1. Introduction
Transglobal Leadership refers to leadership model that encourages company (companies, banks, and State-owned Companies) to grow, develop and expand business across the world. It allows companies to transform into leaders that gain trust and grows rapidly by providing excellent service to customers all over the globe. In order to perform well, companies and banks in particular should apply transglobal leadership. Banks should be able to involve various sectors in both domestic and global scale in order to become sustainable.
There are several factors supporting bank sustainability; one of which is culture of innovation. Eynde et al. (2015) stated that innovation culture comprises willingness to innovate, and fulfillment of infrastructure to innovate, required behavior to influence value and market orientation, and environment supporting innovation. Bank BRI should maintain and improve innovation and its staff should apply it in order to improve services and facilities and transforming Bank BRI into a leading and trustworthy brand. Innovation in the form of excellent service and sophisticated facilities will help improve customer’s trust. This allows Bank BRI to maintain business sustainability in the banking sector.
Besides developing culture of innovation, Bank BRI should also apply Militancy at all levels. In this study, there are 3 levels of militancy, namely at individual employee, individual leader, and individual organization level. When applied well, it brings positive influence toward sustainability of Bank BRI. Militancy refers to ability to compare all thought, attitude, and movement to fight for ideas and principles despite of any obstacle that may hinder achievement of an established objectives. It can be measured based on sincerity, honesty, determination, and readiness of an individual to work as a team in order to achieve certain objective. Militancy should be developed continuously through Transglobal Leadership as this type of leadership promotes militancy as working culture that results in a rapidly growing company. Working culture is strongly associated to culture of innovation.
PT Bank Rakyat Indonesia (Persero) Tbk has won The Best of the Best Award from Forbes Indonesia, a business and finance magazine affiliated with Forbes Magazine USA. Companies categorized as Best of the Best have undergone evaluation processes including evaluation on company performance based on several parameters, namely stock price, net profit, and Return on Equity (ROE). In order to be competitive in the future, banks should promote transglobal leadership and at the same time, develop both militancy and culture of innovation. In relation to those issues, this study aimed to test influence of Transglobal Leadership toward Culture of Innovation through militancy in order to increase performance and sustainability of Bank BRI. It tested influence of 1) Transglobal Leadership toward Militancy, Innovation Culture, Bank Sustainability, 2) Militancy, Innovation Culture toward Bank Sustainability, and 3) Militancy toward Innovation Culture. Previous related studies have investigated relationships between these variables.
Investigating relationship between transglobal leader-ship and militancy, Masi and Cooke (2000) and Yahaya et al. (2014) showed a significant correlation and negative influence between the variables. However, Van Knippenberg et al. (2007), and Bacha and Walker (2013) revealed a significant negative influence. It showed a research gap. Conducting research examining relationship between transglobal leadership and innovation culture, Al Ahmad et al. (2019) claimed a significant and positive influence between the variables. Furthermore, Das (2013) identified a significant and positive relationship between innovation and bank sustainability. Research investigating influence of militancy toward innovation culture and militancy toward bank sustainability has not been conducted yet.
Therefore, this study focused on research gap on the previous related studies in order to obtain a consistent concept. Novelty of this research was employing militancy and innovation culture as intervening variables in influence of transglobal leadership toward bank sustainability. As an addition, Militancy is an important topic to discuss as this concept has been applied in Bank BRI but has not been discussed in academic setting.
2. Literature Review and Conceptual Framework
As the main theory, this study used strategic management that refers to a series of commitment and decision required by companies in order to achieve strategic competitiveness and generate above-average profit (Hitt et al., 2011). The theory of the firm (TFT) has developed and adapted to knowledge-based economic growth recently. Theoretical framework of this study involved several theories including resource-based view (RBV), dynamic capability view (DCV), knowledge-based view (KBV) and others.
There are several influences that are the focus of research because of differences in results between previous studies, as in Table 1. The difference in the results of these studies raises opportunities for conducting research so that the concept applies consistently. This is often called the research gap.
