Measuring and Decomposing Productivity of Co-operatives in Aceh, Indonesia

Authors

  • M. Shabri Abd. Majid Universitas Syiah Kuala, Banda Aceh, Indonesia
  • Faisal Faisal Universitas Syiah Kuala, Banda Aceh, Indonesia
  • Heru Fahlevi Universitas Syiah Kuala (USK), Banda Aceh, Indonesia.
  • Azhari Azhari Universitas Islam Kebangsaan Indonesia (UNIKI), Bireuen, Indonesia

DOI:

https://doi.org/10.15408/etk.v21i1.21299

Keywords:

total factor productivity, co-operatives, DEA, Malmquist index

Abstract

This study empirically assesses the co-operatives' productivity across 23 districts/cities in Aceh province, Indonesia, over 2014-2018 using the Malmquist Total Factor of Productivity Index (MTFPI) based on Data Envelopment Analysis (DEA). Unlike previous studies that focused only on selected sectors and industries, this study examines the co-operative productivity of all industries and sectors within one province. Overall, this study recorded a low productivity level of co-operatives. Only co-operatives in Subulussalam City consistently experienced a fully productive using both Constant Return to Scale (CRS) and Variable Return to Scale (VRS) estimations. Meanwhile, based on the VRS estimation, the study found that the co-operatives in Aceh Besar and Aceh Utara's districts had experienced total productivity. Overall, the co-operatives' productivity level has slightly declined, contributed mainly by a decline in technical efficiency. However, the co-operatives' efficiency level has increased, mainly due to their scale efficiency improvement. The findings suggested the importance of implementing sound co-operative governance principles and enhancing technical efficiency by adopting e-marketing and the internet of things in their business activities.

How to Cite:
Majid, M.S.A., Faisal, F., Fahlevi, H., & Azhari, A. (2022). Measuring and Decomposing Productivity of Co-operatives in Aceh, Indonesia. Etikonomi, 21(1), 55-66. https://doi.org/10.15408/etk.v21i1.21299.

Downloads

Download data is not yet available.

Author Biographies

  • M. Shabri Abd. Majid, Universitas Syiah Kuala, Banda Aceh, Indonesia
    Abd. Majid, M. Shabri is a Professor in Islamic Economics. received his Sarjana Ekonomi (SE) from Universitas Syiah Kuala, Indonesia, in 1995. He completed his Master of Economics (MEc) and PhD in Financial Economics from the International Islamic University Malaysia (IIUM) in 1998 and 2005, respectively. He has served the IIUM for six years (2005-2011) both as the Assistant and Associate Professors. Currently, he is the Head of the Master of Economics Department, Faculty of Economics, Universitas Syiah Kuala, Indonesia. His research interests include financial economics, applied econometrics, Islamic economics, banking and finance. He has published more than 60 articles in international refereed journals such as International Journal of Emerging Markets, Global Economic Review, Journal of Asia-Pacific Business, Studies in Economics and Finance, International Journal of Managerial Finance, Journal of Economic Cooperation and Development, Review of Islamic Economics, and JKAU: Islamic Economics. He has also presented his papers in various seminars locally and internationally.

    Researcher’s contact details: Department of Economics, Faculty of Economics, Universitas Syiah Kuala, Banda Aceh, Indonesia, E-mail: hannanan@gmail.com; Phone: +6282160229553.

  • Faisal Faisal, Universitas Syiah Kuala, Banda Aceh, Indonesia
    Faisal is an Associate Professor in Management, Fakultas Ekonomi dan Business, Universitas Syiah Kuala, Banda Aceh, Indonesia
  • Heru Fahlevi, Universitas Syiah Kuala (USK), Banda Aceh, Indonesia.

    Heru Fahlevi is an Associate Professor at the Department of Accounting, Faculty of Economics and Business, Universitas Syiah Kuala (USK), Banda Aceh, Indonesia.

