Good University Income Generating Governance in Indonesia: Agency Theory Perspective

Abstract

The objective of this study aims to comprehend and portray the management opinions of the three Public Service Board (PSB) universities in Indonesia dealing with the good university income generating governance. Furthermore, this study applies epistemological subjectivism, interpretivism paradigm with multi-site design. The findings were analyzed using agency theory perspective. Therefore, the finding results show that the principles of good university income generating governance is law-abiding, academic oriented, accountable, professional, independent and transparent. The emergence of the principle of law-abiding indicate hierarchical relations agency that is purely between the government and the universities in income generation. The principle of academic orientation, accountability, independence and autonomy suggests that the goal synergy of both principal and the agent are the essence of agency relationship. Meanwhile, the professionalism demonstrated that the agent fully realizes which the principal requires certain tasks to be implemented by the agents because agents have the skills required. Yet, independence gained through wide autonomy both on academic as well as non-academic matters. The principle of transparency demonstrates the importance of the information factor in agency relationship. Agent transparency is necessary for the principal due to the difficulty in obtaining information dealing with the headway of the agent itself.

Conceptual Framework of Good Governance, Organizational Cul Ture, and Performance at Higher Education in Indonesia

“…The position of the assignee (agent) can be assumed as the structural leaders and academicians of a university. Some research on good governance in universities based on agency theory has been done by researchers [9,10].…”

“…The results show that there is no direct effect of the provision of new incentives on the academic teaching performance of the professor. A group researchers reported that the problem which is very important for universities is their highly dependence on the income sources derived from students [10]. It becomes a significant issue on the implementation of independent principles.…”

“…Research in Indonesia related to the variable of university governance principle has been done by several researchers. A study aims to explain the role of state university as an institution which a source of income for the government [10]. As the institution of the public service agency, the results of this study indicate the application of good governance principles in generating revenue there are still problems such as non-optimal legal compliance by the university as the implementation of law-abiding principles, the implementation of a one-door system in financial management as a form of problem in applying the principles of accountability and transparency.…”

Effect of Financial Control Mechanisms on Performance of Income Generating Units in Selected Public Universities in Kenya

“…These challenges in funding occur due to the rising costs in the university education as compared to the relatively low revenues. Income Generating Units are thus internationally practices in sourcing additional funds into the universities (Siswanto, 2013). The IGUs not only aim to bridge the capital insufficiency in the institutes of higher learning, but also improve the quality of education as well.…”

“…The financial obligation of the government is to be expanded to cover both private and public learning institutions in the way of capital expansion and supporting them in terms of budgeting. Additionally, such privileges as government scholarships, loans and bursaries shall also be made available to the private sectors (Siswanto, 2013). As in the cases with the Kenyan public universities, for the four or five years that a student will be in the university, under government regular program, they are assured that they will receive tuition funding from the government (Oketch, 2003).…”