Table 1: Mapping Research Findings
2.1. Transglobal Leadership
Transglobal Leadership is a leadership style; leadership refers to ability and process to influence, arrange and control other people. Interaction between elements of leadership takes place in leadership. There are two different terminologies related to this topic, namely global leadership and transglobal leadership. Future global leaders should have global perspectives in decision-making and pay a close attention to global trends. They are required to put aside their cultural background and analyze particular phenomenon based on culture of society they are facing in order to gain new insight and opportunity. These leaders should gather information through micro investigation to a macro and more global perspective in order to make decision consistent to global perspectives.
On the other hand, transglobal leadership provides more benefits rather than global leadership. Trance in transglobal refers to global leader that transcends boundaries.Furthermore, Sharkey et al. (2012) stated that transglobal leadership refers to a type and style of leadership of which influence transcends cultural and national barriers. Thus, it is universal and has a great contribution toward human spirit that changes human civilization. Service of transglobal leaders creates a more interesting, beautiful, prosperous, dignified, or better life. Transglobal leadership is characterized based on leader’s intelligence and displayed behavior. Global leadership puts emphasis on global intelligence alone; however, transglobal leadership puts higher emphasis on six more comprehensive aspect of intelligence, namely IQ, moral, spiritual, business, cultural, and global intelligence. On the other hand, they are reinforced in transglobal leadership behavior that represents resilience toward uncertainty, pragmatic flexibility, team connectivity, responsive perception, and talent orientation. In conclusion, transglobal leadership puts higher emphasis on a more sophisticated intelligence and behavior compared to global leadership. Sharkey et al. (2012) argued that previous types of leadership, transactional and transformational, is a typical local leader who has yet to reach global aspects. Influence of transglobal leadership transcends cultural and national limitation. Hence, it is universal, provides a great contribution for human spirit and changes human civilization. Transglobal leaders develop service that makes life more interesting, beautiful, prosperous, dignified, or better.
2.2. Militancy
Militancy is a type of consistency and commitment of company manager to achieve an established set of goals. It is pivotal for a company. Militant company executives are able to improve financial performance and maintain sustainability of companies. Besides that, that militancy in general, can be explained as capability to compare all thoughts, attitudes, and movements to fight for ideas and principles in any situation to achieve established objectives.
There are two aspects to consider in maintaining and improving militancy among company executives. The first is increasing cost of attracting new customers in a tight business competition. The second is the fact that company performance is proportional to growing relationship between companies with militant executives and loyal customers.
Militancy for BRI is related to ability to implement BRI plan between 2018 and 2022 in a timely manner or in a faster way while referring to the behavioral code of BRI. Militancy for BRI staff refer to the connection between staff and the company that encourages them to perform well and be proud of the bank. Militancy can be applied at all levels including individual staff level, individual leader, and individual organization.
2.3. Innovation Culture
Innovation refers to new idea, aspect, event, or method for a group of people (society) that may take form as invention or discovery. It is needed to achieve certain goals or overcome particular issues (Ely, 1990). Innovation culture, according to Eyden et al. (2015) consisted of several elements, namely willingness to innovate, and fulfillment of infrastructure to innovate, required behavior to influence value and market orientation, and environment supporting innovation. The culture is the key to create a high performing and sustainable company or organization.
An innovation is any idea, practice, or an artifact perceived to be new and relevant to be adopted. The innovation is the change object. A change is the altera in the structure of a system that requires or could be required relearning on the part of the actor(s) in response to a situation. The requirements of the situation often involve a new requirement is an inventive process producing an invention. However, all innovations, not everything an individual, a formal or informal group adopts is perceived as new (Zaltman et al., 1973).
