Corporate governance, intellectual capital, and organizational culture: their influence on lean manufacturing and firm value

Saraswati, Rr. Sri; Yadiati, Winwin; Suharman, Harry; Soemantri, Roebiandini Article Corporate governance, intellectual capital, and organizational culture: their influence on lean manufacturing and firm value Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Saraswati, Rr. Sri; Yadiati, Winwin; Suharman, Harry; Soemantri, Roebiandini (2024) : Corporate governance, intellectual capital, and organizational culture: their influence on lean manufacturing and firm value, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 11, Iss. 1, pp. 1-34, https://doi.org/10.1080/23311975.2024.2382335 This Version is available at: https://hdl.handle.net/10419/326454 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Business & Management ISSN: 2331-1975 (Online) Journal homepage: www.tandfonline.com/journals/oabm20 Corporate governance, intellectual capital, and organizational culture: their influence on lean manufacturing and firm value Rr. Sri Saraswati, Winwin Yadiati, Harry Suharman & Roebiandini Soemantri To cite this article: Rr. Sri Saraswati, Winwin Yadiati, Harry Suharman & Roebiandini Soemantri (2024) Corporate governance, intellectual capital, and organizational culture: their influence on lean manufacturing and firm value, Cogent Business & Management, 11:1, 2382335, DOI: 10.1080/23311975.2024.2382335 To link to this article: https://doi.org/10.1080/23311975.2024.2382335 © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group View supplementary material Published online: 26 Jul 2024. Submit your article to this journal Article views: 3483 View related articles View Crossmark data Citing articles: 1 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 Accounting, corporAte governAnce & Business ethics | reseArch Article Cogent Business & ManageMent 2024, VoL. 11, no. 1, 2382335 Corporate governance, intellectual capital, and organizational culture: their influence on lean manufacturing and firm value rr. sri saraswati , Winwin Yadiati , harry suharman and roebiandini soemantri Department of accounting, Faculty of economics and Business, Padjadjaran university, Bandung, indonesia ABSTRACT this study aims to explore the relationship between the implementation of corporate governance, intellectual capital, organizational culture, and Firm value, with lean manufacturing serving as an intervening variable. previous research has identified that corporate governance, intellectual capital, and organizational culture have a positive and significant impact on firm value, as measured using tobin’s Q. this research further investigates whether the implementation of lean manufacturing mediates the enhancement of this relationship. the study was conducted on 242 manufacturing companies listed on the indonesia stock exchange. the data for this study were collected using primary data from survey questionnaires, resulting in 118 research samples, and secondary data obtained from financial reports published by the indonesia stock exchange. the data were processed using structural equation Modelling through the partial least square (pls-seM) approach. the findings reveal that intellectual capital and lean manufacturing have a significant positive effect on firm value, while organizational culture has a significant negative effect on firm value. corporate governance, intellectual capital, and organizational culture have a significant and positive effect on the implementation of lean manufacturing. lean manufacturing does not mediate the impact of corporate governance and intellectual capital on Firm value but does mediate the significant effect of organizational culture on firm value. IMPACT STATEMENT this research delves into the roles of corporate governance, intellectual capital, and organizational culture in the implementation of lean manufacturing and their effects on firm value. the findings of this study offer insights for practitioners, highlighting that boards of directors still need to strengthen oversight of internal company operations regarding the roles and contributions of committees and executive boards as part of corporate governance. commissioners should also actively evaluate reports on organizational culture and the effectiveness of lean manufacturing in enhancing firm value. Boards of directors and managers need to develop an organizational culture that supports the application of firm values through realistic and implementable policies and procedures for employee and management performance. employees should enhance their competencies and abilities through training and internships that align with firm needs. 1. Introduction the intricate and multi-faceted relationship between corporate governance, intellectual capital, organizational culture, lean manufacturing, and firm value (Fv) represents a pivotal area of interest in contemporary business and accounting research. Firm value serves as a crucial indicator for investors assessing the long-term viability and profitability of a company. this value reflects the fair market valuation of a company’s total assets and liabilities, providing a comprehensive measure that is pivotal for investment decisions (hoffman, 2018). research by li et al. (2018) underscores the significance of firm value as a key metric in overall company assessment, highlighting its role in enabling investors to ascertain ownership claims and make informed investment choices. © 2024 the author(s). Published by informa uK Limited, trading as taylor & Francis group CONTACT Rr. sri saraswati [email protected].ac.id; [email protected] Department of accounting, Faculty of economics and Business, Padjadjaran university, Bandung, indonesia. https://doi.org/10.1080/23311975.2024.2382335 this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent. ARTICLE HISTORY received 3 March 2024 revised 13 July 2024 Accepted 15 July 2024 SUBJECTS corporate governance; Business, Management and Accounting; Finance KEYWORDS corporate governance; firm value; intellectual capital; lean manufacturing; organizational culture; tobin’s Q REVIEWING EDITOR collins ntim, university of southampton, united Kingdom of great Britain and northern ireland 2 r. s. sArAsWAti etAl. Firm value is inherently tied to the broader concept of corporate governance, which encompasses the mechanisms, processes, and relations by which corporations are controlled and directed. effective corporate governance ensures that a company adheres to legal standards and ethical norms, thereby fostering an environment of accountability, transparency, and sustainability. this, in turn, enhances investor confidence and contributes to an increase in firm value. hoffman (2018) emphasizes that firm value is a fundamental criterion used by investors to evaluate the potential long-term returns of their investments. this is because firm value provides a clear picture of the company’s financial health and operational efficiency. investors are expected to foresee a long-term increase in a company’s market capitalization while acknowledging the inherent value of both its tangible and intangible assets, as suggested by hejazi et al. (2016). this viewpoint is consistent with the broader understanding that market capitalization is influenced not only by current performance but also by potential future growth. investors seek companies capable of sustainably enhancing their market value over time, thereby demonstrating both operational success and strategic foresight. in this context, the principles of corporate governance are vital, ensuring that management decisions are aligned with the interests of shareholders and the long-term objectives of the company. corporate governance mechanisms and principles profoundly influence company performance, as