Business transformation in a distinctive institutional setting: A study of regional development banks in Indonesia

Thuda, Audy; Hamsal, Mohammad; Wa ganega a, Dezie Leona da; He iya i, Pan i
A icle
Business ans o ma ion in a dis inc i e ins i u ional
se ing: A s udy o egional de elopmen banks in
Indonesia
Adminis a i e Sciences
P o ided in Coope a ion wi h:
MDPI – Mul idisciplina y Digi al Publishing Ins i u e, Basel
Sugges ed Ci a ion: Thuda, Audy; Hamsal, Mohammad; Wa ganega a, Dezie Leona da; He iya i,
Pan i (2024) : Business ans o ma ion in a dis inc i e ins i u ional se ing: A s udy o egional
de elopmen banks in Indonesia, Adminis a i e Sciences, ISSN 2076-3387, MDPI, Basel, Vol. 14, Iss.
11, pp. 1-27,
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Ci a ion: Thuda, Audy, Mohammad
Hamsal, Dezie Leona da
Wa ganega a, and Pan i He iya i.
2024. Business T ans o ma ion in a
Dis inc i e Ins i u ional Se ing: A
S udy o Regional De elopmen
Banks in Indonesia. Adminis a i e
Sciences 14: 299. h ps://doi.o g/
10.3390/admsci14110299
Recei ed: 7 Sep embe 2024
Re ised: 6 No embe 2024
Accep ed: 6 No embe 2024
Published: 12 No embe 2024
Copy igh : © 2024 by he au ho s.
Licensee MDPI, Basel, Swi ze land.
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A icle
Business T ans o ma ion in a Dis inc i e Ins i u ional Se ing:
A S udy o Regional De elopmen Banks in Indonesia
Audy Thuda * , Mohammad Hamsal, Dezie Leona da Wa ganega a and Pan i He iya i
Managemen Depa men , BINUS Business School Doc o o Resea ch in Managemen , Bina Nusan a a Uni e si y,
Jaka a 11480, Indonesia; [email p o ec ed] (M.H.); [email p o ec ed] (D.L.W.); [email p o ec ed] (P.H.)
*Co espondence: audy[email p o ec ed]
Abs ac : Limi ed esea ch exis s on business ans o ma ion s a egy wi hin he Indonesian banking
sec o , pa icula ly ega ding egional de elopmen banks, which play a c ucial ole in egional
economic ad ancemen . This s udy in es iga es he d i e s o success ul business ans o ma ion in
Indonesian RDBs and hei impac on o ganiza ional pe o mance, examining he mode a ing ole o
egional go e nmen in e en ion. Employing s uc u al equa ion modeling, he s udy analyzed da a
om 255 b anch manage s ac oss 27 RDBs. Resul s e eal ha alen de elopmen , ans o ma ional
leade ship, and digi al adop ion signi ican ly d i e success ul business ans o ma ion, which in u n
enhances o ganiza ional pe o mance. Con a y o expec a ions, egional go e nmen in e en ion
did no demons a e a mode a ing e ec . This s udy p o ides aluable insigh s o RDB manage s
and policymake s, emphasizing he impo ace o alen de elopmen , leade ship, and digi al adop ion
as key pilla s o success ul ans o ma ion and highligh ing he need o a nuanced unde s anding o
ins i u ional in luences wi hin his sec o .
Keywo ds: business ans o ma ion s a egy; digi al adop ion; go e nmen in e en ion; ans o ma-
ional leade ship; alen de elopmen
1. In oduc ion
Based on Indonesian banking s a is ics pe Decembe 2023, he o al banking asse s
eached IDR 11,765 illion, unde sco ing he signi ican ole o a obus banking sec o in
Indonesia’s economic g ow h. Wi hin his landscape, egional de elopmen banks (RDBs)
hold an asse po ion o up o 8% o he o al banking indus y, demons a ing hei impo -
ance in os e ing egional economic ad ancemen . RDBs ha e expe ienced an 8.9% g ow h
in asse s o e he las h ee yea s, indica ing hei po en ial o u he de elopmen . RDBs
a e p esen in almos e e y p o ince in Indonesia, wi h he majo i y o company sha es
owned by egional go e nmen s. Banking au ho i ies a e u ging RDBs o con inue hei
business ans o ma ion e o s, encompassing all undamen al aspec s o hei ope a ions
(Kalisman 2019). Howe e , RDBs ace moun ing p essu e o adap and e ol e in esponse
o apid echnological ad ancemen s, e ol ing ma ke dynamics, and heigh ened compe-
i ion wi hin he inancial se ices indus y. These challenges necessi a e implemen ing
e ec i e business ans o ma ion s a egies o enhance o ganiza ional pe o mance and
ensu e long- e m sus ainabili y.
In o mula ing e ec i e business ans o ma ion s a egy, i is c ucial o conside alen
de elopmen (Mon e o Gue a e al. 2023), ans o ma ional leade ship (F eiha 2020), and
digi al adop ion (Bughin e al. 2021) as key de e minan s o success. Nume ous s udies
ha e demons a ed he posi i e in luence o hese ac o s on egional banks’ e o s o
ans o m and compe e e ec i ely in an inc easingly compe i i e banking indus y. The
challenges he banking indus y aces a e u he ampli ied by echnological ad ance-
men s and he eme gence o new playe s, such as inancial echnology ( in ech) companies.
Amids compe i ion om la ge banks and in ech companies, RDBs a e ac i ely pu suing
Adm. Sci. 2024,14, 299. h ps://doi.o g/10.3390/admsci14110299 h ps://www.mdpi.com/jou nal/admsci
Adm. Sci. 2024,14, 299 2 o 27
digi alizing hei business p ocesses, p oduc s, and se ices, ecognizing he i al ole o
digi al adop ion in es ablishing a compe i i e ad an age.
Howe e , as en i ies wi h majo i y owne ship by egional go e nmen s, RDBs a e also
subjec o go e nmen in e en ion. Akyuwen and Mangowal (2019) and Rachim e al.
(2021) ha e sugges ed ha egional go e nmen in e en ion can indi ec ly hinde RDB
pe o mance. Con e sely, go e nmen in e en ion in speci ic con ex s has been shown
o ha e a posi i e impac (Zhao e al. 2021;Xu e al. 2022), highligh ing he signi ican
ole o go e nmen in e en ion in ei he acili a ing o hinde ing he success o business
ans o ma ion s a egies aimed a imp o ing bank pe o mance. No ably, no s udies
explo e go e nmen in e en ion as a mode a ing a iable o measu e o ganiza ional
pe o mance in he banking sec o , making his a iable a no el y o his esea ch. This
app oach is c ucial as i di e en ia es he banking si ua ion a egional and na ional le els,
ecognizing hei dis inc complexi ies. While RDBs may s ill lag behind na ional-scale
banks, wi hin he egional con ex , mos RDBs possess asse s ha enable hem o compe e
e ec i ely wi h o he comme cial banks. This unde lines he need o unde s and how
go e nmen in e en ion, as a mode a ing ac o , uniquely impac s RDB pe o mance.
P e ious s udies on o ganiza ional pe o mance in he banking indus y ha e iden-
i ied bo h ex e nal ac o s (Wahyudi e al. 2021;Rachim e al. 2021) and in e nal ac o s
(Be he 2023;Quoc T ung 2022;Bha ia and Gula i 2021;Hossain 2021;Buchdadi e al. 2023;
Rizani e al. 2022;Rumaho bo e al. 2021;Kamaludin and Nashsyah 2020) as key de e -
minan s. Howe e , he e emains a need o comp ehensi ely unde s and he in e play
o hese ac o s in in luencing o ganiza ional pe o mance. This esea ch examines he
impac o business ans o ma ion s a egies, ocusing on alen de elopmen , ans o -
ma ional leade ship, and digi al adop ion, on he pe o mance o egional de elopmen
banks (RDBs) in Indonesia. I u he in es iga es he ole o go e nmen in e en ion as a
mode a ing a iable o p o ide a nuanced unde s anding o how ex e nal ac o s in luence
o ganiza ional pe o mance wi hin a unique ins i u ional se ing. This esea ch in oduces
go e nmen in e en ion as a no el mode a ing a iable in he con ex o pe o mance
s udies in he banking indus y. The indings p o ide aluable insigh s o policymake s,
banking au ho i ies, and bank managemen , guiding e ec i e ans o ma ion s a egies
and suppo ing egional g ow h. Addi ionally, his s udy o e s a aluable e e ence o
o he egional banks in eme ging ma ke s acing simila challenges.
