JRSSEM 2022, Vol. 02, No. 3, 353 – 357

E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494

LITERATURE REVIEW : DECENTRALIZATION ANALYSIS IN

IMPROVING MANAGERIAL PERFORMANCE

Sri Trisnaningsih

Deni Ariadi

1, 2

UPN Veteran East Java, Faculty of Economics and Business, Indonesia

e-mail: trisna.ak@upnjatim.ac.id, deniariadi@gmail.com

*Correspondence: trisna.ak@upnjatim.ac.id

Submitted

: 10 October 2022

Revised

: 21 October 2022

Accepted

: 28 October 2022

Abstract: In the era of the digital economy 4.0 competition in the world of technology and

information is increasing, today companies are required to maintain human resources in order

to decentralize and evaluate performance in a contiunity manner in order to make the right

decisions. In the study, the goal is to analyze more deeply about decentralization in improving

manjerial performance. Researchers use the literature review approach, which is a systematic,

explicit and reproducible method to identify, evaluate and synthesize the work of research

results and the results of thoughts that have been produced by researchers and practitioners.

The review literature aims to make an analysis and synthesis of existing knowledge related to

the topic to be studied in order to find a blank space for the research to be carried out. The

data source used by the author is in the form of secondary data, where the researcher uses 4

articles obtained from the google scholar database. The results of this study suggest that

decentralization is useful for making a positive contribution to management performance, this

is because decentralization is a process of delegation of responsibilities and authorities starting

from upper level management to lower level management. Decentralization has a very

important role for management because it is able to be considered to be able to help

management in the right and efficient decision-making process, so that managers have the

initiative to take action to solve problems that arise so that the decision making can be done

quickly and precisely.

Keywords: Decentralization, Improving Managerial Performance.

Sri Trisnaningsih, Deni Ariadi | 354

INTRODUCTION

Economic growth in the current era

tends to be very dynamic, this is also offset

by competition in a very complex world of

work. Decentralization is a company's effort

in increasing human resources in making

the right decisions, decentralization

according to experts Hendry Maddick

(1963) also revealed that his views on the

meaning of decentralization which is a legal

handover of power to be able to handle

certain areas or functions to autonomous

regions. Meanwhile, according to

Dwinarian, asnawi and sanggenafa

Decentralization is a delegation of

responsibilities and authorities from upper

level management to lower management

so that the workload of upper level

management is reduced and will focus

more on their work.

PT. Financial Statement Manipulation

Scandal. Kimia Farma Tbk. PT Kimia Farma

is one of the government-owned drug

manufacturers in Indonesia. In the audit

dated December 31, 2001, the

management of Kimia Farma reported a net

profit of Rp 132 billion, and the report was

audited by Hans Tuanakotta & Mustofa

(HTM). However, the Ministry of SOEs and

Bapepam considered that the net profit was

too large and contained elements of

engineering. After a re-audit, on October 3,

2002 the financial statements of Kimia

Farma 2001 were re-presented (restated),

because a fairly basic error was found. In

the new financial statements, the profit

presented was only Rp 99.56 billion, or

lower at Rp 32.6 billion, or 24.7% of the

initial reported profit. The error arose in the

Raw Material Industry unit, namely errors in

the form of overstated sales of IDR 2.7

billion, in the Central Logistics unit in the

form of overstated inventory of IDR 23.9

billion, in the Pharmaceutical Wholesaler

unit in the form of overstated inventory of

IDR 8.1 billion and overstated sales of IDR

10.7 billion.

Misrepresentations relating to

inventory arise because the value that is in

the inventory price list is inflated. PT Kimia

Farma, through its production director,

published two master prices on February 1

and 3, 2002. The list price as of February 3

has been inflated in value and used as the

basis for inventory valuation in the

distribution unit of Kimia Farma as of

December 31, 2001. Meanwhile, the

misrepresentation related to sales is to do

double recording of sales. The double

recording was carried out on units that

were not sampled by the accountant, so

they were not successfully detected. Based

on Bapepam's investigation, it was stated

that the KAP that audited PT Kimia Farma's

financial statements had followed the

applicable audit standards, but failed to

detect the fraud. In addition, the KAP was

also not proven to help management

commit the fraud.

In the world of work, problems will

always arise, of course, due to changes in

the work environment that are very

dynamic, this change is of course also

followed by increased competition, of

course, the management is required to

innovate to stricter management controls,

this requires decentralization and work

evaluation in order to demystify and

355 | Literature Review : Decentralization Analysis In Improving Managerial Performance

prevent abuse of authority from each part

of a company.

Based on the explanation above,

researchers are interested in studying and

researching using literary studies with the

title of decentralized analysis research in

improving managerial performance, using

the formulation of the problem, namely

how decentralization analysis in improving

managerial performance.

Decentralization According to Hansen

& Mowen in Widodo & Windi (2011) is the

practice of delegating decision-making

authority to a lower level. Meanwhile,

according to Mulyadi (2013)

decentralization is the delegation of

freedom to make decisions. The important

thing about decentralization is the freedom

of decision-making that makes managers

at lower levels able to make and implement

decisions. In addition to decentralization

authorization, it will also create greater

responsibility for lower-level managers in

carrying out their duties.

