzed using Data Envelopment Analysis (DEA) with Malmquist Index. The study documented that the co-operatives were highly inefficient, indicated by the average level of inefficiency of 47.6%. Out of the co-operatives in 33 provinces, 42.42% were found to record efficiency level of less than 50% and only 12.12% of them were fully efficient. In addition, the study also documented that, of 33 provinces, only the co-operatives in 14 provinces were found to experience an increase in their total factor productivity. The co-operatives in the province of East Nusa Tenggara recorded the highest productivity progress by 49.9%, while the co-operative in the province of Bangka Belitung recorded the highest productivity regress by -24.4%. Overall, the productivity level of the co-operatives only slightly increased by 9.9% over the study period nationwide, which was mainly contributed by an increase in technical efficiency. These findings implied that to further enhance the productivity level of the co-operatives, improving their pure efficiency should be prioritized, followed by enhancing their scale efficiency and technical efficiency. The co-operatives should provide regular training for their staff, professional management, adopt advanced technology, and enlarge their size by merging small co-operatives become a larger entity. |
| first_indexed | 2024-04-12T16:58:04Z |
| format | Article |
| id | doaj.art-5d09841a091341ecae8051e66e417384 |
| institution | Directory Open Access Journal |
| issn | 1135-6618 1885-8031 |
| language | English |
| last_indexed | 2024-04-12T16:58:04Z |
| publishDate | 2018-06-01 |
| publisher | AECOOP Escuela de Estudios Cooperativos |
| record_format | Article |
| series | Revista de Estudios Cooperativos |
| spelling | doaj.art-5d09841a091341ecae8051e66e4173842022-12-22T03:24:09ZengAECOOP Escuela de Estudios CooperativosRevista de Estudios Cooperativos1135-66181885-80312018-06-0112810.5209/REVE.6020855128How efficient and productive are co-operatives in Indonesia? Empirical evidence from data envelopment analysisIshak HasanA. AzhariM. Shabri Abd. MajidArticle 33 of the 1945 Constitution of Indonesia positioned co-operative as a pillar and backbone of the national economy. To optimally function as the pillar and backbone of the economy, the co-operatives should be managed efficiently and productively. Considering their pivotal roles in the Indonesian economy, this study is aimed at empirically measuring efficiency and productivity of the co-operatives across 33 provinces nationwide. Three inputs (i.e., own capital, external financing, and board size) and one output (co-operative surplus) over the period 2010-2015 are analyzed using Data Envelopment Analysis (DEA) with Malmquist Index. The study documented that the co-operatives were highly inefficient, indicated by the average level of inefficiency of 47.6%. Out of the co-operatives in 33 provinces, 42.42% were found to record efficiency level of less than 50% and only 12.12% of them were fully efficient. In addition, the study also documented that, of 33 provinces, only the co-operatives in 14 provinces were found to experience an increase in their total factor productivity. The co-operatives in the province of East Nusa Tenggara recorded the highest productivity progress by 49.9%, while the co-operative in the province of Bangka Belitung recorded the highest productivity regress by -24.4%. Overall, the productivity level of the co-operatives only slightly increased by 9.9% over the study period nationwide, which was mainly contributed by an increase in technical efficiency. These findings implied that to further enhance the productivity level of the co-operatives, improving their pure efficiency should be prioritized, followed by enhancing their scale efficiency and technical efficiency. The co-operatives should provide regular training for their staff, professional management, adopt advanced technology, and enlarge their size by merging small co-operatives become a larger entity.https://revistas.ucm.es/index.php/REVE/article/view/60208EfficiencyTotal Factor ProductivityCo-operativeData Envelopment AnalysisMalmquist Index. |
| spellingShingle | Ishak Hasan A. Azhari M. Shabri Abd. Majid How efficient and productive are co-operatives in Indonesia? Empirical evidence from data envelopment analysis Revista de Estudios Cooperativos Efficiency Total Factor Productivity Co-operative Data Envelopment Analysis Malmquist Index. |
| title | How efficient and productive are co-operatives in Indonesia? Empirical evidence from data envelopment analysis |
| title_full | How efficient and productive are co-operatives in Indonesia? Empirical evidence from data envelopment analysis |
| title_fullStr | How efficient and productive are co-operatives in Indonesia? Empirical evidence from data envelopment analysis |
| title_full_unstemmed | How efficient and productive are co-operatives in Indonesia? Empirical evidence from data envelopment analysis |
| title_short | How efficient and productive are co-operatives in Indonesia? Empirical evidence from data envelopment analysis |
| title_sort | how efficient and productive are co operatives in indonesia empirical evidence from data envelopment analysis |
| topic | Efficiency Total Factor Productivity Co-operative Data Envelopment Analysis Malmquist Index. |
| url | https://revistas.ucm.es/index.php/REVE/article/view/60208 |
| work_keys_str_mv | AT ishakhasan howefficientandproductivearecooperativesinindonesiaempiricalevidencefromdataenvelopmentanalysis AT aazhari howefficientandproductivearecooperativesinindonesiaempiricalevidencefromdataenvelopmentanalysis AT mshabriabdmajid howefficientandproductivearecooperativesinindonesiaempiricalevidencefromdataenvelopmentanalysis |