•  
  •  
 

Abstract

Although the growth of Islamic banking assets is still high, the market share of Islamic banking reached only ± 4,92% by the end of May 2014. Islamic banks should implement an appropriate strategy to face dynamic changes in the business environment. The education strategy is one of the business strategies of Islamic banks that remain a priority today. It provides information and understanding for society about the function, role, activities, and products as well as services of Islamic banks. This study examines the impact of fit between the education strategy and contingency variables (known as strategic-fit) on performance. The contingency variables include efficiency of input, organizational competency, CEO tenure, and composition of shariah supervisory board. The performance of Islamic banks consists of both financial and social performances. Using the data from 1997 to 2012 of 10 fully-fledge Islamic banks in Indonesia and least squares method, this study shows that the efficiency of input has a positive effect on the educational strategy implementation. On the other hand, the composition of shariah supervisory board and organizational competency negatively affect the implementation of the educational strategy. Nevertheless, there is no strong evidence that CEO tenure influences the implementation of the educational strategy. Adopting the method of Van de Ven and Drazin (1985) to determine the degree of strategic misfit, this study finds that the misfit between educational strategy and its contingency variables has a negative effect on financial performance, but no significant effect of misfit on social performance.

References

Al-Ajlouni, A. 2009. Islamic Banks and Financial Globalization: The Expected Outcomes and Required Confrontation. Journal of Islamic Economics, 22 (1), 1-13. Aggarwal, R. K. and T. Yousef. 2000. Islamic Banks and Investment Financing. Journal of Money, Credit, and Banking, 32 (1), 93-120. 10.2307/2601094 Andrews, K. R. 1971. The Concept of Corporate Strategy. Dow Jones Irwin. Illinois: Homewood. Audia, P. G., E. A. Locke, and K. G. Smith. 2000. The Paradox of Success: An Archival and a Laboratory Study of Strategic Persistence Following Radical Environmental Change. Academy Management Journal, 43, 837-853. 10.2307/1556413 Barker III, V. L. and I. M. Duhaime. 1997. Strategic Change in the Turnaround Process: Theory and Empirical Evidence. Strategic Management Journal, 18 (1), 13-38. 10.1002/(SICI)1097-0266(199701)18:1<13::AID-SMJ843>3.3.CO;2-O Bashier, B. A. 1983. Portfolio Management of Islamic Banks: A Certainty Approach. Journal of Banking and Finance, 7 (3), 339-354. 10.1016/0378-4266(83)90043-2 Bank Indonesia. 2012. Kodifikasi Peraturan Bank Indonesia Kelembangan Tingkat Kesehatan Bank. Jakarta: Pusat Riset dan Edukasi Bank Sentral Bank Indonesia. Bettis, R. A. and W. K. Hall. 1982. Diversification Strategy, Accounting Determined Risk, and Accounting Determined Return. The Academy of Management Journal, 25 (2), 254-264. 10.2307/255989 Bresser, R. K. F., R. L. M. Dunbar, and T. Jithendranatan. 1994. Competitive and Collective Strategies: An Empirical Examination of Strategic Groups. Advances In Strategic Management, 10B, 187-211. Burnes, B. 2003. Managing Change and Changing Managers from ABC to XYZ. The Journal of Management Development, 22 (7), 627-642. 10.1108/02621710310484768 Burton, R. M., J. Lauridsen, and B. Obel. 2002. Return in Assets Loss from Situational and Contingency Misfits. Management Science, 48 (11), 1461-1485. 10.1287/mnsc.48.11.1461.262 Chan, R. Y and Y. H. Wong. 1999. Bank Generic Strategies: Does Porter's Theory Apply in an International Banking Centre. International Business Review, 8, 561-590. 10.1016/S0969-5931(99)00020-7 Cole, G. 1994. Strategic Management. London: DP Publication Limited. Direktorat Perbankan Syariah Bank Indonesia. 2013. Outlook Perbankan Syariah Indonesia 2013. Jakarta: Direktorat Perbankan Syariah Bank Indonesia. Direktorat Perbankan Syariah Bank Indonesia. 2010. Outlook Perbankan Syariah Indonesia 2011. Jakarta: Direktorat Perbankan Syariah Bank Indonesia. Direktorat Perbankan Syariah Bank Indonesia. 2008. Outlook Perbankan Syariah Indonesia 2009. Jakarta: Direktorat Perbankan Syariah Bank Indonesia. Donaldson, L. 2001. The Contingency Theory of Organizations. Thousand Oaks, CA: Sage Publishing. 10.4135/9781452229249 Fahy, J. 1996. Competitive Advantage in International Services: A Resource-Based View. International Studies of Management and Organization, 26 (2), 24-37. 10.1080/00208825.1996.11656679 Gani, L. and J. Jermias. 2012. The Effects of Strategy-Management Control System Misfit on Firm Performance. Accounting Perspective, 11 (3), 165-196. 10.1111/j.1911-3838.2012.00038.x Gerdin, J. and J. Greve. 2004. Forms of Contingency Fit in Management Accounting Research – A Critical Review. Accounting, Organizations and Society, 29, 303-326. 