they are closely linked with the intellectual capital owned by the company (ni et al., 2020; ntim & soobaroyen, 2013). intellectual capital, comprising human, structural, and relational capital, is an essential asset that drives innovation, operational efficiency, and competitive advantage. human capital refers to the skills, knowledge, and expertise of employees, while structural capital encompasses the processes, patents, and proprietary technologies that support organizational operations. relational capital, on the other hand, includes the relationships and networks a company has with its stakeholders, such as customers, suppliers, and partners. research has shown that companies with high levels of intellectual capital tend to perform better in the market, as they can leverage their internal resources and external relationships to create value. ni etal. (2020) highlight the strong correlation between intellectual capital and firm value, suggesting that companies that invest in their intellectual assets are better positioned to achieve sustainable growth and profitability. Furthermore, organizational culture, which exhibits a strong correlation with firm value, emerges as an intriguing subject for in-depth exploration, as demonstrated by o’reilly et al. (2014). A positive and supportive organizational culture fosters employee engagement, innovation, and productivity, all of which are critical for enhancing firm value. in the current business landscape, the application of lean manufacturing as a strategic practice to enhance firm value (Zhu & lin, 2017) further accentuates the relevance and urgency of this research. lean manufacturing focuses on maximizing productivity while minimizing waste, thereby improving operational efficiency and reducing costs. By adopting lean manufacturing principles, companies can streamline their production processes, enhance product quality, and respond more effectively to market demands. Zhu and lin (2017) emphasize that lean manufacturing not only improves financial performance but also contributes to long-term sustainability by promoting resource efficiency and environmental stewardship. the contemporary business environment necessitates a nuanced understanding of the complex roles played by corporate governance, intellectual capital, and organizational culture in the effective implementation of lean manufacturing, all of which collectively contribute to enhancing firm value (Kalyar et al., 2020; Wu et al., 2021). these variables are integral to fostering an environment conducive to efficient production processes, innovation, and sustainable business practices. the responsibilities of directors and commissioners, adherence to business ethics, and the maintenance of intellectual capital and organizational cultural values are critical in building and maintaining investor trust (Asiaei et al., 2021; tian etal., 2021; Wu et al., 2021). corporate governance is fundamentally about balancing the interests of a company’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community. good corporate governance provides the framework for attaining a company’s objectives, encompassing practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure. the integrity of a corporation is not only judged by its financial performance but also by its commitment to a high standard of governance. cogent Business & MAnAgeMent 3 intellectual capital, as an intangible asset, is becoming increasingly significant in the knowledge-based economy. the role of intellectual capital in enhancing firm value cannot be overstated. companies that effectively manage and utilize their intellectual capital can develop innovative products and services, optimize their processes, and create sustainable competitive advantages. Asiaei et al. (2021) argue that intellectual capital is a critical driver of firm performance and value, as it encapsulates the knowledge, skills, and relationships that a company can leverage to achieve its strategic objectives. organizational culture, defined as the shared values, beliefs, and norms that influence the way employees think, feel, and behave, is another critical factor in determining firm value. A strong organizational culture aligns employees’ actions with the company’s goals, fosters a sense of belonging and commitment, and encourages behaviours that support the company’s strategic objectives. research by tian et al. (2021) indicates that companies with a robust and positive organizational culture are more likely to succeed in implementing change initiatives, such as lean manufacturing, and achieving superior performance outcomes. lean manufacturing, as a systematic method for waste minimization within a manufacturing system without sacrificing productivity, plays a pivotal role in enhancing firm value. the principles of lean manufacturing, which include continuous improvement, respect for people, and just-in-time production, help companies to streamline their operations, reduce costs, and improve quality. implementing lean manufacturing can lead to shorter lead times, reduced inventory levels, and higher customer satisfaction, all of which contribute to increased firm value. this research endeavours to delve deeply into the interrelationships among corporate governance, intellectual capital, organizational culture, and lean manufacturing, with the objective of providing a comprehensive understanding of their collective impact on firm value. By examining these dynamics, the study aims to contribute valuable insights that are pertinent to business practitioners, management, commissioners, and suppliers in their pursuit of long-term company goals, enhanced firm value, and business sustainability (Kalyar et al., 2020; papa et al., 2020; vithana et al., 2021). the essence of this research lies in conducting a thorough investigation into two critical questions: firstly, how corporate governance, intellectual capital, and organizational culture ensure the effective implementation of lean manufacturing; and secondly, how these factors collectively impact firm value. the goal is to elucidate the complexity of these relationships, providing a clear and in-depth understanding of the mechanisms through which corporate governance, intellectual capital, and organizational culture contribute to lean manufacturing practices and subsequently enhance firm value. the theoretical framework of this study encompasses social and political theory, stakeholder theory, social exchange theory, and organizational culture theory. social and political theory, as articulated by Budhwar etal. (2002), explains how companies can position themselves within a broader system encompassing state, society, and socio-cultural dynamics to achieve their goals. this theory highlights the influence of corporate governance on decision-making processes, considering social and political factors (Barkawi & lawson, 2017). stakeholder theory, introduced by Freeman and phillips (2002), posits that corporate entities should operate in a manner that benefits all stakeholders, not just shareholders (Miles, 2017). this theory emphasizes the importance of balancing various interests and understanding the power dynamics and complex relationships within organizations and society, which are crucial for managing intellectual capital and organizational culture. social exchange theory, developed by george homans in 1949, remains relevant today as it elucidates the reciprocal relationships between companies, employees, and suppliers (onofrei etal., 2019). this theory provides a useful framework for understanding economic phenomena related to company-customer, employee, supplier, and business partner interactions, all of which are pertinent to lean manufacturing implementation (Muldoon et al., 2017). organizational culture theory, as proposed by