OPTIMIZATION OF VILLAGE OWNED ENTERPRISES: THE ROLE OF SOCIAL AND HUMAN CAPITAL IN INDONESIA

Abstract

The number of Village-Owned Enterprises (VOE) in all, in mid-July 2018 reached 35 thousand from 74,910 villages in Indonesia, five times greater than the target of the Ministry of Villages. However, most VOE do not have business activities, even some eventually Collapse. The problems of VOE which should be expected to be the foundation of village economic development are; the quality of Human Resources (HR), misperception, limited capital, and the others. Village owned enterprises should have enormous potential to support village economic growth. but in reality many VOE have failed. the pattern of open communication between the people and their obedience to the village head are not the strength of the VOE. The results of research conducted in North Sumatera and East Java  show that there are several factors causing the failure of VOE, human capital and social capital. There are several aspects of human resources that have become obstacles to the success of VOE in Indonesia: (1) motivation, (2) managerial and entrepreneurial skills, (3) Understanding VOE philosophy. Whereas some aspects of Social Capital which become an inhibiting factor are: (1) lack of harmonious communication, (2) different perception, (3) political climate, (4) different interest, and (5) community support /trust.