The Regulation on Village Governance in Indonesia: Efficient Contracting in Agency Theory

Fandi Galang Wicaksana, R. Agus Trihatmoko, Djoko Suhardjanto, Henny Murtini


The application of efficient contracting concept in Village Fund management is an interesting idea and formula in the public governance perspective. The concept provides a potential solution so that the Village Government obey the Law No. 6 of 2014 and brings impact to public-oriented service. The philosophical concept of “Gotong Royong” or mutual assistance reinforces the efficient contracting essence. The aim of this research is to build a framework of public governance on Village Fund by implementing the efficient contracting, and to identify, illustrate and describe the variables in efficient contracting concept to Village Fund Management. The research used qualitative method, designed in narrative strategy and grounded theory approach, and formulated using constructivism paradigm. Results of the study have demonstrated that (1) Efficient contracting concept encompasses economic constitution, government policy, public finance management and governance, and the functional relationship in the government body (Central, Regional and Village); (2) the essence of Efficient Contracting is the community active participation, legal aspect, government attention, balance consensus, effectiveness and efficiency, justice and equality, transparency, responsibility and accountability. The descriptive findings were interpreted in textual and structural method to expand the Efficient Contracting concept and to bring implication in development administration and public management.

Full Text:



Adele, C., Frisie, C., & Washburn, R. (2015). Situational Analysis in Practice (Mapping Research with Grounded Theory). Routledge Taylor & Francis Group, London and New York.

Afifah, D., Kartini, D., & Yuningsih, N. (2017). Village Independence In Village Funds (A Case of Village Fund Management in Traditional and Modern Villages). Advances in Social Sciences Research Journal, 4(25), 134-145.

Afonso, A., Schuknecht, L., & Tanzi, V. (2005). Public Sector Efficiency: An International Comparison. Public Choice, 123(3-4), 321-47.

Akhlaghi, F. (1996). Ensuring Value for Money in FM Contract Services. Facilities, 14(1/2), 26-33.

Ammons, D., & Rivenbark, W. (2008). Factors Influencing the Use of Performance Data to Improve Municipal Services: Evidence from the North Carolina Benchmarking Project. Public Administration Review, 68(2), 304-318.

Ash-shidiqqi, E., & Wibisono, H. (2018). Corruption and Village : Accountability of Village Fund Management on Preventing Corruption (Problems and Challenges). Journal of Indonesian Legal Studies, 3(2), 195-212.

Atiyah, P. S. (1996). An Introduction to the Law Contract. Clarendon Press, Oxford.

Azlina, N., Hasan, A., & Muda, I. (2017). The Effectiveness of Village Fund Management (Case Study at Villages in Coastal Areas in Riau). International Journal of Economic Research, 14(12), 325-336.

Battese, G. E., & Coelli, T. J. (1995). A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data. Empirical Economics, 20(2), 325-332.

Bergen, M., Dutta, S., & Walker, O. C. (1992). Agency Relationships in Marketing : A Review of the Implications and Applications of Agency and Related Theories. Journal of Marketing, 56(3), 1-24.

Bourgon, J. (2007). Responsive, Responsible, and Respected Government: Towards a New Public Administration Theory. International Review of Administrative Sciences, 73(7), 7-26.

Bovens, M. (2006). Analysing and Assessing Public Accountability: A Conceptual Frame- Work. European Governance Papers (EUROGROV), No. 1, European Governance Papers (EUROGOV), CONNEX and EUROGOV networks.

Bowen, J. R. (1986). On the Political Construction of Tradition: Gotong Royong in Indonesia. The Association for Asian Studies, 45(3), 545-561.

Boyne, G. A. (2003). Sources of Public Service Improvement: A Critical Review and Research Agenda. Journal of Public Administration Research and Theory, 13(3), 367-394.

Coram, R. B. (2006). Managing Organizational Change in the Public Sector – Lessons from the privatisation of the Property Service Agency. International Journal of Public Sector Management, 14(2), 94-110.

Creswell, J. W. (2009). Research Design. Qualitative, Quantitative and Mixed Methods Approaches. SAGE Publication, Achmad Fawaid (2016). Research Design: Pendekatan Kualitatif, Kuantitatif dan Mixed. Edisi Kelima. Pustaka Pelajar, Yogyakarta, Indonesia.

Creswell, J. W. (2013). Qualitative Inquiry & Research Design: Chossing Among Five Approaches. SAGE Publication, Achmad Lintang Lazuardi (2015). Penelitian Kualitatif & Desain Riset: Memilih di antara Lima Pendekatan. Edisi Pertama. Pustaka Pelajar, Yogyakarta, Indonesia.

Fatchan, H. A. (2011). Metode Penelitian Kualitatif (Qualitative Research Method). Jenggala Pustaka Utama, Yogyakarta, Indonesia.

Fikri, H., Suharto, D. G., & Nugroho, R. A. (2018). Utilization of Electronic Government in Realizing Transparency and Accountability of Village Government : Synergy of Implementation of Electronic Village Budgeting and Electronic Monitoring System by Banyuwangi Government. International Journal of Multicultural and Multireligious Understanding, 5(4), 453-469.