edgar schein in 1986, posits that a strong organizational culture creates distinct characteristics, values, and assumptions that involve all employees in achieving company goals (polychroniou & trivellas, 2018). this theory underscores the importance of fostering an innovative and collaborative culture that supports lean manufacturing practices and enhances firm value. extensive literature review indicates that the triad of corporate governance, intellectual capital, and organizational culture plays a vital role in enhancing firm value (ni et al., 2020; tian et al., 2021; 4 r. s. sArAsWAti etAl. tumwebaze et al., 2018; Zulfiqar et al., 2021). good corporate governance, characterized by ethical behaviour, accountability, transparency, and sustainability, builds a foundation of trust that enhances a company’s status in the investor community. intellectual capital, which includes employee expertise, company facilities, and strong relationships with stakeholders, strengthens the company’s business dynamics. A robust organizational culture that fosters innovation and collaboration further enhances the company’s reputation and performance. previous research has produced varying conclusions regarding the impact of these factors on firm value, highlighting the need for further investigation. For instance, Jia (2019), Kamiya et al. (2021), and Malik et al. (2020) found that effective corporate governance positively significant influences company performance, as measured by tobin’s Q. however, ittner and Keusch (2015) reported that the involvement of the risk supervisory board in corporate governance does not significantly affect firm value. this inconsistency raises the question of how corporate governance affects firm value. similarly, intellectual capital has been shown to positively impact firm value in some studies. Bayraktaroglu et al. (2019), Jordão and de Almeida (2017), and ni et al. (2020) found that higher levels of managerial education, company facilities, and strong customer relationships are significantly correlated with increased firm value. conversely, Maditinos et al. (2011) and Abualoush et al. (2018) found that structural and relational capital do not significantly affect firm value. this discrepancy raises the question of how intellectual capital affects firm value. the influence of organizational culture on firm value has also been the subject of debate. studies by polychroniou and trivellas (2018), o’reilly et al. (2014), and uzkurt etal. (2013) suggest that an effective organizational culture significantly enhances firm value. however, calori and sarnin (2016) and Zheng et al. (2017) found that the organizational culture in family-owned companies and the use of cultural attributes in the work environment do not significantly affect firm value. this inconsistency raises the question of how organizational culture influences firm value. research on the implementation of lean manufacturing and its impact on firm value is still relatively limited. lean manufacturing, adopted by companies to enhance competitiveness and meet consumer needs, is posited as an intermediary variable in this study. Zhu and lin (2017), negrão etal. (2016), and Fullerton et al. (2014) found that lean manufacturing positively impacts financial performance. in contrast, hofer et al. (2012) reported that lean manufacturing does not directly affect firm value. this raises the question of how lean manufacturing affects firm value. corporate governance’s impact on the implementation of lean manufacturing is another area of interest. research by Wu et al. (2021), Fu et al. (2020), and Bhamu and sangwan (2014) suggests that the presence of female and independent directors positively influences lean manufacturing practices. however, Balsmeier etal. (2017) found that independent directors do not significantly impact lean manufacturing implementation. this discrepancy raises the question of how corporate governance influences lean manufacturing. intellectual capital’s role in lean manufacturing implementation has also been examined. (sparrow & otaye-ebede, 2014), lee et al. (2011), and claver-cortés et al. (2018) found that human, structural, and relational capital positively influence lean manufacturing. conversely, Wang et al. (2014) reported that intellectual capital does not significantly affect lean manufacturing practices. this raises the question of how intellectual capital impacts lean manufacturing. the influence of organizational culture on lean manufacturing is another critical area of exploration. research by Belhadi et al. (2018), Alkhoraif and Mclaughlin (2018), and pakdil and leonard (2015) suggests that a supportive organizational culture significantly enhances lean manufacturing. however, paro and gerolamo (2017) found that organizational culture does not significantly impact lean manufacturing implementation. this inconsistency raises the question of how organizational culture affects lean manufacturing. the impact of corporate governance on firm value through lean manufacturing has also been explored. studies by Wu et al. (2021), Kalyar et al. (2020), and piercy and rich (2015) found a significant effect. however, pieter van der steen and tillema (2018) reported no significant influence of corporate governance on firm value through lean manufacturing. this discrepancy raises the question of how corporate governance affects firm value through lean manufacturing. cogent Business & MAnAgeMent 5 intellectual capital’s impact on firm value through lean manufacturing has been examined by Fu etal. (2020), papa et al. (2020), and chu etal. (2011), who found a significant effect. in contrast, Kianto et al. (2017) reported no significant influence of intellectual capital on firm value through lean manufacturing. this raises the question of how intellectual capital impacts firm value through lean manufacturing. Finally, the influence of organizational culture on firm value through lean manufacturing has been explored by nold (2012) and polychroniou and trivellas (2018), who found a significant effect. however, Kumar etal. (2018) reported no significant influence of organizational culture on firm value through lean manufacturing. this discrepancy raises the question of how organizational culture affects firm value through lean manufacturing. By investigating these questions, this research aims to provide a comprehensive understanding of the complex relationships among corporate governance, intellectual capital, organizational culture, and lean manufacturing, and their collective impact on firm value. the findings are expected to offer valuable insights for academics and practitioners, contributing to the body of knowledge in business and accounting research and providing practical recommendations for enhancing firm value. 