Meanwhile, according to Mahoney

., (1963) what is meant by managerial

performance is the individual performance

of organizational members in managerial

activities such as planning, investigation,

evaluating, supervision,

staffing

negotiation, representation, and overall

performance. Schwartz (1999) says

managerial performance as a management

style that concerns goal setting, providing

feedback both from managers to

employees and vice versa from employees

to managers

MATERIALS AND METHODS

This type of research is a review of

literature according to Yuhertiana (2015)

research with a

literature review

approach

in it contains summaries, reviews, and

thoughts from the author by reviewing

various documents, such as government

publications, academic publications, laws

and regulations, journals, books, news, and

other records that have relevance to a topic

discussed. The first step that needs to be

done is

planning

or planning, in which the

researcher conducts a survey of several

scientific articles, journals or proceedings,

and other literature that is appropriate to

the purpose of writing this article. In this

first step, researchers conducted a survey

to understand decentralization analysis in

improving managerial performance

through the results of previous studies that

mentioned the relationship between

decentralization and managerial

performance.

The second step is to conduct a review,

where the researcher observes the

presence or absence of relevance of each

literature used in order to obtain

satisfactory

review

results and in

accordance with the title taken. This study

using secondary data, this is because the

data was obtained by researchers from

journals and internet sites so that data

collection was not carried out directly. The

literature in this study uses Google

Scholar

and Google search

to obtain data using the

keywords

"Decentralization", and

"Managerial Performance". Based on

searches on google scholar and google

search researchers found 4 articles selected

based on 2017-2022, as for the 4 articles

356 | Literature Review : Decentralization Analysis In Improving Managerial Performance

used by researchers as a source of literature

spread over the background and discussion

of research results. The third step is

reporting, where researchers pour out the

results of literature studies that have been

analyzed using the systematics of writing

scientific articles.

RESULTS AND DISCUSSION

1. Research from Dessy Gheofani with the

title The influence of decentralization

and management accounting systems

on managerial performance Concluded

that partial decentralization has a

significant effect on managerial

performance in PT. Auxano Pekanbaru is

because decentralization is a broader

concept and relates to how far top

management delegates authority. The

results of the study partially show that

decentralization affects managerial

performance in universities. Auxano

Pekanbaru.

2. Research from Willy Nurhayadi entitled

The influence of decentralization,

perception of environmental

uncertainty, public accountability,

organizational culture on managerial

performance through a management

accounting system concludes that the

results of the study partially show that

decentralization affects managerial

performance through an accounting

system management at a hospital in

Banten province.

3. Research from Asriani Hasan with

Analysis of the Effect of Decentralization

and management accounting system on

Managerial performance concludes that

the results of the study partially show

that decentralization affects managerial

performance so that it can be used by

management for taking decisions.

Research from Alifiah Wulansari Mustofa

and Sri Trisnaningsih entitled Literature

Study: The role of decentralization in

improving management performance

which concludes that decentralization is

able to have a positive influence on

managerial performance.

Decentralization is defined as the

delegation of responsibility and

authority from upper management to

lower-level management.

Decentralization has an important role

in the company, where decentralization

can speed up the decision-making

process and provide motivation to

managers at various levels to improve

their performance which will have an

impact on improving company

performance. In addition,

decentralization can provide

convenience in the process of collecting

and utilizing information, so that upper

management has no obstacles in the

process of formulating strategic

planning and decision-making. From

the description above, the researcher

explained that in increasing competition

in the business world and to overcome

its problems, the management needs to

take decentralization steps in order to

detect problems that arise so that

management is able or able to make

appropriate and efficient decisions.

357 | Literature Review : Decentralization Analysis In Improving Managerial Performance

CONCLUSIONS

Based on what has been explained

above from the results of the study, the

author implies that decentralization is

useful for making a positive contribution to

management performance, this is because

decentralization is a process of delegation

of responsibilities and authorities starting

from upper-level management to lower

level management. Decentralization has a

very important role for management

because it is able to be considered to be

able to help management in the right and

efficient decision-making process so that

managers have the initiative to take action

to solve problems that arise so that the

decision-making can be done quickly and

precisely.

REFERENCES

Nurhayadi, Willy. (2017). The influence of

decentralization, Perception of

environmental uncertainty, public

accountability, organizational culture

on managerial performance through

a management accounting system:

Sultan Ageng Tirtayasa University.

Gheofani, Dessy. (2021). The influence of

decentralization and management

accounting systems on managerial

performance: National Seminar on

Multidisciplinary Scientific Papers,

Vol.1No.1 August 2021, Pp. 217 – 225.

Hasan, Asriani. (2020). Analysis of the Effect

of decentralization and management

accounting systems on Managerial

performance: Journal of Politala

Accounting Research, Vol 3 No.1 June

2020, PP. 11 – 16.

Hasan, Asriani. (2020). Analysis of the Effect

of decentralization and management

accounting systems on Managerial

performance: Journal of Politala

Accounting Research, Vol 3 No.1 June

2020, PP. 11 – 16.

Mustofa Wulansari, Alifiah (2022).

Literature Study : The role of

decentralization in improving

management performance : Rifle

Proceedings, Vol 2 No.1 May 2022,

Pp. 28 – 35.

www.kimiafarma.co.id.

for possible open access publication

under the terms and conditions of the Creative Commons Attribution (CC BY SA) license

(https://creativecommons.org/licenses/by-sa/4.0/).