The emainde o his pape is s uc u ed as ollows. Sec ion 2 e iews he ele an
li e a u e and p o ides he heo e ical backg ound and hypo hesis de elopmen . Sec ion 3
de ails he esea ch me hodology, including he sampling echnique, da a collec ion p o-
cess, and analy ical me hods used, and p esen s he esul s and analysis, ollowed by a
discussion in Sec ion 4 ha in e p e s he indings in ligh o exis ing li e a u e and p ac ical
implica ions. Finally, Sec ion 5concludes he s udy.
2. Li e a u e Re iew and Hypo hesis De elopmen
2.1. Talen De elopmen
Talen de elopmen , encompassing o ganiza ional ac i i ies designed o cul i a e and
enhance employees’ skills, knowledge, and ca ee ajec o ies, is c ucial o achie ing s a e-
gic alignmen wi hin o ganiza ions (Abiwu and Ma ins 2022). This concep can be unde -
s ood om bo h mic o and mac o pe spec i es. F om a mic o pe spec i e, alen de elop-
men ep esen s company ini ia i es aimed a indi idual employee g ow h. F om a mac o
pe spec i e, i encompasses a holis ic p ocess in ol ing in eg a ed planning, selec ion, and
de elopmen ac oss all aspec s o human esou ce managemen (Nu adilah e al. 2022).
Fu he emphasizing he con inuous na u e o alen de elopmen , Dai and Spee -
schneide (2012) de ine i as a p ocess o ongoing o mal and in o mal lea ning and sel -
de elopmen . This p ocess aims o cul i a e a unique and esponsible se o knowledge,
skills, and cha ac e ai s wi hin indi iduals (Dalal and Akde e 2018). Ga a an e al. (2012)
posi ion alen de elopmen wi hin he b oade amewo k o alen managemen , empha-
sizing i s ole in he s a egic planning and implemen a ion o alen - ocused ini ia i es.
Adm. Sci. 2024,14, 299 3 o 27
The posi i e impac o e ec i e alen de elopmen on o ganiza ional ou comes is well-
documen ed. Anand (2011), h ough a case s udy, illus a ed how alen pool managemen
can signi ican ly enhance employee engagemen . This engagemen , in u n, is essen ial o
success ul s a egy implemen a ion and he achie emen o business goals. Anand u he
emphasizes ha alen managemen is inhe en ly s a egic, as achie ing o ganiza ional
objec i es hinges on a ac ing and e aining he bes alen . This s a egic impo ance is
u he accen ua ed by Sa een and Mish a (2016), who ound a di ec link be ween alen
managemen p ac ices and imp o ed company pe o mance. Thei esea ch highligh s
ha o ganiza ions ha e ec i ely manage and s a egically deploy alen a e mo e likely
o expe ience g ow h and p o i abili y. Mo eo e , hey emphasize he impo ance o
e en ion s a egies wi hin alen de elopmen p og ams as a key d i e o enhanced
company pe o mance.
Finally, he inc easing signi icance o alen de elopmen in he con ex o digi al
ans o ma ion is e iden in ecen s udies. Mon e o Gue a e al. (2023) in Spain and
Samih e al. (2022) in Egyp bo h ound a posi i e co ela ion be ween alen de elopmen
and success ul digi al ans o ma ion ini ia i es. Mon e o Gue a e al. p opound ha
business ans o ma ion necessi a es a shi in pe spec i e, posi ioning “people” as a
company’s mos aluable s a egic asse . Simila ly, Samih e al. highligh he c ucial ole o
op managemen suppo in op imizing alen o e ec i ely implemen business s a egies,
pa icula ly wi hin he con ex o digi al ans o ma ion. Based on his body o esea ch,
we p opose he ollowing hypo hesis:
H1. Talen de elopmen has a posi i e e ec on business ans o ma ion s a egy.
2.2. T ans o ma ional Leade ship
T ans o ma ional leade ship, cha ac e ized by a leade ’s abili y o inspi e and mo i-
a e ollowe s owa d sha ed goals, plays a c ucial ole in o ganiza ional success. Radi
A sou an e al. (2022) de ines ans o ma ional leade ship as a p ocess ha ele a es bo h
leade s and employees o highe le els o mo ali y and mo i a ion, os e ing a s ong
commi men o achie ing o ganiza ional missions and goals. This leade ship s yle is cha -
ac e ized by isiona y hinking, inno a i e p oblem sol ing, and he abili y o inspi e
and empowe o he s. G eimel e al. (2023) u he elabo a e on his concep , desc ibing
ans o ma ional leade ship as an app oach ha aligns ollowe s wi h o ganiza ional goals
and in e es s, ul ima ely d i ing imp o ed pe o mance. Sai a e al. (2021) o e s a mo e
p ac ical pe spec i e, de ining ans o ma ional leade ship as he abili y o enhance sub-
o dina e pe o mance h ough mo i a ion, empowe men , and ecogni ion. Syn hesizing
hese pe spec i es, ans o ma ional leade ship can be unde s ood as a leade ’s capaci y o
ele a e o ganiza ional pe o mance by in luencing, mo i a ing, and aluing hei subo di-
na es. The in luence o ans o ma ional leade ship ex ends beyond indi idual and eam
pe o mance, signi ican ly impac ing s a egic design and implemen a ion. F eiha ’s (2020)
s udy o heal h agency leade s in Jo dan demons a ed a posi i e co ela ion be ween ans-
o ma ional leade ship and e ec i e ma ke ing s a egy implemen a ion. This in luence
s ems om he leade ’s abili y o ga ne suppo o and acili a e he eenginee ing o
ma ke ing s a egies ac oss all o ganiza ional le els.
Simila ly, in he echnology manu ac u ing sec o , Huang e al. (2021) ound ha
g een ans o ma ional leade ship among op managemen p edic ed he adop ion o
p oac i e en i onmen al s a egies. This inding highligh s he ole o leade ship in d i -
ing sus ainabili y- ocused s a egic ini ia i es. The au ho s posi ha ans o ma ional
leade s, unde hei au ho i y and in luence, can e ec i ely engage subo dina es in he
de elopmen and execu ion o such s a egies. Özgül and Zehi (2023) u he subs an ia e
his link, e ealing ha g een ans o ma ional leade ship can posi i ely in luence inan-
cial pe o mance h ough he media ing e ec o en i onmen al s a egy implemen a ion.
This media ing ole emphasizes op managemen ’s impo ance in unde s anding s a egic
choices and p io i ies in d i ing sus ainabili y and inancial success.
Adm. Sci. 2024,14, 299 4 o 27
The connec ion be ween ans o ma ional leade ship and human esou ce s a egy
is also no ewo hy. N lhanngoe and Chipunza (2021) ound a s ong associa ion be ween
ans o ma ional leade ship beha io s and e ec i e HR s a egy implemen a ion. Thei
esea ch sugges s ha pa icipa i e leade ship and indi idual conside a ion a e in e wined,
wi h s a egy se ing as a media ing o ce ha aligns leade ship beha io s wi h employee
needs o enhance o ganiza ional pe o mance. Bi asna ’s (2014) li e a u e e iew ein o ces
his no ion, indica ing ha op leade s exhibi ing ans o ma ional leade ship beha io s a e
likelie o achie e success ul s a egy implemen a ion. Based on his e idence, we p opose
he ollowing hypo hesis:
H2. T ans o ma ional leade ship has a posi i e e ec on business ans o ma ion s a egy.
2.3. Digi al Adop ion and O ganiza ional Pe o mance
Digi al adop ion, as he in eg a ion o in o ma ion and communica ion echnology
in o business ope a ions, is c ucial o o ganiza ions o h i e in oday’s digi al landscape.
Wa y e al. (2022) b oadly de ine digi al adop ion as implemen ing digi al echnology in
company ac i i ies. Lashi ew (2023) p o ides a mo e nuanced pe spec i e, pa icula ly
in he con ex o he COVID-19 pandemic, dis inguishing be ween e-comme ce adop ion
(u ilizing echnology o online sales) and emo e wo k adop ion (le e aging echnology
o emo e wo k models). Finkels ein Shapi o and Mandelman (2021) u he e ine his
de ini ion, emphasizing he adop ion o elec onic de ices, so wa e, and ha dwa e o
s eamline and enhance exis ing manual p ocesses. In essence, digi al adop ion ep esen s
he s a egic implemen a ion o ICT o op imize business ac i i ies and gene a e alue.