1.1. Background current business developments and competition mean that stakeholders must understand regulations regarding business dynamics (Wakaisuka-isingoma et al., 2016). regulations set by government authorities or companies have an impact on company strategy (vithana et al., 2021). the company will carry out all rules and regulations provided by the government for the sustainability of its business. government regulations create a company strategy for healthy competition among its competitors. A company that has a good reputation will certainly increase stakeholder trust and is very likely to increase its market capitalization and firm value. this research examines it more deeply than previous studies, where there are still many inconsistencies and still need to be studied more deeply regarding the risks faced by companies and how they are managed in terms of ensuring the sustainability of their business so that it is in accordance with government regulations and company goals (Bhuiyan et al., 2021; Kristanti et al., 2024; ovsiannikov, 2017). the theories that underlie this research are social and political theory, stakeholder theory, social exchange theory and organizational culture theory which strengthen the relationship between things that play a big role in business practice, specifically corporate governance, intellectual capital, organizational culture, which are will have an impact on the implementation of reducing production costs to produce production that meets expectations, and also increase firm value (Adi etal., 2016; Bharathi Kamath, 2008; Kalyar et al., 2020). previous research conducted by hoffman (2018) stated that a strong firm value as an assessment indicator is tobin’s Q, where this ratio shows how much the company is valued by the market. the higher the value obtained, the higher the company’s value in the eyes of the market. this is also reinforced by Dybvig and Warachka (2015) that tobin’s Q is interesting because it is the value of market capitalization plus the fair value of liabilities and divided by the total assets owned by the company. the higher the tobin’s Q value means that the company is well valued by the market, thereby increasing market confidence and increasing confidence in the use of debt compared to the total assets owned. understanding firm value is very complex and interesting to study in more depth. A good company strategy can certainly increase market confidence. the most recent research conducted by Ben ruben etal. (2018) states that firm value can increase because companies have adopted the application of lean manufacturing (lM) in their production processes. lean Manufacturing is a production process based on the ideology of maximizing productivity while minimizing waste in manufacturing operations (psomas & Antony, 2019). lean Manufacturing principles reduce waste so that it will add product value that customers are willing to pay for (staedele et al., 2019). this research is a pioneer in an in-depth discussion between lean manufacturing and firm value where previous research mostly studied lean manufacturing in terms of industry and its impact on operations. in this research, lean manufacturing is discussed in depth how the implementation of lean manufacturing has an impact on firm value which is very focused on business and business sustainability. this research focuses on exploring how companies that have adopted lean manufacturing make their 6 r. s. sArAsWAti etAl. business process management leaner, simpler, more predictable, reliable, can reduce waste in time, materials and work location so that it will be more profitable for both the company and consumers. (henao et al., 2019; panwar et al., 2015; shah & Ward, 2007). implementing lean manufacturing will result in shorter production cycles, quality service to consumers, a safer and more comfortable employee work environment, and produce higher productivity so that it will add product value and will increase profits for the company (Wilson, 2010). the importance of companies following widely applicable business regulations is the implementation of corporate governance in ethical behavior, accountability, transparency and sustainability, so that how companies implement this cannot be ignored (Kristanti etal., 2024; ntim & soobaroyen, 2013; tumwebaze et al., 2018; Wakaisuka-isingoma et al., 2016). Applying the principles of corporate governance in every company operational activity can increase firm value according to research conducted by tam and tan (2007). this research shows the results that high ownership and the role of corporate governance are successful in encouraging an operational system that is transparent, accountable and responsible, and shows a significant positive influence on company performance as measured by tobin’s Q. the increase in firm value is triggered more than anything else. within corporate entities, including the role of corporate governance, is an inseparable part of the sustainability of corporate life (Arora & Bodhanwala, 2018; tuan & tuan, 2016). intellectual capital as an asset owned by a company cannot be ignored, its role in business activities and increasing reputation and firm value. the role of intellectual capital is very important and increases firm value (Brooking, 1996). expertise, supporting factors in work and good relationships with company partners must continue to be built in order to gain the trust of investors (Asiaei etal., 2021). intellectual capital consisting of human capital, structural capital and relational capital has a significant relationship with the implementation of innovation in companies (hejazi et al., 2016; Kianto et al., 2017; ni et al., 2020; salvi etal., 2020; tan etal., 2007), so that the implementation of lean manufacturing as a necessity in running a sustainable business can be implemented. A good work organizational culture can increase the value of the company, because employees have a sense of security to be able to develop themselves, there are clear rules for employee rights and obligations, commensurate appreciation for employee work performance and measurable assessment of employee results (pandey etal., 2018; polychroniou & trivellas, 2018). the definition of oc is in line with research conducted by calori and sarnin (2016); chen et al. (2020); Deshpandé and Farley (2004); tian et al. (2021), which ensures that a good culture exists the company has an influence on innovation carried out by employees because of the existence of clear work guidelines, strict regulations for the company’s operational activities. this encourages employees to work together as a team and jointly strive to produce quality products. this is why companies today cannot ignore the role of their corporate culture so that they continue to play a role in increasingly complex business competition. the choice of this research is corporate governance, intellectual capital, organizational culture on the implementation of lean manufacturing and its impact on firm value because this topic is a topic that continues to develop in accordance with existing business dynamics. the rapid adjustment of regulations regarding corporate governance in companies which currently place great emphasis on ethical behaviour. the special attention from the government and companies regarding intellectual capital, both its recognition in financial reports and also its role in business operations, is a challenge in itself for businesses to survive. organizational culture must be an important thing that the company is proud of and maintains, so that internal consolidation must be carried out continuously in order to compete with competitors. the need for a strong strategy regarding cost control and production processes makes lean manufacturing something that must be implemented as a whole in companies. All of these elements are believed to increase firm value in the long term. 2.Theoretical literature review 2.1. Social and political theory social and political theory is a branch of social science focused on analysing and understanding how power, policies, and political processes influence and shape society (Budhwar et al., 2002). the primary cogent Business & MAnAgeMent 7 goal of social and political theory is to develop a framework of thought that aids in comprehending the complexities of social and political relationships within society and how structures of power and control affect social behaviour and interactions. this theory assists in understanding how politics, policies, and value systems can impact the lives of communities, cultures, and individuals as a whole (Williams & Adams, 2013). this theory also explains how a company can position itself within a country’s system, society, social, and cultural settings to achieve its goals (Budhwar et al., 2002). social and political theory can have a significant impact on corporate systematics because it considers the social and political factors influencing decision-making in an organization or public institution (Barkawi & lawson, 2017). overall, social, and political theory can help companies manage stakeholder relationships, build an inclusive organizational culture, understand the social and political factors affecting business, and establish corporate social responsibility. this can aid companies in creating long-term value and building better relationships with stakeholders (Morgan, 2016). 