Effect of governance practices on value co-creation and organizational performance: Evidence from village-owned enterprises in Riau, Indonesia

Abstract

A broader community is currently paying a significant deal of attention to the existence of social enterprises. This is due to the belief that social enterprises can bring answers to community issues. Village-Owned Enterprises (VOEs), as one of the social enterprises that are expected to continue providing sustainable welfare for villages, must always strive for excellent organizational performance to fulfill their objectives. This study is based on the notion of participatory governance; it seeks to evaluate the effect of governance practices on value co-creation, as well as the effect these practices have on organizational performance. This paper collects data utilizing a structured questionnaire and a quantitative research approach. A cluster sampling methodology is used. The respondents are directors of VOEs in Riau Province, Indonesia. One hundred twenty-five data were analyzed using partial least squares (PLS) of the second order. The results reveal that good governance practices will boost value co-creation, enhancing organizational performance. The findings suggest that VOEs should pay particular attention to their process of managing, monitoring, and accountability to achieve value co-creation and fulfill their mission. The uniqueness of this study lies in its investigation of the governance practices of VOEs and the crucial role of value co-creation in enhancing their organizational performance. AcknowledgmentWe express our gratitude and appreciation to The Directorate of Resources, The Directorate General of Higher Education, The Ministry of Education, Culture, Research and Technology (Ref. 1615/UN.19.5.1.3/PT.01.03/2022) for financial support for this study. We also express the same appreciation to LPPM Universitas Riau for facilitating this research project.