The s a egic implica ions o digi al adop ion a e p o ound. Cue as-Va gas e al. (2021)
highligh he link be ween ICT adop ion and ma ke ing inno a ion as a d i e o imp o ed
business pe o mance. They emphasize he need o o ganiza ions o de elop inno a i e
ad e ising s a egies ha le e age echnology o main ain a compe i i e edge. Van Zee-
b oeck e al. (2021) posi a dynamic ela ionship be ween echnology and s a egy, asse ing
ha “s a egy ollows echnology as much as echnology adop ion ollows s a egy”. While
acknowledging ha new echnology adop ion can d i e s a egic change, hey cau ion ha
o ganiza ions mus adap o hese changes, ecognizing ha mo e ex ensi e echnology
adop ion necessi a es mo e signi ican s a egic modi ica ions.
Howe e , he ela ionship be ween digi al adop ion and o ganiza ion s a egies is no
always s aigh o wa d. Oeij e al.’s (2022) s udy o logis ics companies in he Ne he lands
e ealed a ela ionship be ween employee inno a ion adop ion and compe i i e s a egy,
bu his ela ionship was no as s ong as an icipa ed. The au ho s sugges his may be due
o he lack o co ela ion be ween compe i i e s a egy and employee in ol emen . This
inding highligh s he impo ance o aligning digi al adop ion s a egies wi h employee
engagemen and empowe men o maximize hei impac . Fu he mo e, he success ul
implemen a ion o digi al adop ion s a egies equi es e ec i e esou ce o ches a ion.
San os e al. (2023), in hei s udy on en ep eneu ial esilience du ing he COVID-19
pandemic, emphasize he ole o digi al echnology in enhancing s a egic esilience.
On he o he hand, Oeij e al. (2022), in hei esea ch on 123 logis ics company
manage s in he Ne he lands, ound a ela ionship be ween employee inno a ion adop ion
and compe i ion s a egy. Oeij e al. explained ha his ela ionship could ha e been
s onge because, a he same ime, compe i ion s a egy did no co ela e wi h employee
in ol emen . In a li e a u e s udy examining he esilience o en ep eneu s du ing he
COVID-19 pandemic, San os e al. (2023) said ha digi al echnology had a ole in inc easing
he esilience o s a egies ca ied ou by en ep eneu s. Based on hese indings, we
p oposed he ollowing hypo hesis:
H3. Digi al adop ion has a posi i e e ec on business ans o ma ion s a egy.

Adm. Sci. 2024,14, 299 5 o 27
Digi al adop ion is inc easingly ecognized as a c i ical d i e o enhanced o ganiza-
ional pe o mance, pa icula ly in he apidly e ol ing banking sec o . Nume ous s udies
con i m his posi i e co ela ion, highligh ing he ans o ma i e impac o in eg a ing
digi al echnologies. Fo ins ance, esea ch on e-banking adop ion by Magboul and Abbad
(2018) and Siddik e al. (2016) e eals a s ong link be ween e-banking and imp o ed
o ganiza ional and inancial pe o mance. Simila ly, Dwi edi e al. (2021) emphasize he
signi ican ole o in ech in enhancing compe i i eness and pe o mance by enabling banks
o de elop inno a i e p oduc s and se ices ha a ac and e ain cus ome s.
The e idence consis en ly poin s o he posi i e in luence o digi al adop ion on o ga-
niza ional pe o mance. S udies by Adhi ya and Sembel (2020) and Dadoukis e al. (2021)
u he unde sco e his connec ion, emphasizing he impo ance o s a egic echnology
adop ion o d i ing inancial pe o mance and enhancing esilience, pa icula ly in imes
o dis up ion. These indings s ongly suppo he ollowing hypo hesis:
H4. Digi al adop ion has a posi i e e ec on o ganiza ional pe o mance.
2.4. Business T ans o ma ion S a egy and O ganiza ional Pe o mance
Wi h i s ocus on adap ing and e ol ing o mee changing ma ke demands, business
ans o ma ion s a egy plays a c ucial ole in d i ing o ganiza ional pe o mance. While
a uni e sally accep ed de ini ion o business ans o ma ion emains elusi e due o i s
b oad scope, esea che s like McKeown and Philip (2003) ha e iden i ied key cha ac e is ics
o success ul ans o ma ions. These include disco e ing new s a egies and p ocesses,
o ganiza ion-wide in ol emen , cul u al solid alignmen , and in eg a ion in o all man-
agemen p ocesses, encompassing pe o mance e alua ion, p oduc de elopmen , and
ope a ions. This emphasizes he comp ehensi e and mul i ace ed na u e o success ul
business ans o ma ion ini ia i es. As And a and And i
s
,
an (2022) highligh , s a egy is
no s a ic; i equi es con inuous adap a ion o o e come challenges and achie e o gani-
za ional goals. Empi ical e idence u he suppo s he posi i e impac o a well-de ined
business ans o ma ion s a egy on o ganiza ional pe o mance. Timo ius’s (2023) e-
sea ch on MSMEs in Indonesia demons a es he signi ican in luence o business s a egy
on compe i i e ad an age, pa icula ly h ough inno a ion. Simila ly, in he banking
con ex , s udies by Abu Khala and Alajani (2021) and I ascu e al. (2023) con i m he
posi i e ela ionship be ween s a egic ini ia i es, such as p oduc di e si ica ion, and
o ganiza ional pe o mance.
Beyond di ec e ec s, business ans o ma ion s a egy also plays a media ing ole
in in luencing o ganiza ional pe o mance. Da idson’s (1999) s ages o business ans o -
ma ion ( ision, cul u e, and pe o mance) sugges a sequen ial p ocess whe e s a egic
changes lead o cul u al shi s, ul ima ely d i ing pe o mance imp o emen s. This me-
dia ing ole is u he suppo ed by esea ch highligh ing he posi i e impac o speci ic
ans o ma ion s a egies, such as digi al ans o ma ion, on bank pe o mance (Wang e al.
2020). These s udies emphasize ha success ul ans o ma ion in ol es comp ehensi e
changes ac oss p oduc s, se ices, o ganiza ional s uc u e, and business p ocesses, ul i-
ma ely leading o enhanced o ganiza ional pe o mance. The e o e, a well-c a ed and
e ec i ely execu ed business ans o ma ion s a egy is a c i ical in e media y in achie ing
sus ained o ganiza ional success. The complexi y o de eloping business ans o ma ion in
companies is ele an o he applica ion o esou ce o ches a ion heo y (ROT), which has
high signi icance in s a egy and places manage s as elemen s ha play an essen ial ole in
managing company esou ces (Si mon e al. 2011). Based on hese indings, we p oposed
he ollowing hypo heses:
H5. Business ans o ma ion s a egy has a posi i e e ec on o ganiza ional pe o mance.
H6. Business ans o ma ion s a egy has a media ing ole in o ganiza ional pe o mance.
Adm. Sci. 2024,14, 299 6 o 27
2.5. Regional Go e nmen In e en ion
As highly egula ed ins i u ions, banks ope a e wi hin a complex ecosys em whe e
go e nmen in e en ion is signi ican , especially o egional de elopmen banks wi h
inhe en go e nmen owne ship s akes. This in e en ion can p o oundly in luence he
ela ionship be ween a bank’s business ans o ma ion s a egy and i s o e all pe o mance.
While some s udies sugges po en ial d awbacks, such as hinde ing inno a ion s emming
om boa d di e si y (Luo e al. 2021), e idence sugges s ha go e nmen in e en ion can
be a powe ul o ce in shaping he e ec i eness o business ans o ma ion ini ia i es. Fo
ins ance, Xu e al. (2022) ound ha while egula o y in e en ions migh ini ially hinde
p oduc i i y, coupling hem wi h inancial suppo can yield posi i e ou comes. The s udy
esul s show ha local go e nmen in e en ion is like a “ca o and s ick”; egula ion
is likened o he “s ick” while he “ca o ” is in he o m o subsidies. This highligh s
he impo ance o conside ing he mul i ace ed na u e o go e nmen ac ions and hei
s a egic applica ion in suppo ing ans o ma ion e o s. Fu he mo e, esea ch indica es
ha egional go e nmen in e en ion can os e inno a ion, a c i ical aspec o success ul
business ans o ma ion. Zhao e al. (2021) demons a ed a posi i e co ela ion be ween
egional go e nmen in e en ion and inno a ion, sugges ing ha a ge ed suppo can
c ea e an en i onmen conduci e o ans o ma i e change. Simila ly, Kousa e al. (2017)
highligh ed how go e nmen ins umen s like axes and subsidies can incen i ize g een
inno a ion adop ion, u he s eng hening he link be ween in e en ion and success ul
ans o ma ion owa ds sus ainable p ac ices.