2.2. Stakeholder theory According to Deegan (2004), stakeholders have a right to be provided with information on how organizational activities affect them. Furthermore, Deegan (2004) stated that stakeholder theory emphasizes organizational accountability, far beyond simple financial or economic performance. stakeholder theory posits that companies are not entities operating solely for their own interests but must benefit all their stakeholders (shareholders, creditors). this view serves as a critique of the concept proposed by Miles (2017), which states that the primary purpose of establishing a company is to create value for shareholders. stakeholder theory argues that stakeholders’ power to influence management and corporations should be viewed as a function of the level of control stakeholders have over resources needed by the organization (elijido-ten, 2004). According to Deegan (2002) stakeholders essentially can control or have the ability to influence the use of economic resources utilized by the company. this is further emphasized by onofrei et al. (2019), who stated that companies will react to satisfy stakeholders and establish a harmonious relationship between the company and its stakeholders to create mutually beneficial relationships between them. organizations must actively monitor stakeholders who wield significant power over the company and proactively disclose information related to organizational performance and sustainability (elijido-ten, 2004). Within the context of social and political theory, stakeholder theory can be applied to understand power relations and decision-making within political and social institutions. in both theories, the focus is on the complex relationships of power and influence among individuals and groups within an organization or society. stakeholder theory emphasizes the importance of managing relationships with stakeholders to effectively achieve organizational goals, while social and political theory helps to understand how these power relations and influences can affect the decisions and actions of leaders and stakeholders. 2.3. Social exchange theory this theory was developed by george homans in 1949 and is still considered relevant today. According to this theory, the relationship between a company, its employees, and suppliers can be explained as a relationship where both parties provide benefits and gains (onofrei et al., 2019). companies and suppliers work together openly and transparently to achieve common goals. the theory elucidates why companies and suppliers choose to engage in specific economic transactions and how they determine the value or benefits of those exchanges. in the economic context, social exchange theory helps explain phenomena such as why an individual decides to purchase a particular product, why someone chooses to work for a specific company, and why companies choose to collaborate with particular suppliers (suhadak et al., 2019). overall, social exchange theory is used as a useful framework in explaining the economic phenomena of relationships between companies and their customers, employees, suppliers, and business partners (Muldoon et al., 2017). 14 r. s. sArAsWAti etAl. 4.1.1. Dependent variable Firm value, focusing on the number of shares outstanding, market price of shares, and debt compared to the book value of assets, is measured using the tobin’s Q ratio indicator (Ammann et al., 2011; Fullerton et al., 2013; Zhu & lin, 2017). the approximate formula for tobin’s Q ratio, as provided by Ammann et al. (2011), chung and pruitt (1994), Fullerton et al. (2013), Zhu and lin (2017) is as follows: Tobin s Q Market vale of equity Debt value Total Assets book value ′ ′ =+ (1). tobin’s Q formula 4.1.2. Independent variables the dimensions and indicators used to measure corporate governance utilize 8 governance principles: roles & responsibilities of the Board of Directors and commissioners, composition & remuneration of the Board of Directors and commissioners, Working relationship between the Board of Directors and commissioners, ethical and responsible behavior, risk Management, internal control & compliance, Disclosure and transparency, rights of shareholders, rights of stakeholders. (Ammann etal., 2011; Mishra & Mohanty, 2014; pugKi, 2021). intellectual capital in companies, according to Bontis (2001), chen et al. (2004), hussinki et al. (2017), is measured across three inseparable dimensions for assessing ic: human capital (hc), structural capital (sc), and relational capital (rc). the dimensions and indicators of organizational culture in this study refer to the descriptions provided by robbins and Judge (robbins & Judge, 2021) and research by calori and sarnin (2016), chen, chen et al. (2020), tian et al. (2021) that identify eight (8) cultural dimensions: innovation, attention to details, decisiveness, team orientation, outcome orientation, aggressiveness, supportiveness, and reward emphasis. 4.1.3. Intervening variable in this study, 5 principles will be used as dimensions for lean manufacturing, as outlined in research where these dimensions have implemented 8 lean manufacturing methods (Abolhassani et al., 2016; cadden et al., 2020; Fu et al., 2020; Jain & lyons, 2009; Jasti & Kodali, 2016; Moyano-Fuentes & sacristán-Díaz, 2012; psomas & Antony, 2019; Zhu & lin, 2017) with the following indicators: identifying product value (value by product), mapping the value stream (value stream), creating workflow (value flow), working on product demand (pull value), pursuing continuous improvement (pursue perfection). the description of the variables employed in this study is presented in table 1. Figure 1. Research model. cogent Business & MAnAgeMent 15 Table 1. Variable description and measurement. Variables Role Dimensions indicators Firm value (scott, 2015) Dependent variable tobin’s Q TQ Market value of equity Debt value TotalAssets book value =+ ′ (Zhu & Lin, 2017) Corporate governance (PugKi, 2021) independent variable the roles and responsibilities of the Board of Directors and Board of Commissioners (PugKi, 2021) • the Board of Directors carries out its roles and responsibilities in the best long-term interests of the corporation • the Board of Commissioners conducts performance evaluations of the Board of Directors and its members Composition and remuneration of the Board of Directors and the Board of Commissioners • the Board of Directors comprises a diverse group with a commitment to, knowledge of, skills, and expertise required for the long-term interests and sustainable value creation of the corporation. • the Board of Commissioners consists of a diverse composition with a commitment to, knowledge of, skills, and expertise required for the long-term interests and sustainable value creation of the corporation. the working relationship between the Board of Directors and the Board of Commissioners. • a close, open, constructive, professional, and mutually trusting working relationship among the Board of Directors for the benefit of the corporation • a close, open, constructive, professional, and mutually trusting working relationship among the Board of Commissioners for the benefit of the corporation. ethical and responsible behavior • the company is committed to acting ethically