2.3. Bank Sustainability
According to Elkington (1998) sustainability is a balance between people, planet and profit, known as the triple bottom line (TBL) concept. According to Wheelen and Hunger (2013), there are two characteristics that determine sustainability of company’s specific competence, namely resilience and imitability. Resilience refers to level in which resources, ability and core competence, company’s bases, depreciate or become obsolete. Breakthrough in technology results in depreciation of these bases and as a consequence, company should strive for sustainability. Furthermore, imitability refers to level where resources, ability and core competence of company can be replicated by others. Business competition requires ability to apply, learn and duplicate a better set of ability and skill. The concept of sustainability can be broken down into three aspects that explain economic, environmental and social sustainability. The concept of BRI’s sustainability is contained in the PT. Bank Rakyat Indonesia (Persero) Tbk.
Table 2 shows the classification of variables used in this study.
Conceptual framework illustrated relationship between the variables, in which Transglobal Leadership had influence toward Militancy and Innovation Culture and Militancy influenced Bank Sustainability through Innovation Culture as intervening variable.
H1: Transglobal Leadership has significant influence toward Militancy;
H2: Transglobal Leadership has significant influence toward Innovation Culture;
H3: Militancy has significant influence toward Innovation Culture;
H4: Militancy has significant influence toward Bank Sustainability;
H5: Innovation Culture has significant influence toward Bank Sustainability.
Table 2: Summary Variables
Figure 1: Conceptual Model
3. Methodology
This type of research is explaining (explanatory or confirmatory), which explains the causal influence between the variables studied through testing the hypothesis empirically. This study uses a quantitative approach, which is testing hypotheses and conceptual models. This study uses a survey method for a quantitative approach, which is an analysis carried out on numerical data measuring variable results. This research variable is a latent variable that is measured using a questionnaire instrument and secondary data, and data analysis is done by statistical methods.
This research was conducted at PT. Bank Rakyat Indonesia (Persero) Tbk. operating in Indonesia. The sample units and analysis units in this study are the regional offices and branch offices of Bank BRI. The Population is all Regional and Branch Offices of PT. Bank Rakyat Indonesia in Sumatra, Jawa, Kalimantan, Sulawesi, Bali, and Jayapura with a total of 462 regional and branch offices. 218 samples were selected based on Stratified Proportional Random Sampling method. Taking into consideration how vast the areas were, the sampling technique was adjusted to area and population in each area. Data analysis method was Structural Equation Modeling (SEM) based on Partial Least Square (PLS) used for hypothesis testing.
4. Results
4.1. Data Analysis
Structural Equation Modeling (SEM) tests simultaneous effect among several exogenous and endogenous variables using some indicators. WarpPLS is also used to predict model parameter. Validity and reliability of each item in the questionnaire for each variable had been tested previously. Table 2 showed result of validity and reliability testing.
Validity testing is conducted to make sure validity of data, while reliability testing makes sure whether or not instrument is able to measure variable accurately. Table 2 showed Transglobal Leadership (X), Militancy (Y1), Innovation Culture (Y2), and Bank Sustainability (Y4) were valid and reliable. Table 3 is the result of testing the research variable measurement model.
Table 3: The Results of Validity and Reliability Tests
Table 4 described that all latent variables had suitable and accurate indicators. Character-oriented leader was the most dominant indicator of Transglobal Leadership with loading factor of 0.913. In other words, Transglobal Leadership was influenced by character-oriented leader. Furthermore, Militancy at individual organization level was the most dominant indicator of Militancy with loading factor of 0.932. Militancy was heavily influenced by Militancy at individual organization level. On the other hand, Organization was the most dominant indicator of Innovation Culture with loading factor of 0.946. Finally, Environmental Sustainability was the most dominant indicator of Bank Sustainability with loading factor of 0.898.
Table 4: The Evaluation of Measurement Model
4.2. Feasibility Model
Feasibility model showed that all criteria had met expected critical limits from the Goodness of fit Index recommended in SEM analysis. Thus, it can be concluded that the model proposed in this study was feasible. R-squared Contribution Ratio (RSCR) was 0.989 showed that the model was ideal (minimum RSCR ≥ 0.9). The score means that the test was able to confirm the variables and cause-effect relationship between the variables. Therefore, the empirical data supported the theoretical model developed in this study.