Howe e , he con ex o RDBs p esen s unique challenges, pa icula ly gi en ha
egional go e nmen s o en hold signi ican owne ship s akes. Resea ch sugges s a neg-
a i e co ela ion be ween local go e nmen in e en ion and RDB p o i abili y (Rachim
e al. 2021). This inhe en connec ion makes go e nmen in e en ion in RDBs p ac ically
una oidable. While o e ing po en ial bene i s, his in e en ion can also c ea e p essu e
poin s ha impac he ela ionship be ween business ans o ma ion s a egy and o gani-
za ional pe o mance. As DiMaggio and Powell (1983) highligh ed, go e nmen s ac as
“p oduce s o no ms,” wielding no ma i e p essu e o in luence company ac ions. This
p essu e can mani es in a ious ways, including appoin ing go e nmen ep esen a i es
o boa ds. Un o una ely, esea ch sugges s a nega i e co ela ion be ween inc eased go -
e nmen ep esen a ion on RDB boa ds and p o i abili y. This nega i e impac unde sco es
he po en ial downsides o go e nmen in e en ion, pa icula ly when i hinde s RDBs’
abili y o ope a e wi h he au onomy needed o success ul business ans o ma ion.
Fu he mo e, Akyuwen and Mangowal (2019) and Rachim e al. (2021) highligh
he isks associa ed wi h close in e ac ions be ween RDB managemen and egional lead-
e s. While such in e ac ions can acili a e collabo a ion, hey can also c ea e a enues o
undue in luence and co up beha io , po en ially unde mining he RDB’s p o i abili y
and capaci y o success ul ans o ma ion. The e o e, unde s anding he nuanced ole o
egional go e nmen in e en ion, pa icula ly he balance be ween suppo and po en ial
in e e ence, is c ucial o RDBs seeking o implemen e ec i e business ans o ma ion
s a egies. By p omo ing anspa ency, accoun abili y, and a clea sepa a ion o in e es s,
RDBs can mi iga e he isks associa ed wi h go e nmen in e en ion while ha nessing i s
po en ial bene i s o d i e o ganiza ional pe o mance. Based on his e iew, we p oposed
he ollowing hypo hesis:
H7. Regional go e nmen in e en ion in luences he ela ionship be ween business ans o ma ion
s a egy and o ganiza ional pe o mance.
Regional go e nmen in e en ion plays a signi ican ole in shaping he ela ionship
be ween digi al adop ion and o ganiza ional pe o mance wi hin RDBs. As con olling
sha eholde s, egional go e nmen s wield conside able in luence o e RDB ope a ions and
s a egic di ec ion, including decisions ela ed o echnology adop ion. This in luence can
mani es in a ious ways, om se ing echnology- ela ed policies o p o iding inancial
Adm. Sci. 2024,14, 299 7 o 27
incen i es o digi al ans o ma ion ini ia i es. Se e al s udies ha e highligh ed he impac
o go e nmen in e en ion on echnology adop ion ac oss di e en sec o s (Alzadjali and
Elbanna 2020;Chen e al. 2021;Muhamad e al. 2023), unde lining i s po en ial o ei he
accele a e o hinde digi al p og ess. While go e nmen in e en ion may no always
di ec ly dic a e digi al adop ion wi hin RDBs, i can indi ec ly in luence o ganiza ional
pe o mance by shaping ac o s c ucial o success ul digi al ans o ma ion. Fo ins ance,
Wa y e al. (2022) ound ha go e nmen in e en ion signi ican ly impac s business agili y
and esilience, wo key elemen s ha enable o ganiza ions o adap o echnological ad-
ancemen s and le e age digi al ools e ec i ely. The e o e, by in luencing hese media ing
ac o s, egional go e nmen s indi ec ly shape he ela ionship be ween digi al adop ion
and o ganiza ional pe o mance in RDBs. Based on his e idence, we p opose he ollowing
hypo hesis:
H8. Regional go e nmen in e en ion in luences he ela ionship be ween digi al adop ion and
o ganiza ional pe o mance.
The concep ual model shown in Figu e 1was buil conside ing he hypo heses de eloped.
Adm.Sci.2024,14,xFORPEERREVIEW7o 26


Regionalgo e nmen in e en ionplaysasigni ican  oleinshaping he ela ionship
be weendigi aladop ionando ganiza ionalpe o mancewi hinRDBs.Ascon olling
sha eholde s, egionalgo e nmen swieldconside ablein luenceo e RDBope a ions
ands a egicdi ec ion,includingdecisions ela ed o echnologyadop ion.Thisin luence
canmani es in a iousways, omse ing echnology- ela edpolicies op o iding inan-
cialincen i es o digi al ans o ma ionini ia i es.Se e als udiesha ehighligh ed he
impac o go e nmen in e en ionon echnologyadop ionac ossdiffe en sec o s(Al-
zadjaliandElbanna2020;Chene al.2021;Muhamade al.2023),unde liningi spo en ial
oei he accele a eo hinde digi alp og ess.Whilego e nmen in e en ionmayno 
alwaysdi ec lydic a edigi aladop ionwi hinRDBs,i canindi ec lyin luenceo ganiza-
ionalpe o mancebyshaping ac o sc ucial o success uldigi al ans o ma ion.Fo 
ins ance,Wa ye al.(2022) ound ha go e nmen in e en ionsigni ican lyimpac sbusi-
nessagili yand esilience, wokeyelemen s ha enableo ganiza ions oadap  o echno-
logicalad ancemen sandle e agedigi al oolseffec i ely.The e o e,byin luencing
hesemedia ing ac o s, egionalgo e nmen sindi ec lyshape he ela ionshipbe ween
digi aladop ionando ganiza ionalpe o manceinRDBs.Basedon hise idence,wep o-
pose he ollowinghypo hesis:
H8.Regionalgo e nmen in e en ionin luences he ela ionshipbe weendigi aladop ionand
o ganiza ionalpe o mance.
Theconcep ualmodelshowninFigu e1wasbuil conside ing hehypo hesesde el-
oped.

Figu e1.Concep ualModel.
3.Resea chMe hodology
3.1.Pa icipan sandDa aCollec ions
Thes udypopula ioncomp ised576 esponden s omallRDB(TableA1)b anch
officesinIndonesia.UsingSlo in’s o mulawi ha5%ma gino e o , heminimum e-
qui edsamplesizewasde e mined obe236 esponden s.Thisquan i a i eda acollec-
ions a egyemployeda wo-pa ques ionnai eu ilizinga6-poin Like - ypescale(1=
s onglydisag ee;6=s onglyag ee).The i s pa cap u ed esponden s’demog aphic
p o iles,includinggende ,wo kexpe ience(yea sin heo ganiza ion),b anchofficelo-
ca ion,and ypeo business.Thesecondpa  ocusedonga he ingin o ma ion ela ed o
he esea ch a iables.
Da awe ecollec ed h oughonlinesu eys a ge ingb anchmanage swi hin he
RDBb anchoffices.Thiss udyadop s heb anchofficeasi suni o analysis, ecognizing
Figu e 1. Concep ual Model.
3. Resea ch Me hodology
3.1. Pa icipan s and Da a Collec ions
The s udy popula ion comp ised 576 esponden s om all RDB (Table A1) b anch
o ices in Indonesia. Using Slo in’s o mula wi h a 5% ma gin o e o , he minimum
equi ed sample size was de e mined o be 236 esponden s. This quan i a i e da a col-
lec ion s a egy employed a wo-pa ques ionnai e u ilizing a 6-poin Like - ype scale
(
1 = s ongly
disag ee; 6 = s ongly ag ee). The i s pa cap u ed esponden s’ demo-
g aphic p o iles, including gende , wo k expe ience (yea s in he o ganiza ion), b anch
o ice loca ion, and ype o business. The second pa ocused on ga he ing in o ma ion
ela ed o he esea ch a iables.
Da a we e collec ed h ough online su eys a ge ing b anch manage s wi hin he
RDB b anch o ices. This s udy adop s he b anch o ice as i s uni o analysis, ecognizing
i s signi icance as a p o i cen e and a key implemen e o o ganiza ional s a egy wi hin
he banking indus y. Consequen ly, b anch manage s se e as he obse a ion uni ,
e lec ing hei pi o al ole in ansla ing co po a e g and s a egy in o ac ionable b anch-
le el s a egies. This selec ion aligns wi h es ablished p ac ices in banking esea ch. Fo
ins ance, Kamaludin and Nashsyah (2020) ocused on b anch-le el manage s in hei s udy
on egional bank compe i i eness, while A shan e al. (2022) esea ched leade ship wi hin
a leading Pakis ani bank a he b anch o ice le el. Simila ly, Al-Sha i and Lokhande (2023)
Adm. Sci. 2024,14, 299 8 o 27
u ilized b anch-le el managemen as a da a sou ce o examine he ela ionship be ween
in ech adop ion and bank pe o mance in Yemen. By ga he ing p ima y da a di ec ly om
b anch manage s, his s udy ensu es da a au hen ici y and ele ance o he chosen uni
o analysis.