in upholding the values of its organizational culture • the company is committed to being responsible in upholding the values of its organizational culture Risk management, internal control, & compliance • the company implements integrated governance practices in conjunction with a risk management system to support the achievement of the company’s goals, objectives, and performance targets • the company implements integrated governance practices in conjunction with the implementation of internal control and compliance systems to support the achievement of the company’s goals, objectives, and performance targets Disclosure and transparency • Making accurate and timely disclosures of all material matters concerning the company. shareholders’ rights • Protecting and facilitating the exercise of shareholders’ rights and ensuring fair treatment of minority shareholders. stakeholders’ rights • acknowledging the rights of stakeholders and encouraging active cooperation in creating employment opportunities and promoting a sustainable business environment intellectual capital (steward, 1997) independent variable Human capital (Hussinki et al., 2017) • the company has employees with knowledge, skills, and expertise in their respective fields • the company has employees who can collaboratively generate the best solutions for the company • the company has employees who are innovative, proactive, and responsive to the company’s needs structural capital • the company is capable of fulfilling routine processes to optimize intellectual and business performance • the company has an adequate information system to support optimal intellectual and business performance • the company has a sufficient database to support optimal intellectual and business performance Relational capital • the company builds a system that enhances customer relationships and loyalty • the company builds a system that enhances customer satisfaction • the company establishes relationships with external stakeholders to improve the company (Continued) 16 r. s. sArAsWAti etAl. Variables Role Dimensions indicators organizational culture (Robbins & Judge, 2021) independent variable innovation (Calori & sarnin, 2016) • the company provides opportunities for employees to develop their own work • the company can adapt to new ideas or developments • the company provides opportunities for employees to explore new ideas attention to details • the company has a set of workplace culture guidelines that every individual must adhere to • the company has guidelines for every product specification it produces • the company has guidelines for every attribute that each individual must use Decisiveness • the company has clear guidelines regarding the company’s core values • the company has clear rules regarding the rights and responsibilities of employees • the company has clear regulations regarding rewards and punishments for employees team orientation • the company provides clear guidelines on individual responsibilities in each of its work units • the company provides guidelines for effective and efficient teamwork in each of its work units • the company provides opportunities for collaborative problem-solving among individuals outcome orientation • the company emphasizes the achievement of work results as a key value for employees • the company appreciates the work results provided by employees and teams in the form of material or non-material rewards • the company provides training for employees to achieve good work results aggressiveness • the company always strives for excellence in competition • the company rewards employees who excel in demonstrating their performance • the company is consistent and courageous in its pursuit of continued competitiveness supportiveness • the company provides support and opportunities for work units and employees to develop ideas beneficial to the company • the company provides financial support for work units and employees to develop ideas beneficial to the company • the company provides time support for work units and employees to develop ideas beneficial to the company Rewards/emphasis • the company motivates employees to deliver their best performance • the company creates an environment that encourages employees to consistently show up for work • the company facilitates employees’ needs in the workplace Lean manufacturing (Womack & Jones, 2017) intervening variable Value by product (Zhu & Lin, 2017) • the company produces products that have unique characteristics compared to its competitors • the company produces products that are in accordance with the benefits produced • the company sells products that are needed and desired Value stream • the company creates a visual flow for purchasing raw materials for products • the company creates a visual flow for each production process until the finished goods • the company creates a visual flow for product sales to reach consumers Value flow • the company eliminates waste of employee time and activities on purchasing inventory and storing inventory. • the company eliminates waste of employee time and activities at each stage of production • the company eliminates waste of employee time and activities from the sales stages until they are received by consumers Pull value • the company implements production on demand by improving communication between employees and customers • the company implements efficiency in inventory storage because inventory is ordered according to demand • the company applies flexibility for ordering requests Pursue perfection • Companies can identify problems in the product manufacturing process from raw materials to finished products • Companies can analyze and understand the product manufacturing process from raw materials to finished products • Companies can develop optimal solutions for the product manufacturing process from raw materials to finished goods • Companies can implement solutions to improve the product manufacturing process from raw materials to finished products • Companies can evaluate solutions and adjust them according to the results obtained Table 1. Continued. cogent Business & MAnAgeMent 17 4.2. Unit of analysis, population, and sample 4.2.1. Unit of analysis the unit of analysis in this research is a manufacturing sector company listed on the indonesia stock exchange in 2021. the reason for choosing the unit of analysis is related to the topic of this research, such as the implementation of lean manufacturing and firm value which has been presented in the research background. 4.2.2. Population the population in this study are manufacturing sector companies listed on the indonesian stock exchange based on iDX-ic in 2021, which consists of 4 sectors, such as basic materials, industrials, non-cyclicals consumer goods and cyclicals consumer goods sector. (iDXchannel, 2021). the description of the population in this study is summarized in table 2. 4.2.3. Sample the study sample was determined using a total quota sampling technique. of the 242 questionnaires were sent, 120 questionnaires were completed and returned. however, 2 of these questionnaires returned with incomplete information so they were identified as invalid. therefore, the remaining 118 questionnaires were used for data analysis. Figure 2 illustrates the contribution of each industry sector in the study sample to the overall population. 4.3. Data collection the research methodology employed in this study included the distribution of questionnaires to gather data and information from the target population. the questionnaires were distributed to companies within the indonesian manufacturing sector listed on the indonesian stock exchange (iDX-ic) in 2021, using google Forms. Written approvals from both universitas padjadjaran and iDX-ic were obtained to Table 2. Population. sectors sub sector industry sub industry Population Basic materials 1 5 11 89 industrials 1 3 4 35 non cyclicals consumer goods 4 5 8 69 Cyclicals consumer goods 4 4 9 49 total 242 Source: indonesian stock exchange, data processed by researcher in 2023. Figure 2. sample. 