Firdha, A. P., & Yuwono, T. (2018). Accountability Village of Government in Management of Village Allocation Fund in The Temulus Village, Mejobo District, Kudus Regency. Journal of Politic and Government Studies, 7(2), 131-140.

Gupta, R. K., & Awasthy, R. (2015). Qualitative Research in Management. SAGE Publications India Pvt Ltd., New Delhi, India.

Hensher, D. A., Billon, A. Y., Macário, R., Preston, J., White, P., Tyson, B., ... & Filho, R. D. O. (2007). Delivering Value for Money to Government through Efficient and Effective Public Transit Service Continuity: Some Thoughts. Transport Reviews : A Transnational Transdisciplinary Journal, 24(4), 411-448.

Hood, C. (1991). A Public Management For All Seasons?. Public Administration, 69(1), 3-19.

Hood, C. (1995). Contemporary Public Management: A New Global Paradigm?. Public Policy and Administration, 10(2), 103-117.

Iyoha, F. O., & Oyerinde, D. (2010). Critical Perspectives on Accounting Accounting Infrastructure and Accountability in the Management of Public Expenditure in Developing Countries : A Focus on Nigeria. Critical Perspectives on Accounting, 21(5), 361-373.

Jehn, K. A. (1997). A Qualitative Analysis of Conflict Types and Dimensions in Groups Organizational. Administrative Science Quarterly, 42(3), 530-557.

Jensen, C., & Meckling, H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305-360.

Kraan, D. J, Trapp, L., Kostyleva, V., Tuinen, J., & Morgner, M. (2013). Budgeting in Ukraine. OECD Journal on Budgeting, published online first.

Lane, J. (1999). Contractualism In the Public Sector. Public Management: An International Journal of Research and Theory, 1(2), 179-194.

Mchopa, A. (2015). Integrating Contract Management Practices Into the Achievement of Value for Money in Tanzania Public Procurement: Evidence from Selected Procuring Entities in Moshi Municipality. Journal of Public Procurement, 15(2), 129-49.

Ng, A., & Loosemore, M. (2007). Risk Allocation in the Private Provision of Public Infrastructure. International Journal of Project Management, 25(1), 66-76.

OECD. (2016). Kajian Open Government Indonesia. review-indonesia-kajian.pdf (accessed 17 January 2019).

Rhodes, R. A. W. (1996). The New Governance: Governing without Government. Political Studies, 44(4), 652-667.

Saldana, J. (2011). Fundamentals of Qualitative Research. Oxford University Press, Inc., New York, USA.

Salim, A., Bulan, W., Untung, B., Laksono, I., & Brock, K. (2017). Indonesia’s Village Law : Enabler or Constraint for More Accountable Governance?. Making All Voices Count Research Report, Brighton, IDS.

Schick, A. (1998). A Contemporary Approach to Public Expenditure Management. Governance, Regulation, and Finance Division, World Bank Institute.

Simangunsong, F., & Wicaksono, S. (2017). Evaluation of Village Fund Management in Yapen Islands Regency Papua Province (Case Study at Pasir Putih Village, South Yapen District). Open Journal of Social Sciences, 5(9), 250-268.

Stanislaus, D. R. A., & Syamsuddin. (2017). Pemaknaan Efisiensi Belanja Daerah Dalam Interpretative Phenomenological Analysis : Sebuah Konstruksi Atas Pemufakatan Para Agen. Integritas, 3(2), 183-202.

Stevens, P. A. (2004). Accounting for Background Variables in Stochastic Frontier Analysis. Discussion Paper Number 239. National Institute of Economic and Social Research, London.

Stiglitz, J. E. (2003). Globalization and Its Discontents. Review of Banking, Finance and Monetary Economics, 32(2), 123-142.

Taylor, S. J., Bogdan, R., & DeVault, M. L. (2016). Introduction to Qualitative Research Methods. John Wiley & Son, Inc., Canada.

Temenggung, Y. A. (2016). Rural Financial Management in Perspective Law No. 6 of 2014 Concerning The Village. International Journal of Social Sciences, 43(1), 42-54.

Trihatmoko, R. A., & Susilo, Y. S. (2018). The Conceptual Framework of Indonesia Raya Incorporated (IRI): Extending Relationship between the Economic Constitution and the Roles and Functions of State Companies. Global Journal of Management and Business Research: Economics and Commerce, 18(7), 14-30.

Widodo, I. (2017). Dana Desa Dan Demokrasi Dalam Perspektif Desentralisasi Fiskal. Indonesian Political Science Review, 2(6), 65-85.

Yunita, A., & Cristianingrum. (2018). Measurement of Accountability Management of Village Funds. Integrated Journal of Business and Economics, 2(1), 99-103.


Copyright (c) 2019 Fandi Galang Wicaksana, R. Agus Trihatmoko, Djoko Suhardjanto, Henny Murtini

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Journal of Public Administration and Governance  ISSN 2161-7104


Copyright © Macrothink Institute

To make sure that you can receive messages from us, please add the '' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.