3.2. Da a Analysis
Da a we e analyzed using s uc u al equa ion modeling wi h pa ial leas squa es
es ima ion, employing Sma PLS so wa e e sion 4.0.9.6. PLS-SEM is a mul i a ia e da a
analysis echnique pa icula ly well-sui ed o examining complex models wi h la en con-
s uc s, such as he one p oposed in his s udy (Hai e al. 2019). PLS-SEM is ad an ageous
due o i s abili y o handle o ma i e measu emen models and p o ide obus es ima ions
e en wi h non-no mal da a dis ibu ions. This esea ch aimed o explo e he ela ionships
and in luences among a iables h ough simul aneous analysis, es ing he hypo heses
s a is ically o de e mine da a consis ency (By ne 2009). A wo-s age app oach, as desc ibed
by Van Riel e al. (2017), was employed o examine he hypo hesized ela ionships wi hin
his complex model. This app oach is p e e ed o analyzing second-o de cons uc s
wi hin PLS-SEM, o e ing ad an ages in handling po en ial mul icollinea i y and a oiding
“double coun ing” o indica o a iance.
The i s wo-s age app oach ocuses on ob aining la en a iable sco es o he i s -
o de cons uc s, excluding he second-o de cons uc s om his ini ial analysis. Indica o
loadings a e assessed o signi icance and ele ance, while composi e eliabili y alues
o each i s -o de cons uc a e calcula ed and compa ed o ecommended h esholds.
Con e gen and disc iminan alidi y a e e alua ed using app op ia e me hods such as
AVE and he Fo nell–La cke c i e ion. In he second s age, models inco po a ing he
second-o de cons uc s a e es ima ed, u ilizing he i s -o de cons uc sco es om he
p e ious s age as mani es a iables. Pa h coe icien s a e assessed o signi icance and ele-
ance, and R-squa e alues o he endogenous cons uc s a e calcula ed o de e mine he
model’s explana o y powe . P edic i e ele ance is also e alua ed using he blind olding
echnique, which assesses a cons uc model’s p edic i e ele ance le el.
3.3. Measu emen o Va iables
This esea ch employs a comp ehensi e model encompassing six a iables, ope a-
ionalized h ough 19 dimensions and 57 indica o s (Table A2). The selec ion o dimensions
and indica o s o each a iable is g ounded in es ablished li e a u e, ensu ing a obus
measu emen amewo k. Talen de elopmen dimensions and indica o s a e d awn om
he esea ch o Nu adilah e al. (2022) and Panda and Sahoo (2015), building upon he
ounda ional wo k o Abiwu and Ma ins (2022), Nu adilah e al. (2022), and Dalal and
Akde e (2018). T ans o ma ional leade ship is measu ed using dimensions and indica o s
adap ed om Siswan o and Yuliana (2022) and Bass e al. (2003), complemen ing he
de ini ions p o ided by Radi A sou an e al. (2022) and G eimel e al. (2023).
Digi al adop ion is measu ed using h ee dimensions p e iously s udied by Cue as-
Va gas e al. (2021), aligning wi h he concep ualiza ions o Wa y e al. (2022), Lashi ew
(2023), and Finkels ein Shapi o and Mandelman (2021). Business ans o ma ion s a egy
dimensions and indica o s a e adop ed om he “business s a egy” a iable used by
Wongsansukcha oen e al. (2015) and he “ ans o ma ion s a egy” a iable employed by
Wang e al. (2020), e lec ing he de ini ions o “s a egy” by And a and And i
s
,
an (2022)
and “ ans o ma ion s a egy” by Kalisman (2019). Regional go e nmen in e en ion
elies on he wo k o Zhao e al. (2021), Xiao and Ma (2014), and Luo e al. (2021) o in o m
i s measu emen .
Finally, o ganiza ional pe o mance in he banking sec o is measu ed using a balanced
sco eca d app oach, wi h indica o s de i ed om Al-Sha i and Lokhande’s (2023) s udy,
aligning wi h he amewo k es ablished by Haje and Anis (2018) and Kaplan and No on
(1992). This me iculous app oach o a iable measu emen enhances he alidi y, eliabili y,
and eplicabili y o he esea ch indings.
Adm. Sci. 2024,14, 299 15 o 27
Table 5. Con .
Va iables Dimensions Loading Fac o AVE
O ganiza ional
Pe o mance (OP)
Financial Pe spec i e (FP)
0.851
0.540
Cus ome Pe spec i e
(CP) 0.876
Business P ocess
Pe spec i e (BPP) 0.745
Lea ning & G ow h
Pe spec i e (LGP) 0.340
Table 6. Loading Fac o and A e age Va iance Ex ac ed (AVE) Second S age.
Va iables Dimensions Loading Fac o AVE
Talen De elopmen (TD)
T aining and
De elopmen (TAD) 0.786
0.695
Ca ee De elopmen
(CD) 0.826
C ea i i y (CRV) 0.887
T ans o ma ional
Leade ship (TL)
Inspi a ional Mo i a ion
(IM) 0.936
0.879
In ellec ual S imula ion
(IS) 0.956
Indi idualized
Conside a ion (IC) 0.920
Digi al Adop ion (DA)
In as uc u e (IFT) 0.902
0.843
S a egy Alignmen (SA) 0.939
Indi idual Lea ning (IL) 0.914
Business T ans o ma ion
S a egy (BTS)
S a egy Selec ion (SS) 0.891
0.819
Changes in Value
C ea ion (CVC) 0.913
S uc u al Changes (SC) 0.910
Regional Go e nmen
In e en ion (RGI)
Financial In e en ion
(FI) 0.928
0.711
Regula ion In e en ion
(RI) 0.748
O ganiza ional
Pe o mance (OP)
Financial Pe spec i e (FP)
0.862
0.684
Cus ome Pe spec i e
(CP) 0.885
Business P ocess
Pe spec i e (BPP) 0.724
5. Disc iminan Validi y Tes (Second S age)
The second s age o he disc iminan alidi y assessmen , using he Fo nell–La cke
c i e ion, yielded posi i e esul s. As illus a ed in Table 7, he squa e oo o he AVE o
each a iable consis en ly exceeded i s co ela ions wi h all o he cons uc s in he model.
This ou come con i ms he disc iminan alidi y o he measu emen model, indica ing ha
each cons uc is dis inc and cap u es a unique aspec o he phenomenon being s udied.

Adm. Sci. 2024,14, 299 16 o 27
Table 7. Resul o Fo nell–La cke C i e ion Disc iminan Validi y Tes (Second S age).
BTS DA OP RGI TD TL
BTS 0.905
DA 0.751 0.918
OP 0.634 0.635 0.827
RGI 0.430 0.375 0.450 0.843
TD 0.667 0.729 0.543 0.348 0.834
TL 0.608 0.557 0.524 0.388 0.589 0.938
6. Reliabili y Tes (Second S age)
The eliabili y o he measu emen model was again con i med in he second s age.
Table 8 e eals ha bo h C onbach’s alpha and composi e eliabili y alues o all a iables
exceeded he ecommended h eshold o 0.70. This inding, pa icula ly he consis en ly
high composi e eliabili y alues, s ongly indica es ha all a iables demons a e sa is ac-
o y in e nal consis ency and eliabili y.
Table 8. Resul o Reliabili y Tes .
Va iables Composi e Reliabili y ( ho_c)
Talen De elopmen (TD) 0.872
T ans o ma ional Leade ship (TL) 0.956
Digi al Adop ion (DA) 0.942
Business T ans o ma ion S a egy (BTS) 0.931
Regional Go e nmen In e en ion (RGI) 0.829
O ganiza ional Pe o mance (OP) 0.866
3.4.4. S uc u al Model E alua ion Resul s (Inne Model)
1. Pa h Coe icien
The s uc u al model e alua ion commenced wi h assessing he signi icance o e-
la ionships be ween cons uc s, as indica ed by pa h coe icien s. Following Ha yono’s
(2016) guidelines, he ocus was on he di ec ion and signi icance o hese pa h coe icien s.