18 r. s. sArAsWAti etAl. conduct the online questionnaire. Additionally, all respondents who participated in the online questionnaire provided written consent along with their demographic information. information from the respondents was collected to obtain a representative sample of the population. this study utilized a cross-sectional approach, where all individuals in the population were measured and observed simultaneously. the study adhered to ethical standards and received approval from the ethics committee of universitas padjadjaran. prior to participating in the study, all participants provided informed consent. the data collection process is detailed in table 3. 4.4. Data analysis the data analysis method used is descriptive analysis and verification analysis. the descriptive analysis prepared is to describe the dimensions and indicators of the variables studied for the entire sample used, such as manufacturing companies registered with iDX-ic. Meanwhile, in verification analysis, this research uses structural equation Modeling (seM) with a partial least square (pls) approach. seM consists of two components: the measurement model and the structural equation. the first component, the measurement model, is used to link observed variables with latent variables. the second component, the structural equation Model, demonstrates the causal relationships and influences among latent variables. structural equation models are often represented in path diagrams. this study has two model analyses: direct effect and intervening effect. Direct effect analysis is addressed to analyze the impact of corporate governance, intellectual capital, and organizational culture on firm value. Meanwhile, the intervening effect is to analyze the intervening role of lean manufacturing on the relationship between corporate governance, intellectual capital, organizational culture, and firm value. 5. Empirical results and discussion 5.1. Descriptive analysis table 4 lists the respondents’ gender, age, work positions, department, length of service, and educational levels. in this study 83.05% of the total respondents were male, while the remaining 16.95% were female. Most respondents were in their 41–50 years old with a percentage of 62.71%, followed by those aged between 31 and 40 years at 35.59% and the remaining were aged 51–65 years at 1.69%. the respondents were divided into four groups based on their job titles: supervisory, general manager, director, and commissioner. the percentages of each group were 57.63, 33.90, 8.47, and 0%, respectively. Based on their department, the respondents were classified into seven groups: Finance/Accounting, human capital, production, sales and Marketing, Directors, and commissioners, with the following percentages: 16.10, 18.64, 17.80, 35.59, 11.86 and 0% for both directors and commissioners. the employment tenure was categorized into three groups: one to three years, above three to five years, and above five years, with percentages, respectively. Most respondents fell under the staff with above five years of employment tenure. Based on their recent education, the respondents were classified into three groups: undergraduate, Master, and Doctorate, with the following percentages: 96.61, 3.39, and 0%, respectively. the respondents with undergraduate qualifications constituted the most significant portion. the following (table 5) lists sample firms’ locations that participated in this research. Manufacturing companies from Java and Bali accounted for 93.22% of the total, followed by companies in sumatera at 5.93%, manufacturing firms in Kalimantan at 0.85%. Descriptive analysis aims to provide a descriptive overview of observations on each research variable. the responses from respondents can explain the research variables of each analysis unit according to the Table 3. Description of the data collection process. Population and sample total Percentage Questionary sent to target population 242 100% Questionary return and completed 120 49.58% of total population invalid responses 21.66% of total returned questionary Questionary used for analysis (sample) 118 98.33% of total returned questionary cogent Business & MAnAgeMent 19 factual scoring from the respondents’ answers. the responses are organized based on the range of scores obtained (sekaran & Bougie, 2016). All research questionnaire instruments use positive statements. in total there are 63 statements which are research indicators, where the measurement uses an ordinal scale with a likert scale approach of 1–5 as the highest score. score 1 if there are no facts; score 2 if there is only fact 1; score 3 if there are 2 facts; score 4 if there are 3 facts; score 5 if there are 4 facts. the score range is determined based on the average score of the respondents’ responses, arranged from a maximum score of 5 to a minimum score of 1, then divided by the number of desired categories, using the following formula: Category score range Maximum score minimum score Total category C = − aategory score range Category score range =− = 51 5 0 8. (2). category score range formula With the calculation of the formula above, a range value is 0.80, which is categorized according to the criteria explained in table 6 below. Table 4. Respondent profile. Characteristics total Percentage (%) gender: Male 98 83.05 Female 20 16.95 total 118 100 age: 20–30 Years old 0 0 31–40 Years old 42 35.59 41–50 Years old 74 62.71 51–65 Years old 2 1.69 total 118 100 Working position: supervisory 68 57.63 general Manager 40 33.90 Director 10 8.47 total 118 100 Department: Finance/accounting 19 16.10 Human capital 22 18.64 Production 21 17.80 operational 42 35.59 sales and marketing 14 11.86 total 118 100 Working experiences: 1–3 Years 0 0 3–5 Years 1 0.85 >5 Years 117 99.15 total 118 100 education level: undergraduate 114 96.61 Master 4 3.39 Doctorate 0 0 total 118 100 Table 5. sample’s geographic location. Region total Percentage (%) Bali and Java 110 93.22 sumatera 7 5.93 Kalimantan 1 0.85 sulawesi 0 0 others 0 0 total 118 100 20 r. s. sArAsWAti etAl. the primary data collected through questionnaires include variables of corporate governance, intellectual capital, organizational culture, and lean manufacturing in manufacturing companies. table 7 below details the score range for these variables along with their respective criteria outcomes: table 7 shows that manufacturing companies listed on the iDX-ic Bei have achieved commendable scores in corporate governance 4.02 out of 5, intellectual capital 4.10, and organizational culture 4.54. these scores indicate effective implementation and understanding of long-term corporate sustainability, stakeholder interests, and avoidance of short-term profit tactics. however, there are notable gaps of 20% in corporate governance, 18% in intellectual capital, and 9% in organizational culture, highlighting areas for further attention. these gaps underscore the need for these companies to focus more on governance practices, intellectual assets, and organizational culture to sustain and enhance corporate value over the long term. 5.2. Outer model evaluation the outer model measurement model in pls-seM is used to validate and measure the reliability of measurement variables, and test the validity of latent variables. this model is used to connect latent variables with measurement or observation variables (hair et al., 2017). 