Parameters of Knowledge Management and Internal Corporate Governance as Determinants of Cooperative Sustainability

Abstract

Currently, a lot of cooperatives' business have been declared as failed financial institution and threatened to be withdrawn by the government. Previous studies indicated that the main causes of failure of cooperatives' business are due to limited knowledge of cooperative's members and ineffective internal governance demonstrated by the less optimal role of supervisors to direct and control the manager's activities. The research gap also indicated that studies discussing indicators of knowledge management and internal governance in line with characteristics of cooperative business are still inadequate. Several relevant previous studies employed the indicators referring to general companies having different characteristics with cooperative business. Therefore, determining the indicators that are proper with the characteristics of cooperative business remains a pivotal issue. As a consequence, this study aims to determine indicators of knowledge management and internal governance which are in accordance with characteristics of cooperative business. Literature review and focus group discussion were utilized to unveil the indicators of knowledge management and internal governance based on the characteristics of cooperative in Indonesia. This study figured out that knowledge management was represented by three dimensions, twelve sub-dimensions, and 26 indicators. Meanwhile, internal governance is represented by four dimensions, with sixteen sub-dimensions and seventeen indicators. The finding of this study is expected to contribute new reference for determining indicators of knowledge management and internal governance in accordance with the characteristics of cooperative business in Indonesia.