A signi ican pa h coe icien , whe e he -s a is ic exceeds 1.96 (p- alue < 0.05), signi ies
a s a is ically signi ican ela ionship be ween he independen and dependen a iables.
Con e sely, a non-signi ican pa h coe icien ( -s a is ic < 1.96, p- alue > 0.05) sugges s ha
he da a do no suppo he hypo hesized ela ionship.
Table 9p o ides aluable in o ma ion abou he ela ionships be ween di e en ac o s
in he s udy. The able shows he s eng h and signi icance o hese ela ionships. The
esul s suppo he ini ial hypo heses (H1 o H5) ha Talen De elopmen , T ans o ma-
ional Leade ship, and Digi al Adop ion ha e a posi i e e ec on Business T ans o ma ion
S a egy, which, in u n, posi i ely in luences O ganiza ional Pe o mance.
Fu he da a analysis e eals ha Business T ans o ma ion S a egy plays a c ucial me-
dia ing ole. This means ha he posi i e e ec s o Talen De elopmen , T ans o ma ional
Leade ship, and Digi al Adop ion on O ganiza ional Pe o mance a e channeled h ough
he implemen a ion o e ec i e Business T ans o ma ion S a egy (H6).
Howe e , he s udy did no suppo he mode a ing ole o Regional Go e nmen
In e en ion (H7 and H8). This sugges s ha he in luence o Talen De elopmen , T ans o -
ma ional Leade ship, and Digi al Adop ion on O ganiza ional Pe o mance, as media ed
by Business T ans o ma ion S a egy, emains consis en ega dless o he le el o Regional
Go e nmen In e en ion.
Adm. Sci. 2024,14, 299 17 o 27
Table 9. Resul o Pa h Coe icien .
Coe icien -S a is ics p-Values Resul
TD -> BTS 0.166 2.116 0.017 H1 Accep ed
TL -> BTS 0.231 3.497 0.000 H2 Accep ed
DA -> BTS 0.501 6.252 0.000 H3 Accep ed
DA -> OP 0.341 4.344 0.000 H4 Accep ed
BTS -> OP 0.275 3.114 0.001 H5 Accep ed
TD -> BTS -> OP 0.046 1.771 0.038
H6 Accep ed
TL -> BTS -> OP 0.064 2.024 0.021
DA -> BTS -> OP
0.138 2.658 0.004
RGI x BTS -> OP 0.083 1.077 0.141 H7 Rejec ed
RGI x DA -> OP 0.031 0.434 0.332 H8 Rejec ed
2. R-squa e Tes
The R-squa e alue measu es he le el o a ia ion in changes in he independen a i-
able compa ed o he dependen a iable. The R-squa e esul s (Table 10) o endogenous
la en a iables in he s uc u al model a e 0.67 (s ong), 0.33 (mode a e), and 0.19 (weak)
(Ha yono 2016).
Table 10. Resul o R-squa e Tes .
R-Squa e R-Squa e Adjus ed
Business T ans o ma ion S a egy (BTS)
0.628 0.623
O ganiza ional Pe o mance (OP) 0.502 0.492
The R-squa e alue ep esen s he p opo ion o a iance in he dependen a iable
explained by he independen a iables. The model demons a ed mode a e explana o y
powe , wi h an adjus ed R-squa e alue o 0.623 o Business T ans o ma ion S a egy
and 0.492 o O ganiza ional Pe o mance. This indica es ha he independen a iables
explain 62.3% o he a iance in Business T ans o ma ion S a egy, and he combined
e ec s o Digi al Adop ion, Business T ans o ma ion S a egy, and Regional Go e nmen
In e en ion explain 49.2% o he a iance in O ganiza ional Pe o mance. While he model
does no accoun o all he a iance in he dependen a iables, he mode a e R-squa e
alues sugges ha he chosen independen a iables a e meaning ul p edic o s o Business
T ans o ma ion S a egy and O ganiza ional Pe o mance wi hin he s udied con ex .
3. F-squa e Tes
The s udy u ilized F-squa e alues o de e mine he e ec size o each p edic o
a iable on he dependen a iables. F-squa e alues indica e he magni ude o a p edic o ’s
in luence, ca ego ized as weak (0.02), mode a e (0.15), o la ge (0.35) (Ha yono 2016). The
analysis (Table 11) e ealed ha Digi al Adop ion had a mode a e in luence on Business
T ans o ma ion S a egy (F-squa e = 0.300). All o he es ed ela ionships demons a ed
weak in luence, wi h F-squa e alues below 0.15. Speci ically, Talen De elopmen (F-
squa e = 0.031) and T ans o ma ional Leade ship (F-squa e = 0.089) had weak e ec s
on Business T ans o ma ion S a egy. Simila ly, Digi al Adop ion (F-squa e = 0.094) and
Business T ans o ma ion S a egy (F-squa e = 0.057) had weak in luences on O ganiza ional
Pe o mance. Fu he mo e, he in e ac ion e ec s o Regional Go e nmen In e en ion
wi h bo h Business T ans o ma ion S a egy (F-squa e = 0.009) and Digi al Adop ion (F-
squa e = 0.002) on O ganiza ional Pe o mance we e also weak.
Adm. Sci. 2024,14, 299 18 o 27
Table 11. Resul o F-squa e Tes .
Business T ans o ma ion
S a egy (BTS)
O ganiza ional
Pe o mance (OP)
Talen De elopmen (TD) 0.031
T ans o ma ional Leade ship (TL)
0.089
Digi al Adop ion (DA) 0.300 0.094
Business T ans o ma ion S a egy
(BTS) 0.057
RGI x BTS 0.009
RGI x DA 0.002
4. Goodness o Fi Model
Goodness o i (GOF) alida es he o e all s uc u al model. The GOF index is a single
measu e o alida e he combined pe o mance be ween he measu emen model and he
s uc u al model, whe he he GOF is low (0.1), mode a e (0.25), o high (0.36) (Ha yono
2016). The o mula o calcula ing he GOF index is as ollows:
GOF alue = √(a e age AVE ×a e age R-squa e) (1)
GOF =√0.772 ×0.565 (2)
GOF =0.660
Based on he calcula ion esul s (Table 12), he GOF alue is 0.660, indica ing ha
he combined pe o mance o he ou e and inne models in his s udy alls in o he high
GOF ca ego y.
Table 12. Resul o Goodness o Fi (GOF).
Va iables AVE R-Squa e
Talen De elopmen (TD) 0.695
T ans o ma ional Leade ship (TL) 0.879
Digi al Adop ion (DA) 0.843
Regional Go e nmen In e en ion (RGI)
0.711
Business T ans o ma ion S a egy (BTS) 0.819 0.628
O ganiza ional Pe o mance (OP) 0.684 0.502
A e age 0.772 0.565
5. P edic ion Rele ance Tes
The s udy employed he Q2 p edic i e ele ance es o assess he model’s p edic i e
alidi y. A Q2 alue g ea e han 0 indica es ha he exogenous la en a iables (p edic o s)
e ec i ely p edic he endogenous la en a iables (ou comes). The analysis yielded Q2 al-
ues o 0.505 o Business T ans o ma ion S a egy and 0.322 o O ganiza ional Pe o mance,
bo h exceeding he 0 h eshold. Resul s as shown in Table 13 sugges ha he chosen p e-
dic o a iables demons a e good p edic i e alidi y o Business T ans o ma ion S a egy
and O ganiza ional Pe o mance.
Adm. Sci. 2024,14, 299 19 o 27
Table 13. Resul o P edic ion Rele ance Tes .
SSO SSE Q2(=1 −SSE/SSO)
Business T ans o ma ion S a egy (BTS) 765,000 378,798 0.505
O ganiza ional Pe o mance (OP) 765,000 518,403 0.322
Speci ically, Talen De elopmen , T ans o ma ional Leade ship, and Digi al Adop ion
a e sui able p edic o s o Business T ans o ma ion S a egy. Simila ly, Digi al Adop ion,
Business T ans o ma ion S a egy, and hei in e ac ion wi h Regional Go e nmen In-
e en ion e ec i ely p edic O ganiza ional Pe o mance. Ano he es in s uc u al
measu emen is Q
2
p edic i e ele ance, which unc ions o alida e he model. The esul s
o Q
2
p edic i e ele ance a e said o be good i he alue is >0, which indica es ha he
exogenous la en a iable is good (app op ia e) as an explana o y a iable ha can p edic
i s endogenous a iable (Ha yono 2016).
4. Discussion
This s udy e eals se e al key indings ega ding he ac o s in luencing business
ans o ma ion s a egy and o ganiza ional pe o mance in egional de elopmen banks.