5.2.1. Validity test 5.2.1.1. Convergent validity.table 8 displays the data results, showing that all indicators of independent and dependent variables had loading factors exceeding 0.7 confirming their validity in measuring each latent variable (hair etal., 2017). this figure implies that all the dimensions used as measuring tools were valid and appropriate for determining each construct. 5.2.1.2. Average variance extracted. the Average variance extracted method for assessing convergent validity compares the square root of average extracted (Ave) value of each latent variable with the correlation between other variables in the model and also explains whether the indicators represent or form a good model. if the Ave value of each latent variable is greater than ≥0.05 then it is said that each latent variable is considered adequate or valid or has a conceptually different concept so that it is in accordance with the research model. Based on the results of the Average variance extracted (Ave) test shows in table 9, that the latent variables below all have a value of ≥0.5, meaning that each latent variable in this study has an adequate or valid value and has a different concept conceptually, so that each latent variable is considered adequate as a measurement on this research model. 5.2.1.3. Discriminant validity. All the square roots of the Average variance extracted (Ave) follow the Fornell–larcker criterion. it can be observed that each latent variable has a value greater than that of any other latent variable. the results of the Fornell–larcker test are presented in table 10. As observed in column 1, the latent variable of corporate governance has a value of 0.936, which is greater than its Table 6. score categorization. no score Criteria 1 1.00–1.80 Poor 2 1.81–2.60 Fair 3 2.61–3.40 good 4 3.41–4.20 Very good 5 4.21–5.00 excellent Table 7. Descriptive analysis of variables. Variables Minimum score Real score average score Realization (%) gap (%) Criteria Corporate governance 7.670 6.162 4.02 80 20 Very good intellectual capital 5.310 4.353 4.10 82 18 Very good organizational culture 14.160 12.868 4.54 91 9 excellent Lean manufacturing 10.030 8.677 4.33 87 13 excellent cogent Business & MAnAgeMent 21 correlation with any other variable, such as intellectual capital at 0.914. similarly, intellectual capital has a value greater than organizational culture, which is 0.89. organizational culture has a value greater than lean manufacturing at 0.831, and lean manufacturing has a value greater than tobin’s Q, which is 0.566. likewise, from columns 2–5, all measured latent variables have values greater than those of any other latent variables. Table 8. Convergent validity test. Variable (construct) Laten indicator outer loading factor explanation Corporate governance Cg01 0.936 ≥ 0.7 Valid Cg02 0.958 ≥ 0.7 Valid Cg03 0.932 ≥ 0.7 Valid Cg04 0.919 ≥ 0.7 Valid Cg05 0.927 ≥ 0.7 Valid Cg06 0.889 ≥ 0.7 Valid Cg07 0.940 ≥ 0.7 Valid Cg08 0.958 ≥ 0.7 Valid Cg09 0.955 ≥ 0.7 Valid Cg10 0.911 ≥ 0.7 Valid Cg11 0.961 ≥ 0.7 Valid Cg12 0.926 ≥ 0.7 Valid Cg13 0.956 ≥ 0.7 Valid intellectual capital iC01 0.904 ≥ 0.7 Valid iC02 0.921 ≥ 0.7 Valid iC03 0.761 ≥ 0.7 Valid iC04 0.863 ≥ 0.7 Valid iC05 0.898 ≥ 0.7 Valid iC06 0.951 ≥ 0.7 Valid iC07 0.781 ≥ 0.7 Valid iC08 0.948 ≥ 0.7 Valid iC09 0.754 ≥ 0.7 Valid organizational culture oC01 0.886 ≥ 0.7 Valid oC02 0.893 ≥ 0.7 Valid oC03 0.840 ≥ 0.7 Valid oC04 0.882 ≥ 0.7 Valid oC05 0.862 ≥ 0.7 Valid oC06 0.805 ≥ 0.7 Valid oC07 0.859 ≥ 0.7 Valid oC08 0.788 ≥ 0.7 Valid oC09 0.885 ≥ 0.7 Valid oC10 0.897 ≥ 0.7 Valid oC11 0.839 ≥ 0.7 Valid oC12 0.897 ≥ 0.7 Valid oC13 0.805 ≥ 0.7 Valid oC14 0.803 ≥ 0.7 Valid oC15 0.907 ≥ 0.7 Valid oC16 0.848 ≥ 0.7 Valid oC17 0.793 ≥ 0.7 Valid oC18 0.870 ≥ 0.7 Valid oC19 0.746 ≥ 0.7 Valid oC20 0.842 ≥ 0.7 Valid oC21 0.809 ≥ 0.7 Valid oC22 0.828 ≥ 0.7 Valid oC23 0.888 ≥ 0.7 Valid oC24 0.891 ≥ 0.7 Valid Lean manufacturing LM01 0.906 ≥ 0.7 Valid LM02 0.887 ≥ 0.7 Valid LM03 0.876 ≥ 0.7 Valid LM04 0.770 ≥ 0.7 Valid LM05 0.922 ≥ 0.7 Valid LM06 0.903 ≥ 0.7 Valid LM07 0.807 ≥ 0.7 Valid LM08 0.784 ≥ 0.7 Valid LM09 0.817 ≥ 0.7 Valid LM10 0.798 ≥ 0.7 Valid LM11 0.830 ≥ 0.7 Valid LM12 0.844 ≥ 0.7 Valid LM13 0.887 ≥ 0.7 Valid LM14 0.875 ≥ 0.7 Valid LM15 0.865 ≥ 0.7 Valid LM16 0.832 ≥ 0.7 Valid LM17 0.778 ≥ 0.7 Valid tobin’s Q tQ 1000 ≥ 0.7 Valid 22 r. s. sArAsWAti etAl. 5.2.2. Reliability test table 11 shows that all latent variables are proven reliable from the reliability test results because the test values are above 0.7, not only from composite reliability (cr) but also from cronbach’s alpha (cA) figures (hair etal., 2017). Based on the explanation above, the measurement design model (outer model) in this research can be seen in Figure 3 below. 5.3. Inner model analysis the structural inner model is analysis evaluated to determine the relationship between latent variables or measured factors and the dependent or endogenous variables under study. the inner model is an analytical model to be able to identify which exogenous variables most influence endogenous variables and it is also used to test hypotheses regarding the relationship between exogenous and endogenous variables. the capability of the independent variables to explain the variation of the dependent variable is measured using r-square indicators (table 12). Based on the table above, the Adjusted R-square value for each equation is above 30 percent (0.3). • An adjusted R-square value of 0.930 means that the independent/exogenous variables of corporate governance, intellectual capital, and organizational culture can explain 93 percent of the variance in the mediating variable lean manufacturing, with the remainder explained by other variables outside the model. • An adjusted R-square value of 0.336 means that the independent/exogenous variables of corporate governance, intellectual capital, and organizational culture, along with the mediating variable lean manufacturing, can explain 33.6 percent of the variance in the dependent variable (tobin’s Q), with the remainder explained by other variables outside the model. Based on the calculations from table 13 (predictive relevance), the Q-square value is greater than 0, specifically 0.956061, indicating that the model has predictive relevance or accuracy regarding the unknown endogenous variable. Based on table 14 (overall model fit), the goodness of Fit (goF) value for this model is 0.725, which is substantial. this means that the model in this study has a predictive power of 72.5% in Table 9. average variance extracted (aVe). Variables average variance extracted (aVe) Corporate governance 0.877 intellectual capital 0.753 organizational culture 0.718 Lean manufacturing 0.722 tobin’s Q 1.000 Table 10. Fornell-Larcker test. Cg iC oC LM tQ Corporate governance 0.936 intellectual capital 0.914 0.898 organizational culture 0.898 0.897 0.947 Lean manufacturing 0.831 0.826 0.936 0.850 tobin’s Q 0.566 0.584 0.531 0.452 1.000 Table 11. Composite reliability and Cronbach’s alpha test. Composite reliability Cronbach’s alpha Corporate governance 0.989 0.988 intellectual capital 0.965 0.958 organizational culture 0.984 0.983 Lean manufacturing 0.977 0.975 tobin’s Q 1.000 1.000 cogent Business & MAnAgeMent 23 explaining the relationships between the exogenous latent variables of corporate governance, intellectual capital, organizational culture, and the endogenous latent variables, namely lean manufacturing, and tobin’s Q. in testing the structural model or inner model of the four models carried out above, such as the variance of endogenous variables on the R square value, the stone-geisser Q-square test (predictive relevance), goodness of Fit (goF) produces very reliable values for exogenous variables on endogenous Figure 3. Measurement model test results (outer model). Table 12. R-square adjusted. R-square R-square adjusted Lean manufacturing 0.931 0.930 tobin’s Q 0.359 0.336 Table 13. Predictive relevance. 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