4.3. SEM Analysis
Its objective is to identify coefficient or parameter showing cause effect relationship or effect between one latent variable and another. Causal relationship was not significant when p-value < 0.05. Table 4 summarized result of SEM analysis using WarpPLS.
Table 5 showed that Transglobal Leadership (X) had a significant positive influence toward Militancy (Y1). Thus, increase in Transglobal Leadership (X) would increase Militancy (Y1), where path coefficient was 0.775 with p-value < 0.001. Since p-value < 0.05, statistic hypothesis was rejected and Transglobal Leadership (X) had a significant influence toward Organizational Learning (Y1). Table 4 also illustrated that Transglobal Leadership has a significant positive effect toward Innovation Culture (Y2). Increase in Transglobal Leadership (X) would increase Innovation Culture (Y2), where path coefficient was 0.387 with p-value < 0.001. Since p-value < 0.05, H0 was rejected and Transglobal Leadership (X) had a significant influence toward Innovation Culture (Y2). Table 5 explained that Militancy (Y1) had a significant positive influence toward Innovation Culture (Y2). In other words, the higher the Militancy (Y1) is, higher the Bank Sustainability Bank (Y3) would be. Path coefficient was 0.675 with p-value < 0.001. Since p-value < 0.05, H0 was rejected and Militancy (Y1) had significant influence toward Bank Sustainability (Y3). Based on Table 5, Militancy (Y1) had significant positive influence toward Bank Sustainability (Y3). Increase in Militancy (Y1) would result in another increase in Bank Sustainability (Y3). Path coefficient was 0.675 with p-value < 0.001, which means H0 was rejected. In conclusion, Militancy (Y1) had a significant influence toward Bank Sustainability (Y3). Table 4 described that Innovation Culture (Y2) has significant positive influence toward Bank Sustainability (Y3). It means increase in Innovation Culture (Y2) would increase Bank Sustainability (Y3), in which path coefficient was 0.174 with p-value 0.004. P < 0.05 rejected H0 and in other words, Innovation Culture (Y2) has significant influence toward Bank Sustainability (Y3). Testing of the indirect effect is presented in Table 6.
Table 5: The Estimation Results of Direct Influence Analysis
Table 6: Indirect Influence 1 Mediation
Figure 2: Research Model
Table 5 showed Transglobal Leadership (X) had significant positive influence toward Innovation Culture (Y2) through Militancy (Y1). Since p-value <0.05, H0 was rejected, which means Militancy (Y1) was mediating relationship between Transglobal Leadership (X) and Innovation Culture (Y2). The score was 0.168. Indirect Influence of Transglobal Leadership toward Bank Sustainability through Militancy
Based on Table 5, it can be concluded that Transglobal Leadership (X) had significant positive influence toward Bank Sustainability (Y3) through Militancy (Y1). Since p-value < 0.05, H0 was rejected. It means Militancy (Y1) was mediating relationship between Transglobal Leadership (X) and Bank Sustainability (Y3). The score was 0.591. Indirect Influence of Militancy toward Bank Sustainability through Innovation Culture Table 5 explained that Militancy (Y1) had significant positive influence toward Bank Sustainability (Y3) though Innovation Culture (Y2). Since p-value > 0.05, H0 was accepted that means Innovation Culture (Y2) was not mediating relationship between Militancy (Y1) and Bank Sustainability (Y3).
5. Discussion
5.1. Influence of Transglobal Leadership toward Militancy
Coefficient of correlation between Transglobal Leadership and Militancy was 0.775 with p-value < 0.001. P < 0.05 means Transglobal Leadership has significant direct influence toward Militancy. Based on positive inner weight, relationship between the variables was proportional. Therefore, higher Transglobal Leadership will result in higher Militancy. In relation to PLS model, character-oriented, public-oriented, task-oriented, and process-oriented leaders have a stronger commitment to improve militancy, are better in maintaining company sustainability, and have a higher motivation. The finding is in line with Masi and Cooke (2000) who investigated transformational leadership, both theoretically and empirically, in relation to empowerment, motivation, productivity, and other relevant constructs. The study by Masi and Cooke (2000) improved relationship between leadership style and questioned norms of empowerment even though they are heavily associated to commitment toward quality, motivation and productivity.