Fi s , we ound ha Talen De elopmen signi ican ly in luences Business T ans o ma ion
S a egy ( = 2.116, p= 0.017). This esul is in line wi h he esea ch o Nu adilah e al.
(2022) ega ding he e ec o alen de elopmen on s a egy. O he esul s om his
esea ch con i m he hypo hesis ha T ans o ma ional Leade ship has a posi i e impac
on Business T ans o ma ion S a egy ( = 3.497, p= 0.000). I aligns wi h he basic concep
o ans o ma ional leade ship (McKeown and Philip 2003;Radi A sou an e al. 2022) and
o i ies he indings o Wijaya Kusuma and Sudha io (2020). These esul s show ha
leade ship plays a mo e signi ican ole in he local banking scale han employees.
This s udy exhibi ed ha Digi al Adop ion posi i ely in luenced O ganiza ional Pe -
o mance ( = 4.344, p= 0.000). Digi al Adop ion also in luences Business T ans o ma ion
S a egy posi i ely ( = 6.252, p= 0.000). This inding aligns wi h he s udy o Alisjahbana
e al. (2020), which sugges s ha digi al adop ion should eplace he ole o wo ke s in
business and non-business wo k uni s. Likewise, he s udies by Cue as-Va gas e al. (2021),
Van Zeeb oeck e al. (2021), and Oeij e al. (2022) on new echnology a e ela ed o s a egy
o mula ion and e en encou age s a egy changes. This esea ch shows ha using ech-
nology as an o ganiza ional esou ce is mo e c ucial han o he esou ces in he banking
indus y on a local scale.
Mo eo e , his esea ch e ealed ha Business T ans o ma ion S a egy posi i ely
in luenced O ganiza ional Pe o mance ( = 3.114, p= 0.001). This inding shows he
impo ance o p epa ing a ans o ma ion s a egy in an inc easingly uns able business
en i onmen (Machani e al. 2015). In his way, RDBs need o ans o m hei business o
su i e and compe e wi h compe i o s (Nu adilah e al. 2022). Fu he mo e, Business
T ans o ma ion S a egy has p o en o media e O ganiza ional Pe o mance signi ican ly.
Addi ionally, i has been p o en ha Regional Go e nmen In e en ion did no
signi ican ly ha e a mode a ion e ec on he ela ionship be ween Business T ans o ma ion
S a egy and O ganiza ional Pe o mance ( = 1.077, p= 0.141) o on he ela ionship
be ween Digi al Adop ion and O ganiza ional Pe o mance ( = 0.434, p= 0.332). In
p e ious s udies, go e nmen in e en ion p o ides a mode a ing e ec (Kousa e al.
2017). Howe e , when applied o egional banking, he e ec o egional go e nmen
in e en ion does no ha e a signi ican impac .
This s udy holds signi ican po en ial o ad ance esou ce o ches a ion heo y by
examining digi al ans o ma ion in he con ex o Indonesian egional de elopmen banks.
I can p o ide empi ical suppo o ROT’s ele ance in digi al ans o ma ion by explo ing
how e ec i ely o ches a ing digi al esou ces enables s a egic enewal. By examining
esou ce o ches a ion needs and app oaches ac oss di e en s ages o ans o ma ion,
d awing on Da idson’s (1999) amewo k ( ision, cul u e, pe o mance), he s udy can
Adm. Sci. 2024,14, 299 20 o 27
o e a nuanced unde s anding o how o ches a ion e ol es. Finally, by empi ically es ing
he media ing ole o business ans o ma ion s a egy in linking esou ce o ches a ion o
o ganiza ional pe o mance, he s udy can u he s eng hen ROT’s co e p inciples.
Con a y o expec a ions de i ed om ins i u ional heo y, his s udy ound ha e-
gional go e nmen in e en ion did no di ec ly mode a e he ela ionship be ween key
d i e s (business ans o ma ion s a egy, digi al adop ion) and o ganiza ional pe o mance
in Indonesian egional de elopmen banks. While p e ious esea ch o en posi ions go -
e nmen in e en ion as a signi ican mode a ing o ce shaping o ganiza ional esponses
o ins i u ional p essu es (e.g., Kousa e al. 2017), ou indings e eal a mo e nuanced
dynamic wi hin he Indonesian RDB con ex . This sugges s ha he in luence o go e n-
men in e en ion on RDB pe o mance ope a es h ough al e na i e pa hways, po en ially
s emming om he unique cha ac e is ics o hese ins i u ions. Thei de elopmen al man-
da es, egional esou ce dependencies, and close ela ionships wi h local au ho i ies likely
con ibu e o a dis inc ins i u ional logic ha wa an s u he explo a ion.
While his esea ch p o ides aluable insigh s in o he ac o s d i ing Business T ans-
o ma ion S a egy ( = 0.623) and O ganiza ional Pe o mance ( = 0.492) in Indonesian
egional de elopmen banks, i is essen ial o acknowledge ce ain limi a ions. The esul s
o his s udy show ha Talen De elopmen , T ans o ma ional Leade ship, and Digi al
Adop ion can explain Business T ans o ma ion S a egy as a a iable. The e o e, u u e
esea ch can es o he ac o s (37.7%) as an eceden s o Business T ans o ma ion S a egy.
Meanwhile, he combined e ec o Digi al Adop ion, Business T ans o ma ion S a egy,
and Local Go e nmen In e en ion explains 49.2% o he a iance in O ganiza ional Pe -
o mance. So, he e is space o u he esea ch on he a iables (50.8%) expec ed o a ec
O ganiza ional Pe o mance.
In coun ies such as Japan and China, egional banks’ business s a egies a e no longe
ocused on business ans o ma ion bu on imp o ing pe o mance h ough e iciency
(Ha imaya and Kondo 2016;Zhao e al. 2019). Meanwhile, in Ge many, egional banks
ha e shown be e esilience du ing he inancial c isis compa ed o la ge banks (Flögel
and Gä ne 2020). Fu he in es iga ion o compa e hese ac o s o he pe o mances
o neighbo ing coun ies can add ess new insigh in o RDBs’ pe o mance and business
ans o ma ion. The s udy’s geog aphical ocus on Indonesia and he speci ic sample o
b anch manage s migh es ic he gene alizabili y o indings o o he con ex s. Mo eo e ,
he eliance on a single da a sou ce and c oss-sec ional design limi s b oade compa isons
and long- e m insigh s. Fu u e esea ch could add ess hese limi a ions by expanding
he geog aphical scope and banking scale, inco po a ing mul iple da a sou ces and pe -
spec i es, and employing longi udinal designs o ack he e ol ing dynamics o business
ans o ma ion in he banking sec o .
Al hough ocused on Indonesian egional de elopmen banks, his esea ch o e s
aluable akeaways o manage s ac oss indus ies. P io i izing digi al ans o ma ion
and employee upskilling, cul i a ing ans o ma ional leade ship, os e ing a cul u e o
con inuous lea ning and knowledge sha ing, aligning business s a egies wi h go e nmen
policies, and adop ing a people-cen ic app oach o change managemen a e c ucial o
na iga ing success ul ans o ma ions in oday’s apidly e ol ing business landscape.
Fu u e s udies could in es iga e addi ional ac o s in luencing business ans o ma ion
s a egy and o ganiza ional pe o mance wi hin he digi al economy, such as da a-d i en
decision making, a i icial in elligence, and inancial echnology pa ne ships.
The indings unde sco e he impo ance o ailo ed go e nmen policies ha suppo
RDBs in hei digi al and o ganiza ional ans o ma ion e o s wi hou imposing es ic i e
con ols. Fo RDB managemen and o ganiza ional leade s, his s udy sugges s a s a e-
gic ocus on cul i a ing ans o ma ional leade ship, os e ing alen de elopmen , and
accele a ing digi al adop ion. Addi ionally, aligning business ans o ma ion e o s wi h
local go e nmen ini ia i es and policies can help RDBs achie e mo e e ec i e ou comes.
Finally, banking au ho i ies can signi ican ly con ibu e o a h i ing banking sec o by

Adm. Sci. 2024,14, 299 21 o 27
p o iding guidance on ans o ma ion s a egies, acili a ing collabo a ion and knowledge
sha ing, and os e ing a suppo i e egula o y en i onmen o digi al adop ion.
