Social Culture Formation and Development of Village-Owned Enterprises as a Hybrid Organization in Indonesia: A Case Study in East Java

Abstract

This study aimed to describe the development of Village-Owned Enterprises (BUM Desa) in Indonesia as hybrid organizations. A hybrid organization is formed with different institutions and becomes a new institution. In general, the new institution was created with a double mission. One remains for business-oriented, the other for social purposes. The study followed the guidelines for Village-Owned Enterprises designed uniformly to be implemented by all villages. This study uses studies in East Java to photograph Village-Owned Enterprises in Indonesia. Based on this case study in East Java, Village-Owned Enterprises was found to grow differently following the lines of the socio-cultural area. The results of this study found two important things. First, several Village-Owned Enterprises were successfully formed and then developed into Village-Owned Enterprises with the Advanced category; some villages failed to form Village-Owned Enterprises; some of them succeeded in establishing Village-Owned Enterprises, but the development was not good enough, so they were still the Beginner category. Second, even though it is based on formal institutions that are uniform and apply nationally, the process of forming and developing Village-owned Enterprises in East Java Province, according to initial expectations, turns out to follow the sociocultural divide. Regions with Mataraman and Arek socio-culture generally produce more Village-Owned Enterprises in the Advanced category. Meanwhile, the area with the Pandalungan socio-culture is relatively stagnant because it only produces a few Village-Owned Enterprises in the Advanced category. In conclusion, Village-Owned Enterprises grow differently in different socio-cultural areas. Socio-culture is a supporting factor in the formation and development of Village-Owned Enterprises.