  • Azhari Azhari, Universitas Islam Kebangsaan Indonesia (UNIKI), Bireuen, Indonesia

    Azhari is an Assistant Professor at the Program Study of Master of Management, Faculty of Economics and Business, Universitas Islam Kebangsaan Indonesia, Bireuen, 24352, Indonesia

References

Akinsoyinu, A. C. (2015). Efficiency Evaluation of European Financial Co-operative Sector: A Data Envelopment Analysis Approach. International Journal of Academic Research in Accounting, Finance and Management Sciences, 5(4), 11–21.

Ariyaratne, C. B., Featherstone, A. M., & Langemeier, M. R. (2006). What Determines Productivity Growth of Agricultural Cooperatives? Journal of Agricultural and Applied Economics, 38(1), 47-59. https://doi.org/10.1017/S1074070800022069.

Asawaruangpipop, P., & Suwunnamek, O. (2014). Analysis on Savings and Credit Co-operatives Efficiency in Thailand: A Data Envelopment Analysis (DEA) Approach. Research Journal of Business Management, 3(8), 242-253.

Azhari., Syechalad, M. N., Hasan, I., & Majid, M. S. A. (2017). The Role of Co-operative in The Indonesian Economy. International Journal of Humanities and Social Science Invention, 10(6), 43–46.

Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some Models for Estimating Technical and Scale Efficiencies in Data Envelopment Analysis. Management Science, 9(30), 1078-1092. https://doi.org/10.1287/mnsc.30.9.1078.

Candemir, M., Özcan, M., Güneş, M., & Deliktaş, E. (2011). Technical Efficiency and Total Factor Productivity Growth in The Hazelnut Agricultural Sales Cooperatives Unions in Turkey. Mathematical and Computational Applications, 16(1), 66-76.

Coelli, T. (1996). A Guide to DEAP Version 2.1 Data Envelopment Analysis (Computer) Program. CEPA Working Paper 96/98. Armdale: University of New England, CEPA.

Dong, F., & Featherstone, A. M. (2006). Technical and Scale Efficiencies for Chinese Rural Credit Cooperatives: A Bootstrapping Approach in Data Envelopment Analysis. Journal of Chinese Economic and Business Studies, 4(1), 57-75.

Doumpos, M., & C. Zopounidis. (2012). Efficiency and Performance Evaluation of European Cooperative Banks. In Pasiouras, F (ed). Efficiency and Productivity Growth: Modelling in the Financial Services Industry, pp. 237-252. Wiley. New Jersey.

Fandel, P. (2003). Technical and Scale Efficiency of Corporate Farms in Slovakia. Zemedelska Ekonomika-Praha, 49(8), 375-384.

Galdeano‐Gomez, E., Céspedes‐Lorente, J., & Rodríguez‐Rodríguez, M. (2006). Productivity and Environmental Performance in Marketing Cooperatives: An Analysis of the Spanish Horticultural Sector. Journal of Agricultural Economics, 57(3), 479-500. https://doi.org/10.1111/j.1477-9552.2006.00061.x.

Goodwin, H. (2002). Local Community Involvement in Tourism Around National Parks: Opportunities and Constraints. Current Issues in Tourism, 5(3-4), 338-360.

Hasan, I., Azhari, A., & Majid, M. S. A. (2018). How Efficient and Productive are Co-operatives in Indonesia? Empirical Evidence from Data Envelopment Analysis. Revesco-Revista De Estudios Cooperativos, 128, 149-172.

Ismail, F., Majid, M.S.A., & Rahim, R. A. (2013). Efficiency of Islamic and Conventional Banks in Malaysia. Journal of Financial Reporting and Accounting, 11(1), 92-107.

Jayamaha, A., & Mula, J. M. (2010). Financial Practices and Efficiency of Co-operative Rural Banks in Sri Lanka. Sri Lanka: ICBI 2010-University of Kelaniya.

Khan, Z. (2010). Commercial Versus Co-operative Microfinance Program: An Investigation of Efficiency, Performance and Sustainability. Dialogue, 2(5), 166-180.