5. Conclusions
This s udy examined he ac o s in luencing business ans o ma ion s a egy and
o ganiza ional pe o mance in Indonesian egional de elopmen banks, ecognizing hei
c ucial ole in he na ion’s inancial landscape, as e idenced by hei signi ican asse sha e
and consis en g ow h wi hin he banking sec o . While egional de elopmen banks a e
i al o egional economic ad ancemen , hey ace moun ing p essu es o adap o ech-
nological ad ancemen s, e ol ing ma ke dynamics, and heigh ened compe i ion. This
s udy con i med he c i ical ole o alen de elopmen , ans o ma ional leade ship, and
digi al adop ion as d i e s o success ul business ans o ma ion s a egies and enhanced
o ganiza ional pe o mance in egional de elopmen banks. Impo an ly, ou esea ch
e ealed a unique inding: as en i ies wi h majo i y owne ship by egional go e nmen s
and subjec o go e nmen in e en ion, egional go e nmen in e en ion con o e sially
did no mode a e he ela ionship be ween business ans o ma ion s a egy and digi al
adop ion wi h o ganiza ional pe o mance in Indonesian RDBs. No ably, egional go -
e nmen in e en ion did no di ec ly mode a e he ela ionship be ween key d i e s and
o ganiza ional pe o mance, sugges ing a mo e nuanced in luence on Indonesian RDBs
ha wa an s u he in es iga ion.
Fu u e esea ch could expand on his s udy by compa ing he ac o s in luencing
business ans o ma ion and pe o mance in egional banks ac oss neighbo ing coun ies,
enhancing gene alizabili y and o e ing egional insigh s. Addi ionally, explo ing ac o s
wi hin he digi al economy could deepen unde s anding o digi al ans o ma ion’s impac
on o ganiza ional pe o mance. This s udy ad ances esou ce o ches a ion heo y by
demons a ing he ole o digi al esou ce o ches a ion in s a egic enewal. I challenges
ins i u ional heo y by e ealing nuanced e ec s o go e nmen in e en ion on pe o -
mance, sugges ing ha unique ins i u ional cha ac e is ics shape o ganiza ional ou comes
di e en ly han expec ed. This s udy highligh s he impo ance o RDBs p io i izing digi al
ans o ma ion, alen de elopmen , and ans o ma ional leade ship o enhance o ganiza-
ional pe o mance. Finally, suppo i e go e nmen policies and collabo a i e e o s wi h
banking au ho i ies a e essen ial o os e ing a conduci e en i onmen ha enables RDBs
o na iga e success ul ans o ma ions.
Au ho Con ibu ions: Concep ualiza ion, A.T. and M.H.; me hodology, A.T., M.H., D.L.W. and
P.H.; so wa e, A.T.; alida ion, M.H., D.L.W. and P.H.; o mal analysis, A.T.; w i ing—o iginal d a
p epa a ion, A.T.; w i ing— e iew and edi ing, M.H. and A.T.; isualiza ion, A.T.; supe ision, M.H.,
D.L.W. and P.H.; p ojec adminis a ion, A.T. All au ho s ha e ead and ag eed o he published
e sion o he manusc ip .
Funding: This esea ch ecei ed no ex e nal unding.
Ins i u ional Re iew Boa d S a emen : Doc o o Resea ch in Managemen (DRM) P og am BINUS
Business School 098/HoP.DRM/IX/2024.
In o med Consen S a emen : No applicable.
Da a A ailabili y S a emen : Da a a e con ained wi hin he a icle.
Con lic s o In e es : The au ho s decla e no con lic s o in e es .
Appendix A
Table A1. Lis o Regional De elopmen Banks.
No. RDB
1 Bank Sulu go
Adm. Sci. 2024,14, 299 22 o 27
Table A1. Con .
No. RDB
2 Bank Aceh
3 Bank Sumu
4 Bank Riau Kep i
5 Bank Naga i
6 Bank Jambi
7 Bank Bengkulu
8 Bank Sumsel Babel
9 Bank Lampung
10 Bank BJB
11 Bank Ban en
12 Bank DKI
13 Bank Ja eng
14 Bank RDB DIY
15 Bank Ja im
16 Bank Kalba
17 Bank Kalsel
18 Bankal im a a
19 Bank Kal eng
20 Bank RDB Bali
21 Bank NTB Sya iah
22 Bank NTT
23 Bank Sulselba
24 Bank Sul eng
25 Bank Sul a
26 Bank Maluku Malu
27 Bank Papua
Appendix B
Table A2. Va iables, Dimensions, and Indica o s.
Va iables Dimensions Indica o s
Talen De elopmen
T aining and De elopmen
The company’s aining and de elopmen p og ams designed
o de elop skills ha bene i in comple ing my wo ks
e ec i ely in he long- e m
The company’s aining and de elopmen p og ams has
sha pened my cha ac e s o be mo e e hical, hones , and
mo i a ed
In o ma ion and Technology (IT) aining p og am has helped
me in le e aging he use o digi al echnology
Ca ee De elopmen
The company has a ca ee de elopmen plan o p epa e he
company o he u u e.
The company has succession planning o each posi ion.
Employee p omo ions a he company p io i ize achie emen
and hen senio i y.
Adm. Sci. 2024,14, 299 23 o 27
Table A2. Con .
Va iables Dimensions Indica o s
Talen De elopmen C ea i i y
The company encou aged hei employee o ake ini ia i e
The company open o new ideas
The company has lexibili y in p ocedu es
T ans o ma ional Leade ship
Inspi a ional Mo i a ion
My leade encou ages me o see a p oblem as a lea ning
oppo uni y
My leade acknowledges my achie emen
My leade is a us ed pe son
In ellec ual S imula ion
My leade app ecia es e e y new idea o sol e he p oblem
ha an o ganiza ion aces
My leade p o ides easons o change my pe spec i es
My leade gi es me wha I wan in e u n o my suppo o
him
Indi idualized Conside a ion
My leade wholehea edly suppo s me when he/she eels ha
my idea is good o he company
My leade knows wha I wan and helps me ge i
My leade complimen s me i I pe o m well
Digi al Adop ion
In as uc u e
The company de elops and main ains hei echnology
ha dwa e & so wa e
The company p o ides s a o manage hei in o ma ion
echnology
The company implemen s new echnology applica ions
S a egy Alignmen
The company aligns IT s a egy wi h business s a egy
The company upda ing IT applica ions o business s a egic
goals
The company deploying IT s a egies o business p ocesses
Indi idual Lea ning
The company p o ides IT- ela ed aining
The company adap s employees o use IT applica ions
The company de elops employees’ IT knowledge and skills
Business T ans o ma ion S a egy
S a egy Selec ion
The company implemen s a cos -e iciency s a egy
The company de elops new p oduc
The company implemen s cos -e iciency and p oduc
de elopmen simul aneously
Changes in Value C ea ion
The company de elops a mo e digi al p oduc display o
cus ome s
The company p epa es ways o c ea e e enue om u u e
business ope a ions
The company p epa es hei u u e business scope
S uc u al Changes
The company p o ides pe sons in cha ge o hei digi al
ans o ma ion endea o
The company has a plan o in eg a e new ope a ions in o
exis ing s uc u es o c ea e sepa a e en i ies
The company de elops new compe encies
Regional Go e nmen In e en ion
Financial In e en ion
The egional go e nmen has an in luence on in es men
decisions in my company
The egional go e nmen has an in luence on inancing
decisions in my company.
The egional go e nmen eally suppo s my company’s
capi al.
Regula ion In e en ion
Regional go e nmen policies ha e an in luence on my
company’s business.
Regional go e nmen policies ha e an in luence on my
company’s ope a ions.
Regional go e nmen policies ha e an in luence on cus ome
se ices a my company.
Adm. Sci. 2024,14, 299 24 o 27
Table A2. Con .
Va iables Dimensions Indica o s
Regional Go e nmen In e en ion Pe sonnel In e en ion
The egional go e nmen has an in luence on he selec ion o
managemen in my company.
The egional go e nmen has an in luence on he selec ion o
o icials in my company.
The egional go e nmen has an in luence on he placemen o
employees in my company.
O ganiza ional Pe o mance
Financial Pe spec i e
Company ans o ma ion has inc eased ma ke sha e.
Company ans o ma ion has inc eased e iciency.
Company ans o ma ion has inc eased p o i abili y.
Cus ome Pe spec i e
The quali y o cus ome se ices imp o e
The e is a dec ease in cus ome complain s
The e is an inc ease in cus ome loyal y
Business P ocess Pe spec i e
The company educes he ime o comple e he wo k
Pape use is educed as company swi ch o digi al echnology
The le el o quali y o se ices p ocess inc eases
Lea ning & G ow h Pe spec i e
The quali y o aining o employees inc eases
The skills o employees inc ease
The company imp o es c ea i i y o employees
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