10.1016/S0361-3682(02)00096-X Ginsberg, A. and N. Venkatraman. 1985. Contingency Perspectives of Organizational Strategy: A Critical Review of the Empirical Research. Academy of Managemet Review, 10, 421-434. Hameed, S. et al. 2004. Alternative Disclosure and Performance Measures for Islamic Banks. Working Paper, International Islamic University Malaysia. Haniffa, R and M. Hudaib. 2007. Exploring the Ethical Identity of Islamic Banks via Commnunication in Annual Reports. Journal of Business Ethic, 76 (1), 97-116. 10.1007/s10551-006-9272-5 Hasan, Z. 2009. Corporate Governance: Western and Islamic Perspectives. International Review of Business Research Papers, 5 (1), 277-293. Haveman, H. A., M. V. Russo, and A. D. Meyer. 2001. Organizational Environments in Flux: The Impact of Regulatory Punctuations on Organizational Domains, CEO Succession and Performance. Organization Science, 12, 253-273. 10.1287/orsc.12.3.253.10104 Hofer, C. W. and D. E. Schendel. 1978. Strategy Formulation: Analytical Concepts. St. Paul, MN: West Publishing House. Hopkins, W. E. and S. A. Hopkins. 1997. Strategic Planning-Financial Performance Relationships in Banks: A Causal Examination. Strategic Management Journal, 18 (18), 635-652. 10.1002/(SICI)1097-0266(199709)18:8<635::AID-SMJ904>3.0.CO;2-# Johnson, G. and K. Scholes. 1999. Exploring Corporate Strategy 5th Edition. London: Prentice Hall. Karim Business Consulting. 2006. Strategi Bank Syariah Merebut Hati Nasabah. Republika, Jumat 7 Juli 2006. King, D. R, D. R. Dalton, C. M. Daily, and J. G. Covin. 2004. Meta-Analysis of Post Acquisition Performance: Indications of Unidentified Moderators. Strategic Management Journal, 25, 187-200. 10.1002/smj.371 Kroll, M., P. Wright, L. Toombs, and H. Leavell. 1997. Form of Control: A Critical Determinant of Acquisition Performance and CEO Rewards. Strategic Management Journal, 18 (2), 85-96. 10.1002/(SICI)1097-0266(199702)18:2<85::AID-SMJ833>3.0.CO;2-H Kuppusamy, M., A. S. Saleh, and A. Samudhram. 2010. Measurement of Islamic Banks Performance Using a Shariah Conformity and Profitability Model. Review of Islamic Economics, 13, 35-48. Mehra, A. 1996. Resource and Market Based Determinants of Performance in the U.S. Banking Industry. Strategic Management Journal, 17 (4), 307-322. 10.1002/(SICI)1097-0266(199604)17:4<307::AID-SMJ820>3.0.CO;2-2 Miles, R. E. and C. C. Snow. 1994. Fit, Failure and the Hall of Fame. New York: Macmillan. Miller, D. and M. Chen. 1994. Sources and Consequence of Competitive Inertia: A Study of the US Airline Industry. Administrative Science Quarterly, 39, 1-23. 10.2307/2393492 Ocasio, W. 1995. The Enactment of Economic Adversity: A Reconciliation of Theories of Failure-induces Change and Threat-rigidity. Research in Organizational Behavior, 17, 287-331. Olson, D. and T. A. Zoubi. 2008. Using Accounting Ratios to Distinguish bet-ween Islamic and Conventional Banks in the GCC Region. The International Journal of Accounting, 43 (1), 45-65. 10.1016/j.intacc.2008.01.003 Setiawan, A. B. 2009. Kesehatan Finansial dan Kinerja Sosial Bank Umum Syariah di Indonesia. Tesis, Universitas Paramadina. Simsek, Z. 2007. CEO Tenure and Organizational Performance: An Intervening Model. Strategic Management Journal, 28 (6), 653-662. 10.1002/smj.599 Siregar, M. 2002. Agenda Pengembangan Perbankan Syariah untuk Mendukung Sistem Ekonomi yang Sehat di Indo-nesia: Evaluasi, Prospek dan Arah Kebijakan. Iqtisad, 3 (1), 46-66. Usamah. 2010. Peran Kompetensi dan Model Pengorganisasian Dewan Pengawas Syariah terhadap Pembiayaan Berbasis Bagi Hasil pada Perbankan Syariah di Indonesia. Tesis, Universitas Diponegoro. Van de Ven, A. H. and R. Drazin. 1985. The Concept of Fit in Contingency Theory. Research in Organizational Behavior, 7, 333-365. Venkatraman, N. 1989. The Concept of Fit in Strategy Research: Toward Verbal and Statistical Correspondence. Academy of Management Review, 14, 423-444. Venkatraman, N. and J. Prescott. 1990. Environment-strategy Coaligment: An Empirical Test of Its Performance Implications. Strategic Management Journal, 11 (1), 1-23. 10.1002/smj.4250110102 Walters, B. A., M. J. Kroll, and P. Wright. 2007. CEO Tenure, Board of Directors and Acquisition Performance. Journal of Business Research, 60, 331-338. 10.1016/j.jbusres.2006.12.001 White, L. J. 1991. The S&L Debacle: Public Policy Lessons for Bank and Thrift Regulation. New York: Oxford University Press. Zajac, E. J., M. S. Kraatz, and R. D. K. Bresser. 2000. Modeling the Dynamics of Strategic Fit: A Normative Approach to Strategic Change. Strategic Management Journal, 21 (4), 429-453. 10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# Zuniga-Vicente, J. A., J. M. de la Fuente-Sabaté, and I. S. González. 2005. Facilitating and Inhibiting Factors Behind Strategic Change: Evidence in the Spanish Private Banking Industry, 1983-1997. Scandinavian Journal of Management, 21, 235-265. 10.1016/j.scaman.2004.04.002

Download

Share

COinS