5.2. Influence of Transglobal Leadership toward Innovation Culture
The analysis result showed that coefficient of correlation between Transglobal Leadership and Innovation Culture was 0.387 with p < 0.001. As p-value < 0.05, Transglobal Leadership has significant direct influence toward Innovation Culture. In other words, level of Transglobal Leadership will affect Innovation Culture. The PLS inner model described that the higher character-oriented, public-oriented, task-oriented, and process-oriented leaders are, the higher General, Organization, and Individual Leader will be. Al Ahmad et al. (2019) identified influence of Transformational Leadership (TL) towards two aspects of innovation, namely product and process. In addition, Al Ahmad et al. (2019) revealed that Transformational Leadership has a positive influence toward product and process innovation in Lebanese banks. 75% of innovative behavior can be explained by Transformational Leadership practices.
5.3. Influence of Militancy toward Innovation Culture
Inner weigh testing showed that coefficient of correlation between Militancy and Innovation Culture was 0.217 with p-value < 0.001. Since p < 0.05 Militancy has a significant direct influence toward Innovation Culture in which level of militancy will affect level of Innovation Culture.
This study revealed a new concept on influence of militancy toward innovation culture. It showed that militancy has direct and positive influence toward culture of organization. This finding has a significant contribution toward the body of knowledge since it provides empirical evidence on relationship between Militancy and Innovation Culture.
5.4. Influence of Militancy toward Bank Sustainability
Coefficient of correlation between Militancy and Bank Sustainability was 0.675 with p < 0.001. P < 0.05 means Militancy has significant direct influence toward Bank Sustainability and thus, a change in Militancy will result in another change in Bank Sustainability.This study revealed a new concept on influence of Militancy toward Bank Sustainability, where Militancy increases performance of organization and staff productivity, and eventually sustainability of organization. This finding has a significant contribution toward the body of knowledge since it provides empirical evidence on relationship between Militancy and Bank Sustainability.
5.5. Influence of Innovation Culture toward Bank Sustainability
Coefficient of correlation between Innovation Culture and Bank Sustainability was 0.174 with p 0.004. P < 0.05 means Innovation Culture has significant direct influence toward Bank Sustainability. In other words, a change in Innovation Culture will result in another change in Bank Sustainability. The finding supported Forcadell et al. (2019) who investigated influence of innovation toward sustainability in International Banking Industry. The finding is also in accordance to Abbas et al. (2019) that Innovation Culture has significant influence toward Bank Sustainability. The finding of this study has a significant contribution toward the body of knowledge since it provides empirical evidence on relationship between Innovation Culture and Bank Sustainability.
6. Conclusion
Based on the analysis, it can be concluded that 1) innovation culture and militancy toward bank sustainability, 2) militancy toward bank sustainability, 3) militancy toward innovation culture, and 4) innovation culture toward bank sustainability. These variables influence sustainability of Bank BRI. Therefore, the key to promote the bank sustainability is to identify the most dominant indicator. However, relationship between Militancy and Bank Sustainability through Innovation Culture is not significant. It means without innovation culture as mediating variable militancy can have direct influence toward the Bank Sustainability. Furthermore, transglobal leadership has a significant influence toward innovation culture through militancy, and transglobal leadership has a significant influence toward bank sustainability through militancy and innovation culture.
This study proposed several implications. Company can use the finding as a reference prior to applying transglobal leadership in an organization. Transglobal leadership turned Bank BRI into a leading organization in banking sector as this leadership helps in developing insights and vision of the bank staff. The finding of this study can also be used to design HR policy. Militancy results in a significant improvement of working performance. Innovation culture also motivates employees to work harder. Besides that, this study also helps reformulating policy of which objective is to strengthen and improve Bank Sustainability. In globalization era, every company, including Bank BRI, should implement policy that promotes both performance and sustainability.
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