Ludena, C. E. (2010). Agricultural Productivity Growth, Efficiency Change and Technical Progress in Latin America and The Caribbean. Inter-American Development Bank. Research, Dept. II. Title. III. Series. No.IDB-WP-186.

Majid, M. S. A., & Maulana, H. (2010). Assessing Performance of Mutual Funds in Indonesia. Journal of Economic Cooperation and Development, 13(4), 49-76.

Majid, M. S. A., & Maulana, H. (2012). A comparative Analysis of The Productivity of Islamic and Conventional Mutual Funds in Indonesia: Data Envelopment Analysis (DEA) and Generalized Least Square (GLS) approaches. Gadjah Mada International Journal of Business, 14(2), 183-208. https://doi.org/10.22146/gamaijb.5439.

Majid, M. S. A., Azhari, A., Faisal, F., & Fahlevi, H. (2020). Do Capital and Business Volume Matter for Productivity of The Co-operatives in Indonesia?. Binus Business Review, 11(1), 1-8. https://doi.org/10.21512/bbr.v11i1.5918.

Majid, M. S. A., Hamid, A., & Faradilla. (2017). Assessing The Productivity of Insurance Companies in Indonesia: A Non-Parametric Approach. Journal of Applied Economic Sciences, 52(6), 1593 – 1605.

Nasution, M. (2007). Demokrasi Ekonomi Koperasi. PIP Publishing. Jakarta.

Omar, M. A., Majid, M. S. A., & Rulindo, R. (2007). Efficiency and Productivity Performance of The National Private Banks in Indonesia. Gadjah Mada International Journal of Business, 9(1), 1-18. https://doi.org/10.22146/gamaijb.5603.

Omar, M. A., Rahman, A. R. A., Yusof, R. M., Majid, M. S. A., & Rasid, M. E. S. (2006). Efficiency of Commercial Banks in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 2(2), 19-42.

Othman, A., Mansor, N., & Kari, F. (2014). Assessing The Performance of Co-operatives in Malaysia: An Analysis of Co-operative Groups Using a Data Envelopment Analysis Approach. Asia Pacific Business Review, 3(20), 484-505.

Pasiouras, F. (2013). Efficiency and Productivity Growth: Modelling in the Financial Services Industry. John Wiley & Sons. New Jersey..

Ropke, J. (1992). Co-operative Entrepreneurship. Philips Marburg. Germany

Saad, N. M., Majid, M. S. A., Yusof, R. M., Duasa, J., & Rahman, A. A. (2006). Measuring Efficiency of Insurance and Takaful Companies in Malaysia Using Data Envelopment Analysis (DEA). Review of Islamic Economics, 10(2), 5-26.

Singh, T. (2010). Does Domestic Saving Cause Economic Growth? A Time-series Evidence from India. Journal of Policy Modeling, 32(2), 231-253. https://doi.org/10.1016/j.jpolmod.2009.08.008.

Sulikah, S. (2010). Analisis Efisiensi Koperasi Pegawai Negeri Republik Indonesia Kabupaten Klaten. (Unpublished Thesis). Universitas Sebelas Maret.

Syamni, G., & Majid, M. S. A. (2016). Efficiency of Saving and Credit Co-operative Units in North Aceh Indonesia, Signifikan: Jurnal Ilmu Ekonomi, 5(2), 99 – 118. https://doi.org/10.15408/sjie.v5i2.3193.

Wirnoto, W. (2011). Analisis Efisiensi Koperasi Pegawai Negeri Republik Indonesia Kota Pekalongan Pada Tahun 2011 Dengan Metode Data Envelopment Analysis. (Unpusblished Thesis). Universitas Sebelas Maret.

Downloads

Published

2022-03-19

Issue

Vol. 21 No. 1 (2022)

Section

Articles

How to Cite

Measuring and Decomposing Productivity of Co-operatives in Aceh, Indonesia. (2022). ETIKONOMI, 21(1), 55-66. https://doi.org/10.15408/etk.v21i1.21299